A R10 million contract to provide piling for the R650 million Tata Ferrochrome Smelter Plant in Richards Bay has boosted Esor Limited's order book to R94 million, the lion's share of its forecast revenue for 2007. Esor now has more than 70% of the R130 million forecast revenue for 2007 under its belt four months into the financial year.
CEO Bernie Krone says: "Our participation in a large-scale foreign direct investment project of this nature reflects our position as one of the country's leading piling contractors." With the smelter having recently received final environmental clearance, construction is due to commence shortly and Esor's piling will start at the end of the month.
The Tata Steel contract comes on the back of a number of recent contract awards which have helped swell Esor's order book. "With the current rate of contracts on our order book we look set to beat our forecasts for the 2007 financial year," says Krone.
Commercial and infrastructural projects in Gauteng include Esor's R10,9 million earthworks, lateral support and piling contract for the Hatfield Precinct in Pretoria. Krone says that the increasing demand for office space has also seen a number of office development projects for Esor, particularly in the Sandton area where it recently completed a R2 million contract for the Sandhurst Towers and 1 Sandton Close. "Similar piling projects in the area valued at R5,4 million are currently underway."
Contracts outside of Gauteng include ongoing piling for bridges in Coega and the municipal stormwater outfall pier at Umhlanga.
"We are particularly pleased to be cementing our national footprint with the new contracts ranging geographically across the country," says Krone. While many of the contracts are private sector, he adds that Esor continues to benefit from government and municipal increase in infrastructure spending, for instance Esor's R9 million project for Johannesburg Water and the upcoming slope stabilisation projects on the N1 highway between Mikhado and Mazekwaspoort.
"We are continuing our discussions with a number of potential BEE partners with the aim of achieving charter compliance at 25,1% shareholding in the near future," says Krone. A strong BEE shareholding would stand the group in good stead to further benefit from the increased government infrastructure spending.
The group's maiden annual results after its Altx listing on 14 March 2006 exceeded its pre-listing forecasts. Net profit to February 2006 was up 120% to R13,3 million, ahead of the R11,9 million forecast in the pre-listing prospectus. Group revenue, originally forecast at R117,3 million, increased 25.3% over 2005 to R125,4 million.
Esor's share closed yesterday at R1,77.
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