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Business update in respect of Capital Africa Steel (Pty) Ltd
Wilson Bayly Holmes-Ovcon Limited
(Incorporated in the Republic of South Africa)
(Registration number 1982/011014/06)
Share code: WBO
ISN: ZAE000009932
BUSINESS UPDATE IN RESPECT OF CAPITAL AFRICA STEEL (PTY) LTD
The Directors of Wilson Bayly Holmes-Ovcon Limited (WBHO) wish to advise
shareholders of the effects of production constraints and adverse trading
conditions on the value of non-current assets on the group’s balance sheet
in respect of its construction materials segment and more specifically the
pipe mill, Capital Star Steel S.A. (CSS) in Mozambique.
CSS is a subsidiary of Capital Africa Steel (Pty) Ltd (CAS), the company
through which WBHO operates its construction materials businesses. As
reported at 31 December 2013, the profitability of CSS was severely
affected by various production stoppages which have continued into the
second half of the year. CAS has provided CSS with working capital funding
to the value of R120 million in support of two recovery plans. The required
production outputs from these recovery plans have not been achieved.
Furthermore, aggressive competition in the international project pipe
market has affected the future operations of CSS.
It is expected that the cumulative effects of the above will result in the
economic value of the assets of CSS being materially less than their
current carrying amount of R539 million, resulting in an impairment
thereof.
The impairment will affect earnings per share however the headline earnings
per share of the group will not be affected.
The above information has not been reviewed or reported on by the group`s
auditors.
Johannesburg
27 June 2014
Sponsor: Investec Bank Limited
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