Border Timbers is hoping to have at least $5 million in tax penalties written off, and allow it to enter into a scheme of arrangement with creditors and eventually come out of judicial management.
The company has been under the judicial management since March 2016 after it failed to service debts to several financial institutions worth $20 million.
Judicial Manager Peter Bailey said at the company’s annual general meeting that the company delayed to submit an initial scheme of arrangement to the High Court last September because it was still trying to ascertain the exact amount it owes the Zimbabwe Revenue Authority (ZIMRA).
The amount dates back from the period before he was the judicial manager.
“We asked them how much exactly and they keep promising and promising, still to this day we do not know the exact amount but we got Deloitte to do a tax health check,” said Bailey.
“They gave us an indication that it was big enough to completely upset our cash flow going forward so I had to delay applying to the court. We do not know the figure but it could be $5 million.”
Border Timbers stands to benefit from a proposed government moratorium on tax arrears owed by companies that benefited from debt assumption by the Zimbabwe Asset Management Corporation (ZAMCO).
Bailey said the losses recorded in the last two years owing to fires have not affected the company’s capacity to generate cash.
“We have been building up cash reserves to enable the company to pay off the creditors so going forward it looks very promising,” he added.
Finance Director Lysius Karimanzira told shareholders attending the AGM that the company was on a positive trajectory, with the trend expected to continue.
“Our turnover just for the 5 months to November 2017 is 31 percent higher than the same period last year mainly driven by higher sales volume and also our focus on markets and products that are giving us better selling prices,” said Karimanzira.
“Sales volumes are 19 percent higher than the same period last year mainly as a result of extensive marketing efforts that we put both locally in Zimbabwe as well as efforts into the region as far as East Africa”.
Karimanzira said demand for the company’s main products (poles and lumber) remains very strong both locally and in the region.
“We are achieving much higher selling prices for both products compared to the previous years,” he said. –The Source