Welshpool-based NRW has announced a $112 million contract extension with Fortescue Metals Group and reaffirmed its 2010 profit guidance.
Welshpool-based NRW has announced a $112 million contract extension with Fortescue Metals Group and reaffirmed its 2010 profit guidance.
The FMG contract is for overburden mining at Christmas Creek.
In a statement NRW said the contract takes the company's work in hand to approximately $730 million, of which about $530 million relates to the 2011 financial year.
The statement said NRW's profit guidance remains with an expected net profit after tax range of $34 - $36 million from revenue of approximately $610 million.
This is still subject to finalization of accounts and independent audits.
NRW also closed the company's Promac Sales Division last month, which would result in a $2.71 million goodwill writedown.
See full company statement:
NRW is pleased to announce the award of a twelve (12) month extension to its current contract with Fortescue for overburden mining at Christmas Creek. The scope of works under the extension is an increase to current production levels, and is valued at approximately $112 million for the period which also includes a civil works component of $5 million.
The contract takes NRW's work in hand to approximately $730 million, of which about $530 million relates to FY 2011.
Guidance
Company profit guidance for FY 2010 remains as previously stated with an expected NPAT range of $34 - $36 million from revenue of approximately $610 million, subject to finalisation of accounts and independent audit. This range includes provisioning for goodwill impairment.
Group gearing levels, measured as Net Debt / Equity, is expected to be below 30%.
NRW's outlook remains positive with anticipated revenue growth in FY 2011 of 15 - 20%.
At present, trading conditions remain competitive due to aggressive bidding by contractors on tenders as the sector has suffered from delays caused by the Resources Super Profits Tax issue however NRW is very confident of a significantly improved environment gradually building throughout the second half of FY11.
Promac Sales Pty Ltd
Following a companywide strategic review of operations, the Promac Sales Division (a wholly owned subsidiary of NRW Holdings Limited) ceased trading effective July 2010.
As a consequence, and subject to external audit, NRW will reflect an expense to the profit and loss following a write down of 100% of goodwill associated with Promac, a value of $2.71 million. This goodwill had been carried forward since 2007 when Promac was first integrated into the NRW group prior to its IPO.
Some residual assets and stock (including vehicles) have been absorbed into NRW and arrangements are underway to divest certain remaining assets, stock and other miscellaneous items on commercial terms. The Company will update the market in due course regarding the sale of the superfluous Promac related assets.
