VDM GROUP LIMITED
VDM Group Reports Impressive Full Year Results
VMG - 2008 Full Year Results - Mr John Farrell, CEO
Thu, 28 Aug 2008 03:30PM
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Mr John Farrell
Thu, 28 Aug 2008
03:30PM Australia/NSW
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VDM GROUP LIMITED (VMG)
ASX code: VMG
Website: http://www.vdmgroup.com.au
Industry: Capital Goods
Principal Activities:
VDM Group Limited, with Head Office in Perth and representation in Queensland, Victoria, NSW, NT, Vietnam and Dubai is a fully diversified Group broadly represented by Consulting, Construction and Infrastructure divisions. An integrated, multi-discipline approach embraces every conceivable engineering field including civil, structural, mechanical, environmental and infrastructure contracting.
Address:
11 East Parade
EAST PERTH
WA
Phone: (08) 9227 5599
Fax: (08) 9227 5853
Executives & Directors
Mr John Saleeba , Non Exec. Chairman
Mr John Farrell , CEO, Vice Chairman
Mr Clive Bradshaw , Executive Director
Mr James van der Meer , Executive Director
Mr Anthony Parker , Executive Director
Mr Stuart Cuthbert , Executive Director
Mr Ross Kestel , Non Exec. Director
Mr Peter Simpson , CFO
Company Podcasts
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Company ASX Announcements
Company ASX announcements can be viewed on the ASX website.
Announcements from the preceding six months are shown below.
Please refer to the relevant stock exchange if any of the above information is incorrect
VDM GROUP LIMITED (VMG) Events
Australia/NSW
VDM GROUP LIMITED (VMG)
| VDM Group - Osborne Park Land Holding | Tue, 1 Jul 2008 |
| Appendix 3B - DRP | Wed, 4 Jun 2008 |
| Change of Director`s Interest Notice | Wed, 4 Jun 2008 |
| VDM Group Dividend Reinvestment Share Issue Price | Tue, 20 May 2008 |
| Ceasing to be a substantial holder from WBC | Tue, 13 May 2008 |
| Ceasing to be a substantial holder from BTT | Tue, 13 May 2008 |
| Release of Escrow Shares | Thu, 8 May 2008 |
| Bellero Awarded $12.68 million of Contracts in Hervey Bay | Wed, 16 Apr 2008 |
| VDM`s Keytown Construction Awarded Housing Contract | Wed, 12 Mar 2008 |
| Change in Registered Office | Wed, 5 Mar 2008 |
Please note: This company appears on this website as a result of its listing on the Australian Securities Exchange. Boardroom Radio does not claim any association with any company listed on this site.
INTERVIEW WITH JOHN FARRELL, CHIEF EXECUTIVE OFFICER, VDM GROUP LIMITED (VMG)
“VMG - 2008 Full Year Results”
http://www.brr.com.au/event/50427
THURSDAY, AUGUST 28, 2008, 3:30 PM.
BRR Good morning and welcome to Boardroom Radio. Today, we are talking to John Farrell, CEO of VDM Group. Good morning, John. Thanks for taking the
10 time to speak with me today.
VMG Yeah. Good morning.
BRR John, today VDM Group has reported another very impressive set of full-year results. Can you talk us through the numbers and the main drivers of the
15 growth?
VMG Yes. It was a good result. I’d say we had a good solid year and certainly the team has worked very, very hard. The key point, of course, is that the revenue is up by 78%, $411 million. The NPAT’s up by probably more than 145% to $25.5 million and figured that a lot of people, major companies, on
20 our EPS growth was to 22.5 cents, which is an increase of 44%. So, in all the key drivers, we’ve had an excellent year. The other, of course, benefit that our shareholders are going to have a 20% increase in dividends from last year to 10 cents a share fully franked, that is perhaps marginally less than it could have been when we -- our current (probably) has been to distribute
25 something by 50% to 60% of our profits to shareholders. I think in these current times where things are a bit more volatile, to reduce that a teeny bit and that’s why we’ve suggested that our current payout ratio is more in the range of 40% to 55%. In the overview, what it really means is that we’ve had a good year in times of very difficult cost increases and shortage of people.
30 So we’re not a low-margin, high-turn-over business. We are certainly now a significant engineering player in the (inaudible) sectors of resources and infrastructure.
BRR And you implied in your announcement that the full-year profit was slightly
35 less than the forecast provided at the half year. What were the reasons for this variation?
VMG At the half-year we knew we had a strong order book and we really felt that the second half would be better than the first half. But we are a young company that has been, the history of the group, but things conspired against
40 us, we continue to have a wet winter in Queensland where both Bellero and Civmec have had significant projects and whilst it hasn’t stopped any of the projects, we effectively had, particularly on the Civmec Project at (Copper Bella) (02:27), which is a mine construction camp, a much lower level of activity than we had anticipated. And in WA, where the weather is not the
45 issue, the huge demands of the resources business here vented on a number of projects either as a result of a client been unable to give us the site or engineering design matters, but for a raft of issues, jobs either started late or when they did start has started at lower levels of revenue than we anticipated. So our revenues for the full year are just over $411 million, something in the range of 50 million to 60 million less than I thought they would be when I gave the upgraded guidance. So there’s a lesson for myself and the Directors in being optimistic. On the flipside, the revenues haven’t been lost, not a result of jobs being cancelled. Those revenues are flowing into the ’09 year and of
5 course I’ll talk about that a bit more but our order book for ’09 is the best by far and away that we’ve ever had, so that $50 million or $60 million worth of revenues that didn’t end up in ’08 is now in ’09 and generally speaking now, all of our jobs are in full flight. So we just have to be cautious perhaps towards the end of the year again that we don’t get caught with weaning jobs
10 that we expect will have a significant impact and they just for one reason or another roll forward into another theory.
BRR And you mentioned the four acquisitions you made during the year, what specifically do these bring to VDM Group?
15 VMG Well, both the back half of last year and those acquisitions was the most active time we had made in acquisitions. And they were significant in their entirety. All of those companies have performed, as good if not better, than we had anticipated. All have integrated well. The reasons we acquired them is, take Bellero for argument’s sake, we wanted to start off to have a major
20 construction presence in Queensland and Bellero gave us that. In terms of Malavoca, we wanted an earthmoving business and that gave us that. Como Engineers are our mine process engineer. So, we have never looked for bolt-on profit centres. What we’ve looked for that are companies that either strategically in terms of skill set or geographically in terms of market spread,
25 give us business units that we didn’t otherwise have and those companies have done that and they have all outperformed themselves.
BRR And, John, you flagged you’re still looking at acquisitions. Can you expound on this for us, please?
30 VMG Yeah. Well look, both the reporting dates; we made a small acquisition, BCA Consulting, a West Australian consulting business, is flown on to us. We had flagged that we are looking at a number of full consulting acquisitions and that’s still very much the case and I would like to think you’ll see some very positive signs on that in the near future. We want to have a shot front in South
35 Australia. We see South Australia as just about to start off on a major resources boom. So it would be very logical to acquire a business in South Australia. Because of the market conditions, we probably had to push to one side the idea of making significant construction acquisition, which by very nature, cost a lot more. That being said, we continue to talk to a couple of
40 people, construction companies, that we think that are modelled perfectly, that is they bring us the skill set that we don’t otherwise have. So I’d like to think that in this year, we will make certainly some smaller consulting acquisitions but we may well be able to make a significant construction acquisition as well. So still on the card, there are still plenty of great private
45 companies for sale. It’s just that the capital markets are, as you know, a bit fragile so it just makes it all harder to do than we had done in the past. But beyond that, of course, our organic growth is also very good. So there’s been a view, I think in the past, that most of our growth came from acquisitions, well that’s not the truth and certainly in ’09 we will have very good organic growth without any acquisitions.
BRR Okay. And finally in terms of outlook, you said that you’re starting off the year
5 with a strong order book. Can you give us a little bit more clarity on the outlook for the company?
VMG Well, in essence, we stated that strongest order book we have ever had. I think it’s probably wise what we have this time last year when we were positive about the world then, give or take, it’s about equivalent to last year’s
10 revenue, so you can see that it’s (inaudible) (07:05) 400 million give or take. The level of inquiry and the level of bids that we have out there is also at a record high. At any given time now we would typically have $500 million worth of either tenders in play or work that we’ve identified that’s coming up in the short term and we know that we win our fair share, all of that. So in terms of
15 general optimism about ’09 as a company, we would be more optimistic than we were at ’08 than we were optimistic then. So to start off the year with an order book that’s equivalent to last year’s revenue means you’d have to be pretty optimistic. Any work we win between now and Christmas, you would expect to have a significant positive impact on revenues in this year than the
20 after Christmas that jobs you win generally don’t have too much impact on the year that we are in. So, yeah, we’re in excellent shape. We would expect to have strong organic growth this year based on that base order book and the only issues I think for us like most people in our sector is cost pressures and people, but other than that, we are very optimistic about ’09 and beyond.
25
BRR John, thanks a lot for taking the time to speak with me today. Listeners, that was John Farrell, Chief Executive Officer of VDM Group. If you have any questions for John or you’d like some more information about this broadcast, please email brr@brr.com.au. I’m Tom McKay, thank you for listening to
30 Boardroom Radio.
INTERVIEW CONCLUDED
Contact brr@brr.com.au for more information
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