Full Year 2015 Audited Financial Results

London – 3 March 2016 – URENCO Group (“URENCO” or “the Group”), an international supplier of uranium enrichment services and nuclear fuel cycle products, today announces its results for the full year ended 31 December 2015.

 
Summary
  • Strong financial results supported by current order book and favourable foreign exchange movements
  • Order book extending beyond 2025
  • Completion of the €4 billion capacity expansion programme in USA
  • Commercial operation of Tails Management Facility (TMF) is scheduled for 2017
  • Market conditions continue to remain challenging due to a build-up of worldwide inventories

 

Financial highlights
  2015
€m
2014
€m
Change
%
Revenue 1,842.2 1,612.0 14.3
EBITDA 1,167.3 1,070.8 9.0
EBITDA margin % 63.4% 66.4% (3.0)pp
Income from operating activities 664.6 652.9 1.8
Net income 452.1 404.5 11.8
Earnings per share 2.7 2.4 12.5
Capital expenditure(i) 517.4 537.1 (3.7)
Cash generated from operating activities 1,201.5 979.2 22.7

 

(i) Capital expenditure reflects investment in property, plant and equipment plus the prepayments in respect of fixed asset purchases for the period.

 

Dr Thomas Haeberle, Chief Executive of URENCO, commenting on the full year results, said:

“I am pleased to present my inaugural set of financial results for URENCO which show strong financial performance for 2015 against what continues to be an extremely challenging global enrichment market.

We expect pricing pressures to continue in the near term as we deliver on our existing orders. Developing our offer and range of services as well as building on our flexibility to deliver will be priorities in the coming years. We remain committed to being a reliable long-term partner to our customers.

I have joined the company at a key point in its development and have been immediately impressed by the skills and expertise of URENCO’s people. Our objective is to continue to achieve a high level of employee engagement and commitment.

URENCO is proud to be a key contributor to a low carbon environment and I look forward to meeting the challenges of a difficult enrichment market and leading URENCO to sustained long-term success.”

 

Financial Results

Revenue for the year ended 31 December 2015 was €1,842.2 million, compared to €1,612.0 million in 2014. This year-on-year increase of €230.2 million was due primarily to additional SWU revenue of €161.1 million and additional Uranium revenue of €48.3 million as a result of both higher volumes and higher average unit revenues driven by the favourable impact of foreign exchange movements.

EBITDA for 2015 increased by 9.0% to €1,167.3 million compared to last year (2014: €1,070.8 million) which was mainly due to the increased revenue. Overall, the performance of the underlying business was steady and broadly in line with management expectations. The EBITDA margin for 2015 of 63.4% (2014: 66.4%) was adversely impacted by increased costs following a periodic review of tails and decommissioning provisions.

Depreciation was €496.1 million in 2015 (2014: €417.9 million) reflecting a higher underlying charge for the USA operations as well as an adverse impact from foreign exchange movements.

The tax charge in 2015 decreased compared to last year by €35.7 million to €81.0 million (2014: €116.7 million) and the effective tax rate of the Group was reduced to 15.2% in 2015 from 22.4% in 2014. These movements in tax charge and effective tax rate are predominantly attributable to non-deductible and non-taxable items.

Net finance costs for 2015 were €131.5 million, compared to €131.7 million in 2014, with an increase in costs associated with the refinancing of debt being offset by a favourable impact from foreign exchange movements on cash flow hedges.

Net income increased to €452.1 million (2014: €404.5 million), corresponding to a net income margin of 24.5% (2014: 25.1%). This increase in net income was mainly due to increased EBITDA and lower income tax expense, partially offset by higher depreciation.

 

Cash flow 

Operating cash flows before movements in working capital amounted to €1,325.0 million (2014: €1,132.7 million) and cash generated from operating activities was €1,201.5 million (2014: €979.2 million) as a result of higher revenues partially offset by increased operating costs and adverse working capital movements.

Tax paid in the period was €121.7 million (2014: €145.7 million). Net cash flows from operating activities increased by 29.6% to €1,079.8 million (2014: €833.5 million).

The Group invested a total of €517.4 million in 2015 (2014: €537.1 million), reflecting the conclusion of our capacity expansion programme in the USA and the ongoing investment in TMF.

 

Capital structure and funding

Net debt increased to €2,827.5 million (2014: €2,774.0 million). The Group’s net debt to total asset ratio remained strong at 36% (2014: 38%) well within the Group’s target ratio of less than 60%.

In August 2015, URENCO issued €500 million in bonds with a coupon of 2.25%, which will mature in 2022. The proceeds have been used to manage future debt maturities, including a tender which resulted in a repurchase of part of the 4% Eurobonds due in May 2017. The nominal value of the repurchased bonds was €137.6 million.

During the year URENCO entered into €1.0 billion of cross currency swaps to convert the economic exposure of part of the Group’s debt from euros to US dollars.

The Company’s debt is rated by Moody’s (Baa1/Stable/P-2) and Standard & Poor’s (BBB+/Stable). In June 2015, URENCO announced that it was no longer retaining the services of Fitch.

In 2015 the final dividend for the year ended 31 December 2014 of €340.0 million was paid (dividend paid in 2014 for the year ended 31 December 2013: €340.0 million). The final dividend for 2015 of €350 million has been approved and will be paid to shareholders on 17 March 2016.

 

Outlook 

URENCO continues to have long term visibility of future revenues with an order book which extends beyond 2025. The value of URENCO’s order book at 31 December 2015 was approximately €16.6 billion based on €/$ of 1 : 1.09 (2014: approximately €15.8 billion based on €/$ of 1 : 1.30).

URENCO anticipates pricing pressures to continue in the near term due to the presence of excess inventories. It is possible that URENCO will experience ongoing challenges to profit margin in the coming years. However, URENCO is a company which takes a long-term view and continues to provide customers with the best possible service delivery and the highest level of quality and expertise.

 

Leadership

Sir John Hood KNZM, Chairman of the URENCO Board, reached the end of his original three year tenure in December 2014 and continued in his position as Chairman until 31 December 2015.

On 1 January 2016, Stephen Billingham was appointed Chairman of the URENCO Board. Stephen has been non-executive director of the company since 2009 and will be Chairman of the Board during 2016 whilst URENCO continues the search process for a long term successor to Sir John Hood.

Dr Thomas Haeberle took up the role of CEO on 1 January 2016 succeeding Helmut Engelbrecht who served as CEO from 2005 to 2015. Thomas previously served as President and CEO of Infracor GmbH, the key service provider of Marl Chemical Park and he has also served as President of Degussa's Methacrylates, Building Blocks and Industrial Chemicals Business Units. In 2009 he was appointed to the Board of Evonik Degussa GmbH and in 2011 to the Board of Evonik Industries AG.