http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 13.04Change: -0.16
R/$ = 12.07Change: -0.10
Au 1204.60 $/ozChange: 1.40
Pt 1170.50 $/ozChange: 4.00
 
 
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 Letters 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|Building|Civils|Concrete|Contractor|Mining|PROJECT|Projects|Protech|Readymix|Resources|Road|Africa|DRC|Sierra Leone|South Africa|Tanzania|Zambia|Contracting|Energy|Lesser-known Mining|Sierra Leone|Sierra Zambia|Environmental|Anthony Page|Infrastructure|Rail
Construction|DRC|Engineering|Africa|Building|Civils|Concrete|Contractor|Mining|PROJECT|Projects|Readymix|Resources|Road|Africa|DRC|Tanzania|Zambia|Contracting|Energy|||Environmental|Infrastructure|Rail
construction|drc|engineering|africa-company|building|civils|concrete|contractor|mining|project|projects|protech|readymix|resources|road|africa|drc-country|sierra-leone|south-africa|tanzania|zambia|contracting|energy|lesser-known-mining|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)
 
 
 
 
 
 
 
 
 
Latest News
South African mining and energy adviser Ted Blom has raised a litany of concerns about the state of power utility Eskom and has warned of runaway costs and shortfalls in coal and water, as well as rail capacity. Blom was surprised by the recent buoyancy shown by...
JSE-listed Astrapak will sell specialised packaging systems manufacturer Knilam to Mapflex SA for R17.7-million. The proceeds would be used to reduce Astrapak’s current level of gearing.
The last of the 26 mooring units comprising the Port of Ngqura’s automated mooring system (AMS) have arrived at the port and are expected to improve port efficiency and safety, further driving the Transnet National Ports Authority’s (TNPA’s) objective of establishing...
More
 
 
Recent Research Reports
Steel 2015: A review of South Africa's steel sector (PDF Report)
Creamer Media’s Steel 2015 report provides an overview of the key developments in the global steel industry and particularly of South Africa’s steel sector over the past year, including details of production and consumption, as well as the country's primary carbon...
Projects in Progress 2015 - First Edition (PDF Report)
In fact, this edition of Creamer Media’s Projects in Progress 2015 supplement tracks developments taking place under the Renewable Energy Independent Power Producer Procurement Programme, which has had four bidding rounds. It appears to remain a shining light on the...
Electricity 2015: A review of South Africa's electricity sector (PDF Report)
Creamer Media’s Electricity 2015 report provides an overview of State-owned power utility Eskom and independent power producers, as well as electricity planning, transmission, distribution and the theft thereof, besides other issues.
Construction 2015: A review of South Africa’s construction sector (PDF Report)
Creamer Media’s Construction 2015 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; the key participants in the sector; local construction demand; geographic diversification;...
Liquid Fuels 2014 - A review of South Africa's Liquid Fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2014 Report examines these issues, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing, competition in the sector, the...
Water 2014: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2014 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
 
 
 
 
 
This Week's Magazine
Sappi Southern Africa CEO Alex Thiel
Forest products group Sappi has confirmed the selection of its 25 MW biomass-to-power project, to be erected at its Ngodwana mill, in Mpumalanga, as a preferred bidder under the South African government’s Renewable Energy Independent Power Producer Procurement...
Information and communications technology (ICT) distributor DCC is making Windows- and Android-operating systems tablets available through retailers and education equipment suppliers to provide school children with affordable, high-performance education tools. The...
Another cement manufacturer is set to enter the Ugandan market, raising hopes that prices will come down and spur growth in the construction industry. National Cement, a Kenyan manufacturer, has unveiled plans to invest $195-million in a new manufacturing plant in...
With growth rates exceeding that in the developed world – at an average of between 4% and 5% between 2002 and 2014 – African countries provide investors with ample reason to tap into booming consumer demand says Manufacturing Circle executive director Coenraad...
The South African Chamber of Commerce and Industry’s (Sacci’s) Business Confidence Index (BCI) decreased by 3.7 index points month-on-month to 89.1 in March.
 
 
 
 
 
 
 
 
 
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
Subscribe Now for $96 Close
Subscribe Now for $96