AAP
2009-04-14
Adelaide Brighton Ltd (ABC) is a leading integrated construction materials and lime producing company with origins dating back to 1882.
The company has operations in all mainland states and territories of Australia and employs about 1300 people.
It jumped into the market spotlight last week after the company successfully completed an institutional placement raising $85 million.
The placement attracted strong interest from existing and new institutional shareholders.
About 47.75 million Adelaide Brighton shares were placed at $1.78 per share.
Of this number, Barro Group Pty Ltd who is a related party of Adelaide Brighton, will participate in the placement in relation to about 11.04 million shares, subject to receipt of a waiver from Australian Securities Exchange of Listing Rule 10.11.
In addition to the placement, Adelaide Brighton is inviting eligible Australian and New Zealand retail shareholders to participate in a non-underwritten share purchase plan, further details of which will be announced shortly.
Adelaide Brighton Ltd advises that the Dividend Reinvestment Plan issue price for shares to be allotted to participating shareholders is $1.78 per share in respect of the final dividend payable on April 22, 2009.
Accordingly, the issue price will be based on the weighted average trading price of Adelaide Brighton shares in the 20 business days from March 12, 2009 and ending on 8 April 2009, less a discount of 6.2%.
Shares issued under the DRP are fully paid up ordinary shares in Adelaide Brighton and rank equally with existing ordinary shares.
The good news for shareholders was that the company had little difficulty in raising funds despite the present climate and the shares have actually improved significantly since March 10 when they touched $1.45 before the good result for the year ended December 31, 2008.
Mark Chellew, managing director and CEO in reviewing the outlook for 2009 said that based on previous recessionary cycles, AdBri is preparing for a one to two year decline in construction activity of between 10 to 20 per cent.
But first home owner stimulus should be working post June 2009.
There is an upside regarding Government infrastructure stimuli, although timing is uncertain but the company estimates it will flow into the fourth quarter of 2009.
Mr Chellew, sees positive cement price increase outcomes $9-15/tonne Jan-May 2009 while cash rate decreases provide immediate benefit as AdBri does not currently hedge interest rate risk.
The company has focused profit optimisation plans engaged by all divisions - target reduction $10 million.
Capital expenditure is being curtailed to essential sustaining and short payback investments while it will maintain sound cash flows and balance sheet.
SHARE PRICE MOVEMENTS
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Shares of Adelaide Brighton on Thursday closed 11.5c to 90.5c last Thursday. Rolling high for the year was $3.92 and $1.44. Dividend is 15c to yield 7.87 per cent. Earnings per share is 22c, and price earnings ratio 8.66. The company has 552.4 million shares on issue with a market cap of $1 billion.
Adelaide Brighton reported record sales and profit for the year ended December 31, 2008.
Sales revenue increased by 15.1% over the pcp to $1,022.4 million as a result of continued growth in sales of cement and aggregates and the first half year contribution from the 1st July 2008 acquisition of Hanson Building Products.
Net profit after tax increased by 6.1% to a record $120.8 million and earnings per share improved to 22.2c versus 21c in the pcp.
The growth in sales volumes and prices, together with sustained operating efficiency, were the key drivers behind the 10.4% increase in EBIT to $189.1 million ($171.3 million pcp).
EBITDA increased by 9.8% to $245.9 million and the underlying EBITDA margin at 24.1% fell due to the higher cost of imports and the change in sales mix arising from the Hanson Building Products acquisition.
Cement sales volumes increased by 9% and reached record levels for the company, exceeding three million tonnes for the year.
Cement sales were particularly strong in Queensland and Victoria where increased demand was met by additional imported clinker and cement taken through the Sunstate Cement and Independent Cement and Lime (ICL) joint ventures respectively.
Robust growth in South Australia was driven by higher commercial and infrastructure expenditure together with increased sales of backfill binder to Olympic Dam.
Demand in Western Australia peaked during the year with sales slightly ahead of 2007 levels.
BACKGROUND
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Adelaide Brighton Ltd is one of the long term listed companies, joining the list in May 1962.
The company is a leading, integrated construction materials and lime producing company heavily focussed on the growing resources, engineering and infrastructure sectors.
With its origins going back to 1882, Adelaide Brighton is a S&P/ASX200 company with market capitalisation in excess of $1 billion, 1300 employees and operations in all mainland states and territories of Australia.
The principal activities of the Adelaide Brighton Group are the production and marketing of clinker, cement and lime products; ready mixed concrete and aggregates and concrete products.
Adelaide Brighton has market leadership positions in cement and lime in South Australia, Western Australia and Northern Territory through its Adelaide Brighton Cement, Cockburn Cement and Northern Cement operations.
The company also has strategic cement positions in the eastern states through its Morgan Cement grinding facility in New South Wales and its 50% owned cement supply joint ventures in Queensland (Sunstate Cement) and Victoria (Independent Cement and Lime).
It has a modest position in the ready mixed concrete markets through Hy-Tec in Victoria, New South Wales and south east Queensland and a 50% joint venture in northern Victoria and southern New South Wales with the Mawson Group.
The company has an emerging position in aggregate supply with strategic reserves of aggregates at Austen Quarry, west of Sydney, through the Mawson Group and Hurd Haulage and Kancon in northern New South Wales.
Under the brand of C&M Brick, Adelaide Brighton holds the second largest market share in the national concrete masonry products market, with operations in New South Wales, South Australia and Victoria.
The major end-use markets of Adelaide Brighton's products include residential and non-residential construction, engineering construction, alumina and steel production and mining.
Adelaide Brighton's commitment to sustainable development is demonstrated through the actions across a balanced program of business based initiatives.
The company's strategic plan is to be a focused vertically integrated construction materials company.
Adelaide Brighton will continue to review opportunities for downstream positions in concrete, aggregates and concrete products and to achieve security of supply for clinker and cement.
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