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BRADKEN LIMITED ANNUAL REPORT 2013 13
Bradken Limited
Directors’ report (continued)
30 June 2013
Page 13
Bradken Limited
C. Review of operations
Operating and Financial Review
2013
2012
Change
NPAT
$66.9m
$100.5m
(33%)
EBITDA
$183.6m
$220.4m
(17%)
Underlying NPAT
$96.1m
$100.5m
(4%)
Underlying EBITDA
$214.0m
$219.2m
(2%)
Underlying EBITDA margin
16.2%
15.1%
Sales revenue
$1,313.1m
$1,451.3m
(10%)
Operating cash flow
$217.6m
$121.2m
80%
Earnings per share
39.6 cents
60.5 cents
(35%)
Dividends per share
38.0 cents
41.0 cents
(7%)
The Group recorded a net profit after tax for the year ended 30 June 2013 of $66.9 million, however this included a one-off
pre-tax charge of $30.4 million relating to the Federal Court proceedings associated with the Norcast acquisition. While
statutory EBITDA was $183.6 million, underlying EBITDA before the costs resulting from the Federal Court action was
$214.0 million, a decrease of only 2% on the previous year. This result was achieved in a quietening market, but with sales
down only 10% to $1,313.1 million, demonstrating the strength of the Group’s consumable products focus and the
defensibility of its margins.
Operating cash flow before capital expenditure for the year was $217.6 million, an improvement of 80% over the previous
period. The improvement was driven by working capital reductions of $79 million and reductions in tax payments, however
the results included $26.7 million of cash costs relating to the Federal Court proceedings. Net capital expenditure was $96.7
million for the year, down from $131.9 million in the previous year.
Net debt levels decreased to $425.3 million from $442.8 in the previous year. The reduction in debt was achieved after
allowing for the Federal Court action costs of $26.7 million and the depreciation in the AUD against the USD during May and
June which resulted in an additional $28.8 million on translation of the Group’s USD denominated debt. The Group’s
gearing remains conservative at 2.0 times (net debt / EBITDA) and unchanged from the gearing level at the end of the
previous year.
In December 2012, the Group successfully commissioned a world class 20,000 tonne foundry in Xuzhou, China with the
foundry producing resources-related consumable products during the start-up production phase. This facility will be a
cornerstone for future growth.
Mining Products Division
The Mining Products Division supplies consumable wear products to the global mining industry. Products include ground
engaging tools (GET), Crawler System products for hydraulic mining excavators and electric rope shovels and wear
solutions for mining fixed plant equipment including plate, block, rubber and ceramic products. These are produced in the
Group’s manufacturing facilities in Australia, China, Canada, the USA and the UK. The Division also produces wear pipe
products and fabrications for customers in the northern oil sands region of Alberta, Canada and has foundry capacity in the
United Kingdom to serve the European markets.
A fall in commodity prices during the year led to a slowdown in capital and maintenance spending along with destocking in
Australia and global markets. Despite difficult market conditions, sales revenue of $413m was 4% higher than the prior year
and the gross margin increased from 33.1% to 34.1%.
Ground Engaging Tools global sales increased due to the uptake of the new range of GET products in both Australia and
overseas markets. The increase reflected the strong market penetration of the new product range as well as the fact that
although capital expenditure by miners slowed, production volumes were up on the previous year, which increased the
demand for the Division’s consumable mining products.
Crawler Systems sales increased, attributable to higher sales to Original Equipment Manufacturers’ (“OEM”) customers as
well as growth in direct aftermarket sales in Australia and Europe. The lower prices for mining commodities saw a reduction
in capital expenditure on new mining equipment that adversely impacted order intake and sales of Crawler System products
particularly in the second half.
The Fixed Plant business sales revenue was down with Australian sales reduced 14% due to lower capital project activity in
the Western Australia iron ore market and cutbacks in spending by major mining companies.
The Canadian Oil & Gas business sales were up 6% over F12 with a second half rebound in wear pipe sales and more
project work from the oil sands secured in 2H13.