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Border Timbers in the red

Business
BORDER Timbers Limited continues to trade in the red after posting unfavourable results for the year ended June 30 2014

BORDER Timbers Limited continues to trade in the red after posting unfavourable results for the year ended June 30 2014.

KUDZAI CHIMHANGWA BUSINESS REPORTER

The wood-processing concern incurred consistent losses in the manufacturing divisions, while revenue went down by 26% to $18 million.

This situation, among other factors, was primarily driven by the sale of Border Timbers International following the board’s recommendations that the company was no longer profitable.

Company secretary Munesh Narotam said the company was now focusing on initiatives to enter new pole and sawn wood markets with improved pricing and outsourcing of log extraction and haulage functions among others.

“Whilst the group faced challenges during the year, and at year end had a net current liability position, we are confident that the group will return to profitability once initiatives have been implemented,” said Narotam.

Forestry planting was 1 067 hectares in the financial year 2014, representing a 40% increase on the prior year.

Total sales volume of poles was 11 196 cubic square metres, 39% down on prior year due to the sporadic nature of utility tender processes.

“Demand for poles, however, is high regionally and is expected to remain firm for the foreseeable future,” said Narotam.

Under the circumstances, directors resolved not to declare a dividend.

The debt-to-equity ratio stood at 0,57.

This ratio is basically a quantification of a company’s financial leverage and indicates the proportion of equity and debt used by the company to finance its assets. Although industry specific in most instances, an optimal debt-to-equity ratio is considered to be about 1.

The current ratio stood at a troublesome 0,58 and this liquidity ratio estimates the ability of a firm to pay back short-term obligations as and when they arise.

A higher current ratio indicates the higher capability of a company to pay back its debts.

An ideal current ratio would be 2, signifying that should the current assets be cut by half, creditors will be able to get their money in full.

The company’s borrowings increased by a staggering $2,9 million during the year.

The asset turnover ratio, which measures the efficiency of a company’s use of its assets to product sales stood at 0,11 during the period under review.

This important ratio measures how efficiently management is using the assets at its disposal to encourage sales and also assists to measure the productivity of a company’s assets.

For a company, the higher the number the better.

The total round wood production for the year was 187 035 cubic square metres, which was 8% below the prior year’s production.

Total sawn wood production declined by 2% to 65 811 cubic square metres as compared to the previous period.