Investors + Media Announcements 2008 AusGroup Delivers Record Interim Profit of AUD$12.1 million
AusGroup Delivers Record Interim Profit of AUD$12.1 million
14 February 2008
- Profit After Taxation jumped 47% to AUD$12.1 million while revenue increased 60.4% to AUD$202.2 million.
- Estimated AUD$145 billion worth of expansion and development projects in Western Australia, which AusGroup is well positioned to explore.
- Strong order book of AUD$208 million as at 30 Jan 2008 fuels optimism for FY2008.
AusGroup has announced robust growth in profitability on the back of strong demand for its services in Australia and Singapore.
Profit after taxation jumped 47% to AUD$12.1 million while revenue increased 60.4% to AUD$202.2 million. Earnings per share improved to AUD 3.1 cents, compared to AUD 2.1 cents in the previous corresponding period.
Financial Highlights |
HY2008 AUD$'000 |
HY2007 AUD$'000 |
Change % |
| Revenue | 202,217 | 126,087 | 60.4 |
| Gross Profit | 31,779 | 21,563 | 47.4 |
| Profit Before Taxation | 16,742 | 11,583 | 44.5 |
| Profit After Taxation | 12,119 | 8,246 | 47.0 |
| Earnings Per Share (AUD cents)* | 3.1 | 2.1 | 47.6 |
*Earnings Per Share is calculated using weighted average number of shares. The weighted average number of shares for HY2008 is 393,955,000 shares while weighted average number of shares for HY2007 is 385,961,000 shares
|
“We are pleased to deliver record interim revenue and profit on the back of robust demand for our engineering services in Australia and Singapore. 2007 has been an excellent year for the Australian mining and resources. The outlook across both the Australian mining and resources and oil and gas sectors remains positive which will continue to provide excellent opportunities for our business activities. Based on information from the Department of Industry and Resources of Western Australia, there is an estimated AUD$145 billion worth of expansion and development projects for the oil & gas and mining and resource industries in Western Australia over the next seven years. We believe the Group is well positioned to benefit from this strong demand. In Singapore, Cactus who is a major supplier of subsea components to the industry's leaders and the growing uptake of subsea systems, continues to experience robust demand for its products and services. Our capital investment program in Cactus remains on track with the business set to take on larger, higher value projects with the completion of the new integrated services facility later this year.” Mr John Sheridan, Managing Director of AusGroup |
HY2008 Financial Performance Review
HY2008 revenue jumped 60.4% to AUD$202.2 million due to continuing growth in the engineering division on the back of strong demand in the resources and oil & gas sectors, particularly from the mechanical, structural and installation division, which performed superbly. This was supported strongly by an excellent performance from the services division, which benefited from plant shutdowns which were deferred from the previous financial year and other planned maintenance activities.
There was a decline in gross margins due to certain variation claims associated with the work undertaken within the Engineering division, not being finalised prior to 31 Dec 2007. Provision has been made to incur costs associated with the performance of work under variation where the outcome is uncertain. Gross margins in Singapore improved due to market conditions and better execution of contracted work.
Operating expenses increased considerably due to the increase in activities as well as the strengthening of management structures to support the Group’s continued strong growth.
As a result of the above, profit after tax increased 47% to AUD$12.1 million.
Industry Prospects – The Future Looks Bright
On 6 Feb 2008, a Macquarie research report, titled 'Offshore Sector' highlighted offshore fields today account for 30% of all oil production. This number is set to rise as the bulk of undiscovered hydrocarbon reserves lies offshore. In fact, nearly two-thirds of all planned projects are at depths exceeding 3,000 feet. While oil at this depth is more expensive to extract, the higher oil prices make it worthwhile nonetheless.
Deepwater capex is expected to amount to US$108 billion over the next five years. Subsea spending will increase to US$20 billion this year and well completions will increase 12.5% from 2007 levels, which were already 25% higher than the previous year.
Global Spending on Subsea to Remain High
Source: Global Perspectives Subsea Market Update 2008-2012, Infield Systems; Subsea UK, Autumn 2007
The Group continues to remain optimistic about its business growth potential in view of the ongoing demand in the oil & gas and resources expansion projects in Australia and the Asia Pacific region. As at 31 Dec 2007, the Group has AUD$208.0 million order book and has tendered for new jobs amounting to more than AUD$400.0 million.
AusGroup will also continue to explore M&A opportunities to expand its regional presence across strategic markets in Asia.
