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Head Office: 1 st Floor 159 Coronation Drive Milton QLD 4064 Australia PO Box 1824 Milton BC QLD 4064 Australia Telephone: + 61 7 3367 7800 | Facsimile: + 61 7 3367 7899 | www.transpacific.com.au 9 October 2013 Company Announcements Office ASX Limited Dear Sirs, Please find attached a presentation to be made by Stewart Cummins, Chief Financial Officer of Transpacific Industries Group Ltd, to the RBS Morgans 2013 Queensland Conference commencing at 4pm today. Yours sincerely Transpacific Industries Group Ltd Chris Carroll Company Secretary Transpacific Industries Group Ltd ABN: 74 101 155 220 Level 1, 159 Coronation Drive MILTON QLD 4064 PO Box 1824 MILTON QLD 4064 Phone: + 61 7 3367 7800 Fax: + 61 7 3367 7878 For personal use only

9 October 2013 Company Announcements Office For personal … · 2019. 11. 20. · 9 October 2013 Company Announcements Office ASX Limited Dear Sirs, Please find attached a presentation

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Head Office: 1st Floor 159 Coronation Drive Milton QLD 4064 Australia PO Box 1824 Milton BC QLD 4064 Australia

Telephone: + 61 7 3367 7800 | Facsimile: + 61 7 3367 7899 | www.transpacific.com.au

9 October 2013 Company Announcements Office ASX Limited Dear Sirs, Please find attached a presentation to be made by Stewart Cummins, Chief Financial Officer of Transpacific Industries Group Ltd, to the RBS Morgans 2013 Queensland Conference commencing at 4pm today. Yours sincerely Transpacific Industries Group Ltd

Chris Carroll Company Secretary

Transpacific Industries Group Ltd ABN: 74 101 155 220

Level 1, 159 Coronation Drive MILTON QLD 4064 PO Box 1824 MILTON QLD 4064

Phone: + 61 7 3367 7800 Fax: + 61 7 3367 7878

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Presentation by

Stewart Cummins

Chief Financial Officer

9 October 2013

RBS Morgans 2013 Queensland Conference

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Agenda

1. Introduction

2. Divisional Overview

3. Improving Financial Metrics

4. Business and Operational Review

5. FY14 Agenda

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1. Introduction

Transpacific is Australia and New Zealand’s leading waste management business, operating a national network of unique collection, processing and landfill assets

Over the past three years a number of actions have been taken to strengthen the Company

Our priorities have been: Improving the financial metrics Sell surplus assets and non-core businesses Achieve operational cost savings

These priorities remain but the transformation of Transpacific will be

accelerated via implementation of the recommendations arising from the Business and Operational Review

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Waste Management Operations

Core segment activities

2. Divisional Overview

Industrials Australia

New Zealand Commercial

Vehicles Manufacturing Cleanaway

Municipal Collections

C&I Collections

Post Collections

Technical Services

Industrial Solutions

Hydrocarbons

Collections and Post Collections

Technical & Industrial Services

Importation & Distribution

Dealership

Dealer Network

Metals Manufacturing

Plastics Manufacturing

Our operating structure has changed since 30 June 2013

Non-core Operations

Non-core segment activities

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Municipal Collections C&I Collections Post Collections

Councils typically award 5-10 year contracts to collect residential waste

Disposal options are generally mandated by the council, often ending up in their own landfills

174.3 183.6 180.1 199.0

0

100

200

300

400

500

600

FY10 FY11 FY12 FY13

Revenue ($M)

479.1

540.7 570.6 589.9

0

100

200

300

400

500

600

FY10 FY11 FY12 FY13

Revenue ($M)

Customers range from local small businesses to large national corporate accounts across all industries

Contract duration typically ranges from 1-5 years. Route density and close access to competitive disposal costs key to success

Operation of transfer stations, material recycling facilities, advanced resource recovery and landfill for solid waste

Gate fees are highly variable reflecting state government levies and local factors

125.4 136.2 143.1 135.5

0

100

200

300

400

500

600

FY10 FY11 FY12 FY13

Revenue ($M)

Divisional Overview: Cleanaway F

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Collection, treatment, recycling and safe disposal of liquid and prescribed waste

Liquid waste is highly variable from low volume, high value hazardous waste to low value, high volume waste such as grease traps and biosolids

158.9 161.8 159.8 162.2

0

50

100

150

200

250

FY10 FY11 FY12 FY13

Revenue ($M) 244.2 247.8 242.0

226.0

0

50

100

150

200

250

FY10 FY11 FY12 FY13

Revenue ($M)

Services include vacuum handling, high pressure water blasting, catalyst services, hydro excavation, industrial cleaning and facility maintenance

Major supplier of emergency response services

Collection, treatment and re-sale of used lubricants and oils

The sales price for processed oil products linked to the international market index ICIS LOR, exchange rates and government subsidies (PSO)

112.0

137.5 141.4 135.4

0

50

100

150

200

250

FY10 FY11 FY12 FY13

Revenue ($M)

Technical Services Industrial Solutions Hydrocarbons

Divisional Overview: Industrials F

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Consists of solid waste collection, processing and disposal operations servicing municipal, private residential, commercial and construction customers

Post collection assets located on both the North and South Islands

Consists of businesses serving commercial, industrial and municipal customers and providing:

Collection, treatment and disposal of hazardous liquids

Collection, processing and disposal or sale of black oil and solvents

Services including vacuum handling, high pressure water blasting, emergency spills response, industrial cleaning, facility maintenance and street sweeping

99.1 110.6 101.5 95.7

0

100

200

300

400

FY10 FY11 FY12 FY13

Revenue (NZ$M)

Collections and Post Collections

Technical & Industrial Services

305.7 343.9 332.3 342.2

0

100

200

300

400

FY10 FY11 FY12 FY13

Revenue (NZ$M)

Divisional Overview: New Zealand F

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1,561.2 1,402.0

1,050.6 977.5 792.5

0

500

1000

1500

FY10 FY11 FY12 FY13 FY13PF

Net Debt Balance ($M)

13.6 12.5

9.7 8.7

3.3

0

5

10

15

FY10 FY11 FY12 FY13 FY13PF

Working Capital to Sales Ratio (%)

155.8 157.3

130.2

103.0 91.0

0

50

100

150

FY10 FY11 FY12 FY13 FY13PF

Net cash interest expense ($M)

*

Over the past four years TPI has reduced its debt and achieved a cheaper, simpler debt structure

Sale of the Commercial Vehicles Group for $219 million in FY14

Improved working capital management

Net cash interest reduced by $52.8 million since FY10, $64.8 million when including sale of Commercial Vehicles Group

* *

*FY13PF indicates impact of sale of Commercial Vehicles Group if sale occurred on 1 July 2012

3. Improving Financial Metrics F

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FY12 $12 million from the sale of listed DMX and CMV investments

$5.5 million from the sale of 2 surplus properties

FY13

$28 million from:

Sale of 8 surplus properties Divestment of 4 businesses

FY14 $219 million from sale of Commercial Vehicles Group completed on 30 August 2013

$20-30 million to be realised from further sales of non-core businesses and surplus assets

Over three years, between $285-295 million will have been realised from the divestment of many surplus assets and non-core businesses

3. Improving Financial Metrics (cont’d) F

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4.03

3.51

2.56 2.56 2.31

1.0x

1.5x

2.0x

2.5x

3.0x

3.5x

4.0x

4.5x

FY10 FY11 FY12 FY13 FY13PF

Gross Debt/Underlying EBITDA

*

3.70

3.30

2.39 2.39 2.11

1.0x

1.5x

2.0x

2.5x

3.0x

3.5x

4.0x

4.5x

FY10 FY11 FY12 FY13 FY13PF

Net Debt/Underlying EBITDA

*

41.5% 43.3%

32.8% 32.7%

27.5%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

FY10 FY11 FY12 FY13 FY13PF

Net Debt/Net Debt + Equity

*

2.44 2.40

2.89

3.54 3.61

1.0x

1.5x

2.0x

2.5x

3.0x

3.5x

4.0x

4.5x

FY10 FY11 FY12 FY13 FY13PF

Underlying EBITDA/Net Interest

*

*FY13PF indicates impact of sale of Commercial Vehicles Group if sale occurred on 1 July 2012

3. Improving Financial Metrics (cont’d)

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Procurement

savings

Productivity

Organisational

structure

Amalgamated sites

Biometric time and attendance system

Fleet management system

Implemented organisational restructure resulting in fewer layers and wider spans of control

Reduction of circa 200 staff

Improved pricing and terms from major suppliers:

Fuel contracts in Australia and New Zealand Temporary labour hire suppliers rationalised from

>450 to 42 in Australia and New Zealand Electricity and gas contracts in Australia

Sustainable EBIT Impact FY13 – FY15

FY13 – $15 million

FY14 – $20 million

FY15 – $15 million

Major Initiatives Areas

Total savings

$50 million

Cost savings and efficiencies that will eventuate from the Business and Operational Review are not included in these targets

3. Improving Financial Metrics (cont’d)

Our aim is to reduce costs and increase operating efficiency

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Key areas of focus

Portfolio strategy

Performance

improvement

The review identified 42 businesses across Australia and New Zealand which are either non-core or under-performing and are proposed to be sold or closed in FY14

These businesses represent 13% of the Company’s branch network but only generated 7% of waste management revenues and 0% of EBIT in FY13

Proceeds from businesses sold expected to be $20-30 million

Will enhance focus on core waste management businesses and streamline and reduce complexity within the Company

Review focused on improving performance across the Company

Detailed scoping and implementation planning underway

Management and the Board are currently considering these opportunities in more detail

Capital allocation

The review focused on options where the Company should allocate capital to achieve superior returns

Detailed scoping and implementation planning underway

4. Business and Operational Review

The review is being used to accelerate TPI’s transformation program

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Performance improvement

Delivering on the next phase of the sustainable cost savings targets – a further $20 million of the $50 million indicated in February 2013

Additional performance improvement benefits to flow from implementing the recommendations from the Business and Operational Review

Divestments and asset sales

$20-30 million to be realised from sale of surplus assets and non-core businesses

Debt reduction and interest cost savings

Debt reduction will continue

Approximately $185 million (net) from the sale of Commercial Vehicles Group

Further debt repayment of circa $100 million

Refinancing of November 2014 debt maturities

Reduce total interest costs by $25 million in FY14 by lower debt and termination of certain interest rate hedges

5. FY14 Agenda F

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