Listed infrastructure group Consolidated Infrastructure Group (CIG) continues to struggle with a debt burden, despite reaching a number of agreements with Toronto Stock Exchange-listed Fairfax that led to a capital injection.
Current assets exceeded current liabilities by R701.3m at the end of its year to end-August, with the company still finalising agreements that will shift short-term debt into long-term debt, it said on Monday.
The company says it continues to face tough economic conditions, in which engineering, procurement and construction are under pressure, especially due to uncertainty about Eskom and spending by municipalities.
The company’s share price has lost 70.34% in 2019.
The group — whose portfolio straddles power, building materials, oil and gas and rail — narrowed its loss to R1.34bn, from a restated R1.67bn previously. Group revenue was flat at about R3.17bn.
During the year, it concluded a capital-raising, resulting in R765m of net capital, and in Fairfax Africa becoming a significant shareholder.
The group, which has operations in SA, Sub-Saharan Africa and the Middle East, said Conco, its largest subsidiary and driver of results, continued to experience difficult trading conditions and slower-than-expected contract awards.
The troubles surrounding engineering, procurement and construction business Conco continues to be the gravest cause for concern, with rightsizing of the business mostly complete, said Small Talk Daily’s Anthony Clark.
“However, a lack of infrastructure works in the sector allied to ongoing problems with claims and counter-claims between Conco, its supplier and its clients saw material sums set aside for penalties, legal and construction disputes and debtor concerns” said Clark.
High net debt will cause concerns to the market but the group seems confident that its strategic recovery plan allows sufficient cash flows to meet obligations, he said.
The company said budgeted profit from unsecured contracts failed to materialise, while there was an under-recovery on project overheads carried in anticipation of these contracts.