Key message: The Australian exit is complete, and activity levels in all regions are picking up. Back to business as usual for WBHO.   

  • WBHO released FY23 results. Overall revenue and operating profit increased by 38% and 30% respectively with the operating margin declining to 4.7% (from 5.0%) due to lower UK margins. HEPS from continuing operations increased by 31% to 1703c (from 1297c).
  • The exit from Australia is now complete with no increase in the final settlement during 2H. A total of R782m was paid to Australia during the period to settle the final bill – this was funded through a R350m loan in South Africa (paid down to R180m). The total cost to settle guarantee obligations was R1.6bn.
  • Cash resources increased to R3.69bn (from R3.34bn). WBHO has been able to absorb the Australian losses without the need to raise debt or capital – an impressive achievement. No dividend was declared given that much of this cash is tied up in working capital commitments and a relatively large capex bill for FY24 (some catchup capex required for plant).
  • Building & Civil Engineering (Rev up 46%, OP up 48%): strong performance from building and renewable energy. Order book up 12% driven by civil projects – renewable and traditional civils.
  • Roads & Earthworks (Rev up 46%, OP up 40%): strong performance in 2H as work started on large new road contracts. Mining and energy project activity also picking up. Rest of Africa growth strong. Order book up 131%.
  • UK (GBP: Rev up 13%, OP down 30%): good performance from Byrne Group balanced by loss from Russel-WBHO as capacity was maintained despite low activity levels – a recovery is underway.
  • Gigajoule contributed strongly and paid a R164m dividend.
  • WBHO is back to business as usual (low risk contracting mainly to the private sector). Its position as preferred contractor to the private sector puts it in a competitive advantage and ensures a high quality low-risk order book.
  • Our Target Price increases to R143 (from R129) as the order book picks up strongly and refocuses on its core strengths. The balance sheet has recovered well after the losses in Australia, and we believe that WBHO will be able to consider resuming a dividend in FY24.

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