Wilson Bayly Holmes Ovcon (WBHO), the largest remaining construction firm on the JSE, suffered one of its biggest losses ever in the year to June 2020, as Covid-19 ravaged its operations abroad.
WBHO reported an R1bn profit hit, after Covid-19 disrupted projects and spooked its clients. The pandemic has resulted in lengthy project delays as activity was either reduced or ceased entirely, WBHO said. Its operating profit before nontrading items reversed from a profit of R561m in the 2019 financial year to an operating loss of R541m for the reporting period.
The company experienced additional expected losses provided for on the western roads upgrade (WRU) project in Melbourne, Australia, the loss-making 443 Queen Street project and R396m in potentially unrecoverable costs arising from the Covid-19 pandemic. WBHO misinterpreted the technical specification of the A$1.8bn project in Melbourne, leading to cost overruns, which it first informed the market of in early 2019.
“The current reporting period is considered to be one of the most challenging ever faced by the group in its 50-year history,” WBHO said.
“The effects of further substantial losses incurred in both the building and infrastructure businesses in Australia, the continued deterioration of the domestic economic environment and hesitant fixed capital investment in the UK, ahead of the conclusion of Brexit negotiations, were compounded by the widespread impact of the global Covid-19 pandemic across all areas of the group’s businesses,” the company said.
Though the WRU project has proved to be trouble for WBHO, its offshore diversification has helped it survive while other old SA construction giants have collapsed.
Basil Read and Group Five filed for business rescue in 2018 and 2019, respectively. Group Five and civil engineering group Esor, which had also gone into business rescue, delisted from the JSE in June.
Aveng and Murray & Roberts, the other former leading construction companies, have sold their local construction assets and exited the industry, to focus in mining and engineering contracting, respectively.
WBHO revenue for the year increased 6% to R43bn, from R41bn in 2019. Earnings per share fell 200% to a loss per share of 937c, from a profit of 939c per share in 2019. Headline earnings per share plummeted 199% to a headline loss per share of 923c, compared with 2019 earnings of 932c per share.
WBHO’s net asset value slipped to R5.9bn from R6.1bn in 2019. The group’s cash and cash equivalents increased 28% to R7.6bn, from R6bn a year ago. It decided not to pay dividends.
With Karl Gernetzky
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