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Sep 01, 2008

WBHO eyes growth as earnings more than double

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New construction work in the energy, infrastructure and mining sectors were seen as growth areas for building and civil engineering contractor Wilson Bayly Holmes-Ovcon (WBHO) for the 2009 financial year.

The group, headed by chairperson Mike Wylie, said in a statement to shareholders on Monday that it was well-positioned to participate in this growth and that it had the capacity to play a significant role in South Africa's infrastructural rollout.

"We believe we are well placed to produce another year of real growth while maintaining our profit margins. However, it is unlikely that we will achieve the same rate of growth as accomplished this financial year," Wylie commented in the statement.

The contractor on Monday reported a 146% increase in headline earnings to R694-million for the year ended June 30, 2008, compared with R283-million the year before.

Earnings a share had increased by 160% to 1 303c a share for the year ended June 2008, compared with 500c the year before, while the group's net profit had increased by 140% to R763-million for the year, compared with R318-million in 2007.

Further, the group's turnover for the year ended June 30, had increased by 34% to R10,9-billion, compared with R8,1-billion in 2007.

WBHO's operating margin had improved to 8,3%, compared with 5,1% the year before, which the group said indicated the improved conditions in the construction industry locally, as well as in the African markets and in certain sections of the Australian market.

The contractor had also increased its order book to R18,3-billion, as at July 1, 2008, compared with R10,6-billion as at July 1, 2007.

Meanwhile, Wylie noted that the group would also continue to search for opportunities outside of South Africa to facilitate further growth opportunities for the group.

DIVISIONAL HIGHLIGHTS

WBHO reported that all the regions in which its Building & Civil division was operating had "pleasing" levels of work on hand, with the group continuing to play a major role in South Africa's preparations for the 2010 FIFA World Cup.

The group was a partner in a number of joint-venture construction projects, including the new international airport at La Mercy in KwaZulu-Natal, the soccer stadiums in Durban, Cape Town and Polokwane, and the upgrade of the OR Tambo International Airport.

The contractor stated that there had been an increase in the number of civil contracts on its books, which resulted in a 37% increase in revenue to R7,8-billion for the year ended June 2008, compared with R5,7-billion the year before.

The Probuild business, operating in Australia, had mixed results, with results from Melbourne being excellent, while conditions in Sydney were more competitive.

However, the business had started the 2009 financial year with a large portion of its budgeted turnover secured and was expected to achieve significant increases in turnover and profit.

Further, in Perth, the group had a solid base of secured work with civil engineering associate CECK reporting increased turnover and profits, while Brisbane associate Basic Construction had also reported taking on a number of large projects throughout the year.

Meanwhile, the Roads & Earthworks division had achieved a 45% increase in revenue to R2,7-billion for the year ended June 2008, compared with R1,9-billion the year before.

WBHO reported that work in the mining sector had increased and that the group was heavily involved with infrastructure work in the public and private arenas, which was providing the group with good opportunities for additional work for the division.

The division's order book for the 2009 financial year was "exceptionally strong" with more than 85% of its work secured.

Further, there was potential for a number of acquisitions that was currently under consideration within the Capital African Steel (CAS) business.

WBHO expected all the operating companies with CAS to produce strong profit growth during the 2009 financial year.

 


Edited by: Mariaan Webb
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