Access Engineering set to secure largest overseas project

• To bag 14mn euro sub-contract for steep overpass in Kenya
• Spanish firm Centunion finalising agreement to award sub-contract
• Project size and structure similar to 363 metre Rajagiriya flyover

By Nishel Fernando

Access Engineering PLC is en route to secure its largest construction contract outside Sri Lanka worth of 14 million euros to design and construct substructures for a Spanish-funded steel overpass for vehicles in Nairobi, Kenya, as the firm eyes business expansion in East Africa. 

The Council of Ministers of Spain recently selected the top Spanish engineering firm Centunion S.A. as the main contractor for the 23.25 million euro project which would be financed through a refundable credit scheme under the FCPJ Company Internationalization Fund (FIEM) of Spain.  Speaking to Mirror Business, Access Engineering PLC Managing Director Christopher Joshua confirmed that Centunion is finalising the agreement to award the sub-contract to design and construct a substructure of the steel overpass to Access Engineering PLC.

“It’s in the final stages. We should get the contract within the next quarter,” he said.  Joshua remarked that the size and the structure of the project would be similar to the 363-metre long Rajagiriya flyover for which Access Engineering constructed the steel substructures.

Access engineering earlier completed three flyovers as a solution to the heavy traffic congestion in Ganemulla and Polgahawela as the sub-contractor to Centunion, in addition to Rajagiriya. 

“We have very good relationship with them and they also know about the quality of our work and performances. Hence, they have invited us to undertake the project to construct the substructures,” Joshua said.

Access Engineering plans to complete the construction of the substructures in 24 months, once the sub-contract is awarded. 

Access Engineering PLC, Chairman, Sumal Perera said Access Engineering is looking at expanding its operations to the African continent, in particular East African Region.

Joshua said that a team from Access Engineering will visit Kenya shortly and the firm will register their business in Nairobi.

While noting that the 14 million euro project would be the largest project to be undertaken by Access Engineering outside Sri Lanka, he said the firm earlier entered into deals with China Harbour for the Port Lae Tidal Basin Phase I development project in Papua New Guinea and with China Merchants in the Republic of Djibouti for a feasibility study. 

Access Engineering has already setup a branch office in the Free Zone of the Republic of Djibouti. 

Joshua said Access Engineering is actively pursuing opportunities in infrastructure and construction projects in East Africa.  

Meanwhile, Access Engineering under its subsidiary Access Realities is planning to register a special purpose Board of Investment (BOI) company to commence the construction of the Rs.8 billion Access Tower 3 adjoining Access Tower 2.

Joshua said they have received a letter from the Urban Development Authority (UDA) awarding the 114.56 perch land, which was approved by the Cabinet of Ministers last year.

He said the same architect and the design team which undertook tower one and two has been awarded the design contract for the new tower, while Access Engineering is most likely to undertake the construction of the project.

The new tower is expected to add approximately 300,000 sq.ft. of Grade A office space to Colombo’s commercial real-estate market in three years. 

Commenting on Access group’s other real-estate development projects, Joshua said the 242-unit Capital Heights luxury apartment project and Marina Square mixed development project are progressing to complete construction on schedule while recording healthy pre-sales.

Marina Square which comprises of 1,068 condominium apartment units and commercial space has recorded a pre-sale rate of over 25 percent. The project is scheduled to be completed in 2021.

“We have almost completed the piling and we are in process of finalising the contract for the super structure. We are planning to launch the show-flats in six months,” Joshua said. 

He also noted that the Capital Heights project is on schedule to be completed in 2020 with over 40 percent of the apartments units already sold. 

Construction and property development lift 3Q

Access Engineering PLC reported higher revenues and profits for the quarter ended in December 2018 (3Q19). The performance was propelled by the group’s construction business and the property development arm, the interim results showed.  

Access Engineering reported earnings of 66 cents a share or Rs.659.3 million for the October – December quarter, more than doubling from the 30 cents a share or Rs.304.5 million reported for the year earlier period. 

The revenues for the period also rose by 15 percent year-on-year (YoY) to Rs. 7.95 billion while the cost of sales rose by a faster 11.2 percent YoY to Rs.6.63 billion, resulting in a gross profit of Rs.1.32 billion, up 38 percent YoY.

The operating profit for the group was Rs.1.02 billion compared to Rs.496.9 million a year ago.

Meanwhile, for the nine months ended December 31, 2018, the group reported earnings of Rs.1.65 a share or Rs.1.65 billion in total profits compared to Rs.1.20 a share or Rs.1.21 billion reported for the same period a year ago, which is an increase of 36.4 percent. 

The group revenue led by the construction segment was Rs. 21.6 billion, up 13.4 percent YoY.

Access group did not expect its key construction sector to maintain higher profits as the construction sector profits were subject to 28 percent tax from April 1, 2018 from a subsidized rate of 12 percent which the sector hitherto enjoyed. 

During the nine months, the group’s construction sector operating profits rose to Rs.2.13 billion from Rs.1.24 billion a year ago. 

The construction sector materials business of the group increased its profits to Rs.339.4 million from Rs.245.6 million a year ago. 

The group’s property development unit reported profits of Rs.436.8 million against Rs.154 million a year ago. 

The group banks much of its future growth on the prospects of this sector. 

Meanwhile, the group’s automobile business segment run by Sathosa Motors PLC and SML Frontier Automotive (Private) Limited saw a decline in operating profits to Rs.303.3 million from Rs.569.0 million, despite a slight growth in the revenues.