The only listed metal fabricator company on the Lusaka Securities Exchange has recorded an improvement in its loss per share, according to a statement from ZAMEFA.
“For the six-month period ended 31 March 2021 the loss per share (“LPS”) for the Group and the Company improved by 93% from the LPS achieved in the corresponding period of the prior year”, read the statement issued by BDO who performance company secretarial duties on behalf of the ZAMEFA Board of Directors on 21st May 2021. “The improvement in the LPS is primarily due to the increase in volumes sold during the reporting period compared to the corresponding period in the prior year when limited copper cathode was available in Zambia”.
According to the released statement, “the significant reduction in the overdue amounts due by the Zambia Revenue Authority (“ZRA”) at the end of the previous financial, and the restructuring of the shareholders’ loan into an equity loan in August 2020, reduced the Group’s USD based liabilities”.
Board Chair A. E Dickson in his message to shareholders in their 2020 Annual Reported stated that “The 2020 financial year started off under difficult conditions with the overdue VAT and duty draw back receivables, owed to ZAMEFA by the Zambia Revenue Authority (“ZRA”), at an unsustainable all-time high level. This negatively impacted the liquidity position of the company. These difficult conditions were exacerbated by the unavailability of copper cathode in Zambia during the first half of the financial year and the negative effects of the Covid-19 pandemic that affected the third quarter of the financial year”.
Tax refund and Macro economic factors continue to weigh heavily on the management team. “As a result, the effect of the ongoing weakening of the kwacha against the United States dollar (“USD”) had a smaller negative effect in the reporting period than in the corresponding period of the prior year”.
However, during the period under review, “Revenue was 189% higher than achieved in the same period of 2020 mainly due to the impact of a significant portion of the groups revenue being earned in USD and as the kwacha has depreciated 48% against the United States dollar since the comparative period, the pass through to customers of a 27% increase in the copper price and a 70% increase in volumes compared to the first half of the prior financial year”.
Furthermore, the company’s capital structure also enjoyed some relief in reduced cost of capital. “Financing costs reduced by 51% compared to the same period of 2020 due to the conversion of the interest bearing long term loan into an equity loan with an interest rate of 0%”.
Shareholders will continue to wait for positivity in their earnings per share as the company is still in negative territory. “Group and Company’s Loss per share for the period under review were (Zmw0.53) and (Zmw0.55) while the loss per share for the comparative period of 2020 were (Zmw7.71) for the Group and (Zmw7.69) for the Company”.