SITE VISIT PRESENTATION November 2007
Agenda Strategic Update Operational Update Appendix 1: Outlook Appendix 2: Alliance Partnering 2
Strategic Update 3
Group Strategy in Action A balanced sector portfolio Investments & Concessions Expansion of concession equity & revenue streams, e. g. power, infrastructure projects, INVESTMENT Manufacturing & Materials Construction Higher margin repeat income streams aligned to the construction value chain Innovative project delivery at higher margins ACQUISITIVE ORGANIC 33% of revenue New investments: Recent M&A: Turnkey projects: • A 1 Toll Motorway – Poland • € 1 billion M 6 – Hungary • Mobile Industrial Power – Africa • Property portfolio expansion Important to take advantages of market opportunities now • King Shaka Airport • Durban Port widening • ABA Power IPP • Ruashi mining project • Songa oil & gas project • Acquired Quarry Cats • Acquired Sky Sands • Acquired Bernoberg • Expanding manufacturing product base 4
Innovative project delivery - Alliance Contracting Model Objective: Securing a bigger share of higher margin projects Group Five acts as project facilitator, consortium leader and constructor Selected as most suitable for the project Constructor Group Five Technology Partner Turnkey Solution Eg. Private power - General Electric Cement plants - Thyssen Krupp Airports Selection based on experience specific to the project, capacity and track record Engineering and detail design partner - Airbiz Airport, Power, Cement, Oil & Gas and Mining Infrastructure already delivered through this model. 5
Changed pattern of risk assumption on EPC’s through Alliancing in a consortium EPC contract Contractor Subcontracto rs Alliance partnering Client G 5 Partner Client Process design risk Detail design risk Performance responsibility Construction responsibility Contract price risk 6
Operational Update 7
Update on Key Focus Areas Progress in F 2008 2006 2007 Audite d d Restate d Target s Construction operating margin %# The group’s aim is to retain a 5% margin in the short-term, rising thereafter 3, 6 2, 8 5, 0 Group operating margin %# Meaningful improvement in group margin due to • a 5% construction margin • expansion into construction materials • Any future non-operational transactions will be disclosed separately in future presentations 5, 1 4, 1 6, 0 Net debt : equity ratio (D: E) % A higher than targeted short term D: E equity ratio is expected due to additional capex and acquisition funding 36, 9 - 33, 0 Indications are that interest cover will be below 10 in the short term • group’s cash flow and capital PBIT Interest # cover (x) 9, 9 5, 6 n/a For comparativeraising plansnote full cognisance purposes, take that certain competitors report operating of this margins before accounting for certain overheads, whereas G 5 reports margins after all overheads 8
Update on Key Focus Areas Progress in F 2008 2006 2007 Audite d d Restate d Target s Cash remains an area of focus • • * • Increasing exposure to manufacturing and construction materials activities that require working capital investment Work continues towards showing improved cash after working capital by interim stage • Return on shareholders interest % Advance payments expected on large contracts • Cash and working capital (Rm) each contract is monitored on an individual basis for margins &cash Recent smaller acquisitions have been funded via cash from operations The group’s strategy is designed to achieve this target in the mediumterm 60 391 Cash =profit 17% * 11% 25% 9
Updated Construction order book – 12 month secured* as at 30 September 2007 (Actual) Rm F 2008 order book @ 1 July 07 Current 2008 order book Margin F 2008 Estimated Capacity Building & Housing 3 122 1 883 2 320 2 900 Civil Engineering 2 484 2 215 2 624 3 200 Engineering Projects 794 735 1 102 1 200 6 401 4 833 6 046 7 300 Total Order book emphasis is focused on higher margin areas of activity rather than higher turnover. However the order books contains some older projects which are still in progress A few older contracts are at completion stage & undergoing commercial resolution * For comparative purposes, note that certain competitors report > 12 months secured order 10
New Projects Recently Secured Project Housing Scheme for Police Force and Army Officers - Dubai, Middle East Value G 5 Stake R 2, 3 bn R 1, 5 bn Start Date Duration Nov 2007 18 months Comment: Contract awarded at good margins, upfront payments obtained Construction of Inyoni Retirement Village Phase 2 - South Africa R 100 m Sept 2007 17 months Comment: Contract awarded at higher margins than previously seen, no upfront payments obtained Construction of laboratories, auditorium and offices - University of Western Cape – South Africa R 311 m Sept 2007 24 months Comment: Contract awarded at higher margins than previously seen, no upfront payments obtained 11
New Projects Recently Secured Project Songa Island Train 3 and 4 gas processing facility – Songa Value G 5 Stake Start Date Duration R 196 m Jan 2008 12 months Comment: Piping expansion of the gas processing facility, good tendered margins and upfront payments secured. Songa is located 200 km SE of Dar-Es. Salam N 17 Link Road for SANRAL – South Africa R 316 m Sept 2007 26 months Comment: Design and Construct of new road and bridges, good margin, no upfront payment 12
Current Significant Projects: Progress to date Project Value G 5 Stake Start Date Duration Moses Mabhida Soccer Stadium R 2, 0 b n 35% Jan 2007 2, 5 years R 6, 8 b n 37% June 2007 3, 0 years R 380 m 50% Aug 2006 1, 0 year Comment: Contract on track King Shaka International Airport Comment: Contract on track Four Seasons Hotel Mauritius Comment: Contract running well, we have been awarded an additional 10 luxury villas worth approximately R 140 m which must be completed by October 2008 Department of Education New HO R 322 m 40% Apr 2007 2, 0 years Comment: Contract running well, mark up is lower than current market as negotiations were 4 years old Ruashi Phase 2 – DRC R 374 m 100% Sept 2006 2, 0 years Comment: Contract is running extremely well, Overall the project is at 60% of completion. 13
Current Significant Projects: Progress to date Project Dubai Duty Free Warehouse Value G 5 Stake Start Date Duration R 424 m 100% Dec 2006 1, 5 years 100% Oct 2006 1, 5 year 100% July 2007 1, 3 years Comment: Project complete; Expected margins achieved Dubai Terminal 2 expansion R 577 m Comment: Project underway, some delays experienced Tenke Fungurume – Copper Mine DRC R 170 m Comment: Commenced with mobilisation and procurement on the project. The installation work commences in the new calendar year Durban Harbour: Entrance widening R 1, 8 bn 65% May 2007 3, 0 years Comment: Contract started slowly but activities are underway and productions are at or above the level required in terms of the programme. ABA Power Project: Open Cycle Gas Turbine R 458 m 100% Oct 2007 1, 5 years Comment: Delay in signing of contract has resulted in contract to commence in January 2008 instead of October 2007 14
Group Strategy in Action A balanced sector portfolio Investments & Concessions Expansion of concession equity & revenue streams, e. g. power, infrastructure projects, INVESTMENT Manufacturing & Materials Construction Higher margin repeat income streams aligned to the construction value chain Innovative project delivery at higher margins ACQUISITIVE ORGANIC 33% of revenue New investments: Recent M&A: Turnkey projects: • A 1 Toll Motorway – Poland • € 1 billion M 6 – Hungary • Mobile Industrial Power – Africa • Property portfolio expansion Important to take advantages of market opportunities now • King Shaka Airport • Durban Port widening • ABA Power IPP • Ruashi mining project • Songa oil & gas project • Acquired Quarry Cats • Acquired Sky Sands • Acquired Bernoberg • Expanding manufacturing product base 15
G 5 Construction Materials Tim Woodhead 16
Appendix 1: Outlook 17
Introduction to Market Outlook Balanced Geographic Portfolio G 5 has an established track record in its non-SA areas of operation in Africa, the Middle East and Eastern Europe A small share of these markets, carefully chosen and well managed, should achieve higher margins G 5 maintains the ability to gear up quickly to take advantages of opportunities as the SA market improves, but it’s geographic diversity is a hedge against slow SA infrastructure rollout 18
Market Outlook – MIDDLE EAST Mainly Civil work with expansion into Engineering Project work G 5 Operations (established in early 2004 in partnership with Al Naboodah, the largest local contactor) have now United Arab progressed Emirates: to a JV Abu Dhabi, Dubai, Sharjah Ajmah, Umm Al Strong, sustainable regional economic -Qaiwain, growth, compound growth of 13% since 2000 Al-Khaimah and Ras Fujairah G 5 focus in the region is Civils work in the United Arab Emirates Expansion into mechanical electrical piping (MEP) work is scheduled for F 2008 19
Mega cargo terminal AX 101 – Dubai 20
Jebel Ali Airport Tunnel Entrance– Dubai 21
Market Outlook – EASTERN EUROPE Mainly Concession work G 5 focus: Toll road operations and investment, with substantial international partners such as Bouygues and Skanska Pursuing further toll road opportunities in partnership with well-established international groups such as Poland Skanska and Strabag Sustainable growth opportunities through: Hungary ─ Capitalizing on G 5’s (Intertoll) established reputation in the region ─ The definitive trend towards tolling of vehicles for the use of highways 22
Snow Plough Fleet – Poland 23
Market Outlook – AFRICA & SOUTH AFRICA Civil, Building and Engineering Project work § Transportation ─ Roads * ─ Airports * ─ Rail * ─ Ports * § Power ─ Public * ─ Private * § Mining & industrial * § Oil & gas * ─ West, Emerging East & Southern Africa § Communications and Telecom § Public buildings & housing * ^ § Waste, Water and Environment * ^ * Group 5 target markets ^ South African focus 24
Market Outlook - AFRICA Mainly Civil and Engineering Project work § 250% increase in world population to 6, 7 billion in last 50 years ─ Mainly in emerging economies lead by China and India ─ Per capita income expected to grow from $200 pa and to reach $15, 000 - $50, 000 pa over the next 30 years § Hence the rush for resources, many of which are in Africa, to sustain an expanding world population with improving wealth § Sustainable long-term demand in the resources sector is driving infrastructure spend in many African markets Reference WEF and FNB economist Cees Bruggemans 25
Market Outlook - AFRICA Mainly Civil and Engineering Project work § Private Sector infrastructure spend on resources in Africa is a key G 5 target market ─ Above-average margins ─ Provides opportunity across a single project as we move to turnkey solutions ─ Provides a check against slow delivery by government of infrastructure projects in SA § Public Sector infrastructure spend in Africa is not a G 5 target market ─ Sovereign, payment, governance and logistical risks ─ Will only do under strict conditions 26
G 5 Perspective of Opportunities in Selected Countries Madagascar Mali Angola • Gold • Cement • Mineral sands Ghana • Port • Mining • Roads/Infrastructur e • Gold • Bauxite • Power Benin • Power • Cement Nigeria • Oil & Gas, LNG • Power • Infrastructure • Building • Housing • Cement Congo ROC • Potash • Forestry • Power generation Sector Targeted Projects Secured Projects Transp ort Power Mining Industri al Oil & Gas R 33, 5 bn R 5, 0 bn R 21, 7 bn R 5, 2 bn R 2, 9 bn R 2, 0 bn R 6, 4 bn R 0, 8 bn • Copper • Building R 2, 8 bn R 0, 2 bn R 69, 6 bn R 10, 9 bn • Uranium • Oil & Gas • Building • Water Botswana Mozambique • Mineral sands • Coal • Gas • Power generation • Diamonds South Africa • Gas • Water • Nuclear power • Coega development Zambia • 2010 soccer • Airports • Transport • Water • Housing • Building • Cement • Aluminium • Coal • Copper/Cobalt • Cement Tanzania • Power generation • Roads Total Namibia Congo DRC • Cobalt • Gold • Oil • Power Generation 27
Current Transport Projects Group 5 three-year view in targeted markets South Africa G 5 Total Roads * Sanral Gauteng Network Jhb Metro Rea Vaya Bus Rapid Transport R 4, 6 b n R 23 bn R 1, 2 b n R 1, 9 b n R 350 m R 500 m Transnet Cape Town Container Terminal - R 1, 5 bn Transnet Ngqura Container Terminal - R 1, 6 bn Transnet Ngqura Manganese Terminal - R 1, 0 bn ^ Transnet Durban Harbour Entrance Widening R 1, 2 b n R 1, 8 bn Transnet Durban Point Car Terminal R 6, 0 b n R 1, 0 bn R 12, 0 b n * Transnet Richards Bay Container Terminal R 150 m R 300 m * Transnet Richards Bay Dry Bulk Terminal R 1 bn R 2 bn * Transnet Port Elizabeth Terminal R 2, 5 b ^ Sanral N 1/N 2 Winelands * Sanral N 2 Wild Coast * Sanral Khulani Corridor R 4 bn R 5 bn R 350 m Ports ^ Partially / secured work * Target Value of G 5 target projects = R 16, 5 bn Value of G 5 secured projects = R 2, 4 bn * Transnet Durban Container Terminal 28
Durban Harbour Entrance Widening & Deepening – South Africa Group Five partnering with Belgium based Dredging International 29
Durban Harbour Entrance Widening & Deepening – South Africa Group Five partnering with Belgium based Dredging International 30
Current Transport Projects Group 5 three-year view in targeted markets South Africa G 5 Total Rail Metro Rail Platform Upgrades * Bombela Gautrain Sub Contracts * Transnet Sishen Saldanha Ore Line R 1, 5 b n R 6 bn R 2 bn R 15 bn R 12 bn Airports * ACSA OR Tambo Central Terminal ^ ACSA King Shaka Airport R 9, 5 b n R 2, 6 b n R 19 bn R 7 bn ACSA George - R 50 m ACSA East London - R 300 m ACSA Cape Town International Upgrade - R 1 bn ^ Partially / secured work * Target Value of G 5 target projects = R 17 bn Value of G 5 secured projects = R 2, 6 bn 31
King Shaka International Airport – South Africa 32
targeted Power Projects Current Group 5 three-year view in G 5 Total markets Ivory Coast G 5 Total Kenya GT project - R 1 bn Ghana * Tema Tikaroudo Various GT R 400 m - R 800 m R 700 m * Songo R 180 m R 1 bn R 10 b n R 1. 5 b n R 60 b n Botswana Kalahari gas * Electrotogo Benin R 180 m * GT Project R 200 m R 350 m * Mmamabula CBM 1000 R 400 m * Moropule R 4 bn - R 6 bn R 12 b n Mozambiqu e Nigeria R 2 bn R 450 m R 1. 5 b Ressano Garcia Chevron Agura - R 300 m * Moatise * Farm Electric R 260 m R 450 m R 1 bn R 2 bn South Africa ^ IBOM 1& 2 ^ Aba Value of G 5 target projects = R 21, 7 bn Value of G 5 secured projects = R 2, 9 bn R 3 bn Tanzania Togo ^ Partially / secured work * Target - - R 1. 5 b n * Obajana Cement R 90 m R 250 m * Shagamo R 200 m R 1 bn * Ikorodu Exxon Eket * Ibese R 1 bn * ESKOM Engen ^ Straitchemic al R 1. 5 b n R 4 bn R 6 bn R 90 b n - R 4 bn R 450 m R 500 m DME - KZN - DME - PE - R 400 m R 400 33 m
IBOM Power Project - Nigeria 34
targeted Mining Projects Current Group 5 three-year view in G 5 Total markets Mali G 5 Total Ghana ^ Syama project * Anglo gold mines R 150 m R 250 m R 500 m ^Tarkwa project R 2 bn Tanzania R 150 m R 1. 5 b n R 600 m R 2. 5 b n R 350 m R 100 m R 600 m R 1. 5 b n R 3. 6 b n R 500 m R 250 m R 200 m R 4 bn - R 300 m R 100 m R 2 bn Burkina Faso * Perkoa zinc * Essakane gold Congo DRC ^ Ruashi 2 * Kamoto 1 -5 * Ko. V Kolwezi tailings ^ Kalukundi ^ Partially / secured work * Target Value of G 5 target projects = R 5, 2 bn Value of G 5 secured projects = R 2 bn ^ Tenke fungurume Kipushi zinc * Katanga - South Africa R 100 m R 3 bn R 15 m - R 6. 5 b n * Orapa exp R 600 m R 2 bn * Tati Nickel exp R 100 m R 500 m * Debswana R 200 m R 12 b n * Corridor sands R 150 m R 2 bn * Moatize coal R 1 bn R 3 bn R 2 bn * Chambisi R 70 m R 700 m R 70 m ^ Frontier R 60 m R 1 bn ^ Geita 2 Madagasca r Ambatovy Nickel Botswana Mozambiqu e Zambia * Konkola ^ Lumwana S/Hills platinum R 50 m Khumani iron R 80 m R 200 m R 500 m Namibia R 3 bn 35
Kansanshi – Zambia 36
Current Industrial Projects Group 5 three-year view in targeted markets South Africa G 5 Total Angola G 5 Total R 2 bn * Lobito cement R 300 m R 6 bn Luanda port - R 2. 5 b n R 700 m - R 1 bn R 30 m R 1 bn Nampak bevcan - R 2 bn * Obajana cement R 200 m R 1 bn * MITTAL R 1 bn R 4 bn * Power stations (Ind) Tanzania R 2 bn R 10 b n TPPC expansion - R 1 bn Nuclear stations (Ind) - R 2 bn Mozambiq ue ^ Partially / secured work * Target * Coega Developments R 500 m R 10 b n * MOZAL 3 R 400 m R 3 bn Value of G 5 target projects = R 6, 4 bn Value of G 5 secured projects = R 800 m * Orascom cement R 700 m R 100 m R 2. 8 b n R 500 m R 6 bn R 80 m R 2 bn * Straits chemicals ^ Alcan smelter SASOL water * Highveld steel Columbus furnace 3 * Nampak * Pulp & Paper projects R 600 m R 800 m R 2 bn Nigeria Madagasca r * Ambatovy Nickel 37
Mittal Steel Engineering Project – South Africa 38
Oil & Gas Current Group 5 three-year view in targeted (Projects, shuts, markets turnarounds and maintenance) South Africa G 5 Total Shuts, turnarounds & maintenance New Projects Angola G 5 Total * Soya R 100 m R 400 m * Lobito ref R 1 bn R 500 m R 20 b n R 10 b n R 200 m R 1 bn R 50 m R 1 bn R 600 m R 500 m ^ Cabinda Natref - R 50 m Tanzania Sasol - R 50 m * Songa R 50 m Mozambiqu e New Projects R 300 * Kudu gas m R 150 * ACSA depot m R 600 * Transnet pipe m R 10 b n R 250 m R 11 b n ^ Engen ^ Chevron Potential: Unlimited and ongoing ^ Partially / secured work * Target Value of G 5 targeted projects = R 2, 8 bn Value of G 5 secured projects = R 160 m R 20 m * Sapref West African Gulf R 40 m * Petro SA Petro Nkala ref - Sofala oil - R 30 b n R 10 b n 39
Installations at Malongo base Cabinda – Angola 40
Market Outlook – SOUTH AFRICA is expected to be spent on infrastructure Around R 631 bn over the next 3 years# +/- R 140 bn* will be applied to capital formation in calendar 2007* ― Although growth in residential construction has slowed, construction works and non-residential construction are picking up considerably in 2007^ ― Construction contract awards in 1 st quarter 2007 grew 53% in real terms on an annual basis^ ― Result of ACSA, Transnet, Ports, 2010 and Eskom work being awarded +/- R 631 bn# is projected to be spent on infrastructure over the next 3 years ― stimulated by the 2010 World Cup, GDP growth and the need to catch up past under-spend: *― R 410 bn Researchsector spend Source: Equity public and Advisory # Estimate Services as per Macquarie First South Securities report - 25 ^― R 221 bn. African Federation of spend Source: South private sector Civil Engineering Contractors September 2007 41
Market Outlook – SOUTH AFRICASA Activity – SAFCEC simulated cycle from Long Term 2006 -2025* Civil Engineering Turnover: 2025 R bn (Real 2000) 40, 000 Optimistic view 35, 000 30, 000 25, 000 20, 000 Pessimistic view 15, 000 10, 000 Growth momentum set to continue well past 2010 5, 000 0 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 * Based on pattern of 1960 – 1975 Source: South African Federation of Civil Engineering 42
Sector Challenges Group Five’s response • Substantial investment in training • Repatriation of South Africans and recruitment of expats Skills shortages • Bulk work permit application with Home Affairs approved • Use of local content labour on over-border contracts • Successful retention strategies for top 100 managers Clients capacity & experience in executing large projects • Move towards turnkey projects with growing acceptance of alliance contracting • Early engagement with clients in defining project delivery methodology 43
Sector Challenges Group Five’s response • No shortages have been experienced locally; average price increases of ± 12% in F 2007 Raw material shortages and price increases • Upfront negotiations to secure fixed terms with suppliers and subcontractors • Escalation formula in contracts and under-recovery priced in • Investment in own supply will assist availability to an extent • Rigorous review of risk and availability of resources Risk of overtrading Government delays in commissionin g projects prior to bidding • Stringent project selection • Continued focus on project management discipline • Maintain sector & geographic diversification strategy • Public Private Partnerships • Close working relationship with government as clients 44
Appendix 2: Alliance Partnering 45
Changed pattern of risk assumption on EPC’s through Alliancing in a consortium EPC Contract – Contractor takes all risk and reward Alliancing model – alliance leader manages the interfaces between partners who share risk and reward • Contractor takes full process design • Technology partner takes process risk • • Design partner takes detail design risk, risk Contractor takes full detail design risk • Contractor takes full performance • • Contractor takes full construction • • Contractor price usually lump sum • • Employer’s representative optional • • Independent Engineer optional • risk • Consulting Engineer is responsible • to report to EPC Contractor High risk Medium risk • Commercially responsible for discipline interfaces Low risk • contractor manages design process Performance risk is accepted by the consortium appropriate to their responsibility Constructor partner accepts construction risk Price is remeasurable on an open book basis to design freeze stage Employer is invited to participate in the alliance Independent Engineer usually not necessary Consulting (design) engineer is part of, and responsible and accountable to the alliance for, delivery of design and performance thereof Lead partners manage inter-discipline 46 interfaces
Скачать презентацию SITE VISIT PRESENTATION November 2007 Agenda Strategic
58fa0e3fdfbad2185cec335c0d8c9539.ppt