Zimplow disposes Puzey & Payne

HARARE – Zimplow Holdings (Zimplow) has disposed of its motor vehicle dealer Puzey & Payne to management.

Maxwell Chinorwadza, Company Secretary said the disposal will allow the farm implements manufacturer to streamline operations and focus on its key strategic objectives.

“The directors obtained an independent opinion from advisors that the terms of the transaction are fair and reasonable to the company’s shareholders,” he said.

The Zimbabwe Stock Exchange-listed group Zimplow — which is targeting to achieve $100 million turnover by 2015 from $35 million during the year ended December 31, 2012 — has been realigning its units to improve efficiencies and bolster profitability.

There are several restructuring programmes currently underway at Zimplow to unlock shareholder value. One of them is doing away with non-core operations.

Like most direct importers of brand new cars in the country, Puzey & Payne has been struggling to compete with grey imports which are much cheaper, with small second-hand family sedans averaging about $6 000. Brand new cars like the Peugeot 508 have a $40 000 price tag.

The business — which is essentially a motor vehicle, spares and generators dealer and vehicles servicing — is one of the holders of a Peugeot dealership in the country.

In March, Zimplow chief executive officer, Zondi Kumwenda said the company would pull out some of its investments but did not disclose which units were on sale.

He said negotiations with financiers to provide tractors and other implements on an asset-based finance scheme were also underway.

Kumwenda noted that the company’s exposure to agriculture and mining at a much bigger scale would present avenues for product diversification to achieve the turnover target.

The group’s revenue for the year to December 31, 2012 was at $35,6 million, against $15,5 million recorded in the prior year.

It was boosted mainly by strong results from Tractive Power Holdings, which was taken over by Zimplow last year.

Profit before tax was down 127 percent and this was mainly due to restructuring expenses of $1,9 million.

Finance director, Francis Rwakonda, said revenue for Zimplow was down 13 percent and profit before tax also declined by 96 percent.

“This was mainly due to the interest cost of $297 851, acquisition and restructuring expenses of $1,045 million,” he said.

Kumwenda noted that Zimbabwe’s sovereign risk was high and international investors were thus limiting their exposure to the country with the “hope that this would end in a few years to come”.

“These factors present significant risk for the group going forward. The group will, however, be better placed to absorb such risks should they arise owing to a better-diversified revenue stream,” said Kumwenda when he presented the group’s year-end financial results in March.

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