nrw holdings corporate overview - august 2010 final black€¦ · presentation full year results...
TRANSCRIPT
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
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1500000
2000000
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3000000
3500000
FY 2006 FY 2007 FY 2008 FY2009 FY2010
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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
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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
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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