Construction Group Wilson Bayly Holmes Ovcon (WBHO) saw a 43.4% increase in revenue to R12-billion for the six months to December 31, 2012, with its Australia business achieving a 61% increase in revenue, boosted by increased activity in the high-rise residential market.

The effect of the competitive conditions in the South African and Australian markets and the effect of increased revenue in Australia were evident in the overall reduction of the group’s operating margin from 5.5% to 4.7%.

Operating profit before nontrading items increased by 21.7% to R566-million following the rise in revenue.

Earnings a share grew by 3.8% to 684c a share, up from 659c a share in the 2011 corresponding period and headline earnings a share increased by 16.3% to 737c a share, an improvement from 633c a share in the previous equivalent period.

Headline earnings a share had been adjusted for WBHO’s share of Capital Africa Steel’s impairment of investment in Alert Steel of R15-million, Renniks’ goodwill impairment of R9-million and the R5-million impairment of a minor investment in a hotel in Sandton.

Cash generated from operations amounted to R638-million, compared with R315-million in the comparative period. The group’s capital expenditure (capex) amounted to R345-million against an authorised budget of R733-million for the financial year to end June 30, 2013.

Meanwhile, the company’s order book stood at R22.8-billion at the end of December 2012, marking an improvement from R20.9-billion in June 2012. The order book comprised 55% foreign projects, with the balance being South African.

BUILDING AND CIVIL ENGINEERING

Despite the engineering market remaining depressed with uncertainty in the mining sector and little government spend, WBHO said it had experienced increased activity over the past six months, particularly in the building sector.

Although pressure on margins remained, the building and engineering division’s revenue increased by 21% to R3.2-billion with an operating profit of R139-million.

WBHO further stated that work on constructing Xstrata Coal’s Tweefontein ferrochrome mining complex, in Mpumalanga, had started during the reporting period.

ROADS AND EARTHWORKS

The company indicated that its roads and earthworks division had maintained its momentum through focusing on the resources sector in Africa, with revenue increasing by 40% to R2.7-billion and operating profit growing by 25% to R288-million.

A settlement agreement on the troubled Free State roads contracts had been signed with the Free State provincial government. In terms of the agreement, all outstanding payments should be paid by March 30, 2014.

WBHO highlighted that the turnaround strategy for its Roadspan subsidiary was completed and that the business unit performed satisfactorily. Additional storage capacity had been introduced to manage the risk of the ongoing bitumen shortages.

Meanwhile, WBHO Pipelines had, in a joint venture (JV) with a specialist French piping company, successfully completed and commissioned the 160 km, 26 inch gas line from Sasolburg to Secunda for energy and chemicals group Sasol.

Work had also started on the R1.4-billion north–south carrier pipeline for the Botswana government's Department of Water Affairs, which was being carried out in JV with Botswana-based international contracting company Consolidated Contractors Company.

COMPETITION COMMISSION

WBHO has continued to cooperate with the Competition Commission after its invitation to the construction industry.

“We have submitted the calculation of the expected fine quantum and await a response from the commission. Based on our submission to the Commission, our best estimate of the settlement amount provided for in the prior period has not changed…We hope to conclude this process shortly,” the company stated.