Investor Presentation United Kingdom and United States of America 12 – 18 July 2011 Disclaimer and Important Notice
Information, including forecast financial information in this presentation should not be considered as a recommendation in relation to holding, purchasing or selling shares, securities of other instruments in NRW Holdings Limited or any other company. Due care and attention has been used in the preparation of forecast information. However, actual results may vary from forecast and any variation may be materially positive or negative. Forecasts, by their very nature, are subject to uncertainty and contingencies may occur which are outside the control of NRW Holdings Limited. Before making or varying any decision in relation to holding, purchasing or selling shares in NRW Holdings Limited, investors should consider the appropriateness of that investment in light of their individual investment objectives and financial situation and should seek their own independent professional advice.
2 Executive Summary
Operational Highlights
Purchase of Comiskey Earthmoving in Queensland for $82M plus Tyre Stock.
Award of $780M coking coal contract with Middlemount Coal. NRW’s first coal project.
Signed 5 year Framework Agreement with Rio Tinto Iron Ore for future earthworks involvement on 333 programme
Multiple contract wins with external clients for Action Drill and Blast.
Financial Trading Update
Record order book of $1.664 billion
Successfully raised $70 million from institutional and $5.6 million from retail investors.
Confirm guidance on revenue in excess of $700 million for FY11
NPAT confirmed as per previous guidance and expected at the lower end of broker forecast range of $40-45 million
3 Safety and Training
Performance As of June 30 2011 NRW employs a workforce in excess of 2000, comprising direct staff and sub contractors.
NRW have world class safety systems and procedures in place and have recently implemented a new HSET reporting system which has improved communications between site and the corporate office.
Although our injury statistics have leveled out, the increase in employee HSE training will drive this trend down in 2011
NRW has enhanced it’s training portfolio and is geared to delivering more training to all employees in 2011. • Staff employed in an on-site supervisory role with NRW are enrolled in a Diploma of Management. Currently 175 supervisors are enrolled on the program. • All NRW site based employees will complete Certificate II in Surface Extraction Operations
NRW’s Indigenous content is currently 10% of total workforce with a target of 12% by 2012.
4 Services and Products
Civil Contracting Mining Services Drill and Blast Mechanical / Provides construction Provides a wide range Provides Drill and Blast Fabrication services including rail of contracting services services for the Mining Provides equipment formation, bulk including earth moving, Services and Civil repairs, sand blasting earthworks, detailed waste stripping, ore Contracting divisions as and painting services, road and tunnel haulage, drill and blast, well as for external service truck and tanker construction, as well as related clients. fabrication and import greenfields mine ancillary services. services (including development and quarantine cleaning) concrete installation.
5 Key Clients
6 Civil Division: Current Projects
Western Turner Brockman
Client: Rio Tinto Iron Ore Model: Joint Venture with Eastern Guruma Pty Ltd Value: Award Value: $160 million Scope: Bulk earthworks for the overland conveyor at Western Turner Syncline; and civil works at the Brockman 4 Mine including haul roads, ROM and ROM wall construction and access roads. Herb Elliot Port
Client: Fortescue Metals Group Value: Approximately $36 million Scope: Earthworks and concrete works contract as part of Stages 1 and 2 of the T155 Expansion. Cape Lambert Stockyard and Car Dumper Earthworks
Client: Rio Tinto Iron Ore Model: Joint venture with NYFL Value: Award Value: $101 million Scope: Bulk earthworks for a stockyard, car dumper and stacker reclaimer at Rio Tinto’s Port Lambert
7 Civil Division: Current Projects
Karara Earthworks and Concrete
Client: Karara Mining (Gindalbie Metals) Value: Approximately $190 million Scope: Bulk earthworks and concrete construction work for the iron ore crushing and processing facility. Works include the construction of major concrete foundations and structures for the plant and associated infrastructure. Main Line Rail Duplication ECI
Client: Fortescue Metals Group Value: TBA currently under ECI Scope: Earthworks to duplicate 50 kilometres of rail by realigning the existing access road, includes substantial drill and blast. Port Hedland Inner Harbour Project
Client: BHP Billiton Iron Ore Value: Award value: $158 million Scope: Earthworks for 13 kilometres of rail duplication, 23 kilometres of access road construction and 700,000m³ cut and borrow to fill.
8 Civil Division: Current Projects
Great Eastern Highway Upgrade
Client: Main Roads WA Model: Alliance with Leighton and GHD Value: $225 million Scope: Earthworks for the upgrade of the Great Eastern Highway in metropolitan Perth between Kooyong Road and Tonkin Highway Macedon Drilling Support
Client: BHP Billiton Petroleum Value: Approximately $3.2 million Scope: Preparation earthworks allowing for water bore installation. These early works included access road construction, drill pads and preparation of lined ponds. Morawa - Mullewa Rail ECI
Client: Westnet Rail Model : ECI - Joint Venture with Laing O’Rourke and Brookfield Multiplex Value: To be determined
Scope: JV selected for early contract involvement to formulate the optimisation of design specifications for significant track rectification, replacement and upgrade as well as associated earthworks.
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Civil Division: Preferred Contractor
Framework Agreement
Client: Rio Tinto Iron Ore Tenure: Five years Scope: The projects covered in the agreement are a part of Rio Tinto’s 333 Expansion and this agreement places NRW in a preferred contractor position for these works. Beyond the delivery of the earthworks packages, the framework also encompasses NRW in an ECI role. Current: Works currently being undertaken as part of this agreement: Port Stream - The NRW / NYFL Joint Venture was awarded the Cape Lambert Port Car Dumper and Bulk Earthworks package in March 2011, valued at $100 million and employing an anticipated 196 people. Western Pilbara Stream - The NRW / Eastern Guruma Joint Venture was awarded the Western Turner Brockman earthworks package in April 2011, valued at $160 million and with an anticipated workforce of over 550. Future: Future potential work packages covered under the agreement for the Port Stream consist of similar bulk earthworks as part of the planned future
upgrade of Rio Tinto’s Cape Lambert Port to 333Mt/a, currently awaiting funding approval. Under the Western Pilbara Stream there are three further earthworks packages for three future mine developments planned by Rio Tinto, also awaiting funding approval as part of the 333 Programme.
10 Mining Services: Current Projects
Middlemount Coal
Client: Middlemount Coal* Value: Approximately $780 million (over five years) Scope: The mining contract is for all mining activities including clearing and grubbing, long and short term detailed mine scheduling and planning, as well as drilling and blasting including design and load & haul. *Middlemount Coal is a joint venture between Gloucester Coal Ltd and Macarthur Coal Ltd
Christmas Creek / Cloudbreak
Client: Fortescue Metals Group Value: Approximately $120 million per annum Scope: NRW undertaking the drill and blast; load and haul for the continuous mining operations at pits within Christmas Creek and Cloudbreak Mines.
Karara Mining
Client: Karara Mining (Gindalbie Metals) Value: Approximately $2 million per month Scope: Further to performance on the preceding civil and concrete package, NRW is now also providing mining services including pit development and early works.
11 Mining Services: Current Projects
Western Turner Syncline
Client: Rio Tinto Iron Ore
Model: Joint Venture with Eastern Guruma Pty Ltd
Value: Award Value: $200 million (over 4 years) Scope: Involves the engineering design and development of site infrastructure, mining of the iron ore deposit and ore haulage to Tom Price via a purpose- built 15.5 kilometre-long road Bootu Creek
Client: OM Holdings Value: Approximately $60 million per annum (3 + 2 year contract) Scope: This contract mining operation involves the mining of approximately 33 million tonnes per annum. NRW hold responsibility for drill and blast, load and haul, ROM pad management, waste management and dewatering
Simandou Project
Client: Rio Tinto Iron Ore Value: Approximately $35 million per annum Scope: NRW have been contracted for the civil works required for the exploration phase of this project. These works include preparation of access roads and construction of drill pads along the steep inclines of the site.
12 Action Drill & Blast
Division formed in March 2010.
Initially formed to service internal contracts at Rio Tinto’s Western Turner Syncline and BHP Billiton Iron Ore’s RGP5. It now employs 150 people operates 21 drill rigs and has undertaken work on 12 contracts.
Commenced our first external contract to Karara Mining Limited in September 2010
Commenced drilling on first coal project at Macarthur Coal/Gloucester Coal JV’s Middlemount Operation in February 2011, has since been awarded 2nd coal project at Gregory Crinum for BMA.
Awarded external contracts to a total value of $14.6 million in the last quarter.
Key projects include Greenbushes for Talison Lithium; Gregory Crinum for BMA; as well as additional works at Christmas Creek and South Middleback Ranges.
13 Action Mining Services
Provides equipment repairs, sand blasting and painting services, service truck and tanker fabrication and import services (including quarantine cleaning)
Clients include NRW Civil and Mining, Emeco, MACA, Westrac, Thiess, amongst others.
Sales expected to gain momentum into FY2012 with strong anticipated demand for Action Mining’s range of products and services.
14 Project Map
Fortescue Metals Group - Mining Fortescue Metals Group Christmas Creek Mine; Civil Cloudbreak Mine Herb Elliot Port; Main Line Rail Duplication ECI Darwin Downer EDI - Drill & Blast Christmas Creek Mine
Rio Tinto Iron Ore - Civil Western Turner Brockman; OM Holdings Ltd - Cape Lambert Stockyard Mining and Car dumper Bootu Creek Mackay Pilbara Region BMA - Civil Rio Tinto Iron Ore - Mining Lotus Road Earthworks Western Turner Syncline; Hope Downs Brisbane Middlemount Coal - Mining Macmahon - Drill & Blast Middlemount Cape Lambert Port A Sustaining Works BMA Drill and Blast BHP Billiton - Civil Gregory Crinum Macedon Gas; Port Hedland Inner Harbour Perth Project
Westnet Rail - Civil Guinea Morawa - Mullewa Rail ECI BHP Billiton – Civil Karara Mining - Civil Mt Nimba (West Africa) Earthworks & Concrete Main Roads WA – Talison Lithium – HWE – Rio Tinto Iron Ore – Civil Drill & Blast Drill & Blast Mining/Civil Karara Mining Ltd – Great Eastern Greenbushes South Middleback Simandou Mining/Drill & Blast Highway Upgrade ranges (Guinea, West Africa) Karara DSO
15 Group Revenue Growth
$m's 1200 Target
1000
800
600 $1,000 400 $700 $610 $509 200 $471 $278
0 FY07 FY08 FY09 FY10 FY11 FY12
• FY11 estimated revenue of $700 million consistent with market guidance of 15% increase over FY10; subject to finalisation and audit of statutory financial accounts of the NRW Group. • FY12 estimated revenue a target given the current order book and tender pipeline.
16 Order Book
$0.90 $0.85bn
$0.80 $0.76bn
$0.70
$0.60
$0.50
$0.40
$0.30
$0.20
$0.10 $0.06bn
$- 2HY2011 (Jun 2011) FY12 FY13 & beyond
Total order book at start: $1.66bn $1.61bn $0.85bn
Note: 1. Order book as at 31 May 2011. Mining order book $1.08bn, Civil order book $0.58bn. 2. Order book excludes future expected revenue from projects included in the Rio Tinto 5 year Framework agreement with NRW as preferred contractor; year 1 value is approximately $260 million (see Slide 10); 3. ECI projects Morewa to Mullewa (Westnet) and Mainline Rail Duplication (Fortescue) do not form part of the order book pending finalisation of project scope
17 Current Funding Facilities
FACILITIES ($m's) Limit Bonding 150 Finance Lease 270 Working Capital 50 TOTAL $470
• Structured Debt Facility (ANZ lead arranger) provides NRW the capability and flexibility to fund asset purchases into the future, initial value $100m with ability to scale up or down as required with the participation of other lenders on standard terms and conditions.
• Negotiations commenced to form a syndicate for working capital and performance bonding facilities for future projects given the pipeline for FY13 and 14. Adoption of the second syndicate would be timed for 2HY2012.
18 Opportunity Pipeline FY2012/2013
As highlighted by the award of the Middlemount Contract, NRW is expected to continue to benefit from diversification across client base, commodity and geography.
Target Opportunities Pipeline Civil Projects • Fortescue Expansion 0.79 • Rio Tinto 330mta expansion 0.78 Mining • BHP Billiton Iron Ore’s RGP6 3.20 • BMA Queensland $8.27b Civil • Main Roads and Government infrastructure Oil & Gas 3.50 Mining Drill & Blast • Further Queensland coal expansion • Pilbara iron ore expansion • Gold projects in WA and SA “Planned investment in Australia's resources sector has soared 31 Oil & Gas (on-shore civil works) per cent to a record $173.5 billion, with oil and gas, coal and iron • Chevron - Wheatstone ore projects leading the charge. Western Australia accounted for • Inpex - Ichthys 63 per cent of advanced capital expenditure, reflecting the • BHP Billiton Petroleum - Macedon significant oil and gas and iron ore developments in the state.” • Woodside - Browse ABARE, April 2011
19 Strategic Objectives
Targeting $1b Targeting Achieved to Date Revenue $1.2b+ Revenue FY12 FY13 Awarded Government Main Roads contract • Maintain strong • Expand on-shore Oil & Awarded contract in Oil & Gas sector revenue growth and Gas capability Added to services – Drill & Blast, ROCE • Target further concrete division • Maintain industry emerging market Increase JV alliances with reputable leading margins expansion. companies • Order Book $2b+ • Horizontal and vertical Continue to strengthen management Work • Oil & Gas client integration to service team revenue stream a broader spectrum of Low debt and strong cash flows for to be • Diversify revenue base projects. future growth done for AMS with capital Diversification of client base, light maintenance commodity and geography services Continued revenue and profit growth • Expand external period on period services for Action Drill Awarded major coal project in & Blast Queensland • Expand Queensland Secured long term 5 year Framework footprint Agreement with Rio Tinto • Target Acquisition Increased Order Book to > $1.5b opportunities
20 APPENDICES Half Year Results to 31 December 2010
21 Operating Performance
1HY11 1HY10 Change SALES REVENUE $m 358.3 275.6 30% Civil Contracting $m 192.1 171.3 12% Mining Services $m 149.9 87.7 71% Drill & Blast $m 11.3 0.0 Action Mining $m 12.7 11.2 14% Other* $m (7.7) 5.4 EBITDA $m 48.5 37.9 28% EBIT $m 32.0 25.8 24% NPAT $m 20.4 15.3 31% EPS (basic) cps 8.1 6.1 33% DPS cps 4.0 3.0 33% *Other includes unallocated income and consolidation eliminations for Action Drill & Blast and Action Mining Services
Continued growth across all business divisions
Increased net earnings, earnings per share and dividends
22 Revenue Diversity
REVENUE MIX BY DIVISION REVENUE MIX BY CLIENT
4% 2% 23% 33% 21%
4% 61%
10% 25% 2% 14%
BHP Citic Pacific FMG Gindalbie Mining Civil Action Other OM Holdings Other Rio Tinto
23 Funding and Debt Position
Dec 2010 Jun 2010 Dec 2009 Cash $m 40.9 21.4 14.5 Debt $m 55.7 60.9 79.6 Net Debt $m 14.9 39.4 65.1 Net Debt / Equity 8% 23% 29% Capex (6 months) $m 14.6 26.2 33.8 Funding headroom $m 301.0 175.0 100.0
Significantly improved cash position in 1HY2011 Improved gearing position compared to FY10 Capacity for future growth
24 Cash Flow 1HY2011
$m's $100 $90 $80 $70 $2.8 $3.5 $60 $21.5 $50 $47.8 $7.5 $40 $30 $20 $40.9 $10 $21.4 $0 Opening Cash Operating Investing Proceeds from Repay Loans Dividend Closing Cash June 2010 activities activities borrowings Dec 2010 Inflow Outflow
Investing activities refers to those items not funded directly by financiers and comprise tyres, small capital items and minor leasehold improvements.
Proceeds from borrowings relates to funds received for trade finance.
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