Prospects

Construction Materials is receiving intense attention in response to a severely worsened outlook, while Manufacturing is performing well against very tough markets, with Investments and Concessions positioned for growth.

The group’s core business of Construction is well positioned and active in key sectors with good growth potential, with a proven reputation for the successful delivery of large complex contracts. The Construction one-year order book stands at R6,1 billion (30 June 2010: R7,1 billion). The group’s total secured Construction order book stands at R9,3 billion (30 June 2010: R9,2 billion). The value of the group’s target pipeline stands at R104 billion, down from R119 billion in August 2010, with activity in all its markets.

On a group level, the South African government’s public works programme has the potential to create growth opportunities within the South African construction sector. However, the lack of certain timing continues to plague the domestic construction sector’s ability to plan and forecast. Against this, the group will continue to grow its expertise and capacity in areas where it has developed a multi-disciplinary delivery capability, namely power generation, energy, transport, water, housing, mining and large public infrastructure works. The group’s geographic diversification will continue, with active trading in 18 countries in the period under review, with developing business in seven new countries.

Certain African markets offer future prospects, with the outlook for private sector fixed investment and primary infrastructure starting to improve. Spending is however only likely to come through slowly during the 2011 calendar year, with more certainty emerging from calendar 2012.

In the Middle East, the group has moved into new territories outside of Dubai. These markets provide technically attractive, higher-margin opportunities aligned to the group’s capabilities in infrastructure and industrial contracts.

The group’s strategic focus, its specialist skills, its current order book and its pipeline of opportunities support a positive medium and long term outlook, although short term earnings are likely to be under pressure.

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