A prof­itable fu­ture pre­dicted

The Star Early Edition - - COMPANIES - Roy Cokayne

LISTED con­struc­tion group Esor be­lieves it is po­si­tioned for prof­itable fu­ture growth after con­clud­ing legacy loss-mak­ing con­tracts and set­tling a claim on the Kusile power sta­tion project.

Wes­sel van Zyl, the chief ex­ec­u­tive of Esor, yes­ter­day said the suc­cess­ful res­o­lu­tion in the six months to Au­gust of chal­lenges fac­ing Esor Civils meant the di­vi­sion was now po­si­tioned for a turn­around.

“The be­lea­guered Bak­wena N4 con­tract in­curred a fur­ther R50 mil­lion loss, pri­mar­ily re­sult­ing from late com­ple­tion due in part to late changes to the scope of works and the spillover from labour un­rest at nearby Marikana mine.

“How­ever, the road is now open and we have cer­ti­fi­ca­tion of com­ple­tion. Pru­dent pro­vi­sions have been made for as­so­ci­ated costs,” he said.

Van Zyl said Eskom’s claims on the Kusile project had now also been fi­nalised, re­sult­ing in more than R150m of ad­vance pay­ments be­ing re­paid. He said this had elim­i­nated the bal­ance sheet risk as­so­ci­ated with th­ese ad­vance pay­ments.

Van Zyl said a sig­nif­i­cant por­tion of the Esor Civils or­der book re­mained re­liant on Kusile, but new con­tact terms had been agreed for the re­main­der of this project.

He added that two of the four Kusile projects, the joint ven­ture projects for bulk earth­works and crush­ing, were suc­cess­fully com­pleted in the re­port­ing pe­riod.

The re­main­ing projects were for the ter­race un­der­ground fa­cil­i­ties and gen­eral ser­vice pip­ing. Van Zyl said the ter­race un­der­ground fa­cil­i­ties con­tract re­mained sub­ject to mod­er­ate de­lays and dis­rup­tions and a con­tin­ued claims process was be­ing dealt with on a monthly ba­sis to en­sure is­sues were ad­dressed timeously.

Esor yes­ter­day re­ported a head­line loss a share of 6.59c for the six months to Au­gust com­pared to head­line earn­ings a share of 0.01c in the pre­vi­ous cor­re­spond­ing pe­riod.

Rev­enue de­clined 22 per­cent to R789.8m from R1.01bn.

Van Zyl said this de­cline was in line with the con­sol­i­da­tion ini­tia­tives un­der way at the group. The op­er­at­ing loss widened to R30.9m from R8.8m. The loss after tax in­creased by almost 62 per­cent to R24m from R14.8m. Net as­set value a share de­te­ri­o­rated by 32 per­cent to 198.4c from 291.7c.

Net cash gen­er­ated by op­er­a­tions im­proved to R38.6m from the R21.2m con­sumed in the pre­vi­ous cor­re­spond­ing pe­riod. How­ever, Van Zyl said cash re­mained tight given the group’s work­ing cap­i­tal re­quire­ments. A div­i­dend was not de­clared. The group has a con­sol­i­dated two-year or­der book of R2.4bn and re­ports it has an im­mi­nent project pipe­line of about R500m. Of the con­sol­i­dated two-year or­der book, Esor Civils ac­counts for R1bn, Esor Pipe­lines R604m and Esor De­vel­op­ments R700m. Van Zyl said pre­vi­ously de­layed projects were ex­pected to come on stream and the con­sol­i­da­tion and re­or­gan­i­sa­tion within the group was near­ing com­ple­tion.

Esor shares rose by R2 yes­ter­day to close at R24.

Newspapers in English

Newspapers from South Africa

© PressReader. All rights reserved.