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

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.