CHAIRMAN’S REPORT

Mike Wylie  
WELL, THE WORLD CUP HAS COME AND GONE AND WHAT A SUCCESS IT WAS. THE STADIUMS, AIRPORTS, AND FREEWAYS WERE ALL FINISHED ON TIME AND ALL COPED BRILLIANTLY. Visitors from all over the world were amazed, it was world class, a marketing coup and a feather in our construction industry’s cap. We must continue to build South Africa from this base and turn our attention to infrastructure construction so vital for poverty alleviation.

Last year I was concerned about the tough trading conditions facing the industry but again WBHO has produced a solid performance increasing both revenue and profits.

What a year it has been, the three stadiums in which we were involved, Cape Town, Durban and Polokwane were the first to receive works completion certificates. The massive extensions and alterations to OR Tambo International were handed over months early and King Shaka International Airport opened successfully on the 1st May 2010 having been built in a world record time. Furthermore our 26 km section of the N1 freeway from Buccleuch to 14th Avenue was opened to traffic during May, well ahead of schedule. All this has really been a fantastic achievement.

In Australia, Probuild, is coping well and in Melbourne in particular, it is a case of “what GFC?” The basics of supply and demand work very efficiently in Australia making it a very competitive market, however Probuild has improved its earnings for the 10th successive year.

Personally 2010 has been very significant, it was the financial year in which I turned 60 and, as planned I entered stage one of my retirement. We place great importance on long-term succession planning and prefer to promote from within. On completion, my succession plan will have taken six years. Over the last three years I have handed over leadership of the group to Louwtjie Nel and his very capable team, over the next three years I will gradually reduce my input, initially in WBHO and later in Probuild, Australia.

What I love about WBHO is the attitude and culture of management – strong yet humble. We travel economy class domestically, we seldom have extended business lunches, we limit the use of our company credit cards, essentially there is no special treatment of senior staff. It is quite unique and is part of our success and has enabled WBHO to achieve a compound annual growth rate in headline earnings of over 30% since listing in 1996.

Our conservative nature and a modicum of good luck have kept our investments in property developments at a low level over the past few years. Our flagship residential estate, the Simbithi Eco Estate north of Durban, is one of the largest residential developments in South Africa at present and continues to sell well, having been boosted by the opening of the King Shaka International Airport. Development opportunities are regularly brought to us for investment but we believe it prudent to keep our powder dry for another year or so.

This year growth has been achieved both organically and through acquisition. I believe we have got the mix right. Most of our growth is organic but acquisitions in specific parts of the business enhance our capability thereby facilitating additional organic growth. This is our version of synergy.

Transformation continues to make good progress and our we have maintained our BEE rating as a level 3 contributor. Transformation at senior management level is still our greatest challenge and as a result training, mentoring and succession planning have a high priority.

It is pleasing to observe the strategic direction and value the board continuously provides to management. Every member has an intimate knowledge of the industry and their support and guidance is valued by the operating companies. This year we achieved almost 100% attendance at our board meetings. In addition, the various board committees, audit (chaired by Gando Matyumza), risk (chaired by Kobie Botha) and remuneration (chaired by Savannah Maziya) as well as the Akani Broad-Based Share Schemes (chaired by James Ngobeni) add similar value.

Construction is inherently a high risk industry. Risk perception is inbred and is automatically managed on an ongoing basis by our very experienced teams. The risk committee had made good progress during the year in ensuring that a risk management process is adhered to and is formally documented.

The next two to three years are going to be challenging and we are going to have to be quick on our feet to guide WBHO successfully through this uncertain period. WBHO’s ability to switch rapidly from one discipline to another, from one area to another in pursuit of new work will enable us to weather this difficult period and emerge even stronger when the next upturn comes.

As I have done year after year, I would like to pay tribute again to our loyal and hardworking employees. Their sense of duty and the extraordinary efforts of our people at all levels of the organisation is a constant source of pride. The outstanding financial results achieved this year and in previous years is a testament to this.

Mike Wylie
Chairman