CSG Holdings ups stakes in two construction firms for R61.23m

CSG Holdings (CSG) CEO, Pieter Dry said the company’s two key aims were to diversify revenue streams away from workforce management (the core business of the old M&S Holdings) as well as tap into African markets.

Services company CSG Holdings (CSG) announced on Monday it had increased its holdings in two construction firms for R61.23m.

CSG Holdings said it had bought full control of Significant Site Services (SSS), a key subsidiary that sets up remote site facilities for the mining and construction sectors.

CSG was formed last year when staffing specialist M&S Holdings (formerly Top Fix) and contract services company BDM Holdings merged.

SSS is a key profit driver in the new-look group, and is involved in constructing and managing remote site villages in South Africa as well as Mozambique, Malawi and Zambia. Aside from the mining, plant and construction support hub, CSG’s other operational niches include workforce management and facility management.

The 49% of SSS not already owned by CSG will cost just more than R60m, and will be settled by a combination of cash and the issue of new shares.

The share issue price is yet to be determined. On Monday CSG finished more than 4% down on the JSE at 177c.

CEO of CSG Pieter Dry said the company’s two key aims were to diversify revenue streams away from workforce management (the core business of the old M&S Holdings) as well as tap into African markets.

He reckoned the SSS transaction would probably trigger more acquisitions to rapidly grow CSG’s facility management division. More than 80% of SSS’s revenue was earned in Mozambique, Malawi and Zambia, Mr Dry said. Operating margins in these areas were better than in South Africa.

SSS does look like a strongly profitable contender with the deal conditionally hinging on the company producing aftertax profits of R24.4m in the year to end-March. In the half-year to the end of December last year CSG produced aftertax profits of R27m.

Mr Dry said investments in the mining sector and infrastructure development in SSS’s African markets were in the pipeline.

"We believe that with strong footholds in the countries, SSS is well-positioned to secure further contracts," he said.

CEO of SSS Danie Engelbrecht said construction activity in Africa was on the increase.