Delays in South Africa weigh on growth of infrastructure group CIG

9th November 2016

By: African News Agency

  

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Consolidated Infrastructure Group (CIG) on Wednesday recorded 19% profit growth, suggesting it would have been much higher had the “challenging” South African environment not weighed on “robust” business growth outside the country.

The diversified pan-African infrastructure-focused group with operations across South Africa, sub-Saharan Africa and the Middle East said profits had increased from R331-million to R393-million in the year to the end of August.

It said projects in South Africa had been delayed “due to political uncertainty and waning business confidence”, while earnings outside the country had shown growth of 68%.

Overall revenue was up by 25%, from R3.6-billion to R4.5-billion, predominantly due to increased levels of activity within the power division.

The company noted that its power order book (excluding R2,3-billion of Round 4 Renewable Energy Programme projects) had improved by 22% in the period under review, from R4.1-billion to R5-billion.

“The South African market is difficult to assess, with [state energy utility] Eskom spend increasing substantially while the municipalities have curtailed expenditure despite the backlog of almost R39-billion,” the statement said.

The group said it had previously won contract awards of R2.3-billion from Rounds 4 and 4.5 of the government’s renewable energy feed-in tariff programme, but the projects had been delayed by months despite commitments by both government and Eskom to proceed.

“We have therefore excluded these contracts from the reported order book,” CIG said.

Headline earnings per share were up by 15.7%, from 220.7 cents per share to 255.3 cents per share.

CIG added that since year-end it had successfully concluded the acquisition of electricity and smart meter provider Conlog from Schneider Electrical for up to R850-million. A rights offer had been opened to shareholders to fund R750-million of the purchase price.

No dividend was declared. The statement added that the board had decided that all earnings would be utilised to fund anticipated growth and investment opportunities, as well as to settle the additional payment for Conlog.

Edited by African News Agency

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