Swazi Observer

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NPC’S E7M INVESTMENT YIELDS E50.9M REVENUE

By Nomfanelo Maziya | 2024-11-06

Nkonyeni Pre-Cast Limited (NPC), with a minimal E7 million investment, has generated E50.9 million in revenue, a 17 per cent year-over-year increase

This translates to 78 per cent of its targeted revenue in seven months.

According to the information memorandum which outlined the company’s strategic plan after listing on the Eswatini Stock Exchange, the company anticipated raising up to E75 million in the first year of investment funds being used.

The anticipated funds were E50 million from the sale of shares and E80 million from the bond.

The company Managing Director Marissa van Zuydam Kunene revealed how the company only received E6.9 million raised through the selling of shares and bonds, which was a remarkable progress towards attaining targets within the first six months of receipt of proceeds.

Using this money to recapitalise the group of companies, the company was able to generate E50 million in revenue, which is a 17 per cent increase from the previous financial year.

She shared how instead of the E1.7 million originally targeted for Chemical Solutions’ blending plant and recapitalisation, E1.4 million was used and the subsidiary was able to increase its revenue by 181 per cent when compared to the previous years.

The company was able to use E3.3 million towards commercialising sand mining, plant upgrades and increase stock within the NPC plant, E0.5 million towards transaction fees, E1 million towards increasing stock levels at Hardware Solutions. NPC recorded losses valued at E3.2 million during the period under review.

Kunene attributed losses made by the company to the remarked decline in spending by consumers which affected all sectors in the country which was remarkable in November to May.

This was characterised by a decline in the award of major construction projects countrywide which then led to a difficult operating environment. Debtors also contributed to major cashflow constraints.

“The difficulty in raising funds through equity and bond impacts the progress of strategic planning and growth plans,” she said.

Other factors included increases in fuels prices, electricity and the costs of maintaining aging vehicles as well as the two plants. She relented that the inclement weather which saw widespread destruction of rooftiles countrywide caused a decline in demand because of misconception in market.

There were other factors that resulted in the loss, such as interest paid increased to E1.2 million during the reporting period as a result of cashflow constraints.

Listing fees also had an impact on the profitability of the business with E1.4 million allocated towards the listing, through an increase in marketing and advertising costs, consulting, transactional fees, and costs associated with ensuring legal compliance of the business.

Audit fees increased by 340 per cent to E 463 000 factoring in the amended reporting system as well as six- month interim fee cost.

NPC has taken a cost of E 295 000 to write off bad debts in the year. These were currently in litigation.

Whilst the business has maintained an average GP of 44 per cent, the increase in operational costs contributed to the business made loss.

Major operational costs that increased were fuel 11 per cent, electricity 36 per cent and an increase in plant and vehicle maintenance costs of 89 per cent.

However, the volatile industry/market has stabilised and was exhibiting signs of corrective momentum.

Improvement

Overall, there has been an improvement in the balance sheet compared to F23. NPC balance sheet illustrates that the overall current liabilities have reduced by E800 000.

Bank overdraft has been reduced by E1.2 million as part of it was converted to a short-term loan. Creditors remain high, as a result of long term debtors, however this has improved post the FYE.

The business’ current assets have increased by E 1.4 million.

This is a result of an increase of inventory of 13 per cent, increase in trade receivables and a 141 per cent increase on cash on hand.

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