Established in 1919, Clough delivers an integrated Engineering, Procurement and Construction service primarily to oil and gas projects in Australia, South East Asia and the USA. The Group's services range from concept development through design, construction, installation, commissioning, operations and maintenance.

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Clough Market Update

5 December 2011

Engineering and construction company Clough Limited (ASX:CLO) announced today that it anticipates underlying earnings for the half year ending December 2011 will be down on expectations, however underlying earnings for the full year are expected to be higher than the previous year.

H1 2011-12 Guidance

H1 financials from continuing underlying operations: ^{1, 2}

• Total revenue is expected to be in line with the previous corresponding period
• Underlying earnings from operations is expected to be around $22m
• Underlying NPAT is expected to be around $19m.

The primary reasons for the expected lower half year results are:

• Cost overruns on a fixed price contract for the upgrade of three gas regulating stations in NSW, resulting in a loss of up to $3 million
• A margin reduction for two EPC contracts as a result of increased contract values without a commensurate increase in fee. The fee structure for these contracts is the subject of ongoing discussions with the clients.

Clough will finish the half year with a strong balance sheet following the planned completion of the Marine Construction sale by the end of December 2011.

Clough expects that the issues which have impacted the business in the half year should be resolved during the second half of 2011-12, which, together with an increased contribution from new and existing contracts, should result in stronger performance in H2 2011-12.

Clough’s longer term outlook remains positive as it continues to win new work and the level of tendering activity remains high with a number of significant near term opportunities in the pipeline.

^1. Before adjusting items: the impact of businesses disposed of and acquired, the amortisation of intangible assets arising on the acquisition of Forge and the revaluation of Forge options.
^2. Includes 33% of Forge profit before tax and amortisation.

Ends

 

For further information, please contact:

Kevin Gallagher, Chief Executive Officer +61 8 9281 9407
Neil Siford, Chief Financial Officer +61 8 9281 9762
Kristy McGrath, Marketing & Communications Manager +61 8 9281 9344

About Clough
Established in 1919, Clough delivers an integrated Engineering, Procurement and Construction service to oil and gas and mineral resources projects primarily in Australia and South East Asia. The Group's services range from concept development through design, construction, installation, commissioning, operations and maintenance.

Backed by an experienced management team, over 3,600 personnel and sophisticated project management systems, we are recognised for our commitment to safety, sustainable development and the wellbeing of the people, communities and environments in which we operate.