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


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

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30

35

40

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


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


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.


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


Operational OverviewOperational Overview


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


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


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


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


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


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


FinancialsFinancials

RGP5 Rail South


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


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


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


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


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


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


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.


Order Book

FMG

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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.


Order Book Run Off

0

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200

300

400

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600

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800

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


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


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

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

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