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WILSON BAYLY HOLMES-OVCON LIMITED - Unaudited results for the six months ended 31 December 2018

Release Date: 26/02/2019 07:05
Code(s): WBO     PDF:  
 
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Unaudited results for the six months ended 31 December 2018

WILSON BAYLY HOLMES-OVCON LIMITED
(Incorporated in the Republic of South Africa)
Building and civil engineering contractor
(Registration number: 1982/011014/06)
ISIN number: ZAE 000009932 
Share code: WBO

UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2018

BASIS OF PREPARATION
for the six months ended 31 December 2018

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 in terms of International Financial Reporting Standards and, with the exception of
IFRS 9 Financial Instruments and IFRS15 Revenue from Contracts with Customers which became effective during the current
period, 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 22 February 2019.

The consolidated interim financial statements for the period ended 31 December 2018 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 2018
                                                                           Unaudited        Unaudited         Audited     
                                                                            December         December            June     
                                                                  %             2018             2017            2018    
                                                             change            R'000            R'000           R'000    
Revenue                                                        11,2       20 113 510       18 086 801      35 028 475    
Operating profit before non-trading items                     (99,5)           2 718          509 597       1 045 397    
Loss on deemed disposal of associate                                               -                -         (57 544)   
Gain on bargain purchase of subsidiary                                             -                -         101 675    
Gain on loss of control of subsidiary                                              -            5 092           5 092    
Share-based payment expense                                                  (26 616)         (29 981)        (63 759)   
Operating (loss)/profit                                                      (23 898)         484 708       1 030 861    
Share of profits and losses from equity accounted investments                 29 502           (6 485)         (4 830)   
Finance income                                                                95 478          110 475         192 094    
Finance costs                                                                (11 783)         (10 434)        (23 627)   
Profit before taxation                                                        89 299          578 264       1 194 498    
Income tax expense                                                           (10 064)        (174 254)       (351 053)   
Profit for the period                                         (80,4)          79 235          404 010         843 445    
Other comprehensive income                                                                                               
Items that may be reclassified through profit or loss:                                                                   
Translation of foreign entities                                               32 804          (90 760)         23 493    
Translation of net investment in a foreign operation                          10 117           (6 331)          3 304    
Tax effect of the above items                                                 (2 833)           1 773            (925)   
Share of associates' comprehensive income                                        175           (9 173)        (10 153)   
Total comprehensive income for the period                                    119 498          299 519         859 164    
Profit for the period attributable to:                                                                                   
Equity shareholders of Wilson Bayly Holmes-Ovcon Limited                      71 114          391 127         815 872    
Non-controlling interests                                                      8 121           12 883          27 573    
                                                                              79 235          404 010         843 445    
Total comprehensive income for the period attributable to:                                                                              
Equity shareholders of Wilson Bayly Holmes-Ovcon Limited                     111 377          286 636         831 591    
Non-controlling interests                                                      8 121           12 883          27 573    
                                                                             119 498          299 519         859 164    
Earnings per share (cents)                                                                                               
Basic earnings per share                                      (81,8)           133,7            736,5         1 534,3    
Diluted earnings per share                                    (81,8)           133,7            736,3         1 533,8    
Headline earnings per share                                   (80,0)           145,6            726,8         1 414,6    
Diluted headline earnings per share                           (80,0)           145,5            726,6         1 414,1    
Dividend per share (cents)                                   (100,0)               -            150,0           475,0    


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 31 December 2018
                                                            Foreign
                                                           currency            Non-
                                               Share    translation   distributable    Distributable    Shareholders'     
                                             capital        reserve        reserves         reserves           equity    
                                      Note     R'000          R'000           R'000            R'000            R'000    
At 30 June 2017                               28 597        199 952          (2 875)       5 074 831        5 300 505    
Profit for the period                              -              -               -          391 127          391 127    
Other comprehensive                                -        (90 760)         (4 558)               -          (95 318)   
income (OCI)                                                                                                             
Share of associate OCI                             -         (9 173)              -                -           (9 173)   
Dividend paid                                      -              -               -         (188 149)        (188 149)   
Share-based payment expense                        -              -          29 981                -           29 981    
Share-based settlement                             -              -           2 079                -            2 079    
Changes in interests in subsidiaries               -              -               -          (27 665)         (27 665)   
At 31 December 2017                           28 597        100 019          24 627        5 250 144        5 403 387    
Profit for the period                              -              -               -          424 745          424 745    
Other comprehensive income                         -        114 253           6 937                -          121 190    
Share of associate OCI                             -           (980)              -                -             (980)   
Dividend paid                                      -              -               -          (87 004)         (87 004)   
Shares bought back                               (32)             -               -                -              (32)   
Share-based payment expense                        -              -          33 778                -           33 778    
Share-based settlement                             -              -         (51 030)               -          (51 030)   
Changes in interests in subsidiaries               -              -               -          (32 415)         (32 415)   
At 30 June 2018                               28 565        213 292          14 312        5 555 470        5 811 639    
IFRS 15 adjustment                                 -              -               -          (30 624)         (30 624)   
IFRS 9 adjustment                                  -              -               -          (48 856)         (48 856)   
Profit for the period                              -              -               -           71 114           71 114    
Other comprehensive income                         -         32 804           7 284                -           40 088    
Share of associate OCI                             -            175               -                -              175    
Dividend paid                                      -              -               -         (184 100)        (184 100)   
Share-based payment expense                        -              -          26 616                -           26 616    
Share-based settlement                             -              -         (91 062)               -          (91 062)   
Changes in interests in subsidiaries               -              -               -          (32 651)         (32 651)   
At 31 December 2018                           28 565        246 271         (42 850)       5 330 353        5 562 339    


CONSOLIDATED STATEMENT OF FINANCIAL POSITION              
at 31 December 2018
                                                                           Unaudited        Unaudited         Audited     
                                                                            December         December            June     
                                                                                2018             2017            2018    
                                                                               R'000            R'000           R'000    
ASSETS                                                                                                                   
Non-current assets                                                                                                       
Property, plant and equipment                                              1 933 871        1 636 386       1 883 072    
Goodwill                                                                     942 994          509 224         531 117    
Equity accounted investments                                               1 062 956          670 893         745 059    
Long-term receivables                                                        378 717          366 993         373 136    
Deferred taxation                                                            824 633          651 266         667 779    
Total                                                                      5 143 171        3 834 762       4 200 163    
Current assets                                                                                                           
Inventories                                                                  318 165          287 487         284 543    
Contract assets                                                            1 247 841        1 062 700       1 816 792    
Trade and other receivables                                                5 624 834        4 807 847       6 213 877    
Taxation receivable                                                          142 422          172 205         116 020    
Cash and cash equivalents                                                  4 286 279        4 256 061       5 992 461    
Total                                                                     11 619 541       10 586 300      14 423 693    
Total assets                                                              16 762 712       14 421 062      18 623 856    
EQUITY AND LIABILITIES                                                                                                   
Capital and reserves                                                                                                     
Share capital                                                                 28 565           28?597          28?565    
Reserves                                                                   5 533 774        5 374 790       5 783 074    
Shareholders' equity                                                       5 562 339        5 403 387       5 811 639    
Non-controlling interests                                                    288 576          120 123         207 517    
Total                                                                      5 850 915        5 523 510       6 019 156    
Non-current liabilities                                                                                                  
Long-term liabilities                                                        194 195          167 358         169 718    
Deferred taxation                                                             29 722           50 399          27 527    
Total                                                                        223 917          217 757         197 245    
Current liabilities                                                                                                      
Contract liabilities                                                       2 702 797        2 107 340       2 093 158    
Trade and other payables                                                   5 545 572        4 586 468       8 538 478    
Provisions                                                                 2 384 450        1 938 297       1 764 968    
Taxation payable                                                              55 061           47 690          10 851    
Total                                                                     10 687 880        8 679 795      12 407 455    
Total equity and liabilities                                              16 762 712       14 421 062      18 623 856    
                                                                        

CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended 31 December 2018
                                                                            Unaudited        Unaudited        Audited     
                                                                             December         December           June     
                                                                                 2018             2017           2018    
                                                                Note            R'000            R'000          R'000    
Operating profit before working capital requirements                          747 234          659 707      1 126 373    
Working capital changes                                                    (1 296 225)      (1 462 139)       263 158    
Cash (utilised in)/generated from operations                                 (548 991)        (802 432)     1 389 531    
Finance income                                                                 95 091          132 456        197 576    
Finance costs                                                                  (6 119)          (4 371)       (11 447)   
Taxation paid                                                                (135 150)        (226 402)      (362 634)   
Dividends paid                                                               (193 031)        (198 336)      (285 339)   
Cash (utilised in)/retained from operations                                  (788 200)      (1 099 085)       927 687    
Cash flow from investing activities                                                                                      
Advance of long-term receivables                                               (5 701)               -        (38 774)   
Repayment of long-term receivables                                             40 000          114 058        131 923    
Investments in equity accounted investments                                  (148 069)         (43 746)      (241 921)   
Consideration paid for subsidiary                                  4         (571 670)               -              -    
Loans repaid by/(advanced to) equity accounted investments                      6 558           (6 746)             -    
Additions to investments                                                            -          (23 744)             -    
Proceeds on disposal of property, plant and equipment                          68 271           17 894         78 175    
Purchase of property, plant and equipment                                    (178 244)         (96 203)      (238 274)   
                                                                             (788 855)         (38 487)      (308 871)   
Cash flow from financing activities                                                                                      
Repayment of borrowings                                                       (39 868)               -              -    
Transactions with owners                                                      (56 437)         (48 787)       (93 148)   
Payment of deferred consideration                                             (17 778)               -              -    
Equity-settled incentives                                                     (89 933)               -        (63 611)   
Instalments in respect of capitalised finance leases                          (63 013)         (48 163)       (63 165)   
                                                                             (267 029)         (96 950)      (219 924)   
Net (decrease)/increase in cash and cash equivalents                       (1 844 084)      (1 234 522)       398 892    
Foreign currency translation effect                                            (1 606)         (50 410)       (31 002)   
Cash and cash equivalents at the beginning of the period                    5 992 461        5 545 583      5 545 583    
Cash and cash equivalents acquired                                 4          139 508                -         83 756    
Cash and cash equivalents derecognised                                              -           (4 590)        (4 768)   
Cash and cash equivalents at the end of the period                          4 286 279        4 256 061      5 992 461    
Restricted cash balances that relate to monies held in       
trust in respect of subcontractor retentions in Australia                      80 695           78 446         93 400    


NOTES TO THE SUMMARY CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended 31 December 2018
                                                                           Unaudited        Unaudited         Audited     
                                                                            December         December            June     
                                                                                2018             2017            2018    
                                                                               R'000            R'000           R'000    
1.  SEGMENTAL INFORMATION                                                                                                
    Operating segments                                                                                                   
    Revenue                                                 % change                                                     
    Building and civil engineering                               0,2       3 924 553        3 916 336       7 302 475    
    Roads and earthworks                                        (7,7)      2 610 071        2 829 324       5 282 155    
    Australia                                                   (3,6)     10 706 924       11 102 607      21 941 438    
    United Kingdom                                                         2 554 596                -               -    
    Total construction revenue                                  10,9      19 796 144       17 848 267      34 526 068    
    Property developments                                                      2 387              439           1 778    
    Construction materials                                      32,3         314 979          238 095         500 629    
     Revenue                                                                 510 121          397 565         842 034    
     Inter-segment revenue                                                  (195 142)        (159 470)       (341 405)   
                                                                                                                         
    Total revenue                                               11,2      20 113 510       18 086 801      35 028 475    
    Operating profit/(loss)                                 % margin                                                     
    Building and civil engineering                               4,1         162 762          169 271         332 184    
    Roads and earthworks                                         6,4         166 812          190 050         370 858    
    Australia                                                   (4,2)       (445 085)         142 993         277 906    
    United Kingdom                                               4,1         104 415                -          57 209    
    Total construction operating (loss)/profit                  (0,0)        (11 096)         502 314       1 038 157    
    Property developments                                       24,2             578           (2 890)          1 970    
    Construction materials                                       4,2          13 236           10 173           5 270    
    Total operating profit before non-trading items             (0,0)          2 718          509 597       1 045 397    
    Geographic segments                                                                                                  
    Revenue                                                 % change                                                     
    South Africa                                                 2,5       5 695 273        5 557 654      10 649 599    
    Rest of Africa                                             (18,9)      1 156 717        1 426 540       2 437 438    
    Australia                                                   (3,6)     10 706 924       11 102 607      21 941 438    
    United Kingdom                                                         2 554 596                -               -    
                                                                11,2      20 113 510       18 086 801      35 028 475    
    Operating profit                                        % margin                                                     
    South Africa                                                 4,8         273 966          271 967         524 653    
    Rest of Africa                                               6,0          69 428           97 283         185 629    
    Australia                                                   (4,2)       (445 085)         142 993         277 906    
    United Kingdom                                               4,1         104 415           (2 646)         57 209    
                                                                 0,0           2 718          509 597       1 045 397   
    Non-current assets                                                       
    South Africa                                                           1 786 608        1 785 443       1 797 922    
    Rest of Africa                                                           460 567          236 656         368 597    
    Australia                                                              1 218 714          988 139       1 145 074    
    United Kingdom                                                           852 659          173 258         220 791    
                                                                           4 318 538        3 183 496       3 532 384    

                                                                            Unaudited        Unaudited        Audited     
                                                                             December         December           June     
                                                                                 2018             2017           2018    
                                                                                R'000            R'000          R'000    
2.  RECONCILIATION OF HEADLINE EARNINGS                                                                                  
    Attributable profit                                                        71 114          391 127        815 872    
    Adjusted for:                                                                                                        
    Gain on loss of control of subsidiary                                           -           (4 329)        (5 092)   
    Loss/(profit) on disposal of property, plant and equipment                 10 758           (1 167)       (18 996)   
    Loss on deemed disposal of equity accounted investments                         -                -         57 544    
    Gain on bargain purchase of subsidiary                                          -                -       (101 675)   
    Non-controlling interest in above transactions                             (1 621)                            645    
    Tax effect of above transactions                                           (2 786)             327          5 339    
    Equity accounted investments:                                                                                        
     Profit on disposal of property, plant and equipment                          (40)               -         (3 223)   
     Impairment of investments                                                      -                -          1 097    
     Tax effect                                                                    10                -            683    
    Headline earnings                                                          77 435          385 958        752 194    
                                                                         
3.  ORDINARY SHARES                                                                                                      
    Ordinary shares in issue                                                   59 890           63 190         59 890    
    Weighted average number of shares                                          53 194           53 103         53 175    
    Diluted weighted average number of shares                                  53 209           53 121         53 192    

4.  BUSINESS COMBINATIONS
    On 18 July 2018, WBHO UK Limited concluded an agreement in which it acquired a controlling 60% interest 
    in Russells Limited and a 31,7% equity-accounted interest in Russell Homes Limited for a consideration of
    ?32,8?million (R572 million) and ?3,3 million (R56,4 million) respectively.

    Following stagnant growth within local markets over recent years, WBHO has been seeking growth opportunities in new
    markets in order to further diversify its earnings platform. The construction market in the United Kingdom (UK) was
    identified as offering the most potential at acceptable levels of risk. The acquisition of the Russells businesses 
    is an excellent strategic fit for the group's UK operations and will add additional substance to WBHO's presence 
    in the UK market. The culture and values of both the business and the management team, which are based on teamwork, 
    integrity and loyalty, are strongly aligned with those of WBHO.
    
    Russells Limited is a main contracting business located in Manchester in the UK and provides design, installation 
    and project management capabilities across all main sectors. Russells was founded in 1997 and has grown from a small
    regional contractor into one of North West England's largest and most successful construction business with a strong 
    and reputable brand.
    
    Russell Homes Limited specialises in land acquisition and planning applications in respect of in-house and
    developer-led residential schemes and is experienced in delivering a full spectrum of builds, from cost-effective 
    social housing to executive homes and luxurious bespoke builds. Russell Homes Limited offers WBHO entry into the 
    UK residential property market. The business has a number of schemes in various stages from planning
    permission to build-out with good potential for future growth in the region.

    The following information summarises the fair value of identifiable assets recognised and liabilities assumed in
    respect of Russells Limited on the acquisition date:

                                                                                                                R'000        
    Assets                                                                                                                 
    Property, plant and equipment                                                                              26 121       
    Intangible assets                                                                                           2 437        
    Contract assets                                                                                           122 847      
    Trade and other receivables                                                                               297 409      
    Loan to Russell Homes                                                                                     148 280      
    Cash and cash equivalents                                                                                 139 508      
    Total                                                                                                     736 602      
    Liabilities                                                                                                            
    Non-current liabilities                                                                                    26 112       
    Deferred taxation                                                                                           1 116        
    Trade and other payables                                                                                  204 832      
    Accruals                                                                                                  171 183      
    Other current liabilities                                                                                  32 388       
    Total                                                                                                     435 631      
    Fair value of identifiable net assets                                                                     300 971      
    Proportionate share of non-controlling interests recognised                                              (120 388)    
    Fair value of identifiable net assets acquired                                                            180 583      
    Cash consideration                                                                                        571 670      
    Fair value of identifiable net assets acquired                                                           (180 583)    
    Goodwill recognised at acquisition                                                                        391 087      
    Cash consideration                                                                                        571 670
    Less: cash acquired                                                                                      (139 508)
    Net cash outflow on acquisition                                                                           432 162
    
    The assessment to identify potential intangible assets within the business has yet to be completed. The amount
    recognised as goodwill remains provisional.

    The provisional goodwill arising on the acquisition of this business is not expected to be deductible for 
    tax purposes.
    
5.  JUDGEMENTS AND ESTIMATES
    In preparing these consolidated interim financial statements, management has made judgements and estimates that 
    affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. 
    Actual results may differ from these estimates.
    
    The significant judgements made by management in applying the group's accounting policies and the key sources of
    estimation uncertainty were the same as those described in the last annual financial statements, with the exception 
    of the new significant judgements and key sources of estimation uncertainty related to the application of IFRS 9 as 
    disclosed in note 6.2.

6.  CHANGES IN SIGNIFICANT ACCOUNTING POLICIES
6.1 IFRS 15 REVENUE FROM CONTRACTS WITH CUSTOMERS 
    IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is 
    recognised. It replaced IAS 18 Revenue, IAS 11 Construction Contracts and related interpretations.
    
    The group has adopted IFRS 15 using the cumulative effect method thus applying this standard at the date of 
    initial application (1 July 2018). Accordingly, the information presented for 2018 has not been restated and 
    is presented as previously reported under IAS 18, IAS 11 and related interpretations.

    Under IFRS 15, revenue is recognised when a customer obtains control of the goods or services. Determining the 
    timing of the transfer of control at a point in time or over time requires judgement.

    Type of           Nature, timing of satisfaction of performance                       Nature of change in    
    product/service   obligations, significant payment terms                              accounting policy 
    Construction      Revenue incorporates the original contract value together with      The implementation          
    contracts         any approved variations and claims to the extent it is highly       of IFRS 15 had no           
                      probable they will result in revenue.                               impact on the               
                                                                                          recognition of              
                      Revenue is recognised over time by measuring the progress of        revenue for                 
                      the contract toward completion.                                     construction                
                                                                                          contracts. The              
                      When a claim or variation is recognised, the cumulative             impact of the               
                      contract price is revised and the measurement of progress           implementation of           
                      toward completion is reassessed at each reporting date and          IFRS 15 on operating        
                      any increases or decreases in revenue accounted for.                expenses is                 
                                                                                          described below.            
    Sales of goods    The group recognises revenue when a customer obtains control        The implementation          
    and property      of the goods, which will be through delivery or collection.         of IFRS 15 had no           
                                                                                          impact on the               
                                                                                          recognition of              
                                                                                          revenue for the sale         
                                                                                          of goods and property.    

    In implementing IFRS 15, the group has performed an assessment of all active contracts over the six-month period from
    1 July 2018 to 31 December 2018. The 5-step process for the recognition and measurement of revenue described under 
    IFRS 15 was applied to each individual contract and its effect determined. The assessment of performance obligations, the
    accompanying allocation of the contract value (including the effects of any variations and claims) and the measurement 
    of the progress of the contract resulted in the same outcome for the recognition and measurement of revenue using the
    percentage-of-completion method under IAS 11. 
    
    In Australia, certain tender costs incurred to acquire a contract had previously been capitalised under IAS 11. 
    While IFRS 15 allows for the costs that are incremental to obtaining a contract to be capitalised and subsequently
    amortised over the life of the contract, it was determined that as these costs would have been incurred irrespective of
    whether the contract was awarded, and no longer met the requirements to be capitalised. Costs of this nature, capitalised 
    at 1 July 2018, have been adjusted for against opening retained income while costs incurred over the six month period
    amounting to R62 million have now been expensed.

    The following tables summarises the impact of adopting IFRS 15 at 1 July 2018.

    Consolidated statement of financial position

                                                                           At 30 June       IFRS 15         At 1 July
    R'000                                                                        2018        effect              2018
    Assets                                                                                                               
    Non-current assets                                                                                                   
    Deferred taxation                                                         667 779        15 449           683 228    
    Current assets                                                                                                       
    Trade and other receivables                                             6 213 877       (51 498)        6 162 379    
    Equity                                                                                                               
    Retained earnings                                                       5 555 470       (30 624)        5 524 846    
    Non-controlling interests                                                 207 517        (5 425)          202 092    


6.2 IFRS 9 FINANCIAL INSTRUMENTS
    IFRS 9 sets out requirements for recognising and measuring financial assets and financial liabilities. 
    This standard replaces IAS 39 Financial Instruments: Recognition and Measurement.
    
    Classification and measurement of financial assets and financial liabilities
    IFRS 9 retains the existing requirements for the classification and measurement of financial liabilities under 
    IAS 39 however it eliminates the previous categories for financial assets: held to maturity, loans and 
    receivables and available for sale. These are now classified as amortised cost.
    
    The effect of adopting IFRS 9 on the carrying amounts of financial assets at 1 July 2018 related solely to the 
    new impairment requirements.

    Transition
    The group has applied the exemption not to restate comparative information for prior periods with respect to
    classification and measurement (including impairment). Differences in the carrying amounts of financial assets 
    resulting from the adoption of IFRS 9 are recognised in retained earnings as at 1 July 2018. Accordingly, the 
    information presented for the year ended 30 June 2018 does not reflect the requirements of IFRS 9 but rather 
    those of IAS 39.
    
                                                                                                                  ECL
                                                               At 30 June        IFRS 9     At 1 July   recognised to       
    R'000                                                            2018        effect          2018        Dec 2018    
    Assets                                                                                                               
    Non-current assets                                                                                                   
    Long-term receivables                                         373 136          (987)      372 149            (526)   
    Loans to equity accounted investments                         470 835        (1 496)      469 339              44    
    Deferred tax asset                                            667 779        20 770       688 549           1 722    
    Current assets                                                                                                       
    Trade and other receivables                                 6 213 877       (49 231)    6 184 646          (5 890)   
    Contract assets                                             1 816 792       (17 520)    1 799 272             633    
    Equity                                                                                                               
    Retained earnings                                           5 555 470       (48 856)    5 508 614          (4 101)   
    Non-controlling interests                                     207 517        (1 608)      205 909             (84)   
                                                                                          
    Impairment of financial assets
    Financial assets measured at amortised cost are subject to the impairment provisions of IFRS 9.
    
    IFRS 9 replaces the incurred loss model in IAS 39 with a forward-looking expected credit loss (ECL) model. The ECL
    model requires an entity to account for expected credit losses and changes to those expected credit losses at each
    reporting date arising from changes in credit risk since initial recognition. It is no longer necessary for a 
    credit event to have occurred before credit losses are recognised. The group applies the simplified approach to 
    measuring expected credit losses which uses a lifetime expected loss allowance for all trade receivables and 
    contract assets. The general approach has been applied to other financial assets.
    
    Due to the bespoke nature of construction contracts and specific circumstances relating to the impairment of 
    trade receivables, the group did not recognise general impairments in respect of trade receivables under 
    IAS 39. Specific provisions for impairment were recognised against individual receivables when evidence for 
    impairment existed. 
    
    In applying the simplified approach, exposure within each category of trade and other receivables was segmented 
    based on individual credit risk ratings, industry and geographic region. Factors reflecting the group's view of 
    economic conditions over the expected lives of the receivables were considered when calculating the ECL. These 
    factors included external sources for company, industry and sovereign risk in each of the regions in which the 
    group is active. The specific provisions for impairment recognised under IAS 39 have been retained.

    COMBINED EFFECT OF THE NEW REPORTING STANDARDS AT 1 JULY 2018:
                                                                                                                R'000    
    Total equity at 30 June 2018                                                                            6 019 156    
    Increase in operating costs                                                                               (51 498)   
    Increase in administrative expenses                                                                       (69 234)   
    Decrease in tax expense                                                                                    36 219    
    Decrease in non-controlling interests                                                                       7 033    
    Total equity at 1 July 2018 under IFRS 9 and IFRS 15                                                    5 941 676    

7.  EVENTS AFTER THE REPORTING DATE
    On 31 January 2019, the non-controlling shareholders of Russells Construction Limited exercised their put options in
    terms of the share purchase agreement. The transaction will be concluded on 28 February 2019 for a consideration of 
    ?4,8 million (R83 million) and will increase the group's shareholding in Russells Construction Limited from 60% to 70%.
    
    The Board is not aware of any other 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 2018 or the results of its operations or cash flows for the 
    six months then ended.

    
COMMENTARY

The group delivered disappointing results over the first six months of the financial year principally due to the
recognition of a provision in respect of anticipated future losses on the Western Roads Upgrade (WRU) project (previously
referred to as OSAR) in Australia. The effect of this provision negated otherwise solid results from Australia in both
Probuild and the remainder of the infrastructure business. Details of the problematic project are discussed under the
operational review for the Australian operations. The African business, including South Africa, performed well amid 
turbulent and lacklustre market conditions while in the United Kingdom (UK), the Byrne Group returned to profitability 
and the newly acquired Russells Limited delivered profitability in line with expectations.

FINANCIAL REVIEW
REVENUE AND OPERATING PROFIT
Group revenue increased from R18,1 billion at 31 December 2017 to R20,1 billion in the current period largely due to
the first time consolidation of the UK businesses. Overall revenue growth of 11% consisted of 14% growth from the
inclusion of the UK operations, marginal decline of 2% from the African businesses and a decline in activity of 3,6% 
from Australia.

Total operating profit decreased from R510 million to R3 million as the anticipated losses to be incurred on the 
WRU project over the next 18 months have been provided for in the current period in accordance with International
Financial Reporting Standards. Operating profit from the Building and civil engineering division was broadly in line 
with that of the prior year while profitability from the Roads and earthworks division declined by 12% as activity 
tapered and additional costs were incurred to complete projects in Mozambique and Guinea. The UK businesses delivered 
a combined operating profit of R104 million at a margin of 4% and the Construction materials business delivered 
increased profitability on the back of an improving workload over the first six months.

The impact of the loss-making contract in Australia is further reflected in both the overall earnings per share 
and headline earnings per share of the group which decreased sharply by 82% and 80% respectively.

NON-TRADING ITEMS
The share-based payment expense of R27 million relates to the existing broad-based and management share schemes in
place and the WBHO Share Plan for executive management.

EQUITY ACCOUNTED INVESTMENTS
The group has 11 equity accounted investments. The strategy behind both the property development and concession
investments is to utilise the financial strength of the group to support developments that unlock construction projects 
for its operations, while at the same time creating future higher-margin income streams. In the case of Edwin Construction 
and iKusasa Rail SA which are specialist construction companies, the group has partnered with black businesses, providing
its financial strength and construction expertise in order to support the growth of these businesses while penetrating
new markets. 

                                                                                                    Share of      Share of    
                                                                                                   after-tax     after-tax    
                                                                                                 profit/loss   profit/loss    
                                                                                    Investment        31 Dec        31 Dec    
                                                                        Effective    and loans          2018          2017    
Entity                    Industry                           Country     interest           Rm            Rm            Rm    
Construction                                                                                                                  
Edwin Construction        Infrastructure construction   South Africa          49%         97,0           0,9           4,9    
Byrne Group Limited*      Building and frame                 United              
                          construction                       Kingdom            -            -             -         (28,9)
iKusasa Rail SA           Railway maintenance and       South Africa          49%         16,9          (2,1)         (0,2)   
                          construction                                                                                        
IACS                      Airport construction          South Africa          26%          3,8             -             -    

Concessions                                                                                                                   
Dipalopalo                Serviced accommodation        South Africa        27,5%         58,8             -             -    
DFMS Joint Venture        Serviced accommodation        South Africa        14,6%          1,6           0,9             -    
Gigajoule International   Gas supply                      Mozambique        26,6%        139,2           9,4           7,5    
Gigajoule Power           Power                           Mozambique          18%        151,4          16,6          10,2    

Property developments                                                                                                         
Catchu Trading            Residential                   South Africa          50%        101,6             -             -    
Caulfield                 Residential                      Australia          30%        181,0             -             -    
The Glen Residential      Residential                      Australia          20%        108,6             -             -    

Property developer                                                                                                            
Russell Homes Limited     Residential schemes and            United            
                          house builder                      Kingdom        31,7%        204,5           3,9             -
Expected credit loss      
under IFRS 9                                                                              (1,4)            -             -
Total                                                                                  1 063,0          29,6          (6,5)   
* The Byrne Group was accounted for as an associated company until 30 June 2018. 

During the period the group received dividends of R7,5 million and R3,7 million from Gigajoule International and the
DFMS joint venture respectively.

Edwin Construction experienced a difficult first half of the financial year as a key road project has been delayed by
the client while additional phases of an infrastructure project in the Free State has been suspended due to non-payment.
In addition the provincial road market remains stagnant. As a result, the business has incurred significant
retrenchment costs and the revenue for the second half of the year is expected to decline.

The local rail market also remains subdued with iKusasa Rail SA having insufficient work-on-hand to meet overhead
expenditure. The award of a number of submitted tenders are key for the business to return to profitability. 

The operational phase of the serviced accommodation concession for Statistics South Africa continued to deliver
profits during the current period, while the finalisation of various outstanding contractual issues in respect of the
construction phase of the concession have been substantially resolved.

Gigajoule International, a shareholder in the Matola Gas Company which sells and distributes gas in Mozambique and
Gigajoule Power, a concession company providing electricity generated from a gas-fired power station, continue to 
perform well within their respective markets.

Catchu Trading is a residential development in Tshwane in which WBHO is a 50% equity investor. The construction
contract for phase 1 is well advanced and the group will participate in the development profit on settlement of 
residential unit sales.

Construction of Precinct 2 of the Caulfield development in Australia is underway. Construction activity should 
be complete in August 2019 with the subsequent settlement of sales and final completion of this phase of the
development in FY2020. In addition, Probuild has successfully negotiated the contract for the Glen Residential 
development with construction expected to commence in April 2019.

On 18 July 2018, the group acquired a 31,7% interest in Russell Homes Limited, a scheme developer and house builder in
the UK for R56,4 million. A loan to the business of R148,3 million was also recognised on the consolidation of Russells
Limited, the construction business that has provided funding on certain schemes. 

Russell Homes Limited performed well for the half year to 31 December 2018 delivering revenue of ?6,7 million 
and producing pre-tax profit of ?800k. The business has a number of active schemes under development with the
prestigious ?25 million scheme at Saltersford Gardens in Holmes Chapel selling quickly. The second phase of a joint 
venture with Halton Housing for a further 118 mixed tenure properties at Bower Brook Gardens commenced during the 
period following the successful delivery of 185 homes under phase 1 in 2016. In addition 14 of the 46 properties 
comprising the Cedar Gardens scheme in Heywood have been reserved or exchanged.

Looking ahead, the business expects to further progress the developments at the Littleborough, Congleton, Oldham,
Bromley Cross and Wincham sites through the remainder of 2019, with sales on these developments expecting to 
commence in 2020.

ACQUISITIONS
On 18 July 2018, the group acquired a 60% interest in Russells Limited for a consideration of R572 million and 
a 31,7% interest in Russell Homes Limited for a consideration of R56,4 million. Goodwill of R391 million was
provisionally recognised on consolidation of Russells Limited. Further details of the acquisition are included in 
note 4 of the summary consolidated financial statements.

CHANGES IN SHAREHOLDING
In terms of the provisions of the shareholder agreements, Probuild bought back shares from minority shareholders at a
cost AU$4,0 million increasing the group's interest by 2%, while WBHO Australia acquired a further 0,81% from minority
shareholders at a cost of AU$1,5 million. The combined effect of these transactions resulted in the group's interest in
Probuild increasing from 85% to 88%.

CASH AND WORKING CAPITAL
Cash balances of R4,3 billion were comparable with those at 31 December 2017. The cash balance was R1,7 billion lower
than balances at 30 June 2018 due to a decrease of R1,5 billion in Australia, where it is common practice within the
Australian construction industry for the early settlement of subcontractors ahead of the holiday season. This is
illustrated in the decrease in trade and other payables of R2,9 billion over the six-month period as well as cash 
utilised in operations of R549 million in the cash flow statement. This working capital cash outflow was partially 
mitigated by net cash inflows of R1,1 billion in respect of contract assets and liabilities (previously called 
"Amounts due by customers" and "Excess billings over work done").

Capital expenditure over the period amounted to R245 million, of which R178 million was acquired for cash and 
R67 million was financed. Depreciation amounted to R153 million (2017: R122 million). Additional cash outflows 
include R572 million and R57 million in respect of the acquisition of the Russells businesses, an additional 
R91 million invested in existing equity accounted investments, R56 million in respect of changes in shareholding
within the Australian businesses and R90 million for the acquisition of shares to settle long-term incentives 
under the WBHO Share Plan for executive and senior management.

DEFERRED TAXATION
Deferred tax assets increased by R157 million from 30 June 2018 primarily due to a temporary difference raised 
on the additional provision recognised in Australia for the anticipated future losses to be incurred in respect 
of the WRU project and adjustments in terms of IFRS 9 and IFRS 15.

CONTINGENT LIABILITIES
Financial guarantees issued to third parties amount to R12,2 billion compared to R10,5 billion in issue at 
30 June 2018. Total guarantee facilities available to the group amount to R17,7 billion.

OPERATIONAL REVIEW
BUILDING AND CIVIL ENGINEERING
                                                                                  December      December    
                                                                           %          2018          2017    
                                                                      change            Rm            Rm    
Revenue                                                          0,2% growth         3 925         3 916    
Operating profit                                                 4,1% margin           163           169    
Capital expenditure                                                                      7            39    
Depreciation                                                                            17            21    

Despite the further contraction of building markets and persistent stagnation within civil markets, the Building 
and civil engineering division has performed admirably to sustain revenue levels in line with those achieved 
in the prior period. A 7,7% decrease in building activity was offset by growth within the Civil engineering division,
predominantly in Zambia. Margins were also maintained above 4% reflecting the consistent execution of projects in 
a low margin environment.

BUILDING
The lower activity experienced within building markets was again most prevalent in Gauteng where revenue decreased by
14%. Activity within the retail sector remained subdued with refurbishments at the Sandton City and Eastgate shopping
centres being the only significant retail projects under construction. While overall commercial office activity tapered
further, it remains the largest contributor toward revenue. Major office developments in Gauteng include developments at
92 Rivonia and 2 Pybus in Sandton, new head offices for Barloworld and Exxaro in Tshwane, a new head office for Deloitte
in Waterfall and the 144 Oxford Street development in Rosebank. Also in Rosebank, is the mixed-use development known as
the Rosebank Link. Projects underway within the healthcare, student accommodation and residential sectors have
alleviated some of the impact of lower activity experienced in other sectors. These include additions to the Milpark 
Hospital for Netcare and student accommodation and residential apartments in Tshwane. In the current market the number 
of available projects and the size of projects have, in general, decreased. However, the division has adapted in order 
to compete against the mid-tier contractors.

Activity levels within the coastal divisions remained in line with those of the prior period. The tender market remains 
largely competitive in all coastal regions with projects bid at keen margins. In the Western Cape, the award of new
offices for Capitec as well as ongoing construction of the Axis Apartments in Century City and the Yacht Club along the
V&A Waterfront supported the bulk of activity, assisted by additional revenue from projects in the healthcare sector. 
In KwaZulu-Natal (KZN), the Umhlanga Arch mixed-use development and Suncoast Casino projects were the largest drivers of
activity in the region, but also strongly supported by projects in the retail, commercial office and warehousing sectors.
The Eastern Cape is delivering its strongest performance in recent years with a prominent increase in available projects.
Major projects contributing toward revenue included the social housing project at Milkwood together with completion of
a packaging line for SA Breweries, the Yekani student accommodation and various buildings at the BAIC automotive
facility.

In Ghana, existing projects which included construction of the Takoradi Mall for RMB Westport, a new store 
for Game and a warehouse expansion at the Accra Brewery, were all substantially completed in the first six months. 
The replacement of projects remains difficult and the division continues to explore opportunities in other 
African countries.

CIVIL ENGINEERING
The prevalence of traditional mining and industrial projects between R100 and R300 million within civil engineering
markets remains limited with low margins prevalent on available tenders. Construction of the large-scale commercial 
crude oil terminal facility at Saldanha (in conjunction with the Roads and earthworks division) is now progressing 
well and resolution of contractual issues related to the project are progressing. The re-access works at Kusile 
continues to provide a base-load of work for the division although Eskom has slowed the execution of future work 
still to be  delivered. In the coal mining sector, the construction of a rapid load out station at the Grootegeluk 
mine in Limpopo is nearing completion while a coal-handling facility at Belfast is progressing well. Both projects 
are for Exxaro. The division successfully completed a small-scale marine project at the Durban Harbour.

Revenue in Zambia increased significantly over the comparative period following the award for the construction of new
infrastructure surrounding the concentrator at the Mopani mine in Mufulira and the Ngonye solar photovoltaic power plant
in Lusaka during the second half of FY18.

In the prior year, the division reported on two mining infrastructure projects under construction with the group's
Roads and earthworks division in West Africa. The challenging project in Guinea was completed in the first six months 
of the year, having incurred some additional costs to reach completion. The mining infrastructure project in Ghana is
performing well and is due for completion in the second half of the current financial year.

ROADS AND EARTHWORKS
                                                                                  December      December    
                                                                           %          2018          2017    
                                                                      change            Rm            Rm    
Revenue                                                         7,7% decline         2 610         2 829    
Operating profit                                                 6,4% margin           167           190    
Capital expenditure                                                                    170            96    
Depreciation                                                                            68            70    

Despite an 8% decrease in turnover and a 13% decrease in operating profit as the margin fell from 6,7% in the
comparative period to 6,3%, the Roads and earthworks division delivered another strong performance over the first 
half in a challenging environment. Growth in South Africa, Botswana and Mozambique was offset by a sharp decrease 
in revenue from West Africa where a number of projects were completed without being replaced. The overall revenue 
contribution from the rest of Africa declined from 39% to 25%.

Locally, activity from the road sector has declined. While there are fewer available projects from the South African
National Roads Agency Limited (SANRAL) as it continues to constrain spending, the division has done well to replace
roadwork with projects from provincial government, private clients and road concession companies. Existing roadwork 
includes the ongoing upgrades to the N2 and N6 for SANRAL, extensions to existing roads at Saldanha for the Western 
Cape provincial government, a new bridge for Transnet, also at Saldanha, and the rehabilitation of the R24 in Rustenburg. 
New awards over the period consist of new BRT projects in KZN and Johannesburg and upgrades to provincial roads from 
Worcester to Robertson for the Western Cape provincial government. Roadspan, the road surfacing business within the 
division, delivered a solid performance locally, albeit at a slightly decreased activity levels in line with market 
conditions.

This decline in roadwork was offset by improved activity from the mining sector with the division now executing
projects for three of the large mining houses: Exxaro, South32 and Anglo American.

Other major projects contributing toward activity in South Africa include the earthworks and infrastructure project 
at the Clairwood Logistics Park in KZN, construction of a haul road and ash dam for Sasol and the division's
participation in the construction of the crude oil terminal facility at Saldanha.

The tender market within the local pipeline sector remains challenging with limited opportunities. A large proportion
of work on hand consists of projects procured internally alongside the group's other divisions. These included pipeline
expertise and construction services at the crude oil terminal facility in Saldanha, the ash dam for Sasol and at the
Klipspruit mine for South32. For external customers, the division was awarded a new project at the Nsezi water treatment 
plant and has ongoing small works contracts for Joburg Water, Egoli Gas, the City of Cape Town and Natref. 

Despite improved activity in Mozambique and Botswana, revenue from the rest of Africa fell from R1,0 billion 
to R731 million largely due to a sharp decrease in activity from West Africa, where various projects in Ghana, 
Guinea and Burkina Faso were completed. In addition to the lower activity levels experienced, profitability was 
further impacted by additional costs to complete the Siguiri project in Guinea alongside technical challenges on
Section 16 of the EN4 project in Mozambique.

In Botswana, revenue grew marginally over the six-month period, however, there has been a pleasing improvement 
in activity from the mining sector. Additional work has been awarded at the Orapa diamond mine for Debswana 
and a new large-scale contract was awarded at Khoemacau Copper Mining.

AUSTRALIA
                                                                                  December      December    
                                                                           %          2018          2017    
                                                                      change            Rm            Rm    
Revenue                                                                                                     
Probuild                                                                             8 612         9 762    
Infrastructure - Western region                                                        954           669    
Infrastructure - Eastern region                                                      1 141           672    
Total                                                          3,6% decrease        10 707        11 103    
Operating profit/(loss)                                                                                     
Probuild                                                                               132           104    
Infrastructure - Western region                                                         56            24    
Infrastructure - Eastern region                                                       (634)           15    
Total                                                          (4,2)% margin          (445)          143    
Capital expenditure                                                                     57            14    
Depreciation                                                                            43            27    

Strong delivery from both the building business and the western region of the infrastructure business over the six
months ended 31 December 2018 was overshadowed by a material loss identified and provided for on the WRU project in
Melbourne. The size of the loss provision recognised is unprecedented, not only for the Australian business but for 
the entire WBHO group, and resulted in the Australian business recognising an overall loss for the period.

WRU PROJECT
The design and construct project consists of the widening of roads and upgrades to various intersections in suburban
Melbourne. WBHO Infrastructure is the lead contractor responsible for the delivery of the project to the concession
company. 

The main reason behind the loss recognised relates to interpretation of the technical specification. This
interpretation resulted in the underestimation of the physical work required to be performed to meet the output 
specifications of the contract.

An extensive due diligence was performed by the project delivery team assisted by senior Australian and South African
management. The outcome of this exercise led to a loss provision of $50 million being recognised together with a
write-back of $6,9 million in profit recognised in the 2018 financial year.

Delivery of the project has now commenced with a strong project team in place to ensure performance against the
revised cost estimates included in the forecast loss.

Management believe they have recognised the full extent of the potential loss with the information currently
available. There are a number of recovery options available to the group in terms of both delivery of the project 
and claims. Significant focus is being placed on the resolution of these options.

BUILDING
Revenue from Probuild, the Australian building business, for the six months ended 31 December 2018 decreased by 12,5%
in line with the group's strategy to limit growth and focus on project execution alongside securing new work with the
correct risk allocation. Operating profit improved by 8,6% delivering a return of 1,7% compared to 1,3% for the 2017
comparative period.

In the six months to 31 December 2018, the following projects were completed and handed over successfully: Omnia
residential tower in Sydney; Marq & Icon residential campus towers in Sydney; two smaller phases of the Chadstone 
shopping centre in Victoria; a large handover of The Glen shopping centre in Victoria and the Avant residential 
tower in the Melbourne CBD. Sectional handovers of a large number of apartments in the Aurora tower in Melbourne 
were also completed securing bonus revenue from the client for early completion.

Ongoing construction includes two multi-storey residential towers, the Aurora apartments in Melbourne and the
Greenland tower in Sydney. Large-scale, mixed-use residential and hotel developments at Westside Place in 
Victoria, the Elizabeth Quay development in Western Australia and 443 Queen Street in Queensland comprised 
a large component of work executed over the period. In the commercial office space, construction of new offices 
for the Victorian Police Department in Melbourne is progressing well. 

INFRASTRUCTURE AND CIVIL ENGINEERING
While the results for the Infrastructure and civil engineering business are dominated by the $50 million anticipated
loss provided for on the WRU project, the remainder of the business is performing satisfactorily.

Projects in the Eastern region are in line with expectations and the Western region continues to produce solid 
results from a portfolio of low-risk projects and maintenance contracts.

UNITED KINGDOM                                                
                                                                                  December      December    
                                                                           %          2018          2017*    
                                                                      change            Rm            Rm    
Revenue                                                          136% growth         2 555         1 084    
Operating profit                                                 4,1% margin           104           (92)   
Capital expenditure                                                                     10            19    
Depreciation                                                                            22            22    
* For comparative purposes only as the Byrne Group was accounted for as an associated company until 30 June 2018.
  Includes only the results of the Byrne Group.

Following the acquisition of a 60% interest in Russells Limited on 18 July 2018 and a return to profitability by the
Byrne Group, the group has delivered healthy results in line with expectations from its UK operations over the 
six-month period to 31 December 2018.

Revenue from the region amounted to R2,6 billion with an operating profit of R104 million at a margin of 4,1%.

BYRNE GROUP
Following the commencement of a number of delayed projects secured in the prior year and the positive action taken 
by the group to reduce its cost base, the Byrne Group delivered profitable results over the first six months. 
Revenue increased by 53% to ?91,9 million from ?60,1 million in the comparative period. Operating profit amounted 
to ?2,0 million compared to a loss of ?5,1 at 31 December 2017.

Byrne Brothers, a specialist concrete frame business, completed the frame on a 26-storey commercial development 
in Canary Wharf as well as works associated with the new retractable roof on Court No 1 and remodelling of Court 
No 19 at Wimbledon. Ongoing work within Byrne Brothers includes Google's new head office for 7 000 employees near
London's King's Cross station; the development of a new six-storey private clinic; construction of a 189-room, 
5 star hotel with 28 residential apartments as well as two projects in London's Vauxhall area; Aykon London One,
comprising two residential towers of 50 and 24 storeys, and One Nine Elms, a 56-storey and 42-storey residential 
development.

Ellmer Construction, the new build, fit-out and refurbishment contractor, completed the formation and fit-out of the
washrooms and various hospitality areas at Tottenham Hotspur Football Club along with two significant alterations and
extensions for new flagship stores for River Island and Zara at the Lakeside Shopping Centre. Major ongoing projects under
construction include the refurbishment of 180 rooms at the Kingsway Hall Hotel in Covent Garden; a new build and fit-out
of 26 high-end luxury apartments at Mayfair Park Residences in London; and the fit-out of three multi-million pound
penthouses in Grosvenor Square. In addition, Ellmers is working on refurbishing five floors and adding a further three
floors to Cityside House in Whitechapel as well as the off-site manufacture and site installation of 362 high-quality
bathrooms for a residential redevelopment at Earls Court.

RUSSELLS LIMITED
Russells performed well over the half year with revenue climbing to ?47,3 million compared to ?29,6 million in the
previous period. The increase in revenue follows the negotiation of a number of significant projects during the course 
of 2018 and the associated upscaling of the businesses resource base.

During the six-month period to 31 December 2018, the company completed a ?35 million office refurbishment of Amazon's
new Manchester home at Hanover House. The Hanover project is the second of six buildings that Russells has been
appointed on by the client as part of a ?250 million city regeneration programme.

Further successful projects include reaching practical completion on the ?8,4 million Brown Street development, 
a ?2 million industrial warehouse refurbishment in Bury and a ?7,9 million cold store development in Peterborough. 
The company also recently completed a four-year project at Baildon Business Park.

Good progress continues to be made on the company's flagship ?35 million Axis residential tower which is due for
completion in 2020 as well as new hotels for the Motel One and Premier Inn hotel groups.

CONSTRUCTION MATERIALS
                                                                                  December      December    
                                                                           %          2018          2017    
                                                                      change            Rm            Rm    
Revenue                                                                                510           397    
Inter-company sales                                                                   (195)         (159)   
Revenue to external customers                                   32,3% growth           315           238    
Operating profit                                                 4,2% margin            13            10    
Capital expenditure                                                                      2           0,4    
Depreciation                                                                             2             4    

Despite increased activity, trading conditions within the steel supply market remain difficult. The constrained
conditions within the local construction industry at large continue to exert pressure on margins. Sales volumes 
and pricing in Gauteng remain under pressure, while the coastal regions in the Western Cape, KZN and particularly 
the Eastern Cape are trading well. Trading activity remains subdued in Limpopo, Mpumalanga and the Free State.

ORDER BOOK AND OUTLOOK
                                        31 December             To         Beyond                30 June     
Rm                                 %           2018      June 2019      June 2019        %          2018    
Order book by segment                                                                                       
Building and civil engineering    13          6 387          3 055          3 332       12         5 986    
Roads and earthworks              11          5 408          2 577          2 831        9         4 164    
Australia                         58         29 294         11 828         17 466       66        32 565    
United Kingdom                    18          9 016          3 145          5 871       13         6 446    
Total                            100         50 105         20 605         29 500      100        49 161    
Order book by geography                                                                                     
South Africa                      20         10 200          4 865          5 335       18         8 698    
Rest of Africa                     4          1 595            767            828        3         1 452    
Australia                         58         29 294         11 828         17 466       66        32 565    
United Kingdom                    18          9 016          3 145          5 871       13         6 446    
Total                            100         50 105         20 605         29 500      100        49 161    

The group's total order book at 31 December 2018 of R50,1 billion increased by 1,9% from 30 June 2018. 
Increases in the order books of the Building and civil engineering and Roads and earthworks divisions together 
with the inclusion of the order book of Russells Limited in the UK offset decreased volumes within the Australian
building business. Pleasingly, the combined African businesses have secured more work than has been executed over 
the period thereby increasing its proportion of the total order book to 24% and the acquisition of Russells 
boosting proportion of the UK operations to 18%.

AFRICA (INCLUDING SOUTH AFRICA)
Reduced capacity within the industry has allowed for order books to be maintained despite challenging conditions
across all the group's targeted sectors.

In Gauteng, the ongoing rejuvenation of the Johannesburg CBD is creating various building opportunities through 
the refurbishment of older buildings along with various student accommodation developments. Two large projects 
within the healthcare sector are also being targeted. The division remains the preferred contractor on the 
public-private partnership for the construction of new offices for the Department of Rural Development and 
Land Reform and the subsequent serviced accommodation. In addition, the division is tracking select, large-scale 
projects within the retail and commercial office spaces, which will provide a strong baseload for the next 
financial year once negotiations are concluded and the projects awarded.

In the Western Cape, the ongoing construction of new offices for Capitec together with the recent award of a
biomedical research facility in Stellenbosch have strengthened the order book, allowing the division to be 
more selective as activity in the tender market has quietened. The division continues to negotiate various 
new residential and office developments with existing clients due to commence in the second half of 2019.

In KZN, the Umhlanga Arch and Suncoast Casino contracts remain anchor projects through the second six months.

The Eastern Cape has a strong order book as it enters the second half of the year with various mid-term prospects
being pursued in the industrial building and social housing sectors.

Civil engineering markets remain unpredictable. However, slowly improving activity within the mining sector is
promising. The division has sufficient work on existing projects to sustain activity levels through to the 
first half  of FY2020.

The order book of the Roads and earthworks division also remains healthy following the award of a number of projects
in the first six months, predominantly in South Africa and Botswana. Mining infrastructure projects continue to comprise
increasing volumes within the order book. In Mozambique, the division has been awarded a contract for Anadarko, as
projects relating to the discovery of the gasfields begin to enter the market. In Lesotho, the division was awarded a
contract in joint venture for the advance civil and infrastructure works in relation to the first phases of the Lesotho
Highlands Water Project.

The West African market remains quiet across all sectors. While there are some remaining opportunities in Ghana, 
the building division is also actively seeking opportunities in other regions and specifically tracking a new office
development in Botswana. The Roads and earthworks division has various projects in both Ghana and Sierra Leone. 
There appears to be increased activity from the gold mines in the region with a number of enquiries and tenders 
being submitted. Commencement of these projects is likely dependent on mining houses being able to raise the 
necessary financing and the gold price remaining at current levels.

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 forward order book totalling 
AU$2,6 billion.

The business has focused on identifying alternative opportunities to replace the significant reduction in residential
projects in all major Australian cities in response to tighter funding for both the end purchaser and developers. 
A significant opportunity over the next 12 months is the next wave of retail projects coming to market.

The Victorian business secured a commercial/residential project at The Malt in August 2018 with a contract value of
$115 million, along with a vertical university campus in the Melbourne CBD for Victoria University with a value of 
$161 million. Both these projects have proven the competitiveness of the business in securing projects of a 
smaller nature.

During the year a new mixed-use retail and residential project was secured in New South Wales (NSW) with repeat
Singaporean developer, Frasers, with a contract value of $190 million. The Queensland business has been nominated 
as a preferred contractor on a $150 million commercial building for the Australian Taxation Office and a 
$400 million residential tower at 30 Albert Street, Brisbane. However, both these projects are awaiting resolution 
of neighbouring property disputes.

Western Australia secured work at the Curtain University, winning preferred positions to build a university library
and large student accommodation building. Both these projects should be converted to secured work in early 2019. These
projects are important for the WA business given the completion of the large-scale EQ project in the second half of the
financial year.

The Infrastructure and civil engineering order book at 31 December 2018 amounts to AU$0,7 billion including the WRU
project. Given the difficulties experienced on that project and reduced bidding capacity within the Eastern region, the
forward strategic focus is to identify and secure low risk construction-only road projects as well as projects in the
renewable energy sector where the business has a successful track record.

UNITED KINGDOM (UK)
The secured order book of the Byrne Group stands at ?275 million at the end of the half year, down from ?356 million
at 30 June 2018. This is partly due to the cancellation of a ?60 million project on which Byrne Brothers had commenced
the early works directly for the client. On appointment of the main contractor, Byrne Brothers was unable to agree 
various commercial terms within the contract, resulting in its ultimate termination. During the period, a new project 
for the Royal College of Arts was awarded to the value of ?10 million as well additional work valued at ?25 million 
for Ellmers at the Mayfair Residences. Concrete works for two infrastructure projects to the value of ?50 million 
are expected to be awarded imminently, while a bid for access ways and portals for a new tunnel should commence 
in FY20.

Russells Limited continues to grow in line with expectations, with a secured order book in excess of ?225 million 
at 31 December 2018. New large-scale projects at St Peters Square (?55 million) and Store Street (?80 million - 
the company's largest project to date) are in the early stages of construction and will support activity well into
FY20. These projects are based in the Manchester city centre catchment area and reflect the strength of investment 
into the northwest region with Manchester being the second largest development market (next to London) in the UK.

OUTLOOK
The uncertain South African political and business environment over recent years has had a devastating effect on the
local construction industry, particularly over the last 12 months where the sector has faced severe challenges. The 
lower levels of private investment, combined with little meaningful public infrastructure spending, have seen increased
competition and eroded margins. The failure of various mid-tier contractors together with financial distress within a 
number of large listed companies have had profound consequences that have extended into the subcontractor market, 
resulting in significant job losses for the South African workforce.

The change in political leadership appears to be making inroads in providing some stability to markets and thereby
boosting investor confidence. However, the structural issues that have emerged within state-owned entities and excessive
levels of debt are likely to constrain the country's finances over the short-term at a time when public infrastructure
spending should be a priority.

On a positive note, in December 2018 the construction sector and other large sectors of the economy were invited to
present to government as part of the public-private growth initiative with the aim of delivering on the President's
economic stimulus and recovery plan. This growth initiative appears to demonstrate robust and proactive political 
will to address the challenges facing the country.

Reduced capacity within the construction industry as a whole has meant that WBHO should substantially maintain
activity levels over the short-term. It also provides opportunities for mid-tier contractors to increase market 
share.

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 remains robust across both building and infrastructure markets. Despite the recent
losses experienced within the infrastructure business, the overall Australian operations seem well positioned over 
the short to medium term.

The outlook for the UK market remains cautious due to uncertainty around the impact of Brexit as well as the political
landscape. Brexit is predicted to have an impact on the volume of new commercial office space and prime residential
space to be built in the UK which is largely reliant on international investment. Other sectors such as locally funded
residential, leisure and large infrastructure schemes such as the HS2, a high-speed railway directly connecting London,
Birmingham, the East Midlands, Leeds and Manchester, are likely to be unaffected. To date, in our experience, Brexit 
uncertainty has not diminished the extent of enquiries or the variety of tender enquirers.

Both the London and Manchester markets continue to offer sufficient opportunities for the group's niched UK operations. 
The Byrne Group has a wide range of competencies and is not completely reliant on the commercial office sector and
focus will be directed toward sectors offering opportunities as and when the need arises. Russells continues to 
demonstrate growth and, with the support of WBHO, the size, scale and complexity of projects are expected to increase. 
External support and internal resources have been directed toward targeting public sector projects, while recruitment 
continues to secure the optimal workforce required to deliver a growing order book going forward.

SAFETY
The group's combined lost time injury frequency ratio (LTIFR) at 31 December 2018 dropped to 0,8 injuries per million
man hours, marginally down from 0,9 at 30 June 2018. Helped by a renewed focus on safety by senior management, the
African business improved its injury statistics with the LTIFR decreasing from 0,71 to 0,60 over the period. In Australia,
there was a significant improvement in the LTIFR which decreased from 1,72 at 30 June 2018 to 0,91 in the current period.

APPRECIATION
The directors would like to express their sincere appreciation to employees across all geographies in Africa,
Australia and the UK for their diligence and commitment to the distinct brand and reputation of WBHO and its 
subsidiary companies. Further thanks is given to our many loyal clients and subcontractors for the successful 
partnerships created over the years.

DIVIDEND DECLARATION
In light of the liquidity volatility in the South African and African markets, the acquisition in the UK 
and low profitability over the first six months, the Board has elected not to declare an interim dividend.

Shareholders and interested parties are advised that a presentation of the company's unaudited interim 
financial results for the period ended 31 December 2018 will be held at Investec's offices in Sandton on 
Wednesday, 27 February 2019 at 10:00. The presentation will also be made available on the company's 
website at www.wbho.co.za.

Louwtjie Nel                      Charles Henwood            Mike Wylie
26 February 2019

Sponsor: Investec Bank Limited

STATUTORY INFORMATION

Wilson Bayly Holmes-Ovcon Limited                          
(Incorporated in the Republic of South Africa)             
(Registration number 1982/011014/06)
Share code: WBO 
ISIN: ZAE000009932 
(WBHO)

REGISTERED OFFICE AND CONTACT DETAILS       
53 Andries Street                       
Wynberg, Sandton, 2090                  
                                        
PO Box 531                              
Bergvlei, 2012                          

Telephone: +27 11 321 7200
Fax: +27 11 887 4364
Website:: www.wbho.co.za
Email: wbhoho@wbho.co.za

COMPANY SECRETARY                  
Shereen Vally-Kara ACIS            

AUDITORS
BDO South Africa Inc.

TRANSFER SECRETARIES
Computershare Investor Services (Pty) Ltd 
Rosebank Towers
15 Biermann Ave Rosebank 
Johannesburg, 2196 South Africa
Telephone: +27 11 370 5000
Fax: +27 11 370 5271

SPONSOR
Investec Bank Limited

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