Financial Review
Balance sheet
The group’s gearing1 at 31 December 2010 was 28.4 percent compared with 26.8 percent at 30 June 2010. The increase was due to investing activities, with the acquisition of Australian Construction Products in September, and the 14.9 percent shareholding in Crane Group Limited for $141 million in December. The gearing figure remains well below the target range of 40 to 50 percent. If the company is successful in acquiring 100 percent of Crane Group Limited on the revised terms, the gearing is expected to be approximately 34 percent.
Funding
The group had total available funding of $2,345 million as at 31 December 2010 of which approximately $1,002 million was undrawn, and cash on hand of $84 million. Bank debt facilities represented 51 percent of total available funding, US private placements 32 percent and capital notes 17 percent. Debt requiring refinancing within the next 12 months is $481 million. This includes $68 million of capital notes subject to interest rate and term reset, $111 million of expiring drawn facilities and $302 million of undrawn facilities. The bulk of the expiring facilities are syndicated bank facilities which may be refinanced.
Back to topDebt maturity
The average maturity of the debt of $1,343 million is 4.5 years and the currency split is 61 percent Australian dollar; 18 percent New Zealand dollar; 16 percent US dollar; 4 percent Euro; and 1 percent Pounds Sterling.
Back to topInterest rates
Approximately 85 percent of all borrowings have fixed interest rates with an average duration of 3.9 years and a rate of 7.6 percent. Inclusive of floating rate borrowings the average interest rate on the debt is currently 7.2 percent. All interest rates are inclusive of margins but not fees.
Interest coverage2 for the period was 5.6 times and the group remains in a sound financial position.
Back to topCashflow
Cashflow from operations was $202 million compared with $317 million in the first six months of the 2010 financial year. As foreshadowed at the start of the year, inventory levels were expanded during the period to ensure that group businesses are well positioned to respond to an upturn in activity levels. Operating cashflow was also impacted by increased residential land purchase settlements, and the utilisation of restructuring provisions.
Capital expenditure for the period was $148 million compared with $76 million in the prior corresponding period. Of this total, $74 million was for stay-in-business capital projects, $22 million was for new growth initiatives, and $52 million was for the acquisition of new businesses. Significant investments during the period included the acquisition of Australian Construction Products, and the expansion of the Laminex medium density fibreboard plant in Queensland.
In addition, a 14.9 percent shareholding in Crane Group Limited was acquired towards the end of the period for $141 million.
Back to topDividend
The interim dividend is 16 cents per share. In line with the recently announced dividend imputation and franking policy, the interim dividend will be fully franked for Australian tax purposes, but will not be imputed for New Zealand tax purposes. Consistent with the new policy, the final dividend is expected to be fully imputed. An assessment of further franking credit availability will be made at that time.
The dividend will be paid on 1 April 2011 to holders registered as at 5.00 pm Friday 4 March 2011 (NZT). The shares will be quoted on an ex dividend basis from 28 February 2011 on the ASX and 2 March 2011 on the NZX.
Back to topDividend reinvestment plan
In view of the group’s strong balance sheet and low level of gearing at present, the dividend reinvestment plan will not be operational for this dividend payment.
Back to topFinancial highlights
(unaudited)
1Interest bearing debt (including capital notes) to interest bearing debt (including capital notes) and equity
2 EBIT before unusual items to total interest paid including capital notes interest