Eco Investor Update
A Weekly News Update for Environmental Investors
February 2013 - No 117
Consolidated revenue was up 9 per cent and earnings (EBITDA) up 7 per cent.
Chief Executive Officer David Bartholomew said Coupled with the recent internalization of DUETs management team, this performance provides a platform for continued strong total securityholder returns.
Earnings per stapled security were 9.3 cents and the interim distribution 8.25 cents. The full year distribution guidance remains at 16.5 cents.
DUET Group issued 11,098,092 securities under its Distribution and Dividend Reinvestment Plan for the interim distribution. The number of securities was capped at a participation rate of 25 per cent. Investors had applied for a participation rate of 35.9 per cent.
Three directors, Michael Bessell, Eric Goodwin and Michael Lee reinvested their distributions. (DUET)
Sims Metal Management
$16 million of the write down will impact the December half results. The balance will be reflected in a restatement of prior period results.
There is also more clarity around a previously announced upcoming impairment of goodwill totaling $354 million. $291 million relates to North America Metals and will be recorded in the 2012-13 result. $63 million relates to UK Metals and UK Sims Recycling Solutions and will be reflected in a restatement of results for earlier periods.
The company will restate its results for fiscal 2012, 2011, and 2010. (ASX: SGM)
Ellerston Capital has increased its stake from 5.6 to 7 per cent. (ASX: ENV)
The new deals are for BHP Billitons iron ore mines in the Pilbara and Chevrons Gorgon LNG gas project on the North West Shelf.
The first contract is for the design, construction and supply of a black start and emergency power system for the Yarnima power station, which is being developed by the Forge Group for BHP Billiton. MPowers system will be delivered over this calendar year.
The second contract for Chevron involves the design, manufacture and testing of two 2.5 MW generators with a 25 year design life for the Gorgon administration buildings. The generators will be delivered in late 2013 and are designed to operate in adverse conditions including category 5 cyclones.
The two projects are further confirmation of MPowers success in the provision of sophisticated power solutions for the resources sector, said Tags chief executive, Nathan Wise. MPower has a healthy project order book and has emerged as a leading tier one power systems supplier to the resource sector.
The financial benefits of this project work will begin to have a positive impact on the company in the second half of the current financial year.
Tag said two contracts signed by MPower in September and October last year for the Inpex Ichthys LNG project in WA are well advanced. The contracts are for the emergency power systems for the offshore facilities and are each worth up to $10 million.
MPower dispatched a 20 MW temporary power station for Chevrons Gorgon project under an earlier contract, and site commissioning is expected to commence later this year. (ASX: TAG)
The interim dividend is 4.5 cents per share, up 0.5 cent or 12.5 per cent. It is unfranked.
Managing director and chief
executive, Mark Ryan, said the results are a clear indication that the
companys infrastructure investment and focus on growing domestic
market per capita consumption are the right strategies to deliver sustainable
growth and increasing shareholder returns.
The company has generated a greater overall profit and greater profit per kilogram from selling less fish than the previous corresponding half, he said. The companys growth over the past six months continues the trend over the past three first half results with earnings and cashflows growing strongly and sustainably and reducing debt.
We are looking to implement further sustainability and environmental initiatives and are moving ever closer to achieving global best practice with respect to fish growing costs and processing costs and yields and recoveries, said Mr Ryan.
Tassal Groups share price has continued its recent rise and reached $1.82 on 14 February. (ASX: TGR)
Mr Harding is chairman of Downer EDI, a non executive director of Santos and Roc Oil Company and a former non executive director of Clough. He has held management positions with British Petroleum including president and general manager of BP Exploration Australia.
Mr Chellew is managing director and chief executive of Adelaide Brighton. He has over 30 years of experience in the building materials and related industries in Australia and the UK.
Mr Tilbrook said Since I joined the board of Transpacific in 2009 we have progressed the transformation of the company, in particular the strengthening of its financial position and the establishment of an effective management team focused on the required operational and strategic directions for our businesses. I am confident that the Board, led by Martin with the addition of the significant operational experience of Mike and Mark, will be well positioned to continue its focus on strategies for the delivery of shareholder value. (ASX: TPI)
It has also amended the agreement with secured convertible note holders to remove some financial covenants in the original agreement. As part of this, it will issue up to 46,181,818 additional warrants at 2.75 cents and re price 50,016,604 warrants held by note holders to this level.
The Warrants can convert to ordinary shares. (ASX: CBD)
Its Project Sea Dragon is a land based aquatic production system that will produce 100,000 metric tonnes of prawns such as high value black tiger prawns for export. Development will be staged with a stand alone production unit in northern Australia starting at 3,000 hectares and growing to 10,000 to 15,000 hectares.
Expected project expenditure to the end of this year is around $6 million, and for stage 1 reaching around $400 million with annual expected revenue at full production of around $400 million per annum.
The company is in discussions with several potential partners and with CSIRO over long term research collaboration.
The aim is to develop a new and sustainable large scale aquaculture enterprise and industrialize what it says are Australias currently small and artisanal aquaculture operating models. It wants to scale up efficient production systems to deliver reliable, long term supplies of sustainable, high volume, quality seafood. (ASX: COZ)
Half year revenue was up 84 per cent on the previous corresponding half to $2.4 million. It has cash of $5.929 million. The loss included non recurring listing costs of $311,100.
Chief executive, Marcelo Rouco said The first half loss is in keeping with our traditional revenue profile, where we book the overwhelming majority of revenues and profits in the second half of the year.
We are very pleased with our start to the year and we are confident in our prospectus forecast. The market for our services is growing strongly and we are well positioned to service it. Ecosave continues to grow rapidly as more corporations and governments unlock the cost savings of energy efficiency. (ASX: ECV)
The adjusted profit was $6.5 million before non cash amortization charges, non cash employee share and option expenses, asset sale gains and the related tax effect.
Revenue was up 20 per cent to $18.6 million.
Managing director, Adam Boyd said Pacific Energy continues to deliver exceptional organic earnings growth, resulting in another record result for the period. The result reflects the robust performance of the Kalgoorlie Power Systems business which has commissioned 45 MW of new power station capacity since 1 July 2012. This new generation capacity, together with the planned completion of the 44 MW Tropicana Gold Project power station before FY13 end is expected to deliver new record earnings for the remainder FY13 and FY14.
The company will then have total installed capacity of over 245 MW.
We continue to evaluate and test new equipment that will further enhance the KPS reputation as the benchmark contract power supply partner to the Australian resources sector, he said. We are also focusing on initiatives to expand our service and supply offering to provide our clients energy infrastructure alternatives that can reduce mine operating costs.
During the period the company also worked on the roll out of its waste heat recovery technology across its existing power stations.
The company said its dividend policy is under consideration. It will recommence the payment of income tax in February 2013 providing for franked dividends. The board intends to pay a maiden dividend after the end of 2012-13. The amount and the long term dividend policy will be announced along with the 2012-13 results in August. (ASX: PEA)
Micro Cap Companies
Australian Renewable Fuels
Lignol Energy has increased its interest from 14.8 to 17.7 per cent, and Wentworth has become a substantial shareholder with 6.5 per cent. (ASX: ARW)
The company will not revise its 2012 accounts but use it for the 2013 accounts, said chief executive, Andrew Howard. (ASX: CBP)
Revenue for the half year rose to $4.4 million compared to $2.797 million in the December quarter 2011 but fell compared to the $5.08 million in the prior half year.
The company has cash of $25.8 million.
Sales of consumables increased 98 per cent, reflecting the increased installed base of Trophon EPR units.
Chief executive, Dr Ron Weinberger said customer sales in North America grew significantly each quarter over the past 12 months and include prestigious reference sites that are helping raise awareness and acceptance of the Trophon EPR throughout that market.
Nanosonics is now well positioned to drive growth of the Trophon EPR in its key North American markets and is investing in sales and marketing activities in Europe together with an active regulatory approval program in the Asia Pacific region, he said. (ASX: NAN)
No Orbital news accompanied the latest rise, but a press release by the national peak body for gaseous fuels, Gas Energy Australia, said businesses that rely heavily on their cars to deliver their products and services are saving between $350 and $500 per car each month by converting their fleets to Autogas. It exampled Orbital subsidiary, Sprint Gas.
Gas Energy Australia is encouraging more taxi drivers, couriers, trades persons and small business owners to make the switch, citing the savings, the ease of installation and gas access, more stable pricing and the environmental benefits.
Mike Carmody, chief executive of Gas Energy Australia, said businesses which deliver goods or rely on road transport are suffering inflated fuel costs which are having a direct impact on profits. With petrol at around $1.50 a litre in most areas, every kilometre is delivering unnecessary costs. Gas prices are half that of unleaded petrol, vehicle conversion kits are widely available for nearly every type of car, and government rebates of up to $2,000 are on offer, he said.
Taxi companies have started reaping the cost savings by converting their hybrid and petrol only fueled car fleets to Autogas.
Shane Smith, owner of Gold Coast based taxi operator First Class Taxi Management, conducted research in London and Singapore before undertaking an Australian first for his industry and converting his hybrid vehicles to Autogas. With the help of Sprint Gas, an Autogas vehicle fit out company, Mr Smith undertook the Autogas conversion of a hybrid vehicle with what are said to be impressive results.
Sprint Gas have helped change our business for the better by instaling conversion kits in the cars and programing them to switch from fuel to gas within seconds, Mr Smith said. Businesses who own large fleets or rely on road transport would be crazy to not consider swapping to Autogas.
So far 10 of our cars have been converted and we are still going. We are saving $350 to $500 per car per month, which even after the instalation costs, puts us well in front, especially as we convert more of the fleet, said Mr Smith.
Sprint Gas also provided an Autogas kit that Sunshine Coast instalers, Revolution Automotive, fitted to a vehicle owned by local taxi identity Clark Chappel. Converting his hybrid car to use Autogas enabled the vehicle to be fueled by petrol until the motor reaches 30 degrees Celsius, after which it is fueled by gas or electrical power.
The conversion reduced Mr Chappels monthly petrol cost by $400, taking it from $1,600 per month to $1,200 over the same distance.
Andrew Lees from Sprint Gas said The customer will realize even greater savings by converting a non hybrid petrol car and can therefore future proof themselves from rising petrol prices.
Gas Energy Australia is the national peak body representing downstream Compressed Natural Gas (CNG), Liquefied Natural Gas (LNG), and Liquefied Petroleum Gas (LPG). The Association says its focus is to help Australia achieve energy security and economic prosperity in a lower carbon economy. (ASX: OEC)
Phoslock Water Solutions
The majority of the companys business is a large order from Chinese firm PowerEagle and this is in the early stages of ramping up production to significant volumes.
This year it will launch three new models including the E Milan into Australia. Mr Cairns said the 80L model for city commuting will retail for around 1,500 in Europe or about $2,000.
In addition, the company plans to enter significant new markets that could include Indonesia, India, Malaysia, Egypt, and South America.
It hopes that current large trials in Europe, North America and Australia will materialize into orders, and it is targeting new significant customers in China.
Vmotos new Chinese factory has significant room to expand capacity, he said. This could be up to between 150,000 to 300,000 scooters per annum depending on the model. (ASX: VMT)
The upgrade follows a review of Meridian SeamGas 2012 production results in Qld by independent reserve certifiers MHA Petroleum Consultants.
WestSides chief executive, Dr Julie Beeby, said the report acknowledges the companys achievements in bringing new wells into production at Meridian and extending the life and productivity of existing wells.
There remains significant upside to the current total reserve position, particularly to further increase 2P reserves through the conversion of 3P reserves from both upper seams and seams below 800 metres, she said.
The reserves increase confirms WestSides position as one of Australias leading listed junior coal seam gas companies with significant uncontracted 2P reserves just 160 kilometres west of Gladstone.
Dr Beeby also said that WestSide has made substantial headway progressing the Transitional Environmental Plan (TEP) work program to bring legacy dams and water management for PL94 into compliance with upgraded policy standards.
Works included the installation of a pilot water treatment plant that has the potential to treat water to a sufficient quality for beneficial use in the area. Discussions are underway with several potential water end users including nearby landholders.
Preliminary soil testing has been undertaken to determine the suitability for long term beneficial re use of the treated water.
The company has also completed the rehabilitation of the first decommissioned legacy evaporation dam and revegetation is well advanced.
Work commenced on Underground Water Impact Reports for other project areas. (ASX: WCL)
Micro Cap Companies
Carnegie Wave Energy
Speaking at a shareholder information session to support its current share purchase plan, managing director, Michael Ottaviano, said the companys CETO technology has great scalability. As the diameter of the buoyancy unit increases, it gives dramatic increases in power output due to the greater volumes of water that it can pump.
He said the early buoyant actuator of around 1.8 metres in diameter generated about 1.5 kW while the 10 metre CETO 4 unit to be deployed at Reunion Island will generate around 150 to 180 kW. The 11 metre CETO 5 unit at the Perth Wave Energy Project will generate between 200 to 240 kW.
A new public chart shows that dramatic increases in power output are possible as the units are scaled from 10 metres to 30 metres in diameter. The chart shows that seven fold increases in annual kilowatt hour production are possible at these sizes - much larger than the proportional increase in diameter. However, Carnegie has declined to give the actual power outputs as the diameter increases.
The chart suggests that the optimal diameter for most efficient output is around 30 to 40 metres. The different sizes would also give Carnegie options to design buoyant actuator models and wave farms to suit requirements.
Wave height and the period between waves also affect energy production, said chief operating officer, Greg Allen.
The idea of offshore power generation follows developments in offshore wind farms where an offshore transformer next to the turbines steps up the voltage. A similar offshore structure would allow Carnegie to generate power offshore rather than pipe water to land and back, and would only need a cable to land the electricity.
This means that the wave farm could be sited much further out to sea and also as part of an offshore wind farm. Again, it increases Carnegie design options.
Mr Ottaviano said the Perth Wind Farm would not be profitable, but declined to say how much revenue it would generate.
Again, in response to a question by Eco Investor, he said that The Lind Partners, which manages the Australian Special Opportunity Fund, has converted about $1.2 million of their equity facility into shares and he believes that they still hold this amount and have not dumped the shares on market. (ASX: CWE)
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