20
CIMIC Group Limited Annual Report 2016 |
Operating and Financial Review
FINANCIAL PERFORMANCE
(CONTINUED)
NET FINANCE COSTS
(CONTINUED)
The average cost of debt was 5.5% during the period, impacted by the higher cost of fixed rate US bonds and finance leases.
Average cost of debt calculation
$m
2016
Debt interest expenses (a)
(67.1)
Gross debt
18
1,167.2
Gross debt average (b)
1,224.0
Average cost of debt (-a/b)
5.5%
PROFIT BEFORE TAX
PBT was $740.4 million for FY16, an increase of 0.7%, or $5.4 million, compared to FY15. PBT margin was 6.8%, a 130 basis point increase
on FY15.
Profit before tax by segment
$m
2016
2015
chg. $
chg. %
Construction
595.5
649.2
(53.7)
(8.3)%
Mining & mineral processing
275.6
232.3
43.3
18.6%
Services
8.6
-
8.6
-
HLG
29.4
17.9
11.5
64.2%
Commercial & residential
(74.7)
70.5
(145.2)
(206.0)%
Corporate
(94.0)
(234.9)
140.9
(60.0)%
Profit before tax
740.4
735.0
5.4
0.7%
Construction margins have again increased, through the continued transformation of our business culture, including an improved risk
management and bidding approach, with stricter criteria for the on-boarding of projects. Construction PBT was $595.5 million for FY16, a
decrease of 8.3% or $53.7 million, compared with the 21.5% reduction in revenue.
Mining & mineral processing increased its contribution with expanded margins as a result of CIMIC’s strategy to diversify by commodity
and geography, achieved in part through the acquisition of Sedgman and further expansion into North and South American markets.
Mining & mineral processing PBT was $275.6 million for FY16, an increase of 18.6%, or $43.3 million
.
HLG PBT was $29.4 million for FY16, an increase of 64.2%, or $11.5 million.
Commercial & residential PBT was a $74.7 million loss for FY16, a decrease of $145.2 million. The decrease was in part a result of Devine
undertaking a strategic review of its business, as well as a much larger contribution from property development sales in FY15.
Corporate PBT was a $94.0 million loss for FY16, a decrease of 60.0%, or $140.9 million. Corporate PBT significantly improved due to
reduced finance costs, and an increased contribution from associates and joint ventures. One-off gains from the acquisition of Sedgman
and the divestment of Nextgen were partly offset by onerous leases (including the 177 Pacific Highway, North Sydney lease).
INCOME TAX
Income tax expense was $188.0 million for FY16, a decrease of 14.8%, or $32.6 million, compared to FY15.
The effective tax rate of 25.4% was largely impacted by refunds on overpayment of income taxes in prior years relating to the divestment
of the John Holland and Ventia businesses; a conservative approach was taken to estimating taxes due on these divestments. Also
impacting the effective tax rate are income tax differentials relating to profits and losses from the various jurisdictions in which the Group
operates.
NET PROFIT AFTER TAX
NPAT was $580.3 million for FY16, an increase of 11.5%, or $59.9 million, compared to FY15. The NPAT margin was 5.3%, a 140 basis
point increase on FY15.
Profit for the year (profit after tax and before minorities) was $552.4 million. Non-controlling interests were $27.9 million, attributable to
the share of the minority owners in Devine’s losses for the period.
EPS (basic) was 176.6 cents, an increase of 14.9% on FY15 (compared to an 11.5% increase on NPAT), as well as being boosted by the
benefits of the share buy-back.
18
Total interest bearing liabilities.
20
