WBHO – SA’s Preferred Bidder

WBHO produced a strong set of results in FY23 with solid performances from Building and Civil, as well as Roads and Earthworks. The UK segment, however, continued to struggle and although it improved topline, all growth was provided by the O’Keefe purchase. The Building and Civil segment delivered a solid result despite the many setbacks on commercial projects such as Amazon’s new head office in Cape Town. It is gaining the most traction in renewable energy, where it is currently working on four projects and recently secured another 130MW project for ARM. The Roads and Earthworks segment performed as well as Building and Civil, with many mining and energy infrastructure projects being completed during the year. WBHO also secured numerous SANRAL mega projects and has begun work on many of them. Although it was quite successful during the year, securing R7.7bn in mega projects, government work tends to be lower margin and we could expect OPM to come under pressure in FY24. The core UK business continued to struggle as the high inflation and interest rate environment put pressure on the design and construct, fixed-price construction market. Further, delays in project awards resulted in Byrne Bros and Russells revenue declining sharply. Post year-end, Byrne secured the delayed projects and Russells has PCSAs on four projects, but that is not a guarantee of a construction contract. It is positive that the four projects are in the hotel and leisure sector, which has historically been more profitable and could help recover the segment’s ailing margin. Given the increased construction activity in SA, the exit from Australia all but completed and the UK showing a path to recovery, we believe that there is significant potential for growth.