WORKING CAPITAL REPORT 2014 - · PDF filecapital management working ... As was the case in 2013, there was a wide range of outcomes in the sector ... Cash and Working Capital

Prepared by the McGrathNicol Cash and Working Capital Centre of Excellence

WORKING CAPITAL REPORT 2014

1

While the overall reduction in cash tied up in working capital was not as great in 2014 as it was in 2013, the spread of results in most industries widened, meaning the comparative advantage gained by the best performers increased.

Welcome to the 2014 McGrathNicol Working Capital Report, prepared by our Cash and Working Capital Management Centre of Excellence.

This report profiles the working capital performance of a sample of 91 ASX listed companies across the Building Products, Construction & Engineering, Media & Leisure, Utilities, Retail and Transport & Distribution sectors.

The combined market capitalisation of the companies included is $153.1 billion, representing 76.5% of the total for the selected sectors. The information is based on the most recent full-year results for 2014, compared to 2013 results.

Overall, the amount of cash tied up in working capital fell in 2014 compared to 2013 due predominantly to a reduction in average debtor collection cycles in the majority of the profiled sectors. However, consistent with 2013, there were varying results across companies and sectors. The following pages include our analysis for each sector.

Information about our Cash and Working Capital Management Centre of Excellence, including contact details, is provided at the end of this report.

Welcome

0

20

40

60

80

100

60.9

67.0

28.8

83.7

24.7

44.3

53.1

Construction & Engineering

RetailMedia & Leisure

Building Products

Utilities Transport & Distribution

Sample

Day

s

DWC at 30 June (or latest available)

2013 2014

2Cash and Working Capital

Centre of Excellence

Average Days Working Capital (DWC) in 2014 was 53.1 days, representing a 0.3 day reduction from 2013, “releasing” over $150.9 million in cash from the combined working capital cycles of our sampled companies.

As shown in the table below, the improvement was driven by a 2.2 day reduction in debtor days (or DSO). This means that, on average, management teams were able to generate comparatively more cash through better billing and collections performance. The

additional cash was absorbed in part by a 1.5 day increase in inventory days (or DIO) and was also used to pay creditors more promptly than in 2013 (reducing creditor days, or DPO).

By Sector, the biggest improvements were achieved in the Building Products, Transport & Distribution and Utilities sectors. Only the Construction & Engineering sector showed an increase in average DWC after achieving a material improvement in 2013.

Whilst there was an overall reduction in net working capital, underlying results were mixed with 49% of the profiled companies reporting an increase in DWC. In addition, the metrics in 2014 were impacted by a higher reported instance of operational restructuring and/or investment/divestment activity.

The following pages highlight the stronger performers (relative to the prior year) in each Sector.

Summary

Average DWC by Sector

Overall improvement driven by lower debtor days. Building Products, Transport & Distribution and Utilities saw the largest improvements while Construction & Engineering was the only Sector to show an increase.

Summary sample

Days 2013 2014 Change

DSO 55.3 53.1 (2.2)

DIO 52.2 53.7 1.5

DPO 55.4 52.4 (3.0)

DWC 53.4 53.1 (0.3)

DSO = Days sales outstanding (debtors) DIO = Days inventory outstanding (inventory held) DPO = Days purchases outstanding (creditors) DWC = Days working capital (net working capital)

For details of the basis of preparation and calculations, see pages 10, 11 & 12.

140

0

20

40

60

120

80

100

48.254.1

112.9 112.1

83.7

61.8

Peer group average

Boral Limited James Hardie Industries plc

DuluxGroup Limited

Brickworks Limited

Adelaide Brighton Ltd.

Day

s


2013 2014

Top 5 DWC improvements - Building Products

3Cash and Working Capital Centre of Excellence

Although building dwelling approvals were up 21% in 2014 overall revenue growth was minimal – indicative of both the continued subdued commercial construction conditions and the continued move to higher-density developments, which industry feedback suggests typically pull through about one-third of the building products volume of a detached house.

From a working capital perspective, companies often find themselves acting as the “middle man” in this sector, having to deal with large construction companies or developers whilst also managing numerous subcontractors and suppliers. Both suppliers and customers are trying to tighten working capital cycles and minimise inventory holdings, which means tight debtor and inventory management is vital.

After a material improvement in 2013, driven by better debtor and inventory management, improvement slowed in 2014, but the average improvement of 2.1 days still represented the second best industry result.

The improvement was driven by a 4.2 day reduction in DSO coupled with a marginal increase in creditor days (DPO), partly offset by a 3.8 day increase in inventory days (DIO). Inventory is the most material working capital element in this sector.

Boral, James Hardie and Brickworks were amongst the companies that improved their DWC metrics in 2014. Whilst assisted by the sale of its Gypsum and Windows businesses during the period, Boral was able to significantly decrease its DSO and DIO, allowing it to pay suppliers more quickly.

Building Products

The second most material sector improvement, driven by lower debtor days.

“Operating cash flow increased by $198.3 million to $507.3 million in FY2014, reflecting improved earnings from trading operations and a continued focus on working capital management… working capital benefited from improved debtor management, together with a reduction in inventories in the Australian Brick and Timber businesses.”

Financial Review Boral Limited FY14 Annual Report

Best & Worst - 2014

Days Best Worst Spread

DSO 52.4 89.3 36.9

DIO 54.2 161.2 107.0

DPO 85.1 34.7 50.4

DWC 48.2 124.6 76.4

Building Products


DSO 63.8 59.6 (4.2)

DIO 92.4 96.2 3.8

DPO 59.3 59.4 0.1

DWC 85.8 83.7 (2.1)

Boral Limited


DSO 77.8 58.1 (19.7)

DIO 80.8 59.7 (21.1)

DPO 90.0 73.3 (16.7)

DWC 71.0 48.2 (22.8)

0

20

40

60

120

80

100

71.1

49.9

57.3

43.2

61.0 60.9

UGL Limited WDS Limited

Lycopodium Ltd.

Watpac Ltd.

WorleyParsons Limited

Peer group average

Day

s


2013 2014

Day

s

Top 5 DWC improvements - Construction & Engineering



The Construction & Engineering sector continues to rebalance with a broad slowdown in activity and a change in the nature of investment away from mining and resources towards residential and non-residential construction in the eastern states, as well as newly announced Government led infrastructure projects. Operators have also experienced increased scrutiny on variations, claims and contract terms.

These themes have impacted margins and working capital metrics. A key success factor is each business’ ability to manage its projects and client relationships so that large debtors and WIP balances do not tie up capital.

After a material improvement in 2013, 2014 saw DSO level off, however DPO fell by 3.1 days, driving DWC up by 3.0 days to 60.9 days. The sample indicates that companies in the sector are paying suppliers in nearly half the time that they are collecting debtors –

reflective in part of recent amendments to the Securities of Payments Act in various states and mandatory deadlines for making progress payments from principals to contractors, as well as subsequent payments down the supply chain.

Notwithstanding the above shift in metrics, strong performers included UGL (mainly a result of holding its property business DTZ for sale at 30 June 2014), WDS and Watpac, with WDS generating approximately $24 million of cash by reducing DSO by 24.4 days to 59.4 days, in turn allowing it to invest in plant and equipment.

As was the case in 2013, there was a wide range of outcomes in the sector in 2014, and while there was an average overall increase, 42% of the sample experienced a decrease in net DWC, representing a material comparative advantage.


“A recent compression in contractors’ margins, which is attributable to the current market cycle, means this business [Civil & Mining] must focus on operational efficiencies and taking a more dynamic approach to capital management in order to maximise shareholder value.”

Mark Baker CFO and Company Secretary Watpac FY14 Annual Report

Best & Worst - 2014


DSO 30.1 96.0 65.9

DIO - 146.0 146.0

DPO 143.3 4.4 138.9

DWC 3.1 155.7 152.6



DSO 64.9 64.9 -

DIO 27.7 29.5 1.8

DPO 37.2 34.1 (3.1)

DWC 57.9 60.9 3.0

Watpac Ltd.


DSO 41.0 37.8 (3.2)

DIO 19.7 14.1 (5.6)

DPO 6.2 8.2 2.0

DWC 53.8 43.2 (10.6)

Net working capital increased due to increased inventory holdings and tightening creditor terms.

0

20

40

60

80

(20)

(40)

(30.7)

57.260.5

43.9

(12.0)

28.8

Peer group average

Ten Network Holdings Limited

News Corporation

Southern Cross Media

Group Limited

REA Group Limited

Nine Entertainment Co. Holdings

Limited

Day

s


2013 2014

Top 5 DWC improvements - Media & Leisure


Media & Leisure

The Media & Leisure industry, particularly operators involved with print media and free-to-air television, continued to experience a decline in revenues from traditional sources in 2014.

As a result, companies looked to identify new income streams, growing digital offerings (both mobile and web) and ‘on-demand’ viewing platforms. At the same time, many Media & Leisure companies turned their focus to implementing cost-reduction measures to maintain profitability. The level of change in the industry is highlighted by the fact that 50% of the companies sampled undertook refinancing and/or restructuring activities, including divesting underperforming business units, during the year.

Across our sample, cash tied up in working capital remained at an average 28.8 days in 2014 (consistent with 2013

levels). However, there were swings in the underlying metrics, most notably a 7 day reduction in DPO.

Whilst DWC was stable across the sector, there were some companies that achieved material reductions. Ten Network Holdings, Southern Cross Media and News Corporation were the best performers, reducing DWC and “releasing” the equivalent of $16 million (Southern Cross Media) and $122 million (News Corporation) of cash respectively, predominantly by improving DSO.

The chart below shows that Ten Network Holdings and Nine Entertainment had negative working capital and DWC in both 2013 and 2014, meaning that working capital has provided a source of funding to those companies over the past two years.

Best & Worst - 2014


DSO 16.0 155.4 139.4

DIO - 22.0 22.0

DPO 205.9 2.2 203.7

DWC (30.7) 111.9 142.6

Media & Leisure


DSO 66.7 65.2 (1.5)

DIO 7.4 7.0 (0.4)

DPO 77.3 70.3 (7.0)

DWC 28.8 28.8 -

Ten Network Holdings Limited


DSO 73.4 59.3 (14.1)

DIO - - -

DPO 79.6 78.0 (1.6)

DWC (3.2) (30.7) (27.5)

“Cash outflows from operating activities of $36.1 million are driven by the operating loss for the period, partly offset by net working capital reduction.”

HR McLennan Executive Chairman Ten Network Holdings Limited FY14 Annual Report

No overall change in net working capital days but a tightening of creditor days was offset by an improvement in debtor days.

0

20

40

60

9.6

22.215.0

23.0

38.4

Peer group average

Ethane Pipeline Income Fund

Energy World Corp. Ltd.

Origin Energy Limited

AusNet Services

APA Group

Day

s


2013 2014

24.7

Top 5 DWC improvements - Utilities



Utilities

The Utilities sector achieved the most material reduction in net working capital days, driven by improved debtor management.

“Group operating cash flow after tax was up 74 per cent … primarily due to a positive change in working capital from an improved billing and collections performance.”

Gordon Cairns, Chairman Grant King, Managing Director Origin Energy Limited FY14 Annual Report

Best & Worst - 2014


DSO 9.8 66.7 56.9

DIO - 120.7 120.7

DPO 214.3 0.8 213.5

DWC 9.6 45.9 36.3

Utilities


DSO 50.1 42.3 (7.8)

DIO 28.1 31.9 3.8

DPO 90.3 80.3 (10.0)

DWC 28.8 24.7 (4.1)

Origin Energy Limited


DSO 71.2 62.8 (8.4)

DIO 7.0 9.0 2.0

DPO 64.1 68.8 4.7

DWC 24.8 15.0 (9.8)

Utilities companies continued to experience challenging operating and market conditions in 2014 due to declining demand for energy amongst households and rising competitive pressures following a period of industry deregulation. Industrial demand also softened as some manufacturers moved offshore.

As a result, and consistent with other sectors facing “top-line” pressures, a number of Utilities companies focussed on improving operating efficiencies and cost-reduction initiatives in 2014 to preserve earnings. For some, this has involved implementing new systems, streamlining and (where needed) “cleaning up” the billing cycle and restructuring operating arrangements.

From a working capital perspective, average DWC across our sample of Utilities companies improved 4.1 days from 28.8 days in 2013 to

24.7 days in 2014. This was driven by a 7.8 day improvement in DSO. All but one company in our sample was able to reduce DSO.

Strong performers were Ethane Pipeline Income Fund, Energy World Corp and Origin Energy, the latter achieving an improvement in DWC from 24.8 days in 2013 to 15 days in 2014 due to its increased focus on billings and collections. For the Ethane Pipeline Income Fund, the material improvement in DWC (from 32.7 days in 2013 to 9.6 days in 2014) was driven by a 23.7 day decrease in DSO although this was skewed by the timing of receipts from its sole customer. For the companies operating on the production side of the industry, the dependence on one or a few customers (and the ability to manage trading terms) can have a significant impact on working capital.

140

0

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40

60

120

80

100

80.4

67.2

86.9

33.6

58.067.0

McPherson’s Limited

Billabong International

Limited

RCG Corporation

Limited

Nick Scali Limited

OrotonGroup Limited

Peer group average

Day

s


2013 2014


Australian retailers experienced the strongest growth in retail sales in five years in 2014 (5.3%), however the rate of growth slowed during the year with only 1.7% growth in the six months post-Christmas. Online retail sales experienced stronger growth than “traditional” sales, although the rate of growth was slower than the past two years.

In general, retailers continue to be impacted by high competition and margin erosion. Inventory is usually the most significant capital item on a retailer’s balance sheet so its management is a key success factor in the industry.

During 2013 operators achieved a 21 day reduction in DIO as many increased focus and adjusted business models. However in 2014 average inventory days drifted up by 1.3 days to 121.2 days.

On average operators were able to offset the DIO increase by reducing DSO and slightly increasing DPO, achieving a marginal improvement in DWC, from an average of 67.6 days in 2013 to 67 days in 2014. The underlying data showed that for many operators, M&A activity and broader (ongoing) restructuring had a material impact on working capital metrics, most notably for a number of the best and worst

performers in the sector, including McPherson’s, Billabong, OrotonGroup and Specialty Fashion Group.

McPherson’s 41.2 day improvement in DWC was driven by $26.1 million of inventory being recategorised as “assets held for sale” in its accounts at 30 June 2014 (decreasing DIO) as it pursued the sale of its household consumables and housewares business. Billabong implemented a significant restructuring plan that included the sale of West 49, closure of 41 stores and a write down of inventory, all contributing to a 39.8 day improvement in DWC.

By contrast, Specialty Fashion Group’s DWC increased by 29.9 days following a tightening of average supplier terms as it increased its mix of directly sourced product (reducing DPO from 62 days in 2013 to 36.4 days in 2014) and acquired the Rivers business in November 2013 (increasing DIO from 68.4 in 2013 to 130.4 days in 2014).

Whilst average DWC in 2014 remained broadly in line with 2013 levels, the sector showed a particularly wide spread of metrics, reflecting the varying operating models and increased level of acquisition/divestment activity during the year.

“Continued focus on working capital efficiency has led to further rationalisation and liquidation of marginally profitable product ranges.”

David Allman, Chairman Paul Maguire, Managing Director McPherson’s Limited FY14 Annual Report

Best & Worst - 2014


DSO 0.3 173.0 172.7

DIO 59.9 261.6 201.7

DPO 87.5 10.9 76.6

DWC 25.3 194.0 168.7

Retail


DSO 33.4 31.3 (2.1)

DIO 119.9 121.2 1.3

DPO 47.3 47.7 0.4

DWC 67.6 67.0 (0.6)

McPherson’s Limited


DSO 69.2 65.3 (3.9)

DIO 150.6 80.7 (69.9)

DPO 54.9 54.8 (0.1)

DWC 121.6 80.4 (41.2)

Top 5 DWC improvements - Retail

M&A activity and broader restructuring had a material impact on working capital metrics.

Retail

0

20

40

60

80

100

28.4

73.9

47.6

11.9

25.4

44.3

Peer group average

McAleese Limited

Steamships Trading Company

Limited

Brambles Limited

K&S Corporation Limited

Qube Holdings Limited

Day

s


2013 2014

Top 5 DWC improvements - Transport & Distribution



“The increase in cash flow from Operations reflected higher earnings and a positive working capital movement.”

Operating and Financial Review Brambles Limited FY14 Annual Report

Best & Worst - 2014


DSO 39.6 123.6 84.0

DIO 1.6 100.4 98.8

DPO 84.2 16.5 67.7

DWC 11.9 110.8 98.9

Transport & Distribution


DSO 62.6 62.8 0.2

DIO 17.5 16.6 (0.9)

DPO 40.7 41.7 1.0

DWC 46.4 44.3 (2.1)

Brambles Limited


DSO 81.5 75.5 (6.0)

DIO 6.0 6.7 0.7

DPO 50.1 48.2 (1.9)

DWC 51.8 47.6 (4.2)

Overall improvement driven by lower inventory days and an increase in creditor days.


Sector activity in 2014 was buoyed by higher imports (supported by the stable price of crude oil and a weaker Australian dollar) and the increased outsourcing of logistics functions as companies in other sectors refocused on core operations. As a result, revenues for our sampled companies increased by 4.2% (compared to 2013).

From a working capital perspective, most operators have to manage payment terms with their suppliers that (on average) are shorter than the terms they have been able to agree with their customers. This is reflective of the critical nature of some key inputs and inflexibility in related payment arrangements – fuel, contract labour and warehousing – and the bargaining power of the major retail, primary production and mining customers.

Notwithstanding the above, the sector was able to achieve a net cash release from working capital with DWC reducing by 2.1 days from 46.4 days in 2013 to 44.3 days in 2014. The reduction was achieved by a 0.9 day average reduction in inventory days (DIO) and a 1 day increase in creditor days (DPO).

We note that the best and worst performers in this sector, including McAleese, Steamships and Mermaid Marine Australia, were involved in acquisition/divestment activity during the past 12 months – impacting their working capital metrics. McAleese had the largest DWC improvement (18 days), driven by the Liquip Group (oil and gas) and the Castlereagh Quarry (bulk haulage) businesses being held for sale at 30 June 2014 and therefore excluded from its metrics.


Authors - Jason Ireland, Jason Preston, Sean Wiles and Sijmon van Loon.

Research Team - Dom Barnes, Kristen Legge, Lauren Scott-Logan, Leah Sammut and Michael Halfhide.

Our Cash and Working Capital Management Centre of Excellence is focused on increasing cash flow by implementing practical and effective procedures to forecast, track, save and generate cash. We help businesses to

improve cash flow and give them the tools to sustain improvements.

Our Centre of Excellence program for CFO’s and finance staff provides training and advice on best practice cash and working capital management.

If you are interested in participating, or having a staff member attend a Centre of Excellence program, please contact Jason Ireland, Jason Preston or Sean Wiles.

Cash and Working Capital Centre of Excellence

State Contacts

Sydney

Jason Ireland+61 2 9338 [email protected]

Jason Preston+61 2 9338 [email protected]

Sean Wiles+61 2 9248 [email protected]

Canberra

Shane O’Keeffe+61 2 6222 [email protected]

Adelaide

Sam Davies+61 8 8468 [email protected]

Thea Eszenyi+61 8 8468 [email protected]

Melbourne

Peter Anderson+61 3 9038 [email protected]

Robert Smith+61 3 9038 [email protected]

Brisbane

Anthony Connelly+61 7 3333 [email protected]

Anne-Maree Keane+61 7 3333 [email protected]

Perth

James Thackray+61 8 6363 [email protected]



Peer group classification

The Construction & Engineering, Retail, Media & Leisure, Building Products, Utilities and Transport & Distribution peer group samples underpinning this report have been selected according to the Global Industry Classification Standard (“GICS”) listed in the table opposite.

Accounting periods

Financial information in this survey draws on most recently published full year accounts as at 31 October 2014 (i.e. the most recently published full year financial information prior to this date has been used). Prior year comparable figures may differ from our 2013 report for companies in the sample that adjusted their 2013 accounts following the release of our report. Adjustments may occur if a material error is identified or where there has been a change in accounting policy.

Basis of preparation

Peer group sample GICS groups included

Construction & Engineering Construction and engineeringEnergy equipment and servicesCommercial services and supplies

Retail Textiles, apparel and luxury goodsSpecialty retailMultiline retailHousehold durablesDistributors

Media & Leisure Media Leisure

Building Products Building productsConstruction materialsChemicalsTrading companies and distributors

Utilities Multi-utilitiesGas utilitiesElectric utilitiesElectrical equipmentOil, gas and consumable fuelsIndependent power producers and energy traders

Transport & Distribution TransportationRoads and railAir freight and logisticsMarineCommercial services and suppliesCapital Goods

The full peer group samples are included on pages 13, 14 and 15.

Data used in this survey has been sourced from the S&P Capital IQ platform.


Source data

This publication contains high level financial information sourced from the S&P Capital IQ database of the latest available published financial statements of ASX listed entities for the 2014 financial year. The information contained herein is based on sources we believe reliable, but we do not guarantee its accuracy, and it should be understood to be general information only. The information is not intended to be taken as advice with respect to any specific organisation or situation and cannot be relied upon as such.

McGrathNicol accepts no responsibility for errors or omissions in financial information underpinning this publication, nor the loss of any person arising from use of or reliance on information herein. All readers of this publication must make their own enquires or obtain professional advice in relation to any issue or matter referred to in this publication.

Limitations

McGrathNicol acknowledges that at the level of detail applied, the analysis has limitations, some of which are noted below. For this reason, the analysis focusses on performance relative to the prior period, rather than in absolute terms against peers.

Days sales outstandingDebtors include GST, whilst sales do not. To the extent that a company makes more or less of its sales in Australia (or another jurisdiction that levies a consumption tax), results will vary.

Days inventory outstanding

To the extent that a company has more or less labour included in its cost of sales, results will vary.

Days purchases outstanding

Creditors include GST, whilst cost of sales do not. To the extent that a company acquires inventory or input services in Australia (or another jurisdiction that levies a consumption tax), results will vary.

In addition, to the extent that there has been an accounting adjustment that has affected a company’s sales, purchases, debtors, inventory or creditors, this has not been isolated in the analysis and will be reflected as a change in working capital.


InventoryDIO = x 365

Cost of Sales

DebtorsDSO = x 365

Sales

CreditorsDPO= x 365

Cost of Sales

Debtors + Inventory - Creditors

DWC = x 365Sales



Calculation methodology

The working capital metrics referred to in this report have been calculated, as follows:

Days Sales Outstanding (“DSO”)

DSO is the number of days’ worth of sales represented by the outstanding debtors at the relevant calculation date. The calculation used in this survey is:

A low DSO metric is desirable and indicates that it takes a relatively low number of days for a company to collect debtors.


A low DIO metric is desirable and indicates a relatively high turnover of inventory.

Days Purchases Outstanding (“DPO”)

DPO is the number of days’ worth of purchases represented by the outstanding creditors at the relevant calculation date. The calculation used in this survey is:

A low DPO metric indicates that it takes fewer days for a company to pay its trade creditors. A high DPO is desirable from a cash flow and working capital management perspective, but can be an indicator of tight liquidity and the cause of strained supplier relationships.

A low DWC metric is favourable as it indicates a low level of working capital relative to the size of the business.

Days Working Capital Outstanding (“DWC”)

DWC is a relative measure of total working capital tied up in a company relative to sales. The calculation used in this survey is:

Days Inventory Outstanding (“DIO”)

DIO is the number of days’ worth of purchases represented by the inventory balances at the relevant calculation date. The calculation used in this survey is:


Findings


DSO DIO DPO DWC

Company Name 2013 2014 Change 2013 2014 Change 2013 2014 Change 2013 2014 Change

UGL Limited 121.9 49.3 (72.6) 75.5 70.7 (4.8) 81.6 46.8 (34.8) 116.4 71.1 (45.3)

WDS Limited 83.8 59.4 (24.4) 3.6 3.6 - 14.8 14.8 0.1 74.3 49.9 (24.4)

Lycopodium Ltd. 80.7 61.1 (19.6) - - - 4.6 4.4 (0.2) 77.0 57.3 (19.7)

Watpac Ltd. 41.0 37.8 (3.2) 19.7 14.1 (5.6) 6.2 8.2 2.0 53.8 43.2 (10.6)

WorleyParsons Limited 86.8 79.3 (7.5) - - - 17.8 20.0 2.2 70.7 61.0 (9.7)

Calibre Group Limited 55.6 42.3 (13.3) 7.6 11.4 3.8 44.1 40.0 (4.1) 28.7 20.4 (8.3)

RCR Tomlinson Limited 65.2 64.4 (0.8) 8.7 6.3 (2.4) 19.5 22.9 3.4 55.4 49.3 (6.1)

Logicamms Limited 92.3 83.1 (9.2) - - - 18.5 10.3 (8.2) 81.3 76.8 (4.5)

Seymour Whyte Limited 47.7 65.3 17.6 - - - 15.5 41.4 25.9 35.1 32.3 (2.8)

Sedgman Limited 75.0 91.1 16.1 4.1 3.5 (0.6) 13.5 34.7 21.2 67.1 64.6 (2.5)

Downer EDI Limited 63.6 59.2 (4.4) 16.7 22.1 5.4 21.4 20.0 (1.4) 59.5 61.0 1.5

MacMahon Holdings Ltd. 57.7 55.3 (2.4) 65.6 95.6 30.0 46.0 59.7 13.7 65.0 67.0 2.0

Transfield Services Limited 51.8 48.7 (3.1) 25.2 21.7 (3.5) 50.7 38.0 (12.7) 27.8 33.4 5.6

Ausenco Limited 76.7 81.6 4.9 - - - 39.7 33.9 (5.8) 44.7 50.9 6.2

Cardno Limited 62.0 68.3 6.3 48.5 46.2 (2.3) 39.4 34.4 (5.0) 69.8 78.4 8.6

Boart Longyear Limited 54.4 64.2 9.8 129.9 106.9 (23.0) 39.0 24.7 (14.3) 122.2 132.9 10.7

Leighton Holdings Limited 66.1 82.0 15.9 16.4 14.6 (1.8) 144.2 143.3 (0.9) (11.6) 3.1 14.7

AJ Lucas Group Limited 48.8 30.1 (18.7) 54.0 80.1 26.1 63.2 34.1 (29.1) 42.6 57.4 14.8

NRW Holdings Limited 55.4 64.5 9.1 29.6 29.5 (0.1) 70.6 54.0 (16.6) 37.6 54.7 17.1

Southern Cross Electrical Engineering Limited

82.6 96.0 13.4 3.9 5.5 1.6 23.6 16.9 (6.7) 67.2 86.8 19.6

Monadelphous Group Limited 31.1 36.1 5.0 27.1 27.4 0.3 21.9 5.0 (16.9) 35.8 56.2 20.4

Decmil Group Limited. 53.7 78.8 25.1 - - - 32.4 31.5 (0.9) 28.6 53.5 24.9

MACA Limited 46.3 85.5 39.2 3.4 2.2 (1.2) 40.3 48.9 8.6 15.7 45.3 29.6

Ausdrill Ltd. 57.3 73.9 16.6 126.1 146.0 19.9 24.4 29.6 5.2 124.2 155.7 31.5

Peer group average 64.9 64.9 - 27.7 29.5 1.8 37.2 34.1 (3.1) 57.9 60.9 3.0

Building Products

DSO DIO DPO DWC


Boral Limited 77.8 58.1 (19.7) 80.8 59.7 (21.1) 90.0 73.3 (16.7) 71.0 48.2 (22.8)

James Hardie Industries plc 105.1 89.3 (15.8) 69.6 70.5 0.9 30.4 34.7 4.3 131.9 112.9 (19.0)

Brickworks Limited 53.5 53.5 - 166.2 148.9 (17.3) 66.4 64.4 (2.0) 122.4 112.1 (10.3)

DuluxGroup Limited 55.7 52.7 (3.0) 89.0 87.5 (1.5) 87.8 84.7 (3.1) 56.3 54.1 (2.2)

Adelaide Brighton Ltd. 50.8 52.6 1.8 54.2 52.8 (1.4) 38.2 40.9 2.7 63.1 61.8 (1.3)

Fletcher Building Ltd. 59.0 63.3 4.3 77.8 79.5 1.7 46.6 50.0 3.4 82.2 85.2 3.0

Coventry Group Ltd. 57.8 56.8 (1.0) 135.3 161.2 25.9 41.3 47.0 5.7 114.2 124.6 10.4

Reece Australia Limited 58.4 58.1 (0.3) 78.6 98.3 19.7 82.9 85.1 2.2 55.4 67.1 11.7

GWA Group Limited 56.5 52.4 (4.1) 79.7 107.8 28.1 49.8 54.5 4.7 75.9 87.7 11.8

Peer group average 63.8 59.6 (4.2) 92.4 96.2 3.8 59.3 59.4 0.1 85.8 83.7 (2.1)



Media & Leisure

DSO DIO DPO DWC


Ten Network Holdings Limited 73.4 59.3 (14.1) - - - 79.6 78.0 (1.6) (3.2) (30.7) (27.5)

Southern Cross Media Group Limited 70.7 63.0 (7.7) - - - 27.1 30.8 3.7 66.3 57.2 (9.1)

News Corporation 63.3 59.1 (4.2) 20.3 22.0 1.7 16.3 19.6 3.3 65.7 60.5 (5.2)

REA Group Limited 57.0 52.2 (4.8) - - - 38.7 34.9 (3.8) 47.2 43.9 (3.3)

Nine Entertainment Co. Holdings Limited

75.7 76.7 1.0 0.3 0.2 (0.1) 105.3 111.0 5.7 (10.1) (12.0) (1.9)

Amalgamated Holdings Limited 19.3 16.0 (3.3) 18.3 16.9 (1.4) 36.3 27.8 (8.5) 13.7 12.7 (1.0)

APN News & Media Ltd. 57.3 54.8 (2.5) 11.5 8.6 (2.9) 132.0 127.6 (4.4) 8.9 8.0 (0.9)

Prime Media Group Limited 83.0 78.5 (4.5) - - - 9.2 2.2 (7.0) 76.6 76.9 0.3

Fairfax Media Limited 54.3 56.6 2.3 6.8 6.1 (0.7) 35.6 37.3 1.7 30.8 31.1 0.3

Sky Network Television Ltd. 28.2 26.4 (1.8) 0.7 0.1 (0.6) 45.7 41.4 (4.3) 4.7 5.7 1.0

STW Communications Group Ltd. 160.1 155.4 (4.7) - - - 209.0 187.5 (21.5) 34.0 39.7 5.7

Seven West Media Limited 54.4 62.9 8.5 7.3 7.1 (0.2) 63.1 63.8 0.7 18.0 25.4 7.4

Beyond International Limited 92.1 111.1 19.0 19.8 17.9 (1.9) 16.2 16.9 0.7 94.9 111.9 17.0

Village Roadshow Limited 44.6 41.1 (3.5) 17.9 18.7 0.8 267.4 205.9 (61.5) (44.5) (26.9) 17.6

Peer group average 66.7 65.2 (1.5) 7.4 7.0 (0.4) 77.3 70.3 (7.0) 28.8 28.8 -

Utilities

DSO DIO DPO DWC


Ethane Pipeline Income Fund 33.5 9.8 (23.7) - - - 3.8 0.8 (3.0) 32.7 9.6 (23.1)

Energy World Corp. Ltd. 80.0 54.5 (25.5) 18.4 8.3 (10.1) 102.7 85.3 (17.4) 41.3 22.2 (19.1)

Origin Energy Limited 71.2 62.8 (8.4) 7.0 9.0 2.0 64.1 68.8 4.7 24.8 15.0 (9.8)

AusNet Services 64.9 57.1 (7.8) 50.5 43.1 (7.4) 217.2 214.3 (2.9) 30.6 23.0 (7.6)

APA Group 47.2 40.9 (6.3) 45.1 96.6 51.5 100.7 150.5 49.8 42.7 38.4 (4.3)

ERM Power Limited 36.6 35.6 (1.0) 15.6 10.4 (5.2) 38.4 34.2 (4.2) 14.9 12.7 (2.2)

Pacific Energy Ltd. 58.1 48.8 (9.3) 122.1 120.7 (1.4) 292.9 173.9 (119.0) 47.8 45.9 (1.9)

Spark Infrastructure Group 14.2 13.8 (0.4) - - - 30.0 52.4 22.4 12.0 11.0 (1.0)

DUET Group 47.2 38.7 (8.5) 18.4 20.0 1.6 45.6 20.0 (25.6) 37.8 38.7 0.9

AGL Energy Limited 69.3 66.7 (2.6) 5.9 8.5 2.6 56.4 49.3 (7.1) 26.1 31.7 5.6

Mighty River Power Limited 47.7 46.7 (1.0) 6.1 8.5 2.4 65.2 59.7 (5.5) 9.3 15.6 6.3

Infigen Energy 31.8 31.9 0.1 47.8 57.7 9.9 66.6 54.2 (12.4) 26.0 32.9 6.9

Peer group average 50.1 42.3 (7.8) 28.1 31.9 3.8 90.3 80.3 (10.0) 28.8 24.7 (4.1)

Findings


Retail

DSO DIO DPO DWC


McPherson’s Limited 69.2 65.3 (3.9) 150.6 80.7 (69.9) 54.9 54.8 (0.1) 121.6 80.4 (41.2)

Billabong International Limited 71.5 50.9 (20.6) 187.9 121.3 (66.6) 112.0 87.5 (24.5) 107.0 67.2 (39.8)

RCG Corporation Limited 68.0 52.0 (16.0) 203.2 167.5 (35.7) 62.9 69.1 6.2 106.4 86.9 (19.5)

Nick Scali Limited 18.3 0.4 (17.9) 106.5 123.9 17.4 40.6 40.0 (0.6) 44.2 33.6 (10.6)

OrotonGroup Limited 7.1 6.6 (0.5) 206.2 214.9 8.7 19.3 78.0 58.7 68.5 58.0 (10.5)

Gazal Corporation Limited 17.4 17.7 0.3 149.8 122.3 (27.5) 72.5 65.9 (6.6) 58.6 48.9 (9.7)

Breville Group Ltd 68.7 53.6 (15.1) 99.1 94.2 (4.9) 92.2 78.3 (13.9) 73.1 64.3 (8.8)

Automotive Holdings Group Limited 24.3 22.6 (1.7) 75.4 67.2 (8.2) 13.6 11.2 (2.4) 72.1 65.8 (6.3)

AP Eagers Ltd. 13.5 13.0 (0.5) 68.6 68.2 (0.4) 9.8 10.9 1.1 62.1 60.0 (2.1)

The Reject Shop Limited 0.5 0.3 (0.2) 90.7 92.4 1.7 23.0 28.9 5.9 38.0 35.9 (2.1)

Myer Holdings Limited 1.8 2.2 0.4 92.0 94.5 2.5 48.0 51.0 3.0 25.0 25.3 0.3

Super Retail Group Limited 2.8 6.0 3.2 147.2 152.7 5.5 59.3 63.8 4.5 51.7 55.3 3.6

AMA Group Limited 50.8 48.7 (2.1) 67.2 81.8 14.6 53.8 53.4 (0.4) 57.2 61.7 4.5

Fantastic Holdings Ltd. 5.6 7.6 2.0 93.1 96.9 3.8 10.7 11.2 0.5 59.6 66.2 6.6

Cash Converters International Limited 163.7 173.0 9.3 84.4 78.5 (5.9) 21.1 19.9 (1.2) 185.6 194.0 8.4

Premier Investments Limited 2.5 4.9 2.4 95.2 105.4 10.2 39.5 37.6 (1.9) 20.1 30.5 10.4

JB Hi-Fi Limited 7.1 7.4 0.3 59.9 61.4 1.5 47.1 32.7 (14.4) 17.1 29.9 12.8

GUD Holdings Limited 46.8 57.1 10.3 96.7 109.4 12.7 51.0 59.0 8.0 75.2 88.8 13.6

ARB Corporation Limited 46.3 48.7 2.4 162.4 195.1 32.7 66.5 71.4 4.9 89.7 103.5 13.8

Pacific Brands Limited 41.7 44.5 2.8 127.9 145.2 17.3 60.4 57.9 (2.5) 76.3 91.1 14.8

Kathmandu Holdings Limited 3.5 3.5 - 205.8 261.6 55.8 20.4 29.9 9.5 72.0 88.9 16.9

Specialty Fashion Group Limited 4.6 2.2 (2.4) 68.4 130.4 62.0 62.0 36.4 (25.6) 7.0 36.9 29.9

Peer group average 33.4 31.3 (2.1) 119.9 121.2 1.3 47.3 47.7 0.4 67.6 67.0 (0.6)


DSO DIO DPO DWC


McAleese Limited 55.0 46.0 (9.0) 11.2 1.3 (9.9) 22.2 22.5 0.3 46.4 28.4 (18.0)

Steamships Trading Company Limited 90.3 70.1 (20.2) 102.1 100.4 (1.7) 110.6 84.2 (26.4) 88.2 73.9 (14.3)

Brambles Limited 81.5 75.5 (6.0) 6.0 6.7 0.7 50.1 48.2 (1.9) 51.8 47.6 (4.2)

K & S Corporation Limited 41.4 51.2 9.8 3.4 4.1 0.7 49.3 73.4 24.1 15.0 11.9 (3.1)

Qube Holdings Limited 52.8 55.1 2.3 1.6 1.1 (0.5) 37.5 40.5 3.0 25.9 25.4 (0.5)

Asciano Limited 38.8 39.6 0.8 3.9 4.1 0.2 17.1 18.9 1.8 28.9 28.6 (0.3)

Aurizon Holdings Limited 56.8 62.3 5.5 31.7 35.7 4.0 42.4 54.8 12.4 49.8 50.2 0.4

Toll Holdings Limited 52.0 51.3 (0.7) 2.9 2.8 (0.1) 18.1 16.5 (1.6) 38.6 39.3 0.7

CTI Logistics Limited 57.8 53.0 (4.8) 9.5 5.7 (3.8) 50.5 37.8 (12.7) 25.0 27.2 2.2

Mermaid Marine Australia Limited 99.3 123.6 24.3 2.6 4.5 1.9 8.9 19.8 10.9 94.3 110.8 16.5

Peer group average 62.6 62.8 0.2 17.5 16.6 (0.9) 40.7 41.7 1.0 46.4 44.3 (2.1)

Findings

Auckland +64 9 336 4655 Level 17, 34 Shortland Street Auckland 1142 New Zealand

Adelaide +61 8 8468 3700 Level 26, 91 King William Street Adelaide SA 5000

Melbourne +61 3 9038 3100 Level 6, 171 Collins Street Melbourne VIC 3000

Brisbane +61 7 3333 9800 Level 14, 145 Eagle Street Brisbane QLD 4000

Perth +61 8 6363 7600 Level 17, 37 St Georges Terrace Perth WA 6000

Canberra +61 2 6222 1400 Level 1, 24 Brisbane Avenue Barton ACT 2600

Sydney +61 2 9338 2600 Level 31, 60 Margaret Street Sydney NSW 2000

Our offices

www.mcgrathnicol.com

WORKING CAPITAL REPORT 2014 - · PDF filecapital management working ... As was the case in 2013, there was a wide range of outcomes in the sector ... Cash and Working Capital

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