Slide 1: 2018 Full-Year Results Presentation
2018 FULL-YEAR RESULTS PRESENTATION 26 September 2018
Slide 2: Agenda
AGENDA 2 STRATEGIC FINANCIAL OPERATIONAL OUTLOOK OVERVIEW ANALYSIS REVIEW Eric Diack Adrian Macartney Eric Diack Eric Diack Executive Chairman Chief Financial Officer Executive Chairman Executive Chairman AUDITED GROUP RESULTS FOR THE YEAR-ENDED 30 JUNE 2018 | 26 SEPTEMBER 2018
Slide 3: Strategic Overview
STRATEGIC OVERVIEW
Slide 4: A Busy Year
A BUSY YEAR 4 Solid Balance Sheet Platform The Perfect Storm: 2017 Strategic Actions: 2018 Post Year End • Executive Chairman Leadership Down • GLTA Changes Gross debt R1.5bn • Manufacturing Robust • Capital markets transaction Strategic • Disposals Review • Operating performance Cash Up QCLNG R493m
Slide 5: Salient Features
SALIENT FEATURES 5 ▪ Sustainable capital structure achieved ▪ R493m rights issue completed ▪ Early redemption of R2bn convertible bond ▪ Bank debt renegotiated and termed out to 2020 ▪ Gross debt/equity improved to 40% ▪ Liquidity improved and stabilised ▪ Non-core asset sales of R254m announced ▪ M
Slide 6: Strategic Review
STRATEGIC REVIEW 6 Significant issues highlighted by strategic review What is being done to address these issues? ▪ In February 2018, Aveng announced the outcome of its strategic review ✓ Complex business with five operating groups ▪ Core operations - Moolmans and McConnell Dowell and 24 business un
Slide 7: Stayed True to the Strategy
STAYED TRUE TO THE STRATEGY 7 • Implemented R500m rights offer in June 2018 Capital markets 1 Rights offer • R493m of capital raised in rights offer, representing 98,6% participation by shareholders transaction • New debt instrument of R460m issued and proceeds used to execute a specific buy-back of
Slide 8: Illustrative Impact of Capital Markets Transaction and Completed Disposals
ILLUSTRATIVE IMPACT OF CAPITAL MARKETS TRANSACTION AND COMPLETED DISPOSALS 8 R’m • The early bond redemption has reduced Aveng’s net debt by 50% from R3.3bn to R1.6bn • The early bond redemption was critical for the future sustainability of the Group * Above graphic is purely illustrative and exclud
Slide 9: Where to From Here?
WHERE TO FROM HERE? 9 ▪ Completed capital markets transaction and renegotiation of bank debt provides strong platform ▪ Key priority is to enhance operational performance, deliver growth and unlock value from core assets ▪ Disposal of non-core assets for value is critical ▪ Focus on people, customer
Slide 10: Financial Analysis
FINANCIAL ANALYSIS
Slide 11: Earnings
EARNINGS 11 FY 2018 FY 2017 Results Rm Rm Revenue 30 580 23 456 Gross margin % 5.9 (13.4) Operating expenses (2 292) (2 305) Net operating loss (401) (5 395) Net interest (439) (444) Impairment of PPE, intangibles and FV adjustment ( 2 300) (278) Loss for the period ( 3 519) (6 739) McConnell Dowell
Slide 12: Segmental Results
SEGMENTAL RESULTS 12 Revenue Net operating earnings / (loss) Adjusted * Adjusted * FY 2018 FY 2018 FY 2017 FY 2017 Rm Rm Rm Rm McConnell Dowell 11 716 9 293 103 (129) Moolmans 4 713 4 184 11 219 Aveng Grinaker-LTA 6 622 6 080 (367) (188) Aveng Manufacturing 2 132 2 444 (196) 51 Aveng Steel 5 221 5 4
Slide 13: Statement of Financial Position
STATEMENT OF FINANCIAL POSITION 13 Jun’18 Jun’17 Jun’18 Jun’17 Rm Rm Rm Rm ASSETS 15 070 17 687 LIABILITIES & EQUITY 15 070 17 687 LIABILITIES Goodwill and intangible assets 147 613 Borrowings and liabilities 3 287 3 066 Property, plant and equipment 3 010 4 611 Working capital 4 098 7 260 Investmen
Slide 14: Working Capital
WORKING CAPITAL 14 Jun’18 * Jun’17 Rm Rm Inventory 2 045 2 085 Trade and other receivables 1 580 1 840 Amounts due from contract customers 3 964 4 468 Current trade and other payables (5 722) (5 909) Amounts due to contract customers (1 489) (1 351) Net working capital 378 1 133 * Reflects working c
Slide 15: Uncertified Revenue and Claims
27 UNCERTIFIED REVENUE AND CLAIMS 15 Jun’18 * Dec’17 Jun’17 FY2018 Rm * Rm Rm Rm C&E C&E Manufacturing Other & SA and Australia Mining & Processing eliminations TOTAL Uncertified claims and variations 1 646 1 673 1 760 ROA and Asia Contract claims 31 1 191 75 - (55) 1 242 Contract contingencies (490
Slide 16: Movement in Net Debt
MOVEMENT IN NET DEBT 16 590 223 22 (95) (98) (288) (495) (1 070) (1 211) Net debt 30 Cash from Working Net finance Taxation Net capital Borrowings Other & Net debt 30 Jun ‘17 operations capital charges expenditure in Held for exchange Jun ‘18 change Sale impact AUDITED GROUP RESULTS FOR THE YEAR-END
Slide 17: Liquidity
LIQUIDITY 17 Jun’18 Dec’17 Jun’17 Jun’18 Dec’17 Jun’17 Rm Rm Rm Rm Rm Rm Net Cash 2 076 2 439 1 996 Net Cash 2 076 2 439 1 996 South African operations 633 793 759 Less: McConnell Dowell 1 443 1 646 1 237 Joint operations (568) (711) (625) Advance payments (85) (142) (146) Borrowings 3 287 2 994 3 0
Slide 18: Illustrative Extract of Statement of Financial Position
ILLUSTRATIVE EXTRACT OF STATEMENT OF FINANCIAL POSITION (SUBSEQUENT TO RIGHTS ISSUE AND BOND CONVERSION) 18 Jun’18 Jun’18 adjusted Rm Rm Gross Debt 3 309 1 830 Reduced interest burden Cash 2 076 2 569 Excludes proceeds of property sales Net cash / (debt) (1 233) 739 Overall effect R2bn Equity 2 594
Slide 19: Operational Review
OPERATIONAL REVIEW
Slide 20: McConnell Dowell | Overview
McCONNELL DOWELL │ Overview 20 McConnell Dowell ▪ Returned to profitability and positive cashflow in FY18 ▪ Significant turnaround in operational and financial performance ▪ Reaffirmed MCD strategy: Positioned for sustained growth both in core market sectors and emerging opportunities ▪ Good progres
Slide 21: McConnell Dowell
McCONNELL DOWELL 21 Adjusted * Adjusted * FY 2018 FY 2017 FY 2018 FY 2017 FY 2017 FY 2017 Rm Rm AUDm AUDm Rm AUDm Revenue 11 716 6 183 9 293 1 170 589 906 Operating Expenses (827) (810) (810) (83) (79) (79) EBIT 103 (4 370) (129) 10 (445) (12) OFCF 202 (583) (583) 17 (68) (68) Completed projects: Ne
Slide 22: McConnell Dowell Outlook and Order Book
McCONNELL DOWELL 22 Outlook Two year order book (AUDm) ▪ Solid growth expected in energy, water, rail, roads and airport sectors across Australia 310 Australia, New Zealand and Southeast Asia ▪ Currently AUD1.25bn in preferred/ECI and a further AUD1.6bn in live tenders Built Environs 67 ▪ Continued
Slide 23: Moolmans | Overview
MOOLMANS │ Overview 23 Moolmans ▪ Continues to enjoy strong market position - good track record and resilience in tough commodity markets ▪ Extremely poor contract performance in H2 2018 ▪ Loss-making contracts exited or renegotiated ▪ Comprehensive, Group-led turnaround intervention underway ▪ Good
Slide 24: Moolmans
MOOLMANS 24 FY 2018 FY 2017 TWO YEAR ORDER BOOK BY COMMODITY % change Rm Rm Platinum, 2% Diamonds, 3% Revenue 4 713 4 184 13 Gold, 12% Manganese, 22% Operating Expenses (227) (197) (10) Zinc, 18% EBIT 11 219 (95) Iron Ore & Waste, Cash flow from operating 17% 375 458 (10) activities Nickel, 22% Coal
Slide 25: Moolmans Outlook
MOOLMANS 25 Outlook ▪ Moolmans’ market-leading reputation places it in a strong position to pursue Two Year Revenue secured longer-term growth strategy in selected markets in Africa order book FY19 (R’m) (%) ▪ Recovery expected to be gradual throughout the year Aveng Mining 5 273 88% ▪ 88% of revenu
Slide 26: Construction & Engineering | South Africa and Rest of Africa | Overview
CONSTRUCTION & ENGINEERING │ South Africa and rest of Africa │Overview 26 Aveng Grinaker-LTA ▪ Despite losses in two BUs, Aveng Grinaker-LTA generated positive free cash flow ▪ Poor performance by Building ▪ Building South, M&E and Aveng Water sustained positive operational results ▪ Three of five m
Slide 27: Aveng Grinaker-LTA
AVENG GRINAKER-LTA 27 Adjusted * FY 2018 FY 2017 Rm Rm % change Revenue 6 622 6 080 9 Operating Expenses (353) (452) 24 EBIT (367) (198) (85) OFCF 27 422* (94) * This includes the proceeds from the disposal of the infrastructure investments of R821 million Current contracts: New contract awards: Old
Slide 28: Aveng Grinaker-LTA Outlook
AVENG GRINAKER-LTA 28 Two year Outlook order book (Rm) ▪ Manage Civil Engineering contracts to completion in line with revised objectives Aveng Grinaker-LTA Building & Coastal 2 072 ▪ Subdued market conditions expected to persist in the medium-term Aveng Grinaker-LTA Mechanical & Electrical 1 079 ▪
Slide 29: Manufacturing & Processing | Aveng Manufacturing | Overview
MANUFACTURING & PROCESSING │ Aveng Manufacturing │ Overview 29 Aveng Manufacturing ▪ Overall operating loss for Manufacturing group ▪ DFC and ACS were profitable, other business units that are exposed to mining and rail sectors experienced headwinds ▪ Focused strategy to address underperformance, in
Slide 30: Manufacturing & Processing | Aveng Manufacturing
MANUFACTURING & PROCESSING │ Aveng Manufacturing 30 FY 2018 FY 2017 REVENUE BY INDUSTRY Rm Rm Power Other 12% Revenue 2 132 2 444 11% Rail / Transport Operating Expenses (335) (298) 12% Mining 33% EBIT (196) 51 FY2018 General OFCF (107) (76) Infrastructure Water & 24% Environmental 8% Power Other 2%
Slide 31: Aveng Manufacturing Outlook
MANUFACTURING & PROCESSING │ Aveng Manufacturing 31 Outlook ▪ Market conditions are expected to remain challenging in medium-term ▪ Focus on reducing overheads, consolidation of manufacturing footprint and improved operational performance and marketing functions ▪ Improvement initiatives underway ex
Slide 32: Manufacturing & Processing | Aveng Trident Steel | Overview
MANUFACTURING & PROCESSING │ Aveng Trident Steel │ Overview 32 Aveng Trident Steel ▪ Weak South African economic environment saw minimal investment in large-scale infrastructure development, particularly in construction and manufacturing sectors ▪ Volumes slightly behind previous year, however, aver
Slide 33: Manufacturing & Processing | Aveng Trident Steel
MANUFACTURING & PROCESSING │ Aveng Trident Steel 33 FY 2018 FY 2017 Rm Rm Revenue 5 221 5 492 Operating Expenses (278) (305) EBITDA 40 (22) EBIT 29 (54) OFCF 3 59 Volumes (kt) 433 490 Average price 12 255 11 000 (R) (P/ton) Aveng Steel Products AUDITED GROUP RESULTS FOR THE YEAR-ENDED 30 JUNE 2018 |
Slide 34: Aveng Trident Steel Outlook
MANUFACTURING & PROCESSING │ Aveng Trident Steel 34 Outlook ▪ Improved international steel prices expected despite over-capacity ▪ South African steel demand continues to be hampered by lack of infrastructure spend ▪ Increased competition in South African primary steel market with commissioning of s
Slide 35: Safety, Health & Environment
30 SAFETY, HEALTH & ENVIRONMENT 35 SHE Overview 5 year AIFR trend (per 200 000 hours) Fatalities ▪ Regrettably, one fatality recorded for the year: Mr Anele Nwelende 6 ▪ Improvement in All Injury Frequency Rate (AIFR) to 2.43 ▪ Improvement in Total Recordable Injury Frequency Rate (TRIFR) to 0.91 5
Slide 36: Outlook
OUTLOOK
Slide 37: Two Year Order Book & FY19 Secured Work
TWO YEAR ORDER BOOK & FY19 SECURED WORK 37 Secured Work Two year order book (%) FY2018 FY2017 FY2019 Rm Rm % McConnell Dowell 7 704 15 250 McConnell Dowell 62% Moolmans 5 273 7 754 Moolmans 88% Aveng Grinaker-LTA 4 682 6 832 Aveng Grinaker-LTA 62% Aveng Manufacturing 314 79 TOTAL for Group 67% TOTAL
Slide 38: Outlook and Prospects
OUTLOOK AND PROSPECTS 38 ▪ Strengthened capital structure provides solid platform to continue execution of strategic plan ▪ Strong focus on liquidity management ▪ Completion of majority of non-core asset disposals targeted for June 2019 o Focus on optimising performance of non-core assets until sold
Slide 39: Annexures
ANNEXURES
Slide 40: Annexure | Revenue | Construction & Engineering
ANNEXURE | REVENUE │ Construction & Engineering 40 Adjusted * FY 2018 Adjusted * FY 2018 Aveng Grinaker-LTA McConnell Dowell FY 2017 Rm FY 2017 Rm AUDm AUDm Aveng Grinaker-LTA Building 3 630 3 093 Australia 587 328 and Coastal Aveng Grinaker-LTA 1 569 1 366 Civil Engineering New Zealand and Pacific
Slide 41: Revenue | Manufacturing & Processing and Mining
REVENUE │ Manufacturing & Processing and Mining 41 FY 2018 FY 2017 FY 2018 FY 2017 Aveng Manufacturing Aveng Steel Rm Rm Rm Rm Aveng ACS 444 408 Aveng Trident Steel 5 221 4 988 Aveng DFC 452 481 Aveng Steeledale (sold)* - 504 Aveng Duraset 427 454 Total 5 492 Aveng Infraset 644 744 *Aveng Steeledale
Slide 42: McConnell Dowell
MCCONNELL DOWELL 42 TWO YEAR ORDER BOOK FY2018 REVENUE BY GEOGRAPHY FY2018 FY2017 % Australia AUDm AUDm change 3% Australia 310 675 (54) 15% Southeast Asia 59% New Zealand 150 213 (30) New Zealand 23% Southeast Asia 226 408 (45) Middle East Middle East & other 8 23 (65) Built Environs 67 198 (66) TO
Slide 43: Aveng Grinaker-LTA
AVENG GRINAKER-LTA 43 TWO YEAR ORDER BOOK FY2018 REVENUE BY GEOGRAPHY FY2018 FY2017 % Rm Rm change 3% Aveng Grinaker-LTA Building & Coastal 1 406 3 641 (61) South Africa Aveng Grinaker-LTA Civil Engineering 1 176 1 492 (21) Rest of Africa Aveng Grinaker-LTA Mechanical & Electrical 1 079 1 211 (11) 9