Company Background
CIMIC Group also known as Leighton Holdings is a leading publicly traded transnational contractor headquartered in St Leonards in Australia. The company functions in the telecommunications, infrastructure as well as engineering, building and property, mining and resources as well as environmental service sector. The company has operations in different parts of the world that include Australia, New Zealand, Middle East as well as South East Asia ("Home - CIMIC Group", 2017). Essentially CIMIC stands for construction, Infrastructure, Mining as well as Concessions. Essentially, major projects of the company include Ross River Dam, Anglo-Australian Observatory, Tallowa Dam, Burdekin Dam, Brisbane Airport, ABC Centre and many others. Ownership details of the firm reflect that roughly about 70% of CIMIC Group’s shares are possessed by Hochtief that in turn is possessed by the ACS Group. The current chief executive officer (CEO) of the firm is the Adolfo Valderas.
The core businesses of CIMIC Group include the following:
- CPB Contractors (transnational construction contractor)
- Thiess ( worldwide contract miner)
- Pacific Partnership ( both a developer as well as financier in public private partnership –PPP project)
- Sedgman (worldwide mineral processing expert)
- EIC Activities (Internal engineering as well as consultancy )
- UGL (provider of engineering, maintenance and construction service) ("Home - CIMIC Group", 2017).
Company experience in Public-Private Partnership (PPP) Projects
CPB Contractors is a construction corporation of the CIMIC Group that functions across different parts of New Zealand, Australia, as well as Papua New Guinea ("Projects - CIMIC Group", 2017). Essentially, CPB presents infrastructure projects that count projects on railways, roads, airports, buildings, tunnels, water, resources facilities, energy and social infrastructure among many others. In essence, this comprises of public private partnerships (PPP), in which CPB Contractors along with Pacific Partnerships bond with governments plus other corporations to offer vital assets that includes schools, motorways as well as hospitals ("Home - CIMIC Group", 2017)..
Transmission Gully Motorway
CPB Contractors, as a significant part of particularly Wellington Gateway Partnership (WGP), along with Public Private Partnership (PPP) with the New Zealand Transport Agency are presenting the Transmission Gully Motorway Project worth NZ$1 billion. As such, this project can be considered as the first state highway project of New Zealand that is to be presented as a Public Private Partnership ("Projects - CIMIC Group", 2017).
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Figure: Image of the Transmission Gully Motorway Project (Contract Type: PPP)
Source: ("Projects - CIMIC Group", 2017)
Snapshot of the Transmission Gully project details:
CIMIC Group PPP Project: Third New Zealand Schools
The New Zealand Government has awarded the CIMIC Group companies (Pacific Partnerships together with CPB Contractors) New Zealand Schools project that is the third New Zealand PPP programme. The primary role of the CIMIC Group does include designing, constructing and financing. However, this contract will produce a revenue amount of roughly NZ$113 million to CIMIC throughout the period of designing as well as constructing ("Projects - CIMIC Group", 2017).
Snapshot of the project details:
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Figure: Image of the Third New Zealand Schools Project (Contract Type: PPP)
Source: ("Projects - CIMIC Group", 2017)
Strategic goals of company
Strategic goals of the company include the following:
- continue to build up existent capabilities and acquire a reasonable share of operations in the segments of mineral processing, construction, mining, services as well as PPPs, by developing the competitive position of the firm ("Strategy - CIMIC Group", 2017)
- develop and enlarge the services of the Group’s businesses by acquiring benefit from diverse complementary actions and securing prospects in market development areas particularly in Australia as well as other selected geographies ("Strategy - CIMIC Group", 2017)
- further widen and develop in the PPP segment, strengthen the vigorous pipeline of prospects present specifically in the Australia Pacific zone (Assaf et al., 2012).
- attain higher level of growth by diversifying businesses linked to commodity along with activity in different chosen markets, for instance, by developing skills of exporting mining in the regions of both North as well as South America ("Strategy - CIMIC Group", 2017)
- further expand existent capabilities into various adjacent markets and additional services;
- persistently continue to pursue functional excellence and maximise operations in order to attain sustainable gains and enhance business sustainability;
- improve and strengthen FleetCo, that is necessarily the business of mining equipment employment, that is currently utilizing existing business assets of CIMIC Group to get novel opportunities and deliver a stretchy service to clientele; and
- to foster a well-organized approach of allocation of capital, for instance, acquirements of UGL as well as Sedgman, adoption of strategy of share buy?back and adoption of the stratagem of undertaking divestment in certain cases (Next gen) ("Home - CIMIC Group", 2017).
Financial strength of company
The financial assertions of the CIMIC Group declared on 18th July 2017 reveals a healthy performance of the company for last six months till 30 June 2017, declaring a substantial enhancement in net profit after tax (NOPAT), flows of cash, a very strong position in the balance sheet statement and a high work in hand (WIH).
Highlights of the financial result presented below can help in understanding the financial strength of CIMIC Group:-
- Revenue of the CIMIC Group is registered to be around $6.3 billion (that is up by 28% year on year basis) and Net Profit after tax is recorded to be around $323 million (increase by 22% on year on year basis) ("Home - CIMIC Group", 2017).
- steady PBT as well as marginof net profit after tax that is again recorded to be roughly 7% and 5% respectively
- Flows of Cash from different operating activities of the CIMIC Group is observed to be around $620 million, that essentially reflects a $523 million year on year improvement along with Earnings before interest, tax, depreciation and amortisation ( EBITDA) cash conversion of approximately 133% in the past 12 months ("Home - CIMIC Group", 2017).
- CIMIC Group’s financial declarations reflects a Net cash position of around $608 million, that is necessarily $330 million increase from the year ago period
- Free cash flowfrom operating activities of the firm is recorded to be $344 million ("Home - CIMIC Group", 2017).
- Particularly the credit rating agency Standard & Poor’s increased the CIMIC Group’s grade rating of investment by one score to BBB, together with a steady outlook
- CIMIC Group declared an interim ordinary dividend of approximately 60 cents per share that records an increase of 25% on a year on year basis,
- CIMIC Group’s Earnings per share (EPS) is registered to be 99.6 cents in the financial assertions that mark an increase of 25% on a year on year basis ("Home - CIMIC Group", 2017).
References
Assaf, S. A., Bubshait, A. A., Atiyah, S., & Al-Shahri, M. (2012). The management of construction company overhead costs. International Journal of Project Management, 19(5), 295-303.
Home - CIMIC Group. (2017). Cimic.com.au. Retrieved 24 September 2017, from https://www.cimic.com.au
Projects - CIMIC Group. (2017). Cimic.com.au. Retrieved 24 September 2017, from https://www.cimic.com.au/our-business/projects?query=&f.Location%7Cl=New+Zealand&f.Location%7C7=Australia+Pacific
Strategy - CIMIC Group. (2017). Cimic.com.au. Retrieved 24 September 2017, from https://www.cimic.com.au/our-approach/strategy
