TSL Limited, a company in retail, tobacco packaging and agricultural services recorded an increase in revenue of 34% for the six months ended April 30 2011 but says the increase in tobacco auction floors threatens the group.
The group recorded a revenue of $22,1 million for the period under review from $16,5 million in April 2010.
Profit before tax rose by 23% to$2,1 million from $1,7 million as a result of a significant increase in finance costs and a decline in profits from associated companies.
“The proliferation of tobacco auction floors poses a real challenge to the group. The group also continues to face working capital constraints, in particular at Hunyani and Chemco Holdings,” the group said in a statement.
“Despite a significant below budget profit performance in the first half of the 2011 financial year, business prospects are strong in the second half due to the seasonality of some operations and should enhance performance in the second half.”
Total assets stood at $75,9 million for the six months ended April 30.
The company’s subsidiary in paper packaging, Hunyani’s, volumes increased by 19%, due to the tobacco crop performance.
The group said Hunyani Holdings remained borrowed throughout the period for working capital purposes, resulting in a 92% increase in finance costs compared to the 2010 first half.
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Propak Limited hessian volumes rose by 152% compared to the prior period while overall revenue stood at 95% compared to last year.
Propak managed to eliminate product shortages in the period under review due to a procurement programme that the company embarked on.
The group’s retail and agricultural services ABS, TS Timber, Farm-a-Rama, TSW volumes and profit margins remained depressed leading to closure of two retail outlets as at April 2011.
“The group has since divested out of the Farm-a-Rama franchise. The remaining retail outlets will be organised in the second half of the financial year with a view to improving their contribution to group performance,” the group said.
Agricura revenue performance increased by 2% compared to the prior year while production levels went up by 12%. The company incurred a loss in the period under review.
The horticulture arm of the group, Luxaflor Roses’ production dropped by 37% compared to the first half last year where it was at 43%.
