MGL
26/02/2015 17:27
HALFYR
PRICE SENSITIVE
REL: 1727 HRS Mercer Group Limited
HALFYR: MGL: Mercer Group Limited - Half Year Prelim Result - Dec 2014
Mercer has reported an EBITDA* (Earnings before Interest, Tax, Depreciation
and Amortisation) of $0.7m for the six months to 31 December 2014, which
resulted in a net loss after tax of $23,000. The result sees an improvement
across most divisions versus the prior year (which should be noted had
benefited from the sale of an S-Clave license).
At the Annual General Meeting the Company outlined its objectives for the
2015 Financial Year. We comment on progress against these as follows:
1. Revenue Growth of at least 10% over the prior year. The Company is on
track to meet this objective. Underlying revenue (excluding the S-Clave
license sale in 2014) has improved by 12% for the six months versus the prior
period.
2. Increase Profitability (EBITDA) over the prior year. The Company believes
it will meet this objective.
3. Lost Time Injury Frequency Rates (LTIFR) below ten for 2015. After seven
months the Company has had one Lost Time Injury (LTI) and an LTIFR of three
at 31 December 2014. We are very pleased to have recently achieved Secondary
status ACC accreditation.
4. $3m of headroom in the banking facility by year-end. The Company had $3m
headroom at half-year and believes it is on track to also achieve this
objective by year-end.
5. Sale of at least 12 Titan 500 slicers in the year. The Company had
secured firm orders for four slicers at the half-year with other others
pending. Further orders have now been secured leading to eight closed sales
to date. The Company is in the process of negotiating additional orders and
the Company believes the original objective of twelve sales will be met.
Stainless Fabrication
This division comprises the fabrication workshops in Christchurch and New
Plymouth, the Brisbane office, and Titan Slicers. The division has reported
sales revenue of $16.9m for the six months, some $2.8m (or 20%) higher than
last year. The Segment EBITDA was $1.2m compared to $0.6m in the same six
month period last year. The forward order book is essentially full through to
the end of June and we are expecting a strong second half result.
As noted above, we have continued to make good progress in Titan and are
confident of selling at least 12 slicers this year. We have recruited Tom
Irvine as General Manager of Titan Slicers and believe he will significantly
contribute in taking Titan to the next level of performance.
Mercer Interiors
This division manufactures in New Zealand and supplies sinks, basins, tubs,
toilets, laminate, solid surface material and other similar products to
joiners, merchants, fabricators and other manufacturers. Mercer also
distributes the Wilsonart brand of laminate in the NZ market.
Overall revenue is $4.1m, down by $0.6m compared to last year, largely due to
weakness in Australian sales. EBITDA was $0.1m, flat on last year.
In Australia, Mercer appointed Argent as its primary distributor, and with
its secondary distributor going into administration, it has taken some time
to ramp up volumes again.
*Reconciliation of EBITDA to profit or loss after tax - see attached document
Mercer Medical
Mercer Medical division supplies equipment, related products and services for
sterilisation; washing and disinfection. During the period, Mercer increased
its sales representation in the NZ market but subsequent revenue uplift is
yet to materialize. EBITDA for the division therefore declined to a $0.1m
loss. We expect an improved second half performance.
Corporate
This division includes Mercer Technologies which last year generated $0.8m
earnings from the sale of an S-Clave license that is not repeated in this six
month period. With the momentum behind Titan now better established, the
executive team will dedicate additional resource to the S-Clave opportunity,
with the aim of achieving commercial sales in calendar year 2016.
Funding
During the six month period, management exercised 14,705,882 options at an
exercise price of 8.5c. Mercer also rolled over its banking facility with
Bank of New Zealand for another two years.
Outlook
The Directors believe the Company is on track to meet the objectives it has
set for the financial year and continues to build a strong and sustainable
business that is on a good growth trajectory.
Board Changes
Mercer announces two board changes. John Dennehy has joined the board and has
been appointed Chair. John was most recently Chair of Simcro Ltd that was
majority acquired in 2014 by the US based Riverside Partners. Garry Diack,
recently appointed as CEO of Tait Communications, has stepped down as Chair
of Mercer but will continue as a board member.
Rodger Shepherd
Chief Executive Officer
End CA:00261216 For:MGL Type:HALFYR Time:2015-02-26 17:27:55
