Esorfranki would pay a R115 850 fine in the Competition Commission’s investigation into collusion in the South African construction industry, said Esorfranki CEO Bernie Krone on Monday.

This was substantially less than the penalties reported earlier by larger competitors Raubex and Stefanutti Stocks, fined R58.8-million and R323-million respectively.

Krone said Esorfranki was found guilty on one matter, and had already “signed the cheque”.

However, the civils, geotechnical and pipelines group was not yet in the clear.

The Competition Commission’s investigation into alleged anticompetitive behaviour in the piling and drilling markets had been referred to the Competition Tribunal, following a failed settlement offer, but negotiations were reopened post financial year-end.

The Esorfranki board was convinced an estimated penalty provision made in a previous financial year, would suffice, noted Krone.

This provision was around R6-million, he added, while Esorfranki believed the penalty should be more in the order of R2-million.

This investigation related to events prior to 2005.

Esorfranki on Monday reported a 31.3% increase in revenue, to R2.3-billion, for the year ended February 28, compared with the previous financial year.

Profit after tax was up 382% to R87.7-million.

The order book increased by 43.7% to R2.5-billion, up from R1.8-billion.

Operating cash decreased, however, by R60-million to R33.6-million.

Krone attributed this drop to the group’s strategy to invest in property developments in order to secure a project pipeline.

He added that Esorfranki was “quite pleased” with the growth in the order book.

He noted that the group was attempting to secure more larger, longer-term civil contracts, rather than the shorter-duration contracts which were currently the norm. Another goal was to improve the company’s black-economic empowerment (BEE) status from level 4 to level 3 by the end of June, with Esorfranki in discussions with a BEE investment consortium on the acquisition of ordinary shares within the group.

Krone said Esorfranki had already lost a contract owing to its level 4 status.

He added that it was also a stated goal of the group to move away from government business into more private sector developments, with continued expansion into Africa also on the table.

Government contracts in the geotechnical division, for the financial year ending February 28, decreased to 16% of work, down from 33% in the previous year, while also dropping to 55% in the civils division, down from 77%.

Government remained the sole client in the pipelines division.

Esorfranki earned 18% of its revenue outside South Africa in the past financial year, largely from the geotechnical division, with Krone keen to increase this number.

Following 20 years on the continent, the geotechnical division had operations in Angola, Ghana, Mauritius, Zimbabwe, Tanzania and Mozambique.