ELB slides on Gamsberg losses


ELB slides on Gamsberg losses

Published Date: 2019-03-11 | Source: Stephen Gunnion | Author: Stephen Gunnion | Comments

ELB slides on Gamsberg losses

The engineering group says the Northern Cape zinc project has suffered setbacks that resulted in additional costs and delayed milestone payments.

ELB Group's shares fell sharply on Friday after it warned of a slide in half-year earnings due to losses it's incurred on its Gamsberg Zinc project in the Northern Cape. The project, which is currently being commissioned by ELB Engineering Services, suffered setbacks in the final performance testing that resulted in additional costs being incurred in order to complete the project. While the plant is operating, it said there would be a delay in ELB receiving the final milestone payments.

In a trading statement, the engineering group and capital equipment supplier said it had also incurred additional costs as a result of remedial work required to bring the tendered and implemented design of the plant up to the contracted specifications. It had expected to recover these costs during the current financial period, but delays in recovering them have necessitated the reversal of some of the expected recoveries.

ELB said results for the six months to end-December had also been affected by the adoption of certain new International Financial Reporting Standards (IFRS), which had a "considerable negative impact on the financial position of the group in the current period". It expects to report a loss per share of between 812.4c and 816.4c, compared to earnings of 159.5c a year earlier. Its headline loss per share is expected to be between 815c and 819c, down from earnings of 157.6c.

It said its other engineering projects were all progressing as planned and making a positive contribution to the group. Its Equipment and Australasian segments performed well in a difficult trading environment and were in line with expectations, it said.

Its shares dropped 21% to R7.51.

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