Financial Information
Financial performance summary
Ausenco records 1H net profit of $7.7 million; dividend reinstated.
Ausenco Limited’s (ASX: AAX) performance has continued to improve. The Company today reported an attributable net profit after tax of $7.7 million for the half year ended 30 June 2011 on the back of growth across the group and an increase in personnel numbers.
Key financial highlights:
- Services revenue from operations up 17.1% to $257.2 million (1H10: $219.6 million)
- Underlying EBITDA increased to $16.7 million (1H10: underlying EBITDA loss of $6.6 million)
- Attributable net profit after tax of $7.7 million (1H10: $19.6 million loss); with further profit improvement expected in the second half
- Earnings per share increased to 6.3 cents per share
- Strong balance sheet with net gearing at 11.8%
- Dividend reinstated with a fully franked interim dividend of 3.1 cents per share declared
Key operational highlights:
- Contracts worth $250 million in revenues won during the period
- Ausenco nominated as the preferred contractor on $1.2 billion of additional Create phase contracts worth $128 million in revenue
- Personnel numbers are currently up 11% to 2,780 (31 December 2010: 2,500) and will drive growth in the second half as well as into 2012
- Outstanding performances in the Program Management and Process Infrastructure businesses generates strong EBITDA growth
- Early works pipeline remains at a record level of $15.4 billion providing significant growth opportunities
|
Six months ended 30 June ($m) |
2011 |
2010 |
|
|
Service revenue from operations |
257.2 |
219.6 |
ã |
|
Underlying EBITDA |
16.7 |
(6.6) |
ã |
|
Underlying EBITDA margin (%) |
6.5% |
(3.0%) |
ã |
|
Net profit / (loss) before tax |
9.6 |
(28.7) |
ã |
|
Attributable profit / (loss) after tax |
7.7 |
(19.6) |
ã |
|
Underlying earnings |
7.7 |
(8.1) |
ã |
|
Basic earnings per share (cents) |
6.3 |
(16.2) |
ã |
|
Net operating cash flow |
(26.1) |
(7.4) |
ä |
|
Underlying EBITDA interest coverage |
6.2 |
(2.1) |
ã |
|
Dividend per share (cents) |
3.1 |
- |
ã |
Underlying EBITDA is defined and reconciled to reported earnings on page 3.
EBITDA represents profit before tax, net finance items, depreciation and amortisation.
Underlying earnings excludes the same items, in after-tax terms, as are excluded from underlying EBITDA.
Ausenco’s gross cash position at 30 June 2011 was $32.1 million (31 December 2010: $63.6 million) with net debt increasing from $2.8 million to $31.9 million and the net gearing ratio increasing from 1.2% to 11.8% largely attributable to a net operating cash outflow for the period.
The net operating cash flow for the first half of 2011 was an outflow of $26.1 million (1H10: outflow of $7.4 million) due mainly to the working capital timing lag associated with growth between upfront personnel payments and the collection of associated revenues. This was compounded by supplier payments and related project completion activity on the Kinsevere project. We expect to see an improvement in operating cash flow in the second half of 2011 and are targeting a modest positive net cash position at year end as normalised receivables balances are achieved.
Facilities available for working capital requirements at 30 June 2011 amounted to $78.9 million comprising $32.1 million in cash and $46.8 million in available banking and bonding facilities.
As indicated at the Annual General Meeting in May, with more than 70% of Ausenco’s earnings generated from outside Australia, the company was adversely impacted by the strengthening and volatile Australian dollar over the period. The impact of foreign exchange movements in Ausenco’s income statement was a loss of $1.0 million. Almost 50% of Ausenco’s borrowings are denominated in US dollars which act as a natural hedge against the impact of foreign exchange movements.
Dividend reinstated
Given the strength of Ausenco’s earnings, the company’s strong balance sheet and its pleasing growth prospects, the Directors have reinstated the company’s dividend programme. Directors have declared an interim fully franked dividend of 3.1 cents per share. The dividend will be payable on 21 September 2011 to shareholders registered by 7 September 2011. The declared dividend is in keeping with prudent cash management and the need to maintain a robust working capital facility to meet the requirements of continued growth.
Eligible shareholders will be able to participate in the Dividend Reinvestment Plan (DRP) for the interim 2011 dividend at a 2.5% discount.
Business line performance
All of Ausenco’s business lines continued to win work in the period with the Program Management and Process Infrastructure businesses the standout performers. Corporate costs were down and are expected to continue to decline into 2012.
The Program Management business posted an EBITDA of $2.8 million (1H10: $0.3 million) and continued to win new work in the bulk commodities of coal and iron ore.
The Process Infrastructure business achieved an EBITDA of $7.3 million (1H10: EBITDA loss of $2.2 million) and won new pipeline and port facility work throughout the world.
A summary of all business lines performance is as follows:
| Six months ended 30 June |
2011 |
2010 |
||||
|
|
Operating |
Underlying |
Underlying |
Operating |
Underlying |
Underlying |
|
Minerals & Metals |
140.0 |
14.8 |
10.6% |
119.3 |
11.6 |
9.7% |
|
Process Infrastructure |
72.6 |
7.3 |
10.1% |
69.0 |
(2.2) |
- |
|
Program Management |
19.6 |
2.8 |
14.2% |
5.5 |
0.3 |
5.5% |
|
Environment & Sustainability |
19.4 |
1.0 |
5.3% |
23.8 |
3.5 |
14.5% |
|
Energy |
1.0 |
(0.6) |
- |
- |
(0.9) |
- |
Outlook
Mr Meka said the company’s 2011 full year financial result will show a significant improvement over 2010 and the financial performance for the second half of the year will show an improvement over the first half.
“We will continue to increase personnel numbers and expect to exceed 3,000 people by the end of the year. Our personnel number is a key driver of revenue and margin growth.
“The second half of 2011 has started with a healthy workload and a solid project pipeline. Visibility of project opportunities has improved and underpins our confidence in being able to capitalise on growth opportunities in our key markets.
“On the basis that there will be no material deterioration in our end markets and a stabilisation of exchange rates, we expect total revenue for 2011 to be between $520 million and $550 million and underlying after tax earnings for the year to be between $22 million and $24 million.
“We are currently the preferred contractor to deliver $1.2 billion of capital development across new Create phase projects. This, combined with a strong pipeline of $15.4 billion in Evaluate and Innovate phase projects, some of which are expected to progress to development in 2012, provides an improved visibility of future earnings.
“We expect growth of 2012 underlying earnings to be at least 10% above annualised 2011 second half earnings on the basis that strong commodity demand, forecast client capital expenditure, and the stabilisation of exchange rates and economic circumstances continue.
“South America, Canada, Africa and Australia will continue to drive our growth. We have a strong local footprint in all of these regions as well as excellent long-standing client relationships and a track record of delivering.
Presentation
The live webcast of the half year results presentation is available at http://www.brr.com.au/event/frame/84321