Sea Kay turned over R236m for the period, resulting in an after tax profit of R29m. Headline earnings per share came in at 6,10 cents a share - in line with revised forecasts for the year ended June 2008.
Revenues for the second half of the year are expected to be even greater as government’s spending on housing infrastructure tends to increase in the latter half of the financial year.
No group comparative figures are available because the company was only effectively constituted in January 2007.
But its main operating subsidiary, mass housing contractor Sea Kay Engineering Services, increased its revenue by some 85% over the same period in the prior year – on the back of increased government and private sector housing spending.
Sea Kay Holdings entered the 2008 financial year with a robust order book of R728m in new housing contracts. With government and the private sector putting out more mass housing contracts, that has since ballooned and its forward order book over a 12 month period now stands at R824m.
Sea Kay Holding’s CEO, Corne Kruger, says work has started on a number of exciting new housing projects – principally in Gauteng and the Western Cape - and he is confident in the group’s ability to increase its production levels and efficiencies and deliver more, larger turn-key housing developments to prospective new home owners.
Sea Kay Holdings is the only listed construction company focused on the delivery of all three housing types - subsidised (RDP), affordable (GAP) and bonded mass housing projects.
The company in vertically integrated in that it owns material supply firms, including brick maker Sedibeng Bricks, property development operations as well as construction concerns. It’s BEE partner is Phatsima Housing Investments, owned by black entrepreneur Herman Mashaba, which owns 25.1% of the company.
Sea Kay’s current strategy is to grow both organically and acquisitively while strengthening its capabilities in all aspects of the house-building supply chain. A total of R19,5m has been set aside in the current financial year for capital expenditure – which will include the purchase of mobile volumetric concrete mixers and a roof truss assembly plant. Both are expected to be integrated into the business by the year end.
Says Kruger:
“In his recent State of the Nation address the President reiterated that the 2.3 million-unit housing backlog remains a high priority for government and that around 260 000 new houses a year must be constructed to eradicate informal settlements.
“Delivery mechanisms have changed and the current trend is towards delivering a lesser number, but larger, housing schemes. This trend ideally suits Sea Kay’s business model, growth strategy and national footprint and prospects for the remainder of the year are positive.”
In addition, he says the Department of Housing in Gauteng, a major client, has revised its payment terms which should result in a speeding up of the payment process, assisting Sea Kay’s cash flow.
Illegal occupation of some housing units in the showcase N2 Gateway housing project in the Western Cape have resulted in some contractual delays, but a court order granted on the 6th February has resulted in the eviction of the illegal occupants and Kruger does not expect the delays to have any negative impact on the company’s full year financial results.
Other challenges, he says, remain the application of proper risk management in the selection of suitable housing projects and improving the business’ margins as well as its turnover.
However, he remains confident that barring any unforeseen events or dramatic changes in the company’s operating environment, the projected earnings growth for the full year will be achieved.
Publisher: eProp
Source: Sea Kay Holdings
