ZSE lifts Zeco suspension

The Zimbabwe Stock Exchange (ZSE) has lifted the suspension of Zeco Holdings shares from trading effective after the company complied with the bourse’s directive to issue a detailed statement on a transaction it had entered without requisite approvals.

Trading in the securities of Zeco was halted on Tuesday after the firm failed to notify and seek approval of the ZSE and its shareholders on a significant transaction whose effect changed the sphere of activity of its operations.

“The ZSE had directed that Zeco should issue a statement outlining the nature of the transaction it entered into as well as the steps it is taking to purge its regulatory violations.

“The issuer issued a detailed statement in The Herald newspaper published on February 9, 2022 and on the ZSE web-portal in compliance with the ZSE directive.

“Consequently, the halt in the trading of Zeco securities has been lifted with immediate effect,” Mr Justin Bgoni, the ZSE chief executive said in a statement yesterday.

He said that notwithstanding the foregoing, the trading in Zeco securities shall continue under caution pending the convening of the proposed Extraordinary General Meeting of its shareholders at which the fate of the transaction under consideration shall be determined.

Zeco in its compliance statement said it had changed its strategic focus to a residential, commercial property investment and development company as it seeks to participate in the growth prospects of the property sector.

The new strategic focus was done through the disposal of the company’s rolling stock assets for an amount of US$4,5 million and the purchase of a piece of land measuring 36,395 square meters for a consideration of US$2,150 million.

“In order to maintain the sustainable growth and profitability of the businesses going forward, the board has changed the company’s strategic focus from a rolling stock company to a residential and commercial property investment and development company.

“The new strategic focus will enable the company to participate in the growth prospects of the property development sector which appears to have better prospects than the rolling stock industry,” said Mr John Mwinjilo, the company’s secretary.

Zeco Holdings was primarily an engineering concern that specialised in steel fabrication and installation as well as the manufacturing of plastic components and distribution of electric motors.

Delward engineering is Zeco’s flagship subsidiary and was involved in the manufacture and rehabilitation of rolling stock as its core business.

Mr Mwinjilo said at the time Zeco Holdings was listed on the ZSE in 2008, demand for rolling stock products in Zimbabwe was primarily driven by the National Railways of Zimbabwe (NRZ) and the mining sector.

He said the uncertainties surrounding the railway transportation industry over the years, and the closure of many mines, and the informalisation of the mining sector have put the company’s prospects as a rolling stock company.

“As a result, the company’s shareholders have gone for years without enjoying any capital appreciation or earning a dividend from their continued investment in the rolling stock business,” he said.

According to the statement, the disposed rolling stock assets held by Delward are no 18 Lemington Road, Bulawayo, which is a piece of land called Lot 1 of Bulawayo Township Lands measuring 26 000 square metres together with permanent improvements constructed thereupon.

The other is No 38 Josiah Chinamano, Belmont, Bulawayo, also known as Stand 5091A, Stand 5091C Bulawayo Township of Bulawayo Township Lands, measuring a total of 46,268 square metres together with improvements constructed thereupon.

The acquired land is called Quinninton Township in Harare. It consists of Lot 4AB Quinninton, land measuring 1,8030 hectares for residential stands and Stand 402 Quinninton Township of Lot AD Quinninton measuring 1,8365 hectares, for residential stands.

ZECO in the statement acknowledged that the business transaction was implemented without ZSE and shareholders’ approval.

“Therefore, the directors are currently engaging the regulator to get approvals to convene an extraordinary general meeting to seek shareholders ratification of the change in the strategic focus of Zeco Holdings from a rolling stock company to a residential and commercial property investment and development company,” Mr Mwinjilo said.

In the third quarter performance to September 30, 2021, Zeco recorded a 30 percent business volume growth on the back of a significant number of construction projects in and around Harare despite the Covid-19 challenges.

“This was mainly because there were a significant number of construction projects in and around Harare.
“In addition, stalled projects were now being resumed due to the ease of Covid-19 restrictions during the 3rd quarter 2021.

“We anticipate that business activity will remain like that throughout the year and the beginning of 2022,” the company said.

The company said improved economic activity in the country and expected normal rainfalls will most likely spur increased business for the company.

It also said that an increased infrastructure investment by the public sector on roads and related buildings is also expected to yield positive results for the company.-the herald.