|Six months to 30 June 2011
|Six months to 30 June 2010
|EBITDA margin - %||58%||68%||(10%)|
|Income from operating activities||190||167||14%|
|Net income margin - %||24%||25%||(1%)|
|Cash generated from operating activities||390||
* Restated for change in accounting policy - under IAS 31 interests in joint ventures
Shift in delivery profile compared to 2010 leads to significant revenue increase
Revenue for the first half of 2011 was €527 million, a 35% increase on 2010 half year. This was driven by 29% higher separative work deliveries to our customers.
EBITDA increased by 16% to €306 million (2010: €264 million) mainly as the result of higher revenue and production cost savings, driven by further economies of scale. EBITDA margin at 58% was 10% lower than half year 2010. The main driver for this was a foreign exchange retranslation gain included in 2010 results (2010: €33 million).
Net income grew by 28% during the period (2011: €125 million; 2010: €98 million). This is higher than the growth in EBITDA (2011: €306 million; 2010 €264 million, an increase of 16%), in part as a result of gains on ineffective hedges (€7 million) during the first half of 2011. The net income margin at the half year was 24% (2010: 25%), impacted by higher depreciation costs.
The Group’s tax charge for the half year was €39.3 million (2010: €18.2 million), with an effective rate of 24% (2010: 16%).
The Group invested €334 million in new production capacity (2010: €368 million). The Group expects further new capacity to be added across Europe and in the United States.
Cash generation from operating activities was €390 million (2010: €357 million), an 8% increase, mainly as a result of the shift in customer deliveries. Tax paid in the period was €74 million (2010: €60 million), reducing net cash flow from operating activities to €316 million, a 6% increase on 2010.
Increase in production capacity of 4% across geographies since December 2010
URENCO continued capacity expansion at its European sites during the first half of 2011. This has added circa 500 t/SW of capacity, bringing the Group’s total amount to more than 13,500 tSW/a. This equates to a 4% increase from the start of 2011 (2010: 13,000 tSW/a). The Group expects that new capacity will be added during the second half of 2011.
Commissioning issues at URENCO’s US facility are still causing delays in bringing additional capacity online. URENCO continues to work with the US Nuclear Regulatory Commission (NRC) towards a resolution. Overall, the impact from URENCO’s US facility on the Group’s capacity has been mitigated by additional capacity in Europe, as well as URENCO’s flexible business model.
Order book remains strong at more than €20 billion extending out beyond 2025
URENCO’s order book remains strong, with only minimal impact seen as a result of the events in Japan and the nuclear phase-out in Germany. Currently, forward orders stand at more than €20 billion and extend beyond 2025. This strong visibility of future revenues successfully underpins URENCO’s strategy of growth through investment. URENCO continues to be a leading provider of enrichment services to the global nuclear power industry, maintaining a market share of around 27%*.
* internal calculation
Improved funding position following re-financing of revolving credit facilities at €750 million and extended European Investment Bank loan
URENCO’s liquidity position continues to be good, with significant forward cover from its committed funding facilities through into 2013. In the first half of 2011, the syndicated bank facility of €500 million maturing in 2012 was replaced with a new syndicated and a bilateral facility totalling €750 million, with a term out to 2016. In addition, €75 million was drawn down as part of the funding arrangements with the European Investment Bank (EIB).
Tails Management Facility (TMF) site preparation work completed and lead contract signed for construction services
Site preparation works have been completed in the first half of 2011 for the TMF, which will be built at URENCO’s UK site. Detailed design work continues. A contract has been signed for project management, design engineering, procurement and construction management services. A further contract has also been signed for the supply of core technology. It is anticipated that construction will begin in 2012, with operations due to commence in 2015.
The TMF is an important project for URENCO, as it will provide control over the cost of by-product and the ability to manage by-product in a responsible manner.
The TMF will comprise a UF6 by-product deconversion unit and a number of associated storage, maintenance and residue processing facilities. This supports URENCO’s long-term strategy for the management of by-product pending future re-use.
Japan earthquake and impact on nuclear generation in Japan and other countries will slow near term growth in deliveries
The effects of the earthquake and subsequent tsunami that took place in Japan earlier in 2011 are still being assessed in terms of impact on the global nuclear industry. URENCO has so far experienced minimal impact from the events that took place mainly as a result of URENCO’s flexibility of investment and geographical spread, however near term growth in customer deliveries will slow. The Group will continue to assess this impact and will monitor future capacity development.
The Group expects to deliver stable operational and financial results for 2011, with revenues expected to be slightly higher and EBITDA broadly in line with the 2010 full year results. Net income at the full year is expected to be lower than 2010. Operational cash flow will remain strong and continue to be a significant source of funds for the Group’s expansion programme. We expect to continue capacity expansion in the second half of 2011 in order to meet our customer commitments, which extend beyond 2025.
Helmut Engelbrecht, Chief Executive of the URENCO Group, commenting on the half-year results, said:
“URENCO’s operations continued to perform well in the first half of 2011, and capacity increased by 4%. Our financial results were also robust, with higher customer deliveries providing better performance compared to the same period last year.
“The consequences of the events in Japan are still unfolding and the final implications for the global nuclear industry are not yet fully understood. Although the impact on URENCO is minimal to date, we are aware that this will have implications for how we do business in the future. However, as URENCO has a flexible and robust business model, we are confident that the Group will continue to grow and remain strong both operationally and financially.
“We expect to continue capacity expansion in the second half of 2011 in order to meet our customer commitments, which extend beyond 2025.”
Name: Jayne Hallett
Title: Head of Group Communications
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