Revenue jumped to R2.6 billion (2013: R2 billion) whilst gross profit rose to R589.1 million (2013: R509.1 million). EBITDA increased to R317.2 million (2013: R278.5 million). Profit attributable to ordinary shareholders shot up to R257.2 million (2013: R170.8 million). In addition, headline earnings per share went up to 187.8cps (2013: 137.8cps).
The dividend policy was reviewed by the board. After taking into account prevailing circumstances and future cash requirements, all earnings generated by CIL will be utilised to fund the anticipated growth in the coming year. Accordingly, no dividend has been recommended for the period.
Power and Electricity
The business is well positioned, with a strong order book and sufficient tender awards across its core markets, to continue to deliver steady growth. The Group’s prospects in South Africa within the municipalities and REFIT programme are expected to yield above-average growth prospects. It is probable that Conco will close R1,4 billion of Round 3 renewable work. African utilities should also continue to offer above-average growth prospects.
A key priority of CIG remains the focus on geographic diversification. Consequently, significant business development initiatives are under way in Nigeria, Angola, Mozambique, Ghana and the Middle East Gulf region. These initiatives are gaining momentum and will hopefully lead to a positive conclusion over the next twelve months. Conco has strategically diversified its risk base and will continue to mitigate downturns through successfully operating across multiple geographies.
The power and electricity sector is going through some dynamic shifts as the continent looks to harness the abundance of gas reserves and explores the benefits of renewable energy. The Group now has established the expertise within the sector to design, build, operate, maintain and own power and electrical infrastructure. In South Africa, Eskom’s intention is to balance its capital budgets and increased pressure on the transmission grid. The industry is at a critical juncture as the Eskom multi-year supply contracts are re-tendered for the next four to five years and Eskom seeks innovative ways to overcome backlogs. It is expected that over the medium to longer term the biggest constraint to growth will remain the availability of suitably qualified engineers to execute on the expected increase in the technically complex work.
Despite financial headwinds to consumers, there have been no signs of a slowdown within the Buildings Materials division and it is expected that the division should sustain its current growth trajectory.
Oil and Gas Services
The AES business will continue to grow organically due to the increased oil drilling in Angola and legislated environmental requirements in the drill cutting law. The business is in the process of building a second site at Soyo, in the North of Angola, which will allow AES to relocate all volumes originating from the north to Soyo and free up approximately 30% of additional capacity in Luanda. In the short term there is a cost implication, as additional operating expenditure and capex is incurred, but this capex spend will enable future operating capacity. The business has built a sound track record in providing specialised services of waste management to oil companies in Angola and is well positioned to be the supplier of choice given its performance history.
Effective after the year-end the Group has acquired a business specialising in the electrification of railways. The business successfully installed the electrical system for Gautrain. Substantial investments will be made to increase the footprint of the business and expand the service offerings. The medium- and long-term growth prospects are robust.
While our businesses are exposed to strong growth drivers, it is difficult to fully anticipate the effects of possible austerity measures in South Africa and the effect of the financial pressure Eskom finds itself under. The impact of Ebola on our markets remains uncertain. We have experienced delays in travel and contracts negotiations but we are monitoring the situation as we need to ensure that our staff are not exposed to undue health risks. We approach the new financial year with optimism that our geographic and sector strategies are yielding results and we have sufficient capital to take advantage of the opportunities.