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For Personal Use Only SEDGMAN LIMITED ANNUAL REPORT 2015 PAGE 02 For personal use only SEDGMAN LIMITED ANNUAL REPORT 2015 PAGE 02 Global Minerals OFFICES METALS & MINERALS COAL IRON ORE INFRASTRUCTURE ANNUAL GENERAL MEETING (AGM) The 2015 Sedgman Limited AGM will be held at the Marriott Hotel, For personal use only 515 Queen Street, Brisbane, Queensland on Thursday 19 November 2015. Map: Sedgman has delivered projects and operations across the globe for more than 35 years, including in some of the world’s most remote regions. SEDGMAN LIMITED ANNUAL REPORT 2015 PAGE 03 Contents 04 Chairman’s Message 24 Board 06 CEO | Managing Director’s Report 25 Executive 10 Projects Review 27 Concise Financial Report 14 Operations Review 64 Additional Shareholder Information 18 HSE 66 Corporate Directory 20 Our People For personal use only SEDGMAN LIMITED ANNUAL REPORT 2015 PAGE 04 Chairman’s Message Our Net Profit After Tax (NPAT) for FY 2015 is a solid performance and testament of a sound strategy in difficult market conditions, which have beset many service providers to the minerals sector. By remaining focused on efficiently delivering solutions to our clients, Sedgman will continue to perform in the near term and beyond. I am indeed fortunate to present Confidence in the turnaround This year is the 10th year since my first Chairman’s message at enabled the Board to announce the company’s listing in 2006. a time of a strong recovery in during the year an enhanced Over that period we have experienced our earnings, accompanied by dividend plan. The 100% payout many swings and roundabouts, ratio, together with a series of including the China-fired boom in a solid share price appreciation special dividends (all fully franked), demand for minerals, the impact of and a lift in dividends. means that we are delivering to the Global Financial Crisis and, more our shareholders a very attractive recently, the downturn in new project I pay tribute to the Sedgman yield, particularly at a time of development and the incessant focus team who delivered the turnaround unusually low interest rates and on productivity enhancements, just performance that we mapped heightened market volatility. to name a few. Each has created their out last year. own issues and opportunities. During the 2015 fiscal year we For the 2015 fiscal year, Sedgman’s paid out a 3.5 cents per share reported NPAT was $16.5 million, (cps) interim dividend, which we compared with a loss in the backed up with a final dividend of previous year. 3.8 cps and the first of a series of During the 2015 fiscal year, special dividends of 2.2 cps. It is on the basis of our share price our intention to continue to pay, appreciation and dividend payouts, along with the interim and final we were the best performer of a dividends, a special dividend for group of 20 peer mining services the foreseeable future. The 9.5 cps companies against whom we fully franked dividend payout for compare ourselves, on a Total the 2015 fiscal year was more than Shareholder Return measure. double our 4 cps dividend in the For personal use only previous year. Robert McDonald Chairman, Independent Director SEDGMAN LIMITED ANNUAL REPORT 2015 PAGE 05 Strategy Strategy Operations Opportunity Origination Integrated Client Services Our Core Business Knowledge Leverage and Opportunity Creation Global Infrastructure Minerals Corporate Consulting and Design Capital Management and Corporate Development Create Build Operate Resource Engineering Project Delivery Asset Optimisation Associated Infrastructure EPC Delivery Capability Value Add Performance Culture Technology Development Client Focus Low Cost Sourcing . FY 2015 Total Shareholder Return Performance vs Peer Group(i) With our able and Sedgman flexible management team, supported by a sound and focused strategy and a strong debt-free balance sheet, I am confident that Sedgman will continue to prosper. (100%) (80%) (60%) (40%) (20%) 0% 20% 40% 60% (i) SEE NOTE 14.7.2 OF THE DIRECTORS’ REPORT FOR PEER GROUP We will continue to experience industry team. I would like to recognise Tom Meakin and independence, the Board renewal fluctuations; that is the nature of our and Russ Kempnich, both of whom continue process that we instigated last year industry. However, with our able and to guide the Company with dedication continues. Joining the Board last February flexible management team, supported and enthusiasm. These two men are to a were Philippe Etienne and Bart Vogel. by a sound and focused strategy and large measure the reason for the positive Both Directors bring a broad range of a strong debt-free balance sheet, I am corporate culture that pervades every experience and business acumen to confident that Sedgman will continue to Sedgman location, whether the office is in complement our Board, gained in various For personal use only prosper and deliver shareholder value. Perth or Santiago, or whether the workplace high-level roles and industries. We are entering the 2016 fiscal year be Groote Eylandt or the middle of Guyana. Again, I would like to acknowledge the with a healthy contracted order book of The Sedgman Board is responsible great work of the Sedgman team, led $0.5 billion, some 30% stronger than the for and committed to maintaining by Peter Watson, the Company’s CEO I same time last year. Already we have the highest standards of Corporate Managing Director. Peter was appointed to secured a major additional contract Governance. Our Corporate Governance the role in mid-2014 and already he has put and we have good prospects of winning Statement can be found on our website, his own positive stamp on the organisation. further quality business. and I encourage shareholders to read it. I look forward to addressing shareholders This year we celebrated the 35th work To ensure that your Board maintains at our Annual General Meeting on anniversary of two members of the Sedgman the appropriate blend of diversity, skills Thursday 19 November 2015. SEDGMAN LIMITED ANNUAL REPORT 2015 PAGE 06 CEO | Managing Director’s Report Your Company has achieved a strong and sustainable return to profitability, despite continued challenging market conditions. A Strong Year Our performance has been performance in areas including the outcome of improvements run-hours and process efficiency. Our functional support teams have made across every aspect of the optimised systems and processes to organisation – with our Projects improve internal service delivery and and Operations businesses reduce fixed costs – overall Company and our functional support overheads were reduced by 18%. team each making a significant contribution to achieve a Our success is a credit to our people. Over the past year we fantastic result. have been focused on developing a high-performance culture and Our consolidated structure delivering value in everything we has enabled the Company to do. This commitment to excellence collaborate globally and across has generated great results both all project locations, resulting in commercially and in our safety increased efficiency in project performance. Our full year reported delivery and providing cost NPAT increased to $16.5 million and benefits. Our Operations team our Recordable Injury Frequency Rate delivered an outstanding result, (RIFR) was reduced by 27%. achieving industry-leading facility For personal use only SEDGMAN LIMITED ANNUAL REPORT 2015 PAGEPAGE 07 5 Highlights 315% 315% Increase in Net Profit After Tax (reported) Increase in reported earnings per share 10% 18% Increase in combined sales revenue Decrease in overhead & support costs 109M 318% Net cash position at year end Increase in net cash from operating activities For personal use only 125M 292M Awarded $125 million in extensions to Operations contracts Awarded $292 million in Projects contracts (i) THIS REPORT INCLUDES NON-STATUTORY ITEMS WHICH HAVE NOT BEEN AUDITED OR REVIEWED. FOR RECONCILIATIONS OF THESE ITEMS TO THE RELEVANT STATUTORY ITEMS WITHIN THE FINANCIAL STATEMENTS, REFER TO SECTION 3.7. OF THE DIRECTORS’ REPORT. SEDGMAN LIMITED ANNUAL REPORT 2015 PAGE 08 CORE STRENGTHS & FINANCIAL RESULTS Our Strengths NPBT & Group Overheads as % of Revenue Precious Base Iron Ore Coal NPBT NPBT % of Revenue Group Overheads % of Revenue Industrial Infrastructure Minerals FY 2013 FY 2014 FY 2015 FY 2015 Review Results The FY 2015 full-year results Our diversification strategy continues FY 2015 FY 2014 to deliver positive results. For the first represent the third consecutive Combined $390.4m $355.9m time in Sedgman’s 36 year history 60% half year of strong profitability sales revenue(iii) and delivery of sustained earnings of our near-term opportunities are in (i) through improved business non-coal commodities and 60% are Underlying EBITDA $36.8m $19.1m outside of Australia. We are pursuing performance. Highlights include: Underlying 9.4% 5.4% Global Minerals across the breadth EBITDA margin(ii) of our commodity portfolio, which — Project contracts totalling includes precious metals, base metals, Underlying EBIT(iii) $26.3m $3.0m $292 million awarded – a result of coal, iron ore and industrial minerals. the continued delivery of first-class Our diversification and the expansion Underlying 6.7% 1.1% solutions and value for our clients. (iii) of our expertise across commodities EBIT margin Extensions to Operations contracts — and regions will be key drivers for our Reported NPAT $16.5m ($7.7m) totalling $125 million awarded – sustainable growth. with production targets exceeded Operating cash flow $45.0m $10.8m at all Operations sites. Additional positive results that have positioned Sedgman to capitalise on Reported earnings 7.3 cents (3.4 cents) Margins improved in our Operations — future opportunities include: per share business due to a focus on cost control and consistent improvement — Embedding our “sector / services” Dividends per share 9.5 cents 4.0 cents in performance. structure. This has streamlined the business and delivered efficiencies (i) RECONCILIATION OF EBITDA (UNDERLYING) — Expansion of our Operations TO EBIT (UNDERLYING)(iii).
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