UXC LIMITED
The Directors of UXC Limited are pleased to announce the financial results of the company for the year ended 30 June 2015 and the financial position as at that date.
Includes in UXC's results release are the following documents:
the Appendix 4E;
the financial statements for the year ended 30 June 2015; and
the Appendix 4G.
FY15 financial summary | ||
Earnings before interest, tax, depreciation & amortisation (EBITDA)* | $42.1m | ↑28% |
Net profit before tax (PBT)* | $29.9m | ↑36% |
Net profit after tax (NPAT)* | $23.1m | ↑47% |
Earnings Per Share (EPS)* | 7.0c | ↑41% |
Full Year Dividend (Final dividend 3.6c) | 5.3c | ↑41% |
Return on Equity | 9.9% | ↑36% |
Revenue | $686m | ↑7% |
* from continuing operations
Dividend
The Directors have declared a final dividend of 3.6 cents per share, fully franked, bringing the total full year dividend to 5.3 cents per share. This represents a 79% payout ratio based on net profit after tax attributable to members.
In light of the Directors' confidence in the future earnings capacity of the company, the Directors have considered UXC's dividend policy and have increased the range of the payout ratio based on net profit after tax from continuing operations from 60‐75% to 60‐80%.
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Summary of FY15 highlights
Strong organic growth ‐ organic PBT was strong with a full year increase of 18‐23% with a very pleasing 2H15 PBT improvement over 2H14 of 27%.
Record revenue - FY15 revenue was a record for UXC at $686m. The strategic shift away from lower margin product and licence revenues impacted overall organic revenue (up marginally at
1.3%) for the full year and increased by 2.7% in the second half. The mix of revenue is now more aligned to higher margin services and solutions. This shift not only provides greater margin potential, but the focus on providing clients with high quality managed services with annuity revenue streams is also improving customer relevancy. Many of these wins were in transition periods in May to June and as such did not contribute revenue or earnings for the period but will support the growth expectations of FY16 and beyond.
Increasing annuity revenues - annuity revenues increased by 13%. Major wins in the annuity managed services area of our business have further validated UXC's strategy of being able to win and deliver end to end solutions and build scale in selected high growth markets.
Strategic shift in business mix - the change in business mix has continued to change to higher quality services and annuity revenue, improving the quality of earnings and margin potential. Annuity services now represent 29% of the UXC portfolio.
Success in North America ‐ the North American business continues to grow with revenues currently $68m and the winning of key "brands", especially in the retail sector, continues to increase our confidence in this market.
Market leader in emerging technologies ‐ emerging digital and cloud based solutions have formed a greater component of our business in the second half, with over 50 such solutions being marketed by UXC. Whilst revenue from these emerging technologies currently comprises around
10% of our revenue, it is expected to grow significantly in FY16 and beyond.
Successful acquisitions ‐ the successful full integration of the FY15 acquisitions has seen both UXC Saltbush and contiigo perform above our expectations, with UXC Saltbush in particular having accelerated growth in servicing the buoyant information and cyber security market.
Key accounts focus - our focus on key accounts is showing good returns with strong support from these clients by way of increased business and contract renewals. 47% of UXC's revenues come from our top 50 accounts. Additionally we have won another 19 new customers who spent over
$1m in the year and 4 of these new accounts have spent over $5m.
Strong cash flow and debt reduction ‐ the clear strategy and disciplined execution of our plan is driving cash flows, debt reduction and improved returns. The balance sheet reflects a $3.0m cash surplus at 30 June 2015 compared to a net debt position of $4.2m in the prior year.
Improved banking facilities ‐ increased flexibility and improved commercial terms.
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Outlook
We are very encouraged by the FY15 result especially the second half performance. The strength of the back log of business, coupled with the impact of the recently won contracts, positions us strongly for FY16 and beyond. We remain confident in achieving our FY16 targets, while recognising the historical strong weighting of earnings to the second half, reflecting the nature of the business and market.
This confidence is based on having 53% of our full year FY16 revenue already confirmed through annuity contracts and the contracted backlog of orders. We are also encouraged by a number of large opportunities we are well positioned to win in Q1FY16.
Further gains are expected in North America based on UXC's growing confidence in this market, the support of Microsoft in the Retail market and the track record of winning large scale AX projects in that region.
Given the number of new large contracts won in Q4FY15 and July 2015, significant focus will be placed on disciplined transition programs and the conversion of these contracts into profitable revenue flows. Additionally, the conversion of identified large new business opportunities, for which UXC is shortlisted, provides even greater confidence in achieving a strong FY16 outcome.
Disciplined delivery of the back log of orders, continuing vigilance in operational management, particularly around utilisation and project delivery, will remain key drivers of improving gross margin.
FY16 will see further and material rationalisation of some of the current back office and support functions that can, over time, be streamlined to provide a more effective and lower cost support structure.
We need to continue to attend to the core margin drivers of managing costs and improving utilisation. We will continue to improve the quality of earnings by further changing the business mix away from lower margin products and licences and focusing on services, particularly those that provide greater annuity revenues and greater value to clients. We have made strong progress in effecting this change to date and will continue with our increased focus on our larger and key clients.
In summary, the strong FY15 result validates UXC's strategy to build scale in selected higher growth markets and is beginning to deliver the anticipated returns for shareholders. We have made strong progress in changing the business mix to higher quality services, building annuity revenues that are improving our customer relevancy and quality of earnings.
We are winning larger scale contracts, both in the ERP applications market and in the annuity managed services and infrastructure areas. These wins provide a growing confidence that customers value UXC solutions and the pragmatic outcomes delivered. The strength of these contracts should provide a boost to FY16 revenue and earnings.
We have started the FY16 year well with a strong July performance ahead of our budget targets and the prior year's July result.
We believe our evolving strategic approach and plan is solid, whilst being aware of the need to focus on effective execution and exercising caution with our investments. Our goal is to continue to improve sustainable earnings growth into the future while continuing to invest to achieve our medium term strategic goals of building UXC into an even more robust and sustainable leader in the market.
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Dividend Reinvestment Plan
The Dividend Reinvestment Plan will participate in the final dividend. Shareholders who wish to reinvest their dividend in UXC shares, who have not already elected to do so, need to ensure their Dividend Reinvestment Plan election notice is received by the UXC registry, Link Market Services, by
14 September 2015. An election notice variation form is available on the UXC web site at:
http://www.uxc.com.au/home/Investors/reinvestment.html
UXC also announces that in accordance with Dividend Reinvestment Plan Rule 5.2, the reinvestment price will be the arithmetic volume weighted average market price of all share sold in the ordinary course of trading on the ASX Limited automated trading system during the 5 days immediately prior to the record date, 11 September 2015, rounded to the nearest full cent. No additional discount will be available.
Key Dates for Final Dividend
Ex‐dividend date: Wednesday, 9 September 2015 Record date: Friday, 11 September 2015 Last DRP election date: Monday, 14 September 2015 Dividend payment date: Tuesday, 6 October 2015
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For more information please contact:
Mr Cris Nicolli Managing Director UXC Limited
(613) 9224 5777
Ms Iona MacPherson
Chief Financial Officer & Company Secretary
UXC Limited
(613) 9224 5777
Toll free shareholder information line:
1800 092 092
www.uxc.com.au
ABOUT UXC LIMITED
UXC Limited is an S&P/ASX 300 listed Australian business solutions company, and the largest Australian owned ICT consultancy firm. UXC services medium to large entities in the private and public sectors across Australia and New Zealand, Canada, USA and has operations in Asia.
UXC provides a range of unique, unmatched and formidable ICT Solutions in Consulting, Business Applications and Infrastructure that support our customers to plan & design, implement & enhance, and operate & manage their ICT requirements.
UXC strives to create simplicity and meaning in a complex and disruptive world through the power of people and technology, by being the leading Tier 1 Australian IT Services and Solutions Company, delivering value, innovation and responsive business outcomes with excellent people.
This announcement contains certain forward-looking statements with respect to the financial condition, results of operations and business of UXC Limited ("UXC") and certain plans and objectives of the management of UXC. Forward-looking statements can generally be identified by the use of words such as 'project', 'believe', 'foresee', 'plan', 'expect', 'aim', 'potential', 'goal', 'target',
'intend', 'anticipate', 'believe', 'estimate', 'may', 'could', 'should', 'will' or similar expressions. All such forward looking statements involve known and unknown risks, significant uncertainties, assumptions, contingencies and other factors, many of which are outside the control of UXC, which may cause the actual results or performance of UXC to be materially different from any future
results or performance expressed or implied by such forward looking statements. Such forward-looking statements speak only as of the date of this announcement. Factors that could cause actual results or performance to differ materially include without limitation the following: risks and uncertainties associated with the Australian and global economic environment and capital market
conditions, fluctuations in foreign currency exchange and interest rates, competition, UXC's relationships with, and the financial condition of, its suppliers and customers, or legislative changes, or regulatory changes or other changes in the laws which affect UXC's business. The foregoing list of important factors is not exhaustive. There can be no assurance that actual outcomes will
not differ materially from these statements. Readers should not place undue reliance on forward looking statements. Except as required by law and ASX Listing Rules, UXC undertakes no obligation to update publicly or otherwise revise any forward looking statement as a result of new information, future events or other factors.
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