CIG – with operations in power, building materials, oil & gas and rail – posted an after-tax loss of R1.2 billion in the six months to February, which the group ascribes to a lethargic local economy and impairments.
With a footprint that spans South Africa, sub-Saharan Africa and the Middle East, CIG said its loss was R4.56 a share, compared with R6.13 a share at the same-time last year and after adjusting for an impairment in goodwill and intangible assets, the headline loss per share came to R4.17 a share, higher than the R3.42 a share realised in 2018.
The merger with FAH, from which CIG had received a R777 million cash boost, was intended to ease the group’s liquidity and boost efforts to turn around struggling power infrastructure subsidiary Consolidated Power Projects Group (Conco), which in the period under review still continued to suffer difficult trading conditions, unfavourable work conditions in South Africa, slower-than-anticipated contract awards and downward pressure on margins.
“This period has been impacted by a tough macro-economic environment with pressure on most of the group’s operations, especially in the engineering, procurement and construction businesses within the power and rail segments.
"The results have been further impacted by impairments to unrecoverable work in progress and receivables, mainly in the Conco business, as well as impairments to goodwill and intangibles and deferred taxation,” the group said.
Overall group revenue declined by 8.8 percent from R1.3bn to R1.1bn
In a bid to reverse the negative trends, CIG in January reconfigured its board of directors “with members with appropriate skill and expertise, specifically in financial management, reporting and internal control governance; capital resource management and allocation; trading within the rest of Africa, as well as engineering and construction business management”.
It strengthened its team in April with the appointment of Cristina Teixeira, a highly-skilled group chief financial officer, who has deep industry knowledge, and has in two months had a significantly positive impact on the actions and decisions being taken within the business.
CIG chief executive Raoul Gamsu said yesterday across the continent, the opportunities for the power businesses continued to be driven by growth in renewable energy and off-grid industrial-scale opportunities, which required leveraging the group’s established regional market experience.
The share price closed 3.85 percent lower at R1.25 on the JSE on Tuesday.