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June 2001
Wilson Bayly Holmes - Ovcon Limited
(Registration number 1982/011014/06)
ISIN No. ZAE000009932
Share code : WBO
Audited Results for the Year ended 30 June 2001
* Turnover up 30%
* EBITA up 23.5%
* Headline Earnings up 28.5%
ABRIDGED GROUP INCOME STATEMENT
% Year to Year to
increase/ 30 June 2001 30 June 2000
(decrease) R'000 R'000
Contract revenue 29.9 1 701 182 1 309 550
Operating income
before depreciation
and amortisation 23.5 96 951 78 510
-Depreciation 30 680 24 761
-Amortisation and
goodwill 11 271 -
Operating income 2.3 55 000 53 749
Investment income 13.6 16 858 14 844
Income before
interest 4.8 71 858 68 593
Interest paid 83.4 2 102 1 146
Income before
taxation 3.4 69 756 67 447
Taxation 33.9 24 624 18 397
Income after
taxation (8.0) 45 132 49 050
Associate companies'
earnings 6 351 (230)
Attributable income 5.5 51 483 48 820
Add back goodwill
amortisation 11 271 -
Headline earnings 28.5 62 754 48 820
Shares in issue
(000's) 55 491 55 491
Earnings per share
(cents) 5.7 93 88
Headline Earnings per
share (cents) 28.5 113 88
ABRIDGED GROUP BALANCE SHEET
30 June 2001 30 June 2000
R'000 R'000
ASSETS
Non-current assets 333 035 162 180
Property, plant and equipment 176 125 121 364
Investments in associates 103 926 35 398
Investments and loans 1 283 5 418
Goodwill 51 701 -
Current assets 619 184 475 549
Inventories 18 428 16 637
Contracts in progress 337 312 185 286
Accounts receivable 54 597 58 550
Bank balances 208 847 215 076
Total assets 952 219 637 729
EQUITY AND LIABILITIES
Ordinary share capital and
reserves 255 203 207 464
Non-current liabilities 71 629 50 356
Interest bearing debt 8 804 434
Deferred tax 62 825 49 922
Current liabilities 625 387 379 909
Short-term loans 8 626 758
Accounts payable 594 894 368 363
Taxation 21 867 10 788
Total equity and liabilities 952 219 637 729
Net tangible asset value
per share (cents) 367 374
ABRIDGED GROUP CASH FLOW STATEMENT
Year to Year to
30 June 2001 30 June 2001
R'000 R'000
Cash flow from operating
activities
Cash receipts from customers 1 717 006 1 297 883
Cash paid to suppliers and
employees (1 683 679) (1 175 815)
Cash generated from operations 33 327 122 068
Investment income 16 858 14 844
Financing costs (2 102) (1 146)
Taxation (642) (12 622)
Repayment of share premium (14 428) (11 654)
Net cash flow from operating
activities 33 013 111 490
Cash flow from investing
activities
Change in investing and loans 4 135 (1 184)
Disposal of subsidiary - 6 075
Investment in associates (65 109) (9 784)
Purchase of fixed assets (net) (45 999) (22 854)
Cash flow after investing
activities (73 960) 83 743
Cash flow from financing
activities
Change in borrowings (3 422) (6 245)
Change in cash and cash
equivalents (77 382) 77 498
Cash and cash equivalents
at beginning of year 215 076 139 811
Cash flow on acquisitions of
subsidiaries 71 153 (2 233)
Cash and cash equivalents
at end of year 208 847 215 076
NOTES AND ADDITIONAL INFORMATION
30 JUNE 30 JUNE
2001 2000
R'000 R'000
1. Segmental results
Turnover
Local 1 226 046 997 965
International 475 136 311 585
1 701 182 1 309 550
Operating income before goodwill
amortisation
Local 48 748 28 342
International 17 523 25 407
66 271 53 749
2. Contingent liabilities
Guarantees issued 362 392 210 610
3. Continuity
These results are based on the same accounting policies and methods of
computation as those used in preparing the annual financial statements at 30
June 2000.
STATEMENT OF CHANGES IN EQUITY
Year to Year to
30 June 2001 30 June 2000
R'000 R'000
Capital and reserves at start
of period 207 464 164 479
Retained income for the year 51 483 48 820
Changes in foreign currency
reserve 10 684 (1 395)
Dividends - (4 440)
Share premium repayment (14 428) -
Capital and reserves at the end
of period 255 203 207 464
COMMENTS
Financial review
We are pleased to announce that the company has once again produced
commendable results, making this the ninth consecutive year of increased
earnings. Headline earnings increased by 28.5% to R62.75 million on an
increase in turnover of 30%. Headline earnings per share have grown from 88
per share to 113 cents per share. Return on shareholders' average equity
using headline earnings was 27% compared to 26% last year. Net tangible
asset value per share decreased from 374 cents to 367 cents largely due to
the purchase of subsidiaries. Capital distributions from the company's
share premium account paid and proposed for the financial year are the
equivalent of 30 cents per share (2000:16 cents plus dividend of 8 cents).
The amortisation of goodwill relates to the acquisitions of Stocks Civils
and MacDonald Construction in South Africa and Probuild Constructions in
Australia. The future economic benefits arising from the acquisition of the
South African companies are expected to be consumed over a period of three
years and that of the Australian company over a period of ten years.
Despite the cost of recent acquisitions and the increased working capital
requirements of civil and overborder contracts our bank and cash balances
have shown only a slight decrease of R6 million to give a year-end balance
of R209 million. The balance sheet remains strong with interest bearing
debt representing 7% of shareholders' funds.
The company also improved its position in the Business Report Annual Growth
Awards in 2001. Out of all the companies listed on the JSE, we achieved 4th
place in growth in earnings per share and 5th place in growth in turnover
over the last five years.
A shift in the market
During the last six months the South African construction industry
experienced a significant shift in its markets. The civil engineering
industry which has been in the doldrums for a number of years became very
active, largely triggered by increases in the prices of the platinum group
metals and other base minerals. At the same time the volume of work
available in the building industry declined and bids or projects,
particulary the larger ones, became fiercely competitive. There are
significant differences in the execution of civils contacts and building
contracts and because of our size and the versality of our workforce we were
able to adapt rapidly to the changing conditions.
Roads and earthworks division surpasses expectations
A highlight of the year has been the performance of our roads and earthworks
division which once again achieved excellent results on a substantially
increased turnover. Financial closure on the N4 West Platinum tollroad
contract has been finally achieved and the initial construction work on this
R1,9 billion contract has started.
Acquisitions
During the year we acquired a strategic stake in Probuild Constructions
(Aust) Pty Limited a leading building company in Victoria, Australia. The
acquisition gives the group a foothold in Australia and the geographical
diversification diminishes the cyclical risk and the dependency on single
currency earnings. The company has a full order book and we expect it to
exceed the forecasts made at the time of acquisition.
The acquisition of Stocks Civil Engineering during the year has provided
additional resources for our roads and earthworks division as well as
enabling us to increase our market share of the civil sector.
Macdonald Construction (Pty)Ltd, a building company operating from Port
Elizabeth was also acquired during the year. This acquisition complements
our well-established civils arm in the Eastern Cape.
Further penetration into Africa
During the year we further extended our contracting boundaries and are now
working in Tanzania and have started a large pharmaceutical facility
contract in Ethiopia. The roads and earthworks division has been
particularly successful in gaining overborder work and is using this
experience to move further and further a field. The contribution from work
carried out beyond the borders of South Africa represents 28% of this year's
turnover.
Work levels increasing
Whilst building contracts remained the major contributor to turnover for the
year the company has gained a significant number of contracts for work on
platinum, diamond and base mineral mines throughout South Africa and in
certain adjacent territories. We have also been awarded recently a number
of major road contracts in Botswana and Mozambique and the size of the
Ngwenya highway contract in Swaziland has increased substantially. A
further notable award was the contract for the construction of the
International Conventional Centre in Cape Town worth R400 million. The value
of the group's order book is R1,95 billion compared to R1,2 billion a year
ago.
Prospects
We believe that there are good prospects of maintaining the order book at
its present level but the increasingly competitive conditions could impact
upon margins. The introduction of residence based taxation next year will
also increase the cost of contracting overborder. We nevertheless believe
that, barring unforeseen circumstances the company should again achieve
increased headline earnings in real terms next year.
Distribution of share premium in lieu of a final dividend
Subject to the passing of certain ordinary resolutions at a general meeting
to be held on 3 October 2001 the company will repay to shareholders
registered in its books on Friday 26 October 2001 the sum of R11 098 100
from its share premium account ("the distribution"); the equivalent of 20
cents per ordinary share (2000 : 16 cents).
The last day to trade "CUM" the distribution in order to participate in the
distribution will be Friday, 19 October 2001. The shares of Wilson Bayly
Holmes Ovcon Limited will commence trading "EX" the distribution on Monday
22 October 2001, and the record date will be Friday 26 October 2001. Payment
will be made on Monday, 29 October 2001. A circular giving formal notice of
the meeting has been posted to shareholders. Share certificates may not be
dematerialised between Monday 15 October 2001 and Friday 26 October 2001,
both days inclusive.
On behalf of the board
B G HOLMES A J MACKENZIE
Chairman Director
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