ISIN No: ZAE 000009932  

Condensed Statement of Changes in Equity

The condensed financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), IAS 34: Interim Financial Reporting, the South African Companies Act, as amended, and the JSE Listings Requirements. The principal accounting policies used in the preparation of the reviewed results for the year ended 30 June 2009 are consistent with those applied for the previous year.

Wilson Bayly Holmes-Ovcon (the group) makes estimates and assumptions concerning the future, particularly in regard to construction profit recognition, provisions, arbitrations, claims and the fair values of certain assets. The resulting accounting estimates can, by definition, only approximate the actual results. Estimates and judgements are based on historical experience and other factors, including expectations of future events which are believed to be reasonable at that time.

These results have been reviewed by the independent, external auditors BDO Spencer Steward (Jhb) Inc. and their unmodified review opinion is available for inspection at the company’s registered office.

The group has had a solid year with headline earnings increasing from R694 million in 2008 to R882 million this year, an increase of 27%. Earnings per share increased by 25% to 1 624 cents compared to 1 303 cents in 2008.

The group’s revenue for the year increased by 37% to R14,8 billion (2008: R10,8 billion). Net profit increased to R963 million (2008: R763 million) an improvement of 26%.

The operating margin of 7,1% (2008: 8,4%) achieved by the group is an indication of the tightening of the economic conditions in the construction market both locally and globally.

Assisted by lower levels of capital expenditure and working capital, cash balances increased by R1,2 billion to R4 billion (2008: R2,8 billion). As a result investment income increased by R166 million to R329 million (2008: R163 million).

Capital expenditure for the year amounted to R215 million (2008: R439 million) which is 46% of the R466 million approved at the outset of the year. The group has approved capital expenditure of R244 million for the next financial year which will be confined mainly to the replacement of plant. It is unlikely that the size of our fleet will increase as in the current climate it is possible to hire plant at competitive rates.

On 1 July 2008 the group increased its holding in C.E.C.K. Pty Limited, a civil engineering company operating in Perth, Australia, from 40% to 83% at a cost of R38,7 million. The transaction consitutes a business combination in terms of IFRS 3. The company which was previously equity accounted for has been consolidated as a subsidiary since the acquisition date. Profits for the period included in the group results amount to R14 million. Goodwill amounting to R27 million was raised on the transaction.

Other piece-meal acquisitions resulting in changes in shareholding are as follows; as a result of a share buy back in Probuild Constructions (Aust) Pty Limited, the group’s interest in the company increased by 2,7% to 62,6%. The cost of the transaction amounted to R89,3 million. Furthermore the group increased its investments in St Francis Golf Links (Pty) Limited from 50% to 80% and in Edwin Construction (Pty) Limited from 49% to 57%.

In November 2008 the group acquired a 30% interest in the equity of Roadspan Holdings (Pty) Limited, a company specialising in road resurfacing, rehabilitation and the production of asphalt. The cost of the transaction amounted to R16,3 million. The company has been equity accounted for since the acquisition date.

The impact of the sudden downturn in the economy on both commercial and residential developers this year has unfortunately affected the group. Consequently R163 million in debt and a loan of R57 million have been written off.

Comparative figures have been restated to reflect the effects of a prior period correction. The effect of which has resulted in an increase in goodwill of R62 million, an increase in minority interests of R50 million and an increase in short-term liabilities of R12 million. There is no effect on the comparative income statement.

Total guarantees given to financial institutions amounted to R3,6 billion as at 30 June 2009 (2008: R3,4 billion). The directors believe any exposure to loss is unlikely.

A final dividend of 200 cents per share (2008: 142 cents) has been declared which, together with the interim dividend of 100 cents per share gives a total dividend of 300 cents for the year (2008: 242 cents), an increase of 24%.

The division once again contributed above-average returns, with revenue increasing to R10,3 billion of which Australia contributed R4,7 billion, and achieved an operating profit of R449 million (2008: R484 million). The slowdown in the world economy with a concomitant drying up of finance available for development and reduced demand for commodities will have a negative effect on the performance of these divisions in the medium term as they are more dependent on the private sector.

The North building division has once again shown consistent growth and will enter the new financial year with a healthy order book. Notable achievements were the completion of the OR Tambo Central Terminal Building ahead of schedule and the opening of the Morningside shopping centre. Work is progressing well on the Peter Mokaba Stadium in Polokwane and The Glen shopping centre in Johannesburg. Work has commenced on the mega Mall of the North in Polokwane and phase 1 of the Sandton City upgrade. Large mixed-use developments currently under construction include One Monte at Montecasino, The Zone in Rosebank and Lynnwood Junction in Tshwane. Although most of our contracts in this division have been negotiated with long standing private clients, we have also submitted a number of bids for prisons as public/private partnerships and are awaiting their adjudication.

The Eastern Cape division has had another record year, but unfortunately this has been marred by bad debts arising from the financial failure of a number of local developers. Contracts successfully completed during this period include the five star Radisson Hotel on the Port Elizabeth beach front, the Fountains Mall in Jeffreys Bay, Rosehill Mall in Port Alfred and two hospitals in Port Alfred and Grahamstown. We have three contracts under construction in the Coega Development Zone and have started work on the Livingstone Hospital.

Our Western Cape division has experienced its best year ever, however the construction industry in the Western Cape is very sensitive to the economic cycle and with the current economic downturn, finding replacement work has been difficult. Teams have been relocated to the North and Cape personnel are also spearheading the new Manda Hill contract in Lusaka, Zambia. The highlight for the division was the completion of the One & Only Hotel in the V&A Waterfront months ahead of schedule. Works on the Greenpoint Stadium and the Ben Schoeman harbour contracts are on schedule.

Two of the group’s largest projects are in KwaZulu-Natal, namely the King Shaka International Airport and the Moses Mabhida Stadium, both of which are on programme. Traditionally this market has been very competitive and in the current tough climate margins are coming under pressure however there is potential for future work in and around the new international airport at La Mercy.

The Civil division had a pleasing year, completing work on Anglo Platinum’s Potgietersrust mine, Nkomati Nickel for ARM and Phola Coal for Anglo Coal. The decline in commodity prices has reduced spending on new mining infrastructure. We have been fortunate to secure a contract from Eskom as part of a joint venture for the main civil works at Kusile Power Station and have started work for Foskor in Phalaborwa and on various contracts for Sasol in Secunda.

Probuild Constructions (Aust.) Pty Limited, once again achieved a solid performance with revenue increasing by 53% to AU$666 million and attributable profits increasing by 22%. The group has entrenched its position as a first-tier contractor in the state of Victoria by being awarded several building contracts in Melbourne in excess of AU$100 million and by increasing revenue for the year by 47%. Conditions remain extremely competitive in Sydney and despite increasing revenue by 55%, a small operating loss was incurred. Brisbane achieved exceptional results for the year, increasing operating profits threefold whilst revenue remained static. Performance in Perth was largely influenced by the increase in the
140 William Street contract to AU$200 million, as a result both revenue and contracting margin improved substantially. Our civil engineering subsidiary which operates in Western Australia, achieved good results for the year and also increased its client base.

The global financial crisis has impacted upon the Australian economy but the initial signs are that the effect has not been as severe as that experienced in other developed economies. Despite pressure on margins Probuild is budgeting to increase both revenue and profit in 2010.

The Building and Civil division commences the new financial year with an order book of R11,5 billion.

This division achieved an exceptional performance for the year under review with a 65% increase in its revenue to R4,5 billion (2008: R2,7 billion) and increasing its operating profit by 60% to R598 million (2008: R374 million). Government spending has been slower than anticipated and is moving towards improving service delivery, an area on which we will focus.

In the North division we have recently completed the upgrade of the Sishen-Saldanha railway line and we are the lead partner on the R1,9 billion Gauteng Freeway Improvement project. Work on the Ingula Dam project for Eskom is progressing well and the division continues with work at OR Tambo International Airport and a large tailings facility for Gold Fields.
   
The Central division concentrates largely on work in and around the mining areas of Mpumalanga. A major highlight was the successful commissioning of the coal processing plant at Klipspruit mine for BHP Billiton. Projects in the Ogies, Witbank and Nkomati areas are ongoing and we await further awards in the Secunda/Leandra area.

The Roads and Earthworks Coastal division is the lead partner of the joint venture responsible for executing the civil works at the new King Shaka International Airport north of Durban.
This contract has some very tight deadlines and, despite the recent strike, is still on track to deliver in time for the 2010 Soccer World Cup. Work continues on the R700 million
AC waterline replacement project for eThekwini Metro.

The over-border divisions have experienced an exceptional year with major contracts completed in the DRC copper belt for the Tenke Fungurum mine. We continue to expand our projects relating to mining operations in Ghana and Zambia. In Mozambique work was completed for the Beluluane pipe factory and roadworks continue in Mapapa. The upgrade of the Sir Seretse Khama International Airport in Gaborone, Botswana, was completed and the first aircraft landed on the new improved concrete runway on 1 July 2009. Swaziland’s Mbabane Bypass opened successfully in May 2009. These divisions have also provided resources for the Barberton road contract for SANRAL, which has been completed and are currently providing assistance on the Polokwane and Nelspruit by-passes.  

Subsidiaries
Edwin Construction (Pty) Limited improved its revenue substantially during the year enabling it to successfully tender on larger contracts. The upgrading of the Ogies to Witbank road is going well and in the North West province the link roads and bridges between the N4 and Bafokeng Stadium near Rustenburg are making good progress.

Matkovich & Hayes (Pty) Limited has successfully handed over the Dunblane project near Newcastle and work on the Nondela Golf Estate in the Drakensberg is also nearing completion. The demand for residential golf estates in South Africa has decreased markedly and the company has been obliged to extend its field of operations. As a result it has been awarded the landscaping contract for the King Shaka International Airport.

Insitu Pipelines (Pty) Limited, a company specialising in providing innovative technology for trenchless solutions, is well positioned to benefit from infrastructure spend in the service delivery market. This year revenue increased by more than 200% and 2010 should also prove to be another successful year.

Our strategy going forward is to consolidate and maintain market share by carefully selecting our projects and clients, especially in Africa. The Roads and Earthworks division is experiencing increased competition with tighter margins and fewer contracts being let, we have nevertheless secured contracts to the value of R3,8 billion going forward.

INDUSTRIAL DIVISION
WBHO holds a 50% interest in Capital Africa Steel (Pty) Limited (CAS), an associate, which invests in companies active in the steel industry and in ready-mix and quarrying operations.

Trading has been difficult due to the volatility in the price of steel and price reductions in the second half of the year have impacted margins. Conditions are expected to remain competitive in the new financial year.

The ready-mix and quarrying results for the year have been well below forecast due to the heavy rainfall experienced on certain contracts and delays in the start-up of the power station contracts. CAS acquired a controlling interest in the Bela Bela quarry near Gaborone in Botswana. Although margins are likely to be affected, this sector is expected to remain profitable in 2010.

A joint venture between CAS and the Seven Star Group of China was established to manufacture steel piping for the gas and petro-chemical industries. Construction of the new factory facility is complete and we are now in the last stages of plant commissioning. World-wide, the pipe market remains flat and is only expected to start to improve in the first quarter of 2010. However, the local market has some life and a reasonable order book has been secured. The company is budgeting for modest profits during its first year of operations.

As a whole CAS is budgeting for higher revenue and operating profit in 2010 but due to a significant increase in finance charges, profit after tax is expected to be lower than that achieved this year.

PROPERTY
Sales in our two property developments have been slow due to the decline of activity in the real estate market. Despite this, the property division has recorded R1,7 million profit, we do not expect this market to improve in the next financial year, however we do foresee opportunities for selective investments.

TRANSFORMATION
The Construction Industry Charter was gazetted on 5 June 2009, an event welcomed by the whole industry. WBHO is rated as a level 4 contributor, which gives our clients 100% BEE procurement recognition. As training, mentoring and shadow processes start to bear fruit, employment equity is accelerating across all levels in the group, including the employment of women.

PROSPECTS
The order book at the start of 2010 stands at R15,3 billion (2008: R18,3 billion). Despite the recessionary conditions in the global and local economies our outlook for the South African construction industry remains positive. The group is well positioned to participate in the government’s infrastructural spend and to secure work in the private market. The decrease in funding available to clients and the strong cash position of the group will provide various opportunities to secure additional work in the future. We continue to explore for opportunities outside the country, particularly in Africa and the United Arab Emirates.

APPRECIATION
The board would like to thank each and every employee for their loyalty and hard work throughout the year.

The company’s strength lies in its loyal and committed people and in a management team which, having been together on average for 20 years, has the same culture and values and is well qualified and experienced.

DIVIDEND DECLARATION
Notice is hereby given that a final dividend of 200 cents per share in respect of the year ended 30 June 2009 has been declared payable to all shareholders recorded in the register on Friday, 23 October 2009, the record date. The last day to trade cum dividend will be Friday, 16 October 2009 and the shares will trade ex dividend on Monday, 19 October 2009. Payment will be made on Monday, 26 October 2009.

Share certificates may not be dematerialised or rematerialised between Monday, 19 October 2009 and Friday, 23 October 2009, both dates inclusive.

By order of the board

MS Wylie    EL Nel
Chairman    Chief Executive Officer