TSL to dispose of Nampak, Cut Rag

TSL to dispose of Nampak, Cut Rag Mr Matsaira
Mr Matsaira

Mr Matsaira

Business Reporter
Diversified group TSL Limited intends to dispose of its investment in Nampak Zimbabwe and Cut Rag processors at a combined value of $6,5 million, chief executive Washington Matsaira has said.

TSL has a 16,53 percent stake in Nampak Zimbabwe and a 30 percent stake in Cut Rag Processors, a tobacco processing and exporting firm.

Mr Matsaira told analysts last week that the disposals were part of the company’s long term strategy to strengthen core businesses and optimising efficiencies.

“We have a 16, 53 percent investment in Nampak Zimbabwe and that investment remains available for sale at the right time.

“Substantial value growth is expected from this diversified packaging group in the medium term but it remains our plan to dispose of the investment which is currently sitting at a value of $4,6 million,” said Mr Matsaira.

“Investment in Cut Rag Processors has been reclassified from associate company to held for sale investment and the value of that investment is $1,9 million.”

During the course of 2015, TSL also terminated its joint venture with Classic Leaf as it wants to focus on expansion of farming activities.

Mr Matsaira said the strategy after the termination of the JV will include introducing a wider range of commodities for local and export markets.

The diversified group currently focuses on tobacco and diversification into crops like Maize and Soya beans is already at pilot stages.

He said funding for the new strategy will come from off-takers where possible and focus will mainly be on sustainable and long term marketing arrangements.

On the company’s financial performance for the full year to October 30, 2015, group revenues remained unchanged at $ 48,6 million as the operating environment remained difficult.

Operating profit (before fair value adjustments) for the period was down 8 percent on last year to $6,8 million.

“Against this backdrop, profit before tax at $6,1 million dollars was down 11 percent on 2014 whereas in the prior year, share of associates and joint venture profits contributed 11 percent to Group profit before tax.

“Contributions for the year under review were nil, as these companies were accounted for as investments,” said Mr Matsaira.

The steady performance by the Group in 2015 is, in large measure, attributable to the diversity of its operations.

While the agriculture related businesses were adversely impacted by the weather patterns, the logistics and real estate clusters fared well.

Strong performance registered in the logistics and real estate clusters and new initiatives in the agro trading businesses mitigated the decline in revenues and operating profit in the tobacco related businesses.

Profit before tax for associates and joint venture was unchanged on prior year.

Notwithstanding the difficult operating environment characterised by local deflationary pressures and weak commodity prices globally, the Group posted a satisfactory set of results.

The agricultural season was particularly difficult due to an erratic rainfall season. Consequently, national tobacco production was down 8 percent to 199 million kg from 216 million kg.

The decrease in volumes coupled with depressed global prices translated into a reduction in national revenues. Going forward Mr Matsaira said the group intends to strengthen core businesses, leverage Group synergies and optimise efficiencies.

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