Bak­wena N4 toll and Eskom’s Kusile con­tracts knock con­struc­tion gi­ant

The Star Early Edition - - BUSINESS REPORT - Roy Cokayne

LOSSES on a Bak­wena N4 toll road con­tract and on a claim re­lated to Eskom’s Kusile power sta­tion project have pushed listed con­struc­tion company Esor into the red.

Esor said on Fri­day it ex­pected to re­port a head­line loss a share of be­tween 6.2c and 7.4c for the six months to Au­gust com­pared to earn­ings of 0.01c in the pre­vi­ous cor­re­spond­ing pe­riod, which in­cluded the re­sults of the geotech­ni­cal business that had sub­se­quently been sold. The company ex­pected the ba­sic loss a share to be be­tween 6c and 7.2c com­pared with 0.6c pre­vi­ously.

Esor said the loss had largely re­sulted from the N4 con­tract, which had in­curred a fur­ther R50 mil­lion loss dur­ing the in­terim pe­riod. “The loss on the N4 con­tract is mainly due to the late com­ple­tion of the works com­pared to fi­nal es­ti­mates in Fe­bru­ary.

“This con­tract has since been com­pleted post the in­terim pe­riod end and the road has been opened. All costs to com­ple­tion have been pro­vided,” it said.

In the year to Fe­bru­ary, Esor re­ported a R94m loss on the Bak­wena N4 project, with R62m at­trib­uted to the di­vi­sion never achiev­ing the an­tic­i­pated and his­tor­i­cal pro­duc­tiv­ity on the con­tract be­cause of the im­pact of the strikes at the Marikana mine.

Esor said its claim on the Eskom Kusile un­der­ground ter­races con­tract had been fi­nalised and set­tled.

How­ever, it said the set­tle­ment was in­suf­fi­cient to cover the amount traded and the company had in­curred a R20m loss on the set­tle­ment of this claim. But Esor said there were still “sig­nif­i­cant vari­a­tions” that were cur­rently be­ing sub­stan­ti­ated.

The company added that the bal­ance of the cash, amount­ing to more than R150m that was pre­vi­ously paid on ac­count, had been re­ceived and had re­moved the bal­ance sheet risk as­so­ci­ated with the ad­vance pay­ments. It added that Esor’s work on hand and fu­ture pipe­line re­mained healthy.

Esor said that it had a se­cured out­stand­ing two-year or­der book of R2.4 bil­lion and im­mi­nent pend­ing awards of about R500m. The company ex­pects to publish its in­terim fi­nan­cial re­sults on Novem­ber 27. Shares fell 12 per­cent to 22c.

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