NRW retains healthy order book for FY20
NRW Holdings (ASX: NWH) says that following Gascoyne Resources' collapse into administration it expects to receive about $35 million under its existing contract with the troubled miner, down from up to $145 million in FY19 as agreed prior. NRW has revised its order book to $1.1 billion of work secured for FY20.
NRW Holdings Limited (ASX: NWH) notes the appointment of FTI Consulting as Voluntary Administrators to Gascoyne Resources Limited (ASX: GCY) and its related entities.
NRW provides drill and blast and mining services “contract mining” to Gascoyne. NRW further notes the Administrators at this stage intend to continue operating Gascoyne on a ‘business as usual’ basis while recapitalisation options are explored. NRW is supporting FTI Consulting during the review of recapitalisation options and will be paid for all the works undertaken in this period.
Prior to the announcement of FTI Consulting’s appointment, NRW was expecting earnings before interest, tax, depreciation and amortisation (EBITDA) for FY19 in the range $140 million to $145 million. NRW’s assessment of the current exposure to the Gascoyne contract is circa $35 million representing working capital, a second ranking secured loan of $10 million1 and equity in Gascoyne of ~$4.3 million.
The resulting net cash movement in the second half of FY19 is estimated at circa $8 million, as most of the working capital (circa $17 million) and secured debt exposure ($10 million) was incurred in the first half of FY19.
Following recent contract awards, the order book now includes $1.1 billion of work secured for FY20, (excluding any contribution from the Gascoyne contract). In addition, the RCRMT and Urban businesses are expected to generate circa $200 million of revenue. NRW expects to deliver full year revenues in FY20 of circa $1.5 billion.
Jules Pemberton, Managing Director and CEO commenting on the trading update said “Whilst we are clearly disappointed with the recent events at Gascoyne, we remain positive on the outlook for NRW. In addition, with key resources, both workforce and equipment, currently in high demand we remain confident that our personnel and equipment at Gascoyne’s Dalgaranga Project can be easily redeployed in the event a recapitalisation is unsuccessful."