THOMSON REUTERS STREETEVENTS
EDITED TRANSCRIPT
CIM.AX - Interim 2015 CIMIC Group Ltd Earnings Call
EVENT DATE/TIME: JULY 23, 2015 / 6:00AM GMT
THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us
©2015 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited
without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its
affiliated companies.
JULY 23, 2015 / 6:00AM, CIM.AX - Interim 2015 CIMIC Group Ltd Earnings Call
CORPORATE PARTICIPANTS
Marta Olba CIMIC Group Ltd - Group Manager IR
Marcelino Fernandez Verdes CIMIC Group Ltd - Executive Chairman and CEO
Javier Loizaga CIMIC Group Ltd - CFO
CONFERENCE CALL PARTICIPANTS
Craig Wong-Pan Deutsche Bank - Analyst
Simon Thackray Citigroup - Analyst
Andrew Johnston CLSA - Analyst
Sam Theodore UBS - Analyst
Nathan Reilly Goldman Sachs - Analyst
Tobias Loskamp HSBC - Analyst
Ben Brownette CBA - Analyst
PRESENTATION
Marta Olba - CIMIC Group Ltd - Group Manager IR
Welcome everyone and thanks for joining us for CIMIC's 2015 Half Year Results. My name is Marta Olba, I am responsible for investor relations. I'm
here with Marcelino Fernandez, our Executive Chairman and CEO who is going to present our results.
Also with me is Janet Payne who is handing over investor relations responsibilities to me, Javier Loizaga, our Chief Financial Officer, and Angel
Muriel, who has been announced today as our Chief Financial Officer. After the presentation we will take your questions, but for now let me hand
over to our Executive Chairman and CEO, Marcelino Fernandez.
Marcelino Fernandez Verdes - CIMIC Group Ltd - Executive Chairman and CEO
Thank you, Marta. Welcome and thank you to everyone for joining us for this presentation. I'm pleased to report that in the first half of 2015 CIMIC
reported a strong result. We are going to look into the highlights in regard of work-in-hand, cash flow, operating cash flow, margins, balance sheet
and finally, we are going to give some comments in regard of our guidance.
Work-in-hand on track with increase in new orders. Now, let's look at work-in-hand in a little more detail. As I mentioned during the period we
secured AUD7 billion of new contract extensions and variations and we now have total work-in-hand about AUD28.5 billion.
There was particular strength in construction work-in-hand which increased 11.6% compared with March 31. This included amongst other works
AUD900 million of works for Sydney's M4 East Motorway, and a AUD1.2 billion contract to develop a boundary control point between Hong Kong
and China, the largest project won by our Hong Kong business as a sole contractor.
We also made progress in the Americas with Thiess signing a AUD175 million services agreement for a copper mine in Chile. This project is a
significant milestone for Thiess, showing the opportunities for global mining capabilities in the South American marketplace. Through Thiess we
have further diversified into new markets like those in the Americas. Leveraging our strong base in [Australia and] India we'll offer mining solutions
to clients in the resource regions of North and South America in addition to Southern Africa, where we currently work.
2
THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us
©2015 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited
without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its
affiliated companies.
JULY 23, 2015 / 6:00AM, CIM.AX - Interim 2015 CIMIC Group Ltd Earnings Call
HLG is increasing revenues from AUD2060.7 million to AUD548.1 billion during the period, and winning work including the $608 million of work
for the construction of the reservoirs in Qatar. It recorded a breakeven performance during the six months, evidence of the realisation of the
business.
Looking ahead, we have tendered on and we are shortlisted to tender on several major projects in Australia that are expected to be awarded in
2015 and 2016. WestConnex Stage 2 in New South Wales, a level crossing removals package in Victoria, the Kingsford Smith Drive upgrade in
Queensland, Capital Metro in the ACT and Perth Airport Link, Perth Freight Link and the Tonkin Highway upgrade in Western Australia are some
of the examples. In total we have about AUD20 billion of tenders which are expected to be awarded in the second half of 2015, showing strong
project opportunities in our markets.
On the slide number 4 we speak about the operating cash flow. Operating cash flow totalled AUD852.2 million during the period, a significant
improvement year-on-year over the operating cash flow of AUD78.5 million. We can see in the bridge that the cash flow from investing activities
included AUD1.6 billion in net cash for the divestments of John Holland and from the [50/50 Services] investment partnership. With the proceeds
we strengthened the balance sheet and reduced debt. Included in cash flow from financing activities is the repurchase of AUD383 million of our
10-year senior notes which will significantly reduce our future finance costs.
On slide number 5, improved operating results and significant margin expansion. Moving to our operating results. We produced earnings before
interest and tax of AUD439.3 million during the half, a 15.1% increase on the comparable period in 2014, which [included] 50% of Services. Net
profit after tax was AUD257.2 million, a 7.5% increase on the same comparable period.
[This work is] even with the short-term softening in revenue during the period as we significantly reduced costs. The cost savings arose from
streamlining the operating model, reducing duplication and reducing management layers and bureaucracy.
All up, we were able to improve the EBIT margin to 6.1%, an increase of 150 basis points from the prior comparable period. We delivered an NPAT,
net profit after tax, margin of 3.6%, an increase of 70 basis points on the same period. We expect that throughout the standardisation of business
and IT systems we will achieve further savings.
As you may have seen, the half year results include one-off profits from the sale of our offices in St Leonards and the sale of some Indonesian
interests. These one-off profits offset one-off strategic review costs.
On slide number 6, balance sheet. Turning to the balance sheet the main message here is the further de-risking the leveraging and the strengthening
of the balance sheet during the second quarter. Net debt has come down to AUD215 million, a AUD303 million improvement from the first quarter.
Gearing improved as a result to 5.3% at June 30, down from 12.1% at March 31. It's the focus on cash collection and the proceeds from the divestments
of John Holland and 50% of Services that has enabled us to undertake this deleveraging, including repaying AUD1 billion in debt. The deleveraging
was achieved even with the payment of dividends, income tax and tax on the profits from the investment totalling about AUD750 million.
Progress is also seen in net contract debtors. All up, net contract debtors have reduced by AUD336 million or 15.1% since March, a substantial
de-risking on the balance sheet.
Regarding our legacy projects, management continues to focus on the recovery of the outstanding amounts.
And on slide number 7, transformation. In 2014 we delivered phase 1 of our transformation by reorganising [our] operating model into a streamlined,
simplified and efficient structure, substantially strengthening and de-risking the balance sheet. Phase 2 continues the focus on standardisation,
simplification and streamlining by making improvements to the efficiency of our business and IT systems, further reducing costs and enhancing
the capital discipline within our operating companies.
In terms of forecast, we are on track to deliver 2015 net profit after tax in the range of AUD450 million to AUD520 million, subject to the market
conditions.
3
THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us
©2015 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited
without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its
affiliated companies.
JULY 23, 2015 / 6:00AM, CIM.AX - Interim 2015 CIMIC Group Ltd Earnings Call
That's all from me. Thank you very much everyone for your attention, and now we are ready to take your questions. Marta?
QUESTIONS AND ANSWERS
Marta Olba - CIMIC Group Ltd - Group Manager IR
Thank you, Marcelino. Operator, do you have any questions please?
Operator
(Operator Instructions). Craig Wong-Pan, Deutsche Bank.
Craig Wong-Pan - Deutsche Bank - Analyst
Hi. My first question just comes off the back of your comment that you said there were a number of (multiple speakers) --
Marcelino Fernandez Verdes - CIMIC Group Ltd - Executive Chairman and CEO
Can you speak up, please?
Craig Wong-Pan - Deutsche Bank - Analyst
Is that better?
Marcelino Fernandez Verdes - CIMIC Group Ltd - Executive Chairman and CEO
Could you speak up please?
Craig Wong-Pan - Deutsche Bank - Analyst
Can you hear me now?
Marcelino Fernandez Verdes - CIMIC Group Ltd - Executive Chairman and CEO
(Inaudible) well.
Craig Wong-Pan - Deutsche Bank - Analyst
My first question comes in relation to your comment that you had some one-off gains on sales and then you had some one-off costs. I just wanted
to know whether that one-off cost, did your comment refer to the debt break fee as well, or was that just other one-off costs, one-off restructuring
costs?
4
THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us
©2015 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited
without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its
affiliated companies.
JULY 23, 2015 / 6:00AM, CIM.AX - Interim 2015 CIMIC Group Ltd Earnings Call
Marcelino Fernandez Verdes - CIMIC Group Ltd - Executive Chairman and CEO
Javier, can you go through it please.
Javier Loizaga - CIMIC Group Ltd - CFO
Yes. Hello. This is Javier. Yes, the one-off costs refer essentially to three [chapters]. One is effectively the cost of buying back our bonds from the
US. As you know we have bought back AUD383 million of bonds and there was a cost involved in it. Secondly, we have had the receipts of the sales
a bit later in the year than we expected in our initial guidance. As you know, we received the proceeds part at the end of Q1 and another part in
Q2, so that was a few months later than what we expected initially in our guidance.
And finally, the restructuring costs that we were planning to incur during the year, we have been executing that restructuring at a quicker pace
than we forecasted initially, so we have a higher amount of those restructuring costs during the first half. Although that is essentially offset by
those one-off profits as Marcelino was mentioning in his speech.
Craig Wong-Pan - Deutsche Bank - Analyst
Okay. Then my next question comes from -- in terms of restructuring, are you planning -- you said that it's gone quicker than what you were
planning. Is there more restructuring planned for the second half?
Javier Loizaga - CIMIC Group Ltd - CFO
Yes, we do have more restructuring planned for the second half. It's not -- the exercise of course is not finished and we will be continuing to execute
that transformation throughout the second half, yes.
Craig Wong-Pan - Deutsche Bank - Analyst
Okay. Then my next question, just on margins. You had a very strong improvement within the contract mining margins. I was just wondering, is
there any seasonality to those margins or was that purely the improvements, the operational improvements and cost-out that you've achieved?
Javier Loizaga - CIMIC Group Ltd - CFO
Yes, there isn't a significant seasonality in the margins in mining, although the first half of last year compared to the second half of last year was
significantly different in terms of revenues. But to answer your question in terms of margins, there isn't a big seasonality.
Craig Wong-Pan - Deutsche Bank - Analyst
Okay.
Marcelino Fernandez Verdes - CIMIC Group Ltd - Executive Chairman and CEO
We have started an approach, cost improvement in mining one year ago, reorganising with our clients their jobs and because of that we are getting
high margins today. I think that the mining business is ready, it's complete and that's why (inaudible) the cost. The cost has been streamlined
significantly as you can see in our margins.
5
THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us
©2015 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited
without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its
affiliated companies.
JULY 23, 2015 / 6:00AM, CIM.AX - Interim 2015 CIMIC Group Ltd Earnings Call
Craig Wong-Pan - Deutsche Bank - Analyst
Okay, great. Thank you very much.
Operator
Simon Thackray, Citigroup.
Simon Thackray - Citigroup - Analyst
Thanks very much. Good afternoon, gentlemen. Just a couple of very, very quick questions. The expectations for property, whether this is Javier or
Marcelino, for the second half of 2015 after you've noted the sale of St Leonards and others, the margin in property obviously was a fantastic result
in a strong market, it was around 14% and around 20% of the EBIT in the first half.
Could you give us some colour in the guidance in terms of what the expectations are for the second half for property, part 1? And part 2 of that
property-related question, given the backlog in commercial and residential, what to potentially expect from a margin and an earnings contribution
going into 2016, just given it's such a material contributor to the earnings?
Marcelino Fernandez Verdes - CIMIC Group Ltd - Executive Chairman and CEO
Yes, we are doing that. Do you have another question?
Simon Thackray - Citigroup - Analyst
Yes, I do, but I can wait for this first one to be answered.
Marcelino Fernandez Verdes - CIMIC Group Ltd - Executive Chairman and CEO
Okay. Well, what we are doing in properties as you know is just [managing] the properties business-by-business and investment-by-investment.
We explained in our strategy that we were not in a hurry, that the only thing we are doing is just trying to get what is more convenient for us into
the market.
That's why it's very difficult to know if we are going to get similar profits in second half of the year. We are expecting let's say to continue having
a good profitability in properties but not necessarily coming for the next two quarters, we don't know. We don't know, depending on, let's say, the
market response. Because as I explained in our strategy when we spoke a year ago about properties, the idea was to sell properties in [a whole].
You remember that it was not possible for us and the strategy changed and we are doing business-by-business and we are -- I think that we are in
the right direction but we are not expecting to have significant, significant profits in the next quarters. In any case, what we expect is to match our
extraordinary costs coming from restructuring with the gains that are coming from property.
Let's say that this is a good practice for us and then because of that we can't show this improvement in our profitability because we are offsetting
these extraordinary costs and we are speeding up their increase in our margins. You realise that we commented on our margins in the last quarter
that we were very focused on savings. That's very true.
We are happy that these savings are coming and we expect more savings to come in the next two quarters, as Javier said. But we don't have
especially concrete targets for property in each quarter. We are managing them and when we consider that the market offers are in line with what
we consider is good for the Company then we make the decisions and we sell the assets. That's the way that we are doing it right now.
6
THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us
©2015 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited
without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its
affiliated companies.
JULY 23, 2015 / 6:00AM, CIM.AX - Interim 2015 CIMIC Group Ltd Earnings Call
Simon Thackray - Citigroup - Analyst
That's very helpful, Marcelino. Just so I understand that clearly, there's a -- just so I'm crystal clear, there's a portion of that margin, that 14% margin,
which is actually from cost-out and from restructuring and from the better positioning that business, better running that business than it's done
before, rather than just market forces driving better outcomes in terms of property sales. Is that the way I should be interpreting that?
Marcelino Fernandez Verdes - CIMIC Group Ltd - Executive Chairman and CEO
No. The idea is that as you (inaudible) said it's coming from everywhere. We are (multiple speakers) --
Simon Thackray - Citigroup - Analyst
So that's not just within the commercial and residential division, that's across the board?
Marcelino Fernandez Verdes - CIMIC Group Ltd - Executive Chairman and CEO
Yes.
Simon Thackray - Citigroup - Analyst
I'm trying to understand the margin outcome within commercial and residential.
Marcelino Fernandez Verdes - CIMIC Group Ltd - Executive Chairman and CEO
Yes, but we are not -- as you know, we are not giving guidance because it is very difficult for us to give this guidance. We don't know how the
market is going to react to our assets. I wish we could know this, but what we are expecting is to continue managing this successfully. That's good
for the Company because we consider that it is a good opportunity. You know that the property market is a market that is changing depending
on the particular moment.
Simon Thackray - Citigroup - Analyst
Sure.
Marcelino Fernandez Verdes - CIMIC Group Ltd - Executive Chairman and CEO
I believe that because we are not in a rush -- because we are not in a rush we don't have a plan for selling all the assets in the next quarter or in the
next two quarters. If we can do it successfully we will, but it's not included in our guidance.
Simon Thackray - Citigroup - Analyst
I see. So in your AUD400 million (multiple speakers) your AUD450 million to AUD520 million then doesn't have any particular assumptions around
property or property sales being achieved, that's what you're saying?
7
THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us
©2015 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited
without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its
affiliated companies.
JULY 23, 2015 / 6:00AM, CIM.AX - Interim 2015 CIMIC Group Ltd Earnings Call
Marcelino Fernandez Verdes - CIMIC Group Ltd - Executive Chairman and CEO
No.
Simon Thackray - Citigroup - Analyst
Okay, fantastic. So that would be therefore upside to that guidance but potentially if you got as good an outcome in the second half as you had in
the first half. Would that be the way to interpret that?
Marcelino Fernandez Verdes - CIMIC Group Ltd - Executive Chairman and CEO
We have -- I wish, I wish, but we don't know (multiple speakers) --
Javier Loizaga - CIMIC Group Ltd - CFO
Simon (multiple speakers) --
Marcelino Fernandez Verdes - CIMIC Group Ltd - Executive Chairman and CEO
-- such guidance.
Javier Loizaga - CIMIC Group Ltd - CFO
No, sorry. Just to clarify, we are not expecting -- it's not in the guidance and we are not expecting anything in particular. In the guidance we gave
on the NPAT there is no assumption of any one-off profits out of property. That's what we said at the end of the year.
Also to clarify one of your questions, in June 2014 the improvements in the margins you see is ordinary net because in spite of this one-off profit
we have offset with those one-off profits some one-off restructuring costs and strategic review costs which we have not foreseen to have in the
first half. So the observation of the improvement in the margins is an ordinary one in nature.
Simon Thackray - Citigroup - Analyst
Yes, understand. So organic, yes. Thank you, Javier, that's very helpful. Then just given where the backlog is, gentlemen, there would seem to be
-- I'm putting property aside for a second -- good visibility into the following year, into fiscal 2016, and I appreciate we're only halfway through
2015 but given the backlog. The burn rate on the existing backlog was probably a little higher than perhaps I was anticipating, and I know you've
gone to great lengths to position the business to win work, to rebuild that backlog, but some of the work that you've won obviously is a little
longer-dated in nature. I'm just trying to understand the shape of the revenue curve as we move through the back half of 2015 and into 2016.
By my very simple calculations it seems to be down reasonably materially in 2016 in terms of where we sit on the backlog and the composition of
that backlog. Would that be -- notwithstanding the fabulous margin improvement would that be the way to think about the business in 2016, from
the top line perspective?
Marcelino Fernandez Verdes - CIMIC Group Ltd - Executive Chairman and CEO
I think the question, in your question there are two different aspects. One of them is that -- and I take into account that obviously we are successful
in having [a good order book] (inaudible) that these big projects, most of them are design and construct. It takes time from the moment that you
are secured to the moment that you start reducing your (inaudible) revenues. That's why some of them are going to affect by the last quarter of
8
THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us
©2015 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited
without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its
affiliated companies.
JULY 23, 2015 / 6:00AM, CIM.AX - Interim 2015 CIMIC Group Ltd Earnings Call
next year. That's not a significantly [affecting] for 2016. That's why when we are presenting with a target their assumption is that because of the
postponement of the PPP project remember, that we (inaudible) to replace the LNG project by PPP projects.
They are postponed. They are coming but a little bit later. What we are doing, it's in a radical way, is substituting and -- this LNG project for
construction project, but this construction project is not PPP [based]. Construction projects are projects that they are starting most of them in the
second, third quarter last year. That's why I'm not going affect significantly the revenue amounts. In regards of margin, there what we are doing is
keeping exactly the same risk approach in our tendering processes. We continue in -- positive in the margin expectation for the new order book.
I don't know if with this you have the answer that you were looking for.
Simon Thackray - Citigroup - Analyst
No, no, that's helpful. So just so I understand, the timing of some of these projects starts later into 2016. Some of the PPPs have been delayed so I
can assume the shape of the revenue curve, it certainly doesn't appear to grow in 2016. If anything, it could be off a little bit.
Marcelino Fernandez Verdes - CIMIC Group Ltd - Executive Chairman and CEO
It will be a significant -- it will be a significant growth, not 2016, by 2017 you know?
Simon Thackray - Citigroup - Analyst
Yes 2017. No that's what -- that's how I understand it given the shape of the (multiple speakers) --
Marcelino Fernandez Verdes - CIMIC Group Ltd - Executive Chairman and CEO
-- most [of them will be operating] -- will be operating significantly and then in 2016 we believe that with the success we are having in this first
half, it will continue being successful, you know, that we have ahead of us for being secured, AUD20 billion, which is a significant amount in the
second half of 2015. Imagine we are successful in the same portion that we've been in the first half of the year. The idea is [then] to go to the end
of the year with a similar or even a little bit higher order book, we'll see, but may -- keep in the margins inside and preparing the Company for the
next two to three years which is what is happening when you are having this kind of long [contract project] cost.
As I explained to you, from the moment that you are secured to the moment that you start using some of them, not all of them, but some of them,
need some time. Six months, eight months, something like that. That's what is going to happen.
Simon Thackray - Citigroup - Analyst
No that's perfectly clear. In terms of the excellent improvement in margins in this half certainly I assume we don't extrapolate the same rate of
improvement or same rate of change in the second half? Or going into the following year?
Marcelino Fernandez Verdes - CIMIC Group Ltd - Executive Chairman and CEO
(Inaudible) range, no the [variation of] range, we'll see because you know that what is happening is that with the savings, depending on the speed
of the saving, you are accounting the savings meaning that there are less costs in the next month. Mainly, mainly the savings, 100% of the savings
are going to affect next year. This year, could be we are going to get, I don't know, 60%, 65% of the savings in our margins increase and the total
amount of that will come next year. Meaning that we think that we are going to increase, to continue to see margins next year. This year we are
going to keep more or less a similar trend but not comparing quarter-by-quarter, as a total ratio what was forecast for us in our forecast.
9
THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us
©2015 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited
without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its
affiliated companies.
JULY 23, 2015 / 6:00AM, CIM.AX - Interim 2015 CIMIC Group Ltd Earnings Call
Okay, we are going in the right direction. If your question is, will you continue increasing your margins as you did in the first half of the year, the
answer is yes but not necessarily at the same speed in the second half because I explained to you that the savings will come mainly next year. Okay?
Simon Thackray - Citigroup - Analyst
Yes, no that's perfectly clear. Thank you Marcelino, that's very helpful.
Marcelino Fernandez Verdes - CIMIC Group Ltd - Executive Chairman and CEO
It is a good news -- but it is a good news, this increase in margin because of savings, because this is the [clear] way for increasing margins, save
costs.
Operator
Andrew Johnston, CLSA.
Andrew Johnston - CLSA - Analyst
Good afternoon gentlemen. Marcelino, just a question around the guidance. I'm just trying to understand the basis of guidance. I think Javier, you
mentioned that the guidance of -- the guidance does not include any one-offs, but --
Javier Loizaga - CIMIC Group Ltd - CFO
Yes.
Andrew Johnston - CLSA - Analyst
-- am I right to say that the profit for the first half includes AUD24 million from the sale of -- from sale of an asset and also there's profit on asset
sales out of property that are in the property division? So I'm just trying to understand what you define as one-offs and if it's -- if assets -- and does
it -- should we assume that the guidance number could include more asset sales?
Javier Loizaga - CIMIC Group Ltd - CFO
No. We -- I think (technical difficulty) yes, the answer -- very quick answer is no, the guidance includes no one-offs. The one-offs -- the positive
one-offs we have had in the first half have been essentially offset by one-off extraordinary costs and I was mentioning three categories, (1), the
buyback of the bonds in the US. Second, the fact that we have received the funds, the proceeds from the sales, later in the year than we expected.
So we have had more -- less cash during more time and that's an additional cost. Thirdly, that the restructuring costs, we have anticipated some
of the restructuring cost we are going to have later to the first half.
The result is that the one-off profits have been offset by one-off costs so the EBIT figure you see is very ordinary in nature and we don't expect any
more one-off costs, not -- any more one-off profits in the second half at this point.
Andrew Johnston - CLSA - Analyst
Okay, so any more one-off cost --
10
THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us
©2015 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited
without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its
affiliated companies.
JULY 23, 2015 / 6:00AM, CIM.AX - Interim 2015 CIMIC Group Ltd Earnings Call
Marcelino Fernandez Verdes - CIMIC Group Ltd - Executive Chairman and CEO
We have to say even that -- just one comment please, that you have to say exactly this. For instance, if [suddenly costs] come in from the bonds,
they are right now giving to us the future in the next -- I don't know -- seven years or whatever, significant savings regarding financial costs. That's
important say to realise that they -- obviously [these are] one-off but in the future, we are going to enjoy all the savings coming from this one-off,
okay?
Andrew Johnston - CLSA - Analyst
That would be helpful to understand because at the moment we don't have any clarity on what the actual cost savings were for the half. So can
you provide any more guidance?
Javier Loizaga - CIMIC Group Ltd - CFO
Yes, we don't give detail on that, but it's not too difficult. You know it's public that the bonds had a coupon of around 6%. You know what the
opportunity cost of debt is today in Australia and these were bonds who had another seven years of life and we have bought AUD380 million of
bonds. So I'm sure with that you can have an idea of how much we're going to save.
Andrew Johnston - CLSA - Analyst
So we have that, then we have the AUD24 million on the asset sale but there's also profit on -- looks like there was some profit on asset sales in the
property division which we don't -- which you haven't disclosed.
Javier Loizaga - CIMIC Group Ltd - CFO
We don't disclose the detail, no.
Andrew Johnston - CLSA - Analyst
Okay, so while there might be one-off profits, you were saying in the second half you expect one-off costs to offset those as well.
Javier Loizaga - CIMIC Group Ltd - CFO
No, no, no, the one-off costs were in the first half and they have already offset the one-off profits in the first half.
Andrew Johnston - CLSA - Analyst
But in the second half you're expect more (multiple speakers) --
Javier Loizaga - CIMIC Group Ltd - CFO
We don't expect more one-off profits in the second half.
11
THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us
©2015 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited
without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its
affiliated companies.
JULY 23, 2015 / 6:00AM, CIM.AX - Interim 2015 CIMIC Group Ltd Earnings Call
Andrew Johnston - CLSA - Analyst
But you're still expecting more restructuring charges, yes?
Javier Loizaga - CIMIC Group Ltd - CFO
Not much. A little bit, but not much. So essentially it will not change the expected guidance number at the end of the year.
Andrew Johnston - CLSA - Analyst
Okay. Just going onto the receivables, so it looks like there was about a AUD400 million improvement in the receivable line. Can you talk about
where that came from? Was that the result of collection of legacy receivables and if so, how much came from there versus an improvement in the
current operating business?
Javier Loizaga - CIMIC Group Ltd - CFO
Essentially they are ordinary receivables. There were some of a smaller legacy that we addressed but the larger legacy ones we are still working on
them. If we had settled any of the larger receivables, that would have been disclosed to the market. So the answer is no, essentially that is the
day-to-day improvement of our receivables collection and the working capital management with clients.
Andrew Johnston - CLSA - Analyst
What do you define as the larger legacy receivables?
Javier Loizaga - CIMIC Group Ltd - CFO
The ones which everybody knows about, Gorgon and the like.
Andrew Johnston - CLSA - Analyst
Okay, well I'd put [Iraq] and HLG into there. Would that be fair?
Javier Loizaga - CIMIC Group Ltd - CFO
Yes.
Andrew Johnston - CLSA - Analyst
Okay. Great, thanks very much.
Operator
Sam Theodore, UBS.
12
THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us
©2015 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited
without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its
affiliated companies.
JULY 23, 2015 / 6:00AM, CIM.AX - Interim 2015 CIMIC Group Ltd Earnings Call
Sam Theodore - UBS - Analyst
Thank you for (inaudible). I just wanted the -- your comments around the bonds and the timing (multiple speakers) --
Marcelino Fernandez Verdes - CIMIC Group Ltd - Executive Chairman and CEO
Excuse me, can you speak up please?
Sam Theodore - UBS - Analyst
Sure.
Marcelino Fernandez Verdes - CIMIC Group Ltd - Executive Chairman and CEO
Speak up please.
Sam Theodore - UBS - Analyst
Sorry. I was going to say, given the comments you've made around the cash timing of the receipt and the comments you've made around the
bonds, if you can help us understand roughly what the interest run rate will look like in the second half? So more an annualised interest cost?
Javier Loizaga - CIMIC Group Ltd - CFO
No, we don't give guidance in particular over the finance cost details. We're just trying to help you with the calculation. The benefit of buying the
bonds back is relatively easy to calculate as I say, the coupon of the bonds is public and the opportunity cost of that in Australia today is also public
and we've bought an amount which is public. But we are still working on the rest of the structure of the debts and it's not the final picture of the
balance sheet that we have today. It's going to continue evolving during the year.
So our objective as part of the strategic review is to reduce finance costs as much as we can and in different ways. We've been doing that in the
first half and we will continue to do it in the second.
Sam Theodore - UBS - Analyst
Thank you. Just in terms of the environment, obviously the volatility in commodity prices and what that means for just, you know, the sort of cost
reductions we're seeing sort of still being pursued by miners and large oil and gas companies today, so that's obviously been a change relative to
the last 12, 18 months ago when you, I guess, came into the business. Just wondering how you see -- how the long-term sort of equation works
out from a revenue perspective. So has that turned down relative to your expectations where you've seen sort of infrastructure pickup or is the
revenue just down but margin has more upside? I just want to understand how those two things play out and what you're seeing in the business
at the moment.
Marcelino Fernandez Verdes - CIMIC Group Ltd - Executive Chairman and CEO
Yes. Let me, yes, explain to you what is happening. You know that more or less we are in a [mining flat] market today in Australia. Then if you take
these [figures] into account particularly we can say that we are in the -- in a flat position regarding revenues.
But apart from the Australian market what we are doing is (inaudible) a regional geographic based diversification and you know that we've been
successful firstly in Chile. We are tendering in Chile. We are tendering in US, in the north of US. We are tendering in Canada. We continue tendering
13
THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us
©2015 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited
without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its
affiliated companies.
JULY 23, 2015 / 6:00AM, CIM.AX - Interim 2015 CIMIC Group Ltd Earnings Call
in Botswana. Given that what we are doing [essentially is knowing] that the Australian market is flat and keeping this range of revenues, we want
to increase our profitability by two different ways. One of them is by increasing the cost reduction. This is what happened in the last, as you said,
12 months, more or less. At the same time, increasing our revenues and the way of increasing our revenues is just by looking at the foreign markets
and the markets that we are focused on today, like the markets I explained to you, mainly in these markets.
Because of that, what we expect is that to slightly increase in the next years and once the Australia -- [how do I say] -- current situation regarding
mining is going [over], we'd consider that we are going to have a very, very good position in mining. We want to continue even increasing our
revenues but on the basis of these two points. Well, this kind of flat position in our local market, meaning Australia, and increasing our revenues
in foreign markets and the main foreign markets that we are looking at tendering on are the markets I explained to you, those.
Sam Theodore - UBS - Analyst
Right. Just so I can understand the global framework, are there specific markets that are Leighton markets versus Hochtief versus ACS or is it, should
we think about the type of activity done by those three companies?
Marcelino Fernandez Verdes - CIMIC Group Ltd - Executive Chairman and CEO
No, what we are doing is looking at each company in this -- in [regards] CIMIC, we are speaking about CIMIC. We have our strengths. These strengths
are very clear in construction and in mining. In mining, in our model we are the first operating company in the world and you don't have this activity
either Hochtief or ACS, this is our own activity. What is clear, is that there are some markets that some of these companies are very well positioned
and we are taking [full] advantages of this positioning because we are saving time in recognising exactly the way of -- that markets work, like
anything else.
The strength is coming from our expertise and our positioning. We are very competitive in mining because we are very experienced in that and
we go these foreign markets and we can compete easily and we believe that for us are good markets because -- are markets that can give us these
kind of extra revenue for offsetting this flat moment in Australia. That's the strategy in mining and we believe that with this, once the Australian
crisis is over, we are going to enjoy to benefit the increase in the Australian market and the second one, the positioning in these markets.
You have to take into account that we are right now just including in our mining business another way of tendering which is through our BOTs,
which is new and we are starting to tender in this process and are going to give us some market opportunities also. That's good for mining and we
are very positive in our mining position.
Sam Theodore - UBS - Analyst
Thank you.
Operator
Nathan Reilly, Goldman Sachs.
Nathan Reilly - Goldman Sachs - Analyst
Hi Marcelino. Just a quick question around I guess the contract mining growth opportunities which you're targeting and you mentioned the
countries where you were targeting new projects. Can I get an idea of what --?
14
THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us
©2015 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited
without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its
affiliated companies.
JULY 23, 2015 / 6:00AM, CIM.AX - Interim 2015 CIMIC Group Ltd Earnings Call
Marcelino Fernandez Verdes - CIMIC Group Ltd - Executive Chairman and CEO
Yes.
Nathan Reilly - Goldman Sachs - Analyst
-- the capital commitment or capital investment would be required to chase those opportunities and how you'd look to sort of put equipment into
those markets, given you current levels of fleet utilisation and also, I guess, the second hand market at this point?
Marcelino Fernandez Verdes - CIMIC Group Ltd - Executive Chairman and CEO
Nice question, I appreciate this question. I was just hoping that someone asked me this question because you realise that because of the decline
in Australia, the mining decline, we have some idle machinery. That's good for us because we can share this machinery in these new markets. We
are very competitive because most of this machinery is strongly depreciated and then because of that we [have] strong opportunities. That's a
good question and the answer is we are very well positioned because of this advantage of having machinery that we can use in these markets and
better compete.
Nathan Reilly - Goldman Sachs - Analyst
So does that suggest that the upfront capital cost would be quite low, given your current fleet configuration?
Marcelino Fernandez Verdes - CIMIC Group Ltd - Executive Chairman and CEO
Well we are trying to optimise our current position. First thing that we are going to do is to optimise our equipment and machinery. We need to
do this before going to expending new CapEx, well we are [going to do it]. But the management target and we believe that we are going to need
relatively successful in the next, let's say, six to 12 months on that.
Nathan Reilly - Goldman Sachs - Analyst
Okay thanks, I understand. The second question was simply in relation to the Habtoor Leighton Group business. Marcelino, the last time we spoke,
you mentioned -- I think you were talking reasonably positively about the prospects of that business recovering its receivables. Could we just get
an update on how that -- how the progress is going in terms of its recovery of its legacy receivables and then the outlook for the recovery of the
shareholder loans please.
Marcelino Fernandez Verdes - CIMIC Group Ltd - Executive Chairman and CEO
Yes. Well I was very positive you remember because we got some deals with our clients in regard of these legacy issues. But you know that the
case of this (inaudible) in regards of (inaudible) going to the solution, the [finance] solution which is to pay always is very difficult to have it. We
expected to get some -- part of these legacies in these months. We continue expecting that situation legally speaking is under control, no problem
but it [seems always there's] postponing and postponing and this is one thing.
Second thing is that as you can realise, the Company is getting much better. We increase practically -- we've increased -- practically doubled the
revenues amount because of being so successful in tendering [last] year. We are keeping more or less our position in order book and we expect to
continue improving our position.
You know that we are very successful in getting new jobs and as I explained to all of you in the last meeting, the risk management or the risk
tendering approach in this new project is similar -- exactly the same as the CIMIC risk tendering approach. Meaning that the profits that are in our
15
THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us
©2015 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited
without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its
affiliated companies.
JULY 23, 2015 / 6:00AM, CIM.AX - Interim 2015 CIMIC Group Ltd Earnings Call
order book are getting better, much better. We expect with a little bit of patience, let's say, to get these kind of legacy issues, at least we'll see it
will (inaudible) some of them by the end of the year and at the same time continuing to (inaudible) our position in [our margins] in the market.
We expect it is possible because after reaching that agreement our reputation in the market is very good. They [are counting on us for] most of
the projects and we expect, as I say, to -- little-by-little because we don't know exactly the [stage], it's not depending just on us, it's depending on
our clients, little-by-little improving our financial position.
Nathan Reilly - Goldman Sachs - Analyst
Okay and final question from me. Now that John Holland's been divested and you've divested 50% of your interest in the Services business, can
you just give me an update on your plans for Fleetco this year please?
Marcelino Fernandez Verdes - CIMIC Group Ltd - Executive Chairman and CEO
Yes, Javier.
Javier Loizaga - CIMIC Group Ltd - CFO
Yes, on Fleetco we are now developing the business model to start addressing the market. The whole process is underway and we expect to be
finalised with this process by the end of the year. We are in the process of defining in detail that business model, how it's going to work operationally
and how it's going to address the market, in particular the third parties market.
Nathan Reilly - Goldman Sachs - Analyst
Okay, thanks very much.
Marcelino Fernandez Verdes - CIMIC Group Ltd - Executive Chairman and CEO
Because of the market evolution in mining, what we are doing is adapting our Fleetco strategy to the current market mining position. That's what's
happening. We believe that we are in the right direction also in the Fleetco [project].
Operator
Tobias Loskamp, HSBC.
Tobias Loskamp - HSBC - Analyst
Yes, good day gentlemen. My first question is also on the contract mining business where the revenues are down this year 25%. How does this sit
together with your view of let's say a flattish market or when would you expect revenues to start flattening year-over-year?
The second question that I have is on the services business, on the 50% stake that you still have. Can you just clarify in which segments these profits
go into and how is the business developing at the moment?
Then finally just colour on the current CapEx requirement of the business, you had AUD155 million in the first half. Is that a sustainable level for
the coming years?
16
THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us
©2015 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited
without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its
affiliated companies.
JULY 23, 2015 / 6:00AM, CIM.AX - Interim 2015 CIMIC Group Ltd Earnings Call
Marcelino Fernandez Verdes - CIMIC Group Ltd - Executive Chairman and CEO
Javier, please.
Javier Loizaga - CIMIC Group Ltd - CFO
Yes. So on the first question on the contract mining revenue figure for the first half of this year compared to the first half of last year, the 26%
[apparent fall] is comparing the first semester with the first semester but there was a significant difference between the first and the second semester
last year. As you may remember, the co-production renegotiations during the year had a full effect in the second half of the year and of course in
the first half of this year. So if you compare the first half of this year with the second half of last year the reduction is only 11% or 12% which represents
much more the trend we are seeing this year.
To answer your question, we are very close to flattening we believe and it shouldn't go much further down. We will compensate this going forward
with entering into new markets.
On your second question on services, the services segment is in the corporate columns. That's where it is included, the profit that we equity account
from services. The business is going well. It is winning new work. We are very happy with its development and evolution.
The third question -- sorry, can you --?
Marta Olba - CIMIC Group Ltd - Group Manager IR
CapEx.
Javier Loizaga - CIMIC Group Ltd - CFO
Yes, the CapEx. So on the CapEx, yes, we don't see a significant increasing in the CapEx that we are now committing this year, as Marcelino was
mentioning before. In terms of mining which really represented the biggest fraction of the CapEx we do have enough idle fleet to cover, so our
CapEx going forward should be relatively limited, in particular in the second half of this year. Don't expect much more than what we have now.
Marcelino Fernandez Verdes - CIMIC Group Ltd - Executive Chairman and CEO
There's no new CapEx. This CapEx is coming from commitments from the past but not new special CapEx.
Tobias Loskamp - HSBC - Analyst
Okay. A follow up question on the services business because you said it goes into the corporate line. On the other hand if you look into the corporate
position in your segment reporting, segment information, the profitability has deteriorated. Is it mainly because of the extraordinary losses or is
this also because you are shifting some cost from the segments into the headquarter? How can the development be explained?
Javier Loizaga - CIMIC Group Ltd - CFO
You mean the difference between the corporate profit this year and last year, no?
17
THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us
©2015 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited
without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its
affiliated companies.
JULY 23, 2015 / 6:00AM, CIM.AX - Interim 2015 CIMIC Group Ltd Earnings Call
Tobias Loskamp - HSBC - Analyst
Yes.
Javier Loizaga - CIMIC Group Ltd - CFO
That has two effects. One is some one-offs in this year compared to last year. In particular we have here the cost of buying back the bonds which
are in the corporate column and also you may remember that Macmahon, one of our investments, has got an impairment of their net assets in the
market and we took our share of it. That's also in that column.
Also there is some non-comparable figures in that column because in particular Eng Co. and PPP Co. which in last year did not exist as separate
entities, this year we have them in this column while last year those costs existed but they were at the OpCo level. They were in construction and
mining and they were not separate. Now we do have them separate as separate entities and they go into this column. Those three effects make it
not very comparable with the figures.
Tobias Loskamp - HSBC - Analyst
Alright, thank you.
Operator
Ben Brownette, CBA.
Ben Brownette - CBA - Analyst
Thanks. I just had one on the Middle East and one on the numbers. Can I just go on the numbers given Javier you were talking about it? Just so I
have it right, you have the profit from the sale of St Leonards in the property business and then you have all of the costs plus Macmahon square
ups as well as corporate overhead and the profit from services in the corporate line?
Javier Loizaga - CIMIC Group Ltd - CFO
Correct.
Ben Brownette - CBA - Analyst
I know it was disclosed in the PCP what the EBIT contribution for services was. Is that a reasonable number to look to use for this half? Then can
you give us a guide on what the corporate overhead is just in terms of modelling it forward?
Javier Loizaga - CIMIC Group Ltd - CFO
I'm so sorry, we don't give that detail but the quick answer is no, the AUD37 million of 2014 is not comparable to this year. The capital structure of
that business is different this year so the number is different. We don't disclose it so I apologise for that.
In terms of overhead costs at the holding level, again we don't provide that detail but it's significantly lower than what it used to be. That's all I can
say.
18
THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us
©2015 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited
without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its
affiliated companies.
JULY 23, 2015 / 6:00AM, CIM.AX - Interim 2015 CIMIC Group Ltd Earnings Call
Ben Brownette - CBA - Analyst
Sure. But obviously using that number in the first half for the second half going forward [is] going to be materially incorrect?
Javier Loizaga - CIMIC Group Ltd - CFO
Probably not materially incorrect.
Ben Brownette - CBA - Analyst
But you won't have a write-off for Macmahon, you won't have restructuring costs.
Javier Loizaga - CIMIC Group Ltd - CFO
Correct. We won't have under Macmahon hopefully.
Ben Brownette - CBA - Analyst
So therefore surely it's a materially different number then, surely.
Javier Loizaga - CIMIC Group Ltd - CFO
Yes, maybe if you are thinking of using the same AUD155 million negative profit before tax in the corporate column that's not going to happen in
the second half.
Ben Brownette - CBA - Analyst
Okay, just with that question that was on mining I'm not sure it was interpreted correctly. There was obviously a very strong margin so can you talk
about why it was so strong because generally the June half is a weaker quarter for contract mining -- a weaker half for contract mining rather.
Marcelino Fernandez Verdes - CIMIC Group Ltd - Executive Chairman and CEO
Javier.
Javier Loizaga - CIMIC Group Ltd - CFO
Yes. Since most of the contract renegotiations during last year were effected in the second half and those renegotiations were coupled with the
restructuring of the operations from our side to reduce costs we have seen the full effect of those adjustments in this half. Apparently it looks like
a huge improvement from the first half but it was already happening in the second half and we are now just seeing the full effect of those.
There is not a material difference in that improvement of margins from the second half to the first half. It's only the full effect of it on the P&L.
19
THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us
©2015 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited
without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its
affiliated companies.
JULY 23, 2015 / 6:00AM, CIM.AX - Interim 2015 CIMIC Group Ltd Earnings Call
Ben Brownette - CBA - Analyst
Yes, okay. Just one more on the Middle East. It appears that HLG did actually collect some legacy receivables based on the disclosure about when
it -- I think it was going from -- sorry, let me just get the number -- it went from 61% to 46% on legacy projects receivable in the next 24 months.
Does that imply that HLG did collect on some money?
Marcelino Fernandez Verdes - CIMIC Group Ltd - Executive Chairman and CEO
No, it implies that we have more conservative in the calculation of our valuation [in use] and we have delayed the assumption on when we are
going to collect those legacy issues a bit further down in the future.
Ben Brownette - CBA - Analyst
Okay, thank you.
Operator
Simon Thackray, Citigroup.
Simon Thackray - Citigroup - Analyst
Thanks very much. Javier, just a modelling question really if you can. In the work in hand and in the revenue in the first half, I just want to get a
sense of the US dollar denominated both work in hand and revenue just because we've got currency as a bit of an issue moving around at the
moment and forecast in various houses to move in various directions. I just want to be able to apply the proper proportional FX impact on interest,
coupon costs on interest, as well as on earnings and going forward on the run off of work in hand. Can you help us with that in terms of how much
we've got in US dollar denominated?
Javier Loizaga - CIMIC Group Ltd - CFO
Simon, I don't have the number on me now but we'll call you back.
Simon Thackray - Citigroup - Analyst
Okay, [good as gold] (multiple speakers) --
Javier Loizaga - CIMIC Group Ltd - CFO
Okay, thanks.
Marta Olba - CIMIC Group Ltd - Group Manager IR
Please, the last question.
Operator
Andrew Johnston, CLSA.
20
THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us
©2015 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited
without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its
affiliated companies.
JULY 23, 2015 / 6:00AM, CIM.AX - Interim 2015 CIMIC Group Ltd Earnings Call
Andrew Johnston - CLSA - Analyst
Thank you, just one follow up question. From the comments that were made it sounds as if there has been a reallocation of costs between the
divisional level and the corporate level. That being the case then does that mean that we can't compare the margins currently being earned in
each division in this period with previous periods?
Javier Loizaga - CIMIC Group Ltd - CFO
There is a certain -- as I said Engineering Co. and PPP Co. did not exist and those costs were in the divisions and to that extent you are right. But
the amounts of those costs do no materially alter the margins, only slightly.
Andrew Johnston - CLSA - Analyst
Great. That's it from me. Thank you.
Marta Olba - CIMIC Group Ltd - Group Manager IR
Thank you very much to attend this conference call. Thank you.
Operator
Ladies and gentlemen, that concludes the conference. You may now disconnect. Have a great day.
DISCLAIMER
Thomson Reuters reserves the right to make changes to documents, content, or other information on this web site without obligation to notify any person of such changes.
In the conference calls upon which Event Transcripts are based, companies may make projections or other forward-looking statements regarding a variety of items. Such forward-looking statements are based upon
current expectations and involve risks and uncertainties. Actual results may differ materially from those stated in any forward-looking statement based on a number of important factors and risks, which are more
specifically identified in the companies' most recent SEC filings. Although the companies may indicate and believe that the assumptions underlying the forward-looking statements are reasonable, any of the
assumptions could prove inaccurate or incorrect and, therefore, there can be no assurance that the results contemplated in the forward-looking statements will be realized.
THE INFORMATION CONTAINED IN EVENT TRANSCRIPTS IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION,
THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE CONFERENCE CALLS. IN NO WAY DOES THOMSON REUTERS OR THE APPLICABLE COMPANY ASSUME
ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY EVENT TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE
COMPANY'S CONFERENCE CALL ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.
©2015, Thomson Reuters. All Rights Reserved. 5767525-2015-07-23T11:42:32.470
21
THOMSON REUTERS STREETEVENTS | www.streetevents.com | Contact Us
©2015 Thomson Reuters. All rights reserved. Republication or redistribution of Thomson Reuters content, including by framing or similar means, is prohibited
without the prior written consent of Thomson Reuters. 'Thomson Reuters' and the Thomson Reuters logo are registered trademarks of Thomson Reuters and its
affiliated companies.