May 28, 2012
Protech moves to loss as African projects falterBack
Construction|DRC|Engineering|Africa|Civils|Concrete|Mining|PROJECT|Projects|Protech|Readymix|Resources|Road|Africa|DRC|Sierra Leone|South Africa|Tanzania|Zambia|Building|Contracting|Energy|Lesser-known Mining|Transport|Sierra Leone|Sierra Zambia|Environmental|Anthony Page|Infrastructure|Rail
© Reuse this
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.
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.
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.
“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.
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
Recent Research Reports
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.
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.
This Week's Magazine
The international Square Kilometre Array (SKA) radio telescope – which is to be jointly hosted by South Africa and Australia with, later, outstations in other countries – may not yet exist, but international scientific working groups are already deciding what...
A free Web-based solar power plant capacity-planning tool offers project planners and developers, as well as governments, a means to assess the solar energy potential of thin-film solar PV power over an area of land. The tool was developed by thin-film solar...
As yet, no specific methodology, timeline or costs have been finalised to remedy the water ingress, excessive to contractual specifications, into the Gautrain tunnel between emergency shaft two (E2) and Park Station, says Bombela Concession Company technical and...
The “seriously disruptive” electricity outages in South Africa have cost packaging group Astrapak more than R2-million in “irrecoverable downtime costs”, the company said on Monday, adding that the power cuts were negating some of the benefit of energy saving...
Bakkies and more affordable cars dominated South Africa’s new vehicle market in 2014. Unaudited data from the Department of Trade and Industry (DTI) shows that South Africa’s most popular vehicle in 2014 was the Toyota Hilux, selling 37 562 units.