| Tue 3 Jul 2012, 15:39 | | Erbacon Inv Hldgs Ltd - VOLUNTARY TRADING UPDATE |
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ERB
VOLUNTARY TRADING UPDATE
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' 'the Group')
VOLUNTARY TRADING UPDATE
Shareholders are referred to the debt restructuring plan
announced on SENS and set out in the circular issued to
shareholders on 1 June 2012 ('Debt Restructuring Plan'),
which will be partially implemented by way of a rights
offer ('Rights Offer').
The purpose of this voluntary trading update is to advise
shareholders of Erbacon's position ahead of the anticipated
Rights Offer.
Erbacon's revenues of R333 million for the 1st quarter ended
31 May 2012 were over 50% higher than the comparable period
in the prior financial year. The Group returned to
operating profitability in the quarter under review. As at
31 May 2012, net interest bearing cash assets were R23,8
million comprising cash of R36,4 million, overdraft of nil
and asset-based financing liabilities of R12,6 million (29
February 2012: net interest bearing liabilities of R21.6
million), which excludes liabilities that will convert to
equity on implementation of the Debt Restructuring Plan.
The liquidity position of the Group improved as a result of
profitable trading, working capital management and R25
million of equity-targeted funding received from
shareholders and management.
As at 30 June 2012, the secured forward order book of
Erbacon was R900 million, 95% of which will be executed in
the current financial year. Net interest bearing cash
assets of R17,9 million were held at 30 June 2012 (cash of
R29,7 million; overdraft of nil; asset-based financing
liabilities of R11,8 million). Unutilised overdraft
facilities with banks at the 30th of June 2012 were R40
million.
The prospects statement for Erbacon as contained in the
Audited Condensed Provisional Results for the year ended 29
February 2012, as announced on SENS on 17 May 2012, remains
unchanged and included the following statements:
Trading conditions in the South African building and
civil engineering markets are improving with an
increased quantum of tenders coming to market;
A number of commercial claims in favour of Erbacon are
still to be agreed with our clients, the finalisation
of which may positively impact Erbacon's operating
result in the 2013 financial year;
Erbacon's liquidity position remains constrained,
however, it is forecast to ease as new profitable
contracts are undertaken and commercial claims are
resolved;
The solvency of the Group will be significantly
improved through implementation of the Debt
Restructuring Plan;
The Board is confident that Erbacon will return to
operating profitability in the 2013 financial year;
and
Various IFRS related, once-off, non-cash accounting
charges relating to the Debt Restructuring Plan are
likely to result in an attributable loss for the
period to 28 February 2013. The net asset value of the
Group will not be negatively impacted by these non-
cash charges.
The financial results on which this voluntary trading
update has been based have not been reviewed or reported on
by the Group's auditors.
3 July 2012
Midrand
Designated adviser:
PSG Capital (Pty) Limited
Date: 03/07/2012 03:39:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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