Radar Holdings Ltd reported a 40% decline in after-tax profit in the year to June of US$1.31 million, after operating costs chewed up group revenue of US$36,25 million.
Report by Staff Writer
The group’s revenue was 36,62% higher than last year but operating costs, which include labour, electricity and the costs of redeeming the plantations at Border Timbers after a fire saw the group report an operating profit of US$5,14 million, 26% down from last year.
In a statement accompanying its results, the group said employment costs increased 24% to US$11 million while energy costs increased 32% to US$6 million. To allay energy challenges, Bulawayo subsidiary MacDonald Bricks now had a dedicated power line, while Mutare-based Border Timbers had commissioned a biomass electricity project to produce 0,5MW.
Repairs and maintenance costs in the year under review cost the Radar group US$7,7 million. The group was following its equipment replacement strategy, which will take several years to complete.
Group borrowings rose 59% to US$19,1 million and were used on capital expenditure and plantation development.
At Border, reforestation was continuing, with 1 891 hectares having been planted so far. Border’s total area under plantation was 19 934 hectares.
A total 1 452 hectares were destroyed by fire, which the group said was the worst in recent times. Salvage operations were undertaken which ended in April.
The group said going forward, the level of plantings would be brought down and equated to clear felling area as most of the backlog had been addressed.
Total wood sawmilled at Border was 6 307 cubic metres, an increase of 24% from prior year following growth in round wood production. The company churned out 17 327 cubic metres of poles, up 40% on last year.
Border reported revenue of US$27,9 million from US$21,93 million last year. The company reported earnings of 4 US cents per share from a profit of US$1,85 million.
MacDonald Bricks contributed 22% to group revenue after sales increased by 41% to US$8,2 million. Sales were buoyed by the demand for face bricks. Production increased 25% to 46 million bricks and this was achieved by incorporating clamp brick production into the production capacity.
Radar is currently trading under cautionary on a market capitalisation of around US$5,5 million. The group’s main asset is its 51% stake in Border Timbers, which makes up more than 85% of its balance sheet.
Radar also wholly owns MacDonald Bricks.
As with Border, the group trades at a significant discount to the net asset value, given that the its major shareholders own more than 80% equity.