WBHO gets a lift from Australia, and an accounting change
Where most of its peers have posted losses, geographic diversification and an accounting change helped construction and engineering group Wilson Bayly Holmes-Ovcon posted increased profit in the year to end-June.
Headline earnings per share (HEPS) rose 8% to R14.15, WBHO said on Tuesday.
Australia came in handy, with revenue there up 18%, more than making up for a sluggish performance in the group’s home market, where revenue dropped 7%.
Relative to its peers, WBHO has over time performed better operationally, as well as on the market.
WBHO said in the results statement that market sentiment was positive in Australia and the UK, while the local construction environment deteriorated rapidly, with a number of large and medium-sized contractors facing financial difficulties.
Basil Read and Esor both filed for business rescue, while Aveng is battling for survival after Murray & Roberts dropped a proposal to acquire the struggling group.
Australia accounted for 63% of total group revenue for WBHO, and SA 30%, Tuesday’s results statement showed. The balance came from the rest of Africa.
Group net profit was up 9.4% to R843.4m, as the group revenue rose 10% to R35bn.
"The local currency [rand] has been particularly volatile this year, resulting in currency gains of R128m — of which R80m related to cash balances held in the UK at June 30 2018," the results statement said.
WBHO said in a trading update a couple of weeks ago that accounting changes had also had a positive effect.
"Earnings per share have been positively affected by the accounting treatment required by IFRS 3 in respect of the group’s increased interest in the Byrne Group, which increased from 40% to 80% on June 18 2018," the August 23 trading statement said.
"Under IFRS the group is required to first dispose of its 40% interest in the company and recognise either a gain or loss thereon. Thereafter the group reacquires the 80% interest and recognises goodwill or a bargain purchase as necessary."
The company declared a final dividend of R3.25 per share, bringing the total to R4.75, which was unchanged from the prior year.
The share price was down 1.43% to R146.82 in early trade on the JSE on Tuesday, valuing the company at R8.8bn.