On the $9m shortfall experienced in FY15, the 23/11/2015 MD's...

On the $9m shortfall experienced in FY15, the 23/11/2015 MD's presentations states:

• Two items remained unresolved following the completion of a Main Roads project ahead of schedule:
• Contractual claims pertaining mainly to the amount of rock encountered in cuttings on the project as opposed to the expected quantity
  Insurance matters relating to a number of damaging storm events during the construction period
• Pre‐tax value of these matters, as previously released to the market, is $9M
• The Insurance matters are progressing and are expected to be concluded in the first half of FY16
• The Contractual matters have been elevated to the highest levels in each organisation for resolution in accordance with the dispute resolution process

I cannot add anything concerning the insurance matter, and I have no reason to believe that the insurers are not going to pay out something reasonable.

On the rock-encountered matter, “elevated to the highest levels in each organisation” means Peter McBain for BYL and for Main Roads WA, Steve Troughton, MD, and Reece Waldock, Commissioner. You can read their profiles at https://www.mainroads.wa.gov.au/AboutMainRoads/AboutUs/Pages/CorporateInformation.aspx. Here again, I have no reason to believe that a reasonable settlement should not be reached. It is worth noting that since the matter has been an issue, the parties have continued to keep their long-standing relationship running, with a new $8.5m contract exchanged to upgrade the Coalfields Highway – see https://www.businessnews.com.au/article/Brierty-wins-8m-highway-contract.

Finding work has not been a problem for BYL in recent years. The 23/11/2015 presentation states:
ORDER BOOK AND OUTLOOK

• Our order book for FY16 remains at $230M, with $215M secured beyond FY16
• We are currently bidding or expecting to bid $600M of new work over 18 projects in the next quarter

WE ANTICIPATE:

• Continued new work opportunities in residential developments in WA, although slowing slightly
• Increased opportunity for metropolitan infrastructure works through MRA [Metropolitan Redevelopment Authority], PTA [Public Transport Authority] and supporting mega projects
• Continued nation building infrastructure commitment as we approach state and federal elections
• Fewer mining opportunities, however, we expect effective gold miners and those gaining continued critical mass through acquisition to outperform

BYL tends to secure small contracts with immediate starts and quick delivery, so it has a chance of securing and finalising new work before 30/06/2016. I am unsure if work completed, plus further work scheduled for FY2016 is greater than $230m, or not. Revenue for FY2015 was $299m, and I think $300m was the expected target for FY2016. The H1 announcement should give us a good picture of what revenue to expect.