WBHO reports improved full-year operational performance, financials

19th August 2021

By: Tasneem Bulbulia

Senior Contributing Editor Online

     

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JSE-listed Wilson Bayly Holmes-Ovcon (WBHO) expects to report earnings a share and headline earnings a share of 562c and 600c, respectively, for the financial year ended June 30.

That compares with the loss a share of 937c and a headline loss a share of 923c reported for the 2020 financial year.

The company, which will publish its results on August 31, says that although Covid-19 continued to exert some influence over the group, particularly with regard to the procurement of new work, its operational performance improved significantly over the course of the reporting period.

For the Building and Civil Engineering division, revenue and operating profit for the reporting period are expected to be at least 20% and 125%, respectively, higher year-on-year.

The Roads and Earthworks division’s revenue is expected to be at least 5% higher and operating profit at least 25% higher year-on-year.

In Australia, revenue is expected to decrease by 23% over the comparative period; however, the operating loss will likely decrease by at least 65% over the comparative period, as no further costs have been provided for on the Western Roads Upgrade (WRU) project since the interim reporting period.

Although physical completion has been obtained on the WRU project, the team has encountered additional delays in achieving commercial acceptance.

A “cure plan” has been agreed with the client that allows for the outstanding items to be completed by September 30.

Further difficulties have also been encountered in the completion of 443 Queen street and further costs to complete the project have been raised in the six months period June 30.

The business has also adopted a pragmatic view on the value attainable from claims and variations not yet agreed with the particular clients on two infrastructure projects in the Western region, WBHO notes.

In the UK, Covid-19 has negatively impacted on new work procurement, resulting in revenue and profit for the period being llikely to decrease by at least 15% each over the comparative period.

The Construction Materials division’s revenue is expected to be at least 60% up as the business has returned to profitability in the current period, delivering a strong second six months of the year.

LIQUIDITY

WBHO says it has maintained its strong financial position, with R5.6-billion in cash reserves at period-end.

The group has appropriate processes and systems in place to provide the necessary information to proactively manage cash and liquidity.

During the current period, the group successfully managed the negative cash flow effects from Covid-19 and the onerous contracts in Australia and has adequate cash reserves to manage its liquidity position, WBHO notes.

Liquidity in each region has been forecast to the end of June 2022. Cash generated from the UK and African regions is anticipated to remain strong but the Australian operations will likely require further funding to support liquidity levels owing to the cash settlement of the provisions previously raised to complete the onerous contracts.

The group has been awarded R2.8-billion of new work subsequent to period-end – R1.7-billion in the UK, R600-million in the Roads and Earthworks division and R500-million in the Building and Civil Engineering division.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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