Como-based construction company Forge Group Ltd has posted a 121 per cent jump in net profit after tax of $6 million in its first full year as a listed entity.
Como-based construction company Forge Group Ltd has posted a 121 per cent jump in
net profit after tax of $6 million in its first full year as a listed entity.
The company said the result is after expensing the cost of applying an accounting standard.
Prior to reporting the non cash cost, operational net profit after tax was up 186 per cent to $7.6m with a corresponding earnings per share, before expensing management options, of 11.2 cents.
Forge said it started the new financial year with a strong forward order book with revenue for 2008/9 is expected to grow substantially.
The company's wholly owned subsidiary Abesque Engineering & Construction Ltd did not meet forecast earnings in the six months since acquisition due to the delay in project start ups until later on in the new financial year.
Cimeco Pty Ltd, the major construction arm of the company continued to perform in accordance with expectations and the Ghanaian operations, via Webb Construction (West Africa) Ltd contributed solidly to the earnings of the group.
Head office costs amounted to $700,000 prior to the expensing of management options.
The share sale agreement entered into with the vendors of Abesque prevented any restructuring of the business until such time as the "earn out" period expired.
Subsequent to the reporting period, the company has vacated the Abesque workshop in Welshpool, making the property available for immediate lease and/or sale, and merged the fabrication operations with those of Cimeco in Bibra Lake.
Furthermore, all Abesque plant and equipment and construction activities have also been merged with those of Cimeco. Greater capacity, productivity and efficiencies are expected to flow from such restructuring.
The strategy for the operations of the company over the next 12 months is to focus Abesque and Cimeco on their respective areas of expertise.
Abesque will specialise in the provision of engineering, design, construction and project management services to the resource sector for the implementation of projects involving processing facilities and associated infrastructure.
Cimeco now provides construction services across a wide range of disciplines including, civil, concrete, structural, mechanical, piping, tanks and electrical.
Forge has spent over $7.9m on capital expenditure during the financial year and now maintains a modern and extensive fleet of construction equipment and cranes.
The increase in revenue of over 70 per cent on the previous period resulted in a corresponding increase in working capital requirements.
Together with the cost of having expanded the company owned plant and equipment and a further projected increase in revenue for 2008/9, the board has decided not to declare a dividend for the period.