Monday 28 August 2017 by Mary Anne Low Company updates

Ausdrill FY17 results – strong cash flow generation supports higher capex spend

FY17 results highlights:


Source: Ausdrill, FIIG Securities 


Key points:

  • Revenue was up by 4.5% to AUD776.3m compared to per corresponding period (pcp), as Ausdrill’s African Mining Services segment continued to drive the group’s revenue growth. The gold sector continues to contribute  around 80% of the group’s mining services revenue
  • Growth in Ausdrill’s African operations, combined with cost reductions and restructuring across the group resulted in an increase in EBITDA by 9.4% pcp to AUD136.8m. Proforma EBITDA (including Ausdrill’s 50% share in its African Underground Mining Services joint venture) also increased by 8.6% pcp to AUD154.5m due to 17% growth in the joint venture’s revenue and earnings. Margins continue to improve in a competitive market through cost out and scale benefits
  • However, capital expenditure (capex) for FY17 increased significantly by more than 10 times to AUD147.4m from AUD12.4m in FY16, mostly driven by growth projects in Africa, which is expected to deliver earnings growth in FY18. The higher capex was funded by operating cash flow and cash reserves. Consequently, the higher capex resulted in a negative net cash flow of AUD13.5m compared to AUD104.1m in FY16
  • At 30 June 2017, Ausdrill’s total debt decreased by 2.5% to AUD221.9m, and together with cash of AUD166.7m, resulted in gearing (net debt/ net debt plus equity) dropping marginally by 0.3pt to 26%. In addition to cash, the company has access to AUD124.8m in undrawn facilities. Ausdrill’s next debt maturity will be its USD300m of unsecured notes due in FY20
  • Ausdrill paid dividends of AUD6.2m after taking a hiatus in FY16

A link to the results is available here.

Outlook

Key highlights for FY18:

  • Targeting 30-40% profit growth
  • Secured AUD1.6bn in new projects and contract renewals
  • Expects growth in the African businesses to be significantly based on projects already secured
  • Capex between AUD100-170m


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