Business / Companies
Cairns released a dire set of finals for the year to 31 August 2011
06 Jan 2012 at 07:02hrs | Views
Cairns released a dire set of finals for the year to 31 August 2011, as declining sales volumes and high finance costs haemorrhaged the group. Turnover declined 23% to US$18.9 million on the back of the 30% volume drop. Finance costs remained high at US$3.3 million (FY 2010: US$3.5 million), as borrowings remained largely unchanged at US$11.5 million. A tax credit of US$1.5 million was allowed for resulting in a loss for the period of US$8.2 million worsening from the previous period's US$6.2 million.
The balance sheet also reflected the dismal state of affairs for the company, with shareholders equity moving down to US$1.8 million from US$10.5 million in FY 2010. The gearing ratio was unsustainably high at 631% (FY 2010: 114%). Of the US$11.5m borrowings, US$8.3m was in banks loans down from US$10.7 million while the bank overdraft increased to US$3.1 million (FY 2010: US$1.2 million). The liquidity strain continues to limit the group's operational ability, and management is hopeful that a speedy conclusion of the ongoing disinvestment of Finance Trust of Zimbabwe (a 100% owned subsidiary of the Reserve Bank of Zimbabwe) will assist in the implementation of the capital raising program. Streamlined operations at Cairns are also expected to boost capacity in FY 2012.
Nontando Zungu of Imara Edwards Securities says they (Imara) are sceptical about Cairns prospects in the short to medium term, in view of their heavy cost structure in a highly competitive environment. Accordingly Imara Stockbrokers maintain a SELL recommendation on the stock.
The balance sheet also reflected the dismal state of affairs for the company, with shareholders equity moving down to US$1.8 million from US$10.5 million in FY 2010. The gearing ratio was unsustainably high at 631% (FY 2010: 114%). Of the US$11.5m borrowings, US$8.3m was in banks loans down from US$10.7 million while the bank overdraft increased to US$3.1 million (FY 2010: US$1.2 million). The liquidity strain continues to limit the group's operational ability, and management is hopeful that a speedy conclusion of the ongoing disinvestment of Finance Trust of Zimbabwe (a 100% owned subsidiary of the Reserve Bank of Zimbabwe) will assist in the implementation of the capital raising program. Streamlined operations at Cairns are also expected to boost capacity in FY 2012.
Nontando Zungu of Imara Edwards Securities says they (Imara) are sceptical about Cairns prospects in the short to medium term, in view of their heavy cost structure in a highly competitive environment. Accordingly Imara Stockbrokers maintain a SELL recommendation on the stock.
Source - Byo24News
