VDM Group returns to profit

VDM Group has recorded an after tax profit for the 2010 financial year of $16.8 million, on revenue of $521.3 million.

The result compared to a $105 million loss in the 2009 financial year.

In a statement to the Australian Securities Exchange VDM said the result was slightly above its earnings guidance range announced in July, and was largely a result of the favourable tax effect of prior year research and development claims.

Chief executive officer Ken Perry said the result was the outcome of a restructure and simplifying the business into three divisions, consulting, construction and contracting.

"This has led to reduced costs, better focus, and greater cooperation between divisions," he said.

"We have strengthened the balance sheet with $35 million equity raised in November 2009 and extended our banking facilities," said Mr Perry.

"VDM enters the 2010-11 financial year with over $300 million of work in hand and tendering activity remains high in WA and QLD," he said.

See full company statement below:

Perth, 27 August 2010: VDM Group Ltd (ASX: VMG) ("VDM" or "the Company") today announced an after tax profit of $16.8 million for the full year ended 30 June 2010 on revenue of $521.3 million. This is slightly above the high end of the earnings guidance range announced in early July 2010, largely as a result of the favourable tax effect of prior year research and development claims.

VDM Chief Executive Officer, Ken Perry said: "The full year result is the outcome of initiatives taken early in the financial year. We have restructured and simplified the business into three divisions - Consulting, Construction and Contracting. This has led to reduced costs, better focus, and greater cooperation between divisions. We have strengthened the balance sheet with $35 million equity raised in November 2009 and extended our banking facilities. With strong operating cash flows we have repaid over $58 million in debt and net debt to equity was 12% at the end of the year. Confident for the future, the VDM Board has decided to recommence the payment of dividends and has declared a fully franked final dividend of 2 cents per share".

"VDM enters the 2010/11 financial year with over $300 million of work in hand and tendering activity remains high in WA and QLD. We have experienced delays in award of new projects largely as a result of uncertainty around the mining tax regime. Nonetheless VDM is in a strong position and the outlook remains positive", Mr Perry said.