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Business Reporter
PG Industries will get $1 million fresh equity capital injection once its scheme of reconstruction has been approved. This will enable the adoption of strategies to reverse perennial losses, which widened to $3,9 million in the interim period to June 2014 from $2,3 million in the comparative period last year. The building material supplier said the scheme of arrangement approved by shareholders was awaiting approval by High Court, creating uncertainty over its going concern status.

This is because delays in registration of the scheme of arrangement have held up finalisation of an audit opinion on the group’s financial results for the year to December 2013.
“The delay in the registration of the scheme has resulted in uncertainty regarding the status of the group as a going concern and therefore there has been a delay in finalisation of the audit opinion on financial statements,” said PG.

The scheme of arrangement details the agreement PG has reached with its concurrent creditors, secured creditors and lenders to formalise the status and future of the company.
PG said under the scheme of arrangement, balances owed as at 30 September will be paid over a period of 30 months.

Directors of the company are optimistic that the scheme of arrangement will be registered to enable restructuring of the group’s balance in a manner already approved by shareholders.
PG has been posting perennial losses over the last few years due to a difficult operating environment and capital crisis, which management has not been able to quickly resolve.

While awaiting registration of the scheme of arrangement by High Court, PG said it has centralised back offices and retrenched in what resulted in significant cost savings.
Rationalisation of operations undertaken in June 2014 has resulted in reduction of gross operating expenditure by $1,2 million.

Interest bearing borrowings were reduced by $5,5 million to $8,1 million, which were achieved through property/debt swaps and utilisation of property disposal proceeds.
As a result of the fall in borrowings, PG said it has enjoyed a $1,2 million reduction in interest expenses in the half-year period to June 2014, compared to the same period last year.

A $1,1 million 3-year bank facility was accessed in June this year and the funds were used to acquire stocks and raw materials. The impact of this is expected in the second half.
Further, PG said that a number of stock supply arrangements have been concluded for timber, roofing products, boards, glass, paints and a range of hardware products.

“The stocks are expected to have a significant positive impact on performance in the second half of the year,” PG said.
PG sales declined by 39 percent to $10,3 million in the half year period to June 2014, as all its divisions operated below optimal levels due to chronic working capital challenges.
Operating loss increased by 34 percent to $2,6 million despite net operating expenses falling by 17 percent to $1,1 million.