Thomas Haeberle, Chief Executive of URENCO Group, commenting on the half-year results, said:

Transcription

1 news release 31 August 2017 URENCO Group Half-Year 2017 Unaudited Financial Results London 31 August 2017 URENCO Group ( URENCO or the Group ), an international supplier of uranium enrichment and nuclear fuel cycle services, today announces its results for the half year ending Summary Higher Revenue and EBITDA than H as a result of phasing of customer deliveries and increased uranium related sales. Resulting increase in Net income reflects lower depreciation charge, associated deferred tax impact and reduced volatility in exchange rates. Continued strong cash generation and reduction in net debt. Long established order book provides protection in short to medium term against prevailing market challenges and pricing pressures. Construction challenges at our Tails Management Facility (TMF) with commissioning delayed until late Strategy2020 implementation progressing well with cost reductions on target. Financial highlights Six months to 2017 (unaudited) Six months to 2016 (unaudited) Revenue EBITDA (i) EBITDA margin - % 60.5% 54.6% Income from operating activities (ii) Net income/(loss) (iii) (8.5) Net income/(loss) margin - % 30.8% (1.4)% Capital expenditure Cash generated from operating activities (i) EBITDA is defined as earnings before exceptional items, interest (including other finance costs), taxation, depreciation and amortisation and share of joint venture results. (ii) Income from operating activities has been positively impacted by 28.0 million following an extension of the estimated useful life of centrifuges and associated equipment by between 3 and 5 years. (iii) Net income has been positively impacted by 94.9 million, including net tax impacts of 66.9 million, following the extension of the estimated useful lives of centrifuges and associated equipment. Thomas Haeberle, Chief Executive of URENCO Group, commenting on the half-year results, said: In the first half of 2017, URENCO delivered a strong operational performance reflected in higher revenue and EBITDA compared to H The phasing of revenue between the first half and second half of 2017 is expected to show less seasonality than in prior years, with a larger proportion in the first 1

2 half but with the second half still accounting for the majority of sales. The increase in EBITDA reflects the increased level of sales, lower operating costs and reduced net charges for nuclear provisions compared to the half year results for Our strong financial results continue to be supported by a long established order book that extends into the second half of the next decade. Our commitment to responsible uranium stewardship is evidenced by our investment in the TMF at our UK site. However, the TMF has experienced further construction delays and we now anticipate commissioning in late A comprehensive review of the project undertaken in H indicates higher final construction costs. Despite the strong performance in the first six months of 2017, the enrichment market remains challenging and this is having an impact on our new contracts. In the medium term we continue to benefit from our strong order book. The environment in which we operate reinforces the importance of successfully implementing our Strategy2020 programme. We are making good progress on the cost optimisation target across our organisation. We are progressing well in our plans to expand our hightech capabilities and we are proactively investigating opportunities to broaden the services we provide to the nuclear industry. The commitment and dedication of our workforce has been fundamental to the successful implementation of Strategy2020 to date. Their professionalism has enabled the creation of a more efficient organisation. Looking forward, our focus will continue on developing our people and our technical expertise. It is a privilege to lead such a strong, diverse and talented workforce. Together we are committed to delivering safe and responsible operations, providing the highest standards of customer service and successfully achieving the strategic objectives of our global organisation. We remain confident that our new strategy will support the organisation in sustaining its position as a global leader in enrichment services and trusted long-term partner to the industry. Financial Results Revenue for the six months ended 2017 was million (H1 2016: million) reflecting both higher SWU sales and higher uranium related sales. Overall, the phasing of revenue between the first half and second half of 2017 is expected to show less seasonality than in prior years, with a larger proportion in the first half but with the second half still accounting for the majority of sales. EBITDA for H increased by 52.5% to million compared to H (H1 2016: million) due to increased revenue, particularly higher margin SWU sales, lower operating costs, a pension scheme gain and reduced net charges for nuclear provisions, reflecting the impact of a review of key assumptions and an optimisation of operations across the Group. Depreciation and amortisation was million in H (H1 2016: million) reflecting the impacts of the impairment of the USA operations in 2016 and an increase in the estimated useful life of centrifuges and associated equipment. Net finance costs for H were 49.7 million, compared to net finance costs in H of million. The most significant driver of this movement is the reduced foreign exchange loss of 0.4 million (H1 2016: 83.6 million loss). In H there was less currency volatility than in H and the Group s unhedged foreign currency loan balances were lower. This resulted in a smaller currency movement on the retranslation of certain unhedged loan balances in net financing costs. In addition, a gain associated with ineffective cashflow hedges was recorded of 14.8 million (H1 2016: 15.0 million loss). The net finance cost associated with borrowings declined from 71.5 million to 62.2 million, reflecting lower net debt and the absence of costs for early debt repayments made in the prior period. 2

3 In H there was a tax credit of 1.6 million corresponding to an effective tax rate ( ETR ) of -0.6%. This total tax credit includes a 74.0 million movement in previously unrecognised deferred tax assets, offset by a charge of 7.1 million on increased first half profits, arising as a consequence of the increase in the estimated useful life of centrifuges and associated equipment. Excluding the movement in previously unrecognised deferred tax assets of 74.0 million, the tax charge would have been 72.4 million (29.2% ETR), compared to a tax credit of 4.4 million (34.1% ETR) in H The main reasons for the decrease in ETR (excluding the movement in previously unrecognised deferred tax assets) are changes in the relative proportions of profits and losses generated across the four jurisdictions in which URENCO operates, together with the impact of non-taxable and non-deductible amounts, including foreign exchange financing gains and losses that are excluded from tax under the UK disregard regulations. Net income for the six months ended 2017 was million (H1 2016: 8.5 million loss), reflecting the movements detailed above. Cash generated from operating activities was million (H1 2016: million) reflecting increased revenue and favourable movements in working compared to H Tax paid in the period was 98.3 million (H1 2016: 68.6 million). Net cash flow from operating activities was million compared to million in H The Group invested million in H (H1 2016: million) of which 71.0% was associated with the TMF in the UK, and the remainder spread across the Group s enrichment facilities. The TMF has experienced delays and continues to face risks in terms of cost and schedule; as a result, commissioning of the facility is now forecast for late The comprehensive project review undertaken in H indicated higher forecast costs to complete. Net cashflow from financing activities in the period included the final dividend for the year ended 31 December 2016 of million, which was paid in full in March 2017 (31 December 2015: million, paid in March 2016). In May 2017, million of Eurobonds were repaid. As at 2017, the Group had net debt of 2,591.4 million (31 December 2016: 2,618.3 million). The Company s debt ratings were reconfirmed in April 2017 by Moody s (Baa1/Stable) and S&P Global Ratings (BBB+/Stable). Outlook Our new strategic direction will enable us to remain a reliable and sustainable partner to the global nuclear industry, providing customers with the highest level of service, quality and expertise. In the short-term, pricing pressures may continue due to the presence of excess inventories of enriched product. We remain confident that the global nuclear industry will grow and that we are well positioned to support it for years to come. URENCO s current order book continues to provide long term visibility and financial stability of future revenues. Orders extend into second half of the next decade and the value of the order book at 2017 was approximately 14.2 billion based on /$ of 1:1.14 (31 December 2016: approximately 15.5 billion based on /$ of 1:1.05). The principal risks and uncertainties to which the Group is exposed are the same as those disclosed in the Group s annual financial statements for the year ended 31 December URENCO continues to monitor closely the UK s exit from the European Union and its potential impact on its business. The UK's withdrawal from Euratom also presents significant risks and URENCO is developing business continuity plans with the aim of mitigating some of the potential risks to the company. URENCO has a unique geographical diversity with enrichment facilities in Germany, the Netherlands, the UK and the USA. Our priority is to ensure we sustain normal operations across all our facilities and continue to deliver on our commitments to our customers. ENDS 3

4 Contact Jayne Hallett Director of Corporate Communications Oliver Buckley Madano Partnership About URENCO Group URENCO is an international supplier of enrichment services and fuel cycle products with its head office based close to London, UK. With plants in Germany, the Netherlands, the UK and in the US, it operates in a pivotal area of the nuclear fuel supply chain which enables the sustainable generation of electricity for consumers around the world. Using centrifuge technology designed and developed by URENCO, the URENCO Group provides safe, cost-effective and reliable uranium enrichment services for civil nuclear power generation within a framework of high environmental, social and corporate responsibility standards. For more information, please visit U Definitions Capital Expenditure - Reflects investment in property, plant and equipment plus the prepayments in respect of fixed asset and intangible asset purchases for the period. EBITDA Earnings before exceptional items, interest (including other finance costs), taxation, depreciation and amortisation and joint venture results (or income from operating activities plus depreciation and amortisation, plus joint venture results). Depreciation and amortisation are adjusted to remove elements of such charges already included in changes to inventories and other expenses. Net Debt Loans and borrowings (current and non-current) plus obligations under finance leases less cash and cash equivalents and short-term deposits. Net Finance Costs Finance costs less finance income net of ised borrowing costs and including costs/income of non-designated hedges. Net Income Income for the year attributable to equity holders of the parent. Order book Contracted and agreed business estimated on the basis of requirements and fixed commitment contracts. Revenue Revenue from sale of goods and services. Separative Work Unit (SWU) The standard measure of the effort required to increase the concentration of the fissionable U235 isotope. Tails (Depleted UF6) Uranium hexafluoride that contains a lower concentration than the natural concentration (0.711%) of U235 isotope. Uranium related sales Sales of uranium in the form of UF6, U3O8 or the UF6 component of EUP. 4

5 Disclaimer This press release is not intended to be read as the Group s statutory accounts as defined in section 435 of the Companies Act Information contained in this release is based on the 2016 Consolidated Financial Statements of the URENCO Group, which were authorised for the issue by the Board of Directors on 8 March The auditor's report on the 2016 Consolidated Financial Statements of the Group was unqualified and did not contain a statement under section 498 of the Companies Act The Group's 2015 statutory accounts have been delivered to the registrar of companies. This release and the information contained within it does not constitute an offering of securities or otherwise constitute an invitation or inducement to underwrite, subscribe for or otherwise acquire securities in any company within the URENCO Group. Any forward-looking statements contained within this release are inherently subject to risks and uncertainties. Actual results may differ materially from those expressed or implied by such forwardlooking statements and, accordingly, any person reviewing this release should not rely on such forwardlooking statements. 5

6 INTERIM CONDENSED CONSOLIDATED INCOME STATEMENT Six months ended Year ended 31 December Unaudited Unaudited (re-presented (i) ) Result for the year (post exceptional items) Audited (re-presented (i) ) Exceptional items (ii) Audited (re-presented (i) ) Result for the year (pre exceptional items) Audited (represented (i) ) Revenue from sales of goods and services , ,893.0 Changes to inventories of finished goods and work in progress (50.5) (38.0) - (38.0) Raw materials and consumables used (6.5) (6.6) (13.0) - (13.0) Tails provision created (102.6) (63.8) (139.6) - (139.6) Employee costs (i) (75.4) (88.9) (169.6) - (169.6) Depreciation and amortisation (173.4) (238.8) (489.4) - (489.4) Impairment of US operations - - (760.0) (760.0) - Restructuring costs - - (33.0) (33.0) - Other expenses (105.1) (182.9) (349.8) - (349.8) Share of joint venture results (0.4) - (0.4) Income/(loss) from operating activities (99.8) (793.0) Finance income Finance costs (123.7) (242.3) (384.7) - (384.7) Income/(loss) before tax (12.9) (371.8) (793.0) Income tax income/(expense) (84.5) 52.9 (137.4) Net income/(loss) for the period/year attributable to the owners of the Company (8.5) (456.3) (740.1) Earnings/(loss) per share: Basic earnings/(loss) per share 1.5 (0.1) (2.7) (4.4) 1.7 (i) Employee costs were previously presented gross with Work performed by the Group and ised (H1 2017: 5.3 million, H1 2016: 7.5 million, year ended 31 December 2016: 14.7 million) presented as a separate line item to Employee costs. In the six month period ending 2017 these line items have been presented net within the Employee costs line. The presentation of the comparative financial information for the six months to 2016 and the year ended 31 December 2016 have been re-presented to be on a consistent basis. (ii) In H there were no exceptional items. 6

7 INTERIM CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Six months ended Year ended 31 December Unaudited Unaudited Audited Net income/(loss) (8.5) (456.3) Other comprehensive income/(loss): Items that may be reclassified subsequently to the income statement Cash flow hedges transfers to revenue Cash flow hedges mark to market 67.7 (112.0) (206.4) Net investment hedge mark to market 84.0 (220.2) (343.1) Deferred tax (charge)/income on hedges (19.8) Current tax (charge)/income on hedges (6.4) (3.6) 6.8 Exchange differences on hedge reserve Total movements to hedging reserve (253.7) (373.8) Exchange differences on foreign currency translation of foreign operations (188.1) Share of joint venture exchange difference on foreign currency translation of foreign operations Total movements to foreign currency translation reserve (188.1) Items that will not be reclassified subsequently to the income statement Actuarial gains/(losses) on defined benefit pension schemes 10.9 (56.8) (87.4) Deferred tax (expense)/income on actuarial gains/(losses) (1.9) Current tax income on actuarial gains/(losses) Share of joint venture actuarial losses on defined benefit pension schemes - (9.3) (7.0) Utility partner payments - - (0.3) Deferred tax income on utility partner payments Total movements to retained earnings 9.0 (55.5) (79.4) Other comprehensive loss (2.9) (173.4) (80.6) Total comprehensive income/(loss) relating to the period/year attributable to the owners of the Company (181.9) (536.9) 7

8 INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION 2017 Unaudited 31 December 2016 Audited 2016 Unaudited ASSETS Non-current assets Property, plant and equipment 5, , ,902.1 Investment property Intangible assets Investments including joint venture Financial assets Derivative financial instruments Deferred tax assets , , ,459.3 Current assets Inventories Trade and other receivables Derivative financial instruments Income tax recoverable Short-term bank deposits Cash and cash equivalents , TOTAL ASSETS 6, , ,403.7 EQUITY AND LIABILITIES Equity attributable to the owners of the Company Share Additional paid in Retained earnings 1, , ,594.9 Hedging reserve (485.3) (661.5) (541.4) Foreign currency translation reserve Total equity 1, , ,898.4 Non-current liabilities Trade and other payables Interest bearing loans and borrowings 2, , ,518.6 Provisions 1, , ,421.8 Retirement benefit obligations Deferred income Derivative financial instruments Deferred tax liabilities , , ,528.2 Current liabilities Trade and other payables Interest bearing loans and borrowings Provisions Derivative financial instruments Income tax payable Deferred income , Total liabilities 4, , ,505.3 TOTAL EQUITY AND LIABILITIES 6, , ,403.7 Registered Number The financial statements were approved by the Board of Directors and authorised for issue on 30 August Dr Thomas Haeberle, Chief Executive Officer Ralf ter Haar, Chief Financial Officer 8

9 INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Share Additional paid in Retained earnings Hedging reserves Foreign currency translation reserve Attributable to the owners of the Company As at 31 December 2016 (Audited) ,123.2 (661.5) ,543.4 Income for the period Other comprehensive income (188.1) (2.9) Total comprehensive income (188.1) Equity dividend paid - - (300.0) - - (300.0) As at 2017 (Unaudited) ,082.0 (485.3) ,490.3 Share Additional paid in Retained earnings Hedging reserves Foreign currency translation reserve Attributable to the owners of the Company As at 31 December 2015 (Audited) ,008.9 (287.7) ,430.3 Loss for the period - - (8.5) - - (8.5) Other comprehensive income - - (55.5) (253.7) (173.4) Total comprehensive income - - (64.0) (253.7) (181.9) Equity dividend paid - - (350.0) - - (350.0) As at 2016 (Unaudited) ,594.9 (541.4) ,898.4 Share Additional paid in Retained earnings Hedging reserves Foreign currency translation reserve Attributable to the owners of the Company As at 31 December 2015 (Audited) ,008.9 (287.7) ,430.3 Loss for the year - - (456.3) - - (456.3) Other comprehensive income - - (79.4) (373.8) (80.6) Total comprehensive income - - (535.7) (373.8) (536.9) Equity dividend paid - - (350.0) - - (350.0) As at 31 December 2016 (Audited) ,123.2 (661.5) ,543.4 Hedging reserve The hedging reserve is a separate component of equity used to record changes in the fair values of cash flow hedging instruments and net investment hedges in accordance with the Group s accounting policy. Foreign currency translation reserve The foreign currency translation reserve is used to record exchange differences arising from the translation of the financial statements of foreign subsidiaries and the parent entity into the euro presentational currency. 9

10 INTERIM CONDENSED CONSOLIDATED CASH FLOW STATEMENT Six months ended Six months ended Year ended 31 December Unaudited Unaudited Audited Income/(loss) before tax (12.9) (371.8) Adjustments to reconcile Group income before tax to net cash inflows from operating activities: Share of joint venture results - (7.4) 0.4 Depreciation and amortisation Impairment of US operations Restructuring costs Finance income (74.0) (67.1) (112.7) Finance cost Loss on write off of property, plant and equipment Increase in provisions (2.4) Operating cash flows before movements in working ,242.2 Increase in inventories (7.0) (159.3) (92.2) Decrease/(increase) in receivables (24.4) (Decrease)/increase in payables (80.4) Cash generated from operating activities ,226.0 Income taxes paid (98.3) (68.6) (117.1) Net cash flow from operating activities ,108.9 Investing activities Interest received Proceeds from sale of property, plant and equipment Purchases of property, plant and equipment (151.0) (206.9) (407.6) Purchase of intangible assets (0.2) (0.1) - Increase in investment - - (0.2) Net cash flow used in investing activities (93.5) (164.7) (337.1) Financing activities Interest paid (108.2) (113.8) (212.6) Payments in respect of settlement of debt hedges (6.8) - - Dividends paid to equity holders (300.0) (350.0) (350.0) Proceeds from new borrowings Placement of short-term deposits - - (1.6) Repayment of borrowings (396.8) (240.6) (728.7) Net cash flow from financing activities (607.7) (557.2) (926.5) Net decrease in cash and cash equivalents (199.7) (338.5) (154.7) Cash and cash equivalents and short-term deposits at beginning of period/year Effect of foreign exchange rate changes (1.4) (13.0) 15.1 Cash and cash equivalents at end of the period/year