Zimplow targets share buyback

LISTED agriculture implements manufacturer, Zimplow Holdings, is seeking shareholder approval to buy back 20 percent of the company’s issued ordinary shares to enhance returns for its shareholders.

The share buyback would also enhance shareholder welfare, help reduce cost of capital, enhance earnings per share and the overall efficient utilization of excess working capital.

In a circular to shareholders Zimplow said the share buyback will not exceed 20 percent of the company’s issued share capital, in line with the Zimbabwe Stock Exchange (ZSE) listing requirements. The shares bought back shall be acquired at not more than or below 5 percent below the average price on the local bourse.

“Acquisition shall be of ordinary shares, which the aggregate in any one financial year, shall not exceed 20 percent of the company’s ordinary share capital.

“The maximum and minimum prices respectively, at which such ordinary shares may be acquired will not be more than 5 percent above and 5 percent below the weighted average of the market price at which such ordinary shares are traded on the Zimbabwe Stock Exchange, as determined over five business days immediately preceding the date of purchase of such,” said Zimplow.

Zimplow has been on a growth trajectory spurred by increased demand for its products on account of the Government’s Command Agriculture programme.

A good rainfall season and internal strategy execution in which the company divested out of the non-core assets and paid down expensive debt also drove performance.

In the year to December 31, 2017, the implements manufacturer swung back to the black with profit after tax jumping 236 percent to $3,4 million from prior year’s $2,5 million loss.

Turnover jumped 65 percent to $39,1 million from $22 million achieved in the same period the prior year.

Foreign currency shortage saw Zimplow curtail foreign supplier credit in favour of a prepayment model, which had an added benefit of high quality sales and a shorter working capital cycle.

Despite the foreign currency shortages that are likely to persist and pose challenges to the operating environment, management at Zimplow remains upbeat of its earnings growth going forward on the back of positive sentiment currently prevailing in the country.