06/07/2021 - 14:30

SRG set for strong finish in FY21

06/07/2021 - 14:30

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SRG Global says it has overcome challenges associated with labour shortages and COVID-19, with the group predicting strong earnings and cashflow for the full financial year.

SRG set for strong finish in FY21
David Macgeorge says SRG Global is predicting stronger earnings in FY22.

SRG Global says it has overcome challenges associated with labour shortages and COVID-19, with the engineering and construction group predicting strong earnings and cashflow for the full financial year.

On Tuesday, SRG said it expected to meet the top end its earnings guidance for FY21, of between $45 million and $47 million.

The group had revised its forecast in December, from $38-42 million.

By comparison, SRG earned $20.5 million in FY20.

The company on Tuesday also predicted a net cash position of $12.2 million in FY21, compared with net debt of $8.4 million in FY20.

It also expects a record work-in-hand position of $1 billion (up 41 per cent).

SRG was trading 11 per cent higher on the news to 56 cents per share, as at 3:31pm AEST.

Managing director David Macgeorge said the FY21 forecast was supported by new contract wins, strong operating cashflows, and continued margin improvement.

Some notable contract wins included $120 million in work with South32 in October and $100 million in contracts with builders Multiplex and D&C Corporation in November.

“The company has experienced minimal impact of labour and COVID-19 challenges in FY21 due to the specialist nature of our business and the diversity of our service offering, sectors, and geographic spread,” Mr Macgeorge said.

“I am particularly pleased that we have continued to transition the business towards annuity earnings whilst winning a number of new term contracts in FY21.

“We have also managed the operational startup and contract execution exceptionally well throughout this period.”

Mr Macgeorge said SRG was well-positioned for long-term sustainable growth, with available funds of $88.2 million and undrawn equipment facility of $27.7 million.

He also said earnings in FY22 were expected to be about 15 per cent higher than in FY21.

SRG is scheduled to report its full-year audited results on August 24.

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