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Unaudited Interim Results 2016
WILSON BAYLY HOLMES-OVCON LIMITED
Building and civil engineering contractor
(Registration number: 1982/011014/06)
ISIN number: ZAE 000009932
Sharecode: WBO
(“WBHO”)
WILSON BAYLY HOLMES-OVCON LIMITED UNAUDITED INTERIM RESULTS 2016
HIGHLIGHTS
Revenue
Up 6,9% to R15,4 billion
2014: R14,4 billion
Operating margin
Up to 3,2%
2014: 2,7%
HEPS
Continuing operations
Up 23,6% to 645 cents
2014: 522 cents
Cash
Up 45% to R4,7 billion
2014: R3,2 billion
DIVIDEND
Up 22,7% to 135 cents
2014: 110 cents
SUMMARY CONSOLIDATED FINANCIAL STATEMENTS
for the six months ended 31 December 2015
BASIS OF PREPARATION
The summary consolidated financial statements for the period ended 31 December 2015 have been prepared in
compliance with the Listings Requirements of the JSE Limited, the framework concepts and the measurement and
recognition requirements of International Financial Reporting Standards (“IFRS”), the requirements of the
International Accounting Standards (“IAS”) 34, Interim Financial Reporting, SAICA Financial Reporting Guidelines as
issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting
Standards Council and the Companies Act of South Africa.
The summary consolidated financial statements have been prepared on the historical cost basis, except for specific
financial assets and derivative financial instruments which are measured at fair value through profit and loss. The
accounting policies used in the preparation of these results are consistent in all material respects with those
used in the audited annual financial statements for the year ended 30 June 2015.
The preparation of the summary consolidated financial statements was supervised by the chief financial officer and
approved by the board of directors on 19 February 2016.
The information disclosed in these statements has not been reviewed nor reported upon the group’s auditors.
CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE AND OTHER COMPREHENSIVE INCOME
for the six months ended 31 December 2015
Restated Restated
Unaudited Unaudited Audited
December December June
2015 2014 2015
% change R’000 R’000 R’000
Revenue 6,9 15 405 407 14 404 947 29 054 192
Operating profit before non-trading items 28,6 494 515 384 459 768 418
Impairment of goodwill – – (115 982)
Impairment of property, plant and equipment – – (53 926)
Gain on disposal of property – 17 192 14 813
Share-based payment expense (25 386) (18 284) (36 235)
Operating profit 22,4 469 129 383 367 577 088
Share of profits from associate 20 081 11 367 46 189
Net finance income 69 537 51 905 119 091
Profit before taxation 558 747 446 639 742 368
Taxation (170 307) (134 421) (244 572)
Profit from continuing operations 24,4 388 440 312 218 497 796
(Loss)/profit from discontinued operations (12 016) 14 913 109 490
Profit for the period 376 424 327 131 607 286
Other comprehensive income
Translation of foreign entities 238 719 (91 308) (269 854)
Share of associates’ comprehensive income – – 7 018
Items that may be reclassified to profit or loss 238 719 (91 308) (262 836)
Total comprehensive income for the period 615 143 235 823 344 450
Operating margin (%) 3,2 2,7 2,6
Profit from total operations attributable to:
Equity shareholders of Wilson Bayly Holmes-Ovcon Limited 348 353 315 403 568 680
Non-controlling interests 28 071 11 728 38 606
376 424 327 131 607 286
Total comprehensive income attributable to:
Equity shareholders of Wilson Bayly Holmes-Ovcon Limited 591 536 249 059 304 868
Non-controlling interests 23 607 (13 236) 39 582
615 143 235 823 344 450
Earnings per share – total operations
Basic earnings per share (cents) 11,3 634,1 569,8 1 029,5
Diluted earnings per share (cents) 11,3 634,1 569,8 1 029,5
Headline earnings per share (cents) 16,9 632,1 540,9 1 175,2
Dividend per share (cents) 135,0 110,0 368,0
Profit from continuing operations attributable to:
Equity shareholders of Wilson Bayly Holmes-Ovcon Limited 355 292 302 759 493 605
Non-controlling interests 33 148 9 459 4 191
388 440 312 218 497 796
Earning per share – continuing operations
Basic earnings per share (cents) 18,2 646,7 547,0 893,6
Diluted earnings per share (cents) 18,2 646,7 547,0 893,6
Headline earnings per share (cents) 23,6 644,7 521,7 1 090,7
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 31 December 2015
Unaudited Unaudited Audited
December December June
2015 2014 2015
R’000 R’000 R’000
Shareholders’ equity at the beginning of the period 4 612 718 4 591 240 4 591 240
Profit for the period 348 353 315 403 568 680
Other comprehensive income 243 183 (66 343) (263 812)
Dividend paid (160 975) (146 610) (215 171)
Share buy-back (28) – –
Treasury shares acquired – – (52 079)
Share-based payment expense 25 386 18 284 32 117
Share-based payment settlement 6 261 7 536 845
Changes in shareholding (14 564) (32 618) (49 102)
Shareholders’ equity at the end of the period 5 060 334 4 686 892 4 612 718
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 31 December 2015
Unaudited Unaudited Audited
December December June
2015 2014 2015
R’000 R’000 R’000
ASSETS
Non-current assets
Property, plant and equipment 2 002 385 2 097 512 1 984 417
Goodwill 585 405 615 151 498 266
Investment in associates 283 699 119 195 203 923
Investments 193 666 133 777 148 465
Long-term receivables 113 216 442 441 118 943
Deferred taxation 460 363 381 626 462 279
Total non-current assets 3 638 734 3 789 702 3 416 293
Current assets
Inventories 201 063 331 637 215 108
Amounts due by customers 420 047 800 798 1 058 957
Trade and other receivables 4 357 730 3 858 278 4 524 547
Short-term portion of long-term receivables 605 855 153 653 565 660
Taxation receivable 429 128 404 588 355 900
Cash and cash equivalents 4 688 009 3 282 603 3 995 089
Total current assets 10 701 832 8 831 557 10 715 261
Assets held-for-sale 283 338 305 625 237 610
Total assets 14 623 904 12 926 884 14 369 164
EQUITY AND LIABILITIES
Capital and reserves
Stated capital 28 597 28 625 28 625
Non-distributable reserves 569 710 538 349 297 321
Distributable reserves 4 462 027 4 119 918 4 286 772
Shareholders’ equity 5 060 334 4 686 892 4 612 718
Non-controlling interests 247 505 289 873 262 443
Total equity 5 307 839 4 976 765 4 875 161
Non-current liabilities
Share scheme liability 22 246 22 734 22 734
Borrowings 45 506 126 889 112 530
Deferred taxation 57 958 65 828 47 708
Total non-current liabilities 125 710 215 451 182 972
Current liabilities
Excess billings over work done 1 988 825 1 904 001 1 499 471
Trade and other payables 4 714 642 3 908 849 5 570 407
Short-term portion of borrowings 135 685 170 167 139 045
Provisions 1 788 306 1 173 780 1 619 749
Taxation payable 7 939 51 519 50 174
Bank overdraft 4 710 63 114 –
Total current liabilities 8 640 107 7 271 430 8 878 846
Liabilities associated with disposal group held-for-sale 550 248 463 238 432 185
Total equity and liabilities 14 623 904 12 926 884 14 369 164
CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended 31 December 2015
Unaudited Unaudited Audited
December December June
2015 2014 2015
R’000 R’000 R’000
Operating profit before working capital requirements 821 212 261 734 1 410 626
Working capital changes 131 511 813 708 1 142 304
Cash generated from operations 952 723 1 075 442 2 552 930
Net finance income 115 291 47 402 69 531
Taxation paid (272 117) (168 589) (363 767)
Dividends paid (183 384) (175 075) (251 593)
Cash retained from operations 612 513 779 180 2 007 101
Cash flow from investing activities
Advances of long-term receivables (77 283) (141 044) (231 419)
Additions to investments (7 241) (41 748) (58 127)
Additional investments in associates (57 086) (14 050) (80 917)
Repayments from associates – – 13 785
Proceeds on disposal of businesses – 114 274 161 106
Proceeds on disposal of property, plant and equipment 53 492 54 783 134 758
Purchase of property, plant and equipment (33 788) (95 368) (202 436)
Net cash flow from investing activities (121 906) (123 153) (263 250)
Cash flow from financing activities
(Repayment)/advances of interest-bearing borrowings (5 250) 38 933 (24 109)
Transactions with owners (28 267) (3 648) (64 538)
Purchase of treasury shares – – (52 079)
Instalments in respect of capitalised finance leases (88 228) (106 295) (153 824)
Net cash flow from financing activities (121 745) (71 010) (294 550)
Net increase in cash and cash equivalents 368 862 585 017 1 449 301
Cash and cash equivalents at the beginning of the period 3 995 089 2 641 095 2 641 095
Net overdraft at the beginning of the period in respect of
disposal group (332 180) (268 450) (268 450)
Cash and cash equivalents disposed of – – (12 823)
Foreign currency translation effect 231 697 (33 592) (146 214)
Net overdraft in respect of disposal group 419 831 295 419 332 180
Cash and cash equivalents at the end of the period 4 683 299 3 219 489 3 995 089
NOTES TO THE SUMMARY CONSOLIDATED FINANCIAL STATEMENTS
for the six months ended 31 December 2015
1. DISCONTINUED OPERATIONS AND NON-CURRENT ASSETS HELD-FOR-SALE
The results for the comparative periods to 31 December 2014 and 30 June 2015 have been restated to reflect
the trading of 3Q Mahuma Concrete Holdings (Pty) Ltd, a company that supplies ready mix concrete for the
mining and construction sectors, which met the classification requirements for discontinued operations in the
current period. The statement of financial position has not been restated.
Restated Restated
Unaudited Unaudited Audited
December December June
2015 2014 2015
R’000 R’000 R’000
Revenue 224 130 365 289 739 873
Operating (loss)/profit before non-trading items (3 667) 26 780 122 491
Profit on sale of associate – 4 435 4 435
Gain on disposal of operations – – 20 573
Operating (loss)/profit (3 667) 31 215 147 499
Net finance costs (8 349) (12 363) (20 932)
(Loss)/profit before tax (12 016) 18 852 126 567
Taxation expense – (3 939) (17 077)
(Loss)/profit from discontinued operations (12 016) 14 913 109 490
(Loss)/profit from discontinued operations attributable to:
Equity shareholders of Wilson Bayly Holmes-Ovcon Limited (6 939) 12 644 75 076
Non-controlling interests (5 077) 2 269 34 414
(12 016) 14 913 109 490
Unaudited Unaudited Audited
December December June
2015 2014 2015
R’000 R’000 R’000
Disposal group held-for-sale
Property, plant and equipment 260 704 191 531 206 079
Inventories – 56 229 5 000
Trade and other receivables 404 30 896 10 447
Cash and cash equivalents 22 230 26 969 16 084
Total assets 283 338 305 625 237 610
Short-term borrowings (108 187) (124 856) (83 922)
Provisions – (15 994) –
Bank overdraft (442 061) (322 388) (348 263)
Total liabilities (550 248) (463 238) (432 185)
2. RECONCILIATION OF HEADLINE EARNINGS
Restated Restated
Unaudited Unaudited Audited
December December June
2015 2014 2015
R’000 R’000 R’000
Continuing operations
Attributable profit 355 292 302 759 493 605
Adjusted for:
Impairment of goodwill* – – 99 283
Impairment of property, plant and equipment* – – 49 953
Net gain on disposal of property, plant and equipment* (1 523) (17 192) (35 011)
Tax effect 427 3 177 (5 359)
Headline earnings from continuing operations 354 196 288 744 602 471
Total operations
Attributable profit 348 353 315 403 568 680
Adjusted for:
Impairment of goodwill* – – 99 283
Gain on disposal of associate* – (2 464) (2 464)
Impairment of property, plant and equipment* – 3 632 49 953
Net gain on disposal of property, plant and equipment* (1 523) (17 192) (35 011)
Net gain on disposal of operations* – – (26 418)
Tax effect 427 – (4 904)
Headline earnings from total operations 347 257 299 379 649 119
* Net of non-controlling interests
3. SEGMENTAL INFORMATION
Restated Restated
Unaudited Unaudited Audited
December December June
2015 2014 2015
R’000 R’000 R’000
Continuing operations
Segment revenue % change
Building and civil engineering 2,2 3 893 871 3 810 298 7 385 199
Roads and earthworks (16,8) 2 362 034 2 837 574 5 282 022
Australia 19,0 8 683 576 7 298 531 15 351 787
Total construction revenue 7,1 14 939 481 13 946 403 28 019 008
Property developments (6,6) 18 239 19 537 50 730
Construction materials 2,0 447 687 439 007 984 454
Total revenue 6,9 15 405 407 14 404 947 29 054 192
Segment operating profit % margin
Building and civil engineering 4,8 185 889 167 906 351 685
Roads and earthworks 6,3 149 302 202 755 380 260
Australia 1,5 127 671 478 10 612
Total construction operating profit 3,1 462 862 371 139 742 557
Property developments 82,2 14 998 8 086 13 318
Construction materials 3,7 16 655 5 234 12 543
Total operating profit 3,2 494 515 384 459 768 418
Geographical revenue % change
South Africa (4,2) 5 228 039 5 455 469 10 495 591
Rest of Africa (9,5) 1 493 792 1 650 947 3 206 814
Australia 19,0 8 683 576 7 298 531 15 351 787
Total revenue 6,9 15 405 407 14 404 947 29 054 192
Geographical operating profit % margin
South Africa 4,2 217 527 233 233 427 698
Rest of Africa 10,0 149 317 150 748 330 108
Australia 1,5 127 671 478 10 612
Total operating profit 3,2 494 515 384 459 768 418
4. ORDINARY SHARES
Unaudited Unaudited Audited
December December June
2015 2014 2015
Ordinary shares in issue (‘000) 63 190 66 000 66 000
Weighted average number of shares (‘000) 54 939 55 350 55 236
Diluted weighted average number of shares (‘000) 54 939 55 350 55 236
5. SUBSEQUENT EVENTS
DISCONTINUED OPERATIONS
The documentation required to finalise the sale of Capital Star Steel (CSS), the pipe factory in Mozambique has been
agreed and signature thereof is imminent. Had the sale been concluded at 31 December 2015, the estimated effect would
have been as follows:
R‘000
Effect on comprehensive income
Gain on disposal of CSS 277 597
Less: cost of debt restructure (62 160)
Net gain on disposal of CSS 215 437
Foreign currency translation reserve recycled through profit and loss (281 672)
Net loss on disposal of CSS (66 235)
Effect on basic earnings per share from total operations(cents) (67,0)
Effect of disposal on the financial position of the group
Disposal group held-for-sale:
Property, plant and equipment (260 164)
Short-term borrowings 95 700
Cost of debt restructure (62 160)
Bank overdraft 442 061
Net liability disposed of 215 437
Effect on cash flows
Cash and cash equivalents disposed of 442 061
COMMENTARY
FINANCIAL REVIEW
CONTINUING OPERATIONS
Revenue from continuing operations increased by 7% from R14,4b to R15,4b largely due to growth of 19% from
Australia. Revenue from the African operations declined by 5%. Significantly lower activity experienced within civil
engineering markets continues to affect the group across all its geographies. The impact is most evident in the 17%
decline in revenue from the Roads and earthworks division. The current high volumes of local building work assisted
in lessening this effect on the Building and civil engineering division which achieved growth of 2%. Similarly, strong
growth of 38% in building revenue in Australia offset declining civil engineering related revenue which was impacted
by both market conditions and the restructuring of the civil division in the prior year. Revenue from construction
materials, which now consists only of the steel reinforcing business within Capital Africa Steel (Pty) Ltd (CAS),
increased by 2%.
Operating profit before non-trading items at 31 December 2015 increased by 29% to R495m from R384m in the
prior period. This is largely attributable to an improved performance from Australia following the losses recognised
on three civil engineering contracts in FY15. The margin of 3,2% achieved continues to be impacted by the heavier
weighting of lower margin building and road work within the group’s overall project portfolio. The devaluation of the
Rand in December 2015 resulted in unrealized currency gains improving overall profitability by R30m, a large portion
of which was attributable to Australia. The Australian margin was negatively affected by the cost of the WBHO
Infrastructure strategy implementation. The margin within the Building and civil engineering division has improved
from 4,4% achieved in the comparative period but remains consistent with the 4,8% achieved at 30 June 2015 and
reflects the strength in the building market. Margins within the Roads and earthworks division remain under pressure
having declined further to 6,3% in the current six month period when compared to the 7,2% margin achieved in the
previous financial period. A sustained lack of mining activity and increased competition in other lower margin
sectors remain key factors behind the decline in margin.
DISCONTINUED OPERATIONS AND RESTATEMENT OF PRIOR PERIOD FIGURES
During the period under review management concluded an agreement for the sale of 3Q Mahuma Concrete
Holdings (Pty) Ltd (3Q), a subsidiary of CAS. The agreement remains subject to certain conditions precedent and
will likely only be finalised toward the end of the second six months of the financial year. The respective results for
the comparative periods to 31 December 2014 and 30 June 2015 have been restated in accordance with IFRS to
reflect the classification of 3Q as a discontinued operation. The statement of financial position has not been
restated.
EARNINGS PER SHARE AND HEADLINE EARNINGS PER SHARE
Overall earnings per share increased by 11% from 570 cents per share at 31 December 2014 to 634 cents per share at
31 December 2015. Total headline earnings per share increased by 17% to 632 cents per share.
Earnings per share and headline earnings per share in respect of continuing operations increased by 18% and 24%
respectively from the restated earnings of 547 cents and 522 cents per share achieved in the comparative period.
The increase is primarily due to the normalised performance from Australia.
SHARE-BASED PAYMENT EXPENSE
Of the R25m share-based payment expense recognised in the six months to 31 December 2015, R11m relates to
the WBHO Share Plan for executive management with the balance of R14m relating to the existing Akani (the
group’s broad-based share scheme initiative) and management share schemes in place.
ASSOCIATED COMPANIES
In the current period further equity of R57m has been invested within the two concession companies, Gigawatt
Power, the concession company providing electricity generated from a new gas-fired power station in Mozambique
and Dipalopalo, a concession company responsible for the serviced accommodation of the new building for the
Department of Statistics. The income from associate of R20m relates to the group’s share of profits in respect of
Gigajoule International.
CHANGES IN SHAREHOLDING
A further 1,3% interest was acquired in Probuild at a cost AU$1,3m in terms of the shareholder agreements, while an
additional 12,5% interest was acquired in Renniks Construction (Pty) Ltd at a cost of R6m.
CASH
Since 30 June 2015, cash balances have increased by a further R688m to R4,7b (excluding the overdraft within the
disposal group held-for-sale). Cash generated from operations amounts to R953m compared to R1,1b generated in
the comparative period. This, together with the effects of the significant devaluation of the Rand in December 2015
and lower capital expenditure during the period, was largely responsible for the 17% increase in the cash balances
in the six month period to 31 December 2015. Capital expenditure during the period amounted to R62m and
depreciation amounted to R128m (2014: R170m).
CONTINGENT LIABILITIES
Financial guarantees issued to third parties amount to R6,5b compared to R5,1b in issue as at 30 June 2015.
OPERATIONAL REVIEW
BUILDING AND CIVIL ENGINEERING
Dec 2015 Dec 2014
Rm Rm
Revenue 2,2% growth 3 894 3 810
Operating profit 4,8% margin 186 168
Building
The group’s building division delivered another strong set of results both locally as well as in Ghana.
In Gauteng the high activity levels achieved in FY15 were sustained through the first six months of FY16,
underpinned by major retail and commercial office developments and further supported by various projects from
within the healthcare, leisure and entertainment sectors. Focus remained on the execution of these contracts which
included new phases at Menlyn Maine in Tshwane and Alice Lane in Sandton, serviced accommodation for the
Department of Statistics, the Rosebank Towers and new offices for Discovery in Sandton and Price Waterhouse
Coopers in Waterfall, Midrand. The Mall of Africa shopping centre, also located in Waterfall, is nearing completion
and is due to open in April 2016.
In the coastal regions lower revenue in the Eastern Cape was offset by good growth in KwaZulu-Natal (KZN) and a
vastly improved performance from the Western Cape. Activity in the Western Cape remains centred at the V&A
Waterfront in Cape Town. In the city centre the construction of the structure for the new hospital is practically
complete, and the contract with Netcare for the fit-out has commenced. The division is also constructing three
apartment blocks due for completion in FY16. In KZN, the Ballito Junction shopping centre as well as the
development of the Umhlanga Ridge remained strong sources of revenue with various commercial offices having
been handed over in the six months under review. Projects in the Eastern Cape included the completion of the
English Literary Museum in Grahamstown, the new offices for SANRAL at the Baywest precinct and further
construction at the Greenacres shopping centre.
In Ghana, the Achimota Mall was successfully completed and construction of the Kumasi City Mall and Accra Mall
extensions is well underway.
Civil engineering
The successful completion of the main civil works at Kusile Power Station, together with either delays or shelving of
targeted projects within the oil and gas, energy and mining sectors resulted in lower than expected revenue being
reported by the civil division.
At Kusile, the re-access works following behind the mechanical and electrical contractors is now well under way
while construction of new offices for Transnet at the Ngqura Harbour, a new malting plant for South African
Breweries in Alrode, the Cullinan Mill Extention and a parkade for Nedbank in Sandton are progressing well. The
latter three are due for completion in 2016.
The division continues to maintain a presence in Zambia with a number of smaller projects contributing toward
revenue.
In Mozambique, the construction of the Ressano Garcia gas-fired power station, in conjunction with the group’s
Projects and Roads and earthworks divisions, achieved practical completion in December 2015.
ROADS AND EARTHWORKS
Dec 2015 Dec 2014
Rm Rm
Revenue 16,8% decline 2 362 2 838
Operating profit 6,3% margin 149 203
Given the challenging market conditions within the mining sector and increased competition experienced in the road
sector, the division has produced a credible result.
Locally, work remains heavily weighted toward roadwork and energy related projects. In respect of roadwork, the
bus rapid transport projects in KZN and Sandton as well as the N2 in Grahamstown and R24 in Rustenburg were
the main contributors toward revenue. At Kusile, the ash dam and coal stock yard are progressing well and are due
for completion within the next six months. Both Edwin Construction and Roadspan, which are reliant on work from
government, have experienced declining revenue in an extremely competitive environment.
Likewise, the Pipelines division has struggled to find replacement work following the completion of phase one of the
North south Carrier Pipeline in Botswana. Mining projects in Botswana also remain scarce due to the current low
commodity and diamond prices. Despite this, the division secured a number of smaller contracts which have been
executed well.
A number of mining projects have been secured in both West Africa and Northern Mozambique resulting in an
increase in revenue in both geographies for the six month period.
AUSTRALIA
Dec 2015 Dec 2014
Rm Rm
Revenue 19% growth 8 684 7 299
Operating profit 1,5% margin 128 0
Building
Building revenue in Australia grew by 38% in dollar terms as a result of sustained strength within Australian building
markets. Activity in Victoria remains at record levels contributing 68% of the division’s revenue. The Victorian
business continues to take advantage of the investment in retail and is building four of Victoria’s largest retail
projects as well as some of Melbourne’s tallest residential towers, including the 92 storey Aurora project. In
Queensland, construction of the Toowoomba Shopping Centre is progressing well and the business is now firmly
established, having secured a further two large projects. As expected, building activity in Western Australia has
softened and the teams have been restructured accordingly. Probuild’s presence in New South Wales is slowly
strengthening with four projects currently under construction following the award of a AU$60m apartment block in
the current period.
Infrastructure
The repositioning of the Australian infrastructure business in the Western and Eastern regions has progressed well.
The Western region was awarded a number of small projects which along with annuity maintenance work resulted in
a profitable six months. The restructuring of the Eastern region is complete with the team actively bidding for
projects in its target markets. No awards have been achieved to date, but the division is currently the lowest bidder
on three road infrastructure projects. The cost of the restructure is in line with expectation.
PROPERTY
Dec 2015 Dec 2014
Rm Rm
Revenue 7% decline 18 20
Operating profit 82% margin 15 8
Trading from Property developments represents the transfer of the three remaining stands at the Simbithi Eco Estate
near the King Shaka International Airport in KZN as well as a profit share from a mezzanine financing arrangement in
respect of a development in the Western Cape.
CAPITAL AFRICA STEEL
Restated
Dec 2015 Dec 2014
Rm Rm
Continuing operations
Revenue 2% growth 448 439
Operating profit 3,7% margin 17 5
Discontinued operations
Revenue 39% decline 224 365
Operating profit/(loss) (1,6%) margin (4) 27
Continuing operations
Trading from the reinforcing business within CAS has shown some improvement over the current six months with
margins increasing to 3,7%.
Discontinued operations
The documentation required to finalise the sale of Capital Star Steel (CSS), the pipe factory in Mozambique, has
been agreed and signature thereof is imminent. The effect of the sale, had it been accounted for at 31 December
2015, is disclosed in note 5 of the summary consolidated financial statements.
The results of CSS to 31 December 2015 included under discontinued operations include losses in respect of
holding costs to maintain the pipe factory. Revenue in respect of 3Q is in line with that of the prior year, however
operating profit is lower than expected as the market remains extremely competitive, particularly in the urban areas.
ORDER BOOK AND OUTLOOK
Dec 2015 June 2015
Rm Rm
Order book by segment (Rm)
Building and civil engineering 26 9 290 24 9 136
Roads and earthworks 9 3 141 11 3 789
Australia 65 22 990 65 24 507
Total 100 35 411 100 37 432
Order book by geography (Rm)
South Africa 31 10 936 29 11 005
Rest of Africa 4 1 495 6 1 920
Australia 65 22 990 65 24 507
Total 100 35 411 100 37 432
The 5% decrease in the order book at 31 December 2015 to R35,4b from R37,4b at 30 June 2014 reflects a 6%
decrease in the Australian order book and a 17% decrease in the Roads and earthworks order book, with the
Building and civil engineering order book essentially remaining static. Probuild remains the preferred contractor for
the Christchurch Convention Centre contract in New Zealand, however the project has been delayed due to the
government review process. It is expected that the project will still proceed, but value and timing are currently
uncertain. The reduction in the Australian order book arises primarily from the exclusion of this contract which had
previously been included in the order book at 30 June 2015.
Africa (including South Africa)
Locally, a healthy project pipeline for building work continues to exist across all sectors and regions. Significant new
awards for the Building division over the past six months include the Time Square Casino and Hotel in Tshwane,
Thavani Mall, a regional shopping centre in Thohoyandou and the Cornubia Retail Centre in Umhlanga. All of which
are due for completion in 2018.
In Ghana, the Building division is the preferred contractor for three large projects which are currently under
negotiation while also having identified further projects in both Ghana and Zambia.
Conditions within the mining sector are not expected to improve in the short term and will continue to impact activity
levels within the group’s Civil engineering and Roads and earthworks divisions with revenue expected to decline
further in the second half of the year. Nonetheless, during the period the Civil engineering division was awarded the
contract to build a new furnace at Northam Platinum. Subsequent to 31 December 2015 the division was also
appointed as the preferred contractor on a large civil contract for the construction of new oil tanks for MOGGS in
Saldanha which will be executed together with the group’s Roads and earthworks division. Also in Saldanha, the
Roads and earthworks pipelines division secured a contract for the construction of the LPG Import Terminal. A
number of roadwork opportunities continue to exist and the heavier weighting of the Roads and earthworks division
to this sector will persist over the short to medium term.
Smaller scale mining projects will continue to be targeted across Africa in order to maintain a presence in the various
geographies.
Australia
Building markets in Australia remain buoyant, particularly in the residential sector where Asian demand continues to
be strong. Institutional grade investment in retail also remains buoyant. New awards in Victoria include two
residential towers in the CBD of Melbourne. The Queensland business has secured a $200m contract for a new
hotel and casino. In addition to the order book reflected above the Australian building division is the preferred
contractor on a further 8 projects to the value of $900m where negotiations are being finalised. Monaco Hickey has
successfully gained entry to the sub $50m residential and commercial markets which forms part of the strategy
implemented in the prior period to mitigate declining activity within the pharmaceutical and healthcare sectors.
In both the Eastern and Western Regions, WBHO Infrastructure began the calendar year in strong positions on
numerous bids and is now well placed across various sectors to bid competitively on key contracts in coming
months. The Eastern division is currently the lowest bidder on three road infrastructure projects and has identified
further key projects to bid on over the next 6 months. The Western region is well positioned to secure a number of
small road upgrades and maintenance projects and is the preferred tenderer on the Allawuna Farm Landfill project.
INDUSTRY MATTERS
With regard to the outstanding Competition Tribunal matters previously reported on, we advise that one further case
against WBHO was referred to the Tribunal. This relates to alleged standardisation of trading terms for a 2006
tender, which according to WBHO did not occur. WBHO remains confident that it can defend these cases at the
Tribunal, as well as any civil claims which might arise and has not made a provision in this regard.
SAFETY
Regrettably the group’s LTIFR increased to 1,0 from 0,75 at 30 June 2015 following a spate of injuries over the
period under review. Having investigated the root causes for these injuries a number of initiatives were implemented
across the group to mitigate the possibility of further accidents. Sadly the group experienced one work-related
fatality in respect of a subcontractor in the period and we extend our sincere condolences to family, friends and
colleagues.
APPRECIATION
The directors wish to extend their sincere appreciation to those loyal clients who continue to place their faith in our
ability to deliver quality products on their behalf, particularly in the current challenging economic environment. This
wouldn’t be possible without the full commitment and dedication of our employees and we acknowledge and thank
them for continuously giving their best.
DIVIDEND DECLARATION
Notice is hereby given that the directors have declared an interim gross dividend of 135 cents per share
(2014: 110 cents) payable to all shareholders recorded in the register on 15 April 2016.
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 114,75 cents per share. The company has no STC credits to be utilised.
The number of shares in issue at date of declaration amount to 63 190 064 (54 938 587 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 8 April 2016
Trading ex dividend commences: Monday 11 April 2016
Record date: Friday 15 April 2016
Payment date: Monday 18 April 2016
Shares may not be dematerialised or re-materialised between Monday, 11 April and Friday 15 April 2016, both dates
inclusive.
MS Wylie EL Nel CV Henwood
Chairman Chief Executive officer Chief Financial Officer
19 February 2016
Sponsor
Investec Bank Limited
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