Bradken Limited Annual Report 2015 - page 41

BRADKEN LIMITED ANNUAL REPORT 2015 l 6
DIRECTORS’ REPORT
Bradken Limited
Directors’ report (continued)
30 June 2015
Page 6
Bradken Limited
B. Review of operations
Operating and Financial Review
2015
2014
Change
NPAT
($241.3m)
$21.5m
EBITDA
$109.7m
$143.0m
(23%)
Underlying NPAT
$33.9m
$55.1m
(38%)
Underlying EBITDA
$136.1m
$173.3m
(21%)
Underlying EBITDA Margin
14.1%
15.3%
Sales Revenue
$965.9m
$1,135.2m
(15%)
Operating Cash Flow
$81.2m
$167.6m
(52%)
Underlying Earnings per Share
19.8 cents
32.4 cents
(39%)
Dividends per Share
Nil
26.0 cents
The Company recorded a net loss after tax for the year ended 30 June 2015 of $241.3 million. The loss included
adjustments for:
manufacturing restructure costs of $50.5 million,
impairment of property plant and equipment of $55.8 million,
impairment of intangibles of $167.2 million,
impairment of the investment in Austin Engineering of $36.0 million, and
gains on the sale of property of $26.6 million.
While unadjusted EBITDA was $109.7 million, underlying EBITDA before one-off costs was $136.1 million, a decrease of
21% on the previous year. This result was achieved in a challenging environment where mining companies were focused
on reducing expenditure. This resulted in pricing pressure and depressed demand for some of Bradken’s products,
especially capital products such as rail wagons. Bradken has responded to the market pressure with a restructuring
program to lower the Company’s cost base with the closure of high cost facilities and movement of products to lower cost
locations as well as substantial reductions in cash overheads.
Sales revenue reduced 15% as a result of lower sales of rail wagon products, sales to mining OEMs and energy products.
Margin percentages were largely retained as variable costs were reduced in line with volume decreases. The Company’s
base load of key product sales has remained steady over the last four years, which continues to demonstrate the strength of
the Company’s consumable products focus.
Key Outcomes
Sales revenue decreased 15% to $966 million due to lower mining capital sales.
Variable costs reduced in line with the sales decrease while cash overhead improvements of $25 million year-on-year
delivered an underlying EBITDA of $136 million.
An NPAT loss of $241 million was recorded after significant, but mainly non-cash, charges for restructuring and
impairment somewhat offset by sale of properties.
Restructuring was largely completed with the creation of a new division from four existing businesses, closure of high
cost subscale manufacturing facilities and write-down of assets in line with current market conditions.
Net debt including the RPS was $398 million at 30 June 2015 with gearing for covenant purposes reduced to 2.5x (Net
Debt / EBITDA).
The Directors did not declare a dividend to ensure maximum flexibility is maintained at the bottom of the current market
cycle.
Operational Restructure
In May 2015 the Australian based Industrial Business, the Rail Division and the GET and Crawler Systems Businesses
(formerly part of the Mining Products Division) were merged to form the new Mining & Transport Division. This consolidation
will enable more effective utilisation of shared resources in manufacturing, product development and sales. The Fixed Plant
business, also formerly part of the Mining Products Division, has been separated to form a new Division retaining the Fixed
Plant name. The Company’s Oil & Gas Business in Canada has been consolidated into the Fixed Plant Division in a move
that will see improved utilisation of like resources including manufacturing and sales. Similarly, management of the Metal
Recycling Business, previously under the Mineral Processing Division, has been transferred to the Cast Metal Services
Business.
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