Wilson Bayly Holmes-ovcon Limited · JSE:WBO
Wilson Bayly Holmes-ovcon — H1 FY2019 Earnings Presentation
46 slides from Wilson Bayly Holmes-ovcon's earnings presentation, February 2019
Slide 1: Unaudited Results for the Six Months Ended 31 December 2018
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2018
Slide 2: Contents
CONTENTS Presented by Louwtjie Nel and Charles Henwood Welcome Overview Operational review Building and civil engineering Roads and earthworks Australia United Kingdom Financial review Order book Outlook
Slide 3: Overview
OVERVIEW
Slide 4: Overview: revenue and operating profit
Overview REVENUE (Rm) OPERATING PROFIT (Rm) 30 000 569 2,6% 535 20 000 450 510 471 3,3% 3,1% 20 114 4,0% 18 087 16 491 16 941 15 416 10 000 200 3 0% - H1 2017 H2 2017 H1 2018 H2 2018 H1 2019 ( 50) H1 2017 H2 2017 H1 2018 H2 2018 H1 2019 • Revenue growth of 11% to Dec 2018 largely due to • Breakeven
Slide 5: The Six Months in Perspective: Western Roads Upgrade Project
Overview THE SIX MONTHS IN PERSPECTIVE AUSTRALIA – WESTERN ROADS UPGRADE PROJECT (WRU) BACKGROUND • Design and construct contract consisting of eight packages for the widening and upgrade of various roads and intersections in the western suburbs of Melbourne • Project bid in July 2017 and financial
Slide 6: Australia – Western Roads Upgrade Project actions
Overview AUSTRALIA – WESTERN ROADS UPGRADE PROJECT (WRU) WHAT HAVE WE DONE? • Termination of the WBHOI corporate leadership and bidding teams in December 2018 • Withdrawal from design and construct role on new projects bid with same risk profile • Extensive due diligence performed by the project del
Slide 7: The Six Months in Perspective: South Africa and Rest of Africa
Overview THE SIX MONTHS IN PERSPECTIVE SOUTH AFRICA • Solid delivery despite lower levels of private investment combined with little meaningful public infrastructure spending • Failure of various mid-tier contractors together with financial distress within a number of large listed companies • Profou
Slide 8: The Six Months in Perspective: United Kingdom
Overview THE SIX MONTHS IN PERSPECTIVE UNITED KINGDOM • Acquisition of a 60% interest in Russells Limited on 18 July 2018 adds further substance to the UK operations • Byrne Group returns to profitability with restructuring of the business essentially complete • London and Manchester markets offerin
Slide 9: Safety
Overview SAFETY LTIFR (No. of lost time injuries per million man hours) 2,00 1,50 1,00 0,94 0,91 0.80 0,80 0,50 0,75 0,00 2015 2016 2017 2018 Dec 2018 • Group LTIFR decreases from 0,91 to 0,80 • Decline in safety statistics to 0,6 from Africa business following continued focus from senior management
Slide 10: Building and Civil Engineering
BUILDING AND CIVIL ENGINEERING
Slide 11: Geographic Footprint
Building and civil engineering GEOGRAPHIC FOOTPRINT REVENUE (%) 13 8 H1 H1 FY19 FY18 87 92 OPERATING PROFIT (%) 24 19 H1 H1 FY19 FY18 76 81 South Africa Rest of Africa
Slide 12: The Six Months in Perspective: Building and Civil Engineering
Building and civil engineering THE SIX MONTHS IN PERSPECTIVE BUILDING • Declining revenue in Gauteng with fewer large-scale projects available • Competing with mid-tier contractors on smaller projects • Sustained activity in coastal regions • Concentration of work in commercial office sector but act
Slide 13: Building and Civil Engineering Revenue and Operating Profit
Building and civil engineering REVENUE (Rm) OPERATING PROFIT (Rm) 8 000 400 6 000 300 4 000 200 4 332 217 3 804 3 916 3 925 5,0% 3 386 168 169 163 163 4,4% 4,3% 4,2% 2 000 100 4,8% - 0 H1 2017 H2 2017 H1 2018 H2 2018 H1 2019 H1 2017 H2 2017 H1 2018 H2 2018 H1 2019 • Revenue in line with comparative
Slide 14: Order Book
Building and civil engineering ORDER BOOK BUILDING AND CIVIL % AT DECEMBER AT JUNE ORDER BOOK UP 7% ENGINEERING (Rm) GROWTH 2018 2018 • 15% improvement in local order book South Africa 15,2 6 188 5 374 • Strong order books in coastal regions • Difficulty in replacing building work in the rest Africa
Slide 15: Roads and Earthworks
ROADS AND EARTHWORKS
Slide 16: Geographic Footprint
Roads and earthworks GEOGRAPHIC FOOTPRINT REVENUE (%) 28 39 H1 H1 FY19 FY18 72 61 OPERATING PROFIT (%) 3 34 H1 H1 FY19 66 FY18 97 South Africa Rest of Africa
Slide 17: The Six Months in Perspective: Roads and Earthworks
Roads and earthworks THE SIX MONTHS IN PERSPECTIVE SOUTH AFRICA • Growth in local revenue supported by existing large-scale projects and new awards within the mining sector • Infrastructure for mining, energy and industrial sectors forms the bulk of activity as roadwork begins to taper • Local pipel
Slide 18: Roads and Earthworks Revenue and Operating Profit
Roads and earthworks REVENUE (Rm) OPERATING PROFIT (Rm) 5 000 300 4 000 250 200 3 000 190 198 150 8,0% 6,7% 181 2 829 7,4% 167 2 470 2 610 6,4% 2 000 2 453 144 2 119 100 6,8% 1 000 50 - 0 H1 2017 H2 2017 H1 2018 H2 2018 H1 2019 H1 2017 H2 2017 H1 2018 H2 2018 H1 2019 • Decline in revenue of 8% again
Slide 19: Order Book
Roads and earthworks ORDER BOOK ROADS AND EARTHWORKS AT ORDER BOOK UP BY 30% (Rm) % DECEMBER AT JUNE • 27% increase in local order book supported GROWTH 2018 2018 by new mining infrastructure and low-cost housing projects South Africa 26,9 4 216 3 323 • 42% increase in Africa order book reflects Afr
Slide 20: Australia
AUSTRALIA
Slide 21: Geographic Footprint
Australia GEOGRAPHIC FOOTPRINT REVENUE (%) 12 20 H1 H1 80 FY19 88 FY18 OPERATING PROFIT (%) 30 30 H1 H1 FY19 FY18 70 (130) Building Infrastructure
Slide 22: The Year in Perspective: Australia
Australia THE YEAR IN PERSPECTIVE • Provision for future losses on WRU project overshadows solid performance from Probuild and Western infrastructure businesses • Results in significant loss from Australian business as a whole BUILDING • 12% decline from building divisions reflects focus on careful
Slide 23: Australia Revenue and Operating Profit
Australia REVENUE (Rm) OPERATING PROFIT (Rm) 300 212 2,1% 14 000 143 135 200 101 1,3% 1,2% 1,2% 131 12 000 11 103 10 838 1,7% 10 707 100 9 975 10 000 8 625 0 9 761 H1 2017 H2 2017 H1 2018 H2 2018 H1 2019 8 000 8 752 8 548 8 612 -100 7 839 6 000 -200 4 000 -300 2 291 2 095 2 000 1 224 1 341 -400 786
Slide 24: Order Book
Australia ORDER BOOK AT ORDER BOOK UP 3% % DECEMBER AT JUNE • Consolidation of building business and focused AUSTRALIA (Rm) GROWTH 2018 2018 project selection reflected in lower building order Building (6,9) 22 345 23 997 book • WRU comprises 44% of infrastructure order book Infrastructure (18,9) 6
Slide 25: United Kingdom
UNITED KINGDOM L LOUWTJIE NEI
Slide 26: Geographic Footprint
United Kingdom GEOGRAPHIC FOOTPRINT REVENUE (%) 34 H1 66 2019 OPERATING PROFIT (%) H1 40 60 2019 Byrne Group Russells Limited
Slide 27: The Year in Perspective: United Kingdom
United Kingdom THE YEAR IN PERSPECTIVE UNITED KINGDOM • Acquisition of Russells Limited on 18 July 2018 adds substance to overall UK operations • First time consolidation of UK operations drives overall revenue growth for the wider group • Revenue of R2,5 billion comprises 13% contribution to group
Slide 28: Order Book
United Kingdom ORDER BOOK AT ORDER BOOK UP 40% % DECEMBER AT JUNE • Inclusion of Russells Limited increases UK order UNITED KINGDOM (Rm) GROWTH 2018 2018 book by 40% Byrne Group (23,8) 4 909 6 446 • 24% decrease in Byrne Group order book • Cancellation of £60m project after Russells Limited 4 107 -
Slide 29: Financial Review
FINANCIAL REVIEW
Slide 30: Financial Performance
Financial review FINANCIAL PERFORMANCE KEY FINANCIAL INDICATORS TARGET/ GROWTH H1 2019 H1 2018 Revenue growth % >10 11,2% 17,3% Operating profit margin % 3–4 0,0% 2,8% Cash and cash equivalents Rm 1% 4 286 4 256 Earnings per share cents (82%) 134 737 Headline earnings per share cents (80%) 145 727 O
Slide 31: Contribution by Geography
Financial review CONTRIBUTION BY GEOGRAPHY REVENUE (Rm) % growth H1 2019 H1 2018 REVENUE (%) South Africa 2,5 5 695 5 558 Rest of Africa (18,9) 1 157 1 427 28 31 H1 H1 Australia (3,6) 10 707 11 103 53 FY19 6 61 FY18 8 United Kingdom 2 555 - 13 TOTAL 11,2 20 113 18 086 South Africa Australia Rest of
Slide 32: Financial Performance
Financial review FINANCIAL PERFORMANCE SUMMARISED FINANCIAL PERFORMANCE % change H1 2019 H1 2018 Revenue 11,2 20 113 18 087 Operating profit before non-trading items (99,5) 3 510 Share-based payments expense (27) (30) Share of profits and losses from equity accounted investments 30 (6) Finance incom
Slide 33: Financial Position
Financial review FINANCIAL POSITION 6 900 747 6 700 6 500 6 300 6 100 5 900 5 700 89 5 500 5 300 (1 296) (135) 5 100 (193) 4 900 4 700 5 992 4 500 140 4 300 (789) 4 100 (267) (2) 3 900 4 286 3 700 3 500 Cash & cash Operating profit Working capital Net finance Taxation paid Dividends paid Net cash fl
Slide 34: Financial Position: Property, Plant and Equipment
Financial review FINANCIAL POSITION PROPERTY, PLANT AND EQUIPMENT (Rm) H1 2019 JUNE 2018 Property, plant and equipment 1 934 1 883 Depreciation 153 240 CAPITAL EXPENDITURE APPROVED 2019 H1 2019 JUNE 2018 Replacement 198 110 283 Expansion 94 135 33 TOTAL 292 245 316 • Increased capital expenditure to
Slide 35: Financial Position: Equity Accounted Investments
Financial review FINANCIAL POSITION EQUITY ACCOUNTED INVESTMENTS (Rm) CARRYING SHARE OF PROFITS/(LOSSES) COUNTRY OF EFFECTIVE ENTITY INDUSTRY AMOUNT OF OPERATION % INVESTMENT H1 2019 H1 2018 JUNE 2018 Edwin Construction Road /civil construction South Africa 49% 97,0 0,9 4,9 9,6 iKusasa Rail SA Railw
Slide 36: Financial Position: Tax and NCI Movement
Financial review FINANCIAL POSITION TAX (Rm) H1 2019 JUNE 2018 Net deferred tax asset 758 640 Net current tax asset 87 105 Deferred tax asset consists of: Current tax asset consists of: • Asset of R171m raised WRU provision • Foreign tax credits of R65m (June 2018: R81m) • Tax losses of R253m (June
Slide 37: Impact of New Accounting Standards
Financial review IMPACT OF NEW ACCOUNTING STANDARDS IFRS 15: REVENUE RECOGNITION • Comprehensive framework for determining if, how much and when revenue is recognised • 5-step assessments of active contracts to 31 December 2018 completed • No changes to the recognition and measurement of revenue und
Slide 38: Post Balance Sheet Event
Financial review POST BALANCE SHEET EVENT RUSSELLS LIMITED: EXERCISE OF OPTIONS • Non-controlling shareholders exercised put options in terms of share purchase agreement • Completion expected by 28 February 2019 • Consideration of £4,8 million (R83 million) • Shareholding increases from 60% to 70%
Slide 39: Order Book and Project Pipeline
ORDER BOOK AND PROJECT PIPELINE
Slide 40: Consolidated Order Book by Segment
Order book and project pipeline CONSOLIDATED ORDER BOOK AT TO ORDER BOOK BY SEGMENT (%) AT JUNE DECEMBER JUNE SEGMENT (Rm) 2018 2018 2019 2020 Building and civil 18 13 13 12 5 986 6 387 3 055 3 333 engineering DEC 11 JUNE 9 Roads and earthworks 4 164 5 407 2 577 2 821 59 2018 66 2018 Australia 32 56
Slide 41: Consolidated Order Book by Geography
Order book and project pipeline CONSOLIDATED ORDER BOOK AT AT TO ORDER BOOK BY GEOGRAPHY (%) JUNE DECEMBER JUNE GEOGRAPHY (Rm) 2018 2018 2019 2020 South Africa 8 698 10 200 4 865 5 335 18 20 13 18 Rest of Africa 1 452 1 595 767 819 DEC 3 JUNE 3 59 2018 66 2018 Australia 32 565 29 294 11 828 17 467 U
Slide 42: Outlook: South Africa
Outlook OUTLOOK SOUTH AFRICA • Local construction industry remains distressed • Reduced capacity within the sector as a whole will support remaining industry players over the short- term until recovery • Reduced capacity not healthy for the industry or country over the medium and long-term due to sk
Slide 43: Outlook: Rest of Africa
Outlook OUTLOOK REST OF AFRICA • Replacement of building projects in Africa proving challenging • Limited current activity from mining sector in West Africa however increased enquiries and pricing for gold mining houses in various countries • Award of first contract relating to Lesotho Highlands Wat
Slide 44: Outlook: Australia and United Kingdom
Outlook OUTLOOK AUSTRALIA • Market sentiment remains positive, particularly within infrastructure sectors • Continued focus on project selection and delivery to improve margin performance • Smaller number of larger-scale building projects • Declining residential markets mitigated by focus on mixed-u
Slide 45: Disclaimer
Outlook DISCLAIMER Certain statements contained within this presentation may be classified as forward-looking statements. Words, including but not limited to, “believe”, “anticipate”, “expect”, “seek”, “intend”, “estimate”, “project”, “plan”, or “predict” are used to identify such statements. Forwar
Slide 46: Thank You
THANK YOU
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