Highlights

living up to our motto

The key fundamentals of reliability, delivery and quality, together with an ability to build and nurture relationships, underpin the motto of the group 'being a pleasure to do business with’.

Executive commentaries

MESSAGE FROM THE CHAIRMAN

“It has been a turbulent five years, unquestionably, but the performance of the group over this difficult period confirms for me the underlying health and stability...”

Message from the CEO

“We have come through another difficult year with the executive team intact and having an experienced, proven team is fundamental to our strong, distinctive culture and our consistent delivery...”

Message from the CFO

"The group delivered a reasonable result from its core construction operations, despite persistent margin pressure on divisions exposed to the mining sector. This was, however, negated..."

  • Pr Eng, BSc (Eng), BCom (Hons)

    Mike joined WBHO three years after graduating from the University of Cape Town in 1975. He was appointed managing director of the building and civil engineering division in 1988 and assumed the role of joint CEO and Chairman in 2002. From 2008, he relinquished his role as CEO, but retained the position of Chairman.

    BEING OPEN, RESPONSIVE AND FLEXIBLE
    On the whole, the construction industry has remained hampered by subdued conditions this year. The global reduction in mining-related work continues to have a significant impact and, in South Africa specifically, the delayed roll out of the public sector strategic integrated projects and persistent low levels of gross domestic fixed investment are clearly having an impact on the economy and the industry.

    Last year, WBHO enjoyed good growth and, despite the difficult economic conditions and sustained pressure on earnings, the group has consolidated that growth this year. it has been a turbulent five years, unquestionably, but the performance of the group over this difficult period confirms for me the underlying health and stability of this remarkable construction company. in the construction industry you have to be adaptable and flexible enough to 'go where the work is', especially when conditions are challenging, and i am comfortable that we continue to have this vital capacity, without compromising our standards.

    A significant part of our sustained revenue, for instance, is the result of an increased share in good quality private building sector work in Australia and Africa, where the profiles of the WBHO and Probuild brands continue to strengthen.

    It is also rewarding to be told, from many corners, what a pleasure it is to do business with WBHO and our commitment to high standards and hard work is reflected in the fact that we are now the biggest contractor in South Africa.

    Flexible strategy is the best approach
    Our industry is much less predictable than many others and we have to adapt to a constantly changing mix of work and geographical spread. The skill is being agile and flexible enough to support our clients in the disparate economies and sectors in which they are operating. as a construction company — operating in a high risk, low margin industry — it is prudent to define your strategies and business model as flexibly as possible.

    Genuine transformation takes time
    Ongoing challenges for us are the industry-wide skills shortage, labour uncertainty and productivity, and, in South Africa in particular, the urgent need for transformation. These are pressing issues to which there are no easy, short-term solutions.

    Even though we are a level 2 bbbee contributor, our employment equity levels are not where we would like them to be and this remains an area to which management is paying particular attention. likewise, our enterprise development programme continues to mentor 15 emerging contractors successfully, but we recognise that more needs to be done.

    We are addressing this issue with urgency, but acknowledge that genuine, lasting transformation cannot be superficial. Opportunity and experience work in tandem and we have had to accept that it takes time to groom talented individuals successfully, despite our investment in training and skills development being at an all time high. bearing this in mind, it is pleasing to see the solid progress that has been made up to middle management levels in the company.

    Governance and remuneration
    From a governance perspective, i am delighted to report that we have made a great deal of progress in aligning our remuneration report to the best practices contained within king iii. we have introduced thresholds, targets and kpis to ensure that short-term incentives are more closely tied to group performance and we have finalised our long-term incentive schemes. executive director, Mr jp (kobie) botha, resigned from the board in january 2014 and we thank kobie for his important contribution to the success of the company and wish him well in his future endeavours. To fill the vacancy, Mr ross gardiner has been appointed as an independent non-executive director and i would like to take this opportunity to welcome him to the team.

    I would also like to take this opportunity to thank the members of the board for their continued invaluable guidance and unwavering support this year.

    Forty wonderful years
    This report marks the start of my 40th year as part of the WBHO team and i am extremely proud to be a part of this world- class company. Our continued success and growth, in spite of the challenging environment, is a credit to the entire team and, i believe, further evidence that our commitment to being open, flexible and responsive to our clients and their needs is the secret to our success.

    Mike Wylie
    Chairman

     

  • BSc (Eng)

    Louwtjie joined WBHO in 1987, after graduating from RAU with a BSc in Civil Engineering and completing his national service. He was appointed as managing director of the Building and civil engineering division in 2002 and then as group CEO and to the board of Wilson Bayly Holmes-Ovcon Limited in 2008.

    KEEPING THE TEAM INTACT
    Following significant growth last year, revenues have consolidated in the current reporting period. Overall, our construction divisions delivered a credible performance in the midst of challenging conditions within certain sectors of the economy. Subdued activity in the mining sector, in particular, continued to impact our Civil Engineering and Roads and Earthworks divisions adversely. Of notable concern this year were further frustrating performances from our investments in the construction materials segment. On the positive side, nonetheless, we experienced good growth in the Australian and South African private building markets and the expansion of our African building division continues to gain traction.

    Our key fundamentals of being flexible, dependable and hard-working are suited to navigating competitive market conditions and our focus this year remained on keeping client relationships strong by delivering on projects. On the whole, I believe that this is something we have achieved.

    Disposal of non-performing businesses
    The prevailing difficult market conditions, together with various production constraints, contributed towards poor results from Capital Star Steel (CSS), which prompted the decision to dispose of the business. While we are disappointed that we have not been able to turn the company around, the decision reflects an honest recognition of the lack of value being created for shareholders and forms part of a reconsideration of our industrial portfolio in general.

    The WBHO Way
    I continue to entrench our culture and commitment to doing things ‘the WBHO way’ since success and growth can weaken this aspect of an organisation — even though it is a distinctive ingredient in its success. accordingly, it is gratifying to see how this priority has been embraced by senior management and how ‘being a pleasure to do business with’ is being reflected in the attitude of our people at every level.

    Our culture is our guide, but it is not static and cognisance is being taken of the ever-changing environment within which we operate and the fact that ‘the WBHO way’ has to be progressively aligned with the future as well. Part of this is attracting and developing talented young people and i am pleased to see the substantial efforts being made in terms of the WBHO academy and the success of our graduate programme, as well as in the way senior members of staff are making themselves available to their younger colleagues.

    Safety
    The new safety practices we initiated last year are in place and beginning to take effect, and this year we have introduced further measures, incorporating peer reviews and visible field leadership from the top down. i am happy to report that we achieved an overall lTifr of 0.94, down from 1,35 in the previous year and below the group target of less than 1,0 for the first time. The most significant improvement came from Australia, where the lTifr decreased from 5,3 to 1,6. all in all, it is a very commendable result.

    Prospects
    The order books of our South African and Australian building divisions are healthy and the growth prospects for building in the rest of Africa appear promising. Margins within our Civil Engineering and Roads and Earthworks divisions are dependent on a turnaround in the mining sector and the ability of government to deliver on its large infrastructure objectives. although we have seen an encouraging increase in activity from our local mining clients, we believe a recovery is only likely over the medium term. The focus of the presidential infrastructure Coordinating Commission by government is also a good sign and seems to demonstrate a renewed commitment to delivering on the proposed infrastructural upgrades.

    Through our projects team, we successfully delivered on the kathu renewable energy project in the Northern Cape during the year and secured new contracts for the department of Statistics, an office development on a ppp basis and an epC for a 100Mw gas-fired power station in Mozambique.

    The projects team continues to play a strategic role in sourcing these value-add projects for the construction divisions of the group; however, we remain alert to the additional risks these types of contracts entail and are extremely vigilant about ensuring that we have the requisite skills and partners available when deciding which projects to pursue.

    Risk management will continue to be a priority during both the procurement and execution phases within the group. We have learnt valuable lessons from some of our under-performing contracts and will apply this insight to future projects.

    An experienced, proven team
    Following what has been a difficult number of years for the construction industry, we have come through yet another 12 months with the executive team intact. It is perhaps easy to underestimate the importance of an experienced, proven team, but it is fundamental to our strong, distinctive culture and our consistent delivery, especially in challenging market conditions.

    Lastly, I would like to thank all of our employees and pay tribute to the contribution that they each make to the ongoing success of WBHO.

    Louwtjie Nel
    Chief Executive Officer

     

  • BCom, BCompt (Hons), CA(SA)

    Charles started his career at Deloitte, after graduating from the University of South Africa in 1986. He has 24 years of experience in the construction industry and enjoyed a number of directorships across a broad spectrum of disciplines. Charles joined WBHO in June 2010 as the financial director of WBHO Construction (Pty) Limited. He was appointed as group CFO and to the board of Wilson Bayly Holmes-Ovcon Limited in 2011.

    REASONABLE RESULTS DESPITE PERSISTENT MARGIN PRESSURE
    The group delivered a reasonable result from its core construction operations, despite persistent margin pressure on divisions exposed to the mining sector. This was, however, negated by a disappointing performance from within the construction materials segment, which stemmed from significant impairments in respect of the pipe factory in Mozambique, as well as poor trading results in general. Together, these resulted in an overall decrease in earnings per share of 31% for the year, while headline earnings per share, which excludes the impact of the impairment, increased marginally by 1,9%. On a positive note, headline earnings per share from continuing operations increased by 11,4%, which formed part of the basis to maintain the gross dividend of 368 cents payable to shareholders.

    We have not achieved our revenue growth target of 10% in the current year; this, however, allowed the operational teams time to consolidate after the significant growth of 32,9% achieved in FY13. Static growth of 3,2% achieved by the Construction divisions of the group improves to 8,4% when combined with the revenue in respect of continuing operations from the Construction materials division. Growth from Africa of 6,9% (FY13: 16%) relates to good growth from the Africa Building division, but was negatively impacted by a decline in available mining projects, particularly in West Africa.

    In Australia, a marginal decline in revenue of 2% in Dollar terms improves to 2% growth in Rand terms, following further Rand weakness during the year. Revenue from discontinued operations amounted to R484 million.

    Operating margin
    The overall operating margin of 4% is within the target range of the group of 4% to 6%, but remains at the lower end, a result of declining margins from the Civil engineering and Roads and earthworks divisions, as well as the poor trading performance from the construction materials segment. Local building margins have, however, improved, positively affected by the performance of the Kathu project in the second half of the year, and the Australian margin increased to 2%.

    IFRS 2 share-based payment
    This year, a further 1 238 000 Akani shares were issued to 695 eligible employees. This brings to 2 173 the total number of employees currently participating in the scheme. This is the second year there has been a significantly large issue due to more employees being eligible for shares. The expense relating to the new issue was apportioned for a period of 10 months in the current year.

    Net finance income
    Net finance income is broadly in line with that of the prior year and incorporates interest received from financial institutions in respect of positive cash balances, interest received and accrued in relation to mezzanine financing arrangements, interest received and paid in respect of the South African Revenue Services and interest paid to financial institutions in respect of asset finance.

    Taxation
    As a group, we are subject to varying tax regimes, each with its own compliance requirements. As revenue authorities become more stringent in their enforcement of tax compliance, the tax practices and tax compliance of the group are submitted to regular scrutiny from tax officials. In addition to consulting with the local tax specialists in each regime, we have strengthened our internal tax team in recent years to better mitigate the additional tax risks presented and to ensure continued compliance. The effective tax rate of 30% is a result of foreign taxes raised in higher tax rate jurisdictions and withholding taxes levied on dividends repatriated during the period.

    On 1 July 2013, Capital Africa Steel (CAS) acquired 10,0% of its share capital for an amount of R15,9 million through a share buy-back transaction with the result that the shareholding of the group increased from 50,0% to 55,6%. Revenue and profit before tax in respect of the continuing operations of CAS included in the results of the group to 30 June 2014 amount to R1,3 billion and R4,2 million, respectively, as well as the loss of R527 million from discontinued operations.

    The shelving and racking businesses, Symo Steel (a division within CAS) and Krost (Pty) Ltd have been reported as discontinued operations, following their disposal during the year. Capital Star Steel and Dywidag Systems International (DSI), both of which are in the process of being sold, are also included.

    The R360 million impairment is in respect of the pipe factory in Mozambique and combined with a provision of R35 million in respect of onerous contracts, comprises a significant portion of the overall loss of R527 million. The profit from associates of R5,2 million relates to DSI.

    The carrying amount of property, plant and equipment increased from R1,9 billion to R2,1 billion, mainly due to the consolidation of CAS. Capital expenditure in the current year is weighted heavily toward the replacement of plant in accordance with the plant philosophy of the group. A budget of R278 million has been approved for FY15; R209 million in respect of replacement and R69 million in respect of expansion, which takes cognisance of current market conditions.

    Cash balances have declined by 17% to R2,6 billion due to the impact of the consolidation of CAS and investment in working capital of R345 million, largely in respect of a rain-delayed project incorporating milestone payments within one of the construction divisions of the group and revised creditor payment terms in Australia. Cash balances of R1,1 billion are held in South Africa, a decline of R532 million from FY13, and R1,4 billion is held offshore, of which R910 million is held in Australia.

    The following graph illustrates the movement in cash through the year. In addition to the R797 million generated from operations, R61 million in net finance income was earned on cash balances, R548 million was spent on taxes and R265 million was distributed to shareholders. The R498 million utilised in investing activities relates mostly to the purchase of plant and equipment and acquisition of non-controlling interests during the year. R186 million serviced the asset-based finance facilities. The overdrafts in respect of the discontinued operations are included with the liabilities of the disposal groups on the face of the statement of financial position. As a result, these are added back in the cash flow statement to arrive at the actual cash and cash equivalents and overdraft balances presented.

    Share capital and reserves increased by 3,8%. The return on equity (ROE) of 14% achieved remains below the target of the group of 20% due to operating margins at the lower end of the group target range and a need to maintain healthy cash balances in the current low interest rate environment. The balance sheet is regularly evaluated against all variables to determine the optimal structure.

    The low interest rate environment, together with particularly favourable rates negotiated on certain asset-based finance facilities, has resulted in increased utilisation of these facilities in recent years. The decline in net current liabilities, excluding cash, relates to a change in the creditor payment policy of Probuild in Australia, as well as an increase in amounts due from customers in respect of the rain-delayed milestone payment project discussed previously.

    Guarantees issued to third parties have increased by R1,8 billion due to greater bonding requirements from large-scale retail projects in Australia and the consolidation of CAS.

    The increase in goodwill is due to the translation effects of the weakening Rand against the Australian Dollar and R9 million recognised in respect of the conversion of CAS to a subsidiary. The impairment of goodwill relates to the remaining goodwill in WBHO CARR (Pty) Ltd.

    The increase in non-controlling interests to R274 million is again the result of the consolidation of CAS. The interest of the group in Probuild increased by 1,9% following a buy-back of shares from minority shareholders, while Probuild also acquired an additional 24% interest in Monaco Hickey. Debit amounts of R39 million were recognised in equity, which represents the excess of the purchase prices over the fair value of the equity interests acquired.

    The closing share price at 30 June 2014 amounted to R127,98, which represents an 18% decrease when compared to the prior year share price of R155,15. The market capitalisation of the group decreased by R1,8 billion to R8,4 billion. The share price does, however, continue to outperform the Construction and Materials Index over the medium term.

    APPRECIATION
    I would like to extend sincere thanks and appreciation to the members of my financial teams, who continue to provide me with their unwavering support, as well as to all of our stakeholders, who contribute to the continuing success story that is WBHO.

    Charles Henwood
    Chief Financial Officer



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    This section, including all tables and charts
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  • Strategic

    This section of the report presents the long-term strategic objectives and material issues of the group. These strategic objectives are implemented through the operating divisions...

  • Risk

    This section of the report presents a concise overview of the risk management processes of the group and the movement of the top 10 strategic risks during the year under review.

  • Governance & remuneration

    This section of the report presents the corporate governance and remuneration practices of the group for the reporting period. This year, key governance tasks have been tied to the governance...

  • LONG-TERM STRATEGY: GEOGRAPHIC AND SECTOR DIVERSIFICATION
    The group has, over recent years, successfully implemented a diversification strategy, not only to facilitate its growth objectives, but also to mitigate risk and reduce earnings volatility over the long term.

    Each of the various sectors and geographies from which the group sources its projects has its own inherent risk profile and corresponding margins, as well as being exposed to differing effects from both global and regional economic cycles at different times.

    By developing capabilities across a range of higher and lower risk markets, the overall risk profile of the group is controlled. At the same time, the effects of negative market conditions on a particular sector or geography can, to a greater or lesser extent, be mitigated.

    Due to the cyclical nature of economies, exposure levels to individual sectors and geographies are controlled and managed over the short to medium term and, as a result, strategy and risk management form an integral part of the procurement processes of the group.

    LONG-TERM MATERIAL ISSUES
    These highlighted issues are based on the risks and opportunities present within our operating context and informed by our stakeholder engagement, risk management processes and business environment analysis. Senior management and the board review these material issues on a regular, ongoing basis. This section briefly describes each material issue and how it influences WBHO as an organisation, as well as our strategic responses.

    Reputation
    A visible profile in the marketplace and our reputation for reliability, consistency and value-for-money are critical to developing and maintaining close relationships with clients and being able to tender on large contracts successfully. Accordingly, entrenching our culture and commitment to doing things ‘the WBHO Way’ always remains a top priority for the group. We achieve this through the visible leadership of our executive and senior management in their dealings with clients, professionals, suppliers and our employees, as well as through regular discussion and debate regarding what it means to be part of the WBHO team in our various interactions with junior colleagues.

    Capacity and talent management
    The construction industry is faced with a serious skills shortage at almost every level and so developing and retaining skilled personnel is critical to our ability to deliver projects.

    Inadequate skills can lead to additional costs and delays on projects as a result of poor supervision, rework and waste. As well as ensuring efficient project execution, experienced management teams are required to grow a company. Keeping our teams intact is vital to achieving our short- and medium-term objectives. In response to this issue, we have implemented a range of initiatives over the last few years, including our engineering school, the WBHO Academy, the C4 management programme and formal mentoring programmes, the latest of which is on-site mentoring.

    Our training spend also increased to R38 million for the year under review. Further detailed information regarding our FY14 initiatives is contained in our training and skills development review.

    Health, safety and environmental sustainability
    Construction is an inherently dangerous, high-impact activity. We maintain the very highest health and safety standards to ensure a safe working environment for our employees and subcontractors. We also have a moral and legal obligation to minimise our impact on the environment in the areas within which we operate. The group employs global best practices to monitor compliance to its policies and procedures in these vital areas of the business. During the year under review, we introduced further safety measures, incorporating peer reviews and visible field leadership. For further information regarding our current objectives in respect of these issues, consult our FY14 safety and environmental reviews.

    Transformation
    The industry, and WBHO in particular, has made good progress and achieved a great deal in overall terms, but employment equity at senior levels remains a challenge. Even though the limited pool of suitably experienced engineers and the time needed to equip candidates with management capabilities remain significant obstacles, we continue to address this challenge proactively through our retention and development programmes, with a number of promising black individuals progressing through our ranks. The Enterprise Development Programme, in particular, continues to mentor 15 emerging contractors successfully. Please see our FY14 transformation and skills development reviews in the downloads section for more information.

    Labour
    The labour environment is a growing concern, particularly in South Africa. The wealth gap quandary is one of the root causes and there is no easy, ‘quick fix’ answer to this challenge. Increased labour unrest and industrial action has led to reduced productivity and project delays, as well as negatively impacting investor perceptions and foreign investment in certain sectors.

    We are particularly concerned about the trend of intimidation and violence that is emerging and which was evident in the two week industry strike in September FY13. WBHO has, in the past, played a role in industry labour negotiations, and communicates openly and fairly with employees. This year, we have begun exploring new initiatives to address productivity within our teams. A full review of our human resource activities during the year is is available online.

    Regulatory and legal compliance
    Compliance with the laws and regulations of the territories in which we operate is inextricably linked to an organisation's reputation. This, together with our obligation to behave as a responsible corporate citizen, means that regulatory and legal compliance is top of the governance agenda and is regularly reviewed by the Social and ethics committee.




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  • This section of the report presents a concise overview of the risk management processes of the group and the movement of the top 10 strategic risks during the year under review. Further, detailed information regarding the way the group manages risk can be obtained on the WBHO website.

    RISK MANAGEMENT
    Risk is inherent in all of the business activities of the group. The objective of the risk management processes is not to eliminate risk, but to provide the structural means to identify, prioritise and manage risk in the organisation.

    STRATEGIC RISK PROFILE
    The board is, ultimately, responsible for risk governance and determines the level of risk tolerance within the organisation. The following risks have been identified by the Operational risk committee and ratified by both the Audit and risk committee and the board of WBHO. Each strategic risk is allocated to an executive committee member who assumes responsibility for monitoring and mitigating the risk.

    Click the image to view our strategic risk matrix and the associated risks.



    Download this section, including our risk management process, an analysis of our top 10 risks and our strategic risk matrix.




  • This section of the report presents the corporate governance and remuneration practices of the group for the reporting period. This year, key governance tasks have been tied to the governance structure responsible for addressing them; namely, the relevant board committee. The aim of this approach is to show our ‘governance in action’, rather than presenting a set of static principles and processes. This section also includes the FY14 remuneration report, which details significant amendments that have been made to the remuneration policy of the group.

    STRONG, ETHICAL GOVERNANCE
    WBHO recognises that strong, ethical governance is a key component of sustainability within the organisation. This requires us to deliberate and act with fairness, responsibility, transparency and accountability, and to consider more than just our financial performance, appraising the short- and long-term impacts of our operations on society and the environment at the same time.

    The board of WBHO and its committees are responsible for corporate governance throughout the organisation and ensure that it is addressed appropriately from a strategic perspective.

    SOCIAL AND ETHICS COMMITTEE REPORT
    The Social and ethics committee had an active year as it is still relatively new and its mandate is broad. The Chairperson of the Audit and risk committee, Nomgando Matyumza, was appointed to the committee to further strengthen available expertise and the co- ordination between the two working groups.

    In terms of promoting and communicating ethical standards across the group, the committee supervised further company-wide training on competition law and updated the Code of Conduct, which enshrines the values and behaviour expected of all WBHO employees.

    The committee has reviewed the wide range of regulations and laws with which the group must comply, including the Employment Equity Act, the Broad-based Black Economic Empowerment (BBBEE) Act, King III and the JSE Listing Requirements and is also assessing the standing of the company in terms of the United Nations Global Compact Principles. The objective of this review is to develop a framework against which the committee is able to assess and monitor the sustainability, risk and compliance key performance indicators of the company. Processes are now being put in place to ensure effective ongoing monitoring and reporting in this regard; in particular, formalising the reporting procedures and metrics used by the heads of shared services and the company compliance officer when presenting to the committee.

    In terms of BBBEE, the committee reviewed the group scorecard and employment equity targets and obtained feedback from the Transformation committee on its progress.

    The committee continues to monitor the company from an occupational health and safety (OHS) perspective and was pleased to note that the company achieved an overall LTIFR rate of 0,84 in South Africa and the rest of Africa for the period under review. In terms of environmental sustainability, the company maintained its ISO 14001 compliance across all divisions, marked its tenth year of continuous SABS, ISO 9001 QMS certification, and continues to participate in the Carbon Disclosure Project.

    NOMINATION COMMITTEE REPORT
    In fulfilment of its mandate, the Nomination committee reviewed the composition of the board to ensure that the balance of skills, experience and knowledge continued to be appropriate for the business to meet its strategic objectives. The committee reviewed the succession plans for both executive and non-executive appointments to the board as well.

    During the year the lead independent non-executive director, Nomgando Matyumza, was appointed chairman of the committee. The committee also met during the period under review to discuss candidates to fill the vacancy left on the board by the resignation of executive director, Mr Malcolm McCulloch, in February 2013.

    After due discussion and deliberation, Mr Ross Gardiner was nominated, and has been appointed, as an independent non-executive director to the board.

    REMUNERATION COMMITTEE REPORT
    During the year, the Remuneration committee (Remco) took cognisance of feedback received from shareholders and made significant amendments to the remuneration policy of the company and the means by which senior executive pay is determined.

    Without altering the overall orientation towards performance-variable pay, the remuneration policy has been amended to align Executive total guaranteed package levels closer to industry norms and to introduce a better balance between short-term and long-term incentives in respect of performance-variable pay.

    This task has been concluded successfully and the amended policy will be presented to shareholders for approval at the company annual general meeting.

    Further details regarding the amendments to executive pay are discussed in the remuneration report that follows and in the remuneration policy of the company, which is available on the WBHO website

    REMUNERATION REPORT
    Remuneration within WBHO is aligned to corporate strategy and in adherence to the principles set out in King III, the requirements of the Companies Act of South Africa in relation to the remuneration of directors and principal officers, and the remuneration policy of the group.

    Senior executive pay
    The remuneration policy has been amended to cater for:
    - executive total guaranteed package (TGP) levels that are more closely aligned to industry norms, away from the previous
    - an improved mix, to be introduced over time, of targeted short-term incentives (STIs) and long-term incentives (LTIs) in respect of performance-variable pay.

    Performance-variable pay will continue to carry a heavier weighting than guaranteed pay when rewarding the operational performance of senior directors and key management, albeit to a lesser extent.

    Although more closely aligned to the comparable guaranteed executive pay levels within the industry, guaranteed pay levels of executive directors and senior management at WBHO will remain benchmarked below the median level, the purpose of which is to prevent large gaps in salary developing between executive directors and key senior operational management. It is the belief of the group that such gaps (often found in other companies) are counter-productive in a construction company where working as a cohesive team is crucial to success. A comparison of the total guaranteed package (TGP) of WBHO executives with those of other locally listed construction companies highlights that, on average, the TGPs of WBHO executives are approximately half of those of their industry peers.

    Total guaranteed package
    R'000
    STI
    R’000
    LTI
    R’000
    Total
    R’000
    2014
    CEO, EL Nel 1 831 6 500 - 8 331
    Executive directors
    CV Henwood 1 815 5 500 - 7 315
    MS Wylie 1 590 4 500 - 6 090
    JP Botha* 1 857 4 500 - 6 357

    * JP Botha resigned from the board on 23 January 2014.

    Total guaranteed package
    R'000
    STI
    R’000
    LTI
    R’000
    Total
    R’000
    2013
    CEO, EL Nel 2 139 5 506 - 7 645
    Executive directors
    CV Henwood 2 053 5 018 - 7 071
    MS Wylie 1 740 4 583 - 6 323
    JP Botha* 1 038 - - 1 038

    * JP Botha resigned from the board on 23 January 2014.



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