Conco, the power subsidiary of listed Consolidated Infrastructure Group (CIG), had won R800 million worth of work for green energy projects as part of the first round of the Department of Energy’s renewable energy programme, CIG chief executive Raoul Gamsu said yesterday.
Conco’s high growth rate continued in Africa and it had won tenders to build and upgrade electrical substations in countries including Angola, Mozambique, Tanzania, Botswana, Ghana and Zambia.
However, he said the Saudi Arabian market remained a challenge despite Conco having won a few small tenders there. The prospects of securing a reasonable market share in the Middle East seemed limited.
The South African municipal sector, a key market for Conco, remained disappointing and the levels of activity continued to decline.
CIG’s newly launched operations and maintenance division had made steady progress, winning two small electrical maintenance contracts. The objective remained to win larger contracts to maintain and operate entire wind farms, Gamsu said.
This division was in extensive discussions with original equipment manufacturers and renewable energy developers.
“The group is strategically positioned to service the growth and high demand for power and electrification infrastructure to the African power market.
“The substantial backlog identified in the National Development Plan… offers sustainable longer-term growth opportunities for the group,” he said.
The domestic renewable energy programme and increased spending on electrical infrastructure across the African continent helped to drive CIG’s financial results in the six months to February, which were released yesterday.
CIG reported a 23 percent increase in interim headline earnings a share to 59c compared with a year earlier, on the back of a 27 percent rise in revenue to R969.7m. Earnings before interest, taxation, depreciation and amortisation grew by the same percentage to R123.8m from R97.4m.
Amounts due from contract customers increased 72 percent to R1.05 billion, while trade and other receivables rose by almost 20 percent to R55.7m.
Gamsu said the rapid growth in Conco’s turnover had placed some additional strain on the business in ensuring all elements of efficient project management were maintained, including the timeous invoicing of work in progress and collection of receivables.
There had been a build-up of amounts due from contract customers during the period under review, but management was satisfied that steps to ensure the timeous invoicing of work in progress was in place.
“Those debtors that have exceeded credit terms are represented by blue chip clients with whom Conco has had long-standing and successful business relationships. Management actions are expected to improve the collection efficiency of our debtors book by year-end,” he said.
Gamsu said the Conco business funded a significant portion of the growth of the renewable energy projects through internally generated funds because of the timing of payment milestones.
The group’s order book grew by 17 percent from a year earlier to R2.1bn.
Gamsu said the current order book at Conco, together with higher-than-expected levels of bidding tenders awaiting adjudication and prospects, placed the group on a solid foundation to continue to deliver growth.
He said the greatest constraint to growth over the medium and longer term was expected to remain the availability of suitably qualified engineers to execute the expected increase in work.
CIG shares lost 1.59 percent to end at R18.60 yesterday.