Johannesburg - While some construction groups may be wondering whether there will be life after 2010 and the Fifa World Cup, JSE-listed Sanyati isn't concerned.
"We haven't been relying on 2010 over the last 24 months. Clearly, we've welcomed it and we've played our part wherever possible. But our core business has always been a much broader civil infrastructural market, including roads and the real things our country needs, particularly under the new government," Sanyati CEO Malcolm Lobban told Fin24.com.
The group was involved with one stadium, Vodacom Park in Bloemfontein.
But its order book has been focused on public sector contracts instead and it stands to benefit from R700bn government plans to spend on infrastructure over the next three years.
"The huge need to invest in infrastructure in our country is going to continue well beyond 2010 - we believe well into 2014."
Sanyati posted revenue growth of 54% to R1.5bn in the year to end-February 2009. The increase is mainly as a result of the acquisition of the road construction and infrastructure development group Meyker, which has been consolidated in its full-year results for the first time.
When excluded, the remaining Sanyati divisions posted revenue growth of about 30%.
The group's earnings before interest, taxation, depreciation and amortisation rose 13% to R104.3m.
"Margins are under pressure, with ours marginally down from 9.2% to 8.9%. But it's nothing (we are) terribly concerned about. No dividends have been declared for the financial year-end, in line with our current group dividend policy," said Lobban.
Sanyati executive chairperson Rick Jackson said: "Looking towards the future, we have a secured a forward pipeline of work of R2.4bn with approximately R1.3bn pending award at present. Included in this amount of confirmed work is R2.1bn that will be executed during the 2010 financial year."
Analysts were upbeat about the group's order book prospects, with one saying the pipeline is "looking good".
"I don't think the market appreciates that. These small construction counters have been hit much harder than the bigger ones and they're trading on very low price earnings ratios, but I'm positive about Sanyati... just look at its order book," said Coronation fund manager Siphamandla Shozi.
Contracts on hold but not scrapped
The R1.3bn pending order book is made up of a number of diverse projects, according to Lobban.
He said the group had a major opportunity in establishing a new coal-fired plant in Botswana.
It also has local projects pending in roads, township infrastructure and telecommunications, including laying fibre-optic cables.
"Putting up a mast is a major opportunity; we continue working with our client MTN in the central region, so it's pretty diverse. In the pending book there are not just one or two projects."
He said that even though the group's order book comprised mostly public infrastructure spend contracts, the longer-term plan is to get the order book to balance between public and private spend.
While other firms have been suffering from the cancellation of contracts, particularly in the Middle East, Lobban says no local contracts have been scrapped because of the global economic slowdown. But contracts have been delayed, he added.
"One of the contracts in Botswana seems to be on hold, but we're not seeing anything cancelled."
The group isn't planning further acquisitions this financial year.
"I think we've completed a fairly comprehensive acquisition programme - it's afforded us with a good national footprint. I think for the short term the likelihood of us making acquisitions is fairly remote.
"I think our objective now is to keep our heads down and to really consolidate what we've got," said Lobban.
- Fin24.com