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Cape Town - CSG Holdings, an AltX-listed contract services company with PSG Private Equity as major shareholder, are aiming for a bigger presence in the cleaning industry with the establishment of a stronger specialist contract cleaning operation.
The group’s future plans also include a stronger focus on its security business with more acquisitions.
The emphasis on the cleaning industry follows the acquisition of 100% of Afriboom in September last year, a company that specialises in cleaning services in the hospitality and health-care sectors.
The acquisition followed shortly after acquiring the remaining minority shareholding in Ukweza, a contract catering and cleaning group providing services to mainly private hospital, as well as some state hospitals.
CSG Holdings CEO Pieter Dry said the plan is to consolidate the Ukweza contract cleaning business under the Afriboom brand for cost savings and in so doing creating a stronger specialist in die cleaning sector.
“The recent weakening of the rand against major international currencies provided a major boost to the local tourist industry. Afriboom performed very well during the four months since the acquisition. The company’s potential for the future provided the impetus for the consolidation with the Ukweza contract cleaning business,” said Dry.
Ukweza provide catering services to thirteen Mediclinic and Life Healthcare hospitals, as well as to state hospitals, while cleaning services are provided to seven Mediclinic and Netcare hospitals.
CSG’s focus on the security sector flows from the recent acquisition of Hi-Tech Laeveld, Hi-Tech Nelspruit and Hi-Tech Witrivier. The Hi-Tech group provide security services, monitoring and armed response to businesses and to the public. The division is currently performing well and CSG plans to develop it into a fully-fledged national service provider in security services.
Dry said the current difficult economic environment and the subsequent increase in unemployment results in more crime. “The benefit of Hi-Tech is that it provide a constant income stream to flatten out the cyclical nature of the contract sector.”
Regarding CSG’s interest in the temporary labour contracting, Dry said that more stringent laws concerning temporary employment are putting pressure on the industry. There is nevertheless a tendency amongst corporate clients to reduce risk by contracting reputable and listed service providers.
“While the division will not soon achieve the same level as in 2013/14, moderate growth is still foreseen,” said Dry.
Substantial cost savings by Sasol did effect CSG, but the turnover from these related activities has now reached a turning point. It is envisaged that moderate growth in the second half of the year is possible.
Major power supply spending by Eskom is presenting future opportunities and CSG is also well positioned in the Northern Cape with the expansion of solar farms.
Subdued commodity prices, particularly iron ore, has put pressure on turnover in the contract sector. CSG however is not capital intensive and was able to cut cost to keep the mining support service division profitable. Poor economic conditions in Africa has compelled the group to be more careful with expansion on the continent, however CSG remain committed to Africa.
“The diversification of the group’s activities is bearing fruit. The divergence of the group’s services and activities is making the unlocking of synergies between the divisions more and more possible, while revenue contribution is spread over various industries,” said Dry.
