Kapsch Trafficcom – the Austrian company that brought e-tolling to South Africa and subsequently took over the collection of the fees – has announced that it will be taking a revenue knock in the first quarter of the year, due to “certain current projects”.
In a statement to investors on Tuesday, Kapsch said that it had to adjust its revenue target downward for the first quarter. Kapsch is now expecting revenues of about EUR 158 million and EBIT of about EUR 7 million.
“The main reason for the weaker results of the first quarter 2018/19 are deferments in certain existing projects,” it said.
“Based on these lower than expected values, the company lowers the outlook for the current fiscal year 2018/19. Revenues and EBIT should reach previous year’s levels (revenues: EUR 693 million, EBIT: EUR 50 million).”
Initially a growth of 10% was forecasted for both figures.
While the group does not mention the South African e-tolling project by name as the main cause for this slump, the announcement comes in the same week that the ANC said it took a decision to finally scrap the controversial system and come up with an alternative.
According to newly elected deputy chairperson of the ANC in Gauteng, Panyaza Lesufi, who was speaking to Talk Radio 702’s Karima Brown on Monday (23 July), the people of Gauteng are still opposed to e-tolls, and that many have advised that the system is in need of a complete overhaul.
He said that following recent conference talks, the Gauteng ANC planned to publish a formal stance on the termination of e-tolls sometime in August 2018.
E-tolling in South Africa has been widely rejected by Gauteng motorists, with the scheme seeing declines in revenue collection and compliance levels. The system, which launched in December 2013, has never reached the levels of compliance from motorists that would make it viable.
Kapsch has repeatedly put a positive spin on the e-toll troubles, with even its latest full year report (to March 2018) saying that toll collections have been higher than expected. However, the numbers speak for themselves.
South Africa’s e-toll project has consistently been the biggest liability on Kapsch’s books, and the system, including collection, is by far the biggest project it has in its portfolio.
The Gauteng e-toll project sits as a EUR34.2 million contingent liability in its books, with the company having almost 1,590 people employed in South Africa – the largest staff count across all its operations.
In the 2017/18 financial year, the group’s largest revenue contribution of EUR 346.8 million (2016/17: EUR 307.1 million) was again generated in the EMEA region – with nation-wide toll collection projects in the Czech Republic, Poland, Belarus, Austria and South Africa.
However, Kapsch noted that its financial results deteriorated in the fiscal year from EUR 0.4 million in the previous year to EUR -5.2 million. The main reason for this was a decline in currency gains of EUR -4.6 million, primarily in connection with the US dollar (USD) and the South African rand (ZAR), showing what impact South African concerns have on the numbers.
The e-tolling system was and remains backed by the South African government – so taxpayers remain on the hook for the development costs of building the systems. However, the toll revenues that would have been collected by ETC – the toll collection company wholly owned by Kapsch – will dry up if the system is scrapped.
If Kapsch is stressed, however, it is not showing it. “The general order situation of the company remains positive,” it said.
The group’s share price on the Vienna stock exchange took a knock on Tuesday, dropping 5.4% from EUR 40.15 to a intraday low of EUR 38.00. It closed the session at EUR 38.30.