Construction and mining services group Watpac has worked to rehabilitate its balance sheet and will look to the year ahead with a share buyback and new projects.
As the last piece of the repair, the group reported a $9.1 million impairment to residual industrial property assets, which took the statutory profit to $11.5 million for the 2014-15 year, down 35.4 per cent on the previous year.
This was offset by the stronger contracting business, where the group has won a number of projects including the York & George apartment and retail project in central Sydney and the Melbourne Park redevelopment.
Watpac’s contracting revenue was $929 million, up from $857 million, while revenue from mining and civil revenue was $284 million, down marginally.
No distribution was paid.
Watpac managing director Martin Monro said its better balance sheet meant the group was “backing” itself with a buy back of 10 per cent of its issued shares.
“This was seen as the most efficient approach to provide shareholder value,” Mr Monro said.
“We will continue to explore capital management initiatives to enhance shareholder value, with flexibility to consider other strategic options maintained with the on-market share buyback.
“There are signs that NSW has got its mojo back in term of new construction and infrastructure projects and Victoria is also in good shape. Queensland remains tough, but showing positive signs in the past few months.”
Mr Monro said Watpac had a total construction forward order book of almost $1.2 billion across a number of sectors, while the mining and civil business continued to deliver profit despite difficult conditions, and had recently converted several contracts.
“The focus for us will be more of the same in the coming year, but we do see genuine and sustainable signs of improvement and robustness emerging across the country,” he said.
“There is $150 million in net cash which gives us new-found health in the balance sheet, to be able to pay debt and return equity and bid on new projects.
“We remain confident of our strength in contracting, and we will continue to explore opportunities in the resources sector as they come to market.”