http://www.engineeringnews.co.za
  SEARCH
Login
R/€ = 13.04Change: -0.16
R/$ = 12.07Change: -0.10
Au 1204.60 $/ozChange: 1.40
Pt 1170.50 $/ozChange: 4.00
 
 
Note: Search is limited to the most recent 250 articles. Set date range to access earlier articles.
Where? With... When?








Start
 
End
 
 
And must exclude these words...
Close Main Search
Close Main Login
My Profile News Alerts Newsletters Logout Close Main Profile
 
Agriculture   Automotive   Chemicals   Competition Policy   Construction   Defence   Economy   Electricity   Energy   Environment   ICT   Metals   Mining   Science and Technology   Services   Trade   Transport & Logistics   Water  
What's On Press Office Tenders Suppliers Directory Research Jobs Announcements Letters Contact Us
 
 
 
RSS Feed
Article   Comments   Other News   Research   Magazine  
 
 
Aug 31, 2012

Group Five keen to accelerate African expansion beyond civils

Back
Construction|Engineering|Tshwane|Africa|Building|Civils|Eskom|Housing|Mining|PROJECT|Projects|Renewable Energy|Renewable-Energy|Resources|Africa|India|South Africa|Energy|Maintenance|Power Generation|Power-generation|Real Estate Sector|Service|Eric Vemer|Mike Upton|Power|Operations|Middle East
Construction|Engineering||Africa|Building|Civils|Eskom|Housing|Mining|PROJECT|Projects|Renewable Energy|Renewable-Energy|Resources|Africa||Energy|Maintenance|Power Generation|Power-generation|Service|Power|Operations|
construction|engineering|tshwane|africa-company|building|civils|eskom|housing|mining|project|projects|renewable-energy|renewable-energy-company|resources|africa|india|south-africa|energy|maintenance|power-generation|power-generation-industry-term|real-estate-sector|service|eric-vemer|mike-upton|power|operations|middle-east
© Reuse this



A“bittersweet year” is how Group Five CEO Mike Upton describes the 2012 financial year, which ended June 30, for the JSE-listed company.

It was a year that saw the company attempt to wrap up legacy projects in the Middle East and India, as well as close down a loss-making construction materials division.

When balancing out profit from conti- nuing operations at R223-million and loss from discontinued operations, such as construction materials, at R453-million, the JSE-listed construction group reported a net loss of R230-million for the year, following on from a loss of R159-million in the 2011 financial year.

Recording revenue of R8.78-billion for the year, Group Five’s operating margin dropped from 6.9% in the 2011 financial year, to 3.8% in 2012.

The civil engineering business, part of the construction division, took a heavy beating, at a –1.1% margin. However, should the troubled Middle East projects be stripped from this business’ results, the margin was 5.6%, says Upton, “well in line” with the group’s target of between 4% and 6%.

“The underlying business in South Africa and Africa is very healthy.”

Possibility of Improvement

Looking at civil engineering prospects in South Africa, Upton says despite tough conditions remaining, there exists the possibility of improvement. He says tender activity has picked up, but that “pricing is still tight”.

Africa has seen strong growth in the resources and transport sectors, adds Upton. The group also secured 13 new mining construction contracts on the continent in the 2012 financial year, with one power plant contract in progress, and one to start in the 2013 financial year.

Upton believes there is a strong market for the building and operating of assets in Africa, especially in the transport market.

He adds that Group Five has pretty much wrapped up work in the Middle East for the foreseeable future, with one active contract remaining.

“We want to drive our Africa plan,” he notes, not only for civils, but also for the rest of the group.

Around 57% of Group Five’s current R4.4-billion civil engineering order book is outside South Africa, with 99% of this in Africa, says Upton.

In the building and housing business, 5% of projects are outside South Africa, with the projects business, also part of the construction division, at 63% over- border activity, with Upton aiming to take this to 75%.

Group Five’s one-year construction order book was at R8.39-billion at the end of the 2012 financial year, which was 117% of its 2012 revenue.

Total order book was at R11.3-billion, with 62% of this in South Africa, and the remaining work spread across Africa. Around 23% of the order book was in the real estate sector and 24% in the transport market.

At 38% of total order book cross-border, up from 30% in June 2011, the aim was to reach 40% soon, says Upton.

A new order book for Group Five is a multiyear operations and maintenance order book, which stood at R4.85-billion for the year ended June 30.

Upton says the group expects to increase this annuity type revenue stream through the addition of power and service accommodation projects.

When considering the 2013 financial year, Upton expects an improved performance from the company.

Group Five currently employs some 10 400 people, down from a peak of 14 000 during the construction boom four years ago.

Patience Required for Renewable Energy, PPP Projects
South Africa’s R100-billion Renewable Energy Independent Power Producer Programme (REIPPP), as well as government’s public-private partnership (PPP) drive, are not delivering results quite as quickly as one would hope, indicates Group Five.

There are still “some frustrations” on South Africa’s PPP and REIPPP projects, especially in terms of the time it is taking, but Group Five is “not negative”, says Upton.

Through the REIPPP, the Department of Energy aims to procure 3 725 MW of capacity, which could be introduced into South Africa’s power generation mix between 2014 and 2016.

The department said in July that the schedule and capacity allocation for the third bid window under REIPPP would be confirmed soon, despite the delay to finalise the 28 window-one projects.

Upton tells Engineering News that the REIPPP process appears to be bogged down by its complex nature, requiring the input of a multitude of stakeholders, such as the Department of Energy, Eskom, Treasury and many others.

Each project is also unique in terms of technology, structure and funding, adds Upton.

“We were told that the first project would be signed in late August.”

The PPP process is facing a similar complexity delay, notes head of Group Five’s investments and concessions divi- sion, Eric Vemer.

Group Five is the preferred bidder to provide serviced headquarters to the City of Tshwane and the Department of Rural Development and Land Reform (DRDLR).

“We have to align the interests of a number of parties,” says Vemer.

While the parties are “best aligned” on the DRDLR project, achieving the same on the Tshwane project was proving a difficult task, he adds.

Edited by: Martin Zhuwakinyu
© Reuse this Comment Guidelines (150 word limit)
 
 
 
 
 
 
 
 
Other Construction News
Updated 42 minutes ago With Africa holding 60% of the world’s arable land, agriculture held one of the keys to unlocking economic opportunities for the continent, but could only be achieved through cooperation with other countries in regions such as Asia. Speaking at the Asia–Africa...
Updated 1 hour 26 minutes ago JSE-listed Consolidated Infrastructure Group (CIG) on Tuesday reported a 26% year-on-year increase in revenue to R1.7-billion for the six months ended February 28, while its aftertax profit grew by 36% year-on-year to R164-million. The higher profit was driven...
Updated 3 hours ago The developers behind the large-scale mixed-use residential development, the “holistic” R20-billion Coega Ridge housing estate, outside Port Elizabeth, in the Eastern Cape, have confirmed that the project remains on track to break ground in 2018 and will likely slash...
More
 
 
Latest News
Updated 41 minutes ago With Africa holding 60% of the world’s arable land, agriculture held one of the keys to unlocking economic opportunities for the continent, but could only be achieved through cooperation with other countries in regions such as Asia. Speaking at the Asia–Africa...
Updated 1 hour 18 minutes ago Business process outsourcing (BPO) industry association Business Process enabling South Africa (BPeSA) has appointed Tebogo Molapisane as its new CEO, following the relaunch of the national organisation. Molapisane has been involved in the contact centre industry for...
Updated 1 hour 25 minutes ago JSE-listed Consolidated Infrastructure Group (CIG) on Tuesday reported a 26% year-on-year increase in revenue to R1.7-billion for the six months ended February 28, while its aftertax profit grew by 36% year-on-year to R164-million. The higher profit was driven...
More
 
 
Recent Research Reports
Steel 2015: A review of South Africa's steel sector (PDF Report)
Creamer Media’s Steel 2015 report provides an overview of the key developments in the global steel industry and particularly of South Africa’s steel sector over the past year, including details of production and consumption, as well as the country's primary carbon...
Projects in Progress 2015 - First Edition (PDF Report)
In fact, this edition of Creamer Media’s Projects in Progress 2015 supplement tracks developments taking place under the Renewable Energy Independent Power Producer Procurement Programme, which has had four bidding rounds. It appears to remain a shining light on the...
Electricity 2015: A review of South Africa's electricity sector (PDF Report)
Creamer Media’s Electricity 2015 report provides an overview of State-owned power utility Eskom and independent power producers, as well as electricity planning, transmission, distribution and the theft thereof, besides other issues.
Construction 2015: A review of South Africa’s construction sector (PDF Report)
Creamer Media’s Construction 2015 Report examines South Africa’s construction industry over the past 12 months. The report provides insight into the business environment; the key participants in the sector; local construction demand; geographic diversification;...
Liquid Fuels 2014 - A review of South Africa's Liquid Fuels sector (PDF Report)
Creamer Media’s Liquid Fuels 2014 Report examines these issues, focusing on the business environment, oil and gas exploration, the country’s feedstock supplies, the development of South Africa’s biofuels industry, fuel pricing, competition in the sector, the...
Water 2014: A review of South Africa's water sector (PDF Report)
Creamer Media’s Water 2014 report considers the aforementioned issues, not only in the South African context, but also in the African and global context, and examines the issues of water and sanitation, water quality and the demand for water, among others.
 
 
 
 
 
This Week's Magazine
Today’s organisations execute projects within increasingly complex environments – particularly in the engineering sector. The ability to successfully execute these projects is what drives the realisation of successful projects and, ultimately, the achievement of...
SMART DISTRIBUTION Providing funds to introduce smart grid technologies in the absence of a clearly defined strategy will not result in the desired outcome
South Africa’s distribution grid is a twentieth-century relic, which must be changed to serve the country’s modern electricity needs, says South African National Energy Development Institute (Sanedi) Smart Grid Programme manager Dr Minnesh Bipath. “What we are...
There is a disparity in government funding provided to integrated transport networks – bus rapid transit (BRT) networks ¬¬– and that given to conventional bus services, says Putco executive director Thys Heyns. “We have neglected and strangled conventional bus...
The Johannesburg Social Housing Company (Joshco) is building 502 rental housing units, valued at R200-million, in Dobsonville, Soweto, which are scheduled for completion in June 2016.
Automotive component manufacturer and distributor Metair is centralising its research and development (R&D) work in Turkey, in an attempt to bolster the company’s ability to produce affordable start/stop batteries. The new R&D centre is part of an expansion plan in...
 
 
 
 
 
 
 
 
 
Alert Close
Embed Code Close
content
Research Reports Close
Research Reports are a product of the
Research Channel Africa. Reports can be bought individually or you can gain full access to all reports as part of a Research Channel Africa subscription.
Find Out More Buy Report
 
 
Close
Engineering News
Completely Re-Engineered
Experience it now. Click here
*website to launch in a few weeks
Subscribe Now for $96 Close
Subscribe Now for $96