Construction firm Wilson Bayly Holmes-Ovcon (WBHO) has crashed into a full-year headline loss representing more than a third of its R4.8 billion market value, taking a severe hit after pulling the plug on its embattled Probuild unit in Australia.
WBHO posted a R1.96 billion headline loss in its year to end-June, from earnings of R329.4 million previously, taking about a R3 billion whack from Probuild, which went into business rescue in February.
The more than 50-year-old group's struggles with two Australian projects had prompted its first-ever operational loss in its 2020 year when it made a headline loss of R490.7 million, while its decision to stop funding Probuild followed tough trading conditions amid severe Covid-19 restrictions, as well as a deteriorating diplomatic relationship between China and Australia.
At the time that funding was withdrawn, the business climate in Australia was highly uncertain and difficult to predict, WBHO said on Tuesday. "The political tension between Australia and China and the collapse of the Chinese property sector created further uneasiness, as Chinese developers have historically formed a large proportion of Probuild’s client base and China is a major supplier of goods to the construction industry in Australia," it said.
A proposed sale of Probuild worth about R3 billion had also fallen through, with WBHO saying in 2021 the Chinese buyer had been advised the deal would be rejected by Australia's government on national security grounds.
Rising inflation has led to substantially increased input costs for contractors with limited contractual rights of recovery that ultimately resulted in the failure of a number of prominent construction companies throughout Australia over the last six months, the company said on Tuesday.
WBHO listed on the JSE in 1994, having been founded in 1970, and remains one of the few JSE-listed survivors of a downturn in the sector that followed the 2010 FIFA World Cup.
The group recognised a R1 billion hit from loss of control of its subsidiary, while its discontinued operations contributed an operating loss of R1.57 billion, more than triple the prior year's.
Headline earnings from continuing operations slipped about 2% to R689.7 million, and revenue had fallen 11% to R17 billion.
SA revenue increased 1.4% to R11 billion, but the revenue from the Rest of Africa fell by more than a third to R2 billion, stemming primarily from the the suspension and termination of various large-scale gas-infrastructure projects in Mozambique in the second half of the prior year that were unable to be meaningfully replaced.
The order book for continuing operations increased by 43% to R22 billion, however, which WBHO said "highlights the much-improved procurement environment across all regions and divisions". The order book for the African operations increased by 39% which comprises a 33% increase in the order book in SA and a 112% increase for the Rest of Africa.