| Mon 30 Aug 2004, 17:29 | | WBHO BAYLY HOLMES - OVCON LIMITED - REVIEWED RESUL |
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WBHO BAYLY HOLMES - OVCON LIMITED - REVIEWED RESULTS FOR THE YEAR ENDED 30 JUNE
2004
WILSON BAYLY HOLMES - OVCON LIMITED
Building and Civil Engineering contractors
(Registration number 1982/011014/06)
ISIN: ZAE000009932
Share code: WBO
REVIEWED RESULTS FOR THE YEAR ENDED 30 JUNE 2004
Consistent performance
Operating income up 52,6%
Headline earnings up 17,5%
Dividends up 21,4%
Group Balance Sheet
Reviewed Audited
2004 2003
R`000 R`000
ASSETS
Non-current assets 431 565 375 472
Property, plant and equipment 266 553 234 302
Investment in associates 90 519 116 132
Investments 3 847 90
Loans 69 709 13 273
Goodwill 937 11 675
Current assets 1 036 782 990 582
Inventories 26 395 28 748
Contracts in progress 531 734 562 645
Accounts receivable 141 225 90 741
Bank balances 337 428 308 448
Total assets 1 468 347 1 366 054
EQUITY AND LIABILITIES
Ordinary share capital and reserves 396 642 360 376
Non-current liabilities 75 404 52 302
Interest bearing debt 2 813 15 856
Deferred tax 72 591 36 446
Current liabilities 996 301 953 376
Interest bearing debt 12 594 20 043
Accounts payable and provisions 921 185 835 348
Bank overdrafts 14 006 22 107
Taxation 48 516 75 878
Total equity and liabilities 1 468 347 1 366 054
Net tangible asset value per share (cents) 713 628
Group Income Statement
Year to Year to
30 June 30 June
Reviewed Audited
2004 % increase/ 2003
R`000 (decrease) R`000
Gross revenue 2 510 717 4,2 2 408 399
Operating income before
depreciation and amortisation 161 657 16,5 138 773
Less: Depreciation 44 196 (4,4) 46 227
Goodwill amortisation 20 482 (29,3) 28 975
Operating income 96 979 52,6 63 571
Investment income 15 559 (28,8) 21 852
Income before interest 112 538 31,7 85 423
Finance charges 4 001 (7,2) 4 311
Income before taxation 108 537 33,8 81 112
Taxation 30 393 8,9 27 921
Income after taxation 78 144 46,9 53 191
Income from associates 20 271 7,7 18 816
Income attributable to
shareholders 98 415 36,7 72 007
Reconciliation of headline
earnings
Income attributable
to shareholders 98 415 72 007
Add back
Goodwill amortisation 20 482 28 975
Profit on sale of fixed assets (3 123) (2 409)
Headline earnings 115 774 17,5 98 573
Shares in issue (000`s) 55 491 55 491
Earnings per share (cents) 177,4 36,7 129,8
Headline earnings per
share (cents) 208,6 17,5 177,6
Dividends per share (cents) 51,0 21,4 42,0
Group Statement of Changes in Equity
Reviewed Audited
2004 2003
R`000 R`000
Capital and reserves at start of year 360 376 335 101
Retained income for year 98 415 72 007
Changes in foreign translation reserve (37 178) (25 646)
Repayment of share premium - (21 086)
Dividend paid (24 971) -
Capital and reserves at end of year 396 642 360 376
Group Segment Information
Reviewed Audited
2004 2003
R`000 R`000
Revenue
- Local 2 002 046 1 644 596
- International 508 671 763 803
2 510 717 2 408 399
Operating income before goodwill amortisation
- Local 83 198 86 362
- International 34 263 6 184
117 461 92 546
Group Cash Flow Statement
Reviewed Audited
2004 2003
R`000 R`000
Cash flow from operating activities
Operating profit before working capital
changes 131 920 109 685
Working capital changes 68 617 (49 890)
Cash generated from operations 200 537 59 795
Investment income 15 559 21 852
Financing costs (4 001) (4 311)
Taxation (21 610) (8 174)
Repayment of share premium - (21 086)
Dividend paid (24 971) -
Net cash inflow/(outflow) from
operating activities 165 514 48 076
Cash flow from investing activities
Change in investments (3 757) (4 596)
Change in loans (56 436) (69)
Acquisition of subsidiary (1 376) (21 140)
Change in associates 25 613 (8 230)
Purchase of equipment (87 290) (59 706)
Proceeds from sale of fixed assets 15 305 8 862
Net cash inflow/(outflow) from investing
activities (107 941) (84 879)
Cash flow from financing activities
Change in net debt (20 492) 22 174
Net cash inflow/(outflow) from financing
activities (20 492) 22 174
Net increase/(decrease) in cash and
cash equivalents 37 081 (14 629)
Cash and cash equivalents at
beginning of year 286 341 291 489
Cash acquired on acquisition of subsidiary - 9 481
Cash and cash equivalents at end of year 323 422 286 341
Comments
Financial review
We are pleased to report that the group has once again achieved a satisfactory
result with headline earnings per share increasing by 17,5%.
The current increase in earnings has been achieved despite a moderate growth in
turnover of 4,2%. This follows the same pattern as last year when there was a
healthy increase in turnover from building contracts which was off-set by a
decline in turnover on roads and earthworks contracts. In addition, the volume
of foreign work, mostly road contracts, also declined. Fortunately, the foreign
work has been more profitable and the proportion of operating profit from this
source was much higher than last year.
The strength of the Rand has had some upside for us. The real interest rate
differential, whilst bolstering the Rand, has been sufficiently low in South
African terms to stimulate retail demand. In turn, this has triggered investment
in new shopping centres and the refurbishment of other centres and this has been
a major source of work for the company during the year. On the other hand, we
have a number of US dollar denominated contracts whose results would have been
better had the Rand been weaker.
Cash flows during the year recorded an increase of R37 million after capital
expenditure of R87 million, an increase of R27 million compared to 2003.
Roads and Earthworks division - Results much improved
A number of large contracts were either completed during the year or are in the
final stages. Having completed the R360 million road contract in Swaziland from
the Oshoek border to the outskirts of Mbabane we have just been advised that we
have been awarded the contract for the construction of the next section of this
highway which will by-pass Mbabane. The contract is worth R500 million and will
take three years to complete.
Our portion of the work on the N4 Platinum toll road has been completed although
there is still some work to be carried out by our joint venture partners. We
have recently been awarded a R200 million contract for the upgrade of a
provincial road in the Eastern Cape and are also one of the joint venture
partners constructing the R550 million Berg River dam.
Work continues on the Buhemba gold mine contract in Tanzania. The remoteness of
the site has been a challenge and the strength of the Rand has also impacted
upon its earnings.
Our Lesotho road contract was completed and handed over during the year.
Unfortunately, we were unable to reach agreement regarding the settlement of
certain claims and it is likely that these will be decided by arbitration. No
reliance has been made on these claims in arriving at the results shown.
The division has not been as busy in Botswana as in previous years but there are
good prospects of increasing our order book in this country.
The group has been awarded a number of larger contracts in Mocambique and now
has work on hand worth over R500 million in this country. The largest is the
contract for the upgrading of the EN1 Highway between Zandamela and Maxixe worth
R200 million.
Building contracts continue to perform well
The building division achieved another successful year with steady growth in
both turnover and profits. The flow of work has been reasonable but conditions
remain competitive, particularly on the larger projects.
Another notable feature has been the increase in high-density residential
projects, especially in the coastal areas. The value of work being carried out
at the Oubaai golf estate continues to grow and we are also engaged on a major
residential project at Simbithi Eco-Estate on the North Coast. Apartments are
also under construction in Clifton and the Strand in Cape Town. The Eastern Cape
division has also gained its fair share of residential building work.
The construction and upgrading of shopping centres continues to be a major
source of work and we were engaged on 11 projects of this nature during the
year, two of the largest being the Clearwater Mall near Roodepoort worth R300
million and the Capegate regional centre in Cape Town worth R260 million.
Our subsidiary company, Suncon (Pty) Limited, in Botswana has grown rapidly
during the year on the back of a building boom in Gaborone. However, this is
unlikely to be sustained and we are expecting a quieter year in 2005.
Property developments
The group has had a fairly active year insofar as property developments are
concerned. Our stake in the Rustenburg Mall was sold during the year at a
reasonable profit and we have exited from our investment in the Gwen Lane
property in Sandton at a loss. We have a 20% stake in the first phase of the
Simbithi Eco-Estate in Ballito which is almost sold out and have the option to
increase our stake in the future phases. We also have a 50% stake in St Francis
Links, a golf estate to be built close to St Francis Bay.
Probuild results pleasing
Despite a downturn in the residential property sector in Melbourne, our
Australian associate, Probuild Constructions, again achieved increases in
turnover and profit in both Australian dollar and Rand terms. A branch of the
company has been successfully established in Sydney and an interest was acquired
in a small civil engineering contracting company in Brisbane.
Prospects
We enter the new financial year with a degree of cautious optimism. Our order
book is at a high level of R2,75 billion (2003: R1,80 billion) and is of a
reasonably good quality but we do operate in an industry where circumstances can
change rapidly. Barring any unforeseen circumstances we should again achieve
increased earnings per share in real terms next year.
Accounting policy and consistency
The accounting policies and methods of computation as disclosed in the group`s
financial statements for this year are consistent with those applied in 2003 and
comply with the South African Statements of Generally Accepted Accounting
Practice.
These results have been reviewed by our auditors, BDO Spencer Steward
(Johannesburg) Inc. and their unqualified review opinion is available for
inspection at the company`s registered office
Dividend declaration
Notice is hereby given that a final dividend of 34 cents per share in respect of
the year ended 30 June 2004 has been declared payable to all shareholders
recorded in the register of the company on Friday, 22 October 2004, the record
date. The last day to trade cum-dividend will be Friday, 15 October 2004 and the
shares will trade ex-dividend on Monday, 18 October 2004. Payment of the
dividend will be made on Monday, 25 October 2004.
Share certificates may not be dematerialised or rematerialised between Monday,
18 October 2004 and Friday, 22 October 2004, both dates inclusive.
On behalf of the board
M S Wylie
Chairman
A J MacKenzie
Director
30 August 2004
