Forge Group Limited HY Results 2013 ASX Spotlight - Small to Mid Caps Conference Thursday 7 th March 2013 Donald Montgomery
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. 2
FINANCIAL HIGHLIGHTS A Strong Half-Year Performance On-Track To Meet Full Year Forecasts 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 HFY13 (cps) 187.2 93.1 101 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 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 3
OPERATING AND STRATEGIC HIGHLIGHTS Safety, Operations and Strategy Performance Underpinning Growth 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 4
STRENGTHENING SAFETY PERFORMANCE Driving World Class Safety Standards is an Ongoing Focus 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 NB 37% of Man hours from Oct 2012 attributed to the inclusion of Forge Group Power and Forge Group Africa. 5
RECORD HALF-YEAR REVENUE AND PROFIT Continued Growth in HY Revenue and Earnings 6
UNDERLYING EARNINGS STRONG Committed to Sustainable Growth 7
CONSISTENT RETURNS FOR SHAREHOLDERS Solid EPS Growth Delivering Long Term Returns for Shareholders 8
ORDER BOOK As at 23 January 2013, Forge Group had an Order Book Value of $1.04 Billion By Sector 9
FINANCIAL POSITION AND FUNDING Well Positioned For Growth. Minimal Capital Required Going Forward HFY13 ($m) HFY12 ($m) Change (%) Cash and Term Deposits 187.2 93.1 101 Net Cash (Cash less interest bearing loans and borrowings) 161.9 81.8 98 Capital Expenditure (Cash and Hire Purchase) 11.0 10.6 3 Bank Guarantee & Insurance Bond Facilities Utilised 290 65 346 Available 92 81 14 Total Facility 382 146 162 10
FOUR DIVISIONS TO DRIVE GROWTH Diversified Service Provider Across Range of Growth Sectors 11
BROADENING OUR GEOGRAPHICAL PRESENCE Pursuing Growth Opportunities in East Coast of Australia and Africa 12
GROWING OUR TEAM Operating Under One Unified Forge Group Brand Integration and rebrand of four business units completed one culture Appointment of senior executives to complement strategy and growth plans Implemented incentive plans with links to financial performance and shareholder returns Continued to focus on people to optimise the new integrated operating model of Forge Group Embrace our values and support our strategy through attraction, development and retention of our people at all levels 13
DIVISIONAL REVENUE SUMMARY Business Unit Contributions HFY13 ($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 Power (CTEC) was acquired Jan 2012. **This is a newly created entity which had no activity prior to 31 December 2012. 14
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. 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. 15
FORGE GROUP POWER Forge Group Power Is A Turnkey Project Provider To The Energy And Utilities Sectors Specialising In Gas Turbine Power Plants. 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 REVENUE* 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 SALES CONTRIBUTION* *Based on operating segment pre-consolidation revenues. 16
FORGE GROUP CONSTRUCTION Forge Group Construction is an Award Winning Multi-disciplinary Contractor Providing a Complete Suite of Construction Services to All Sectors HIGHLIGHTS Awarded $82 million in new contracts Completion of Solomon Iron Ore Primary Crushing Hubs Solid tendering pipeline Power, Minerals & Resources 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 REVENUE* SALES CONTRIBUTION* *Based on operating segment pre-consolidation revenues. 17
FORGE GROUP ASSET MANAGEMENT Forge Group Provides A Broad Range Of Asset Management Services Across Our Customer s Asset Life Cycles 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 18
OUTLOOK - FORGE GROUP PERFORMANCE 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 19
DISCLAIMER 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. 20
THANK YOU & QUESTIONS Forge Group Ltd 45 Stirling Highway, Nedlands, Western Australia, 6009 T (08) 6389 8500 F (08) 6389 8599 E investor@forgegroup.com.au 21