Calibre Group Half Year Results MARCH 2018
Contents Calibre Overview Financial Review Operational Review Summary 2
Calibre Overview
Calibre is a trusted partner within the resources, urban, technologies, defence, transport and infrastructure markets, bringing together diversified engineering, advisory, project delivery, construction and asset management services. Turning knowledge into value, we deliver positive economic and social outcomes for our clients and the communities in which we work and live.
Turning Knowledge into Value 41.9% to $306.3m Revenue Growth 8.9% to $5.7m Underlying EBITDA Our Projects are diverse Building Australia s newest coal facility Hunter Valley Heritage works to Brisbane s iconic $1b Queen s Wharf Project Finalists two consecutive years in prestigious Client Choice Service Award, New Zealand Early construction infrastructure works Badgerys Creek for Western Sydney Airport $1.3bn Order book 2,200 Employees 37 Offices Australasia 5
Calibre s Operations Professional Services and Innovation & Advisory Construction and maintenance specialising in urban infrastructure Construction and maintenance specialising in resources markets Engineering Civil & Structural Security, Systems & Controls Electrical/Renewables Geology/Geotechnical Transportation & Rail Mechanical/Process Automation Town Planning and Surveying Project Management Utilities specialist across Gas Power Water and Sewer Supporting mining and industrial across Construction & Trade Services Asset Management Decommissioning & Deconstruction 6
Market Sectors Environment & Renewables We work with government bodies and the private sector to leverage their sustainability as a market differentiator and open up new opportunities for profitable investment. Defence & Intelligence Whether for procurement, IT and security infrastructure or advanced, purpose-built training or maintenance facilities, Calibre s multidisciplinary capability brings together the right services to meet your needs. Agribusiness Our integrated approach starts with feasibility studies, planning, infrastructure design, and multi-disciplinary engineering, through to construction, maintenance and optimisation, and/or decommissioning, for commercial farming operations, or undertaking capital upgrades. Energy & Power We work with major resource clients, energy suppliers, major contractors and specialist power generation providers to develop generation and transmission solutions. Government From cost-effective buildings, infrastructure and utilities, to providing proactive planning or asset management solutions that support economic growth, we work with government at local, state and national levels. 7
Market Sectors (continued) Metals & Minerals From large-scale design and construction of new mines to machinery overhauls, we have assisted some of the world s leading mining and resource companies achieve successful operations. International Development From climate response initiatives to fisheries warehouses and social housing projects, we work together with government and NGOs to assist communities to overcome environmental, social and economic adversities. Health & Retirement For health facilities and retirement developments to succeed, they must be commercially viable, high-performing, adaptive, and satisfy the needs of end-users and their families. Manufacturing & Industrial We are industry leaders in end-to-end mechanical, structural and civil, electrical, instrumentation, and manufacturing services for fixed and mobile processing, and materials handling plants. Oil & Gas For upstream or downstream services, our teams combine to offer integrated solutions such as gas processing facilities, gas compression stations, water treatment plants and the infrastructure for the transmission of gas in remote areas. 8
Market Sectors (continued) Utilities Whether for power, gas, water and wastewater, or telecommunications, our multidisciplinary teams work closely with utility providers, councils and government departments to optimise operations and expedite project delivery. Transportation With a whole-of-life approach, we work with clients to deliver robust transportation solutions, satisfying regulatory and community requirements while considering environmental impact and future provisions. Residential & Commercial With a goal to optimise our clients development viability and facilitate enduring value, we maximise usable floor space, improve energy and water use, and create collaborative, open spaces. Urban Development From master planned communities and large-scale subdivisions, medium-density townhouses and retirement villages, to industrial estates and civic projects, we understand urban and land development projects. Water & Wastewater From water servicing strategies and water sensitive urban design, and wastewater treatment plants for local councils, to process and potable water holding tanks for industrial facilities, or flood modelling and mitigation for mining developments. 9
Financial Review
Financial Results Overview KEY FINANCIAL RESULTS 31 Dec 2017 31 Dec 2016 % movement COMMENTARY Revenue 306.3 215.8 41.9% Underlying EBITDA 5.7 5.3 8.9% Underlying EBITDA margin 1.9% 2.4% - Net Loss After Tax ($m) 6.1 1.9 - Operating cash flow ($m) 12.2 3.5 248.8% Dividend per share (cents) 0.0 0.0 0.0% Revenues of $306.3m comprised $223.6m from Construction and Maintenance (up 71% pcp) and $84.2m from Professional Services (down 1% pcp). Underlying EBITDA from Construction & Maintenance of $6.9m, up strongly from $1.5m in H2 2016 largely due to contribution from Diona. Underlying EBITDA from Professional Services of $0.3m, down from $4.8m in H2 2016 due to significant declines in activities of the Group s resource sector clients. Underlying results exclude a fair value revaluation on contingent consideration cost of $0.2m, restructuring expenses of $0.2m and business acquisition costs of $0.6m Operating cash flow for the period was $12.2m, an increase of $8.7m from the prior corresponding period, reflects a strong focus on working capital management. 11
Cash Flow Overview SUMMARY CASH FLOWS ($m) 31 Dec 2017 31 Dec 2016 COMMENTARY Underlying EBITDA 5.7 5.3 Operating cash flow was $12.2m, an increase of $8.7m on pcp reflects strong focus on working capital Net working capital movements 6.5 (1.6) management. Income tax (paid) / received - (0.2) Net Operating Cash Flow 12.2 3.5 Payment for acquisitions (30.0) (16.5) Capital expenditure (2.8) (1.4) Net interest paid (4.9) (1.6) Strong cash balances of $25.1m, up $5.3m from the prior year. $30.0m in acquisition payments reflected final earn-out payments for Diona acquisition. Net capital expenditure of $8.8m was invested in PP&E and system upgrades, which will underpin business efficiency opportunities going forward. Borrowings repaid (78.8) (6.3) Proceeds from borrowing 107.7 20.0 Proceeds from issue of preference shares 5.0 - Share buy-back - - Net Cash Generation 8.4 (2.3) Opening Cash Balance 16.7 22.1 Closing Cash Balance 25.1 19.8 12
Balance Sheet Overview ($m) 31 Dec 2017 30 Jun 2017 COMMENTARY Cash and cash equivalents 25.1 16.7 Trade and other receivables 89.9 100.4 Other current assets 23.2 17.0 Total Current Assets 138.2 134.2 Property, plant and equipment 30.4 33.0 Goodwill and intangibles 137.2 136.5 Other non-current assets 16.0 16.0 Total non-current assets 183.6 185.6 Total Assets 321.8 319.8 Trade and other payables 95.6 88.0 Bank borrowings 32.6 72.5 Deferred acquisition consideration 0.3 30.5 Provisions 20.4 18.1 Total Current Liabilities 148.9 209.1 Bank borrowings 77.2 4.4 Deferred acquisition consideration - - Provisions 20.6 25.2 Total non-current liabilities 97.7 29.6 Total Liabilities 246.6 238.7 Net Assets 75.2 81.1 On 30 June 2017 Calibre executed an agreement for the refinancing of $96.5m of its senior bank facilities. On 3 October 2017, Calibre executed convertible notes agreements to raise $25.0m, and an additional $5.0m in funding from NAB. With the execution of the new agreements, the new facility been completed on 31 October 2017 and this amount is classified as noncurrent debt. The increase in bank borrowings of $5.0m and convertible notes of $25.0m were solely to fund the final earn out payments of $30.0m in relation to Diona acquisition. The overall recapitalisation program of $101.5m has extended the borrowings tenure to 4 years, with scheduled repayments. Calibre s net bank borrowings position as at 31 December 2017 was $57.2m (30 June 2016 $58.5m). Net borrowing was derived after offsetting cash and cash equivalents of $25.1m (30 June 2017 $16.7m). 13
Construction & Maintenance $223.6m Revenue: 31 Dec 17 73% contribution to FY18 revenue (31 Dec 16: $130.7m) 71.0% Revenue increase; first half year in 2018 was $223.6m, an increase of 71.0% from the prior year. Improving market; Revenue for G&S Engineering increased by 90% to $108.6m due to improving market conditions in Australian coal driving increased work in major projects and maintenance. Agreement renewals; G&S successful in negotiation of renewals or extensions of key maintenance agreements within Qld and in securing a role on the BHP Iron Ore Construction Panel. Major Projects success; Diona reported revenue of $114.9m, translating to a 56% increase from the prior period. Major projects contributing to this result include the Powells Creek Bank Renewals, Woolloomooloo Sewer Separation and the Canterbury Town Centre Works. Strong order book; Diona continues to report a strong order book and pipeline, with major new projects being awarded inclusive of the Transgrid TRNG 330kv cable project, Ausgrid Canterbury to Summerhill 33kb cable project and the West Connex 630 Water Main. Projections reflect strong growth into future financial years. $6.9m EBITA: 31 Dec 17 (31 Dec 16: $1.5m) 14
Professional Services $84.2m Revenue: 31 Dec 17 27% contribution to FY18 revenue (31 Dec 16: $85.4m) 1.5% Revenue; first half year in 2018 was $84.2m, a decrease of 1.5% from the prior year. The Professional Services business settled down a number of aspects of its original restructure during the period, including appointing a number of new key management roles. Improved outlook; many of the Professional Services markets are showing significant improvement, particularly in WA, as the iron ore and other sectors evaluate both new greenfield and brownfield opportunities. The east coast urban development and infrastructure markets also continue to reflect a strong outlook with Calibre Professional Services implementing a new division Building and Renewables to capture the opportunity of providing complementary services to an existing client base. Professional Services markets have proven to be of an increasingly competitive nature with higher than normal employee turnover and operational inefficiencies contributing to a decline in gross margins for the period. The new PS Management team has commenced implementation of their operational plan addressing these aspects and projecting an improved second half of earnings. $0.3m EBITA: 31 Dec 17 (31 Dec 16: $4.9m) 15
Contacts Craig Allen Group Chief Financial Officer + 61 2 8339 2011 Tara Dennis Company Secretary + 61 8 9265 3000 General enquiries@calibregroup.com www.calibregroup.com 16
Disclaimer and additional information This presentation has been prepared by and concerns Calibre Group Limited (Calibre), and consists of these slides and any accompanying commentary. By reviewing / attending this presentation, you acknowledge the following statements / information in this disclaimer. FORWARD LOOKING STATEMENTS This presentation may contain forward looking statements that are subject to risk factors associated with the engineering services, mining, rail, construction, industrial technology, consulting, and asset management business. All statements other than the statements of historical facts included in this presentation, including, without limitation, those regarding Calibre s financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives relating to Calibre s products and services and forecasts) are designated as forward looking statements. In addition to the categories of risk set out here, such forward looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Calibre, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. PAST PERFORMANCE Past performance information given in this presentation is given for illustrative purposes only and should not be relied upon as (and is not) an indication of future performance. Nothing in this presentation should be interpreted to mean that future earnings per share of Calibre will necessarily match or exceed its historical published earnings per share. All references to dollars, cents, or $ in this presentation are to Australian currency, unless otherwise stated. References to Calibre, the Company, the Group or the Calibre Group may be references to Calibre Group Limited ACN 100 255 623, or its subsidiaries. While Calibre considers the assumptions on which these statements are based to be reasonable, whether circumstances actually occur in accordance with these statements may be affected by a variety of factors. These include, but are not limited to, levels of actual demand, currency fluctuations, loss of market, industry competition, environmental risks, physical risks, legislative, fiscal and regulatory developments, economic and financial market conditions in various countries and regions, political risk, project delay or advancement, approvals and cost estimates. These could cause trends or results to differ from the forward looking statements in this presentation. NOT FINANCIAL PRODUCT ADVICE This presentation is for information purposes only and is not financial product or investment advice, nor a recommendation to acquire Calibre shares. It has been prepared without taking into account the objectives, financial situation or needs of individuals. Before making an investment decision, prospective investors should consider the appropriateness of the information having regard to their own objectives, financial situation and needs and seek legal and taxation advice appropriate to their jurisdiction. 17