WBHO diluted HEPS down 1.8% 1‚139.4c

Wilson Bayley Holmes-Ovcon (WBHO) CEO Louwtjie Nel.

Construction group Wilson Bayley Holmes-Ovcon (WBHO‚ WBO) has reported a 1.8% decrease in diluted headline earnings per share (HEPS) to 1‚139.4c for the year ended June 2013 from 1‚160.4c a year ago.

Its dividend per share was up 4.5% to 368c from 352c a year earlier.

The company reported a 1.4% decline in HEPS to R11.51 due to an additional provisioning of R91m in respect of the Competition Commission penalty which was finalised in July.

The civil engineering and construction company said earnings were also affected by an additional provisioning of R145m within three loss-making contracts in Australia and the general completion of contracts in all operating segments awarded when margin pressure was at its greatest.

Revenue increased by 32.9% to R23.8bn as a result of solid growth within each of the group’s operating segments and a general improvement in the construction operating environment. The growth in revenue was further assisted by a weakening rand against both the US and Australian dollar.

Despite the growth in revenue‚ operating profit before nontrading items decreased by 3.7% to R939m‚ with a corresponding decrease in the operating margin from 5.5% to 4%.

The company said profit from Renniks Construction had not met the earn-out target set at the time of acquisition and the contingent consideration was reduced by R9.7m‚ the refund for which was received. The negative profit outlook also necessitated an impairment of the remaining goodwill in the company.

The group’s Capital Africa Steel (CAS) division generated operating profit of R38m in the year‚ from R17m in 2012. These earnings were negatively affected by CAS’s share of equity accounted losses from Alert Steel‚ a loss arising from the sale of Alert Steel and exchange differences arising from currency fluctuations‚ ultimately resulting in an attributable loss of which the group’s share amounts to R29m.

The loss was partially offset by the group’s share of profits in Gigajoule International‚ which has seen good growth in gas sales in Mozambique this year.

The group said margins within the local building markets are improving and‚ as can be seen from the 123% increase in the building and civil engineering divisions order book‚ activity levels are high.

At June 30 2013 the order book had grown by 15.1% over the previous year‚ to R24bn‚ of which R21bn is expected to be executed in the 2014 financial year.

However‚ it said current levels of commodity prices continue to affect activity in the mining sector locally as well as in Africa and Australia.

Of particular concern is the decline in mining projects in West Africa. The suspension of the Mayoko project for Exxaro in the Congo has affected the roads and earthworks order book. The project is expected to begin later in the year and WBHO remains the preferred contractor.