Roy Cokayne
LISTED Esor has retrenched 250 employees, including 23 salaried staff, at a cost of R12.1 million as the group was restructured into one construction unit with a focus on six product areas as part of a strategy to return the group to profitability.
Wessel van Zyl, the chief executive of Esor, said yesterday that 90 percent of the retrenchments were in the group’s civils division, which also related to the completion of major contracts, but it was still a material employer with a workforce of more than 2 500 people.
The group’s focused product areas are building/housing, developments, infrastructure, pipe services, pipelines and sanitation.
Van Zyl said part of the reason for its retrenchments and the current state of the construction industry was the industry geared itself up for the government’s R900 billion infrastructure expenditure programme, which had not happened. He said contracts were being awarded, but the total amounted to between R200bn and R300bn, and not R900bn.
Esor yesterday reported an almost 40 percent narrowing in loss to R99.89m for the year to February from the R166.16m loss in the previous year. Van Zyl said the results were impacted by the impairment of goodwill of R29.7m and the fair value write down of the contingent consideration from the disposal of the geotechnical business of R35.4m and the operating loss of R48.3m reported in the civils division.
Revenue fell by 9.1 percent to R1.448bn from R1.59bn.
Van Zyl said revenue was impacted by the group consolidation, the conscious decision a year ago not to chase revenue and loss-making contracts.
The headline loss a share increased to 18.8c from 11.3c, but for continuing operations improved to 18.8c from 24.4c. Cash generated by operations improved to R111.69m from the R88.2m the previous year.
Van Zyl said major problem contracts had now been completed, handed over and resolved and with a two-year stable order book of R1.9bn in hand, Esor’s management had its sights firmly set on future profitability.
He said Esor would selectively go into Africa because there was a lot of opportunity.
Esor shares rose 10 percent to close at 22c yesterday.