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Dear Fellow Shareholders,

Over the course of the last few years, we have been dedicated to two core objectives: delivering improved margins through our continued focus on execution and performance; and organic growth in our three core market sectors of Infrastructure, Energy and Mining.

To support these objectives, we have been building a high performance team – a team best suited to serve our clients in these diverse sectors. We further strengthened our management team with additional expertise and today we are focused on safety, operational excellence, project controls, and risk management – all within a disciplined framework towards reaching our target of a 9 per cent EBITDA margin in 2015.

Last year, I pledged to you that we planned to build on our 2011 achievements, and again, we delivered on that commitment in 2012. Aecon is @ work...for you, our shareholders.

"The ‘One Aecon’ approach is now entrenched within the operations of the organization."

The ‘One Aecon” approach – providing comprehensive and integrated turnkey services to our clients – is now entrenched within the operations of the organization and has gone from an initial concept, to what is now the Aecon way of doing things. Under the leadership of our Chief Operating Officer, Teri McKibbon, we have fundamentally changed the way Aecon works. The ability to self-perform a vast array of services allows for cost savings for both Aecon and our clients through economies of scale and resource sharing.

In 2012, Aecon successfully completed an impressive number of projects including the Toronto Rehab Centre; the Bruce Nuclear Refurbishment project in Kincardine, Ontario; Autoroute 30 in Montreal, Quebec; the Picadilly Potash Mine in Sussex, New Brunswick; upgrades to Consumers’ Co-operative Refinery in Regina, Saskatchewan; and most recently, the Quito International Airport in Ecuador. Moving forward, Aecon has a strong pipeline of work, reporting $2.4 billion of backlog at December 31, 2012, with an extended duration of work beyond the next twelve months representing 42 per cent of backlog versus 38 per cent in the prior year.

The focus on operational performance, paired with Aecon’s turnkey capabilities, has resulted in significant growth in profitability and margins in our Industrial business, successful scaling of Aecon’s Mining business, the expansion of our Utilities business in Western Canada, and completion of the redefined mandate of our Buildings operations.

With over 40 per cent of Aecon’s revenue now coming from larger, more complex projects, the importance of building relationships, partnerships and alliances is more of a priority than ever before. We have positioned Aecon to be a partner our peers want to work with – a partner with the financial strength to take on substantial projects which require a unique blend of operational expertise, project management skills and long-term planning capabilities. In the same vein, increasingly, Aecon is being chosen for multi-year operating and maintenance contracts, construction management advisory contracts and alliance agreements. This type of work – with recurring revenues of some $750 million annually – now accounts for approximately 25 per cent of Aecon’s business.

These deliberate steps to optimize our operational performance and be a partner and supplier of choice are making a meaningful contribution to Aecon’s financial performance, evident in the 2012 results.

Revenue for the year ended December 2012 grew two per cent over the year before, with additional progress reflected in the bottom line as adjusted EBITDA margins improved from 5.1 per cent to 5.9 per cent. Due to these higher margins, gross profit for the year increased by $41 million, or 15 per cent, to $315 million, compared to $274 million in 2011. Aecon delivered $172 million adjusted EBITDA (excluding gains on sale of assets and investments) on almost $3 billion in revenue compared to $147 million in the prior year – an increase of 17 per cent. Adjusted profit attributable to shareholders in 2012 of $75 million was a significant improvement over the $55 million recorded the year before. Additionally, the Board of Directors approved a 14 per cent increase in Aecon’s annual dividend, from $0.28 to $0.32 per share, to be paid in quarterly instalments of $0.08 per share.

I believe these financial results and operational performance reflect a compelling story of Aecon at work which has set us on a path to strong, sustainable earnings growth.

Aecon’s business strategy is focused on four key elements: best-in-class safety and training programs for our employees, leveraging Aecon’s diverse service offering and turnkey capabilities, building partnerships and alliances, and the overarching focus on profitability and operational discipline. Looking forward, we see opportunities to leverage our scope and scale to grow our business organically, based on our national capabilities.

As we enter 2013, we remain positive about Aecon’s outlook and financial performance with our diversified portfolio, focus on execution and improved margins. Aecon’s balance sheet, financial liquidity and substantial bonding capacity, each of which are among the strongest in the industry, continue to provide the financial resources to capitalize on the opportunities on the horizon.

Aecon has been built as a proudly Canadian company, and we are confident Aecon will be Canada’s premier construction and infrastructure development company.

Our employees across Canada are hard at work making Aecon the best company for our clients, our partners, and you, our valued shareholders.

Thank you for your continued support.

John M. Beck
Chairman and Chief Executive Officer
Aecon Group Inc.

"I believe these financial results and operational performance reflect a compelling story of Aecon at work which has set us on a path to strong, sustainable earnings growth."

In Conversation with John M. Beck

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117
2009
125
2009
106
2010
163
2011
173
2012
1.23
1.20
2008
0.82
0.80
2009
0.57
0.54
2010
1.01
0.84
2011
1.41
1.18
2012
89.1
2008
76.2
2009
57.2
2010
100.5
2011
109.8
2012
1877
2008
2261
2009
2750
2010
2896
2011
2947
2012
1254
2008
2183
2009
2447
2010
2390
2011
2428
2012

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