27/08/2008 - 10:29

Mermaid profit up 43% for FY08

27/08/2008 - 10:29

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Fremantle-based oil and gas services company Mermaid Marine Australia Ltd has reported a net profit of $17.9 million for the 2008 financial year, up 43 per cent on the previous corresponding period.

Fremantle-based oil and gas services company Mermaid Marine Australia Ltd has reported a net profit of $17.9 million for the 2008 financial year, up 43 per cent on the previous corresponding period.

The result was struck on a revenue of $149.4 million, up 45 per cent while earnings before interest tax, depreciation and amortisation rose 43 per cent to $39.4 million.

Earnings per share for the period were up from 8.9 cents to 11.8c and the directors have declared a dividend of 2 cents per share.

 

Below are comments made by chairman Tony Howarth and managing director Jeffrey Weber.

 

Commenting on the result, MMA Chairman Mr Tony Howarth said:

“The Board is extremely pleased that the Company’s growing maturity and capability has enabled us to exceed the aggressive growth targets we set for FY08.

“While the global economy is under significantly more pressure than it was a year ago, MMA’s exposure to the offshore oil and gas industry gives the Board confidence that the Company can deliver ongoing growth in shareholder returns.

“In view of this, the Board has declared a fully franked dividend of 2 cents per share, up from 1 cent per share in the previous corresponding period.

“Furthermore the Board has resolved to implement a new dividend policy. Commencing in the 2009 financial year, MMA will pay an interim and final dividend reflecting a payout ratio of between 40 and 50%. The new dividend policy is designed to take into account the ongoing capital requirements of the Company while at the same time transferring valuable franking credits to our shareholders”.

The Company has a Dividend Reinvestment Plan (Plan) in place which allows shareholders to elect to have all or part of their dividends reinvested in additional shares in the Company. The discount of 2.5% which was announced when the Plan was introduced will remain in place for the shares issued in relation to this current dividend.

Operational Highlights

MMA experienced rapid growth in employee numbers during the year with hours worked across the organisation increasing approximately 40% in FY08 compared to FY07. Compared to FY06 the number of hours worked almost doubled.

“On this basis it is pleasing to note that the safety performance across the organization improved against all our measures,” MMA Managing Director Mr Jeffrey Weber said.

“Safety performance is one of the key operational determinants of success within the Company and within the oil and gas industry overall. Consequently MMA is continually working with our clients to provide a safe work environment,” he said.

MMA’s vessel revenue grew by 50% as a result of investment in new vessels, strong utilisation levels and a number of chartered vessels brought in over the year.

The Mermaid Discovery, Mermaid Sentinel and Mermaid Spirit were purchased during the year and the Company entered into a charter/purchase arrangement on the Crest Diamond which will see that vessel become part of the fleet in FY09.

A number of older, smaller vessels were sold during the year as part of the Company’s overall fleet renewal programme. The average age of the fleet now stands at 13 years. The major project during the year for vessel operations was MMA’s involvement in the construction of the Woodside Angel Project. MMA was the lead marine provider for this project with up to five owned and chartered vessels involved over the construction period.

“This type of work is vital to the ongoing development of the Company and our success in this project positions us to well to take advantage of other development projects being planned,” Mr Weber said.

During the year MMA also secured a multi-vessel contract with Geokinetics resulting in the Mermaid Discovery working in Egypt and three other chartered vessels currently working in Australia.

MMA’s Dampier Supply Base also performed strongly over the year generating EBITDA of $8.4 million up 53% from FY07. This growth was driven primarily from increased demand for wharf services. The increased demand has also enabled the Company to commit $22 million toward the expansion of the Dampier wharf facility. Also as a result of increasing demand, a 2,250 m2 new warehouse was constructed on the base with the majority of the area already committed to clients.

In addition MMA signed an “Agreement to Sublease” with Chevron to support its Gorgon project. This agreement was the first step towards a formal sublease arrangement which is currently under negotiation.

“This is an extremely positive step for the Company and will drive continued growth in earnings from our Dampier Supply Base asset,” Mr Weber said.

The Broome Supply Base JV with Toll continues to expand with construction of a new casing yard completed during the year and construction of a new supply base area commencing adjacent to the port. The Broome Supply Base gives MMA exposure to the highly prospective Browse Basin region with clients including Shell, Woodside and Inpex undertaking drilling programmes during the year.

The Dampier Slipway had a strong year as increased numbers of vessels in the North West underpinned continued demand for ship repair services. During the year MMA upgraded the slipway cradles improving the Company’s capacity to accept larger vessels. As the MMA fleet continues to grow, the strategic benefit of owning a slipway becomes increasingly significant.

“FY08 was a year of significant growth for MMA but equally importantly, the Company has established solid foundations for future growth,” Mr Weber said.

“We have an exciting year in front of us as investment in fleet expansion and supply base infrastructure sets us up to take advantage of the world scale projects planned for our area of operations.

“In addition MMA will have at least four vessels operating internationally over the year representing another major growth opportunity for the future.

“Demand for our services remains strong across the board and we look forward to continuing strong earnings growth,” he said.

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