CIG profit grows on rising demand for power in Africa

CONSOLIDATED Infrastructure Group (CIG) delivered “solid profit growth” for the year to the end of August across all its divisions in SA and sub-Saharan Africa, as it benefited from strong demand for power across the continent.

The electrical equipment, building materials, and oil and gas waste management provider said yesterday it intended to turn Africa into a growth engine for the group. To this end, it had concluded a fully underwritten agreement with a shareholder to raise R250m of extra equity at not less than 3,200c a share.

“As the sector continues to experience high growth, it is essential that we have enough fuel in the tank,” said group CEO Raoul Gamsu.

The group wants to identify niche power-generation opportunities across the continent, diversify its geographic footprint and earnings beyond SA, and service multiple infrastructure sectors.

Profits after tax from outside SA were marginally down at 54% of total profits, compared to 56% reported last year. But the order book for work outside SA was more than $100m, the group said.

Meanwhile, the group order book in SA had risen from R1.9bn in financial 2014 to R2.8bn in financial 2015, Mr Gamsu said, as tender activity rose. He said spending by municipalities had been growing strongly in the past year, mainly in electricity transmission and grid infrastructure.

Eskom was a minor part of the group’s business, but SA’s new rounds of renewable energy projects were worth billions of rand to the company. Mr Gamsu said procurement by state-owned entities was “complex and tough” and that recently amended black economic empowerment legislation was “onerous and a drag on business — but you have to ... get on with it”.

The building materials division benefited from heightened demand from the residential building sector in Gauteng, and increased revenue 25% to R500m for the year.