STRATEGY UPDATE - McConnell Dowell · the business, winning through execution ... construction and...
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Transcript of STRATEGY UPDATE - McConnell Dowell · the business, winning through execution ... construction and...
Scott Cummins
28 September 2017
STRATEGY UPDATE
2STRATEGY UPDATE
• Transformational Growth Strategy – Reset, Stabilise, Consolidate, Grow • New operating model and turnaround in performance• Pursuit of operational excellence adopted across the entire business and all operating regions• Cultural shift to a consistent, reliable and high-performing project delivery business• Simplified business structure and strengthened technical & operational capabilities• Established strong foundation with effective management systems and programs• Active Project Portfolio performing in line with expectations and plan
• Balance Sheet ‘Clean & Strong’. Significantly Reduced overall Business Risk Profile. 1. Balance Sheet Strengthened & Restored Financial Capacity & Flexibility
• Aveng have reset the McConnell Dowell Balance Sheet. Removed risk & uncertainty from the Balance Sheet• Resolution of the long outstanding arbitration process in relation to the QCLNG Export Pipeline Project that
was executed over a four-year period from 2010• Project impairments remove risk and uncertainty from the Balance Sheet. Non cash in nature but impacted
the FY17 P&L 2. Capital Restructure
• Recapitalised the balance sheet by capital injection from Aveng3. No External Debt
• Paid off all external debt in Australia (minor asset finance / leases remain)
• Full Support from all Stakeholders• All our Banks and Bonding providers have approved the balance sheet restructure and have confirmed ongoing
commitment to provide bonding required to support our business plan
STRATEGIC HIGHLIGHTS
‘Following the reset of our organisational structure and
operating model it was necessary to reset the balance
sheet. This has been successfully completed and now positions the Group for future reliable & predictable
project delivery and Corporate growth.’
Scott Cummins, Chief Executive Officer McConnell Dowell
3STRATEGY UPDATE
FY17 PERFORMANCE SUMMARY
VALUE WE ARE DELIVERINGMcConnell Dowell has taken the final step in completing the Reset phase of its transformational strategy – Reset, Stabilise, Consolidate & Grow – and built a platform to optimise value and growth. Transformational program to ensuring the McConnell Dowell Group are a leading project delivery business.
Select highlights are included below:
SAFETY PERFORMANCE
33,969 Safety Observations Recorded 84%
Projects Remained LTI Free
FINANCIAL PERFORMANCE
Revenue
A$936 Millionof construction work including:
• Webb Dock, Melbourne, Australia• Waterview Tunnel, Auckland, New Zealand• Modbury Hospital, Adelaide, Australia• RAPID Solid Product Jetty, Malaysia• Mangere BNR, Auckland, New Zealand• O-Bahn City Access, Adelaide, Australia
Cash Position
A$120 MillionImproved Cashflow Performance
Order Book & Preferred Status
A$1,500 MillionIncreased >50% from Dec 16
SIGNIFICANT INDUSTRY RECOGNITION
• Australian Construction Achievement Award
• Webb Dock
• Master Builders• Modbury Hospital
Redevelopment
• Civil Contractors New Zealand
• Waterview Tunnel
MAJOR PROJECTS AWARDED
• Murray Basin Rail Upgrade, Australia• BP Tanguuh LNG Export Jetty, Indonesia• Northern Gas Pipeline, Australia• Dryandra Road Underpass, Australia• Amrun Export Facility, Australia• Western Program Alliance, Australia
• Midvale, Australia• Christchurch Southern Motorway Stage 2, New
Zealand• U2 on Waymouth, Australia• West Franklin Apartments, Australia
4STRATEGY UPDATE
YEAR IN REVIEW
Established a new leadership• Set clear expectations for
leaders and business units
MAXIMISINGVALUE
Stronger focus on Customer relationships• Strong band and
market position• Customer orientated
and outcome focused
Simplified the organisation• New structure and operating
model• Lean and accountable• Regionally focused business
units and strategies
Enhanced technical and operational capabilities
Implemented a structured approach to winning a new business
• Embedded a clear transformational growth strategy – Reset, Stabilise, Consolidate & Grow
• Maximise value by becoming a reliable and high performance business
• Increased transparency in all aspects of the business, winning through execution
• Improved Systems and Procedures –back to basics drive, execution improvement program, centralised project start-up expertise, centralised HSEQ processes
• Strengthened new business and commercial management processes to safeguard brand, profitability and strategy
• Monthly project review process, peer reviews, internal audit
Strengthened project and business governance
Year of considerable change across the organisation
Foundations built to optimise value and growth
Focused on becoming a consistent reliable project delivery business
Strengthened Customer Relationships
Reduced the fixed cost base to improve cost competitiveness
RESET PHASE COMPLETED STRENGTHENED OPERATIONAL MANAGEMENT
5STRATEGY UPDATE
• Strengthening the balance sheet was a significant focus for the organisation in the 2017 financial year
• Results reflect the financial Reset of the business and places the Group in a strong position to support the further stages of the growth strategy
• Project impairment for QCLNG and other historical issues (Previously announced non-cash impairment)
• Banks and financiers support the project impairments and capital restructure that forms part of the FY17 Full Year Results
• The capital restructure provides the Group with a robust balance sheet to:
• Execute and fulfil all defined growth objectives in line with the transformational strategy
• Support future working capital and bonding requirements associated with the strong pipeline of projects
• Continue to invest in building and enhancing capability across the entire Group
STRONGER BALANCE SHEET
GREATER PREDICTABILITY& CERTAINTY OF
FINANCIAL PEFORMANCE
• >100% secured revenue for FY18. More predictable performance and earnings.
• Efficient & scalable cost structure
• Strong operational focus to bid, execute and deliver strong earnings growth
• Strong & healthy Order Book
Transforming to a stabilised and cash flow positive business. Recapitalised the balance sheet to support Business Plan.
6STRATEGY UPDATE
PROJECT IMPAIRMENTS Previously announced non-cash impairment on the QCLNG Export Pipeline Project and other historical commercial issues
PROJECT IMPAIRMENTS FROM LEGACY & HISTORICAL ISSUES
• QCLNG Export Pipeline Project
• Reflects the long running arbitration process associated with the project that commenced in 2010 and was executed over a four-year period. Project was completed in late 2013
• The award event was fully anticipated and represents a long awaited important milestone in our strategic journey
• Other Historical Commercial Issues
• Enable the finalisation of commercial issues and disputes
• Clean up the balance sheet of historical issues so we can focus on the future
• No material adverse impacts expected in FY18
REDUCED BUSINESS RISK PROFILE
• Significantly reduced the level our dispute backlog in relation to all legacy and historical projects
• Significantly lower risk profile as legacy matters are closed
CULTURAL SHIFT TO DISCIPLINE
• Disciplined commercial delivery approach to project commercial and legal disputes. Focused on timely and effective resolution.
• Embedded new rigorous project commercial framework and procedures in response to past practices and decision making processes
7STRATEGY UPDATE
FY18 & BEYOND
• Turnaround strategy on track• Positive momentum moving in to FY18 with 100% of Group
Revenue Budget secured• All Business Units are well placed to deliver strong operational
results in line with plan
2016 2018 2021 2025
RESET STABILISE, DELIVER & POSITION FOR GROWTH
CONSOLIDATED GROWTH
EXTENDED GROWTH & SUSTAINED PROFITABILITY
• Cultural shift to a consistent, reliable and high-performing project delivery business
• Disciplined focus on high growth opportunities. Strong growth in Order Book & Preferred Status. Significant upside.
• Positioned for strong earnings growth in FY18 – Year of delivery
GROUP STRATEGY REMAINS INTACT AND FULLY SUPPORTED BY AVENG.
MCCONNELL DOWELL ENTERS FY18 WITH A CLEAR STRATEGY, A NEW LEADERSHIP TEAM, A STRONGER BALANCE SHEET AND TREMENDOUS MOMENTUM.
8STRATEGY UPDATE
GROUP DIVERSITYACTIVELY EXECUTING MAJOR PROJECTS ACROSS ALL GLOBAL REGIONS, MARKET SECTORS ANDSPECIALIST CAPABILITIES OF THE MCCONNELL DOWELL GROUP’S VALUE OFFERING
9STRATEGY UPDATE
ACTIVE PROJECT PORTFOLIO
O’Bahn City Access, Australia
• Customer: Department of Planning, Transport & Infrastructure
• Design & Construct Contract• 670m long tunnel completed
Murray Basin Rail Upgrade, Australia
• Customer: V/Line• Upgrading 1,055km of rail track• Converting the track from broad gauge to
standard gauge• Completion scheduled for August 2018
Amrun Export Facility, Australia
• Customer: Rio Tinto• Significant Australian mining project• 642m of jetty structure• 306m of wharf with attached tug berth
10STRATEGY UPDATE
ACTIVE PROJECT PORTFOLIO
Dryandra Road, Australia
• Customer: Brisbane Airport Corporation• Significant structural element of new
runway• Concrete 4-lane underpass structure• 700 precast piles including 1.5km of road
Northern Gas Pipeline, Australia
• Customer: Jemena• Engineering, construction and
commissioning 481km of pipeline• Scheduled for completion late 2018
Western Program Alliance, Australia
• Customer: LXRA• Major Alliance Project• Significant Program of Work 5+ years• First 2 sites to be complete by end 2018
11STRATEGY UPDATE
ACTIVE PROJECT PORTFOLIO
Christchurch Southern Motorway, New Zealand
• Customer: New Zealand Transport Agency• 8km new of 4 lane motorway• 7 bridges over new highway• Scheduled Completion end 2019
City Rail Link, New Zealand
• Customer: City Rail Link Limited• Largest Infrastructure project in New
Zealand• 3.45km twin tunnel underground rail link
Russley Road Upgrade, New Zealand
• Customer: New Zealand Transport Agency• An on-line roundabout and a 150 m
subway • Scheduled Completion end 2019
12STRATEGY UPDATE
Petronas RAPID 12B Solid Product Jetty, Malaysia
• Customer: Petronas PRPC Utilities• EPC Contract• 8km new of 4 lane motorway• 7 bridges over new highway• Scheduled Completion end 2019
ACTIVE PROJECT PORTFOLIO
Tangguh LNG Bulk Offloading Facility, Indonesia
• Customer: PT Saipem Indonesia (PTSI)• Bulk Offloading Facility, LNG and
Condensate Loading Jetty• Onshore brownfield site and receiving
facility
Tuas Road Bridges, Singapore
• Customer: National Environment Agency (NEA)
• 2 Permanent viaducts including foundations, abutments and marine deck
• Scheduled for completion in June 2018
13STRATEGY UPDATE
ACTIVE PROJECT PORTFOLIO
Nakhon Ratchasima Pipeline Extension, Thailand
• Customer: PTT Public Company Limited• EPC Contract• 60 km of 42-inch diameter pipeline, 18
block valve stations• 20 km of pipe installation by Direct Pipe
processes
Maris South Canal, Philippines
• Customer: SNAP (Aboitiz Power and Statkraft Norfund Power Investment group)
• 8.5 megawatt hydroelectric power plant• Scheduled for completion late 2017
Dubal Energy Optimisation Mechanical Works, Dubai
• Customer: Emirates Global Aluminium (EGA)
• 4 pot rooms, 8 sections, 241 pots, 4 temporary crossovers, 4 central passageways
• 4 North end and 4 South end crossovers
14STRATEGY UPDATE
ACTIVE PROJECT PORTFOLIO
Urbanest, Australia
• Customer: Urbanest Australia• Design & Construct Contract• 689 – bed accommodation• Scheduled completion November 2017
West Franklin Apartments, Australia
• Customer: Greaton• 272 residential apartments• two towers (north tower is 20 storeys and
the south tower is 18 storeys)• Scheduled for completion early 2019
U2 on Waymouth, Australia
• Customer: U2• Design & Construct Contract• 27 Levels with 257 apartments• Scheduled completion for early 2019