The group said operating profit decreased by 28% to R16.9 million due to the effects of the slowdown in the residential and commercial markets experienced by its businesses that supply heavy building materials to the construction industry.
On a pro-forma basis however incorporating the results of its recent acquisition Conco- operating profit increased to R46.1 million which represents an increase of 96% over the prior corresponding period.
"Although these results are not as pleasing as we would have liked, it should be noted that if the full 6 months' results of Conco were included in the Group's interim results, operating profit would have increased by 96%, and earnings per share and headline earnings per share would have only decreased by 13% with that of the prior year.
"However, the full effect of the Conco transaction will only be evident in August 2010," says Raoul Gamsu, CEO of Buildworks.
The balance sheet of the Group has been transformed since the acquisition of Conco, by Conco not only bringing additional cash resources into the group, but the group now having the ability to generate strong cash flows going forward.
"The future benefit of the Conco acquisition therefore substantially reduces the Group's exposure to the currently depressed residential and commercial construction industries.
"Buildworks has diversified away from a building materials only focus, to include electrical infrastructure establishment in the business.
"Over 86% of the Group's revenue will in now be generated by Conco.
"The Heavy Building materials business that listed in November 2007 has become a much smaller component of the overall Group structure," added Gamsu Establishment of power infrastructure is the key growth driver for the Conco business.
Conco has historically operated successfully in 14 African countries and, at present, has ongoing operations in 9 countries.
The Group aims to expand Conco's footprint in the higher growth economies across the African continent.
To counter any potential slowdown in its historic markets, the Group is also expanding into new geographies and improving its tender success ratio with enhanced business development.
The Conco operation has a proven track record of successfully executing work in difficult environments and it is this experience that will assist the Group in breaking into new markets.
Saudi Arabia and Qatar have been targeted as two countries which offer enormous opportunities in the electrical arena.
Initially all earnings generated by the company will be utilised to fund future growth.
Accordingly, no dividend has been declared for the period, it said.
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