WBHO builds up profits

WILSON Bayly Holmes — Ovcon ( WBHO ) has built up profits for the year ended June 30, 2009, the JSE-listed construction group said today. The company — responsible for the building of 3 2010 World Cup stadiums — said group turnover was 37% higher at R14.8bn while operating profit showed an increase of 16% to R1bn.

The company said headline earnings per share were 27% higher than the previous year at 1.605 cents.

A final dividend of 200 cents was declared, resulting in a total dividend for the year of 300 cents.

Group chairman Mike Wylie said he was “pleased” with a 27% increase in headline earnings — especially considering that headline earnings growth had exceeded 70% for the past three years — “the strength of WBHO never ceases to surprise me”.

However, he warned that the procurement environment had become more difficult. “Project finance is under pressure in both the public and private sectors and margins are tightening.” Nevertheless, Wylie said WBHO, with its strong order book of R15bn, had “a very strong” balance sheet and was well positioned to tackle the difficult times ahead.

“We are pleased and relieved to find that Australia is managing the financial crisis better than many other Western countries and there are also signs that the resources market is improving,” he said.

Divisionally, roads and earthworks had an exceptional year with a 70% increase in turnover to R4.6bn. The division was working on a host of major projects — including a R1.9bn portion of the Gauteng Freeway Improvement Project; the new King Shaka International Airport in Durban; and a R700 million waterline replacement project for the eThekwini Metro.

It was also involved in several large mining and infrastructure projects in Botswana, Ghana, Zambia, the Democratic Republic of Congo and Mozambique and many smaller projects in the mining and private sectors. Wylie said the majority of the division’s order book for the current year had already been secured.

The building and civil engineering division, which was more reliant on the private sector, had been negatively impacted by the diminishing pool of development finance and the reduced global demand for commodities and resources. Nevertheless, the division increased its revenue to R10.2bn, R4.7bn of which was contributed by its Australian operations.

It had also completed work on the new central terminal building at OR Tambo International Airport and the Morningside Shopping Centre and had commenced work on a number of shopping centres in Tshwane, Polokwane, Sandton, Rosebank, and the Eastern Cape. In addition, Wylie said the division was still active on construction work at the Peter Mokaba Stadium in Polokwane; the Moses Mabhida Stadium and King Shaka International Airport in Durban.

Offshore, WBHO’s Australian subsidiary, Probuild Constructions, once again had a good year increasing turnover by 51% to AUD 661 million. “The company is active all over Australia — particularly in Melbourne, Victoria, where it has been awarded several building contracts in excess of AUD 100 million. “Despite Australia being affected by the global economic slowdown, the division is looking to increase both turnover and profit in 2010 and starts the year with an order book of 93% of its budgeted annual turnover,” Wylie said.

Sales in the company’s two property developments were slow because of the fall off in the real estate market but profit of R1.7 million was accrued by the division. Similarly, turnovers in the industrial division, where the group was invested in companies associated with steel pipe-making and ready-mix and quarrying operations, were somewhat depressed because of the unfavourable economic climate.

Despite the difficult economic environment that presently existed in South Africa, Wylie remained optimistic that WBHO would have “another good year”.

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