Construction group Wilson Bayly Holmes-Ovcon said yesterday it had approved capital expenditure of R401-million for the next financial year, the majority of which will be used to equip new contracts in Africa and to replace existing plant items.

To date, R69-million of the approved capital budget has been committed, it said.

WBHO said its building and civil division starts the 2011 financial year with an order book of R4.3-billion, from R5.8-billion, while the total order book at July 1 stood at R12.1-billion, from R15.3-billion previously.

It said its building and civil engineering division achieved a turnover of R5.5-billion from R5.4-billion, while operating profit increased 39% to R430-million.

"The division concentrated on projects for Eskom, Sasol, Transnet and the mining industry, and also contributed to civil works on two World Cup stadiums. Continuing work on the Duncan dock in Cape Town is progressing well," it said.

The group said a strong presence has been maintained in the Western Cape. In 2009 the Cape division successfully expanded into Zambia to exploit opportunities in that country and further projects are currently being negotiated.

The bulk of the work in KwaZulu-Natal related to the World Cup, with hospital projects and commercial developments continuing to be a source of work.

"This market is very competitive and we can expect further declines in construction activity," Wilson Bayly said.

WBHO said recovery from the global financial crisis had been slower than initially expected and the construction industry tended to lag the economic cycle by between six and 18 months.

"Fixed investment by the private sector has slowed and the industry has put much store in the infrastructural works programme announced by government," it said.

The group said Asia had not been affected by the global crisis to the same degree as the industrialised world and continues to achieve reasonable growth, especially China and India.

"This growth has fortunately increased the demand for resources, particularly from Australia and Africa. It is in this arena that the group is actively pursuing opportunities," the group said.