Key message: Losses increase in Australia by an extra R200m to R1.2bn, but at least through a settlement that caps project costs.

  • WBHO released a further Trading Statement covering the Covid-19 impact and completion of the Western Roads Upgrade in Australia.
  • Further losses have been incurred in Australia on WRU (we estimate an extra R200m loss taking the full year loss in Australia to R1.2bn). An agreement has been reached with the State Government of Victoria with regard to completion of the 8 projects which constitute the WRU project and settlement of the agreed quantum and terms of payment of the submitted claims.
  • This will necessitate a cash transfer to Australia to maintain covenants to support local guarantee facilities.
  • This does reduce the completion risk of the project (completion date estimated end Jan 2021 with commercial acceptance in April 2021).
  • The other loss-making project in Australia – 443 Queen Street – has no further losses from previous guidance.
  • WBHO also gave an update on the unsolicited approach for Probuild – this is progressing well with principle agreement reached.
  • WBHO have increased the cash position on the balance sheet to R7bn as of 30 June 2020 (from R5.1bn in 1H FY20) – the balance sheet remains robust and no liquidity issues are apparent.
  • We update our numbers to reflect this trading update. FY20 is forecast to show a HEPS loss of 934c. We do expect HEPS to recover to 1246c in FY21.
  • The losses in Australia have been a blow to WBHO – but also signal the end of the Australian division as the Probuild sale seems likely. The infrastructure division will be sold or closed, in our opinion.
  • The contribution from the UK is growing steadily, and market share gains in South Africa should help in a market with little activity.
  • FY20 results are expected on 17 November 2020.

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