Austrian company that brought you e-tolls takes some pain as ANC talks scrapping system

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.

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Read: It’s final – e-tolls will be scrapped:
ANC