BSA LIMITED Level 7, 3 Thomas Holt Drive,
Macquarie Park, NSW 2113
P: 02 8748 2400
F: 02 8748 2577 www.bsa.com.au onlyuse
personalGood afternoon shareholders, Board and management. As in the prior year I am pre-recording this address in Melbourne as uncertainty around state borders were present during the planning phase.
It does seem plausible that most states will return to a level of normality as we look forward to the second half of this financial year.
Financial year 2021 provided stable results despite the significant disruption to business activity caused by the pandemic. The BSA business model, proved largely resilient and adaptable to this constantly changing environment. Most of the COVID-19 disruption has been on the East Coast of Australia which comprises 75% of BSA's operations.
Du ing FY21 we did secure very significant contracts, which will set the platform for the next 5 years. Major customers such as NBN, Foxtel and Telstra have written long-term contracts with us. Arguably one of the most successful years in s curing new long-term work.
The impact of the pandemic was felt most in our facility maintenance business, servicing the commercial, education and industrial sectors. We saw reduced trading volumes in this division due to constantly changing protocols and stay-at-home orders .
This unpredictability has unfortunately continued in the first half of FY22, which was the trigger for our recent trading Forupdate on 28th October 2021. In the last 6 months, unlike last financial year the construction sector was shut down in its
enti ety in Victoria and New South Wales. Whilst only temporary, it provided significant challenges.
Yet despite these disruptions BSA was still able to deliver a satisfactory financial result in FY21, and continued to return a stable dividend to shareholders.
BSA now has a secure contract base, and importantly an annuity business from which to "step off", as we look for far more aggressive, if not transformational growth.
The springboard for this growth is a very coherent strategic intent which the Board signed off on recently. It's an easy to articulate strategy.
We now have a pathway to be the market leader in tech enabled workforce management.
We aim to be the "go to" bridge between B2B customers on the one hand, and the large pool of skilled technicians in our National network.
We aim to deliver services to buildings and infrastructure, as well as the home, through technology enabled solutions.
Given this aspiration and to achieve our three-year $750 million revenue objective, we intend to make well considered acquisitions,
We foreshadow going to the market at some point soon for an equity raise given the scale of some of the already filtered opportunities before us. We believe the deals will be accretive year one, and low in execution risk.
Additionally, the Board has been very focused on removing legal distractions.
Both BSA and Tandem (the latter now in administration) were defendants to the Shine class action, which in summary seeks to treat our technicians as employees not independent contractors.
We had until recently understood the importance of representing the industry as market leader and standing up for the onlyrights of those that want to set up business for themselves as self-employed contractors.
But also weighing heavily on our minds is our primary role of running a business and creating shareholder value. Legal cases such as these are fraught with complexity, AND, as in any major dispute, contain an element of risk, even when your advisers insist you have the better side of the argument.
There is also significant "opportunity cost" of continuing to defend the action given the significant distraction to both the executive team and Board. So, having considered all of the above, we are in advanced discussions with the class action claimants to settle this matter, with the details still to be documented and signed off by the court.
Tim Harris our CEO has overseen BSA's navigation of the pandemic, which coincided with his commencement as CEO in useMarch 2020. I would sincerely like to thank Tim and his executive team for their effort and dedication over the last financial
year.
We have continued to focus on expanding the skillsets of our Board. To this end we welcome Michelle Cox as a new non- executive director. Michelle commenced, pending AGM approval, on 31 July 2021. Michelle has extensive experience in marketing and technology. We welcome her insights and the additional perspective she brings in the oversight of BSA's strategy.
It is with some sadness that in recent days Paul Teisseire advised me that he would be withdrawing his nomination for a
further term.
personalP ul has been the backbone of the Board for over a decade, with his sound counsel, undoubted legal acumen and calm le dership of the Audit Committee. On a personal level I will miss him, and wish him well.
We did complete one acquisition in FY21, being Catalyst ONE. It was an important tactical bolt on, as it opened the CUI division to the mobile tower market, which is a significant market opportunity that we previously had not been able to access. The exceptional leadership team of Catalyst ONE have integrated well into the BSA culture and performed
str ngly in the period.
So in summary it's been an unpredictable operational environment. Yet, as you can see from the above and the list of achievements, a time where BSA has remain forward looking and focused.
In closing, I would like to again thank the Board and shareholders for their ongoing support, and of course the Executive team, our staff and contractors for their continued hard work and dedication.
I c rtainly look forward to next year, when hopefully, we can all be together in person. Thank you. For
FY21 - Key Achievements
FY21 saw a number of significant achievements across the Group, setting a robust platform for sustainable growth
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Chief Executive Officer's Address
Thank you Michael and once again welcome to all shareholders.
Slide 12 gives an overview of the key safety initiatives and metrics for the Group. This year BSA refreshed its key values which underpin everything we do as a business. As part of these refreshed values we continue to place emphasis on safety, with the fundamental value "We Work Safe & Go Home Safe" being the foundation on which the rest of our values are built.
FY21 and the first quarter of FY22 also saw a significant focus on proactively managing the impact of the pandemic on our workforce. This included working collaboratively with clients and regulators to ensure our workforce and customers remained safe and adhered to government mandated practices and restrictions at all times, as well as a number of internal initiatives focused on mental health and well-being for our workforce. One such initiative was the Executive led Stop for Safety Day in October, which included a keynote address by Gus Worland from Gotcha4Life on mental fitness, meaningful mateship and reaching out. We also led a pro-active participation in the national "R U OK?" initiative to raise awareness and address the psychological wellbeing of our workforce.
As a company, we continue to innovate and adapt our safety protocols and invest in our key pillars of: Systems, Risk Management, Safety Capability as well as Health and Wellbeing.
Safety is and remains our number one priority and we are proud to have a strong embedded safety culture across the Group, with a focus on continual improvement across all our business operations.
Turning to slide 13.
Financially, we were pleased to report a stable result for FY21 despite the headwinds and uncertainty in the economy.
Key tender successes discussed in the Chairman's speech were awarded late in the first half of the financial year with mobilisation occurring in the second half. This, along with the stabilisation of nbn from peak volumes in FY20 has resulted in a decline in revenue; but a growth in secured long-term annuity style contracts which now represent 84% of revenue.
Revenue and underlying EBITDA were in line with guidance and I'm pleased to report another strong cash result, with 77% operating cash conversion and the Group retaining its net cash position.
As a result, the Board approved a fully franked final dividend of 0.5 cents per share, bringing the declared dividends for the year to 1 cent per share, therefore continuing the consistent flow of dividends over recent years.
Despite some pandemic driven delays in the awarding of new key contracts and infrastructure spend in FY21 our order book remains robust, and we predict a strong increase in demand for our services in the new year as confidence returns to the economy, client spend patterns return to normal and the backlog of delayed upgrade works comes to market.
Slide 14 gives an overview of current and historic financial performance within our core operating divisions.
Whilst the Communications and Utility Infrastructure division delivered revenues below prior year at $211.1m and EBITDA of $16.9m due primarily to lower nbn volumes compared to the FY20 peak, the division successfully delivered on the key objective of diversifying our client base. This was achieved through key contract wins with Telstra and Vocus as well as through the successful acquisition of Catalyst ONE giving the Group a strategic entry into the growing wireless market. The smart metering contracts continue to grow year on year and remain a key focus area with strong returns.
The Advanced Property Solutions division delivered revenues slightly below prior year at $211.4m and EBITDA of $9.4m, pleasingly showing a growth in EBITDA margins of 0.4% due to improvements in operational efficiency including some technology enablement pilots and initiatives.
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The APS segment includes our Fire Build and core Maintenance portfolios which are now consolidated. Fire Build revenue decreased reflecting the cyclical nature of construction with a number of key contracts completed in the period and some project awards delayed. A strong pipeline of work remains with significant infrastructure spend expected at the end of FY22.
It was very pleasing to see revenue on maintenance contracts increased over the period, despite a significant temporary slowdown in discretionary spend driven by the pandemic. This shows the growing strength of our underlying workbook and positions the Group well to benefit from the strong supply of work we predict in 2022, as client confidence returns and the accumulated backlog of work from 2020 and 2021 across many sectors comes to market.
Our Group priorities for FY22 shown on slide 15 leverage on the solid long term base set during FY21. The recent contract wins, entry into the wireless market and successful role out of our leading workforce management technology platform has set a robust platform for sustainable growth. Our focus is on optimising delivery to enhance margins as well as further diversifying our client and product offering by leveraging our key differentiators of: workforce management expertise, end customer experience and client collaboration.
These core competencies are being recognised by our existing client base and we see opportunities to take these attributes to new clients and complimentary sectors, markets, and geographies.
These competencies have also helped us frame target markets and sectors for inorganic activity to accelerate growth for the Group as shown on slide 16.
We see significant benefit in complementing our organic growth plans with acquisitions. Senior management and the Board have spent considerable time in the second half of FY21 and early FY22 identifying target markets and sectors that meet our selection criteria, leverage our core competencies as well as enable us to drive economies of scale through utilisation of our existing fixed cost base, in-house management expertise and leading technology platforms. We have made further significant progress in this area since year end as mentioned by the Chairman.
Slide 17 gives an update on latest trading conditions and our medium-term targets previously announced.
As outlined in the FY21 Investor Presentation in August, we anticipated COVID-19 restrictions driven by the voracity of the Delta variant would impact volumes in both CUI and APS. We have seen this occur in early FY22 with the suspension of all non-critical activity in New South Wales and Victoria, construction site restrictions and shutdowns in New South Wales and Victoria and delays in tenders and infrastructure spend while progress towards the 80% vaccination target was achieved.
In CUI, the division experienced significant temporary operational impacts, given the majority of our revenue is generated where the lockdowns hit hardest. Of our major delivery platforms only nbn remained classified as an essential service under government definitions, with all other revenue streams facing a variety of negative restrictions and shutdowns imposed through government orders. This impact is clearly temporary with the backlog of volume needing to be caught up now restrictions have eased and we are already observing early signs of recovery.
The impacts felt through the APS division where discretionary work was paused either through government enforced shutdowns or short-term client site closures are also temporary in nature. We are already starting to see resumptions of this work as restrictions are lifted.
Generally, we expect volumes to rebound strongly through calendar year 2022 as the majority of our maintenance work is non-discretionary and there will be pressure to accelerate delivery in our minor projects and reactive works programs as well as across major construction.
As a group, we mitigated the impacts in Q1 of FY22 though cost rationalisations and staff stand downs where appropriate. However, given the stated government goal of resumption of business as usual at 80% vaccination rates we maintained our core workforce, management, supervisors, safety and support professionals to ensure we can ramp-up and meet customer needs as restrictions ease.
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BSA Limited published this content on 16 November 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 16 November 2021 02:15:03 UTC.
