The global financial crisis has slowed economies around the world and South Africa’s is no exception. This, along with slow government infrastructure spend, has resulted in difficult trading conditions for the construction industry and has put pressure on a number of companies. Against this background we as WBHO have achieved a commendable revenue of R14,9 billion down 2.9% on the previous year and operating profit of R1,1 billion, 14,5 % down on the previous year.
Louwtjie Nel says, “Our effective teams, efficient site operation and keeping overheads to an absolute minimum, allowed us to maintain a satisfactory margin of 7,4%.”
“We have a strong balance sheet, very little debt and R2,8 billion in cash after substantial capital expenditure and a number of acquisitions. As a result, even in this low margin environment we are in a healthy state which is illustrated by our R16,2 billion order book, 110% of FY11 turnover and with no reduction in the dividend.
During the year our Roads and Earthworks Division secured a number of mining infrastructure projects in countries such as Sierra Leone, Ghana, Botswana, Zambia and Mozambique. Louwtjie says “This is the result of many years of careful relationship building throughout the African continent, which is now paying off. Our strong systems and well-developed logistics capability allow us to operate effectively in these harsh and remote regions. It is here that our tried and tested quality, environmental, safety and administrative systems come into their own.”
The R&E’s order book stood at R2,4 billion at year-end and with the subsequent award of an additional R1,7 billion we are well placed for the year ahead.
Our Building and Civil Engineering Division was successful in replacing all of the World Cup stadia and airport projects with impressive contracts, such as the new Standard Bank offices in Rosebank, the new Alexander Forbes offices in Sandton, Nicolway shopping centre on William Nicol Drive in Bryanston, the expansion of the Sandton City shopping centre and various commercial projects in Menlyn, Pretoria.
The Civil Division has a number of large projects, such as Xstrata’s Project Lion Phase II in Limpopo, with work continuing on Kusile Power Station and the Cape Town Harbour.
The Building and Civil division closed the year on a very positive note with a R5,7 billion order book. We are expanding our footprint in Australia where revenue grew 21% to R5.4 billion. A number of acquisitions and the strength of the dollar have made Australia a very attractive destination for us. Having started in a small way 11 years ago our growth has been impressive and we have managed to increase profits year-on year.
The Australian diversification has given us, through our subsidiaries Probuild Civils, CECK and Carr Civils, the opportunity of participating in the rebuilding of the road infrastructure in Queensland, following the floods earlier this year, and in the provision of infrastructure for the iron ore resource boom in Western Australia.
The building company, Probuild Constructions, has now firmly reached First Tier status in both Melbourne and Perth, where contracts of over R1 billion are not unusual.
Finally, our Projects Division has successfully negotiated the design and construction contract for the upgrading of the Beitbridge border post in Zimbabwe. The team is also involved in an engineering procurement and construction (EPC) project for a new gas fuelled power plant in Mozambique, is the preferred bidder on the Department of Rural Development and Land Reform offices in Tswane and is a participant in the N1/N2 toll toad concession where the announcement of the preferred bidder is imminent.
This is the first year since listing in 1996 that we have not made more profit than the previous year – an impressive record. With 80% of our order book coming from private clients we are well-placed to benefit when the South African government embarks on its R800 billion infrastructure spend.