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FY2010 Half Year Results Presentation

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FY2010 Half Year Results Presentation Powered By Docstoc
					       Sedgman Ltd
Mining Services Conference
“Rising Stars” Presentation
        3 November 2011 – Hong Kong
        4 November 2011 - Singapore

Nick Jukes – Managing Director & Chief Executive Officer
           Ian Poole – Chief Financial Officer
Disclaimer




             2
      Contents



•   Overview

•   Scope of Services

•   Global Presence

•   Financial Results

•   Order Book & Pipeline

•   Strategy




                            3
        Overview
A Leading Provider of Mineral Processing Solutions
to the Global Resources Industry

•   Established in 1979, Sedgman is recognised internationally for its
    minerals processing and materials handling technologies and
    solutions

•   A global leader in the design, construction and operation of coal
    handling and processing plants (CHPP’s)

•   An emerging capability in the design, delivery and operation
    of processing plants in the metalliferous sector

•   Two business units of Engineering and Operations servicing
    the global coal and metalliferous markets

•   Strategic relationship with Thiess:

      • 50/50 joint venture (TSJV) for delivery of significant design
        and construction CHPP projects in Australia

      • Major shareholder ~ 32%




                                                                         4
Company
Overview


                                                      SDM SHARE PRICE PERFORMANCE

                                              $2.50                                                                          6.0




                                              $2.20                                                                          4.8




           Closing share price (A$ / share)




                                                                                                                                   Daily volume (m shares)
                                              $1.90                                                                          3.6




                                              $1.60                                                                          2.4




                                              $1.30                                                                          1.2




                                              $1.00                                                                         0.0
                                                 27-Oct-10          27-Jan-11    27-Apr-11           27-Jul-11        27-Oct-11

                                                             Volum e (m , RHS)               Share price (A$ / share, LHS)




                                                                                                                               5
 Board and
Management
 Overview




             6
 Board and
Management
 Overview




             7
Scope of
Services




           8
    Scope of Coal
      Services



                                                   Rejects Co-disposal


                      Product Stockpile
Train Loading



                                          Preparation

   Crushing




                ROM




                                                                         9
             Global
            Presence
                                                                                     Southern    South    China /
                                                                         Australia    Africa    America   Mongolia    Total
•   Global footprint provides increased
    capability to service our clients      Pipeline Value (3 years)      $5,810m     $1,219m    $399m      $135m     $7,563m

•   25% of project opportunities in the    No. of projects in pipeline      85          22        11         6         124
    pipeline are international. This is
    expected to increase as commodity      No. of Employees - 2011          802         61        78         47        988

    diversification gains traction         No. of Employees - 2010          641         37        64         21        763

•   Santiago office is an engineering
    resources base targeting coal and
    metals projects in South America
•   Beijing office established to secure
    coal projects that support China’s
    industrialisation. Targeting
    emerging coking coal mines
    particularly in Mongolia
•   Johannesburg office is a service
    delivery hub targeting the thermal
    coal opportunities in South Africa
    and the coking coal projects in the
    Moatize basin in Mozambique. It
    also provides the foundation for
    delivering metals projects in Africa




                                                                                                                      10
Market Leader
  in CHPP’s
                               •     Greater than 50% market share of CHPP projects in Australia
Dominant Market Position
                               •     Involved in the delivery of over $2.0 billion of CHPP’s over the last 7.5 years
                               •     Processing approximately 20 mtpa of coal under 7 Operations contracts


Quality Client Base consists
of International and
Australian coal producers                                                                                    ENRESTECHNOLOGY LLC

with a history of repeat
business


                                                   Contract Size
                                Date                  ($m)              Client         Project
                                                                   Energy Resources    EPCM for 3 module 2,700 tph CHPP - Ukhaa Khudag Mine
                               2009, 2010 & 2011       65+
                                                                          LLC          (UHG) (Mongolia)
                                                                     Lake Vermont
                                       2011             145                            CHPP Expansion to 800 tph - Lake Vermont Mine
                                                                       Resources
                                                                    Bengalla Mining
                                       2010             85                             CHPP Upgrade to 1,700 tph – Bengalla Mine
                                                                   Company Pty Ltd
Proven Project                                                     Riversdale Mining
                                       2010            140+                            800tph CHPP - Benga Stage 1 Project (Mozambique)
                                                                          Ltd
Delivery Capability                                                Whitehaven Coal     New CHPP at Narrabri Coal Operations' Stage 2 longwall
                                       2010            50+
                                                                        Limited        mining development
                                       2010            120+          Xstrata Coal      CHPP Upgrade to 1,700 tph – Atcom Mine (South Africa)
                                                                    Lake Vermont
                                   2009 & 2010         100+                            800 tph CHPP - Lake Vermont Mine
                                                                      Resources
                                       2009            50+            Tecnimont        CHP for Powerstation upgrade – Bocamina (Chile)
                                       2008            80+               BMA           800 tph CHPP – Daunia mine
                                       2008            100+             QCoal          800 tph CHPP (stages 1 & 2) - Sonoma mine
                                                                                       3,400 tph & 800tph CHPPs + Overland Conveyors - Dawson &
                                   2007 & 2008         780+           Anglo Coal
                                                                                       Lake Lindsay mines
                                   2003 & 2006         170+            Rio Tinto       2 x 1,200 tph CHPP’s - Hail Creek mine

                                                                                                                                     11
Lake Lindsay
   CHPP




               12
    Growth in
     Metals
                              •   Currently delivering metals projects in Australia and Africa
Building a Strong Metals      •   US$90m EPC copper project in Botswana (Boseto) under construction
Business
                              •   Sedgman metal operations within Australia are processing 9 mtpa of ore p.a.
                              •   Sedgman targeting further growth globally in metals



Quality Client Base with
significant growth
opportunities




                                                                  Macarthur River
                                                                                       Ernest Henry
                                                                                    Mt Isa Cannington

Australian Metals Operation
Sites

                                                Agnew




                                                                                                        13
Boseto




         14
        Financial
         Results
                               ($million)                                  FY               FY              Var %
                                                                          2011             2010
                                                          1
                               Combined Revenue                           555.1            336.1                 65.1%
                                                      2
                               EBITA (underlying)                          42.5             31.2                 36.4%

                               EBITA % Margin (underlying)2               7.7%             9.3%
                                                      23
                               NPAT (underlying)                           30.9             24.8                 24.7%

                               NPAT (reported)                             26.0             25.0                   4.2%
                                                     23
                               EPS (underlying)           (cps)            14.8             12.2                 21.5%

                               DPS (cps)                                    7.0              6.5                   7.7%


•       Revenue/EBITA (underlying) growth for both engineering and operations. Sedgman’s
        dominant market position in coal as well as its commodity and global diversification strategy is
        delivering results as it leverages increased activity in the resources sector globally
•       EBITA (underlying) margins improved in 2H FY2011 to 8.7% from 6.5% in 1H FY2011
•       NPAT (underlying) of $30.9m has improved by 24.7% since FY2010
•       EPS (underlying) of 14.8 cps is 21.5% higher than FY2010

Notes
1.      This represents revenue of Sedgman together with Sedgman’s share of revenues from Joint Ventures
2.      Excludes one-off write down of assets ($4.1m (tax effected $2.9m)) (FY2011) at metals operations.
3.      Excludes amortisation of intangible assets. FY2010 also excludes additional tax deductions for acquisition cost for customer contracts due to
        legislation changes.



                                                                                                                                                    15
         Business Unit
         Performance                                                                  Engineering
                                                                                      •   Revenue growth of 95.6% reflects Sedgman’s
                                                                                          premier position in the mining services sector
 ($million)                                  FY              FY          Var %            and the robust resources industry globally
                                                                                      •   Engineering margins contracted in 2011 as a
                                           2011           2010                            result of three projects (UHG1, Narrabri and
                                                                                          Atcom).
 Combined Revenue             1


                                                                                      •   Margins have improved in the 2H FY2011 to
 Engineering Services                       392.9           200.8         95.6%
                                                                                          7.9% from 6.2% for 1H FY 2011 (FY2011 Avg
 Operations                                 162.2           135.3         19.9%           7.1%)
 Total                                      555.1           336.1         65.1%       •   FX loss for the for the year $4.3m
 EBITA (underlying)2                                                                  Operations

 Engineering Services                        27.9           17.4          60.7%       •   Coal operations revenue improved by 19.9%
                                                                                          primarily because of growth in the sustaining
 Operations                                  14.6           13.8           5.8%           capital works business
 Total                                       42.5           31.2          36.4%       •   Coal margins were impacted as a result of record
 EBITA % Margins (underlying)
                                                                                          wet weather in December 2010 and cyclone Yasi
                                                                                          in January 2011
 Engineering Services                       7.1%           8.6%
                                                                                      •   Metal operations were challenged by high
 Operations                                 9.0%          10.2%                           maintenance costs and poor availability.
                                                                                          However following an operational review in the
 Total                                      7.7%           9.3%
                                                                                          3rd quarter there has been sustained
                                                                                          improvements in production during the 4th
Notes
                                                                                          quarter
1.      This represents revenue of Sedgman together with Sedgman’s share of           •   Margins have improved in 2H 2011 to 10.7%
        revenues from Joint Ventures
                                                                                          from 7.3% in 1H FY2011 (FY2011 Avg 9.0%)
2.      Excludes one-off write down of assets ($4.1m) (FY2011) at metals operations

                                                                                                                                  16
         Income
        Statement
Income Statement Summary
(Equity Method)
                                                 FY               FY
($million)                                      2011             2010

Revenue                                            507.7            326.5

EBITDA                                               53.7             44.9

Depreciation                                        (16.3)           (13.0)

Amortisation of intangibles1                         (2.9)             (2.7)

EBIT before JV profits                               34.6             29.2

Sedgman share of JV profits        2                   1.0             (0.8)

EBIT after JV profits                                35.6             28.5

Net interest (expense)/revenue                       (1.1)             (1.4)

Profit (loss) before tax                             34.5             27.0

Income tax expense       34                          (8.5)             (2.0)

Profit (loss) after tax                              26.0             25.0

Notes
1.      Represents amortisation of intangible assets resulting from prior acquisitions
2.      Before allocation of indirect costs. No income tax is payable by the Joint
        Ventures
3.      Includes tax deductions for R&D concessions (FY2011 $0.6million, FY2010
        $3.3million)
4.      FY2010 includes additional tax deductions for acquisition costs for customer
        contracts due to legislation changes ($2.1 million)


                                                                                         17
       Balance Sheet

 Consolidated Balance Sheet      June       June       Change
 ($million)
                                 2011       2010
Working Capital                                                   •   Work in progress increased primarily as a
Trade receivables                   70.3       59.9       10.4        result of amounts due from clients which
Other receivables                   18.3        4.1       14.2        cannot be billed until milestones are met
Work in progress                    48.8       18.6       30.2
                                                                  •   Other payables increased due to project
Inventories                          6.7        6.2        0.5
                                                                      related accruals which reflects increased
Trade payables                     (16.8)     (18.3)       1.5
                                                                      activity in the Engineering business
Sundry creditors & accruals        (71.3)     (39.3)     (32.1)

Progress payments in advance       (16.8)     (19.9)       3.0    •   Intangibles increased due to capitalisation
Non-monetary balances and other non-current items                     of SAP implementation costs
Intangibles                         47.8       42.7        5.1
                                                                  •   Acquisition loans total $19.7m and expire
Property, plant & equipment         57.1       67.1      (10.0)
                                                                      in May 2014 and January 2015
Deferred taxes (net)                 4.1        3.2        0.9

Unlisted investments                 1.0        1.0       -       •   Current Debt is $10.8m Non-Current Debt
Other receivables                    1.3       -           1.3        is $18.4m
Cash and debt-like items                                          •   Net Cash $13.9m
Cash and cash equivalents           43.2       58.0      (14.8)
                                                                  •   Unused debt facilities total approximately
Debt                               (29.3)     (42.8)      13.6
                                                                      $75.6m
Provisions                         (12.9)     (13.2)       0.2

Current tax (payable)/asset         (0.4)       4.6       (5.1)

Net Assets                        151.1     132.2        18.9

                                                                                                             18
                          Operating
                          Contracts
                   •     Operating contracts provide longer term recurring income and diversification of business risk

                   •     Sedgman is processing approximately 20 mtpa of coal and 9 mtpa of ore

                   •     History of repeat business reflects outstanding client service

                   •     Growth of the business unit is a key element of the Company’s long term strategy

                   •     Three year pipeline contains good opportunities including several coal, metals and iron ore
                         prospects within the one year timeframe

                                                                  Summary of Major Operating Contracts
                                         Coal Operations                                                                                          Metal Operations
                                                                                                 2020
 Middlemount                                                                                                                                                                                                  2029
                                                                                                                Mt Isa
                                                                                                 2030
UHG Mongolia
                                                                                                                                                                                                              2029
                                                                                                 2023 McArthur River
     Sonoma
                                                                         2015                                                                                           2011
   Blair Athol                                                                                            Ernest Henry
                                                                                         2018
  Coppabella                                                                                                                                                                                    2016
                                                                                                          Cannington
                                                                                         2018
    Moorvale
                                                                                                                                                                                         2015
                                                                                                 2031
                                                                                                               Agnew
Red Mountain

                 1999             2004              2009                 2014                     2020                   1997      2000            2005          2009                 2014                    2020
             1998       2000   2002   2004   2006   2008   2010   2012     2014   2016    2018     2020              1996   1998     2000   2002   2004   2006   2008   2010   2012   2014   2016      2018     202




                                                           Prior Contracts                      Current Contracts                  Life of Mine




                                                                                                                                                                                                19
     Order Book &
     1 yr Pipeline
                                                                                      Order Book Replenishment
•   Order book and 1 year pipeline combined                                           • 1 year pipeline contains 62 projects totalling $2.2
    at June 2011 has grown by $440m over                                                billion
    the last 12 months                                                                • Sedgman has secured over $310m in contracts
                                                                                        over the past twelve months
•   Order book at June 2011 totals $606m1
                                                                                      • Sedgman may undertake early engineering works
    •     Engineering Services $252m
                                                                                        for projects utilising purchase orders whilst project
          (executable over 12 – 18 months)
                                                                                        contracts are under negotiation in order to meet
    •     Operations $354m (contract terms                                              clients’ project timetable requirements.
          vary between 1 to 10 years)
                                                                                      Recently Awarded Contracts1
                                                               $2.8bn
    $M   3,000                                                                          Date             Contract
         2,500         $2.3bn              $2.4bn                                      awarded          size ($m) Client                           Project
         2,000                                                                                                                                     Design for CHPP at first stage of
                                                                                      Mar-11 &
         1,500                                                                                             A$49         Aston Resources            Maules Creek project and
                                                                                      Apr 11
         1,000                                                                                                                                     procurement of long-lead items
            500
                                                                                                                        Lake Vermont               CHPP Expansion to Lake Vermont
               0                                                                      Feb-11              A$145
                                                                                                                        Resources                  Mine
                        Jun 10             Dec 10             Jun 11
         1 year pipeline                                                                                                                           New CHPP at second stage and
         Engineering Order Book                                                       Jan-11              US$31         Energy Resources           operation of the first stage at
         Operations Order Book                                                                                                                     UHG plant in Mongolia

                                                                                                                        Bengalla Mining
                                                                                      Dec-10               A$85                                    CHPP upgrade at Bengalla mine
                                                                                                                        Company Pty Ltd
    Notes
    1. Excludes major contracts signed after 30 June 2011 which included the US$24 million EPCM contract for stage 3 at Energy Resource’s UHG Coal Mine, the A$22.5 million CHPP
    improvement contract at the Bowen Basin’s Middlemount Coal Mine, the $123m CHPP Construction contract with BMA’s Daunia Mine and the A$85m Codrilla CHPP Contract.
    .




                                                                                                                                                                                   20
       Strong Pipeline
       of Opportunity

            June 10                                            Dec 10                                          June 11
           $6.3 Billion                                   $6.8 Billion                                      $7.6 Billion

3 yr                           1.8 billion    3 yr                              2.2 billion   3 yr                           2.4 billion


  2 yr                     2.9 billion           2 yr                       2.8 billion              2 yr                  3.0 billion

           1 yr          1.6 billion
                                                        1 yr            1.8 billion
                                                                                                            1 yr     2.2 billion



       •          Pipeline represents Sedgman’s targeted domestic and international projects

       •          Total pipeline has grown by $1.3 billion from June 2010 reflecting the continued recovery in
                  the resources market

       •          Near term pipeline (1 year) has increased by $600 million from June 2010

       •          Sedgman currently has some involvement in approximately 80% of projects and operations
                  identified




                                                                                                                           21
        Strategy
Sedgman will continue growing organically

•    Enhancing our coal technology leadership
•    Strengthening our client relationships
•    Converting pipeline opportunities into projects
•    Expanding operations to underpin growth
•    Continuing with our international expansion
•    Growing our regional offices for more autonomy
     and increasing collaboration

Strategic Imperatives

•    Building a stronger service targeting the iron
     ore and metalliferous sectors
•    Developing new business models to better
     leverage Sedgman’s expertise and intellectual
     property
•    Creating a competitive advantage through cost
     leadership
•    Focusing on our delivery capability
•    Improving margins
•    Continuing integration of metals and coal
     operations
New Initiatives

•    Identifying opportunities for upstream
     investments (including BOO)
•    Identifying potential merger and acquisitions

                                                       22
Questions




            23

				
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