Group Five seeks more work abroad, in private sector
Engineering|Africa|Design|PROJECT|Project Management|Projects|Water|Africa|South Africa|Energy|Energy Sectors|Mining|Transport|Infrastructure|Mike Upton|Power|Water|Ricoh R10 Digital Camera|Middle East
© Reuse this
Group Five was seeking a return to a “nice mix of public and private work such as before the super-boom”, said CEO Mike Upton on Thursday as he announced the company’s results for the six months ended December 31.
He was also in favour of procuring more work abroad.
Upton said this was driven by the fact that there had been a slowdown in the South African public infrastructure sector, punctuated by a 12-month hiatus in public utility contract awards.
He said several factors conspired to make this hiatus happen, including last year’s election, a new administration taking office, an erosion of the tax base, a global recession, an inherent lack of capacity in government departments to execute projects, as well as the fact that parastatals had to raise their own debt financing in a difficult market.
This all meant that the public sector was “not such as big theme” for Group Five as 12 or 18 months ago, said Upton.
Instead, the group was focusing on growth opportunities in the Middle East, and in Africa’s mining and energy sectors, including South Africa’s burgeoning private power sector.
However, Upton added that the South African government’s water, power and transport sectors were still big spenders.
He noted that the company’s civil engineering order book constituted 61% local business by the end of August 2009, but that it had now shifted to 48% by February this year.
Also, by February, around 62% of Group Five’s full order book was local public sector work, down from 80% in August 2009. Cross-border work was at 25% of order book, which Upton wanted closer to 40%.
The group’s order book was at R10,5-billion in February, down from R11,5-billion in August.
When considering a pipeline of possible projects across all sectors, Upton said the group could secure around R36-billion of work in a multiyear pipeline valued at R116-billion, which would translate into a base-load of work at R10-billion a year.
Group Five recorded a 4% drop in revenue to R5,7-billion for the six months ended December 31 compared with the same period in the previous financial year.
Operating profit was up 6% to R399-million, fully diluted headline earnings a share increased by 8%, with operating margin up from 6,3% to 7%.
Upton believed it was possible for the group to protect its margin through tackling larger multidisciplinary projects requiring design and project management capabilities, further cost savings, a further reduction in loss-making projects, and greater international exposure, as international projects carried higher margins than local projects.
Edited by: Creamer Media Reporter
© Reuse this
Comment Guidelines (150 word limit)
Other Construction News
JSE-listed Intu Properties has replaced an existing £375-million facility, set to expire in November 2018, with a new corporate £600-million revolving credit facility (RCF). In an update to shareholders on Friday, the company explained that the new facility had a...
Now in its third year, the 2014 Nedbank Capital Sustainable Business Awards has recognised African businesses that have succeeded in balancing economic profitability with sustainable business practices, challenging companies in major industries to rethink the way...
The retail price of 95-grade petrol in South Africa will drop by 45 cents or 3.3 percent a liter from next Wednesday, while wholesale diesel will decrease by 4.9 percent, the government said on Friday. Petrol will cost 13.16 rand ($1.20) a liter while the wholesale...
Special purpose vehicle GreenCape will, by the end of 2014, make an application to the Department of Trade and Industry (DTI), the Western Cape provincial government and the City of Cape Town to declare Atlantis, on the Western seaboard, a special economic zone...
The German government has committed a further R70-million towards the second phase of the Non-Motorised Transport (NMT) programme. The NMT programme forms part of the Department of Environmental Affairs’ 2010 FIFA World Cup National Greening Legacy Programme.
Recent Research Reports
Defence 2014: A review of South Africa's defence industry (PDF Report)
Creamer Media’s Defence 2014 report examines South Africa’s defence industry, with particular focus on the key participants in the sector, the innovations that have come out of the sector, local and export demand, South Africa’s controversial multibillion-rand...
Road and Rail 2014: A review of South Africa's road and rail infrastructure (PDF report)
Creamer Media’s Road and Rail 2014 report examines South Africa’s road and rail transport system, with particular focus on the size and state of the country’s road and rail network, the funding and maintenance of these respective networks, and the push to move road...
Real Economy Year Book 2014 (PDF Report)
This edition drills down into the performance and outlook for a variety of sectors, including automotive, construction, electricity, transport, steel, water, coal, gold, iron-ore and platinum.
Real Economy Insight: Automotive 2014 (PDF Report)
This four-page brief covers key developments in the automotive industry over the past 12 months, including an overview of South Africa’s automotive market, trade figures, production and the policies influencing the sector.
Real Economy Insight: Construction 2014 (PDF Report)
This five-page brief covers key developments in the construction industry over the past 12 months. It provides an overview of the sector and includes details of employment in the sector, infrastructure and municipal spending, as well as insight into companies’...
Real Economy Insight: Electricity 2014 (PDF Report)
This five-page brief covers key developments in the electricity industry over the past 12 months, including details of State-owned power utility Eskom’s generation activities, funding and tariffs, independent power producers and prospects for the sector.
This Week's Magazine
In the next 20 years, it was expected that, in Africa, more people would live in cities and towns than in rural areas, United Nations Habitat executive director Dr Aisa Kirabo Kacyira said at the Human Settlements Indaba that took place earlier this month in...
Tough-talking Human Settlements Minister Lindiwe Sisulu has committed government to building 1.5-million low-cost houses over the next five years, telling the Human Settlements Indaba in Johannesburg on Wednesday that the State would achieve this target through the...
Over the past 20 years there has been persistent concern about deindustrialisation in South Africa, as well as the fact that locally produced manufactured products have been increasingly displaced by imports.
Financial agreement for Ghanian independent power producer (IPP) Cenpower Generation Company’s $900-million, 350 MW combined-cycle gas-turbine power plant was finalised earlier this month, paving the way for the project’s construction to begin before 2015 in Tema,...
The revenue implications for South Africa of ‘base erosion and profit shifting’ by corporate taxpayers are firmly in the crosshairs of the Davis Tax Committee (DTC) and Judge Dennis Davis hinted last week that recommendations were being considered to “detect and...