CLOUGH EXPECTS TO RETURN TO PROFITABILITY IN SECOND HALF
Clough Limited (ASX: CLO) has reported an after tax loss of $4.9 million for the six months to December 31, 2002, compared with a net profit of $13.4 million in the previous corresponding period. This followed a sharp increase in tax to $7.1 million ($1.3 million previously) and full provisioning for unexpected project and commercial difficulties - as foreshadowed in the profit warning issued by the company’s Directors on November 11, 2002.
Profit before tax was $3.2 million (down 81.2%). EBITDA was $19.8 million (down 39.8%). Group turnover rose 70.6% to $591.1 million. Clough’s order book was $2.1 billion (up 33.7%) and work in hand was $1.1 billion (up 31.2%). An interim dividend of 0.5 cents per share, unfranked has been declared.
“We are reshaping the group. The changes which are being put in place are starting to produce positive results. With better management controls and the level of work in hand remaining high the company is expecting to return to profitability in the second half,” Dr Brian Hewitt, Managing Director of Clough Limited, said.
Dr Hewitt said Clough Limited’s balance sheet remains strong. Net operating cash flows for the half-year were $42.2 million (up 81.1%). Debt has been reduced significantly and the company has no net debt.
“The Clough group has had a tough 18 months. The profit performance has been unacceptable. There have been some hard lessons learnt. But the fundamentals of the company remain solid and following the actions which are being taken, I believe the tide is now turning and we are better positioned to grow the profitability of the company,” he said.
Following the announcement by the company on December 19, 2002 regarding Clough Board and management changes, an external executive placement group has been appointed to conduct a search for a new CEO for Clough Limited. This is well underway and the Board expects the process to be concluded within the next three to four months.
A range of commercial and operating initiatives have begun to be implemented during the six-month period. Major changes have been made to the management structure of two of the main operating divisions. This has included senior staff changes to project management teams on most of the company’s problem projects.
Other initiatives have included a review of the group-wide Risk Management Plan and continued roll-out of the new accounting, procurement and cost control system.
Dividend & DRP
The interim dividend will be paid to shareholders on April 4, 2003, with a closing date for entitlements of March 21, 2003. The dividend reinvestment plan will be continued, however with no discount to the market price. The Clough family will take their full entitlement in shares.
CLO Price at posting:
0.0¢ Sentiment: Hold Disclosure: Held
