Annual review 2022 Operational Performance Strong revenue growth, coupled with disciplined bidding, project delivery and cost control, combined to see the Group’s profit after tax improve and work in hand grow significantly. Positively, revenue growth was spread across multiple business units and regions with Australia, South East Asia and Built Environs business units all achieving healthy increases in turnover. Revenue for the New Zealand business was adversely impacted by a five-week COVID lockdown, however the underlying performance of that region was also positive. Work in hand also grew substantially, especially in Australia, New Zealand and the Built Environs business. South East Asia remains an ongoing challenge for newwork, but new opportunities are emerging, particularly in the strategically important marine sector. Preferred contractor positions also grew steadily across the business, underwriting the potential for further revenue improvement in FY23. The diversity of the Group’s capability and market sector participation continues to benefit the organisation and proactive customer engagement and business development is continuing to ensure a strong and diverse pipeline of opportunities remains available and actively pursued. Business Unit Overview Australia Conditions were strong in the Australian construction sector with all levels of government using infrastructure investment to drive post-COVID recovery efforts. Private sector investment is also holding up well with the resource and energy markets in particular seeing strong activity levels. NewWork Won for the year was at $1.6 billion, exceeding budget by 12%, while revenue and operating earnings both increased. Revenue was $1.1 billion. The Australian business unit increased tendering activity and achieved an exceptional win rate of over 50% The business was awarded a broad range of project sizes and types across all Australian regions and in most specialist capabilities, highlighting the diversity of the business unit. Contracts awarded include the Midland Station and BCI Minerals - Mardie Salt projects in Western Australia; the Heysen Tunnels Managing Contractor development phase in South Australia; AIE Port Kembla in New South Wales; and the Archer River Crossing in Queensland. Meanwhile, Victoria continues to contribute significant revenue and work in hand, with new contracts awarded with existing customers such as the Level Crossing Removal Project, Major Road Projects Victoria, Rail Projects Victoria, and Australian Rail Track Corporation. In addition, the business secured numerous smaller rail services contracts in Victoria for numerous customers including V/Line, VicTrack, and MTM. Additional work was also secured through the SAWater Frameworks partnership in South Australia. Looking forward, a number of major opportunities are pending award in the first half of next financial year, signifying a strong start to the next reporting period. New Zealand & Pacific Revenue for the New Zealand and Pacific Islands business unit was slightly down on last year at $186 million, the result being negatively impacted by a five-week industrywide COVID lockdown. Despite this the business unit’s profitability improved by 9%. The business successfully completed several major projects across a range of disciplines. These included transport related projects such as the Puhinui Station Interchange Project in Auckland (in internal joint venture with MCD’s Built Environs business), the Christchurch Southern Motorway Stage 2, and the City Rail Link Contract 2 in Auckland. All are important upgrades and augmentations to the country’s road-rail network. In the water sector, the company completed the Auckland-based Snells Algies Wastewater Pipeline and Outfall, and the St Marys BayWater Quality Improvement projects. The former project achieving a newworld record for the longest Direct Pipe® drive at 2021 metres. The business also continued to support regional water needs with projects such as the Pukekohe WWTP, Warkworth to Snells pumpstation and Dunedin City Council Panel works. 05 In the Pacific Islands, McConnell Dowell completed Stage 2 of the Te Mato Vai project - a multi-staged upgrade of the water supply network on Rarotonga. McConnell Dowell New Zealand were awarded several projects during the financial year and newwork won was $437m. New project awards included Barber Grove, Gisborne Wastewater Treatment Plant, Corbans Reserve, Continuing works at AIAL on the Fuel network, Eastland Port and Auckland District Health Board. The latter another joint venture with Built Environs. In the Pacific Islands McConnell Dowell was awarded a contract to upgrade the lighting at Fitiuta Airport and Pago Runway 5/23000 in American Samoa. Looking forward, the New Zealand business has a strengthening pipeline of opportunities in the transport, water/wastewater and energy sectors. Built Environs Built Environs, the Group’s commercial building business operating in South Australia, Victoria and New Zealand, increased its revenue by 20% to $143m in FY22. The business successfully delivered a range of complex projects in health, education, community sport and infrastructure. Highlights include completion of the Auckland City Mission Home Ground project and the Puhinui Station Interchange project in New Zealand; Modbury Hospital Upgrade and the State Sports Park in Adelaide; and its first project in Victoria, the Beaumaris Secondary College project for the Victorian Schools Building Authority. The former three projects receiving multiple industry awards for excellence. The team’s strong focus on business development across all operating regions saw bid volumes increase f to $1.6 billion and newwork won increase from $99m to $312m. Key project wins in FY22 include the Queen Elizabeth Hospital Stage 3 Redevelopment in Adelaide for the South Australian state government, and the Fitzroy Sports Centre for the Victorian state government. Built Environs’ successful partnership in New Zealand with McConnell Dowell continued with their joint venture being awarded the A40 Central Plant and Tunnel Project for the Auckland District Health Board. The Built Environs business enters the new financial year with several promising upcoming tender opportunities in all regions and the likelihood of further business growth. South East Asia Revenue in South East Asia increased by 56% to $251 million, however the region remains the most challenging for McConnell Dowell. Profit margins were adversely impacted by difficult operating conditions, including the residual impact of COVID-19 border closures across the region, and no newwork was secured in the reporting period. Despite recent relaxation of COVID-19 restrictions, current projects are now navigating through the challenges of the tightening global supply chain. Active projects include Tangguh LNG and Palembang Wastewater project in Indonesia; Jurong Regional Line (J108), C1A, and Tuas Water Reclamation Works in Singapore; and FGEN LNGMulti-Purpose Jetty and Gas Receiving Facility in the Philippines. Looking forward, and notwithstanding these challenges, the regional construction sector appears to be on a steady path to recovery and is forecast to return to near pre-pandemic levels in FY23. A complete review of the region’s opportunity pipeline has been undertaken and good quality prospects that align stronglywith the Group’s specialist engineering capability and delivery strengths have been identified. Tendering activitywhich was temporarily paused during the period of International border closures has now recommenced and the Group anticipates securing newwork in this region in the near term.
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