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Home > News > Corporate news > September 23rd, 2009
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September 23rd, 2009
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Trading update and Possible Disposal of Assets
Trading update
For the year ended 30 June 2009, Group revenue is expected to be circa US$760 million. The backlog as of 30 June 2009 was approximately US$735 million. This has since reduced mainly due to ongoing project execution, but also as a result of a suspended contract. Thus as of 31 August 2009 the Group’s backlog was approximately US$570 million.
The Board previously stated, with the publication of the Group’s half year results on 31 March 2009 that it was targeting a reported EBITDA (including exceptional items) at the breakeven level for the year ended 30 June 2009. The Board can confirm that it expects a reported EBITDA margin (including exceptional items) of between zero and minus one per cent for the full year.
This reflects an improvement in the second half performance of the financial year (1H 2008/09: reported EBITDA loss of US$10.2 million). The progress is a result of cost cutting and better project execution. Furthermore, Delta-T has effectively completed all legacy projects. The Group has now delivered six consecutive months of positive EBITDA (including exceptional items), although the Board is not satisfied with the Group’s overall level of financial performance.
Exceptional charges for the year ending 30 June 2009 are likely to be in the region of US$50 million before tax (1H 2008/09: US$34.5 million; FY 2007/08: US$88.2 million). Of these charges approximately US$25 million relates to operating exceptional charges (1H 2008/09: US$13.6 million; FY 2007/08: US$68.8 million) while the remaining US$25 million relates to non cash hedging and goodwill impairment charges (1H 2008/09: US$20.9 million; FY 2007/08: US$19.4 million).
While progress has been made on the major oil and gas legacy project in the Former Soviet Union, there is as yet no definitive agreement with the client over legacy and forecast cost overruns. Negotiations are continuing, although until successfully concluded, this matter presents an ongoing and significant risk to the Group‘s cash and overall financial position.
As of 30 June 2009 the Group had free cash (after restricted cash) of circa US$32 million (FY 2007/08: US$69.8 million), however, the Group’s gross debt position increased to approximately US$89 million (FY 2007/08: US$46.7 million). Our banks remain generally supportive as evidenced by the Group successfully gaining waivers for loan covenants that were in breach. The Group’s cash position is a critical focus for Management and the Board.
In this regard, a loan has been provided by Bateman Engineering N.V. a subsidiary of BSG Resources Ltd, the Group’s major shareholder. The loan is for US$5 million over a three-month period and relates to one of the potential sales as described under Possible Disposal of Assets below. Bateman Litwin’s directors, with the exception of Peter Blauw and David Granot, who are involved in the transaction as a related party, consider, having consulted with its nominated adviser, that the terms of the transaction are fair and reasonable insofar as its shareholders are concerned. Any sale transaction, if concluded, would be a related party transaction under AIM rules and would also be subject to a fairness opinion. In addition, the Group is in final negotiations to secure further short-term financing.
While Management and the Board remain focused on managing near term liquidity, the new business pipeline is showing an increase in enquiries and interest. The Group has seen a notable increase in the award of smaller feasibility and engineering studies, which Management and the Board believe is a sign of firming activity.
Possible Disposal of Assets
The Group is reviewing potential disposals of one or more parts of the business. To this extent, the Board has received several indicative proposals for various units of the business. Discussions are ongoing with a number of parties but there can be no guarantee that any divestment will result.
Bateman Litwin
David Lamont, Chief Executive Officer
Davis Larssen, Chief Financial Officer
Ingrid Boon, Investor Relations Manager
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Tel: + 44 (0)20 7799 8307 |
Credit Suisse Securities (Europe) Limited
Nominated adviser and joint broker
Jon Grussing
Will MacLaren
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Tel: +44 (0)20 7888 8888 |
Oriel Securities Limited
Joint broker
Richard Crawley |
Tel: +44 (0)20 7710 7600 |
About Bateman Litwin N.V.
Bateman Litwin is a supplier of technology, engineering, procurement and project management services to the world’s energy and resource industries. To find out more, visit Bateman Litwin at: www.bateman-litwin.com
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