2020 Tier 2 Builder Metrics 2020 is shaping up to be a challenging year for builders, with several variables impacting the industry. Newpoint highlights the key financial metrics for a sample of six Tier 2 builders prominent in the eastern states of Australia.* 01 Industry Challenges in 2020 Weak residential presales market Reduction in new project commencements (-15% in FY2019) Increase in construction insolvencies (+18% in FY2019) Union and Enterprise Bargaining Agreements are due to be reviewed Structural and regulation changes relating to defective works (NSW) COVID-19 related issues impacting on supply chain and work continuity Increase Financial Due Diligence Stress test forward cash flow on a worst case basis Review current projects for any programming issues Consider appropriateness of warranty and business restructuring provisions Review cash and working capital requirements Investigate off balance sheet liabilities Review compliance with statutory and employee liabilities and insurance *This is Newpoint’s assessment only and may differ from other industry assessments of a Tier 2 builder
Transcript
2020 Tier 2 Builder Metrics
2020 is shaping up to be a challenging year for builders, with several variables impacting the industry.
Newpoint highlights the key financial metrics for a sample of six Tier 2 builders prominent in the eastern states of Australia.*
01
Industry Challenges in 2020
Weak residential presales marketReduction in new project commencements (-15% in FY2019)Increase in construction insolvencies (+18% in FY2019)Union and Enterprise Bargaining Agreements are due to be reviewedStructural and regulation changes relating to defective works (NSW)COVID-19 related issues impacting on supply chain and work continuity
Increase Financial Due Diligence
Stress test forward cash flow on a worst case basisReview current projects for any programming issuesConsider appropriateness of warranty and business restructuring provisionsReview cash and working capital requirementsInvestigate off balance sheet liabilitiesReview compliance with statutory and employee liabilities and insurance
*This is Newpoint’s assessment only and may differ from other industry assessments of a Tier 2 builder
Who is Included?
We have sampled 6 builders that lodge public Annual Financial Accounts with ASIC.
02
DIRECTOR NAMES
AUDITOR
HEAD OFFICE
PROJECTS
EMPLOYEES (EST.)
Brett MasonMarco Rossi
KPMG
NSW
AUS, NZ
850
John C HutchinsonJohn S HutchinsonGregory QuinnKellie WilliamsRussell FryerOwen ValmadreBenjamin Young
BDO
QLD
AUS
1,800
Anthony ToumaEmile TabetDallas Whitehead
PWC
NSW
NSW, QLD
290
Simon GrayCharles HenwoodEric MeyerowitzSamuel DelmenicoLuke StambolisJeffrey WellburnPaul Foley
BDO
VIC
NSW, VIC, QLD, WA
1,000
Richard CrookesJamie CrookesJohn HodgesPeter Barnes
Deloitte
NSW
NSW, ACT
600
Mark TaylorClive Wickham
KPMG
NSW
NSW
200
Construction Market Key Statistics
03
1. Construction Insolvencies by Calendar Year (Number)
2017
-3%
2018
- 1%
18%
-5%
0%
5%
10%
15%
20%
1 , 300
1 , 350
1 ,400
1 ,450
1 ,500
1 ,550
1 ,600
1 ,650
1 ,700
1 ,750
2019
Federal, State & Local Governments: 20.5%
Households: 25.6%
Property Developers: 28.1%
Private Corporations: 25.8%
2. Major Market Segmentation
Site Prep. & Other Services: 10.8%
Installation trade Services: 14.1%
Building Structure Services: 5.2%
Building Completion Services: 8.2%
Residential Building Construction:
26.70% ($115bn)
Heavy Industry/Civil Engineering
Construction: 25.8%
4. Product & Services Segmentation
Projected 2020Industry Revenue
$423.7bn
Non-Residential Building Construction:16.8%
3. Residential Commencements (Value)
- 1%
8%
-15%
-20%
-15%
-10%
-5%
0%
5%
10%
$60Bn
Sept 2016 Sept 2017 Sept 2018 Sept 2019
$70Bn
$80Bn
$90Bn
%ChangeReferences
1. ASIC 2. & 4. IBISWORLD 3. ABS
2016
Built Crookes Hutchinson Parkview TaylorProbuild
2019 Financial Performance ($’M)
04
$Millions
%FY 18/FY 19change
Total Revenue ($) & Revenue Growth (%)
4%6% 6%
33%
-13%-9%
Gross Profit Margin (%)
5 .52
Built
12 . 24
Crookes
1 . 8 1
Hutchinson
8 .07
Parkview
4 .07
Probuild
5 .5 1
Taylor
3 .47
2 .58
3 . 16
1 .62
9. 17
3 .57Built
Crookes
Hutchinson
Parkview
Probuild
Taylor
Overheads on Revenue (%)Market Share Against Tier 2’s Sampled
Hutchinson: 33.7%
Built: 17.8%Taylor: 6.7%
Probuild: 19.9%
Parkview: 6%Crookes: 15.9%
Total SampleRevenue: $8.4bn
SUMMARY
REVENUE
LESS: COST OF SALES
GROSS PROFIT / (LOSS)
NON-CONSTRUCTION INCOME
TOTAL INCOME
TOTAL EXPENSES
PROFIT / (LOSS) BEFORE INCOME TAX
INCOME TAX
PROFIT / (LOSS) AFTER INCOME TAX
NET PROFIT MARGIN BEFORE TAX (%)
BUILT
1,494
(1,412)
82
1
83
53
30
10
21
2.04
CROOKES
1,333
(1,170)
163
9
172
133
39
15
24
2.90
HUTCHINSON
2,834
(2,783)
51
10
61
46
16
5
11
0.55
PARKVIEW
501
(461)
40
1
42
16
26
8
18
5.23
PROBUILD
1,672
(1,604)
68
NIL
68
53
16
7
9
0.93
TAYLOR
569
(537)
31
2
33
20
14
4
9
2.39
2019 Financial Position ($’M)
05
Dividends for FY19 ($’000)
6 ,426
12 ,000
5 , 2557,000
232
17, 242
Built Crookes Hutchinson Parkview Probuild Taylor
Debt to Assets (Ratio)
0.75
0. 84
Built
0. 85
Crookes
0.64
Hutchinson
0. 81
Parkview
0. 83
Probuild Taylor
0. 25
0.17
0. 19
0. 36
0.15
0. 16Built
Crookes
Hutchinson
Parkview
Probuild
Taylor
Equity to Assets (Ratio)
9.15
12 .76
19 . 18
13 .66
12 .91
13 . 27Built
Crookes
Hutchinson
Parkview
Probuild
Taylor
Cash to Turnover (%)
SUMMARY
ASSETS
CURRENT ASSETS
NON-CURRENT ASSETS
TOTAL ASSETS
LIABILITIES
CURRENT LIABILITIES
NON-CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS
PROVISIONS (WARRANTY CLAIMS)
CURRENT LIABILITIES
NON-CURRENT LIABILITIES
BUILT
516
38
554
466
1
468
86
NIL
NIL
CROOKES
455
8
463
379
14
393
70
7.27
2.75
HUTCHINSON
718
200
918
544
47
591
327
NIL
NIL
PARKVIEW
182
25
207
147
22
168
38
3.58
5.55
PROBUILD
420
106
526
411
24
435
91
2.12
NIL
TAYLOR
163
6
169
123
4
126
42
NIL
NIL
Brett MasonMarco Rossi
KPMG
NSW
AUS, NZ
850
About Newpoint AdvisoryNewpoint Advisory provides builder financial assessments, restructuring and insolvency services to the Australian construction market. We specialise in helping stakeholders in the property and construction industries to manage risk and make informed credit and investment decisions. If you would like further information about this article or would like to learn more about Newpoint Advisory please contact us directly:
Disclaimer
This report has been prepared on limited publicly available information only. Newpoint Advisory has not verified the information and this report should not be construed as advice or recommendation of any of the builders highlighted. Newpoint will not accept any liability to any party that relies or uses this information. This summary contains selected information and does not purport to contain all of the information required to make informed financial decisions in relation to the sample builders. The reader acknowledges that circumstances may change and this summary may become outdated as a result. Newpoint Advisory accepts no obligation to update or correct this report.
