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Audited summary consolidated financial statements for the year ended 30 June 2015
Wilson Bayly Holmes-Ovcon Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1982/011014/06)
Share code: WBO ISIN: ZAE000009932
(“WBHO”)
AUDITED SUMMARY CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2015
HIGHLIGHTS
Revenue
Up 15% to R29,5 billion
2014: R25,7 billion
Operating margin
Down to 2,7%
2014: 4,0%
HEPS
Continuing operations
Down 13,5% to 1 106 cents
2014: 1 278 cents
Cash
Up 51% to R3,9 billion
2014: R2,7 billion
ROCE
Down to 18,0%
2014: 22,7%
LTIFR
Down to 0,75
2014: 0,94
BASIS OF PREPARATION
for the year ended 30 June 2015
The summary consolidated financial statements, which are derived from the full audited consolidated financial
statements, are prepared in accordance with the JSE Limited Listings Requirements, the framework concepts
and the measurement and recognition requirements of International Financial Reporting Standards (IFRS), the
information required by IAS 34 Interim Financial Reporting, the SAICA Financial Reporting Guides as issued by
the Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting
Standards Council and the requirements of the Companies Act of South Africa.
The accounting policies applied in the preparation of these summary consolidated financial statements are in
accordance with IFRS and are consistent with the accounting policies applied in the preparation of the previous
consolidated financial statements.
These summary consolidated financial statements together with the audited consolidated financial statements
for the year ended 30 June 2015 have been audited by BDO South Africa Inc., who expressed an unmodified
opinion thereon.
The audited consolidated financial statements together with BDO South Africa Inc.’s, unmodified audit report is
available on the company’s website at www.wbho.co.za, at the company’s registered offices and upon request.
INDEPENDENT AUDITOR’S REPORT
To the Shareholders of Wilson Bayly Holmes-Ovcon Limited
The summary consolidated financial statements of Wilson Bayly Holmes-Ovcon Limited, contained in the
accompanying abridged report, which comprise the summary consolidated statement of financial position as
at 30 June 2015, the summary consolidated statements of financial performance, changes in equity and cash
flows for the year then ended, and related notes, are derived from the audited consolidated financial statements
of Wilson Bayly Holmes-Ovcon Limited for the year ended 30 June 2015. We expressed an unmodified audit
opinion on those consolidated financial statements in our report dated 28 August 2015.
The summary consolidated financial statements do not contain all the disclosures required by International
Financial Reporting Standards and the requirements of the Companies Act of South Africa as applicable to
annual financial statements. Reading the summary consolidated financial statements, therefore, is not a
substitute for reading the audited consolidated financial statements of Wilson Bayly Holmes-Ovcon Limited.
Directors’ responsibility for the summary consolidated financial statements
The directors are responsible for the preparation of the summary consolidated financial statements in
accordance with the requirements of the JSE Limited Listings Requirements for abridged reports, set out in the
Basis of preparation note to the summary financial statements, and the requirements of the Companies Act of
South Africa as applicable to summary financial statements, together with such internal control as the directors
determine is necessary to enable the preparation of summary consolidated financial statements that are free
from material misstatement, whether due to fraud or error.
Auditor’s responsibility
Our responsibility is to express an opinion on the summary consolidated financial statements based on our
procedures, which were conducted in accordance with International Standard on Auditing (ISA) 810,
Engagements to Report on Summary Financial Statements.
Opinion
In our opinion, the summary consolidated financial statements derived from the audited consolidated financial
statements of Wilson Bayly Holmes-Ovcon Limited for the year ended 30 June 2015 are consistent, in all
material respects, with those consolidated financial statements, in accordance with the requirements of the
JSE Limited Listings Requirements for abridged reports set out in the Basis of preparation note to the summary
financial statements and the requirements of the Companies Act of South Africa as applicable to summary
financial statements.
Other matter
We have not audited future financial performance and expectations by management included in the
accompanying summary consolidated financial statements and accordingly do not express any opinion thereon.
BDO South Africa Incorporated
Per: Japie Schoeman
Director
Registered Auditor
28 August 2015
22 Wellington Road
Parktown
2193
CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE AND OTHER COMPREHENSIVE INCOME
for the year ended 30 June 2015
Restated
Audited Audited
% 2015 2014
change R’000 R’000
Revenue 14,8 29 522 972 25 721 683
Operating profit before non-trading items (22,9) 793 428 1 029 446
Impairment of goodwill (115 982) (392)
Loss on deemed disposal of associate – (1 914)
Impairment of property, plant and equipment (53 926) (15 340)
Gain on disposal of property 14 813 –
Share-based payment expense (36 235) (33 337)
Operating profit 602 098 978 463
Share of profits from associate 46 189 11 168
Net finance income 116 478 114 091
Profit before taxation 764 765 1 103 722
Taxation (250 786) (332 149)
Profit from continuing operations (33,4) 513 979 771 573
Profit/(loss) from discontinued operations 93 307 (523 336)
Profit for the year 607 286 248 237
Other comprehensive income
Items that may be reclassified to profit or loss
Translation of foreign entities (269 854) (64 216)
Share of associates’ comprehensive income 7 018 6 967
Total comprehensive income for the year 334 450 190 988
Total comprehensive income attributable to:
Equity shareholders of Wilson Bayly Holmes-Ovcon Limited 304 868 401 252
Non-controlling interests 39 582 (210 264)
334 450 190 988
Profit attributable to:
Equity shareholders of Wilson Bayly Holmes-Ovcon Limited 568 680 422 742
Non-controlling interests 38 606 (174 505)
607 286 248 237
Earnings per share – total operations
Basic earnings per share (cents) 34,8 1 029,5 763,8
Diluted earnings per share (cents) 35,0 1 029,5 762,6
Headline earnings per share (cents) 0,2 1 175,2 1 172,6
Dividend per share (cents) 368,0 368,0
Profit from continuing operations attributable to:
Equity shareholders of Wilson Bayly Holmes-Ovcon Limited 501 885 703 384
Non-controlling interests 12 094 68 189
513 979 771 573
Earning per share – continuing operations
Basic earnings per share (cents) (28,5) 908,6 1 270,8
Diluted earnings per share (cents) (28,4) 908,6 1 268,8
Headline earnings per share (cents) (13,5) 1 105,7 1 278,4
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2015
Audited Audited
2015 2014
R’000 R’000
Stated capital and reserves at the beginning of the year 4 591 240 4 423 257
Profit for the year 568 680 422 742
Other comprehensive loss (263 812) (21 490)
Dividend paid (215 171) (235 490)
Treasury shares acquired (52 079) –
Share-based payment expense 32 117 33 337
Share-based payment settlement 845 12 496
Changes in shareholding (49 102) (43 612)
Stated capital and reserves at the end of the year 4 612 718 4 591 240
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 30 June 2015
Audited Audited
2015 2014
R’000 R’000
ASSETS
Non-current assets
Property, plant and equipment 1 984 417 2 164 724
Goodwill 498 266 644 936
Investment in associates 203 923 97 847
Investments 148 465 96 997
Long-term receivables 118 943 292 345
Deferred taxation 462 279 365 903
Total non-current assets 3 416 293 3 662 752
Current assets
Inventories 215 108 259 025
Amounts due by customers 1 058 957 929 688
Trade and other receivables 5 090 207 4 955 738
Taxation receivable 355 900 356 268
Cash and cash equivalents 3 995 089 2 756 700
Total current assets 10 715 261 9 257 419
Assets held-for-sale 237 610 477 642
Total assets 14 369 164 13 397 813
EQUITY AND LIABILITIES
Capital and reserves
Stated capital 28 625 28 625
Non-distributable reserves 297 321 578 873
Distributable reserves 4 286 772 3 983 742
Shareholder’s equity 4 612 718 4 591 240
Non-controlling interests 262 443 273 776
Total equity 4 875 161 4 865 016
Non-current liabilities
Share scheme liability 22 734 18 761
Borrowings 112 530 166 142
Deferred taxation 47 708 32 591
Total non-current liabilities 182 972 217 494
Current liabilities
Excess billings over work done 1 499 471 1 417 028
Trade and other payables 5 570 407 4 697 296
Short-term portion of borrowings 139 045 149 645
Provisions 1 619 749 1 313 421
Taxation payable 50 174 66 552
Bank overdraft – 115 605
Total current liabilities 8 878 846 7 759 547
Liabilities associated with disposal group held-for-sale 432 185 555 756
Total equity and liabilities 14 369 164 13 397 813
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 30 June 2015
Audited Audited
2015 2014
R’000 R’000
Operating profit before working capital requirements 1 410 626 1 344 045
Working capital changes 1 142 304 (546 938)
Cash generated from operations 2 552 930 797 107
Net finance income 69 531 61 005
Taxation paid (363 767) (548 071)
Dividends paid (251 593) (265 089)
Cash retained from operations 2 007 101 44 952
Cash flow from investing activities
Advances of long-term receivables (231 419) (211 166)
Additions to investments (58 127) (53 547)
Additional investments in associates (80 917) (27 524)
Repayment of loans by associates 13 785 –
Repayment of receivables – 15 753
Proceeds on disposal of businesses 161 106 29 052
Proceeds on disposal of property, plant and equipment 134 758 106 175
Purchase of property, plant and equipment (202 436) (302 143)
Net cash flow from investing activities (263 250) (443 400)
Cash flow from financing activities
Repayment of interest-bearing borrowings (24 109) (22 565)
Transactions with owners (64 538) (54 787)
Instalments in respect of capitalised finance leases (153 824) (163 494)
Purchase of treasury shares (52 079) –
Net cash flow from financing activities (294 550) (240 846)
Net increase/(decrease) in cash and cash equivalents 1 449 301 (639 294)
Foreign currency translation effect (146 214) (59 693)
Net overdraft acquired – (263 927)
Cash and cash equivalents disposed of (12 823) –
Net overdraft at the beginning of the year in respect of disposal group (268 450) –
Cash and cash equivalents at the beginning of the year 2 641 095 3 335 559
Net overdraft in respect of disposal group 332 180 268 450
Cash and cash equivalents at the end of the year 3 995 089 2 641 095
NOTES TO THE AUDITED RESULTS
for the year ended 30 June 2015
1. RECONCILIATION OF HEADLINE EARNINGS
Restated
Audited Audited
2015 2014
R’000 R’000
Continuing operations
Attributable profit 501 885 703 384
Adjusted for:
Group:
Impairment of goodwill* 99 283 392
Loss on deemed disposal of associate – 1 914
Impairment of property, plant and equipment* 49 953 14 825
Net gain on disposal of property, plant and equipment* (35 011) (12 213)
Tax effect thereof (5 359) (731)
Headline earnings from continuing operations 610 751 707 571
Total operations
Attributable profit 568 680 422 742
Adjusted for:
Group:
Impairment of goodwill* 99 283 392
Loss on deemed disposal of associate – 1 914
Impairment of property, plant and equipment* 49 953 214 849
Net gain on disposal of property, plant and equipment* (35 011) (12 213)
Gain on disposal of associate* (2 464) –
Net (gain)/loss on disposal of operations* (26 418) 22 101
Tax effect thereof (4 904) (731)
Headline earnings 649 119 649 054
* Net of non-controlling interests
2. DISCONTINUED OPERATIONS AND NON-CURRENT
Restated
Audited Audited
2015 2014
R’000 R’000
ASSETS HELD-FOR-SALE
Revenue 271 093 538 955
Operating profit/(loss) before non-trading items 97 480 (60 529)
Impairment of property, plant and equipment – (360 014)
Profit on sale of associate 4 435 –
Gain/(loss) on disposal of operations 20 573 (39 778)
Onerous contracts – (35 233)
Operating profit/(loss) 122 488 (495 554)
Share of profits from associate – 5 223
Net finance costs (18 319) (32 195)
Profit/(loss) before tax 104 169 (522 526)
Taxation expense (10 862) (810)
Profit/(loss) from discontinued operations 93 307 (523 336)
Effect of restatement – (3 694)
As previously reported 93 307 (527 030)
Profit/(loss) from discontinued operations attributable to:
Equity shareholders of Wilson Bayly Holmes-Ovcon Limited 66 795 (280 642)
Non-controlling interests 26 512 (242 694)
93 307 (523 336)
Disposal group held-for-sale
Property, plant and equipment 206 079 178 000
Inventories 5 000 137 270
Trade and other receivables 10 447 44 722
Cash and cash equivalents 16 084 32 085
Assets of disposal group held-for-sale 237 610 392 077
Trade and other payables (83 922) (213 108)
Provisions – (42 113)
Bank overdraft (348 263) (300 535)
Liabilities associated with disposal group held-for-sale (432 185) (555 756)
Non-current asset held-for-sale
Investment in associate – 85 565
3. SEGMENTAL INFORMATION
Building and civil engineering
2015 2014
R’000 R’000
Revenue 7 385 199 7 001 985
Operating profit before non-trading items 351 685 329 089
Additional items regularly reported to the executive committee:
Impairment of goodwill – –
Depreciation and amortisation 57 662 51 862
Capital expenditure 74 804 53 614
Roads and earthworks
2015 2014
R’000 R’000
Revenue 5 282 022 5 001 508
Operating profit before non-trading items 380 260 413 888
Additional items regularly reported to the executive committee:
Impairment of property, plant and equipment – 14 181
Depreciation and amortisation 133 037 165 639
Capital expenditure 188 218 151 969
Australia
2015 2014
R’000 R’000
Revenue 15 351 787 12 437 970
Operating profit before non-trading items 10 612 250 040
Additional items regularly reported to the executive committee:
Impairment of goodwill 106 857 392
Impairment of property, plant and equipment 53 926 –
Depreciation and amortisation 76 438 75 309
Capital expenditure 44 986 127 804
Construction materials
Restated
2015 2014
R’000 R’000
Continuing operations
Revenue 1 453 234 1 195 619
Operating profit before non-trading items 37 553 8 372
Additional items regularly reported to the executive committee:
Impairment of goodwill 9 125 –
Impairment of property, plant and equipment – 1 159
Depreciation and amortisation 28 857 27 058
Capital expenditure 19 017 79 175
Loss on disposal of operations – 1 639
Discontinued operations
Revenue 271 093 538 955
Operating profit/(loss) before non-trading items 97 480 (60 529)
Additional items regularly reported to the executive committee:
Depreciation and amortisation – 35 463
Impairment of property, plant and equipment – 360 014
Profit/(loss) on disposal of operations/associates 25 008 (39 778)
Property developments
2015 2014
R’000 R’000
Revenue 50 730 84 601
Operating profit before non-trading items 13 318 28 057
Geographical area
Restated
2015 2014
R’000 R’000
Revenue
South Africa 10 495 591 10 242 530
Rest of Africa 3 675 594 3 041 183
Australia 15 351 787 12 437 970
29 522 972 25 721 683
Operating profit before non-trading items
South Africa 452 708 495 022
Rest of Africa 330 108 284 384
Australia 10 612 250 040
793 428 1 029 446
COMMENTARY
FINANCIAL REVIEW
Continuing operations
Performance
Revenue from continuing operations increased by 15% from R25,7b to R29,5b for the year ended 30 June
2015. Growth of 23% from Australia and 21% from the rest of Africa underpinned this performance, however,
moderate growth of 3% was also achieved by our local South African businesses.
The 23% decrease in operating profit before non-trading items from R1b to R793m is primarily due to the
margin of 0,1% (2014: 2%) achieved in Australia for the year, resulting in a decrease in the overall margin from
4% to 2,7%. Four loss-making projects within the group’s Australian civil businesses, combined with poor
trading conditions in general, were the main contributors behind this disappointing performance. The
performance of the group’s African based businesses improved marginally from R779m to R783m, where
healthy profitability within the Building and civil engineering division largely offset declining margins within the
Roads and earthworks division.
The results included under Property developments represent the transfer of the remaining stands at the
Simbithi Eco-Estate near the King Shaka International Airport in KZN.
Goodwill
The current poor performance from the group’s Australian civil businesses together with what remains a
negative outlook for future earnings, has necessitated an impairment of all the goodwill in respect of these
businesses amounting to R50m. A further amount of R57m has been impaired in respect of Monaco Hickey,
a business focusing on the extremely competitive Australian pharmaceutical and healthcare markets.
Property, plant and equipment
The weak trading conditions within Australian civil markets have further resulted in an over-supply of plant in the
sector and hence a steep decline in market values. Impairments of R45m and R9m have been made to reduce
the respective carrying amounts of plant and equipment within WBHO Civil and Probuild Civils to their net
realisable values.
Capital expenditure during the period amounted to R327m and depreciation amounted to R296m (2014: R320m).
The approved capital expenditure budget for FY16 amounts to R260m.
Share-based payment expense
During the year the group implemented the WBHO Share Plan which was approved at the last annual general
meeting as well as issuing additional share options from the WBHO Management Trust. A pro rata expense of
R2m was recognised in the current year. The balance of the share-based payment expense of R34m relates to
the existing Akani (the group’s broad-based share scheme initiative) and management share schemes in place.
Associated companies
The group has an interest in three associated companies, namely Dipalopalo, a concession company
responsible for the serviced accommodation of the new building for the Department of Statistics, Gigawatt
Power, the concession company which will provide electricity generated from a new gas-fired power station
currently under construction in Mozambique and Gigajoule International, a shareholder in the Matola Gas
Company which sells and distributes gas in Mozambique.
In the current year equity of R67m has been invested within the two concession companies. The income from
associate of R46m recognised this year relates to the group’s share of income in respect of Matola Gas
Company and rental income received by Gigawatt Power from Aggreko. No income has been recognised in
respect of Dipalopalo during the year as the project is still in the construction phase.
Changes in shareholding
In order to facilitate the restructuring of the Australian civil businesses, all the shares owned by management
were acquired during the year at a cost of AU$1m. A further 0,5% interest in Probuild was also acquired at a
cost of AU$1,2m in terms of the Contexx purchase agreement.
Discontinued operations
During the year the group disposed of its interests in Bela-Bela, a quarry in Botswana, as well as Dywidag
Systems International (DSI). The results of Bela-Bela have been disclosed as part of discontinued operations in
the current year and the comparative information has been restated in accordance with IFRS. DSI had been
disclosed as a discontinued operation at 30 June 2014.
The amounts reflected under discontinued operations in FY15 represent the final trading of Capital Star Steel
(CSS), the results from Bela-Bela prior to disposal as well as any gains or losses recognised on the actual
disposals of the various businesses. Foreign exchange gains amounting to R 147m have been included in the
trading of CSS, arising from the functional currency of CSS being US dollars.
Earnings per share and headline earnings per share
Full earnings per share increased by 35% from 764 cents per share at 30 June 2014 to 1,029 cents per share
at 30 June 2015, while full headline earnings per share increased by 0,2% to 1,175 cents per share from
1,173 cents per share.
The disappointing performance from Australia together with the various impairments recognised,resulted in
earnings per share in respect of continuing operations decreasing by 28,5%. Headline earnings per share
in respect of continuing operations, which excludes the effects of the impairments, decreased by 13,5% over
the comparative period.
Cash
The 51% increase of R1,4b in cash balances to R4b, excludes the net overdraft of R322m (2014: R268m)
included within the disposal group held-for-sale. Cash generated from operations amounts to R2,6b compared
to R797m in the comparative period. The primary reason for the improvement in working capital is the current
higher proportion of building work which is largely cash generative.
Contingent liabilities
Financial guarantees issued to third parties amount to R6,2b compared to R6,6b issued as at 30 June 2014.
OPERATIONAL REVIEW
BUILDING AND CIVIL ENGINEERING
2015 2014
Rm Rm
Revenue 5,5% growth 7 385 7 002
Operating profit 4,8% margin 352 329
Building
The group’s building divisions delivered a strong set of results both locally as well as in Ghana. Retail and
commercial offices continue to contribute strongly toward the revenue, supported by various projects from
within the healthcare, leisure and entertainment sectors.
The high activity levels achieved in Gauteng in FY14 were sustained throughout FY15. Having successfully
delivered a number of shopping centres in the first six months of the year, focus has shifted onto the execution
of a number of large scale projects. These include new phases at both Menlyn Maine and Alice Lane in
Tshwane and Sandton respectively, serviced accommodation for the Department of Statistics, secured through
the group’s Projects division, and new offices for Discovery in Sandton and Price Waterhouse Coopers in
Waterfall, Midrand. Construction at the Mall of Africa shopping centre, also located at Waterfall, is ongoing and
due for completion in the first half of 2016.
In the coastal regions lower revenue from the Western Cape, following the completion of the Kathu photovoltaic
solar farm in the Northern Cape, was offset by growth from KwaZulu-Natal (KZN) and a vastly improved
performance from the Eastern Cape. Activity in the Western Cape has largely been centred at the V&A
Waterfront in Cape Town where the division has secured a number of projects over the course of FY14 and
FY15. In the city centre the construction of the structure for a new hospital is approaching completion.
The development of the Umhlanga Ridge in KZN remained a strong source of work during the year with various
commercial offices under construction. In the Eastern Cape activity levels have improved and during the year
two large warehouses at the COEGA development zone were completed, which together with further
construction at the Greenacres shopping centre, formed the bulk of the division’s workload in FY15.
In Ghana, the completion of the West Hills and Junction malls together with ongoing construction at the
Achimota and Kumasi malls, awarded toward the end of FY14, resulted in 30% growth over the prior year.
Civil engineering
Construction of the main civil works at the Kusile Power Station is complete and the re-access works behind
the mechanical and electrical contractors has now commenced. An agreement has been reached with Eskom
in respect of the variations and outstanding claims relating to the project. During the year the division also
completed construction of the ancillary mining infrastructure for the coal processing and handling plant at
Glencore’s Tweefontein mine as well as a new malting plant for SAB.
Following the low activity levels within the mining sector, which continue to impact the volume of work on hand,
and the release of a significant number of resources from Kusile, a process of right-sizing the division was
completed in the second half of the year.
In Mozambique, the construction at Ressano Garcia, the gas-fired power station, in conjunction with the
group’s Projects and Roads and earthworks divisions, along with various smaller-scale industrial projects in
Zambia, supported good growth from the Civil engineering divisions in the rest of Africa.
ROADS AND EARTHWORKS
2015 2014
Rm Rm
Revenue 5,6% growth 5 282 5 002
Operating profit 7,2% margin 380 414
The growth achieved by the group’s Roads and earthworks division is commendable given the weak trading
conditions across global civil markets. The division’s South African business units performed strongly where
23% growth offset lower revenue from the rest of Africa, however, the current weighting of work toward public
sector roadwork continues to impact margins.
Within SADC, the bulk of the division’s remaining mining projects were successfully completed during the year
with very little replacement work derived from this sector. Once again, roadwork (both construction and
surfacing) and the energy related projects at Kusile comprised the bulk of the division’s local workload
supported by both small and large scale pipeline contracts and a number of rural housing contracts.
Revenue from Botswana dropped off significantly in FY15 following the completion of the problematic North
South Carrier Pipeline and very few available mining opportunities. Conversely, activity levels in Mozambique
improved over the period, where the division secured a number of mining and roadwork contracts. In West
Africa, the reduced activity levels associated with the smaller scale projects being secured improved over the
prior year, however, the division is yet to secure an anchor project in the region in the current climate.
AUSTRALIA
2015 2014
Rm Rm
Revenue 23,4% growth 15 352 12 438
Operating profit 0,1% margin 11 250
While the group achieved strong growth of 23% in Australia this year the overall result was particularly
disappointing, impacted by poor results from the civil businesses.
Building
Building markets in Australia remain buoyant and Probuild’s building divisions delivered strong top-line growth
of 42% in FY15, however, margins are still competitive. Although growth was generated across most of the
divisions, it was centred in Melbourne where activity levels increased significantly following the award of a
number of major projects in the latter half of last year. In FY14, Probuild also gained entry to the Brisbane
market following the procurement of two projects for existing clients. Construction of these projects is under
way and the Brisbane business is now well established and profitable. Monaco Hickey, which historically
serviced the healthcare and pharmaceutical markets, has struggled in recent years and revenue was again
lower in FY15 and management have expanded the company’s target markets to include smaller scale
commercial projects in order to improve activity levels.
Civil Engineering
Revenue from the civil businesses decreased by 29% in FY15 as mining activity in Western Australia remained
subdued and Probuild Civil were unable to replace the work secured during the flood relief programmes in
Queensland, which ended in FY14. Of the four loss-making projects previously reported upon, three were
completed in the second half of the year with the remaining project due for completion in October 2015. Good
progress has been made in resolving the claims relating to these projects, however, they will only be finalised in
the first half of the new financial year.
Both WBHO Civil and Probuild Civil have been down-sized during the course of the year in accordance with
anticipated activity levels within their markets.
CAPITAL AFRICA STEEL
Restated
2015 2014
Rm Rm
Continuing operations
Revenue 22,5% growth 1 453 1 196
Operating profit 2,6% margin 38 8
Revenue from continuing operations (Reinforced Mesh Solutions (RMS) and 3Q Concrete) improved
significantly over the prior period as demand from the local building sector strengthened. While operating
profitability showed some improvement as well, margins are still very low. The falling steel price negatively
impacted the performance from RMS.
In March 2015, Capital Africa Steel signed an exclusive sale of shares agreement for the sale of Capital
Star Steel (CSS), the group’s pipe factory in Mozambique, where production ceased in December 2014.
On 1 June 2015 the purchaser signed a heads of agreement with the banks in respect of restructuring the
debt within CSS and the detailed funding arrangements are currently being negotiated.
ORDER BOOK AND PROSPECTS
2015 2014
Order book by segment % Rm % Rm
Building and civil engineering 24 9 136 23 8 207
Roads and earthworks 10 3 789 14 5 064
Australia 66 24 507 63 22 880
Total 100 37 432 100 36 151
2015 2014
Order book by segment % Rm % Rm
South Africa 29 11 005 31 11 363
Rest of Africa 5 1 920 6 1 908
Australia 66 24 507 63 22 880
Total 100 37 432 100 36 151
The order book at 30 June 2015 has increased by 3,5% over the prior period and reflects increases to the
order books of the group’s building divisions locally, as well as in the rest of Africa and Australia.
The challenging conditions within civil markets are evident in the 25% decrease in the Roads and earthworks
order book to R3,7b, however, R687m has been secured subsequent to 30 June 2015. The heavier weighting
toward lower margin building and roadwork included in the group’s book means margins are likely to remain at
the lower end of the group’s targeted range over the short to medium term.
South Africa and the rest of Africa
The local building market continues to deliver a number of major projects each year of which the group’s
building divisions are able to secure a significant share. With a strong horizon through to FY17, activity levels
and margins from the division are likely to be sustained over the near term. Focused attention on project
execution will remain a priority in the year ahead to ensure delivery to our exacting standards is maintained.
Recent awards of major projects in the second half of FY15 include commercial offices at 140 West Street in
Sandton, the Ballito shopping centre in KZN, the fit out of the Netcare Hospital and additional phases at the
V&A Waterfront in the Western Cape. Additional opportunities targeted within the procurement pipeline include
projects from the entertainment, retail and healthcare sectors.
In the rest of Africa, the division is the preferred contractor for two retail developments in Ghana and Mozambique.
While the outlook for the civil engineering division, which is heavily reliant on the mining and industrial sectors
remains concerning, the division successfully secured contracts for the construction of a parkade for Nedbank,
administrative offices for Transnet at COEGA in the Eastern Cape and extensions to a mill for Petro Diamonds
which will support activity in the year ahead. Furthermore, a number of opportunities in the oil and gas, energy
and mining sectors expected to reach the market in FY16 have been targeted.
The Roads and earthworks division has in recent years successfully re-directed resources into other markets
as mining opportunities have dried up, however, the potential impact of the current low-growth economic
environment on the public sector’s ability to fund future infrastructure projects is concerning. Having tapered
off over the second half of FY15, activity in the road sector has again shown improvement with SANRAL
recently releasing a number of projects to the market. Construction of the BRT projects in KZN and Sandton
and upgrades to the R24 to Rustenburg and N2 to Grahamstown will form the bulk of the local work from this
sector in FY16. The pipeline market is also becoming significantly more competitive with an increasing number
of contractors bidding on available projects, however, the division was recently lowest on a tender for Umgeni
Water in KZN. Construction of the ash dams and coal stock yard at the Kusile Power Station will continue until
the end of the FY16 financial year. Two additional rural housing projects in KZN were secured in the second half
of the year. With the Medupi Power Station coming on-stream and construction at the Kusile Power Station
advancing, it is anticipated that coal-related mining projects will begin to materialise.
In the rest of Africa smaller-scale mining projects will continue to be targeted in order to retain a strategic
presence in key markets. Various projects of this nature were secured in Botswana and Ghana toward the end
of FY15 which will sustain our current activity levels. In Mozambique further phases for the rehabilitation of the
EN4 were secured during the year while a project for the rehabilitation of a tailings facility on the Benga Coal
mine in Tete was secured post year end.
Under these challenging conditions, revenue and margins from the Roads and earthworks division are
expected to remain under pressure over the short term. The division’s strategy of maintaining a low cost base
in strategic territories is essential to afford the necessary flexibility to pursue opportunities as they arise.
Bidding on the enabling works for gas infrastructure in Mozambique is currently a key focus for the group, in
addition the renewable energy sector locally continues to provide EPC opportunities.
Australia
Probuild’s reputation for consistent delivery and strong client relationships continues to provide opportunities
to gain entry to new markets. Having successfully established a footprint in Brisbane following the award of
two projects for existing clients in FY15, Probuild’s building division has now secured a NZ$390m contract in
New Zealand, where building activity is again increasing. Strong Asian investment continues to support the
retail and residential sectors in Melbourne and Sydney, while commercial office developments are providing
opportunities as well. Building activity in Perth is expected to decline over the short-term as investment in the
region is largely reliant on the mining sector which remains subdued.
The weak trading conditions within the traditional markets of the Australian civil businesses are expected to
continue for some time. Increased public spending on infrastructure within Melbourne and Sydney have been
identified by management as opportunities for growth. In response, the civil headquarters have now been
relocated to Melbourne and in April 2015 a recognised leader from the civil industry was appointed to
reposition the business and target these markets. As previously mentioned, the capacity of the businesses in
Western Australia and Queensland have been aligned to current activity levels in their respective markets.
INDUSTRY MATTERS
WBHO continues to develop its defence with regard to the “World Cup Stadia meeting” referred to the
Competition Tribunal and the civil claim received from the City of Cape Town. WBHO remains confident that it
can defend these cases and has not made a provision in this regard.
The Construction Industry Development Board gave notice to the 15 contractors who settled with the
Competition Commission of their intention to launch a formal inquiry with regard to the conduct of these
contractors, this inquiry is currently being challenged.
SAFETY
The downward trend in the group’s safety record continues with the LTIFR decreasing further from 0,94 at
30 June 2014 to 0,75 in the current year. Sadly, the group experienced one subcontractor work-related fatality
in the period. Three further non-work related fatalities were recorded. We extend our heartfelt condolences to
their families, friends and colleagues.
APPRECIATION
The directors and management again thank our employees, clients and all other stakeholders for their
contribution and ongoing support and loyalty.
DIVIDEND DECLARATION
Notice is hereby given that the directors have declared a final gross dividend of 258 cents per share (2014:
233 cents) payable to all shareholders recorded in the register on 16 October 2015.
In terms of the dividends tax legislation the following information is disclosed:
The dividend is made from income reserves and is subject to dividend withholding tax of 15% which results in
a net dividend of 219,30 cents per share. The company has no STC credits to be utilised.
The number of shares in issue at date of declaration amount to 66 000 000 (54 886 485 exclusive of treasury
shares) and the company’s tax reference number is 9999597710.
In order to comply with the requirements of Strate, the following details are relevant:
Last date to trade cum dividend: Friday, 9 October 2015
Trading ex dividend commences: Monday, 12 October 2015
Record date: Friday, 16 October 2015
Payment date: Monday, 19 October 2015
Shares may not be dematerialised or rematerialised between Monday, 12 October and Friday 16 October 2015,
both dates inclusive.
MS Wylie EL Nel CV Henwood
Chairman Chief Executive Officer Chief Financial Officer
28 August 2015
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