CIL interim results 28 February 2014

Revenue for the interim period soared to R1.3 billion (2013: R969.7 million). Gross profit rose to R314.6 million (2013: R258.3 million). Earnings before interest, taxation, depreciation and amortisation (“EBITDA”) increased to R168.5 million (2013: R123.9 million), total profit for the period attributable to equity holders of the parent jumped to R118.8 million (2013: R70.1 million), while headline earnings per share grew to 88.5cps (2013: 59cps).

The group’s policy is for the board to consider a dividend on an annual basis after reviewing the annual results.

The Power division is well positioned, with a strong order book and sufficient tender awards across its core markets, to continue to deliver steady growth. Its prospects in South Africa within the municipalities and REFIT programme are expected to yield above average prospects. African utilities will however continue to offer above average growth prospects.

A key priority of CIG remains the focus on geographic diversification. Consequently significant business development initiatives are underway in Nigeria, Angola, Mozambique and Oman. 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 manage downturns through successfully operating across multiple geographies while providing a variety of relevant product ranges. 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.

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 capital and operating expenditure (“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.

Despite financial headwinds to consumers’ demands for housing, there have been no signs of a slowdown and it is expected that the Building Materials division should sustain its current growth trajectory.

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