| Mon 27 Aug 2007, 17:35 | | WBO - WILSON BAYLY HOLMES - Reviewed financial sta |
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WBO
WBO
WBO - WILSON BAYLY HOLMES - Reviewed financial statements for the year ended 30
June 2007
WILSON BAYLY HOLMES
OVCON LIMITED
Building and civil engineering contractors
(Registration no. 1982/011014/06)
ISIN No: ZAE 000009932
Share code : WBO
Reviewed financial statementsfor the year ended 30 June 2007
Revenue up 40%
Operating profit up 59%
Adjusted headline earnings up 59%
CONDENSED INCOME STATEMENT
% Reviewed Audited
increase 2007 2006
R`000 R`000
Revenue 40,3 8 127 793 5 795 118
Operating profit 58,6 415 877 262 153
Fair value adjustment to concession 5 689 18 130
investment
Share-based payments expense (34 610) (314)
Impairment of goodwill (10 731) (4 928)
Profit before net finance income 376 225 275 041
Net finance income 55 399 22 385
Profit before associate income 431 624 297 426
Income from associates 14 679 7 188
Profit before taxation 446 303 304 614
Taxation (127 999) (75 343)
Net profit 38,8 318 304 229 271
Attributable to
Equity shareholders of the parent 39,7 276 180 197 668
Minority interests 33,3 42 124 31 603
318 304 229 271
Reconciliation of headline earnings
Net profit 276 180 197 668
Adjustments:
Impairment of goodwill 10 731 4 928
Profit on sale of property, plant (4 299) (7 437)
and equipment (net of tax)
Headline earnings 44,8 282 612 195 159
BEE share-based payments expense 28 391 -
Adjusted headline earnings 59,4 311 003 195 159
Ordinary shares
Issued (`000) 55 190 55 491
Weighted average number of shares 55 190 55 491
(`000)
Earnings per share (cents) 500,4 356,2
Headline earnings per share (cents) 512,1 351,7
Adjusted headline earnings per 563,5 351,7
share (cents)
Dividend declared per share (cents) 121,0 81,0
CONDENSED BALANCE SHEET
Reviewed Audited
2007 2006
R`000 R`000
ASSETS
Non-current assets 1 064 673 671 967
Property, plant and equipment 752 137 513 177
Goodwill 86 421 76 220
Investments 133 293 45 160
Other non-current assets 92 822 37 410
Current assets 3 183 655 2 336 322
Cash and cash equivalents 1 269 015 638 322
Other current assets 1 914 640 1 698 000
Total assets 4 248 328 3 008 289
EQUITY AND LIABILITIES
Total equity 1 081 404 762 778
Shareholders` equity 1 002 702 702 467
Minority interests 78 702 60 311
Non-current liabilities 117 232 191 332
Long-term financial liabilities 117 232 157 736
Other non-current liabilities - 33 596
Current liabilities 3 049 692 2 054 179
Bank overdrafts 564 12 319
Other current liabilities 3 049 128 2 041 860
Total equity and liabilities 4 248 328 3 008 289
Net tangible asset value per share 1 660 1 129
(cents)
CONDENSED CASH FLOW STATEMENT
Reviewed Audited
2007 2006
R`000 R`000
Cash generated from operations 1 157 400 239 965
Net finance income 55 399 22 385
Taxation paid (80 275) (55 218)
Dividend paid (59 400) (38 288)
Cash retained from operations 1 073 124 168 844
Net cash flow from investing activities (449 953) (191 026)
Property, plant and equipment (344 518) (200 373)
Acquisition of subsidiaries, minority (66 201) (50 805)
interests and associates
Other investing activities (39 234) 60 152
Net cash flow from financing activities 12 231 111 835
Net increase in cash and cash equivalents 635 402 89 653
Cash and cash equivalents at the 626 003 539 333
beginning of the year
Cash/(overdraft) acquired on acquisition 7 046 (2 983)
of subsidiaries
Cash and cash equivalents at the end of 1 268 451 626 003
the year
CONDENSED STATEMENT OF CHANGES IN EQUITY
Reviewed Audited
2007 2006
R`000 R`000
Total equity at the beginning of the year 762 778 562 774
Issue of shares 26 047 -
Net profit for the year 318 304 229 271
Translation of foreign entities 27 083 16 268
Share-based payments reserve 34 610 314
Movement in other reserves (3 349) 4 350
Dividend paid (59 400) (38 288)
Change in shareholding of subsidiaries (24 669) (11 911)
Total equity at the end of the year 1 081 404 762 778
SEGMENTAL INFORMATION
Reviewed Audited
2007 2006
R`000 R`000
Segment revenue
- Building and civil engineering 5 716 322 4 378 336
- Roads and earthworks 1 877 000 1 166 416
- Industrial 289 648 216 218
- Property and concessions 244 823 34 148
8 127 793 5 795 118
Segment result (operating profit)
- Building and civil engineering 222 453 151 963
- Roads and earthworks 76 128 71 392
- Industrial 65 083 33 377
- Property and concessions 52 213 5 421
415 877 262 153
COMMENTARY
Financial overview
We are pleased to report that the group has achieved excellent results with
adjusted headline earnings, before deducting the once-off expense of the share-
based BEE transaction, increasing from R195 million in 2006 to R311 million this
year, an increase of 59%.
The group`s turnover for the year increased by 40% to R8,1 billion (2006: R5,8
billion). Commensurate with the increase in turnover, attributable earnings
increased to R318 million (2006: R229 million) an improvement of 39%.
The operating margin of 5,1% (2006: 4,5%) achieved by the group is an indication
of the improved conditions in the construction industries of both the local and
African markets.
Cash balances at the year end were R1,27 billion (2006: R626 million), an
increase of R640 million. This increase is attributable to the cash holdings of
our Australian operation and cash held by our joint ventures.
Interest received more than doubled to R75 million (2006: R36 million) and
finance costs increased to R20 million (2006: R14 million).
Capital expenditure for the year amounted to R345 million (2006: R200 million)
and the group has approved capital expenditure of R376 million for the next
financial year.
A final dividend of 85 cents per share (2006: 54 cents) has been declared which,
together with the interim dividend of 36 cents per share, gives a total dividend
of 121 cents for the year (2006: 81 cents).
Building and Civil division
The division increased turnover by 31% from R4,4 billion to R5,7 billion in
2007. Operating profit increased by 47% to R222 million. All regions have
pleasing levels of work on hand.
The group is playing a major role in preparing the country for the Soccer World
Cup in 2010. We are partners in joint ventures which have been awarded contracts
for the construction of the King Shaka International Airport, as well as the
soccer stadia in Durban, Cape Town and Polokwane. Because of the early stages of
these contracts no profits have been recognised in these accounts.
In addition, we are engaged in major works at OR Tambo International Airport as
well as the construction of shopping centres, office and apartment blocks and
hospitals throughout the country. We have recently been awarded in joint venture
the One and Only Hotel in the Cape Town Waterfront.
There has been a marked improvement in the number of civil contracts on offer
and the group`s turnover in this sector has doubled over the year.
In Australia, turnover has been relatively flat compared to 2006, but Probuild
Constructions nevertheless increased profits by 11%. There are indications that
the market is improving in Melbourne and the order book is at a reasonable
level. Contracts awarded to our joint venture in Perth have also assisted in
absorbing surplus capacity. Basic Constructions, our civil engineering company
in Brisbane, experienced a busy year with turnover increasing by 22%. Our
activities in Sydney also showed significant growth and we have strengthened our
foothold in this large but competitive market.
Roads and Earthworks division
The division`s turnover of R1,9 billion was 61% higher than last year. Work for
the mining sector has increased, providing good opportunities for additional
work for the division. The division is also contracting in the DRC, Ghana,
Zambia and other SADC countries.
Operating profit increased by 7% from R71 million to R76 million but with
margins declining from 6,1% to 4%. The relatively new status of certain over-
border contracts presents many risks and the group adopts a cautious stance in
recognising profits until work is more advanced.
Property and Concessions
The operating profit from this division was essentially derived from two
developments, the Simbithi Eco Estate and the St Francis Links Golf Estate.
Sales have been satisfactory with an increase in interest in Simbithi since the
announcement of the King Shaka International Airport project.
This year the concession team has been busy with the gas and petroleum line
projects in Mozambique and the bid for the King Shaka International Airport
which was awarded in June this year. The fair value adjustments relate to our
stakes in the Bakwena N4 toll road and the Mozambican gas pipeline.
Industrial
WBHO Industrial Holdings (Pty) Limited which supplies steel to the construction
and mining industries has increased its turnover by 34% to R290 million. The
group is operating at very high levels and we commence the new financial year
with a satisfactory order book.
Black economic empowerment
As mentioned in our interim report, the group successfully completed its black
economic empowerment transaction in October last year. This initiative resulted
in 15% of the company`s shareholding being held by Akani Investment Holdings, an
SPV created for this purpose. Shares were allocated to our three black partners
and approximately 1 300 employees. At the AGM in October 2006 our three black
partners were appointed to the board as independent non-executive directors.
Prospects
The group`s outlook for the construction industry remains positive with
prospects for new work more likely to arise in the civil engineering sector than
in the building sector. We believe we are well placed to benefit from this shift
in the industry.
We start the 2008 financial year with an order book of R10,6 billion (2006: R6,1
billion). The nature of our order book has changed with a greater number of
large contracts spread over longer time periods.
The group is fortunate, within an environment of skills shortages, to have a
very loyal and stable workforce. We continue to provide comprehensive training
both in-house and externally to employees at all levels for their benefit and
that of the group. Succession planning is high on our agenda to provide growth
opportunities for our talented team and to ensure sustainability for WBHO.
Accounting policy and consistency
The condensed consolidated financial statements have been prepared and presented
in accordance with IAS 34, Interim Financial Reporting, and Schedule 4 of the
South African Companies Act 1973, as amended. The principal accounting policies
used in the preparation of the reviewed results for the year ended 30 June 2007
are consistent with those applied in the previous financial year and comply with
International Financial Reporting Standards (IFRS).
IFRS 2, "Share-based payments" has been applied to account for the cost of the
shares issued to our black partners and the group`s employees. The cost of R34
million arising from these issues has been charged to the income statement.
The group makes estimates and assumptions concerning the future, particularly in
regard to construction profit recognition, provisions, arbitrations, claims and
the fair values of certain assets. The resulting accounting estimates can, by
definition, only approximate the actual results. Estimates and judgments are
based on historical experience and other factors, including expectations of
future events which are believed to be reasonable at that time.
These results have been reviewed by the independent external auditors BDO
Spencer Steward (Jhb) Inc. and their review opinion is available for inspection
at the registered office.
Dividend declaration
Notice is hereby given that a final dividend of 85 cents per share in respect of
the year ended 30 June 2007 has been declared payable to all shareholders
recorded in the register on Friday, 19 October 2007, the record date. The last
day to trade cum-dividend will be Friday, 12 October 2007 and the shares will
trade ex-dividend on Monday, 15 October 2007. Payment will be made on Monday,
22 October 2007.
Share certificates may not be dematerialised or rematerialised between Monday,
15 October 2007 and Friday, 19 October 2007, both dates inclusive.
For and on behalf of the board
MS Wylie NS Maziya
Chairman Director
24 August 2007
Date: 27/08/2007 17:35:57 Produced by the JSE SENS Department.
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