Companies / 4 September 2019, 1:00pm / Edward West
CAPE TOWN – Wilson Bayly Holmes-Ovcon’s (WBHO) defied sluggish performance in the construction sector, but the group’s African and UK operations were overshadowed by provisions made for anticipated losses on the Western Road Upgrade (WRU) project in Australia.
WBHO revenue rose 16 percent to R41 billion in the year to end June 30, while headline earnings per share fell 34 percent to 932 cents per share.
A dividend of 190c per share was declared, down from 325c last year.
Profit for the year came to R549m versus R843.4m last year. The segmental analysis provided insight into how much the Australian operations had hurt operating profit, which was down 46 percent to R561.2m.
Australia accounted for the bulk of revenue at R21.76bn, followed by the South African operations, which generated R10.9bn, while R5.7bn revenue was sourced from the UK. The Australian operations reported a R335.2m operating loss due to the WRU.
Chief executive Louwtjie Nel said market conditions in Australia remained buoyant. Nel said the building and infrastructure businesses in the Western region continued to perform satisfactorily.
“The group had performed admirably in South Africa in an environment where a number of large and medium-sized businesses had entered business rescue or were facing financial difficulties,” Nel said, adding WBHO already had 83 percent of the order book for the new financial year.
He said the A$50m (R511m) write-down in Australia had taken care of the problems on the WRU contract.
In addition, four state-owned organisations, Airports Company South Africa, Transnet, Eskom and SA National Road Agency had, in the last few weeks, come out with about R20bn in new tenders “for the first time in years.”
Nel said South Africa might be at the bottom of the cycle for the construction and civil engineering industry, and if it is, “we still have a long way to go yet.” He said the group was preserving its balance sheet strength in case markets deteriorate further or from other unforeseen events, and to bed down the operations in the UK, which WBHO had entered only 18 months ago.
In the UK there were enough opportunities for the Byrne Group, based in London, to return to profitability, while a healthy market in Manchester saw the newly acquired Russells produce a “solid” performance.
In the rest of Africa, building and mining activity in West Africa was subdued, but there was increased activity in Botswana and Zambia.
A foreign currency translation gain of R426m was realised during the year.
In July last year a 60 percent interest in Russells and a 31.7 percent interest in Russell Homes, both in the UK, was acquired for £32.6m and £3.25m respectively.
Edwin Construction in Gauteng experienced a difficult year as a large road project was delayed by a client and additional phases of an infrastructure project in the Free State was suspended.
Major office developments under construction in Gauteng during the year included developments at 92 Rivonia and 2 Pybus Sandton, a new head-office for Deloitte in Waterfall, the 144 Oxford Street development in Rosebank and new head-offices for Barloworld and Exxaro in Tshwane.