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Pretoria - Late payments by government clients are a threat to low-cost housing specialist Sea Kay's continued existence as a going concern.
The auditors of the firm have warned serious cash flow problems are causing "considerable doubt" about the company's ability to continue operating as a viable business.
Executive director Pieter van der Schyf said these problems can be attributed directly to late payments by government clients, but feels that Sea Kay should be over its troubles before the end of February.
The auditors' statement comes after repeated requests by Sea Kay directors for government to speed up its payments, and despite an undertaking by President Jacob Zuma that companies doing business with the state will be paid within 30 days.
"We do not want to quarrel in the media with the government, which is our biggest client, but we are bound by the JSE's rules. Shareholders are entitled to know what's going on," Van der Schyf said.
He said the company has requested speedier payment up to cabinet level. In September, when it announced its annual results, Sea Kay said its debtor payment period had already gone down from 238 days to 161 days.
According to Van der Schyf, negotiations with authorities in the Western Cape on finalisation of the N2 Gateway project are at an advanced stage.
Biggest client, poorest payment record
Sake24 reported earlier that Sea Kay had sued the government for R144m in outstanding debt in connection with this project.
Van der Schyf hopes the problem will be resolved through independent arbitration by the end of January. If that happens, Sea Kay's cash flow will be sound again, he said.
In addition, the group will be able to go ahead with building a further 3 000 houses to the value of R400m in Delft, which forms part of the N2 Gateway.
Sea Kay has won R600m of new work for other clients in the Western Cape, and it can go ahead full steam with this if its cash flow improves, Van der Schyf said.
"Sea Kay is a fantastic business except that government, its biggest client, doesn't pay on time."
A further R100m owed by the Gauteng department of housing is still outstanding, Van der Schyf said.
Sea Kay at first considered taking the matter to court, but Van der Schyf said there have been strong indications from national and provincial government that the money will be paid in January or February.
- Sake24
For more business news in Afrikaans, visit Sake24.com.