Erbacon Investment Holdings Limited (Erbacon), a medium-to-large sized national construction company,has decided to merge its two civils businesses, Civcontract Civils (Pty) Ltd (“Civcon”) and Erbacon Construction (Pty) Ltd (“Erbacon Construction”). The businesses are being combined into a more substantial single civil construction business with effect from 1 March 2011, and will relocate its head office to Gauteng.
Civcon and Erbacon Construction provide civil engineering solutions for a broad spectrum of clients in the infrastructure development and construction sectors, as well as the mining construction and heavy industrial markets.
The merger meets the objectives of Erbacon’s strategic intent and will allow the Group to ratchet up its turnover, and to develop a solid company with a strong brand identity, further providing a unique opportunity to reposition the Group for growth. “The merger offers a significant value proposition going forward and will give management the flexibility to better utilise the Group’s resources and align them with the opportunities which offer sustainable earnings growth in both the public and the private sectors,” says Sean Flanagan, Erbacon’s Group CEO.
The merged business will trade under the name Civcon with Lex Henning as the managing director. Dave van der Merwe, who joined the Group on 1 January 2011, has been appointed finance director of Civcon, with direct responsibility for finance and administration, procurement, HR, IT, technical services and SHEQ.
Erbacon Construction’s financial performance in the current financial year remains a huge disappointment and has been severely affected by a slow infrastructure spend roll out, whilst Civcon has experienced a more buoyant trading environment. “We have achieved a number of critical successes during the 2010/2011 financial year, but much work remains in reshaping the Group into a cohesive competitive organisation which offers shareholders, customers and employees sustainable earnings growth and value creation. Civcon’s budget for the 2012 financial year is very encouraging with about R 550 million turnover already secured and the business continues to employ new staff at all levels of the organisation as the work flow continues to grow,” says Flanagan.
A number of key performance initiatives are underway within the Group, including an overhaul of the contract review and reporting process, the initialisation of a more robust risk management structure, an integrated IT operating platform (directed by a Steering Committee made up of expertise from across the Group), centralised treasury and cash management processes, and a roll out of a performance management methodology across the Group.
“Market and trading conditions in the construction industry remain very tough. We are, however, confident that the industry will start to pick up again in the second half of the 2011 calendar year. By then, we have to have the Group performing optimally so that we can take advantage of the upturn when it arrives,” Flanagan concluded.
Issued by Erbacon Investment Holdings Limited.
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Erbacon executes a variety of projects for private clients, parastatals, government departments, municipalities, provincial government and private property developers, either as a main contractor or in partnership with larger, private or listed multi-national construction companies.
The Group’s comprehensive suite of heavy civil engineering, commercial and industrial building, general construction and plant hire services is already evident in many of the major projects being undertaken throughout South Africa; and, over-and-above the merged business, also consists of Armstrong Construction and Erbacon Small Plant Hire.
With its purchase of 100% of Civcontract Civils (Pty) Limited (Civcon), a major Gauteng civil engineering company during November 2009, Erbacon – then a KwaZulu Natal-based company – gained entry into the lucrative Gauteng construction industry, as well as a strong diversification into the private civil engineering sector. Today Civcon operates on contract sites throughout the southern Africa region and the neighbouring states for a number of high profile clients.