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1. Presentation to the JSE / PSG. September 2010. 2. Agenda. Introduction. Results to 28 February 2010. Outlook. Introduction. 3. What does Protech do?. Protech is a bulk earthworks and civil engineering group that offers fast-track contracting. Its business offering includes:. - PowerPoint PPT Presentation
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September
2010
Presentation to the JSE / PSG
1
Outlook
2
Agenda
Introduction
Results to 28 February 2010
Introduction
3
What does Protech do?
Introduction
Site clearance Demolitions Fast-track bulk
earthworks Basement excavation Canal/river
rehabilitation Earthworks for
commercial, industrial and retail developments
Crushing and screening
Road construction Community
infrastructure services Dams and attenuation
ponds Airports and airfields Harbour and
reclamation works
Mine infrastructure development
Earthworks Topsoil and
overburden removal Rehabilitation Slime dams Dump reclamation Materials handling Contract mining
Plant hire and logistics Geotechnical laboratory and survey servicesImpact compaction Readymix concrete and pumping services
Protech is a bulk earthworks and civil engineering group that offers fast-track contracting. Its business offering includes:
Bulk earthworks Roads and civil works
Mining
4
What gives Protech the edge?
Introduction
Reputation as fastest in sector― Guaranteed to be onsite in 24-48 hrs― 100% track record for finishing in time or before time― Proactively manage adversities to improve completion dates
Expertise & experience (21 yrs)
Fast trackspecialists
Proven quality assurance
Compete on reputation,
not price
Margins underpinned by:1.Cherry-picking work2.Plant renewal policy
Above average margins
A focused producer of efficiency
Quality client base
Blue chip client base: bad debts < 1% of revenue
Introduction
5
Protech Offices in Botswana, Zambia, Zimbabwe, Namibia and Tanzania
6
Rm
PBT remainswell above F2008 levels following the peak of the
construction cycle in F2009
5-year Performance: Profit Before Tax
Note: PBT used as a measure as it includes all historic acquisition funding costs
Introduction
Outlook
7
Results to 28 February 2010
Results to 28 February 2010
Introduction
Agenda
Revenue R748,8m
Operating profit R118,6m
Operating margin 15.8% vs 22.2%
EPS* 20,9cps
Maiden dividend declared 5x covered 4,0cps
Market capitalisation** R275,5m
P:E ratio** 3.7 times
Results to 28 Feb 2010
Results to 28 February 2010
* HEPS of 20,2cps declined by 22% as it excludes profit on sale of plant & equipment (i.t.o. plant replacement policy)** As at 31 August 2010
8
18%Pleasing in light of results from most other construction sector players
24%
7%
6 p.p.
18%
Results to 28 February 2010
9
30%
20%
50%
Affected by 3 main factors
Results to 28 Feb 2010
Plant policyFleet age & quality
‒ Plant max. 2 years old‒ Demo-quality by end of term‒ Protects against state of the
equipment market Balance sheet protection – no
impairments‒R3m profit on sale of equipment Competitive advantage: Fleet averages
1 year old vs 6 yr industry avg
High efficiencies secure above-average margins Reputation as
– Providers of innovative solutions for clients
– Ultra-efficient fast-track specialists Won contracts worth R1,5bn without
pricing stupidlyStill have margin headroom
Ability to quickly shift sectorsSector flexibility combats market conditions Successful shift into coal mining sector
Quality earningsBlue-chip clientele & well-entrenched risk policy Bad debts only 0,08% of revenue
10
Results to 28 February 2010
Results to 28 Feb 2010Earnings decline limited through unique
business model
11
Results to 28 February 2010
Results to 28 Feb 2010
Strong cash flow
Capital intensive business, therefore traditionally high gearing
― Net gearing reduced to 57%
― Net interest cover of 7,6x vs. minimum target of 5x–6x
― However, gearing will increase in line with capex requirements for specific contracts won
― There is sufficient equity in plant & equipment to cover the debt (carrying value of PPE: R374m vs debt of R265m)
Statement of financial position
12
Outlook
Outlook
Results to 28 February 2010
Introduction
Agenda
Revenue*
Operating Profit*
F2010R769,3m
F2009R708,7m
Geotechnical
Contracting
Readymix
Divisional contributions to revenue & operating profit
F2010R117,6m
F2009R150,6m
Readymix = R5,4m loss in F2010
13
Outlook
* Before eliminations
Outlook: Contracting 14
Outlook
1st
2nd
3rd
Non mining work has dried up; unlikely to show much improvement in H1 F2011
Spend unlikely to increase meaningfully until government, provincial and municipal management structures, processes & capacity improve
― Will continue to be selective in choosing contracts
Sector preferences based on margins
Protech’s short term pipeline = 90% of work is on the mines Immediate focus remains coal – sustained activity due to global energy
demand Will broaden when other mining capex increases Owned fleet will grow to service 3-yr R340m blue-chip mining contract
Private sector
Mining sector
Public sector
Current work in progress (short term)
Work in Progress at May 2010 (Rm) 2009 (Rm)
Total contracts awarded 1 500 982
Already executed 360 526
Total WIP still-to-be-executed(91% is new projects secured since Nov 2009)
1 140 456
15
Outlook
Starting F2011 with 99% of F2010 Group revenue already secured
Outlook: Contracting (contd)
16
Outlook
R1,43bn realistic Pipeline as at May 2010 runs to 2012 (medium term)
Categories of workTotal
Rm
Realistic expectatio
n Rm
Current Work in Progress - Still to be executed 1 140 1 140
Category 1 - Recommended by professional team
170 ±130
Category 2 - Shortlisted (imminent)*
320 ±160
Category 3 - Un-adjudicated bids 900 -#
Realistic total - Current WIP + Category 1 + Category 2
±1 430
* Note: Of the R300m imminent work list at interim results, R263m (88%) was secured # Not included in pipelineSee appendix for breakdown of the pipeline and work in progress
Outlook: Contracting (contd)
Outlook: Geotechnical 17
Outlook
Improves credibility with existing clients
Servicing of a wider selection of external clients in future
Increased turnover on existing cost base
* SANAS: South African National Accreditation Systems
State of the art laboratories & SANAS* accreditation:
Protech culture now entrenchedSuccessful shift out of Residential Pro-active management ensures that payments from RDP Housing
remain strictly under control
SectorCurrent Revenue
contr.Supply to
F2011 expected conditions
Residential 27%
(95% at acquisition)
Townhouse & estate developers Picking up
Industrial & commercial
43%
Shopping centres; light industrial/engineering parks; commercial retail & office parks
Flat
Public infrastructure
13%
Roads, bridges, storm water drains, reservoirs & hospitals
Flat
RDP Housing 7% Building contractorsUnreliable payment
Mining infrastructure
10%Infrastructure contractors
Picking up
Volumes likely to increase from late F2011
Outlook: Readymix18
Outlook
Outlook
Outlook: Group19
H1 F2012
Improved market conditions
H1 F2010
H2 F2010
Includes initial effects of market downturn
Brunt of the downturn
Excessive rainfall
Pre-contract costs (largely once-off) on mining work
H1 F2011 H2 F2011 Benefits of
shorter term contracts won in H1 at higher margins
Slight improvement expected in Private Residential building sector
Longer duration of mining contracts means H2 F2010 margins will impact 12 months +
However, full benefit of mining contracts realised as pre-contract mine costs already sunk
Strong pipeline allows us to be more selective on the new margins we accept on new shorter duration work
Forward looking statementsCertain statements in this release that are neither reported financial results nor other historical information are forward looking statements including but not limited to predictions of or indications of future earnings.
Undue reliance should not be placed on such statements because, by their very nature, they are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results and company plans and objectives to differ materially from those expressed or implied in the forward looking statements.
The information in this presentation has not been reviewed or reported on by Protech’s auditors.
20
Group outlook
Questions & answers
21