CSG flags a full-year loss


CSG flags a full-year loss

Published Date: 2020-06-30 | Source: Stephen Gunnion | Author: Stephen Gunnion

CSG flags a full-year loss

Following a negative return on its investment, the group is selling parts of its 7 Arrows security business as it adopts a new strategy.

CSG Holdings says it will report a headline loss due to weak performances across all its operations, particularly security businesses 7 Arrows and Revert Risk Management, as well as expected credit losses resulting from the Covid-19 pandemic.

In a further trading statement, the services group said it would report a headline loss per share of between 8.23c and 9.23c for the year to end-March, down from earnings of 4.99c last year. However, its basic loss per share would narrow to between 12.66c and 18.28c from 28.66c due to a smaller goodwill impairment. Last year it booked a R200 million impairment due to the poor performance of the security division. Apart from security, CSG's operations include facilities management and staffing solutions.

While it didn't provide any additional detail about its performance, the security business also weighed on its first-half numbers after the integration and consolidation of acquisitions made the previous year took longer than expected. Pressure on consumer spending and the increase in fuel prices also had a significant impact on the sector, while a new centralised control room in Pretoria made a first-half operating loss. Last year, as well as Revert, it bought alarm and monitoring business Cortac and armed response and guarding business Intercity.

Last week, the group said it had entered a deal to sell part of the armed response and monitoring business of 7 Arrows Security, as well a part of its residential guarding business, for R65.9 million. Following a review of its operations, and due to the negative return on investment of 7 Arrows over the last two years, it said some of its business segments were considered non-core to the group's future strategy. It planned to consolidate the rest of the 7 Arrows business into the security business of Revert.

It expects to release its results tomorrow. Its shares fell 8.3% to 11c in light trade yesterday.

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