The business

Erbacon is a construction company consisting of infrastructure development (Erbacon and Civcon Construction), general construction (Armstrong Contraction) and a tool hire division (Bo's Plant Hire). Its services include general civil engineering construction, industrial and process plants, mining infrastructure and support (both surface and underground), and the design and construction of turnkey industrial projects.

Performance

Erbacon experienced a challenging year characterised by adverse trading conditions and management challenges. Headline earnings decreased from R65 million in 2010 to a loss of R64.5m in 2011. The poor performance were predominantly due to a general downturn in the construction sector which lead to reduced margins and also significant write offs of assets and contracts partially caused by a lack of adequate contract management.

Prospects

Together with the prospective turnaround of the South African construction sector, Erbacon is expecting to boost performance through their new strategic direction which includes the implementation of a growth strategy underpinned by operational excellence. Erbacon is revisiting all its business divisions to ensure optimisation of profitability and internal controls under the leadership of newly appointed CEO Sean Flanagan (former executive director of Murray & Roberts).

Financial Highlights