Johannesburg - Wilson Bayly Holmes-Ovcon (WBHO) is expanding its building and civil engineering sector presence in Africa by following its roads and earthworks division into markets where it feels comfortable.
Louwtjie Nel, the chief executive of WBHO, said yesterday that the building and civil engineering division wanted to follow the roads and earthworks division into areas in which it was working, such as Botswana, Zambia, Mozambique and Ghana.
Nel said Ghana was a good hub for the division because Atterbury Property was planning five retail centres in that country.
WBHO was busy with the first of these centres and was in negotiations over two other centres, which should “keep us busy for three or four years”.
On Monday the division was awarded a contract for a new retail centre in Ghana by RMB Westport.
RMB Westport is a real estate investment management and development firm that is focused on property developments in sub-Saharan Africa.
Nel stressed that WBHO’s building and civil engineering division was not tendering on any work for any international clients in Africa but was following existing clients as they expanded on the continent.
He said the building and civil engineering division had previously steered away from work in Africa (excluding South Africa) because the risk was too high. But its roads and earthworks division had offices in some ports, which meant the logistics was taken care of and materials could be moved to project sites.
Nel said WBHO’s total order book had increased by about 15 percent to R24 billion in June from R20.8bn the previous year. Subsequent to its year-end, WBHO had received contract awards worth R1.97bn.
The largest contribution to this increase was the 123 percent increase in the one-year order book for the building and civil engineering division to R9.3bn.
Nel said the group was also the preferred contractor for projects worth R6.3bn and there was a good chance of these projects coming to book “very soon”.
These projects included the public-private partnership (PPP) for a new head office for Statistics SA located in Pretoria.
“It has been a model PPP in the way they have kept to the time scale and they are adamant it will get to financial close by October this year,” he said.
“WBHO’s percentage of the project is R820 million.”
Nel said the group’s project pipeline stood at about R161.95bn, compared with R180bn last year.
The project pipeline comprised any contracts that WBHO believed would be put out for bids within the next 12 months and that it would be keen to bid on.
Nel said WBHO was reasonably comfortable it would not experience a shortage of work. The challenge would be to improve the quality of its earnings and prevent loss-making projects in future.
On Monday WBHO reported a 1.4 percent decline in headline earnings a share to R11.509 in the year to June from R11.667 a share the previous year.
Revenue rose by almost 33 percent to R23.8bn.
Operating profit dropped by 4 percent to R939.2m because of the additional provisions of R91m for the R311m penalty it agreed to pay to the Competition Commission for collusion and R145m for three loss-making contracts in Australia.
Nel said the group’s financial results would have been quite different without the R145m provision.
On the back of its order book, WBHO was quietly optimistic that the decline in operating profit in the past year represented the bottom turning point.
The share price surged 4.67 percent on the JSE yesterday to close at R154.56 – slightly off the day’s high of R155. - Business Report