DRC weighs on Protech earnings
JSE-listed Protech Khuthele fell into the red during the year to February as its project in the Democratic Republic of Congo (DRC) hampered performance.
The civil engineering and construction company said in a statement this week that it expected a loss a share of between 23c and 27c and a headline loss a share of between 24c and 28c for the 12 months to February, compared with the earnings a share of 4.4c and headline earnings a share of 3.9c achieved the year before.
The group attributed the loss to payment disputes and cost overruns, besides others, which emerged in November, as Protech’s 33.33% joint venture project moved to complete mining infrastructure in the DRC.
No further adverse effects were expected on the group’s profitability in future and with the imminent completion of the project, the company could end its foreign exposure in the short to medium term.
Protech added that the resolution of foreign tax issues and full impairment of long outstanding payments due on historical contracts also weighed on the financial results for the year under review.
However, Protech vowed a return to profitability as it secured 65% of the total anticipated turnover for the 2015 financial year.
“This work secured is inside South Africa with private mining infrastructure clients, public infrastructure clients and targeted subcontracting to other major South African contractors,” Protech said.
“The group’s income is less subject to sector and geographic concentration risk and is supported by a strong improvement in project delivery, with South African operations having achieved expected profit margins,” the group explained.
Liquidity was expected to remain tight until all payments due on the DRC project were paid during the next six months and the new secured work generated positive cash flow.
Protech would release its full-year results on May 26.
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