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The year under review saw continued growth in levels of activity from all the Group’s regional
and sectoral markets. The South African government has targeted Gross Fixed Capital
Formation (GFCF) at 25% of Gross Domestic Product (GDP) by 2014 in an economy growing
at between 4,5% and 6,0% per annum. Construction Spend, which is nominally targeted at a
third of GFCF, this year breached 5% of GDP on its way to an estimated high of about 10% by
2011, which is up from a low of about 2,5% in 2000. This implies a potential nominal market
growth in the range 15% to 25% per annum for the foreseeable future.
All markets targeted by the Group continue to promise sustainable growth potential and in
particular, major project opportunity. There is strong evidence of capacity constraints in the
sector resulting in a welcome reduction in the high levels of destructive price competition that
had become a worldwide characteristic of the industry through the 1990’s.
In South Africa, interest rate increases have started to dampen consumer appetite for credit
and the housing sector has felt a lowering in demand growth. Government’s promised
investment into primary economic infrastructure has started to deliver the level and nature of
major project opportunity specifically attractive to the Group.
Global socio-economic growth and development, driven primarily from Asia, continues to
place increased demand into the natural resources sector. Indications are that demand growth
will continue for the foreseeable future before reaching a new sustainable level.
As a consequence, the Group’s resources-driven international markets have remained positive
with countries forming the Gulf Cooperative Council in Middle East continuing to invest the
free cash flow benefit of strong oil revenues into the extension of their regional economic
infrastructure. The Canadian and Australian mining contracting markets have also continued
to offer growth and conditions in the global oil & gas sector remain buoyant, which bodes well
for the future performance of Australian subsidiary Clough. |
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