Johannesburg - Eqstra reported yesterday that the proposed sale of assets it operated in Mozambique on the Benga coal mining contract and the impairment of those assets and related closure costs would negatively impact on the company’s earnings for the six months to December.
Eqstra Mozambique Limitada, a wholly owned subsidiary of listed leasing and capital equipment company Eqstra, has operated the Benga contract for the past five years. The contract came to an end in December.
The group said this impairment took place in the context of the excess of mining assets in the international market and subdued mining activity, and would impact its discontinued operations headline earnings a share and discontinued earnings a share for the six months to December. It said it, therefore, anticipated it would realise below-market values on the sale of these assets.
Disposal
It said Eqstra Mozambique Limitada had signed a memorandum of intent with Minas de Benga Limitada, the client, for the disposal of all plant and equipment assets used in the provision of mining services in terms of the Benga contract.
The sale of these assets was aligned with its stated strategy to reduce exposure to the mining industry, it added.
Eqstra said it was still in the process of concluding the sale of the assets and its board deemed it prudent not to announce the specific scale of the anticipated impairments until it had completed examining various options that might limit the scale of the impairments.
It said there was, therefore, insufficient certainty to enable the group to provide specific guidance on the extent of the impact on headline earnings a share and earnings a share.
However, the group said it anticipated that both headline earnings a share and earnings a share for the six months to December would be at least 20 percent lower than for the previous corresponding period.
It said the group anticipated publishing a further trading statement once it had certainty on the terms of the proposed disposal of contract mining assets and discontinuation or disposal of non-core operations.
Eqstra said the proposed sale of assets was material to the group and, if successfully concluded, would require shareholder approval.
It reiterated that in line with the strategic direction communication it issued in September, the group was also in the process of closing or selling other non-core operations, including the heavy equipment business in the industrial equipment division.
It said the continuing operations headline earnings a share was not expected to differ materially period on period.
Eqstra’s interim financial results are expected to be published on March 1.
The share price dropped 5.04 percent to close trade at R2.45 on the JSE.
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