Civil engineering group Protech, which filed for business rescue over the weekend, disclosed in March that its loss “has to a large extent resulted from difficulties experienced in completing a mining infrastructure project in the DRC.”
Protech has a 33.33% stake in a joint venture which it is executing with “a leading South African construction company”. According to its 2013 Integrated Report the other partners are Group Five and Societe Africaine de Construction Au Congo (SARL).
Group Five is in a closed period and would not comment on the issue.
In its March announcement, Protech said it became aware of payment disputes and cost over-runs relating to the project in November last year and it was now anticipated to make a loss.
The Integrated Report shows that at February 28 last year Protech’s interest in the joint venture consisted of R17m of non-current assets, R129m in current assets, and R218m in income. However, it also had R126m in current liabilities, R187m in expenses and a negative cash utilisation of R9m.
Olof Bergh, analyst of Sanlam Private Investments said while Group Five’s involvement is of concern, it is not overly exposed to the rest of Africa. About 18% of Group Five’s construction order book is situated across the Limpopo; the rest is local.
“It should not be an overly negative influence (on the group’s results),” he said.