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Agro-based firm CFI Holdings Limited says it expects to reduce its bank borrowings to $4,6 million from the current $5,8 million on the back of a land for debt swap to be completed by the end of this month.
The group impaired deferred tax assets amounting to $12,8 million mainly in the poultry and specialised division compounding to a loss for the year of $25,1 million last year.
In the trading update for eight months to May this year, the group revenue declined by 45 percent to $23 million.
Turnover for the group’s Agri Foods and Retail divisions went down to 66 percent and 33 percent respectively owing to “limited funding and aggressive cost containment measures”.
Milling volumes at Victoria Foods went down by 66 percent.
CFI acting chairman Grace Muradzikwa told the group’s 20th annual general meeting held in the capital this week that in October last year the firm had an agreement with local banks to find way forward to reduce its bank borrowings.
“We were owed a total of $16 million. This has resulted in the group’s bank borrowings declining to reasonable levels.
“This development has left the group with bank borrowings of $5,8 million which it expects to reduce it to $4,6 million on the back of another land for debt swap to be completed by the end of this month,” she said.
During the period the group’s financing costs came down to $1,1 million compared to $2,7 million incurred in the previous year.
Mrs Muradzikwa said since March this year the group had implemented a variety of reforms with the view of focusing on the group operations and rationalising its cost structures.
“In view of the significant losses registered in the poultry group, operations have been significantly curtailed and your board is in the process of identifying technical partners for this sector and further retrenchments were taken for the two milling business Victoria Foods and Agri Foods.”
She said in an effort to align overheads to volumes projected in the short to medium term a number of cost cutting initiatives were also being implemented to align the group to its sustained revenue base.
The group had recently approved a recapitalisation process to address in particular, the three units of the company namely retail, Victoria milling and Agri Foods, she said.
“We would like the recapitalisation process to balance the need to address the legacy debt and the need to provide trading capital for immediate recovery of these entities,” she said.
Mrs Muradzikwa added that the group was in the process of evaluating proposals for a joint venture with “strategic technical investors to effectively utilise the group’s poultry infrastructure.
The company’s margins at 1,1 percent below that achieved last year mainly coming from reduced capacity utilisation in the poultry and milling divisions.
CFI acting chief executive officer, Timothy Nyika noted that the group was finalising plans that would see Farm and City scaling up its operations. In the outlook Mr Nyika said the company was projecting a reduced loss to year end.
“We expect the restructuring and recapitalisation efforts scheduled for the last quarter of the financial period to assist in the turn around.” — New Ziana.
Online Reporter