CIG close to debt deal after tough year


CIG close to debt deal after tough year

Published Date: 2019-12-03 | Source: Stephen Gunnion | Author: Stephen Gunnion

CIG close to debt deal after tough year

The power and energy infrastructure group is trying to reduce interest-bearing debt following a recapitalisation earlier this year.

Consolidated Infrastructure Group (CIG) has reported a weak end to an already tough year but says it has seen an improvement in the core operating results of some parts of its business. It's also making progress with a restructuring to try and reduce debt which continues to hover around R1.9 billion. Auditors PricewaterhouseCooper say its financial position threatens its ability to continue as a going concern.

CIG has a portfolio of infrastructure businesses focused on the power, building materials, oil & gas and rail sectors across Africa and the Middle East. It attributed 'disappointing' results for the 12 months to end-August to a tough macroeconomic environment, with pressure on most of its operations but particularly the engineering, procurement and construction businesses within the Power and Rail segments, including Consolidated Power Projects (Conco).

Its performance was also impacted by impairments to unrecoverable work in progress and receivables, mainly in the Conco business, as well as impairments and the reassessment of deferred tax liabilities made in the first half of the year. However, it said pre-paid power business Conlog and its building materials business (CBM) had a better second-half and continued to show signs of improvement.

Its largest subsidiary, Conco, is in negotiations to reclassify R1 billion of debt from short term to long-term. Conco, which supplies substations and high voltage electrification work, has been severely impacted by unfavourable work conditions in SA, slower than anticipated contract awards and downward pressure on margins.

During the year, it received R765 million of net capital following a rights offer that saw cornerstone investor Fairfax Africa increase its shareholding to almost 50%. The group said it may require further funding to settle its current obligations and continue as a going concern. Although total assets exceeded total liabilities by R575 million at the end of August, current liabilities exceeded current assets by R701 million.

Revenue was largely unchanged at R3.17 billion from a restated R3.14 billion a year earlier. Its after tax loss shrank to R1.34 billion and its loss per share more than halved to 398c. After adjusting for the impairment of goodwill and intangible assets, its headline loss per share reduced by 40% 366c. Net cash more than doubled to R98.3 million at financial year end.

CIG said significant growth was expected in the development of renewable energy and off-grid industrial-scale opportunities in Africa. It remained focused on its long-term strategy of establishing a sustainable platform supplying power needs across Africa.

CIG plans to change its financial year end from end-August to end-December to align its reporting period with that of its major shareholder.

Its shares fell 14% to 90c yesterday.

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