Braced for a battle royal

A succession of increasingly doomladen trading updates meant that the dire results of Consolidated Infrastructure Group (CIG) wouldn’t have taken anybody by complete surprise. A dash for the exit in the wider shareholder body of the group that provides services to the oil, gas and power sections has caused the share price to plummet from R23 in February to R4.

That is straight out of the Visigoth playbook in terms of wanton value destruction, and a fall of 64% in the past 30 days shows in the clearest possible way precisely what the market thinks of this performance.

All but one of CIG’S businesses had a solid trot, generating a profit between them of R291m and performing in line with expectations.

Sadly for them, their efforts were overshadowed by the fact that they were tethered to Conco, which managed to drop R441m, stiffing the group with a loss of R150m.

This has resulted in a breach of the company’s interest cover covenant, and the lenders have granted a stay of execution until February.

Conco’s woes are not far off Heinz’s full 57 varieties, but the major contributors include the fourth round of the renewable energy programme being put on hold at an estimated cost of R104m in profits.

Margin pressure was felt across the board, and rising compliance and regulatory costs in SA, as well as issues with the workforce, combined to force costs up.

The group has established a war room to grapple with the problems it is facing, and the battle needs to be joined fast.