South African mobile capital equipment distributor Eqstra has, through its Mozambican subsidiary, signed a memorandum of agreement with Minas de Benga Limitada to dispose of all plant and equipment assets used in the provision of mining services during a five-year contract at Minas’ Benga coal mine, in Tete.
This was in light of its anticipation that its headline earnings per share (HEPS) and earnings per share (EPS) for the six months ended December 31, 2015, would drop by at least 20% from the corresponding period in 2014. Estra is listed on the main board of the Johannesburg Stock Exchange.
The sale of these assets was aligned with Eqstra’s strategy to reduce exposure to the mining industry. Instead of the proposed sale, an impairment of assets and related closure costs would impact discontinued operations HEPS and EPS.
The impairment of assets took place in the context of the excess of mining assets in the international market and subdued mining activity. Eqstra, therefore, anticipated that it would realise below market values on the sale of these assets.
The company was still in the process of concluding the sale of the assets. For this reason, the board deemed it prudent not to announce the specific scale of the anticipated impairments until it has completed examining various options that may limit the scale of the impairments.
“There is currently insufficient certainty to enable the group to provide specific guidance on the extent of the impact on HEPS and EPS,” the group said in a statement, adding that it would publish a further trading statement once it had certainty on the terms of the proposed disposal of contract mining assets and discontinuation or disposal of noncore operations.
The group was also in the process of closing or selling other noncore operations. This included the heavy equipment business in the industrial equipment division.