Big rise in Concor earnings

Posted On Thursday, 22 September 2005 02:00 Published by Commercial Property News
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Concor has reported a 56% rise in its headline earnings per share for the year to end-June 2005 to 226.7 cents from a re-stated 145.4 cents a year earlier

Cobus Bester Murray & Roberts The company declared a final dividend of 50 cents per share, representing a 67% increase on the 30 cents distributed in 2004.

The dividend cover was reduced to 4.5 times from 6.1 times previously.

The results marginally exceeded the group's own forecasts of a 30-50% increase in HEPS made to the market on August 4.

Rival construction group Murray & Roberts (MUR) recently announced plans to acquire the Concor shares held by major shareholder Hochtief, while also making an offer to all Concor minorities.

Should the transaction go ahead, Concor will become a wholly owned subsidiary of Murray & Roberts.

The group's 2004 results were restated to reflect consolidation of the employee share scheme.

Announcing its final results, Concor said revenue had risen 17% to 1.62 billion rand from 1.39 billion rand a year earlier, with revenue from construction totaling 1.31 billion rand and revenue from manufacturing activities coming in at 307.7 million rand. Only 1% of group revenue was derived from outside of South Africa.

The group attributed the rise in revenue to strong growth in its Building division.

Operating income jumped 96% to 32.8 million rand versus 16.8 million rand, helped by an improvement in the operating margin to 2% from 1.2% in 2004.

However, the percentage margin was still well below its target of at least 3%, due to losses in the Civils and Building divisions.

Headline earnings attributable to shareholders, meanwhile, totaled 26.23 million rand, up from 17.7 million rand previously.

The group's net asset value per share was reported at 19.1 rand, an improvement on the 16.65 rand recorded in 2004, while gearing fell to 23% from 25% a year earlier.

Capital expenditure amounted to 70 million rand during the year, exceeding the budget as a result of shortages experienced in the equipment hire market. Deposits and cash increased by 18.6 million rand to 204 million rand, while asset-based, interest- bearing debt remained at 50 million rand.

Return on shareholder's equity improved to 12.4%, with some of the divisions achieving superior returns, while loss-making divisions reduced the overall return.

Operationally, Concor said the Coega Harbour project was nearing completion and was expected to report a final profit in line with the original budget.

Its Technicrete division had achieved a record result in a strong building market, and was activity pursuing further expansion opportunities in South Africa after having acquired a 49% interest in the royal Bafokeng Brick and Tile factory in Rustenburg in April.

Both the Underground and Opencast Mining divisions had exceeded their budgets for the year, while the Roads and Engineering divisions had also achieved outstanding results by turning 2004 losses into high-margin profits. The significant improvement in profitability of the Roads division was attributable to the realignment of its strategy to focus on bulk earthworks contracts.

Looking ahead, Concor said work on hand amounted to 1.3 billion rand with the recent award of the 320 million rand Johannesburg Airport International terminal contract, of which the group is a 55% partner. All the divisions, except for Civils, had a satisfactory workload.

"We are pleased to note an improvement in margins over the last few months and will only tender on contracts that will deliver an acceptable return with proven teams," the company noted.

"We are excited about the future prospects in the construction industry given that several major projects have been announced recently, which include harbour, airport, dam, and power station expansion projects. The Gautrain project and continued private sector spending as a result of the low interest and inflation rates, as well as government's promised road infrastructure programme, will result in strong growth in the industry over the next few years."

Last modified on Wednesday, 26 June 2013 17:30

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