Full Year 2011 Audited Financial Results

03/04/2012

Solid results, successful capacity expansion and strong order book

Highlights

• Increase in revenue by 3.4% to €1,302.4 million, in line with expectations
• Lower EBITDA and net income due to higher operating costs and substitution of Separative Work (SW) with lower margin feed sales
• Capacity expansion of 12% to more than 14,600 tSW/a to meet continued customer demand
• Strong order book, in excess of €20 billion extending beyond 2025
• Outlook: expected growth in output, revenue and earnings in 2012

Financial highlights

2011
€m
2010(i)
€m
% Increase/ (Decrease)
Revenue 1,302.4 1,259.4 3%
EBITDA 784.6 809.2 (3)%
Income from operating activities 525.7 590.5 (11)%
Net income 359.1 387.1 (7)%
Capital expenditure(ii) 752.0 798.5 (6)%
Cash generated from operations (before interest and tax) 902.8 858.2 5%
(i) The December 2010 results have been restated for a change in accounting policy under IAS 31 Interests and Joint Ventures
(ii) Capital expenditure reflects investment in property, plant and equipment plus the prepayments in resepect of fixed asset purchases this year

Operating results
The events in Japan and the global re-evaluation of nuclear power created a challenging and complex operating environment in 2011. URENCO reports a 3.4% rise in revenue for the year to €1,302.4 million (2010: €1,259.4 million). Income from operating activities is €525.7 million (2010: €590.5 million).

In 2011 all customer commitments continued to be met, fulfilling the terms of contracts established five or more years ago. For the year, the impact of Fukushima and the decision by the German government to phase out nuclear energy was limited.

EBITDA is slightly lower than 2010 at €784.6 million (2010: €809.2 million). This is due to higher operating costs as a result of some structural factors e.g. energy costs, as well as ongoing USA build-up costs when compared to 2010. In addition, the substitution of SWU with feed sales provided a lower margin than core SWU sales. Whilst EBITDA margins are down this year compared to 2010, they remain robust.

Net income for the year is €359.1 million (2010: €387.1 million). The reduction in net income is a consequence of reduced EBITDA and a higher depreciation charge due to newly installed capacity coming online, partly offset by a lower taxation charge.

The Group’s tax charge for the year was €101.2 million (2010: €134.6 million), with an effective rate of 22.0% (2010: 25.8%).

Capital investments and capacity expansion programmes
Capacity expansion continued at URENCO’s enrichment facilities in Germany, the Netherlands and USA during 2011, adding an additional 1,600 tSW/a of capacity. This brings the Group’s total capacity to more than 14,600 tSW/a, a 12% increase on 2010. The Group’s target to achieve 18,000 tSW/a by 2015 remains on track.

Commissioning issues at URENCO’s enrichment facility in the USA continued to cause delays in the year in bringing additional capacity online. However, progress is evident with additional cascades being brought online with increased efficiency. The impact from slower than planned progress in the USA has been mitigated by additional capacity in Europe.

In 2011, the benefits of the implementation of URENCO’s Enterprise Resource Planning SAP Platform across Europe were visible further optimising operations and strengthening cost control. Through this and other initiatives internal processes have been streamlined with operational efficiencies and administration of customer deliveries improved.

Strong underlying operating cash flow
Cash generated from operations was €902.8 million (2010: €858.2 million), a 5% increase. The major drivers for this are an increase in revenues, partly offset by an increase in other expenses, movements of year on year trade receivables and prepayments for fixed assets reported under cash flow from operating activities. Tax paid in the period was €117.0 million (2010: €142.2 million), with net cash flow from operating activities being €785.8 million, a 10% increase on 2010.

Leading market position and strong order book
Although national policy on nuclear energy varies greatly, with some nations choosing to phase out their nuclear power plants while others are choosing to focus on new build programmes, URENCO continues to benefit from a strong forward order book, diverse global customer base and leading market share. URENCO maintained its role as a leading supplier of enriched uranium to the worldwide nuclear power industry with a global market share of 29% .

URENCO’s order book stands in excess of €20 billion extending beyond 2025, providing clear long-term revenue visibility. Through its global operations, URENCO has the capacity to meet all of the commitments of its long-term order book, supplying an international customer base in the majority of global markets.

Investment funding
URENCO’s liquidity position continues to be good, with significant forward cover from its committed funding facilities through into 2014. This forward cover and strong cash generation from operations translates into a headroom in excess of €200 million. The syndicated bank facility of €500 million due to mature in 2012 has been replaced with facilities totalling €750 million, with a term out to 2016. In addition, €75 million has been drawn down as part of a funding facility with the European Investment Bank.

At the end of 2011, URENCO’s total committed borrowing facilities (which exclude the Commercial Paper Programme) were €2.9 billion.

URENCO is committed to operating to the highest standards of safety, environmental and security requirements and its operations are governed by strict regulatory regimes which provide high levels of safety for our workers, the environment and the general public. In 2011, the Group continued to focus on improving safety across its activities by setting ambitious safety goals, and ensuring that they are supported by management action and training.

Outlook
We remain confident in URENCO’s ability to provide enrichment services to the nuclear industry in a safe and timely manner, with an order book of more than €20 billion extending beyond 2025. This good visibility of future revenues successfully underpins URENCO’s strategy. We expect growth in output, revenue and earnings in 2012.

Helmut Engelbrecht, Chief Executive Officer of the URENCO Group, said:
“We were deeply saddened by the tragic accident involving Friso van Oranje, our Chief Financial Officer. Our thoughts have been very much with his family throughout this difficult time. Bart Le Blanc, Friso’s predecessor, has accepted the role of interim CFO.

During 2011, URENCO continued to meet commitments made to all customers and we are able to report an increase in revenue, market share and capacity for the year. I am proud to say that during a challenging year we were able to further expand capacities in order to meet our customer contractual commitments.

During a year of change, we have demonstrated the benefits of the responsive nature of our business model. The impact of events in Japan and the phase-out of reactors in Germany, whilst not without consequence for our financial performance, will only be a consideration in the short-term as opportunities in new markets begin to fill the gap. However, we will continue to monitor developments in the Japanese market. URENCO’s market position, order book, and revenue remain strong.

Centrifuge technology has proven to be the preferred technology for uranium enrichment. We therefore anticipate that the way we deliver our service will increasingly differentiate us from our competitors. We have made good progress this year in strengthening the service we provide, I gained great confidence from the comments in the recent independent customer survey which confirmed a strong reputation in the areas of quality and customer service; with customer relations scoring consistently high.”

Click here to download the full press release.

Contact:
Name: Jayne Hallett
Title: Head of Group Communications
Tel: +44 (0) 1753 660 660
Email: jayne.hallett@URENCO.com

Name: Andrew Mitchell / Carole Cable
Title: Brunswick Group
Tel: +44 (0) 207 7404 5959
Email: URENCO@brunswickgroup.com  

Virtual tour
Welcome to the URENCO Xperience, a virtual tour of our enrichment facilities.

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