Zimplow targets share buyback

Enacy Mapakame

HARARE – Agriculture implements group, Zimplow holdings Limited are considering a shareholder approval for a share buy back as it seeks to enhance strong returns for its shareholders.

The share buyback scheme should enhance shareholder welfare, help in reduction in cost of capital, enhance earnings per share and the overall efficient utilization of excess working capital.

According to a circular to shareholders the proposed number of shares available for purchase will not exceed 20 percent of the company’s issued share capital, in line with the Zimbabwe Stock Exchange (ZSE) listing requirements.

The shares shall be acquired at not more than or below 5 percent below the average price on the local bourse.

“Acquisition shall be of ordinary shares, which the aggregate in any one financial year, shall not exceed 20 percent of the company’s ordinary share capital.

“The maximum and minimum prices respectively, at which such ordinary shares may be acquired will not be more than 5 percent above and 5 percent below the weighted average of the market price at which such ordinary shares are traded on the Zimbabwe Stock Exchange, as determined over five business days immediately preceding the date of purchase of such,” said Zimplow.

Zimplow has been on a growth trajectory spurred by increased demand in its products, thanks to Government’s Command Agriculture programme.

A good rainfall season and internal strategy execution in which the company divested out of the non-core assets and paid down expensive debt also helped the group.

In the year to December 31, 2017, the implements manufacturer swung back to the black with profit after tax jumping 236 percent to $3,4 million from prior year’s $2,5 million loss.

Its turnover jumped 65 percent to $39,1 million from $22 million achieved in the prior year period.

In anticipation of the tight foreign currency market, Zimplow curtailed foreign supplier credit and switched to a prepayment model, which had an added benefit of achieving high quality sales and a shorter working capital cycle.

Despite the foreign currency shortages that are likely to persist and pose challenges to the operating environment, management at Zimplow remains upbeat of its earnings going forward on the back of a positive sentiment that is currently prevailing in the country.