WILSON BAYLY HOLMES-OVCON LIMITED - Unaudited interim results for the six months ended 31 December 2017

Release Date: 27/02/2018 07:30
Code(s): WBO
 
Wrap Text
Unaudited interim results for the six months ended 31 December 2017

WILSON BAYLY HOLMES-OVCON LIMITED
Building and civil engineering contractor
(Registration number: 1982/011014/06)
ISIN number: ZAE 000009932 Share code: WBO

UNAUDITED INTERIM RESULTS
for the six months ended 31 December 2017

HIGHLIGHTS

Revenue
2017: 17,3% to R18,1 billion
2016: R15,4 billion

Operating profit 
2017: 8,1% to R510 million
2016: 471 million

HEPS
Continuing operations
2017: 82,6% to 727 cents
2016: 398 cents

Dividend 
2017: 150 cents
2016: 150 cents


BASIS OF PREPARATION
for the six months ended 31 December 2017
The consolidated interim financial statements are prepared in accordance with the JSE Limited Listings Requirements,
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 financial statements, from which the summary consolidated
financial statements were derived, 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 approved by the board on 23 February 2018.

The consolidated interim financial statements for the period ended 31 December 2017 have not been audited or reviewed
by the group's auditors, BDO South Africa Inc.

CONSOLIDATED STATEMENT OF FINANCIAL PERFORMANCE 
AND OTHER COMPREHENSIVE INCOME
for the six months ended 31 December 2017
                                                                        Unaudited        Unaudited         Audited     
                                                                         December         December            June     
                                                               %             2017             2016            2017    
                                                          change            R'000            R'000           R'000    
Revenue                                                     17,3       18 086 801       15 415 743      31 906 660    
Operating profit before non-trading items                    8,1          509 597          471 352         986 297    
Settlement agreement expense                                                    -         (170 274)       (170 274)   
Profit on disposal of shares                                                    -           12 111          12 726    
Gain on loss of control of subsidiary                                       5 092                -           9 607    
Share-based payment expense                                               (29 981)         (24 012)        (57 788)    
Operating profit                                            67,6          484 708          289 177         780 568    
Share of profits and losses from associates                                (6 485)          18 608          68 916    
Net finance income                                                        100 041          115 980         240 894    
Profit before taxation                                                    578 264          423 765       1 090 378    
Taxation                                                                 (174 254)        (181 165)       (319 161)   
Profit from continuing operations                           66,5          404 010          242 600         771 217    
Loss from discontinued operations                                               -           (3 613)         (1 671)   
Profit for the period                                                     404 010          238 987         769 546    
Other comprehensive income                                                                                            
Items that may be reclassified to profit or loss:                                                                     
Translation of foreign entities                                           (90 760)        (194 195)       (256 522)   
Translation of net investment in a foreign operation                       (6 331)               -         (20 908)   
Revaluation of a designated cash-flow hedge                                     -                -         (11 269)   
Tax effect of the above items                                               1 773                -           9 235    
Share of associates' comprehensive income                                  (9 173)          (3 070)        (33 933)   
Total comprehensive income for the period                                 299 519           41 722         456 149    
Profit from total operations attributable to:                                                                         
Equity shareholders of Wilson Bayly Holmes-Ovcon Limited                  391 127          214 898         722 064    
Non-controlling interests                                                  12 883           24 089          47 482    
                                                                          404 010          238 987         769 546    
Total comprehensive income attributable to:                                                                           
Equity shareholders of Wilson Bayly Holmes-Ovcon Limited                  286 636           17 633         410 187    
Non-controlling interests                                                  12 883           24 089          45 962    
                                                                          299 519           41 722         456 149    
Earnings per share (cents)                                                                                            
Basic earnings per share                                    87,0            736,5            393,8         1 345,6    
Diluted earnings per share                                  87,5            736,3            392,8         1 345,1    
Headline earnings per share                                 83,9            726,8            395,3         1 307,9    
Dividend per share (cents)                                                  150,0            150,0           475,0    

Profit from continuing operations attributable to:                                                                    
Equity shareholders of Wilson Bayly Holmes-Ovcon Limited                  391 127          216 905         722 133    
Non-controlling interests                                                  12 883           25 695          49 084    
                                                                          404 010          242 600         771 217    
Earnings per share - continuing operations (cents)                                                                    
Basic earnings per share                                    85,3            736,5            397,5         1 345,7    
Diluted earnings per share                                  85,7            736,3            396,4         1 345,3    
Headline earnings per share                                 82,6            726,8            398,1         1 308,9    


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 31 December 2017
                                                                        Unaudited        Unaudited         Audited     
                                                                         December         December            June     
                                                                             2017             2016            2017    
                                                                            R'000            R'000           R'000    
Shareholders' equity at the beginning of the period                     5 300 505        5 428 429       5 428 429    
Profit for the period                                                     391 127          214 898         722 064    
Other comprehensive income                                               (104 491)        (197 265)       (311 878)   
Dividend paid                                                            (188 149)        (189 700)       (277 410)   
Treasury shares acquired                                                        -         (279 015)       (278 996)   
Share-based payment expense                                                29 981           24 012          57 788    
Share-based payment settlement                                              2 079            3 188           6 226    
Transactions with owners                                                  (27 665)         (31 962)        (45 718)   
Shareholders' equity at the end of the period                           5 403 387        4 972 585       5 300 505    


CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 31 December 2017
                                                                        Unaudited        Unaudited         Audited     
                                                                         December         December            June     
                                                                             2017             2016            2017    
                                                                            R'000            R'000           R'000    
ASSETS                                                                                                                
Property, plant and equipment                                           1 636 386        1 657 235       1 635 349    
Goodwill                                                                  509 224          520 818         523 613    
Investment in associates                                                  670 893          344 483         650 246    
Investments                                                                29 162           47 533             298    
Long-term receivables                                                     337 831           42 817         446 626    
Deferred taxation                                                         651 266          491 883         631 799    
Total non-current assets                                                3 834 762        3 104 769       3 887 931    
Inventories                                                               287 487          216 445         258 858    
Amounts due by customers                                                1 062 700          546 285         758 001    
Trade and other receivables                                             4 807 847        3 787 918       5 635 000    
Taxation                                                                  172 205          229 366         148 534    
Cash and cash equivalents                                               4 256 061        5 161 208       5 545 621    
Total current assets                                                   10 586 300        9 941 222      12 346 014    
Total assets                                                           14 421 062       13 045 991      16 233 945    
EQUITY                                                                                                                
Share capital                                                              28 597           28 597          28 597    
Reserves                                                                5 374 790        4 943 988       5 271 908    
Shareholders' equity                                                    5 403 387        4 972 585       5 300 505    
Non-controlling interests                                                 120 123          195 408         139 895    
Total equity                                                            5 523 510        5 167 993       5 440 400    
LIABILITIES                                                                                                           
Long-term liabilities                                                     167 358          225 284         192 637    
Deferred taxation                                                          50 399           22 772          57 211    
Total non-current liabilities                                             217 757          248 056         249 848    
Excess billings over work done                                          2 107 340        1 815 538       1 673 161    
Trade and other payables                                                4 586 468        4 025 557       6 931 937    
Provisions                                                              1 938 297        1 746 406       1 913 262    
Taxation                                                                   47 690           32 178          25 299    
Bank overdraft                                                                  -           10 263              38    
Total current liabilities                                               8 679 795        7 629 942      10 543 697    
Total equity and liabilities                                           14 421 062       13 045 991      16 233 945    
                                                                                    

CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended 31 December 2017
                                                                                                      
                                                                        Unaudited        Unaudited         Audited     
                                                                         December         December            June     
                                                                             2017             2016            2017    
                                                                            R'000            R'000           R'000    
Operating profit before working capital requirements                      659 707          283 778       1 084 403    
Working capital changes                                                (1 462 139)        (153 185)         32 225    
Cash (utilised in)/generated from operations                             (802 432)         130 593       1 116 628    
Net finance income                                                        128 085          142 515         259 765    
Taxation paid                                                            (226 402)         (79 061)       (252 139)   
Dividends paid                                                           (198 336)        (200 450)       (302 081)   
Cash (utilised in)/retained from operations                            (1 099 085)          (6 403)        822 173    
Cash flow from investing activities                                                                                   
Advances of long-term receivables                                               -           (1 299)       (265 356)   
Repayment of long-term receivables                                        114 058            9 346          90 765    
Repayment of contributed equity                                                 -          138 816         152 211    
Additional investment in associates                                       (43 746)               -        (202 962)   
Disposal of associate                                                           -                -          13 386    
Loans advanced to associates                                               (6 746)               -               -    
Additions to investments                                                  (23 744)               -               -    
Proceeds on disposal of businesses                                              -          112 111         112 726    
Proceeds from share buy-back in subsidiary                                      -                -           8 815    
Proceeds on disposal of property, plant and equipment                      17 894           11 525         130 369    
Purchase of property, plant and equipment                                 (96 203)         (80 816)       (220 402)   
                                                                          (38 487)         189 683        (180 448)   
Cash flow from financing activities                                                                                   
Repayment of borrowings                                                         -           (9 530)        (21 288)   
Transactions with owners                                                  (48 787)        (100 459)       (184 531)   
Treasury shares acquired                                                        -         (279 015)       (278 996)   
Instalments in respect of capitalised finance leases                      (48 163)         (39 199)        (46 321)   
                                                                          (96 950)        (428 203)       (531 136)   
Net (decrease)/increase in cash and cash equivalents                   (1 234 522)        (244 923)        110 589    
Foreign currency translation effect                                       (50 410)        (356 326)       (167 054)   
Cash and cash equivalents acquired                                              -                -          12 451    
Cash and cash equivalents derecognised                                     (4 590)               -        (162 597)   
Cash and cash equivalents at the beginning of the period                5 545 583        5 752 194       5 752 194    
Cash and cash equivalents at the end of the period                      4 256 061        5 150 945       5 545 583    


NOTES TO THE SUMMARY CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended 31 December 2017
                                                                        Unaudited        Unaudited         Audited     
                                                                         December         December            June     
                                                                             2017             2016            2017    
                                                                            R'000            R'000           R'000    
1. SEGMENTAL INFORMATION                                                                                              
   Operating segments                                                                                                 
   Revenue                                              % change                                                      
   Building and civil engineering                           (9,6)       3 916 336        4 332 227       8 135 777    
   Roads and earthworks                                     33,6        2 829 324        2 118 529       4 589 881    
   Australia                                                28,7       11 102 607        8 624 997      18 599 977    
   Total construction revenue                                          17 848 267       15 075 753      31 325 635    
   Property developments                                                      439            1 551           2 301    
   Construction materials                                  (29,6)         238 095          338 439         578 724    
   Total revenue                                            17,3       18 086 801       15 415 743      31 906 660    
   Operating profit                                     % margin                                                      
   Building and civil engineering                            4,3          169 271          217 233         384 943    
   Roads and earthworks                                      6,7          190 050          143 966         341 737    
   Australia                                                 1,3          142 993          100 603         312 586    
   Total construction operating profit                       2,8          502 314          461 802       1 039 266    
   Property developments                                                   (2 890)              74          (1 472)   
   Construction materials                                    4,3           10 173            9 476           2 103    
   Total construction operating profit                       2,8          509 597          471 352       1 039 897    
   Equity-accounted development profit from Caulfield                           -                -         (53 600)   
   Total operating profit before non-trading items                        509 597          471 352         986 297    
   Geographic segments                                                                                                
   Revenue                                              % change                                                      
   South Africa                                             (6,1)       5 557 654        5 921 113      11 453 907    
   Rest of Africa                                           64,0        1 426 540          869 633       1 852 776    
   Australia                                                28,7       11 102 607        8 624 997      18 599 977    
                                                            17,3       18 086 801       15 415 743      31 906 660    
   Operating profit                                     % margin                                                      
   South Africa                                              4,9          271 967          289 224         475 720    
   Rest of Africa                                            6,8           97 283           81 525         251 591    
   Australia                                                 1,3          142 993          100 603         312 586    
   United Kingdom                                                          (2 646)               -               -    
   Total construction operating profit                       2,8          509 597          471 352       1 039 897    
   Equity-accounted development profit from Caulfield                           -                -         (53 600)   
                                                                          509 597          471 352         986 297    
   Non-current assets                                                       
   South Africa                                                         1 785 443        1 545 689       1 642 474    
   Rest of Africa                                                         236 656          212 613         466 851    
   Australia                                                              988 139          854 584         943 845    
   United Kingdom                                                         173 258                -         202 962    
                                                                        3 183 496        2 612 886       3 256 132    


                                                                        Unaudited        Unaudited         Audited     
                                                                         December         December            June     
                                                                             2017             2016            2017    
                                                                            R'000            R'000           R'000    
2. RECONCILIATION OF HEADLINE EARNINGS                                                                                
   Continuing operations                                                                                              
   Attributable profit                                                    391 127          216 905         722 133    
   Adjusted for:                                                                                                      
   Gain on loss of control of subsidiary*                                  (4 329)               -          (9 607)   
   Profit on disposal of shares*                                                -           (6 729)              -    
   (Profit)/loss on disposal of property, plant and equipment              (1 167)          10 117         (13 944)   
   Tax effect                                                                 327           (3 051)          3 813    
   Headline earnings from continuing operations                           385 958          217 242         702 395    
   Total operations                                                                                                   
   Attributable profit                                                    391 127          214 898         722 064    
   Adjusted for:                                                                                                      
   Gain on loss of control of subsidiary*                                  (4 329)               -          (9 607)   
   Profit on disposal of shares*                                                -           (6 729)              -    
   (Profit)/loss on disposal of property, plant and equipment              (1 167)          10 784         (14 611)   
   Tax effect                                                                 327           (3 238)          4 000    
   Headline earnings from total operations                                385 958          215 715         701 846    
   *Net of non-controlling interests                                                                                  
                                                                                                                      
3. ORDINARY SHARES                                                                                                    
   Ordinary shares in issue                                                63 190           63 190          63 190    
   Weighted average number of shares                                       53 103           54 572          53 663    
   Diluted weighted average number of shares                               53 121           54 716          53 680    
                                                                                                                      
4. EVENTS AFTER THE REPORTING DATE                                                                                   
   The board is not aware of any matter or circumstance arising since the end of the reporting period not 
   otherwise dealt with in the interim summary consolidated financial statements, which significantly affects 
   the financial position of the group at 31 December 2017 or the results of its operations or cash flows 
   for the six months then ended.                                                          


COMMENTARY

The group delivered profitable operational results which, in the current period, were characterised by a healthy
construction environment and positive market sentiment in Australia; increased mining infrastructure activity 
for the group in the rest of Africa - particularly West Africa; and a resilient performance in South Africa 
set against an uncertain business climate and lacklustre economy.

FINANCIAL REVIEW
Revenue and operating profit
Group revenue increased from R15,4 billion to R18,1 billion at 31 December 2017. Overall revenue growth of 17% 
consisted of strong growth of 29% in Australia following the award of a number of large-scale projects in FY17; 
64% growth from the rest of Africa due to increased activity in Botswana and progress on mining infrastructure
projects in Ghana, Guinea and Burkina Faso; and a 6% decline in revenue from South Africa, partly due to Edwin 
Construction now being recognised as an associate and exacerbated by subsiding building markets which were only 
partially offset by good growth from the local Roads and earthworks division. Activity in the local construction 
materials market and particularly the supply of long-steel products remains challenging and revenue from 
Reinforced Mesh Solutions (RMS), before the elimination of inter-company sales, decreased from R433 million 
to R397 million over the first six months of the year.

The increase in operating profit before non-trading items of 8% from R471 million to R510 million is attributable to
increased profitability associated with the revenue growth in Australia and within the Roads and earthworks division.
This was however diluted by lower profitability from the Building and civil engineering division as building revenues
contract and margins come under pressure. While the overall operating profit of the group increased, the group margin
declined from 3,1% to 2,8% due to margin slippage within the Building and civil engineering division and the increased
contribution to total revenue from Australia at lower embedded margins.

The contribution to group revenue from Australia has increased from 56% to 61% with South Africa and the rest of
Africa contributing 31% and 8% respectively compared to 38% and 6% in the comparative period. The profit contribution 
from Australia improved from 22% to 28% with South Africa contributing profit of 53% and the rest of Africa 19% as 
opposed to 61% and 17% respectively in the first six months of FY16.

NON-TRADING ITEMS
The R30 million share-based payment expense recognised relates to the WBHO Share Plan for executive management and the
existing broad-based and management share schemes in place.

ASSOCIATED COMPANIES
The group has an interest in seven significant associated companies:
                                                                                                          Share of
                                                                                      Investment         after-tax
                                                                        Effective      and loans     profit / loss     
Entity                             Industry               Country        interest             Rm                Rm   
Gigajoule International           Gas supply             Mozambique         26,6%          147,2               7,5    
Gigajoule Power                     Power                Mozambique           18%          110,7              10,2    
Dipalopalo Concession       Serviced accommodation      South Africa        27,5%           57,5                 -    
Edwin Construction              Road and civil          South Africa          49%           93,3               4,9    
                                 construction
iKusasa Rail SA               Railway maintenance       South Africa          49%           12,9              (0,3)   
                               and construction
Caulfield                    Property development         Australia           30%           72,1                 -    
Byrne Group                      Construction          United Kingdom         40%          173,3             (28,8)   
Other                                                                                        3,9                 -    
Total                                                                                      670,9              (6,5)   

The group received dividends of R3,9 million and R10,9 million from Gigajoule International and Edwin Construction
respectively.

Gigajoule International and Gigajoule Power continue to deliver sound operating performances within their respective
markets where demand for their product remains strong.

The operational phase of the serviced accommodation concession for Statistics South Africa commenced toward the end of
the last financial year. Due to the outstanding finalisation of various contractual issues in respect of the
construction phase of the concession, no profit has yet been recognised by the private party.

Pre-sales of Precinct 2 of the Caulfield development in Australia have progressed well with the development now 92%
sold. In addition, Probuild Constructions Aust (Probuild) has successfully negotiated the design and construct contract
for the development. 

Edwin Construction saw improved activity in the first half of FY18 following an improved order intake in the second
half of FY17. The award of a sizeable earthworks and related infrastructure project at the Industriqua Estate near
Harrismith will further support activity over the second half of the year.

Byrne Group
                                                                                                          December    
                                                                                                              2017    
                                                                                                                Rm    
Revenue                                                                                                      1 084    
Operating loss                                                                                                 (68)   
Restructuring costs                                                                                            (22)   
Finance costs                                                                                                   (2)   
Loss before tax                                                                                                (92)   
Taxation                                                                                                        20    
Loss after tax                                                                                                 (72)   
Group's 40% share of after-tax loss                                                                          (28,8)   

Following WBHO's acquisition of a 40% interest in the Byrne Group in June 2017 and the subsequent recapitalisation 
of the balance sheet, the company experienced a slow order intake over the first quarter of FY18, compounded by 
delays to the expected start of a number of projects within both the frame contracting business and the new build 
and fit-out business on which they were preferred bidders. Margin performance was satisfactory however the low 
volume of work was insufficient to cover the group's overhead which has been compounded by additional restructuring 
and retrenchment costs, resulting in the reported loss.

The share purchase agreement includes a contractual mechanism that caters for any difference between the earnings
before interest, tax and depreciation (EBITDA) used in respect of the 2018 financial year when valuing the business 
at the time of the acquisition, and the actual 2018 EBITDA achieved. The application of the mechanism can result 
either in an increased percentage interest in the business for WBHO, or additional capitalisation of the business 
by the original shareholders.

The concrete frame business will shortly complete a £38 million commercial development of 39 floors at 100 Bishopsgate
in the heart of the City of London. Construction of the core for a £14 million 10 storey retail/commercial scheme for
Lend Lease at The International Quarter near the Olympic Stadium is progressing well and new work has just commenced 
on the £40 million Aykon Tower, a 50 storey building at Vauxhall, London.

The new-build construction and fit-out business, Ellmer Construction (Ellmer) has commenced work on the Kingsway Hall
Hotel in London's Covent Garden for Shiva Hotels. The £25 million project entails the strip-out of the existing hotel 
in order to create 180 new rooms and common areas and is due for completion in April 2019. Ellmer is also working on 
a £37 million building project for the construction of 52 high-end residential apartments in Kensington, London which 
will be completed during 2018 as well as the fit-out of the new Tottenham Hotspur Football stadium at White Hart Lane, 
London.

The award of three key projects in the second quarter together with the benefit of a reduced overhead in the second
half of the year - due to the restructuring that has been implemented - should improve operating performance, but 
further restructuring costs are expected.

EARNINGS PER SHARE AND HEADLINE EARNINGS PER SHARE - CONTINUING OPERATIONS
Earnings per share increased by 85% from 398 cents per share at 31 December 2016 to 737 cents in the current period
largely due to the socio-economic fund contribution recognised in respect of the Voluntary Rebuild Programme (VRP) 
in the comparative period. Headline earnings per share from continuing operations increased by 83% to 727 cents 
per share from 398 cents per share. 

If the effect of the VRP on earnings per share in the prior period is excluded, then earnings per share and headline
earnings per would have increased by approximately 4% and 2% respectively, affected by lower net finance income of 
R16 million and losses from associates of R6 million.

CHANGES IN SHAREHOLDING
In terms of the provisions of the shareholder agreements, Probuild acquired a further 1,7% interest from minority
shareholders at a cost AU$3,1 million and WBHO Australia acquired a further 0,75% from minority shareholders at a 
cost of AU$1,6 million during the period. The effect of these transactions resulted in the group's interest in 
Probuild increasing from 80,7% to 83,1%.

CASH AND WORKING CAPITAL
Cash balances have decreased by R1,3 billion since 30 June 2017 largely due to a decrease in cash balances 
in Australia from AU$230 million at 30 June 2017 to AU$123 million at 31 December 2017. It is common practice 
within the Australian construction industry to settle subcontractors which are due in January midway through 
December, the impact of this is illustrated in cash utilised in operations in the cash flow statement which 
amounts to R802 million and includes a net amount of R1,5 billion in negative working capital changes. These 
comprise the early settlement of subcontractors mentioned above, a significant increase in amounts due to 
customers due to the time taken to settle a substantial claim on the Toowoomba shopping centre in Australia 
(payment received on 15 February 2018) and the large value of materials on-site at the crude oil terminal 
in Saldanha. The increase of R1 billion in trade and other receivables and the increase of R561 million in 
trade and other payables over the comparative period can be attributable to the 17,3% increase in activity.

Capital expenditure over the period increased from R139 million to R150 million, of which R96 million was 
acquired for cash and R54 million was financed. Depreciation amounted to R122 million (2016: R115 million). 
Additional cash outflows include R49 million in respect of the changes in shareholding discussed above and 
further investments in Australia of R44 million and R24 million into Precinct 2 of the Caulfield development 
and a new residential apartment development respectively. Mezzanine financing of R114 million relating to a 
building project in Ghana was repaid. Local and foreign cash balances amount to R1,8 billion and R2,4 billion 
respectively.

CONTINGENT LIABILITIES
Financial guarantees issued to third parties amount to R10,0 billion compared to R11,5 billion in issue at 
30 June 2017. During the period, Probuild finalised a AU$275 million syndicated guarantee facility with the 
Commonwealth Bank of Australia, significantly reducing the need for balance sheet support from South Africa. 
Total guarantee facilities available to the group now amount to R16,4 billion.


OPERATIONAL REVIEW
BUILDING AND CIVIL ENGINEERING
                                                                                            December      December    
                                                                                                2017          2016    
                                                                                                  Rm            Rm    
Revenue                                                                   9,6% decline         3 916         4 332    
Operating profit                                                           4,3% margin           169           217    
Capital expenditure                                                                               39            22    
Depreciation                                                                                      21            23    

The impact of contracting building markets is now noticeable in the results of the Building and civil engineering
division as revenue levels begin to decline after a number of years of consecutive growth. A 14,6% decrease in 
building activity was offset to some extent by pleasing growth within the Civil engineering division both locally 
and in the rest of Africa. The lower revenue generated, together with the decrease in margin from 5,0% to 4,3%, 
resulted in a 22% decrease in operating profit. The division continues to perform well on existing projects in 
a difficult environment.

BUILDING
The lower activity within building markets was felt most keenly in Gauteng where revenue decreased by 19%. 
The decrease is mostly attributable to the minimal order intake from the retail sector due to an oversupply 
of shopping centres, the poor state of the economy and over-indebted consumers. Commercial office developments 
constituted the bulk of activity with a number of large-scale projects under construction. The new offices for 
both Discovery and PWC are essentially complete while work progresses at 2 Pybus in Sandton, at 33 Baker Street 
and Rosebank Link in Rosebank, the Millpark hospital in Auckland Park and Loftus Park in Tshwane. The remaining 
hotel component of the Time Square Casino which opened last year is also on track.

The coastal divisions have maintained activity levels in line with those of the prior period. In the Western 
Cape, commercial office and mixed-use and residential developments supported activity. In the residential 
sector, the award of the Yacht Club, a large mixed-use development along the Waterfront was a key project 
secured in the second half of FY16 and is progressing well along with the Axis apartments and Oasis Palm Vue 
projects from this sector. The green 5 star rated commercial offices at Sable Park in Century City are also 
well advanced. In KwaZulu-Natal (KZN), retail and commercial office activity have for some time underpinned 
activity levels supported by smaller projects from the hotel, leisure and healthcare sectors. The Cornubia 
shopping centre in Umhlanga and a new regional office for ABSA were completed in the first six months of the 
year while the extensions to the Gateway shopping centre and Suncoast Casino are in progress. Work has also 
started on the mixed-use Arch development, the Oceans hotel and the Zivitone office building. The Eastern Cape 
division has had a satisfactory six months with activity comprising ongoing construction of a warehouse at the 
Woodlands Dairy, student accommodation in Summerstrand, Port Elizabeth as well as a manufacturing facility and 
ancillary buildings for Yekani at the East London Industrial Development Zone. Work has also started on the 
Milkwood housing project.

In Ghana, the replacement of work remains challenging however a new project for the construction of the Takoradi 
Mall for RMB Westport was awarded and commenced in the first half of the year. The design and construct contract
incorporating new offices for Standard Chartered Bank, also on behalf of RMB Westport, is progressing well and 
will be nearing completion toward the end of the financial year.

CIVIL ENGINEERING
Civil engineering markets remain depressed with the increase in revenue derived from the large-scale commercial crude
oil terminal facility at Saldanha. The project was however subject to a six week strike during the period which has
impacted profitability recognised on the project to date and resulted in delays to the programme. The re-access works 
at Kusile continue to provide work through to FY19, as will the construction of a rapid load-out facility for Exarro 
at the Grootegeluk mine in Limpopo. VSL Construction (which was previously included in the construction materials 
segment and part of Capital Africa Steel) had a difficult six months.

Revenue in Zambia increased by 10%, albeit from a low base, as overall activity in the region seems to be improving.
The division is currently executing projects for SAB Miller at the Ndola Brewery, for the Mopani Copper Mine in 
Mufulira and for the National Milling Corporation in Lusaka.

In West Africa, the mining infrastructure projects under construction in Guinea and Ghana in conjunction with the
group's Roads and earthworks division are gaining traction but have been highly challenging.

ROADS AND EARTHWORKS
                                                                                            December      December    
                                                                                                2017          2016    
                                                                                                  Rm            Rm    
Revenue                                                                   33,6% growth         2 829         2 119    
Operating profit                                                           6,8% margin           190           144    
Capital expenditure                                                                               96            86    
Depreciation                                                                                      70            53    

The Roads and earthworks division had a strong first half following a healthy order intake through FY17. 
The impact of recognising Edwin Construction, which had revenue of R241 million over the period, as an associate was
partially offset by revenue from the newly acquired iKusasa Rail Africa at the end of FY17. Pleasingly, growth was
experienced across nearly all geographies. Operating profit increased by 32% in line with the top-line growth. While 
the margin of 6,8% remained consistent with that of the comparative period (December 2016), it is down from the margin 
of 7,4% achieved at 30 June 2017. The revenue contribution from the rest of Africa improved from 27% to 39% over 
the period.

Locally, the road sector remains the dominant source of activity, providing 46% of South African revenue. 
Existing projects along the N1 and N6 in the Free State and the N2 in the Eastern Cape are on track with new 
roadwork incorporating extensions to existing roads and a new bridge being awarded at Saldanha in the Western Cape. 
Revenue from Roadspan has been maintained at the same level as that of the comparative period.

Other major projects which contributed to activity in South Africa include the earthworks and infrastructure project
at the Clairewood Logistics Park in KZN, construction of a haul road and ash dam for SASOL, ongoing construction at 
the Booysendal mine for Northam Platinum and the division's participation in the construction of the crude oil terminal
facility at Saldanha.

In addition to the pipeline component of the crude oil terminal facility at Saldanha, other local pipeline projects
include the construction, installation and commissioning of the infrastructure for the fire protection system at
Transnet's Tarlton depot, work at the Rosherville oil processing plant for Eskom and the pipework component of
the ash dam for SASOL.

Revenue from the rest of Africa grew sharply from R585 million to R1,0 billion largely due to increased activity 
in West Africa, where the division is executing various projects in Ghana, three projects in Guinea and one in 
Burkina Faso. While revenue from the region has increased, delays on a project at the remote Siguiri mine in Guinea
have impacted margins. The project has experienced a difficult start following the slower than expected mobilisation 
of resources (particularly plant and the local labour component that was required under the contract) which has put 
the project behind programme. Additional resources have been sent to the site to make up the lost time which has 
resulted in additional costs.

In Botswana, revenue grew by 30% which was mostly attributable to the inclusion of the Tshele Hills rail project being
executed by iKusasa Rail Africa. Work also commenced on the Orapa Slimes Dam project. In Mozambique revenue has picked
up marginally after dropping sharply during FY17. Activity in the region was centred around the Vale coal mine, further
rehabilitation of the EN4 and construction of a new 60 000m2 transfer facility for Grindrod for the haulage of graphite
to the Nacala port.

AUSTRALIA
                                                                                            December      December    
                                                                                                2017          2016    
                                                                                                  Rm            Rm    
Revenue                                                                 28,7% increase        11 103         8 625    
Operating profit                                                           1,3% margin           143           101    
Capital expenditure                                                                               14            29    
Depreciation                                                                                      27            33    

The healthy growth in Australia was underpinned by strong activity within the building businesses as well as moderate
growth within the infrastructure business. The overall margin performance from Australia remains below expectations due
to an additional under-performing building project in Sydney.

Building
Revenue from the building business for the six months ended 31 December 2017 increased 28,7% over the prior period on
the back of a strong order intake during the financial year ended 30 June 2017. The longer than expected conversion
periods of targeted projects experienced in the 2017 financial year have supported the increased revenues through 
the first half of the current financial year.

Although the building business delivered a significant increase in activity, the operating result for the period 
was discouraging following a material margin downgrade on a residential project in Sydney, New South Wales (NSW). 
The management and performance of key subcontractors on this project have led to considerable delays in completion, 
resulting in significant additional project costs. At 31 December 2017, two of three separable portions have been 
completed and the overall project is 91% complete. The last separable portion is forecast to be completed in 
March 2018.

Diversification of business activity across the key states has continued with 44% of revenue derived from the group's
stronghold in Victoria and consistent volumes of work in each of the other three states in which the business operates,
being NSW, Queensland and Western Australia (WA). Monaco Hickey, the group's mid-tier construction business continues 
to perform well in the sub AU$50 million building market as well as its niche pharmaceutical construction market.

In the six-month period a total of ten projects were completed and handed over. Seven of these projects were high-rise
residential projects, two were hotel projects with one being a six-star all-suite hotel and casino on the Gold Coast
and the Toowoomba shopping centre a large-scale retail project, both in Queensland. The loss-making Cooparoo project 
which negatively impacted performance in the comparative period was also handed over to the satisfaction of the client 
during the period.

In Victoria, projects continuing through the second half include the expansion of the Melbourne Convention Centre,
construction of the Victoria One and Aurora residential towers and extensions to the Glen shopping centre. In NSW, the
Greenland Tower, Sydney's tallest residential apartment building and the largest project in the state, is progressing well
against programme. This project remains the focus of the NSW business. Similarly, in WA the Elizabeth Quay residential
tower and Ritz Carlton hotel is progressing well alongside the recently awarded AU$200 million mixed-use residential and
hotel tower at Murray Street in Perth. Probuild is currently the largest builder of hotel accommodation across Australia,
servicing the full spectrum of the market from mid-range to ultra-luxury brand hotels.

Infrastructure and civil engineering
The Infrastructure and civil engineering business achieved revenue of AU$130 million for the six-month period, an
increase of 5% with activity split evenly between the Eastern and Western regions. Revenue from the business now comprises
approximately 12% of the Australian operation's total revenue. The operating result was satisfactory and in line with
expectations. 

A noteworthy achievement over the period was the award of the Outer Suburban Arterial Roads (OSAR) project in
Melbourne, with a contract value of AU$630 million to be delivered over the next three years. This project significantly 
raises the profile of the infrastructure business in Victoria and the successful delivery of this project is of the utmost
priority to ensure the successful transformation of this business into a major infrastructure contractor.

The infrastructure and civil engineering business continues to build creditability in the renewable energy space
having delivered a number of solar and wind power farms in Australia. The success of existing energy projects alongside 
a focus on green energy as a whole in Australia is leading to increased investment within this sector and additional 
project opportunities for the infrastructure market from which the business will continue to benefit.

CONSTRUCTION MATERIALS                                                
                                                                                            December      December    
                                                                                                2017          2016    
                                                                                                  Rm            Rm    
Revenue                                                                   8,3% decline           397           433    
Inter-company sales                                                                             (160)          (96)   
Revenue to external customers                                                                    238           338    
Operating profit                                                           4,2% margin            10             9    
Capital expenditure                                                                              0,4             2    
Depreciation                                                                                       4             5    

Trading conditions within the steel supply market remain difficult. The local steel mills have recently reported poor
results and have tightened credit terms and volume rebates accordingly. Sales volumes within RMS remain low particularly
in the North West, Polokwane and Limpopo. Activity in Gauteng, the Western Cape and KZN is sustainable although pricing
remains competitive.

ORDER BOOK AND OUTLOOK
                                                   December       To June       Beyond June                30 June     
Rm                                         %           2017          2018              2018        %          2017    
Order book by segment                                                                                                 
Building and civil engineering            15          7 614         3 628             3 986       16         7 189    
Roads and earthworks                      11          5 892         2 526             3 366       14         6 161    
Australia                                 74         38 904         9 954            28 950       70        31 526    
Total                                    100         52 410        16 108            36 302      100        44 876    

Order book by geography                                                                                   
South Africa                              23         11 786        5 248              6 538       26        11 707    
Rest of Africa                             3          1 720          906                814        4         1 643    
Australia                                 74         38 904        9 954             28 950       70        31 526    
Total                                    100         52 410       16 108             36 302      100        44 876    

The group's total order book at 31 December 2017 increased by 17% to R52 billion from R45 billion at 30 June 2017. 
The Building and civil engineering and Roads and earthworks divisions' order books are broadly in line with the level
achieved at 30 June 2017, while the Australian order book grew 23% from R32 billion to R39 billion following the 
award of the Westside Place building project and the large-scale OSAR roadwork project within the infrastructure 
business. 

AFRICA (INCLUDING SOUTH AFRICA)
Despite contracting building markets, by leveraging our proven track-record and successful delivery of projects in a
difficult operating environment, the Building division has procured sufficient projects to sustain its order book over
the period. The retail sector has been subdued for the last 18 months and there is evidence that the commercial office
sector is now also tapering off. Nonetheless, select opportunities continue to exist in all sectors. In Gauteng,
opportunities in the retail, commercial office, hotel and leisure, healthcare and residential markets are being tracked 
for commencement dates in FY19. In addition the coastal building divisions have promising pipelines of work, particularly 
in the Eastern Cape which has seen an increase in building activity over the period. In KZN, the division has a strong 
existing order book while in the Western Cape the division has received a letter of intent for the construction of a 
large commercial office development.

Significant new awards in Gauteng include a further phase of refurbishment at the Sandton City shopping centre, two
new office developments, one at 144 Oxford Street in Rosebank and the other for Exxaro at the Lakeside Office Park,
opposite the Gautrain Station in Centurion, as well as a residential apartment project at the Menlyn Maine precinct. 
In the coastal regions the division was awarded the Oceans hotel and Umhlanga Arch mixed-use residential development 
in KZN and the Milkwood social housing project and paint shop for BAIC in the Eastern Cape.

Construction of the commercial crude oil terminal facility at Saldanha will comprise a large portion of future local
work within the Civil engineering division, supported by two mining infrastructure projects at Exxaro's Grootegeluk and
Belfast mines, the latter being awarded during the current period. The general civil engineering market is subdued and
mining infrastructure opportunities are confined to the coal and platinum mines and remain limited. The division has
submitted a bid for expansions to the Durban Port. In Zambia, the division secured further work at the Mopani Copper 
mine for the construction of a new concentrator which will commence in the second half of the year, as well as civil 
works at the milling plant for the National Milling Corporation which are underway.

The order book of the Roads and earthworks division also remains healthy following good growth in the previous year.
New sizeable mining infrastructure projects were secured at Orapa in Botswana and at the Klipspruit Colliery for 
South 32 in Mpumalanga as well as new roadwork projects along the N4 near Belfast and the previously mentioned 
project at Saldanha. Roadspan also continues to secure good volumes of work in the current market. In Mozambique, 
in addition to the construction of the transfer facility for Grindrod, a new earthworks and pipeline project has 
been awarded at the Pande gas fields for SASOL. iKusasa Rail has secured various new contracts in Mozambique, 
Ghana and South Africa as well as having submitted bids on a number of 10 year rail maintenance projects for 
Transnet.

In West Africa, the Takoradi shopping centre in Ghana will assist in sustaining building activity as the new offices
for Standard Chartered near completion, while the three mining infrastructure projects secured in Guinea, Burkina 
Faso and Ghana will continue through to the end of the financial year with new opportunities being pursued in both 
Ghana and Burkina Faso.

AUSTRALIA
The Australian building market remains strong and Probuild continues to maintain sound relationships with key clients 
resulting in repeat contracts. The building business has established a strong order book totalling AU$2,9 billion. 
A large contributor to the order book position was the award of the West Side Place residential project in Melbourne, 
Victoria which has a contract value of AU$695m which commenced on site in December 2017. The current order book 
contains secured revenue for the 2019 financial year at sufficient levels for the business to focus upon the next wave 
of work, which is necessary given the lengthy timescales need to convert projects. The residential market, particularly 
in Melbourne, Victoria is softening, with the number of available high-rise residential projects on targeted project 
lists diminishing. However the high-end luxury residential space, serving retirees looking to downsize, does remain 
a market that has demand.

The Infrastructure and civil engineering order book at 31 December 2017 amounts to AU$1,0 billion when including the
OSAR project. This represents a significant increase in excess of 200% from the position at 30 June 2017. This growth
achieves enhanced diversification to the overall WBHO Australia business.

UNITED KINGDOM (UK)
The Byrne Group has a secured order book of £111 million and is the preferred bidder on an additional £226 million
worth of work for which pre-construction service agreements have been negotiated. In 2018 the group was awarded a 
£35 million contract for the construction of the frame for Google's new head office opposite London's King Cross Station, 
housing 7 000 employees, while the One Nine Elms Project will continue into 2020. In Ellmer, the refurbishment of the 
Kingsway Hall Hotel will be substantially complete by December 2018 with two further projects targeted to start in 
the third quarter.

OUTLOOK
The South African business environment remains uncertain. However the changing local political landscape, although
still in its infancy, has injected a sense of optimism into markets and appears to bode well for the country and economy 
as a whole. While it is too early to foresee any potential positive outcomes for the construction industry - which has
been in the doldrums over the last 24 months - an increase in fixed investment arising from renewed business and investor
confidence, together with added public spending should the economy improve, can only be of benefit. In addition, the new
Construction Sector Codes were gazetted during the period and WBHO has improved to a Level One contributor. SANRAL's
proposed new procurement requirements which stipulate 51% black ownership for prospective bidders remains of concern for
the large industry players, particularly listed companies with limited influence over its shareholders, however WBHO
continues to engage with SANRAL on the matter.

Markets in the rest of Africa continue to offer various opportunities and the group targets those projects which fall
within its risk appetite.

Market sentiment in Australia is expected to remain robust and the Australian operations are well positioned over the
short to medium-term with the strategy behind the infrastructure business slowly bearing fruit.

The outlook for the UK market is relatively cautious over the short term due to uncertainty around the impact of
Brexit. In Greater London (Byrne Group's main operating area) the infrastructure sector continues to forecast healthy
growth, whilst the commercial sector is less promising, forecasting a 4% decline in activity in 2019. However, with 
a market size in Greater London of £22.5bn per annum there remains sufficient opportunities for the Byrne Group.

SAFETY
The group's lost-time injury frequency ratio (LTIFR) at 31 December 2017 remained at 0,8 injuries per million man
hours the same as at 30 June 2017. While the African business improved further on its injury statistics with the 
LTIFR decreasing from 0,54 to 0,50, an employee of a subcontractor was fatally injured on a building project in 
South Africa during the period and we extend our sincere condolences to the family, friends and colleagues affected 
by this tragedy.

APPRECIATION
The directors would like to express their gratitude to all our employees spread across Africa and Australia for 
their enduring commitment to the proud success of WBHO. We additionally thank our loyal clients and subcontractors 
for the many fruitful relationships we have developed to the mutual benefit of our respective businesses.

DIVIDEND DECLARATION
Notice is hereby given that the directors have declared an interim gross dividend of 150 cents per share
(2016: 150 cents) payable to all shareholders recorded in the register on 20 April 2018.

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 (53 103 021 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 April 2018    
Trading ex dividend commences:                                                             Wednesday 18 April 2018    
Record date:                                                                                  Friday 20 April 2018    
Payment date:                                                                                 Monday 23 April 2018    

Shares may not be dematerialised or re-materialised between Wednesday 18 April and Friday 20 April 2018, 
both dates inclusive.

Shareholders and interested parties are advised that a presentation of the Company's unaudited interim 
financial results for the period ended 31 December 2017 will be held at Investec's offices in Sandton on 
Wednesday, 28 February 2018 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
27 February 2018

Sponsor: Investec Bank Limited
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