Wilson Bayly Holmes-ovcon Limited · JSE:WBO
Wilson Bayly Holmes-ovcon — H1 2018 Earnings Presentation
42 slides from Wilson Bayly Holmes-ovcon's earnings presentation, February 2018
Slide 1: Unaudited Interim Results for the Six Months Ended 31 December 2017
UNAUDITED INTERIM RESULTS FORTHE SIX MONTHS ENDED 31 DECEMBER 2017
Slide 2: Contents
CONTENTS SUBJECT PRESENTER Welcome Louwtjie Nel Overview and highlights Louwtjie Nel Operational review Building and civil engineering Roads and earthworks Louwtjie Nel Australia United Kingdom Financial review Charles Henwood Order book and project pipeline Louwtjie Nel Outlook Louwtjie Nel
Slide 3: Overview and Highlights
OVERVIEW AND HIGHLIGHTS
Slide 4: Six Months in Perspective
Overview and highlights SIX MONTHS IN PERSPECTIVE SOUTH AFRICA • Low-growth environment and political instability create uncertain business environment • Building markets subside further • Civil engineering markets showed little sign of improvement – outlook slightly better • Mining infrastructure p
Slide 5: Six Months in Perspective
Overview and highlights SIX MONTHS IN PERSPECTIVE AUSTRALIA • Market sentiment remains positive, driven by continued Asian demand • Strong revenue growth of 29% • Revenue growth of 31% in Australian dollar terms • Well-diversified business • One under-performing building project in Sydney impacts pr
Slide 6: United Kingdom
Financial review UNITED KINGDOM BYRNE GROUP SUMMARISED • Low volumes of work experienced due to delays PERFORMANCE (Rm) in contract awards H1 2018 • Operational performance satisfactory Revenue 1 084 • Restructuring results in once-off additional costs Operating loss (68) • Three key projects secure
Slide 7: Revenue and Operating Profit
Overview and highlights REVENUE (Rm) OPERATING PROFIT (Rm) 30 000 1 000 750 20 000 18 087 500 16 491 569 15 276 15 374 15 416 495 3,3% 510 510 471 10 000 3,9% 4,0% 2.8% 3,1% 250 - - H1 2016 H2 2016 H1 2017 H2 2017 H1 2018 H1 2016 H2 2016 H1 2017 H2 2017 H1 2018 • Revenue growth of 17% (H1:2017 1%) •
Slide 8: Safety
Overview and highlights SAFETY LTIFR (Number of lost time injuries per million man hours) • LTIFR unchanged at 0,80 from June 2017 2.00 • Further improvement in safety performance from African operations 1.50 o LTIFR improves from 0,54 to 0,50 o Reflects impact of proactive safety processes 1.00 • O
Slide 9: Transformation and Empowerment
Overview and highlights TRANSFORMATION AND EMPOWERMENT PROCUREMENT • Inconsistent implementation of PFMA guidelines by public entities • Additional empowerment requirements imposed by individual SOEs • Increase in joint ventures with empowered partners to meet requirements CONSTRUCTION SECTOR CODES
Slide 10: Building and Civil Engineering
BUILDING AND CIVIL ENGINEERING
Slide 11: Geographic Footprint
Building and civil engineering GEOGRAPHIC FOOTPRINT REVENUE (%) 8 7 H1 H1 2018 2017 92 93 OPERATING PROFIT (%) 19 20 H1 H1 81 2018 2017 80 Rest of Africa South Africa
Slide 12: Six Months in Perspective
Building and civil engineering SIX MONTHS IN PERSPECTIVE BUILDING • Declining building markets result in lower overall revenue from building divisions • Lower activity felt mostly in Gauteng • Coastal building divisions able to maintain activity levels over period • Retail sector is quiet with comme
Slide 13: 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 3 894 3 916 186 3 804 184 5,0% 3 491 4,8% 168 169 5,3% 4,4% 4,3% 2 000 100 - 0 H1 2016 H2 2016 H1 2017 H2 2017 H1 2018 H1 2016 H2 2016 H1 2017 H2 2017 H1 2018 • Decline in revenue of 10% (H1 :20
Slide 14: Order Book
Building and civil engineering ORDER BOOK BUILDING AND CIVIL AT TO BEYOND ORDER BOOK 6% ENGINEERING (Rm) % JUNE AT DEC JUNE JUNE • Order book levels maintained GROWTH 2017 2017 2018 2018 • Select opportunities remain available in South Africa 0,9 6 738 6 798 3 310 3 488 individual building sectors •
Slide 15: Roads and Earthworks
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Slide 16: Geographic Footprint
Roads and earthworks GEOGRAPHIC FOOTPRINT REVENUE (%) 39 27 H1 H1 61 2018 2017 73 OPERATING PROFIT (%) 34 H1 H1 28 66 2018 72 2017 Rest of Africa South Africa
Slide 17: Six Months in Perspective
Roads and earthworks SIX MONTHS IN PERSPECTIVE SOUTH AFRICA • Strong performance on the back of order book growth in 2017 • Road construction levels remain high comprising 40% of overall activity • Large-scale road projects in Mpumalanga, the Free State, Eastern Cape and Western Cape • Roadspan surf
Slide 18: Revenue and Operating Profit
Roads and earthworks REVENUE (Rm) OPERATING PROFIT (Rm) 5 000 350 300 4 000 250 3 000 200 2 829 198 190 2 000 2 470 150 8,0% 6,7% 2 362 144 1 972 2 119 149 134 100 6,3% 6,8% 6,8% 1 000 50 - 0 H1 2016 H2 2016 H1 2017 H2 2017 H1 2018 H1 2016 H2 2016 H1 2017 H2 2017 H1 2018 • Revenue growth of 34% (H1:
Slide 19: Order Book
Roads and earthworks ORDER BOOK ROADS AND AT TO BEYOND ORDER BOOK 5% EARTHWORKS (Rm) % JUNE AT DEC JUNE JUNE • Increased order book levels of FY17 have been GROWTH 2017 2017 2018 2018 maintained South Africa 0,38 4 969 4 988 1 938 3 050 • Change in mix of public / private work – now 40% public and 6
Slide 20: Australia
AUSTRALIA
Slide 21: Geographic Footprint
Australia GEOGRAPHIC FOOTPRINT REVENUE (%) 12 9 H1 H1 88 2018 91 2017 OPERATING PROFIT (%) 1 30 H1 H1 70 2018 99 2017 Infrastructure Building
Slide 22: Six Months in Perspective
Australia SIX MONTHS IN PERSPECTIVE BUILDING • Building markets continue to offer opportunities • Strong growth delivered on the back of increased order book in FY17 • Melbourne comprises 44% of overall building revenue with good volumes of work in other states • Multi-level residential projects and
Slide 23: Revenue and Operating Profit
Australia REVENUE (Rm) OPERATING PROFIT (Rm) 300 15 000 200 10 000 212 11 103 172 2,1% 9 429 9 975 1,8% 143 8 684 8 625 100 128 1,3% 5 000 1,5% 101 1,2% - 0 H1 2016 H2 2016 H1 2017 H2 2017 H1 2018 H1 2016 H2 2016 H1 2017 H2 2017 H1 2018 • Revenue growth of 29% (H1:2017 0%) • Operating profit growth
Slide 24: Order Book
Australia ORDER BOOK AUSTRALIA (Rm) AT TO BEYOND ORDER BOOK 23% % JUNE AT DEC JUNE JUNE • High volume of building work maintained GROWTH 2017 2017 2018 2018 • Diversification of building order book entrenched Building 1,2 29 740 30 108 7 753 22 355 • New roadwork project boosts infrastructure order
Slide 25: Financial Review
FINANCIAL REVIEW
Slide 26: Financial Performance
Financial review FINANCIAL PERFORMANCE KEY FINANCIAL INDICATORS TARGET/ GROWTH H1 2018 H1 2017 Revenue growth % >10 17,3 0,9 Operating profit margin % 3 – 4,5 2,8 3,1 Earnings per share cents 87% 737 398 Adjusted earnings per share cents 4% 737 709 Headline earnings per share cents 84% 727 398 Adjus
Slide 27: Contribution by Geography
Financial review CONTRIBUTION BY GEOGRAPHY % REVENUE (%) REVENUE (Rm) GROWTH H1 2018 H1 2017 South Africa (6,1) 5 558 5 921 31 39 Rest of Africa 64,0 1 427 870 H1 H1 61 2018 56 2017 Australia 28,7 11 103 8 625 8 5 TOTAL 17,3 18 087 15 416 South Africa Rest of Africa Australia OPERATING PROFIT % % (R
Slide 28: Financial Performance
Financial review FINANCIAL PERFORMANCE KEY FINANCIAL NUMBERS AND RATIOS % CHANGE H1 2018 H1 2017 Revenue 17,3 18 087 15 416 Operating profit before non-trading items 8,1 510 471 Settlement agreement expense – (170) Gain on loss of control / Profit on disposal of shares 5 12 Share-based payments expe
Slide 29: Financial Position
Financial review FINANCIAL POSITION 6 400 660 6 200 6 000 5 800 5 600 5 400 5 200 5 000 128 4 800 4 600 (1 462) (226) 4 400 5 546 (198) (38) 4 200 (5) (97) (50) 4 000 3 800 3 600 4 256 3 400 3 200 3 000 Cash & cash Operating Working Net finance Taxation paid Dividends Net cash flow Net cash flow For
Slide 30: Financial Position
Financial review FINANCIAL POSITION JUNE PROPERTY, PLANT AND EQUIPMENT (Rm) H1 2018 2017 Property, plant and equipment 1 636 1 635 Depreciation 122 211 JUNE CAPITAL EXPENDITURE APPROVED 2018 H1 2018 2017 Replacement 303 139 262 Expansion 52 11 47 TOTAL 355 150 309 • Fleet size maintained at FY17 lev
Slide 31: Financial Position
Financial review FINANCIAL POSITION JUNE INVESTMENTS (Rm) H1 2018 2017 Investments 29 0,3 Investments in associates 671 650 • Investment of AU$3m in new property development in Australia • Further AU$4,1m invested in Precinct 2 of Caulfield development • Investments in other associates includes, R57
Slide 32: Financial Position
Financial review FINANCIAL POSITION JUNE TAX (Rm) H1 2018 2017 Net deferred tax asset 601 575 Net current tax asset 125 123 Deferred tax asset consists of: • Asset of R39m raised on future settlement agreement expense (June 2017: R42m) • Tax losses of R115m (June 2017: R114m) • Timing differences of
Slide 33: Order Book and Project Pipeline
ORDER BOOK AND PROJECT PIPELINE
Slide 34: Consolidated Order Book
Order book and project pipeline CONSOLIDATED ORDER BOOK TO ORDER BOOK BY SEGMENT (%) AT JUNE AT DEC JUNE SEGMENT (Rm) 2017 2017 2018 2019 15 16 Building and civil 7 189 7 614 3 628 3 986 engineering DEC 11 JUNE 14 Roads and 6 161 5 892 2 526 3 366 74 17 70 17 earthworks Australia 31 526 38 904 9 954
Slide 35: Consolidated Order Book
Order book and project pipeline CONSOLIDATED ORDER BOOK TO ORDER BOOK BY GEOGRAPHY (%) AT JUNE AT DEC JUNE GEOGRAPHY (Rm) 2017 2017 2018 2019 22 27 South Africa 11 707 11 786 5 248 6 538 DEC 3 JUNE 4 Rest of Africa 1 643 1 720 906 814 74 17 69 17 Australia 31 526 38 903 9 954 28 950 TOTAL 44 876 52
Slide 36: Project Pipeline
Order book and project pipeline PROJECT PIPELINE SOUTH AFRICA Rm SOUTH AFRICA Building 19 492 • Building • Civil engineering Public 3 246 35 38 • Roads and earthworks 2018 Private 16 246 Civil engineering 14 155 27 Public 8 379 Private 5 776 SOUTH AFRICA • Public Roads and earthworks 18 189 • Privat
Slide 37: Project Pipeline
Order book and project pipeline PROJECT PIPELINE AUSTRALIA Rm AUSTRALIA 16 • Building Building 58 961 • Infrastructure and Civil engineering 11 558 2018 civil engineering 84 TOTAL 70 519 SUMMARY Rm 11 SUMMARY Building and civil engineering 44 659 27 • Building and civil engineering • Road and earthw
Slide 38: Outlook
Outlook OUTLOOK SOUTH AFRICA • Outlook for remainder of FY18 stable with current volume of work • Country risk appears to have improved significantly since 31 December • Any potential positive impact on the industry will take time to materialize • Building margins under pressure in current market •
Slide 39: Outlook
Outlook OUTLOOK AUSTRALIA • Market sentiment remains positive • Asian investment into Australia is significant • Building markets are currently strong • Multi- level residential projects are being replaced with mixed-use hotel/residential developments • Successful execution of large-scale road proje
Slide 40: Outlook
Outlook OUTLOOK UNITED KINGDOM • UK markets have been strong for some time, particularly London and the North West • Limited impact from BREXIT at this stage • Strong demand for residential and infrastructure developments • Despite a brief lull in the order intake through FY18, the Byrne Group has r
Slide 41: 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 42: Thank You
THANK YOU
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