Government spending has been rolling out in a number of focused pockets, such as water, healthcare and power, but there has been little movement on government’s “big themed strategic projects” as part of its national infrastructure plan, says Group Five CEO Mike Upton.

He notes Cabinet will “really need to get down to business” after the election in order to “create the infrastructure that creates jobs”.

“The traditional markets have been slow, and it is a concern to us.”

However, adds Upton, Group Five has, during this period of slow government spend, secured a number of build- ing projects based on its strong reputation, as well as projects in new sectors, such as oil and gas, and in new territories in Africa.

Group Five has reported a 56% increase in revenue, to R7.66-billion, from ongoing oper- ations for the six months ended December 31, compared with the same period in 2012.

Operating profit was up 28% to R328-million, and net profit up 54% to R219-million.

At 4.3%, however, the operating margin was down from the 5.2% recorded in the comparable prior period. Two problematic civil engineering contracts, which will realise lower margins than originally expected, added to this decline.

The civil engineering division recorded a margin of 1.5% for the period, well below the 4% to 6% target range.

Group Five has a R14-billion contracting order book, says Upton, with building and housing accounting for R6.64-billion, projects for R1.48-billion, engineering and construction for R2.54-billion, and civil engineering for R3.36-billion.

Building and housing are up roughly R1-billion on the order book announced in August last year, and civil engineering down around R200-million.

Upton says Group Five’s mining housing component has doubled, with work secured at good margins.

He believes the civil engineering business has “worked hard” to achieve R3.3-billion in a slow market.

The order book is weighted 82% towards the local market, with 18% of work outside South Africa.

Upton, however, emphasises that this does not reflect the over-border replenishment effort currently on the go.

He also notes that Africa is gaining ground in the group’s order book, with the company seeing some new contract awards in Liberia, for example.

As at October 2013, t

he order book was R14.6-billion, and R13.5-billion as at December 2012.

Upton adds that power projects “have doubled” in the group’s pipeline of projects in which it hopes to participate.

Group Five’s operations and maintenance order book stands at R4.8-billion, bringing its total order book to R18.8-billion.

“We want it to be bigger, but are happy we could hold steady in a tough market,” says Upton.

Group Five remains in discussion with the Competition Commission around four outstanding cases not settled in the penalty process completed last year, says Upton.

In 2013

, the commission imposed R1.46-billion in penalties on 15 companies in the construction industry for collusive tendering related to projects concluded between 2006 and 2011.

Group Five, as a whistleblower on these collusive practices, has been granted leniency by the commission on all 25 of its submissions.

However, despite its cooperation over a period of four years, the group received notice from the commission in 2013 that it intended to fine the group for infringements on four projects in which it was implicated and for which no leniency had been granted.