Civil engineering and construction group Sanyati Holdings on Tuesday said government contracts and extending operations beyond KwaZulu-Natal had boosted its order book, positioning the black economic empowerment company to achieve its forecast net profit of R53 million for the 2007-08 financial year.

The order book included a R25 million contract for civil infrastructure work in Polokwane, a R75 million road rehabilitation contract in Gamtoos, Eastern Cape, and a R1,9 billion contract for civil works on the new King Shaka International Airport in Durban.

Releasing the company’s results for the six months ended August, CEO Rick Jackson said the buoyant growth in the construction industry boded well for the firm. He said though 66% of Sanyati’s contracts came from KwaZulu-Natal, he was pleased at the inroads the company had made in Gauteng.

“The Gauteng operations are up and running with (the group’s piling subsidiary) Mega Pile’s first R2 million contract ,” said Jackson.

Gauteng accounted for 22% of Sanyati’s contracts, with the balance split among Mpumalanga, Eastern Cape and Zambia.

In an effort to grow the business , Sanyati said, it had acquired Gauteng-based Ruthcon Civil Contractors and GEM Earthworks, which has operations in Eastern Cape and Mpumalanga.

Net profit for the period under review doubled to R22,9 million on a 105% increase in revenue to R396,2 million — up from R192,5 million.

Cash generated from operations surged to R10,9 million from a loss of R4,5 million. Headline earnings per share increased to 8,74c from 5,73c.

Of Sanyati’s four business units, Civils Coastal was the biggest contributor to overall performance.

Revenue accumulated by C ivils C oastal was R215 million. Its performance was boosted by large-scale projects such as the R117 million tender to construct roads in Barberton, and the R52 million contract to construct a water pipeline in Umgeni, on the south coast.

The unit also stood to gain R190 million over the next 19 months after the Ilembe Consortium was awarded a R1,9 billion contract to build the R6,8bn King Shaka International Airport.

The host cities of Fifa World Cup matches in 2010 will receive a major boost in the two years before the tournament

Many of South Africa’s independent airports and aerodromes remain technically non-compliant and continue to lose out on increasing opportunities presented through either tourism or large events like the upcoming 2010 FIFA World CupTM

“The upsurge in Public-Private Partnerships (PPPs) and the current “building boom” rippling through our country is providing huge opportunities for the Facilities Management (FM) industry and companies need to capitalise on the expert services of this 11 years young industry”

So says Bonang Mohale, CEO of Drake & Scull Facilities Management (DSFM) and key participant in this year’s SAFMA Facilities Management Expo. The FM industry’s services and products will be showcased at the SAFMA Facilities Management Expo, taking place on 22 and 23 August 2007 at the Sandton Convention Centre.

“Outsourcing in general and Facilities Management in particular is recognised as the emerging area for high business impact and increasing shareholder value; commands increasingly high levels of interest at all organizational levels in all industries and in all market segments; senior management is becoming more involved in the Facilities Management outsourcing decisions; etc. Success in the leading FM companies  of today has been achieved through delivering on Customer fundamentals such as predictable and falling unit costs; added value without additional costs; zero risks or surprises; guaranteed results; minimum fixed and maximum variable costs; etc. and the good FM companies have responded by demonstrating through deeds not just an intellectual understanding of issues, among others, that quality and cost reduction are fundamental; asset and risk transfer have a price that must be understood; innovation is a prerequisite; seamless ‘one team’ integration is required; best in class customer service is a must; no performance, no pay, no future; etc.” adds Mohale.
 
The local construction industry is expected to grow at an average rate of 6.41% between 2007 and 2010. According to Statistics SA, the Gauteng province (including Johannesburg and Pretoria) accounts for 38.8% of the value of recorded building plans, with the Western Cape following close behind with 29.8%.

“The demand for facilities management is increasing as the FIFA 2010 World Cup draws nearer, during and long after”, says Mohale. “With new stadiums being built and existing ones being upgraded there are great opportunities for South African companies and especially FM professionals as these “construction marvels” will need to be appropriately designed, professionally project managed and efficiently maintained in a sustainable manner in the way of mechanical engineering equipment, security, cleaning and other services to ensure they robustly stand long after the Soccer World Cup. “

The Government has set aside an estimated R846 billion for infrastructure developments over the period 2006/07 to 2011/12 and the value of the construction industry is forecast to reach R633 billion in 2010 contributing 2.74% to the gross domestic product (GDP). “With the understanding we have gained, we can identify a significant role for facilities management in developing best in class infrastructure”, concludes Mohale.

SAFMA Facilities Management is an exhibition for suppliers and service providers offering assistance in the effective planning, integration and operation of the many different elements which make up the work environment. Now in its second year, the event aims to be the definitive meeting place for all those involved in facilities management, workplace management, occupational health and safety, energy management, security, etc. 

SAFMA Conference
As part of the SAFMA Facilities Management Expo, the SA Facilities Management Association (SAFMA) will host a two-day Conference on “Facilities Management – a strategic enabler”. The Conference will consider issues such as the impact of:
• Accommodation policy and practices on your bottom line
• Planned Preventative Maintenance (PPM) scheduling on your asset value and productivity
• The workplace and environment on staff and equipment productivity
• Energy and utilities management on your profitability
• Property and facilities management decisions on your balance sheet
• Facilities Management on your image and branding
• Statutory compliance and associated risks on your business

For more information on the conference contact Heidi Gouws at SAFMA on 086 516 3821 or e-mail This email address is being protected from spambots. You need JavaScript enabled to view it. or visit www.safma.org.za.

For more information on the SAFMA Facilities Management Expo 2007, please contact Bette McNaughton of Fair Consultants SA on (021) 713 3360 or This email address is being protected from spambots. You need JavaScript enabled to view it. or contact Catherine Larkin for any media queries on (011) 789-7327 or This email address is being protected from spambots. You need JavaScript enabled to view it..

Airports Company SA (Acsa) said yesterday that it would spend R19,3bn over the next five years to expand the capacity of its airport infrastructure.

2010 Soccer World Cup Local Organising Committee is confident that the tournament will fuel long-term sustainable economic growth

Building confidence in SA rose back to near a record peak in the second quarter of this year, reflecting a boom spurred by public spending and pent-up demand for affordable housing, an independent survey showed yesterday.

The FNB building confidence index rose to 88 points from 87 in the first quarter of this year, edging back towards a historic high of 89 posted in the fourth quarter of last year.

FNB chief economist Cees Bruggemans said improved confidence in the building industry reflected higher overall economic growth, which quickened to an average annual rate of 5% over the past three years from 3% earlier in the decade.

"We have barely started. It looks like we are in an extended growth cycle which is likely to last another 7-8 years," he said.

Release of the survey coincided with official data yesterday showing that capital spending by the government rose by 25,4% to R71,8bn in the financial year which ended in March, with expenditure on land and buildings soaring by 149% and construction up by 23,1%.

A slowdown in public sector capital expenditure is expected this year, before the pace picks up again in 2008, the figures from Statistics SA showed.

Construction is playing an increasing role in the economy, with the sector expanding a blistering 21,3% in the first quarter of this year a 17-year record.

At the same time, the government's R416bn infrastructure spending drive is having positive spin-offs, although it focuses on ports, roads, railways and soccer stadiums.

The FNB building survey showed that confidence in the nonresidential sector, which covers commercial buildings, was steady at 94 points but fell in the residential sector to 82 points from 86 in the first quarter.

This suggested business conditions there had been hit by the cumulative two percentage point increase in lending rates last year, Bruggemans said.

The Reserve Bank raised its key repo rate by half a percentage point to 9,5% again in June, and many analysts expect another hike at its meeting next month. But the residential slowdown is unlikely to last, the survey carried out by the Bureau for Economic Research showed.

"Regarding the business outlook for the third quarter, residential contractors said they expected business conditions to remain more or less stable, but an improvement in the tempo of building activity is expected," FNB said.

Bruggemans said there was "enormous pent-up demand" for affordable housing units worth R170000-R250000 from the expanding black middle class.

FNB commercial property strategist John Loos said builders in the nonresidential sector were "very optimistic" and "upbeat" about short-term prospects but they also indicated that shortages of skilled labour and inadequate supplies of materials were "seriously constraining" operations.

Construction company Group Five has won a R1,8-billion contract from Transnet to widen Durban's existing harbour by 100m and to increase the depth by 6m.

Working with Belgian company, Dredging International, Group Five Civil Engineering is responsible for the civil portion of the contract, valued at R1,1 billion.

Transnet group chief executive Maria Ramos last week announced the state-owned enterprise's plans to spend R78 billion on expanding South Africa's rail, port and fuel pipeline infrastructure over the next five years and this amount is likely to grow as more projects get the go-ahead.

Group Five's managing director of the civil engineering operations, Andrew McJannet said: "We are very pleased with this contract, which was won against international competition. We believe our previous marine civils experience, such as the Moma Jetty in Mozambique and the dry bulk terminal jetty in Richards Bay, played a role in us being the winning bidder."

Group Five's partner on the project, Dredging International, has dispatched a hi-tech dredger capable of moving 5000m of rock and silt an hour from Belgium to achieve the 7-million cubic metres that will be moved over the next two years.

"This is the third major contract in Kwazulu-Natal awarded to the group since the beginning of 2007. We have already started on the 2010 Durban soccer stadium, in consortium with WBHO and Pandev, and have signed the contract for the R6,8 billion King Shaka Airport, in which Group Five is the lead contractor for the Ilembe Consortium - which includes WBHO and the KZN Empowerment Group," said Group Five's chief executive officer Mike Upton.

Work on the harbour has started, with the demolition of existing land structures and the establishment of a pre-cast concrete yard close to the site where the blocks required for the contract will be cast.

The contract is due for completion in May 2010

There are some broader implications of South Africa’s groaning infrastructure for investors in general and Property Unit Trusts (PUTs) in particular

Civil engineering contractor Esor has scored more than R500m from government's increased spending on infrastructure for the 2010 Soccer World Cup.

CEO Bernie Krone said new contracts, including the Gautrain project and the upgrading of the OR Tambo Airport, had swelled the company's order book by R580m, putting Esor firmly on track to achieve targeted growth for the new financial year starting this month.

"We intend leveraging our new directors' network and industry knowledge to drive growth and position the group as a favourite contender for infrastructure contracts," Krone said.

The group has to date tendered for Gautrain contracts to the value of R365m, of which R80m has been secured in two piling projects.

"We are still awaiting a decision on the remaining tenders and are confident of our prospects in this regard," he said.

Other new contracts include R80m worth of contracts for the Airports Company of SA, in line with its R5,2bn intended outlay between 2005 and 2009. Esor has already completed the upgrades at the OR Tambo International Airport and is now extending the Cape Town International Airport.

"Following Esor's completion of the Ushaka Pier marine project, the group is now aligned with the preferred bidder for the Ushaka airport in Durban," said Krone.