Construction and development company Diploma Group has continued to rebuild its earnings, reporting a net profit of $1.9 million for the six months to December 31, but the timing on some of its planned projects has slipped.
Diploma slumped to a $15.5 million full-year net loss in FY2012, before recovering last financial year to lodge a $1.6 million net profit.
The company said the first-half result in FY2014 was primarily driven by a strong performance from its construction division, while Diploma was able to reduce its debts by $11.3 million during the half year following a $9.1 million capital raising.
First-half revenue came in at $111.6 million, up 34 per cent on the previous corresponding period.
Diploma said it expects to meet its full year earnings guidance of $7 million, before interest and tax.
Managing director Nick Di Latte said the result was very pleasing, while the company’s pipeline of new contract opportunities stood at around $478 million.
“The continued profits, recapitalisation of the balance sheet and the current forward order book put the group in a strong position for FY14, which will enable the company to build on this result into FY2015” Mr Di Latte said in a statement to the ASX.
Diploma's development projects include two apartment joint ventures with the Dept of Housing - one on Aberdeen due for completion in June 2014, while construction of Abode in West Perth is under way.
The company reported good news on its $30 million Rockingham Residential project, formerly branded as Salt. It received development approval last month for the revised project, which now comprises 76 lower-cost apartments, and expects them to be released to the market in April.
Diploma reported "significant pre-sales" at its 288 Lord joint venture in Highgate, valued at $36 million. However the company failed to achieve its target of completing sufficient pre-sales to satisfy bank funding requirements by the end of Janaury.
Mr Di Latte told Business News construction was likely to start in June, a little later than the March-April goal previously set.
He said the company's main priority was to complete documentation so that construction could commence "in the coming months" of two apartment projects underpinned by leasing deals with Quest Serviced Apartments Group.
The company had been targeting to start construction of the Rockingham project this month.
Diploma said its largest third-party project - a $100 million construction contract for Singapore's Fraser Property, for its 275-apartment QIII development in East Perth - was expected to reach practical completion within the next six months.
Diploma shares have risen strongly in early trade, and at 10:00AM, WST, were up 23 per cent at 3.9 cents.
