Wilson-Bayly Holmes-Ovcon (WBHO) has maintained a liquid balance sheet after deconsolidation of its Australian subsidiary, with R3bn in cash reserves on May 31, the group said in a trading statement yesterday.
This balance was also after an outflow of AUD $75 million (about R848m) post the WBHO Australia deconsolidation date. WBHO’s earnings per share and headline earnings per share were expected to be at least 1.1 percent worse and 3.6 percent lower respectively, for the year to June 30, compared with the previous year.
“Liquidity in each region has been forecast to the end of June 2023. WBHO is acutely aware of the remaining impact of deconsolidating the Australia group and has forecast these negative cash flows,” the group said.
Cash reserves in the UK and Africa were anticipated to remain strong and the group had the support of its South African and UK financial institutions, the group said.
“Ensuring a clean exit from Australia … and considering funding to resolve the Western Road Upgrade parent company guarantee requires the group to increase anticipated costs of closure from AUD $119m to AUD $135m. The group can fund these obligations from current resources and a 3-year term loan facility,” it said.
On February 23 this year the board withdrew further funding of the Australian operations and WBHO Australia’s board placed those operations into administration.
WBHO said with the loss of control of the Australian subsidiaries, there had not been significant Covid-19 disruption this financial year.
However, low work procurement was a consequence of Covid-19, and this particularly affected WBHO-Russells in the UK.
Meanwhile, the shift in market activity toward the industrial building and warehousing sector remained prevalent.
Increased demand for data centres in South Africa had potential to improve activity within this sector.
The coastal divisions continued to perform well while work in Gauteng remained steady when compared to 2021.
In roads and earthworks, the improvement in commodity prices over two years had seen an increase in construction spend from the South African mining sector which compensated for the Sanral contract cancellation.
The roads and earthworks results were impacted by the mining infrastructure project in Madagascar and a loss-making contract in Lesotho, while the other roads and earthwork divisions performed well in the year.
In the UK the low business confidence due to Covid-19 continued to hamper new work procurement in the reporting period. This, combined with the uncertainty and inflationary effect of the war in Ukraine, resulted in a likely decrease in revenue and profit for the year to June 30, 2022 by at least 25 percent and 40 percent, respectively in the UK, over the comparative period.
“Despite this, the UK operations delivered existing projects successfully and produced satisfactory results given the prevailing trading conditions.”
In construction materials trading conditions within the steel supply industry continued to show little signs of recovery.
BUSINESS REPORT