TIDM44ZP
RNS Number : 3588P
Urenco Finance N.V.
31 August 2017
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 30 June 2017.
Summary
-- Higher Revenue and EBITDA than H1 2016 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 2018.
-- Strategy2020 implementation progressing well with cost reductions on target.
Financial highlights
Six months Six months
to to
30 June 30 June
2017 2016
(unaudited) (unaudited)
EURm EURm
================================== ============= =============
Revenue 811.4 589.2
EBITDA (i) 490.8 321.8
EBITDA margin - % 60.5% 54.6%
Income from operating activities
(ii) 297.9 162.3
Net income/(loss) (iii) 249.8 (8.5)
Net income/(loss) margin -
% 30.8% (1.4)%
Capital expenditure 151.2 207.0
Cash generated from operating
activities 599.8 452.0
================================== ============= =============
(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 EUR28.0 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 EUR94.9
million, including net tax impacts of EUR66.9 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 H1 2016. 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. 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 2016. 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 2018. A comprehensive review of the project
undertaken in H1 2017 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 high-tech 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 30 June 2017 was EUR811.4
million (H1 2016: EUR589.2 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 H1 2017 increased by 52.5% to EUR490.8 million
compared to H1 2016 (H1 2016: EUR321.8 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 EUR173.4 million in H1 2017
(H1 2016: EUR238.8 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 H1 2017 were EUR49.7 million, compared to
net finance costs in H1 2016 of EUR175.2 million. The most
significant driver of this movement is the reduced foreign exchange
loss of EUR0.4 million (H1 2016: EUR83.6 million loss). In H1 2017
there was less currency volatility than in H1 2016 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 EUR14.8
million (H1 2016: EUR15.0 million loss). The net finance cost
associated with borrowings declined from EUR71.5 million to EUR62.2
million, reflecting lower net debt and the absence of costs for
early debt repayments made in the prior period.
In H1 2017 there was a tax credit of EUR1.6 million
corresponding to an effective tax rate ("ETR") of -0.6%. This total
tax credit includes a EUR74.0 million movement in previously
unrecognised deferred tax assets, offset by a charge of EUR7.1
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 EUR74.0 million, the tax charge
would have been EUR72.4 million (29.2% ETR), compared to a tax
credit of EUR4.4 million (34.1% ETR) in H1 2016. 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 30 June 2017 was EUR249.8
million (H1 2016: EUR8.5 million loss), reflecting the movements
detailed above.
Cash generated from operating activities was EUR599.8 million
(H1 2016: EUR452.0 million) reflecting increased revenue and
favourable movements in working capital compared to H1 2016. Tax
paid in the period was EUR98.3 million (H1 2016: EUR68.6 million).
Net cash flow from operating activities was EUR501.5 million
compared to EUR383.4 million in H1 2016.
The Group invested EUR151.2 million in H1 2017 (H1 2016:
EUR207.0 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 2018. The comprehensive
project review undertaken in H1 2017 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 EUR300.0
million, which was paid in full in March 2017 (31 December 2015:
EUR350.0 million, paid in March 2016). In May 2017, EUR362.0
million of Eurobonds were repaid.
As at 30 June 2017, the Group had net debt of EUR2,591.4 million
(31 December 2016: EUR2,618.3 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 30 June 2017 was approximately EUR14.2 billion based
on EUR/$ of 1:1.14 (31 December 2016: approximately EUR15.5 billion
based on EUR/$ 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 2016.
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
Contact
Jayne Hallett
Director of Corporate Communications
+44 1753 660 660
Oliver Buckley
Madano
+44 20 7593 4000
oliver.buckley@madano.com
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 www.urenco.comU
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR ZMGFRVGNGNZM
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