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Broadspectrum Releases Half-Yearly Results; Up Almost 9% Upon Open

Broadspectrum Releases Half-Yearly Results; Up Almost 9% Upon Open
Feb 15, 2016 By Ben Khouri Tags: BRS

Broadspectrum Ltd (ASX:BRS) has released their half-yearly results, for the period ending 31st December 2015. The results highlighted improved earnings within the company’s Defence, Social & Property sector. However, the results also provided a contractionary insight into the company’s Infrastructure sector.

NPAT up 198%

For the half year ending 31st December 2015, reported revenue for the period was $1.8 billion, down 1.8% to the PCP. However, NPAT (Net Profit After Tax) was up 198%, when compared to the PCP, to $25 million. Underlying NPAT was recorded 54.2% higher than the previous interim period. The operating cash flow rose 61% to the PCP, to $43.5 million.

The company’s significant improvements in profit and cash flow was supported by ongoing growth in their Defence, Social & Property operations, with revenue increasing by 5%, to $818 million. Moreover, their Americas business reported a 48% increase in revenue, to $262 million.

On the contrary, they reported subdued earnings within their Infrastructure operations, with revenue falling 13%, to $447 million. The company recorded a 20% fall in revenue within their Resources and Industrial operations, to $335 million.

Broadspectrum partially attributes the declines in revenue within their Infrastructure and Resource and Industrial operations to the challenging macro-environment, along with a $15 million provision taken against Legacy telecommunications contract in New Zealand.

$200 Million Contract with AGL

The company announced a multitude of contracts over the period. Particularly within the utilities, transport and water sub-sectors. Namely, a $200 million contract with AGL, for the Transfield Worley Power Services JV, in order to provide services at Loy Yang A power station.

Furthermore, the company had also announced a $170 million contract with Queensland Urban Utilities for Utility Water Solutions (Their JV with Downer), to deliver electrical, civil and mechanical maintenance services.

19% Reduction in Debt

Over the period, the company had managed to reduce their debt by 19%, to $460 million (down from $569 million). The company also improved its leverage ratio to 1.7x, in line with their target range between 1.5x-2.0x.
As at the 31st December 2015, Cash and Cash equivalents were at $239.1 million, down 3% to the PCP.

Outlook

For FY16, the company expects to deliver Underlying EBITDA between $280-300 million. Furthermore, they remain optimistic for FY17, with Underlying EBITDA expecting to be in excess of $300 million.

Net Debt is expected to further decline to between $370-390 million by 30th June 2016. Along with expecting to generate free cash in excess of $100 million in FY17.

Share Performance

As at 10.13am (AEDT), BRS has surged almost 9% upon open, to $1.16.  

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Ben Khouri Author: Ben Khouri Feb 15, 2016

Ben Khouri is a financial editor for Wise-Owl with a particular focus on the top ASX 300 companies. Having a vast background in economics and finance, Ben provides financial commentary & analysis as well as global market updates, which guide investors in devising investment strategies. Ben specialises in analysing economic data and global events from around the world and examines the impacts they have on the major equity markets.

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