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WILSON BAYLY HOLMES-OVCON LIMITED - Audited Summary Consolidated Financial Statements for the period ended 30 June 2017

Release Date: 05/09/2017 08:00
Code(s): WBO     PDF:  
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Audited Summary Consolidated Financial Statements for the period ended 30 June 2017

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 PERIOD ENDED 30 JUNE 2017

HIGHLIGHTS

REVENUE
2017: R31,9 billion
2016: R30,7 billion

DIVIDEND
2017: 475 cents
2016: 448 cents

EPS
2017: 1 346 cents
2016: 1 322 cents

CASH
2017: R5,5 billion
2016: R5,8 billion

OPERATING MARGIN
2017: 3,1%
2016: 3,3%

CASH GENERATED FROM OPERATIONS
2017: R1,1 billion
2016: R1,9 billion


BASIS OF PREPARATION 
for the year ended 30 June 2017 

The summary 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 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 the annual consolidated financial statements, from which the 
summary consolidated financial statements were derived, are in terms of International Financial Reporting Standards and 
are consistent with the accounting policies applied in the preparation of the previous consolidated annual financial statements.

The summary consolidated financial statements have been compiled under the supervision of the Chief Financial Officer, 
Charles Henwood CA(SA) and were authorised by the board on 1 September 2017.

The directors take full responsibility for the preparation of the summary report and that the financial information has 
been correctly extracted from the underlying annual consolidated financial statements.

These summary consolidated financial statements for the year ended 30 June 2017 have been audited by BDO South Africa 
Inc., who expressed an unmodified opinion thereon. The auditor also expressed an unmodified opinion on the annual 
consolidated financial statements, a copy of which is available on the company's website at www.wbho.co.za, for 
inspection at the company's registered office. 

A copy of the auditor's report on the summary consolidated financial statements and of the auditor's report on the 
annual consolidated financial statements are available on the company's website at www.wbho.co.za, or for inspection at 
the company's registered office, together with the financial statements identified in the respective auditor's reports. 

The auditor's report does not necessarily report on all of the information contained in this announcement. Shareholders 
are therefore advised that in order to obtain a full understanding of the nature of the auditor's engagement they 
should obtain a copy of the auditor's report together with the accompanying financial information from the company's 
registered office or on the company's website at www.wbho.co.za.

CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE AND OTHER COMPREHENSIVE INCOME 
for the year ended 30 June 2017 

                                                                                     Audited      Audited 
                                                                           %            2017         2016 
                                                                      change           R'000        R'000 
Revenue                                                                  4,1      31 906 660   30 650 309 
Operating profit before non-trading items                               (1,8)        986 297    1 004 557 
Settlement agreement expense                                                        (170 274)           - 
Profit on disposal of property                                                             -       29 166 
Profit on disposal of shares                                                          12 726            - 
Gain on loss of control of subsidiary                                                  9 607            - 
Share-based payment expense                                                          (57 788)     (42 481)
Operating profit                                                                     780 568      991 242 
Share of profits from associates                                                      68 916       45 659 
Net finance income                                                                   240 894      203 014 
Profit before taxation                                                             1 090 378    1 239 915 
Taxation                                                                            (319 161)    (395 715)
Profit from continuing operations                                       (8,6)        771 217      844 200 
Loss from discontinued operations                                                     (1 671)    (122 350)
Profit for the year                                                                  769 546      721 850 
Other comprehensive income                                                                                
Items that may be or have been reclassified through profit or loss:                                       
Translation of foreign entities                                                     (256 522)     101 651 
Translation of net investment in a foreign operation                                 (20 908)           - 
Revaluation of a designated cash-flow hedge                                          (11 269)           - 
Tax effect of above items                                                              9 235            - 
Share of associates' comprehensive income                                            (33 933)      28 618 
Recycling of translation of foreign operations                                             -      284 086 
Total comprehensive income for the year                                              456 149    1 136 205 
Profit from total operations attributable to:                                                             
Equity shareholders of Wilson Bayly Holmes-Ovcon Limited                             722 064      725 533 
Non-controlling interests                                                             47 482       (3 683)
                                                                                     769 546      721 850 
Total comprehensive income attributable to:                                                               
Equity shareholders of Wilson Bayly Holmes-Ovcon Limited                             410 187    1 081 409 
Non-controlling interests                                                             45 962       54 796 
                                                                                     456 149    1 136 205 
Earnings per share (cents)                                                                                
Basic earnings per share                                                 1,8         1 345,6      1 322,3 
Diluted earnings per share                                               1,7         1 345,1      1 322,3 
Headline earnings per share                                              1,1         1 307,9      1 293,7 
Dividend per share (cents)                                               6,0           475,0        448,0 

Profit from continuing operations attributable to:                                                        
Equity shareholders of Wilson Bayly Holmes-Ovcon Limited                             722 133      766 031 
Non-controlling interests                                                             49 084       78 169 
                                                                                     771 217      844 200 
Earnings per share - continuing operations (cents)                                                        
Basic earnings per share                                                (3,6)        1 345,7      1 396,1 
Diluted earnings per share                                              (3,6)        1 345,3      1 396,1 
Headline earnings per share                                             (2,5)        1 308,9      1 342,9 


CONSOLIDATED STATEMENT OF  CHANGES IN EQUITY 
for the year ended 30 June 2017 

                                                                       Audited              Audited 
                                                                          2017                 2016 
                                                                         R'000                R'000 
Shareholders' equity at the beginning of the year                    5 428 429            4 565 742 
Profit for the year                                                    722 064              725 533 
Other comprehensive income                                            (311 878)             355 876 
Dividend paid                                                         (277 410)            (242 864)
Share buy-back                                                               -                  (28)
Derecognition of non-controlling interest                                    -              (10 639)
Treasury shares acquired                                              (278 996)                   - 
Share-based payment expense                                             57 788               43 845 
Share-based payment settlement                                           6 226                5 472 
Transactions with owners                                               (45 718)             (14 508)
Shareholders' equity at the end of the year                          5 300 505            5 428 429 

CONSOLIDATED STATEMENT OF FINANCIAL POSITION 
for the year ended 30 June 2017 

                                                                Audited               Audited 
                                                                   2017                  2016 
                                                                  R'000                 R'000 
ASSETS                                                                                        
Non-current assets                                                                            
  Property, plant and equipment                               1 635 349             1 710 358 
  Goodwill                                                      523 613               572 102 
  Investments in associates                                     650 246               347 171 
  Investments                                                       298               201 942 
  Long-term receivables                                         446 626                96 193 
  Deferred taxation                                             631 799               558 840 
Total                                                         3 887 931             3 486 606 
Current assets                                                                                
  Inventories                                                   258 858               210 314 
  Amounts due by customers                                      758 001               514 438 
  Trade and other receivables                                 5 635 000             5 111 251 
  Taxation receivable                                           148 534               294 687 
  Cash and cash equivalents                                   5 545 621             5 773 369 
Total                                                        12 346 014            11 904 059 
Total assets                                                 16 233 945            15 390 665 
EQUITY AND LIABILITIES                                                                        
Capital and reserves                                                                          
  Share capital                                                  28 597                28 597 
  Reserves                                                    5 271 908             5 399 832 
Shareholders' equity                                          5 300 505             5 428 429 
  Non-controlling interests                                     139 895               258 421 
Total                                                         5 440 400             5 686 850 
Non-current liabilities                                                                       
  Long-term liabilities                                         192 637                34 581 
  Deferred taxation                                              57 211                24 253 
Total                                                           249 848                58 834 
Current liabilities                                                                           
  Excess billings over work done                              1 673 161             1 917 491 
  Trade and other payables                                    6 931 937             5 595 564 
  Provisions                                                  1 913 262             2 059 645 
  Taxation payable                                               25 299                51 106 
  Bank overdrafts                                                    38                21 175 
Total                                                        10 543 697             9 644 981 
Total equity and liabilities                                 16 233 945            15 390 665 


CONSOLIDATED STATEMENT OF CASH FLOWS 
for the year ended 30 June 2017 

                                                                         Audited         Audited 
                                                                            2017            2016 
                                                                           R'000           R'000 
Operating profit before working capital requirements                   1 084 403       1 681 906 
Working capital changes                                                   32 225         312 949 
Cash generated from operations                                         1 116 628       1 994 855 
Net finance income                                                       259 765         141 641 
Taxation paid                                                           (252 139)       (487 234)
Dividends paid                                                          (302 081)       (273 873)
Cash retained from operations                                            822 173       1 375 389 
Cash flow from investing activities                                                              
Advances of long-term receivables                                       (265 356)        (14 000)
Repayment of long-term receivables                                        90 765         500 284 
Repayment of/(additions) to investments                                  152 211         (27 874)
Acquisition of associate                                                (202 962)              - 
Disposal of associate                                                     13 386               - 
Loans advanced to associates                                                   -         (68 353)
Proceeds on disposal of businesses                                       112 726               - 
Proceeds from share buy-back in subsidiary                                 8 815               - 
Restructuring of debt                                                          -         (65 114)
Proceeds on disposal of property, plant and equipment                    130 369         213 168 
Purchase of property, plant and equipment                               (220 402)       (116 206)
                                                                        (180 448)        421 905 
Cash flow from financing activities                                                              
Repayment of borrowings                                                  (21 288)       (141 272)
Transactions with owners                                                (184 531)        (41 720)
Purchase of treasury shares                                             (278 996)            (28)
Instalments in respect of capitalised finance leases                     (46 321)       (139 302)
                                                                        (531 136)       (322 322)
Net increase in cash and cash equivalents                                110 589       1 474 972 
Foreign currency translation effect                                     (167 054)        259 212 
Overdraft in respect of disposal group at the beginning 
of the year                                                                    -        (332 180)
Cash and cash equivalents at the beginning of the year                 5 752 194       3 995 089 
Overdraft disposed of                                                          -         355 101 
Cash and cash equivalents acquired                                        12 451               - 
Cash and cash equivalents derecognised                                  (162 597)              - 
Cash and cash equivalents at the end of the year                       5 545 583       5 752 194 


NOTES TO THE FINANCIAL STATEMENTS 
for the year ended 30 June 2017 

                                                               Audited                   Audited 
                                                                  2017                      2016 
                                                                 R'000                     R'000 
1. RECONCILIATION OF HEADLINE EARNINGS                                                            
Continuing operations                                                                            
Attributable profit                                            722 133                   766 031 
Adjusted for:                                                                                    
Gain on loss of control of subsidiary                           (9 607)                        - 
Profit on disposal of property, plant and equipment*           (13 944)                  (41 215)
Tax effect                                                       3 813                    12 038 
Headline earnings from continuing operations                   702 395                   736 854 
Total operations                                                                                 
Attributable profit                                            722 064                   725 533 
Adjusted for:                                                                                    
Gain on loss of control of subsidiary                           (9 607)                        - 
Profit on disposal of property, plant and equipment*           (14 611)                  (41 755)
Loss on disposal of operations*                                      -                    13 939 
Tax effect                                                       4 000                    12 125 
Headline earnings                                              701 846                   709 842 
* Net of non-controlling interests                                                               

2. ORDINARY SHARES 
                                                              Audited                    Audited 
                                                                 2017                       2016 
                                                                R'000                      R'000 
Ordinary shares in issue ('000)                                63 190                     63 190 
Weighted average number of shares ('000)                       53 663                     54 870 
Diluted weighted average number of shares ('000)               53 680                     54 870

3.  BUSINESS COMBINATION 
On 30 June 2017, WBHO Construction (Pty) Ltd acquired 90% of the voting equity in Grindrod Rail Construction Company (Pty) Ltd 
for an amount of R62,3 million through the purchase of shares. The group has been rebranded as iKusasa Rail.

The principal activities of iKusasa Rail includes the construction and maintenance of railway lines, overhead track 
equipment, track related civil works and the supply of related concrete products. 

The primary reason for the acquisition is to optimise the synergies in rail related construction by allowing the group 
to provide the full scope of services relating to rail construction.

All identifiable assets and liabilities are recognised at fair value and where necessary a valuation has been performed 
by external experts.

The following provisional information summarises the fair value of the identifiable assets acquired and liabilities 
assumed at the acquisition date:

                                                                     R'000 
Assets                                                                
Property, plant and equipment                                       33 596 
Other non-current assets                                             4 418 
Inventory                                                           28 129 
Other current assets                                                65 783 
Cash and cash equivalents                                           12 451 
Total                                                              144 377 
Liabilities                                                                
Non-current liabilities                                             (2 785)
Current liabilities                                                (72 415)
Total                                                              (75 200)
Identifiable assets and liabilities                                 69 177 
Fair value of consideration payable                                 62 259 
Fair value of non-controlling interests recognised                   6 918 
Fair value of identifiable assets and liabilities                  (69 177)
No revenue or losses have been included in the group's results. 
The amounts below illustrate the impact on the group's results 
had the acquisition been effective at 1 July 2016. 
Revenue                                                            151 884 
Loss after tax                                                     (29 150)

                                                                Audited          Audited 
                                                                   2017             2016 
                                                                  R'000            R'000 
4. SEGMENTAL INFORMATION                                                                 
Segment revenue                                                                          
Building and civil engineering                                8 135 777        7 536 471 
Roads and earthworks                                          4 589 881        4 333 788 
Australia                                                    18 599 977       18 112 931 
Total construction revenue                                   31 325 635       29 983 190 
Property developments                                             2 301           18 880 
Construction materials                                          578 724          648 239 
Total revenue                                                31 906 660       30 650 309 
Segment operating profit before non-trading items                                        
Building and civil engineering                                  384 943          369 585 
Roads and earthworks                                            341 737          283 422 
Australia                                                       312 586          300 392 
Total construction operating profit                           1 039 266          953 399 
Property developments                                            (1 472)          14 656 
Construction materials                                            2 103           36 502 
Total operating profit                                        1 039 897        1 004 557 
Equity-accounted development profit from Caulfield              (53 600)               - 
Total operating profit before non-trading items                 986 297        1 004 557 
Geographical revenue                                                                     
South Africa                                                 11 453 907        9 739 222 
Rest of Africa                                                1 852 776        2 798 156 
Australia                                                    18 599 977       18 112 931 
                                                             31 906 660       30 650 309 
Geographical operating profit                                                            
South Africa                                                    475 720          346 354 
Rest of Africa                                                  251 591          357 811 
Australia                                                       312 586          300 392 
                                                              1 039 897        1 004 557 
Equity-accounted development profit from Caulfield              (53 600)               - 
Total operating profit before non-trading items                 986 297        1 004 557 
Geographical non-current assets excluding deferred tax                                   
South Africa                                                  1 642 474        1 437 288 
Rest of Africa                                                  466 851          378 755 
Australia                                                       943 845        1 111 723 
United Kingdom                                                  202 962                - 
                                                              3 256 132        2 927 766

COMMENTARY 
The group delivered a positive set of results in a year where market sentiment in Australia was upbeat while locally, 
the year was characterised by low-growth, a volatile rand exchange rate and political events which impacted South 
African business confidence. Nonetheless, within this climate the Building and civil engineering division delivered 
record revenue at solid margins and the Roads and earthworks division had a strong second six months with an improved 
order intake, particularly in West Africa. In Australia, the record activity levels achieved in previous years have 
been maintained. The construction materials division endured difficult market conditions, however on an exciting note, 
the group entered the United Kingdom (UK) construction market through the acquisition of a 40% interest in an 
established frame contractor based in London. 

FINANCIAL REVIEW
Revenue and operating profit
In FY17 revenue increased by 4% to R31,9 billion compared to R30,7 billion the previous year. Strong growth from the 
group's local building divisions and an improved performance from the Roads and earthworks division resulted in 18% 
growth in South Africa. This increased the contribution from South Africa toward group revenue from 32% to 36%. 
Revenue from the rest of Africa declined by 33%, primarily due to lower activity in Mozambique and Botswana while 
revenue of R18,6 billion from Australia, which comprised 58% of group revenue, was largely in line with the comparative 
period of R18,1 billion. Revenue from construction materials of R893 million before the elimination of inter-company 
sales was also essentially flat.

Increased profitability from the Roads and earthworks division negated lower profitability from Australia which was 
impacted by a single loss-making project in Queensland and unrealised currency losses. As a result, operating profit 
before non-trading items amounting to R986 million was below that of the prior year while the overall margin dropped 
from 3,3% to 3,1%. 

Non-trading items
Included in non-trading items is an amount of R170 million in respect of the annual amounts of R21,5 million to be made 
to the Tirisano Trust over a period of 12 years arising from the Settlement Agreement signed with the Government of 
South Africa on 11 October 2016.

IFRS dictates that the present value of the full liability be recognised in the period in which it is incurred.

In June 2017 the group reduced its interest in Edwin Construction from 57% to 49%. A gain of R9,6 million was 
recognised on the loss of control transaction. Capital Africa Steel disposed of the shares it received from PPC Cement Ltd
in respect of the sale of 3Q Mahuma Concrete Holdings (Pty) Ltd in the prior year, resulting in a profit of 
R12,7 million.

The share-based payment expense of R57,8 million recognised relates to the WBHO Share Plan for executive management and 
the existing broad-based and management share schemes in place.

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 3,6% from 1 396,1 cents per share at 30 June 2016 to 1 345,7 cents per share at 30 June 2017 and 
headline earnings per share decreasing by 2,5% to 1 308,9 cents per share from 1 342,9 cents per share.

Adjusting the group's earnings for this once-off expense, earnings per share and headline earnings per share would have 
increased by between 13% and 15% as reflected in the table below.

                                                           %                        June                        June 
                                                      change                        2017                        2016 
Adjusted earnings per share - 
continuing operations (cents)  
Basic earnings per share                                12,7                     1 574,1                     1 396,1 
Diluted earnings per share                              12,7                     1 573,6                     1 396,1 
Headline earnings per share                             14,5                     1 537,4                     1 342,9 

Associated companies
The group now has an interest in six 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 gas-fired power station in Mozambique; Dipalopalo, a concession company responsible for providing 
serviced accommodation to the Department of Statistics; Edwin Construction, previously a subsidiary; Caulfield, a 
property development in Australia; and the Byrne Group, a frame contractor in the United Kingdom in which the group 
acquired a 40% interest this year for a consideration of £12 million.

Income from associates of R69 million relates to the group's share of after tax income in respect of gas supplied by 
the Matola Gas Company, the sale of electricity by Gigawatt Power and the profit from the development sales of the 
first precinct of the Caulfield development.

The total equity invested in associated companies amounts to R339 million.

During the year the group received a dividend of R25 million from Gigajoule International and R32 million distribution 
of the profits from the Caulfield development.

Changes in shareholding
In terms of the shareholder agreements, Probuild Constructions (Probuild) acquired a further 2,1% interest from 
minority shareholders during the period at a cost AU$3,6 million, while WBHO Australia acquired a further 0,8% from 
minority shareholders at a cost of AU$1,4 million. In June 2017, Probuild sold 1,6 million shares to management. The 
combined effect of these transactions resulted in the group's interest in Probuild reducing from 83,0% to 80,7%. 

The remaining 17,5% interest in Renniks Construction and 44,4% interest in Capital Africa Steel were also acquired from 
minority shareholders during the year at a cost of R99 million. 

Acquisitions
In addition to the 40% interest acquired in the Byrne Group, the group acquired a controlling interest in iKusasa Rail 
(formerly Grindrod Rail) for a consideration of R63 million. 

Cash
Cash balances decreased by R206 million since 30 June 2016 to R5,5 billion largely due to the de-recognition of R163 million 
in cash following the loss of control in Edwin Construction. Cash generated from operations remained healthy amounting to 
R1,1 billion compared to R2 billion generated in the comparative period. Capital expenditure increased from R127 million to 
R309 million, of which R220 million was acquired for cash and R89 million was financed. Depreciation amounted to R212 million 
(2016: R258 million). Additional cash outflows included R203 million in respect of acquisitions, R184 million in respect of 
the changes in shareholding discussed above and R279 million in respect of treasury shares acquired.

Contingent liabilities
Financial guarantees issued to third parties amount to R10,6 billion compared to R9,5 billion in issue at 30 June 2016.

OPERATIONAL REVIEW 
BUILDING AND CIVIL ENGINEERING 

                                                                 30 June                            30 June 
                                                                    2017                               2016 
Revenue (8,0% growth)                                              8 136                              7 536 
Operating profit (4,7% margin)                                       385                                370 
Capital expenditure                                                   67                                 49 
Depreciation                                                          43                                 66 

The Building and civil engineering division achieved record levels of revenue this year as a strong performance from 
the local building divisions offset lower activity in the rest of Africa and activity within the civil engineering 
division remained static. The decrease in the margin from 4,9% to 4,7% reflects lower revenue from higher-margin design 
and construct projects in the current year and a lower margin return from the civil engineering division where industry 
conditions within the sector remain constrained.

Building
Locally, the Gauteng and KwaZulu-Natal (KZN) building divisions delivered exceptional performances, while in the 
Western Cape activity levels dropped off following the completion of a number of large projects and a lower order 
intake in the first half of the year. In the Eastern Cape the division produced a satisfactory performance.

The retail, commercial office and entertainment sectors continue to underpin activity levels. Activity within the hotel 
and entertainment sector spiked this year following the completion of the Times Square Casino in Tshwane and the 
conversion of the grain silos precinct at the V&A Waterfront in the Western Cape into a hotel and the Zeits Museum of 
Contemporary Art Africa. Activity from this sector was further supported by smaller projects for the Hilton hotel group 
in KZN and Mount Nelson Hotel in Cape Town. 

Retail activity in Gauteng reduced significantly during the year following the completion of the Menlyn Maine Central 
Square project in Tshwane and Thavhani Mall in Limpopo. Overall activity levels from the sector were however maintained 
due to the ongoing construction of the Ballito and Cornubia shopping centres in KZN and, to a lesser extent, the 
completion of a new Virgin Active and refurbishment at the Greenacres Centre in the Eastern Cape.

The commercial office space remained highly active with projects concentrated in Gauteng around Sandton, Rosebank, 
Midrand and Tshwane. Activity from existing projects within this sector included: completion of Phase 3 of the Alice 
Lane precinct in the second half of the year; the ongoing construction of new head offices for Discovery and 
PriceWaterhouseCoopers scheduled for completion in the first half of next year and new office developments at 
92 Rivonia, the Rosebank Towers and Loftus Park. In the coastal areas, commercial projects included Sable Park in the 
Western Cape which includes a new regional office for Discovery, a new regional head office for ABSA in KZN and 
completion of new offices for Transnet and the South African National Road Agency (SANRAL) in the Eastern Cape.

In Ghana, building activity levels have begun to decline as the replacement of projects has proved challenging. 
Construction of the Kumasi City Mall was completed in the second half of the year while the design and construct 
contract incorporating new offices for Standard Chartered Bank on behalf of RMB Westport is progressing well. 

Civil engineering
Revenue from the Civil engineering division improved in the second half of the year as construction of the commercial 
crude oil terminal facility at Saldanha gained traction, yet remained flat for the full year due to a weaker first six 
months. Construction of a furnace for Northam Platinum and a stacker and reclaimer for Exarro at the Grootegeluk mine 
in Limpopo have progressed well and will be completed early in FY18 while the re-access works at the Kusile Power 
Station will continue into the next financial year. 

In Zambia activity remained subdued due to poor economic conditions and political uncertainty, nonetheless the division 
continues to secure sufficient smaller-scale projects within the mining, industrial and agricultural sectors to sustain 
a presence in the region. 

In West Africa, the division has now partnered with the group's Roads and earthworks division to deliver two new 
projects in Guinea and Ghana.

ROADS AND EARTHWORKS 

                                                                30 June                            30 June 
                                                                   2017                               2016 
Revenue (5,9% growth)                                             4 590                              4 334 
Operating profit (7,4% margin)                                      342                                283 
Capital expenditure                                                 178                                105 
Depreciation                                                         99                                 53 

The Roads and earthworks division performed well to achieve growth of 6% largely due to a considerably stronger second 
half as activity in the private sector improved. Sound growth locally offset lower activity in the rest of Africa, as 
the road, mining, and energy sectors offered opportunities.

The local roads sector remained buoyant comprising 60% of South African revenue with the division executing projects 
countrywide. In Gauteng, improvements to the M1 near Oxford Road in Johannesburg are ongoing while the iconic cable 
stay bridge over the M1 near Sandton was completed alongside the Katherine Street bus-rapid transport (BRT) project. 
The BRT projects in KZN will be completed early next year. The R24 near Rustenburg in the North West Province is 
nearing completion and in Mpumalanga, the upgrade to the N4 near Waterval Boven for TRAC was successfully handed over. 
In the Free State, construction commenced on two new projects, the N6 near Smithfield and the N1 near Winburg. In the 
Eastern Cape the upgrade of the N2 between Grahamstown and the Fish River Pass was completed during the year, however 
the division has been awarded two further sections along the N2 near Breidbach and Coombs. Roadspan also benefited from 
the sustained activity within the roadwork sector with the surfacing division achieving in excess of 40% growth this 
year. Minimal activity from within the provincial road sector impacted the performance of Edwin Construction which 
experienced a slow start to the year. Construction of the N5 near Harrismith underpinned activity throughout the year 
while two new road projects, namely the rehabilitation of the D670 near Bronkhorstspruit for the Gauteng Department of 
Transport and the rehabilitation of the R34 near Vryburg for SANRAL were secured in the second half and are now 
underway. Edwin Construction also secured a sewer and water reticulation project in Mangaung as it seeks opportunities 
in new markets.

A resurgence of local private sector projects was prevalent in the second six months as the division secured projects 
in the mining, energy and logistics sectors. These include additional work at Northam Platinum's Booysendal mine, an 
ash dam, haul road and accompanying earthworks and infrastructure for SASOL, new lining and drainage on an ash dam for 
Eskom and bulk earthworks, roads and other infrastructure at the Clairwood logistics park in KZN.

The pipeline sector offered good growth for the division this year with a large proportion of work derived from 
the LPG Import Terminal and the crude oil terminal, both in Saldanha. Activity was further supported by the 
construction, installation and commissioning of the infrastructure for the fire protection system at Transnet's 
Tarlton Depot and the installation of a steel pipeline at the Neckartal Dam in Namibia.

The rural housing market also continues to offer opportunities as new projects were secured in KZN and the 
Eastern Cape.

Activity in the rest of Africa declined once again this year following sharp declines in activity in both Botswana 
and Mozambique. In Botswana the division managed to secure some projects from the mining sector during the year as well 
as the award of a new pump station along the North South Carrier Pipeline. In Mozambique, the division struggled to 
replace projects on various coal mines which were completed early in the year, however the road sector offered some 
opportunities and the division secured a further section of the EN4.

It is encouraging to note activity in West Africa has finally showed some improvement as the division secured a number 
of projects in Ghana, Guinea and Burkina Fasso. 

AUSTRALIA 

                                                              30 June                            30 June 
                                                                 2017                               2016 
Revenue (2,7% increase)                                        18 600                             18 113 
Construction profit (1,4% margin)                                 259                                300 
Share of profit from Caulfield development                         54                                  - 
Total operating profit (1,7% margin)                              313                                300 
Capital expenditure                                                53                                  8 
Depreciation                                                       60                                 62 

The Australian business grew its revenue by 5,5% in dollar terms in the current financial year. Strong Asian investment 
and continued population growth continues to support record high activity levels in Australia, particularly in 
Victoria, New South Wales (NSW) and Queensland. Despite the growth achieved this year, activity levels were 
significantly impacted by two factors; slower commencement of projects due to longer than expected client planning 
requirements and financier approvals; and severe weather in both Queensland and NSW.

Building
The Melbourne and Sydney markets continue to be particularly busy with 68% of total revenue being concentrated in these 
two metropolitan cities. The increased levels of activity in NSW has seen Probuild securing larger projects in Sydney 
and elevating it toward Tier One builder status in the state. 

Multi-level residential projects underpinned activity during the 2017 financial year alongside increasing levels of 
activity in the hotel sector in response to significant growth in Chinese tourism, and a growing presence in the 
commercial sector which contributed 11% of total revenue in the 2017 financial year. 

Prominent residential projects this year include the Eporo, Victoria One and Empire apartment buildings as well as the 
Marina and Aurora Towers, all in Melbourne; together with Phase 2 of the Promenade and the Discovery Point apartments 
in Sydney. Residential activity in Brisbane has been slowing for the past twelve months and the business has been 
increasingly selective in which projects to pursue, choosing to partner with developers where the business has strong 
relationships built on the strength of its Victorian operations. The Queensland business navigated its way through a 
difficult loss-making project this year, namely the Coorparoo project, a mixed use residential and retail development 
covering three apartment buildings, a retail precinct and a 10 theatre cinema complex. Losses were largely due to 
delays in securing subcontractor packages as the market accelerated resulting in unanticipated price increases. Two of 
the three apartment towers have been completed at the date of this report, with the final tower forecast for completion 
in October 2017. 

The Chadstone and Werribee retail projects in Melbourne and the Toowoomba retail project were all completed in the 
current financial year.

The Western Australian building operations, which have been quieter in recent years, secured a key AU$400m anchor 
project at the Elizabeth Quay in Perth supported by a number of other mid-sized projects. 

The Monaco Hickey business continued its penetration into the sub AU$50 million building project space, completing mid-
size commercial projects in suburban areas along with medium density luxury apartment projects.

Infrastructure and civil engineering 
The Infrastructure business continues to grow with revenue increasing by 63% to AU$195 million, with our presence in 
the renewables sector being a highlight. Significant opportunities exist to grow revenue in this sector given the level 
of government driven activity particularly in the road, rail and bridge infrastructure spaces. The Western Australia 
business contributed strongly to the overall results for the 2017 financial year while the Eastern Region secured two 
new contracts during the year.

CONSTRUCTION MATERIALS 

                                                             30 June                            30 June 
                                                                2017                               2016 
Continuing operations                                              
Revenue (1,4% decline)                                           893                                906 
Inter-company sales                                             (314)                              (258)
Revenue to external customers                                    579                                648 
Operating profit (0,4% margin)                                     2                                 37 
Capital expenditure                                               11                                 17 
Depreciation                                                      10                                 10 

Revenue from the steel business decreased marginally this year and trading conditions remain challenging, 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 loss-making contract in VSL Construction (Pty) Ltd (VSL), a subsidiary of Capital 
Africa Steel. Disputes over the settlement of claims have been referred to international arbitration by VSL and its 
joint venture partner.

ORDER BOOK AND OUTLOOK 

Order book by segment (Rm)                                   30 June                                  30 June 
                                              %                 2017                %                    2016 
Building and civil engineering               16                7 189               20                   8 683 
Roads and earthworks                         14                6 161                8                   3 041 
Australia                                    70               31 526               72                  30 976 
Total                                       100               44 876              100                  42 700 

Order book by geography (Rm)                                 30 June                                  30 June 
                                              %                 2017                %                    2016
South Africa                                 26               11 707               25                  10 532 
Rest of Africa                                4                1 643                3                   1 192 
Australia                                    70               31 526               72                  30 976 
Total                                       100               44 876              100                  42 700 

The group's total order book at 30 June 2017 increased by 5% to R45 billion from R43 billion at 30 June 2016. 
The increase comprises a 17% decrease in the Building and civil engineering order book which was offset by a 103% 
increase in higher margin work from the Roads and earthworks division's order book as the Australian order book 
remained largely flat.

Africa (including South Africa)
The order intake for local building work continues to diminish as the softening of the retail and commercial office 
sectors becomes more entrenched. That said, a number of opportunities exist in the commercial office, retail and 
residential space in Gauteng that will continue to support future activity. In the Western Cape, activity is expected 
to improve next year following a better order intake in the second half and strong relationships with developers 
looking to unlock a number of projects in the short to medium-term. 

Significant new awards for the Building division this year include the Rosebank Link, a 15 storey office park 
opposite the Gautrain station, a new office development at 33 Baker Street in Rosebank, new phases at The Club in 
Tshwane, the expansion of the Gateway shopping centre and the Suncoast casino in KZN and in the Western Cape, the new 
Yacht Club development consisting of commercial space, residential apartments and a hotel component as well as the Axis 
and Palm Vue Apartments. 

In Ghana, construction of the new offices for Standard Chartered Bank will continue into next year, with potential new 
work coming from the retail sector. 

The Civil engineering division's order book has been significantly bolstered by the award of the commercial crude oil 
terminal facility at Saldanha which will continue well into the 2019 financial year as well as being awarded a rapid 
load-out facility at Exarro's Grootgeluk mine. Despite an increase in commodity prices and a growing number of 
enquiries from the mining houses during the year, overall activity from the sector has yet to recover to meaningful 
levels. Nonetheless, the division continues to seek new opportunities both in coastal markets and the rest of Africa as 
well as marine construction.

The strong order book growth within the Roads and earthworks division will support activity levels next year.
Locally, the commercial crude oil terminal facility in Saldanha and the ash dam and related infrastructure at SASOL 
will extend well into the 2019 financial year. Various new road contracts secured in the second half will see activity 
from this sector sustained throughout 2018. Construction of a new platform and road at Booysendal for Northam Platinum 
will form the bulk of local mining activity in the year ahead.

Mining infrastructure activity in Botswana, Namibia and Mozambique remains subdued and work for next year comprises 
largely of water and road infrastructure projects. The division has however secured a large mining infrastructure 
project at Orapa, in Botswana subsequent to 30 June 2017.

In West Africa, mining infrastructure projects secured in Guinea, Burkina Fasso and Ghana will continue through next 
year and all have the potential for additional phases. 

The acquisition of iKusasa Rail (formerly Grindrod Rail) in partnership with Faku Family Enterprises presents the group 
with exciting opportunities in the rail maintenance and new construction markets both locally and in the rest 
of Africa.

Australia
The Australian order book remains strong at approximately AU$3 billion and, having successfully secured key major 
projects in Queensland, Western Australia and NSW, focus will remain on strengthening our presence in these states, in 
particular NSW.

The business has good diversification of its order book across the various sectors within both the building and 
infrastructure markets. Residential only projects comprise 39% of the order book, mixed use residential and hotels 24% 
while retail has decreased to 9% following the completion of three large-scale projects this year. 

An increase in the number of commercial projects secured, equating to 17% of the order book, highlights the growing 
exposure to this sector, with two commercial projects valued in excess of AU$500 million in aggregate being delivered 
over the next two years.

Growth in online shopping is beginning to impact retail markets in Australia, however the market appears to be 
preparing for the next wave of construction works. By providing assistance on early design development to key shopping 
centre owners Probuild is able to target specific construction projects in the near-term.

Subsequent to year-end Probuild secured the West Side Place contract for the Far East Consortium in what is to 
be Melbourne's largest CBD residential development with over 2 600 apartments, and the tallest hotel in the southern 
hemisphere.

The WBHO Infrastructure order book continues to be underpinned by ongoing maintenance contracts in the mining and 
industrial sectors in the Western Region, and a growing market presence in the renewable energy sector having secured a 
number of wind farms and solar power generation facilities in both the Eastern and Western regions. Additional work to 
the value of AU$165m has been secured since the end of the year.

United Kingdom (UK)
WBHO has been seeking growth opportunities in new markets for some time. The UK construction market has seen good 
growth in recent years particularly in London and the North West. The construction environment is similar to that of 
Australia with the main contractor fulfilling a construction management role with the different packages of projects 
being let to subcontractors, and as such was identified as offering the most potential at acceptable levels of risk.

In a construction management environment, understanding the supply chain is key to delivering successful projects. 
Due to our familiarity and capability in erecting structures in South Africa, a decision was taken to seek investment 
opportunities in a local frame contractor.

On 23 June 2017, WBHO acquired a 40% interest in the Byrne Group. Through Byrne Bros., the group specialises in 
concrete sub and superstructure packages while high quality new build refurbishment and fit-out projects are delivered 
through Ellmer Construction.

Our investment into the group will provide insight and understanding of the dynamics prevalent within the industry as 
we cautiously enter this market. 

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 radical transformation within the construction sector. 

Competition Commission
With regard to two outstanding cases referred to the Competition Tribunal on which we have previously reported, two 
interlocutory hearings on procedural matters went against the company, however, WBHO remains confident that it can 
defend these cases as well as the civil claim received from the City of Cape Town. 

SAFETY
The group's lost-time injury frequency ratio (LTIFR) at 30 June 2017 improved to 0,8 injuries per million man hours 
from 0,94 at 30 June 2016. The African business achieved its best injury statistics to date and an LTIFR of 
0,54. Regrettably the employee of a subcontractor was fatally injured on a project in Australia. The management of both 
WBHO and Probuild extend their sincere condolences to the family, friends and colleagues affected by this tragedy.

APPRECIATION
The directors would like to thank our employees both in Africa and Australia for their dedication in what has been a 
challenging year and our loyal clients' belief in our ability to meet their expectations.

DIVIDEND DECLARATION
Notice is hereby given that the directors have declared a final gross dividend of 325 cents per share (2016: 313 cents) 
payable to all shareholders recorded in the register on 20 October 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 260 cents per share. 

The number of shares in issue at date of declaration amount to 63 190 064 (53 166 006 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 17 October 2017
Trading ex dividend commences:                          Wednesday 18 October 2017
Record date:                                            Friday 20 October 2017
Payment date:                                           Monday 23 October 2017

Shares may not be dematerialised or re-materialised between Wednesday, 18 October and Friday 20 October 2017, both 
dates inclusive.

Shareholders and interested parties are advised that a presentation of the group's audited financial results for the 
year ended 30 June 2017 will be held at Investec's offices in Sandton on Wednesday, 6 September 2017 at 10:00. 

The presentation will be made available on the company's website at www.wbho.co.za along with the notice to the annual 
general meeting and accompanying form of proxy which is attached to the shareholder leaflet.

EL Nel                                CV Henwood                        MS Wylie
4 September 2017

Sponsor:
Investec Bank Limited
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