LISTED cable manufacturer Cafca says it believes it will remain in business in the foreseeable future mainly due to no foreign debts and consistent supply of raw materials, despite the effects of COVID-19 threatening the survival of businesses globally.

By Fidelity Mhlanga

“Management has assessed that the company will continue operating as a going concern on the basis that the company has no exposure to foreign liabilities, stock of six months
deliveries in finished goods. Raw materials suppliers are still shipping,” the company said in its half year results for the period ended March 31, 2020.

The company’s optimism also derived from the fact that it has secured loans and overdraft facilities to the tune of $31 million and its operations have been classified as an essential service.

Cafca said despite the impact of coronavirus on the market, it was still
pursuing a monthly sales model of
140 tonnes to the export market.

“Assisting Cafca to mitigate these
threats are our finished goods stock
of 746 tonnes and our export consignment stock arrangements. We have commitments from our raw material suppliers that our immediate needs will be met with only our imported spare parts requirement being a minor challenge. Despite the
expected local market liquidity constraints, indications from our lo-
cal customers are that local sales ex-
pectations will be met,” the compa-
ny said.

During the period under review,
inflation-adjusted revenue tumbled
77% from $165,5 million to $294, 2
million in the prior year.
However, profit for the year jumped
318% to $98,3 million from $23,5 mil-
lion the previous year.
The company’s total assets decreased from $462,7 million to $383,2
million.

Volumes for the six months period to March 31, 2020 were marginally low at 836 tonnes from 844 tonnes recorded the same period last year.

Export volumes increased from 11% to
14% of sales.

In historical terms, turnover has
moved from $18,6 million in the comparative period last year to $206,9
million in the current half year period.

“The impact of hyperinflation on
working capital is well illustrated
when comparing the investment in
inventories and other trade receiva-
bles between March 2020 and March
2019. The amounts invested therein
as at March 31, 2020 are $151,6 mil-
lion against the investments as March
31, 2019 of $11,2 million,” it said.

The increase in investment in working capital has been funded by profits generated in the period and borrowings at March 31 of $23,6 million.

Total liabilities were slowed to $63,2 million from $90 million in the prior year.

Net cash generated from operating
activities improved from a negative
position of $13,2 million to $7 million.

Net cash generated from financing
activities also increased to $15,4 mil-
lion from $168 853.

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