Sanral draft procurement rules concern WBHO
WBHO, THE LISTED construction and engineering group, reports that the SA National Roads Agency’s (Sanral) proposed new procurement requirements remained a concern for large industry players, particularly listed companies with limited influence over their shareholders.
Sanral’s proposed new procurement requirements stipulate 51 percent black ownership and a minimum broad-based black economic empowerment (B-BBEE) Level 2 rating for prospective bidders.
Louwtjie Nel, the group chief executive of WBHO, said the company continued to engage with Sanral on the matter.
Business Report reported earlier this month that Sanral appeared to have softened its stance on the draft new procurement requirements launched in September, with Sanral spokesperson Vusi Mona indicating that it was not dogmatic about the 51 percent black-ownership requirement and it was Sanral’s opening position.
Nel said yesterday that the new Construction Sector Codes were gazetted in the second half of last year, and WBHO had improved its rating to a Level 1 contributor.
He added that the business environment remained uncertain, but the changing local political landscape, although still in its infancy, had injected “a sense of optimism” into markets and appeared to bode well for the country and economy as a whole.
“While it’s too early to foresee any potential positive outcomes for the construction industry, which has been in the doldrums over the past 24 months, an increase in fixed investment arising from renewed business and investor confidence, together with added public spending should the economy improve, can only be of benefit,” he said.
Strong results
WBHO yesterday reported strong financial results for the six months to December.
It said the reporting period was characterised by a healthy construction environment and positive market sentiment in Australia, increased mining infrastructure activity for the group in the rest of Africa and a resilient performance in South Africa set against an uncertain business climate and lacklustre economy.
Revenue rose by 17.3 percent to R18.1 billion from R15.4bn.
Nel said this revenue growth consisted of strong growth of 29 percent in Australia, following the award of a number of large-scale projects in the previous financial year; 64 percent growth from the rest of Africa due to increased activity in Botswana, and progress on mining infrastructure projects in Ghana, Guinea and Burkina Faso; and a 6 percent decline in revenue in South Africa.
He attributed the revenue decline in South Africa partly to Edwin Construction, one of the group’s black-owned mentorship partners in terms of the Voluntary Rebuilding Programme agreement with the government, now being recognised as an associate and exacerbated by subsiding building markets that were only partially offset by good growth from the local roads and earthworks division.
Operating profit improved by 8.1 percent to R510 million from R471m, but the group margin deteriorated to 2.8 percent from 3.1 percent because of margin slippage within the building and civil engineering division and the increased contribution to total revenue from Australia at lower embedded margins. This operating profit improvement was attributed to the revenue growth in Australia and with the roads and earthworks division.
Headline earnings a share from continuing operations grew by 82.6 percent to 727 cents from 398c. An unchanged dividend of 150c was declared. WBHO shares rose 0.88 percent on the JSE yesterday to close at R172.50.