WBHO slams probe's focus on joint venture collusion
September 8, 2009
By Roy Cokayne
Wilson Bayly Holmes-Ovcon (WBHO) believes the Competition Commission's focus on alleged anti-competitive practices in joint ventures in the construction sector has "zero validity".
The listed construction and engineering group says it has positioned itself to take advantage of construction materials acquisitions, public-private partnerships and concession opportunities that it believes will become available in the next two years.
Louwtjie Nel, WBHO's group chief executive, said yesterday it was quite confident about the outcome of the commission's investigation, but added that the focus of the commission's probe on joint ventures had "zero validity".
"You've got to understand strategies, strengths, resources and risk and weigh them all up. Every time we see a big project come along we always say: 'Can we do it alone or do we want a partner?'."
Last week the commission said preliminary investigations indicated that there might be widespread collusion in the construction industry.
In regard to joint ventures, it said preliminary investigations showed that construction firms, which would normally bid independently, often formed joint ventures when bidding for certain projects and that these joint venture might be used as a platform to engage in collusive practices.
WBHO yesterday reported 27 percent growth in headline earnings a share to R16.10 in the year to June. Turnover rose 37 percent to R14.8 billion.
Operating profit rose 16 percent to R1.03bn despite the operating margin deteriorating to 7.1 percent from 8.4 percent.
Nel said WBHO would keep its R4.03bn cash pile as it wanted to be well placed when public-private partnership and concessions opportunities came along. The full dividend for the year rose 24 percent to R3 a share.
The group's order book was at R15.3 billion compared with R18.3 billion a year earlier.
WBHO's shares rose 2.5 percent to R118.05 yesterday.
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