Wilson Bayly Holmes – Ovcon Limited (WBHO), a leading construction company, has provided a business update and trading statement for the six-month period ended 31 December 2023, showcasing resilience amidst challenging economic conditions.
Robust Performance Despite Economic Challenges: Despite facing persistent economic challenges, WBHO has demonstrated resilience and maintained a strong performance across its divisions. The Group’s African operations have seen increased activity, with sustained high order book levels driving growth. In the United Kingdom (UK), while challenges persist, WBHO’s operations have shown improvement, particularly with a bidding strategy aimed at securing the right projects.
Divisional Highlights:
- Building and Civil Engineering: WBHO anticipates a significant increase in revenue and operating profit, reflecting sustained growth in this division.
- Roads and Earthworks: Strong work procurement in the previous fiscal year has led to a substantial increase in revenue and operating profit.
- United Kingdom (UK): Despite procurement challenges, WBHO’s UK operations are expected to show growth in both revenue and operating profit, driven by strategic project selection.
- Construction Materials and Property Developments: The division’s operating profit is expected to remain steady compared to the prior period.
Financial Outlook
WBHO expects its finance income to increase due to higher interest rates, while finance costs are projected to rise in line with increased asset-based finance requirements. The share of profits from associates is expected to decrease due to a one-off effect from the refinancing of Gigawatt Power Station in Mozambique.
Liquidity and Order Book
The Group’s financial position remains robust, with healthy profitability and cash generation. Despite reducing external debt, WBHO maintained cash reserves in excess of R3 billion as of 31 December 2023. The total order book stood at R32.313 billion, indicating a strong pipeline of projects.
Australia Update
WBHO’s Australian operations continue to face challenges, with efforts underway to minimize losses from discontinued operations. The Group is actively pursuing guarantees and has extended the administration period of the Deed of Company Arrangement to safeguard creditors.
Trading Statement
WBHO expects to report a notable increase in earnings per share from continuing operations, driven by strong performance across divisions. Headline earnings per share from continuing operations are also projected to show growth. Total operations earnings per share and total operations headline earnings per share are expected to demonstrate significant increases, reflecting the Group’s overall performance.
Looking Ahead
As WBHO prepares to announce its financial results on SENS on 5 March 2024, the Group remains optimistic about its prospects despite the challenging economic landscape. With a focus on strategic growth initiatives and prudent financial management, WBHO aims to continue delivering value to its shareholders amidst evolving market conditions.
