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RioZim Limited looks to double revenues
15/04/2013 00:00:00
by Rebecca Moyo
RioZim revenues increase 43 percent
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Concern over RioZim recapitalisation

LISTED miner, RioZim, is forecasting revenue growth of US$185 million by December this year from US$72 million last year a 157 percent increase

Acting chief financial officer Beki Nkomo told a briefing in Harare Monday that the group was optimistic because to meet its targets.

EBITDA for the year to December is expected to increase by 229 percent to US$23 million from the US$7 million reported in last year.

Operating profits would also rise to US$16 million, a 251 percent increase while earnings per share would be up 294 percent to 23,5c.

The group says last year it had taken a US$726,000 knock on retrenchment costs while making a profit of US$175,434 from the sale of the Msasa building.

The retrenchment exercise would result in cost savings of US$2 million per year.

Turnover grew 33 percent to US$72 million with over half of it coming in the second half of the year at US$41,4 million.

EBITDA was up 37 percent to US$6,9 million while the group managed to report an operating profit of US$4,63 million from a loss of US$1,47 million at the end of 2011.

However, huge finance costs at US$11,8 million saw the group report a loss of US$7,47 million.

Ndlovu said 2012 had been a difficult year for the company.

The group started the year saddled with a US$91 million debt, US$60 million of which was owed to the banks at high interest rates. Five of the major banks were seeking judicial management.

“We haven’t been able to put much cash back into the operations as we were battling to reduce the debt burden,” the official said.

The group also had a weak procurement system as there were huge mark-ups on goods supplied while production was low at Renco and ENR was stuck in a loss making toll refining agreement.

However to get round this new shareholder GEM brought in a US$6,6 million, Old Mutual had brought in US$5 million which formed a get-out-of-jail capital injection while the group started renegotiating with banks and also applied some of the funds to working capital.

"The Gem group did a strategic overhaul of the business,” Ndlovu said

He said the group was in the process of renegotiating for 24-36 months facilities.

“We have to match repayments with cash as the structure if the debt was straining cash flows. A lot of progress has been made towards addressing the issue and we hope to have closed it in the next two months,” said Ndlovu.


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