adminNgoni Dapira
Business Correspondent
MANICALAND’S forestry and wood-processing concern, Border Timbers Limited, is showing positive signs of coming out of the provisional judicial management it is currently under.
The Zimbabwe Stock Exchange listed company which comprises of three divisions in forestry, saw-milling and pole manufacturing went under voluntary provisional judicial management last year in January, after hitting hard-times.
According to the 2015 BTL report under the operational financial review by the judicial manager, Mr Peter Bailey, he expressed satisfaction that the company was in a sound financial position with adequate resources to continue in operational existence for the foreseeable future.
“I effectively took over the stewardship of the company from the date of placement under provisional judicial management and am pleased to report that, during this respite from the penalty interest burden, the company is undergoing a significant turnaround. In the last quarter of the financial year, the company managed a break even result in spite of the United States Dollar/Rand exchange rate trajectory,” he said, adding that turnaround strategies that were put in place, both before and during the provisional judicial management period had begun to bear fruit.
He said, impressively, the company in its first year under provisional judicial management was able to sustain operations without any additional external funding generating cash throughout the period under review.
According to the 2015 financial statements, the cash generated during the period under review amounted to $3,8 million, a 267 percent increase from the prior year amount of $1 million, while turnover reduced marginally by one percent from the prior year of $17,8 million.
The operating loss before tax and interest cost from continuing activities for the year amounted to $3,2 million against $8,7 million for the prior year.
He, however, said while a loss before income tax of $5,6 million was incurred during the year, $3,9 million of this was sustained during the first six-months to 31 December 2015.
In the treated poles division, the actual sales volume of treated poles was 12 384 cubic metres against 11 196 cubic metres during the prior year, a notable increase of 11 percent.
In round wood production, the production for the period was 168 032 cubic metres, a reduction of 10 percent compared to the previous year.
The reduction was largely as a result of mothballed veneer and door plant. Lumber production ended up at 65 267 cubic metres, a marginal increase of nearly one percent compared with the previous year.
He said efforts of continued upgrade programs in the mills with emphasis on the kilns and re-work sections have resulted in vastly improved drying quality and higher valued grade out-turns.
Mr Bailey said during the period under review the company also made a decision to follow the global industry trend and outsource its harvesting operations which has had substantial impact on business through improved reliability in its log supply to the mills.
He added that the company had over the last year become recognised as a reliable supplier of excellent quality treated poles in Mozambique, Zambia and Tanzania.
“Sizable pole tenders into Zambia were secured and the company has performed extremely well on deliveries, cementing its reputation as a reliable supplier of quality poles. Currently the company continues to perform strongly on a stop-gap order from Zambia and is in the process of concluding orders for the next two years into Zambia, Tanzania and Ghana. It is expected that the pole plant will work to capacity in the foreseeable future, and will move from two to three shifts as tenders are secured,” read the report.
In his business outlook the judicial manager said sustainable performance is anticipated on both poles and lumber on the back of heightened demand for the product in the Southern African Development Community region where rural electrification projects and infrastructural developmental projects are currently being funded through increased foreign direct investment.
Mr Bailey, however, revealed that though the export market demands remained strong, the weakening South African Rand and Botswana Pula have had a negative effect their selling prices.
He said though actions to mitigate this have been implemented the continuing slide on the exchange rate was posing a serious challenge citing that alternate markets entered into such as Zambia were also currently under threat as the Zambian Kwacha has come under exchange pressure.
“However, more recently attempts are underway to move products into Namibia and Mozambique and further reduce exposure to the South African Rand. The company is poised and ready to exploit high return dollar-based market opportunities, continues to look at ways to expand operational efficiencies in the saw mills particularly in the Charter Saw mill and to pursue cost rationalisation for shareholder value enhancement,” he said in his report.
Mutare has always been known as home to big timber industries that tap raw materials from the thick forests in the Eastern Highlands.
Before the discovery of diamonds at Chiadzwa in Marange, the timber industry was the major economic activity in the eastern border city, employing thousands in downstream industries.
Big timber companies that quickly come to mind include the now defunct Mutare Board and Paper Mills, the struggling Wattle Company and Allied Timbers as well as Mutare Board and Doors.
During the heydays when these companies were operating at full throttle, thousands were decently employed, with the Nyakamete Industrial area full of activity, unlike present-day.
If all goes well according to the judicial manager’s report the company will join other big companies like agro-processors, Cairns Holdings, which came out of judicial management last year in November after going under the court-supervised rescue plan in 2012.
Border Timbers has a total of five estates, with three located in Chimanimani namely Tilbury, Charter and Sawerombe estates while the Imbeza and Sheba estates are in Penhalonga.
The ultimate holding Company is Rift Valley Corporation Limited incorporated in Jersey in the Channel Islands (between England and France).
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