Highlights Delivering Returns To Shareholders RCR Businesses RCR s Acquisition of Norfolk (ASX: NFK) - Strategic Rationale - Overview Post Norfolk

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Dennis Blake
6 years ago
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1 RCR Investor Presentation ASX Hong Kong & Singapore Conference Managing Director & CEO: Dr Paul Dalgleish 14 May

2 Agenda 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 2

3 RCR Highlights Revenue (FY12) increased 33% EBIT (FY12) increased 39% NPAT (FY12) increased 40% 3

4 Delivering Returns To Shareholders Net Cash (FY12) increased $51.6M EPS (FY12) increased 38% Total Dividend (FY12) increased 67% 4

5 Total Shareholder 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

RCR Businesses Leader in mining equipment design and manufacture. Technology leader in power generation and energy plants. Engineering and construction for SMP in mining and oil & gas projects.

6 RCR Businesses Leader in mining equipment design and manufacture. Technology leader in power generation and energy plants. Engineering and construction for SMP in mining and oil & gas projects. Engineering and construction for EI&C in resources and infrastructure projects. 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 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: SMP construction Underground Construction Mechanical installation Shutdowns Dragline Maintenance Maintenance Heat treatment 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) 6

RCR Acquisition of Norfolk Market Leader with strong brands Diverse market exposure

New Zealand, Asia A leading electrical and communications engineering solutions

Constructors who design, build and maintain 'mission critical' infrastructure.

7 RCR Acquisition of Norfolk 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 7

Norfolk Acquisition Transaction Overview Consideration Funding RCR to acquire Norfolk

~$78M RCR to assume Norfolk forecast debt $62M Equates to an Enterprise Value of ~$140M

Board and Major Shareholder Support Norfolk s Board unanimous recommendation * Maui

favourable independent expert report Other Conditions The transaction will be subject

including: - market fall condition - regulatory requirements - no material adverse

8 Norfolk Acquisition Transaction Overview Consideration Funding RCR to acquire Norfolk by Scheme of Arrangement 1 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 Board and Major Shareholder Support Norfolk s Board unanimous recommendation * Maui Capital (20% shareholder) will vote in favour * * Subject to no superior proposal and favourable independent expert report Other Conditions 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 1 Full details are available in the Scheme Implementation Deed as announced to ASX on 12 April

9 Strategic Rationale 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 9

10 Strategic Rationale Increases earning diversification across Engineering and Construction Sectors Earning accretive in first full year of ownership Large infrastructure client base Revenue Diversification RCR Revenue By Sector Pre-Acquisition RCR Revenue By Sector Post Acquisition 48.8% 9.8% 21.3% 20.1% Mining Energy Resources Power 56% 10% 34% Resources Infrastructure Energy Analyses based on FY12 financial information for RCR Analyses based on consolidated FY12 financial information for RCR and Norfolk 10

11 Overview Post Norfolk Transaction 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 ) 11

RCR Future Business Structure Power RCR Resources RCR Mining RCR Energy RCR Power Norfolk ODG Norfolk Haden Norfolk Resolve FM SMP

Radial Stackers Mobile mining equipment Off-site repair Power and energy plants (HRSG, turbine, geothermal, biomass) Combined Cycle

cutting Rail signalling and overhead wiring systems Power generation, transmission & distribution systems and generator maintenance

12 RCR Future Business Structure Power RCR Resources RCR Mining RCR Energy RCR Power Norfolk ODG Norfolk Haden Norfolk Resolve FM 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. 12

13 RCR HY13 Financial Performance Firetail Ore Processing Facility, photographed during construction by RCR at the Fortescue Metals Group Ltd, Solomon Mine Image courtesy of Fortescue 13

14 HY13 Highlights 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 Revenue Increased 17% Well balanced Order Book at $465M Net Cash of $53.5M and no debt Interim Dividend of 2.5 cents per share fully franked NPAT Increased 83% 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 EBIT Increased 42% All amounts are representative of the six months to 31 December

15 HY13 Earnings HY13 HY12 $M $M Revenue 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 EBITDA Depreciation (5.2) (5.0) EBITA % % 1st Half / 2nd Half Revenue - $M 1st Half / 2nd Half EBIT - $M Amortisation (2.0) (2.0) EBIT % % Finance income / (cost) 1.2 (1.1) PBT per half year report Tax (4.5) (3.7) NPAT

16 HY13 Cashflow 90.0 Cashflow - $M (10.0) Opening Net Cash EBITDA Working Capital Mvt Dividends Paid Capex Other Closing Net Cash 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 16

17 RCR Mining Installation of RCR designed-and-built Belt Feeder at Fortescue s Solomon Mine 17

RCR Mining 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 -

18 RCR Mining 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 Full Year Half Year 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 18

19 Project Summary 19

20 RCR Energy RCR s Completed Gas Turbines and Heat Recovery Steam Generator System of 450MW for a Major Iron Ore Producer in Western Australia 20

RCR Energy Performance Acquired AE&E in 2011 (from Administration) Recurring revenues for Boiler Service, Maintenance and Manufacturing $110M Sales increase

discipline Prospects and Outlook Tendering several large Closed Cycle Power Plants Continued opportunities for embedded power for the Resource industry Recurring

21 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 21

22 Project Summary 22

23 RCR Resources Firetail Ore Processing Facility Constructed by RCR for Fortescue at its Solomon Mine in Western Australia. Image courtesy of Fortescue 23

RCR Resources Performance Major Revenue growth from the FMG Solomon Project Margin

FMG - Newcrest - BHPB - Woodside Prospects and Outlook Further organic growth opportunities

Ichthys ($35B) - 3 X Projects Curtis Island ($20B) Significant Projects gaining traction;

24 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 24

25 Project Summary 25

26 Project Summary 26

27 RCR Power Electrical Infrastructure work carried out by RCR at Prominent Hill Inset: RCR s purpose-built switchboard manufacturing facility 27

RCR Power Performance Increased activity driven by FMG Solomon project Significant Margin expansion - Larger Project size - Improved commercial discipline

Prospects include E&I and combined SMPE&I packages RCR awarded BHPBIO Panel contractor status for sustaining capital projects Infrastructure opportunities -

28 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 28

29 Project Summary 29

30 Sustainability RCR employees following pre-start meeting during construction at Firetail Ore Processing Facility, Solomon Mine 30

31 Safety and Our People Performance LTIFR reduced by 24% to 0.32 TRIFR reduced by 69% to % 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 31

32 Strategy & Outlook RCR designed HRSG modules, arriving at Fremantle Port for transport to site at BHP Billiton s Yarnima Power Station 32

33 Strategy & Outlook 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 33

34 Important Notice 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 Further details about the scheme will be contained in a Scheme Booklet to be prepared by Norfolk which will be released in June 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. 34

For the Financial Year Ended 30 June 2013

Annual Results For the Financial Year Ended 30 June 2013 Record Profit Record Revenue Record Cash Record Year Managing Director & CEO: Paul Dalgleish Chief Financial Officer: Andrew Walsh 22 August 2013