view on chairman & md's report

My Highlights and view from the Chairman & Directors report. (Norfolk 2012 Annual report)

* Macro economic pressures affect some divisions and project areas - but Norfolk still achieved 5% NPAT growth. (as per 2011 outlook statement)

* New 150ml Banking Facility in place, up 25ml on previous facility, which was not due to mature until March 2013. This is an arrangement with Norfolk’s existing Bankers and reflects both their confidence in Norfolk’s performance and Outlook.

* Clear stand-out is the Norfolk Order Book in excess of $1 billion and is supported by an even larger Pipeline of New Work Opportunities.

* Seeing further growth opportunities collectively across the group.

* Norfolk continue to take a Considered & Prudent approach to our Balance sheet and Capital Structure

* MD is Confident in Norfolk’s ability to continue winning significant contracts. Looking ahead to 2013 - Norfolk is very positive on its outlook, Norfolk has a Strong Balance Sheet, No Net Debt, Strong Banking support & evidence of Margin expansion due to Norfolk’s success in Selective Tendering and Leveraging across Norfolk's 3 major Brands.

* Haden’s Business still impacted by commercial construction market BUT is gaining momentum and will continue to recover throughout 2013.

* Haden’s Key focus on the higher margin growth sectors of “Sustainability, Health & Industrial.” and delivered a strong 2H12.

* Haden’s Order Book has grown significantly and continues to gain momentum and will continue to recover throughout 2013 financial year.

* Resolve stand-out year continues with a strong order book for 2013. High volumes in the Custodial Sector underpin Resolves performance and has the ability to re-sign and extend existing contracts. (This business continues to surprise to the upside.)

* O’Donnell Griffin continues to excel as a specialist in electrical and communications works to key growth sectors of the economy. Also the Order Book shows the clear ongoing strength in winning rail associated contracts.

* ODG’s FY2012 was similar to FY11 principally due to impact from project
delays and adverse weather. This was flagged back in late November by Goldman Sachs so was not of any negative surprise also Norfolk management maintained a 5% NPAT growth at 3Q12 outlook statement.

* Norfolk is very well positioned & confident of delivering consistent, steady growth. Its diversity of earnings across the Group is one of Norfolk’s key strengths.

The highlights I have made are a blend of what was stated in the report and my interpretation of that report.
To take it one step further, I am of the view that in this section of the report the Chairman & Managing Director are giving a simple, honest and direct commentary as to both Norfolk’s current and future performance. (No Fluffy dressing up). They continue on their theme of conservative and prudent fiscal management of the company Balance sheet and Norfolk's key strategies.

This part of the report is important to gain an understanding (confidence) of Norfolk’s Board & Management and it’s consistency in walking the talk, which ultimately determines for myself, how much weight I place on information delivered to the market place.

My conclusion from this part of the report is that Norfolk's Board & Managent have not only shown consistency in their message and fiscal duties but have also exceeded my expectations on their "Order Book", "Pipeline of New Work Opportunities" and particularly progress with their Key stated strategy of leveraging off their 3 main Brands/Divisions (which is having an immediate positive impact on the Haden Division). This is a valuable commodity (confidence in Board & Senior Management) in the current fear driven environment where headlines in the shadows turn the market in a moment. I don't know about those of you who may read this, but I work hard to surround myself with solid and accountable information. That in itself tends to block out the constant rubbish/noise from the shadows and it allows me to continue doing what I need to do.

That’s as far as I have got in the report so far.