PG INDUSTRIES Zimbabwe has been suspended from trading its shares on the Zimbabwe Stock Exchange (ZSE) as the company faced viability constraints emanating from working capital constraints.
ZSE chief executive Alban Chirume yesterday said the company had delayed finalising its proposed scheme of arrangement to restructure its balance sheet.
Chirume said the suspension was effective from December 31 2013.
“The ZSE has been made aware of a pending Press announcement concerning a proposed scheme of arrangement to restructure the company’s liabilities to banks and other creditors,” Chirume said in a statement released yesterday.
“As consultations have not been concluded, the Exchange has taken a decision in accordance with the provisions of Section 1.7 of the Stock Exchange Listings Requirements and with the concurrence of the company to suspend the trading of the company’s shares until the plans under consideration have been finalised and have been published to all shareholders on a non-exclusionary basis.”
The suspension of PG follows the suspension of several companies from the local bourse after some of them breached listing requirements.
The year 2013 saw an increasing number of delistings and suspensions on the ZSE, with 10 counters being delisted, while five others were suspended largely due to viability constraints.
PG Industries has been facing challenges and the company has continued to record losses and financial results recently published for the six months to June 30 2013 show that it is still deep in the red.
PG Industries posted a loss of $2,4 million for the half year ending June 30, 2013 compared to a loss of $2,7 million due to a high level of borrowings.
During the period under review, Zimtile sales increased by 29% to $4,6 million due to strong demand for concrete, roofing tiles, bricks and pavers, while PG Glass sales increased by 22% to $1,5 million on the back of an improvement in stocking levels.
The company disposed off 18,9% of its 27,9% investments in Manica Boards and Doors and the remainder will be for the group’s investment.
The group’s current ratio, which measures the company’s ability to meet current liabilities, stood at 0,72 for the full year to December 2012, falling below a standard minimum of 1.
As at December 2012, the group’s current liabilities exceed current assets by $6 784 501 (2011:$10 328 944) and it continued to face working capital constraints particularly in the first half of the year, triggering fears that the company could be facing a going concern crisis.
PG’s total assets turnover, a measure of how much assets are being used to generate sales, stood at 0,92.
This could mean that the company is struggling to efficiently use its assets to generate sales.
The efficiency is below 1, showing under-utilisation of assets which might be a management issue and pricing policy in light of stiff competition.
Its profit margin, which stood at 0,28, remained depressed for each dollar of sales generated.