The group delivered disappointing results over the first six months of the financial year principally due to the recognition of a provision in respect of anticipated future losses on the Western Roads Upgrade (WRU) project (previously referred to as OSAR) in Australia.
The operating performance of the group over the first six months of the financial year will be negatively affected upon the recognition of a material provision in respect of the anticipated loss to complete the OSAR Western Roads infrastructure project in Australia. The completion of contract anticipated loss is due to the interpretation of the technical specifications within the contract bid design resulting in the underestimation of the physical construction works required under the design and construct contract. The Group is investigating all possible recoveries.
The summary consolidated financial statements are prepared in accordance with the JSE Limited Listings Requirements, the framework concepts and the measurement and recognition requirements o fInternational Financial Reporting Standards (IFRS), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council.
The shareholders of Wilson Bayly Homes-Ovcon Limited (WBHO) are hereby advised that WBHO UK Limited, a wholly owned subsidiary of WBHO, has entered into an agreement through which it has acquired 60% of the issued share capital of Russells Limited for a consideration of £32,8 million and 31,7% of the issued share capital of Russell Homes Limited for a consideration of £3,25 million, with an effective date of 18 July 2018.
The directors of Wilson Bayly Holmes-Ovcon Limited (‘WBHO’ / ‘the group’) wish to advise shareholders of developments within the group during the second half of the financial year ending 30 June 2018.
“Group revenue increased from R15,4 billion to R18,1 billion at 31 December 2017. Overall revenue growth of 17% consisted of strong growth of 29% in Australia following the award of a number of large-scale projects in FY17; 64% growth from the rest of Africa due to increased activity in Botswana and progress on mining infrastructure projects in Ghana, Guinea and Burkina Faso; and a 6% decline in revenue from South Africa, partly due to Edwin Construction now being recognised as an associate and exacerbated by subsiding building markets which were only partially offset by good growth from the local Roads and earthworks division. Activity in the local construction materials market and particularly the supply of long-steel products remains challenging and revenue from Reinforced Mesh Solutions (RMS), before the elimination of inter-company sales, decreased from R433 million to R397 million over the first six months of the year.”
The directors further advise shareholders that the marked increase in earnings per share is attributable to the full value of the group’s socio-economic contribution arising from the Settlement Agreement signed with the Government of South Africa being recognised in the consolidated results for the comparative period ending 31 December 2016.
Executive Directors, Prescribed Officers and the Company Secretary have been granted rights (off market) to participate in the Company’s share incentive plan as follows: Performance share awards, which are subject to performance conditions and vest after three years.
Shareholders are advised that Macquarie is hosting a CEO Infrastructure Conference on Wednesday, 29 November 2017 at which the Company’s management will be submitting a presentation. The presentation will be made available on the Company’s website at www.wbho.co.za.
The financial information on which this presentation is based, has not been reviewed by the external auditors.
29 November 2017
The group delivered a positive set of results in a year where market sentiment in Australia was upbeat while locally, the year was characterised by low-growth, a volatile rand exchange rate and political events which impacted South African business confidence.