JOHANNESBURG (miningweekly.com) – Electrical services, infrastructure and materials provider Consolidated Infrastructure Group (CIG) has delivered strong profit growth for the year ended August 31, driven largely by first-time inclusion of results from newly acquired oil service provider Angola Environmental Servicos Limitada (AES).

The group lifted revenue 29% to R2-billion in the period and doubled profit for the year to R258-million.

Similiary, headline earnings a share grew 36% to 187.8c apiece, while the order book grew 36% to R3-billion over the year.

The company said on Wednesday that substantial progress had been made to diversify the group’s risk base by extending its geographical footprint across Africa.

“Significant” development initiatives in Nigeria, Angola, Mozambique and the Middle East were under way.

The group’s portfolio of operations would be diversified into the railway sector, with the announced purchase of 100% of shares in Tractionel, a company specialising in electrification in the railways sector and which successfully installed the electrical system for the Gautrain.

The acquisition, valued at between R111-million and R141-million, became unconditional subsequent to year-end, save for the final close-out conditions.

Meanwhile, substation and high-voltage electrification work provider Conco invested in substantial additional internal capacity to meet the expected rise in demand in the industry and to service an expanded geographic footprint.

“Although Conco reported a 29% increase in revenue, the division failed to maximise its potential capacity, as the Round 3 renewable energy contractual closure from the Department of Energy's Renewable Energy Independent Power Producer Procurement Programme was shifted to November from July,” the group outlined.

However, South African municipalities continued to award the subsidiary projects from the country’s estimated R39.6-billion electrical infrastructure backlog.

A large R800-million project was also awarded during the financial year, which was scheduled to be executed over a three-year period.

Conco also won tenders to build and upgrade electrical substations elsewhere in sub-Saharan Africa over the year.

Meanwhile, CIG’s consolidated power maintenance division established traction in the renewable energy sector and, while not contributing to trading profit for the year, secured multiple long- and short-term contracts that should contribute profitably to the next financial year.

Conco Energy Solutions performed in line with expectations, growing revenue by 38%.

“Substantial investment in highly skilled engineering personnel and a rental of new engineering facilities required to handle the expected increase in volumes was completed during the year,” said CIG. 

Moreover, demand from the residential sector and growth in market share boosted earnings from the building materials division, which also benefitted from the inclusion of the full year’s contribution from the Laezonia quarry, in Muldersdrift.

The group's oil and gas waste disposal provider AES, meanwhile, provided a substantial R82-million in profit for its 11-month inclusion into the results. 

“As planned, this business delivered excellent growth owing to increased drilling, stricter environmental laws and growth in market share,” the group outlined.

Commenting on the prospects of CIG, CEO Raoul Gamsu said Conco was well positioned, with increased capacity and a strong order book to continue delivering steady growth.

“It is anticipated that the division will close at least R1.4-billion of Round 3 renewable work in the next financial year,” he outlined.

CIG also intended to conclude the business development initiatives undertaken in Nigeria, Angola, Mozambique and the Middle East region in the next financial year. 

“We expect the demand for power and electricity in Africa to continue and the group is confident in its expertise and enhanced capacity to design, build, operate, maintain and own power and electrical infrastructure across the continent,” he commented.

Gamsu added that AES had proven itself as a significant contributor to the group's results and its performance history was indicative of its continued growth in the Angolan market.

“Although we have exposed our business to strong growth drivers, we remain subject to external influencers. We can't fully anticipate the effect of the financial pressures that face [energy utility] Eskom, nor are we certain of the long-term impact of Ebola on our African ventures.

“We approach the new financial year with optimism that our geographic and sector diversification strategies are yielding results and we have sufficient capital to take advantage of the available opportunities,” he noted.