JOHANNESBURG - JSE-LISTED Wilson Bayly Holmes-Ovcon (WBHO) yesterday said that it had decided to focus its strategy on the UK market as the country presented it with growth opportunities.
The group said the UK construction market has seen solid growth in recent years, particularly in London and the north west. “The construction environment is similar to that of Australia with the main contractor fulfilling a construction management role with the different packages of projects being let to subcontractors, and as such was identified as offering the most potential at acceptable levels of risk,” the group said.
In June, WBHO announced that it had acquired a 40% interest in the Byrne Group for a consideration of £12million (R201m). The company specialises in concrete sub- and superstructure packages while high-quality new build refurbishment and fit-out projects are delivered through Ellmer Construction. “Our investment into the group will provide insight and understanding of the dynamics prevalent within the industry as we cautiously enter this market,” the group said.
In the results for the year to end June, the group said it managed to post positive results despite low-growth, a volatile rand exchange rate and political events which hit South African business confidence. It said market sentiment in Australia was upbeat.
The group reported 4% increase in revenue to R31.9bn, up from R30.7bn as compared with last year, buoyed by strong growth from its local building divisions and an improved performance from the roads and earthworks division which resulted in 18percent growth in South Africa. Revenue from the rest of Africa declined 33percent, subdued by lower activity in Mozambique and Botswana, while Australia posted R18.6bn, which made 58percent of group revenue.
WBHO said the figure was largely in line with the comparative period of R18.1bn. It said construction materials revenue was R893m while inter-company sales remained flat. Headline earnings per share (Heps) fell 2.5percent from continuing operations to 1308cents a share.
The group declared a dividend of 475c a share, up from last year’s 448c. Izak van Niekerk, an investment analyst at Mergence Investment Managers, said the results were in line with the company’s recent trading statement.
“Today’s numbers are within the company’s guidance, which means it is in line with market expectations,” Van Niekerk said. “The Heps from continuing operations is down 2.5 percent and the number was affected by their socio-economic contribution arising from the settlement agreement signed with the government in October last year.”
Last year WBHO was one of seven construction companies that agreed to contribute a total of R1.5bn over the next 12 years towards a fund to develop skills in the sector and give black workers a bigger role. The firms were slapped with a fine of R1.4bn by the antitrust authorities in 2013 for collusion in tendering processes.
“Their reported financial performance is well ahead of recent numbers released by most other JSE-listed construction companies,” Van Niekerk said. WBHO shares rose 2.13percent on the JSE yesterday to close at R141.