Government recently awarded Build Trust Construction Limited a K95 million project for the tarring of selected urban township roads in Sinda District of the Eastern Province.Here works on Great East -Chassa road going on

Raubex has taken steps to reduce the risk from its R1.2 billion greenfields road construction contract in Zambia.

The listed road construction and rehabilitation company reported yesterday that trade and other receivables increased by 23.9% to R1.51bn in the six months to August from R1.2bn in the previous corresponding period.

This was partly because of payments due from the Zambia Road Development Agency on the Link 8000 contracts awarded to Raubex.

These two contracts in the North-eastern part of Zambia involve the construction of 200km of new roads.

Rudolf Fourie, the chief executive of Raubex, said yesterday that the “good news” was that the Zambia Road Development Agency had made two “quite substantial” payments after the end of the reporting period.

Fourie said the agency still owed Raubex 37 million Zambian kwacha (R40m) but had assured Raubex in meetings that it would continue paying.

He said Raubex was managing its exposure and had told the agency that if it skipped payment it would terminate the contract.

Raubex warned last month that the significant devaluation of the Zambian kwacha would impact on the future profitability of these contracts if the currency remained at current levels and was negotiating measures with the agency to mitigate the exchange rate risk and support the successful completion of the contracts.

Fourie said there was a built-in 30 percent escalation formula for inflation in the contract, which had been agreed with the agency, and Raubex had been able to “pull back a lot of the exchange rate loss”.

“That means we will be able to complete the contract profitably. We have given the market guidance of a 15 percent margin and we should be able to attain that.”

Fourie said Raubex had also proposed that the contract be converted to rand because “we are uncomfortable with what the currency (kwacha) is doing at the moment”.

He said the agency had made a recommendation to the Treasury in this regard and was waiting for a response.

Fourie confirmed the contract still had two years to run and Raubex was on schedule to complete it on time.

He confirmed Raubex continued to look for acquisitions in the materials sector in both South Africa and southern Africa, noting it was considering a number of acquisitions and one small acquisition in the Western Cape was imminent.

Raubex yesterday reported a 5.3 percent increase in headline earnings a share to 107.0c in the six months to August.

Revenue rose by 4.3 percent to R3.89bn from R3.73bn.

Operating profit improved by 9.5 percent to R329.3m from R300.8m.

An interim dividend of 36c a share was declared, which was 2.8 percent higher than the 35c dividend declared in the prior period. The order book grew 9.3 percent to R8.24bn from R7.54bn.

Fourie said the first half of the year was marked by another consistent performance from the group under challenging industry conditions and in spite of unplanned refinery shutdowns that affected local asphalt operations.

He said the materials division continued to perform strongly during the period and Raubex had established a presence from which to grow in Botswana through the acquisition of Belabela Quarries.

“Our order book is solid and we anticipate an improved performance in the second half of the year supported by the materials division, a stabilised asphalt production environment and the execution of various solar projects in progress,” he said.

Shares in Raubex rose 2.37 percent to close at R16, which valued the road construction and rehabilitation company company at R3.1bn.

BUSINESS REPORT

Source:IOL

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2 COMMENTS

  1. This is what happens in a collapsing economy. Nobody has faith in the currency and the govt’s ability to pay. I am wondering what the Eurobond sucker financiers are now thinking.

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  2. This partly explains why the Kwacha is on a slippery slope….most of our Forex earnings are being externalized by the South Africans and Chinese who have taken over the construction industry – its a shame!

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