The buoyant resources sector in Western Australia has proved a boon for engineering consultancy firm Lycopodium Limited.
The buoyant resources sector in Western Australia has proved a boon for engineering consultancy firm Lycopodium Limited.
Since listing on the Australian Stock Exchange last December, the company’s share price has risen from its $1 issue price to $2.16 this week, with a 10.5 cents per share dividend declared in the 2005 annual report.
The company has offices nationally in Perth, Sydney and Melbourne, as well as overseas in Ghana.
Lycopodium Limited chairman Mick Caratti said the offer of six million shares at the $1 issue price was fairly attractive, however he did not downplay the impact of the resource boom in the current share price.
“I would say the difference between the $1.50, $1.70 and the $2.16 is primarily the impact of the boom on the industry,” Mr Caratti said.
“Our strategies don’t bear fruit in that short time frame.”
Mr Caratti said the company took a fairly conservative approach with forecasts, as illustrated by 2005’s net profit of $5.7 million and revenue of $69 million compared to the forecast of $4.28 million and $51.3 million respectively in the company’s prospectus.
“The second half of the year filled in to be as good as the first half and the turnover went up,” Mr Caratti said.
“We win work in very large chunks and so, if work does come in, it can fill up very well. Equally if you miss out on one job you have got a bit of a hole.”
Mr Caratti said Lycopodium had grown from 12 people since its inception in 1992 to today’s 400-odd employees working in the company’s subsidiaries: Lycopodium Engineering, Process Design and Fabrication and Orway Mineral Consultants.
“The company has grown quite strongly over the 13 years but what we have concentrated on is to try to do projects well,” he said.
“We haven’t taken short term views, we haven’t tried to get it down to a lump sum approach to maximise the return or maximise in the short term.
“We have always taken a very long-term view and I think it’s meant we have established progressively a credibility with the larger companies because we have stuck to what we have said and we have performed.”
Mr Caratti said acquisitions were unlikely for Lycopodium in the near future.
“Working capital is better spent on organic growth at the moment and that is probably our major focus,” he said. “Opportunities do arise and we are looking but not exactly holding our breath.
“Our type of industry is such that you have to have reliable management in a subsidiary or else it can be more of a liability than an advantage.
“So we are careful about it and only target areas that suit us strategically.”
As outlined in its 2005 annual report, Lycopodium Engineering specialises in resource projects including Newmont Mining Corporation’s Ahafo gold project in Ghana.
It is Lycopodium’s largest project to date, with a projected 7.5 million tonne per annum throughput and a capital cost of approximately $US450 million.
Process Design and Fabrication is involved with industrial projects, including working with Toyota at its Altona site in Victoria.
Orway Minerals Consultants specialises in the supply of process engineering services for clients and provides process engineering support to Lycopodium Engineering.
