Stricken construction giant Probuild racked up more than $158m in consecutive net losses since 2019

The South African owners of collapsed construction firm Probuild agreed to provide the company with at least 12 months of continuous financial support in October – then pulled the pin.

A workers hard hat outside a Probuild site in Elizabeth St. Melbourne. Picture: Ian Currie.

The South African owners of collapsed construction firm Probuild agreed to provide the company with “at least 12 months” of continuous financial support in October – before pulling the pin.

Documents filed with the corporate regulator show that the Johannesburg-listed Wilson Bayly Holmes-Ovcon offered ongoing financial support for a year only four months ago. That, according to the disclosures, was the reason directors considered the business remained a going concern.

Despite this, WBHO called in administrators Deloitte, who are now beginning the process of selling the business.

The accounts also show Probuild had recorded more than $158m in losses since 2019 and survived until this week only because its overseas owner propped it up financially for four years.

While a cost blow out on a glitzy Brisbane apartment tower has won headlines the group was also handicapped by hefty losses on the Andrews government‘s $1.8bn Western Roads Upgrade after blundering the complex bid.

Launched in 1987, Probuild was headquartered in Melbourne under the leadership of industry veteran Luke Stambolis, who joined the group in 2013 and took the helm as managing director in late 2019. By that point, it was clear the Probuild entities trading under the umbrella of WBHO Australia were in deep trouble even as it worked on some of the nation’s biggest building projects.

Probuild sites have come to a standstill.

WBHO Australia suffered a $32.7m net loss in the last financial year and $104.6m of red ink in 2020, according to the annual report. It also lost $20.9m in 2018-19.

Most recently it was battered with a $28m provision related to work on the Western Roads Upgrade Project in Victoria.

WBHO’s accounts in 2020 revealed a blow out in losses on the project from $82m to $133m and it admitted the job was its biggest mistake in 50 years amid as subcontractors were left stranded on the project until a deal was reached with the government.

WBHO agreed to undertake the work on eight arterial road upgrades and rehabilitation works across Melbourne’s suburbs.

It blamed the cost blow out on significant unforeseen delays and on the protracted design finalisation, subcontractor failures, significantly increased costs charged by utility providers and delays by them, as well as claims from clients and consultants.

Six of the eight projects were finished by late 2020 and the other two finished by early last year. After June 2020, WBHO reached agreement with the Andrews government.

WBHO originally blamed the woes of the road project on a misinterpretation of the design specifications which resulted in a forecast loss of about $50m in 2019. By the time it finished the works it was left dealing with the impact of Covid-19 and six month delays to the project. The size of the loss on the road project required significant funding from South Africa “to ensure the infrastructure business is able to fulfil its contractual obligations”.

The Queensland project has also been bleeding. The company took another $12m hit stemming from its 443 Queen Street project in the Brisbane CBD, a long-stalled $375m riverfront unit tower backed by Cbus Property.

Total liabilities exceeded $400m as revenues dived 30 per cent to $1.64bn but it remains unclear at this point precisely how much is owed to creditors.

Auditors did not flag a material uncertainty’ over the group’s ability to survive largely because WBHO said that its position had been strengthened through $51m of equity recapitalisation by its majority shareholder in 2021.

Originally published as Stricken construction giant Probuild racked up more than $158m in consecutive net losses since 2019