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“Sedgman has achieved some remarkable results since our ASX listing in June 2006,” Mr Kempnich told the November 20 meeting.
“These achievements have largely been due to a clearly articulated and well executed strategy of growth within our mainstay coal business. In addition, Sedgman’s acquisitions of Pac-Rim and Intermet Engineering have opened up new opportunities in the broader metalliferous sector.”
For the year to June 30, Sedgman posted record combined revenue of over $371 million, up 57 per cent on the previous year.
“Our record net profit after tax of $20.9 million was up 60 per cent on fiscal 2006, reflecting strong contributions from the Lake Lindsay, Acland, Sonoma and Millennium projects and seven months’ contribution from Pac-Rim,” Mr Kempnich said.
“Earnings before interest, tax and amortisation of intangibles is now showing an impressive compound annual growth rate of 87 per cent over the last three years.
“Earnings per share grew by 34 per cent to 12.3 cents per share. Shareholders have seen the benefits of this growth with a total dividend declared for the full year of seven cents per share, fully franked.
“I am pleased to announce that the board has approved the implementation of a dividend reinvestment plan which will commence with the fiscal 2008 interim dividend payable in the first quarter of next year.”
Mr Kempnich said the company’s performance had been recognised by the investment community, with market capitalisation growing to $547 million as at June 30, 2007.
Sedgman’s expansion into the metals sector, through the acquisitions of ore crushing and screening services provider Pac-Rim, and minerals process engineering and project management company Intermet, had given rise to a new corporate structure, he said.
“Having achieved market leadership in the design, construction and operation of coal handling and preparation plants in Australia, we aim to expand and capitalise on growth opportunities in the broader resources sector both at home and abroad.
“Our new structure comprises two core divisions of Sedgman Coal and Sedgman Metals, both encompassing the business units of Engineering Services and Operations.
“Sedgman Metals is based in Perth, home to our recently acquired minerals process engineering and project management company, Intermet Engineering. The Intermet acquisition has complemented our December 2006 purchase of ore crushing and screening services provider, Pac-Rim.
“These two strategic moves are aimed at leveraging Sedgman’s international reputation into the metalliferous sector. The board has worked closely with management to identify and evaluate opportunities for complementary acquisitions, and we will continue to pursue this successful strategy.”
Mr Kempnich said the company’s diversification, pursuit of expanded opportunities, both in Australia and abroad, and forecasts of strong global economic growth were all factors likely to contribute to a very bright future for Sedgman.
The chairman concluded his address with the announcement that managing director Peter Hay, described by Mr Kempnich as the “primary architect of the company’s consistent growth and our successful listing in 2006”, would not be renewing his contract of employment upon expiry on September 1, 2008.
In highlighting the company’s performance for the 2007 financial year, Mr Hay assured shareholders there would be a range of achievements to be pursued in his final year with Sedgman.
“Sedgman continues to lead the Australian market in the design, construction and operation of coal handling and preparation plants (CHPPs). This market leadership has been achieved due to our strong client relationships, and our hard-won reputation for delivering on our promises,” Mr Hay said.
“Our company is involved in two of the biggest CHPP contracts ever awarded in the Australian coal industry, at Anglo Coal Australia’s Dawson and Lake Lindsay projects.
“These projects have a total value of $788 million. Sedgman successfully negotiated contracts to a value of approximately $180 million for the Sonoma project. These contracts provided for the design and construction of an 800 tonnes per hour CHPP and an initial five year operations agreement.
“In February this year, we completed the design, construction and commissioning work for the New Acland CHPP. The delivery of the new plant at New Acland on time and within budget was a major achievement, given the current resource constraints of the coal industry.”
Mr Hay said the continuing demand for Australian coal and the subsequent demand for new infrastructure had resulted in a record number of project studies for Sedgman Coal.
“We continue to expand our operations contracts and now have a total of six, including the Sonoma, Middlemount and Millennium projects. To cater for this growth, we have allocated significant resources to the attraction and retention of staff and to the development of systems and processes in the areas of training and HSE (health, safety and environment).
“Sedgman has started the 2008 financial year with the award of the $100 million Lake Vermont CHPP to be delivered in joint venture with our major shareholder, Thiess, through the TSJV [Thiess Sedgman Joint Venture].”
Mr Hay said Sedgman had also achieved contract closure on a massive project in Mozambique.
“The multi-billion dollar Moatize project is set to be one of the biggest coal mines in Africa and indeed the Southern Hemisphere. What is really exciting about this project is that it confirms our assessment of the global potential of Sedgman Coal.
“Additionally it is our first project with CVRD, the world’s No. 2 resources company. CVRD, which is based in Brazil, has announced plans to invest US$59 billion over five years across both greenfield and brownfield projects around the world.
“Sedgman will be undertaking the detailed design of a 4,000 tonne per hour process plant – one of the largest single building four module preparation plants in the world. To put this into perspective, it will be about twice the size of the biggest plant in Australia which is Anglo Coal’s CHPP at Dawson, again a Sedgman Coal project.
“In addition to the Moatize project in Africa, we also see China as offering enormous potential and have commenced discussions with potential partners who share our vision of service excellence.”
Mr Hay went on to say the outlook for Sedgman’s future was excellent.
“I believe this to be the case not just because we are a resource services provider in the midst of a global resources boom which shows no signs of abating, but because we are pursuing strategies that are expanding our business base and providing for opportunities to leverage our technical excellence.
“In terms of earnings guidance, Sedgman has forecast cash earnings per share growth of between 15 to 20 per cent in fiscal 2008, with significant growth from both our business units. We expect a number of our coal division’s project studies to be converted into new design and construct projects,” he said.
“With our strong cash flows, leading market position and skilled human resources, we are well positioned to take advantage of the current conditions. We have forecast record profits for the year ahead, and I am confident we will deliver them for the benefit of shareholders.”
“These achievements have largely been due to a clearly articulated and well executed strategy of growth within our mainstay coal business. In addition, Sedgman’s acquisitions of Pac-Rim and Intermet Engineering have opened up new opportunities in the broader metalliferous sector.”
For the year to June 30, Sedgman posted record combined revenue of over $371 million, up 57 per cent on the previous year.
“Our record net profit after tax of $20.9 million was up 60 per cent on fiscal 2006, reflecting strong contributions from the Lake Lindsay, Acland, Sonoma and Millennium projects and seven months’ contribution from Pac-Rim,” Mr Kempnich said.
“Earnings before interest, tax and amortisation of intangibles is now showing an impressive compound annual growth rate of 87 per cent over the last three years.
“Earnings per share grew by 34 per cent to 12.3 cents per share. Shareholders have seen the benefits of this growth with a total dividend declared for the full year of seven cents per share, fully franked.
“I am pleased to announce that the board has approved the implementation of a dividend reinvestment plan which will commence with the fiscal 2008 interim dividend payable in the first quarter of next year.”
Mr Kempnich said the company’s performance had been recognised by the investment community, with market capitalisation growing to $547 million as at June 30, 2007.
Sedgman’s expansion into the metals sector, through the acquisitions of ore crushing and screening services provider Pac-Rim, and minerals process engineering and project management company Intermet, had given rise to a new corporate structure, he said.
“Having achieved market leadership in the design, construction and operation of coal handling and preparation plants in Australia, we aim to expand and capitalise on growth opportunities in the broader resources sector both at home and abroad.
“Our new structure comprises two core divisions of Sedgman Coal and Sedgman Metals, both encompassing the business units of Engineering Services and Operations.
“Sedgman Metals is based in Perth, home to our recently acquired minerals process engineering and project management company, Intermet Engineering. The Intermet acquisition has complemented our December 2006 purchase of ore crushing and screening services provider, Pac-Rim.
“These two strategic moves are aimed at leveraging Sedgman’s international reputation into the metalliferous sector. The board has worked closely with management to identify and evaluate opportunities for complementary acquisitions, and we will continue to pursue this successful strategy.”
Mr Kempnich said the company’s diversification, pursuit of expanded opportunities, both in Australia and abroad, and forecasts of strong global economic growth were all factors likely to contribute to a very bright future for Sedgman.
The chairman concluded his address with the announcement that managing director Peter Hay, described by Mr Kempnich as the “primary architect of the company’s consistent growth and our successful listing in 2006”, would not be renewing his contract of employment upon expiry on September 1, 2008.
In highlighting the company’s performance for the 2007 financial year, Mr Hay assured shareholders there would be a range of achievements to be pursued in his final year with Sedgman.
“Sedgman continues to lead the Australian market in the design, construction and operation of coal handling and preparation plants (CHPPs). This market leadership has been achieved due to our strong client relationships, and our hard-won reputation for delivering on our promises,” Mr Hay said.
“Our company is involved in two of the biggest CHPP contracts ever awarded in the Australian coal industry, at Anglo Coal Australia’s Dawson and Lake Lindsay projects.
“These projects have a total value of $788 million. Sedgman successfully negotiated contracts to a value of approximately $180 million for the Sonoma project. These contracts provided for the design and construction of an 800 tonnes per hour CHPP and an initial five year operations agreement.
“In February this year, we completed the design, construction and commissioning work for the New Acland CHPP. The delivery of the new plant at New Acland on time and within budget was a major achievement, given the current resource constraints of the coal industry.”
Mr Hay said the continuing demand for Australian coal and the subsequent demand for new infrastructure had resulted in a record number of project studies for Sedgman Coal.
“We continue to expand our operations contracts and now have a total of six, including the Sonoma, Middlemount and Millennium projects. To cater for this growth, we have allocated significant resources to the attraction and retention of staff and to the development of systems and processes in the areas of training and HSE (health, safety and environment).
“Sedgman has started the 2008 financial year with the award of the $100 million Lake Vermont CHPP to be delivered in joint venture with our major shareholder, Thiess, through the TSJV [Thiess Sedgman Joint Venture].”
Mr Hay said Sedgman had also achieved contract closure on a massive project in Mozambique.
“The multi-billion dollar Moatize project is set to be one of the biggest coal mines in Africa and indeed the Southern Hemisphere. What is really exciting about this project is that it confirms our assessment of the global potential of Sedgman Coal.
“Additionally it is our first project with CVRD, the world’s No. 2 resources company. CVRD, which is based in Brazil, has announced plans to invest US$59 billion over five years across both greenfield and brownfield projects around the world.
“Sedgman will be undertaking the detailed design of a 4,000 tonne per hour process plant – one of the largest single building four module preparation plants in the world. To put this into perspective, it will be about twice the size of the biggest plant in Australia which is Anglo Coal’s CHPP at Dawson, again a Sedgman Coal project.
“In addition to the Moatize project in Africa, we also see China as offering enormous potential and have commenced discussions with potential partners who share our vision of service excellence.”
Mr Hay went on to say the outlook for Sedgman’s future was excellent.
“I believe this to be the case not just because we are a resource services provider in the midst of a global resources boom which shows no signs of abating, but because we are pursuing strategies that are expanding our business base and providing for opportunities to leverage our technical excellence.
“In terms of earnings guidance, Sedgman has forecast cash earnings per share growth of between 15 to 20 per cent in fiscal 2008, with significant growth from both our business units. We expect a number of our coal division’s project studies to be converted into new design and construct projects,” he said.
“With our strong cash flows, leading market position and skilled human resources, we are well positioned to take advantage of the current conditions. We have forecast record profits for the year ahead, and I am confident we will deliver them for the benefit of shareholders.”
