Builder chasing stable future
ONE of Australia’s largest home builders and a major sponsor of the renovation television show The Block, the Simonds Group, is seeking a potential capital injection as it faces a prolonged and challenging construction environment.
The Melbourne-based company, which started in 1949, was seventh in the HIA largest home builders list for 2021-22 but faces an uncertain future.
In September Simonds announced it would slash 9 per cent of its workforce after suffering a net loss of $9.7m in the past financial year due to skyrocketing costs and was seeking to realign its cost base.
However, the company told the ASX on Monday that the impact of wet weather, supply shortages and materials delivery delays, the labour shortage and interest rate rises was “likely to continue for a prolonged period”.
Simonds said it was prudent to investigate options to strengthen the company’s balance sheet, including a possible capital injection. The board has established an independent committee to consider the various options.
The company’s largest shareholder – its founder Gary Simonds, who owns a 45 per cent stake in the company – has given in-principle support to a capital solution.
“The board is confident that additional funding will allow Simonds to continue to operate strategically during this adverse period, including positioning the company to respond to the opportunities presented in the recent federal government budget announcements concerning the new Housing Accord and a new national housing supply target,” it said.
The Simonds Group has a number of subsidiaries; Simonds Homes is the largest detached home builder in Victoria with operations in NSW, Queensland and South Australia. According to the Housing Industry Association, it recorded 2376 housing starts across the country in 2021-22.
Despite its ASX listing, the company remains a family affair, with largest shareholder Mr Simonds’ son Mark sitting on the board as executive director and his grandson Rhett Simonds the executive chairman, group chief executive and managing director.
It remains high-profile, especially in Victoria, and this year returned as a major sponsor of The Block on the Nine Network.
In the past 12 months the construction industry has come under unprecedented pressure with household names such as Privium, Condev, Probuild, Lanskey and others collapsing.
In May Australia’s biggest builder Metricon received a $30m cash injection from its private owners.