| Mon 1 Sep 2008, 14:29 | | WBO - Wilson Bayly Holmes - Ovcon - Reviewed Financial Statements For The Year |
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WBO
WBO
WBO - Wilson Bayly Holmes - Ovcon - Reviewed Financial Statements For The Year
Ended 30 June 2008 and dividend declaration
WILSON BAYLY HOLMES - OVCON LIMITED
Building and civil engineering contractors
(Registration no. 1982/011014/06)
ISIN No: ZAE 000009932 Share code: WBO
REVIEWED FINANCIAL STATEMENTS for the year ended 30 June 2008
- Revenue up 34%
- Operating profit up 156%
- Headline earnings up 146%
Condensed Income Statement
% Reviewed Audited
increase June 2008 June 2007
R`000 R`000
Revenue 34 10 881 129 8 127 793
Operating profit before non- 118 904 828 415 877
trading items
Fair value adjustment to 7 248 5 689
concession investment
Profit on partial disposal of 93 408 -
subsidiary
Share-based payments expense (23 860) (34 610)
Impairment of goodwill (18 994) (10 731)
Operating profit 156 962 630 376 225
Share of (losses)/profits in (24 301) 14 679
associates
Investment income 162 744 72 230
Operating income 1 101 073 463 134
Finance costs (20 338) (16 831)
Profit before taxation 1 080 735 446 303
Taxation (318 211) (127 999)
Net profit 140 762 524 318 304
Attributable to
Equity shareholders of Wilson 159 716 169 276 180
Bayly Holmes-Ovcon Limited
Minority interests 46 355 42 124
762 524 318 304
Operating profit (%) 8,3 5,1
Reconciliation of headline
earnings
Net profit attributable to the 716 169 276 180
equity shareholders of the
holding company
Adjusted for:
Impairment of goodwill 18 994 10 731
Share of impairment of goodwill 58 109 -
arising within associate
Profit on partial disposal of (93 408) -
subsidiary
Profit from disposal of (5 634) (4 299)
property, plant and equipment
(net of tax)
Share of profit on disposal of (74) -
property, plant and equipment
arising within associate (net of
tax)
Headline earnings 146 694 156 282 612
Ordinary shares
Issued (`000) 66 000 66 000
Weighted average number of shares 54 956 55 190
(`000)
Diluted weighted average number 55 118 55 190
of shares (`000)
Earnings per share (cents) 160 1 303,2 500,4
Diluted earnings per share 1 299,3 500,4
(cents)
Headline earnings per share 147 1 263,1 512,1
(cents)
Diluted headline earnings per 1 259,4 512,1
share (cents)
Condensed Balance Sheet
Reviewed Audited
June 2008 June 2007
R`000 R`000
ASSETS
Non-current assets 1 594 384 1 124 971
Property, plant and equipment 1 041 071 752 137
Goodwill 98 600 86 421
Investments 318 877 133 293
Other non-current assets 135 836 153 120
Current assets 6 169 070 3 183 655
Cash and cash equivalents 2 781 520 1 269 015
Other current assets 3 387 550 1 914 640
Total assets 7 763 454 4 308 626
EQUITY AND LIABILITIES
Total equity 1 815 333 1 081 404
Shareholders` equity 1 731 904 1 002 702
Minority interests 83 429 78 702
Non-current liabilities 192 534 177 530
Long-term financial liabilities 142 630 117 232
Other non-current liabilities 49 904 60 298
Current liabilities 5 755 587 3 049 692
Bank overdrafts 4 597 564
Other current liabilities 5 750 990 3 049 128
Total equity and liabilities 7 763 454 4 308 626
Net tangible asset value per share (cents) 2 972 1 660
Condensed Cash Flow Statement
Reviewed Audited
2008 2007
R`000 R`000
Cash generated from operations 2 226 533 1 137 706
Investment income 162 744 72 230
Finance costs (20 338) (16 831)
Taxation paid (224 995) (80 275)
Dividend paid (88 110) (59 400)
Cash retained from operations 2 055 834 1 053 430
Net cash flow from investing activities (517 890) (423 213)
Purchase of property, plant and equipment (438 942) (344 518)
Acquisition of subsidiaries and minority (136 506) (59 155)
interests net of cash acquired
Proceeds from partial disposal of 41 742 -
subsidiary net of cash disposed
Proceeds on disposal of property, plant 23 917 23 538
and equipment
Other investing activities (8 101) (43 078)
Net cash flow from financing activities (29 472) 12 231
Issue of share capital - 26 047
Long-term financial liabilities (29 472) (13 816)
Net increase in cash and cash equivalents 1 508 472 642 448
Cash and cash equivalents at the beginning 1 268 451 626 003
of the year
Cash and cash equivalents at the end of the 2 776 923 1 268 451
year
Condensed Statement of Changes in Equity
Reviewed Audited
2008 2007
R`000 R`000
Total equity at the beginning of the year 1 002 702 702 467
Issue of shares - 26 047
Net profit for the year 716 169 276 180
Translation of foreign entities 81 964 27 083
Transfer to employee share scheme reserve 23 860 34 610
Movement in other reserves - (4 285)
Dividend paid (88 110) (59 400)
Movement in treasury shares (4 681) -
Total equity at the end of the year 1 731 904 1 002 702
Segmental Information
Reviewed Audited
2008 2007
R`000 R`000
Segment revenue
- Building and civil engineering 7 807 924 5 716 322
- Roads and earthworks 2 719 297 1 877 000
- Industrial 281 167 289 648
- Property and concessions 72 741 244 823
10 881 129 8 127 793
Segment result (operating profit before
non-trading items)
- Building and civil engineering 484 380 222 453
- Roads and earthworks 374 394 76 128
- Industrial 39 058 65 083
- Property and concessions 6 996 52 213
904 828 415 877
Secondary Segments
Reviewed Audited
2008 2007
R`000 R`000
Segment revenue
- Local 7 009 274 5 515 206
- International 3 871 855 2 612 587
10 881 129 8 127 793
Segment result (operating profit before
non-trading items)
- Local 521 894 303 519
- International 382 934 112 358
904 828 415 877
BASIS OF PREPARATION
The consolidated condensed financial statements have been prepared in accordance
with International Financial Reporting Standards ("IFRS"), IAS 34: Interim
Reporting, the South African Companies Act of 1973, as amended, and the JSE
Listings Requirements. The principal accounting policies used in the preparation
of the reviewed results for the year ended 30 June 2008 are consistent with
those applied for the previous year.
During the current year IFRS 7: Financial Instruments Disclosure and the
consequential amendments to IAS 1: Presentation of Financial Statements, which
are effective for annual reporting periods beginning on or after 1 January 2007,
were adopted. Restatement of comparatives was not necessary as these statements
deal with disclosure.
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.
ACQUISITIONS
On 1 July 2007 the group acquired a 100% interest in LET Construction (Pty)
Limited and a 70% interest in Insitu Pipelines (Pty) Limited. Simbithi Eco-
estate (Pty) Limited, which was previously proportionately consolidated, is now
consolidated at 100%, following the group acquiring the remaining 50% of the
issued share capital on 1 January 2008.
The fair values of the assets and liabilities of the
subsidiaries acquired are set out below:
R`000
Total assets 137 258
Total liabilities 104 205
Minority interest recognised on consolidation 4 351
Goodwill recognised on consolidation 32 898
Purchase price of acquisitions 58 766
The goodwill recognised consists of:
LET Construction (Pty) Limited 15 052
Insitu Pipelines (Pty) Limited 17 846
32 898
Through its Australian subsidiary Probuild Constructions Pty Limited
("Probuild"), the group acquired an additional 10% interest in Basic
Constructions Pty Limited. Consequently Probuild`s interest increased from 70%
to 80%. The effective interest of the group increased from 42% to 48%.
R`000
Goodwill recognised 3 199
Purchase price of additional 10% interest 9 495
Decrease in minority interests 6 296
On 1 July 2007 an additional R71 million was charged to the cost of the
investment of Capital Africa Steel (Pty) Limited ("CAS") upon CAS meeting the
performance criteria set out in the purchase agreement.
Restructuring of Capital Africa Steel (Pty) Limited
On 1 January 2008 Capital Africa Steel (Pty) Limited ("CAS") purchased 50% of
its issued share capital from the group in terms of a restructuring agreement.
The effect of the restructuring agreement reduced the interest of the group in
CAS to 50% with the result that for the six months to 30 June 2008 equity
accounting has been applied.
The fair values of assets and liabilities sold are as R`000
follows:
Total assets 194 273
Total liabilities 102 862
Profit on share buy-back 93 408
Total proceeds 184 819
Less:
Loan account created (116 875)
Cash balances disposed (26 202)
Cash effect of transaction 41 742
The transaction has had the effect of increasing investments in associates as
follows:
Cost of investment now classified as an associate 89 562
Non-cash portion of restructuring arrangement 116 875
Post balance sheet event
With effect from 1 July 2008 the group acquired a further 22% interest in
C.E.C.K Civil Construction Pty Limited ("C.E.C.K.") in Perth, Australia,
bringing to 67% the effective interest. The purchase consideration amounted to
R9 million. Equity accounting has been applied to C.E.C.K in the current
accounting period. With effect from 1 July 2008 C.E.C.K will be consolidated.
FINANCIAL OVERVIEW
We are pleased to report that the group has had an exceptional year with
headline earnings increasing from R283 million in 2007 to R694 million this
year, an increase of 146%. Earnings per share increased by 160% to 1 303 cents
compared to 500 cents in 2007.
The group`s turnover for the year increased by 34% to R10,9 billion (2007: R8,1
billion). Net profit increased to R763 million (2007: R318 million), an
improvement of 140%.
The operating margin of 8,3% (2007: 5,1%) achieved by the group is an indication
of the improved conditions in the construction industries of the local and
African markets and in certain sections of the Australian market.
The share of losses in associates of R24 million (2007: profit of R14,7 million)
arose mainly as a result of our share of the impairment of goodwill of R58
million in two of the subsidiaries acquired by CAS, this has been added back for
the purposes of headline earnings. The group made a gain of R93 million from the
restructuring of CAS.
Cash balances increased by R1,5 billion to R2,8 billion (2007: R1,3 billion).
Higher interest rates assisted the strong cash balances to increase our
investment income to R163 million (2007: R72 million). Capital expenditure for
the year amounted to R439 million (2007: R345 million). The group has approved
capital expenditure of R466 million for the next financial year.
Total guarantees given to financial institutions on behalf of subsidiary
companies amounted to R3,4 billion as at 30 June 2008 (2007: R2,5 billion). The
directors believe any exposure to loss is unlikely.
A final dividend of 182 cents per share (2007: 80 cents) has been declared
which, together with the interim dividend of 60 cents per share, gives a total
dividend of 242 cents for the year (2007: 121 cents), an increase of 100%.
BUILDING & CIVIL DIVISION
The division increased revenue by 37% from R5,7 billion to R7,8 billion in 2008.
Operating profit increased by 118% to R484 million (2008: R222 million). All
regions have pleasing levels of work on hand.
The group continues to play a major role in preparing the country for the Soccer
World Cup in 2010. We are partners in joint ventures for the construction of the
King Shaka International Airport, as well as the soccer stadia in Durban, Cape
Town and Polokwane. In addition, we are engaged in major works at OR Tambo
International Airport. We are involved in a number of retail and commercial
buildings, apartments, hotels, and hospitals throughout the country.
There has been an increase in the number of civil contracts that we have on our
books and as a result revenue in this sector has nearly doubled compared to the
last financial year and at the same time solid operating margins were achieved.
In Australia, Probuild increased profits by 14% in Australian dollar terms. The
results in Melbourne have been excellent, whilst conditions in Sydney remain
much more competitive with margins being eroded. We have a solid base of secured
work in Perth. C.E.C.K. the group`s Perth-based civil engineering associate
increased both turnover and profit for the year. Basic Constructions in Brisbane
experienced a busy year taking on a number of larger contracts. Probuild starts
the new financial year with the majority of its budgeted turnover secured and is
poised to achieve significant increases in both turnover and profit in 2009.
ROADS & EARTHWORKS DIVISION
The division`s revenue of R2,7 billion (2007: R1,9 billion) was 45% higher than
last year. Work for the mining sector has increased and we are heavily involved
with infrastructure work both in the public and private arenas which is
providing us with good opportunities for additional work for the division. We
are in a joint venture which was recently awarded a section of the Gauteng
Freeway Improvement programme worth R1,9 billion. In addition we are busy
constructing three international airports; King Shaka in Durban, OR Tambo in
Johannesburg and Sir Seretse Khama in Gaborone. The division is also contracting
in the DRC, Ghana, Zambia and other SADC countries.
Operating profit increased significantly this year to R374 million (2007: R76
million) and our operating margin improved to 13,8% (2007: 4,1%). The improved
performance is a function of our extended operations in African countries as
well as our increased confidence in the success of these ventures. Our local
subsidiaries and operations have also benefited from the South African
infrastructure investment programme.
Our newly acquired subsidiary, Insitu Pipelines has produced good profits and
has provided the division with access to another construction niche market.
L.E.T, acquired last year, has been successfully absorbed into our business.
The division`s order book for the ensuing financial year is exceptionally strong
with more than 85% of our work secured and we look forward to another successful
year.
PROPERTY AND CONCESSIONS
Sales in our two property developments have been slow this year as a result of
the increase in interest rates, rising prices and the tightening of the economy
and this has resulted in a decline in profit.
Concessions remain quiet with fair value adjustments making a minor contribution
to these results.
INDUSTRIAL DIVISION
This year the division showed a 13,9% operating margin for the six months to
December 2007. Thereafter our shareholding in CAS was reduced to 50% and the
results have been accounted for as an associate.
This year WBHO entered into a partnership with Brait South Africa Limited in
order to expand its industrial base by using CAS as the vehicle. The transaction
became effective on 15 January 2008. WBHO retains 50% of the issued capital of
CAS, Brait funds 40% and the founders, through Caracal (Pty) Limited, 10%.
In terms of the restructuring agreement, CAS acquired two companies operating in
the steel industry, Symo Corporation and Steel Mecca. CAS also entered into a
partnership with the Seven Star Group of China to establish a pipe factory in
Maputo, Mozambique. An interest was acquired in the 3Q Concrete Group, a
manufacturer of ready-mix concrete. There are a number of other potential
acquisitions currently under consideration.
All the operating companies within CAS produced strong profit growth during the
year and this segment is budgeting for increased turnover and profits for the
2009 financial year.
BLACK ECONOMIC EMPOWERMENT
We have completed the second year of our broad-based black empowerment
initiative. The special purpose vehicle for carrying out our BEE initiative is
Akani Investment Holdings (Pty) Limited whereby one Akani share is linked to one
WBHO share. This year we awarded Akani shares to a further 119 of our employees,
to bring the number of beneficiaries to 1 710. In July 2008, in terms of our BEE
agreement, our black partners were sold a further 550 000 shares.
Good progress has also been made in all of the other six elements of both the
Construction and generic Dti scorecards.
PROSPECTS
We start the 2009 financial year with an order book of R18,3 billion (2007:
R10,6 billion). Our outlook for the South African construction industry remains
positive with prospects for new work in the energy, infrastructural and mining
sectors. The group is well positioned to participate in this growth and has the
capacity to play a significant role in South Africa`s infrastructural roll-out.
We continue to search for opportunities outside the country. We believe we are
well placed to produce another year of real growth whilst maintaining our profit
margins. However, it is unlikely that we will achieve the same rate of growth as
accomplished this financial year.
APPRECIATION
We would like to thank all our employees who have worked tirelessly to enable
the group to meet its obligations in contributing to the growth of Southern
African infrastructure. We are also grateful to all the families who have stood
by our dedicated staff during the year. We also thank our clients both public
and private for the opportunities they provide.
DIVIDEND DECLARATION
Notice is hereby given that a final dividend of 182 cents per share in respect
of the year ended 30 June 2008 has been declared payable to all shareholders
recorded in the register on Friday, 17 October 2008, the record date. The last
day to trade cum-dividend will be Friday, 10 October 2008 and the shares will
trade ex-dividend on Monday, 13 October 2008. Payment will be made on Monday, 20
October 2008.
Share certificates may not be dematerialised or rematerialised between Monday,
13 October 2008 and Friday, 17 October 2008, both dates inclusive.
By order of the board
MS Wylie NS Maziya
Chairman Director
www.wbho.co.za
1 September 2008
Sponsor: Investec Bank Limited
Date: 01/09/2008 14:29:01 Produced by the JSE SENS Department.
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