Sharechat Logo

HEB Construction returns to profit in 2017 as sales grow 39%, year-earlier charge not repeated

Tuesday 6th March 2018

Text too small?

HEB Construction returned to profit in 2017 as the construction company's revenue climbed 39 percent and as a $38.3 million charge on losses from a major project wasn't repeated. 

The Drury-based company, which was bought by France's Vinci Group in 2015 for 43 million euros, reported a profit of $11.6 million in the 12 months ended Aug. 31, turning around a loss of $23.5 million a year earlier, financial statements lodged with the Companies Office show. Construction contract revenue climbed to $462.1 million from $333.3 million, outpacing a 22 percent increase in its cost of sales to $411.1 million and a 24 percent rise in admin costs to $35 million. 

HEB didn't repeat the charge on its provisioning for losses on the completion of an onerous contract, although depreciation charges tripled to $15 million and a 59 percent jump in its wage bill to $104.7 million. 

The company's website names 23 projects currently on its books including the Transmission Gully highway north of Wellington, the North Canterbury transport infrastructure recovery alliance and the Mangere wastewater plant. 

HEB's cash flow statement showed an operating outflow of $217,000 compared to an inflow of $20.2 million in the 2017 financial year. Some $23.3 million of property, plant and equipment acquisitions drove an investing outflow of $23.1 million and saw the New Zealand unit's cash and equivalents shrink to $8.9 million as at Aug. 31 from $32.3 million a year earlier. 

Trade and other receivables almost doubled to $57.1 million from a year earlier, and trade payables jumped 80 percent to $78.3 million. The value of HEB's positive construction work in progress more than doubled $22.3 million, while negative work in progress fell 41 percent to $12.3 million while provisioning for losses on onerous contracts halved to $19 million. 

HEB's current liabilities of $118.2 million exceeded its current assets of $91 million, and parent Vinci confirmed "it would provide financial assistance as may be required for the foreseeable future to enable the company to meet its financial obligations as and when they fall due", the statements said. 

New Zealand's construction sector has been running at skinnier margins in recent years as capacity constraints in the sector drive up labour costs, while a glut of work encouraged some firms to bid treat some projects as loss-leaders. 

HEB also acknowledged a $5 million litigation provision as a non-current liability. 

The construction firm didn't respond to BusinessDesk inquiries about the company's earnings or its outlook. 


  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

MARKET CLOSE: NZ shares fall as investor uncertainty weighs on exporters; F&P Health, A2 drop
NZ dollar drops below US68c on plan to up bank capital
Noel Leeming fined $200,000 for misleading consumers
Big four banks face stiffer capital requirements from RBNZ
Infratil signals A$50m investment in Canberra Data Centres
Govt provides $2.5 mln to develop Opotiki aquaculture
Labour co-ordinator role may alleviate kiwifruit labour shortage
NZ manufacturing activity chugs along in November
Australia's GWA lobs in $118M bid for Methven
Govt leaves door open for higher emissions price cap

IRG See IRG research reports