06/06/2006 - 22:00

R&D plays major role in ISS growth

06/06/2006 - 22:00

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Listed Nedlands company ISS Group Ltd is seeking to build on its strong position in the Australian market to become a global supplier of specialist software for process plants in the oil and gas and mining sectors.

R&D plays major role in ISS growth

Listed Nedlands company ISS Group Ltd is seeking to build on its strong position in the Australian market to become a global supplier of specialist software for process plants in the oil and gas and mining sectors.

Since being founded by Shane Attwell in 1995, the company has the enviable record of achieving 35 per cent revenue growth each year.

Its latest results for the half-year to December 2005 show a 45 per cent jump in revenue to $3.8 million and a net profit of $0.6 million, from a small loss in the previous corresponding period.

Mr Attwell attributed the company’s rapid growth to two attributes – it had been much more “nimble” than its main competitors, which were large multi-nationals, and it had a big commitment to research and development, which took 30 to 40 per cent of revenue each year.

Its current focus is on establishing an international distribution network to build on its track record in the Australian market.

Mr Attwell said the Singapore office, opened last year, was already cash-flow positive and its London office would be cash-flow positive in a few months.

The next move would be to establish a presence in North America, to service mining centres such as Houston and Calgary.

A major step in its international expansion was a contract to pilot its flagship product BabelFish with Saudi Aramco, one of the world’s biggest oil producers.

Mr Attwell said ISS software was designed to help companies monitor and pro-actively manage their production assets in real-time to ensure they were operating at optimum levels.

“The BabelFish application and its inbuilt visualisation, event detection, calculation and modeling tools provide this capability,” he said.

The company’s new product, jointly developed with oil and gas producer Santos, has taken this concept a step further by integrating exploration and seismic information with operational and production information.

As well as expanding internationally, the company is seeking to improve its operating margins by getting existing clients to increase their use of ISS products.

Clients included Rio Tinto, Woodside, Origin Energy, Apache Energy and BHP Billiton, which awarded ISS new contracts this year at its Worsley Alumina and Ravensthorpe nickel projects.

Mr Attwell said the company’s $6 million initial public offering in 2004 gave it the financial capacity to expand.

“Our reason for listing was so we could take the business overseas,” he said.

The listing had also opened up additional tendering opportunities.

Mr Attwell said that, as a private owner-operator business, ISS had automatically been struck-off tender lists by some big companies, but was now winning work from those companies.

With most of the company’s 65 staff based in Perth, Mr Attwell believes ISS has been helped by the relatively low labour costs in Western Australia.

Partly offsetting this advantage was Perth’s isolation, though that had started to change over the past few years with development of the oil and gas sector.

“Perth is starting to be a new Aberdeen,” he said.

A source of frustration for Mr Attwell was the lack of government support for training of university students.

He had previously paid tuition costs for university students planning to join the company but, unlike payments to apprentices, he could not claim these payments as expenses and had to pay fringe benefits tax.

Therefore he has transferred the scheme to ISS’s Singapore office.

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