Consolidated infrastructure slows its losses despite subdued conditions
DURBAN – Consolidated Infrastructure Group (CIG) on Monday said it slowed its losses narrowly to R1.34 billion after tax for the year to end August from R1.68bn in the prior year, as the engineering, procurement and construction (EPC) businesses continued to feel the pressure of subdued global economic conditions.
The EPC business falls within the power and rail segments, which includes Consolidated Power Projects (Conco).
Conco, CIG’s largest subsidiary, continued to face unfavourable work conditions in South Africa, slower than anticipated contract awards and downward pressure on margins.
“This resulted in budgeted profit from unsecured contracts failing to materialise, along with an under-recovery on project overheads carried in anticipation of these contracts. Support services costs remain in excess of those required to profitably sustain the current trading volumes,” the group said.
The group said that the business recorded an after tax loss of R878.83 million during the period, but its revenue rose 15.66 percent to R1.92bn.
Conco supplies substations and delivers high voltage electrification services, including wind farms and solar parks across Africa and the Middle East.
The business contributes 60.7 percent to group revenue.
The group said revenue remained unchanged at R3.17bn, compared with the restated R3.1bn, while headline loss a share eased to 366 cents from the restated 612c last year.
“Following targeted operational initiatives, the group experienced some improvement in core operating results in the second half of the financial year from its building materials businesses (CBM) and its pre-paid power business, Conlog,” the group said.
The group said its building materials unit implemented a focused recovery programme during the second half of the financial year to address costs as well as market share and product mix.
“The benefits of this programme have started to flow, evidenced by improved earnings and cash performance. While there is little macro-economic improvement to the prospects for the sector, the actions taken in financial year 2019 continue to deliver results, and the improvement realised in the second half of the year is being sustained,” the group said.
CIG is a leading pan-African infrastructure-focused group with a diversified portfolio in power, building materials, oil & gas and rail. The group’s footprint spans South Africa, sub-Saharan Africa and the Middle East.
Conlog, which provides prepaid and smart electronic metering devices, was the only segment which reported a profit after tax during the period. It reported R42.07m profit, but it was less than last year’s R152.28m.
Going forward the group said it will change its financial year-end from August to December.
“The reason for the decision to change the financial year-end is to align the company’s financial reporting periods with those of its major shareholder,” the group said.
CIG shares declined 14.29 percent on the JSE on Monday to close at R0.90.