South African construction firm Esor makes profit comeback

South African construction firm Esor makes profit comeback
South African construction firm Esor makes profit comeback

Construction Company Esor has jumped back into the profit making league profit in the financial year to end-February, according to a reported released on Thursday, 26 May.

Esor recorded an after tax profit of US$234000 up from the previous year’s US$635.5 loss. There was a slight decline in revenue to US$91.6 million from US$92.2 million which the company says it was as a result of delays experienced in awarding the contract for the Diepsloot mixed-use housing development project.

Come the end of February, Esor’s work on hand was at US$108.2 million. It is still highly dependent on government contracts, with 86% of the revenue secured from national, provincial and local government and parastatals.

Esor further said that it completed the two reconstruction and development programme (RDP) housing development projects in KwaZulu-Natal, which was used as a learning curve for the company.

Unfamiliar terrain, new and unreliable subcontractors and the delay in start-ups let to a US$1 million loss in the 2016 financial year but was largely absorbed in the interim results.

According to Esor’s chairman, Bernie Krone, the company has reassessed its approach to RDP housing development projects and aligned its operations with Bigen Africa, a consultancy firm that designs RDP houses, and have decided to submit joint proposals.

Once successful, it is expected to reduce the company’s risk to delivery by Bigen Africa taking over the role of implementation and taking responsibility for the whole process.
Delays at Diepsloot persisted as a result of environmental objections, which were overruled post year-end and the project has been carried on to the final stages of township layout and approvals.

In terms of the agreement with property developer Calgro M3, Esor is due a payment of US$1.5 million by November, regardless of the project progress at that time.