forge group ltd · forge group limited completed 2012 with a trifr of 14.20 and an ltifr of 0.55,...
TRANSCRIPT
Forge Group Ltd David Simpson
Chief Executive Officer
Forge Group Limited HY Results 2013
ASX Spotlight - Small to Mid Caps Conference
Thursday 28 February 2013
David Simpson, MD & CEO
COMPANY OVERVIEW
Forge Group Limited (ASX:FGE) has emerged as a leading engineering,
construction and maintenance service provider to the power, infrastructure,
mining, and oil & gas sectors in Australasia and Africa. With a unified brand and
market presence, Forge is well placed for growth.
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FINANCIAL HIGHLIGHTS
A Strong Half-Year Performance – On-Track To Meet Full Year Forecasts
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Solid half-year NPAT up 60% to $33.9
million
Strong revenue growth – up 123% to
$502.9 million
Cash position robust at $187 million
EPS of 39.4 cents – a 54% improvement
First half dividend increased from 6c to
10c since Dec 2011
Order book of $1.04 billion as at 23
January 2013 – underpins FY2013 and
FY2014
Well funded for future growth
HFY13
($m)
HFY12
($m)
Change
(%)
Revenue 502.9 225.9 123
EBITDA 61.8 33.6 84
NPBT 49.0 30.2 62
NPAT 33.9 21.3 60
Cash and Term
Deposits 187.2 93.1 101
HFY13
(cps)
HFY12
(cps)
Change
(%)
Basic EPS 39.4 25.5 54
Diluted EPS 39.4 24.7 59
Dividend 10.0 6.0 67
NB: Table Dec 2011- Dec 2012 Comparative
OPERATING AND STRATEGIC HIGHLIGHTS
Safety, Operations and Strategy Performance Underpinning Growth
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Safety
Significant improvement in safety performance – a key priority for management
Forge Group Limited completed 2012 with a TRIFR of 14.20 and an LTIFR of 0.55, reductions of 22%
and 42% respectively when compared with December 2011.
2012 saw an increase in hours worked (exposure hours) of 75%
Operations
Integration and rebrand of four business units into one distinct brand – now trading as Forge Group
Strong pipeline of work in growth markets, particularly power and mining
Continued to deliver outstanding results in core business areas
Amount of work secured July 1 2012 - 23 January 2013 circa $0.6 billion
Strategy Defined
Continue to grow EPC power and mining services in diversified geographies
Growth in market share in the process infrastructure sector
Developed our asset management services across Australia and Africa
Growth in market share of services to the oil & gas industry
Geographical diversification continuing – growing Forge in new markets
STRENGTHENING SAFETY PERFORMANCE
Driving World Class Safety Standards is an Ongoing Focus
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NB 37% of Man hours from Oct 2012 attributed to the inclusion of Forge Group Power and Forge Group Africa.
Group wide safety management system to support continual improvement in safety culture - implemented in 2012
Advocates safety leadership and focus across the group
New initiative ForgeSafe Cultural & Behavioural Expectations (CBE) Program
Continuation of SafeSpine rollout
RECORD HALF-YEAR REVENUE AND PROFIT
Continued Growth in HY Revenue and Earnings
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UNDERLYING EARNINGS STRONG
Committed to Sustainable Growth
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CONSISTENT RETURNS FOR SHAREHOLDERS
Solid EPS Growth Delivering Long Term Returns for Shareholders
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ORDER BOOK
As at 23 January 2013, Forge Group had an Order Book Value of $1.04 Billion
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By Sector
FINANCIAL POSITION AND FUNDING
Well Positioned For Growth. Minimal Capital Required Going Forward
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Bank Guarantee & Insurance Bond Facilities
Utilised 290 65 346
Available 92 81 14
Total Facility 382 146 162
HFY13
($m)
HFY12
($m)
Change
(%)
Cash and Term Deposits 187.2 93.1 101
Net Cash (Cash less interest bearing loans and borrowings) 161.9 81.8 98
Capital Expenditure (Cash and Hire Purchase) 11.0 10.6 3
FOUR DIVISIONS TO DRIVE GROWTH
Diversified Service Provider Across Range of Growth Sectors
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BROADENING OUR GEOGRAPHICAL PRESENCE
Pursuing Growth Opportunities in East Coast of Australia and Africa
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GROWING OUR TEAM
Operating Under One Unified Forge Group Brand
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Integration and rebrand of four business units
completed – one culture
Appointment of senior executives to
complement strategy and growth plans
Implemented incentive plans with links to
financial performance and shareholder returns
Continued to focus on people to optimise the
new integrated operating model of Forge Group
Embrace our values and support our strategy
through attraction, development and retention of
our people at all levels
DIVISIONAL REVENUE SUMMARY
Business Unit Contributions
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*Forge Group Power (CTEC) was acquired Jan 2012.
**This is a newly created entity which had no activity prior to 31 December 2012.
HFY13
($m)
HFY12
($m)
Change
(%)
Forge Group Minerals And Resources 55.0 52.6 5
Forge Group Power* 202.5 Nil N/A
Forge Group Construction (incl Africa) 344.9 220.0 57
Forge Group Asset Management** Nil Nil N/A
Internal Eliminations (99.5) (46.7) 112
Total 502.9 225.9 123
FORGE GROUP MINERALS AND RESOURCES
Providing Engineering; Process Design; Project Management Services Including
Feasibility Studies, Front End Engineering Design, EPC Contract Execution; And Turnkey
Project Solutions.
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HIGHLIGHTS
Completion DeGrussa Copper Project
Completion Shark Bay Salt Washplant (Feb 2013)
Strong tender pipeline
MAJOR PROJECTS DeGrussa Copper Project, EPC, Sandfire Resources,
Western Australia
Obuasi Gold Mine, EPC, AngloGold Ashanti, Ghana,
Africa
Shark Bay Salt Washplant, Design and Construction,
Shark Bay Resources, Western Australia
REVENUE* SALES CONTRIBUTION %*
*Based on operating segment pre-consolidation revenues.
FORGE GROUP POWER
Forge Group Power Is A Turnkey Project Provider To The Energy And Utilities Sectors
Specialising In Gas Turbine Power Plants.
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REVENUE*
SALES CONTRIBUTION*
MAJOR PROJECTS Diamantina 242 MW Combined Cycle Power Station,
EPC, DPS LTD, Queensland, Australia
Cape Lambert 120 MW, Combined Cycle Power
Station, EPC, RTIO, Western Australia
West Angelas Power Station 100MW Open Cycle Power
Station, EPC, RTIO, Western Australia
HIGHLIGHTS $505 million contract awards 1 July 2012 - 23 January
2013
Chief Executive promoted internally, former Chief
Executive assumes Chief Development Officer role
96% increase in Employees since July 2012
Completion McKee 100MW Open Cycle Power Plant,
NZ
Established Thailand Base
*Based on operating segment pre-consolidation revenues.
FORGE GROUP CONSTRUCTION
Forge Group Construction is an Award Winning Multi-disciplinary Contractor Providing a
Complete Suite of Construction Services to All Sectors
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HIGHLIGHTS
Awarded $82 million in new contracts
Completion of Solomon Iron Ore Primary Crushing
Hubs
Solid tendering pipeline Power, Minerals &
Resources
REVENUE*
SALES CONTRIBUTION*
MAJOR PROJECTS Solomon Iron Ore Processing Facility, Civil and
Concrete Works, FMG, Western Australia
Obuasi Gold Mine, EPC services, Anglo Gold Ashanti,
Ghana, Africa
West Angelas and Brockman Fuel Hubs, EPC, RTIO,
Western Australia
*Based on operating segment pre-consolidation revenues.
FORGE GROUP ASSET MANAGEMENT
Forge Group Provides A Broad Range Of Asset Management Services Across Our
Customer’s Asset Life Cycles
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Newly created entity which had no activity prior to 31 December 2012
Supports Forge Group’s unique ability to provide end to end project solutions
Maintenance services from current contracts to flow into Asset Management Business Unit.
MAJOR PROJECTS
South Hedland Power Station, Operations and Maintenance Contract
Water Corporation, Asset Management Program
On-going Navy Maintenance
OUTLOOK - FORGE GROUP PERFORMANCE
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On-track to achieve forecasted FY2013 NPBT of between $90 million - $100 million
Full year revenue of between $950 million to $1 billion
Revenue and earnings evenly weighted between first and second half
Order book of $1.04 billion as at 23 January 2013
Solid bidding pipeline underpins growth
Continue geographic diversity
– Blue chip partners in new markets
– Broadening sector focus
– Expanding existing capability into Eastern States and strengthening African presence
Continued emphasis on growing asset management business
$187 million in cash and term deposits – well placed to take advantage of growth opportunities
DISCLAIMER
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This presentation has been prepared by the management of Forge Group Ltd (the Company)
for the benefit of brokers, analysts and investors and not as specific advice to any particular
party or person. The information is based on publicly available information, internally
developed data and other sources. Where an opinion is expressed in this document it is based
on assumptions and limitations mentioned herein and are an expression of present opinions
only. No warranties or representations can be made as to the accuracy, validity, completeness
or reliability of the information. The company disclaimers and excludes all liability (to the extent
permitted by law), for loses, claims, damages, costs and expenses of whatever nature arising in
any way out of or in connections wit the information, its accuracy, completeness or by reason of
reliance by any person on any of it. Where the Company expresses or implies an expectation
or belief as to the success of future developments, such expectations or belief is expressed in
good faith and believed to have a reasonable basis. However, such forecasts are subject to
risks, uncertainties and other factors which could cause actual results to differ materially from
future results expressed, projected or implied by forecasts made in this presentation. The
Company does not have any obligation to advise any person if it becomes aware of any
inaccuracy in or from any forecast or to update such forecast.
THANK YOU & QUESTIONS
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Forge Group Ltd
45 Stirling Highway, Nedlands, Western Australia, 6009
T (08) 6389 8500
F (08) 6389 8599
Forge Group Ltd David Simpson
Chief Executive Officer