BGC discloses big losses

Perth’s largest homebuilder has shone a rare light on its financial performance, with annual accounts for BGC Australia revealing big investment write-downs and large bottom-line losses over two years.

The group incurred a loss of $139 million in the year to June 2018, following a loss of $68 million in the prior year.

In both cases, the losses were amplified by big write-downs in the value of its investment properties.

The pre-tax write-downs amounted to $141 million in FY18 and $64 million in the previous year.

The details were included in annual financial statements lodged by BGC Australia with the Australian Securities and Investments Commission for the first time.

They come after the Buckeridge family pulled BGC from the market and recruited independent directors led by chairman Neil Hamilton and a new chief executive to run the business.

The company's new leadership faces the challenge of lifting performance, at a time when housing construction in WA is limping along at historical lows.

The group’s financial statements did not disclose details of its investment properties but they are likely to include two big hotel developments - The Westin Perth and Aloft Perth – that have subsequently been sold.

The company is continuing efforts to sell various other assets and business units, including the BGC Centre office building in central Perth, BGC Contracting and its fibre cement and plasterboard business units.

BGC’s historic earnings were illustrated by its results for the year to June 2016, when it reported a net profit of $57 million.

The annual accounts show a significant weakening in the group’s balance sheet.

In the two years to June 2018, its total equity fell to $820 million from $1 billion.

Over the same period, its total liabilities including bank overdrafts and payables increased to $1.2 billion from $731 million.

The group’s revenue was $1.97 billion in the year to June 2018.

That was a big lift from $1.7 billion in FY17 but in line with the reported revenue in FY16.

The accounts also disclose that BGC paid $56 million for Geraldton-based DIAB Engineering in November 2016.

This comprises $43.8 million in cash and a contingent consideration of $12.2 million.

DIAB had about 500 staff at the time of the acquisition and was led by chief executive Glen Payne.

The business was co-founded by his parents David and Anne Payne in 1970, and their business partners Ian and Betty Shields.

The ASIC returns also diclsoe that BGC owns 100 per cent of Ventura Home Group Pty Ltd.

Historically, Osborne- Park-based Ventura was widely considered part of BGC but in recent years has been seeking to carve out an independent profile in the home building industry.