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Unaudited summary consolidated interim financial statements for the six months ended 31 December 2016
WILSON BAYLY HOLMES-OVCON LIMITED
Building and civil engineering contractor
(Registration number: 1982/011014/06)
ISIN number: ZAE 000009932
Sharecode: WBO
("WBHO")
UNAUDITED SUMMARY CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended 31 December 2016
CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE AND OTHER COMPREHENSIVE INCOME
for the six months ended 31 December 2016
Restated
Unaudited Unaudited Audited
December December June
2016 2015 2016
% change R'000 R'000 R'000
Revenue 0,9 15 415 743 15 276 509 30 650 309
Operating profit before non-trading items (4,7) 471 352 494 515 1 004 557
Socio-economic fund contribution (170 274) - -
Profit on disposal of property - - 29 166
Profit on disposal of investment 12 111 - -
Share-based payment expense (24 012) (25 386) (42 481)
Operating profit 289 177 469 129 991 242
Share of profits from associates 18 608 20 081 45 659
Net finance income 115 980 69 537 203 014
Profit before taxation 423 765 558 747 1 239 915
Taxation (181 165) (170 307) (395 715)
Profit from continuing operations (37,5) 242 600 388 440 844 200
Loss from discontinued operations (3 613) (12 016) (122 350)
Profit for the period 238 987 376 424 721 850
Other comprehensive income
Items that may be reclassified to profit or loss:
Translation of foreign entities (194 195) 238 719 101 651
Share of associates' comprehensive income (3 070) - 28 618
Recycling of translation of foreign operations - - 284 086
Total comprehensive income for the period 41 722 615 143 1 136 205
Profit from total operations attributable to:
Equity shareholders of Wilson Bayly Holmes-Ovcon Limited 214 898 348 353 725 533
Non-controlling interests 24 089 28 071 (3 683)
238 987 376 424 721 850
Total comprehensive income attributable to:
Equity shareholders of Wilson Bayly Holmes-Ovcon Limited 17 633 591 536 1 081 409
Non-controlling interests 24 089 23 607 54 796
41 722 615 143 1 136 205
Earnings per share (cents)
Basic earnings per share (37,9) 393,8 634,1 1 322,3
Diluted earnings per share (38,1) 392,8 634,1 1 322,3
Headline earnings per share (37,5) 395,3 632,1 1 293,6
Dividend per share (cents) 11,1 150,0 135,0 448,0
Profit from continuing operations attributable to:
Equity shareholders of Wilson Bayly Holmes-Ovcon Limited 216 905 355 292 766 031
Non-controlling interests 25 695 33 148 78 169
242 600 388 440 844 200
Earnings per share - continuing operations (cents)
Basic earnings per share (38,5) 397,5 646,7 1 396,1
Diluted earnings per share (38,7) 396,4 646,7 1 396,1
Headline earnings per share (38,3) 398,1 644,7 1 342,9
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 31 December 2016
Unaudited Unaudited Audited
December December June
2016 2015 2016
R'000 R'000 R'000
Shareholders' equity at the beginning of the period 5 428 429 4 612 718 4 565 742
Profit for the period 214 898 348 353 725 533
Other comprehensive income (197 265) 243 183 355 876
Dividend paid (189 700) (160 975) (242 864)
Share buy-back - (28) (28)
Derecognition of non-controlling interest - - (10 639)
Treasury shares acquired (279 015) - -
Share-based payment expense 24 012 25 386 43 845
Share-based payment settlement 3 188 6 261 5 472
Transactions with owners (31 962) (14 564) (14 508)
Shareholders' equity at the end of the period 4 972 585 5 060 334 5 428 429
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 31 December 2016
Unaudited Unaudited Audited
December December June
2016 2015 2016
R'000 R'000 R'000
ASSETS
Non-current assets
Property, plant and equipment 1 657 235 2 002 385 1 710 358
Goodwill 520 818 585 405 572 102
Investment in associates 344 483 283 699 347 171
Investments 47 533 193 666 201 942
Long-term receivables 42 817 113 216 96 193
Deferred taxation 491 883 460 363 558 840
Total 3 104 769 3 638 734 3 486 606
Current assets
Inventories 216 445 201 063 210 314
Amounts due by customers 546 285 420 047 514 438
Trade and other receivables 3 787 918 4 963 585 5 111 251
Taxation receivable 229 366 429 128 294 687
Cash and cash equivalents 5 161 208 4 688 009 5 773 369
Total 9 941 222 10 701 832 11 904 059
Assets held-for-sale - 283 338 -
Total assets 13 045 991 14 623 904 15 390 665
EQUITY AND LIABILITIES
Capital and reserves
Share capital 28 597 28 597 28 597
Non-distributable reserves 253 432 569 710 702 514
Distributable reserves 4 690 556 4 462 027 4 697 318
Shareholders' equity 4 972 585 5 060 334 5 428 429
Non-controlling interests 195 408 247 505 258 421
Total 5 167 993 5 307 839 5 686 850
Non-current liabilities
Cash-settled share scheme liability 17 571 22 246 17 571
Borrowings 56 884 45 506 17 010
Other payables 150 829 - -
Deferred taxation 22 772 57 958 24 253
Total 248 056 125 710 58 834
Current liabilities
Excess billings over work done 1 815 538 1 988 825 1 917 491
Trade and other payables 3 988 467 4 714 642 5 508 209
Borrowings 37 090 135 685 87 355
Provisions 1 746 406 1 788 306 2 059 645
Taxation payable 32 178 7 939 51 106
Bank overdraft 10 263 4 710 21 175
Total 7 629 942 8 640 107 9 644 981
Liabilities associated with disposal group held-for-sale - 550 248 -
Total equity and liabilities 13 045 991 14 623 904 15 390 665
CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended 31 December 2016
Unaudited Unaudited Audited
December December June
2016 2015 2016
R'000 R'000 R'000
Operating profit before working capital requirements 289 091 821 212 1 681 906
Working capital changes (153 185) 131 511 312 949
Cash generated from operations 135 906 952 723 1 994 855
Net finance income 142 515 115 291 141 641
Taxation paid (79 061) (272 117) (487 234)
Dividends paid (200 450) (183 384) (273 873)
Cash (utilised in)/retained from operations (1 090) 612 513 1 375 389
Cash flow from investing activities
Advances of loans and receivables (1 299) (88 662) (14 000)
Repayment of loans and receivables 9 346 11 379 500 284
Additions to investments - (7 241) (27 874)
Repayment of investments 138 816 - -
Loans advanced to associates - (57 086) (68 353)
Proceeds on disposal of businesses 112 111 - -
Restructuring of debt - - (65 114)
Proceeds on disposal of property, plant and equipment 11 525 53 492 213 168
Purchase of property, plant and equipment (80 816) (33 788) (116 206)
189 683 (121 906) 421 905
Cash flow from financing activities
Repayment of borrowings (9 530) (5 250) (141 272)
Transactions with owners (100 459) (28 267) (41 720)
Purchase of treasury shares (279 015) - (28)
Cash portion of socio-economic fund contribution (5 313) - -
Instalments in respect of capitalised finance leases (39 199) (88 228) (139 302)
(433 516) (121 745) (322 322)
Net (decrease)/increase in cash and cash equivalents (244 923) 368 862 1 474 972
Foreign currency translation effect (356 326) 231 697 259 212
Overdraft in respect of disposal group at the beginning
of the period - (332 180) (332 180)
Cash and cash equivalents at the beginning of the period 5 752 194 3 995 089 3 995 089
Overdraft disposed of - - 355 101
Overdraft in respect of disposal group at the end
of the period - 419 831 -
Cash and cash equivalents at the end of the period 5 150 945 4 683 299 5 752 194
NOTES TO THE SUMMARY CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended 31 December 2016
1. BASIS OF PREPARATION
The consolidated interim 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 SAICA Financial Reporting Guides as issued by the Accounting Practices
Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council, and at a
minimum, contain the information required by IAS 34 Interim Financial Reporting and the requirements of the
Companies Act of South Africa.
The accounting policies applied in the preparation of these financial statements are in terms of International
Financial Reporting Standards (IFRS) and are consistent with the accounting policies applied in the preparation of
the previous consolidated annual financial statements.
The consolidated interim financial statements have been compiled under the supervision of the Chief Financial
Officer, Charles Henwood CA (SA) and were authorised by the board on 24 February 2017.
The consolidated interim financial statements for the period ended 31 December 2016 have not been audited or
reviewed by the group's auditors, BDO South Africa Inc.
2. SEGMENTAL INFORMATION
Restated
Unaudited Unaudited Audited
December December June
2016 2015 2016
R'000 R'000 R'000
Continuing operations
Segment revenue % change
Building and civil engineering 11,3 4 332 227 3 893 871 7 536 471
Roads and earthworks (10,3) 2 118 529 2 362 034 4 333 788
Australia (0,7) 8 624 997 8 683 576 18 112 931
Total construction revenue 0,9 15 075 753 14 939 481 29 983 190
Property developments (91,5) 1 551 18 239 18 880
Construction materials 6,2 338 439 318 789 648 239
Total revenue 15 415 743 15 276 509 30 650 309
Segment operating profit % margin
Building and civil engineering 5,0 217 233 185 889 369 585
Roads and earthworks 6,8 143 966 149 302 283 422
Australia 1,2 100 603 127 671 300 392
Total construction operating profit 3,1 461 802 462 862 953 399
Property developments 4,8 74 14 998 14 656
Construction materials 2,8 9 476 16 655 36 502
Total operating profit 3,1 471 352 494 515 1 004 557
Geographical revenue % change
South Africa 16,1 5 921 113 5 099 141 9 739 222
Rest of Africa (41,8) 869 633 1 493 792 2 798 156
Australia (0,7) 8 624 997 8 683 576 18 112 931
15 415 743 15 276 509 30 650 309
Geographical operating profit % margin
South Africa 4,9 289 224 217 527 346 354
Rest of Africa 9,4 81 525 149 317 357 811
Australia 1,2 100 603 127 671 300 392
3,1 471 352 494 515 1 004 557
3. RECONCILIATION OF HEADLINE EARNINGS
Unaudited Unaudited Audited
December December June
2016 2015 2016
Continuing operations
Attributable profit 216 905 355 292 766 031
Adjusted for:
Profit on disposal of investment* (6 729) - -
Loss/(profit) on disposal of property, plant and equipment* 10 117 (1 523) (41 215)
Tax effect (3 051) 427 12 038
Headline earnings from continuing operations 217 242 354 196 736 854
Total operations
Attributable profit 214 898 348 353 725 533
Adjusted for:
Profit on disposal of investment* (6 729) - -
Loss/(profit) on disposal of property, plant and equipment* 10 784 (1 523) (41 755)
Profit on disposal of operations* - - 13 939
Tax effect (3 238) 427 12 125
Headline earnings 215 715 347 257 709 842
* Net of non-controlling interests
4. ORDINARY SHARES
Unaudited Unaudited Audited
December December June
2016 2015 2016
Ordinary shares in issue (R'000) 63 190 63 190 63 190
Weighted average number of shares ('000) 54 572 54 939 54 870
Diluted weighted average number of shares ('000) 54 716 54 939 54 870
5. DISCONTINUED OPERATIONS AND DISPOSAL GROUP HELD-FOR-SALE
Unaudited Unaudited Audited
December December June
2016 2015 2016
Revenue - 224 130 289 235
Operating loss before non-trading items (3 613) (3 667) (11 831)
Loss on disposal of operations - - (71 548)
Profit on sale of property - - 1 217
Onerous contracts - - (14 753)
Impairment of loans - - (2 683)
Operating loss (3 613) (3 667) (99 598)
Net finance costs - (8 349) (13 520)
Loss before tax (3 613) (12 016) (113 118)
Taxation - - (9 232)
Loss for the period (3 613) (12 016) (122 350)
Loss attributable to:
Equity shareholders of Wilson Bayly Holmes-Ovcon Limited (2 008) (6 939) (40 498)
Non-controlling interests (1 605) 5 077 (81 852)
(3 613) (12 016) (122 350)
Disposal group held-for-sale
Property, plant and equipment - 260 704 -
Trade and other receivables - 404 -
Cash and cash equivalents - 22 230 -
Total assets - 283 338 -
Short-term borrowings - (108 187) -
Bank overdraft - (442 061) -
Total liabilities - (550 248) -
6. PRIOR PERIOD ERROR
At 30 June 2016, the group became aware that inter-company revenue from Capital Africa Steel (Pty Ltd had not been
eliminated. This error also impacts the six-month period to 31 December 2015 and as a result, the group has restated
these figures. The impact of the error is disclosed below:
Statement of financial performance and other comprehensive income
Profit for
Revenue the period
R'000 R'000
As previously reported at 31 December 2015 15 405 407 376 424
Elimination of inter-company revenue (128 898) -
15 276 509 376 424
There was no impact on earnings or headline earnings per share
There was no impact on the statement of cash flows or statement of financial position.
COMMENTARY
FINANCIAL REVIEW
REVENUE AND OPERATING PROFIT
Revenue from continuing operations amounting to R15,4 billion was in line with the revenue achieved in the
comparative period. Revenue growth from the group's Building division offset lower revenue derived from the Civil
engineering and Roads and earthworks divisions. The growth in revenue from the local Building divisions together
with a heavier weighting of local work within the Roads and earthworks division resulted in an increase of 16% in
revenue derived from South Africa. The lack of mining activity in the rest of Africa continues to impact revenue
streams from the region which decreased by 42% over the comparative period. Australian revenue in rands
remained largely flat.
Revenue from construction materials, which now consists only of the reinforcing business within Capital Africa Steel
(Pty) Ltd (CAS), increased by 6%.
Operating profit before non-trading items decreased by 4,7% to R471 million from R495 million at 31 December 2015.
The impact of lower profitability from Australia, hampered by one loss-making project and unrealised currency losses
arising from the strengthening of the rand since 30 June 2016, was partially offset by improved profitability from the
Building and civil engineering division due to the increase in revenue as well as an improvement in margin from 4,8%
to 5,0%. While profitability from the Roads and earthworks division decreased by 4%, this was mitigated to some
extent by an improvement in the margin from 6,3% to 6,8%. The overall margin for the group decreased minimally
from 3,2% at 31 December 2015 to 3,1% in the current period.
NON-TRADING ITEMS
Included in non-trading items is an amount of R170 million in respect of the group's obligation arising from the
agreement signed with the Government of South Africa (Settlement Agreement). WBHO will make annual
contributions of R21,5 million over a 12 year period to a fund established for the purpose of developing and
enhancing the construction industry with a particular focus on supporting the industry's transformation objectives.
In terms of IFRS the present value of the full liability is recognised in the period in which the obligation is incurred.
The share-based payment expense of R24 million recognised in the period relates to the WBHO Share Plan for
executive management, the existing broad-based share scheme and the management share schemes in place.
During the period, the WBHO Management Trust acquired 1 893 000 treasury shares at a cost of R279 million.
EARNINGS PER SHARE AND HEADLINE EARNINGS PER SHARE – CONTINUING OPERATIONS
The effect of the liability recognised in terms of the Settlement Agreement resulted in earnings per share from
continuing operations decreasing by 39% from 647 cents per share at 31 December 2015 to 398 cents per share
at 31 December 2016 and headline earnings per share decreasing by 38% to 398 cents per share from 645 cents
per share.
Adjusting the group's earnings for this once-off liability, earnings per share and headline earnings per share would
have increased by approximately 10% as reflected in the table below.
Unaudited Unaudited
% change December December
2016 2015
Adjusted earnings per share - continuing operations (cents)
Basic earnings per share 9,7 709,5 646,7
Diluted earnings per share 9,4 707,6 646,7
Headline earnings per share 10,1 710,1 644,7
ASSOCIATED COMPANIES
The group has an interest in three associated companies: Gigajoule International, a shareholder in the Matola Gas
Company which sells and distributes gas in Mozambique; Gigawatt Power, a concession company providing
electricity generated from a newly constructed gas-fired power station in Mozambique; and Dipalopalo, a
concession company responsible for providing serviced accommodation to the Department of Statistics.
Total equity invested within the concession companies amounts to R162 million.
Income from associate of R18 million relates to the group's share of income in respect of gas supplied by the Matola
Gas Company and the sale of electricity by Gigawatt Power. No income has yet been recognised in respect of
Dipalopalo as the company has only recently begun the operational phase of the concession. During the period the
group received a dividend of R20 million from Gigajoule International.
INVESTMENTS
Investments have decreased by R154 million since June 2016 following a capital repayment of AU$14 million from
the Caulfield development in Australia.
WORKING CAPITAL
The completion of major projects and delays to the construction start of new projects in Australia resulted in working
capital utilisation over the period.
CASH
Cash balances decreased by R601 million since 30 June 2016 to R5,2 billion largely due a stronger currency, share
transactions in Australia and the purchase of additional treasury shares during the period. Cash generated from
operations amounted to R136 million compared to R953 million generated in the comparative period. Capital
expenditure during the period amounted to R139 million, of which R81 million was acquired for cash and R58 million
was financed. Depreciation amounted to R115 million (2015: R128 million).
CHANGES IN SHAREHOLDING
In terms of the shareholder agreements, Probuild Constructions (Probuild) acquired a further 1,8% interest from
minority shareholders during the period at a cost AU$3,6 million. In addition, WBHO Australia acquired a further
0,8% from minority shareholders at a cost of AU$1,4 million. Together these transactions increased the group's
interest in Probuild from 83,02% to 85,6%. The remaining 17,5% in Renniks Construction was also acquired during
the period at a cost of R3,8 million.
CONTINGENT LIABILITIES
Financial guarantees issued to third parties amount to R11 billion compared to R9,5 billion in issue at 30 June 2016.
OPERATIONAL REVIEW
BUILDING AND CIVIL ENGINEERING
December December
2016 2015
Rm Rm
Revenue 11,3% growth 4 332 3 894
Operating profit 5,0% margin 217 186
Capital expenditure 22 10
Depreciation 23 22
BUILDING
Having begun the year with a healthy order book, the group's building division delivered strong results over the six
month period particularly in South Africa which saw revenue growth of 28%. Both the Gauteng and Kwa-Zulu Natal
(KZN) regions delivered growth while the Cape and Eastern Cape regions maintained activity levels consistent with
those of the previous period.
The retail, commercial office and entertainment sectors continue to drive the growth in activity levels. Retail activity
consisted largely of the Menlyn Maine Central Square project in Tshwane, the Thavhani Mall in Limpopo, the Ballito
and Cornubia shopping centres in KZN and the Green acres shopping centre in the Eastern Cape. A large number
of major projects within the commercial office sector which grew by 30% over the period, further supported activity
levels. These projects consisted of the ongoing construction of new offices for Discovery and phase 3 of the Alice
Lane precinct in Sandton, iconic new offices for PriceWaterhouse Coopers in Midrand, a development at Loftus in
Tshwane and various projects at the V&A Waterfront in Cape Town (most notably the conversion of the grain silos
precinct into a hotel, the Zeits Museum of Contemporary Art Africa (MOCAA), a mixed use development and
parking). Construction of the Times Square Casino opposite the Menlyn Maine precinct also contributed strongly
toward activity levels.
In Ghana activity levels were sustained as construction of the Kumasi City Mall progressed well and, having reached
financial close, construction of the new offices for Standard Chartered Bank, a design and construct contract, has
now commenced.
CIVIL ENGINEERING
Revenue from the Civil engineering division declined over the period due to a severely strained order intake and
persistently weak mining activity, as well as delays to various contract start dates. Activity consisted largely of the
re-access works at the Kusile Power Station, construction of a furnace for Northam Platinum, a stacker and
reclaimer for Exarro at the Grootegeluk mine in Limpopo and the completion of the mill at the Cullinan mine for
Petra Diamonds.
The division continues to secure various smaller-scale projects in Zambia within the mining, industrial and
agricultural sectors.
ROADS AND EARTHWORKS
December December
2016 2015
Rm Rm
Revenue 10,3% decline 2 119 2 362
Operating profit 6,8% margin 144 149
Capital expenditure 86 15
Depreciation 53 54
While the Roads and earthworks division experienced solid growth of 23% locally following strong activity within the
roadwork sector, it was insufficient to mitigate the impact of the prevailing reduction in mining activity in the rest of
Africa, particularly in Mozambique. As a result overall revenue decreased by 10% over the comparable period.
Overall, roadwork comprised 50% of the division's revenue, the majority of which consisted of local projects.
Key projects consisted of the R24 near Rustenburg, improvements to the M1 near Oxford Road in Johannesburg,
ongoing construction of various bus-rapid transport projects in Durban and Johannesburg (including the cable stay
bridge over the M1 near Sandton), the N2 near Grahamstown and the N4 near Waterval Boven. Roadspan has also
benefited from the increase in activity within the roadwork sector with the surfacing division achieving significant
growth. Edwin Construction which relies on the provincial road sector, experienced a slow start to the year but did
secure a number of projects in the second quarter. Construction of the N5 near Harrismith is progressing well.
Although there are a number of projects available within the pipeline market, competition within the sector is
aggressive and the order intake remained low. Activity over the period consisted of the Nekartal dam pipeline in
Namibia, an LPG terminal and the early works for the crude oil terminal facility, both at Saldanha, supported by
various smaller contracts.
In Botswana, the impact of declining mining activity and the economy at large continues to stifle the number of
available projects within both the mining and infrastructure sectors. However, the division recently secured
construction of a pump station along the North South Carrier Pipeline which together with a number of smaller yet
profitable mining projects supported activity in the first half of the year.
Mozambique was the single largest contributor to declining revenue from the rest of Africa where, following the
completion of the gas-fired power station and the EN4 in the previous year and lower activity on the coal mines,
revenue decreased substantially. However additional work secured on existing mining projects as well as a new
section of the EN4 will assist activity levels in the second half of the year.
In West Africa, activity was limited to the construction of a new tailings dam at Ahafo in Ghana and various other
small works contracts. Replacement of existing work remained difficult and revenue was again down from the
comparative period.
AUSTRALIA
December December
2016 2015
Rm Rm
Revenue 0,7% decline 8 625 8 684
Operating profit 1,2% margin 101 128
Capital expenditure 29 4
Depreciation 33 26
BUILDING
Despite having been successful in securing new projects over the six-month period, the Building business's revenue
reduced by 11% due to delays in the construction start of projects. These delays were the result of longer than
expected client planning requirements and financier approvals. Profitability for the period was impacted by a single
loss-making residential project as well as unrealised exchange losses arising from a strengthening of the rand since
30 June 2016.
Strategic diversification of the workbook across all key states in Australia is proving to be successful as lower
revenue from Victoria has been countered by increased activity in Queensland, Western Australia, New South Wales
and Monaco Hickey.
Victoria remains the dominant market for Probuild with key projects under construction including extensions to the
Melbourne Convention Centre as well as 6 high-rise residential towers, including the iconic 88 storey Aurora Tower
which will be the second tallest building in Melbourne on completion.
In Western Australia, where activity levels have been subdued for a period of time, the division was awarded the
construction of the Towers and six-star Ritz-Carlton Hotel at the Queen Elizabeth Quay in Perth. This AU$400m
design and construct project involves the development of separate hotel and residential apartment towers which sit
over a common podium and basement car parking adjacent to the Swan river and will contribute toward revenue
over the coming period.
In Queensland, the last stage of the Toowoomba shopping centre is on programme for completion in April 2017
and the Jupiters six-star hotel tower on the Gold Coast is progressing well (ahead of the Commonwealth Games in
April 2018). In New South Wales, Probuild has secured its largest project yet, the AU$340 Greenland Centre in
Sydney, a 235 metre residential skyscraper (the tallest residential tower in Sydney) consisting of luxury apartments
and penthouses which complements the existing portfolio of projects and further strengthens Probuild's presence in
the region. Probuild's successful relationship with Greenland led to the award of a further project in Sydney in
January 2017, a AU$100m residential development commencing in April.
INFRASTRUCTURE AND CIVIL ENGINEERING
The Infrastructure business achieved commendable growth of 25% over the previous six month period and now
comprises approximately 10% of the Australian operation's total revenue, up from 7% in the comparative period.
As revenue from the Western region was broadly in line with the prior period, the growth was derived from two new
projects secured in the Eastern region toward the end of the last financial year. Both of these projects are
progressing in line with expectations.
CONSTRUCTION MATERIALS
December December
2016 2015
Rm Rm
Continuing operations
Revenue 6,2% growth 338 319
Operating profit 2,8% margin 9 17
Capital expenditure 2 12
Depreciation 5 4
Discontinued operations
Revenue - 224
Operating loss (4) (12)
CONTINUING OPERATIONS
Although revenue from the steel business within CAS has shown some growth in the current six months trading
conditions are difficult, particularly in Gauteng, the North West and KZN. Profitability has been affected by rising
input costs in a market where pricing remains keen as well as a problematic contract in KZN.
ORDER BOOK AND OUTLOOK
31 December 30 June
% 2016 % 2016
Order book by segment (Rm)
Building and civil engineering 20 8 090 20 8 683
Roads and earthworks 15 5 839 8 3 041
Australia 65 26 224 72 30 976
Total 100 40 153 100 42 700
Order book by geography (Rm)
South Africa 30 12 004 25 10 532
Rest of Africa 5 1 925 3 1 192
Australia 65 26 224 72 30 976
Total 100 40 153 100 42 700
The group's total order book at 31 December 2016 decreased by 6% to R40,2 billion from R42,7 billion at 30 June 2016.
The decrease comprises a 15% decrease in the Australian order book and a 7% decrease in the Building and civil
engineering order book, while the Roads and earthworks order book improved significantly by 92% to R5,8 billion from
R3 billion at 30 June 2016.
AFRICA (INCLUDING SOUTH AFRICA)
While the local order book for building work remains healthy across all sectors and regions over the short-term, as
predicted we are beginning to experience some softening in the project pipeline and a slightly slower order intake.
That said, the local book did show improvement in the second quarter of the year.
Significant new awards for the Building division over the past six months include the Rosebank Link, a 15 storey
office park with retail and basement parking opposite the Gautrain station, the expansion of the Gateway shopping
centre in KZN and in Cape Town, the new Yacht Club development which consists of commercial space, residential
apartments and a hotel component.
Further projects in the residential, hotel and commercial office sectors are being targeted over the short term.
In Ghana, the Kumasi City Mall will be completed in the second half of the year, while construction of the new offices
for Standard Chartered Bank will continue into next year.
The Civil engineering division's order book has been significantly bolstered by the award of the commercial crude oil
terminal facility at Saldanha as well as the expansion of a manufacturing plant for Twinsaver. Civil engineering
opportunities are also being explored in the KZN, Eastern Cape and Western Cape markets as well as marine
construction.
Following the strong order book growth within the Roads and earthworks division, we anticipate improved activity
levels in the second half of the year. As with the Civil engineering division, the Roads and earthworks division's local
order book also benefited from the award of the commercial crude oil terminal facility. Other major projects awarded
include a contract for the construction of a new box-cut platform and road at Booysendal for Northam Platinum to
accommodate an extension to the mine, bulk earthworks, infrastructure and access roads at the Clairwood logistics
Park in KZN, and construction of a return water dam, haul road and service corridor for an ash dam for Sasol.
In West Africa, the division secured various projects late in the second quarter, these include projects for the Guinea
Aluminia Corporation and Alufer Mining Limited, both in Guinea and a project on the Natougou gold project in
Burkina Faso. These awards, which all have the potential for additional phases, will strengthen activity levels in the
second six months and into the new financial year.
AUSTRALIA
The Australian building market remains strong and Probuild continues to maintain sound relationships with key
clients resulting in repeat contracts. The Australian Building business has established a strong order book, with
close to R11 billion in new work secured since 1 January 2017 across the retail, commercial and residential markets.
While a further softening of demand for residential projects is expected to continue throughout the 2017 calendar
year, particularly at the budget and low-end of the market, Probuild continues to experience good volumes of work
in the high-end, luxury residential space, a primary focus area for many of our existing blue-chip clients.
Lower activity in the residential sector is being offset by increased volumes within the commercial building space, a
relatively new area of success for the Australian operations, and follows ongoing success in retail and hotel
construction. The successful appointment of Probuild following a competitive tender for the site enabling and
demolition for the Destination Brisbane project at Queens Wharf is also exciting. With landmark projects now in each
of the key states of Queensland, New South Wales and Western Australia, the business is well positioned for future
growth in those states, adding to the significant number of projects in the stronghold state of Victoria.
The Infrastructure and civil engineering order book in Australia has improved by 37% since 30 June 2016. While
continuing to pursue key mining projects the division aims to reduce its reliance on this sector in the Western
Region and secure projects from the infrastructure and telecommunication sectors during the first half of the 2017
calendar year.
In the Eastern region, the division was awarded the Yaloak windfarm in Victoria, a contract totalling AU$18m as well
as a AU$28 million upgrade to the Bruce Highway in Queensland. Further projects in the road and renewable energy
sectors are currently being targeted.
INDUSTRY MATTERS
SETTLEMENT AGREEMENT
On 11 October 2016, seven major listed construction companies signed a Settlement Agreement with the
Government of South Africa. The primary purpose of the agreement is to achieve meaningful transformation within
the construction sector. In addition to the socio-economic contributions made to the fund, companies may elect to
either dispose of a significant portion of their businesses to black persons, or mentor existing black construction
companies and grow their turnover to 25% of the individual listed company's qualifying South African turnover over
a 7 year period.
WBHO has elected the second option and has identified 3 existing black construction companies whom we will
work together with over the coming years.
COMPETITION COMMISSION
With regard to the two outstanding cases referred to the Competition Tribunal previously reported on, WBHO
remains confident that it can defend these matters as well as the civil claim received from the City of Cape Town.
SAFETY
The group's LTIFR at 31 December 2016 improved to 0,93 injuries per million man hours from 0,94 at 30 June 2016.
Regrettably the employee of a subcontractor was fatally injured on a project in Australia. WBHO extends its sincere
condolences to the family and colleagues.
APPRECIATION
The directors extend their sincere appreciation to our many loyal clients for their continued belief in our ability to
meet their expectations and deliver quality products on their behalf, none of which would be possible without the full
commitment of our dedicated employees both in Africa and Australia. We acknowledge and thank them whole-heartedly
for continuously giving their best.
DIVIDEND PAID AND DECLARED
The final gross dividend of 313 cents per share in respect of the year ended 30 June 2016 was paid to shareholders
on 24 October 2016.
Notice is hereby given that the directors have declared an interim gross dividend of 150 cents per share
(2015: 135 cents) payable to all shareholders recorded in the register on 21 April 2017.
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 20% which results in a net
dividend of 120 cents per share.
The number of shares in issue at date of declaration amount to 63 190 064 (52 967 514 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: Tuesday 18 April 2017
Trading ex dividend commences: Wednesday 19 April 2017
Record date: Friday 21 April 2017
Payment date: Monday 24 April 2017
Shares may not be dematerialised or re-materialised between Wednesday, 19 April and Friday 21 April 2017, both
dates inclusive.
Shareholders and interested parties are advised that a presentation of the Company's unaudited interim financial
results for the six months ended 31 December 2016 will be held at Investec's offices in Sandton on Wednesday,
1 March 2017 at 10:00. The presentation will also be made available on the Company's website at www.wbho.co.za.
EL Nel CV Henwood MS Wylie
28 February 2017
Sponsor:
Investec Bank Limited
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