OTOC Limited For personal use only 1H 2012: Earnings and Operations Review
Disclaimer For personal use only This Document should not be considered as an offer or invitation to subscribe for or purchase any securities in OTOC Limited (“OTOC” or “The Company”) or as an inducement to make an offer or invitation with respect to those securities. No agreement to subscribe for securities in OTOC should be entered into on the basis of this Document. This Document contains high level information only and 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 OTOC and its prospects. Any forecasts and forward looking information contained in this Document are subject to risks and uncertainties and are not a guarantee of future performance. Actual performance will almost certainly differ from those expressed or implied. OTOC makes no representation or warranty, express or implied, as to the accuracy, currency or completeness of the information presented herein. Information contained in this Document may be changed, amended or modified at any time by OTOC. OTOC is under no obligation to update any information or correct any error or omission which may become apparent after this under no obligation to update any information or correct any error or omission which may become apparent after this Document has been issued. To the extent permitted by law, OTOC and its officers, employees, related bodies corporate and agents (‘Associates’) disclaim all liability, direct, indirect or consequential (and whether or not arising out of the negligence, default or lack of care of OTOC and/or its Associates) for any loss or damage suffered by recipients of this Document or other persons arising out of, or in connection with, any use of or reliance on this Document or information contained herein. By accepting this Document, the recipient agrees that it shall not hold OTOC or its Associates liable in any such respect for the provision of this Document or any other information provided in relation to this Document. Recipients of this Document must make their own independent investigations, consideration and evaluation of the information contained herein. Any recipient that proceeds further with its investigations, consideration or evaluation of the information described herein shall make and rely solely upon its own investigations and inquiries and will not in any way rely upon this Document. Recipients of this Document should not act or refrain from acting in reliance on material in this Document. 2
HY 2012 HIGHLIGHTS For personal use only •Reverse takeover of Emerson Stewart Group Limited completed •Group rebranded OTOC Limited (ASX: OTC) Corporate •Strengthened Board and Management following the appointment of new Chairman Derek La Ferla and Adam Lamond as Group CEO •Strong progress made on the sale of Emerson Stewart Consulting •Continued OTOC’s stellar reputation for delivery in iron ore sector •First oil & gas contract for OTOC (BHP – Macedon) Operational Operational •Record order book of $87 million •Record order book of $87 million •Introduced business improvement initiatives •Outstanding safety performance •Group operating revenue of $70.5 million •EBIT from continuing operations of $1.8 million 1 Financial •NPAT from continuing operations $2.1 million 2 •Group restructure to deliver improved margins •Refinancing of facilities positions OTOC for solid growth in 2H FY2012 Note 1: Before allocation of corporate overhead Note 2: Includes a non-cash gain of $2.0 million 3
OTOC Transaction Completed For personal use only � Acquisition of OTOC Group Pty Ltd (OTOC) completed on 13 October 2011 � Established in 2003, OTOC is a direct construction lead (not a sub-contractor) specialising in the installation of mine site accommodation and non-process infrastructure (‘NPI’) in north west Western Australia � OTOC acquired for total consideration of $28 million; o $20 million in cash and scrip o $8 million of performance shares subject to FY2012 EBIT of between $5.5 million and $6.5 million � OTOC is the dominant operating business of the Group along with Whelans, a leading consultancy in the provision of surveying, mapping and town planning services � � Strengthened Board and Management following the appointment of Derek La Ferla as Chairman and Strengthened Board and Management following the appointment of Derek La Ferla as Chairman and Adam Lamond (founder of OTOC) as CEO Capital Structure OTOC Limited (ASX: OTC) Last close (13-Mar-12) 13c Ordinary shares on issue 153.1m 100% 100% 100% Performance shares 20.0m Market cap (undiluted) $19.9m 140 staff 40 staff Net cash/(debt) (31 Dec) $11.8m Enterprise value $29.4m 250 staff 4
1H 2012 Financial Results For personal use only Statutory Accounts $000's Consolidated Group 2011 2010 Revenue 70,492 18,679 EBIT 820 1,856 Net financial income/(costs) 1,411 2 -375 Profit before income tax 2,231 1,481 Income tax (expense)/benefit -83 -490 NPAT from continuing operations 2,148 991 Loss from discontinued operations 3 Loss from discontinued operations 3 -402 -402 - - NPAT for the Period 1,746 991 Note 1: Due to the reverse acquisition accounting required for the OTOC transaction, 2010 reflects only OTOC pre acquisition and the statutory accounts of the Company only reflect the performance of Whelans for the period 1 October 2011 to 31 December 2011 Note 2: Includes a non-cash gain of $2.0 million on the revaluation of contingent consideration relating to Performance Shares on the OTOC acquisition Note 3: Emerson Stewart Consulting business is classified as held for sale as at 31 December 2011 Segment Report $000's OTOC Whelans Revenue 64,785 12,435 EBIT before corporate costs 782 1,039 EBIT margin 1.2% 8.4% Note 1: Note that due to the reverse acquisition accounting required for the OTOC transaction, the statutory accounts of the Company only reflect the performance of Whelans for the period 1 October 2011 to 31 December 2011 5
OTOC – 1H Highlights For personal use only 1H Highlights Major Clients � Revenue $64.8m; EBIT $0.8m � Record revenue reflects the strong demand for non-process infrastructure and accommodation services � Continued strong exposure to the iron ore sector with work carried out for BHP, Rio Tinto, FMG and Hancock Prospecting � First contract in the oil & gas sector: $22m contract for BHP’s Macedon project BHP’s Macedon project Outlook � EBIT margin significantly below forecast and historic � performance due to cost overruns at two projects Record order book of $77 million � � Significant business improvement initiatives Estimated $66 million to be delivered in undertaken to deliver improved margins: H2 FY2012 with capacity to exceed this o Group wide implementation of Jobpac system � Significant pipeline of iron ore opportunities o Introduction of further experienced contract � Oil & gas market a strategic priority administrators � Improved management controls and margins o Full review of contracts and identification of likely cost recoveries � Expand maintenance capability to capture o Integration of OTOC and Whelans greater share of recurring work 6
OTOC Projects For personal use only Macedon (Complete) � Client: BHP Petroleum/Technip � Job/camp size: 330 man camp - including EPCM Office and infrastructure � 1 st oil & gas project � Contract value (approx): $22 million � Contract value (approx): $22 million Extension Hill (Complete) � Client: Asia Iron � Job/camp size: 160 man camp - including utility infrastructure � Contract value (approx): $10 million 7
OTOC Projects For personal use only Christmas Creek, Pilbara (Complete) � Client – Rio Tinto, Calibre Rail � Client: Fortescue Metals Group � Location – Weelumurra, � Job/camp size: 900 man camp - Pilbara region including infrastructure upgrades � Job/Camp Size – 140 buildings and new kitchen diner complete turnkey package � Contract value: $20 million � Contract Value – $6.5 million Weelumurra, Pilbara (Complete) � Client: Rio Tinto / Calibre Rail � Job/Camp Size: 140 man camp - complete turnkey package � Contract Value: $6.5 million 8
Whelans – 1H Highlights For personal use only Operations 1H Highlights � Revenue $12.4m; EBIT $1.04m Whelans Surveying � EBIT margin below forecast due to margin • Engineering • Land development pressure both external and internal surveys • Exploration and � • Restructuring of Karratha office to be better Cadastral surveys mining surveys placed to take advantage of the increasing pipeline of work in both oil & gas and mining � Whelans Mapping Expanded presence includes 110 professional staff and offices in Perth, Karratha, Broome, staff and offices in Perth, Karratha, Broome, • • • • Aerial mapping Ortho processing Kununurra and Kalgoorlie • Mine mapping Outlook � Robust order book with $10m of work in hand to be completed in 2H 2012 Town Planning � Historically a further $2-$3m revenue is • Strategic and • Land use planning community generated each half from recurring work streams • Development • Statutory planning � Well positioned to capitalise on the record management investment in oil & gas � Significant cross selling opportunities between Whelans and OTOC following integration 9
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