TIDMBATE
RNS Number : 8870O
Bateman Engineering N.V.
16 March 2009
Bateman Engineering N.V.
("Bateman Engineering" or "the Company")
Half year results for the six months ended 31 December 2008
The Board of Bateman Engineering announces the consolidated financial results
for the six months ended 31 December 2008.
Financial Summary (US$m)
+--------------------------------------------------------+----------+-----------+
| | December | December |
| | 2008 | 2007 |
+--------------------------------------------------------+----------+-----------+
| Revenue | 243.8 | 295.8 |
+--------------------------------------------------------+----------+-----------+
| Results from operating activities | (42.3) | 7.6 |
+--------------------------------------------------------+----------+-----------+
| (Loss)/profit before tax | (37.9) | 11.6 |
+--------------------------------------------------------+----------+-----------+
| (Loss)/profit for the period attributable to equity | (40.0) | 9.8 |
| holders of the parent | | |
+--------------------------------------------------------+----------+-----------+
| Net cash (utilised)/generated from operating | (41.9) | 57.0 |
| activities | | |
+--------------------------------------------------------+----------+-----------+
| Net cash and cash equivalents at end of the period | 50.3 | 126.4 |
+--------------------------------------------------------+----------+-----------+
| Shareholders' equity after minorities | 71.0 | 118.7 |
+--------------------------------------------------------+----------+-----------+
Results were affected by a number of noteworthy items including:
* US$33.4m provision for costs to complete problematic legacy projects
* US$6.2m provision for bad debts
* US$4.8m interest charge on unwinding costs related to acquisitions
* US$7.5m goodwill impairment charge
Operational highlights:
* Full senior management team and operating structures in place
* Balanced order book with less emphasis on pure LSTK projects
* Globally focused technology expertise and focused centers of excellence
* Good prospects in specific regions, technologies and commodities
Rick Menell, Chairman of Bateman Engineering said:
"While it is expected that the Company will continue to face a difficult
trading environment in the second half of this financial year, the Board is
confident that the provisions for losses it has made in these half year results
are realistic.
"With the recent appointments to its senior management, the Company now has its
full management team in place and this is expected to considerably strengthen
the leadership of the Company and its performance going forward.
"The board has been approached by its largest shareholder, Global Minerals B.V.
to consider delisting the company from the AIM market of the London Stock
Exchange. Global Minerals B.V. further requested that an EGM be called at which
shareholders can vote on a resolution for the companies delisting. A circular
and notice of EGM to all shareholders will be issued as soon as practical."
Eddie du Rand, Chief Executive Officer of Bateman Engineering, said:
"We are confident that the strategic actions taken since the start of this
financial year and the continued focus on costs and operational excellence will
ensure that the Group is well positioned during these difficult times and,
importantly, is ready to take advantage of the anticipated recovery of the
natural resources market."
16 March 2008
ENQUIRIES:
+---------------------------------------+--------------------------------+
| Bateman Engineering | Tel: +31 (0) 20 502 2370 |
+---------------------------------------+--------------------------------+
| Eddie du Rand, CEO | |
+---------------------------------------+--------------------------------+
| Philippe Monier, CFO (designate) | |
+---------------------------------------+--------------------------------+
| | |
+---------------------------------------+--------------------------------+
| Shore Capital and Corporate Limited | Tel: +44 (0) 20 7408 4090 |
+---------------------------------------+--------------------------------+
| Christian Littlewood | |
+---------------------------------------+--------------------------------+
| Edward Mansfield | |
+---------------------------------------+--------------------------------+
| | |
+---------------------------------------+--------------------------------+
| College Hill | Tel: +44 (0) 20 7457 2020 |
+---------------------------------------+--------------------------------+
| Mark Garraway | |
+---------------------------------------+--------------------------------+
| Adam Aljewicz | |
+---------------------------------------+--------------------------------+
Copies of this press release, together with a presentation to analysts and
investors, can be downloaded in pdf format from the Bateman Engineering website
at www.BatemanEngineering.com or is otherwise available from Amsteldijk 166,
1079LH Amsterdam, The Netherlands.
NOTE FOR EDITORS:
Bateman Engineering is a technology-driven engineering-project house serving the
minerals and metals industries worldwide. Bateman Engineering's shares (BATE.L)
are traded on AIM, a market of the London Stock Exchange.
Chairman's Statement
Overview
The past six months continued to be challenging for the Bateman Engineering
Group ("the Group") with stressed world markets as well as ongoing close out
problems on legacy lump-sum turnkey ("LSTK") projects. However, the Board
anticipates that these projects will be substantially completed by June 2009 and
that the strategic measures now in place, focusing on project execution and
greater alignment between the individual business units, should avoid a repeat
of these problems on future projects.
Safety, Health and the Environment
Whilst the Bateman Engineering Projects and Bateman Engineered Technologies SBUs
achieved excellent safety results over the period with major safety milestones
achieved on both Zambia's Lumwana Copper and Madagascar's Ambatovy Nickel
projects, we regret to report one fatality at the Bateman Mineral Recovery SBU's
Mashila Metal Recovery site in South Africa. The Group remains committed to
improving the safety, health and environment of its employees and contractors.
Human Capital
As a technologically-driven engineering-project house, Bateman Engineering is
reliant on the intellectual capital in the business. Due to the downturn in the
economic market, emphasis has been placed on various strategic initiatives to
help ensure the future sustainability of the Group, including rightsizing the
organisation so that resource capacity is in line with changed market
conditions. A priority of these measures has been to ensure that critical skills
remain available to the Group.
Technology
Bateman Engineering's position as a leading project house in the natural
resources sector is underpinned by its capability to offer differentiated,
project-specific process technology solutions. A focused initiative to broaden
the process technology portfolio of the Group and improve the effectiveness of
technology commercialisation is in place, with a number of global Centres of
Excellence to develop, nurture and licence proprietary process technology.
Corporate Governance
Bateman Engineering is committed to high standards of corporate governance,
complying substantially with the principles and best practices of the Dutch
corporate governance code (the Tabaksblat Code) and the provisions set out for
AIM companies published by the Quoted Companies Alliance.
Outlook
While it is expected that the Company will continue to face a difficult trading
environment in the second half of this financial year, the Board is confident
that the provisions for losses it has made in these half year results are
realistic.
With the recent appointments to its senior management, the Company now has its
full management team in place and this is expected to considerably strengthen
the leadership of the Company and its performance going forward.
The board has been approached by its largest shareholder, Global Minerals B.V.
to consider delisting the company from the AIM market of the London Stock
Exchange. Global Minerals B.V. further requested that an EGM be called at which
shareholders can vote on a resolution for the companies delisting. A circular
and notice of EGM to all shareholders will be issued as soon as practical.
RICK MENELL
Chairman
16 March 2009
Chief Executive Officer's Report
Introduction
On 16 December 2008 the Group released a trading update notifying shareholders
that the changed macro-economic environment had led to markedly more difficult
trading conditions, particularly in the minerals and metals sector. The economic
downturn and the continued focus on closing out the remaining four legacy LSTK
projects have resulted in the Group reporting an operating loss of US$42m for
the six months ended 31 December 2008. The total additional provision made for
these three contracts during the period amounted to US$33m. These figures are
in line with the previous announcements.
Trading Environment
Global financial market conditions have severely impacted the natural resource
sector with lower demand for commodities and limited funding available for
projects. For the minerals and metals sector, project deferrals, delays and
cancellations have been the order of the day, while the Mining Houses come to
grips with the changed market conditions. There are still opportunities in
certain regions and commodities, with prospects in gold, coal, uranium and iron
ore being dominant. Clients are also taking this opportunity to invest more in
upfront studies and position themselves for capital investment once there is a
clearer direction in the global finance and commodity markets.
Operational Review
Bateman Engineering Projects (BEP)
BEP has experienced a reduction in its order book in the Sub-Saharan and
Australia regions, while the outlook for the Commonwealth of Independent States
("CIS") and Indian regions remains positive. BEP's structure enables skills and
experience residing in Sub-Saharan Africa and Australia to provide significant
input into future CIS and Indian projects over the medium term. BEP continues
to focus on providing global technology and know how with local execution
capability, with an emphasis on securing reimbursable and hybrid work. The
legacy LSTK contracts covered in previous reports remain challenging and
continue to be closely monitored. It is anticipated that these projects will be
substantially completed by the end of the financial year.
Bateman Engineered Technologies (BET)
Performance for the period ending 31 December 2008 has been positive, with
significant demand experienced in the power and energy sector within South
Africa. The recently-acquired Delkor group is integrating well and synergies
are being driven.
Bateman Mineral Recovery (BMR)
The significant decline in ferrochrome prices has led to many of the producers
worldwide having shut down all or some of their production capacity, resulting
in a significant reduction in revenue for BMR. BMR has placed a number of its
plants on care and maintenance and has cost initiatives underway to further
reduce ongoing costs.
The Group has undertaken a review of all of its operational units in light of
the current economic climate. A reduction in the Group headcount has taken
place in specific regions and operational units. The Group will continue to
ensure that it is appropriately sized to match the demand in the various regions
in which it operates and tightly manages its requirements for working capital.
Management Appointments
In line with the revised operating structure announced last year, key executive
appointments have been made. Philippe Monier has been appointed as Chief
Financial Officer (designate) and brings a wealth of experience gained in the
international natural resources sector. Pieter du Plessis has been appointed as
Chief Executive Officer of the BEP strategic business unit ("SBU") and will be
responsible for this SBU globally, driving operational efficiencies and
synergies. Arnold Matthee, Chief Executive Officer of the BET SBU, together with
Philippe Monier will be nominated to the Board as Executive Directors at an
extraordinary general meeting to be held in June 2009.
Outlook
Looking forward, the legacy LSTK contracts should be substantially completed by
the end of this financial year. The risk in the order book has been reduced with
a more balanced portfolio of reimbursable and hybrid versus pure LSTK contracts.
The Group's focus on technology (and in particular in pyrotechnology - both DC
and AC furnaces) is showing results. We are confident that the strategic actions
taken since the start of the financial year and the continued focus on costs and
operational excellence will ensure that the Group is well positioned during
these difficult times and, importantly, is ready to take advantage of the
inevitable recovery of the natural resources market.
EDDIE DU RAND
Chief Executive Officer
16 March 2009
Chief Financial Officer's Report
Overview
The Group's unaudited half year consolidated results to 31 December 2008 reflect
the effects of the current difficult trading conditions within the industry and
the financial consequences of the closing out actions on problematic legacy LSTK
projects.
The results include the following noteworthy items, totalling US$51.9m,
consistent with the trading update issued on 16 December 2008:
* US$33.4m provision for costs to complete legacy problematic projects in the BEP
strategic business unit,
* US$6.2m provision for bad debts,
* US$4.8m interest charge on unwinding costs related to acquisitions, and
* US$7.5m goodwill impairment charge.
After accounting for these items, the Group posted a consolidated loss after tax
of US$40m for the first half of the 2009 fiscal year. Management believes it
has acted prudently in the review of the Group's financial position.
As of 31 December 2008, the Group's consolidated net asset value amounted to
US$71m and showed a positive cash balance of US$50m.
Financial Performance
Bateman Engineering Projects (BEP)
+-------------------------+--------------------+---------------------+
| | December 2008 | December 2007 |
+-------------------------+--------------------+---------------------+
| Revenue | 177 | 244 |
+-------------------------+--------------------+---------------------+
| (Loss)/Profit before | (23) | 8 |
| tax | | |
+-------------------------+--------------------+---------------------+
| (Loss)/Profit before | (12.7%) | 3.5% |
| tax margin | | |
+-------------------------+--------------------+---------------------+
The BEP Strategic Business Unit came under severe strain for the first six
months mainly due to the legacy projects being worked out.
Bateman Engineered Technologies (BET)
+-------------------------+--------------------+---------------------+
| | December 2008 | December 2007 |
+-------------------------+--------------------+---------------------+
| Revenue | 128 | 108 |
+-------------------------+--------------------+---------------------+
| Profit before tax | 5 | 5 |
+-------------------------+--------------------+---------------------+
| Profit before tax | 3.6% | 4.5% |
| margin | | |
+-------------------------+--------------------+---------------------+
BET experienced favourable trading conditions. BET is benefiting from the
sustained demand in the power related business through the provision of bulk
material handling solutions to this sector.
Bateman Mineral Recovery (BMR)
+-------------------------+--------------------+---------------------+
| | December 2008 | December 2007 |
+-------------------------+--------------------+---------------------+
| Revenue | 5 | 10 |
+-------------------------+--------------------+---------------------+
| (Loss)/Profit before | (6) | 1 |
| tax | | |
+-------------------------+--------------------+---------------------+
| (Loss)/Profit before | (128.5%) | 13.7% |
| tax margin | | |
+-------------------------+--------------------+---------------------+
BMR's business faced adverse trading conditions in the first six months of the
fiscal 2009 year, mainly as a result of the impact of low commodity prices
(especially ferrochrome) on its clients. Currently, it is not viable to operate
at full production on certain dumps and some clients have requested BMR to place
some of its toll facilities on care and maintenance.
Order Book
The Group's order book has declined from US$360m as at 30 June 2008 to US$306m
at 31 December 2008. The fall was due to a combination of an unfavourable
external environment and the Group's move away from pure LSTK projects. The
order book nonetheless provides forward visibility for the balance of the
financial year.
Cash Flow and Financing Requirements
Liquidity and cash management are a key focus for management in the changed
trading environment. Management is closely monitoring its debtors' book and
ensuring that payments due are collected on a timely basis to minimise the risk
of bad debt.
Outlook
The Group has had a very difficult six months of trading; however, the Group's
recent focus on energy related sectors such as coal materials handling and
uranium is expected to bolster the order book by the fiscal year end, especially
in the Southern African region. The Group's current rightsizing effort will
reduce the Group's cost structure and better position it for the future.
PIETER DU PLESSIS
Chief Financial Officer
16 March 2009
Consolidated income statement
These condensed consolidated interim financial statements are unaudited
+---------------------------------------------------+--+--------------+--+--------------+
| | | December | | December |
+---------------------------------------------------+--+--------------+--+--------------+
| | | 2008 | | 2007 |
+---------------------------------------------------+--+--------------+--+--------------+
| | | US$'000 | | US$'000 |
+---------------------------------------------------+--+--------------+--+--------------+
| | | | | |
+---------------------------------------------------+--+--------------+--+--------------+
| Revenue | | 243,773 | | 295,818 |
+---------------------------------------------------+--+--------------+--+--------------+
| Cost of revenue | | (241,645) | | (266,794) |
+---------------------------------------------------+--+--------------+--+--------------+
| | | | | |
+---------------------------------------------------+--+--------------+--+--------------+
| Gross profit | | 2,128 | | 29,024 |
+---------------------------------------------------+--+--------------+--+--------------+
| Other income | | 605 | | 660 |
+---------------------------------------------------+--+--------------+--+--------------+
| Selling, general and administrative expenses | | (36,210) | | (21,980) |
+---------------------------------------------------+--+--------------+--+--------------+
| Other expenses | | (8,821) | | (73) |
+---------------------------------------------------+--+--------------+--+--------------+
| | | | | |
+---------------------------------------------------+--+--------------+--+--------------+
| Result from operating activities | | (42,298) | | 7,631 |
+---------------------------------------------------+--+--------------+--+--------------+
| Net finance income | | 4,354 | | 3,992 |
+---------------------------------------------------+--+--------------+--+--------------+
| | | | | |
+---------------------------------------------------+--+--------------+--+--------------+
| (Loss)/profit before tax | | (37,944) | | 11,623 |
+---------------------------------------------------+--+--------------+--+--------------+
| Income tax expense | | (2,054) | | (1,743) |
+---------------------------------------------------+--+--------------+--+--------------+
| | | | | |
+---------------------------------------------------+--+--------------+--+--------------+
| (Loss)/profit for the period | | (39,998) | | 9,880 |
+---------------------------------------------------+--+--------------+--+--------------+
| | | | | |
+---------------------------------------------------+--+--------------+--+--------------+
| Attributable to: | | | | |
+---------------------------------------------------+--+--------------+--+--------------+
| Equity holders of the parent | | (40,027) | | 9,792 |
+---------------------------------------------------+--+--------------+--+--------------+
| Minority interests | | 29 | | 88 |
+---------------------------------------------------+--+--------------+--+--------------+
| | | | | |
+---------------------------------------------------+--+--------------+--+--------------+
| | | (39,998) | | 9,880 |
+---------------------------------------------------+--+--------------+--+--------------+
| | | | | |
+---------------------------------------------------+--+--------------+--+--------------+
| | | | | |
+---------------------------------------------------+--+--------------+--+--------------+
| | | US cents | | US cents |
+---------------------------------------------------+--+--------------+--+--------------+
| Earnings per share | | | | |
+---------------------------------------------------+--+--------------+--+--------------+
| | | | | |
+---------------------------------------------------+--+--------------+--+--------------+
| (Loss)/ Earnings from continuing operations | | | | |
+---------------------------------------------------+--+--------------+--+--------------+
| Basic | | (94.90) | | 23.54 |
+---------------------------------------------------+--+--------------+--+--------------+
| Diluted | | (94.90) | | 22.74 |
+---------------------------------------------------+--+--------------+--+--------------+
Consolidated balance sheet
These condensed consolidated interim financial statements are unaudited
+-----------------------------------------------+--+---------------+--+---------------+
| | | December | | June |
+-----------------------------------------------+--+---------------+--+---------------+
| | | 2008 | | 2008 |
+-----------------------------------------------+--+---------------+--+---------------+
| | | US$'000 | | US$'000 |
+-----------------------------------------------+--+---------------+--+---------------+
| ASSETS | | | | |
+-----------------------------------------------+--+---------------+--+---------------+
| | | | | |
+-----------------------------------------------+--+---------------+--+---------------+
| Intangible assets | | 43,280 | | 53,780 |
+-----------------------------------------------+--+---------------+--+---------------+
| Property, plant and equipment | | 20,758 | | 18,046 |
+-----------------------------------------------+--+---------------+--+---------------+
| Investment in equity accounted investees | | 62 | | 62 |
+-----------------------------------------------+--+---------------+--+---------------+
| Loans to equity accounted investees | | 209 | | 2,668 |
+-----------------------------------------------+--+---------------+--+---------------+
| Other investments | | 314 | | 261 |
+-----------------------------------------------+--+---------------+--+---------------+
| Non current receivables | | 2,446 | | 2,847 |
+-----------------------------------------------+--+---------------+--+---------------+
| Finance lease asset - non current portion | | 9,269 | | 11,470 |
+-----------------------------------------------+--+---------------+--+---------------+
| Receivable from controlling shareholder | | 5,325 | | 5,190 |
+-----------------------------------------------+--+---------------+--+---------------+
| Deferred taxation | | 4,598 | | 5,506 |
+-----------------------------------------------+--+---------------+--+---------------+
| | | | | |
+-----------------------------------------------+--+---------------+--+---------------+
| Non current assets | | 86,261 | | 99,830 |
+-----------------------------------------------+--+---------------+--+---------------+
| | | | | |
+-----------------------------------------------+--+---------------+--+---------------+
| Construction and engineering contracts in | | 50,497 | | 34,008 |
| progress | | | | |
+-----------------------------------------------+--+---------------+--+---------------+
| Inventories | | 4,449 | | 5,323 |
+-----------------------------------------------+--+---------------+--+---------------+
| Trade and other receivables | | 117,540 | | 141,617 |
+-----------------------------------------------+--+---------------+--+---------------+
| Finance lease asset - current term portion | | 2,748 | | 3,042 |
+-----------------------------------------------+--+---------------+--+---------------+
| Interest receivable | | 10 | | 287 |
+-----------------------------------------------+--+---------------+--+---------------+
| Income tax receivable | | 4,768 | | 2,971 |
+-----------------------------------------------+--+---------------+--+---------------+
| Cash and cash equivalents | | 53,918 | | 132,430 |
+-----------------------------------------------+--+---------------+--+---------------+
| | | | | |
+-----------------------------------------------+--+---------------+--+---------------+
| Current assets | | 233,930 | | 319,678 |
+-----------------------------------------------+--+---------------+--+---------------+
| | | | | |
+-----------------------------------------------+--+---------------+--+---------------+
| Total assets | | 320,191 | | 419,508 |
+-----------------------------------------------+--+---------------+--+---------------+
| | | | | |
+-----------------------------------------------+--+---------------+--+---------------+
| EQUITY AND LIABILITIES | | | | |
+-----------------------------------------------+--+---------------+--+---------------+
| | | | | |
+-----------------------------------------------+--+---------------+--+---------------+
| Issued capital | | 680 | | 671 |
+-----------------------------------------------+--+---------------+--+---------------+
| Share premium | | 95,419 | | 95,071 |
+-----------------------------------------------+--+---------------+--+---------------+
| Foreign currency translation reserve | | (17,676) | | (6,804) |
+-----------------------------------------------+--+---------------+--+---------------+
| Accumulated (loss)/ profits | | (7,541) | | 31,997 |
+-----------------------------------------------+--+---------------+--+---------------+
| | | | | |
+-----------------------------------------------+--+---------------+--+---------------+
| Equity attributable to equity holders of the | | 70,882 | | 120,935 |
| parent | | | | |
+-----------------------------------------------+--+---------------+--+---------------+
| Minority interests | | 145 | | 137 |
+-----------------------------------------------+--+---------------+--+---------------+
| | | | | |
+-----------------------------------------------+--+---------------+--+---------------+
| Total equity | | 71,027 | | 121,072 |
+-----------------------------------------------+--+---------------+--+---------------+
| | | | | |
+-----------------------------------------------+--+---------------+--+---------------+
| Non - current liabilities | | 7,103 | | 20,501 |
+-----------------------------------------------+--+---------------+--+---------------+
| Deferred taxation | | 1,217 | | 838 |
+-----------------------------------------------+--+---------------+--+---------------+
| | | | | |
+-----------------------------------------------+--+---------------+--+---------------+
| Non-current liabilities | | 8,320 | | 21,339 |
+-----------------------------------------------+--+---------------+--+---------------+
| | | | | |
+-----------------------------------------------+--+---------------+--+---------------+
| Construction and engineering contract | | 110,644 | | 106,608 |
| liabilities | | | | |
+-----------------------------------------------+--+---------------+--+---------------+
| Trade payables, other payables and accruals | | 123,503 | | 164,101 |
+-----------------------------------------------+--+---------------+--+---------------+
| Income tax payable | | 3,034 | | 3,968 |
+-----------------------------------------------+--+---------------+--+---------------+
| Bank overdrafts | | 3,663 | | 2,420 |
+-----------------------------------------------+--+---------------+--+---------------+
| | | | | |
+-----------------------------------------------+--+---------------+--+---------------+
| Current liabilities | | 240,844 | | 277,097 |
+-----------------------------------------------+--+---------------+--+---------------+
| | | | | |
+-----------------------------------------------+--+---------------+--+---------------+
| Total liabilities | | 249,164 | | 298,436 |
+-----------------------------------------------+--+---------------+--+---------------+
| | | | | |
+-----------------------------------------------+--+---------------+--+---------------+
| Total equity and liabilities | | 320,191 | | 419,508 |
+-----------------------------------------------+--+---------------+--+---------------+
Consolidated statement of changes in capital and reserves
These condensed consolidated interim financial statements are unaudited
+--------------------------+---------+-----------+-------------+-------------+-------------+----------+------------+
| | Attributable to equity holders of the | | Minority | Total |
| | parent | | | |
+--------------------------+-------------------------------------------------+-------------+----------+------------+
| | | | Interest | Equity |
| | | | | |
+--------------------------+-------------------------------------------------+-------------+----------+------------+
| | | | Foreign | | | | |
+--------------------------+---------+-----------+-------------+-------------+-------------+----------+------------+
| | | | Currency | Accumulated | | | |
| | | | | | | | |
+--------------------------+---------+-----------+-------------+-------------+-------------+----------+------------+
| | Issued | Share | Translation | Profits/ | | | |
| | | | | | | | |
+--------------------------+---------+-----------+-------------+-------------+-------------+----------+------------+
| | Capital | Premium | Reserve | (Losses) | Total | | |
| | | | | | | | |
+--------------------------+---------+-----------+-------------+-------------+-------------+----------+------------+
| | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 | US$'000 |
+--------------------------+---------+-----------+-------------+-------------+-------------+----------+------------+
| Balance at 30 June 2007 | 563 | 94,861 | (2,375) | 17,869 | 110,918 | - | 110,918 |
+--------------------------+---------+-----------+-------------+-------------+-------------+----------+------------+
| Revaluation of issued | 54 | | | | 54 | | 54 |
| capital | | | | | | | |
+--------------------------+---------+-----------+-------------+-------------+-------------+----------+------------+
| Foreign exchange | - | - | 634 | - | 634 | ( 1) | 633 |
| translation | | | | | | | |
+--------------------------+---------+-----------+-------------+-------------+-------------+----------+------------+
| Total income and | 54 | - | 634 | - | 688 | ( 1) | 687 |
| expense | | | | | | | |
| recognised directly in | | | | | | | |
| equity | | | | | | | |
+--------------------------+---------+-----------+-------------+-------------+-------------+----------+------------+
| Result for the period | - | - | - | 9,792 | 9,792 | 88 | 9,880 |
+--------------------------+---------+-----------+-------------+-------------+-------------+----------+------------+
| Total recognised income | 54 | - | 634 | 9,792 | 10,480 | 87 | 10,567 |
| and | | | | | | | |
| expense | | | | | | | |
+--------------------------+---------+-----------+-------------+-------------+-------------+----------+------------+
| Shares taken up in | 4 | 190 | - | - | 194 | - | 194 |
| Employee Share Ownership | | | | | | | |
| Plan | | | | | | | |
+--------------------------+---------+-----------+-------------+-------------+-------------+----------+------------+
| Share based payment | - | - | - | 1,222 | 1,222 | - | 1,222 |
+--------------------------+---------+-----------+-------------+-------------+-------------+----------+------------+
| Dividends paid | - | - | - | (4,176) | (4,176) | - | (4,176) |
+--------------------------+---------+-----------+-------------+-------------+-------------+----------+------------+
| Balance at 31 December | 621 | 95,051 | (1,741) | 24,707 | 118,638 | 87 | 118,725 |
| 2007 | | | | | | | |
+--------------------------+---------+-----------+-------------+-------------+-------------+----------+------------+
| Revaluation of issued | 47 | | | | 47 | - | 47 |
| capital | | | | | | | |
+--------------------------+---------+-----------+-------------+-------------+-------------+----------+------------+
| Foreign exchange | | - | (5,063) | - | (5,063) | (6) | (5,069) |
| translation | | | | | | | |
+--------------------------+---------+-----------+-------------+-------------+-------------+----------+------------+
| Total income and expense | 47 | - | (5,063) | - | (5,016) | (6) | (5,022) |
| recognised directly in | | | | | | | |
| equity | | | | | | | |
+--------------------------+---------+-----------+-------------+-------------+-------------+----------+------------+
| Result for the period | | | | 6,459 | 6,459 | 56 | 6,515 |
+--------------------------+---------+-----------+-------------+-------------+-------------+----------+------------+
| Total recognised income | 47 | - | (5,063) | 6,459 | 1,443 | 50 | 1,493 |
| and expense | | | | | | | |
+--------------------------+---------+-----------+-------------+-------------+-------------+----------+------------+
| Shares taken up in | 3 | 20 | - | - | 23 | - | 23 |
| Employee Share Ownership | | | | | | | |
| Plan | | | | | | | |
+--------------------------+---------+-----------+-------------+-------------+-------------+----------+------------+
| Share based payment | - | - | - | 831 | 831 | - | 831 |
+--------------------------+---------+-----------+-------------+-------------+-------------+----------+------------+
| Balance at 30 June | 671 | 95,071 | (6,804) | 31,997 | 120,935 | 137 | 121,072 |
| 2008 | | | | | | | |
+--------------------------+---------+-----------+-------------+-------------+-------------+----------+------------+
| Foreign exchange | - | - | (10,872) | (51) | (10,923) | (21) | (10,944) |
| translation | | | | | | | |
+--------------------------+---------+-----------+-------------+-------------+-------------+----------+------------+
| Total income and expense | - | - | (10,872) | (51) | (10,923) | ( 21) | (10,944) |
| recognised directly in | | | | | | | |
| equity | | | | | | | |
+--------------------------+---------+-----------+-------------+-------------+-------------+----------+------------+
| Result for the period | | | | (40,027) | (40,027) | 29 | (39,998) |
+--------------------------+---------+-----------+-------------+-------------+-------------+----------+------------+
| Total recognised income | - | - | (10,872) | (40,078) | (50,950) | 8 | (50,942) |
| and expense | | | | | | | |
+--------------------------+---------+-----------+-------------+-------------+-------------+----------+------------+
| Shares taken up in | 9 | 348 | - | - | 357 | - | 357 |
| Employee | | | | | | | |
| Share Ownership Plan | | | | | | | |
+--------------------------+---------+-----------+-------------+-------------+-------------+----------+------------+
| Share based payment | - | - | - | 540 | 540 | - | 540 |
+--------------------------+---------+-----------+-------------+-------------+-------------+----------+------------+
| Balance at 31 December | 680 | 95,419 | (17,676) | (7,541) | 70,882 | 145 | 71,027 |
| 2008 | | | | | | | |
+--------------------------+---------+-----------+-------------+-------------+-------------+----------+------------+
Consolidated cash flow statement
These condensed consolidated interim financial statements are unaudited
+------------------------------------------------+--------+------------+--+------------+
| | | December | | December |
| | | 2008 | | 2007 |
+------------------------------------------------+--------+------------+--+------------+
| | | US$'000 | | US$'000 |
+------------------------------------------------+--------+------------+--+------------+
| Cash flows from operating activities | | | | |
+------------------------------------------------+--------+------------+--+------------+
| | | | | |
+------------------------------------------------+--------+------------+--+------------+
| Result from operating activities - continuing | | (42,298) | | 7,631 |
| operations | | | | |
+------------------------------------------------+--------+------------+--+------------+
| Non-cash adjustments | | 25,064 | | 5,024 |
+------------------------------------------------+--------+------------+--+------------+
| Changes in operating assets | | 8,708 | | (49,676) |
+------------------------------------------------+--------+------------+--+------------+
| Changes in operating liabilities | | (32,918) | | 90,307 |
+------------------------------------------------+--------+------------+--+------------+
| Net finance income | | 3,686 | | 3,909 |
+------------------------------------------------+--------+------------+--+------------+
| Income tax paid | | (4,171) | | (190) |
+------------------------------------------------+--------+------------+--+------------+
| | | | | |
+------------------------------------------------+--------+------------+--+------------+
| Net cash (utilised ) / generated from | | (41,929) | | 57,005 |
| operating activities | | | | |
+------------------------------------------------+--------+------------+--+------------+
| | | | | |
+------------------------------------------------+--------+------------+--+------------+
| Cash flows from investing activities | | | | |
+------------------------------------------------+--------+------------+--+------------+
| | | | | |
+------------------------------------------------+--------+------------+--+------------+
| Property, plant and equipment purchased net | | | | (4,559) |
| additions | | (5,063) | | |
+------------------------------------------------+--------+------------+--+------------+
| Other investments purchased | | (56) | | - |
+------------------------------------------------+--------+------------+--+------------+
| Proceeds on disposal of other investments | | 6 | | - |
+------------------------------------------------+--------+------------+--+------------+
| Subsidiary (acquired) disposed | | (23,481) | | (16,343) |
+------------------------------------------------+--------+------------+--+------------+
| (Increase) Decrease in loans to equity | | (15) | | 73 |
| accounted investees | | | | |
+------------------------------------------------+--------+------------+--+------------+
| | | | | |
+------------------------------------------------+--------+------------+--+------------+
| Net cash utilised in investing activities | | (28,609) | | (20,829) |
+------------------------------------------------+--------+------------+--+------------+
| | | | | |
+------------------------------------------------+--------+------------+--+------------+
| Cash flows from financing activities | | | | |
+------------------------------------------------+--------+------------+--+------------+
| | | | | |
+------------------------------------------------+--------+------------+--+------------+
| Proceeds from long-term liabilities | | 618 | | 560 |
+------------------------------------------------+--------+------------+--+------------+
| Share capital taken up in Employee Share | | 357 | | 194 |
| Ownership Plan | | | | |
+------------------------------------------------+--------+------------+--+------------+
| Advances of long term receivable | | (296) | | (1,018) |
+------------------------------------------------+--------+------------+--+------------+
| Finance lease receivable repayments | | 1,080 | | 484 |
+------------------------------------------------+--------+------------+--+------------+
| Dividends paid | | - | | (4,176) |
+------------------------------------------------+--------+------------+--+------------+
| | | | | |
+------------------------------------------------+--------+------------+--+------------+
| Net cash generated / (utilised) from financing | | 1,759 | | (3,956) |
| activities | | | | |
+------------------------------------------------+--------+------------+--+------------+
| | | | | |
+------------------------------------------------+--------+------------+--+------------+
| (Decrease)/increase in cash and cash | | (68,779) | | 32,220 |
| equivalents | | | | |
+------------------------------------------------+--------+------------+--+------------+
| | | | | |
+------------------------------------------------+--------+------------+--+------------+
| Cash and cash equivalents at the beginning of | | 130,010 | | 93,370 |
| the year | | | | |
+------------------------------------------------+--------+------------+--+------------+
| | | | | |
+------------------------------------------------+--------+------------+--+------------+
| Exchange losses on cash and bank overdrafts | | (10,976) | | (866) |
+------------------------------------------------+--------+------------+--+------------+
| | | | | |
+------------------------------------------------+--------+------------+--+------------+
| Net cash acquired in subsidiaries | | - | | 1,658 |
+------------------------------------------------+--------+------------+--+------------+
| | | | | |
+------------------------------------------------+--------+------------+--+------------+
| Net cash and cash equivalents at end of the | | 50,255 | | 126,382 |
| period | | | | |
+------------------------------------------------+--------+------------+--+------------+
Notes to the consolidated half year financial statements
('000)
1. Reporting entity
Bateman Engineering N.V. ("Company") is a company domiciled in the Netherlands.
The condensed consolidated interim financial statements of the Company as at and
for the six months ended
31 December 2008 comprise the Company and its
subsidiaries (together referred to as the "Group") and the Group's interests in
equity accounted investees and jointly controlled entities.
The consolidated financial statements of the Group as at and for the year ended
30 June 2008 are available upon request from the Company's registered office
at Rivierstaete Building, Amsteldijk 166, 1079 LH, Amsterdam, The Netherlands or
at web site address: www.BatemanEngineering.com.
2. Statement of compliance
These condensed consolidated interim financial statements have been prepared in
accordance with International Financial Reporting Standard (IFRS) IAS 34 Interim
Financial Reporting. They do not include all of the information required for
full annual financial statements, and should be read in conjunction with the
consolidated financial statements of the Group as at and for the year ended 30
June 2008.
These condensed consolidated interim financial statements were approved by the
Board of Directors on
12 March 2009.
3. Significant accounting policies
The accounting policies applied by the Group in these condensed consolidated
financial statements are the same as those applied by the Group in its
consolidated financial statements as at and for the year ended 30 June 2008.
4. Estimates
The preparation of interim financial statements requires management to make
judgements, estimates and assumptions that affect the application of accounting
policies and the reported amounts of assets and liabilities, income and expense.
Actual results may differ from these estimates.
In preparing these condensed consolidated interim financial statements, the
significant judgements made by management in applying the Group's accounting
policies and the key sources of estimation uncertainty were influenced by the
global financial crisis. Management consider their estimates to be reasonable
and prudent taking into account current economic conditions.
5. Financial risk management
The Group's financial risk management objectives and policies are consistent
with those disclosed in the consolidated financial statements as at and for the
year ended 30 June 2008.
6. Segment reporting
For the six months ended 31 December 2008 (US$'000):
+---------------------+-------------+--+--------------+--+-----------+--+--------------+--+------------+
| 2008 |
+------------------------------------------------------------------------------------------------------+
| | Bateman | | Bateman | | Bateman | | Corporate, | | Total |
| |Engineering | | Engineered | | Mineral | | Other & | | |
| | Projects | |Technologies | | Recovery | |Eliminations | | |
+---------------------+-------------+--+--------------+--+-----------+--+--------------+--+------------+
| Income Statement | | | | | | | | | |
+---------------------+-------------+--+--------------+--+-----------+--+--------------+--+------------+
| Revenue | | | | | | | | | |
+---------------------+-------------+--+--------------+--+-----------+--+--------------+--+------------+
| External sales | 153,193 | | 85,984 | | 4,596 | | - | | 243,773 |
+---------------------+-------------+--+--------------+--+-----------+--+--------------+--+------------+
| Inter-segment sales | 24,305 | | 41,517 | | - | | (65,822) | | - |
+---------------------+-------------+--+--------------+--+-----------+--+--------------+--+------------+
| Total revenue | 177,498 | | 127,501 | | 4,596 | | (65,822) | | 243,773 |
| | | | | | | | | | |
+---------------------+-------------+--+--------------+--+-----------+--+--------------+--+------------+
| | | | | | | | | | |
+---------------------+-------------+--+--------------+--+-----------+--+--------------+--+------------+
| Result | | | | | | | | | |
+---------------------+-------------+--+--------------+--+-----------+--+--------------+--+------------+
| Segment Result | (26,961) | | 5,030 | | (7,072) | | (13,295) | | (42,298) |
+---------------------+-------------+--+--------------+--+-----------+--+--------------+--+------------+
| Net Finance Income | 4,355 | | (441) | | 1,166 | | (726) | | 4,354 |
+---------------------+-------------+--+--------------+--+-----------+--+--------------+--+------------+
| (Loss)/Profit | (22,606) | | 4,589 | | (5,906) | | (14,021) | | (37,944) |
| before income tax | | | | | | | | | |
+---------------------+-------------+--+--------------+--+-----------+--+--------------+--+------------+
| | | | | | | | | | |
+---------------------+-------------+--+--------------+--+-----------+--+--------------+--+------------+
| Income tax expense | | | | | | | | | (2,054) |
+---------------------+-------------+--+--------------+--+-----------+--+--------------+--+------------+
| | | | | | | | | | |
+---------------------+-------------+--+--------------+--+-----------+--+--------------+--+------------+
| Loss for the period | | | | | | | | | (39,998) |
+---------------------+-------------+--+--------------+--+-----------+--+--------------+--+------------+
| | | | | | | | | | |
+---------------------+-------------+--+--------------+--+-----------+--+--------------+--+------------+
| | | | | | | | | | |
+---------------------+-------------+--+--------------+--+-----------+--+--------------+--+------------+
| 2007 |
+------------------------------------------------------------------------------------------------------+
| | Bateman | | Bateman | | Bateman | | Corporate, | | Total |
| |Engineering | | Engineered | | Mineral | | Other & | | |
| | Projects | |Technologies | | Recovery | |Eliminations | | |
+---------------------+-------------+--+--------------+--+-----------+--+--------------+--+------------+
| Income Statement | | | | | | | | | |
+---------------------+-------------+--+--------------+--+-----------+--+--------------+--+------------+
| Revenue | | | | | | | | | |
+---------------------+-------------+--+--------------+--+-----------+--+--------------+--+------------+
| External sales | 222,035 | | 63,749 | | 10,034 | | - | | 295,818 |
+---------------------+-------------+--+--------------+--+-----------+--+--------------+--+------------+
| Inter-segment sales | 21,914 | | 44,348 | | - | | (66,262) | | - |
+---------------------+-------------+--+--------------+--+-----------+--+--------------+--+------------+
| Total revenue | 243,949 | | 108,097 | | 10,034 | | (66,262) | | 295,818 |
+---------------------+-------------+--+--------------+--+-----------+--+--------------+--+------------+
| | | | | | | | | | |
+---------------------+-------------+--+--------------+--+-----------+--+--------------+--+------------+
| Result | | | | | | | | | |
+---------------------+-------------+--+--------------+--+-----------+--+--------------+--+------------+
| Segment Result | 7,419 | | 4,390 | | 1,241 | | (5,419) | | 7,631 |
+---------------------+-------------+--+--------------+--+-----------+--+--------------+--+------------+
| Net Finance Income | 987 | | 455 | | 137 | | 2,413 | | 3,992 |
+---------------------+-------------+--+--------------+--+-----------+--+--------------+--+------------+
| Profit before | 8,406 | | 4,845 | | 1,378 | | (3,006) | | 11,623 |
| income tax | | | | | | | | | |
+---------------------+-------------+--+--------------+--+-----------+--+--------------+--+------------+
| | | | | | | | | | |
+---------------------+-------------+--+--------------+--+-----------+--+--------------+--+------------+
| Income tax expense | | | | | | | | | (1,743) |
+---------------------+-------------+--+--------------+--+-----------+--+--------------+--+------------+
| | | | | | | | | | |
+---------------------+-------------+--+--------------+--+-----------+--+--------------+--+------------+
| Profit for the | | | | | | | | | 9,880 |
| period | | | | | | | | | |
+---------------------+-------------+--+--------------+--+-----------+--+--------------+--+------------+
| | | | | | | | | | |
+---------------------+-------------+--+--------------+--+-----------+--+--------------+--+------------+
The Group currently has three operating segments - Bateman Engineering Projects,
Bateman Engineered Technologies and Bateman Mineral Recovery. These segments are
the basis on which the Group reports its primary segment information.
Principal activities are:
+------------------------------+----------------------------------------------------+
| * Bateman Engineering | minerals and metals process engineering and |
| Projects | project management. |
+------------------------------+----------------------------------------------------+
| * Bateman Engineered | bulk-materials handling, environmental protection |
| Technologies | and water and effluent treatment. |
+------------------------------+----------------------------------------------------+
| * Bateman Mineral Recovery | recovery of minerals from slag dumps and waste |
| | streams. |
+------------------------------+----------------------------------------------------+
Segment information about the Group's continuing operations is presented above.
7. Income tax expense
Although the Group incurred a loss for the period, the Group still incurred a
tax charge for the period of US$2,054. This was as a result of profits being
earned in higher effective tax rate jurisdictions as opposed to losses being
made in lower effective tax rate jurisdictions.
8. Earnings per share
Earnings per share for the six months ended 31 December 2008 have been
calculated on the basis of loss for the period of US$40,027 (2007: US$9,792
profit) and the average number of shares in issue 42,178,191 (2007: 41,585,471).
Diluted earnings per share have been calculated on the basis
of 42,178,191 (2007: 43,061,943) shares. The potential dilutive effect of
certain share options has been disregarded due to the significant losses
incurred by the Group during the six months ended 31 December 2008.
9. Intangible assets
Intangible assets have decreased by US$10,500 to US$43,280 as a result of a
total impairment of goodwill of US$7,471. The following impairment losses were
charged to goodwill arising as a result of acquisitions:
* US$4,293 on Metplant Engineering Pty Ltd;
* US$1,921 on the Atoll group of companies; and
* US$1,257 on the Mining Process division of Intertech Trading Corporation.
During the period, intangible asset amortisation of US$1,247 has also been
charged to the income statement. Adjustments for earn-out payments and
subsequent movements in the expected purchase price, as well as exchange
differences make up the balance of the movement.
10. Property, plant and equipment
During the six months ended 31 December 2008, the Group acquired assets with a
cost of US$5,214.
Other assets disposed of during the six months ended 31 December 2008 resulted
in a profit on disposal of US$4, which is included in other income.
11. Dividends
No interim dividend will be recommended by the Group.
12. Senior management and director share incentive plan
The Company has three share option schemes for all key employees of the Group,
the pre IPO plan and the post IPO plan 2005 and 2006.
The pre IPO plan is a closed plan with no further options to be issued and all
options are fully vested. The exercise price under the pre IPO plan is 21.6 UK
pence. Under the post IPO plans the exercise price is equal to the average
closing price for the three days preceding the grant date.
Historical practice under the 2005 and 2006 post IPO option plans was that
three-quarters of the options granted to employees shall vest in half year
intervals over a three year period. One quarter of options granted to employees
shall vest in half year intervals over the fourth year.
Historical practice has been that the performance criteria under the 2005 and
2006 post IPO option plans are as follows: 50% will vest subject to continued
employment; and 50% will be subject to an EPS performance target whereby, in
order for the shares to vest, the Group shall obtain an annual EPS growth of at
least 10% (calculated on a cumulative basis).
Options are forfeited if the employee leaves the Group before the options vest.
13. Acquisition of subsidiaries
On 1 July 2008 Bateman Mineral Recovery SBU acquired the remaining 50% of the
shareholding in Jiggings Technologies LLC (USA) from its joint venture partner
for a consideration of US$1,700. Jiggings Technologies LLC (USA) is now a wholly
owned subsidiary of the Group and its financial statements have been fully
consolidated into the Group's results since the acquisition date. The
acquisition is not subject to any purchase price amendments.
The Group made no further acquisitions during the period.
During the 2008 financial year the Group made a number of acquisitions where a
portion of the acquisition price was structured on an earn-out basis which
included criteria such as the performance of the acquired entity and retention
of key management.
During the period the Group paid a further US$11,101 (AUD11,653) as part of the
acquisition price for Metplant Engineering Services Pty Ltd, acquired in July
2007. The total estimated purchase price is AUD33,171.
The Group also paid US$10,381 during the period as part of the acquisition price
for the Delkor group of companies acquired in April 2008. The total estimated
purchase price is US$21,475.
The third acquisition subject to an earn-out structure is the Mining Process
Division of Intertech Trading Corporation, acquired in September 2007. During
the period the Group paid US$300. The total estimated purchase price is
US$17,314.
The net present value of outstanding earn out payments have been raised as
liabilities on the Group's balance sheet.
14. Related Party Transactions
During the period, Group entities entered into the following trading
transactions with related parties that are not members of the Group:
+---------------------------------------+-------------+-----------+-----------------+
| | Project | Interest |Amounts Owed by |
| | Revenue | Received |Related parties |
+---------------------------------------+-------------+-----------+-----------------+
| Minority Shareholders in Bateman | 9 | - | - |
| Africa (Pty) Ltd | | | |
+---------------------------------------+-------------+-----------+-----------------+
| Global Minerals B.V | - | 135 | 5,325 |
+---------------------------------------+-------------+-----------+-----------------+
15. Exchange rates
The exchange rates used in converting the financial information from their
source currencies to the presentation currency are as follows:
+------------------+---------------+-------------------+-----------+-----------------+
| | 2008 | 2008 | 2007 | 2007 |
+------------------+---------------+-------------------+-----------+-----------------+
| Currency | half year end | average half year | half year | average half |
| | rate | end rate | end rate | year end rate |
+------------------+---------------+-------------------+-----------+-----------------+
| | | | | |
+------------------+---------------+-------------------+-----------+-----------------+
| ZAR to US$ | 9.4649 | 8.8718 | 6.8547 | 6.9566 |
+------------------+---------------+-------------------+-----------+-----------------+
| CHF to US$ | 1.0561 | 1.1153 | 1.1267 | 1.1732 |
+------------------+---------------+-------------------+-----------+-----------------+
| AUD to US$ | 1.4487 | 1.3094 | 1.1419 | 1.1529 |
+------------------+---------------+-------------------+-----------+-----------------+
| GBP to US$ | 0.6910 | 0.5830 | 0.5009 | 0.4921 |
+------------------+---------------+-------------------+-----------+-----------------+
| | | | | |
+------------------+---------------+-------------------+-----------+-----------------+
| EURO to US$ | 0.7095 | 0.7124 | 0.6794 | 0.7094 |
+------------------+---------------+-------------------+-----------+-----------------+
| INR to US$ | 49.7178 | 46.8839 | 39.4350 | 40.0184 |
+------------------+---------------+-------------------+-----------+-----------------+
16. Subsequent event
Subsequent to 31 December 2008, the Group determined that a rightsizing exercise
of the organisation would take place, which is currently in progress. The costs
related to this are not yet fully quantified but are expected to be fully
included in the full year results.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR GRGDXDDBGGCL
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