THE new head office for Stanbic Bank Tanzania in Dar es Salaam will be completed in November next year at a cost of $8 million.

This applies to all race groups

Private sector contribution to local economies is undermined by officials' ambivalence towards it, study finds

 Arrogant attitudes and short-term thinking" by some South African building contractors threaten the future acceptance of local contractors in the rest of Africa.

South Africans are showing a talent for solving the many problems around property

Johannesburg - Construction and manufacturing giant Group Five on Thursday announced that its three-year restructuring plan had resulted in strong results for the year to June 2003.

Revenue increased by two percent to R4,1-billion compared with R4,0-billion in 2002, earnings per share increased 26 percent to 140 cents per share and operating profit was up 29 percent to R160,1 millioncompared with R124,6 million in teh previous year.

The strengthening of the rand had a significant impact on the group during the year, particularly in construction, where exchange gains decreased from a R58 million gain to a R2 million loss.

The stronger currency also led to a fall in revenue generated outside South Africa, from 37 percent of group turnover in the previous year to 33 percent this year.

Net finance costs increased from R26,4 million to R28,5 million in the year due to higher average interest rates and increased levels of working capital.

"Our three-year restructuring was focused around building a properly positioned, broad-based portfolio of businesses to offer integrated, top quality solutions across the full infrastructural value chain," said group chief executive Mike Lomas.

"We have achieved this."

"Over the three years, the group reported average compounded revenue growth of 12.7 percent, average compounded operating profit growth of 54.6 percent and average compounded EPS growth of 58.4 percent."

Construction revenue, representing 78 percent of group revenue, remained constant at R3,2 billion, compared to an exceptional improvement of 40 percent in the previous year.

Operating profit decreased from R137 million to R91 million, primarily due to the strengthening of the rand.

Construction operating profit, before the effect of currency translation, showed an 18 percent improvement from the prior year.

Building revenue remained constant, while operating profit, before exchange rate effects, increased from the previous year.

The completion of a number of large contracts and the securing of cross-border work contributed to a strong result for the year.

Poor performance in the roads division was mainly due to a decrease in exchange gains compared to the previous year and to the run-out of problematic contracts.

Lomas said this business unit had been consolidated and downsized and the future looked stronger. 

The deferment of major projects by the resource sector in the latter half of the year following the strengthening of the rand impacted on a strong operational performance in civils. Cross-border opportunities for this business unit appeared promising and were being "strongly evaluated".

Engineering showed strong performance despite delays in finalising the commercial closure of a mining house contract. This adversely affected the operating result and led to higher levels of working capital.

Revenue increased over the year and operating profits before currency effects were in line with the previous year.

Engineering was now well placed to exploit benefits from the significant oil, gas and petrochemical developments planned in southern Africa.

Manufacturing, representing 15 percent of group revenue, showed an increase in revenue of 3.1 percent to R631 million, compared with the 2002 figure of R612 million and an increase in operating profit to R34 million from a R52 million loss previously.

The significant improvement in performance was largely due to the elimination of losses in Everite Building Products, substantial improvements in the results of both Vaal Sanitaryware and DPI Plastics and the downsizing of the AC Pipes operation.

Infrastructural Development Services (IDS) achieved strong results and was well-positioned for continued growth through the further strengthening of the management team. IDS would continue to add value to the overall group through the appropriate financial structuring and delivery of selected projects.

"...Group Five is well positioned to tap into the increase in infrastructure spend announced by government. The group has a healthy construction order book of R3.5-billion. The completed turnaround in manufacturing, coupled with the introduction of new technology, improved productivity and the establishment of empowerment initiatives will further drive local market penetration. The recent development of new products will provide the opportunity to drive the export growth strategy," Lomas added.

"The combination of these factors, together with exciting opportunities throughout the businesses, will allow for meaningful growth of earnings in the year ahead," concluded Lomas.

A Cape Town trade mission to Angola has found that there are massive opportunities for local companies in the construction and manufacturing business.

Angola's economy has been destroyed by civil war for over than two decades and now is in a re-building phase.

Chris Nissen, president of the Cape Town Regional Chamber of Commerce and Industry, led the delegation of businessmen.

"The mission found that the urgent need was for houses, clinics and schools ... and this has opened up opportunities for local builders as well as suppliers of products like paint and building materials." 

Angola, which uses the US dollar in most of its business transactions, was concentrating on rebuilding the country's infrastructure, Nissen said.

"The delegates are planning more trips to forge partnerships and joint ventures with Angolan firms," he said.

Interest in Angola was confirmed by a chamber waiting list of some 20 delegates interested in follow-up trade missions. - 

What is the connection between a monolithic building in central Pretoria and an old mansion in the Johannesburg suburb of Parktown? Not a great deal, but the deliberations in either one will have a bearing on economic growth.

Last month Credit Agricole Indosuez donated one of its buildings to the CIDA City Campus, a virtually free tertiary education facility for people from previously-disadvantaged backgrounds

South Africa, along with Egypt, Nigeria, Morocco and Tunisia, accounted for 60 percent of all direct investment inflows into Africa from 1997 to 2001, a draft World Economic Forum (WEF) report had shown.