| UGL | announced that it has secured a new $99.45 million contract for structural, mechanical and piping works at BHP Billiton Iron Ore’s Jimblebar Mine in WA | Company report |
| EU | S&P Cuts Greece’s Outlook to ‘Negative’ | Market Watch |
| BKN | BKN reported FY12 results above consensus.15% NPAT growth surpassed April-12 guidance of 13% (midpoint). Similarly, 12% EBITDA growth exceeded 10% guidance – with sales up 26% to $1.45b, which was also well ahead of our expectations. EBITDA margins impacted by 190bp to 15.2% – much weaker than we expected with volume and price improvements (and acquisitions) offset by increased costs and overheads and slight mix attrition. But still above 1H12’s 14.6% which suffered from the loss of the ESCO license and price deflation on Rail wagons. Order book at historic highs – additional foundry capacity in Australia, Malaysia, Canada and the US to meet improved demand for cast steel products. Balance sheet improves with gearing (ND/ND+E) improving from 40.4% to 38.1% but is still relatively high in our view – net debt fell $32m to $442.8m; interest cover healthy at 6.5x (6.7x pcp) and working cap to sales of 21.9% (23.1% pcp). Operating cashflow surged 274% from $32.4m to $121.2m – augmented by improved working cap management (c$63m and better inventory management + acquisitions) and lower interest costs offsetting higher tax (higher earnings). Free cashflow post the record capex of $131.9m vs. $55.9m pcp (predominantly expanding foundry capacity in China by 25%) improved from -$30.6m to -$10.7m. Final DPS of 21.5cps declared taking FY DPS to 41.0cps – a record total dividend for the company. | Shaw |
| LEI | Underlying NPAT of $114.6m – with FY12 underlying NPAT guidance maintained at between $400m and $450m. The result was underpinned by strong performances from Thiess, John Holland and Leighton Contractors, which mitigated the impact of the write-down on Brisbane Airport Link (BAL) and the Victorian Desalination Plant (VDP). Total revenue up 14.6% to $11.1b – with Contract Mining comprising 63% with an average contract duration of 6-7 years. The sale of HWE was offset by more than $3.6b of new mining work won. Record Work-in-Hand (WIH) of $47b plus $9.7b in preferred bidder positions and $11.1b contracted beyond 5 years, taking the WIH total to c$68b – in addition to a $29.9bn tendering pipeline. Gearing (TD/TD+E) increased to 46% as LEI incurred increased expenditure in delivery of its legacy projects (BAL and VDP) – gearing is expected to reduce at year end to within the company’s target band of between 35% and 45%, with the sale of Thiess Waste Management for $218m expected to be completed in 2H of the year. LEI is progressively reviewing all non-core assets with the intent of divesting in the future to shore up the balance sheet – businesses with not high enough market share, a weak addressable market, and/or too capital intensive will be divested with funds used to either pay down debt or redeploy to higher growth areas. VDP project remains on target for completion by the end of the year – construction of the plant is now over 95% complete. Operating cashflow down 22% to $1.2b – Owing to increased capex of $500m, impact costs on APL and VDP and timing of receivables. LEI are working with Al Habtoor Leighton Group (HLG) on the recovery of legacy receivables in the Middle East – and are looking to have HLG “IPO ready by 2016” as a standalone construction company. LEI share of losses in HLG was $32m. | Shaw |
| ASX | The ASX released its monthly trading statistics on Friday, which were very poor. Average value of equity trades per day fell 30% in July as did Futures trading (see following two charts). While it is only one month’s trading activity, 2013 earnings forecasts are at risk by around 8%. The stock is trading on 15x consensus 2013 forecasts and a 6% fully franked yield. These earnings may be at risk. | Shaw |
| SPL | SPL and NUF sign agreement under which the parties will apply SPL’s Priostar dendrimer technology to develop innovative crop protection formulations for NUF’s product portfolio | Company report |
| NUF | SPL and NUF sign agreement under which the parties will apply SPL’s Priostar dendrimer technology to develop innovative crop protection formulations for NUF’s product portfolio | Company report |
| TCL | For the FY to June 2012 TCL reported statutory profit down 50.4% to $58.6M. This included a write-down on the US assets (within the DRIVe investment vehicle) of $138M (TCL proportionate share). On a proportionate basis excluding the write down, group EBITDA increased by 9.1% to $784M. Toll Revenue increased by 7.6% on group tolled volume up 0.9%. The company declared a final distribution of 15 cps comprising 11.5 cps unfranked trust distribution plus 3.5 cps franked dividends. The full year distribution is thus 29.5 cps. Outlook: the company has guided to 31 cps distribution for 2013 (with “potential upside”), with the franked component expected to be the same as for 2012 (ie 7 cps). TCL expects 2013 distribution to be 95% cash covered, indicating partly (5%) debt funded. Growth opportunities include: Return of traffic to key roads after completion of expansion of several toll roads in 2012, M5 widening – to reduce peak period bottlenecks. Will result in truck toll increases, car traffic volume increase, and extension to concession period. Hills M2 widening – TCL expects 16% traffic increase by 2016 due to the widening, “495 Express Lanes” toll road construction in the US (Washington), “95 Express Lanes” toll road construction in the US (Washington), Enhanced linking with nearby roads in NSW and VIC to funnel more traffic onto TCL toll roads, “Target” the Western Link in Melbourne, and potentially build the “East West Tunnel” in Melbourne, Potential for the F3-M2 link toll road in Sydney (TCL is in exclusive discussions with NSW Govt). Long term opportunity (5-10 years). Potential links to NW Sydney regions as well as the F3-M2 link road. | Shaw |
| FXL | announced the successful pricing of AUD255m asset-backed securities | Company report |
| IGR | Silver Lake Resources to acquire Integra Mining via a unanimously recommended Scheme of Arrangement at an exchange ratio of 1 new Silver Lake share for every 6.28 Integra shares. Offer values Integra at 45.2 cents and represents a 44% premium to the last closing price and a 40% premium to the 20‐day VWAP. Integra shareholders to hold ~40% of the enlarged Silver Lake. Proposed Scheme will create a major Australian gold producer with a 6.6Moz resource base (inclusive of 1.8Moz of Ore Reserves) current production of 200,000 oz pa and forecast production of +400,000oz pa in 2014. Transaction offers a rare opportunity in the resources sector to create material value for shareholders of both companies given the proximity of operating mines, mills and combined tenement holdings: Operational synergies at Mount Monger with ability to substantially increase future production and reduce future operating and capital costs. Economies of scale and ability to optimise production outcomes. Reduction of corporate and operational overheads. Access to Silver Lake’s underground mining expertise to de‐risk Integra’s proposed underground operations. Ability to optimise exploration spend with access to Integra’s highly regarded exploration team. Scale/breadth of technical resources to further de‐risk development of Murchison Project. Enlarged Silver Lake to have strengthened balance sheet with A$107 million in cash. Integra shareholders will benefit from project diversification and scale attributes increasingly sought by institutional investors | Company report |
| SLR | Silver Lake Resources to acquire Integra Mining via a unanimously recommended Scheme of Arrangement at an exchange ratio of 1 new Silver Lake share for every 6.28 Integra shares. Offer values Integra at 45.2 cents and represents a 44% premium to the last closing price and a 40% premium to the 20‐day VWAP. Integra shareholders to hold ~40% of the enlarged Silver Lake. Proposed Scheme will create a major Australian gold producer with a 6.6Moz resource base (inclusive of 1.8Moz of Ore Reserves) current production of 200,000 oz pa and forecast production of +400,000oz pa in 2014. Transaction offers a rare opportunity in the resources sector to create material value for shareholders of both companies given the proximity of operating mines, mills and combined tenement holdings: Operational synergies at Mount Monger with ability to substantially increase future production and reduce future operating and capital costs. Economies of scale and ability to optimise production outcomes. Reduction of corporate and operational overheads. Access to Silver Lake’s underground mining expertise to de‐risk Integra’s proposed underground operations. Ability to optimise exploration spend with access to Integra’s highly regarded exploration team. Scale/breadth of technical resources to further de‐risk development of Murchison Project. Enlarged Silver Lake to have strengthened balance sheet with A$107 million in cash. Integra shareholders will benefit from project diversification and scale attributes increasingly sought by institutional investors | Company report |
| US | The U.S. economy added more jobs in July than in any month since February, but the unemployment rate ticked up, signaling that the U.S. recovery, while not headed for a stall, remains too weak to bring down high unemployment. Employers added 163,000 jobs in July, far above the paltry 64,000 they added in June | Seeking Alpha |
| EU | Italian Q2 GDP fell to -0.7% on quarter from -0.8% in Q1 for the fourth decline in a row. The contracting economy will increase concerns about Italy’s ability to cut public debt, which stands at 123% of GDP. | Seeking Alpha |
| APN | The second largest shareholder in APN has warned the outdoor advertising, radio and newspaper group that it will launch a campaign to remove chief executive Brett Chenoweth if it continues to acquire digital media businesses | AFR |
| RIO | profit this year is set to be increased by US$1 billion due to the Federal Government’s implementation of the mineral resource rent tax | AFR |
| BHP | may announce further asset writedowns ahead of its full-year results presentation in a fortnight, after the global miner declared on Friday that it was booking a $2.7 billion impairment charge on its shale gas assets in the United States. | The Australian |
| CBA | The chief executive of CBA) Ian Narev, could be summoned to appear before an upper house inquiry to respond to allegations that Australia’s largest lender and its subsidiary Bankwest panicked during the global financial crisis and reacted by calling in loans that were performing satisfactorily. | The Australian |
| SDG | Lawyers for two men involved in a controversial property transaction in the United Arab Emirates have claimed that property developer SDG filed a lawsuit against the two men to safeguard the company and a senior executive from prosecution in Dubai. | Age |
| STO | has restructured the management team for its US$18.5 billion Gladstone liquefied natural gas venture in Queensland after the company’s capacity to guarantee coal seam gas to the facility was hampered by softening investor confidence | AFR |
| CWN | has been warned by credit rating agency Moody’s Investors Service that its ambitious plans to build a six-star hotel in Perth and a new luxury hotel and casino in Sydney could affect its Baa2 investment grade credit rating | AFR |
| HVN | said the combination of a high Australian dollar, deflation and lower than expected sales had led the white goods and electronics retailer to announce that its full-year pre-tax earnings would be almost 40% down on the previous fiscal year. | The Australian |
| FMG | announced that its move to borrow more funds than required was a “prudent” decision that would give the iron ore producer a safeguard against the negative sentiment that continues to permeate the global economy | SMH |
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