MGL
28/02/2014 09:40
HALFYR
REL: 0940 HRS Mercer Group Limited
HALFYR: MGL: Mercer Group Limited Half Year Results to 31 December 2013
NEWS RELEASE dated 28/2/14
S-Clave License agreement highlight for Mercer Group
Mercer has reported a surplus after tax of $0.4m in the six months to 31
December 2013 versus $0.6m in the prior year. This was generated off a
trading profit (Earnings Before Interest, Tax, Depreciation and Amortisation,
EBITDA)* of $1.1m for the six months to 31 December 2013 (2012: $1.4m). This
result was underpinned by the sale of an S-Clave license to a large North
American medical services company.
Highlights over the six month period include:
o Signing an S-Clave license agreement for North America;
o Securing the installations for Titan equipment to two new very large North
American customers, due to take place in March;
o Secured $600k of New Zealand Trade & Enterprise funding across the next two
years to accelerate market penetration in North America; and
o Completing the tight-radius sinkware upgrade and starting to see the sales
growth resulting.
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 $14.0m, some $2.8m lower than last year. The Segment EBITDA
was $0.6m compared to $2.0m in the same six month period last year.
The lower sales and profitability compared to the prior year was due in part
to the large Maple Leaf Foods Titan order in the previous year. However the
two workshops in Christchurch and New Plymouth also had lower earnings due to
a small number of jobs not achieving expected margins. In addition, the
introduction of Titan manufacturing in the Christchurch workshop from Nelson
has taken longer than we had forecast and we have increased staffing levels
in advance of expected Titan and Mercer equipment growth.
The current order book is full through to the end of June. We anticipate a
stronger second half result from this division but we will continue to invest
in people, particularly around Titan and other Mercer owned equipment.
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 distributes
the Wilsonart brand of laminate in the NZ market.
Overall revenue is $4.7m, up by $0.7m over last year. EBITDA was $0.1m, flat
on last year due to the staffing increases as we continue to build for the
future. In November, the upgrade to our Christchurch sinkware plant to
manufacture tight radius sinks was opened by the Prime Minister, John Key.
Demand for the new sinkware is strong and we are gearing up to run a second
shift at the plant in April 2014 once new production staff are secured.
In Australia, Mercer appointed Argent as our primary distributor, which is
showing promising signs at this early stage. Unfortunately our secondary
distributor was suddenly put into administration in January owing Mercer
money.
Mercer Medical
Mercer Medical is a division supplying equipment and related products and
services for sterilization, washing and disinfection. During the period,
Mercer has increased its presence in the NZ market and made a number of MMM
sterilizer and washer equipment sales. We expect this to continue to grow in
the second half.
Corporate
This division includes Mercer Technologies which generated a strong result,
signing a license agreement for our S-Clave technology with a large North
American medical services company during the half year. We are now in the
process of applying for funding support to assist us funding the next phase
of the project in New Zealand. This will allow us to hire more Research
and Development staff and ensure we develop the S-Clave technology for all
international markets. The potential of this technology is significant to the
value of the Company, albeit sales into hospitals are likely to be at least
two years away.
Funding
During the six month period, Murray Capital Rakaia Fund Ltd Partnership
exercised 34,371,533 warrants at a price of $0.05 per share and subsequent to
the period end on 2 February 2014, management exercised 17,857,142 shares at
a price of $0.07 per share. This funding supports the near term organic
growth aspirations of Mercer.
Outlook
The Directors believe the Company should continue to invest in people and
technology to drive sales growth and increase profitability in the medium
term. The investment in people will impact earnings for 12 months as we
front load the expense to lift medium term performance. Investment is
currently being focused on S-Clave, Titan and Interiors. We believe that
investment in these projects will drive shareholder value over time. We are
currently forecasting EBITDA for the financial year of around $2m, although
this could be exceeded if the Titan installations that are beginning in North
America convert to follow on sales before the end of June.
The Company continues to review complementary acquisition opportunities that
come up from time to time, and one such opportunity is currently under
consideration. If this proceeds to a signed Sale and Purchase agreement, the
Company will announce further details.
For further information, please contact Rodger Shepherd, Group CEO on +649
837 7540
*Reconciliation surplus after tax to EBITDA by division is set out in Note 3
of the Interim Report attached as Appendix 1
End CA:00247627 For:MGL Type:HALFYR Time:2014-02-28 09:40:46
