Zimbabwe Newspapers (1980) Limited struggled to break even in 2012 after a US$680 000 loss at Star FM dragged the parent company’s bottom line to a very small near break-even profit of US$62 186.
Announcing the company’s results in a statement, Chairman of Zimpapers Group, Dr Paul Chimedza, cited the tight liquidity challenges in the market that impacted on borrowing costs and the high cost of operations due to electricity shortages.
Despite improvement in the cost of imported newsprint following reduction in its customs duty, shortages of the product locally and the entrance of new competitors were cited as the key variables that negatively affected the groups’ performance.
Gross income rose 13% to US$41,4 million, from US$36,6 million in the prior year, while cost of sales declined 9% from US$13 million last year to US$11,9 million due to what the company said was an efficient purchasing process for newsprint and inks.
The below-par performance by Star FM, which recorded an operating loss of US$680 000, stemmed from an 88% increase in finance charges from US$544 821 to US$1,025 million.
Huge overheads and a debt overhang had the commercial printing division, Natprint, hamstrung. The division suffered a loss of US$1,07 million, which added further strain on the group’s performance.
The company had in the year under review resorted to selling non-core assets, which included a block of flats and a factory in the industrial areas, in order to inject liquidity on its balance sheet and reduce reliance on expensive short term borrowings.
An inspection of the company’s statement of financial position shows that the company is highly geared, with total liabilities topping US$21 304 million, including balances owing to related parties of US$4,103 million, while shareholders equity was only US$7,8 million.
Chimedza said the company successfully refurbished its machinery and acquired a new printing press during the year under review.
“The recapitalisation will result in improved production capacity and efficiency,” he said.
“ The new kid on the block, Star FM is expected to positively contribute to the company’s performance in the coming year,” he added.