Neptune Marine Services today reported first half 2009 revenues of $95 million versus $31.7 million in H1 2008. Income from continuing operations, excluding non-cash charges, was $15.6 million, representing diluted earnings per share of 5.1 cents versus 1.0 cent for the same period last year. Operating cashfows for the period were $6.4 million versus $4.2 million for the first half of 2008.
Neptune's managing director and CEO, Christian Lange, said the result was particularly encouraging in light of the current global economic climate. "As previously outlined, Neptune has not experienced a material impact to date as the majority of our revenue is derived from continued investment in brownfield infrastructure and producing assets," he explained.
"Additionally, it is worth noting that revenues for the first six months includes only three months contribution from the Neptune Trident. Since acquisition, the Trident has been on continuous charter and has generated a high level of interest within the Australasian offshore market. Similarly, the Neptune ROV Supporter continues to be a consistent performer in South East Asia. This type of performance is indicative of the significant levels of organic growth that are being experienced across the Neptune group of companies. At our current state of development it is important to recognise that organic growth far outweighs that of growth driven by acquisition," he added.
Revenues for offshore services were $71 million, up more than 320% on the same period last year and up 460% on the fourth quarter of FY08. The capabilities of the Offshore Services Division were expanded during the period with the acquisition of Access Management (WA) (subsequently rebranded as Neptune Access IRM). The addition of Access Management also contributed to Neptune's international expansion via the company's established operations in Singapore. Recognition for and application of the NEPSYS® dry underwater welding technology increased with new contracts awarded in the Gulf of Mexico (USA) and North Sea (UK).
A tangible indicator of the service line's continued growth and technical acceptability is the current pipeline of global tender opportunities worth more than $50 million. Early in the period, Neptune's pipeline stabilisation and protection business, Sea-Struct, announced a range of international orders for its unique product range valued at approximately $7 million. Included in the orders was the local fabrication of 600 ANCHORMAT pipeline stabilisation mattresses for the Santos VICP/44 Henry Project. Similarly consistent was Neptune Geomatics that completed the $8 million geophysical and geotechnical survey of the Ichthys gas field development operated by INPEX Browse. The combination of Neptune Geomatics' technical expertise and commitment to client relations helped ensure successful delivery of the project to the highest standards, as demanded in the offshore oil and gas industry.
Demand for diving services both in Australia and the USA remained high during the period with a wide scope of installation, inspection, repair, maintenance, emergency response and salvage works completed in both inland and offshore locations. An increased need for inspection, repair and maintenance works on oil and gas assets in the Gulf of Mexico - the result of damage caused by hurricane Ike - stimulated the historically slower winter period for US Underwater Services. Fostering the successful delivery of services was the ongoing collaboration between the Australian and American operations.
Engineering and project management services
Revenues for engineering and project management services were $23.9 million, up more than 60% on the same period last year and up 41% on the fourth quarter of FY08. Building on the success of the Apache Simpson Pipeline Replacement Project, and in line with increased recognition for Neptune's integrated service offering, the Integrated Projects Group secured another project in the form of support works for the Blacktip gas field development in the Timor Sea.
Internationally, the demand for Neptune's engineering, fabrication, welding, piping and associated services remained high, with the Link Weld Engineering, Subsea Developments and Neptune Deeptech (UK) business units all maintaining a strong level of activity for a wide range of new and existing clients. Growing political and social interest in the development and commercialisation of sustainable energies also resulted in a tangible opportunity for Neptune Deeptech to fabricate specialist components for a wave energy converter known as the Pelamis P-2 that will undergo testing in the UK.
Additional international expansion for the Neptune group commenced during the period with the signing of a letter of intent (LOI) for the acquisition of Aberdeen-based Subsea Engineering Services (SES), a specialist provider of subsea consultancy and project engineering services to the global oil and gas industry. The acquisition of SES represents a vital component in Neptune's international growth strategy and is expected to enhance the group's subsea capabilities to provide significant growth opportunities in the European market that is forecast to attract billions of dollars in subsea expenditure over the next three years.
The successful establishment of a debt facility with National Australia Bank (NAB) provided Neptune with the opportunity to increase its asset base through the purchase of the 70.05m Neptune Trident DP construction support vessel. The Neptune Trident complements the 55m Neptune ROV Supporter, the purchase of which was completed during 2008. During the first half, the company realised $2.7 million in non-cash adjustments related to inferred interest on deferred payments ($1.316 million) share based payments ($0.62 million) and derivative adjustments ($0.78 million). Operating income including these non cash items was $12.9 million versus $0.8 million during the same period last year.
"The combination of significant organic growth, strong financial performance and ongoing demand and stability in the oil and gas services sector has Neptune well placed to take advantage of the numerous opportunities we are currently pursuing. We are on track to deliver on our previously stated revenue and profit forecasts for 2009 and, more importantly, we are starting to see revenue visibility into FY2010," Mr Lange said. "We currently have more than $50 million worth of work under active tender within the NEPSYS business alone; an excellent example of the industry recognition that is occurring across our service lines and a reflection of our strong business development capabilities."
Despite the current economic climate, Mr Lange suggested the demand for offshore brownfield services remained high. "The robust pipeline of bidding activity for brownfield inspection, repair and maintenance works in Asia and the USA, coupled with construction support activities in Australia and the UK, will continue to drive the next phase of growth for Neptune Marine," he said. "Additionally, in the vessel and ROV supply market, the Neptune ROV Supporter has proven to be a consistent performer and is providing the platform from which Neptune has developed and will continue to focus its ROV services in order to meet the growing demand that exists throughout Australasia."
"The Neptune group remains well funded and continues to benefit from its unparalleled service offering. As a collective we are focused on building our market presence within our target sectors and on identifying and pursuing a range of international opportunities that will contribute to our long-term growth and development," he added.