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rely on our ability

Annual Report 08

profile

As a leading force in construction in southern Africa,Wilson Bayly Holmes-Ovcon Limited is principally

involved in building construction, civil engineering androads and earthworks. The group is additionally

engaged in an expansion programme into greaterAfrica as well as internationally.

With a rich history of achievement that dates back toour establishment in 1970, the group is presently one of

the largest construction companies in southern Africaand is listed on the Johannesburg Stock Exchange.

a leading force inconstruction in southernAfrica towards 2010

company

1WBHO Annual Report 2008

annual report 08

contents

Financial highlights 2Policy and objectives 3

Seven year review 4Group structure 6

Geographical overview 8Segmental highlights 9

Board of directors 10Chairman’s statement 12

Chief Executive Officer’s report 15Operational review 18

Financial Director’s report 34Shareholder analysis 35

Sustainability ReportIntroduction 40

Human resources 40Organisational development 41

Health and safety 41Quality assurance 43

Internal audit 43Corporate governance 43

Transformation 46Corporate social investment 47

Annual Financial StatementsStatement of responsibility by the board of directors 48Statement of compliance by the company secretary 48

Report of the independent auditors 49Directors’ report 50

Accounting policies 52Group balance sheet 62

Group income statement 63Group statement of changes in equity 64

Group cash flow statement 66Notes to the financial statements 67

Company balance sheet 102Company income statement 102

Company statement of changes in equity 103Company cash flow statement 103

Company notes to the financial statements 104Annexure 1: Investment in subsidiaries 106Annexure 2: Investment in associates 107

Annexure 3: Unlisted investments 109Annexure 4: Interests in joint ventures 110

Annexure 5: Loans receivable 111Annexure 6: Long-term financial liabilities 113

Notice of annual general meeting 114Administration 112

Shareholders’ diary 115Form of proxy – Inserted

visionTo be the leading construction companywherever we operate, a pleasure to dobusiness with delivering quality solutionsconsistently.

ethosWe undertake to conduct our activities anddealings with all stakeholders and employeesembracing a culture of integrity, accountability,reliability and respect.

2 WBHO Annual Report 2008

financialhighlights

%

2008 2007 change

Group summary (R’000)

Revenue 10 783 651 8 127 793 33

Operating profit 959 039 376 225 155

Total assets 7 895 982 4 308 626 83

Cash generated from operations 2 239 493 1 239 405 81

Ordinary share performance (cents)

Earnings per share 1 303,2 500,4 160

Headline earnings per share 1 263,1 512,1 147

Dividends per share 242,0 121,0 100

Net tangible asset value per share 2 972,0 1 660,2 79

Closing share price 11 050,0 10 335,0 7

Financial statistics and ratios

Operating margin 8,3 5,1

Current ratio 1,1 1,0

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policy andobjectives

FocusTo concentrate our activities on those areas where ourengineering, construction and management skills willhave the greatest effect.

ServiceTo strive to provide an unequalled service to our clients.To deliver the standards of construction quality specified.To maintain cordial relationships with our clients and theirprofessional advisers and to minimise areas of dispute.

Human resource developmentTo create an environment which will provideopportunities for self-improvement and career growth forall employees, whatever their background.

TransformationTo support the country’s black economic empowermentinitiatives within the construction industry.

Labour relationsTo maintain good relationships with our labour force. Torecognise the position of trade unions within our industryand to seek common ground with them to ensure astable workplace environment for our workforce.

SocialTo interact with the disadvantaged of the communities inthe areas where we contract in an attempt to improvetheir standards of health and education.

SafetyTo give the highest priority to providing a safeenvironment within which our workforce can beproductively employed.

PartnershipsTo form strategic partnerships and participate in jointventures with other industry players where appropriate.To continue to support our associate companies formedin partnership with persons and companies from thepreviously disadvantaged sector of our society.

FinancialTo improve returns to shareholders at a rate in excess ofthe real growth of the economy and the constructionsector in particular. To keep debt at acceptable levelswith due regard to the nature of our industry and thetypes of contracts undertaken.

valuesAccountability– to do what we say we will do

Excellence– quality is our obsession

Human dignity– to trust in our employees’ abilities

Integrity– to be real and ethical

Passion– committed in heart and mind

Relationships– to develop and nurture relationships to secure our

future

Reliability– to understand that within our relatively short construction

time we build our clients assets that will last a lifetime

Respect– for each other, the environment, our industry and our

clients

Safety– the safety, health and well being of our employees is

not negotiable


seven yearreview

Years ended 30 June

R’000 2002 2003 2004 2005 2006 2007 2008

Consolidated income statementsRevenue 2 284 063 2 408 399 2 510 717 4 765 342 5 795 118 8 127 793 10 783 651

Operating profit before non-trading items 79 353 92 546 109 092 186 747 261 839 415 877 904 828 Impairment/amortisation of goodwill (26 680) (28 975) (12 114) (9 341) (4 928) (10 731) (18 994)Share-based payments expense – – – – – (34 610) (23 860)Profit on partial disposal of subsidiary – – – – – – 93 408 Fair value adjustments – – – – – 5 689 3 657

Operating profit 52 673 63 571 96 978 177 406 275 041 376 225 959 039 Net finance income 12 650 17 541 11 558 18 717 22 385 55 399 142 406 Share of associates’ profits/(losses) 13 437 18 816 20 271 1 749 7 188 14 679 (20 710)

Operating income 78 760 99 928 128 807 197 872 304 614 446 303 1 080 735 Taxation (25 483) (27 921) (30 393) (40 126) (75 343) (127 999) (318 211)

Net profit 53 277 72 007 98 414 157 746 229 271 318 304 762 524 Minority interests – – – (20 684) (31 603) (42 124) (46 355)

Profit attributable to equity shareholders of the holding company 53 277 72 007 98 414 137 062 197 668 276 180 716 169

Headline earnings 79 957 98 573 115 774 139 256 195 159 282 612 694 156

Consolidated balance sheetsAssetsProperty, plant and equipment 217 338 234 302 266 553 387 332 513 177 752 137 1 041 071 Goodwill 31 688 11 675 73 555 38 874 76 220 86 421 98 600 Investments 106 746 129 495 90 519 23 852 45 160 133 293 285 755 Other non-current assets – 937 63 046 37 410 92 822 318 265 Cash and cash equivalents 291 489 286 341 337 428 554 694 638 322 1 269 015 2 781 521 Other current assets 659 087 682 134 699 355 1 223 381 1 698 000 1 914 640 3 370 770

Total assets 1 306 348 1 343 947 1 468 347 2 291 179 3 008 289 4 248 328 7 895 982

Equity and liabilitiesShareholders’ equity 335 101 360 376 396 641 522 155 702 467 1 002 702 1 731 904 Minority interests – – – 40 619 60 311 78 702 83 429 Long-term financial liabilities 5 012 15 856 2 813 50 503 157 736 117 232 141 632 Other non-current liabilities 47 154 36 446 72 511 60 533 33 596 – 122 856 Bank overdrafts – – 14 007 15 361 12 319 564 4 597 Other current liabilities 919 081 931 269 982 375 1 602 008 2 041 860 3 049 128 5 811 254

Total equity and liabilities 1 306 348 1 343 947 1 468 347 2 291 179 3 008 289 4 248 328 7 895 982

Consolidated cash flow statementsCash generated from operations 174 925 59 795 225 811 285 211 239 965 1 239 405 2 239 493Net finance income 12 650 17 541 11 558 18 717 22 385 55 399 142 406 Taxation paid (19 942) (8 174) (21 610) (38 572) (55 218) (80 275) (224 994)Dividend paid (17 757) (21 086) (24 971) (30 520) (38 288) (59 400) (88 110)

Cash retained from operations 149 876 48 076 190 788 234 836 168 844 1 155 129 2 068 795Net cash flow from investing activities (61 589) (75 398) (133 216) (46 747) (194 009) (442 569) (530 556)Net cash flow from financing activities (5 645) 22 174 (20 492) 27 823 111 835 (70 112) (29 766)

Net increase/(decrease) in cash and cash equivalents 82 642 (5 148) 37 080 215 912 86 670 642 448 1 508 473


Years ended 30 June

2002 2003 2004 2005 2006 2007 2008

Statistics

Shares in issue

Number of shares in issue (000) 55 491 55 491 54 595 54 595 54 595 66 000 66 000

Weighted average number of

shares (000) 55 491 55 491 54 595 54 595 54 595 55 190 54 956

Diluted weighted average number

of shares (000) 55 491 55 491 54 595 54 595 54 595 55 190 55 118

Share performance

Basic earnings per share (cents) 96,0 129,8 251,1 251,1 362,1 500,4 1 303,2

Diluted earnings per share (cents) – – – – – – 1 299,3

Headline earnings per share (cents) 144,1 177,6 212,1 255,1 357,5 563,5 1 263,1

Diluted headline earnings per share

(cents) – – – – – – 1 259,4

Dividends per share (cents) 36,0 42,0 51,0 63,0 81,0 121,0 242,0

Dividend cover (times) 2,7 3,1 3,5 4,0 4,5 4,1 5,4

Closing share price (cents) 735 1 000 1 900 2 980 5 200 10 335 11 050

Ratios and statistics

Return on total assets (%) 8,3 8,6 9,4 8,7 10,4 10,7 13,9

Return on ordinary shareholders’

interest (%) 27,1 28,3 30,6 26,7 27,8 31,0 41,4

Current ratio 1,0 1,0 1,0 1,1 1,1 1,0 1,1

Debt/equity (%) 3,5 10,0 3,9 12,8 30,3 19,9 15,7

Net tangible asset value per ordinary

share (cents) 546,8 628,4 724,8 870,9 1 147,1 1 660,2 2 972,0

Operating profit margin (%) 3,5 3,8 4,7 3,9 4,5 5,1 8,3

Net profit margin (%) 2,3 3,0 3,9 3,3 4,0 3,9 7,1

Effective tax rate 32,4 27,9 23,6 20,3 24,7 28,7 29,4

Market capitalisation (R’000) 407 855 554 905 1 037 296 1 626 916 2 838 914 6 821 100 7 293 000

Exchange rates

US dollar (closing) 10,57 7,47 6,28 6,68 7,25 7,09 7,83

Australian dollar (closing) 5,85 4,98 4,33 5,09 5,30 6,03 7,49

Definitions:

Headline earnings per share: Headline earnings divided by the weighted average number of shares in issue.

Basic earnings per share: Attributable earnings divided by the weighted average number of shares in issue.

Diluted earnings per share: Attributable earnings divided by the diluted weighted average number of shares in issue.

Dividends per share: Ordinary dividends divided by the weighted average number of shares in issue.

Dividend cover: Attributable earnings divided by ordinary dividends.

Net tangible asset value per ordinary share: Ordinary shareholders’ interest less goodwill divided by the weighted average

number of shares in issue.

Current ratio: Current assets divided by current liabilities.

Debt/equity %: Total interest-bearing liabilities as a percentage of total shareholders’ interest.

Return on total assets: Profit before interest paid and taxation as a percentage of total assets.

Return on ordinary shareholders’ interest: Headline earnings as a percentage of average ordinary shareholders’ interest.

Operating profit margin: Operating profit as a percentage of revenue.

Net profit margin: Net profit as a percentage of revenue.

Market capitalisation: Number of shares in issue multiplied by the closing share price.


groupstructure

INDUSTRIAL

Chairman

Malcolm McCulloch CA(SA)

This group’s industrial activities are conducted throughCapital Africa Steel and its subsidiaries. Its main area ofactivity is the supply of reinforced steel, reinforced meshand rock anchors to the construction and miningindustries. We also supply steel manufactured productsto local and international markets and are suppliers ofdimension stone and ready mix concrete. The group willbe manufacturing steel pipes in Maputo early next year.

Steel pipe factory under construction, Maputo

BUILDING AND CIVILENGINEERING DIVISION

Managing director

Paul Foley BSc (Eng)

The division operates primarily in South Africa andAustralia, and has extensive experience in various types ofcivil projects including headgears, crushing plants,refineries, flotation tanks and other infrastructure. We arecurrently involved in the construction of sports stadia,retail centres, hotels, conference centres, office blocks,hospitals, apartment blocks and industrial and commercialbuildings. Our experience further includes construction ofsome of the most technically complex projects in southernAfrica such as airports, steel plants, reservoirs andaluminium smelters.

FNB/Wesbank head office, Johannesburg


ROADS AND EARTHWORKS DIVISION

Managing director

Kobie Botha Pr Eng, BSc (Eng)

Roads and Earthworks are specialists in the constructionof major freeways, roads, airport taxiways and parkingbays, bulk earthworks for all types of building andconstruction works, and bridges. The division carries outextensive works for the major mining houses in a numberof countries in Africa. This work includes the constructionof haul roads, slimes dams and other infrastructure. We have experience in the construction of damsthroughout southern Africa. Other specialist projectsinclude the laying of water, stormwater, gas andpetroleum pipelines, electrical reticulation and bulkservices. The division is involved with the infrastructure oftownship and eco and golf estate developments includingthe design and construction of golf courses.

Mbabane bypass, Swaziland

PROPERTY ANDCONCESSIONS

Managing directors

Property: Mike Simpson CA(SA)Concessions: Duncan Barry BSc (Eng)

The division is involved in property developments includinggolf estates, offices and retail projects, taking on the roleof developer as well as principal contractor.

We have the capability to exploit and project manageopportunities arising from private-public partnerships andfocus on toll roads, serviced accommodation and energyrelated markets.

Simbithi Eco Estate, KwaZulu-Natal


AUSTRALIA

AFRICA

overview

South Africa

Swaziland

Botswana

Moçambique

Zambia

DemocraticRepublic of Congo

Ghana

Perth

Brisbane

Sydney

Melbourne

geographical


segmentalhighlights

Operating profit Revenue before non-trading items

2008 2007 2008 2007R’000 R’000 R’000 R’000

Building and Civil Engineering 7 807 924 5 716 322 484 380 222 453 Roads and Earthworks 2 719 297 1 877 000 374 394 76 128 Industrial 183 689 289 648 39 058 65 083 Property and concessions 72 741 244 823 6 920 52 213 Unallocated – – 76 –

10 783 651 8 127 793 904 828 415 877

Building and Civil Engineering

Revenue

Roads and EarthworksIndustrialProperty and Concessions

Building and Civil Engineering

Operating profit

Roads and EarthworksIndustrialProperty and Concessions

Local

Revenue

InternationalLocal

Operating profit

International


board ofdirectors

every year senior executives meet toforecast the group’s profile five yearsinto the future


1. Michael Stanley Wylie (58)Pr Eng, BSc (Eng), BCom (Hons)Chairman

Mike joined WBHO Construction (Pty) Ltd three yearsafter graduating from the University of Cape Town. Hewas appointed managing director of the constructiondivision in 1988 and assumed the role of chairman of thegroup in 2002. He is co-chairman of the ConstructionIndustry Charter Group and is a member of the taskteam of the Deputy President’s Joint Initiative on PrioritySkills Acquisition (JIPSA).

2. Elia Louw Nel (47)BSc (Eng)CEO

Louwtjie joined WBHO in 1987 after graduating fromRAU with a BSc in Civil Engineering in 1984 andcompleting his national service. He spent several yearson civil and building contracts all over the countryincluding large shopping centres and casinos. He wasappointed alternate director of Construction North in1994, progressing to full director in 1999 and managingdirector in 2001, representing the civil and buildingdivisions on EXCO.

On 1 July 2008 he was appointed CEO of WBHOConstruction (Pty) Ltd and on 1 August 2008 wasappointed to the board of Wilson Bayly Holmes-OvconLimited.

3. Brian Graham Holmes* (71)BSc (Eng)

Brian was one of the founder members of the group in1970 and chairman from 1994 to 2002. After 36 years’service to WBHO he has retired with effect from1 August 2008.

The board extends their appreciation and gratitude tohim for the valuable contribution that he has made to thesuccess of the group. His vast experience in theconstruction industry will be missed.

4. Malcolm William McCulloch* (54)CA(SA)

Malcolm has occupied a senior executive position in theconstruction industry for many years. He participated inthe Advanced Management Programme at the WhartonSchool of Business, University of Pennsylvania, and iscurrently on the boards of a number of companies,including Wilderness Safaris Limited and The Kelly GroupLimited. He has been a board member since 2003.

5. John Wells Abbott (57)BSc (TRP), BCom, BCompt (Hons), CA(SA)

John qualified as a town and regional planner in 1975.He then worked in the auditing profession until 1985

when he moved to the construction industry and joinedthe company in 1989. He was appointed to the board ofWBHO Construction (Pty) Ltd in 1996 and in October2005 was appointed to the board of WBHO.

6. James Matingi Ngobeni* (56)BA (Hons) Geography, MCRP

James obtained his masters degree in city and regionalplanning from the University of Cape Town and obtaineda diploma/certificate in housing finance at HarvardUniversity, Massachusetts.

He is currently managing director of Matingi andAssociates, a town planning, transport planning, projectand construction management company, where he isresponsible for the co-ordination and management offinance and operations.

James is currently on the boards of the MAMOETSouthern Africa (Pty) Ltd, the South African Council forPlanners, Rand Airport (Germiston), Matingi & AssociatesCC, Ilembe Consortium and co-chairperson of theConstruction Sector Charter.

7. Nonhlanhla Sylvia Mjoli-Mncube* (50)BA, MCRP

Nonhlanhla obtained her masters degree in city andregional planning from the University of Cape Town anda Certificate in Technology from Warwick University (UK).In addition, she obtained a fellowship at MassachusettsInstitute of Technology (USA) and a Senior ExecutiveCertificate from Harvard University (USA).

She is presently the economic adviser to the DeputyPresident, focusing on ASGISA. Nonhlanhla serves onthe boards of Capitec Bank Holdings Limited, PioneerFoods and Cadiz Holdings.

Nonhlanhla has been the winner of several prestigiousawards, including Business Woman of the Year (SABC),Finance Woman of the Year (Department of Housing)and forms part of the Top 10 Black Leaders, selected bythe Black Management Forum.

8. Nonhlanhla Savannah Maziya* (40)BCom (Hons), MBA

Savannah’s current position is group CEO of BunengiHoldings, a company with mining and infrastructuredivisions. She previously occupied the position of CEOof African Broadcast Network (the largest TV network inAfrica with over 120 million viewers).

Savannah is currently on the boards of SRX UraniumOne, Aflease Gold, Phumani Paper and is a memberof the King of Swaziland’s Economic Advisory Board.

*Non-executive


chairman’sstatement

I am consistently impressed by theteamwork and talent that makesWBHO what it is today.

Mike Wylie, Chairman


Ownership – 1 671 employees received shares in theAkani Broad-Based Share Trust and thousands more willqualify in the years to come. Our black partners, namelyJames Ngobeni, Savannah Maziya and Nonhlanhla Mjoli-Mncube were each sold a further 150 000 shares in July2008. In addition Eddie Maila, CEO of our subsidiaryEdwin Construction was allocated 100 000 shares. Webelieve these shares are in good hands and all theseshareholders will add value to WBHO in the future.

Employment Equity – we are strong in both the lowerand middle management sectors but have much roomfor improvement in senior management. I am pleased toannounce that we have made good progress in thisregard, having moved from 8% black seniormanagement to 14% in the period and have plans inplace to move to 20% in the short term.

Training and Skills Development – enormous strideshave been made in this area and it is here that thefoundations of our growth vest. The combination ofmentoring, bursary schemes and numerous trainingcourses at all levels is enabling WBHO to copeadequately with the critical skills shortage and achievesolid growth. It is most gratifying to see our staff developand grow, surprising sometimes even themselves.Fortunately, we have lost very few staff to emigration andhave recruited virtually no staff from overseas.

Enterprise Development – helping develop otherblack contractors has assisted greatly in enhancingthe capacity of WBHO. At present we have fifteencompanies in our enterprise development programmebeing mentored by our various divisions throughoutthe country.

Procurement – we have over 4 000 suppliers andsubcontractors, most of them support the transformationprocess and our procurement from black companies asa percentage of total procurement has increased from8% to 35%. We thank all our suppliers andsubcontractors for their commitment to transformation.I believe that it is in this area of procurement where wewill make the biggest impact on transformation.

Well, it’s been quite a year and I trust that you, ourshareholders, are pleased with the sterling performancesof all divisions this financial year, especially bearing inmind that the increase in turnover from R8,1 billion toR10,8 billion and the increase in earnings per share fromR5 to R13 has been achieved in an environment of risingcosts, the credit squeeze, electricity shortages andheavy rains during the first quarter of 2008.

It is sometimes good to reflect on where we have comefrom to achieve these results – since listing we haveachieved a compound annual growth rate in headlineearnings of 36,9% and have accordingly beenrecognised by Standard and Poor, for the second year,as one of the top performing companies in the world.

All of the group’s divisions have done exceptionally well,covering civil, building and roads and earthworksthroughout South Africa. In addition all our contracts insub-Saharan Africa have performed well in difficultcircumstances, especially in the remote areas of Ghana,the Democratic Republic of Congo and northern Zambia,a testament to the determination and tenacity of our sitestaff as well as the efficiency of our logistics andtransport departments. In Australia, Probuild increasedits turnover and profits, especially in Perth and Melbournewhere excellent results were achieved.

I would like to highlight a performance that perhaps mayotherwise go unnoticed, namely that of our property andconcession division. Our turnover decreased fromR244 to R73 million (because we have had littleconcessions work during the period these figures applymainly to property). Towards the end of 2006, we took aview that property was reaching the end of its cycle andit was time to consolidate on what we had and make nofurther investments in the many developments thatcontinually come across our table. We therefore walkedaway from at least ten developments, the bulk of whichwere golf course estates. This was a difficult period forus because we were criticised for being negative.However, in January of this year, it was a relief to notethat we had made the right call.

The restructuring of our industrial arm, Capital AfricaSteel, has resulted in an opportunity to work closely withBrait and Caracal in building what we hope will becomea large, strong industrial entity.

What is also most pleasing is the good progress wehave made on the Construction Sector Charter. The seven elements of the Construction Scorecardprovide an excellent platform to tell you more aboutWBHO’s progress:


Corporate Social Investment (CSI) – we have spentR5 million during the financial year on a number of CSIprojects throughout the country. Our policy of relatingCSI spend to specific contracts is now well in place andwe believe this is far more effective than having CSIspend directed from the boardroom. The activities of ourcompany touch the poorest of the poor daily and thisCSI spend enables our staff at all levels to feel that theyare personally helping others in need.

Ten years ago, we thought that transformation was aburden to achieving growth. We have now come torealise that our growth is being achieved because oftransformation. It gives me great pleasure andsatisfaction to make this statement. I was disappointedto read in the recent press that transformation had gonebackwards over the past 12 months – this is certainlynot the case at WBHO.

At the end of August 2008, Minister Thoko Didiza gaveher written support for the Construction Industry CharterGroup to submit our final charter, adapted to the latestgeneric codes and third party review scrutiny, to DTI forfinal approval and legislation. We believe this is a majorstep forward for the sustainability of transformation in theconstruction industry.

I am pleased to report that we maintained our lost timeinjury frequency rate per million hours worked at 3.2which has been based on significantly more employeesand hours worked compared to last year. We continueto place emphasis on safety first throughout the group.

I am sure you are aware that I have resigned as CEOand now continue as executive chairman. I will retire inJune 2010. Our succession planning, which started overa year ago, is now in full swing. On 1 July 2008 LouwtjieNel was appointed group CEO, Paul Foley, groupmanaging director – Construction and Lance Cohen,managing director – Construction North. They join KobieBotha, group managing director – Roads and

Earthworks, Terry Armstrong, group procurement andrisk director and John Abbott, group financial director, tomake a formidable team.

In devising our succession planning, an enormousamount of discussion at all levels took place and I amconsistently impressed by the teamwork and talent thatmakes WBHO what it is today.

With our order book at a record levels we are confidentthat we will achieve real growth in the financial year toJune 2009. We are privileged to be involved in five majorWorld Cup Soccer projects and I am pleased to reportthat the Greenpoint, Durban and Polokwane stadia areon track and that progress at OR Tambo and KingShaka airports has been exceptional. I am sure you haveall noticed the wonderful central atrium now open at theCentral Terminal Building at OR Tambo Airport. Thehanding over of this significant portion of our R1,5 billioncontract represents the first of many handovers makingup the World Cup facilities – the public will soon start tofeel the excitement of South Africa hosting the WorldCup Soccer 2010 as these facilities become a reality.

I would like to thank my fellow directors for theirdedication and commitment over the past year both atboard and committee level. Brian Holmes retired fromthe board at the end of July this year, and on behalf ofWBHO, I extend thanks to Brian, a founder member ofthe group, for his 36 years of invaluable service. I wish tothank all our employees once again for their relentlessefforts in serving the group. Furthermore, I sincerelyappreciate the support that the families of ouremployees have given during the year which enabledWBHO to succeed at all levels.

Mike WylieChairman

chairman’s statement continued


chief executive officer’sreport

a culture of training and developmenthas become ingrained throughout WBHO


IntroductionIt is with pride that I assume the role of CEO for the groupwith effect from 1 July 2008. I have been with WBHOsince 1981 when I joined as a site engineer. In 1994 I wasappointed as an alternate director to Construction North,a regional division of building and civil engineering,progressing to full director in 1999 and managing directorof the division and EXCO in 2001.

Succession planningSuccession planning is critical in any business andparticularly ours where the average length of service ofour senior management is 19 years. With the quality andloyalty of our staff it is important that strategic dialogue isundertaken in order to ensure sustainability forsuccession within WBHO. I look forward to theassistance of Kobie Botha, Group MD – Roads andEarthworks and Paul Foley, Group MD – Construction asI begin my tenure as CEO. The executive committee hasbeen strengthened by a number of key appointments.The number of committee members has increased fromsix to eleven and I welcome Paul Foley, FernandoMonteiro, Paul Netscher, Mike Sprott, Peter Taylor andWayne Reddie to EXCO.

I believe the foundations for a new phase in the successof WBHO have been laid. At middle and juniormanagement levels we employ young graduates, offeringthem career paths and assist them to grow into ourculture and value system thus ensuring sustainability forthe group.

Financial overviewThis year has seen an increase of 155% in operatingprofit relative to an increase of 33% in revenue.Accordingly operating margins increased by 65% to8,4%. This has been as a result of the boom in theconstruction industry and WBHO’s ability to bid onlarger contracts at higher margins. Capital expenditureof R439 million, relating mainly to plant and vehicles,was incurred in order to ensure projects areadequately resourced.

Operational reviewLocally, we have been fortunate to have negotiated most ofour work from the private sector. This has enabled us toselect the type of contracts, clients and the professionalteams we prefer to work with, thereby substantiallyreducing our risks. The three stadia and three airports we

are building have provided us with a solid revenue streamand have enabled us to train and grow our resource base.These contracts will continue throughout the next financialyear. Interest rates locally have had no marked influence onour business as we are not involved in the housing market.Our relationships with private clients supply us with aconsistent stream of commercial building contracts.

Our Australian subsidiary, Probuild Constructions,increased its profits by 14% in Australian dollar terms. Theresults in Melbourne were excellent, whilst conditions inSydney remain much more competitive resulting inmargins being eroded. We have a solid base of securedwork in Perth. C.E.C.K., the group’s Perth-based civilengineering associate, increased both turnover and profitfor the year. Basic Constructions in Brisbane experienceda busy year, taking on a number of larger contracts.

ProspectsWe begin the 2009 financial year with an order book ofR18,3 billion, 73% higher than the figure at the end of2007. Infrastructure spend will continue well after 2010and we are confident that we will secure a fair portion ofthis work. We are also a member of various consortiabidding for Eskom work. Focus on PPP and EPCcontracts is opening opportunities not only in South Africa,but also further afield. We are currently looking into otherinternational markets for suitable partners to sustain ourgrowth and enhance our rand earnings. We believe we arewell placed to produce another year of real growth whilstmaintaining our profit margins.

AppreciationI would like to add to Mike Wylie’s words of thanks to allour staff and their families for their support without whichWBHO would not be the success it is.

Louwtjie NelChief executive officer

chief executive officer’s report continued


proudly contributingtowards

2010

1 Greenpoint Stadium, Cape Town2 Moses Mabhida Stadium, Durban3 Peter Mokhaba Stadium, Polokwane4 King Shaka International Airport, Durban

1

2

3

1

4


operational reviewBuilding and Civil Engineering Division

2005 2006 2007 2008

0

2 000

4 000

6 000

8 000

2005 2006 2007 2008

0

100

200

300

400

500

600

Revenue (Rm) Operating profit (Rm)

Revenue 37%

Operating profit 118%

2008 2007 R’000 R’000

Revenue 7 807 924 5 716 322 Operating profit 484 380 222 452

➜

➜

Group managing director: Paul Foley


The building and civil engineering division has throughthe years spread its footprint to be a major playerthroughout South Africa, with regional offices in CapeTown, Port Elizabeth, Durban and Johannesburg. Wealso have a presence in Australia where we are active inPerth, Melbourne, Sydney and Brisbane. As a divisionwe have been able to show consistent growth over theyears, even in lean times.

PerformanceThis financial year has been very successful for thedivision with all the regions showing excellent results.With the mining and infrastructure work picking up asexpected, the civil division has once again shownexceptional results and is well set to take advantage ofthe increased spend on infrastructure and powergeneration.

The division increased its revenue by 37% from R5,7 billionto R7,8 billion and operating profit from R222,5 million toR484,4 million, achieving an operating margin of 6,2%. The improved margins at which we have been able totender are now coming to fruition. Furthermore there havebeen no significant loss-making contracts this year. Allregions have produced good operating margins.

MarketAlthough there has been an overall tightening in theeconomy, both locally and internationally we stillenvisage opportunities for the construction industry forthe next few years. There is still a lot of public buildingwork including health care and community services to beundertaken in South Africa. The power and energy criseswhich occurred in January and February will have to beresolved. This is high priority task for the governmentand will provide work into the future. The short tomedium term pipeline for mining and infrastructure workremains strong and there is still a reasonable supply ofcommercial and retail contracts.

Regions and subsidiariesNorth

Construction North operates from WBHO’s head office inWynberg and descends from the building activities of theoriginal Wilson-Holmes company established in 1970. As the company evolved and established a nationalfootprint, Construction North expanded its operations inthe Gauteng, Limpopo, and Mpumalanga provinceswhilst assisting the other regional divisions on largercontracts.

The region has had a very good year, as a result ofundertaking larger contracts with higher margins. Thedivision contributed 20% of the group’s profit.

Traditionally private sector work formed the largest partof this region’s turnover, This has now been partiallyreplaced by government and infrastructure of work, suchas stadia and airports. During the year under reviewinflation and higher interest rates have restricted retailand office development. However, our ability to deliverquality buildings on time has cemented our relationshipswith clients and provides us with opportunities tonegotiate private sector work.

Contracts that have been successfully completed duringthe year include the National Library in Tshwane, theNorwood Shopping Centre upgrade, the Carnival Cityparkade for Sun International, Menlyn Parkade inTshwane, the Fairlands project in Randburg and anumber of hospital upgrades for Netcare.

We are progressing well with the extensions to Investec’shead office in Sandton, Morningside Shopping Centre,the upgrade to the Sun City main hotel and the MetcourtInn at Emperors Casino. The bulk of our contracts arelonger-term, including the Polokwane stadium which,despite some labour issues is still on track, the Centralterminal building at OR Tambo International Airport, King


Building and Civil Engineering Division continued

Shaka International Airport, the Glen Shopping Centreupgrade, the Zone multi use development and OneStation Place in Sandton, all of which continuethroughout the next financial year.

With the majority of our turnover secured, our orderbook remains positive and very few replacementcontracts are required to meet our budget for year.

Eastern Cape

The Eastern Cape region operates from Mossel Bay inthe Western Cape to East London in the Eastern Cape.We have been contracting in this area since 1985 withthe regional head office located in Port Elizabeth. Weexperienced a very successful year, doubling ourrevenue and maintaining operating margins.

Building conditions in the Port Elizabeth metropoleremain constant, albeit with the work in the privatesector showing signs of slowing down. We expect workfrom government and the Coega DevelopmentCorporation in the IDZ in the near future. Our currentorder book and the prospect of imminent contractawards give us a good chance of maintaining controlledgrowth next year.

This year, the region successfully completed a number oflarge projects including the Kings Mall Shopping Centrein Gonubie, East London, the Kings Court mixed useretail centre, two apartment blocks and the Moffett onMain Lifestyle shopping centre in Port Elizabeth.

We are currently constructing two shopping centres, theFountains Regional Mall in Jeffreys Bay and the RosehillMall in Port Alfred. Both are due for completion at theend of the year. We have also commenced building anextension of the Cleary Park Shopping Centre in PortElizabeth due for completion in March 2009. Work onthe five star Radisson Hotel, an eighteen storey buildingin Port Elizabeth, remain on programme. We are alsoconstructing two hospitals, one in Grahamstown and theother in Port Alfred.

The Eastern Cape region is looking forward to anothersuccessful year.

Cape

The Cape region has been operating for over 30 years,firstly as Ovcon and since 1996, as WBHO.

In the second half of this financial year, the region hasbegun to feel the slowdown in the building sector withtwo of the region’s projects currently on hold, namelyIntaba Hotel and Waterstone extension, pending SDPapprovals.

It has been an exciting year with the Greenpoint stadiumtaking shape and all the pressure that comes with theconstruction of a mega project. The second large hub ofactivity, at the V & A Waterfront consists of theconstruction of four luxury apartment blocks and the sixstar One & Only Hotel. Another major project keeping usbusy is the Ben Schoeman harbour container terminalberth deepening. We have recently been awardedcontracts for the construction of the N1 City Hospitaloncology, the Century City retail pods, the Century CityEdison Square and the House Chantal & Brandon.

The region is focusing on maintaining its status as thepreferred contractor in the Western Cape especially in theV&A Waterfront by delivering projects on time and to thehighest standards of quality. We have managed to handover three of the four apartment blocks, Palgrave,Pembroke and Kylemore, on programme and to a level ofquality that has never before been achieved in Cape Town.

The order book is healthy, with the current majorprojects taking us into the new financial year. Thegovernment is releasing infrastructure projects which willallow steady growth. As Cape Town is a popular touristdestination this will fuel growth in years to come and webelieve we are well placed to receive our fair share.

KwaZulu-Natal (KZN)

The division has been in KZN for more than 20 years,the market has historically been tough and competitionhas once again been keen this year.

Despite the two World Cup projects, the Moses Mabhidastadium and the King Shaka International Airport, theconstruction industry in KZN continues to be verycompetitive with tight margins being experienced.However, there are still a number of opportunitiesavailable.

During the financial year we successfully completed theNondela Drakensberg administration building and showhouses, the Gatemax tenant fit-out, as well as sectionalhandovers on the Huletts project in Pietermaritzburg.


The St Lucy’s hospital at Tsolo and the IDZ project inEast London are progressing well and are on track forcompletion in August 2008 and December 2008respectively.

The World Cup projects, both in joint venture, will keep asignificant portion of the division’s resources occupiedthis year and are on track for completion by 2010. Thedivision has also managed to secure The Lincoln-On-The-Lake project in Umhlanga with the potential forfurther negotiated work. Our order book is nearly full forthe next financial year and despite the competitiveenvironment we look forward to another successful year.

Civil

The division was formed three years ago out of theNorth region arising from the prospect of increasedinfrastructure work emanating from the mining andpublic sectors.

The volume of civil work has improved markedly over thelast few years and we foresee numerous opportunities inthis sector.

The Civil division has had another successful year withturnover increasing by 70% and an improvement incontracting margins.

This year saw the successful completion of theconcentrator at Potgietersrust Platinum for AngloPlatinum and the first phases at the East London IDZ.Other work completed during the year includes the newchrome furnace for Samancor in Middelburg, work atAmandelbult for Anglo Platinum and a number of smallercontracts for Impala Platinum in Rustenburg.

Resources from the Civil division will shortly be releasedfrom the soccer stadia at Polokwane and Durban.Further work has been secured in both Mokopane andEast London which will keep these teams busy well intothe next financial year. Significant new contracts includethe new concentrator for Nkomati Nickel, a number ofcontracts with Anglo Coal and BHP Billiton Coal, and theexpansion of the Impala Platinum refinery in Springs.

The successful implementation of training initiativesimplemented over the last four years has enabled thisdivision to cope with the large increases in turnover.

Australia

WBHO has a 60% stake in Probuild Constructions. Ourinterest in the company dates back to 2001 and sincethen Probuild has extended its building operations fromits base in Melbourne to both Sydney and Perth. It alsohas a subsidiary in Brisbane, Basic Constructions, whichundertakes civil engineering contracts.

Overall, the Australian group performed well, increasingprofits this year by 14% in Australian dollar terms. Due tothe strong dollar these profits, on translation, reflect anincrease of 43% over the previous year.

It is gratifying to note that the results achieved havebeen underpinned by an excellent performance inMelbourne, the group’s main sphere of operations,where profits increased by 43% over the prior year. The company was successfully awarded a number oflarge contracts in the latter half of the financial year andis well positioned to achieve further growth in Melbournein 2009.

Conditions in Sydney have been a lot more competitive.Whilst the region managed to maintain turnover at thesame level as 2007, margins were eroded and profits forthe year were lower.

In Perth, a good start has been made onOne40WilliamStreet, a contract in excess ofAUS$200 million. Additional contracts have recentlybeen awarded and we begin the new financial year inPerth with a solid base of secured work. C.E.C.K., thegroup’s civil engineering associate, increased bothturnover and profit for the year.

In Brisbane the amount of civil engineering workavailable for tender remains at a high level but consistsof a number of large projects. Bids for small to mediumcontracts have become more competitive and, as inSydney, turnover levels in this region were maintainedbut profits achieved were lower than those of theprevious year.

Australia begins the new financial year with 88% of its budgeted turnover secured and is poised toachieve significant increases in both turnover andprofit in 2009.


Building and Civil Engineering Division continued

Human capitalOur results bear testament to the ability andcommitment of all our staff. We take great pride in thesuccesses we have experienced in offering themopportunities within WBHO. The group trains its staffboth internally and externally. Over the last few years wehave trained over 100 foremen on site which hasassisted us to cope with the capacity restraints withinthe construction industry.

Prospects and order bookThe future of the division certainly seems positive for thenext few years with some current long-term contractsthat have recently started and our loyal client base thatalways gives us first option on their work. We are lookingto venture further into Africa and internationally to spreadour risk over several economies. The division’s expertisein EPC (engineer, procure and construct) contracts, suchas the King Shaka International Airport in KZN, isgrowing and as such we will be pursuing similaropportunities not only in southern Africa, but alsointernationally.

The division looks forward to the next financial year withthe majority of budgeted revenue already secured.

Kylemore apartments, V&A Waterfront Marina, Cape Town


National Library, Pretoria

370 Dockside Drive, Melbourne, Australia


operational reviewRoads and Earthworks Division

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Revenue 2 719 297 1 877 000 Operating profit 374 394 76 128

Revenue 45%

Operating profit 392%➜

➜

Group managing director: Kobie Botha


The Roads and Earthworks (R&E) division consists ofeight business units with its core business being theconstruction of airports, roads, rail, bridges, dams,reservoirs, infrastructure, petrochemical installations,pipelines, mining infrastructure as well as infrastructurefor golf and residential estates.

The R&E division originates from the merger of PeterBayly Construction and Wilson Holmes in 1983 and wasofficially established as a business unit in WBH in 1988.

Twenty years of growth has resulted in one of the largestand most diversified R&E companies in southern Africa.

PerformanceThe R&E division has had an outstanding year,increasing its revenue by 45% to R2,7 billion (2007:R1,9 billion) and operating profit to R374,4 million fromR76,1 million in 2007.

All business units had solid results for the year with theexception of Matkovich & Hayes, which suffered from the downturn in the property market and the resultingdecrease in demand for golf estate developments.

MarketWe believe that strong infrastructure spending bygovernment and parastatals will continue for the nexttwo to three years. Competition for the available workwill increase as some of the smaller and medium sizecompanies have grown substantially because of theboom in the industry over the last few years.

The spend by mining houses in extracting resourcessuch as coal, iron, copper and platinum should still bestrong for another five years. Infrastructure for energyrelated projects will continue unabated, however golfcourse and eco estate developments will be slow.

Regions and subsidiariesNorth

The North region has experienced solid growth duringthe period under review, with a record 48% growth inrevenue over the previous year and an increase inoperating profit of 105%.

Significant projects include the successful completion ofthe Berg River dam in the Western Cape, for TCTA, thestart up of the civil works package for the King ShakaAirport in KwaZulu-Natal, for ACSA and Dube Tradeport;the upgrading of the railway line carrying iron ore toSaldanha, for Transnet, and the completion andcommissioning of the civil works for the new Mafubecoal mine in Mpumalanga, for Anglo Coal.

Further ongoing work includes dams for the Ingula pumpstorage scheme in the Drakensberg, for Eskom, the civilworks for the new Klipspruit coal mine in Mpumalanga,for BHP Billiton, together with the civils portion of thePhola coal handling plant for the BHP Billiton/Anglo CoalJoint Venture, the infrastructure to the Nondela GolfEstate in the Drakensberg, for Abalengani, and ourportion of the Gauteng Freeway Improvement Project,for SANRAL in joint venture.

In order to sustain future growth we have increased ourtraining budget so as to educate and employ moreengineers and technicians, particularly from thepreviously disadvantaged communities. By way ofmentoring and intensive training programmes, bothinternal and external, and through fast-trackdevelopment we will be able to achieve ourempowerment goals and satisfy our human resourcerequirements.

The North region will continue to target larger sizeprojects throughout South Africa both individually and injoint venture. The type of work will rely heavily on South


Roads and Earthworks Division continued

Africa’s infrastructure requirements and varies betweentownship infrastructure projects for private clients, mininginfrastructure projects for the likes of BHP Billiton, Anglo,Exxaro and ARM; railway formation work for Transnetand Eskom, airport infrastructure for ACSA and majorroadworks for SANRAL.

Against this diversified background and with a goodorder book the region can look forward to continuedgrowth with improved margins for the next five years.

Coastal

The division operates in the coastal regions of theEastern Cape and KwaZulu-Natal provinces, and hasdone so for the last 20 years. Revenue for the year hasgrown 36% while still producing solid contractingmargins.

During the year the region successfully completed theSAPREF refinery to Island View tank farm transferpipeline replacement contract, started construction ofthe eThekwini Municipality’s AC water pipe replacementcontract and continues its involvement in the Ilembe CivilConstruction Joint Venture at the King ShakaInternational Airport. Work is progressing well on theMount Frere road contract as well as the Kenton-on-SeaEco Estate.

Infrastructure work in the region has not yet beenforthcoming due to provincial and municipal capacityconstraints, however the division is well placed to securework on the larger public and private infrastructureprojects and is the preferred bidder for the R700 millionAlbany regional water supply scheme.

Our area of operations encompass regions that requiremuch needed infrastructure improvements and we areconfident that there is a major political will to deliver onthis in the near future.

90% of the region’s 2009 budgeted turnover is securedand indications are that there will be continued growth inthe area if government can fulfil its delivery promises.

International

This year has seen pleasing growth for the division. Ouractivities in Ghana have been relatively quiet, althoughwe successfully completed the third phase of the Ahafotailings dam for Newmont mining. In Zambia, we

completed our initial US$29 million earthworks contractfor the Lumwana Mining Co., and have negotiated anadditional contract to extend a water diversion channelaround the existing mine pit. At Tenke, in the DRC, ourinitial plant site earthworks contract has been extendedwith the award of four additional contracts including alarge section of the plant site civil works, the tailingsfacility as well as the permanent village infrastructure.Our civil operations in Australia are growing slowly butsteadily, and we should see increased contributions fromboth C.E.C.K. in Western Australia and BasicConstructions in Queensland over the next few years.

One of our more notable achievements over the last yearhas been to source quality manpower from outsideSouth Africa. We have approximately 170 expatriates onthe Tenke site in the DRC, of whom only 20% are SouthAfricans. The plant fleet has been expanded, andstrategic partnerships are bearing fruit. On a safety note,there was not a single lost time injury during the year,which is a remarkable achievement given the difficultconditions.

We will be busy on all current sites for at least the next12 months. We also intend extending our activities toother African countries whilst giving seriousconsideration to expansion on other continents.

The division is budgeting for growth in revenue andmargin in the next financial year.

Moçambique

The division has had a successful year with an increasein revenue of 75% over the previous year with goodoperating margins. This growth has been achieveddespite a decrease in activities within Moçambique. Theregion is still active with contracts at the Maputo Port,the Xinavane sugar mill, the Mapapa road contract andthe construction of a 30 000m2 pipe factory. However, inorder to take advantage of buoyant trading conditionselsewhere we have secured contracts in South Africaand the DRC, namely the Barberton/Nelspruit roadupgrade, section 1 of the N4 Nelspruit bypass and in theDRC a portion of the Tenke mine infrastructure project.

Looking ahead to 2009, prospects are good withbudgeted increases in revenue and acceptable contractmargins. 95% of our budgeted revenue for next year issecured and we feel comfortable that we will meet ourtargets.


Swaziland/Botswana

R&E has been active in Swaziland since the mid-ninetiesand in Botswana since 1990 where most contracts havebeen executed by our subsidiary company, Kalcon.

In Swaziland we are currently constructing the Mbabanebypass road whilst in Botswana we are currentlyinvolved with projects in Orapa, Francistown, Shasheand Gaborone where the upgrade of the Sir SeretseKhama airport has just commenced. We havesuccessfully completed the Ntimbale water treatmentworks and pump station and the 44km Shashe pipeline.The design and construct of the Orapa storage dam willbe complete in August 2008.

Botswana, over the years, has proved to be a stablearea for producing steady growth and pleasing results.Swaziland has been more erratic in terms of both workopportunities and profit.

The division has had an excellent year, with increases inboth revenue and operating profit.

Prospects for future work in Swaziland are notpromising. Botswana, however, has more potential withfurther opportunities in mining and governmental work.

Edwin Construction

Edwin has traditionally worked for the provincialgovernments of Mpumalanga and Limpopo. This yearsaw expansion into the North West province.

Revenue increased by 30% over the previous year, butproblems on specific contracts have prevented similarmargins being achieved.

Competition has increased in this market with the entryof a number of new developing companies which arenow competing in the medium-sized project market.There has been a reduction in new contracts out totender as provincial budgets have already beenallocated.

We have specifically remained in the provincialgovernment market while opportunities have arisen frommega road projects for SANRAL. We believe thisstrategy will benefit us once the 2010 infrastructureboom has abated.

The company has recently been awarded its largestcontract worth R239 million to upgrade the road fromWitbank to Ogies. Edwin has built up an excellentreputation with the provincial governments and this willbe an advantage to us bidding for the infrastructureupgrades planned for these regions. Our order book isfull taking us into the next financial year.

The company is growing steadily and personnel andplant resources are being continuously improved.

Matkovich and Hayes

Matkovich and Hayes has successfully completed the fullconstruction and/or reconstruction of courses at Ebotse,Waterberg, Steenberg, San Lameer and Kranspoortduring the year under review. Results have beendisappointing due to the decline in demand for golfestate developments over the year, and consequently wehave not been operating at full capacity and marginshave been adversely affected.

Work commenced at Dunblane near Newcastle andcontinues at Nondela in the Drakensberg.

The club management sector of the business, InsideRight, presently manages two operations at Ebotse andCotswold respectively, and is holding its own.

The golf course construction industry has been furthernegatively influenced by rising interest rates and it isexpected that the downturn in this sector will continuethrough the next financial year. However, we are activelylooking for opportunities internationally to replacecontracts that have been completed in South Africa.

Insitu Pipelines

Insitu has been a contractor for the installation ofpipelines for water, sewer, petrochemical and gasthroughout southern Africa since 1994 and specialises intrenchless construction methods for the installation andrehabilitation of existing pipelines.

The company has performed well during the yeardoubling the turnover and returning above averageprofits. Whilst retaining market share in the trenchlessarea, the company has increased turnover by expandinginto steel pipe laying.


Roads and Earthworks Division continued

The market is buoyant at the moment due to largepipeline contracts in the offing and the need to replaceageing infrastructure in urban areas.

In addition to maintaining our business with establishedclients, new pipe-cracking work has been obtained fromthe eThekwini Municipality on the existing water mainsreplacement contract through to 2010.

The eThekwini pipe replacement project in Durban isprogressing well and we are responsible for all thetrenchless installation which has led to significant savingsin time and reinstatement whilst reducing inconvenienceto the public. The Klapperkop pipeline contracts inTshwane are almost complete and we have beencommended by the client for our quality and approachto the work which will stand us in good stead goingforward. We have also been awarded three newJohannesburg Water contracts for the replacement ofvalves and sewers.

The outlook is very promising with the prospect ofawards on large water schemes and as a result ofongoing work in the energy related fields.

R&E will continue to take its share of the availableinfrastructural spend in the local markets and will widenits activities by working for selected clients in Africa andfurther abroad. Due to the capability and capacity withinthe division, we will target the larger contracts where wecan offer our clients a “one stop” solution.

Human capitalThe excellent performance of the division is directlyattributed to the dedication of our teams. Constructionskills remain a scarce commodity and all business unitshave budgeted substantial amounts for the training of alllevels from artisans through to senior and topmanagement.

Transformation is on track and we have achieved verygood success with junior and middle managementthroughout the division. The challenge for the comingyear will be to achieve the same success at seniormanagement level.

Prospects and order bookProspects for the year are positive as the division hasalready secured 86% of its projected work for the nextfinancial year.

PPRust Mine, Limpopo


Berg River dam, Western Cape

Mafube coal mine, Mpumalanga


operational reviewIndustrial Division

Division restructured toimplement growth strategies

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2008 2007 R’000 R’000

Revenue 183 689 289 648Operating profit 39 058 65 083

Chairman: Malcolm McCulloch


WBHO has concluded a partnership with Brait SouthAfrica Limited in order to expand its industrial base.Capital Africa Steel (Pty) Ltd (CAS) has been restructuredto facilitate this expansion. WBHO will retain 50% of theissued capital of CAS, Brait 40% and management 10%subsequent to the restructuring.

CAS has acquired Symo Corporation, a long-establishedsteel engineering business, and a 50% interest in SteelMecca, a steel trading company in Rustenburg, as partof its expansion strategy.

CAS has also entered into partnership with the SevenStar Group of Huludao, China to establish a pipe factoryin Maputo, Moçambique. The cost of the factory isexpected to be in the region of R300 million and isexpected to go into production early next year. Equityparticipation is dependent upon certain milestones beingachieved but CAS’s interest will not be less than 50%.

Approval by the competition authorities to acquire a 60%interest in the 3Q Concrete Group was granted prior tothe financial year-end. The group is a manufacturer ofready mix concrete for markets in the North West andLimpopo provinces. There are a number of otherpotential acquisitions currently under consideration.

Reinforcing and Mesh Solutions (Pty) Ltd continues to bethe largest contributor of profits to CAS and followingthe increased demand for steel by the constructionindustry it achieved strong profit growth during the year.

Dywidag Systems International (Pty) Ltd in which CAShas a 50% equity interest experienced strong demandfor its products from the mining industry and alsoachieved excellent growth during the year.

All divisions are budgeting for increased turnover andprofits for the 2009 financial year.

Tswala-RMS assembly factory, Elandsfontein


operational reviewProperty and Concessions Division

Property division anticipatesmarket changes well inadvance

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Revenue 72 741 244 823 Operating profit 6 920 52 214

Group managing director Property: Mike Simpson

Group managing director Concessions: Duncan Barry

St Francis Links Clubhouse, St Francis Bay


During this financial year a decision was made not toinvest in any further property developments due tounease over the property market. This decision hasproved to be correct and we have not been adverselyaffected by the downturn in the market.

The infrastructure of our two property developments isvirtually complete and both are in highly desirablelocations. As a matter of interest, the golf course atSt Francis Links was given a 5 star rating by themagazine Compleat Golfer, which makes it one of thetop 18 courses in the country. The Simbithi course wasrated 32nd in South Africa and the best new course inKwaZulu-Natal by the same magazine.

Sales have been slow this year as a result of theincrease in interest rates, rising prices and the tighteningof the economy and this has resulted in a decline inprofit.

Concessions remain quiet with fair value adjustmentsmaking a minor contribution to this year’s results.


financial director’sreport

growth in operating marginencouraging


The construction sector in South Africa grew by over18% in 2007 compared to an overall rate of GDP growthof 5%. Forecasts for 2008 indicate a lower rate ofgrowth but nevertheless still well ahead of other sectorsof the economy.

It is against this background that it gives me greatpleasure to present this year’s results. The group’srevenue increased from R8,1 billion in 2007 toR10,8 billion this year, an increase of 33%. Mostencouraging is the growth in the operating margin upfrom 5,1% to 8,4%, an improvement of 65%. Thereasons for this are threefold. Firstly, older contractstendered at lower margins have now essentially beencompleted. Secondly, certain high risk contracts in Africaare performing well, and lastly contracts which were bidat higher margins, as a result of the construction boomhave started to contribute profits.

Our headline earnings increased by 146% toR294 million and our earnings per share increased by160% to 1 303,2 cents (2007: 500,4 cents). The group’soperating profit of R905 million grew from R416 million,an increase of 118%.

R93 million was realised from the disposal of 50% of ourinvestment in Capital Africa Steel (Pty) Ltd (CAS). As aresult, CAS was consolidated for the first six months andequity accounted for the remainder of the year.Therefore, the segmental analysis shows only the sixmonths in which CAS was accounted for as a subsidiary.

The loss in associates of R20,7 million was mainly theresult of a goodwill impairment of R58,1 million withinCAS in the second half of the financial year. Theimpairment is a technical requirement arising from therestructure of the company and the intrinsic value of thebusiness has not changed. Other associates, namelyC.E.C.K. Civil Construction Pty Ltd (Australia), IlembeAirport Construction Services (Pty) Ltd and GigajouleInternational (Pty) Ltd contributed R7,1 million toearnings.

The fair value adjustment of R3,6 million is in respect ofour investment in the Bakwena Platinum Toll Roadconcession. The share-based payment expense ofR23,8 million relates to the issue of shares to ouremployees and management. The R18,9 millionimpairment of goodwill consists of write-downs in valuesof L.E.T. Construction (Pty) Ltd and Matkovich andHayes (Pty) Ltd.

Investment income of R162,7 million arose mainly frommonies held on call deposit. Cash generated fromoperations increased by R1,1 billion. This is mainly afunction of the increased levels of activity and effectiveworking capital management. A significant portion of theR2,7 billion in cash reserves is held in joint ventures orrepresents advance payments. Finance costs relatemainly to plant and machinery under instalment saleagreements.

The capital expenditure spend for the year amounted toR439,4 million, which is R58 million more than wasapproved at the beginning of the year. The major reasonfor this additional expenditure is attributable to the plantrequirements necessary for expansion in Africa. This yearwe have authorised R466,4 million for capitalexpenditure of which R81,9 million has been committed.

The dividend of 242 cents for the year is double that oflast year. The dividend cover has been set at 5,4 timesto fund growth and maintain our liquidity going forward.Next financial year it is our aim to bring the cover in linewith previous years.

The order book is full at R18,3 billion (2007:R10,6 billion). R7,5 billion relates to our Australianoperations, R6,2 billion to the local Building and CivilEngineering division and R4,6 billion to the Roads andEarthworks division.

John AbbottFinancial director


In accordance with the JSE Listing Requirements, we set out below analysis of our shareholders:

Registered shareholder spread

Number of Number ofShareholder spread shareholders % shares %

1— 1 000 shares 4 141 66,51 1 838 102 2,791 001— 10 000 shares 1 723 27,67 5 079 344 7,70

10 001— 100 000 shares 282 4,53 10 172 152 15,41100 001— 1 000 000 shares 74 1,19 23 432 061 35,50

1 000 001 shares and above 6 0,10 25 478 341 38,60

Total 6 226 100,00 66 000 000 100,00

Public and non-public shareholdings

Number of Number ofShareholder type shareholders % shares %

Non-public shareholders 140 0,56 24 388 076 36,95

• Directors 2 0,03 680 307 1,03• Associates of directors 8 0,13 4 003 924 6,07• Employees 128 2,06 5 481 301 8,31• Akani Investments Holdings (Pty) Ltd 1 0,02 9 989 000 15,13• WBHO Share Syndicate 1 0,02 4 233 544 6,41

Public shareholders 6 086 97,75 41 611 924 63,05

Total 6 226 100,00 66 000 000 100,00

Substantial investment management and beneficial interests—above 3%

Shareholder Shareholding %

Investec Asset Management 5 742 350 8,70PIC 4 254 447 6,45Old Mutual Asset Managers 4 206 865 6,37Capital Group Companies Inc 2 848 268 4,32William Blair Investment Management 2 431 071 3,68

Total 19 483 001 29,52

shareholder analysis


Geographic analysis

Region Shareholding %

South Africa 55 159 601 83,58United States of America and Canada 4 960 819 7,52United Kingdom 569 371 0,86Rest of Europe 2 694 654 4,08Rest of the World1 2 615 555 3,96

Total 66 000 000 100,00

1Represents all shareholdings except those in the above regions

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Share price and volume performance over one year

July 2007 - June 2008 reporting period


hopes and dreams. . .it takes a small victoryto inspire a nation


sustainabilityreport

Introduction 40Human resources 40

Organisational development 41Health and safety 41Quality assurance 43

Internal audit 43Corporate governance 43

Transformation 46Corporate social investment 47


Sustainability report continued

IntroductionThe primary concern of any business should be toincrease enterprise value. However, in order to achievethis over the long term it is necessary to take an holisticview. The board of WBHO fully supports such anapproach and in setting its strategy and in our dailyconduct we strive to be a good corporate citizen.

We believe that it is vital for our future as a country thatblack economic empowerment be advanced as quicklyas possible but in an orderly and sustainable manner.This is even more important in the construction industrywhich is the third largest employer of labour in thecountry. Our chairman has played a leading role since2004 in bringing the Construction Charter to a pointwhere it can now become law.

In tandem with black empowerment is the necessity totrain our people at all levels. There is currently a world-wide shortage of skills which has been exacerbated inSouth Africa by the urgent requirement to expand ourinfrastructure. The group has placed a high priority ontraining at all levels this year and the success of thisinitiative can be measured by the increase in productivity.

We do not view in-house training as a solution to atemporary problem but as a critical component of ourlong-term viability. We are fully aware that our long-termsuccess is dependent on a contented workforce. Westrive to be a fair, equal opportunity employer whichrecognises the trade unions operating in our industryand we work towards maintaining a harmoniousrelationship with them.

We also recognise that we have an obligation to thecommunity at large and in particular to those in theareas in which we contract. Our CSI activities are set outin greater detail on page 47.

WBHO also recognises the importance of soundcorporate governance practices and adheres to theprinciples set out in the King Report on CorporateGovernance. The board recognises that it needs tocomprise more independent non-executive directors andis currently giving this matter attention.

The impact our contracting activities may have on theenvironment is also given high priority and is second inprecedence only to safety in our site managementpractices.

We realise that our success is heavily dependent uponmaintaining good relationships with our clients,subcontractors and suppliers. We aim to be fair and toact ethically in our dealings with all our stakeholders.

Human resourcesEmployment equity and empowerment

WBHO fully supports the drive to empower previouslydisadvantaged South Africans and enthusiasticallyaccepts the challenge to transform our constructionindustry.

WBHO’s policy is based on the principle of “bestopportunity for all” rather than “only opportunity forsome”. It seeks to identify, develop and rewardemployees who demonstrate qualities of initiative, hardwork and loyalty. It emphasises opportunity forcandidates with potential rather than criteria basedpurely on demographic or racial grounds.

The notion of “window dressing” or tokenism inemployment equity practices is insulting to any employeeand is rejected by the group. WBHO will strive to haveits workforce reflect both the demographic compositionof the industry it serves and ultimately society at large.

In these efforts to achieve reasonable representation,consideration must be given to the skills required by thecompany. The group will not enforce a quota-basedsystem, and it will strive to reach its targeted levels ofdemographic representation through proper recruitment,accelerated training and development as well aspromotional practices.

Employment by the group shall remain on a merit andidentified potential basis, rather than some other basiswhich is unrelated to the capacity of a person to do thejob required.

WBHO supports the South African government’s BEEinitiatives and in doing so is actively involved in thetransformation of the construction industry. WBHOrecognises the importance of BEE as a key driver ofsustainable economic growth and positive transformationin South Africa.

The following table reflects the demographics ofWBHO’s employees, in terms of the Employment EquityAct, as at 30 June 2008:


Occupational levels Designated Non-designated Total

White ForeignMale Female male nationals

Occupational levels A C I A C I W W Male Female

Top management 4 1 5 – – 1 – 80 91

Senior management 3 2 5 – – – 4 69 83

Professionally qualified and experienced specialists and mid-management 157 35 27 37 3 4 34 249 546

Skilled technical and academically qualified workers, junior management, supervisors, foremen and superintendents 538 96 23 6 3 2 11 202 881

Semi-skilled and discretionary decision making 1 922 141 24 103 42 15 83 143 2 473

Unskilled and defined decision making 6 915 152 11 559 22 6 15 25 7 705

Total permanent 4 556 309 73 132 58 23 119 624 5 894

Non-permanent employees 4 983 118 22 573 12 5 28 144 5 885

Grand total 9 539 427 95 705 70 28 147 768 11 779

*Excludes Australia employees

Organisational developmentWBHO believes that a truly effective organisation is onein which both the organisation and the individual canmutually grow and develop. We have created a culture oftraining, support and promotion that allows us to providenearly all the necessary skills requirements from withinthe group.

In order to achieve scorecard targets, WBHO isdedicated to improving the effectiveness of theorganisation and its members by means ofsystematically planned interventions. Focus has beenplaced on graduate development programmes,supervisor learnerships and the development of criticalskills. Our bursary programme sponsors students suchthat artisans, supervisors, technicians and graduatesbecome available each year.

WBHO realises the importance of accelerating trainingand the gaining of experience in line with the group’ssuccession planning. This acceleration involvesmentoring, attending appropriate courses and mostimportant of all, on-the-job training.

We spend millions of rands on training each year but wehave no doubt that the real value is obtained in the workplace through support and camaraderie and mostimportantly everyone enjoying the success achieved byan individual.

We are fully compliant with the Skills Development Act,Skills Development Levies Act and CETA, and have metall the requirements for full grant reimbursement.

Health and safetySafety standards within WBHO are continually improving.Furthermore we have improved the safety levels ofnumerous subcontractors who have worked with WBHOduring the year. WBHO was part of the nine memberTechnical Task Team which revised the ConstructionRegulations which are due for promulgation during 2008.A National Construction Advisory Council has beenformed by the Department of Labour which will bereporting to the Minister of Labour regardingconstruction related issues and we are proud to be partof this council. The council is set to continue until theend of 2010.


Training of our employees in safety is a major focusand is considered as important as having aqualification to do a specific task. During the year wetrained 235 first aiders, 230 HSE representatives, 62fire fighters, 98 portable electrical tool operators, 129scaffold erectors, 87 scaffold inspectors, 25 in safelifting practices, 24 in hazard identification and riskaccess, 86 in IRCON safety courses for supervisors,48 in accident investigation and course analysis and31 in modern health and safety environment trainingcourses.

As our clients become more environmentally and safetyaware, their comprehensive specifications haveencouraged WBHO to improve its levels of safety andenvironmental standards.

Senior management regards the health and safety ofemployees and persons affected by our operations to beof vital importance. Safety remains the first item on theagenda of all divisional and executive board meetings.Our primary objective is to achieve and maintain thehighest practicable level of health and safety standardsin all areas of WBHO’s operations.

To this end we will ensure that:

• Matters affecting health and safety are accorded ahigh level of priority;

• Adequate precautions are taken to prevent injuries,incidents and damage; and

• The provisions of all relevant legislation as well as theHealth & Safety Management System are compliedwith.

To achieve our goals it is necessary to:

• Train our employees in occupational health and safetyissues in order to– ensure competence in the workplace;– be aware of the potential hazards implicit in their

work activities; and– be aware of their scope of authority in terms of

Occupational Health and Safety control;

• Manage occupational health and safety to acceptablestandards;

• Enforce health and safety measures with discipline inthe workplace; and

• Protect the public and persons from health and safetyhazards associated with our work.

WBHO employees worked 25 735 344 hours in 2008(2007: 20 766 998 hours). The lost time injury frequencyrate (LTIFR) remained at 3.2 for 2008.

The LTIFR represents the number of injured persons booked off work forevery 1 000 000 (1 million) hours worked.


2006 2007 2008

0

50 00 000

10 000 000

15 000 000

20 000 000

250 00 000

30 000 000

0

2

4

6

8

10

Manhours LTIFR

Safety awards

The results below are for the MBA Regional Safety competition. The awards are to WBHO contracts or facilities.

Category R50 to R120 million 1st place Port Alfred HospitalCategory R120 to R200 million 1st place Radisson HotelCategory R200 to R500 million 1st place Fountains Shopping CentreCategory R500 million plus 2nd place KSIA JVCategory R500 million plus 3rd place CTB JVCategory R200 to R500 million 2nd place Investec ExtensionsCategory R20 – R50 million 3rd place Acasia HospitalCategory Yard 1st place WBHO Plant and Services Yard North

Best Safety Officer Gauteng Region2nd Best Safety Manager Gauteng Region


HIV/AIDSWBHO has commenced with a second round of HIVAwareness, Counselling and Testing (ACT) of employees,with a recognised and experienced managed healthcareservice provider who has secured funding from PEPFAR(the US Presidential Plan for AIDS Relief) programme.

WBHO has undertaken to provide company funded ARVtreatment to HIV+ permanent employees who are notcovered by a medical aid HIV programme, and who haveregistered on the managed care programme of theaforementioned healthcare service provider.

To date a total of 4 692 people have participated in ACT,of which 3 766 volunteered to be tested for HIV. Thisrepresents a success rate of 81%.

Of the people electing to be tested, 96% requested theirtest results. This is a particularly significant statistic, as itreflects the high level of understanding amongst theworkforce of the importance of knowing their HIV status.

Information flowing from the HIV/AIDS programme willenable WBHO to implement interventions that willreduce the future effect of HIV/AIDS on the group.

WBHO compliments all involved in the brave decisionthat they have made, both in discovering their ownstatus as well as serving as an example to colleagues.

Quality assuranceWBHO in its motto “Rely on our ability” signifies theconcept of a focused group, which concentrates onproviding its clients with a quality product. To this end,the group mobilises its management skills and itsresources in the most efficient and cost effective mannerto produce projects to the required standard and quality.

WBHO ensures quality management by using the bestconstruction practices within the core activities of thegroup. In adhering to this philosophy the group becameISO 9001:2000 certified.

All procedures are formalised, controlled and continuallyimproved in line with a comprehensive qualitymanagement system based on the ISO 9001:2000international standard.

Training of our employees in our quality system has beenidentified as a major improvement tool and training isongoing at all levels throughout the group.

The group monitors and audits the Quality ManagementSystem to ensure compliance with customer, regulatoryand international requirements. All business units,including sites, offices and support functions aremonitored on a regular basis. The performance of oursuppliers is monitored and supplier audits are conductedto measure compliance.

Through regular meetings, audits and discussions, it isenvisaged that the impact of the quality managementsystem will add significantly to the performance of thegroup.

Internal auditThe scope of internal auditing encompasses theexamination and evaluation of the adequacy andeffectiveness of the organisation’s system of internalcontrol and the quality of performance in carrying outassigned responsibilities.

The internal audit department furnishes managementand the audit committee with analyses, appraisals,recommendations, counsel, and information concerningactivities reviewed. The audit objective is to promoteeffective control at reasonable cost.

The department operates in a manner that is consistentwith the Standards for the Professional Practice ofInternal Auditing, the professional standards of conductand the Code of Ethics of the Institute of InternalAuditors, Inc.

Objectivity requires that internal auditors have anindependent mental attitude, and an honest belief in theirwork product. Independence permits internal auditors torender impartial and unbiased judgements essential tothe proper conduct of audits. The internal auditors ofWBHO are independent of the activities they audit, andcan carry out their work freely and objectively.

Corporate governanceWilson Bayly Holmes-Ovcon Limited is committed to theprinciples of integrity, accountability and transparency asset out in the second King Report on CorporateGovernance in South Africa (the Code). The boardrecognises the importance of sound corporategovernance principles in its dealings with all stakeholdersand thereby carry out their responsibilities based on thecore principles.


The board strives to provide leadership and vision to thecompany in a manner that will enhance shareholdervalue and ensure its long-term sustainable developmentand growth.

Compliance with the Code

The group complied with the Code throughout the yearended 30 June 2008 with the exception that thechairperson is not independent.

Board of directors

The board comprises seven directors chaired by MikeWylie. In accordance with sound corporate governanceprinciples, the board has a majority of five non-executivedirectors, two of whom are independent. The day-to-day affairs of the group are the responsibility of the chiefexecutive officer. The board is responsible for settingstrategy, monitoring succession planning, determininginvestment policy and reviewing quarterly performancein detail against previously approved budgets. Theboard is responsible for identifying risk areas and formonitoring them. The board meets four times a year ona formal basis.

The board holds a strategy meeting with executivemanagement on an annual basis to determine strategicdirection and to consider plans proposed bymanagement for the achievement thereof.

None of the directors have service contracts with thecompany. One-third of the directors retire each year byrotation and re-appointment is subject to the approval ofthe shareholders at the annual general meeting. A curriculum vitae of each director standing for re-election is placed before shareholders at the annualgeneral meeting to assist in deciding their merits for re-election. Non-executive directors have access tomanagement and the records of the company, and may,at the group’s expense, seek external professionaladvice should the need arise.

The directors currently participating in the WBHO BEEscheme are James Ngobeni, Savannah Maziya andNonhlanhla Mjoli-Mncube. The remaining directors arenot participants in any of the company’s share schemes.

The board has established subcommittees which areaccountable to the board. These committees are a vitalassembly of skills that seek to concentrate on achievingset objectives, designed to delegate board functionality,

assist and monitor the executive and ensure thatdedicated functions are executed in the best interests ofthe group and its stakeholders.

Remuneration committee

The remuneration committee consists of three non-executive directors, Malcolm McCulloch, SavannahMaziya and chaired by Brian Holmes. The committeemet twice during the year and management attendedthe meetings by invitation.

The remuneration committee is responsible for evaluatingthe performance of executive directors andmanagement, and for setting appropriate remunerationfor them.

Responsibilities of the remuneration committee include:

• Determining the remuneration packages andconditions of employment of the group executivedirectors;

• Reviewing the company’s retirement funding policies;

• Recommending allocations in terms of the company’sshare purchase and share option schemes;

• Reviewing annual bonuses; and

• Recommending the appointment of new directorsthrough a formal and transparent procedure.

The group’s philosophy is to remunerate its directors,executives and staff with competitive and appropriatelystructured packages and to reward them over andabove their packages with incentive bonuses and byparticipation in share incentive schemes at levels basedon results achieved.

Audit committee

The audit committee for the year under review comprisedMalcolm McCulloch (Chairman), Brian Holmes and JamesNgobeni, all non-executive directors. The committee mettwice this year and management as well as internal andexternal auditors attended the meetings by invitation. The internal audit manager has unrestricted access toboth the chief executive officer and the chairman of thecommittee, and is invited to attend and report on hisdepartment’s activities at all management meetings.

The committee meets with the external audit partnersand the internal audit manager without managementbeing present.



Responsibilities of the audit committee include:

• Overseeing the internal audit function;

• Reviewing and amending the group’s internal controlsand operating procedures to suit changingcircumstances;

• Reviewing the systems in place to ensure that thebusiness risk areas are identified and thatmanagement institute appropriate controls andmanage risk effectively;

• Reviewing the financial reporting including specificdisclosures in compliance with accounting standards;

• Reviewing the audit recommendations; and

• Setting the principles for recommending the use ofthe external auditors for non-audit services.

The systems in place are considered to be adequate toprovide reasonable assurance against material lossthrough fraud or unauthorised use of the group’sassets and that all transactions are properly authorisedand recorded.

The audit committee includes risk management in itsportfolio and reports to the board on its evaluation of therisks faced by the company and the recommendedstrategies for mitigating the impact thereof.

Developments

During the year, legislation was promulgated thatspecified that the audit committee comprise at least twoindependent non-executive directors. As a result of thislegislation and the retirement of Brian Holmes, themembership of the audit committee was changed. Witheffect from 1 August 2008, Malcolm McCulloch agreedto remain as chairman of the audit committee until theboard has found a suitably qualified independent non-executive director to chair the committee. The otheraudit committee members are James Ngobeni andNonhlanhla Mjoli-Mncube, both being independent non-executive directors. The board made the decision to splitrisk management into a separate sub-committee.

In addition to the committees of the board mentionedabove, a number of standing committees have beenestablished to oversee the day-to-day management ofthe group’s affairs.

Nomination committee

The group does not have a nomination committee butthe board undertakes a self-evaluation process on anannual basis.

Risk management committee

The board is responsible for overseeing the riskmanagement processes in the group in accordance withcorporate governance best practice. This is achievedthrough the risk committee, a subcommittee of the auditcommittee.

The risk committee is governed by a charter whichoutlines its primary purposes as being to:

• Establish and maintain a common understanding ofthe group’s risk;

• Ensure that a proper business risk assessment iscarried out and that a risk profile is compiled bymanagement;

• Monitor the group’s risk management and assuranceefforts; and

• Satisfy the corporate governance reportingrequirements.

Developments

In August 2008 it was proposed that a risk committee,reporting to the board, be constituted. The duties andresponsibilities of this committee would be transferredfrom the audit committee. The committee wouldcomprise a non-executive board member, still to benominated, executive director John Abbott andoperational directors Terry Armstrong and Paul Foley.The financial, information technology, internal audit,quality assurance, insurance, commercial, procurement,environmental and safety departments are representedthrough invitees to the committee. This committee willconvene at least twice a year. The committee will reportto the board on a regular basis setting out its evaluationof the risks faced by the company and the recommendedstrategies for mitigating the impact thereof on thecompany. Ultimate responsibility for risk identification,evaluation and management remains with the board.

The company has a confidential reporting process inplace.



Attendance at board meetings

Attendance by the directors at the meetings held during the year are recorded below:

MS JW BG MW JM NS Mjoli- NS Date Wylie Abbott Holmes McCulloch Ngobeni Mncube Maziya

Board meetings:24/08/2007 P P P P P P P09/11/2007 P P P P P P P22/02/2008 P P P P P P P09/05/2008 P P P P P P P

Audit committee:20/02/2008 P P P P P n/a n/a16/05/2008 A P P P P n/a n/a

Remuneration committee:09/11/2007 P P P P n/a n/a P03/03/2008 P P P P n/a n/a P

P = Present at meeting

A = Apologies submitted

Non-executive directors’ fees

The board, board subcommittee members and theirrespective chairmen, are paid a flat fee per annum, asrecommended by the executive committee andapproved by the shareholders in terms of the company’sArticles of Association.

An analysis of directors’ remuneration, share options andshareholding is disclosed on pages 82 and 83 of thisreport.

Conflicts of interest and share dealings

The board stipulates that directors must disclose anypotential conflict of interest and any other directorshipsheld by them. Directors are prohibited from dealing in thecompany’s shares during closed periods which extendrespectively from 1 January and 1 July prior to the datesof the announcements of the interim and year endresults. In addition, directors may not trade during anyperiod when they have access to price-sensitiveinformation.

Going concern

The directors are of the opinion that the business willremain a going concern in the year ahead and astatement in this regard is also contained in thestatement on the responsibility of the directors for theannual financial statements.

Ethics and whistle-blowing policy

The group is committed to maintaining long-termrelationships with its clients and maintaining highstandards of ethical behaviour is one of the mostimportant adjuncts to this.

We are a signatory to and support the anti-corruptioninitiative launched by the Engineering and Construction,Energy and Mining and Metals Governors of the WorldEconomic Forum.

The group has set out rules for its staff covering thereceipt of gifts and entertainment from subcontractorsand suppliers. We communicate the group’sstandards and values to new employees during theinduction process and operate a confidentialwhistleblower system.

All reports made in terms of the whistle-blowing policyare fielded by the internal audit department, whichensures that these are treated confidentially. Theinformation is submitted to management and to internalaudit for investigation.

TransformationEmployees receive their first share allocationcertificates

Various presentations were held nationally to bearwitness to the fruits of WBHO’s transformation drive


where qualifying employees of the WBHO Broad-BasedShare Employee Incentive Scheme received their firstshare allocation certificates. The event was a proudmoment for WBHO and marks a milestone for thecompany.

WBHO Executive Chairman, Mike Wylie stated that:

“We may have a long way to go to fully transform ourcompany and our industry, but under the guidance ofthe seven elements of the Charter, transformation ishappening in a co-ordinated and effective way. And withthe help and support of Government, we believe that wecan transform our industry into an entity of which all ofus can be proud.”

Succession planning

The remuneration and nomination committee isresponsible for succession planning at executive level.Central to all succession planning is the group’s overallBEE and employment equity strategy. Line managerstogether with human resource managers are responsiblefor human capital planning to ensure that training anddevelopment interventions address the multipleobjectives of skills development, succession planningand employment equity are achieved.

Corporate social investmentThis year WBHO spent R5,2 million on various aspectsof corporate social investment.

WBHO participated in the following projects:

TRAC

A partnership formed between the Department ofEducation, the University of Stellenbosch and WBHO,where a travelling science laboratory is deployed to asmany schools as possible within the suburb ofAlexandra, north of Johannesburg. This is a three yearprogramme and aims to assist all schools to improveeducation in the sciences, targeting both learners andeducators.

Business Against Crime

The company contributes towards this initiative on anannual basis.

ComMart – Livestock farming

WBHO has formed an alliance with ComMart wherebythe local farming community close to our contract inMount Frere has been engaged in order to improve theiranimal husbandry skills.

Sport

The company has sponsored James Kamte, a youngand talented black golfer, who is currently on theEuropean golf tour.

Social programmes

We are involved in social programmes throughout thecountry where we assist organisations involved withHIV/AIDS orphans, social welfare, child care, socialactivities, education, sick care etc.

Lydia Bici, Department of Public Works and Gwede Mantashe, Secretary General of the ANC presentWBHO employees with their share allocation certificates


The directors are responsible for the preparation,integrity and fair presentation of the financial statementsof Wilson Bayly Holmes-Ovcon Limited and itssubsidiaries. The financial statements, presented onpages 50 to 113, have been prepared in accordancewith International Financial Reporting Standards (IFRS)and the Companies Act of South Africa 1973, andinclude amounts based on judgements and estimatesmade by management. The directors have alsoprepared any other information included in the annualreport and are responsible for both its accuracy and itsconsistency with the financial statements.

The directors acknowledge that they are ultimatelyresponsible for the system of internal financial controlestablished by the group and place considerableimportance on maintaining a strong control environment.To enable directors to meet these responsibilities, theboard sets standards for internal control aimed atreducing the risk of error or loss in a cost-effectivemanner. These standards include the proper delegationof responsibilities within a clearly defined framework,effective accounting procedures and adequatesegregation of duties to ensure an acceptable level ofrisk. These controls are monitored throughout the groupand all employees are required to maintain the highestethical standards in ensuring the group’s business isconducted in a manner that in all reasonablecircumstances is above reproach. The focus of riskmanagement within the group is to identify, assess andmonitor all known forms of risk across the group. Whilstoperating risk cannot be fully eliminated, the groupendeavours to minimise it by ensuring that appropriateinfrastructure, controls, systems and ethical behaviourare applied and managed within predeterminedprocedures and constraints.

The directors are of the opinion, based on informationand explanations given by management and the internalauditors, that the system of internal control providesreasonable assurance that the financial records may berelied on for the preparation of the financial statements.However, a system of internal control can provide onlyreasonable, and not absolute, assurance againstmaterial misstatement or loss.

The going concern basis has been adopted in preparingthe financial statements. The directors have no reasonto believe that the company or the group will not begoing concerns in the foreseeable future based onforecasts and available cash resources. The viability ofthe company and the group is supported by thefinancial statements.

The financial statements have been audited by theindependent auditors, BDO Spencer Steward(Johannesburg) Inc., who were given unrestrictedaccess to all financial records and the related data,including minutes of all meetings of shareholders, theboard of directors and committees of the board. Thedirectors believe that all representations made to theindependent auditors during their audit were valid andappropriate. BDO Spencer Steward’s unqualified auditreport is presented on page 49.

The financial statements were approved by the boardof directors on 23 September 2008 and are signed onits behalf.

MS Wylie NS MaziyaChairman Director

statement of responsibility by theboard of directors

I confirm that the company has lodged with the Registrar of Companies in respect of the year ended 30 June2008 all returns which are required to be lodged by a public company in terms of the Companies Act of 1973, asamended, and that all such returns are true, correct and up to date.

Mrs S Vally-KaraCompany secretary

statement of compliance by thecompany secretary


To the shareholders of Wilson Bayly Holmes-Ovcon LimitedWe have audited the accompanying annual financialstatements and group annual financial statements ofWilson Bayly Holmes-Ovcon Limited, which comprisethe directors’ report, the balance sheet as at 30 June2008, the income statement, the statement of changesin equity and cash flow statement for the year thenended, a summary of significant accounting policies andother explanatory notes as set out on pages 50 to 113.

Directors’ responsibility for thefinancial statementsThe group’s directors are responsible for the preparationand fair presentation of these financial statements inaccordance with International Financial ReportingStandards, and in the manner required by theCompanies Act of South Africa, 1973. This responsibilityincludes: designing, implementing and maintaininginternal control relevant to the preparation and fairpresentation of financial statements that are free frommaterial misstatement, whether due to fraud or error;selecting and applying appropriate accounting policies;and making accounting estimates that are reasonable inthe circumstances.

Auditors’ responsibilityOur responsibility is to express an opinion on thesefinancial statements based on our audit. We conductedour audit in accordance with International Standards onAuditing. Those standards require that we comply withethical requirements and plan and perform the audit toobtain reasonable assurance whether the financialstatements are free from material misstatement.

An audit involves performing procedures to obtain auditevidence about the amounts and disclosures in thefinancial statements. The procedures selected dependon the auditors’ judgement, including the assessment ofthe risks of material misstatement of the financialstatements, whether due to fraud or error. In makingthose risk assessments, the auditor considers internalcontrol relevant to the entity’s preparation and fairpresentation of the financial statements in order todesign audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing anopinion on the effectiveness of the entity’s internalcontrol. An audit also includes evaluating theappropriateness of accounting policies used and thereasonableness of accounting estimates made by the

directors, as well as evaluating the overall presentationof the financial statements.

We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for ouraudit opinion.

OpinionIn our opinion, the financial statements present fairly, inall material respects, the financial position of thecompany and the group as of 30 June 2008, and itsfinancial performance and its cash flows for the yearthen ended in accordance with International FinancialReporting Standards, and in the manner required by theCompanies Act of South Africa, 1973.

BDO Spencer Steward (Johannesburg) IncorporatedRegistered Auditors

13 Wellington RoadParktown 2193

23 September 2008

report of the independent auditors


Nature of businessThe company is listed on the securities exchangeoperated by JSE Limited and is the holding company ofa number of subsidiary companies principally engagedin civil engineering and building contracting activities inthe Republic of South Africa and internationally.

Group resultsGross revenue increased by 33% to R10,8 billion (2007:R8,1 billion), giving an operating profit of R904,8 million(2007: R415,9 million) which represents an increase of118% over the previous year. Headline earnings for theyear amounted to R694 million (2007: R283 million). The group income statement set out on page 63 givesfurther details.

Interest in subsidiariesDetails of principal subsidiary companies are disclosedin annexure 1. A full list of subsidiary companies isavailable on request from the company secretary.

The holding company is an investment company andconsequently all profits shown in the group incomestatement were earned by subsidiary companies. Nomaterial losses were incurred by the subsidiaries this year.

On 15 January 2008, the group concluded apartnership with Brait South Africa Limited (Brait) andCaracal (Pty) Ltd (Caracal) to facilitate the restructuringof Capital Africa Steel (Pty) Ltd (CAS). The effect of thetransaction reduces the group’s interest in the equity ofCAS from 100% to 50%. Brait and Caracal hold theremaining 50%.

DividendsDependent upon profits earned and the availability ofcash, the policy of the company is to pay an interimdividend in April and a final dividend in October of eachyear. A final dividend of 182 cents per share in respectof the 2008 year was declared on 29 August 2008.This, together with the dividend of 60 cents per sharedeclared after the interim results were released,represents a total payment to shareholders for the yearof 242 cents per share (2007: 121 cents).

Share capitalThe company’s issued share capital is 66 000 000ordinary shares.

The unissued ordinary shares are under the control ofthe directors, subject to the regulations of the JSE, until

the next annual general meeting to be held on29 October 2008. At this meeting, shareholders will berequested to grant the directors general authority tocontrol a percentage of the unissued shares until thenext annual general meeting.

Share incentive schemesA summary of transactions undertaken by the shareincentive schemes during the year is disclosed innote 27 of the financial statements.

In terms of the trust deeds a further 1 054 669 sharescould be issued to eligible employees. None of thedirectors are participants in these schemes.

Participants in the schemes are advanced interest freeloans by the trust to enable them to purchase theshares offered.

The trusts are consolidated for the purposes of thegroup financial statements.

Details of the black empowerment share-based schemefor employees and selected black partners aredisclosed in note 27 of the financial statements.

Borrowing powersThe articles of association place no restrictions on thedirectors concerning the amount of money the companymay borrow.

DirectorateIn terms of the company’s articles of association,Messrs MW McCulloch and JM Ngobeni retire byrotation at the forthcoming annual general meeting.Both are eligible for re-election.

Shareholders will also be asked to confirm theappointment of Mr EL Nel as a director.

Details concerning the company’s secretary, businessand postal addresses are set out on page 115.

Directors’ shareholdingThe interests of the directors and those of their familiesappear in note 25 of the financial statements.

There have been no material changes to directors’shareholdings between the balance sheet date and thedate of this report. The composition of the board isdisclosed on page 11.

directors’ report


Directors’ interest in contracts Directors’ interests in contracts are disclosed in note 25of the financial statements

Property, plant and equipmentFull details of the property, plant and equipment aredisclosed in note 1 of the financial statements.

Post-balance sheet eventsOn 1 August 2008 Mr EL Nel was appointed to theboard as an executive director and Mr BG Holmesretired from the board.

Mr JM Ngobeni, Ms NS Maziya and Ms NS Mjoli-Mncube were each sold 150 000 Akanishares and Mr E Maila, the CEO of our subsidiary EdwinConstruction (Pty) Ltd, was sold 100 000 Akani shares.

On 1 July 2008 the group increased its shareholding inC.E.C.K Civil Construction Pty Ltd from 40% to 67% ata cost of R19,7 million.

On 3 September 2008 the board of directors of ProbuildConstructions Pty Ltd proposed a share buy back of5,5% of the issued share capital of the company. Theeffect of the transaction will increase the group’s interestin the company from 60% to 63,5%.

Special resolutionsThe following special resolutions were passed during theyear:

Subsidiaries:Edwin Construction (Pty) Ltd subdivided its authorisedshare capital of R1 000 into 40 000 000 ordinary sharesof R0,000025 each and subdivided its issued sharecapital of R100 into 4 000 000 ordinary shares ofR0,000025 each (26 May 2008).

Capital Africa Steel (Pty) Ltd subdivided its authorisedshare capital of R1 000 into 10 000 ordinary shares ofR0,01 each and subdivided its issued share capital ofR300 into ordinary shares of R0,01 each (16 August2007).

Capital Africa Steel (Pty) Ltd divided its share capital of R11 002 into 100 000 ordinary shares of R0,01 each,2 redeemable “B” preference shares of R1,00 each and10 000 variable rate cumulative redeemable “A”preference shares of R1,00 each (16 August 2007).

Capital Africa Steel (Pty) Ltd amended its articles ofassociation to permit the company to redeem the “A”preference shares on written notice to “A” preferenceshareholders (17 October 2007).

Capital Africa Steel (Pty) Ltd was authorised to acquireits 12 700 issued shares for a price of R184 818 832,04being R14 552,66 per share (1 November 2007).


Principal accounting policiesBasis of preparationThe consolidated financial statements have beenprepared on the historical cost convention except forspecific financial assets which are measured at fairvalue. The accounting policies adopted have beenconsistently applied throughout the group to all theperiods presented.

Statement of complianceThe consolidated and company financial statements areprepared in accordance with International FinancialReporting Standards (IFRS) and the interpretationsadopted by the International Accounting StandardsBoard (IASB) and the International Financial ReportingInterpretations Committee of the IASB.

Significant judgements and estimatesIn preparing the annual financial statements,management is required to make estimates andassumptions that affect the amounts represented in thefinancial statements and related disclosures. Estimatesand judgements are continually evaluated and arebased on historical experience and other factors,including expectations of future events that are believedto be reasonable under the circumstances. Actualresults in the future could differ from these estimates,which may be material to the financial statements.Significant judgements include:

Impairment of trade receivablesEstimates based on management's assessment of thelikelihood of collecting receivables outstanding for longerthan 120 days.

Allowance for slow-moving, damaged and obsoletestockAny stock which is slow-moving, damaged or obsoleteis written off when identified.

Property, plant and equipmentManagement uses the best available information tomake estimates of the residual values and useful lives ofitems of property, plant and equipment.

Impairment testing of goodwillManagement uses the value-in-use or fair value lesscosts to sell methods to determine the recoverableamount of cash-generating units that may have beenimpaired. Additional disclosures of assumptions andjudgements are included in note 2.

Fair value of assets acquired in businesscombinationsEstimates are made in determining the future cashflowsof identifiable assets and liabilities of entities acquired ina business combination.

ProvisionsProvisions are raised when deemed necessary bymanagement and are based on their estimate ofexpected outflows using the information available.

Contracting profit or loss recognitionProfit is recognised on an individual contract basis usingthe stage of completion method, measured by theproportion that costs incurred to date compare to theestimated total costs of the contract. Management issometimes required to use judgement to determinewhether the outcome of a contract can be reliablyestimated.

TaxationThe group is subject to taxes in numerous jurisdictions.Significant judgement is required in determining theprovision for taxes as the tax treatment cannot be finallydetermined until a formal assessment has been madeby the relevant tax authority.

Deferred tax assetsManagement estimate the probability of future taxableprofits against which unused tax losses and deductibletemporary differences can be utilised and raise deferredtax assets to that extent.

Fair value adjustments to financial instrumentsFair value adjustments to financial instruments aredetermined by using discounted cash flow modelswhich take into account forecasted operating incomestreams, market-related discount rates and inflationrates. Such models, by nature, require assumptions andjudgements regarding the future based on existingmarket conditions.

Basis of consolidationThe consolidated financial statements include thefinancial position, operating results and cashflowinformation of the holding company, its subsidiaries,joint ventures and associates. All financial results areconsolidated with similar items on a line by line basisexcept for investments in associates.

Where accounting policies other than those adopted inthe consolidated financial statements are used,appropriate adjustments are made in preparing theconsolidated financial statements.

accounting policiesfor the year ended 30 June 2008


Intercompany transactions, balances and unrealisedgains and losses between entities are eliminated onconsolidation. To the extent that a loss on a transactionprovides evidence of a reduction in the net realisablevalue of current assets or an impairment loss of a non-current asset, that loss is recognised in the incomestatement.

In respect of joint ventures and associates, unrealisedgains and losses are eliminated to the extent of thegroup’s interest in these entities. Unrealised gains andlosses arising from transactions with associates areeliminated against the investment in the associate.

SubsidiariesSubsidiaries are entities in which the group has aninterest of more than half of the voting rights or thepower to govern the financial and operating policiesrelevant to the entity. Subsidiaries are consolidated fromthe acquisition date until the disposal date or any otherdate where there is a change in shareholding or controlsuch that the entity becomes or ceases to be classifiedas a subsidiary.

The cost of an acquisition is measured as the fair valueof assets transferred, equity instruments issued andliabilities incurred or assumed, plus any costs directlyattributable at the date of acquisition. The excess of thecost of acquisition over the fair value of the group'sshare of the net identifiable assets is recorded asgoodwill. Minority interests are determined as theminority shareholders' proportionate share of the fairvalue of the net assets of subsidiaries at the acquisitiondate and their further interest in the subsidiarycompany's equity since the date of acquisition.

AssociatesAssociate entities are those over which the group hasthe ability to exercise significant influence, but notcontrol. Investments in associates are initially recognisedat cost. The group's share of the post-acquisitionearnings and reserves of its associates are incorporatedin the financial statements using the equity method ofaccounting, from the effective dates of their acquisitionuntil the effective dates of their disposal or any otherdate where there is a change in shareholding or controlsuch that the entity becomes or ceases to be classifiedas an associate. Post-acquisition profits are transferredto a non-distributable reserve in line with the directors'recommendations. The group's share of post-acquisition losses are recognised until such time as thecarrying amount of the investment including any post-

acquisition losses are written down to nil. Post-acquisition losses in excess of the group's interest in anassociate are not recognised.

Goodwill arising on the acquisition of associates isaccounted for in the carrying value of the associates.The group's share of earnings of associates is includedin earnings attributable to ordinary shareholders.

Joint venturesJoint ventures are contractual agreements where thegroup and third parties undertake an economic activitythat is subject to joint control. The financial andoperational decisions surrounding the activities require theunanimous consent of all parties. Joint ventures may takethe form of jointly controlled operations, jointly controlledassets or jointly controlled entities. The group's interestsin joint ventures are accounted for using the proportionateconsolidation method. The group combines its share ofthe assets and liabilities, revenues and expenses, andcash flows on a line by line basis with similar items in thefinancial statements of the group.

Special purpose entities (SPE)Special purpose entities are entities that are created toaccomplish a narrow and well-defined objective. AnSPE is created with legal arrangements that imposestrict and permanent limits on the decision makingpowers of the governing board, trustee or managementover the SPE.

An SPE is consolidated on a line for line basis if thegroup has control over the entity. The group is definedas having control over an SPE if any one of the followingconditions is met:

– in substance, the activities of the SPE are beingconducted on behalf of the group according tospecific business needs so that the group obtainsspecific benefits from the SPE's operation;

– in substance, the group has the decision makingpowers to obtain the majority of benefits of theactivities of the SPE or, by setting up an autopilotmechanism, the group has delegated these decisionmaking powers;

– in substance, the group has the rights to obtain themajority of the benefits from the SPE and thereforemay be exposed to risks incidental to the activities ofthe SPE; or

– in substance, the group retains the majority of theresidual or ownership risks related to the SPE or itsassets in order to obtain benefits from its activities.


Segment reportingA reportable segment is a distinguishable business orgeographical component of the group that providesproducts or services that are different from those ofother segments.

Business segments are defined according to theoperational activities undertaken by each segment whilstgeographical segments are defined according to thegeographical area in which each segment is located.

The group's primary format for reporting segmentalinformation is determined in accordance with the natureof the business and its secondary format is determinedwith reference to the geographical location of theoperations.

Inter-segment transfersSegment revenue, segment expenses and segmentresults include transfers between business segmentsand between geographical segments. Such transfersare accounted for at arm’s length prices. Thesetransfers are eliminated on consolidation.

Segmental revenue and expensesAll segmental revenue and expenses are directlyattributable to the segments. Segment revenue andexpenses are allocated to the geographical segmentsbased on the location of the operating activity.

Segmental assetsSegmental assets represent all operating assets usedby a segment, principally property, plant and equipment,investments, inventories, contracts in progress,receivables and cash.

Segmental liabilitiesSegmental liabilities represent all operating liabilities ofthe segment, principally accounts payable,subcontractor liabilities, contracts in progress andexternal interest bearing borrowings.

Property, plant and equipmentMeasurementProperty, plant and equipment are stated at historicalcost less accumulated depreciation and impairment.Land is not depreciated. Cost includes all qualifyingexpenditure that is directly attributable to the acquisitionof the item.

Subsequent costsSubsequent costs are included in an asset's carryingvalue only when it is probable that the future economicbenefits associated with the item will flow to the groupand the cost of the item can be measured reliably.

RevaluationsProperty, plant and equipment are not revalued.

ComponentsWhere plant and equipment comprises major componentswith different useful lives, such components are accountedfor and depreciated as separate items. Expenditureincurred to replace or modify a significant component iscapitalised and any remaining book value of thecomponent replaced is written off in the incomestatement. All other expenditure is recognised in theincome statement.

DepreciationProperty, plant and equipment are depreciated to theirestimated residual values over their expected usefullives. The depreciation methods, estimated remaininguseful lives and residual values are reviewed at leastannually. The depreciation methods and averagedepreciation periods are set out in note 1.

ImpairmentWhen the carrying value of an asset is greater than itsestimated recoverable amount, an impairment provisionis immediately raised to reduce the carrying value of theasset to its estimated recoverable amount.

Impairment of assetsThe group's assets, other than deferred tax, arereviewed annually, or whenever events or changes incircumstances indicate that the carrying value may notbe recoverable, to determine whether there is anyindication of impairment.

Recoverable amounts are estimated for individual assetsor, where an individual asset cannot generate cashflows independently, the recoverable amount isdetermined for the larger cash-generating unit to whichthe asset belongs. The recoverable amount is estimatedas the higher of the net selling price and the value-in-use of the asset.

An annual impairment test is performed for all goodwill,including the goodwill of subsidiaries.

accounting policies continued

for the year ended 30 June 2008


Determining whether goodwill is impaired requires anestimation of the value-in-use or fair value less costs tosell of the cash-generating units to which goodwill hasbeen allocated. The value-in-use calculation requires theentity to estimate the future cash flows expected toarise from the cash-generating unit and a suitablediscount rate in order to calculate present value.

The impairment recognised in the income statement isthe excess of the carrying value over the estimatedrecoverable amount.

With the exception of goodwill, a previously recognisedimpairment may be reversed insofar as estimates changeas a result of an event occurring after the impairmentwas recognised. An impairment is reversed only to theextent that the asset's carrying value does not exceedthe carrying value that would have been determined hadno impairment been recognised. A reversal of animpairment is recognised in the income statement.

Business combinations – goodwillThe purchase method is used when an entity isacquired. On the acquisition date, fair values areattributed to the identifiable assets, liabilities andcontingent liabilities. Fair values of the identifiable assetsand liabilities and contingent liabilities, except for assetswhich are held for sale in accordance with IFRS 5 whichare measured at fair value less costs to sell, aredetermined by reference to market values of those orsimilar items, where available, or by discountingexpected future cash flows to achieve present values.

The cost of acquisition is the fair value of the group’scontribution in the form of assets transferred, sharesissued or liabilities assumed at the acquisition date pluscosts directly attributable to the acquisition.

At acquisition date, goodwill is recognised when thecost of the acquisition exceeds the fair value of thegroup’s interest in the net identifiable assets of the entityacquired. Goodwill is subjected to an annual impairmenttest and any impairment is recognised immediately inthe income statement and is not subsequently reversed.Accumulated amortisation written off in previous years isnot reversed. To the extent that the fair value of the netidentifiable assets of the entity acquired exceeds thecost of acquisition, the excess is recognised in theincome statement at the acquisition date.

Goodwill on the acquisition of a subsidiary or a jointventure is included in intangible assets. Goodwill on the

acquisition of an associate company is included ininvestment in associates.

On disposal of a subsidiary, joint venture or associatethe attributable goodwill is included in the determinationof the profit or loss on disposal. The same principle isapplicable for partial disposals, where a portion of theattributable goodwill is recognised as part of the cost ofthe disposal.

Financial instrumentsFinancial instruments are recognised when the entitybecomes a party to the contractual provisions of theinstruments.

The group classifies its financial instruments into thefollowing categories:

– fair value through profit and loss– held-to-maturity– loans and receivables– available-for-sale

The classification is dependent on the purpose forwhich the investment is acquired. Managementdetermines the classification of its investments at thetime of initial recognition.

Initial recognitionFinancial instruments are recognised initially ontransaction date at fair value. For financial instrumentsnot classified as fair value through profit and loss,transaction costs are either added to or deducted fromthe fair value on recognition.

Subsequent measurementFinancial assets and liabilities classified as fair valuethrough profit and lossFinancial assets and liabilities classified as fair valuethrough profit and loss, which include trading investments,non-trading investments and derivative financialinstruments, are subsequently measured at fair value.

The fair value of instruments that are actively traded inorganised financial markets is determined by referenceto quoted market bid prices at the close of business onthe balance sheet date. For instruments where there isno active market, fair value is determined usingvaluation techniques. Such techniques include usingrecent arm’s length market transactions; reference to


the current market value of another instrument which issubstantially the same; discounted cash flow analysis orother valuation models.

Where fair values cannot be reasonably measured, suchfinancial instruments are carried at amortised costwhere they have a fixed maturity date or cost wherethere is no fixed maturity date.

Gains and losses incurred on adjustments to the fairvalue of trading investments and derivative financialinstruments are recognised in the income statement.

Held-to-maturity investmentsThese investments are non-derivative financial assetswith fixed or determinable payments and fixed maturitiesare classified as held-to-maturity when the group hasthe positive intention and ability to hold to maturity. Afterinitial recognition held-to-maturity investments aremeasured at amortised cost using the effective interestmethod. Gains and losses are recognised in the incomestatement when the investments are derecognised orimpaired, as well as through the amortisation process.

Loans and receivablesLoans and receivables are non-derivative financialassets with fixed or determinable payments that are notquoted in an active market. Loans and receivables aresubsequently measured at amortised cost. Amortisedcost is calculated using the effective interest ratemethod. Short-term receivables are, however, carried atcost as the effect of imputing interest would beinsignificant. Gains and losses are recognised in theincome statement when the loans and receivables arederecognised or impaired, as well as through theamortisation process.

Available-for-sale financial assetsAvailable-for-sale financial assets are those non-derivative financial assets that are designated asavailable-for-sale or are not classified in any of the threepreceding categories. After initial measurement,available-for-sale financial assets are measured at fairvalue with unrealised gains or losses recognised directlyin equity until the investment is derecognised ordetermined to be impaired at which time the cumulativegain or loss previously recorded in equity is recognisedin the income statement.

Impairment lossesThe group assesses at each balance sheet datewhether there is any objective evidence that a financialasset is impaired.

For held-to-maturity investments and loans receivable,an impairment loss is determined to be the differencebetween the asset’s carrying amount and the presentvalue of estimated future cash flows discounted at thefinancial asset's original effective interest rate.

For available-for-sale financial assets where a decline inthe fair value of such asset has been recognised inequity and the asset is determined to be impaired, thecumulative loss that had been recognised directly inequity is removed from equity and recognised in theincome statement even though the asset has not beenderecognised. The amount of the cumulative lossrecognised in the income statement is the differencebetween the acquisition cost and the current fair value.Impairment losses for assets classified as available-for-sale are not reversed through the income statement.

Contracts in progressProfits or losses in respect of contracts arerecognised by way of valuation taking into accountthe stage of completion of the contracts. The stage ofcompletion is determined on the basis of the actualcosts incurred for work performed at the balancesheet date and is compared to the estimated totalcosts of the contract. Anticipated losses onincomplete contracts are fully provided for as soon asthe loss is foreseen and include any loss related tofuture work on the contract. Contracts in progress arestated at cost plus profit taken to date less cashreceived or receivable less any provision for losses.On contracts where the outcome cannot be reliablyestimated, revenue is recognised to the extent thatthe recoverability of costs incurred is probable.

InventoriesInventories are valued at the lower of cost or net realisablevalue. Cost is determined on the following basis:– materials on site and consumable stores are valued

at cost on the weighted-average basis; and– property for development is stated at cost together

with development expenditure incurred during thedevelopment stage, unless the capitalisation of such




expenditure would result in the value of the propertyexceeding the value which, in the opinion of thedirectors, would be realised when sold.

Net realisable value represents the estimated sellingprice less all estimated costs to completion and costs tobe incurred in marketing, selling and distribution.

Non-current assets held-for-saleNon-current assets are classified as held-for-sale iftheir carrying value will be recovered through a saletransaction rather than through continuing use. Thiscondition is regarded as being met only when the saleis highly probable within twelve months and the assetis available for immediate sale in its present condition.Management must be committed to the sale, whichshould be expected to qualify for recognition as acompleted sale within one year from the date ofclassification.

Non-current assets held-for-sale are stated at thelower of the carrying amount and fair value less coststo sell.

Cash and cash equivalentsCash and cash equivalents include cash on hand,deposits held on call with banks, investments in moneymarket instruments, and bank overdrafts.

Leased assetsFinance leases Leases of property, plant and equipment where thegroup assumes substantially all the benefits and risksof ownership are classified as finance leases. At theinception of the lease, assets leased in terms of financelease agreements are capitalised at amounts equalto the fair value of the leased asset or, if lower, at thepresent value of the minimum lease payments and aredepreciated in accordance with the policies applicableto equivalent items of property, plant and equipment.The corresponding rental obligations, net of financecharges, are stated as finance lease liabilities.

Lease finance charges are amortised over the duration ofthe leases by using a constant periodic rate of intereston the remaining balance of the liability for each period.

Operating leasesLeases of assets under which all the risks and rewardsof ownership are effectively retained by the lessor are

classified as operating leases. Operating lease rentalsare charged against operating profit on a straight-linebasis over the period of the lease.

ProvisionsProvisions are recognised when there is a present legal orconstructive obligation resulting from past events, wherethe settlement of such obligation will result in theprobable outflow of resources from the group and areliable estimate can be made of the amount of theobligation. If a present obligation does not exist or theamount cannot be reliably measured, the provision is notrecognised but rather disclosed as a contingent liability.

Provisions are measured at the directors' best estimateof the expenditure required to settle the obligation atyear-end and are discounted to present value if theeffect is material.

Provisions for future expenses are not recognised,unless supported by an onerous contract, being acontract in which unavoidable costs will be incurred inmeeting contract obligations in excess of the economicbenefits expected to be received from the contract.

Borrowing costsBorrowing costs that are directly attributable to theacquisition, construction or production of a qualifyingasset are capitalised as part of the cost of that assetuntil such time as the asset is ready for its intended use.The amount of borrowing costs eligible for capitalisationis determined as follows:

– actual borrowing costs on funds specifically borrowedfor the purpose of obtaining a qualifying asset lessany income earned from any temporary investment ofthose borrowings;

– weighted average of the borrowing costs applicableto the entity on funds generally borrowed for thepurpose of obtaining a qualifying asset; and

– borrowing costs capitalised may not exceed the totalborrowing costs incurred.

The capitalisation of borrowing costs commences when:

– expenditures for the asset have been incurred;– borrowing costs have been incurred; and– activities that are necessary to prepare the asset for

its intended use or sale are in progress.


Capitalisation ceases when construction of thequalifying asset is interrupted for an extended period orwhen the asset is substantially complete. Any furtherborrowing costs are recognised in the incomestatement.

Revenue and revenue recognitionRevenue is recognised when it can be reliably measuredand it is probable that the economic benefits associatedwith the transaction will flow to the entity.

Contract revenueWhere the outcome of a construction contract can beestimated reliably, contract revenue is recognised basedon the fair value of measured work done includingvariations on claims, taking into account the stage ofcompletion of each contract.

When the outcome of the construction contract cannotbe estimated reliably, contract revenue is recognised tothe extent that the recoverability of incurred costs isprobable.

Sale of goodsRevenue arising from the sale of goods is recognisedwhen the significant risks and rewards of ownershiphave been transferred to the purchaser.

Rendering of servicesRevenue from rendering services is recognised over theperiod over which the services are rendered.

Other incomeOther income earned by the group which is not includedin revenue, is recognised on the following basis:

– Interest income is recognised in the income statementusing the effective interest rate method; and

– Dividend income is recognised in the incomestatement when the shareholder's right to receivepayment has been established.

Foreign currency translationPresentation currencyThe consolidated financial statements are presented inRands which is the presentation currency and functionalcurrency of the group.

Foreign operationsItems included in each of the group's entities aremeasured using the currency of the primary economicenvironment in which the entity operates (the functionalcurrency). The results and financial position of all thegroup entities that have a functional currency differentfrom that of the presentation currency are translated intothe presentation currency as follows:

– assets and liabilities are translated at the closing rate;– income and expenses are translated at average

exchange rates; and– all resulting exchange differences are recognised as a

separate component of equity until the foreign entityis disposed of at which time such translationdifference is recognised in the income statement.

Transactions and balancesForeign currency transactions are translated into thefunctional currency using the exchange rates prevailingat the transaction dates. Foreign exchange gains andlosses resulting from the settlement of suchtransactions and from the translation at year-endexchange rates of monetary assets and liabilitiesdenominated in foreign currencies are recognised inthe income statement.

Goodwill and fair value adjustments arising on theacquisition of a foreign entity are treated as assets ofthe foreign entity and translated at the closing rate.

TaxationCurrent taxationThe current tax charge is the calculated tax payable onthe taxable income for the year using substantivelyenacted tax rates and includes any adjustments to taxpayable in respect of prior years.

Deferred taxationDeferred taxation is provided using the balance sheetliability method on all temporary differences between thecarrying amounts for financial reporting purposes andthe amounts used for taxation purposes.




No deferred tax is provided on temporary differencesrelating to:

– goodwill;– the initial recognition (other than in a business

combination) of an asset or liability to the extent thatneither accounting nor taxable profit is affected onacquisition; and

– investments in subsidiaries to the extent they willprobably not reverse in the foreseeable future.

A deferred tax asset is recognised to the extent that it isprobable that future taxable profits will be availableagainst which the unused tax losses and deductibletemporary differences can be utilised.

Enacted or substantively enacted tax rates are used todetermine the deferred taxation provision at balancesheet date that are expected to apply when an asset isrealised or liability settled.

Secondary taxation on companies (STC)STC is recognised as part of the current tax charge inthe income statement when the related dividend isdeclared. When dividends received in the current yearcan be offset against future dividend payments toreduce the STC liability, a deferred tax asset isrecognised to the extent of the future reduction in STC.

Employee benefitsDefined contribution benefitsUnder defined contribution plans the group's legal orconstructive obligation is limited to the amount that itagrees to contribute to the fund. Consequently the riskthat assets invested will be insufficient to meet theexpected benefits is borne by employees.

Contributions to a defined contribution plan in respect ofservice in a particular period are recognised as anexpense in that period.

Defined benefit fundsThe cost of providing benefits under the defined benefitplan is determined using the projected unit creditactuarial valuation method. Actuarial gains and lossesare recognised as income or expense when the netcumulative unrecognised actuarial gains and losses foreach individual plan at the end of the previous reportingperiod exceeded 10% of the higher of the defined

benefit obligation and the fair value of plan assets atthat date. These gains or losses are recognised over theexpected average remaining working lives of the employees participating in the plan.

The past service cost is recognised as an expense on astraight-line basis over the average period until thebenefits become vested. If the benefits are vestedimmediately following the introduction of, or changes to,a pension plan, past service cost is recognisedimmediately.

The defined benefit asset or liability comprises thepresent value of the defined benefit obligation less pastservice cost not yet recognised and less the fair value ofplan assets out of which the obligations are to besettled directly. The value of any asset is restricted tothe sum of any past service cost not yet recognised andthe present value of any economic benefits available inthe form of refunds from the plan or reductions in thefuture contributions to the plan.

Leave payEmployee entitlements to annual leave are recognisedwhen they accrue to employees. An accrual is made forthe liability for annual leave, as a result of services byemployees, up to the balance sheet date.

Bonus plansA liability for employee benefits in the form of bonusplans is recognised as a provision as past practice hascreated a valid expectation by employees that they willreceive a bonus and amounts can be determined beforethe time of issuing the financial statements.

Equity compensation benefitsThe group issues equity-settled share-based paymentsfrom time to time to employees in terms of the WilsonBayly Holmes-Ovcon Limited share scheme and thegroup's Black Economic Empowerment initiative. Wheregoods or services are received by the group in return forthe equity compensation benefits the net cost of shares,calculated as the difference between the fair value ofsuch shares at grant date and the price at which theshares were granted, is expensed on a straight-linebasis over their vesting periods. Where no goods orservices can be determined to be received by the groupthe net cost of shares, as calculated above, is expensedin the income statement immediately.


Treasury sharesShares in Wilson Bayly Holmes-Ovcon Limited held bythe various share trusts are treated as treasury shares.The shares are treated as a deduction from the issuedand weighted average number of shares and the costprice of the shares is deducted from the share capitaland share premium in the balance sheet onconsolidation. Dividends received on treasury shares areeliminated on consolidation.

No profit or loss is recognised in the income statementon the purchase, sale, issue or cancellation of thegroup’s own equity instruments.

Comparative figures (company)Comparative figures are reclassified or restated wherenecessary to afford a proper and more meaningfulcomparison of results as set out in the affected notes tothe financial statements.




Statements and interpretationsThe group and company have adopted the following statements and interpretations during the year:

IAS 1 – Presentation of Financial Statements – Capital DisclosuresIFRS 7 – Financial Instruments: Disclosures and consequential amendments to IFRS 4IFRIC 10 – Interim Financial Reporting and ImpairmentIAS 23 – Borrowing costs: Comprehensive revision to prohibit immediate expensingIFRIC 15 – Agreements for the construction of Real Estate

At the date of authorisation of these financial statements, the following new and amended Standards andInterpretations were in issue but not yet effective.

Accounting Standard/Interpretation Effective dateIAS 1 – Presentation of Financial Statements – Financial years commencing on or after 1 JanuaryComprehensive revision including requiring a statement 2009of comprehensive income

IAS 27 – Consolidated and Separate Financial Statements Financial years commencing on or after 1 Januaryand IFRS 1 – First Time Adoption of International Financial 2009Reporting Standards – Amendment relating to cost of an investment on first time adoption

IAS 32 – Financial Instruments: Presentation and IAS 1 – Financial years commencing on or after 1 JanuaryPresentation of Financial Statements – Puttable Financial 2009Instruments and Obligations Arising on Liquidation

IAS 39 – Financial Instruments: Recognition and Financial years commencing on or after 1 July 2009Measurement – Amendments for eligible hedged items

IFRS 2 – Share Based Payments – Amendment relating Financial years commencing on or after 1 Januaryto vesting conditions and cancellations 2009

IFRS 3 – Business Combinations – Comprehensive Financial years commencing on or after 1 July 2009revision or applying the acquisition method; IAS 27 – Consolidated and Separate Financial Statements; IAS 28 – Investments in Associates and IAS 31 – Interests in Joint Ventures – Consequential amendments arising from amendments to IFRS 3

IFRS 8 – Operating Segments Financial years commencing on or after 1 January2009

IFRIC 12 – Service Concession Agreements Financial years commencing on or after 1 January2008

IFRIC 13 – Customer Loyalty Programmes Financial years commencing on or after 1 July 2008

IFRIC 14 – The limit on a Defined Benefit Asset, Minimum Financial years commencing on or after 1 JanuaryFunding Requirements and their Interaction 2008

IFRIC 16 – Hedges of a net investment in a Foreign Financial years commencing on or after 1 OctoberOperation 2008

None of these Standards or Interpretations are expected to have a significant effect on the results of operations orthe financial position of the group.

62

group balance sheetas at 30 June 2008

2008 2007Notes R’000 R’000

ASSETSNon-current assets 1 743 691 1 124 971

Property, plant and equipment 1 1 041 071 752 137 Goodwill 2 98 600 86 421 Deferred taxation 13 210 705 100 442 Investments in associates 3 285 755 99 765 Derivative financial instruments 4 16 779 –Other financial assets 5 90 781 86 206

Current assets 6 152 291 3 183 655

Inventories 6 193 093 152 584 Amounts due by customers 7 448 496 142 521 Trade and other receivables 8 2 434 782 1 619 535 Derivative financial instruments 4 38 399 –Short-term investments 9 256 000 –Cash and cash equivalents 29.5 2 781 521 1 269 015

Total assets 7 895 982 4 308 626

EQUITY AND LIABILITIESTotal equity 1 815 333 1 081 404

Shareholders' equity 1 731 904 1 002 702 Minority interests 11 83 429 78 702

Non-current liabilities 264 798 177 530

Long-term financial liabilities 12 141 942 117 232 Deferred taxation 13 122 856 60 298

Current liabilities 5 815 851 3 049 692

Excess billings over work done 7 1 927 875 823 282 Trade and other payables 14 2 743 673 1 655 972 Derivative financial instruments 4 20 774 –Provisions 15 737 821 330 921 Taxation 381 111 238 953 Bank overdrafts 29.5 4 597 564

Total equity and liabilities 7 895 982 4 308 626

WBHO Annual Report 2008

63

2008 2007Notes R’000 R’000

Revenue 16 10 783 651 8 127 793 Operating costs (9 229 440) (7 152 621)Administrative costs (649 383) (559 295)

Operating profit before non-trading items 904 828 415 877 Impairment of goodwill 2 (18 994) (10 731)Share-based payment expense 27 (23 860) (34 610)Profit on partial-disposal of subsidiary 93 408 –Fair value adjustments of financial assets 5 3 657 5 689

Operating profit 17 959 039 376 225 Share of (losses)/profits from associates 3 (20 710) 14 679 Investment income 18 162 744 72 230

Operating income 1 101 073 463 134 Finance costs 19 (20 338) (16 831)

Profit before taxation 1 080 735 446 303 Taxation 20 (318 211) (127 999)

Net profit 762 524 318 304

Attributable toEquity shareholders of Wilson Bayly Holmes-Ovcon Limited 716 169 276 180 Minority interests 46 355 42 124

Net profit 762 524 318 304

Weighted average number of shares (000) 54 956 55 190 Diluted weighted average number of shares (000) 55 118 55 190 Earnings per share (cents) 1 303,2 500,4 Diluted earnings per share (cents) 1 299,3 500,4 Dividend per share (cents) 242,0 121,0

group income statementfor the year ended 30 June 2008


64

group statement of changes in equityfor the year ended 30 June 2008

Ordinary shares Treasury Shareissued shares premiumR’000 R’000 R’000

Balance at 30 June 2006 555 – 4 573

Income from associates – – –Net profit for the year – – –Dividend paid – – –Issue of shares 5 100 25 942 Treasury shares acquired (8) 8 –Share-based payment – – –Translation of foreign entities – – –Other reserves – – –Change in shareholding of subsidiaries – – –

Balance at 30 June 2007 552 108 30 515

Net profit for the year – – –Dividend paid – – –Treasury shares acquired (2) 2 (1 290)Share-based payment – – –Translation of foreign entities – – –Other reserves – – –Change in shareholding of subsidiaries – – –

Balance at 30 June 2008 550 110 29 225

*Other reserves include attributable reserves of equity-accounted investments



Non-distributable reserves

Capital Foreignredemption currency Employee

reserve translation share-scheme Other Distributable Shareholders’ Minority Totalfund reserve reserve reserves* reserves equity interests equity

R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000

2 085 34 926 942 14 401 644 985 702 467 60 311 762 778

– – – 14 679 (14 679) – – –– – – – 276 180 276 180 42 124 318 304 – – – – (59 400) (59 400) (14 387) (73 787)– – – – – 26 047 – 26 047 – – (13) – – (13) – (13)– – 34 610 – – 34 610 – 34 610 – 27 083 – – – 27 083 12 938 40 021 – – – (3 795) (477) (4 272) – (4 272)– – – – – – (22 284) (22 284)

2 085 62 009 35 539 25 285 846 609 1 002 702 78 702 1 081 404

– – – – 716 169 716 169 46 355 762 524 – – – – (88 110) (88 110) (15 515) (103 625)– – (3 391) – – (4 681) – (4 681)– – 23 860 – – 23 860 – 23 860 – 81 964 – – – 81 964 11 134 93 098 – – – – – – – –– – – – – – (37 247) (37 247)

2 085 143 973 56 008 25 285 1 474 668 1 731 904 83 429 1 815 333

66

group cash flow statementfor the year ended 30 June 2008

2008 2007Notes R’000 R’000

Cash flow from operating activitiesCash generated from operations 29.1 2 239 493 1 239 405 Investment income 18 162 744 72 230 Finance costs 19 (20 338) (16 831)Taxation paid 29.2 (224 994) (80 275)Dividend paid (88 110) (59 400)

Net cash flow from operating activities 2 068 795 1 155 129

Cash flow from investing activitiesIncrease in other financial assets (13 118) (27 656) Acquisitions net of cash acquired 30.4 (136 506) (59 155)Increase in advances to associates (7 108) (35 116)Proceeds on partial disposal of subsidiary net of cash disposed 31 41 742 –Proceeds on disposal of plant and equipment 23 917 23 538 Purchase of property, plant and equipment – to maintain operations (264 316) (124 171)– to expand operations (175 167) (220 009)

Net cash flow from investing activities (530 556) (442 569)

Cash flow from financing activitiesIssue of share capital – 26 047 Decrease in long-term financial liabilities 29.4 (29 766) (96 159)

Net cash flow from financing activities (29 766) (70 112)

Increase in cash and cash equivalents for the year 1 508 473 642 448 Cash and cash equivalents at beginning of year 1 268 451 626 003

Cash and cash equivalents at end of year 29.5 2 776 924 1 268 451


67

Plant, Office andLand and vehicles and computerbuildings Aircraft equipment equipment Total

R’000 R’000 R’000 R’000 R’000

1. Property, plant andequipment2008CostAt 30 June 2007 147 207 3 849 963 422 49 035 1 163 513 Additions 36 948 23 811 365 814 12 910 439 483 Acquisition of subsidiaries – – 29 864 689 30 553 Disposals (752) – (47 875) (1 414) (50 041)Disposal of subsidiary (1 552) – (26 909) (1 462) (29 923)Translation of foreign entities 16 915 – 9 186 4 970 31 071

At 30 June 2008 198 766 27 660 1 293 502 64 728 1 584 656

Accumulated depreciationAt 30 June 2007 6 696 3 067 369 784 31 829 411 376 Depreciation 1 441 345 150 596 8 490 160 872 Disposals (752) – (31 963) (1 233) (33 948)Acquisition of subsidiaries – – 13 809 328 14 137 Disposal of subsidiary (799) – (13 125) (794) (14 718) Translation of foreign entities 255 – 2 731 2 880 5 866

At 30 June 2008 6 841 3 412 491 832 41 500 543 585

Net book value at 30 June 2008 191 955 24 248 801 640 23 228 1 041 071

2007CostAt 30 June 2006 97 931 3 849 722 854 44 146 868 780 Additions 45 817 – 291 591 6 772 344 180 Acquisition of subsidiaries 270 – 1 280 198 1 748 Disposals (1 617) – (55 182) (4 092) (60 891)Translation of foreign entities 4 806 – 2 879 2 011 9 696

At 30 June 2007 147 207 3 849 963 422 49 035 1 163 513

Accumulated depreciationAt 30 June 2006 5 134 2 790 319 902 27 777 355 603 Depreciation 1 488 277 87 922 6 797 96 484 Disposals – – (39 605) (3 803) (43 408)Acquisition of subsidiaries 34 – 105 23 162 Translation of foreign entities 40 – 1 460 1 035 2 535

At 30 June 2007 6 696 3 067 369 784 31 829 411 376

Net book value at 30 June 2007 140 511 782 593 638 17 206 752 137

notes to the financial statementsfor the year ended 30 June 2008


68

notes to the financial statements continued


2008 2007R’000 R’000

1. Property, plant andequipment continuedThe net book value of land and buildings comprises:Land 13 678 9 269 Buildings 178 277 129 785 Leasehold improvements – 1 457

191 955 140 511

The depreciation rates applied are set out below:Aircraft Variable rates based on flying hoursLand NilBuildings 2% straight-linePlant and vehicles Variable rates based on expected

production unitsEquipment 33,3% straight-lineOffice and computer equipment 10% – 33,3% straight-line

Details of the freehold land and buildings are recorded in a register in terms of Schedule 4 of the Companies Act of South Africa which is available for inspection at the group's registered office.

Plant, vehicles and equipment with a book value of R280,2 million (2007: R191,2 million) are subject to instalment sale agreements (note 12).

2. GoodwillCost 142 594 111 421 Accumulated impairment (43 994) (25 000)

Carrying value 98 600 86 421

The carrying value of goodwill is reconciled as follows:Carrying value at beginning of year 86 421 76 220 Goodwill recognised on acquisitions 107 098 15 187 Goodwill impaired during the year (18 994) (10 731)Goodwill disposed of during the year (47 912) –Goodwill transferred to investment in associate (43 133) –Translation of foreign entities 15 120 5 745

Carrying value at end of year 98 600 86 421

Business segmentationBuilding and civil engineering 75 931 57 612 Roads and earthworks 22 669 8 764 Industrial – 20 045

98 600 86 421


69

2. Goodwill continuedImpairment of goodwillThe recoverable amount of a cash-generating unit is determined based on value-in-use calculationsThese calculations use discounted cash-flow projections based on financial forecasts over a five year period.The discount rates used in the cash flow models are between 16% and 16,2%.

These estimates are pre-tax discount rates that reflect the current market assessments of the time-value ofmoney and specific risk to the cash-generating unit.

The discount rates are arrived at after taking into account the following factors:

– fluctuations in operating conditions;– fluctuations in estimated growth rates; and– expected working capital requirements.

The growth rates used in forecasting cash flows are between 15% and 18% depending on the economicenvironment in which the cash-generating unit operates.

2008 2007R’000 R’000

3. Investments in associatesUnlisted:Investment at cost 135 379 40 143 Attributable post-acquisition gains and losses (23 149) 16 986 Fair value adjustment 5 266 1 675 Loans advanced to associates 168 259 40 961

285 755 99 765

The investments in associates can be reconciled as follows:Carrying value at the beginning of the year 99 765 25 865 Additions 91 565 30 186 Disposals (24 564) –Share of associate earnings (20 710) 14 679 Loans advanced 123 238 35 116 Translation of foreign entities 16 461 (6 081)

Carrying value at the end of the year 285 755 99 765

A complete list of investments in associates is set out in annexure 2.

The aggregate assets, liabilities and results of operations of associates are summarised as follows:

Non-current assets 401 854 96 936 Current assets 1 351 820 113 865

Total assets 1 753 674 210 801

Shareholders' equity 292 730 106 547 Non-current liabilities 408 093 41 145 Current liabilities 1 052 851 63 109

Total equity and liabilities 1 753 674 210 801

Revenue 2 963 938 264 405 Operating profit 125 748 54 653 Impairment of goodwill (116 219) –

Group's share of associates' net (loss)/profit for the period (20 710) 14 679


70



2008 2007R’000 R’000

4. Derivative financial instrumentsNon-current assetsForward exchange contracts 16 779 –

Current assetsForward exchange contracts 38 399 –

Current liabilitiesForward exchange contracts 20 774 –

Details in respect of the derivative financial instruments and the group's financial risk policy are set out in note 26.

5. Other financial assets5.1 Financial assets classified as fair value through profit and loss

Investments:Listed investments:At market value 433 792

Unlisted investments:ConcessionsAt cost 482 482 Fair value adjustments 19 666 16 009

At fair value 20 148 16 491

Other unlisted investmentsAt cost 12 791 16 244 Fair value adjustments (250) –

At fair value 12 541 16 244

Total investments 33 122 33 527

A register of listed investments is available for inspection at the registered office of the group in terms ofsection 113 of the Companies Act of South Africa.

The group's investments in concessions are carried at fair value using discounted cash flow models based onforecasted operating income streams, market-related discount rates and inflation rates.

A complete list of unlisted investments is set out in annexure 3.


71

2008 2007R’000 R’000

5. Other financial assets continued5.2 Financial assets carried at amortised cost

Long-term receivables:Loans to concession investments At amortised cost 5 251 8 736 Impairment of loan – (2 431)

5 251 6 305

Property development loansAt amortised cost 46 818 27 832 Impairment of loan (31 818) (19 694)

15 000 8 138

Loans to employees for sharesAt amortised cost 35 343 38 136

Other loansAt amortised cost 2 065 100

Total long-term receivables 57 659 52 679

Total other financial assets 90 781 86 206

The terms and conditions relating to long-term receivables are set out in annexure 5.

6. InventoriesRaw materials – 22 195 Manufacturing work-in-progress – 1 001 Finished goods – 2 242 Consumable stores 19 833 11 967

19 833 37 405 Properties for development 167 610 109 329 Trading stock 5 650 5 850

Total inventories 193 093 152 584

Properties for development with a carrying value of R139,4 million (2007: R70,8 million) are secured by mortgage bonds as described in note 12.

7. Contracts in progressCosts incurred to date 27 884 275 15 266 105 Plus: Profit recognised to date 2 993 911 1 241 406

30 878 186 16 507 511 Less: Work certified to date (32 698 093) (17 423 967)

Net amounts due to customers (1 819 907) (916 456)Payments received in advance (note 14) 340 528 235 695 Excess billings over work done 1 927 875 823 282

Amounts due by customers 448 496 142 521

Contract debtors and contract retentions which, in the comparative year, were classified under contracts inprogress have been reclassified under trade and other receivables (note 8) in the current period.


72



2008 2007R’000 R’000

8. Trade and other receivablesTrade receivables 2 049 456 1 285 216 Impairment of trade receivables (58 145) (131 184)Contract retentions 198 653 140 419 Prepayments 57 156 8 274 Amounts owing by joint venture partners (note 25) 10 289 53 966 Staff debtors 13 017 10 968 Short-term loan 60 234 54 734 Value-added taxation 62 220 20 805 Other receivables 41 902 176 337

2 434 782 1 619 535

The carrying values of these receivables approximate their fair values due to the short-term nature of the instruments.

The terms and conditions of the short-term loan and other relevant information are set out in annexure 5.

9. Short-term investmentsAvailable-for-sale financial assetSanlam Alternative Income Fund 256 000 –

The fund offers a liquid, mainly dividend yielding investment that tracks the South African short-term interest rate cycle.

10. Share capitalAuthorised100 000 000 ordinary shares of 1 cent each 1 000 1 000 20 000 000 redeemable preference shares of 5 cents each 1 000 1 000

2 000 2 000

IssuedTo the public:54 956 331 fully paid-up ordinary shares of 1 cent each 550 552

To share trusts and BEE vehicles:11 043 669 fully paid-up ordinary shares of 1 cent each 110 108

10.1 Share premiumBalance at the beginning of the year 30 515 4 573 Issue of share capital – 25 942 Treasury shares held by the WBHO Share Trust at net cost (1 290) –

Balance at the end of the year 29 225 30 515

The directors are authorised, by resolution of the shareholders until the forthcoming annual general meeting, todispose of the unissued shares for any purpose and upon such terms and conditions as they see fit.

Less than 20% of the issued share capital of the group has been issued to employees in terms of shareincentive schemes


73

2008 2007R’000 R’000

11. Minority interestsThe minority interest balance can be reconciled as follows:

Balance at the beginning of the year 78 702 60 311 Share of attributable earnings 46 355 42 124 Dividends declared and paid (15 515) (14 387)Acquisition of businesses 4 351 3 686Minority interests purchased (26 733) (25 970)Minority interests disposed of (14 865) –Translation of foreign entities 11 134 12 938

Balance at the end of the year 83 429 78 702

12. Long-term financial liabilities12.1 Interest bearing secured loans

Loans secured by properties for development (note 6) 91 129 58 477 Capitalised finance lease liabilities 166 582 137 452

257 711 195 929

PayableWithin 1 year 120 693 82 341 Within 2 – 5 years 137 018 113 588

257 711 195 929 Less: Short-term portion (note 14) (120 693) (82 341)

137 018 113 588

The present value of future minimum payments on capitalised finance lease liabilities are as follows:

DueWithin 1 year 167 707 145 630 Within 2 – 5 years 48 657 4 190

216 364 149 820 Less: Future finance costs (49 782) (12 368)

Present value of lease obligations 166 582 137 452

12.2 Interest bearing unsecured loansOther loans 4 924 3 644

PayableWithin 1 year – –Within 2 – 5 years 4 924 3 644

Total long-term financial liabilities 141 942 117 232

The terms and conditions relating to long-term financial liabilities and other relevant information are set out inannexure 6.


74



2008 2007R’000 R’000

13. Deferred taxationDeferred taxation assets

The movement on the deferred taxation asset account is as follows:At beginning of year 100 442 18 705Acquisition/(disposal) of businesses (1 183) 214Translation of foreign entities 5 222 1 662Transfer to deferred taxation liability 1 150 –Change in tax rate (2 401) –Charge to income statement 107 475 79 861

At end of year 210 705 100 442

Comprising:Uncertified work and other construction temporary differences (108 979) (132 346)Plant and equipment (1 034) –Tax losses 34 244 37 619Prepayments 270 –Provisions and accruals 193 820 131 553Advance payments received 90 496 63 616Other 1 888 –

210 705 100 442

Deferred taxation liabilitiesThe movement on the deferred taxation liability account is as follows:At beginning of year (60 298) (52 301)Acquisition/(disposal) of businesses (3 283) –Foreign exchange translation (756) (1 146)Transfer from deferred taxation asset (1 150) –Change in tax rate 1 927 –Charge to income statement (59 296) (6 851)

At end of year (122 856) (60 298)

Comprising:Uncertified work and other construction temporary differences (23 266) (6 907)Plant and equipment (101 471) (45 811)Tax losses 1 881 –Prepayments – (2 312)Other – (11)Translation of foreign entities – (5 257)

(122 856) (60 298)


75

2008 2007R’000 R’000

14. Trade and other payablesTrade creditors 874 229 573 732 Subcontractor creditors 528 746 155 155 Subcontractor retentions 283 140 201 860 Contract and other accruals 209 869 326 327 Payroll accruals 115 979 30 924 Payments received in advance (note 7) 340 528 235 695 Amounts owing to joint ventures (note 25) 114 702 1 436 Value-added taxation 148 802 48 502 Short-term loan 5 938 – Other payables 1 047 – Short-term portion of capitalised finance liabilities 120 693 82 341

2 743 673 1 655 972

The carrying values of these financial liabilities approximate their fair values due to the short-term nature of theinstruments.

The terms and conditions relating to the short-term loan are set out in annexure 6.

Contracting Bonus Accidentprovisions provision claims provision Total

R’000 R’000 R’000 R’000

15. ProvisionsBalance at 30 June 2006 117 473 89 535 2 658 209 666 Provisions raised 371 405 128 094 37 789 537 288 Amounts utilised (245 899) (92 133) (28 686) (366 718)Unutilised amounts reversed (33 043) (6 793) (10 049) (49 885)Translation of foreign entities 323 247 – 570

Balance at 30 June 2007 210 259 118 950 1 712 330 921 Provisions raised 570 849 367 865 8 290 947 004 Amounts utilised (349 256) (164 426) (7 719) (521 401)Unutilised amounts reversed (23 011) – (3) (23 014)Translation of foreign entities 4 292 19 – 4 311

Balance at 30 June 2008 413 133 322 408 2 280 737 821

Contracting provisionsThe balance represents estimated amounts relating to obligations to third parties at the balance sheet dateincluding provisions for estimated claims arising on contracts. The provisions will be utilised as and wheninvestigations into the claims are finalised and settled.

Bonus provisionThe bonus provision arises from a constructive obligation to staff members, where an annual bonus based onthe performance of the group is calculated. The actual bonus is approved by the board of directors.

Accident claims provisionThe balance represents provisions for probable claims relating to past accidents. The provisions are utilisedwithin twelve months, once investigations into the claims are expected to be finalised.

The carrying values of these provisions approximate their fair values due to their short-term nature.


76



2008 2007R’000 R’000

16. RevenueContract revenue 10 531 271 7 612 464 Sale of goods 252 380 515 329

10 783 651 8 127 793

17. Operating profitOperating profit is arrived at after taking into account the following:

Auditors' remuneration 6 287 5 782

Audit fees 6 227 5 661 Advisory services 60 121

Consulting and technical fees 397 3 775 Share-based payments expense 23 860 34 610 Employee benefits (note 27) 1 714 533 1 137 127 Net foreign exchange gains and losses 50 712 13 797

Realised 17 125 2 093Unrealised 33 587 11 704

Depreciation 160 872 96 484

Aircraft 345 277 Buildings 1 441 1 488 Plant, vehicles and equipment 150 596 87 922 Office and computer equipment 8 490 6 797

Operating lease rentals 6 534 6 373

Land and buildings 5 705 5 808 Plant, vehicles and equipment 829 565

Profit on disposal of property, plant and equipment 7 824 6 055 Impairment of loans – property development (note 5) 12 124 19 694Impairment of loans reversed – concessions (note 5) 2 431 –

18. Investment incomeInterest received – Cash and cash equivalents 143 851 62 631 – Unlisted investments 7 749 7 059 – Other 4 626 2 540 Dividends received 6 518 –

162 744 72 230


77

2008 2007R’000 R’000

19. Finance costsBank overdrafts 394 1 294 Long-term financial liabilities 13 121 9 005 Instalment sale agreements 17 991 5 834 Other 1 953 9 703

33 459 25 836 Finance costs capitalised during the year (13 121) (9 005)

Charge to the income statement 20 338 16 831

The weighted average borrowing rate used in the capitalisation of interest is 13,2% (2007: 11,2%).

20. Taxation South African normal taxCurrent taxation– Current year 255 995 103 761 – Prior years 4 034 (4 268)

Deferred taxation– Current year (note 13) (72 993) (3 886)– Prior years 917 3 992

189 237 99 599

Foreign taxation (including withholding tax)Current taxation– Current year 99 315 71 670 – Prior years – 23 058

Deferred taxation– Current year (note 13) 15 411 (63 659)– Prior years 9 000 (9 458)

123 726 21 611

Secondary taxation on companies (STC) 5 248 6 789

Total tax charge 318 211 127 999


78



2008 2007% %

20. Taxation continuedReconciliation of tax rate:South African normal tax rate 28,0 29,0

Adjusted for:Exempt income (5,0) (0,4)Non deductible expenses 2,8 2,5Foreign tax rate differential 1,1 (0,9)Net overprovision 0,0 (2,6)Tax losses utilised 0,0 (0,7)Capital profits 0,0 (0,3)Other 2,5 2,1

Effective tax rate 29,4 28,7

Estimated tax losses available for set-off against future taxableincome (R’000) 110 616 170 421

Potential tax relief at current taxation rates (R’000) 37 633 49 422

This depends on sufficient taxable income being earned in future by subsidiaries concerned. The potential taxlosses have been fully accounted for in both years presented.


79

2008 2007

21. Earnings per share and headline earnings per shareEarnings per share is calculated by dividing attributable earnings by the weighted average number of shares in issue. Appropriate adjustments are made in calculating headline earnings per share.

Diluted earnings per share reflect the potential dilution that could occur if all the outstanding treasury shares of the group are issued.

Earnings (R’000)Attributable earnings 716 169 276 180

Number of shares ('000)Weighted average number of shares

Shares in issue at the beginning of the period 66 000 55 491 Shares issued to share trusts – 520 Shares issued to Akani Investment Holdings (Pty) Ltd – 9 989

Total issued share capital 66 000 66 000 Less: Treasury shares under the control of the directors (4 289) (4 289)

Linked shares (note 27.4) (5 700) (5 700)Unallocated shares in the trusts (1 055) (821)

Weighted average number of shares 54 956 55 190 Dilutive adjustment attributable to the BEE initiative 162 –

Diluted weighted average number of shares 55 118 55 190

Earnings per share (cents)– Basic 1 303,2 500,4 – Diluted 1 299,3 500,4

Headline earnings (R’000)Attributable earnings 716 169 276 180 Adjusted for:Impairment of goodwill 18 994 10 731 Share of impairment of goodwill arising within associate 58 109 –Profit on partial disposal of subsidiary (93 408) –Profit from the disposal of property, plant and equipment including associates (7 928) (6 055)Tax effect thereof 2 220 1 756

Headline earnings 694 156 282 612

Headline earnings per share (cents)– Basic 1 263,1 512,1 – Diluted 1 259,4 512,1


80



2008 2007R’000 R’000

22. Guarantees and contingent liabilitiesGuarantees issued in respect of due performance of contracts by:Subsidiaries 1 769 128 1 528 096 Associates – 2 143 Joint ventures 1 830 618 984 485 Third parties 5 483 2 592

3 605 229 2 517 316

It is the opinion of the directors that the possibility of any loss is improbable and it is not anticipated that any material liabilities will arise.

A subsidiary of the group has received a tax assessment which is the subject of a dispute with the South African Revenue Services. At the balance sheet date resolution of the dispute has been unsuccessful and has been escalated to the next level of dispute resolution within the South African Revenue Services’ dispute resolution process. The outcome of the dispute is uncertain and the value of any possible future liability cannot yet be determined.

Secondary tax on companies (STC)Undistributed earnings subject to STC 1 474 668 846 909 Tax effect if distributed 134 061 94 101

23. Capital commitmentsCapital commitments include expenditure relating to property, plant and equipment for which specific board approval has been obtained.

Authorised and contracted for 81 852 136 371 Authorised but not yet contracted for 384 501 245 579

466 353 381 950

Expenditure on estimated commitments will occur within one year.Capital commitments will be funded from internal cash resources and existing facilities.

24. Commitments under operating leasesThe minimum lease rentals to be paid under non-cancellable leases at 30 June 2008 are as follows:

Land and buildings:Due within 1 year 5 113 5 061 Due later than 1 year but less than 5 years 12 382 5 753

17 495 10 814

Plant, vehicles and equipment:Due within 1 year 652 758 Due later than 1 year but less than 5 years 207 844

859 1 602


81

2008 2007R’000 R’000

25. Related party transactions25.1 Identification of related parties

The group has a related party relationship with its subsidiaries (annexure 1), associates (annexure 2), joint ventures (annexure 4), retirement and benefit plans (note 27) and directors and executive officers.

25.2 Related party transactions and balancesDuring the year, group companies, in the ordinary course of business, entered into various inter-group sale and purchase transactions.

These transactions are no less favourable than those arranged with third parties.

Transactions and balances between the group companies have, where appropriate, been eliminated on consolidation and are not disclosed. Details of transactions and balances with other related parties are set out below.

Amounts owed by related partiesAmounts owed by associate companies are disclosed in annexure 2.

Amounts owed by joint ventures (note 8) 10 289 53 966 The amounts are unsecured, interest free and have no fixed terms of repayment.

Amounts owing to related partiesThe amounts owing to joint ventures (note 14) 114 702 1 436 The amounts are unsecured, interest free and have no fixed terms of repayment.

Transactions with related partiesSales and purchase transactions with associated companies 58 048 –Uneliminated portion of sale and purchase transactions with joint ventures 34 872 14 660

Interest received from related parties 4 212 –

97 132 14 660

Transactions with key management personnelKey management personnel compensation, excluding the directors, is as follows:– Salaries 3 547 2 740 – Incentive bonuses 12 188 5 135 – Retirement and medical 701 600 – Other benefits 727 666

Total remuneration 17 163 9 141


82



Retirement Total Directors’ Incentive and Other emolu-

fees Salaries bonuses medical benefits mentsR’000 R’000 R’000 R’000 R’000 R’000

25. Related party transactions continuedDirectors’ emolumentsPaid by subsidiaries

2008ExecutiveMS Wylie – 1 112 5 655 341 184 7 292 JW Abbott – 738 1 600 222 170 2 730

– 1 850 7 255 563 354 10 022

Non-executiveBG Holmes* 189 – – – – 189 MW McCulloch 190 – – – – 190 NS Maziya 208 – – – – 208 NS Mjoli-Mncube 156 – – – – 156 JM Ngobeni 173 – – – – 173

916 – – – – 916

Total 916 1 850 7 255 563 354 10 938

2007ExecutiveMS Wylie – 944 3 299 294 172 4 709 JW Abbott – 619 1 000 189 157 1 965

– 1 563 4 299 483 329 6 674

Non-executiveBG Holmes* 133 – – – – 133 MW McCulloch 123 – – – – 123 NS Maziya 105 – – – 12 117 NS Mjoli-Mncube 56 – – – – 56 JM Ngobeni 112 – – – 4 116

529 – – – 16 545

Total 529 1 563 4 299 483 345 7 219

* Resigned as a director 1 August 2008


83

25. Related party transactions continuedDirectors’ shareholdingThe interests of directors and those of their families in the share capital of the company are as follows:

2008 2007

Number of shares ('000)Ordinary shares Direct Indirect Total Total

MS Wylie 286 2 000 2 286 2 286 JW Abbott 394 – 394 394 BG Holmes 42 2 004 2 046 2 181 NS Maziya – 400 400 400 NS Mjoli-Mncube – 400 400 400 JM Ngobeni – 400 400 400

722 5 204 5 926 6 061

Other material transactions with directorsMr MW McCulloch has a 50% interest in Caracal (Pty) Ltd, a company which acquired a 10% interest inCapital Africa Steel (Pty) Ltd, of which the group is also a shareholder. Mr McCulloch is also a director ofCapital Africa Steel (Pty) Ltd.

Ms NS Maziya is a director in, and has an 80% interest in, Bunengi Holdings (Pty) Ltd, a company in which thegroup acquired a 20% interest in the current year.

There were no other transactions with directors or entities in which directors have a material interest.

26. Financial instruments and financial risk managementThe group has a risk management and treasury function that manages the financial risks relating to thegroup's operations. The group is exposed to interest rate, credit, foreign currency and liquidity risks arisingfrom its financial instruments. The treasury function monitors and controls these risks on a day-to-day basis.The risk committee meets on a regular basis to review the group's management and implementation of riskstrategies.

26.1 Interest rate riskThe group is exposed to interest rate risk through its commitments in long and short-term interest bearingborrowings. Borrowings issued at variable rates expose the group to cash flow interest rate risk and interestrate fluctuation risk. These risks are mitigated through maintaining borrowings at manageable levels.


84



26. Financial instruments and financial risk management continued

Sensitivity analysisPotential interest rate risk is presented by way of sensitivity analysis demonstrating the effects of movements inmarket interest rates. A movement of 150 basis points in the prime lending rate at 30 June 2008 would havehad the following effects on profitability for the year:

+ 150 basis - 150 basispoints pointsR’000 R’000

Balances denominated in RandsCash and cash equivalents 18 696 (18 696)Interest bearing borrowings (1 951) 1 951 Interest bearing long-term receivables 225 (225)

Balances denominated in foreign currenciesCash and cash equivalents 22 958 (22 958)Interest bearing borrowings (268) 268

Effect on profit before taxation 39 660 (39 660)

26.2 Credit riskCredit risk is the risk of financial loss due to third parties not meeting their contractual obligations. The group isexposed to credit risk through its investments in trade and other receivables and loans. The group manages itsexposure by obtaining letters of credit through approved financial institutions where it is considered necessary,performing comprehensive credit checks on new clientele and obtaining collateral where considerednecessary.

Credit quality of trade receivablesCarrying value Impairment

R’000 R’000

Not past due 1 559 890 –Past due 0 – 30 days 330 216 –Past due 31 – 120 days 83 978 (4 442)Past due > 120 days 75 372 (53 703)

2 049 456 (58 145)

Trade receivables as a percentage of revenue (%) 19,01Impairment of trade receivablesOpening balance 131 184 Impairments raised 55 033 Impairments utilised/reversed (128 072)

Closing balance 58 145

Impairment of long-term receivablesOpening balance 22 125Impairments raised 12 124 Impairments utilised/reversed (2 431)

Closing balance 31 818


85


26.3 Foreign currency riskThe group's transactions occur in various foreign currencies and, consequently, are exposed to exchange ratefluctuations that have an impact on cash flows and financing activities. These transactions are predominantlyentered into in the respective functional currencies of the individual operations. The group mitigates this risk bymaintaining cash balances in the various currencies utilised. Some operations are exposed to foreign currencyrisk in connection with contracted payments in currencies not in their individual functional currencies. Thegroup manages this risk through the selective use of forward exchange contracts and cross currency swaps.Forward exchange contracts are used primarily to reduce foreign currency exposure relating to imports intoSouth Africa.

Forward exchange contractsThe group has entered into significant forward exchange contracts in the current year in order to mitigateforeign exchange risks associated with the supply of foreign goods and services within the Ilembe EPCJoint Venture.

The following forward exchange contracts and cross currency swaps were held during the year and at30 June 2008:

Contract Contract Actual/foreign rand Average estimated

currency equivalent rate of fair value amount amount exchange gain/(loss) FC’000 R’000 (calculated) R’000

Relating to transactionswhich have already occurred:US dollar 677 5 304 7,8 (545)Euro 3 697 39 472 10,7 (538)

Related to future commitmentsUS dollar 5 863 49 776 8,5 2 727 Euro 13 641 180 509 13,2 30 990

2008 2007R’000 R’000

Foreign currency analysisThe group has the following financial instruments denominated in foreign currencies at 30 June 2008:

Trade and other receivablesAustralian dollar 526 693 279 810Botswana pula 53 217 49 686Moçambique meticais 7 160 32 497US dollar 125 509 181 397

712 579 543 390

Cash and cash equivalentsAustralian dollar 514 498 297 127Botswana pula 61 693 58 319Moçambique meticais 42 959 16 801US dollar 454 750 111 362

1 073 900 483 609


86



2008 2007R’000 R’000

26. Financial instruments and financial risk managementcontinued

Financial liabilitiesLong-term borrowingsAustralian dollar 17 836 1 589

Trade and other payablesAustralian dollar 723 029 363 540Botswana pula 27 948 33 755Moçambique meticais 5 915 16 801US dollars 81 741 93 015

838 633 507 111

Sensitivity analysisPotential foreign currency risk is presented by way of sensitivity analysis demonstrating the effect of a 10%movement in the spot rates at 30 June 2008

Exchange rate +10% -10%R’000 R’000

US dollar 7,8Cash and cash equivalents 45 476 (45 476) Trade and other receivables 12 551 (12 551) Trade and other payables (8 174) 8 174

Moçambique meticais 0,33Cash and cash equivalents 4 296 (4 296)Trade and other receivables 716 (716)Trade and other payables (592) 592

Australian dollar 7,5Cash and cash equivalents 51 450 (51 450)Trade and other receivables 52 669 (52 669)Interest bearing borrowings (1 784) 1 784Trade and other payables (72 303) 72 303

Botswana pula 1,2Cash and cash equivalents 6 172 (6 172) Trade and other receivables 5 322 (5 322) Trade and other payables (2 795) 2 795

Effect on profit before taxation 93 004 (93 004)


87


26.4 Liquidity riskLiquidity risk is the risk that an entity within the group will be unable to meet its obligations as they becomedue. The group manages liquidity risk by effectively managing its working capital requirements, capitalexpenditure and cash flows. The group finances its operations through a mixture of favourable cash balancesand short and long-term financial institution funding. Adequate banking and reserve borrowing capabilities aremaintained.

Maturity profile of financial instrumentsAny potential liquidity risk is illustrated in the maturity profile of the group's financial instruments listed below.

< 1 year 2 – 5 years > 5 years Total R’000 R’000 R’000 R’000

Financial assetsBank balances and cash 2 781 521 – – 2 781 521 Trade and other receivables 2 315 406 – – 2 315 406 Derivative financial instruments 38 399 16 779 – 55 178 Short-term investments 256 000 – – 256 000 Financial assets classified as fair value through profit/loss – 13 254 19 868 33 122 Financial assets carried at amortised cost – 57 659 – 57 659 Loans advanced to associates – 168 259 – 168 259

5 391 326 255 951 19 868 5 667 145

Financial liabilitiesBank overdrafts 4 597 – – 4 597 Interest bearing liabilities 120 693 141 942 – 262 635 Derivative financial instruments 20 774 – – 20 774 Other financial liabilities 1 321 764 – – 1 321 764 Sub-contractor liabilities 811 886 – – 811 886

2 279 714 141 942 – 2 421 656

26.5 Capital risk managementThe group's objectives when managing capital are to safeguard the group's ability to continue as a goingconcern in order to provide returns for shareholders and benefits for other stakeholders and to maintain anoptimal structure to reduce the cost of capital.

In order to maintain or adjust the capital structure, the group may adjust the amount of dividends paid toshareholders, return capital to shareholders, issue new shares or sell assets to reduce debt.

The group monitors capital on the basis of a debt/equity ratio. This ratio is calculated as net debt divided bytotal capital. Net debt is calculated as total interest bearing borrowings less cash and cash equivalents.

2008 2007R’000 R’000

Total interest bearing borrowings including overdrafts 273 440 200 137 Cash on hand (2 781 521) (1 269 015)

Net debt (2 508 081) (1 069 082)Total equity 1 815 333 1 081 404

Debt/equity ratio – –


88



2008 2007R’000 R’000

27. Employee benefits27.1 Staff costs

Wages and salaries 1 613 227 1 048 703 Pension cost – defined benefit fund 714 1 543 Provident cost – defined contribution funds 53 109 58 900 Medical aid 15 229 12 543 Other contributions 32 254 15 438

1 714 533 1 137 127

27.2 Defined benefit fundPresent value of obligation 39 853 39 484 Fair value of fund assets (37 428) (38 442)

Funded status 2 425 1 042 Net unrecognised actuarial loss (2 425) (1 042)Paragraph 58 limitation – –

Liability recognised – –

Defined benefit obligationOpening balance 39 484 38 095 Service cost 695 438 Interest cost 3 026 3 393 Members' contributions 205 184 Actuarial loss (1 231) 2 320 Benefits paid (2 237) (4 805)Risk premiums (89) (141)

Closing balance 39 853 39 484

Fair value of fund assetsOpening balance 38 442 35 630 Expected return on assets 3 567 2 104 Contributions 884 671 Risk premiums (89) (141)Benefits paid (2 237) (4 805)Actuarial (loss)/gain (3 139) 4 983

Closing balance 37 428 38 442

The composition of fund assets is made up as follows: % %Cash 11,0 4,4Equity 69,7 76,9Bonds 2,7 3,8Property and other 2,0 0,7International 14,6 14,2

100,0 100,0


89

2008 2007% %

27. Employee benefits continued

The principal actuarial assumptions used as at the balance sheet date were as follows:

Discount rate 10,3 7,8 Inflation rate 7,3 4,8 Salary increase rate 9,3 6,8 Expected rate of return on assets 12,3 9,5 Pension increase allowance 5,4 3,6

The fund’s expected long-term return is a function of the expected long-term returns on equities, cash andbonds. In setting these assumptions the fund administrators made use of the asset split as at 30 April 2008.

The expected long-term rate implies a yield on government bonds at 10,25% per annum. The expected long-term rate of return on equities was set at a level of 3% above the bond rate, whilst the expected long-termrate of return on cost was set at a level of 2% below the bond rate. Adjustments were made to reflect theeffect of expenses.

These assumptions have been based on the requirements of the reporting standard and are typically lessconservative than those used by the valuator for funding purposes. All other assumptions adopted in thefunding valuation were left unchanged.

The WBHO Pension Fund, which is governed by the Pension Funds Act of 1956 (as amended), is closed tonew entrants. The fund is a final emolument pension fund and 0,47% of employees are members of the fund.Actuarial valuations are made annually and the most recent valuation was made on 30 June 2008.The actuaryis of the opinion that the fund is in a sound financial position.

27.3 Defined contribution fundsWBHO Staff Provident FundThe fund is open to all full-time monthly paid employees of the company.

WBHO Provident FundThe fund is open to membership by any hourly paid employee employed full time by the company and whohas completed at least twelve months' continuous service.

27.4 Equity compensation benefitsThe WBHO Share Trust The trust is a special purpose vehicle through which the group sells shares to employees with the aim ofretaining existing talent within the group. The group issues shares to the trust at the discretion of the directors.The shares are sold to employees at market value at the date of issue. At the time of the sale, a loan equal tothe value of the shares sold, is raised for each identified employee. The employee is required to pledge theshares to the trust as security against the loan. The loan must be repaid after, but not before, a period of fiveyears. Any dividends earned by the shares during that period are to be set off against the balance of the loan.The trustees are entitled to buy back from the employee sufficient shares to settle any amount outstanding onthe loan once the five year period has elapsed. Should a scheme member leave the employ of the companybefore the five year period has elapsed, the member is obligated to sell the shares back to the trust at thesame price at which they were purchased. Details relating to the number of shares issued to the trust, theselling prices to employees and the accompanying share-based payments are set out in the following table.


90




The WBHO Share Trust Share-based

Selling payments Future

Number of price per expense expense to be

shares share to date recognised

'000 cents R'000 R'000

Shares sold to employees in prior

periods where the loan period has

not yet expired 1 417 2 832 2 119 828

Shares sold during the current period 12 4 957 – –

Shares repurchased during the

current period 46 3 591 n/a n/a

Unsold treasury shares 41 n/a n/a n/a

The WBHO Management Trust

The trust is a special purpose vehicle through which shares are sold to employees with the aim of retaining

existing talent within the group. In order to further this aim the trust has the option to acquire shares from

certain employee shareholders at a discounted price.

Shares sold to employees out of the trust match those shares sold out of the WBHO Share Trust on a one-for-

one basis. However, as the options described above allow the trust to acquire shares at a discount to the

market price, the trust is able to sell such shares to the identified members of staff at a similar discount.

The terms and conditions relating to the sale of shares by the trust in terms of the scheme, any loans raised or

settled, the duration of the loan, securities pledged and repurchasing of shares by the trust before the

prescribed period are the same as for the WBHO Share Trust described above.

Details relating to the number of shares purchased and sold by the trust, the respective share prices, and the

accompanying share base payment expense are set out in the following table.

The WBH-O Management Trust Share-based

Selling payments Future

Number of price per expense expense to be

shares share to date recognised

'000 cents R'000 R'000

Shares sold to employees in prior

periods where the loan period has

not yet expired 521 2 800 12 445 8 544

Options exercised in the current

period – – – –

Shares sold during the current period 10 2 792 – –

Shares repurchased during the

current period 33 2 800 – –

Unallocated share stock 1 014 n/a n/a n/a


91

27. Employee benefits continuedAkani Investment Holdings (Pty) Ltd and The Broad-Based Employee Share Incentive TrustThe company and trust are special purpose vehicles created to give effect to the group's Black EconomicEmpowerment initiative, aimed to source strategic black partners and reward black employees who have beenin the service of the group for more than five years.

Akani Investment Holdings (Pty) Ltd (Akani) has been incorporated and will have as its main business andobject the subscription for and holding of Wilson Bayly Holmes-Ovcon Limited (WBHO) shares. Theshareholders of Akani at the issue date comprise the Broad-Based Employee Share Incentive Trust (BBETrust), three black partners and WBHO. On 16 October 2006 WBHO issued shares to Akani and Akani issuedan equal number of shares to the shareholders, the effect being that each Akani share held by theshareholders is linked to one WBHO share (linked shares).

Black partnersThe black partners subscribed for the Akani shares at par value, in cash on the issue date.

In terms of the BEE agreement the black partners may not dispose of the Akani shares held by them for aperiod of ten years from the issue date (the lock-up period). The last day of the lock-up period is determinedto be the date of repurchase. On the date of repurchase, WBHO will repurchase from Akani (with Akaniimmediately repurchasing an equal number of Akani shares from the relevant black partners) so many of theWBHO shares, at their par value, based on the repurchase formula. The repurchase formula is calculated asfollows:A = [(B+D)/C] x E Where:A = number of WBHO shares to be repurchasedB = notional initial amount being the 15 trading day VWAP (Volume Weighted Average Price) of a WBHO share

for the period preceding the issue dateC = market value of a WBHO share on the date of repurchaseD = an amount determined by applying the hurdle rate to the notional initial amount less the subscription price

paid for the subscription share for the period from the issue date until the date of repurchaseE = original number of WBHO shares subscribed for by the black partner in question

The hurdle rate is defined as being the nominal annual growth rate of 8,33% compounded annually.

In terms of the BEE agreement a reinvestment obligation is imposed on the black partners whereby they areobliged to utilise two-thirds of the proceeds from all cash distributions received during the lock-up period forthe subscription for shares in Akani, thereby allowing Akani to purchase WBHO shares on the open market.Any shares acquired by the black partners arising from the reinvestment obligation will also be subject to thelock-up period and two-thirds of any distributions received will be subject to the reinvestment obligation.

The Broad-Based Employee Share Incentive Trust (BBE Trust)The BBE Trust subscribed for the Akani shares at par value, in cash at the issue date.

Allocations of the Akani shares subscribed for are granted to eligible employees meeting the qualificationcriteria as set out by the board of directors of WBHO. To date 1 671 employees have been allocated shares.Each allocation will be for a period of five years from the date of issue of the allocation (the allocation period).

In terms of the BEE agreement, a reinvestment obligation is imposed on participants similar to that imposedon the black partners above with the exception that the full proceeds from any cash distributions shall beapplied for the subscription of shares in Akani for the purchase by Akani of WBHO shares on the open market.

WBHOWBHO subscribed for the Akani shares at par value, in cash at the issue date.

WBHO is entitled to transfer the Akani shares for which it has subscribed to black people identified by WBHOfrom time to time. WBHO intends transferring at least 800 000 shares to new or existing black partners withina period of three years from the issue date.


92




Details of shares issued by Akani and the accompanying share-based payments expense recognised are setout in the table below.

Akani Investment Holdings (Pty) Ltd Share-basedSelling payments Future

Number of price per expense expense to beshares share to date recognised

'000 cents R'000 R'000

WBHO shares issued to Akani in terms of the BEE agreement 9 989 1 n/a n/a

Akani shares issued to the black partners 1 200 1 28 391 Nil

Akani shares issued to the BBE Trust– Allocated 1 322 1 10 826 31 711 – For future allocation 3 178 1 n/a n/a

Akani shares issued to WBHO– For transfer to new or existing

black partners within three years 800 1 n/a n/a – For future transfer to new or

existing black partners 3 489 1 n/a n/a

WBHO shares purchased in terms of the reinvestment obligation– Black partners 12 n/a n/a n/a – The BBE Trust 29 n/a n/a n/a

In calculating the share-based payments expense applicable to the black partners and the BBE Trust it wasnecessary to estimate the number of shares that could vest at the end of the lock-up period and allocationperiod respectively. The following assumptions and judgements were used in arriving at the estimate:

BlackBBE Trust partners

Hurdle rate (%) 8,3 8,3 Weighted average expected volatility (%) 24,0 24,0 Weighted average dividend yield (%) 1,7 1,7 Weighted average risk-free interest rate (%) 8,8 8,5 Vesting period (years) 5,0 10,0


93

28. Segmental analysisPrimary reporting formatBusiness segments

Civil and Roads and Property andbuilding earthworks Industrial concessions Other Consolidated

R’000 R’000 R’000 R’000 R’000 R’000

At 30 June 2008Segment revenue – external 7 807 924 2 719 297 183 689 72 741 – 10 783 651

Segment result 484 380 374 394 39 058 6 920 76 904 828 Impairment of goodwill – (18 994) (18 994)Fair value adjustments – – – 3 657 – 3 657 Share-based payments expense – – – – (23 860) (23 860)Profit on partial disposal of subsidiary – – 93 408 – – 93 408 Investment income 104 517 55 094 1 171 1 962 – 162 744 Share of associates' profits or losses 5 538 1 375 (30 585) 2 962 – (20 710)Finance costs (11 550) (8 630) – (158) – (20 338)Taxation (127 306) (173 078) (14 381) (3 446) – (318 211)

Net profit 455 579 230 161 88 671 11 897 (23 784) 762 524

Segment assets 4 617 370 3 015 822 (32 322) 137 483 157 629 7 895 982 Segment liabilities (3 554 015) (2 425 398) – (98 658) (2 578) (6 080 649)Aggregate investment in associates 87 586 – 173 197 24 972 – 285 755 Depreciation (90 909) (67 827) (2 136) – – (160 872)Capital expenditure 151 629 285 834 2 020 – – 439 483


94



28. Segmental analysis continued

Civil and Roads and Property andbuilding earthworks Industrial concessions Other Consolidated

R’000 R’000 R’000 R’000 R’000

At 30 June 2007Segment revenue – external 5 716 322 1 877 000 289 648 244 823 – 8 127 793

Segment result 222 452 76 128 65 083 52 214 – 415 877 Impairment of goodwill – (10 731) – – – (10 731)Fair value adjustments – – – 5 689 – 5 689 Share-based payments expense – – – – (34 610) (34 610)Investment income 51 748 17 304 1 385 1 793 – 72 230 Share of associates' profits or losses 5 017 – 9 873 (211) – 14 679 Finance costs (10 817) (5 211) (265) (538) – (16 831)Taxation (75 714) (16 157) (19 898) (16 230) – (127 999)

Net profit 192 686 61 333 56 178 42 717 (34 610) 318 304

Segment assets 2 684 395 1 243 367 199 825 133 029 48 010 4 308 626 Segment liabilities 2 145 347 898 286 78 076 85 040 20 473 3 227 222 Aggregate investment in associates 64 212 – 19 356 16 197 – 99 765 Depreciation (66 473) (25 903) (4 038) (59) (11) (96 484)Capital expenditure 266 944 74 032 3 204 – – 344 180

Secondary reporting formatGeographical segments

Local International Consolidated R’000 R’000 R’000

At 30 June 2008Segment revenue 6 911 796 3 871 855 10 783 651

Segment result 521 894 382 934 904 828 Segment assets 5 236 174 2 659 808 7 895 982 Segment liabilities (4 192 102) (1 888 547) (6 080 649)Capital expenditure 418 736 20 747 439 483

At 30 June 2007Segment revenue 5 515 206 2 612 587 8 127 793

Segment result 303 519 112 358 415 877 Segment assets 2 678 016 1 630 610 4 308 626 Segment liabilities (2 174 506) (1 052 716) (3 227 222)Capital expenditure 268 588 75 592 344 180

The group's activities are classified into two distinct operating areas, namely local and international. Alloperating activities in areas within the borders of the Republic of South Africa are included in the localsegment. The international segment includes operating activities in the following countries: Swaziland,Botswana, Moçambique, The Democratic Republic of Congo, Zambia, Tanzania, Ghana and Australia.


95

2008 2007R’000 R’000

29. Cash flow information29.1 Cash generated by operations

Operating profit before non trading items 904 828 415 877 Adjusted for non-cash items:Depreciation 160 872 96 484 Fair value adjustment to derivative financial instruments (34 404) – Foreign currency adjustment on property, plant and equipment – (7 161)Movement in provisions 406 900 121 255 Net unrealised foreign exchange gains and losses (33 587) (11 704)Profit from the disposal of property, plant and equipment (7 825) (6 055)Impairment of long-term receivables 12 124 19 694 Impairment of long-term receivables reversed (2 431) – Translation of foreign entities (note 29.3) 81 964 27 083

Operating income before working capital changes: 1 488 441 655 473Working capital changesDecrease in inventories 8 416 49 313 Increase in net excess billings over work done 798 618 223 403Increase in trade and other receivables (918 932) (170 621)Increase in short-term investments (256 000) –Increase in trade and other payables 1 118 950 481 837

751 052 583 932

Cash generated from operations 2 239 493 1 239 405


96



2008 2007R’000 R’000

29. Cash flow information continued

29.2 Taxation paidOutstanding at beginning of the year (238 953) (116 500)Expense for the year (318 211) (127 999)Change in deferred tax (47 705) (73 740)Acquisition and disposal of subsidiaries (1 236) (989)Outstanding at end of year 381 111 238 953

Net taxation paid (224 994) (80 275)

29.3 Foreign currency translation reserve movementsProperty, plant and equipment 31 780 9 532 Goodwill 17 867 5 021 Inventories 589 114 Contracts in progress (60 146) 11 382 Short-term receivables 163 904 10 722 Cash and cash equivalents 171 856 34 385 Long-term financial liabilities 10 313 183 Deferred tax 4 023 (742)Provisions (17 778) 2 090 Short-term financial liabilities (211 753) (38 484)Taxation (11 582) (6 318)Minority interests and joint ventures (17 109) (802)

81 964 27 083

29.4 Long-term financial liabilitiesOutstanding at beginning of year (117 232) (212 555)Acquisition and disposal of subsidiaries (54 476) (836)Outstanding at end of year 141 942 117 232

Cash outflow for the year (29 766) (96 159)

29.5 Cash and cash equivalentsCash and cash equivalents 2 781 521 1 269 015 Bank overdrafts (4 597) (564)

2 776 924 1 268 451


97

2008R’000

30. Acquisitions30.1 Acquisition of businesses

LET Construction (Pty) LtdOn 1 July 2007 the group acquired a 100% interest in LET Construction (Pty) Ltd. The company contributed revenue of R89,7 million and an attributable loss of R1,4 million during the period.

The fair value of assets and liabilities at the acquisition date were as follows:

Property, plant and equipment 10 323 Trade and other receivables 19 962 Long-term financial liabilities (3 782)Trade and other payables (15 200)Taxation and deferred taxation (1 843)Cash and cash equivalents (512)

8 948 Goodwill 15 052

Purchase price 24 000

Insitu Pipelines (Pty) LtdOn 1 July 2007 the group acquired a 70% interest in Insitu Pipelines (Pty) Ltd. The company contributed revenue of R87,7 million and attributable profit of R14,4 million during the period.


Property, plant and equipment 6 635 Inventory 1 087 Trade and other receivables 10 783 Long-term financial liabilities (718)Trade and other payables (3 281)

14 506 Minority interest recognised at acquisition (4 351)

10 155 Goodwill 17 845



98



2008R’000

30. Acquisitions continued

Simbithi Eco Estate (Pty) LtdThe group acquired the remaining 50% interest in the company on 1 January 2008 thereby increasing its total interest to 100% with the effect that the company has been consolidated since the acquisition date. The company was previously proportionately consolidated on a line-for-line basis.


Property for development 77 070 Trade and other receivables 8 645 Long-term financial liabilities (49 976)Trade and other payables (24 198)Taxation and deferred taxation (5 208)Cash and cash equivalents 3 267

9 600 Discount received on land (2 834)


30.2 Additional purchase price Capital Africa Steel (Pty) Ltd 71 000 On 8 August 2007 an additional amount was charged to the cost of the investment of Capital Africa Steel (Pty) Ltd upon the company achieving the performance criteria set out in the original purchase agreement.

30.3 Minority interestsThe following minority interests were acquired during the year.Basic Constructions Pty Ltd 9 495

During the year, the group's Australian subsidiary Probuild Constructions Pty Ltd acquired an additional 10% in Basic Constructions Pty Ltd, bringing its total interest to 80%. The effective interest of the group increased to 48%.

30.4 Cashflow on acquisitionsFrom:Acquisition of businesses 58 766 Additional purchase price 71 000 Acquisition of minorities 9 495 Cash acquired (2 755)

136 506


99

2007R’000


The following acquisitions took place in the prior year:30.5 Acquisition of additional interests in associates

RMS-Dynamic-Rebar (Pty) LimitedThe fair value of assets and liabilities on acquisition was as follows:Contracts in progress 10 824Property, plant and equipment 622Inventory 2 871Accounts payable (13 007)Taxation (248)Cash and cash equivalents 5 127

6 189Minority interest recognised on acquisition (3 088)

3 101Previously acquired as an associate (2 475)

626Goodwill 1 139


The group acquired an additional 10,1% interest in the company on 1 November 2006 thereby increasing its total interest to 50,1% with the effect that the company has been consolidated since the acquisition date.

Tsala – RMS Solutions (Cape) (Pty) LimitedThe fair value of assets and liabilities on acquisition were as follows:Investments 469Contract debtors 4 644Contracts in progress (2 528)Inventory 196Accounts payable (2 642)Taxation (601)Cash and cash equivalents 1 682

1 220Minority interest recognised on acquisition (598)

622Previously acquired as an associate (488)

134Goodwill 92

Purchase price 226

The group acquired an additional 11% interest in the company on 1 November 2006 thereby increasing its total interest to 51% with the effect that the company has been consolidated since the acquisition date.


100



2007R’000


30.6 Acquisition of additional interest in joint ventureAmandla Reinforcing (Pty) LimitedThe fair value of assets and liabilities on acquisition were as follows:Property, plant and equipment 626Contract debtors 1 227Inventory 84Accounts payable (889)Taxation (138)Deferred tax (2)Long-term financial liabilities (835)Cash and cash equivalents 237

310Negative goodwill (310)

Purchase price –

The group acquired an additional 49% interest in the company on 1 November 2006 thereby increasing its total interest to 95% with the effect that the company has been consolidated since the acquisition date.

30.7 Acquisition of associatesC.E.C.K. Civil Construction Pty Limited


The group acquired an additional interest in the company on 1 July 2006 thereby increasing its total interest to 40% with the effect that the company has been equity accounted for since the date of acquisition.

30.8 Minority interestsThe following minority interests were acquired during the previous year.

Probuild Constructions (Aust) Pty Limited 32 207Probuild Residential Pty Limited –Basic Construction Pty Limited 1 972

34 179

30.9 Cashflow on acquisitionsFrom:Additional interests in associates 1 991Additional interest in joint venture –Acquisition of associates 30 031Acquisition of minorities 34 179

66 201


101

2008R’000

31. Partial disposal of businessesCapital Africa Steel (Pty) LtdOn 15 January 2008 Capital Africa Steel (Pty) Ltd purchased 50% of its issued share capital from the group in terms of a restructuring agreement. The effect of the restructuring agreement reduced the interest of the group in Capital Africa Steel (Pty) Ltd to 50% with the result that for the six months to 30 June 2008 equity accounting has been applied.

The fair value of assets and liabilities sold are as follows:Property, plant and equipment 15 206 Goodwill 20 045 Investment in associates 24 564 Inventory 29 232 Trade and other receivables 70 770 Trade and other payables (73 928)Taxation and deferred taxation (5 814)Minority interests (14 866)Cash and cash equivalents 26 202

91 411 Profit on partial disposal of subsidiary 93 408

Proceeds on disposal 184 819 Non-cash portion (loan account) (116 875)Cash disposed of (26 202)

Cashflow on disposal 41 742

32. Events after the balance sheet dateThe following non-adjusting event took place after the balance sheet date.

On 1 July 2008 the group acquired an additional 22% interest in C.E.C.K. Construction Pty Ltd based inPerth, Australia, bringing to 67% the effective interest. C.E.C.K. Construction Pty Ltd is currently accounted foras an associate, with effect from 1 July 2008 the company will be consolidated. The purchase considerationamounted to R19,7 million.

On 3 September 2008 the board of Probuild Constructions Pty Ltd proposed a share buy back of 5,5% of theissued share capital of the company.

The transaction will have the effect of increasing the group’s interest in Probuild from 60% to 63,5%.The transaction will be ratified in a general meeting on 25 September 2008.


102

company balance sheetas at 30 June 2008

2008 2007Notes R’000 R’000

ASSETSNon-current assetsInvestments in subsidiaries and special purpose entities 1 42 781 42 781 Other financial assets 2 223 513 43 728

Current assetsCash and cash equivalents 509 –

Total assets 266 803 86 509

EQUITY AND LIABILITIESTotal equity 200 286 27 460 Long-term financial liabilities 3 66 210 59 049 Short-term financial liabilities 4 307 –

Total equity and liabilities 266 803 86 509

company income statementfor the year ended 30 June 2008

2008 2007R’000 R’000

Investment income 5 268 526 54 825

Net profit 268 526 54 825


103

Ordinary Employeeshares Share share-scheme Distributable Totalissued premium reserve reserves equityR’000 R’000 R’000 R’000 R’000

Balance at 30 June 2006 as previously reported 555 4 573 942 (82) 5 988 Effect of prior period error (note 6) (942) 942 –

Balance at 30 June 2006 as restated 555 4 573 – 860 5 988 Net profit for the year – – – 54 825 54 825 Dividend paid – – – (59 400) (59 400)Issue of shares 105 25 942 – – 26 047 Share-based payments – – 34 610 – 34 610 Effect of prior period error (note 6) (34 610) – (34 610)

Balance at 30 June 2007 restated 660 30 515 – (3 715) 27 460 Net profit for the year – – – 268 526 268 526 Dividend paid – – – (95 700) (95 700)

Balance at 30 June 2008 660 30 515 – 169 111 200 286

company statement of changes in equityfor the year ended 30 June 2008

2008 2007R’000 R’000

Cash flow from operating activitiesWorking capital changes 307 –Investment income 268 526 54 825 Dividend paid (95 700) (59 400)

Net cash flow from operating activities 173 133 (4 575)

Increase in investments in subsidiaries and SPEs – (43)Increase in other financial assets (179 785) (38 447)

Net cash flow from investing activities (179 785) (38 490)

Proceeds on issue of shares – 26 047 Increase in long-term financial liabilities 7 161 17 018

Net cash flow from financing activities 7 161 43 065

Increase in cash and cash equivalents for the year 509 –Cash and cash equivalents at beginning of year – –

Cash and cash equivalents at end of year 509 –

company cash flow statementfor the year ended 30 June 2008


104

notes to the company financial statementsfor the year ended 30 June 2008

2008 2007as restated

R’000 R’000

1. Investments in subsidiariesShares at cost less impairment losses 42 781 42 781

A complete list of investments in and loans to subsidiaries is set out in annexure 1.

2. Other financial assetsSubsidiaries 184 308 5 281 Share trusts 39 205 38 447

223 513 43 728

The loans are unsecured, bear no interest and will not be repaid within the next twelve months.

3. Long-term financial liabilitiesLoans to subsidiaries 62 914 59 049 Loans to share trusts 3 296 –

66 210 59 049

The loans are unsecured, bear no interest and will not be repaid within the next twelve months. Further details in annexure 1.

4. Short-term financial liabilitiesDividends payable 307 –

5. Investment incomeDividends received from subsidiaries 268 526 54 825

6. Restatement of comparative figures6.1 Share-based payment expense

The company financial statements for the year ended 30 June 2006 and 30 June 2007 have been restated asthe share-based payment expense was incorrectly included in prior years. There is no effect on the groupfinancials for either of these years.

6.2 Secondary taxation on companiesThe company financial statements for the year ended 30 June 2007 have been restated as the secondarytaxation charge was incorrectly included in prior years.

EffectR'000

2006Income statementShare-based payment expense –Increase in income 942

Statement of changes in equityIncrease in distributable reserves 942 Decrease in employee share-scheme reserve (942)

Net effect on equity –


105

6. Restatement of comparative figures continued

EffectR'000

2007Income statementShare-based payment expense –Secondary taxation charge 6 789 Increase in income 34 610

Statement of changes in equityIncrease in distributable reserves 34 610 Decrease in employee share-scheme reserve (34 610)

Balance sheetDecrease in liabilities 6 789

Net effect on equity 6 789


106

ANNEXURE 1

investment in subsidiariesas at 30 June 2008

Country of Issued Effective Shares Amounts owingIncorporation capital holding at cost by/(to) subsidiaries

2008 2007 2008 2007% R’000 R’000 R’000 R’000

Held directlyAkani Investment Holdings(Pty) Ltd South Africa R100 297 43 43 43 – –WBHO Construction(Pty) Ltd South Africa R900 000 100 42 738 42 738 (52 946) (49 180)Ovcon Holdings(Pty) Ltd South Africa R280 100 – – (9 968) (9 869)WBHO Industrial Holdings(Pty) Ltd South Africa R100 100 – – 184 308 5 281

Held indirectlyAltech Marketing Ltd Jersey GBP9 100Basic Constructions AUS$Pty Ltd Australia 140 004 48Edwin Construction(Pty) Ltd South Africa R100 49Insitu Pipelines (Pty) Ltd South Africa R100 70Kalcon (Pty) Ltd Botswana P2 100LET Construction(Pty) Ltd South Africa R480 000 100Matkovich & Hayes(Pty) Ltd South Africa R10 000 51Probuild Constructions AUS$(Aust) Pty Ltd Australia 30 744 823 60Probuild Residential AUS$Pty Ltd Australia 533 644 60Simbithi Eco Estate(Pty) Ltd South Africa R100 100Suncon (Pty) Ltd Botswana P12 000 100WBHO Australia Pty Ltd Australia AUS$

16 400 000 100WBHO ConstrucaoMoçambique Limitada Moçambique US$403 910 100WBHO PropertyDevelopments (Pty) Ltd South Africa R100 100WBHO Swaziland Ltd Swaziland E2 100WBHO Ghana (Pty) Ltd Ghana US$500 000 100

42 781 42 781 121 394 (53 768)

Investments in dormant subsidiaries have been omitted.

WBHO Construcao Moçambique Limitada has a 31 December reporting date and WBHO Ghana (Pty) Ltd has a31 March reporting date; changes to the reporting dates are not permitted per the respective countries' legislation.

Management information for the period to 30 June 2008, which has been reviewed, has been consolidated.


107

Country of Effective Shares Amounts owingIncorporation holding at cost by associate

2008 2007 2008 2007% R’000 R’000 R’000 R’000

Unlisted associatesGigajoule International (Pty) Ltd South Africa 26,6 7 770 7 770 13 337 7 524C.E.C.K. Civil Construction Pty Ltd Australia 32,0 36 044 30 031 37 497 29 164 Dywidag Systems International(Pty) Ltd South Africa 50,0 – 2 187 – 3 923Mecca Reinforcing (Pty) Ltd South Africa 44,6 – 155 – 300Mecca Quick Slabs (Pty) Ltd South Africa 33,3 – – – 50 Capital Africa Steel (Pty) Ltd South Africa 50,0 89 562 – 116 875 –Ilembe Airport Construction Services (Pty) Ltd South Africa 28,5 3 – – –Bunengi Mining Services (Pty) Ltd South Africa 20,0 2 000 – 550 –

135 379 40 143 168 259 40 961

The terms and conditions relating to amounts owing by associates and other relevant information is set out below:

Gigajoule International (Pty) LtdThe loan is unsecured, bears interest at the prime lending rate and will not be repaid within the next 12 months.

Gigajoule International (Pty) Ltd has a 31 December year-end. This was the financial reporting date established whenthe company was incorporated, and a change of reporting date is not permitted in Moçambique. For the purposesof applying the equity method of accounting, the financial statements of Gigajoule International (Pty) Ltd for the yearended 31 December 2007 have been used, and appropriate adjustments have been made for the effects ofsignificant transactions between that date and 30 June 2008.

Gigajoule International (Pty) Ltd has a 37,6% investment in the Matola Gas Concession. The concession hasbeen awarded several gas sales contracts but continues to depend on the support of its shareholders in theshort term.

The investment in the above concession has been fair valued by the group, in line with the group's accountingpolicies, using discounted cash flow models taking into account future expected dividend streams, market-relatedexchange rates, discount rates and inflation rates.

Dywidag Systems International (Pty) LtdThe loan was unsecured, bears interest at the prime lending rate and will not be repaid within the next 12 months.

Mecca Reinforcing (Pty) Ltd and Mecca Quick Slabs (Pty) LtdThe loans were unsecured, bear no interest and will not be repaid within the next 12 months.

C.E.C.K. Civil Construction Pty LtdC.E.C.K. is a civil engineering company based in Perth, Australia.

ANNEXURE 2

investment in associatesas at 30 June 2008



The loan is unsecured, bears no interest and will not be repaid within the next 12 months.

Ilembe Airport Construction Services (Pty) LtdThe group acquired an interest in Ilembe Airport Construction Services (Pty) Ltd on 1 July 2008. The company has acontract with Airports Company South Africa (Pty) Ltd for the construction of the King Shaka International Airport inKwaZulu-Natal. The company has subcontracted the construction to the Ilembe EPC joint venture.

Bunengi Mining Services (Pty) LtdThe group acquired an interest in Bunengi Mining Services (Pty) Ltd on 1 May 2008.

The loan is unsecured, bears no interest and will not be repaid within the next 12 months.

The company owns mineral rights in the Yzerfontein area and is currently conducting geological surveys todetermine the feasibility of future mining prospects.

Capital Africa Steel (Pty) LtdCapital Africa and its subsidiaries are principally engaged in providing reinforced steel and rock anchors to theconstruction and mining industries. The loan is unsecured, bears interest at the prime lending rate plus 2% and willnot be repaid within the next twelve months.

ANNEXURE 2

investment in associatesas at 30 June 2008


ANNEXURE 3

unlisted investmentsas at 30 June 2008

Effective Sharesholding at cost

2008 2007% R’000 R’000

ConcessionsBakwena Platinum Corridor Concession (Pty) Ltd 3.6 19 868 16 211Rainprop (Pty) Ltd 2.5 280 280

20 148 16 491

Bakwena Platinum Corridor Concession (Pty) LtdThe group has a 3,6% investment in the company which owns and operates various toll roads. Future cash flows will arise from dividends declared from profits expected to be earned from toll gate collections.

Rainprop (Pty) LtdThe group has a 2,5% investment in the company which has an interest in the DTI Campus. Various contractual disputes with the client have yet to be settled, the outcome of which is uncertain. As a result the cost of the investment in the concession has been determined to be its fair value.

Other unlisted investmentsMurphy Street Developments Pty Ltd 50 – 6 005 Saddleback Pty Ltd 50 10 110 8 095 Victorian Opportunity Fund 4.8 2 431 2 144

12 541 16 244

Murphy Street Development Pty Ltd (Aus)The group has an interest in a company which is developing a property in Melbourne (Aus). The company has beenproportionately consolidated in the current year.

Saddleback Pty Ltd (Aus)The group has an interest in a headlease over two apartments located at Mount Buller, Victoria (Aus).

Victorian Opportunity Fund (Aus)The group has an interest in the fund which invests in real estate property or property related investmentspredominantly located in or with a connection to Victoria (Aus).


2008 2007% %

Investments in significant joint venturesStatutory entitiesSt Francis Golf Links (Pty) Ltd 50,0 50,0Murphy Street Developments Pty Ltd (Aus) 50,0 50,0Reinforcing and Mesh Solutions (Southern Cape) (Pty) Ltd – 50,0RMS – Wakefield Reinforcing (Pty) Ltd – 49,0Simbithi Eco Estate (Pty) Ltd – 50,0

Non-statutory entitiesBerg River Consortium 24,0 24,0Durban Stadium Joint Venture 37,5 37,5Echo Contractors Joint Venture 50,0 50,0Fairlands Joint Venture 50,0 50,0Green Point Stadium Joint Venture 50,0 50,0Hullets Joint Venture 50,0 50,0ICC Arena Joint Venture 24,5 24,5Ilembe EPC Joint Venture 38,5 –Ilembe Civils Joint Venture 35,0 –Ilembe Building Joint Venture 34,5 –Polokwane Stadium Joint Venture 87,5 87,5WBHO/CTB Joint Venture 83,0 83,0WBHO/Kalam Joint Venture 80,0 80,0WBHO/Mandlethu Joint Venture 50,0 50,0WBHO/M&R Mandela Rhodes Joint Venture 50,0 50,0WBHO/Pro Khaya Construction Joint Venture 70,0 70,0WBHO/Rainbow National Library Joint Venture 70,0 70,0WBHO/Shearwater Coastal Joint Venture 50,0 50,0WBHO/Shearwater (Potties Pipes) Joint Venture 50,0 50,0WBHO/Simunye 3 Joint Venture 90,0 90,0Zambia – Lumwana Civils Joint Venture 30,0 30,0

R’000 R’000

The group's proportionate share of the assets, liabilities, results of operations and cash flows as incorporated in the financial statements are summarised below:

Non-current assets 42 456 35 180 Current assets 3 163 485 1 120 095

Total assets 3 205 941 1 155 275

Shareholders' equity 920 247 409 539 Current liabilities 2 285 694 745 736

Total equity and liabilities 3 205 941 1 155 275

Revenue 3 390 144 2 198 078

Profit before taxation 581 193 214 080

ANNEXURE 4

interests in joint venturesat 30 June 2008


ANNEXURE 5

loans receivableat 30 June 2008

2008 2007R’000 R’000

Secured loan included under long-term receivablesProperty development loansLocal loans 15 000 –

The loan represents funding advanced to a local property developer with whom the group may transact in the future. The loan is secured by a second covering bond over units in a hotel located in KwaZulu-Natal. The loan bears no interest and will not be repaid within the next twelve months.

Unsecured loans included under long-term receivablesLoans to concession investments (net of impairments)Bakwena Platinum Corridor Concession (Pty) Ltd 2 259 5 809Rainprop (Pty) Ltd 2 992 496

5 251 6 305

Loans to concession investments are unsecured, bear no interest and will not be repaid within the next twelve months.

Property development loansForeign loans 31 818 19 694 Impairment of loans (31 818) (19 694)

– –

Property development loans represent loans to foreign developments in which the group may participate in the future. The loans are unsecured and either bear no interest or bear interest at the prime lending rate or the prime lending rate plus 2,5%.The loans will not be repaid within the next twelve months.

Non-recoverability of loans to foreign developments has been provided for in full due to uncertainty surrounding the long-term viability of the projects.

Loans to employees for sharesAmounts outstanding 35 343 38 136

Loans to employees for shares are unsecured, bear no interest and are repayable after, but not before a period of five years from the date of sale of the shares (note 27).

Secured loan included under trade and other receivablesShort-term loanNondela Drakensberg Mountain Estate (Pty) Ltd 60 234 54 734


ANNEXURE 5

loans receivable continued

at 30 June 2008

The short-term loan relates to an amount owing to the group by Nondela Drakensberg Mountain Estate (Pty) Ltd(Nondela). A subsidiary of the group is the principal contractor engaged for the construction of Nondela. The grouphas entered into an agreement with Nondela to assist with the financing of the development, details of which are setout as follows:

• The group provided a bridging loan to Nondela in the amount of R60 million by carrying out works in respect ofthe construction of Nondela at its own cost to such value.

• The total debt of R60 million bears interest as a lump sum in the amount of R20 million.

• The interest and capital shall be repaid from time to time and by no later than 1 June 2008 out of the initialproceeds realised by Nondela from the transfer of the 41st full title erven.

• The loan is secured by a second mortgage bond in the amount of R85 million over the remaining extent of theFarm Bellevue No. 8247, portion 2 of the Farm Bellevue No. 8247 and portion 2 of the Farm WaterkloofNo. 10683, being the properties on which Nondela is being developed.


ANNEXURE 6

long-term financial liabilitiesas at 30 June 2008

2008 2007R’000 R’000

Interest bearing loans included under long-term financial liabilitiesSecured loansImperial Bank Limited 81 314 58 477

The loan is secured and bears interest at the prime lending rate less between 0,5% and 1,5%. Interest (note 19) is capitalised on the account during the construction phase of the development and will be settled from the net proceeds as and when transfers are made of properties over which the mortgage bond is held. The loan is secured by the township development costs disclosed under note 6. The loan relates to the development funding of the Simbithi Eco Estate.

In the comparative year Simbithi Eco Estate was proportionately consolidated on a line-for-line basis at 50%. The loan represents the group's 50% share, had Simbithi Eco Estate been consolidated from 30 June 2007 the loan would have amounted to R116,9 million.

Prodev Murphy Investments Pty Ltd 9 815 –

The amount represents the group's 50% share of the loan funded to develop 91 Murphy Street, Richmond, Australia. The loan is secured over the mentioned property and bears interest at 10,6%.

Capitalised finance lease liabilities 45 889 55 111

Capitalised finance lease liabilities are secured by instalment sale agreements over certain assets as specified in note 1. Interest is charged at market related rates linked to prime lending rates. The agreements are for various periods up to 48 months.

Unsecured loansThird parties 4 924 3 644

Other loans include third party loans to subsidiary companies bearing interest at either the prime lending rate or the prime lending rate less 2% and are repayable as and when funds are available.

141 942 117 232

Interest bearing loans included under trade and other payablesSecured loansShort-term portion of capitalised finance lease liabilities 120 693 82 341 Nedbank Limited 5 938 –

126 631 82 341

The loan from Nedbank Limited is secured by a first mortgage bond over Erf 731 Simbithi and suretyship by WBHOConstruction (Pty) Ltd and other parties. The loan bears interest at 1% below the prime lending rate. The loan isrepayable from the net proceeds of the sale of units or on the loan expiry date, 31 October 2008.

The amount represents the group's share of the loan arising from its 25% interest in The Thompson's View JointVenture, which is developing Erf 731 on the Simbithi Eco-Estate.


Notice is hereby given that the 26th annual generalmeeting of shareholders of Wilson Bayly Holmes-OvconLimited (the company) will be held in the board room,ground floor, 53 Andries Street, Wynberg, Sandton at11:00 on Wednesday, 29 October 2008 for the followingpurposes:

1. Ordinary resolution number 1To receive and adopt the financial statements andreports of the directors and auditors of the companyfor the year ended 30 June 2008.

2. Ordinary resolution numbers 2.1 to 2.3To ratify the election of Mr EL Nel who was appointedas a director to the board during the year. A brief CVof Mr Nel is set out on page 11.

To re-elect Messrs MW McCulloch and JM Ngobenias directors by way of separate resolutions, whoretire by rotation and being eligible, offer themselvesfor re-election. A brief CV of these directors is set outon page 11.

3. Ordinary resolution number 3To approve the fees payable to the non-executivedirectors.

4. Ordinary resolution number 4To confirm the appointment of the auditors, BDOSpencer Steward (Johannesburg) Inc. for the ensuingyear.

5. Ordinary resolution numbers 5.1 to 5.2General authority to directors to issue sharesreserved for the share schemes“Resolved as an ordinary resolution that, subject tomeeting the requirements of the JSE Limited (theJSE) to consider and if approved, to pass with orwithout modification that the unissued ordinaryshares in the capital of the company reserved for thepurposes of the company’s share schemes, continueto be placed under the control of the directors, whoshall be authorised to issue these shares at suchtimes and on such terms as they deem fit.”

General authority for directors to issue shares “Resolved that after providing for the shares reservedfor the purpose of the company’s share schemes,the balance of unissued ordinary shares be placedunder the control of the directors, who are herebyauthorised to allot and issue these shares at suchtimes and on such terms as they may decide,subject to the Listing Requirements of the JSE andprovided that any shares issued in terms of thisauthority shall not exceed 10% of the company’sissued share capital prior to such issue.”

6. To transact such other business asmay be transacted at an annualgeneral meeting.General instructions and information

PageDirectors and management 11Responsibility statement 48Directors’ shareholding 83Share capital of the company 72Material changes Nil

Voting instructionsA member registered as such (either as the holder ofshares in certificated form and whose name isreflected in the register of company members, or asthe holder of shares in dematerialised form andwhose name is reflected in a sub-register maintainedby a CSDP) is entitled to appoint one or moreproxies to attend, speak and, on a poll, vote inhis/her stead should he/she be unable to attend theannual general meeting, but wishes to berepresented thereat.

A proxy need not be a member of the company.Proxy forms should be forwarded to reach the officeof the Transfer Secretaries, Computershare InvestorServices (Pty) Ltd, Ground Floor, 70 Marshall Street,Johannesburg 2001 (PO Box 61051, Marshalltown2107) at least 48 hours before the commencementof the meeting.

Shareholders who have dematerialised their shares inthe company such that their holdings are no longerrecorded in their own names should arrange withtheir CSDP or broker for the necessary authority toattend the annual general meeting. Should they beunable, or do not wish to attend but wish to berepresented at the meeting, they should provide theirCSDP or broker with their voting instructions in termsof the agreements entered into between theshareholder and CSDP or broker concerned.

By order of the board

S Vally-KaraCompany Secretary

23 September 2008

notice of annual general meeting


Wilson Bayly Holmes-Ovcon Limited (Incorporated in the Republic of South Africa) (Registration number 1982/011014/06)Share code: WBO ISIN: ZAE000009932 (WBHO)

Registered office and contact details53 Andries StreetWynberg, Sandton 2090

PO Box 531Bergvlei 2012Telephone: (011) 321 7200Fax: (011) 887 4364

Website: www.wbho.co.zae-mail: [email protected]

Company SecretaryS Vally-KaraACIS

AuditorsBDO Spencer Steward (Johannesburg) Inc.

Transfer secretariesComputershare Investor Services (Pty) Ltd70 Marshall StreetJohannesburg 2001

PO Box 61051Marshalltown 2107Telephone: (011) 370 5000Fax: (011) 370 5271

SponsorInvestec Bank Limited

administration

Financial year-end 30 June

Preliminary announcement August

Annual report posted September

Annual general meeting October

Interim results announced February

SHAREHOLDERS’ PAYMENTSInterim payment– approved February– payable April

Final payment– approved August– payable October

shareholders’ diary

Notes


form of proxy

WILSON BAYLY HOLMES-OVCON LTD(Incorporated in the Republic of South Africa) (Registration number 1982/011014/06)Share code: WBO ISIN: ZAE000009932(WBHO)

For use by certificated and own name dematerialised shareholders at the annual general meeting of shareholders tobe held in the boardroom at the registered office of WBHO, 53 Andries Street, Wynberg, Sandton on Wednesday,29 October 2008 at 11:00

I/We

of

being a shareholder of WBHO shares hereby appoint (see note 1):

1. or failing him/her

2. or failing him/her

3. the chairperson of the general meeting

as my/our proxy to act for me/us at the general meeting of shareholders which will be held in the boardroom at theregistered office of WBHO, 53 Andries Street, Wynberg, Sandton, on Wednesday, 29 October 2008 at 11:00 for thepurpose of considering and, if deemed fit, passing, with or without modification, the ordinary resolutions to beproposed thereat and at each adjournment or postponement thereof, and to vote for me/us as follows:

Number of votes (one vote per share)

In favour Against Abstain

1. To receive and adopt the annual financial statements for the year ended 30 June 2008

2. Election of directors

2.1 Mr EL Nel

2.2 Mr MW McCulloch

2.3 Mr JM Ngobeni

3. To approve fees payable to the non-executive directors

4. Re-appointment of BDO Spencer Steward (Jhb) Inc as the company’s auditors

5.1 Directors’ authority to issue shares reserved for the share schemes

5.2 General authority for directors to issue shares

and generally to act as my/our proxy at the said general meeting. (If no directions are given, the proxy holder will beentitled to vote or to abstain from voting as that proxy holder deems fit.)

Signed at on 2008

Signature

Assisted by me (where applicable)

(State capacity and full name)

Each shareholder is entitled to appoint one or more proxies (none of whom need be a shareholder/s of WBHO) toattend, speak and vote in place of that shareholder at the annual general meeting.

(Please read the notes on the reverse hereof)

1. This proxy form is to be completed only by thoseshareholders who still hold shares in a certificatedform or whose shares are recorded in their ownname in a dematerialised electronic form in thesubregister.

2. Shareholders whose dematerialised shares are heldin the name of a nominee and wish to attend theannual general meeting, must contact their CentralSecurities Depository Participant (CSDP) or brokerwho will furnish them with the necessary letter ofrepresentation. Alternatively, they have to instructtheir CSDP or broker as to how they wish to vote.This has to be done in accordance with theagreement between the shareholder and the CSDPor broker.

3. Dematerialised shareholders, other than those withown name registration, who wish to attend andvote at the meeting, must ensure that their lettersof representation from their CSDP or broker reachthe transfer secretaries by no later than 48 hoursbefore the commencement of the meeting.

4. A shareholder may insert the name of a proxy orthe names of two alternative proxies of theshareholder’s choice in the space provided.

The person whose name stands first on the form ofproxy and who is present at the general meetingwill be entitled to act as proxy to the exclusion ofthose whose names follow.

5. A shareholder’s instructions to the proxy must beindicated by the insertion of the relevant number ofvotes exercisable by the shareholder in theappropriate box provided. Failure to comply withthe above will be deemed to authorise the proxy tovote or to abstain from voting at the generalmeeting as he/she deems fit in respect of all theshareholder’s votes exercisable thereat.

A shareholder or the proxy is not obliged to use allthe votes exercisable by the shareholder or by theproxy, but the total of the votes cast and in respectof which abstention is recorded may not exceedthe total of the votes exercisable by the shareholderor by the proxy.

6. Forms of proxy must be lodged with or posted tothe transfer secretaries, Computershare InvestorServices (Pty) Ltd, 70 Marshall Street,Johannesburg 2001 (PO Box 61051, Marshalltown2107) to reach them no later than 11:00 onMonday, 27 October 2008.

7. The completion and lodging of this form of proxywill not preclude the relevant shareholder fromattending the general meeting and speaking andvoting in person thereat to the exclusion of anyproxy appointed in terms thereof.

8. Documentary evidence establishing the authority ofa person signing this form in a representative orother legal capacity must be attached to this formof proxy unless previously recorded by the transfersecretaries or waived by the chairperson of theannual general meeting.

9. An alteration or correction made to this form ofproxy must be initialled by the signatory/ies.

10. If any shares are jointly held, the first nameappearing in the register shall, in the event of anydispute, be taken as the shareholder.

11. Any alterations, corrections or deletions to this formof proxy must be initialled by the signatory/ies.

notes to form of proxy

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