Unifreight prunes loss-making units

unifreight_logoBusiness Reporter
UNIFREIGHT Limited, which completed acquisition of Pioneer Corporation Africa last year, has pruned perennial loss-making units in a restructuring exercise that will see it exiting public passenger and cross-border road freight transport business. The Zimbabwe Stock Exchange-listed transport and logistics group said after the restructuring it will concentrate on revised assembly of entities that include Swift Transport, Bulwark, Unifreight Engineering and Heavy Haulage, Skynet and Trentyre.

“The board is confident that the restructuring exercise will ensure that the company will show profitable results from 2015 onwards,” said Unifreight in a statement.

The company’s Botswana unit, Pioneer Clan Limited, ceased operations in December last year, necessitated by operational and stringent regulatory requirements, which Unifreight said presented an unfavourable operating environment.

Unifreight said Pioneer Clan’s viability was compounded by reduced business and persistent losses with revenue for the year to December 2014 totalling $680 279 while net loss before tax stood at $247 295.

The Botswana unit’s fleet has since been transferred to Zimbabwe and integrated into the Swift Transport operations.

Unifreight said its other local unit, Pioneer Transport (Private) Limited, was being disposed of to employees through a management takeover for a nominal amount of $200, subject to the transaction receiving the relevant regulatory approvals.

An agreement has since been signed effective January 1 this year. Unifreight said during the period to December 2014 the unit was constrained by a liquidity crunch, which reduced revenues and caused losses despite cost cutting measures.

Pioneer Transport revenue totalled $7,3 million in the year to December 2014 while the net profit before tax of $2,2 million arose after shareholders had foregone loans amounting to $3,5 million. As at year end, its net liabilities were $749 391.

Furthermore, the Unifreight board resolved that the business of Pioneer Coaches, including its operating assets, liabilities and borrowings, currently under Pioneer Transport Limited, be transferred to a separate dormant company.

Unifreight said Pioneer Coaches has been trading separately since January 1 this year and will continue doing so until a suitable purchaser for the business has been found.

For the year to December 2014, Pioneer Coaches recorded revenues amounting to $9 million and net loss before tax of $50 574, which was reduced by forgiving of shareholder loans amounting to $1,3 million, just as was done with Pioneer Transport.

Unifreight generated $29,2 million revenue from continuing operations in the year to December 2014, which saw the group posting operating profit of $1,7 million while net loss after taxation for the period under review came in at $233 000.

“The net loss is mainly attributable to the impairment of goodwill of $2,502 million, which arose on the acquisition of Tredcor Zimbabwe Limited,” said Unifreight.

Unfreight impaired the goodwill as the fair value of the liabilities of Tredcor exceeded the fair value of its assets on acquisition while it had negative forecast cash flow.

The group, which has streamlined and aligned costs throughout remaining operations, believes investment into its brands, better service delivery and addition of new and efficient assets will return it to growth and sustainable profitability this year.