NRW Holdings Corporate Overview - August 2010 Final BLACK€¦ · Presentation Full Year Results...

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Investor Investor Presentation Presentation Full Year Results Full Year Results FY2010 FY2010 Jules Pemberton Chief Executive Officer Mark Wallace Chief Financial Officer Kim Hyman Company Secretary
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Transcript of NRW Holdings Corporate Overview - August 2010 Final BLACK€¦ · Presentation Full Year Results...

  • Investor Investor PresentationPresentation

    Full Year Results Full Year Results FY2010FY2010

    Jules PembertonChief Executive Officer

    Mark WallaceChief Financial Officer

    Kim HymanCompany Secretary

  • Investor PresentationFull Year Results FY2010

    Year in Review - Highlights

    Revenue of $609.7m 20% increase on FY09

    EBIT* of $62.3m 6% increase on FY09

    Net Profit After Tax* $37.9m 2% increase on FY09

    Net debt / Equity 23% From 27% in FY09

    Total dividends 6 cents fully franked

    Order book of $730 million / 75% of FY11 revenue secured

    Establishment of Action Drill and Blast

    Another year of growth despite a difficult economic environment and managed to maintain double digit EBIT margin*

    *excludes $2.71m of goodwill expense

    Financial and Operational Highlights

  • Investor PresentationFull Year Results FY2010

    SafetySafety

    Performance

    At June 2010 NRW employs a workforce of 1614 personnel comprising direct staff and sub contractors.

    Safety performance is an important fundamental factor in retaining key clients and the awarding of new contracts.

    NRW has world class safety systems and procedures including implementation of STEM’s OHS program in May 2010.0

    500000

    1000000

    1500000

    2000000

    2500000

    3000000

    3500000

    FY 2006 FY 2007 FY 2008  FY2009  FY2010

    0

    5

    10

    15

    20

    25

    30

    35

    40

    Man hoursTRIFR (Tota l  Recordable  Injury Frequency Rate)LTIFR (Lost Time  Injury Frequency Rate)

  • Investor PresentationFull Year Results FY2010

    Key ClientsKey Clients

    REVENUE MIX BY CLIENT

    23%

    4%

    10%

    2%

    14%

    25%

    21%

    BHP Citic Pacific FMG GindalbieOM Holdings Other Rio Tinto

    NRW HOLDINGS LTDREVENUE MIX BY DIVISION

    3%4%

    61%

    33%

    Mining Civil Action Promac

  • Investor PresentationFull Year Results FY2010

    Human Resources and TrainingHuman Resources and TrainingTraining & Development Initiatives

    Employee Retention and Mix

    Key Management

    • Julian Pemberton, Chief Executive Officer• Willie Rooney, MD Civil & Mining• John Silverthorne, Director Business

    Development• Mark Wallace, Chief Financial Officer• Kim Hyman, Company Secretary• Mal Stewart, GM Civil Operations• Simon Ridley, GM West Coast/Overseas Mining

    Operations• Shaun Lucas, GM East Coast Mining• Warren Fair, GM Action Drill and Blast• Bob McNair, GM HSE & Training• Keith Bounsell, GM Assets• Keith Bassett, GM Human Resources• Rob Roper, GM Action Mining Services

    Jun 09 Jun 10Total Staff 830 1189Indigenous Staff 11% 10%Project Staff 90% 90%Retention Rates 90% 90%Sub Contractors 800 425

    Ongoing extensive Safety Training programmes attended by all staff

    Indigenous Cultural Awareness workshops attended by all staff.

    Accredited (Cert.II) in Metaliferous Mining: 121 new attendee’s. 901 Completed to date.

    Diploma of Management (Cert. IV) for all Supervisors and site managers – attended by 145 staff

    Power Up programme providing indigenous groups extensive training to enter the mining sector

    Commitment to Dept. of Employment for intake of minimum 100 indigenous employees each year.

  • Investor PresentationFull Year Results FY2010

    Indigenous EngagementIndigenous Engagement Currently Joint Ventures exist between NRW and Traditional

    Owner Groups, the Ngarluma and Yindjibarndi People (represented through the Ngarluma and YindjibarndiFoundation Limited - NYFL) and the Eastern Guruma People (represented by Eastern Guruma Pty Ltd).

    To provide opportunities for Indigenous candidates lacking level entry skills to the Industry, we assess and engage suitable participants in our innovative work-start program “Power-Up”. Participants are guaranteed full time work upon completion.

    By providing an innovative business model to encourage and support the sustainable increase of Indigenous business opportunities, employment and training - NRW is helping to lay the foundations for a brighter future for Indigenous Australia

  • Investor PresentationFull Year Results FY2010

    Operational OverviewOperational Overview

  • Investor PresentationFull Year Results FY2010

    Civil Division Civil Division –– Key ProjectsKey Projects

    RGP5 (South) - BHPBIO

    Cape Preston – CP Mining

    Rail duplication - 54km of the southern section from Cowra siding to Yandi mine

    Contract includes: Rail formation, drill and blast, track and signals and a 300 man camp

    Consortium with Laing O’Rourke & John Holland

    Chichester Deviation contract awarded by variation in Jan 2010 for $145m including 40km rail south of Cowra Siding

    Total contract value $350m (NRW portion $200m)

    Peak workforce in excess of 500 personnel

    Port infrastructure and mine site earthworks.

    6 million cubic meters of drill and blast rock

    Contract includes: 2.5km breakwater construction, plant site andbulk earthworks

    JV with VDM Group

    Peak workforce in excess of 400 personnel

    Final JV contract value approximately $280m

    RGP5 South Rail Deviation

    Cape Preston Breakwater

  • Investor PresentationFull Year Results FY2010

    Civil Division Civil Division –– Key ProjectsKey Projects

    Contract includes: All preliminary construction works including site drains, roads, retention ponds and all-weather airstrip

    40,000 cubic metres of concrete for Process Plant foundations In excess of 250 NRW personnel on site Contract value: $120 million

    Karara Concrete Works – Gindalbie Metals

    Christmas Creek Rail - Fortescue

    Contract resumed Jan 2010

    Additional works being undertaken including Nullagine Road, Ore Processing facility, ROM backfill and mine haul roads

    Rail formation completed ahead of schedule – July 2010

    Karara Transformer Plinth

    Christmas Creek Rail Formation

  • Investor PresentationFull Year Results FY2010

    Mining Services Mining Services –– Key ProjectsKey Projects

    Excavation, haulage and waste dump management services

    In-pit works including pre-development pit establishment, waste pre-stripping, waste cutback and remnant ore mining

    Hope Downs and Tom Price Mining – Rio Tinto

    Excavation of mine overburden, load and haul of waste and ore

    NRW unsuccessful in securing main expansion contract

    Subsequently awarded 12 month $112 million contract extension with expanded scope of works

    Christmas Creek - Fortescue

    Western Turner Syncline – Rio Tinto

    Drill & Blast, excavation of mine overburden, load and haul plussignificant civil infrastructure works

    Four year Joint Venture with Indigenous Group (Eastern GurumaCorporation) site Indigenous workforce 28%

    Preliminary civil works completed – ore haulage to Tom Price commenced July 2010

    Christmas Creek

    Western Turner Syncline

    Hope Downs

  • Investor PresentationFull Year Results FY2010

    Mining Services Mining Services –– Key ProjectsKey Projects

    Drill and blast, excavation, haulage waste dump management services and crusher feed

    3 + 2 year contract term

    Production targets increased

    Bootu Creek – OM Holdings

    Simandou Project – Rio Tinto

    Renegotiated contract extension through to December 2010 plus one year option

    NRW onsite since July 2007

    July 2010, Rio Tinto announces agreement with Chalcocovering planning, construction and management of the Simandou project and associated port and rail infrastructure (source Rio Tinto 3 August 2010)

    Bootu Creek Mine

    Simandou workshop facility

  • Investor PresentationFull Year Results FY2010

    Action Mining ServicesAction Mining Services

    AMS has had a difficult year though still profitable and remains an important part of NRW’s business mix.

    Quarantine works increased due to stringent environmental criteria on Gorgon Project.

    As part of company wide review new GM and management structure implemented

  • Investor PresentationFull Year Results FY2010

    Action Drill & Blast Division formed in March 2010

    GM Warren Fair and senior personnel ex-Brandrill

    Initially formed to service internal contracts at Western TurnerSyncline and Chichester Deviation

    Significant scope for external contracting in Western Australia and Queensland

    $10 million in new capital spent/committed to date

  • Investor PresentationFull Year Results FY2010

    FinancialsFinancials

    RGP5 Rail South

  • Investor PresentationFull Year Results FY2010

    Operating Performance

    $M's FY07 FY08 FY09 FY10 *Mining 77.8 107.2 189.4 201.1 Civil 158.9 336.8 294.1 383.6 Drill & Blast - - - 7.0 Action Mining 4.8 26.2 25.6 24.5 Promac 28.6 21.2 31.8 17.1 Other / Eliminations (12.8) (20.2) (31.4) (23.4)

    SALES $257.4 $471.2 $509.6 $609.7 Consistent revenue growthEBITDA 45.2 71.9 79.7 92.5 Consistent growth in EBITDA

    Depreciation (11.6) (18.1) (21.1) (30.1) EBIT 33.6 53.8 58.7 62.3 Consistent growth of EBITNPAT 20.1 32.8 37.1 37.9 Consistent growth of NPAT

    EPS (cents) * $0.08 $0.13 $0.15 $0.15DPS (cents) $0.08 $0.02 $0.06 Dividends back on track post GFC

    Revenue Growth (YoY) 83% 8% 20%Earnings Growth (YoY) * 63% 13% 2%

    *Results presented excludes Goodwill writedown of Promac of $2.71m

  • Investor PresentationFull Year Results FY2010

    Balance Sheet

    NRW has continued to reduce the net debt to equity position of the balance sheet.

    Investment in income producing assets increased to service greater demand from clients and expansion of revenue base.

    $M's FY07 FY08 FY09 FY10Working Capital 9.7 56.4 26.4 30.1 Non Current Assets 110.8 165.5 156.7 178.8 Investment in income producing assetsNon Current Liabilities (1.6) (12.3) (0.6) (0.4)

    118.9 209.6 182.5 208.5 FundingCash / (overdraft) 16.6 (11.3) 20.6 21.4 Short term debt (62.1) (36.3) (34.7) (29.3)Long term debt (27.9) (44.7) (26.1) (31.5)Net funding (73.4) (92.3) (40.2) (39.4)Shareholders equity 45.5 117.2 142.2 169.1

    Debt / Balance Sheet MetricsEBIT / net interest 6.9x 8.4x 7.2x 9.8x Strengthening interest coverNet debt / (Net debt + equity) 61.7% 44.1% 22.0% 18.9% Lowering of net debt position

    Reduction of debt

  • Investor PresentationFull Year Results FY2010

    Revenue

    -

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    FY06 FY07 FY08 FY09 FY10 FY11

    $M's

    NRW has secured FY11 revenue of $530m.

    In order to meet a 15% growth over FY10, $170m is to be won from a significant sized pipeline of works in the 2HY11.

    Revenue excludes variations, extensions or expansion of scope to existing contracts.

    30% CAGR

  • Investor PresentationFull Year Results FY2010

    Cash Flow

    FY09 cash flow was the beneficiary of cash received from a contract variation that should have been received in FY08 (approx. $20m).

    Depreciation higher with increased capital spend occurring in 1HY10 Goodwill impairment associated with Promac

    $M's FY09 FY10

    EBIT 60.1 59.6

    Depreciation 21.1 30.1

    Goodwill impairment 0 2.7

    Cash from operations before working capital 81.2 92.5

    Net working capital movement 30.1 3.3

    Tax Expense (14.9) (16.1)

    Interest paid (8.3) (8.6)

    Cash from operations 88.1 71.1

  • Investor PresentationFull Year Results FY2010

    Funding

    Funding represented is only base facilities with availability for expanded capacity to meet large project requirements.

    The ANZ facility is flexible and is available for either working capital or performance bonding.

    NRW also utilizes insurance bonds as an alternative to bank guarantees

    $M's FY10Working Cap & bank guarantees (ANZ) 100.0 OEM and other bank funding 173.0 Total $273.0

    Utilization of facilities June 2010 $100.8

    Headroom $172.2

  • Investor PresentationFull Year Results FY2010

    Capital Expenditure

    $4.4 $8.0 $6.2 $3.4

    $36.4

    $51.0

    $19.7

    $47.3

    FY07 FY08 FY09 FY10

    Maintenance ($m's) Growth ($m's)

    FY10 majority of expenditure occurred in 1HY10 with strategic and opportunistic purchases to meet new projects coming on stream in 2HY10.

    Growth Capex relates to 785C dump truck fleet at Bootu Creek and new fleet items for Western Turner Syncline contract.

    Purchase of new rigs and support fleet for Drill and Blast division

  • Investor PresentationFull Year Results FY2010

    Debt

    $39

    $40$93$29

    23%28%

    79%

    67%

    FY07 FY08 FY09 FY10

    Net Debt ($m's) Net Debt/Equity

    NRW’s mining projects are increasing in tenure providing the ability to match funding and avoid a funding “gap”

    The balance sheet was purposely de-geared in FY09 without the need to raise equity and dilute shareholders earnings.

    The balance sheet of FY10 has been a continuation of maintaining a prudent position on debt.

  • Investor PresentationFull Year Results FY2010

    Order Book

    FMG

    0

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    Jun 05 Jun 06 Jun 07 Jun 08 Jun 09 Jun 10

    $M's

    The order book is expanding as NRW diversifies the portfolio of projects with longer dated tenure.

    Western Turner Syncline (Rio Tinto) and Bootu Creek (OM Holdings) provide an anchor to the order book as contract tenure in excess of 3 years.

    The order book including the FMG extension of contract represents 75% of secured revenue for FY11.

  • Investor PresentationFull Year Results FY2010

    Order Book Run Off

    0

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    FY 11 FY 12 FY 13 FY 14

    $M's

    The order book represents value at the commencement of the financial year.

    Clear goals set to increase tenure of projects to provide more transparency of future earnings

  • Investor PresentationFull Year Results FY2010

    Strategy & OutlookStrategy & OutlookFY11 target is to build NPAT growth in line with revenue growth; activity in second half of FY11 expected to increase as timing of project roll-outs normalizes

    Increase focus on longer term revenues whilst maintaining ROCE levels

    Focus on increasing NRW’s relevance to customers needs, e.g. Action Drill & Blast

    Growth revenue streams from services and products adjacent to existing business and skill base

    Mining

    Civil

    Drill & Blast

    Action

    • Add new resource mining contracts (e.g. coal)

    • Pursue new geographies, adapt delivery methods to suit risk

    • Focus on ROCE

    • Pursue iron ore expansion opportunities, continued focus on customer expectations on timing / delivery

    • Extend into Oil & Gas, leveraging reputation for quality in iron ore

    • Promote adjacent services to deliver on broader customer needs and lengthen revenue cycle

    • Ensure offering recognized as alternative in quality and ‘economy’

    • Focus expansion in line with group target projects – larger capacity equipment with higher competitive entry barriers

    • Promote existing skills & product range to wider market

    • Introduce product innovations to assist market increase in civil and mining activity, focus on shortening customer timeframes

  • Investor PresentationFull Year Results FY2010

    Strategic EmphasisStrategic Emphasis

    A subtle shift . . .

    • Increased focus on ROCE as well as margin

    • Focus more on increasing our relevance to customers through a broader product / service offering

    • Ensure product / revenue mix appropriately balanced to changing environment

    • Take business improvements developed and applied internally into products and services that are meaningful to our customers’ performance, e.g. indigenous training and employment, safety innovations, efficiency measures

    • Carefully consider ROCE accretive acquisitions that fit our strategy – not simply “order book growth”

    . . . with measurable outcomes

    • Increasing tender conversion ratio; whilst

    • Increasing order book size; together aimed at

    • Near term target of annual revenues of >A$1bn

    • Growth revenue streams increasing as % overall revenues

    • One material growth initiative per division for each year

    • Internal / management focus on rolling 12 month performance metrics