21 February 2018
New strategy delivers 433% increase in underlying profit to US$336 million
Full-year (US$ million) 2017 2016 Change Product sales 3,107 2,594 +20% EBITDAX(1) 1,428 1,199 +19% Underlying profit(1) 336 63 +433% Net loss after tax (360) (1,047) - 66% Operating cash flow 1,248 840 + 49% Free cash flow(1) 618 206 +200% Net debt 2,731 3,492 -22%
Santos Managing Director and Chief Executive Officer Kevin Gallagher said the company�s full-year results demonstrated a significant turnaround in business performance ahead of plan.
�We have removed substantial costs, reported a material increase in underlying profit, generated significant free cash flow and reduced net debt.
�Strong operating performance across the core assets resulted in sales volumes above the upper end of guidance and production toward the top end of guidance.
�Santos is now a stronger, more resilient company with the capacity to execute and bring on-line growth opportunities across its core long-life natural gas assets,� Mr Gallagher said.
Excluding the net impairment taken at half-year and other significant items, the company recorded an underlying profit of US$336 million, up 433% on the corresponding period.
Operating cash flow was up 49% to US$1.2 billion and free cash flow(1) up 200% to US$618 million.
Strong free cash flows reduced net debt to US$2.7 billion at the end of 2017.
Consistent with the company�s focus on debt reduction, the Board has determined not to pay a final dividend. In light of the substantial turnaround in the underlying business, should market conditions remain supportive and the company achieve its debt reduction target ahead of plan, the Board will consider capital management strategies to return value to shareholders.
The 2017 full-year result includes the previously announced net impairment charge of US$689 million after tax taken in the first half against the GLNG (US$867 million) and AAL assets (US$149 million), partially offset by a positive net write-back to the Cooper Basin of US$336 million.
Additional impairment charges of US$14 million after tax were recorded against other assets in the second half.
All guidance for 2018 is maintained.
To view the ASX release, Full Year Results Presentation, Santos 2017 Annual Report and Santos Climate Change Report click here.
(1) EBITDAX (earnings before interest, tax, depreciation, depletion, exploration, evaluation and impairment), underlying profit and free cash flow (operating cash flows less investing cash flows net of acquisitions and disposals) are non-IFRS measures that are presented to provide an understanding of the performance of Santos� operations. Underlying profit excludes the impacts of asset acquisitions, disposals and impairments, as well as items that are subject to significant variability from one period to the next, including the effects of fair value adjustments and fluctuations in exchange rates. The non-IFRS financial information is unaudited however the numbers have been extracted from the audited financial statements. A reconciliation between net loss after tax and underlying profit is provided in the Appendix of the 2017 full-year results presentation released to ASX on 21 February 2018.
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