Thank you for standing by, and welcome to the Austin Engineering Half Financial Year 2021 Results Presentation. All participants are in a listen only mode. There will be a presentation followed by a question and answer session. I would now like to hand the conference over
for year 2021. I'm Managing Director, Peter Forsyth, and I have our Chief Financial Officer, Sam Cookshank, with me today to run through our financial results in detail. We've had an eventful year, one of ups and downs, as like many companies, we're aware that the impacts of the COVID-nineteen pandemic and the subsequent economic impacts across the world. The underlying strength and resilience of Austin's business has seen us register a profit for the first half of the year, despite in particular the significant changes in the North and South American economies. We see the tide turning on demand for capital equipment in North America, particularly, following a number of orders received over the last 2 months And firmly stand behind our earnings guidance of underlying net profit after tax in excess of $9,000,000 We do understand a much improved second half is required to meet our guidance target.
However, our order book is currently at 90% of the revenue
in the coming half at $87,900,000 Our Asia Pacific revenue saw a lift of 24% of strong earnings performances in our Perth Indonesian operations because of a solid order book at the start of the year. North America revenue fell 58% in the period, which is really down to market confidence across our customers in light of COVID-nineteen risks, including the impact that the virus on certain commodities such as oil and political uncertainties leading up to the U. S. Election. Our perspective There were lots of miners waiting to see how the dust settles on some of these matters before committing, which had a big impact on revenues for the half.
What is encouraging is that we've really started to see a turnaround now in that key market in this new calendar year, which Peter will talk more on shortly. We had a 32% lift in EBITDA on improved efficiencies and geographical revenue mix. This included an unrealized foreign exchange loss on re measurement of a long term U. S. Dollar denominated receivable of $1,400,000 in Chile.
Our EBITDA margins were higher at 7.2% and our first half underlying NPAT from continuing operations was $1,500,000 We do need to run through the cash flows for the period. Recording negative operating cash flows for the first half, it's quite a drop from the corresponding period last year when we were cash flow positive. It's really due to those lower half earnings as well as movements in working capital, mainly in Asia Pacific and also some capital purchases. You'll see here the full details of our working capital in each of the regions we operate. For frequent listeners to our results presentations, you'll remember that our working capital levels tend to be quite lumpy due to the large size of certain orders, Payments and receipts that might occur over a period end.
We had a large number of works being completed over that December 2020 to January 2021 period in Indonesia, which saw our working capital levels grow considerably in Asia Pacific. Also contributing to that working capital increase was the unwinding of payments received in advance as at 30 June 2020 that were being fulfilled during this year. We also saw an increase in South America due mainly to timing factors, but also due to some prompt payments that were being made to smaller suppliers in that region. The working capital levels at 31 December 2020 have supported the strong start to the second half of the year, which provides further comfort on meeting that guidance number. And just showing on this slide, Our net debt has increased supporting those working capital requirements.
Debt levels remain very manageable. We have determined to pay a fully franked interim dividend of 0.02 dollars per share. Drilling deeper into the balance sheet. Austin has a fairly substantial property portfolio, including current operating assets in the U. S, Indonesia, Australia and Chile, as well as some assets that were connected to businesses that we recently restructured in Coloma, Chile and also in Peru and Colombia.
We're working on the sale of certain assets in South America following restructures. Whilst we are seeing some impact in demand Resultant from COVID-nineteen, we are confident that sales with values meeting or exceeding carrying values on each of these assets held for sale. I'll now hand back to Peter for an update on the operations over the first half and company outlook.
Thanks, Sam. I'll start with the Asia Pacific region. Our operations in Perth have shown strong earnings and have had a good start to the year. The facility there is very busy. It's a similar situation with our operation in Batam, Indonesia.
It delivered products to the East Coast of Australia, Africa and also within Indonesia. The MacKay repair facility showed an improvement performance too. We really do see the Asia Pacific region performing strongly in the second half of the year to bring about a solid full year result. Our Perth and Indonesian facilities are more than 90% committed to enable guidance targets to be met with strong opportunity pipelines. We've made headway into forming our own partnerships in Europe and Africa, from which we'll see more opportunities in existing markets as well as new markets.
This gives me strong confidence in the medium long term success of this region and importantly, keeping our 2 big facilities in Perth and Indonesia loaded up with work to take advantage of that operating leverage that exists in the business. We delivered our first product into Egypt in the period, So that's the one new market that has opened up. We, of course, have delivered product into other parts of Africa for many years. As the results show and as Sam mentioned, our North American market has been deeply impacted by COVID-nineteen and the instability caused by the U. S.
Election, plus connected commodity price impacts. We understand these factors have weighed heavily on our We are most definitely seeing a turnaround in North America. We currently have orders already on hand in that region for an excess of 50 truck bodies for delivery prior to 30 June 2021. That's in the 1st 8 weeks of the second half. Compare that to delivery of 33 truck bodies in the whole first half of the year.
The new federal government is in place, oil prices have improved, and in turn, we see an uplift in activity in that region, particularly in the Canadian oil sands region, which has been extremely quiet for us in the first half of the year. We see the Powder River Basin market weakening due to a decline in demand for thermal coal from the domestic USA market. Our outlook in Canada, however, continues to strengthen, particularly with signs of the oil sands region coming back, But also in their iron ore, metallurgical coal and other mineral deposits throughout the country. This will be an increasingly important mark for Austin in years to come. The copper gold deposits in Utah, Arizona and Nevada are also key markets in this region.
In South America, we saw higher revenues in Chile, We've continued the restructuring in South America. The result of that is planned to complete wind up of operations in Colombia. We terminated a major site repair contract in Colombia last year and decided to undertake a strategic review to identify whether our operations in Colombia could be sustainable to maintain. Unfortunately, we can't see Colombia making good enough contribution to earnings right now, so we're closing our operations there. We've also reduced the size of our Peru operations to a small sales and marketing office with manufacturing support from Austin's Chile facilities and local partners.
The region was and still is deeply impacted by COVID-nineteen. We see recovery in this region, but a modest second half in the interim. I'll just turn now to safety and people. Safety of our people is, of course, a major focus for Austin. Our results have improved significantly over recent years with the reduction of more serious injuries and we will continue pushing to further improve these metrics through a variety of initiatives and training.
We have in place and retained when necessary Across all our operations globally. Our staff base stayed mostly level with the last 6 months of FY 2020. The increase in work in the Asia Pacific region meant more staff came on board, balanced out by a decrease in the Americas and the aforementioned wind down in Colombia. Moving to our outlook and forecasts. The improvement in commodity prices is providing a boost to our business.
We've seen good lifts on copper and iron ore, which is positive for our clients and therefore our business. In some markets, particularly Asia Pacific, those commodity shifts have led to increased demand for capital equipment, But there are ongoing impacts of COVID-nineteen around the globe have tempered demand in the Americas. We're seeing an upward trend in new equipment sales, as you can see on the graph. This bodes well for Austin as well as the graph focus On primary equipment such as trucks and shovels, it does indicate capital purchasing behaviors in the supporting attachments, I. E, Bodies and buckets that we provide for this equipment.
As mentioned, we are reiterating our full year guidance on underlying Net profit after tax in excess of $9,000,000 I'm really pleased we're able to do this, and it's thanks to the very hard work of our team through these difficult times. We are excited by the growth prospects for the company and opportunities we have ahead. We have 90% of the revenue we need to meet this guidance target. And whilst that was similar to this time last year, we don't anticipate the of COVID related challenges we experienced in the last financial year. What gives me confidence is that all of our major facilities Having excess of 80% of required work locked in to meet their respective targets, but all facilities have surplus capacity to deliver more earnings should more orders than expected be received.
So in summary, We see a strong performance in the Asia Pacific with the majority of full year guidance targets locked in. We are seeing real signs of improvement in North America and that supports a much improved second half. South America is uncertain, but we do envisage a second half improvement based on some contract opportunities. Thank you for joining us today. Sam and I are here to answer any questions.
Thank you. Your first question comes from James Lennon from Petra Capital. Please go ahead.
Good day, guys. Can you hear me?
Yes, we can. Hi, James.
Good day. Well done on the results. Two questions, if I Ken, firstly, just on the Aussie dollar impacts, can you maybe talk to us about that and how you're managing that?
Sure. So really the big impact for us from an Aussie dollar perspective was the and it wasn't so much the Aussie dollar, it was the U. S. Dollar compared to the Chilean peso. So we've got a long term receivable donated in U.
S. Dollars in Chile. And the translation of that has caused a loss of $1,400,000 for the year for the half, sorry. So that's had an impact to our EBITDA. The previous half, we actually made a gain on currency.
So that's an interesting one to manage from a cash flow perspective. It's a positive contract to have in U. S. Dollars Because the input costs are in U. S.
Dollars, but it is an exposure on our balance sheet, and it's something that we are looking at in terms of management. In terms of sort of the earnings profile from overseas, the U. S. Has obviously delivered a loss for the half and The currency, the way it is at the moment, has actually benefited us, that not being a bigger loss as a result of currency. So it is something we look at.
It's not a huge exposure for us, currency. It's more on that translation of results. And as I said, if the U. S. Was a more material number for our earnings at the moment, then it would be more impactful.
Yes, we'll see a bit of an impact on that in the second half because we're expecting a much better second half from the U. S.
Great. Thanks. And just also on discontinued operations and asset sales, is there anything still to come through in that second half or is it Expecting it to be quite clean now going forward.
Look, from our perspective, I think it's quite clean. And one of the reasons we put that slide up on the property portfolio is really To sort of cement that position to say that we've got these big sort of chunky assets and Yes, we've got 4 there that are very much operating assets in the U. S, in Indonesia, in MacKay and in Antipagastro in Chile. And we do have some for sale in Colama, Chile and Colombia and Peru. We really feel like we're at the end of that process.
Yes, COVID-nineteen has probably made us go a little bit further than we had expected previously. Colombia is the market there has been incredibly impacted by COVID and demand On thermal coal, there's a number of customers that have really reduced the size of their operations. Some have stopped and haven't reopened yet. So that's been more impactful than we had expected. Yes, we see ourselves at the end of that process now, James, and I hope we are.
Thank you.
Thank you. Your next question comes from Philip from Blue Ocean Equities. Please go ahead.
Hi, guys. Thanks for taking the question. Just a couple of quick ones on the order book. So Peter, I think you said earlier, 90% of Perth and Indonesia is covered. Given that the group said 90% covered, does that mean you're Nothing from USA North America?
I mean, that's not 0?
No, I think what we're saying is that all facilities are in excess of 80, and In particular, Indonesia and Perth were in excess of 90%. So I guess, long story cut short, Phil, is that Overall, we've got 90% of the revenue locked in and it gives me a lot of comfort to say that number because originally we said back in August, We do an excess of $9,000,000 We reiterated that back in November. And now with the outlook in North America, with the orders that we've just secured In the last 8 weeks, we're very strong in that number. So, yes, but when you aggregate them all up, it's in excess of 9.
Excellent. And yes, the other question I had was, how much room for slippage do you have? I mean, do you need to Keep that 100% utilization from now to June or what happens if Perth goes into 5 day lockdown, will you still get the revenue in the second half or some still into July?
I think with what we know now, we were in the same position this time last year, we had 90% locked in, So we just didn't see the freight train coming at us. We had 3 months of total lockdown in Colombia and Peru where we were paying in excess of 4.50 people Wages for 3 months. So and I think at the end of the day, we did $8,000,000 in excess of $8,000,000 for that 6 months. We're very confident, Phil, in having a very strong second half and hitting that 90.
And we've got a bit of room, Phil, in all of those So key facilities in Perth, Indonesia, U. S. And in Chile to actually put more work through than we're currently forecasting In each of those facilities. So there is some certainly some opportunities To have a better number, yes, we've got to secure the sales obviously to get there, but that does give us that comfort on the slippage as well. As you'll know, Bill, you've been involved with Austin for a long time.
Yes, there are deals that can slip over periods and there are a number of reasons for that. And we look at that in our forecast and we look at the risks of that in our forecast. And right now, we're very confident That in excess of $9,000,000 taking into account those And to put it in
perspective, we're only really 2 thirds through the year, 66%, we've got 90% locked in. So as I said, we're very bullish on exceeding that target of 9,000,000 As Sam said, plenty of capacity still in our facilities. I think North America, From where we've been 3 months ago back in December, things were a Tight there with the political situation, things seem to have settled down. The oil sands is starting to turn, which is good news And all other commodities are too. So we've secured a lot of good orders across the board, not just with one customer.
So I think there's certainly great shoots shown in North America.
Understand. Thank you.
Thank you. We will pause to allow questioners to join the queue. There are no further questions at this time. I will now hand back to Peter. Pardon me, we do have a follow-up question.
Your follow-up question comes from Philip from Blue Ocean Equities. Please go ahead.
Can't let you get off that easy. I thought I'd ask you another one. Look, I almost thought about it. Right. Just a quick one.
So the guidance of minimum $9,000,000 given that was set a year ago, did you take into account What was to become the discontinued operations or just by removing potentially loss making division, make that minimum whatever, minimum of 10, minimum of something? Or did you factor that in when you gave us 3rd line plus 6 months ago?
Yes. Thanks, Phil, for the question. And we so we at that time, it was a continuing operation, but it was a pretty negligible result from an underlying perspective. Yes, the results for that division will be a loss, but that's really just because of the restructure. Costs involved in winding that business down.
So from an underlying perspective, yes, the result Fairly neutral in Colombia. It's more the things that sit outside of that underlying number, so it really doesn't make too much difference. That's a good question. Thanks, Phil.
No problem. Okay. Thanks, guys.
Thank you. We are showing no further questions at this time. I will now hand back to Peter for closing remarks.
Okay. Thank you. We've now come to the end of the restructure phase at Austin,
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.