Mass housing contractor and property developers, Sea Kay Holdings interim results to end December 2009 reflect the extremely difficult trading conditions experienced in these sectors over the past six months.
But the company believes the market for its services is improving and better prospects lie ahead - especially after Government's current focus on the World Cup Soccer event and the Gautrain rapid rail project subsides.
Sea Kay Holding's managed to maintain revenue for the first six months at reasonably buoyant levels - R405-million as opposed to R432-million for the previous comparable period (a decline of 6,36%).

However, operating profit declined from R81-million during the previous period to an operating loss of R51-million - mainly due to losses incurred in the building material supply and property development divisions and impairment of trade receivables and loans of R27-million in the housing division. In addition, turnover budgets were not reached and the operating margin underwent severe strain.
The Headline loss for the period was R57-million, which translated into a Headline Earnings Per Share loss of 11,76 cents a share.

One of the group's principal problems experienced during the period under review was the slow payment for services rendered by its clients - principally Government's housing departments.
However, it has taken remedial action to address this problem by establishing a special costing office whose main focus will be to facilitate and track payments to facilitate maximum efficiency in the collection of debtors.
The deteriorating economic conditions have effected the ability of banks and other financial institutions to fund housing projects, which, in turn, has negatively impacted on the GAP and credit-linked housing market (house in the R200 000 to R380 000 range).

In response, homebuilders Sea Kay Engineering Services have shifted their focus to Government's Breaking New Ground (BNG) low cost housing initiatives. The company is expecting new allocations of BNG housing projects to be made in the next six months, and, as a result is forecasting higher volumes of work from this sector in the medium term.
Sea Kay's property development division has been involved in discussions with financial institutions and private sector companies to develop its own integrated housing developments and the first of these should commence in the Western Cape shortly. These projects have the potential to provide a strong pipeline of work for home builders Sea Kay Engineering Services as well as the property development and civil engineering divisions into the future.

The group's best performer over the period was the Lonerock civil engineering division which made a R35-million profit before tax on revenue of R259-million. Lonerock constructs roads and freeways and undertakes a broad range of civil engineering projects. The company is currently tendering on a number of projects, which, if it is successful, could have a significant impact on its revenues going forward.
Sea Kay is also planning to diversify into contracting for other Government departments such as the Department of Health and Education and says it's encouraged by the additional 14% funding allocation by Government to its BNG housing programme in the March Budget to help in the eradication of informal settlements.

"The group's future prospects - after the 2010 Soccer World Cup and the completion of the Gautrain project - look healthier and buoyant. Management is confident that Government's spending to improve the country's infrastructure will take centre stage, and continue to increase. Housing and the eradication of informal settlements remain at the forefront of Government's infrastructure investment programmes," says acting Group chairman Pieter van der Schyf.