Roy Cokayne

Construction and engineering group Wilson Bayly Holmes-Ovcon (WBHO) is focusing on longer-term gas-related infrastructure opportunities in Mozambique which could potentially include the construction of a new gas-fired power station in Mozambique for Eskom.

Louwtjie Nel, WBHO’s chief executive, said yesterday that it had entered into a partnership agreement with natural gas concession company Giggawatt Mozambique, which was one of only two gas transporters in that country.

Nel said Mozambique’s state-owned electricity firm, EDM, was in discussions with Eskom about a potential new gas-fired power station. He believed the discussions were “pretty far down the line”, and it was “80 to 90 percent certain” the project would go ahead.

Natural gas has increased importance as an attractive source of power generation on the Mozambique government’s agenda since the discovery of a major gas field off the country’s eastern coast.

Nel added that some estimates indicated that enough gas reserves had been discovered to provide power to South Africa for 100 years and put pressure on Eskom’s other planned power projects.

“Eskom is waking up to gas because it’s much cleaner and cheaper,” he said.

Nel also disclosed that WBHO had secured R4.2 billion in additional projects since its financial year-end in June, including the R1.4bn North-South Carrier pipeline in Botswana, in an equal joint venture with Greece-based CCC Construction.

These contract awards also include eight new retail and commercial office developments including: a R650 million contract for the redevelopment of the Rosebank Mall; the R180m final development phase of Lynnwood Bridge in Pretoria for Atterbury Property; a R160m contract for the development of a commercial office building in the Menlyn Maine precinct in Pretoria; a R160m head office building in Rosebank for Investec for Fluxman’s Attorneys; and the R100m first phase of the Steyn City mixed-use estate between Dainfern and Diepsloot.

Nel said WBHO had a fantastic pipeline of retail and commercial projects and bigger projects were finally coming to market. “We are very optimistic and bullish on the commercial side.”

However, Nel admitted that there was unfortunately very little new work from the government.

WBHO yesterday reported a 17.6 percent decline in headline earnings a share to R11.67 in the year to June, from R14.16 in the previous year.

Group revenue increased by 21.2 percent to R17.9bn, from R14.8bn.

Operating profit decreased by 10.5 percent to R976m from R1bn and the operating margin deteriorated to 5.5 percent, from 7.4 percent.

Nel attributed this to the effect of competitive conditions within both the local and Australian markets, together with revenue growth within the inherently lower margin Australian segment.

Cash generated from operations increased to R1bn from R345m and the group’s net cash position improved to R3.1bn from R2.9bn.

A final dividend of R2.42 was declared, increasing the dividend for the full year to R3.52, 6 percent higher than last year.

WBHO surged 4.71 percent to close at R138 yesterday.