Trading statement, update on debt restructure and change to the board of directors

(Incorporated in the Republic of South Africa)
(Registration number 2007/004935/06)
JSE share code: CIL ISIN: ZAE000153888
(“CIG” or the “Company” or the “Group”)


Trading statement for the six months ended 30 June 2020

In terms of paragraph 3.4(b) of the JSE Listings Requirements, companies are required to publish a trading statement as soon as it is satisfied that a reasonable degree of certainty exists that the financial results will differ by at least 20% from those of the previous corresponding period. The Group changed its year end from August to December and, as a result, the previous corresponding period referred to herein was for the six months ended 28 February 2019 (“the prior comparable reporting period” or “H1 F2019”).

Shareholders are accordingly advised that for the six months ended 30 June 2020 (“H1 FY2020”), the Group expects to report:

– Loss per share (“LPS”) of between at least 91 cents per share and 137 cents per share, being an improvement of between 70% and 80% compared to the six months ended 28 February 2019
of 456 cents loss per share; and

– Headline loss per share (“HLPS”) of between at least 91 cents per share and 137 cents per share, being an improvement of between 67% and 78% compared to the prior comparable reporting period of 417 cents loss per share.

Shareholders are reminded that the H1 F2019 results were impacted by impairments to unrecoverable work in progress and receivables, mainly in the Consolidated Power Projects Proprietary Limited (“CONCO”) business, as well as impairments to goodwill and intangibles and reversal of deferred tax assets previously recognised.

The Company will publish a further trading statement once it has the reasonable degree of certainty required to confirm the extent of the difference in LPS and HLPS from the prior corresponding period.

The information on which this trading statement has been based has not been reviewed or reported on by the Company’s external auditors.

Update on debt restructure

CIG has previously advised stakeholders that it was engaging with its lenders, being certain of the bond holders of the previously listed CIG ZAR1,000,000,000 domestic medium-term note programme (“DMTN bond programme”) and the local bank lenders to its subsidiary, CONCO, to restructure its short-term debt profile into a longer-term, more sustainable, debt structure.
On 9 March 2020, the Company announced that it had finalised, and signed, a binding term-loan facility agreement with four CIG DMTN bond holders (“Original Lenders”). These agreements allowed for the restructure of its debt profile under the DMTN bond programme. This restructuring would result in a substantial portion of the short-term debt owed by the company, being converted to term debt. This agreement was subject to normal conditions precedent (including the signature of a CONCO term loan facility). In March 2019 the Company purchased notes from the four Original Lenders at an aggregate nominal value of R150 million, utilising available cash, commencing the implementation of the agreement.

At the time the Company also reported that binding legal agreements between CONCO and its local bank lenders were near finalisation.

The COVID-19 pandemic and resultant extended lockdown in South Africa has significantly impacted both CIG and CONCO and brought most of the Group’s operations and construction sites to a standstill for 2 months and followed by a slow restart thereafter. During this period, CONCO also experienced delays in collection of debtor’s payments both in South Africa and the Rest of Africa, which has placed further pressure on the Group.

The management team and the board of directors (the “Board”) have worked tirelessly on the continued turnaround of CONCO, however the impact of COVID-19 necessitated another reassessment of the Group’s cash forecasts . As a result, the Company has engaged with the Original Lenders requesting a concession to the recently-signed agreements as the conditions could no longer be fulfilled. CONCO also engaged with its local bank lenders with requests for concessions to the terms of agreement reached.

CIG has appointed Metis Strategic Advisors, specialists in debt restructure, to assist CIG and CONCO, with the objective to conclude a debt restructure in a timeous manner. The restructured debt profile for both the Company and CONCO is critical to their sustainability and trading ability. Negotiations are in progress.

Change to the Board

The Company announces that Kofi Bucknor has resigned as independent non-executive director and as a member of the remuneration and nominations committee with effect from 12 August 2020, after eight years on the Board.

We thank Kofi for his valuable contribution to the Board of directors during his time served and wish him well.

The Board is in the process of evaluating the board’s size and composition, including that of its various sub-committees and an announcement in respect thereof will be released in due course.

14 August 2020

Java Capital