WBH Ovcon 6 month headline earnings down 19.5%

Construction group, Wilson Bayly Holmes-Ovcon says revenues increased by 16.5% to R8.4 billion for the six months ended December 2011, from R7.2 billion in 2010.

The company said the increase is predominantly a result of increased activity levels in Australia across both traditional markets and the mining and resources sector in Western Australia. 

Earnings per share (EPS) declined by 8.6% to 659 cents and headline earnings per share (HEPS) declined by 19.5% to 633 cents. 

The company also noted that the effect of the competitive conditions within both the local and Australian markets is evident in the reduction of the group's operating margin from 8.5% to 5.5%. 

Operating profit before non-trading items declined by 23.6% to R466 million when compared to the comparative period of R609 million. It remains comparable with the profits from the second half of FY2011, which amounted to R481 million. 

WBHO said it continued to cooperate with the Competition Commission, and that the commission was still assessing its submissions. 

"The outcome of the process will only be known later in 2012 and the group has made provision for a possible penalty. Compliance education is an ongoing process for all senior staff," the company said. 

Although the group said the business environment remained muted by uncertainties in the global economic and financial markets, its order book at the beginning of 2012 rose to R21.1 billion compared to R16.2 billion in June 2011. 

Approximately 50% of the book is in Australia, with the balance split equally between Building and Civil Engineering and Roads and Earthworks. The geographical split of the order book is now 61% foreign and 39% local. 

On the operational front, WBHO said it was pursuing opportunities within the renewable energy sector, and that it hoped these materialised in the short term. 

It added that it was encouraged by the potential increase in the South African government's public infrastructure spend. 

WBHO said it was in pursuit of new mining infrastructure work in SA and the rest of Africa, and that the new work prospects across Australia remained promising, with the 12 to 18 month tracked project pipeline amounting to AU$7.5 billion, slightly higher than the pipeline of AU$7.4 billion at June 30, 2011. 

"The contracting market in Western Australia remains buoyant due to strong global demand for commodities and significant investment in oil, gas and mining infrastructure. Penetration of the civil engineering market in Western Australia is progressing as we consolidate the businesses and enhance the WBHO brand," the company said.