rcr investor presentation - asx · 1 rcr investor presentation asx hong kong & singapore...
TRANSCRIPT
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RCR Investor Presentat ion ASX Hong Kong & S ingapore Confe rence
Managing Director & CEO: Dr Paul Dalgleish
14 May 2013
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• Highlights
• Delivering Returns To Shareholders
• RCR Businesses
• RCR’s Acquisition of Norfolk (ASX: NFK)
- Strategic Rationale
- Overview Post Norfolk Transaction
• RCR’s Future Business Structure
• RCR’s HY13 Financial Performance
• RCR’s Business Units | Performance, Prospects & Outlook
• Strategy and Outlook
Agenda
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RCR | H igh l igh ts
EBIT (FY12)
increased
39%
NPAT (FY12)
increased
40%
Revenue (FY12)
increased
33%
4
Del iver ing Returns To Shareholders
EPS (FY12)
increased
38%
Total Dividend (FY12)
increased
67%
Net Cash (FY12)
increased
$51.6M
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Tota l Shareho lder Returns (TSR)
• > 625% increase in TSR since May 2009
• Compound Annual Growth Rate (CAGR) from May 2009 in excess of 60% p.a.
Source: Lincoln Crowne & Company | S&P Capital IQ | TSR Period 20 May 2009 to 8 May 2013
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RCR Bus inesses
Engineering
and construction
for EI&C in resources and
infrastructure projects.
Technology leader in
power generation and
energy plants.
Leader in mining
equipment design and
manufacture.
Key Activities:
• Electrical maintenance,
construction and installation
• Electrical, Instrumentation
and control systems
• HV specialist
• Manufactured electrical
product and systems
(substations and
switchboards; above and
below ground)
Key Activities:
• SMP construction
• Underground Construction
• Mechanical installation
• Shutdowns
• Dragline Maintenance
• Maintenance
• Heat treatment
Key Activities:
• Power and energy plants
(HRSG, turbine, geothermal,
biomass)
• Combined Cycle Power
Plants
• Packaged boilers
• Conventional and renewable
fuels
• Burners, heaters and
combustion systems
• Servicing and maintenance
• Laser cutting
Key Activities:
• Materials handling equipment
• Apron feeders, belt feeders
• Radial Stackers
• Belt Reelers, Dozer Traps
• Mobile mining equipment
• Off-site repair
• Specialist manufacturing and
machining
Engineering and
construction for SMP in
mining and oil & gas
projects.
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RCR Acqu is i t ion o f Nor fo lk
• Market Leader with strong brands
• Diverse market exposure
• Annual Revenue (FY12) of approx $902M
• Strong Order Book
• 3,000 Personnel - Australia, New Zealand, Asia
A leading electrical and communications
engineering solutions provider.
Constructors who design, build and
maintain 'mission critical' infrastructure.
A leading mechanical engineering
solutions provider.
Delivering technically, environmentally
and geographically complex projects.
A leading provider of technical facilities
and property management services.
Offering a complete suite of integrated
facilities management services.
FY12 Revenue: $579M FY12 Revenue: $248M FY12 Revenue: $74M
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• RCR to acquire Norfolk by Scheme of Arrangement1
• Price of 48 cents per Norfolk share - total consideration of ~$78M
• RCR to assume Norfolk forecast debt $62M
• Equates to an Enterprise Value of ~$140M
• RCR’s own cash at bank and committed acquisition finance from a leading
Australian bank
• Norfolk’s Board unanimous recommendation *
• Maui Capital (20% shareholder) will vote in favour *
* Subject to no superior proposal and favourable independent expert report
• The transaction will be subject to Norfolk shareholder and Court approvals
and customary defeating conditions including:
- market fall condition
- regulatory requirements
- no material adverse change
Norfo lk Acqu is i t ion
Transaction
Overview
Consideration
Funding
Other Conditions
Board and Major
Shareholder
Support
1 Full details are available in the Scheme Implementation Deed as announced to ASX on 12 April 2013
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Stra teg ic Rat iona le
RCR will continue to deliver on strategy outlined in 2010
• Our clear objectives:
- Provide services direct to customers as prime contractor
- Target larger project opportunities
- Leverage IP-rich businesses into delivery of turnkey
solutions
• Strong balance sheet gives capacity to target growth through
acquisition
Specific initiatives for FY13 include:
• Target further large projects in Energy, Resources & Power
• Continue exploration for applications of our IP2C technology
• Expand mining equipment offering through Technology
Partnerships
• Further grow Energy business in SE Asia
• Diversify revenue through technology-based infrastructure
Norfolk
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• Increases earning diversification across Engineering and Construction
Sectors
• Earning accretive in first full year of ownership
• Large infrastructure client base
Stra teg ic Rat iona le
Revenue Diversification
Analyses based on FY12 financial information for RCR
21.3%
20.1% 48.8%
9.8%
RCR Revenue By Sector | Pre-Acquisition
Mining
Energy
Resources
Power
34%
56%
10% Resources
Infrastructure
Energy
RCR Revenue By Sector | Post Acquisition
Analyses based on consolidated FY12 financial information for RCR and Norfolk
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• Annual Revenues in excess of $1.8 billion *
• Balanced exposure to Infrastructure and Resources sectors
• Earnings accretive in FY14
• High degree of recurring revenue
• In excess of 5,000 employees with significant offices in all capital cities
and major regional locations
• Balanced national business plus improved critical mass in New Zealand
and Asia
• Post acquisition Net Debt of ~$80M and Debt to Equity ~35%.
* Based on RCR and Norfolk FY2013 Revenue consensus (RCR: $850M, Norfolk:$950M )
Overv iew | Post Nor fo lk Transact ion
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RCR Future Bus iness St ruc ture
Power
RCR Resources
RCR Mining
RCR Energy
• SMP construction
• Underground Construction
• Mechanical installation
• Shutdowns
• Materials handling equipment
• Apron feeders, Belt feeders
• Radial Stackers
• Mobile mining equipment
• Off-site repair
• Power and energy plants (HRSG,
turbine, geothermal, biomass)
• Combined Cycle Power Plants
• Packaged boilers
• Conventional and renewable fuels
• Burners, heaters and combustion
systems
• Servicing and maintenance
• Laser cutting
• Rail signalling and overhead wiring
systems
• Power generation, transmission &
distribution systems and generator
maintenance
• High voltage cabling, switchboards and
process control instrumentation
• installation and maintenance of
mechanical engineering and air
conditioning.
RCR Power
Norfolk ODG
Norfolk Haden
Norfolk Resolve FM
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RCR HY13 F inanc ia l Per formance
Firetail Ore Processing Facility, photographed during construction by RCR at the Fortescue Metals Group Ltd, Solomon Mine | Image courtesy of Fortescue
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• Sales revenue up 17% to $388M
• Earnings Before Interest and Tax (EBIT) up 42% to $19.3M
• Net Profit After Tax (NPAT) up 83% to $16M
• Well balanced Order Book at $465M
• Net Cash of $53.5M and no debt
• Interim Dividend of 2.5 cents per share fully franked
• Operating Margins improved to 5.0%
• Earnings per share up 83% to 12.1 cents per share
• LTI Frequency Rate reduced to 0.32, on increased activity
Revenue Increased
17%
NPAT Increased
83%
EBIT Increased
42%
HY13 High l igh ts
All amounts are representative of the six months to 31 December 2012
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EBITA margin improved to 5.5%
EBIT margin meets minimum 5.0% target
Effective tax rate at 21.8% includes R&D
benefits from prior years
HY13 Earn ings
HY13 HY12
$M $M
Revenue 388.4 333.1
EBITDA 26.5 20.6
Depreciation (5.2) (5.0)
EBITA 21.3 5.5% 15.6 4.7%
Amortisation (2.0) (2.0)
EBIT 19.3 5.0% 13.6 4.1%
Finance income / (cost) 1.2 (1.1)
PBT per half year report 20.5 12.5
Tax (4.5) (3.7)
NPAT 16.0 8.8
265.8 300.0
333.1 388.4
279.8
307.2
475.6
10 11 12 13
1st Half / 2nd Half Revenue - $M
4.9
10.3 13.5
19.3 9.6
15.8
22.7
10 11 12 13
1st Half / 2nd Half EBIT - $M
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HY13 Cashf low
• Operating cashflow of $22.7M
• Working Capital includes expected reduction in contract advances
• Strong underlying cashflows from Earnings and maintenance of Working Capital improvements
generated in past 2 years
• Capital investment includes completion of Welshpool development
(10.0)
10.0
30.0
50.0
70.0
90.0
OpeningNet Cash
EBITDA WorkingCapital
Mvt
DividendsPaid
Capex Other ClosingNet Cash
Cashflow - $M
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RCR Min ing
Installation of RCR designed-and-built Belt Feeder at Fortescue’s Solomon Mine
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RCR Min ing
Full Year Half Year
Performance
• Stable Revenue Generating Business
• Steady Backlog and Order book
- Standard Products and Spare Parts
- Recurring Off Site Repair (OSR) work
• Strong earnings and margin
- Productivity improvements
- Product mix change over time
Prospects and Outlook
• Current prospects remain solid for standard products
• In-Pit Crushing opportunities (IP2C) for Major clients
• Opportunity to deliver more complete Mine Process Solutions
- Through Technology Partnerships
• Recent awards of Off Site Repair work for Oil & Gas sector
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Pro jec t Summary
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RCR Energy
RCR’s Completed Gas Turbines and Heat Recovery Steam Generator System of 450MW for a Major Iron Ore Producer in Western Australia
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RCR Energy
Performance
• Acquired AE&E in 2011 (from Administration)
• Recurring revenues for Boiler Service, Maintenance
and Manufacturing $110M
• Sales increase following award of
BHPB Yarnima Power Project (Acquired Technology)
• Significant Margin expansion
- Increased sales of Technology Projects
- Improved commercial discipline
Prospects and Outlook
• Tendering several large Closed Cycle Power Plants
• Continued opportunities for embedded power for the
Resource industry
• Recurring upgrade and maintenance contracts with major
Australian utilities
• HRSGs and Boilers for steam generation
• Biomass energy projects in Australia, Europe & Asia
Full Year Half Year
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Pro jec t Summary
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RCR Resources
Firetail Ore Processing Facility | Constructed by RCR for Fortescue at its Solomon Mine in Western Australia. Image courtesy of Fortescue
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RCR Resources
Performance
• Major Revenue growth from the FMG Solomon Project
• Margin improvement predominantly through Revenue
expansion
• Extended work for Blue Chip Clients
- FMG
- Newcrest
- BHPB
- Woodside
Prospects and Outlook
• Further organic growth opportunities in Iron Ore
• Current ramp-up of LNG and CSG projects
- Gorgon ($50B)
- Wheatstone ($30B)
- Ichthys ($35B)
- 3 X Projects Curtis Island ($20B)
• Significant Projects gaining traction; Adani (Coal);
Roy Hills (Iron Ore)
• Move toward EPC delivery of major Resources projects
Full Year Half Year
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Pro jec t Summary
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Pro jec t Summary
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RCR Power
Electrical Infrastructure work carried out by RCR at Prominent Hill |Inset: RCR’s purpose-built switchboard manufacturing facility
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RCR Power
Performance
• Increased activity driven by FMG Solomon project
• Significant Margin expansion
- Larger Project size
- Improved commercial discipline
• Increased Revenue from Manufacturing
• Increased Panel Contract agreements with Clients
Prospects and Outlook
• Business will be merged with the ODG business
• Prospects include E&I and combined SMPE&I packages
• RCR awarded BHPBIO Panel contractor status for sustaining
capital projects
• Infrastructure opportunities
- Rail signalling and HV infrastructure
- HV substation and cable replacement works
- Infrastructure for Resource projects (Power and Transport)
Full Year Half Year
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Pro jec t Summary
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Susta inab i l i ty
RCR employees following pre-start meeting during construction at Firetail Ore Processing Facility, Solomon Mine
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Safety and Our Peop le
Performance
• LTIFR reduced by 24% to 0.32
• TRIFR reduced by 69% to 4.76
• 95% of RCR sites LTI free
• Leading Indicators
- 230,000 stop & think actions completed;
- More than 9,500 tool box & pre-start meetings held
- Over 14,000 Unsafe Acts Preventions
- Over 14,000 Job Safety Analyses conducted
Our People
• 2,449 employees (Dec 2012)
- Current Solomon headcount over 900 on site
• 162 Apprentices and Trainees
• Continued focus on increased diversity of the workforce
- Female workforce remained at 12%
- Targeting minimum 10% Indigenous workforce on
Solomon
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Stra tegy & Out look
RCR designed HRSG modules, arriving at Fremantle Port for transport to site at BHP Billiton’s Yarnima Power Station
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Stra tegy & Out look
RCR will continue to deliver on strategy outlined in 2010
• Our clear objectives:
- Provide services direct to customers as prime contractor
- Target larger project opportunities
- Leverage IP-rich businesses into delivery of turnkey solutions
• Strong balance sheet gives capacity to target growth through acquisition
Specific initiatives for FY13 include:
• Target further large projects in Energy, Resources & Power
• Continue exploration for applications of our IP2C technology
• Expand mining equipment offering through Technology Partnerships
• Further grow Energy business in SE Asia
• Diversify revenue through technology-based infrastructure
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Impor tant Not ice
• This presentation and any oral presentation accompanying it has been prepared by RCR Tomlinson Ltd (“RCR “ or the “Company”). It should not be considered
as an offer or invitation to subscribe for or purchase any securities in the Company or as an inducement to make an offer or invitation with respect to those
securities. No agreement to subscribe for securities in the Company will be entered into on the basis of this presentation.
• The material in this presentation includes a summary of the proposed acquisition of the Norfolk Group Limited (ASX: NFK) by RCR by scheme of arrangement
(Scheme). Details of the proposed acquisition of Norfolk are set out in a Scheme Implementation Deed as released to the ASX on 12 April 2013. Further
details about the scheme will be contained in a Scheme Booklet to be prepared by Norfolk which will be released in June 2013.
• This presentation provides information in summary form only and is not intended to be complete. It does not constitute an offer, invitation, solicitation or
recommendation with respect to the purchase or sale of any securities and the information contained in this presentation should not be relied upon by investors
or potential investors in making an assessment of RCR, Norfolk or the Scheme or in assuming any liability or other obligation. Investors or potential investors in
the securities of RCR or Norfolk should read the Scheme Implementation Deed dated 12 April 2013 and the Scheme Booklet to be released in due course for
further information in respect of the Scheme, and should consider seeking independent advice before making any decisions in relation to the Scheme.
• Certain information concerning Norfolk, its business and financial information has been prepared by RCR using publicly available information (together Norfolk
information) and none of Norfolk or its officers, employees, agents or advisors has independently verified any Norfolk information contained in this presentation.
• This presentation should also be read in conjunction with other publicly available material relating to RCR and Norfolk. Further information including historical
results and a description of the activities of RCR and Norfolk is available on each company’s website. To the maximum extent permitted by law, neither RCR or
its related bodies corporate, Directors, employees or agents, nor any other person, accepts any liability, including, without limitation, any liability arising from
fault or negligence, for any direct, indirect or consequential loss arising from the use of this presentation or its contents or otherwise in connection with it.
• This presentation contains forecasts and forward looking information. Such forecasts, projections and information are not a guarantee of future performance,
involve unknown risks and uncertainties. Actual results and developments will almost certainly differ materially from those expressed or implied. RCR has not
audited or investigated the accuracy or completeness of the information, statements and opinions contained in this presentation. Accordingly, to the maximum
extent permitted by applicable laws, RCR makes no representation and can give no assurance, guarantee or warranty, express or implied, as to, and take no
responsibility and assume no liability for, the authenticity, validity, accuracy, suitability or completeness of, or any errors in or omission, from any information,
statement or opinion contained in this presentation.
• You should not act, or refrain from acting, in reliance on this presentation material. This overview of RCR does not purport to be all inclusive or to contain all
information which its recipients may require in order to make an informed assessment of the Company’s prospects. You should conduct your own investigation
and perform your own analysis in order to satisfy yourself as to the accuracy and completeness of the information, statements and opinions contained in this
presentation before making any investment decision.
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