Border Timbers now out of the woods as group is now making profit
BORDER Timbers is now out of the woods as the company is now making profits to sustain operations, provisional judicial manager Peter Bailey has said.
In an interview after the company’s AGM, Bailey said the strong turnaround of operations has seen the company achieving profitability in the last four months.
“Border Timbers is now out of the woods because it’s now making profits, we now need the creditors to vote at the next scheme meeting so that I can step down,” he said.
Border Timbers filed for judicial management in January this year to ward off pressure from a major creditor and currently remains the only counter to on-board the automated trading platform, CSD.
Bailey said the company is not technically insolvent and has shown good prospects for the current year.
In a trading update for the four months to 31 October 2015, FD Wellington Mutizwa said turnover is 7% up on the same period last year largely driven by increased transmission pole sales into the region and the group has since secured its pole business for the next financial year.
“Demand for the company’s two main products, namely poles and lumber, remain strong both locally and in the region,” he said.
During the period, sales volume rose 2% on same period last year but Mutizwa said the effects of the rand depreciation has had an impact on sales, as the company had to slow down exports into South Africa.
Production volume is 45% up on prior year, driven by improved supply as a result outsourced harvesting and secured pole orders in the region.
Mutizwa said EBITDA is positive, compared to a loss for the same period last year. The company has posted profits on a monthly basis since July 2015.
Mutizwa said BTL will continue with a rigorous approach to manage costs along the production chain.
Managing Director Erhard Kuhn said high production costs have been optimised through outsourcing some logistical operations.
He said the company adopted a new forestry management regime which has impacted on costs while production volume has been driven by new equipment and people.
Kuhn said the Pole operations is operating at full capacity producing 140 cubes per day up from the previous 100, while production costs have dropped to $100 from $140.
He said with the company’s traditional export market currently underperforming, focus is now on the Zimbabwean market which contributed 47% of volumes while the group was also looking at other markets such as Mozambique and Namibia.
According to Kuhn, South Africa used to provide 40% of the company’s market. He added that the company will also export logs to China and Europe with the first consignment expected to be dispatched in January next year.
In terms of negotiations, to restructure the loans with banks, Bailey said the agreement was imminent having agreed in all principles.
“The agreement with banks will be signed soon, and the company has also successfully negotiated with a certain bank to provide working capital,” he said.
BTL liabilities comprise mainly of deferred tax of $30 mln arising primarily from the biological assets, while borrowings are at $20 mln made up of $6.7 mln overdrafts and loans now due of $13.3 mln.
There were no directors fees for the past financial year while auditors fees were set at $16 500 for the current year and $102 311 for the prior year service. FinX
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