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Unaudited condensed consolidated interim financial statements for the six months ended 28 February 2019
Consolidated Infrastructure Group Limited
(Incorporated in the Republic of South Africa)
(Registration number: 2007/004935/06)
JSE share code: CIL
ISIN: ZAE000153888
Debt company code: CIG
("CIG" or "the group" or "the company")
Unaudited condensed consolidated interim financial statements
for the six months ended 28 February 2019 ("interim period")
Commentary
Introduction
Consolidated Infrastructure Group Limited ("CIG") is a pan-African infrastructure-
focused group with a diversified portfolio of operations in Power, Building
Materials, Oil & Gas and Rail. The group's footprint spans South Africa, sub-
Saharan Africa and the Middle East.
CIG reports disappointing results for the six months to 28 February 2019
("the period"). Group revenue decreased by 8,8% from R1,304 million to
R1,189 million. The loss after taxation for the group is reported at
R1,220 million (H1 F2018: R1,203 million loss).
The group incurred a loss per share of R4,56 (H1 F2018: R6,13). After adjusting
for the impairment in goodwill and intangible assets, the headline loss per
share is R4,17 (H1 F2018: R3,42).
Despite the significant operating loss, only R133,8 million of cash was utilised
in operations (H1 F2018: R96,5 million). Net cash outflow from operating
activities was R281,1 million (H1 F2018: R255,1 million).
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 ("EPC") 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. These impairments do not
represent future cash outflows and thus do not impact on the group's liquidity
forecasts. These impairments are further discussed within the divisional overview.
Group recapitalisation
During the period, the company successfully concluded its capital raising and,
following a rights offer which closed on 24 December 2018, received R777 million
of net fresh capital, resulting in Fairfax Africa Holdings Corporation ("Fairfax
Africa") acquiring a significant shareholding in CIG.
In addition, the board of directors was also reconfigured on 30 January 2019.
The reconstituted board of directors was established 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.
The appointment on 2 April 2019 of Cristina Teixeira, a highly-skilled group CFO,
who has deep industry knowledge, has in two months already had a significantly
positive impact on the actions and decisions being taken within the business.
The group's cornerstone shareholder, Fairfax Africa, remains committed to the
long-term prospects of CIG's offering and opportunities across the African
energy space.
Divisional overview
Power
Conco
R'000 H1 F2019 H1 F2018 F2018
Revenue 729 423 579 676 1 234 432
Loss after taxation (839 646) (629 790) (1 243 692)
Conco supplies substations and delivers high voltage electrification work
including wind farms and solar parks across Africa and the Middle East.
Operationally, Conco continued to suffer difficult trading conditions,
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 sustain the current trading volumes.
Conco remains focused on successful execution of REIPPPP Round 4 projects in
hand, which represents approximately 60% of current work on hand.
During the period under review, the business continued to make progress in
improving its project management and financial reporting processes including:
- Assessments of and accountability on project execution and performance;
- Evaluation of the recoverability of recorded balance sheet values; and
- Liquidity management.
As a result, several impairments to work in progress and receivables balances, as
well as impairments to intangible assets were recorded during the period. These
impairments relate to costs incurred and cash spent in previous years.
Internally generated intangible assets, valued at R39,4 million, relating to a
power-solution product development which is in progress for a specific customer,
was impaired due to the early stages of development of the product and thus its
suitability for recognition as an asset.
A provision for the possible impairment to under-certified revenue and contract
debtors of R155,9 million on various projects was recorded.
Accruals for various direct and indirect taxation liabilities in multiple
jurisdictions, as well as the reversal of taxation assets expected not to be
recoverable was charged against earnings, totalling R142,3 million.
The material active contracts were re-assessed in the period and downward margin
adjustments were processed, to reflect the expected realisable estimated
completion margin, resulting in a charge against earnings of R110,5 million.
In addition, the cost to complete active contracts was reassessed and a charge
against earnings of R31,8 million was recorded on a few onerous contracts.
Stock and materials on hand was assessed at period-end and inventory valued at
R24,5 million was scrapped.
The deferred taxation liability required for temporary differences was reassessed
by each of the Conco operations and a liability of R21,9 million was raised.
In addition, retrenchment costs of R11,4 million were recorded in the period.
The impact of all the above adjustments has been factored into the division's
liquidity forecasts.
The introduction of a new Conco CEO, Jonny Dladla, on 15 November 2018 and CFO,
Graham Comins, on 1 March 2019, both with significant industry knowledge, has been
well received both by the organisation and its external stakeholders, and they
have already made significant progress with a focus on instilling a culture of
accountability, improved project management and processes, monitoring of project
margin and cash flow. Monthly project reviews were introduced in the period,
attended by both Conco and CIG management, enabling early remedial intervention
on contracts where necessary.
A cautious approach has been adopted regarding the inclusion of earnings and cash
enhancements from unapproved variation orders and claims. Further, recovery plans
have been implemented on all projects which indicated a completion date later than
the initial programme with regular monitoring by the Conco CEO. The commercial
skillset within the business has been recently bolstered with a key focus on
improving the organisation's contracting processes and addressing claim management
and recovery thereon.
To bolster liquidity management, a Project Management Office programme was
introduced requiring daily feedback on project cash flows, with feedback to
CIG management and the group's recently constituted financial committee,
comprising certain members of the CIG board of directors.
In addition, a contract engineering expert is being appointed, to independently
assess and monitor project performance and adherence to the contract delivery
programme with regular feedback to the CIG and Conco management.
The Conco order book is reported at R3,6 billion (F2018: R4,7 billion).
Conlog
R'000 H1 F2019 H1 F2018 F2018
Revenue 218 379 312 840 656 075
Profit after taxation 2 927 60 062 152 275
Conlog provides pre-paid and smart electronic metering devices and solutions,
from design to distribution. Services for utilities and municipalities include
revenue management, revenue protection, pre-payment with smart load control
and load management.
Conlog's performance for the period was satisfactory in the prevailing economic
landscape, albeit that the business performance was below that of the prior
comparable period and its budget for the first six months. This is due to lower
than expected sales to its primary customer which impacted on the business's
performance in the period. Short-term actions to curtail discretionary and
non-essential spend have been taken and the cash generation expectation for
the next period is expected to exceed earnings levels.
The group is cognisant of Conlog's customer concentration risk and has developed
diversification strategies. Sales levels are expected to recover in the
latter half of calendar year 2019 and into 2020.
Conlog will continue targeting meter leasing and platform opportunities to grow
annuity income and introduce new services. Opportunities for Conlog remain
significant.
Other
R'000 H1 F2019 H1 F2018 F2018
Revenue 15 672 20 551 41 239
Loss after taxation (94 704) (109 176) (120 717)
Consolidated Power Maintenance maintains renewable energy sites and
transmission substations.
During the period, an impairment of goodwill of R1,9 million was recorded. In
addition, a provision was raised for potentially unrecoverable debtor balances
and costs incurred on contracts not yet certified totalling R12,8 million. A
deferred taxation asset of R5,5 million related to assessed losses incurred,
which was previously raised, was also reversed and charged against earnings
until the utilisation thereof can be reasonably demonstrated.
CIGenCo designs and develops mid-sized power generation projects in Africa.
CIGenCo remains focused on co-developing and operating clean energy power-
producing plants to grow annuity income. The contribution from its Namibian
Ejuva Solar Energy projects remain pleasing.
During the period, the group also impaired the recognition of all costs incurred
on projects under development where the group deems financial close not to be
achievable in the short term. This impacted the segment results by R67,8 million.
Rail
R'000 H1 F2019 H1 F2018 F2018
Revenue 23 914 147 952 259 123
Loss after taxation (122 246) (5 119) (43 331)
Tractionel specialises in the electrification of railways and the installation
of overhead traction equipment.
The business continued to experience quiet activity levels with few new contracts
awarded and a resultant under-recovery of overheads.
A provision of R86 million was made against two contracts in which there are
ongoing legal disputes, resulting in the business reporting a loss for the
period.
A deferred taxation asset of R27,2 million related to assessed losses incurred,
which was previously raised, was also reversed and charged against earnings until
the utilisation thereof can be reasonably demonstrated.
Building Materials
R'000 H1 F2019 H1 F2018 F2018
Revenue 201 289 242 954 515 701
(Loss)/profit after taxation (82 781) 8 474 27 275
Drift Supersand mines a range of aggregates and West End Claybrick ("West End")
manufactures clay bricks and concrete roof tiles.
The division continued to perform steadily in the period within difficult local
macro-economic conditions amplified by the lack of expenditure within traditional
construction works.
West End's concrete roof tile component performed well, while its clay bricks
remain under pressure with cyclical demand.
During the period an impairment of goodwill of R64,3 million was recorded relating
to both the aggregate business as well as the clay brick business. In addition,
the business enhanced its provision for rehabilitation liability.
Oil & Gas
R'000 H1 F2019 H1 F2018 F2018
Profit after taxation 18 672 10 419 50 646
AES is a waste disposal service provider to the oil and gas industry in Angola.
The company performed well in the period to meet budget and continues to have
some strong near-term growth opportunities as the number of new drilling rigs
increases.
Recapitalisation
The group's debt standstill agreement with its funders expired on 31 May 2019
and the group has been successful in securing an extension until 29 July 2019,
with the expectation that the key conditions of the debt restructuring agreement
be agreed before the end of June 2019.
The group, along with its funders are focused on concluding a finalised
restructured debt agreement within this timeframe. Specific conditions on
covenants, pricing and other matters as would be expected in support of a normal
debt restructuring process, are being discussed. Once finalised between the
company and its funder group, the structure will progress for consideration by
each of the funders' credit committee's and the company's board of directors,
culminating in finalised legal agreements.
CIG thanks its funders for their co-operative efforts in supporting the group to
re-establish sustainability.
Outlook
Across the continent, the opportunities for CIG's power businesses continue to
be driven by:
- Growth in renewable energy and off-grid industrial-scale opportunities in
Africa;
- Leveraging the established regional presence/market experience of group
companies to geographically expand other group companies' products and services;
- Normality returning to the South African market and recovery with award and
ability to execute contracts; and
- Financing of grid infrastructure-utilising export credit funding lines.
Management remains focused on the long-term strategy to transition the group
away from the vagaries of EPC contracting and into a sustainable platform
supplying power needs across Africa.
Basis of preparation
Statement of compliance
The unaudited condensed consolidated interim financial statements are prepared
in accordance with International Financial Reporting Standards ("IFRS"),
(IAS) 34 Interim Financial Reporting, the SAICA Financial Reporting Guides as
issued by the Accounting Practices Committee and Financial Pronouncements as issued
by the Financial Reporting Standards Council, the JSE Listings Requirements and the
requirements of the Companies Act of South Africa.
The accounting policies applied in the preparation of these interim financial
statements are in terms of International Financial Reporting Standards and are
consistent with those applied in the previous consolidated annual financial
statements for the year ended 31 August 2018, with the exception of International
Financial Reporting Standard 15: Revenue from Contracts with Customers and
International Financial Reporting Standard 9: Financial Instruments, which
have been adopted in these interim financial statements for the first time.
Changes to significant accounting policies are described below.
The unaudited condensed consolidated interim financial statements have been
prepared by C de Kock CA(SA) under the supervision of CMF Teixeira CA(SA).
The condensed consolidated interim financial statements were not reviewed or
audited by the group's external auditor.
The unaudited condensed consolidated interim financial statements of the
Consolidated Infrastructure Group Limited were authorised for issue by the board
of directors on 3 June 2019.
Estimates and contingencies
The group makes estimates and assumptions concerning the future, particularly
with regard to construction contract profit taking, provisions, arbitrations,
claims and various fair value accounting policies. Accounting estimates and
judgements can, by definition, only approximate results, as the actual results
may differ from such estimates. Estimates and judgements are continually evaluated
and are based on historic experience and other factors, including expectations of
future events that are believed to be reasonable under the circumstances.
Total financial institution guarantees offered to third parties on behalf of
subsidiary companies amounted to R1,8 billion.
Change in accounting policies
A number of new or amended standards became effective for the current reporting
period. The group has adopted the following new standards, which are relevant
to the group, for the first time:
- IFRS 9: Financial Instruments (IFRS 9)
- IFRS 15: Revenue from Contracts with Customers (IFRS 15)
The adoption of these standards has resulted in the group changing its accounting
policies. The impact of the adoption of the new accounting policies is disclosed
below. The prior year annual financial statements did not have to be restated as
a result of the changes in the group's accounting policies, as IFRS 15 and IFRS 9
were adopted without restating comparative information.
IFRS 15: Revenue from Contracts with Customers (IFRS 15)
IFRS 15 supersedes IAS 18 (Revenue), IAS 11 (Construction Contracts) and related
interpretations for annual periods beginning on or after 1 January 2018. IFRS 15
applies to all revenue arising from contracts with customers, unless those
contracts are in the scope of other standards.
IFRS 15 establishes a comprehensive framework for determining whether, how much
and when revenue is recognised, providing additional guidance in many areas not
covered in detail under the previous revenue standards and interpretations. The
standard requires entities to exercise judgement, taking into consideration all
of the relevant facts and circumstances when applying the framework to the
contracts with customers. The standard also specifies the accounting treatment
for the incremental costs of obtaining a contract and the costs directly related
to fulfilling a contract. IFRS 15 further includes extensive new disclosure
requirements.
As permitted by IFRS 15, the group has elected not to restate the comparative
information. Accordingly, the impact of IFRS 15 has been applied using the
modified retrospective restatement method allowed under the standard resulting
in an adjustment to the group's opening retained earnings. The comparative
information presented for 2018 is therefore presented as previously reported
applying the previous revenue standards and interpretations.
In assessing contract positions on an individual project basis as required by
IFRS 15, contract assets recognised under IAS 11 were not regarded as
contractually receivable and were therefore reversed under IFRS 15 into cost
of sales. The cumulative effect of the retrospective application on the group's
retained earnings is reflected within the group's statement of changes
in equity.
The group derives revenue from contracts with customers for the supply of
goods and services. Below is the group's revised revenue treatment of each
product type.
Segment:
Building Materials
Types of revenue stream:
- Revenue generated from the sale of crushed stone, rock and aggregates for
the construction industry for application in roads, ready mix, concrete and
for stabilisation
Treatment under IAS 11 or IAS 18:
- Individual contract per customer with revenue recognised on transfer of
completed unit (IAS 18)*
Treatment under IFRS 15:
- Individual contract per customer with revenue recognised on transfer of
completed unit - revenue recognised at a point in time
Segment:
Building Materials
Types of revenue stream:
- Revenue generated from the manufacture and sale of a range of clay bricks and
concrete roof tiles for the building sector including developers, contractors
and wholesalers
Treatment under IAS 11 or IAS 18:
- Individual contract per customer with revenue recognised on transfer of
completed unit (IAS 18)*
Treatment under IFRS 15:
- Individual contract per customer with revenue recognised on transfer of
completed unit - revenue recognised at a point in time
Segment:
Power - Conco
Types of revenue stream:
- Revenue generated from the construction of high voltage turnkey electrical
substations, overhead power lines, renewable energy - wind and solar - and
related products
Treatment under IAS 11 or IAS 18:
- Individual contract with revenue recognised based on percentage completion
(IAS 11)*
Treatment under IFRS 15:
- Individual contract treatment with revenue recognised over time#
Segment:
Power - Conlog
Types of revenue stream:
- Revenue generated from manufacturing and distribution of pre-paid electricity
meters along with related applications and support services
Treatment under IAS 11 or IAS 18:
- Individual contract per customer with revenue recognised on transfer of
completed unit and provision of support service (IAS 18)*
Treatment under IFRS 15:
- Individual contract per customer with revenue recognised on transfer of
completed unit - revenue recognised at a point in time
Segment:
Power - Other
Types of revenue stream:
- Revenue generated from long-term operational and maintenance services to
wind farms, solar parks, municipalities and utilities - often on projects
constructed by Conco
Treatment under IAS 11 or IAS 18:
- Individual contract per customer with revenue recognised over the period
of maintenance services being provided (IAS 18)
Treatment under IFRS 15:
- Individual contract treatment with revenue recognised over time
as the maintenance services are being rendered for the customer
Segment:
Oil & Gas
Types of revenue stream:
- Revenue from waste management services provided to the oil and gas
industry. This encompasses the collection, recycling and disposal of
oil-based waste created during the drilling process
Treatment under IAS 11 or IAS 18:
- Individual contract per customer with revenue recognised over the
period of waste management services being provided (IAS 18)
Treatment under IFRS 15:
- Individual contract treatment with revenue recognised over time
as the waste management services are being rendered for the customer
Segment:
Rail
Types of revenue stream:
- Revenue generated from provision of transmission lines, substations up to
132 kV as well as installation and maintenance of electrical lines for railway
lines
Treatment under IAS 11 or IAS 18:
- Individual contract per customer with revenue recognised on percentage
completion for the construction of the transmission lines and substations
(IAS 11)*, on installation for the customer (IAS 18) and over the period of
maintenance of electrical lines (IAS 18)
Treatment under IFRS 15:
- Individual contract per customer with three performance obligations
- Revenue on construction of transmission lines and substations to be recognised
over time. Revenue recognised on installation for the customer at a point in time.
Revenue recognised over time as maintenance of electrical lines are completed
Segment:
Rail
Types of revenue stream:
- Revenue generated from provision of railway maintenance services to Gautrain,
Transnet, PRASA, private siding owners such as mining houses
Treatment under IAS 11 or IAS 18:
- Individual contract per customer with revenue generated from the maintenance
provided over time (IAS 18)
Treatment under IFRS 15:
- Individual contract treatment with revenue recognised over time
as the waste management services are being rendered for the customer
Segment:
Corporate
Types of revenue stream:
- No revenue is generated by the corporate segment
* Based on an individual contract basis as if treated as a separate engagement
and not part of an integrated development.
# Exact treatment will be assessed based on the individual contract with the
customer and the underlying terms and conditions that are unique to each contract.
Revenue may, in certain cases, be recognised at a point in time rather than over
time and may have more than one performance obligation as determined by IFRS 15.
Each will be assessed on its own set of underlying facts and recognised according
to the guidance contained in IFRS 15.
IFRS 9: Financial Instruments (IFRS 9)
IFRS 9 replaces IAS 39: Financial Instruments: Recognition and Measurement
for annual periods beginning on or after 1 January 2018. IFRS 9 brings
together all aspects of accounting for financial instruments that relate to the
recognition, classification and measurement, derecognition, impairment and hedge
accounting.
Dividend
The group's policy is for the board of directors to consider a dividend on an
annual basis after reviewing the annual results. No dividend is recommended.
Special resolutions
In terms of the provisions of section 45(5)(a) of the Companies Act 71 of 2018
("the Act") and pursuant to the special resolution passed at the annual general
meeting of the company held on 27 March 2019 authorising the board of directors
("the board") to provide direct or indirect financial assistance to related and
inter-related parties, notification is hereby given that the board has adopted a
resolution in terms of section 45(3)(b) of the Act authorising the company to
provide financial assistance for working capital purposes to Consolidated
Power Projects Group Limited and Tension Overhead Electrification Proprietary
Limited, trading as Tractionel Enterprise, both wholly-owned subsidiaries of CIG,
which constitutes financial assistance in terms of section 45 of the Act and
which financial assistance exceeds one tenth of one percent of the company's
net worth.
In accordance with section 45 of the Act, the board is satisfied and
acknowledges that:
- Immediately after providing such financial assistance, CIG would have
satisfied the solvency and liquidity test as provided for in section 4 of
the Act, and
- The terms under which such financial assistance has been given are fair
and reasonable to CIG.
Changes to the board of directors
A previously announced, the CIG board of directors was reconstituted in
January 2019.
Mr Frank Boner, Mr Alex Darko, Mr Anthony Dixon and Professor Kalu Ojah
resigned. The board thanks the past members for their contribution over
the years.
Mr Michael Wilkerson was appointed as a non-executive director and Chairman
of the board of directors. Mr Ahmad Mazar, Mr Quinn McLean and Mr Sean Melnick
were appointed as non-executive directors. Mrs Cindy Hess and Mr John Beck were
appointed as independent non-executive directors.
A previously announced, Cristina Teixeira was appointed as CFO with effect from
2 April 2019 replacing Sean Jelly who was appointed as an interim CFO from
November 2018. We thank Sean for his contribution while serving as CFO.
Appreciation
The directors and management of CIG wish to thank all staff for their loyalty
in these difficult times. We also thank our customers, business partners,
advisers, suppliers and our shareholders for their ongoing support.
By order of the board
Michael Wilkerson Raoul Gamsu
Chairman CEO
Johannesburg
3 June 2019
Unaudited condensed consolidated statements of comprehensive income
for the six months ended 28 February 2019
Unaudited Unaudited Audited
six months six months year
ended ended ended
28 February 28 February 31 August
R'000 2019 2018 2018
Revenue 1 188 677 1 303 973 2 706 570
Cost of sales (1 515 753) (1 500 531) (2 837 268)
Gross loss (327 076) (196 558) (130 698)
Other income 19 306 28 004 39 615
Other operating loss - - (22)
Operating expenses (647 771) (569 358) (947 994)
Foreign exchange loss (30 129) (92 777) (23 047)
Operating loss (985 670) (830 689) (1 062 146)
Impairment of carrying value in
joint arrangement - (134 401) (134 401)
Impairment of goodwill (66 241) (397 938) (472 490)
Gain on settlement of
instalment sale liabilities - - 342
Equity-accounted income from
joint ventures and associates 19 884 10 419 50 944
Loss before interest (1 032 027) (1 352 609) (1 617 751)
Interest received 18 083 10 939 26 212
Interest paid (138 985) (130 019) (248 341)
Loss before taxation (1 152 929) (1 471 689) (1 839 880)
Taxation (67 278) 268 992 (187 882)
Loss for the period (1 220 207) (1 202 697) (2 027 762)
Total loss for the period
attributable to:
Equity holders of the company (1 213 104) (1 202 916) (2 022 177)
Non-controlling interest (7 104) 219 (5 585)
Other comprehensive income:
Items that will be reclassified
to profit and loss:
Exchange rate differences on
translating foreign operations 17 725 (27 433) 19 708
Remeasurement of defined
benefit liability - 1 012 3 272
Total comprehensive loss (1 202 482) (1 229 118) (2 004 782)
Total comprehensive loss
attributable to:
Equity holders of the company (1 195 379) (1 229 337) (1 998 453)
Non-controlling interest (7 104) 219 (6 329)
Basic loss per share (Rand) (4,56) (6,13) (10,30)
Diluted loss per share (Rand) (4,56) (6,13) (10,30)
Unaudited condensed consolidated statements of financial position
as at 28 February 2019
Unaudited Unaudited Audited
as at as at as at
28 February 28 February 31 August
R'000 2019 2018 2018
Assets
Non-current assets 1 967 860 2 321 458 2 135 636
Property, plant and equipment 503 685 495 582 526 984
Goodwill 613 237 754 029 679 478
Intangible assets 113 937 153 743 161 881
Deferred tax 15 131 385 928 32 374
Investment in joint arrangement 714 579 521 036 727 526
Financial assets 7 290 11 140 7 393
Current assets 3 511 864 3 459 615 3 692 963
Inventories 296 065 257 799 327 996
Financial assets 924 5 890 796
Trade and other receivables 468 490 447 251 729 460
Amounts due from contract
customers 1 102 660 608 876 815 477
Contracts work in progress 486 230 1 729 664 1 196 462
Taxation receivable 54 679 106 743 51 328
Cash and cash equivalents 1 102 816 303 392 571 444
Total assets 5 479 724 5 781 073 5 828 599
Equity and liabilities
Equity 1 306 068 2 616 004 1 846 114
Share capital 3 105 928 2 328 926 2 328 926
Share-based payment reserve 60 959 55 184 60 958
Foreign currency translation
reserve 82 459 16 849 64 734
Accumulated (loss)/profit (1 927 935) 216 736 (600 265)
Total equity attributable to
equity holders of the company 1 321 410 2 617 695 1 854 353
Non-controlling interest (15 343) (1 691) (8 239)
Non-current liabilities 1 097 334 310 988 1 075 836
Financial liabilities 949 399 200 478 962 125
Provisions 24 560 17 346 20 974
Operating lease liability - 6 569 1 765
Instalment sale liabilities 15 098 17 800 18 702
Deferred tax 108 276 68 795 72 270
Current liabilities 3 076 322 2 854 081 2 906 649
Other financial liabilities 468 122 945 399 468 865
Trade and other payables 1 336 068 1 118 121 1 250 669
Contract excess billings 643 682 247 115 624 988
Bank overdraft 586 958 522 042 530 782
Provisions 3 874 589 589
Instalment sale liabilities 12 148 12 198 14 192
Operating lease liability 4 412 3 377 4 804
Taxation payable 21 059 5 240 11 760
Total equity and liabilities 5 479 724 5 781 073 5 828 599
Unaudited condensed consolidated statements of changes in equity
for the six months ended 28 February 2019
Share- Foreign Accumu-
based currency lated
Share payment translation (loss)/
R'000 capital reserve reserve profit
Balance as at
31 August 2017 2 328 926 49 410 44 282 1 418 640
Share-based payments - 5 774 - -
Other comprehensive
loss for the period - - (27 433) 1 012
Loss for the period - - - (1 202 916)
Balance as at
28 February 2018 2 328 926 55 184 16 849 216 736
Share-based payments - 5 774 - -
Other comprehensive
loss for the period - - 47 885 2 260
Loss for the period - - - (819 261)
Balance at
31 August 2018 2 328 926 60 958 64 734 (600 265)
IFRS 15 adjustment in
equity - - - (114 567)
Restated balance at
31 August 2018 2 328 926 60 958 64 734 (714 832)
Share issue 777 002 - - -
Other comprehensive
loss for the period - - 17 725 -
Loss for the period - - - (1 213 104)
Balance as at
28 February 2019 3 105 928 60 959 82 459 (1 927 935)
Total
attributable
to equity
holders Non-
of the controlling Total
company interest equity
R'000 as at as at as at
Balance as at 31 August 2017 3 841 258 (1 910) 3 839 348
Share-based payments 5 774 - 5 774
Other comprehensive loss for
the period (26 421) - (26 421)
Loss for the period (1 202 916) 219 (1 202 697)
Balance as at 29 February 2018 2 617 695 (1 691) 2 616 004
Share-based payments 5 774 - 5 774
Other comprehensive loss for
the period 50 145 (744) 49 401
Loss for the period (819 261) (5 804) (825 065)
Balance at 31 August 2018 1 854 353 (8 239) 1 846 114
IFRS 15 adjustment in equity (114 567) - (114 567)
Restated balance at 31 August 2018 1 739 786 (8 239) 1 731 547
Share issue 777 002 - 777 002
Other comprehensive loss for
the period 17 725 - 17 725
Loss for the period (1 213 104) (7 104) (1 220 207)
Balance as at 28 February 2019 1 321 410 (15 343) 1 306 068
Unaudited condensed consolidated statements of cash flow
for the six months ended 28 February 2019
Unaudited Unaudited Audited
six months six months year
ended ended ended
28 February 28 February 31 August
R'000 2019 2018 2018
Cash flows from operating activities
Cash (used)/generated from
operations (133 836) (96 498) 51 247
Interest income 18 083 10 939 26 212
Finance costs (138 985) (130 019) (247 292)
Tax paid (26 382) (39 482) (69 913)
Net cash flows used in
operating activities (281 121) (255 060) (239 746)
Cash flows from investing activities
Acquisition of property, plant
and equipment (16 207) (38 273) (91 774)
Proceeds on sale of property,
plant and equipment 1 291 151 4 433
Investment in intangible assets (9 220) - (35 976)
Disposal of financial assets - - 5 672
Acquisition of financial assets (425) - -
Additional in investment in
joint arrangement - - (29 672)
Repayment in investment in
joint arrangement 4 410 - -
Net cash flows from investing
activities (20 151) (38 122) (147 917)
Cash flows from financing activities
Proceeds on share issue 777 000 - -
Repayment of financial liabilities (10 510) - -
Additional financial liabilities - 109 885 418 099
Repayment of instalment sale
liabilities (5 647) (17 300) (9 050)
Net cash flows from financing
activities 760 843 92 585 409 049
Total cash and cash equivalents
movement for the period 459 571 (200 597) 21 386
Cash and cash equivalents at
beginning of the year - net 40 662 (10 556) (10 556)
Effect of foreign currency
translation on cash balances 15 626 (7 497) 29 232
Total cash and cash equivalents
at the end of the period - net 515 859 (218 650) 40 662
Unaudited segmental analysis
for the six months ended 28 February 2019
Unaudited Unaudited Audited
six months six months year
ended ended ended
28 February 28 February 31 August
R'000 2019 2018 2018
Revenue
Building Materials 201 289 242 954 515 701
Power 963 474 913 067 1 931 746
Conco 729 423 579 676 1 234 432
Conlog 218 379 312 840 656 075
Other 15 672 20 551 41 239
Rail 23 914 147 952 259 123
Total 1 188 677 1 303 973 2 706 570
(Loss)/profit after tax
Building Materials (82 781) 8 474 27 275
Power (931 424) (678 904) (1 212 135)
Conco (839 646) (629 790) (1 243 692)
Conlog 2 927 60 062 152 275
Other (94 704) (109 176) (120 717)
Oil & Gas 18 672 10 419 50 646
Rail (122 246) (5 119) (43 331)
Corporate (102 428) (537 567) (850 217)
Total (1 220 207) (1 202 697) (2 027 762)
Assets
Building Materials 629 213 669 080 714 448
Power 995 385 1 939 851 1 752 361
Conco 384 061 1 337 518 1 045 362
Conlog 569 279 588 153 706 418
Other 42 045 14 180 582
Oil & Gas 682 155 521 036 691 429
Rail 64 790 215 623 201 676
Corporate 3 602 899 3 185 162 3 254 773
Inter-group elimination (494 719) (749 679) (786 088)
Total 5 479 724 5 781 073 5 828 599
Liabilities
Building Materials 479 326 438 037 474 381
Power 2 493 151 1 905 291 2 229 533
Conco 2 280 156 1 636 787 1 943 014
Conlog 201 650 252 931 270 411
Other 11 345 15 572 16 107
Oil & Gas 66 467 79 618 71 975
Rail 135 708 122 195 146 098
Corporate 1 376 722 962 396 1 408 884
Inter-group elimination (377 719) (342 468) (348 386)
Total 4 173 656 3 165 069 3 982 485
Unaudited notes
for the six months ended 28 February 2019
Headline earnings
Unaudited Unaudited Audited
six months six months year
ended ended ended
28 February 28 February 31 August
R'000 2019 2018 2018
Reconciliation of headline
earnings:
Loss attributable to ordinary
shareholders (basic earnings) (1 213 104) (1 202 916) (2 022 177)
Adjusted for:
Profit on disposal of property,
plant and equipment* (54) (109) (16)
Impairment of goodwill 66 241 397 938 472 490
Impairment of intangibles 39 387 - -
Impairment of carrying value
in joint arrangement - 134 401 134 401
Headline earnings attributable
to ordinary shareholders (1 107 530) (670 686) (1 415 302)
* Profit on disposal is net of tax of R16 (February 2019), R42 (February 2018)
and R6 (August 2018).
Loss per share
Unaudited Unaudited Audited
six months six months year
ended ended ended
28 February 28 February 31 August
R'000 2019 2018 2018
Weighted average number of
shares in issue (000's) 265 772 196 255 196 255
Diluted weighted average number
of shares in issue (000's) 265 772 200 087 196 255
Basic loss per share (Rand) (4,56) (6,13) (10,30)
Diluted loss per share (Rand) (4,56) (6,13) (10,30)
Headline loss per share (Rand) (4,17) (3,42) (7,21)
Diluted headline loss per share (Rand) (4,17) (3,42) (7,21)
Corporate information
Business and postal address
First Floor, 30 Melrose Boulevard, Melrose Arch 2196
PO Box 651455, Benmore, Johannesburg 2010
Telephone: 011 280 4040
Facsimile: 086 748 9169
Company secretary
CIS Company Secretaries Proprietary Limited
Transfer secretaries
Computershare Investor Services Proprietary Limited
Sponsor
Java Capital
Board of directors
Non-executive chairman
M Wilkerson#
Lead independent non-executive director
R Hogarth*
Non-executive directors
T Hudson#, A Mazar^, Q McLean@, S Melnick&
Independent non-executive directors
K Bucknor+, K Kariuki$, J Nwokedi*, C Hess*, J Beck@
Executive directors
RD Gamsu* (CEO), CMF Teixeira* (CFO)
* South African # American
^ Pakistanian @ Canadian
& British + Ghanaian
$ Kenyan
Auditor
PricewaterhouseCoopers Inc.
Investor relations
Singular Systems IR
Released on 4 June 2019
Visit our website: http://www.ciglimited.com
Disclaimer
The group has in good faith made reasonable effort to ensure the accuracy and
completeness of the information contained in this document, including all
information that may be regarded as "forward-looking statements". Forward-
looking statements may be identified by words such as "believe", "anticipate",
"expect", "plan", "estimate", "intend", "project", "target". Forward-looking
statements are not statements of fact, but statements by the management of the
group based on its current estimates, projections, expectations, beliefs and
assumptions regarding the group's future performance and no assurance can be
given to this effect.
The risks and uncertainties inherent in the forward-looking statements contained
in this document include but are not limited to changes to IFRS and the
interpretations, applications and practices subject thereto as they apply to
past, present and future periods; domestic and international business and market
conditions such as exchange rate and interest rate movements; changes in the
domestic and international regulatory and legislative environments; changes to
domestic and international operational, social, economic and political risks;
and the effects of both current and future litigation.
The group does not undertake to update any forward-looking statements contained
in this document and does not assume responsibility for any loss or damage and
howsoever arising as a result of the reliance by any party thereon, including,
but not limited to, loss of earnings, profits or consequential loss or damage.
Date: 04/06/2019 03:09:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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