Norfolk Group reports maiden half-year results
27 November 2007
Highlights
- 1H2008 pro forma NPAT of $8.8 million; on track to deliver FY2008 prospectus earnings
- EBIT margins expanded in line with prospectus forecast to 4.0%
- 80% of FY2008 gross profit underpinned by current contracts, work orders or existing service relationships (as at 30 September 2007)
- Emphasis on maintenance and recurring service contracts continued and comprised 51% of total revenue for the first half
- Expanded into new regions in Australia; successfully integrated recent domestic acquisitions
- Completed first international acquisition
Half Year Results Interview with Glenn Wallace, Managing Director
Norfolk Group Limited (ASX: NFK), a leading Australasian provider of integrated electrical, communications, HVAC (heating, ventilation and air conditioning), passive fire protection and property services, today announced a pro forma net profit after tax (NPAT) of $8.8 million, or 6.77 cents per share, for the first half ended 30 September 2007.
Commenting on Norfolk Group’s first result since listing on the ASX in July, Managing Director Glenn Wallace said earnings for the six months were more than half those achieved by the Group for the full year ended 31 March 2007, and places the company on track to deliver its FY2008 prospectus forecast earnings of $19.5 million. The first-half EBIT margin rose to 4.0 per cent in line with the full-year prospectus forecast, up from 3.4 per cent in FY2007, as Norfolk Group targeted stable earnings from higher-margin maintenance and service contracts. “Maintenance services provide a stable, recurring source of earnings and deliver higher gross margins than installation contracts,’’ Mr Wallace said.
The company reported that more than 80 per cent of the FY2008 gross profit is underpinned by current contracts, work orders or existing service relationships. During the first half, gross profit from maintenance and recurring services rose to 51 per cent of total group gross profit, from 50 per cent.
It should be noted that the Appendix 4D documents and reported financial results lodged with the ASX relate to the period from 21 June 2007, when the operating entities were acquired by Norfolk Group Limited, through to 30 September 2007, representing a period of three months and nine days. In FY2007, only the full year accounts were audited and therefore no prior half year comparisons are available.
Organic Growth
During 1H2008, Norfolk Group companies opened new offices in Dubbo and Wagga Wagga in New South Wales; Perth and Karratha in Western Australia; Darwin in the Northern Territory; and Blenheim and Palmerston North in New Zealand.
“A key part of our expansion is to identify ‘geographical gaps’, where there is a clear demand for our services. Establishing new branches for our business allows us to reach new markets and customers,” Mr Wallace said.
The Mechanical division continues to focus on growing recurring revenue with the development of a national key account team that has won new contracts to service 40 department stores nationally and 35 sites for a leading Queensland bank.
The Electrical & Communications division is also targeting opportunities in the high-growth resources sector, as well as the rail and power infrastructure industries.
Bolt-On Acquisitions
The acquisitions of Refcom (based in Mackay, Queensland) and Coral Coast Cooling (based in Bundaberg, Queensland) were successfully integrated during the first half.
More recently, in November 2007, Norfolk Group purchased Gold Coast Airconditioning Services and The Plumbing Doctor (Canberra region), supporting the expansion strategy the company announced at the time of its initial public offer.
The combined acquisition of Gold Coast Airconditioning Services and The Plumbing Doctor (Canberra Region) will increase revenue by approximately $9 million per annum. Both businesses are expected to be earnings positive immediately.
“One of the core elements of our growth strategy is bolt-on acquisitions that complement Norfolk technologically and geographically. The addition of Gold Coast Airconditioning Services and The Plumbing Doctor (Canberra Region) not only boosts our earnings but also adds highly qualified and experienced personnel to our teams in those markets,” Mr Wallace said.
Norfolk Group completed its first international acquisition during the first half, buying 85 per cent of India-based Trans-American Air Conditioning in August 2007. The acquisition was the result of following existing Australian customers into new, high-growth markets.
“The acquisition of Trans-American Air Conditioning is Norfolk’s first acquisition outside Australia and New Zealand, and establishes a firm foothold in the important, high growth Indian market,” Mr Wallace said.
“India’s economy is expanding rapidly. Structural reforms are generating rapid growth in all real estate markets including commercial, retail, tourism and industrial. The acquisition of Trans-American is a low-risk way for Norfolk to participate in India’s economic expansion.”
The company is exploring further opportunities in the Middle East.
Outlook
“The company is on track to meet its FY2008 prospectus earnings with more than 80 per cent of gross profit underpinned by existing contracts, work orders or service relationships.
“With strong growth expected in the resources, power and rail infrastructure industries, the outlook across all three of the divisions in which Norfolk operates is healthy,” Mr Wallace said.
“We expect further organic growth, bolt-on acquisitions and continued international expansion, following on from our recent acquisition in India,” Mr Wallace concluded.
For further information please contact:
|
Jane Waddel
Marketing and Communications Manager
Norfolk Group Limited
jwaddel@norkfolkgh.com
Mob +61 437 267 282 (AU)
Mob +64 21 611 327 (NZ)
|
John Gardner
Savage & Partners
john@sandp.com.au
Tel (+61) 2 8281 3237
Mob (+61) 413 355 997 |
Norfolk Buys Gold Coast Air Conditioning Services & Plumbing Doctor
Norfolk acquires two new companies
7 November 2007
- Total investment of $6 million to expand airconditioning and plumbing businesses
- Adds approximately $9 million of combined revenue to Norfolk
- Both acquisitions expected to be earnings positive immediately
- Boosts Norfolk’s footprint in ACT and South East Queensland
- Acquisitions support Norfolk’s expansion strategy announced at time of IPO
Norfolk Group Limited (ASX: NFK), a leading Australasian provider of integrated electrical, communications, HVAC (heating, ventilation and air conditioning), passive fire protection and property services, today announced two strategic acquisitions to further expand the company’s operations on the Gold Coast and the ACT.
The combined acquisition of Gold Coast Airconditioning Services and The Plumbing Doctor (Canberra Region) will increase revenue by approximately $9 million. Both businesses are expected to be earnings positive immediately.
Glenn Wallace, Managing Director of Norfolk, said the acquisitions support the expansion strategy the company announced at the time of its initial public offering (IPO) in July this year.
“One of the core elements of our growth strategy is bolt-on acquisitions that complement Norfolk technologically and geographically. The addition of Gold Coast Airconditioning Services and The Plumbing Doctor (Canberra Region) not only boosts our earnings but also adds highly qualified and experienced personnel to our teams in those markets,” Mr Wallace said.
Both acquisitions will be financed through existing debt facilities.
Gold Coast Airconditioning Services
Gold Coast Airconditioning Services (GCACS) will be acquired for $2.65 million by Haden Engineering Pty Limited, a Norfolk Group company within its Mechanical division.
Mr Wallace said Norfolk had identified South East Queensland as a strong growth region for the Norfolk businesses, given the population growth of approximately 55,000 people per annum.
“A key part of our expansion is to identify ‘geographical gaps’, where there is a clear demand for our services. The Gold Coast, with high population growth expected to continue for the next two decades, fits our criteria for expansion. The acquisition of GCACS will strengthen Haden’s position in the expanding Queensland market,” Mr Wallace said.
GCACS specialises in high-margin airconditioning refurbishment, installation projects and preventative maintenance and service contracts. The business includes 11 full-time employees and will be integrated to complement the maintenance and installation services already offered by Haden’s Gold Coast business.
The GCACS’s forecast revenue is approximately $4 million, with earnings before interest and tax (EBIT) of more than $620,000. The transaction is expected to settle on 9 November 2007.
The Plumbing Doctor (Canberra region)
The Plumbing Doctor (Canberra region) will be acquired for A$3.275 million by Haden Engineering Pty Limited, a Norfolk Group company within its Mechanical division, and will be managed by Smith Brothers Plumbing.
The purchase of the Plumbing Doctor (Canberra region) supports Norfolk’s strategy of growing its plumbing services companies organically, and through strategic acquisition.
The Plumbing Doctor (Canberra region) is supported by 30 experienced plumbers and apprentices with 24 maintenance vehicles, making it the largest (by headcount) and most recognised plumbing repair and maintenance business in the ACT
The Plumbing Doctor’s forecast revenue is approximately A$4.8 million, with earnings before interest and tax (EBIT) of approximately A$635,000
The Plumbing Doctor’s client base consists largely of government and residential customers, ensuring a consistently strong cash flow and accurately forecast revenues. Approximately 50 per cent of residential sales are “pay on completion”, combined with the certainty and regularity of income from large government housing plumbing maintenance contracts.
Mr Wallace said the potential for further growth through the acquisition was high, particularly through additional government and corporate maintenance contracts, and broader pipeline service offerings.
“Water conservation projects, the efficient application of innovative maintenance and usage initiatives, and the potential expansion into light construction all present growth opportunities for us in the Canberra region,” Mr Wallace concluded.
Norfolk acquires HVAC business in India -
Norfolk’s first move outside of Australia and New Zealand -
8 August 2007
Norfolk Group Limited (ASX: NFK), a leading Australasian provider of integrated electrical, communications, HVAC (heating, ventilation and air conditioning), passive fire protection and property services, today announced its international expansion into India through the acquisition of 85 per cent of Trans American Air-conditioning, an Indian HVAC business.
The acquisition is Norfolk’s first move outside Australia and New Zealand.
Trans American Air-conditioning is a leader in the Indian HVAC market. The business operates eight sites throughout India with a corporate customer base and a high percentage of revenue secured via annual maintenance contracts. Trans American Air-conditioning has been recognised over time as the highest performing dealer in India for Carrier, Voltas and Daikin air-conditioning units. The business is well supported with more than 200 staff and proven accounting, HR and administrative systems.
Trans American Air-conditioning’s forecast revenue is approximately A$3 million and earnings before interest and tax (EBIT) of approximately A$420,000.
Glenn Wallace, Managing Director of Norfolk, said the acquisition was part of Norfolk’s international expansion strategy.
“The acquisition of Trans American Air-conditioning is Norfolk’s first acquisition activity outside of Australia and New Zealand and establishes a firm foothold for Norfolk in the important, high growth Indian market.
“India’s economy is expanding rapidly. Structural reforms are generating rapid growth in the Indian economy and in all real estate markets including commercial, retail, tourism and industrial. The acquisition of Trans American Air-conditioning is a low-risk way for Norfolk to participate India’s economic expansion.
“In particular penetration of air conditioning in India remains low at approximately two percent of commercial property. There is robust demand for commercial office space in India as the multi-national and domestic corporate sector increases. Foreign companies operating in India are driving the demand for high quality air-conditioning in corporate real estate. Trans American Air-conditioning is well placed to continue capitalizing on this demand and respond to existing Norfolk customer demand to expand into new markets, such as India” he said.
The founder of Trans American Air-conditioning, Farhan Pettiwala, will be retain a 15 percent shareholding in the company. He will remain as the Managing Director of Trans American Air-conditioning and will play an active role in Norfolk’s expansion plans in India. Farhan Pettiwala is a Gold Medal qualified mechanical engineer with an excellent knowledge of operating a business in India.
Mr Pettiwala said he is delighted that Trans American Air-conditioning will join Norfolk.
“Trans American Air-conditioning has fantastic opportunities to grow it’s services, client base and industry presence in India. By joining with Norfolk we now have the right financial backing to support Trans American Air-conditioning’s continued growth.
“I look forward to working with the management team of Norfolk to maximize growth opportunities,” he said.
Norfolk recently listed on the Australian Securities Exchange.
Strong Sharemarket Debut for Norfolk
Shares close at 7.2% premium to offer price
27 July 2007
Norfolk Group Limited (ASX: NFK), a leading Australasian provider of integrated electrical, communications, HVAC (heating, ventilation and air conditioning), passive fire protection and property services, today commenced trading on the Australian Securities Exchange.
Norfolk shares closed at $2.09, a 7.2% premium to the $1.95 per share offer price.
Norfolk’s sharemarket debut was on an overall negative day of trading on the Australian Securities Exchange, with the All Ordinaries Index closing down 174 points, a 2.8% loss on the day.
Norfolk Chairman, Peter Abery, welcomed Norfolk’s new shareholders. “Investors have recognised the growth potential of Norfolk and its operating businesses and seen a compelling investment opportunity,” Mr Abery said. “With earnings stability from a high and growing proportion of maintenance services, this is a business that will continue to benefit from organic growth as well as through strategic, bolt-on acquisitions and international expansion.’’
For further information please contact:
|
Jane Waddel
Marketing and Communications Manager
Norfolk Group Limited
jwaddel@norkfolkgh.com
Mob +61 437 267 282 (AU)
Mob +64 21 611 327 (NZ)
|
Stuart Carson
Senior Consultant
Third Person Communications
stuart@thirdperson.net.au
Mob (+61) 403 527 755 |
Norfolk launches Initial Public Offer
22 June 2007
The directors of Norfolk Group Limited today lodged a Prospectus with the Australian Securities and Investment Commission (ASIC) for its A$196.9 million initial public offer (IPO).
The offer consists of 100,945,892 million shares at a price of A$1.95 per share (Offer). This represents approximately 77.7% of Norfolk’s issued shares, implying a market capitalisation at listing of A$253.5 million. The company expects that normal trading of its shares will begin on the Australian Securities Exchange (ASX) on 27 July 2007.
Norfolk is a leading provider of electrical, communications, HVAC (heating, ventilation and air conditioning), passive fire protection and property services and products to more than 19,500 customers across Australia and New Zealand. Norfolk is the number one provider of electrical and HVAC maintenance services in Australia operating through widely recognised, established brands including O’Donnell Griffin and Haden.
Norfolk has 3,400 employees at more than 80 sites throughout Australia and New Zealand, including more than 1,750 highly skilled electricians, air conditioning technicians and engineers. Norfolk’s scale provides an advantage over smaller competitors as it is able to undertake and resource large, complex projects and provide trans-Tasman coverage to customers.
Norfolk has highly specialised capabilities in the high growth infrastructure market, including:
- rail electrification; and
- power generation and transmission.
In addition, Norfolk is strongly positioned to grow in other areas of specialised capabilities, including:
- HVAC maintenance;
- environmental HVAC; and
- fire retardant products.
“With our broad geographic reach and integrated offering of a wide range of services and products, we have significant scale advantages over many of our competitors in the fragmented markets in which we operate. This scale has assisted us in establishing long term relationships with many high quality customers,’’ said Norfolk Chairman, Peter Abery. “The earnings stability this diversity provides is enhanced by our focus on the provision of recurring maintenance services to our customers.’’
The Norfolk businesses were acquired from Tyco in November 2004. Managing Director, Glenn Wallace and the management team of Norfolk have spent the past two and half years focused on building a strong operational platform from which to grow the business.
By embarking on an IPO and listing on ASX, Norfolk will have access to liquid capital markets that will support its growth strategies, including expansion, both organically and via bolt-on acquisitions, into new, innovative markets and selected international markets as well as to take advantage of strong demand in its existing markets.
“Investors in Norfolk will benefit from significant organic growth opportunities as well as additional upside from the execution of further bolt-on acquisitions and increasing demand for our services overseas. ’’ said Mr Wallace.
Norfolk is expected to continue to deliver strong revenue growth and margin expansion. Norfolk’s annual pro-forma revenue is forecast to be A$829.4 million in FY2008, supporting pro-forma EBIT of A$33.0 million. This represents growth in Norfolk’s pro forma EBIT margin from 3.3% in FY2006 to 4.0% in FY2008, with an EBIT compound annual growth rate of 21.6% over that period.
Existing shareholders and management will retain a 22.3% stake in Norfolk post IPO. An option scheme is also in place to align the interests of management with Norfolk’s performance.
Norfolk will raise approximately A$196.9 million from the Offer, based on the offer price of A$1.95 per share. The Offer is fully underwritten by the Joint Lead Managers, Goldman Sachs JBWere and ABN AMRO Rothschild.
The Offer of shares is made under the Prospectus and comprises an offer to employees, retail investors and Australian and international institutional investors. There is no general public offer.
Subject to certain conditions set out in the Prospectus, the directors intend to declare a fully franked dividend of 5.7 cents per share for the period from the listing date (expected to be 27 July 2007) to 31 March 2008 and pay any declared dividend in July 2008. This implies a dividend yield of 4.3% based on the offer price of $1.95 per share.
| Key Dates |
|
| 22 June |
Lodgement of Prospectus |
| 2 July |
Offer opens |
| 18 July |
Offer closes |
| 27 July |
Shares expected to begin trading on ASX |
| Key Offer Statistics |
|
| Offer price per Share |
A$1.95 |
| Shares offered under the Prospectus |
A$196.9 million |
| Gross proceeds of the Offer |
130,000,000 |
| Market capitalisation of the offer price |
A$253.5 million |
| ASX code |
NFK |
| Key Financials FY2008 |
|
| Revenue |
A$829.4 million |
| EBIT |
A$33.0 million |
| EPS |
15.0 cents |
| Price to earnings ratio |
13.0x |
| Dividend per share |
5.7 cents |
| Annualised dividend yield for FY2008 |
4.3% |
For further information please contact:
|
Jane Waddel
Marketing and Communications Manager
Norfolk Group Limited
jwaddel@norkfolkgh.com
Mob +61 437 267 282 (AU)
Mob +64 21 611 327 (NZ)
|
Jan Eakin
Third Person Communications
jan@thirdperson.net.au
Tel (+61) 2 8298 6100
Mob (+61) 422 997 161
|
Norfolk introduces new corporate branding
11 May 2007
Norfolk today announced the introduction of updated corporate branding. The new branding will apply to Norfolk and the three operating divisions of Mechanical, Electrical and Communications, and Fire and Property Services.
The updated branding better encapsulates the divisions as part of the wider Norfolk structure, while at the same time maintaining each division’s operational focus.
Norfolk Managing Director Glenn Wallace said “we wanted the corporate branding to better reflect the structure of Norfolk and the three distinct divisions created recently. I believe the new branding achieves this as well as refreshing the look and feel of Norfolk.
“Importantly, these new brands apply to Norfolk and the three divisions. There are no plans to change the corporate branding of the operating companies within the divisions. We remain committed to growing each brand in its individual market and every brand is critically important to Norfolk.”
The new branding is as follows:
The new branding will be rolled out over the coming months.
|
Media Contact
Jane Waddel
Marketing and Communications Manager
|
Norfolk Group Limited
jwaddel@norkfolkgh.com
Mob +64 21 611 327 (NZ)
Mob +61 437 267 282 (AU)
|
Norfolk simplifies organisational structure
21 March 2007
Norfolk today announced it will simplify the group’s structure and create three separate operating divisions. This new structure will allow for improved efficiencies, provide better management support structures and promote information sharing across the companies.
The new divisions will consist of a Mechanical Division, Electrical and Communications Division and a Fire and Property Services Division. The new structure will be implemented over the coming weeks and will include all of Norfolk’s operating companies.
Norfolk Managing Director Glenn Wallace said, “the three divisions have been established to support Norfolk’s growth in the future. It will not affect the day-to-day operations of the individual businesses.
“We remain committed to growing each brand in its individual market, and every brand is critically important to the Norfolk. The focus is on the growth of the individual brands to support the overall growth of the Norfolk.”
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Media Contact
Jane Waddel
Marketing and Communications Manager
|
Norfolk Group Limited
jwaddel@norkfolkgh.com
Mob +64 21 611 327 (NZ)
Mob +61 437 267 282 (AU)
|