Rudolf Fourie, chief executive of Raubex, said on Monday that it had reached agreement to mentor Enza Construction and Emso Construction, but was waiting for approval from the Competition Commission before it formally started engaging with the two firms.
Fourie added that it was a requirement of the VRP that companies first obtained approval from the commission before commencing with the development initiatives in the VRP to ensure the construction companies were not again accused of collusion.
Seven listed construction companies agreed to collectively contribute R1.5 billion for development projects and committed to promote transformation and black participation and ownership in the sector in terms of the VRP, which also settled any claims and potential claims for damages these companies faced from certain public entities.
A civil damages claim for R84.2 million had earlier been lodged against Raubex and several other companies for collusion and bid-rigging by the SA National Roads Agency (Sanral). In terms of the VRP agreement, Raubex agreed to pay R15 million a year for 12 years to a development trust and to embark on transformation initiatives.
This led to Raubex’s operating profit, including a R119 million non-recurring expense in the year to February, declining by 6.9 percent to R661.7 million from R710.6 million.
However, operating profit before the VRP expense increased by 10 percent to R781.6 million from R710.6 million.
Raubex on Monday reported a 14.8 percent growth in headline earnings a share before the VRP expense to 269.1 cents in the year to February from R234.4c in the previous year.
Revenue rose by almost 14 percent to R9.01 billion from R7.93 billion.
Cash flow from operations improved by 16.5 percent to R1.22 billion from R1.05 billion.
A final dividend a share of 45c was declared, compared with the 42c dividend declared in the previous year.
Raubex’s order book at year-end was marginally lower at R8.03 billion, compared with R8.27 billion in the previous year.
Read also: Raubex halts Zambia contract over debt
Fourie said the group’s strong operating results were supported by a consistent supply of bitumen, which enabled a strong recovery in the group’s road surfacing and rehabilitation division.
The group’s results were impacted by an R18.3 million foreign exchange loss in Mozambique while the Zambian Road Development Agency owes the group R154.1 million for work already done on the suspended Link 800 road contracts.
Fourie said the total value of the Link 800 road contracts was R1.3 billion, of which R850 million was outstanding.
He said the suspension of work on the contract resulted in Raubex pulling back its resources, which affected 36 expatriates and 300 local Zambia works.
Fourie said the client was positive it would get a bailout from the International Monetary Fund and if and when that happened the contract would resume.
He added that Raubex was in a similar situation with the Zambian Road Development Agency a few years ago when it was owed R200 million and the outstanding amount was subsequently paid in full with interest.
Fourie said Raubex had a typical crushing operation in Mozambique, but had pulled its plant out of the country.
“We battled to get paid and felt the risk was too high,” he said.
Fourie was bullish about Raubex’s prospects, adding the increase in Sanral’s maintenance budget from R13 billion to R15 billion bodes well for both its road surfacing and rehabilitation and road construction divisions. He said the materials division was expected to continue to enjoy favourable operating conditions in both the commercial aggregate market and the mining sector, while the infrastructure division’s order book had shown growth in the affordable housing sector.
Raubex shares rose 3.96 percent on the JSE to close at R24.95.