The UBM disposal was part of the group’s strategy to focus on core activities and dispose of noncore assets to focus management on key strengths and improve the balance sheet, the company said.
The company hoped to convert its remaining short-term debt to long -term debt at sustainable interest rates by June this year.
The loss of US$2,6 million was sustained after a fire destroyed 1055 hectares of timber at Border Timbers Ltd’s Sheba plantation.
Finance costs increased to US$1 million, rising from US$760 994 recorded the previous year in the same period under review.
The group revenue rose marginally to US$17,9 million, compared to US$17,8 million in the previous year, buoyed by increased production at two of the group’s operations — Border Timbers and Macdonald Bricks.
Border Timbers recorded a turnover of US$13,6 million, a figure 7% below target, but 40% above the US$9,7 million achieved in the prior comparative period.
The unit registered an operational loss of US$99,865 for the six months to December 2011.
However, the recovery of the market for poles as well as increased sales volumes of kiln-dried timber locally are expected to be the major drivers going into the second half of 2012.
High costs of production emanating from running some of the factory plants on diesel-generated power, repairs, maintenance and labour continued to negatively impact on margins.
The company said its finance costs rose 76% above the prior year owing to increased costs of borrowings necessitated by the recapitalisation drive currently underway at Border Timbers Ltd.
Capital expenditure for the period was US$4,9 million, split towards property plant and equipment spending of US$2,9 million and the balance channelled to development of plantations.
Production at MacDonald bricks increased by 47% compared to the same period in the prior year despite continuous disturbances owing to erratic power supplies.
The group sees revenues improving this year through investment in capital expenditure.
The company envisages profits growth in the next six months aided by firming demand for bricks and timber products.
The group’s noncurrent biological assets increased to US$89,9 million rising from US$84,4 million in the previous year.