AusGroup Profit Drops, Australia

AusGroup today announced its results for the three/twelve months ended 30 June 2013 (‘4Q FY2013/FY2013’).

“The ability of AusGroup to provide a range of services to both the resources and the oil and gas sectors has enabled us to respond to a changing and challenging market. We continue to focus on delivering projects of excellence and we are well positioned to secure work on the LNG projects being developed in Australia as well as the maintenance opportunities that are arising.” Said CEO and Managing Director Laurie Barlow.

Revenue for the fourth quarter of FY2013 decreased by 21.5% to AU$137.5 million (4Q FY2012: AU$175.3 million). This is mainly a result of a reduction in revenue generated by the Integrated Services division.

Revenue for FY2013 has decreased by 7.8% to AU$582.7 million (FY 2012: AU$632.0 million). Revenue growth occurred in the Major Projects and Fabrication divisions, but offset by a reduction in revenue from the Integrated Services division. The Group was impacted by decreased activity in the resource sector. This was a result of major resource companies scaling back capital expenditure in response to volatility in commodity prices as well as customer delays in awarding contracts in the oil and gas sector.

Gross profit margins decreased from 13.8% during the fourth quarter of FY2012 to 10.5% during the fourth quarter of FY2013. The decrease is due to weaker margins achieved in the Fabrication and Integrated Services divisions, whilst margins improved in the Major Projects division.
Gross profit margins decreased from 12.4% during FY2012 to 10.9% during FY2013. The decrease is due to weaker margins achieved in the Fabrication and Integrated Services divisions.

Other operating income for the fourth quarter of FY2013 increased by 27.2% to AU$1.6 million (4Q FY2012: AU$1.2 million). The increase is mainly due to the profit on the sale of scaffolding equipment in the Integrated Services division.

Other operating income for FY2013 increased by 60.2% to AU$3.9 million (FY2012: AU$2.5 million). The increase is due to the profit on the sale of scaffolding equipment in the Integrated Services division, as well as an increase in interest income from bank deposits.

Share of (loss) / profit of joint venture for the fourth quarter of FY2013 of AU$(1.0) million represented the reversal of previously accrued profits from the joint venture arrangement after the final contractual claims and variations had been concluded. Share of profit of joint venture for FY2013 was AU$0.5 million.

Operating expenses (comprising administrative expenses, marketing and distribution expenses and operating costs) for the fourth quarter of FY2013 decreased by 14.1% to AU$11.9 million (4Q FY2012: AU$13.8 million), mainly as a result of reversal of share right expenses as a result of employee resignations, terminations and the effect of not achieving certain performance targets.

Operating expenses for FY2013 increased by 8.6% to AU$49.7 million (FY2012: AU$45.8 million). The increase is mainly due to the Group’s expansion into Queensland, Australia, the introduction of a project controls support group and also the increase in overhead costs in the Fabrication and Integrated Services divisions where key project staff have been retained on overhead ahead of anticipated contract awards. Some of these awards have seen significant slippage.

Net profit attributable to equity holders for the fourth quarter of FY2013 was AU$0.5 million (4Q FY2012: AU$8.3 million) whilst for FY2013 it was AU$9.7 million(FY2012: AU$23.3 million). The lower profit for the fourth quarter of FY2013 was as a result of lower revenue and gross margins, a share of loss from a joint venture and increased finance costs.

The lower profit for FY2013 was mainly due to lower gross margins in the Integrated Services segment, increased overhead costs, lower share of profit from joint venture and increased finance costs.

The Group’s property, plant and equipment decreased 20.7% from the previous year as a result of the reclassification of the Singapore property to non-current assets held for sale.

The Group’s balance sheet reflects a total shareholders’ equity of AU$173.2 million as at 30 June 2013, an increase of 5.8% over the previous year (FY2012: AU$163.9 million). This was due to the profit and other comprehensive income for the year.

As at 30 June 2013, the Group has cash and cash equivalents at AU$11.7 million and the Group had a net debt position due to the increase in bank borrowings.

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LNG World News Staff, August 27, 2013; Image: AusGroup