Neptune Enters Agreement to Sell Australian Fabrication Division

Neptune Marine Services Limited announces it has entered into an agreement to sell the Company’s Australian fabrication division to privately owned engineering group Kempe Engineering.

Kempe Engineering will purchase the business for approximately $0.4 million while Neptune will retain the existing lease commitments through to their expiration in September 2012. Neptune expects that completion of the sale will occur on or about 7 October 2011.

Neptune has previously flagged its intention to sell its fabrication arm, based at Henderson, Western Australia, following a comprehensive review of the Company’s operations earlier this year. The review concluded that fabrication capability was better out-sourced through a strategic relationship rather than operated in-house. The fabrication business had contributed operating losses in both FY2010 and FY2011 and was forecast to continue to do so in the current financial year.

Neptune Chief Executive Officer, Robin King, said the sale of the fabrication business represented one of the final milestones in the restructure of Neptune’s businesses and assets. Mr King said despite the fabrication business having a good team, it had underperformed financially under Neptune’s control as it was not core to operations. He said he believed the strengths of the business could be better utilised by an engineering specialist such as Kempe Engineering, who can integrate the division with its existing operations.

“Neptune has entered into a strategic relationship with Kempe Engineering that will allow us to maintain access to the operational capability in the fabrication business which allows us to continue to offer integrated design and fabrication packages in conjunction with Kempe Engineering”, Mr King said.

“Across our business we are increasingly looking to use third-party relationships to access skills and assets rather than spreading our own capital across a broad base. By working with these specialists, rather than competing against them, there is scope to grow revenue in new markets.

“By selling the fabrication business, we have also removed the ongoing operating losses it was generating and it allows us to focus on growing our profitable divisions.”

Kempe Engineering is a privately owned group of companies headquartered in Geelong, Victoria, that is a leading world class global specialist engineering company providing engineering, technology and construction, maintenance services and process equipment to the major resource industries. It employs approximately 2000 staff.

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Source: Neptune, September 27, 2011