HY20 NPAT $317M; REVENUE1
OPERATING CASH FLOW2 PRE-FACTORING OF $1.3BN IN LTM3; EBITDA CASH CONVERSION4 PRE
FACTORING OF 61% IN LTM
STRONG LIQUIDITY WITH GROSS CASH5 OF $4.0BN
SOLID WIH6 OF $38.1BN WITH NEW WORK7 OF $4.9BN; AROUND $540BN FUTURE PIPELINE, UP 17% YOY
OUTLOOK ACROSS CORE BUSINESSES REMAINS POSITIVE; MONITORING COVID-19 IMPACT
CIMIC Group today announced the performance of its business during the six months to 30 June 2020:
- NPAT of $317 million
- Revenue of $6.2 billion, down $0.8 billion from HY19
- COVID-19 leading to temporary delay in the award of new projects and slowdown of revenues across our activities, both domestic and overseas
- Resilient operating profit8 , PBT and NPAT margins9 of 8.6%, 6.9% and 5.1% respectively; supported by mix of activities and cost efficiency measures
- Operating cash flow pre-factoring in LTM of $1.3 billion, up $495 million YOY
- 61% EBITDA cash conversion pre-factoring in LTM, up from 39% in HY19, notwithstanding COVID-19 impact
- Factoring balance reduced to $1.87 billion (versus $1.99 billion at June 2019)
- Supply chain financing reduced to $361 million (versus $851 million at December 2019)
- Strong liquidity with gross cash of $4.0 billion, debt repayments of just $264 million due in next 12 months
- Net debt of $1.3 billion; net cash of $64 million excl. BICC and after $147 million of share buyback, with YTD variation mainly due to COVID-19 impact and H1 seasonality
- Solid work in hand of $38.1 billion includes $3.1 billion from Ventia’s acquisition of Broadspectrum
- $4.9 billion of new work secured in HY20; temporary delay in award of new work due to COVID-19
- Outlook across the Group’s core businesses remains positive
- Continuing to monitor the impact of COVID-19 on 2020 operational and financial performance
- Mining market proving resilient; exclusivity agreement signed with new equity investor to support mining growth, process well advanced and targeting resolution in the coming weeks
- Removal of tendering restrictions in Hong Kong with immediate effect.
CIMIC Group Executive Chairman Marcelino Fernández Verdes said: “The outlook across our core businesses remains positive, notwithstanding the impact from COVID‐19 which has led to a temporary delay in the award of new projects and slowed down revenues in certain parts of our business.
“The mining market is proving resilient and we have signed an exclusivity agreement with funds advised by Elliott Advisors (UK) Limited to support our mining growth strategy. This would provide joint control of Thiess to CIMIC and Elliott.
“The introduction of an equity partner into Thiess would capitalise on the robust outlook for the mining sector and provide capital for Thiess’ continued growth, while also enabling CIMIC to maintain its strong balance sheet. We expect that the negotiations will conclude in the coming weeks with a share purchase agreement that will be subject to customary conditions, including regulatory approvals.
“In our core construction and services market, numerous stimulus packages have been announced by governments, and there are additional opportunities through the strong PPP pipeline. In addition, after two years, our tendering licences have been reinstated in Hong Kong with immediate effect and we expect to ramp up our tendering activities.
“Our priority of promoting continued evolution, through innovation and digitalisation, continues to be a focus as we further build our competitive advantage and resilience. Our teams are working on new and emerging technologies focused on the construction, mining and industrial services sectors, generating value for our business.”
CIMIC Group Chief Executive Officer Juan Santamaria said: “In the current environment, our strict attention to project delivery, cost efficiency measures, risk and working capital is unchanged as we maintain our focus on generating sustainable cash-backed profits.
“Our investment grade credit rating was reaffirmed by Moody’s at Baa2/Stable in June 2020, and by Standard & Poor’s at BBB/Stable/A-2 in the first quarter of 2020.
“We continue to apply our disciplined approach to tendering across the pipeline, which is now 17% larger compared with a year ago.”
CIMIC has a solid level of work in hand of $38.1 billion and its project wins during the half year included:
- Lake Vermont mining services extension, Queensland
- Port Wakefield to Port Augusta Regional Projects Alliance, South Australia
- South Gippsland Highway Upgrade, Victoria
- Mackay Northern Access Upgrade, Queensland
- Several services contracts in the rail sector, Australia
- Several maintenance contracts in the mining, and oil and gas sectors, Australia.
Also during the period, CIMIC’s 50:50 investment partnership Ventia completed its acquisition of Broadspectrum on 30 June 2020, with the combined entity expected to generate annual revenue in excess of $5 billion. The acquisition added $3.1 billion to CIMIC’s work in hand.
As at 30 June 2020, around $70 billion of tenders relevant to CIMIC were expected to be bid and/or awarded for the remainder of this year (subject to COVID-19 evolution), and around $470 billion of projects were coming to the market in 2021 and beyond. This pipeline includes around $130 billion of PPP opportunities identified for the remainder of 2020 and beyond.
Mr Fernández Verdes said: “Looking ahead, the pipeline is extensive and we’re pursuing a range of opportunities. By focusing on collaborative contracting models and long-term mining and services contracts across a mix of activities and geographies we are further improving our risk profile and enhancing the sustainability of our company.”
Refer to ‘Analyst and Investor Presentation’ for further information.
1 Revenue excludes revenue from joint ventures and associates of $1,168.1m (HY19: $1,170.5m)
2 Operating cash flow includes cash flow from operating activities and changes in short term financial assets and investments before interest, finance costs and taxes
3 Last 12 months
4 EBITDA cash conversion and EBITDA in HY20 LTM does not include any gains/(losses) recognised as a result of the Group’s financial investment in BICC and exit from the Middle East region recognised in 4Q19
5 Gross cash represents cash and equivalent liquid assets (which includes cash, cash equivalents and short term financial assets and investments)
6 WIH includes CIMIC’s share of work in hand from joint ventures and associates
7 New work includes new contracts and contract extensions and variations, including the impact of foreign exchange rate movements
8 Operating profit is EBIT adjusted for any one‐off items. No one‐off items in HY20 or HY19
9 Margins are calculated on revenue which excludes revenue from joint ventures and associates