version : for personal use only 29 august 2011 · 2011. 8. 28. · 2.50% 3.30% 4.00% 3.00% 4.00% p...

Version :

2011 Full Year ResultsDavid Harris Group Managing Director & CEO

Chris WoodwardFinance Director

29 August 2011

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Agenda

Business OverviewBusiness Overview

Highlights FY 2011

Fi i l P f Financial Performance

Business Reviews

Strategy

Outlook

“Leading international designer, installer and maintainer of technical services to the building

and infrastructure sectors”

Hastie Group 2011 FY Results | 2

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Business Overview

RotaryM h i l El t i l &

Hastie M h i l El t i l Pl bi (MEP) Fi &

Hastie & Rotary Mechanical, Electrical &Mechanical, Electrical &

Plumbing (MEP) systemsMechanical, Electrical, Plumbing (MEP), Fire & Refrigeration systems and Maintenance Services

Mechanical, Electrical & Plumbing (MEP) systems

14% OF FY11 REVENUE 77% OF FY11 REVENUE 9% OF FY11 REVENUE

Employees 7,000+

Revenue FY 2011 A$1.8 bn


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2011 Full Year Results

Revenue $1,848m

Underlying EBIT result in line with Prospectus (June 2011)

Underlying EBIT 1 $ 47.5m

NPAT ($ 87.8m)

Underlying EBIT result in line with Prospectus (June 2011)

Impacted by difficult trading conditions and inclement weather

Working Capital at 30 June 2011 significantly increased (+$82m) due to voluntary suspension and standstill agreement period (8 April 2011 to 18 July 2011)

$2.5bn of Work-in-Hand2 at 30 June 2011 - new contract wins and active tender pipeline

$160m (gross) capital raising completed in July 2011 of which $43m raised pre June 2011

New syndicated debt facilities agreed with banks providing funding and committedNew syndicated debt facilities agreed with banks providing funding and committed project bonding and letter of credit (LC) facilities until FY2014 and FY2015

No dividend declared for FY2011


1. FY11 Underlying EBIT adjusted for acquisition costs of $0.3m expensed in line with revised accounting standards, provision for aged doubtful debts mainly in the Middle East and Republic of Ireland of $33.5m, a goodwill impairment charge of $69.1m in respect of Rotary businesses in the Middle East, a write down of $1.3m of Rotary brand name in Middle East markets and fees of $2.3m for the banks’ advisor during the standstill agreement. 2. Work-in-Hand includes orders in hand, letters of intent, expected project extensions/variations, small project sales and recurring service revenues.

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Business Description

Leading supplier of technical building solutions and maintenance services to a g gdiverse customer base

Unique integrated multi service capability – Mechanical (air conditioning), Electrical,Plumbing (MEP), Fire, Refrigeration and Maintenance Services

services co-ordination from a single source

greater opportunity to value engineer integrated MEP offerings

Hastie has the most extensive resource base in the industry

engineering/design (D&C) capability

project management experience across all project typesproject management experience across all project types

experienced site personnel including supervisors

Track record of successful project delivery, high quality of service and reliabilitylti i t i t f tresulting in certainty of outcome

Excellent safety performer, 35% average annual reduction in LTIFR since IPO in 2005 -leader in driving industry safety initiatives


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Operational Status Post Capital Raising

Trade credit insurance to Hastie’s suppliers reinstated – trading terms withTrade credit insurance to Hastie s suppliers reinstated trading terms with suppliers being reinstated

Internal organisation settling down

R l ti hi ith t d li li i t t dRelationships with customers and suppliers normalising - new contracts secured

Market conditions still challenging

Focus on improving margins and cash management – reducing working capitalp g g g g g p

Middle East strategic review in progress

Engaged external firm (Flagstaff Wild Consulting) to review MEP Australia’s forecasting and budgeting processesforecasting and budgeting processes.


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Financial Snapshot

A$m 2010 2011 Change

R 1 651 1 1 848 8 11 9%Revenue 1,651.1 1,848.8 11.9%

Underlying EBIT 77.8 47.5 (38.9%)

Underlying EBIT Margin (%) 4.7% 2.6% (44.7%)

Acquisition Costs (2.2) (0.3)

Gain on Spectrum Acquisition 1.6 -Abnormal Project Provision (4.7) (33.5)

Goodwill Impairment in respect of Rotary operations in Middle East - (69.1)

Write off of Rotary brand name in respect of Middle East operations - (1.3)p

Banks' advisor fees in respect of standstill period - (2.3)

EBIT 72.5 (59.0)

N t Fi i C t ( (20 6) (35 1)Net Financing Costs (see next page) (20.6) (35.1)

Income Tax benefit / (expense) (11.3) 6.3

Minority Interest (0.7) -


Net Profit After Tax 39.8 (87.8)

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Financial Snapshot

A$ 2010 2011A$m 2010 2011

Net Financing Costs

Interest Income 1.0 0.5

Loan interest and fees (17.1) (21.0)

Interest on contingent acquisition consideration (0.1) (0.3)

Bank and Guarantee fees (2.7) (5.8)( ) ( )

Loan Establishment fees (1.5) (5.1)

Bank Standstill fees - (2.6)

N t f i h l (0 3) (0 9)Net foreign exchange losses (0.3) (0.9)

Total (20.6) (35.1)


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7 Year Financial Performance

Revenue ($m) EBIT1 ($m)

90.1

77.8

1781.0

1651.1

1848.8

67.51270.7

47.6

39.7

41.3

47.5

923.1

808.7900778.6

11 7

18.2

26.922.1

18.4

25.0

353.9

506.3370.0

479.4

10.0 11.7

2005 2006 2007 2008 2009 2010 2011

180.4 216.5

2005 2006 2007 2008 2009 2010 2011

1H 2H


1. FY11 Underlying EBIT adjusted for acquisition costs of $0.3m expensed in line with revised accounting standards, provision for aged doubtful debts mainly in the Middle East and Republic of Ireland of $33.5m, a goodwill impairment charge of $69.1m in respect of Rotary businesses in the Middle East, a write down of $1.3m of Rotary brand name in Middle East markets and fees of $2.3m for the banks’ advisor during the standstill. FY10 Underlying EBIT of $77.8million adjusted for one-off acquisition costs of $2.2m expensed in line with revised accounting standards, abnormal $4.7m hospital project provision in the Caribbean and gain on acquisition of Spectrum Fire $1.6m.

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Cash Reconciliation

N t h f $62 illi t 30 J 2011Net cash of $62 million at 30 June 2011

62.6

40 0

39.8 ‐ 82.3

‐ 7.4

‐ 9.6 ‐ 12.4

‐ 5.7

80.8 62.0

40.0 ‐ 10.1

‐ 33.5

Net Cash 30 June 2010

EBITDA Increase in Working Capital

Tax Paid Net Capital Expenditure

Net Financing costs

Net Proceeds from Equity

Net increase in

Borrowings

Dividends & Minority Interests

Net Acquisition

Costs

ForeignExchange & Other Sundry Movements

Net Cash30 June 2011


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Working Capital

Working capital abnormally high at 30 June 2011 due to the impact of the voluntary suspension and standstill agreement period in 2H-FY2011:suspension and standstill agreement period in 2H FY2011: increase in contract WIP due to under certification by customers tightening in trade credit terms by Hastie suppliers due to reduction in trade

credit insurancecredit insurance

Expectation is for Working Capital to begin to trend towards normalised levels during FY2012 with supplier trade credit insurance being reinstated

4.20% 4 00%

6.00%

5.00%

6.00%

les

2.49%2.20%

1 70%

2.40%1.90%

2.50%

3.30%

4.20% 4.00%

3.00%

4.00%

pita

l as

% o

f Sal

1.70%

‐0.10%0.00%

1.00%

2.00%

Wor

king

Cap


‐1.00%2006 FY 2007 1H 2007 FY 2008 1H 2008 FY 2009 1H 2009 FY 2010 1H 2010 FY 2011 1H 2011 FY

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Restructured Debt Facilities

In conjunction with the Capital Raising, Hastie Group entered into restructured debt, project bonding and LC arrangements which provide significantly increased financial flexibilitybonding and LC arrangements which provide significantly increased financial flexibility

Staggered maturity profile, with the firstmaturity being 31 July 2013 (see profile on

Term debt and RCF maturity postthe Offer and Debt Repayment

y g y ( pthe right)

Pricing grid on market terms

Amended covenant package including

39

100

200

millions

Amended covenant package, includingremoval of the Adjusted Gross LeverageRatio and appropriate covenant headroom(see table below)

134

66

21

0FY2012F FY2013F FY2014F FY2015F

$ m

( )

Previous 30 Sep 11 31 Dec 11 31 Mar 12 30 Jun 12 Thereafter

LTM Interest Cover Ratio1 >3 00x ≥ 1 85x ≥ 1 90x ≥ 2 25x ≥ 2 40x ≥ 2 40x

Amended covenant package

Drawn Undrawn

LTM Interest Cover Ratio1 >3.00x ≥ 1.85x ≥ 1.90x ≥ 2.25x ≥ 2.40x ≥ 2.40x

Gross Leverage (Gross Debt / EBITDA) na ≤ 3.75x ≤ 3.75x ≤ 3.75x ≤ 3.50x ≤ 3.50x

Gross Debt / Total Assets less intangible assets ≤ 60% ≤ 60% ≤ 60% ≤ 60% ≤ 60% ≤ 60%


1. For the purposes of calculating the Interest Cover ratio, net interest excludes bonding facility fees and amortising establishment fees and calculated on a rolling 12 months basis.

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Safety Performance

100

120

s W

orke

d FY11 another year of excellent performance

80

100

ion

Man

Hou

rs

6th consecutive year of sustained improvement in safety performance

60

y R

ate

per M

illi

35% p.a. reduction in lost time frequency rates and 32% p.a.

d ti i t t l

20

40

jury

Fre

quen

cy reduction in total recordable injuries since IPO

I d t l d

02005 2006 2007 2008 2009 2010 2011

Inj Industry leader

proactively driving industry wide safety initiatives


Lost Time Injury Frequency Rate Total Recordable Injury Frequency Rate

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Underlying Divisional Performance

A$m 2010 2011 Change

R 1 041 4 1 139 5 9 4%

MEP ANZRevenue 1,041.4 1,139.5 9.4%

EBIT 52.9 27.2 (48.6%)

Margin 5.1% 2.4% (52.9%)

R 217 8 305 1 40 1%

Maintenance Services Revenue 217.8 305.1 40.1%

EBIT 9.4 10.6 12.7%

Margin 4.3% 3.5% (18.6%)

Revenue 294 3 240 9 (18 1%)

MEP UK & Rep of Ireland Revenue 294.3 240.9 (18.1%)

EBIT1 6.3 7.6 20.6%

Margin 2.1% 3.1% 47.6%

Revenue 97 7 163 3 67 2%

MEP Middle EastRevenue 97.7 163.3 67.2%

EBIT 4.5 2.1 (53.3%)

Margin 4.7% 1.3% (72.3%)

Revenue 1 651 1 1 848 8 12 0%

TotalRevenue 1,651.1 1,848.8 12.0%

EBIT2 73.1 47.5 (35.0%)

Margin 4.4% 2.6% (40.9)%


1. Rotary impacted by further weakening of GBP by $1.0m unfavourable translation of earnings between FY11 and FY10 exchange rates.

2. FY11 Underlying EBIT adjusted for acquisition costs of $0.3m expensed in line with revised accounting standards, provision for aged doubtful debts mainly in the Middle East and Republic of Ireland of $33.5m, a goodwill impairment charge of $69.1m in respect of Rotary businesses in the Middle East, a write down of $1.3m of Rotary brand name in Middle East markets and fees of $2.3m for the banks’ advisor during the standstill agreement period. FY10 EBIT adjusted for abnormal $4.7m hospital project provision in the Caribbean.

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FY12 Group Outlook

Focus on stabilising relationships and improving cash flow and margins

1.5

2.0

n

Forward Work-in-Hand

$2.5 billion Work-in-Hand1 at 30 June 2011 8 % f d FY2012

1.85 1.64

0.88

0 0

0.5

1.0

$ billion2011 - 85% of expected FY2012 revenue

covered$5 billion of tenders awaiting award, currently being worked onPoor performing plumbing businesses addressedRisk-managed approach strengthened :

0.0

FY2011 FY2012 FY2013Revenue Work‐in‐Hand

currently being worked on

Middle East review in progress

Flagstaff Wild Consulting engaged to review internal MEP forecasting and budgeting processes

Increased scrutiny/review on cash management and forecasting

Strengthened risk management review processes

Challenging market conditions remain – unknown impact from on-going volatility inglobal financial marketsNo change in forecast FY2012 earnings of $58m EBIT as per Prospectus

Hastie Group 2011 FY Results | 151. Work-in-Hand includes orders in hand, letters of intent, expected project extensions/variations, small project sales and recurring service revenues.

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Disclaimer

The information in this presentation:p

Is not an offer or recommendation to purchase or subscribe for securities in HastieGroup Limited or to retain any securities currently held

Does not take into account the potential and current individual investment objectivesor the financial situation of investors

Was prepared with due care and attention and is current at the date of theWas prepared with due care and attention and is current at the date of thepresentation

Actual results may materially vary positively or negatively from any forecasts (whereapplicable) in this presentation. Before making or varying any investment in securities inHastie Group Limited, all investors should consider the appropriateness of that investmentin light of their individual investment objectives and financial situation and should seekg jtheir own professional advice.


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“Leading international designer, i t ll d i t i f t h i linstaller and maintainer of technical

services to the building and i f t t t ”infrastructure sectors -”

www.hastiegroup.com.auHastie Group LimitedHastie Group LimitedLevel 5, 20 Highgate StreetAuburn NSW 2144 Australia+61 2 9714 460261 2 9714 4602


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Supplementary Information

“Leading international designer installer anddesigner, installer and maintainer of technical

services to the building and i f t t t ”infrastructure sectors”


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Geographic Revenue Split

Revenue 2010 Revenue 2011

Australia & New

$1.8bn$1.7bn 0%

Australia & New Zealand

77%

Middle East &0%

Australia & New Zealand76%

Middle East & Other $1.8bn$1.7bn 0%

0%0%

UK & Republic

Middle East & Other

International 9%

0%

0%0%

UK & Republic of Ireland 17%

International 7%

UK & Republic of Ireland 14%

Ireland 17%


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MEP (Mechanical, Electrical, Commercial Plumbing) -ANZANZ

“Leading supplier of technical building solutions and refrigerationsystems to a diverse customer base”

Significant losses in QLD and NSW plumbing businesses impacted results

systems to a diverse customer base

A$m 2010 2011 Change (%)plumbing businesses impacted results – actions taken to address thisRevenue maintained despite subdued non-residential construction sector

Revenue 1,041.4 1,139.5 9.4%

EBIT 52.9 27.2 (48.6%)

Margin 5.1% 2.4% (53.9%)

Margins adversely impacted by continuing challenging market conditions

Examples of Recent Contract Awards

Delays on two key projects in AustraliaLack of capital invested in refrigeration systems by supermarket groups

Royal Adelaide Hospital (final negotiations)Equinix Data Centre161 Castlereagh Street (Sydney)

Floods in Brisbane adversely impacted Queensland performance in 2H-FY2011Some better quality new work secured with order book up 20% on prior year

161 Castlereagh Street (Sydney)700 Bourke Street (Melbourne)Royal Brisbane Women’s HospitalO C t l P k (S d )with order book up 20% on prior year

Hastie Group 2011 1H Results | 20

One Central Park (Sydney)

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Maintenance Services - ANZ

“Full suite of technical maintenance services, for more than 8,000 customersA t li d N Z l d”

Revenue growth primarily due toSpectrum (Fire) - performing to

across Australia and New Zealand”

A$m 2010 2011 Change (%)expectationUnseasonally mild summer severelyimpacted 1H service call levels –reduced HVAC PM uplift

(%)

Revenue 217.8 305.1 40.1%

EBIT 9.4 10.6 12.7%

Margin 4.3% 3.5% (18.6%)reduced HVAC PM upliftFloods and cyclone in Qld impactedHVAC revenue in 2HDiscretionary HVAC maintenance

g ( )

Examples of RecentContract Awards

Discretionary HVAC maintenancespend at historical lows with highlycompetitive tendering – marginimpact

Australia Post – HVAC maintenanceWoolworths Distribution Centres -HVAC maintenance

“Green Solutions” launched - energyaudits and energy reductionstrategies for building owners andtenants

AMP Commercial – Fire services Royal Brisbane – Fire servicesFitness First (national) – energytenants


Fitness First (national) energy reduction solution

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MEP – United Kingdom and ROI

“Specialising in mechanical, electrical and commercialplumbing systems across the UK and Republic of Ireland”

AUD appreciation impacting translationof earnings – $1.0m unfavourable

plumbing systems across the UK and Republic of Ireland

GBPm 2010 2011 Change(%)

Revenue 164 1 149 7 (8 8%)Bid margins remain tight due toaggressive tendering - some ability topass onto subcontractors.

A$m 2010 2011 Change(%)

Revenue 164.1 149.7 (8.8%)

EBIT 4.5 5.9 31.1%

UK remains subdued although signs ofsome recovery with privately fundeddevelopments - active tender pipelineMargin improvement in FY11 positively

$ g ( )

Revenue 294.3 240.9 (18.0%)

EBIT 6.3 7.6 20.6%

Margin 2.1% 3.1% 47.6%Margin improvement in FY11 positivelyimpacted by favourable closure of majorprojectsIreland continues to be tough (loss in

Examples of RecentContract Awards

Ireland continues to be tough (loss inFY2011 of $1.2m) Leeds Arena (Leeds)

Snow Hill (Birmingham offices)Sheffield Schools program (Sheffield)


S e e d Sc oo s p og a (S e e d)St Vincent’s Hospital (Dublin)

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MEP – Middle East

“Specialising in air conditioning, electrical and commercial plumbingsystems across the Middle East”

AUD appreciation impacting translation of earnings – $0.6m unfavourable

systems across the Middle East

A$m 2010 2011 Change (%)earnings $0.6m unfavourable Focus remains on key builders & clients in preferred market sectors aligned with government priorities – health and education

$ (%)

Revenue 97.7 163.3 67.2%

EBIT 4.5 2.1 (53.3%)

Some delays on existing contracts impacted short terms resultsCash collection a major focus – payments

Margin 4.7% 1.3% (72.3%)

continue to be drawn outDelays in issuing project bonds for new projects and trade letters of credit caused a delay in revenue and profit recognitiondelay in revenue and profit recognition. Key projects delivered on time – Zayed University ($140m CV - Abu Dhabi) Al Ain University ($30m CV - Abu Dhabi)


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Operating Cash Flow

A$,000s Jun‐10 Jun‐11

Cash generated from operations 59,726 (19,748)

Income tax paid (8,117) (7,438)

Net cash generated by operating activities 51,609 (27,186)g y p g , ( , )

Net Capital Expenditure (10,715) (10,148)

Acquisition related (23,682) (12,420)

Ad ( ) / f l d i (1 336) 80Advances (to) / from related parties (1,336) 80

Proceeds (Repayment) of borrowings 15,009 39,810

Proceeds (Payment) for share issue (114) 40,012

Interest and other costs of finance paid (20,074) (33,516)

Dividends and non‐controlling interests (14,765) (9,589)

Net increase (decrease) in cash (4,068) (12,957)

Opening Net Cash 87,599 80,835

FX Differences & Sundry Movements (2,696) (5,784)

Closing Net Cash 80 835 62 094


Closing Net Cash 80,835 62,094

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Balance Sheet

A$,000s Jun‐10 Jun‐11

Cash 84 051 71 665Cash 84,051 71,665

Trade and other receivables 406,501 387,898

Inventories 34,450 83,001

Other 9,700 15,964

Current Assets 534,702 558,528

Property, plant and equipment 54,967 49,790

Goodwill 424,039 320,056

Other 40,221 37,327

Non Current Assets 519,227 407,173

Total Assets 1,053,929 965,701

Payables 322,953 306,894

Interest Bearing Liabilities 9 478 34 705Interest Bearing Liabilities 9,478 34,705

Provisions 53,439 58,155

Other 12,926 8,608

Current liabilities 398,796 408,362

Total liabilities 666,701 690,248

Net assets 387,228 275,453

Capital and Reserves 292,935 280,134

Retained earnings 92,734 (4,681)


g , ( , )

Minorities 1,559 ‐

Total Shareholder Funds 387,228 275,453

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Forecasts

Australian Non-Residential Construction Forecast

A$m

Australian Non Residential Construction

All Sectors Excluding Education

35,000

40,000

45,000

A$m All Sectors Excluding Education

15,000

20,000

25,000

30,000

0

5,000

10,000

,

2006 07 2007 08 2008 09 2009 10 2010 11 2011 12 2012 13 2013 14 2014 15 2015 16 2016 17 2017 18 2018 19

Source : Australian Construction Industry Forum (ACIF), April 2011

2006‐07 2007‐08 2008‐09 2009‐10 2010‐11 2011‐12 2012‐13 2013‐14 2014‐15 2015‐16 2016‐17 2017‐18 2018‐19


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Forecasts

UK Non-Residential Construction Forecast

UK Non Residential Construction

35,000

40,000

45,000

£m Private Commercial Private Industrial Gov't Non Residential

15 000

20,000

25,000

30,000

,

0

5,000

10,000

15,000

2006 2007 2008 2009 2010 2011 2012 2013

Source : Experian, Construction Forecasting and Research: Vol 17, Summer 2011

2006 2007 2008 2009 2010 2011 2012 2013


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version : for personal use only 29 august 2011 · 2011. 8. 28. · 2.50% 3.30% 4.00% 3.00% 4.00% p...

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