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WATPAC Limited (ASX: WTP) has been awarded a $146 million contract from the Department of Defence.
WTP CEO Martin Monro says the extensive program of works will comprise a broad range of facility upgrades, civil works, and enhancements to securing and visitor management at 16 bases along Australia’s east coast.
“This is a significant multi-site construction project and will draw upon Watpac’s considerable experience in delivering critical infrastructure within fully operational Defence bases,” says Monro.
Works will start later this month with the project due for completion by December 2014. It complements WTP’s already substantial national Defence construction portfolio, which includes the delivery of more than 3000 new accommodation units across 14 Australian Defence Force bases as part of the Plenary Living Consortium’s Single Living Environment Accommodation Precinct (LEAP 2) project.
WTP also announced today it has successfully repaid over $100 million in net property debt in FY13.
Following a strategic property sales campaign, WTP is now in a position to pursue growth opportunities; however CEO Martin Monro says any new ventures will be conservative.
“During the past 12 months Watpac has divested more than $120 million in property assets along Australia’s east coast, extinguishing the group’s property debt and enabling the remaining capital invested in property assets to now be recycled back into existing businesses,” says Monro.
The remaining portfolio is now valued at less than $100 million and includes Joule and Waterloo Stages II, III and IV in Brisbane, Central Park Industrial Estate in Coolum on the Sunshine Coast and retail tenancies in Melbourne.
Property asset sales are set to continue in FY14 and return capital for redeployment across the group.
“Our capital management strategy looks beyond the current market cycle to ensure that all decisions meet the requirements for sustainable, profitable growth and protect Watpac’s brand and balance sheet,” says Monro.
“Although the impairments associated with the property sales in FY13 have certainly been undesirable, the longer term benefits will ultimately deliver sustainable value to Watpac.”
Property assets totalling less than $100 million represent an equity investment of around 50 cents per share. Monro says a substantial component of this value is expected to be realised in cash in FY14.
He says current strategies are aimed at restoring long-term value for shareholders with the group’s national contracting operations in construction and mining, and civil operations in Western Australia, performing strongly despite growing competition and tightening margins in the sector.
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