ENGENCO LIMITED 24 November 2015
2015 Annual General Meeting Chairman's Address and Managing Director's Address
Engenco Limited (ASX:EGN) (Company) attaches a copy of the Chairman's address and the Managing Director's address for the 2015 Annual General Meeting held on 24 November 2015.
For further information please contact:
Kevin Pallas Managing Director and CEO T: +61 (0)3 8620 8900 E: kevin.pallas@engenco.com.au | Stephen Bott Company Secretary T: +61 (0)3 8620 8900 E: stephen.bott@engenco.com.au |
ABN: 99 120 432 144
Level 22, 535 Bourke Street
Melbourne VICTORIA 3000
T +61 (0)3 8620 8900
F +61 (0)3 8620 8999
Follow us at
www.engenco.com.au
Ladies and Gentlemen
Welcome to the Engenco Limited 2015 Annual General Meeting.
While Engenco's reported result for the 2015 financial year was still not satisfactory, we were pleased that consolidated underlying financial performance continued to improve.
The reported result was influenced by a non-cash item which had a significant impact. During the year the Board determined that the Greentrains and Gemco rolling stock asset carrying values should be impaired given the rapidly deteriorating capital rental market, particularly in the rail sector.
However, the trading result for the Company showed modest improvement compared to previous periods. This trend is heartening, particularly in the face of a very challenging market and slightly lower revenue.
Workplace safety throughout the Group is of paramount importance to us and a strong focus a rea for improvement and vigilance. We are pleased this focus has resulted in positive trends in our safety performance indicators.
Another important objective of the Board has been placing the Company in a position where it can contest larger, high-quality contracts to deliver more durable revenue streams. Over recent years measured investments have been made to increase efficiency, capability and the capacity of our operations and this strategy is now beginning to bear fruit. We are attracting valuable additional business from blue -chip clientele, while staying focused on retaining our loyal long-standing customers.
The company has performed reasonably well from a cash perspective, generating a positive cash flow of just over $4.5M during the year. Coupled with careful management of our working capital, the company is less reliant on external funding and is continuing to generate cash. The facility with the Commonwealth Bank of Australia is being replaced with a more flexible funding arrangement from Elph Pty Ltd. This is a further demonstration of support from one of our major shareholders.
Bringing the inherent value of the group operations to fruition has been difficult in the current economic environment. However the overall strategy of streamlining our management and operating structures, focusing on core business and delivering quality and value to our customers by running efficient and flexible businesses, remains in place. The ongoing training and development of our management and employees further underpins an improving business performance.
We would like to acknowledge the efforts of our Managing Director, Kevin Pallas and the Chief Financial Officer, Graeme Campbell and thank them for their strong and dedicated leadership over the past year.
We want to thank the management and employees for their continued determination and commitment to improve the overall performance of our business.
We would also like to acknowledge and thank our fellow Board Members for their contribution. Having a solid and stable board has had a very positive impact on the continued improvement of our business
Most importantly we thank our shareholders for their continued support and look forward to a more positive future.
Kevin Pallas, our Managing Director will provide a more detailed update at the conclusion of the Items of Business which we will now deal with.
Dale Elphinstone Chairman
Good morning Ladies and Gentlemen,
As most of you are now aware, the Engenco structure includes two segments namely Rail & Road, and Power & Propulsion. As the Chairman has mentioned, we have simplified and streamlined the operations over the last few years and this has ensured, in addition to pure cost saving, greater oversight of the Company's businesses. This has also allowed for a far more cohesive and integrated management structure. We are actively developing our management teams throughout the Company and strongly believe that our future success will be founded on the high quality of our leaders and the teams that they manage.
I would now like to detail, for the consolidated group and for each of the Company businesses, some key aspects of the 2015 annual financial report and provide an update on the current year environment.
Regarding the consolidated results for FY 2015, key points are as follows:
Revenue declined 4.6 percent year-on-year, reflecting the very subdued market conditions being experienced generally and especially in the mining sector.
The impairment of rollingstock assets had a significant impact on reported NPAT and reflected a stubbornly weak rental market currently being experienced in Australia.
Operating expenses were contained as restructuring benefits began to manifest themselves.
Cash generation and cash balance outcomes at the end of the period were good and together with reductions of the Greentrains loan this resulted in a decrease of around $3M in net debt.
Notwithstanding the lower revenue, the company was able to record an improved underlying trading result compared with the previous period and although still a loss, was an improvement of some 19 percent, a trend that we are working hard to accelerate.
Turning to Business Unit performance:
Our RTO business, Centre for Excellence in Rail Training (CERT) performed extremely well as plans to capture government funded training opportunities in the rail sector were realised. We have continued to expand the CERT training facility footprint, and this has generated further growth particularly in Queensland and Victoria. As demand for training services which are linked to rail regulation requirements are expected to remain robust, and given that government funded training is likely to continue, we are confident of further success for CERT in this area. Growth plans include expansion of the training scope into areas such as forklift operation and materials handling, in which CERT Training plans to offer formal courses.
Convair Engineering achieved a better revenue result year-on-year, and a stable profit result. The manufacturing facility in Epping, Victoria has a continuing programme of lean manufacturing resulting in on-going efficiency improvements which in turn have helped ensure that the business remains successful in the dry bulk tanker market. Price competition remains a challenge but demand for Convair's high quality and innovative product suite is expected to remain reasonably strong in the medium term, especially in the construction sector.
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