WHBO Australia, the parent company of construction firm Probuild, has entered voluntary administration.
Global consulting firm Deloitte announced that is has taken control of 18 companies linked to WBHO Australia (WBHOA) Group.
Wilson Bayly Holmes-Ovcon (WHBO) Limited, based in South Africa, announced that it can no longer see a strategic imperative to retain the Australian part of the group, which has significantly depleted resources for the company.
As a result, WHBO Construction will no longer provide financial assistance to the Australian-based company. The WHBOA board has applied for voluntary administration.
“The company has the support of its South African financial institutions and intends to honour its existing parent company obligations provided to Australian institutions,” WHBO said in a statement.
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“The losses to date, together with the closure of WBHOA and the cost of the parent company obligations will have a significant impact on the company’s consolidated statement of financial position and consolidated statement of financial performance, however but the Company remains liquid and the limitation of losses from WBHOA is expected to have a positive effect on the financial position of the Company going forward.”
The move follows WHBO’s 2021 Integrated Annual Report, which said the Australian construction environment has also become increasingly competitive and contractual, with the potential risk on large mega-building projects outweighing the current margins available.
“The Australian government’s hard-line approach of managing COVID-19 through a combination of border restrictions, snap lockdowns and mandatory work-from-home regulations for many sectors, has had a considerable impact on property markets as well as other industries such as the leisure industry,” the report reads.
“Border restrictions have resulted in hundreds of thousands of foreign students, tourists and investors unable to gain entry to the country. Population levels in the two major cities of Melbourne and Sydney have shown negative growth as a result.
“The impact of lockdown restrictions on the retail, hotel and leisure and commercial office sectors of building markets have created high levels of business uncertainty in Australia and have significantly reduced demand and delayed the award of new projects in these key sectors of the construction industry.”
WHBO had been attempting to sell the Probuild business and entered into negotiations with a third party in 2020, but the Australian Foreign Investment Review Board did not grant approval.
The company claims the Australian businesses have not being able to complete projects on time and not been able to recover variation and delay claims, resulting in material losses in the financial period to date and the requirement for further funding and balance sheet support from WBHOC.
Details of the financial effects of this decision will be available in the half year results to be released on 1 March 2022.