“The Reset phase of the transformational strategy has seen the Group focus on customer relationships, simplify the structure and operating model of the organisation and establish a new leadership team. We have also given the needed attention to enhance our technical and operational capabilities, improve Group wide collaboration to leverage our in-house skills and dramatically improve project and business governance,” Mr Cummins said.
The completion of the Reset phase marked by the announcement of certain project impairments and recapitalisation of the McConnell Dowell balance sheet, enables the Group to move forward with the next phase of the strategy without the burden of legacy and historical issues.
Parent Company Aveng continue to be fully supportive of the overall strategy and are in lockstep with the established plan and goals for the years ahead.
Year in Review
FY17 was a year of considerable change throughout the organisation.
All change introduced has sought to maximise the value the McConnell Dowell Group can bring by being a reliable, consistent and high-performing business and making a positive contribution to the development of infrastructure in all countries in which we operate.
To further support our strategic endeavours and enhance Board value, the McConnell Dowell Board has been strengthened by the appointment of Chris Lock as a Non-Executive Director. Chris brings extensive experience as a highly capable and extremely well-respected leader within the Australian engineering and construction sector.
FY17 Financial Results
As mentioned above, the 2017 financial year results (ending 30 June 2017) include certain project impairments and the recapitalisation of the McConnell Dowell balance sheet. This along with the confirmed and committed support of our business plan by our financial institutions (banks and bond providers) represents continued progress and key milestones along our strategic road map.
The financial measures taken have significantly reduced our overall business risk profile. This allows us to balance the value of commercial settlements with the associated costs, business disruptions, customer relationships and the impact on the entire Group’s reputation.
The 2017 financial year results reflect the following:
* A reduction in underlying performance due to impact from the continuing work on loss making historic projects;
* The resolution of the long outstanding arbitration process in relation to the QCLNG Export Pipeline Project, physical work on which was completed in 2013;
* Various project impairments which now removes risk and uncertainty from the Balance Sheet;
* An active project portfolio performing in line with expectations and plan;
* A high volume of tendering activity across all Business Units and improved new work rolling success rate; and
* Restructure of overheads to enable business scalability, improved business efficiency and effectiveness and to be commensurate with the revenue, earnings and future business growth profile.
Stronger Balance Sheet
Strengthening the balance sheet was a significant focus for the organisation in the 2017 financial year. To guarantee adequate financial strength and flexibility to support the strategic growth plans, it was necessary to recapitalise the McConnell Dowell Group. This demonstrated absolute confidence in the Group and its strategic plan and will ensure all Business Units are able to take full advantage of all new work opportunities and growth initiatives.
With banks and financiers fully supportive of the project impairments and the capital restructure, the business can now fully realise and deliver upon the remaining phases of the strategic growth plan.
Outlook - FY18 & Beyond
Supported by a strong and healthy Order Book, together with increased project delivery capacity McConnell Dowell proceed with the subsequent phases of the transformational strategic road map with much confidence.
As of today, FY18 Revenue expectation is fully secured which provides a high degree of predictability and certainty regarding performance and earnings for the coming financial year. With all projects awarded over the past couple of years performing well, McConnell Dowell can expect to deliver its business plan.
The outlook for new work opportunities for execution in FY18 and beyond is promising, with high demand growth across the infrastructure markets in Australia, South-East Asia and New Zealand.
“We have the right strategy, capability, people and growth options to deliver our promise in FY18 and drive future success across the entire Group. I continue to be excited by the opportunities before us and remain fully committed to our customers’ needs and continuing to deliver expected performance and value. We are poised for a strong FY18,” Mr Cummins said.
Additional updates on McConnell Dowell's strategic journey are summarised in the below slides along with an update on major projects currently in execution.