Art restructuring pays off

HARARE - Zimbabwe Stock Exchange-listed diversified group Art Corporation (Art) says its restructuring exercise has started paying dividends after the company recorded growth in turnover and sales volumes in four months to January this year.

Art chief executive Tapiwa Ameer told shareholders at an annual general meeting last week that the company recorded an eight percent increase in turnover driven by a 23 percent improvement in Eversharp sales volumes.

“The division continues to show a lot of potential and recorded the biggest movement in the period… 21 million pens were sold during this period compared to 17 million sold in the same period last year,” Ameer said.

He added that Art’s operating costs fell 14 percent on the back of the group’s retooling and restructuring exercise.

Ameer, however, noted that the group’s Zambia-based business recorded a 32 percent loss in the same period.

Art’s tissue-making division, Softex, posted a one percent increase in sales while the paper-manufacturing unit recorded a seven percent sales improvement in the period under review.

Operating profit for four months surged to $1,4 million compared to $204 000 registered in the same period last year.

The group — which roused delisting speculation last year — also said it has no plans of delisting from the local bourse despite a significant increase in shareholding by its majority shareholder, Korean investor, Taesung Chemical (Taesung).

According to Ameer, the transaction — which happened during the year under review and left Taesung with a 63,7 percent shareholding in the group — did not warrant the group’s delisting.

ZSE’s listing rules dictate that a single investor that raises their stake above 35 percent must make an offer to buy-out minorities, and most companies who usually go this route delist from the bourse.

Taesung Chemical increased its shareholding after acquiring the 12,7 percent shareholding disposed by the National Social Security Association (Nssa). Some of the shares were bought through Platinum Nominees.

In partnership with an investment vehicle Basrum Investment,  Taesung Chemical is said to have initially acquired 42 percent of ART in August last year, but split the shareholding to avoid making a mandatory offer.

The Korean investor’s investment vehicles, Cranbal Investment and Silvermine Investments, bought the shareholding from minorities.

The diversified group was recently given the nod to borrow up to $20 million to revive operations by its shareholders.

Art’s subsidiaries, Eversharp, Chloride and Kadoma Tissue Mills, are operating at 80 percent, 60 percent and 17 percent of their capacity respectively. The group’s other divisions include Fleximail, National Waste Collections and Softex.

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