Zimplow Limited’s turnover for the 12 months to December 31, 2015 was 15 percent down at $30 million from $35 million of the prior period as result of subdued demand at Mealie Brand and prevailing difficult global environment. Despite a slump in revenue for the period, the company managed to reduce its expenses by 6 percent as a result of the company’s efforts to right size the business.“We undertook a restructuring program where we right-sized the business for the level of business that we are underwriting. We reduced overheads across the group and we expect an average annual saving of $1,7 million going forward,” said Zimplow chairman Thomas Chataika in a statement accompanying the company’s financial results
The company disposed of Puzey and Payne to management through an MBO in 2013 as part of its restructuring exercise during the period under review.
Zimplow strengthened its balance sheet during the period under review through a rights issue concluded in February last year for $5 million. The money was used to retire expensive bank debt which was overdue and placing the business under strain.
The combination of cash raised from the rights issue and collection of debtors helped to reduce the company’s total debt to equity ratio to 16 percent from 43 percent.
Mr Chataika said the company during the period increased its efforts to release cash tied up in debtors and inventory across the group during the period.
As a consequence Zimplow released a net cash amount of $ 7,4 million from debtors and inventories. This cash was used to pay down debt and fund restructuring expenses.
On operational review, at Farmec volumes for tractors and implements were up on 2014.
Tractor sales were up 10 percent on prior year but on prices which were on average 7 percent lower than the prior year.
There was a strong improvement in the volume of implements sold and the net effect, however, was that Farmec recorded a 7 percent decline in revenues compared to 2014.
Barzem had a commendable performance with revenues up 9 percent on prior year.
This was despite equipment sales being down 30 percent on prior year largely as a result of the collapse in commodity prices, especially base metals.
“Our relationship with the Barloworld Group of South Africa afforded us an opportunity to export labour on a contract basis into the region particularly into Mozambique,” said Mr Chataika.
Mealie Brand was the most affected by the drought and the low levels of disposable income in communal farmers’ pockets during the period.
Additionally Mealie Brand’s key export markets of Angola and Zambia were badly affected by the collapse in oil and copper prices respectively.
Overall revenues at Mealie Brand were down 50 percent with exports at 25 percent of prior year.
Mr Chataika said the Board is happy with the team at CT Bolts and will be allocating further trading capital to the business.
Mr Chataika said the bulk of CT Bolts revenues currently come from the Southern region and going forward they will add more focus on the Northern region for revenue growth.
Industrial and domestic power systems Genset volumes were up 49 percent in 2015.
Mr Chataika said Zimplow managed to strengthen its relationship with Barloworld of South Africa during the period through an allotment of an additional 14 percent shareholding in Barzem in accordance with the existing shareholder’s agreement.
“This achieved our important twin goals of protecting our rights to the Caterpillar dealership as well as raising money for Barzem. Barzem is now adequately capitalised and also has a strong cash position,” said Mr Chataika.
Going forward Mr Chataika said the company will ensure that Barzem benefits from the management practices and processes of Barloworld which is the largest Caterpillar dealership in the world.
He said Zimplow will protect its home market in Mealie Brand and then move on to reclaim market share in the traditional export markets.