WBHO: from R549m profit to R508m loss
Cape Town - Wilson Bayly Holmes- Ovcon (WBHO) struggled with two loss-making projects in Australia and the Covid19 pandemic, and headline earnings per share fell by 200 percent to a loss of 937 cents a share in the year to June 30. A loss of R508.1 million compared with a R549m profit the previous year. Revenue increased by 6 percent to R43 billion.
Liquidity, however, remained robust, with cash and its equivalents up 28 percent to R7.6bn.
The group said yesterday that while it had made substantial losses, cash generated from operations remained healthy at R790m compared to R1.5bn in the comparative period.
And while overall liquidity was expected to be constrained in the short-term, the cash reserves would allow it to adequately manage its liquidity position. Net tangible asset value amounted to R4.6bn.
Due to the balance sheet strength, low external debt and healthy cash reserves, strong relationships and ongoing support from guarantee providers had been maintained.
The group continued to operate within facility limits and had access to asset finance facilities to fund capital expenditure where necessary. The debt-equity value at June 30, 2020, was 12 percent.
A “noticeable uptick in activity” had been visible in the first quarter of the 2021 financial year, new projects were secured to the value of R9.4bn from the end of the reporting period.
These provided the group with sufficient work over the next 12 months. A right-sizing of the business over the first quarter of the new financial year was considered appropriate for workon-hand and anticipated awards.
The South African, Australian and UK governments had committed to public infrastructure development as part of their economic stimulus packages to relieve the effects of Covid-19 on economies.
The Roads and Earthworks and Civil Engineering divisions in South Africa and WBHO Infrastructure in Australia, were well-positioned to participate in these stimulus packages.
In the UK, the Byrne Group had positioned itself for public infrastructure spend and had developed good relationships with contractors bidding for work on the HS2 rail project.
Russells-WBHO also gained entry on to its first public sector framework, which comprises pre-tendered agreements with a range of suppliers from which public sector customers can purchase goods and services.
The gas- related infrastructure project in Mozambique – the largest infrastructure project ever in Africa – as well the renewable energy sector and a number of large-scale public-private partnerships in South Africa also offered real prospects of future work.
Considering these factors, the directors said they were satisfied the group had access to adequate resources to continue for the foreseeable future.
The growing risk to the balance sheet of the increasing complexity and size of the Australian business resulted in the directors opting to engage with a major international construction company that wished to acquire WBHO’s interest in Probuild Constructions, the Australian building business.
Agreement was reached on most of the key terms in the transaction.
The share price was up 2 percent to R96.65 yesterday midday on the JSE. It later closed the day at R99.