Downer EDI Delivers Record Profit

Engineering services group, Downer EDI Limited (Downer EDI), today announced record levels of revenue and profit for the year ended 30 June 2005, its eighth consecutive year of improvement. The company lifted profit after tax by 28% to $104.0 million (2004: $81.5 million).

After tax profit of $104 million, up 28% Final ordinary dividend of 12 cents per share (franked to 70%) making total ordinary dividends for the year 18 cents per share, up 15% Good operating performance across all businesses with revenue of $3.8 billion, up 20% Our exposure to key growth sectors of energy, resources, rail and infrastructure underpins a favourable and sustainable outlook for Downer EDI over the next few years Revenue for the year was $3.8 billion (2004: $3.2 billion), a 19% increase. Of this amount core businesses delivered organic growth exceeding $570 million. Operating earnings (EBITA) increased by 20% to $188.6 million, reflecting record sales and reliable margins in core businesses.

The directors have declared a final ordinary dividend of 12.0 cents per share, payable 19 October 2005, with an increase in franking from 50% to 70%. An interim dividend of 6 cents per share, franked to 50%, was paid on 22 April 2005, bringing total dividends for the year to 18.0 cents per share, representing a 15% increase (2004: 15.6 cents per share).

The year's total ordinary dividends of $52.0 million represent a pay-out ratio of 50% of Downer EDI's net profit after tax. The Dividend Reinvestment Plan (DRP) will again apply providing shareholders with the opportunity to reinvest their dividends in Downer EDI at a discount to market.

Commenting on the result, Downer EDI Managing Director Stephen Gillies said: "This is our eighth successive year of earnings and profit increases, a record we are proud of. It was a year of further consolidating the strong market positions of our core businesses, improving the quality of earnings and maintaining a strong level of orders, particularly in the services area, providing sustainability of revenue.

"Whilst this year realised record sales, we also saw the highest number of employees working for the organisation, up 1,600 over the previous year, and it was pleasing to note that the increased level of personnel also coincided with a reduction in the Lost Time Injury Frequency Rate (LTIFR). For the first time as a total Group, the LTIFR fell below 2.5," Mr Gillies said.

"We have an underlying business prime exposure to the growth areas of transport, energy and infrastructure services. The outlook for these markets continues to be positive across all our operating businesses. Our core businesses delivered around $600 million of incremental revenue during the year, of which approximately 90% was organic, clearly demonstrating the healthy markets in which Downer EDI participates," Mr Gillies said.

"We continue to deliver stable and growing core earnings streams in operate and maintenance services now estimated to be 75% of our total revenue, to underpin the sustainability of our business," he said.

Mr Gillies said the significant increase in revenue and profit achieved was ahead of guidance provided at the half year. "Excluding a tax consolidation benefit of $10 million, reported NPAT was $94 million, up 15% and in line with market estimates.

"Net profit after tax equates to a basic earnings per share of 36.3 cents (last year 29.6 cents), an increase of 23%, underlying another healthy improvement in earnings per share year on year. Net debt was $340.8 million, in line with the company's minimum target levels.

"Significantly, we also delivered our third consecutive year of strong operating cash flow off the back of increased profitability year on year, with operating cash flow for the period at $186.0 million.

"This strong cash flow generation continues to help strengthen the composition of Downer EDI's balance sheet. While funds utilised in working capital increased by $62.5 million to $420.7 million during 2005 this was on the back of a $622 million increase in revenue. As a percentage of revenue, working capital has remained steady at 11%. Management remains focused on reductions in working capital to internally fund further growth," Mr Gillies said.

More details at Downer EDI