| Fri 4 May 2012, 16:51 | | ERB - Erbacon Investment Holdings Limited - Revise |
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ERB
ERB
ERB - Erbacon Investment Holdings Limited - Revised trading statement and
renewal of cautionary announcement
ERBACON INVESTMENT HOLDINGS LIMITED
Incorporated in the Republic of South Africa
(Registration Number: 2007/014490/06)
Share Code: ERB ISIN: ZAE000111571
("Erbacon" or "the Company" or "the Group")
REVISED TRADING STATEMENT AND RENEWAL OF CAUTIONARY ANNOUNCEMENT
In terms of the Listings Requirements of the JSE Limited, a listed company is
required to publish a trading statement as soon as it becomes reasonably certain
that the financial results for the next period to be reported on will show a 20%
or more difference from those of the previous corresponding period.
Further to the trading statement published on SENS on 27 March 2012, the board
wishes to update its prior trading statement. The board has obtained a
reasonable degree of certainty that the Group will now report a basic loss per
share of between 88,91 cents per share and 95,78 cents per share, and a headline
loss per share of between 67,48 cents per share and 74,15 cents per share,
respectively for the financial year ended 29 February 2012 compared to a basic
and headline loss per share of 34,38 cents per share and 33,36 cents per share
respectively for the prior corresponding period.
During the year under review the Group incurred losses in its small plant hire
business and on a number of contracts. The losses in the small plant hire
business were accounted for in the interim results wherein the business was
treated as a discontinued operation. As advised to shareholders via the SENS on
13 March 2012, Erbacon Small Plant (Pty) Ltd was disposed of with effect from
29th February 2012. The problematic contracts, on which estimated contract
losses to completion have been taken to book in the Group`s results to 29
February 2012, are all anticipated to be complete by end June 2012. In terms of
IAS 11(Accounting for Construction Contracts), the Group maintains a
conservative policy in respect of the recognition of un-agreed contract claims.
A number of commercial claims in favour of the Company are still to be agreed
with our clients, the finalisation of which should improve the relevant contract
results in the 2013 financial year.
As at 29 February 2012 the net interest bearing debt in the Group was R21,6
million, which excludes liabilities that will be converted to equity through the
below mentioned Debt Restructure Plan. After considering the additional equity
that will arise through the Debt Restructure Plan, the Board considers that the
level of debt is well within prudential limits.
Trading conditions in both the South African building and civil engineering
markets are improving with an increased quantum of tenders coming to market. The
Group has a secured order book in excess of R 1 billion, of which 90% is to be
completed within the period to 28 February 2013. The implementation of the
Group`s medium-term strategy of `Best-in-Class` (comprising Order Book
Development, Project Execution, and Business Sustainability) is still
progressing well. In particular, the business imperatives of sustainability as
relating to the risk assessment process, a culture of safe behaviour, Black
Economic Empowerment, corporatisation initiatives, and the below mentioned debt
restructuring process, remain the focus of the Board.
The Board is confident that the Group will return to operating profitability in
the 2013 financial year, however various non-cash accounting charges relating to
the below mentioned Debt Restructure Plan is likely to result in an attributable
loss for the period. The net asset value of the Group will not be negatively
impacted by these non-cash accounting charges.
The financial information on which this trading statement is based has not been
reviewed or reported on by the Company`s auditors.
The financial results for the year ended 29 February 2012 will be announced on
or about 18 May 2012.
RENEWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders were also advised on SENS on 27 March 2012 that Erbacon had entered
into an agreement with various shareholders and related parties in terms of
which Erbacon`s debt owing to them will be restructured through a
recapitalization plan (the Debt Restructure Plan) consisting, inter alia, of the
conversion of outstanding loans payable and preference shares into ordinary
shares in Erbacon. Progress in this regard is on track. The required Competition
Commission Merger Notification has already been filed, whilst the revised
Memorandum of Incorporation and Conversion Circular to Shareholders is expected
to be submitted to the JSE for formal approval on or around 31 May 2012.
Accordingly, shareholders are advised to continue to exercise caution when
dealing in the Company`s securities until a further announcement is made, which
will set out the detailed particulars and the pro forma financial effects on
Erbacon of the Debt Restructure Plan.
4 May 2012
Designated adviser:
PSG Capital (Pty) Limited
Date: 04/05/2012 16:30:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
