http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 13.58Change: 0.17
R/$ = 10.95Change: 0.02
Au 1201.61 $/ozChange: 2.45
Pt 1226.50 $/ozChange: -3.50
 
 
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?








Start
 
End
 
 
And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
 
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Contact Us
 
 
 
RSS Feed
Article   Comments   Other News   Research   Magazine  
 
 
May 28, 2012

Protech moves to loss as African projects falter

Back
Construction|DRC|Engineering|Africa|Civils|Concrete|PROJECT|Projects|Protech|Readymix|Resources|Road|Africa|DRC|Sierra Leone|South Africa|Tanzania|Zambia|Building|Contracting|Energy|Lesser-known Mining|Mining|Transport|Sierra Leone|Sierra Zambia|Environmental|Anthony Page|Infrastructure|Rail
Construction|DRC|Engineering|Africa|Civils|Concrete|PROJECT|Projects|Readymix|Resources|Road|Africa|DRC|Tanzania|Zambia|Building|Contracting|Energy|Mining|Transport||Environmental|Infrastructure|Rail
construction|drc|engineering|africa-company|civils|concrete|project|projects|protech|readymix|resources|road|africa|drc-country|sierra-leone|south-africa|tanzania|zambia|building|contracting|energy|lesser-known-mining|mining|transport-industry-term|sierra-leone-natural-feature|sierra-zambia|environmental|anthony-page|infrastructure|rail
© Reuse this



Bulk earthworks and civil engineering specialist Protech Khuthele’s African safari turned sour in the financial year ended February 29, as two mining projects in Tanzania and one in the Democratic Republic of the Congo (DRC) pushed the company firmly into the red.

Protech CEO Anthony Page said on Monday that all three projects had been with lesser-known mining companies, with one client in Zambia running into financial difficulty, while the other faced environmental complexities.

“There are also tax and VAT issues that we have been unable to resolve.”

The DRC project had not moved beyond the first phase, while there were also some “tax issues”.

However, noted Page, these projects would no longer be a drain on the company’s resources, as Protech had exited them in full.

Despite these bad-apple projects, he emphasised that the company had not been chased from the continent. It had, however, been forced to review its risk matrix.

Aside from more rigorous project selection, the company would now also consider more carefully who it worked with in Africa.

For example, Protech’s list of remaining clients in Africa were largely blue-chip, such as AngloGold and Randgold, both in the DRC, noted Page.

Protech was also still active in Sierra Leone and Zambia.

Page said Protech was more willing to do work in Africa with “clients we know and have worked with in South Africa”.

Country selection was also important, with countries where the company had worked before and where it understood the tax regime and politics, more likely to be viewed favourably.

“If it is a new country, we have to make sure we understand it before we go there,” said Page.

“A last consideration is cash. Can we get an upfront payment?” he noted.

THE NUMBERS

Protech Khuthele saw revenue for the year ended February 29 decrease by 10% compared with the previous financial year, to R965.8-million.

Operational expenditure increased 18% to R286.3-million, with the major impact flowing from the impairments recognised on the three projects in Africa which had not progressed beyond the first phase.

The full effect of these projects had been accounted for in the 2012 financial year.

The group reported an operating loss before interest and taxation of R3.8-million, compared with an operating profit of R77.1-million in the previous year.

A loss a share of 3.1c and a headline loss a share of 1c were recorded for the year.

When looking at the different business units, contracting, which made up 84% of group revenue, showed an 8% decline in revenue to R865.8-million.

The business unit reported an operating loss of R17.9-million.

While Africa had stung the company in the year under review, South Africa had not presented much opportunity either.

“Despite large infrastructure investment budgets, public sector spending continued to be slow. The economic uncertainty led to drawn out decision-making and erratic spending patterns among top mining companies. Accordingly, tenders and new project opportunities are highly contested, with lower margins on new contracts,” reported the company.

The geotechnical business unit, which primarily serviced Protech`s contracting business unit, achieved a 24% increase in revenue to R23.4-million, with a 97% growth in operating profit to R7.1-million.

The readymix unit, which was responsible for 14% of group revenue in the financial year, recorded a turnaround and posted an operating profit of R5.5-million, following a 2011 loss of R1.5-million.

Looking ahead, the group had seen evidence of improved tender activity since the beginning of the new financial year, both in the mining sector and commercial infrastructure.

“Renewed commitments from the South African government to accelerate infrastructure investments are encouraging, particularly in the transport and energy sectors which are strategic focus areas for Protech,” reported the company.

The group’s total order book amounted to R1.1-billion at February 29.

In addition, the total value of work tendered, submitted and awaiting adjudication and award to the successful contractor was currently valued at some R2.4-billion on a probability weighted basis.

Initiatives to extend Protech’s capability in specific areas of the construction value chain were on track, including the recent announcement to establish a civils division.

This civils division should grow to a reasonable size over the next three years, said Page.

He said this division would not move into the buildings arena for example, but focus more on building road-over-rail bridges, for example, or concrete aprons.

Page said he expected the company to return to profitability in the current financial year.

 

Edited by: Creamer Media Reporter
© Reuse this Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
Other Construction News
A month before it plans to list on the main board of the JSE, property group, the Pivotal Fund has posted a net asset value per share excluding deferred tax (NAVPS) for the six months ended August 31, of R15.55 – a 5.9% increase on the NAVPS at the end of the...
Steel among the five resource value-chains being prioritised
The Mineral Beneficiation Action Plan (MBAP), which is currently in draft form, should be finalised by the end of March 2015, the Department of Trade and Industry (DTI) has confirmed. The department is leading the drafting process, which also involves the National...
Construction company Group Five says its strategy is strongly focused on expansion in Africa, with selected projects in Russia and Northern America also possibly on the horizon. Outgoing CEO Mike Upton says the South African construction industry saw what appears to...
More
 
 
Latest News
Industrialisation remains a major part of the South African developmental agenda and an important vehicle towards achieving the Department of Trade and Industry’s (DTI’s) target of creating 100 black industrialists in the next five years, Trade and Industry...
The construction of a new innovation hub in the heart of the Dube TradePort, in Durban, was set to kick off in March 2016, as Dube TradePort Corporation sealed a R160-million lease agreement with Eureka Capital. Eureka Capital planned to develop a seven-storey 21 500...
South Africa will become the first African country to host the Organisation for Economic Cooperation and Development’s (OECD’s) Steel Committee Conference when the committee’s seventy-seventh session takes place in Cape Town between December 11 and 12. The...
More
 
 
Recent Research Reports
Defence 2014: A review of South Africa's defence industry (PDF Report)
Creamer Media’s Defence 2014 report examines South Africa’s defence industry, with particular focus on the key participants in the sector, the innovations that have come out of the sector, local and export demand, South Africa’s controversial multibillion-rand...
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move road...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
 
 
 
 
 
This Week's Magazine
JSE-listed real estate investment trust (REIT) Rebosis Property Fund achieved a distribution growth of 8.1% to 99.45c per linked unit in the financial year ended August 31, despite volatile market conditions.
JAMES ROBERTS The MOM incubator was designed to help babies in developing nations who were dying in conflict-struck nations or who do not receive hospital care
A low-cost, inflatable incubator won this year’s international James Dyson design award, which aims to encourage and inspire the next generation of design engineers.
The World Bank released its ‘Doing Business 2015: Going Beyond Efficiency’ report last month and ranked South Africa 43 out of 189 global economies for its ease of doing business, with Singapore topping the rankings.
Air Products South Africa officially launched its R300-million Eastern Cape air- separation unit (ASU), at its new manufacturing facility in the Coega Industrial Development Zone (IDZ), earlier this month. It is the second facility that Air Products launched in South...
BMW South Africa (SA) has signed a power purchasing agreement with energy company Bio2Watt. The offtake partnership will bring renewable energy to the carmaker’s Rosslyn plant, north of Pretoria.
 
 
 
 
 
 
 
 
 
Alert Close
Embed Code Close
content
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
 
 
Close
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks