BORDER Timbers judicial manager, Peter Bailey, said he would approach the High Court of Zimbabwe for the company to be removed from judicial management, as negotiations with one of the major creditors may see a large part of the claim waived.
BY TATIRA ZWINOIRA
Bailey first announced to creditors in January last year that he would be looking to get Border Timbers out of judicial management since the company was operating profitably.
However, this stalled as some of the creditors rejected a scheme of arrangement proposal, which Bailey offered, resulting in ongoing negotiations.
In a statement accompanying its financial results last week, Bailey said he “expected to approach the High Court shortly for permission to hold scheme of arrangement meetings with each class of creditors”.
“One of the delays in making progress has been the negotiations, currently ongoing, with a major creditor with potential for a large part of the claim to be written off or waived,” he said.
“If the proposals to be submitted to each class of creditors are approved by all classes with the appropriate majorities, I will recommend to the Master of the High Court that the company be taken out of judicial management.”
The new proposals presented to the creditors seem to be more favourable to them, which may see the company out of judicial management. The company was placed under judicial management in March 2016.
Previously, negotiations had stalled as two of the major creditors put forward competing individual demands after finding the scheme of arrangement offered to them unfavourable.
Consistent losses in the manufacturing divisions and revenue going down by 26% to $18 million in the year ended June 30, 2014, forced Border Timbers to be placed under judicial management applying to the High Court for it in January 2015 before being granted in March 2016.
In terms of performance, at the end of the half-year ending December 31, 2017 an income tax credit of $392 251 helped grow profit after taxation to $597 182.
However, in terms of net profit before taxation, Border Timbers earned $204 931 for the period which was still an improvement over the loss of $369 488 in the 2016 comparable showing an improvement from its operations and cost containment.
The income tax credit has helped the company with a dollar-for-dollar reduction of the income tax it owed for the half-year, resulting in an improvement of its overall financial position at the end of the period.
Revenue was up 25% to $10,87 million from a 2016 comparative of $8,67 million due largely to increased pole sales by 104%.
Bailey said cost containment also helped with the results.
“Selling and distribution expenses were down 7% from FY17 H1 reflecting the successes in the cost containment introduced by management. Administration expenses increased by 23% from $1,3 million in FY17 H1 to 41,6 million,” he said.
Cash generated during the period was up 6,5% to $2 million for the period under review compared to the 2016 comparable period.
In terms of profitability, excluding the income tax credit, Border Timbers recorded a net profit margin of 1,88% showing the company was now in a profitable position compared from its 2016 loss making position at minus 4,25%.