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File Image: IOL

Solid results from Africa, UK businesses see WBHO return to profitability

By Edward West Time of article published Mar 3, 2021

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Wilson Bayly Holmes-Ovcon Limited (WBHO) moved back into profitability in the six months to December 31, following solid results from its Africa and UK businesses, and despite ongoing losses at its Australia infrastructure operations. A R43.8 million attributable profit was reported for the six months versus a R508.1m loss for the year to June 2020.

No half-year dividend was declared due to losses in the Australian infrastructure projects, the group said yesterday. The Australia building operations had returned to profitability.

Group revenue fell 11 percent to R20 billion. Earnings per share fell 92 percent to 32 cents per share. Headline earnings per share were down 80 percent to 81c. Net asset value fell to R5.6bn, down from R6.3bn a year before.

Within the Africa operations, a 12 percent decline in revenue in South Africa was offset by a 24 percent increase in revenue from the rest of Africa, largely due to strong activity in Mozambique.

Revenue from Australia fell 27 percent in Australian dollars, partially due to lockdown restrictions in Melbourne, but also because of strict project selection to secure more manageable and lower-risk projects.

The UK operations saw a 22 percent decline in revenue in pound terms.

The impact of lower foreign revenues from Australia and the UK was somewhat mitigated by a weaker local currency, which resulted in a positive foreign currency translation effect on revenue of R1.9bn.

Operating profit before non-trading items more than halved to R111m from R264m, primarily a result of the impact of Covid-19 on the Australian building business and an additional A$28m (about R326m) loss provided for on the Western Road Upgrade project. In the comparative period, a A$20m loss was recognised.

Cash reserves of more than R5bn were maintained. Foreign cash balances fell from R5.7bn at June 30, 2020, to R3.4bn at December 31, due to the seasonal early settlement of subcontractors in Australia ahead of the holiday season.

Since June 30, 2020, local cash balances decreased by R215m to R1.7bn, due to the funding of Australia.

The effects of worldwide vaccination programmes and numerous economic revival packages were likely to take time to filter through to the private construction markets, and fixed investment was expected to remain subdued in the short term in all the regions where the group operates.

“Pockets of activity still exist, and the group will vigorously target these opportunities. We have observed increased activity in the mining sector in South Africa and Australia. Public sector infrastructure spending has been fast-tracked, with many shovel-ready projects accelerated across all the group’s operations.”

In South Africa, there was a “noticeable increase” in the availability of new projects from state-owned entities, including Sanral, Eskom, Transnet, Prasa and Rand Water, as well public-private partnership projects for serviced accommodation.

WBHO’s shares closed 1.21 percent higher at R99.34 on the JSE yesterday.

BUSINESS REPORT

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