ADZ adsteam marine limited

today's announcement , page-4

  1. 6,389 Posts.
    re: today's announcement (2) SALE OF NON CORE ASSETS AND RESTRUCTURING COSTS

    Non core operations and assets not directly complementary to Adsteam's core ship assist business will be sold.

    They include the 50% investment in North American based ocean barging and fuel distribution company, Northland Holdings, fuel bunkering businesses in Australia and overseas, and an investment in a
    stevedoring business in Australia.

    The asset sales will be conducted in an orderly manner, with Mr Moller adding, "We intend to set up a process to achieve appropriate value for the business with the proceeds to be used to retire debt."

    Complementary ship services such as lines and mooring, deep sea services, salvage and tug barging will be retained, as will our investment in Flinders Ports.

    The company will write down A$64m in goodwill and provide A$24m for restructuring costs as a result of the operational review this financial year. The restructuring is expected to deliver recurring cost savings of A$3m in 2003/04 rising to A$10m in 2004/05.

    DEBT REDUCTION

    Mr Moller said paying down the Group's debt to a more appropriate level in a relatively flat operating environment was a clear priority for the Group.

    "The strength of the Group's cash flows and the nature of the business allows us to service reasonably high debt levels. Our target is to achieve an interest coverage ratio (EBITA / interest expense)
    of at least 3.0x in the medium term compared to 2.1x currently," he said. "We have presented the business plan to our bankers and they support our strategies."

    Earnings outlook

    Adsteam's results for the current 2002/03 financial year will include the effects of write offs and provisions detailed today. The underlying performance of core operating businesses in Australia and the UK will be similar to that of last year. Operating performance in
    the US business continues to disappoint. Therefore earnings for the six months ending 30 June 2003 prior to write offs will be around A$10m.

    "The impact of these measures will result in negative retained earnings for the Group at June 2003," Mr Moller said.

    "At this early stage, we expect operating earnings for 2003/04 to be slightly higher than the expected 2002/03 earnings. The substantial positive impact on operating profits arising from the operational
    review, start to kick in during 2004/05," he said.

    DIVIDENDS

    Mr Corlett said shareholder dividends are a major priority going forward. "Our intention is to place the company in a position to pay reliable dividends to our shareholders reflecting the underlying operating performance of the business.

    "However, as a consequence of the substantial write downs to be effected during the current financial year, Adsteam Marine will have negative retained earnings and therefore cannot pay a final dividend this year.

    "Notwithstanding this, the Board recognises the importance of dividends to its shareholders and remains committed to resuming dividend payments in 2004."

    It is the Board's current intention, subject to there being no unforeseen circumstances, to declare a dividend in February 2004, to be paid in April 2004. We expect this dividend to be fully franked.

    The policy for the 2003/04 interim and future dividends is for thecompany to pay approximately 50% of NPAT by way of dividends. This policy will be reviewed once the company's interest cover target of at least 3.0x is achieved (expected at the end of 2004/05).

 
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