adminOld Mutual bought a 40 percent stake in Manica Board through a US$6,4 million private placement.
Before the transaction, PG owned 60 percent in Manica Board through its wholly-owned subsidiary, Zimboard, while PG Bison, part of Steinhoff of South Africa, owned the remainder.
PG Bison is now a 32 percent shareholder. PG decided to be a minority shareholder in Manica Board to focus on businesses that made money in the past.
Manica Board will be treated as an associate of PG.
In a trading update, PG management said the group turnover for the current financial year (excluding Manica Board) is expected to grow by 10 percent from US$39,6 million.
The retail division has remained a challenge, although the restructuring has assisted in creating savings. The management is now working on strategies to improve stocking levels.
A US$2,4 million plant was commissioned in December 2011 at Zimtile Harare while US$956 000 was raised in March to finance working capital.
This resulted in daily output increasing from 25 000 tiles to 40 000 tiles. PG Timbers returned to profitability in September last year on the back of improved timber supply. PG Glass is also expected to become profitable by year-end as sufficient glass was secured.
The Mozambican subsidiary now has six branches, after another branch was opened in Kilimani.
The group continued to be haunted by high borrowings, which stood at US$12,3 million as at December 31, 2011 (US$8 million in long-term debt and US$4,3 million short-term debt).
The resultant high finance costs will continue to dampen the earnings growth. High competition in the building and allied products retailing business is also a major concern as small-to-medium enterprises seem to be having an edge.
Online Reporter