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Settlement charge hits earnings at WBHO

Total order book increases by 5%, boosted by higher margin work from roads and earthworks division.

South African builder Wilson Bayly Holmes-Ovcon (WBHO) reported a 2.5% decline in full-year earnings due to its payment towards a fund to develop skills in the sector and give black workers a bigger role.

WBHO, which makes 58% of revenue from Australia, said headline earnings per share from continuing operations came in at 1 308 cents for the year ended June, down from 1 342 cents the year before.

WBHO was one of seven construction companies that agreed in October to contribute a total of R1.5 billion ($116 million) over the next 12 years towards a development fund. 

Read: Construction firms to pay R1.25bn into sector’s development fund

The group’s total order book increased by 5% to R45 billion, which was boosted by higher margin work from its roads and earthworks division.

Group revenue increased by 4% to R31.9 billion, while operating profit before non-trading items fell 1.8% to R986 million.

Shares in WBHO were up 1.5% to R140.15 at 08:51 GMT.


WBHO share performance


“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,” WBHO said in a statement.

Africa’s second biggest economy slid into recession in March and business and consumer confidence have been dented by high unemployment and credit downgrades by two of the top three ratings agencies following economic and political turmoil.

Read: SA economy recovers from recession in second quarter

Despite this, activity in the retail, commercial office and entertainment sectors boosted revenue for WBHO’s building and civil engineering division, which rose 8% to R8.1 billion.

WBHO, which entered the UK market in June with a 40% stake in Byrne Group, declared a final gross dividend of 325 cents per share.

($1 = R12.9575)

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