Unaudited Interim Results 2016

Revenue from continuing operations increased by 7% from R14,4b to R15,4b largely due to growth of 19% from Australia. Revenue from the African operations declined by 5%. Significantly lower activity experienced within civil engineering markets continues to affect the group across all its geographies. The impact is most evident in the 17% decline in revenue from the Roads and earthworks division. The current high volumes of local building work assisted in lessening this effect on the Building and civil engineering division which achieved growth of 2%. Similarly, strong growth of 38% in building revenue in Australia offset declining civil engineering related revenue which was impacted by both market conditions and the restructuring of the civil division in the prior year. Revenue from construction materials, which now consists only of the steel reinforcing business within Capital Africa Steel (Pty) Ltd (CAS), increased by 2%.

Operating profit before non-trading items at 31 December 2015 increased by 29% to R495m from R384m in the prior period. This is largely attributable to an improved performance from Australia following the losses recognised on three civil engineering contracts in FY15. The margin of 3,2% achieved continues to be impacted by the heavier weighting of lower margin building and road work within the group’s overall project portfolio. The devaluation of the Rand in December 2015 resulted in unrealized currency gains improving overall profitability by R30m, a large portion of which was attributable to Australia. The Australian margin was negatively affected by the cost of the WBHO Infrastructure strategy implementation. The margin within the Building and civil engineering division has improved from 4,4% achieved in the comparative period but remains consistent with the 4,8% achieved at 30 June 2015 and reflects the strength in the building market. Margins within the Roads and earthworks division remain under pressure having declined further to 6,3% in the current six month period when compared to the 7,2% margin achieved in the previous financial period. A sustained lack of mining activity and increased competition in other lower margin sectors remain key factors behind the decline in margin.

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