To view the PDF file, sign up for a MySharenet subscription.

WBO - Wilson Bayly Holmes - Ovcon Limited - Audited financial results for the

Release Date: 05/09/2011 10:00
Code(s): WBO
Wrap Text

WBO - Wilson Bayly Holmes - Ovcon Limited - Audited financial results for the year ended 30 June 2011 WILSON BAYLY HOLMES - OVCON LIMITED Building and civil engineering contractors (Registration no. 1982/011014/06) ISIN No: ZAE 000009932 Share code: WBO Sponsor: Investec Bank Limited Audited financial results for the year ended 30 June 2011 Revenue down 3% Operating profit down 14% Headline earnings down 20% SUMMARISED CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE Audited Audited June June % 2011 2010
change R`000 R`000 Revenue (2,9) 14 766 631 15 201 095 Operating profit before non-trading items (14,5) 1 090 049 1 274 174 Impairment of goodwill/negative goodwill (36 266) (219) realised Fair value adjustment to investments 97 2 583 Impairment of loan to associate (65 867) - Profit/(loss) on disposal of investments 57 921 (5 682) Share-based payment expense (32 418) (8 922) Operating profit 1 013 516 1 261 934 Share of profits and losses in associates (51 388) (30 386) Income from investments 224 727 279 505 Operating income 1 186 855 1 511 053 Finance costs (18 089) (17 018) Profit before taxation 1 168 766 1 494 035 Taxation (380 000) (466 524) Profit for the year (23,2) 788 766 1 027 511 Operating margin 7 4% 8,4% Profit attributable to Equity shareholders of Wilson Bayly Holmes- 733 475 961 485 Ovcon Limited Non-controlling interests 55 291 66 026 788 766 1 027 511 Reconciliation of headline earnings Attributable profit 733 475 961 485 Adjusted for: Impairment of goodwill 36 266 219 Impairment of loan 65 867 - (Profit)/loss on disposal of investments (57 921) 5 682 Profit on disposal of property, plant and (2 502) (3 703) equipment Tax effect thereof (412) 1 036 Headline earnings (19,7) 774 773 964 719 Ordinary shares Issued (`000) 66 000 66 000 Weighted average number of shares (`000) 54 727 54 791 Diluted weighted average number of shares 55 237 54 987 (`000) Earnings per share (cents) (23,6) 1 340,2 1 754,8 Diluted earnings per share (cents) (24,1) 1 327,9 1 748,6 Headline earnings per share (cents) (19,6) 1 415,7 1 760,7 Diluted headline earnings per share (20,1) 1 402,4 1 754,4 (cents) Dividend per share (cents) 0,0 330,0 330,0 SUMMARISED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Audited Audited June June 2011 2010
R`000 R`000 Profit for the year 788 766 1 027 511 Translation of foreign entities 17 005 (47 730) Share of associates` comprehensive loss (17 922) (25 978) Total comprehensive income for the year 777 849 953 803 Total comprehensive income attributable to Equity shareholders of Wilson Bayly Holmes-Ovcon 732 558 887 777 Limited Non-controlling interests 55 291 66 026 787 849 953 803 SUMMARISED CONSOLIDATED STATEMENT OF FINANCIAL POSITION Audited Audited
June June 2011 2010 R`000 R`000 ASSETS Non-current assets 2 472 330 2 198 648 Property, plant and equipment 1 433 063 1 203 768 Goodwill 390 467 293 057 Investment in associates 401 116 415 773 Other non-current assets 247 684 286 050 Current assets 7 019 418 7 159 445 Other current assets 4 136 646 3 268 406 Cash and cash equivalents 2 882 772 3 891 039 Total assets 9 491 748 9 358 093 EQUITY AND LIABILITIES Capital and reserves 3 630 209 3 228 245 Ordinary share capital and reserves 3 371 904 3 031 919 Non-controlling interests 258 305 196 326 Non-current liabilities 131 526 82 048 Long-term financial liabilities 90 526 24 946 Other non-current liabilities 41 000 57 102 Current liabilities 5 730 013 6 047 800 Other current liabilities 5 713 620 6 047 800 Bank overdrafts 16 393 - Total equity and liabilities 9 491 748 9 358 093 SUMMARISED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Audited Audited June June 2011 2010
R`000 R`000 Ordinary share capital and reserves at the 3 031 919 2 384 550 beginning of the year Profit for the year 733 475 961 485 Other comprehensive income for the year (917) (62 563) Share of movement in associates` equity (24 812) (6 918) Dividend paid (209 721) (193 974) Cash settled equity instruments raised (1 632) - Treasury shares sold/(acquired) - 3 587 Share based payment expense 13 337 8 922 Goodwill arising from business combinations (169 745) (63 170) Ordinary share capital and reserves at the end of 3 371 904 3 031 919 the year SUMMARISED CONSOLIDATED STATEMENT OF CASH FLOWS Audited Audited June June
2011 2010 R`000 R`000 Operating profit before working capital changes 1 233 151 2 141 491 Working capital changes (887 875) (1 076 702) Cash generated from operations 345 276 1 064 789 Income from investments 224 727 279 505 Finance costs (18 089) (17 018) Taxation paid (650 624) (608 154) Dividends paid (224 562) (193 974) Cash retained from operations (323 272) 525 148 Net cash flow from investing activities (660 148) (611 738) Net cash flow from financing activities (41 240) (54 634) Net (decrease)/increase in cash and cash (1 024 660) (141 224) equivalents Cash and cash equivalents at the beginning of the 3 891 039 4 032 263 year Cash and cash equivalents at the end of the year 2 866 379 3 891 039 SEGMENTAL INFORMATION Audited Audited June June
2011 2010 R`000 R`000 Segment revenue - Building and civil engineering 4 377 474 5 469 684 - Roads and earthworks 4 110 792 4 609 889 - Australia 5 972 873 4 534 442 - Other operations 305 492 587 080 14 766 631 15 201 095
Segment result - Building and civil engineering 332 810 430 024 - Roads and earthworks 524 569 629 779 - Australia 171 200 152 241 - Other operations 61 470 62 130 1 090 049 1 274 174 BASIS OF PREPARATION The summarised financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), IAS 34: Interim Financial Reporting, the South African Companies, Act 71 of 2008, as amended, and the JSE Listings Requirements. The principal accounting policies used in the preparation of the audited results for the year ended 30 June 2011 are consistent with those applied for the previous year. Wilson Bayly Holmes-Ovcon Limited (WBHO) makes estimates and assumptions concerning the future, particularly in regard to construction profit recognition, provisions, and the fair values of certain assets. The resulting accounting estimates can, by definition, only approximate the actual results. Estimates and judgements are based on historical experience and other factors, including expectations of future events which are believed to be reasonable at that time. These results have been audited by the independent, external auditors, BDO South Africa Inc. and their unmodified audit opinion is available for inspection at our registered office. FINANCIAL OVERVIEW When considering the particularly tough market conditions experienced over the last 18 months the group has produced a commendable performance. Revenue decreased marginally to R14,8 billion (2010: R15,2 billion) while the decrease of 14,5% in operating profit before non-trading items to R1,1 billion (2010: R1,3 billion) is representative of the decline in available work and consequential margin pressures. Despite such margin pressures the group has maintained a satisfactory margin of 7,4%, firstly through the finalisation of some major contracts and secondly through effective cost management within the operating divisions. Earnings per share, which decreased by 23,6% to 1,340 cents, was impacted predominantly by the decrease in operating profits but furthermore through impairments of goodwill and loans and a 19,6% decrease in investment income. Headline earnings per share of 1,416 cents, which excludes the effects of impairments and other adjustments, showed a decrease of 19,6%. The initial goodwill recognised on the acquisition of Roadspan Holdings (Proprietary) Limited has been fully impaired following conservative profit forecasts. In December 2010, as part of the group`s interim reporting, the loan to Capital Africa Steel (Proprietary) Limited ("CAS") was impaired by R66 million and no further adjustment was deemed necessary at year end. The group realised a profit of R58 million from the sale of its investment in the Bakwena Platinum Corridor Concessionaire (Proprietary) Limited. The net cash position reduced to R2,8 billion (2010: R3,9 billion) following working capital demands, in particular the absorption of payments in advance and from short-term contract financing for selected clients. Further cash outflows arose from the acquisition of four new subsidiaries, and capital expenditure of R291 million (2010: R256 million) on plant. Capital expenditure of R437 million has been approved for the FY2012, a significant portion of which will be utilised to equip new contracts awarded in the rest of Africa. Financial institutions have issued guarantees to the value of R3,8 billion (2010: R3,5 billion). The directors believe that the risk of loss is minimal. OPERATIONAL REVIEW Building and Civil Engineering Matching the performance of the prior year after the completion of all the major projects was always going to be a challenge for the division. While a decrease in revenue was anticipated, slow starts on some of the division`s larger projects further exacerbated this impact. In Gauteng construction began on the prestigious Alexander Forbes offices in Sandton, whilst work continues on the Standard Bank office block in Rosebank and the Sandton City expansion. Construction also began on new shopping centres on William Nicol Drive, in Sandton and in Middleburg. The Lynwood Precinct in Pretoria and the Mall of the North shopping centre in Polokwane were completed. The division has also been awarded a number of new contracts in the Menlyn suburb of Pretoria. Activity in the coastal markets remains subdued and in the absence of large projects the regions have had to tender on an increased number of smaller projects to keep resources fully utilised. The latter half of the year showed some signs of improvement particularly in KwaZulu-Natal, where the region procured a number of contracts including the Empangeni Hospital. The Western Cape division is involved in a mixed use development in Mauritius and continues with the on-going works at the Cape Town Harbour. In the Eastern Cape, we are optimistic that additional contracts will soon be awarded. On 30 June 2011 the division acquired a 60% interest in Renniks Construction (Proprietary) Limited, a civil contracting company specialising in sliding. The continued strength within the resources market has seen ongoing capital expenditure on the mines which has supported revenue growth within the Civil Engineering division this year. The Kusile Power Station provides a solid revenue stream for the division through to 2013 while work for Sasol and expansion into Botswana and Zambia assisted further in the growth achieved. Project Lion Phase II for Xstrata has recently been awarded to the division. The increase in the division`s order book to R5,7 billion (2010: R4,3 billion:) supports sentiment that WBHO remains the construction company of choice, however projects continue to be secured at competitive margins which will remain evident in the division`s results over the short to medium term. Roads and Earthworks The recessionary effects within the construction environment were perhaps most prevalent within the local roads and earthworks market. Instead of securing projects at very low margins the division elected to focus on strengthening revenue streams from the rest of Africa. Revenue for the period decreased by 10,8% to R4,1 billion (2010: R4,6 billion) with an operating profit of R525 million (2010: 630 million). In South Africa, the North region successfully completed the Bedford and Braamhoek dams for the Ingula Pump Storage scheme. The Free State Roads Project, managed by the Central region together with Edwin Construction (Proprietary) Limited, a group subsidiary, incorporates six road projects and has progressed well. A number of the roads are due for completion ahead of schedule at the end of 2011. Following very little tender activity the Coastal region has focused on low cost housing in the KZN rural area securing three significant projects. In the rest of Africa, mining projects in Sierra Leone, Zambia and in the Moatize coal fields in Mozambique underpinned the division`s offshore operations. Activity in Ghana has also improved and construction of a tailings dam and haul road at the Iduapriem Mine has commenced. In Botswana, mining infrastructure work at Jwaneng for Debswana continues and the division has secured additional work at the AK6 Boteti Mine. The division has also been appointed as the preferred bidder in joint venture, on the North South Carrier project to the value of R1,2 billion. During the year WBHO acquired the remaining 30% interest in both Roadspan Holdings (Proprietary) Limited and Insitu Pipelines (Proprietary) Limited. Within Roadspan the strengthening of the operational teams and upgrading and modernising of the plant over the last twelve months has seen improvements in production and profits. Insitu Pipelines will also have a significant role in the construction of the North South Carrier contract in Botswana. The order book for the Roads and Earthworks division amounts to R2,4 billion (2010: R3,8 billion), however since then R1,7 billion worth of work has been secured. Australia The Australian operations begin the year with an impressive order book of R7,7 billion (2010: R4,1 billion) which represents 140% of the revenue achieved in 2011. However, in line with local markets this increase in activity remains at competitive margins. The acquisition of three subsidiaries together with the strength of the Australian dollar saw revenue from Australia grow by 21% over the comparative period to R5.4 billion (2010: R4,5 billion). On 1 July 2010 Probuild acquired a 60% interest in Monaco Hickey Proprietary Limited (MH), a company specialising in the construction of laboratories and medical facilities. On 1 November 2010 the company also acquired a 51% interest in Contexx Proprietary Limited, a high rise residential building contractor operating in Melbourne. Probuild, produced solid results within the building market and successfully completed the R1,6 billion Myer Shopping Centre redevelopment and the R1,4 billion 717 Burke Street mixed use development in Melbourne. During the year the Highpoint Redevelopment, Monash University research centre and the Precinct Apartments worth R3 billion were awarded in Melbourne. In Perth we secured our first PPP design and construct project the QE11 Medical Centre Car Park valued at R800 million and in Queensland, the R500 million NDRA 18D Clarkson cyclone damage restoration project was also secured. In respect of the civil side of the Australian business, WBHO Australia purchased a 51% share in Carr Civils Proprietary Limited, a roads and earthworks company operating out of Western Australia. With WBHO`s involvement the company has shown considerable growth during the year achieving revenue of R575 million, in line with expectations. CECK Proprietary Limited has again shown revenue growth and continues to achieve solid results each year. Projects The Projects team has been strengthened during the year and was successful in negotiating the design and construct contract for the upgrade of the Beitbridge border post in Zimbabwe. The Overberg Consortium which WBHO is a partner has reached the BAFO stage of the N1/N2 Winelands Project and we expect that the preferred bidder will be announced soon. In addition to a number of other potential projects we are involved in an EPC contract for a new gas fuelled power plant in Mozambique and are preferred bidder on the Department of Rural Development and Land Reform offices in Tshwane. Associated companies The results for Capital Africa Steel (Proprietary) Limited (CAS) were again heavily influenced by conditions within the steel industry and interest accruing on shareholder loans advanced for the construction of the pipe factory in Mozambique. Demand remains volatile with all companies expecting to operate well within capacity. We do anticipate increases in demand but remain concerned about the constrained and volatile market conditions. WBHO together with the shareholders and CAS management has focused on restructuring the group in preparation for a recovery in the steel industry. ACQUISITIONS Subsidiaries The aggregate fair values of the assets and liabilities of the acquisitions (Monaco Hickey Proprietary Limited, Contexx Proprietary Limited, Carr Civils Proprietary Limited, and Renniks (Proprietary) Limited), the non-controlling interests and goodwill recognised and the purchase prices paid are set out below: Total assets 518 498 Total liabilities 318 031 Non-controlling interests recognised on consolidation 61 202 Goodwill recognised on consolidation 97 555 Purchase price 205 873 The aggregate effect of the acquisitions on the group`s results amounted to an increase in revenue of R1,2 billion and an increase in profit after tax of R2 million. Increase in shareholding of existing subsidiaries The aggregate goodwill recognised and purchase prices paid arising from transactions with non-controlling shareholders (Probuild Constructions Proprietary Limited, Roadspan Holdings (Proprietary) Limited and Insitu Pipelines (Proprietary) Limited) are as follows: Goodwill recognised in equity 169 745 Purchase price 221 555 PROSPECTS We commence this financial year with an impressive order book of R16,2 billion (2010: R12,1 billion) which is well balanced with 50% outside of South Africa. 80% of the order book is with private clients and the group thus is well positioned once government spending increases. Margins will remain under pressure for the foreseeable future until there is sufficient work to absorb the excess capacity in the market. Despite the resilience of the resources market, the global economy especially in Europe and America remains sluggish regardless of all the financial support mechanisms put in place. Institutional investment is extremely conservative, which negatively impacts the construction industry. Government in South Africa is still slow in producing an adequate stream of identified infrastructure and PPP work. Our civil business benefits from the mining industry, particularly in Africa and Australia and rides on the back of the demand from China and India. Strategically we are focusing on the civil opportunities in both Africa and Australia and to this end our acquisitions will assist us going forward. The Building division continues to secure opportunities in South Africa and Australia but is intent on procuring further building work in other African countries in order to expand its footprint in a similar fashion to the Roads and Earthworks and Civil Engineering divisions. SAFETY Regrettably, two subcontractors` employees lost their lives in fatal accidents on WBHO sites during the year and we extend our deepest sympathies to their families. This year the group met its safety target of a lost time injury frequency rate (LTIFR) of less than 1 which was set at the beginning of the year achieving an LTIFR of 0,93 (2010: 1,24). TRANSFORMATION This year WBHO was proudly ranked fourteenth in the Financial Mail`s Top Empowerment Companies listed on the JSE. The group continues to concentrate on the training and development of black management through its management development programme. COMPETITION COMMISSION The Competition Commission is currently in the process of assessing WBHO`s submissions which will possibly result in the imposition of an administrative penalty. The outcome of the process will only be known early in 2012 and therefore the group has not made any provision for a penalty in the results for the year ended 30 June 2011. APPRECIATION The board acknowledges the efforts of management and staff over the past year especially when taking cognisance of the difficult conditions experienced over the past 18 months. The board also extends its gratitude once again to all the group`s stakeholders who have supported us during the year. DIVIDEND DECLARATION Notice is hereby given that a final dividend of 220 cents per share in respect of the year ended 30 June 2011 has been declared payable to all shareholders recorded in the register on Friday, 21 October 2011, the record date. The last day to trade cum the dividend will be Friday, 14 October 2011 and the shares will trade ex the dividend on Monday, 17 October 2011. Payment will be made on Monday, 24 October 2011. Share certificates may not be dematerialised or rematerialised between Monday, 17 October 2011 and Friday, 21 October 2011, both dates inclusive. By order of the board MS Wylie Chairman EL Nel Chief Executive Officer Johannesburg 2 September 2011 www.wbho.co.za Date: 05/09/2011 10:00:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

Share This Story