Departure of Chief Executive Officer and Appointment of Interim Chief Executive Officer
- SNC-Lavalin announced that Pierre Duhaime has stepped down from his position as Chief Executive Officer and as a director and will retire from the Company. Ian A. Bourne will assume the function of Vice-Chairman and Interim Chief Executive Officer while a search for a new Chief Executive Officer is carried out.
- For the fourth quarter of 2011, net income attributable to SNC-Lavalin shareholders was $76.0 million ($0.50 per share on a diluted basis) compared to $132.6 million ($0.87 per share on a diluted basis), excluding the 2010 net gain after taxes of $26.1 million from the disposal of two infrastructure concession investments.
Year Ended December 31, 2011
- For the year ended December 31, 2011, net income attributable to SNC-Lavalin shareholders was $378.8 million ($2.49 per share on a diluted basis), compared to $431.0 million ($2.83 per share on a diluted basis), excluding the net gains of $45.7 million from the disposals of certain assets and investments recognized in 2010.
- Revenues for the year ended December 31, 2011 increased by 20.3% to $7.2 billion, compared to $6.0 billion for the year ended December 31, 2010.
- Revenue backlog increased to $10.1 billion at the end of December 2011 compared to $9.7 billion at the end of December 2010. Operations & Maintenance revenue backlog decreased by 12.9% while the Services revenue backlog increased by 57.8% to $2.2 billion.
- Financial position remained solid with cash and cash equivalents of $1.2 billion at December 31, 2011.
- Return on average shareholders' equity was 19.3% for the 12-month period ended December 31, 2011.
- The Board of Directors increased the quarterly cash dividend by 4.8% to $0.22 per share for the fourth quarter of 2011.
MONTREAL, March 26, 2012 /CNW Telbec/ -
|SNC-Lavalin Group Inc.|
|Financial Highlights (unaudited)|
|Fourth Quarter||Year ended December 31|
|(in thousands of Canadian dollars, unless otherwise indicated)||2011||2010||2011||2010|
|Revenues by activity|
|Operations and Maintenance||382,458||383,619||1,399,197||1,330,459|
|Infrastructure Concession Investments (ICI)||155,851||156,745||501,366||472,274|
|Net income excluding ICI||$||36,495||$||104,092||$||247,585||$||341,770|
|SNC-Lavalin's net income from ICI||39,494||54,611||131,215||134,896|
|Net income attributable to SNC-Lavalin shareholders||75,989||158,703||378,800||476,666|
|Net income attributable to non-controlling interests||137||2,866||8,542||10,723|
|Diluted earnings per share ($)||$||0.50||$||1.04||$||2.49||$||3.13|
|Shares outstanding (in thousands)|
|Weighted average number of outstanding shares - Basic||150,924||151,187||150,897||151,020|
|Weighted average number of outstanding shares - Diluted||151,645||152,454||151,940||152,277|
|Return on average shareholders' equity (ROASE) (1)||19.3%||28.4%|
|| As at
|| As at
|Revenue backlog by activity||2011||2010|
|Operations and Maintenance||2,379,100||2,732,800|
(1)Corresponds to the trailing 12-month net income attributable to SNC-Lavalin shareholders, divided by a trailing 13-month average equity attributable to SNC-Lavalin shareholders, excluding "other components of equity".
N.B.: All amounts indicated are in Canadian dollars.
SNC-Lavalin Group Inc. (TSX: SNC) announced that Pierre Duhaime has stepped down from his position as chief executive officer and as a director and will retire from the Company.
"Pierre has made major contributions to the growth and profitability of the Company during his 23 years of dedicated service," said Gwyn Morgan, Chairman of the Board. "The Board has accepted his decision to step down, and we wish him well in the future. We are proud of the 28,000 skilled and dedicated people of SNC-Lavalin and know that they will continue their excellent service to the Company's thousands of clients around the world."
A search for a new Chief Executive Officer will begin immediately under the direction of the Chairman of the Board. Both internal and external candidates will be considered.
At the request of the other members of the Board, Ian A. Bourne has agreed to assume the function of Vice-Chairman and Interim Chief Executive Officer of the Company. The Board has struck a Special Transition Committee composed of the Chairman of the Board, the Interim CEO, and the Chairmen of the Audit and Human Resources Committees to assist with transitional matters, including serving as a resource to the management team.
Mr. Bourne is a seasoned executive who has served as a senior officer of a number of Canadian public corporations and is well versed in the affairs of the Company having served as a director and Audit Committee and Health, Safety and Environment Committee member since 2009.
"I look forward to working with our employees to build shareholder value," said Mr. Bourne. During the transition period, Mr. Bourne will remain a director of the Company but will temporarily step-down from Board Committees.
The Company also announced its results today for the fourth quarter and year ended December 31, 2011 and is separately reporting today on the results of its voluntary Independant Review.
Fourth Quarter Results
For the fourth quarter of 2011, net income attributable to SNC-Lavalin shareholders was $76.0 million ($0.50 per share on a diluted basis), compared to $158.7 million ($1.04 per share on a diluted basis) for the comparable quarter in 2010, or $132.6 million ($0.87 per share on a diluted basis), excluding the 2010 net gain after taxes of $26.1 million from the disposal of two infrastructure concession investments. The decrease, excluding the 2010 net gain, mainly reflects an operating loss in the Infrastructure & Environment and the Hydrocarbons & Chemicals segments, mainly due to unfavourable cost reforecasts on certain projects, a $22.4 million loss from a revised position of the Company's net financial position related to its Libyan infrastructure projects and period expenses of $35 million in Hydrocarbons & Chemicals, partially offset by higher operating income, mainly from the Mining & Metallurgy and Operations & Maintenance segments. The $35 million of period expenses relate to payments made under what are presumed to be agency agreements that were charged and documented to construction projects to which they did not relate. Because these payments were documented to construction projects to which they did not relate, it was determined that they would need to be recorded as period expenses (i.e., not generating any revenues) for accounting purposes.
For the year ended December 31, 2011, net income attributable to SNC-Lavalin shareholders was $378.8 million ($2.49 per share on a diluted basis), compared to $476.7 million ($3.13 per share on a diluted basis) for the comparable period in 2010, or $431.0 million ($2.83 per share on a diluted basis) excluding the net gains of $45.7 million from the disposals of certain assets and investments recognized in 2010. The net income from Infrastructure Concession Investments was $131.2 million, compared to $134.9 million, mainly due to the 2010 net gain from the disposal of two infrastructure concession investments, partially offset by higher dividends from Highway 407. Net income, excluding Infrastructure Concession Investments, was $247.6 million compared to $341.8 million, or $322.2 million excluding the 2010 gain from the disposal of certain assets. This decrease mainly reflects a lower contribution from the Infrastructure & Environment segment, partially offset by higher contributions from all other segments. As mentioned above, in the fourth quarter of 2011, the Company recognized a net loss of $35 million related to payments made in the fourth quarter of 2011, under what are presumed to be agency agreements. It should be noted that the Company's 2010 results were adjusted by reducing net income by $17.9 million to reflect the impact of payments of $20.0 million made in 2010, under what is presumed to be an agency agreement. The Company decided to correct its prior period comparative financial information in its first issuance of annual audited consolidated financial statements prepared in accordance to International Financial Reporting Standards.
Revenues for the year ended December 31, 2011 increased by 20.3% to $7.2 billion compared to $6.0 billion for the same period in 2010. Revenues increased in all the Company's segments of activity and in all revenue categories, with Packages revenues growing by 34.3% and Services revenues growing by 18.7%.
Revenue backlog increased to $10.1 billion at the end of December 2011, compared to $9.7 billion at the end of December 2010. The Operations & Maintenance revenue backlog decreased by 12.9% while the Services revenue backlog increased by 57.8% to $2.2 billion.
The Company's financial position remained solid with cash and cash equivalents totalling $1.2 billion at December 31, 2011.
The Company's return on average shareholders' equity was 19.3% for the 12-month period ended December 31, 2011.
Material Weakness Disclosure
The Company has identified material weaknesses in its internal control over financial reporting as at December 31, 2011 relating to management override, non-compliance with and ineffective controls over compliance with the Company's policy on commercial agents and its code of ethics. As a result, the Company has concluded that its disclosure controls and procedures and its internal control over financial reporting were not effective as at December 31, 2011. These material weaknesses and proposed remedial measures are fully described in the Company's annual Management's Discussion and Analysis.
The Company currently expects its full year 2012 net income to be in line with full year 2011 net income, as we expect that the Power and Mining & Metallurgy segments, mainly based on their current backlog, and the Infrastructure Concession Investments segment will be the main contributors to net income while the Hydrocarbons & Chemicals and Infrastructure & Environment segments will continue to be challenging throughout 2012. This outlook is based on the methodology described in the Company's annual Management's Discussion and Analysis under the heading "How We Budget and Forecast Our Results" and is subject to the risks and uncertainties described in the Company's public disclosure documents, including risks resulting from the Independent Review, the results of which were separately announced today.
Declaration of Quarterly Dividends
The Board of Directors has increased the quarterly cash dividend by 4.8% to $0.22 per share, payable on April 12, 2012 to shareholders of record on April 5, 2012. This dividend is an "eligible dividend" for income tax purposes.
SNC-Lavalin will hold a conference call with the financial community today at 10:00 a.m. Eastern Daylight Time, to discuss its fourth quarter and year ended December 31, 2011 results. Participants will include Gwyn Morgan, Chairman of the Board of Directors, Ian Bourne, Vice-Chairman and Interim Chief Executive Officer and Gilles Laramée, Executive Vice-President and Chief Financial Officer. To participate, please dial toll-free at 800-814-4859, or 416-644-3414 in Toronto, or 514-807-8791 in Montreal, or 44-20-7190-1595 in England. Please note that this call will be accompanied by an online presentation that will be available in the investor relations section of our website at www.snclavalin.com, approximately one hour prior to the call. A replay of the conference call will be available on our website, approximately one hour after the termination of the call. Members of the media are welcome to participate on a listen-only basis to the investor call. Following this call, journalists are invited to stay on the line to ask questions to Mr. Morgan and Mr. Bourne.
SNC-Lavalin (TSX: SNC) is one of the leading engineering and construction groups in the world and a major player in the ownership of infrastructure, and in the provision of operations and maintenance services. SNC-Lavalin has offices across Canada and in over 40 other countries around the world, and is currently working in some 100 countries. www.snclavalin.com
Ian A. Bourne is Chairman of the Board of Ballard Power Systems Inc. and serves on all its board committees. Mr. Bourne is a director of Canada Pension Plan Investment Board (CPPIB), Canadian Oil Sands Corporation, Wajax Corporation, the Canadian Public Accountability Board and the Calgary Foundation. Mr. Bourne was Executive Vice-President and Chief Financial Officer of TransAlta Corporation (1998-2005) and President and director of TransAlta Power LP, from 1998 to 2006. Prior to joining TransAlta he spent most of his career in the General Electric Company, including four years as Chief Financial Officer of GE Capital. He obtained his Bachelor of Commerce Degree at Mount Allison University in 1969. He is a member of the Institute of Corporate Directors, having completed the Director Education Program in February 2006 and was awarded the ICD designation in April of the same year and recognized as a Fellow of the Institute of Corporate Directors in June 2011.
| Reference in this press release, and hereafter, to the "Company" or to "SNC-Lavalin" means, as the context may require, SNC-Lavalin Group Inc. and all or some of its subsidiaries or joint ventures, or SNC-Lavalin Group Inc. or one or more of its subsidiaries or joint ventures. Statements made in this press release that describe the Company's or management's budgets, estimates, expectations, forecasts, objectives, predictions or projections of the future may be "forward-looking statements", which can be identified by the use of the conditional or forward-looking terminology such as "anticipates", "believes", "estimates", "expects", "may", "plans", "projects", "should", "will", or the negative thereof or other variations thereon.
The Company cautions that its actual actions and/or results could differ materially from those expressed or implied in forward-looking statements, or could affect the extent to which a particular projection materializes, as a result of risks and uncertainties relating to: (a) cost overruns from fixed-price contracts; (b) failure to meet scheduled dates or performance standards on a particular project; (c) attracting and retaining qualified personnel and any strike, partial work stoppage or other labour actions by the Company's or its subcontractors' unionized employees; (d) failure of the Company's joint venture partners to perform their obligations; (e) failure by the Company's subcontractors to deliver their portion of a particular project according to contractual terms; (f) the financial performance of the Company's infrastructure concession investments during a particular concession period; (g) the Company obtaining new contract awards; (h) revenue backlog and whether such revenue backlog will ultimately result in earnings and when revenues and earnings from such backlog will be recognized; (i) foreign currency exchange and interest rates; (j) credit risk and the delay in collection from the Company's clients; (k) information management including its integrity, reliability and security; (l) the inherent limitations of the Company's control framework and the effectiveness of the measures implemented by the Company to strengthen its internal controls over financial reporting following the identification by the Company of material weaknesses relating to the design and operational effectiveness of its internal controls over financial reporting as of December 31, 2011; (m) uncertain economic and political conditions in the countries in which the Company does business; (n) any lack of strong safety practices by the Company or its subcontractors exposing the Company to lost time on projects, penalties, lawsuits and impact on future contract awards; (o) the Company's inability to comply with environmental laws and regulations; (p) the Company's reputation as a result of, among others, any quality or performance issues on its projects, a poor health and safety record, non-compliance with laws or regulations by the Company's employees, agents, subcontractors, suppliers and/or partners, or creation of pollution and contamination; (q) the inability to adequately integrate an acquired business in a timely manner; (r) non-compliance with laws and regulations by an employee, agent, supplier, subcontractor and/or partner of the Company or any further regulatory developments; (s) failure by the Company's employees, agents, suppliers, subcontractors and/or partners to comply with anti-bribery laws; (t) any litigation and/or legal matters to which the Company is a party; (u) any negative publicity associated with the Independent Review led by the Company's Audit Committee of the facts and circumstances surrounding certain payments that were documented to construction projects to which they did not relate, and certain other contracts, as well as any sanctions that could be brought against the Company in connection with possible violations of law or contracts should additional facts adverse to the Company become known in connection with such Independent Review including as to matters beyond its scope; (v) the proposed class action lawsuit filed on March 1, 2012 against the Company with the Quebec Superior Court; and (w) the investigations of the Royal Canadian Mounted Police and the World Bank relating to the Company's involvement in a past submission as the Owner's Engineer for the Bangladesh government.
For more information on risks and uncertainties, and assumptions that would cause the Company's actual results to differ from current expectations, please refer to the section "Risks and Uncertainties" and the section "How We Analyze and Report our Results", respectively, in the Company's 2011 Financial Report under "Management's Discussion and Analysis". The forward-looking statements herein reflect the Company's expectations as at the date of this press release and are subject to change after this date. The Company does not undertake any obligation to update publicly or to revise any such forward-looking statements, unless required by applicable legislation or regulation.
SNC-Lavalin's Consolidated Financial Statements and Management's Discussion and Analysis and other relevant financial materials are available in the Investor Relations section of the Company's website at www.snclavalin.com. These and other Company's reports are also available on the website maintained by the Canadian Securities regulators at www.sedar.com.
Vice-President, Investor Relations
514-390-8000, ext. 7553
Vice-President, Global Corporate Communications
514-390-8000, ext. 7354