Over the past few years, WBHO has supported its Australian business with R2 billion in equity funding.
- WBHO, which put its Australian business into business rescue in February, posted a total loss of almost 2 billion rand by the end of June, from a profit of about 330 million rand previously.
- Profits from its continuing operations also fell amid a drop in activity related to Mozambique’s gas industry in 2021.
- But WBHO says its order book for continuing operations increased 43% to 22 billion rand, more than double that for the rest of Africa
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Construction firm Wilson Bayly Holmes-Ovcon ( WBHO ) posted a full-year loss of more than a third of its market value of 4.8 billion rand, taking a major hit after it shut down its Probuild unit in Australia.
WBHO posted an underlying loss of 1.96 billion rand for the year to the end of June, from a profit of 329.4 million rand earlier, having received about 3 billion rand from Probuild, which went into business rescue in February.
The group’s more than 50-year struggle with two Australian projects led to its first operating loss of 2020 when it posted a combined loss of 490.7 million rand, while its decision to end its funding of Probuild followed tough trading conditions strict Covid-19 restrictions, as well as the deterioration of diplomatic relations between China and Australia.
At the time the funding was withdrawn, the business climate in Australia was highly uncertain and difficult to predict, WBHO said on Tuesday. “Political tensions between Australia and China and the collapse of the Chinese property sector have raised additional concerns as Chinese developers have historically made up a large proportion of Probuild’s client base and China is a major supplier of goods to the construction industry in Australia,” it said. said.
A proposed sale of Probuild worth about 3 billion rand also fell through, with WBHO saying the Chinese buyer was told in 2021 that the Australian government would reject the deal on national security grounds.
Rising inflation has driven up material costs for contractors with limited contractual recovery rights, ultimately leading to the collapse of a number of prominent construction companies across Australia in the past six months, the company said on Tuesday.
WBHO listed on the JSE in 1994, was founded in 1970, and remains one of the few companies to survive the downturn in the sector following the 2010 FIFA World Cup.
The group recognized a loss of 1 billion rand on the loss of control of its subsidiary, while its discontinued operations resulted in an operating loss of 1.57 billion rand, more than triple the previous year’s figure.
Underlying profit from continuing operations fell about 2% to 689.7 million rand, while revenue fell 11% to 17 billion rand.
South Africa’s revenue rose 1.4% to 11 billion rand, but revenue from the rest of Africa fell by more than a third to 2 billion rand, mainly due to the suspension and shutdown of various large-scale gas infrastructure projects in Mozambique in the second half of the previous year , which could not be significantly replaced.
However, the going concern order book increased by 43% to 22 billion rand, which WBHO said “underlines the significant improvement in the procurement environment across all regions and divisions”. The order book for the African operations increased by 39%, which includes a 33% increase in the order book in South Africa and a growth of 112% for the rest of Africa.