Neptune Marine Services Limited has taken full advantage of its peerless service offering to buck the trend in the difficult economic climate and post a normalised net profit after tax of $25.1 million1 (FY08: $10.9m) and net profit after tax of $21.0m (FY08: $7.4m) for the full year 2009.
Neptune's total revenue of $188.9m was up almost 120% on the comparative FY08 result of $86.7m. Significantly, a large proportion of this growth was organic, with the vessels, ROV and NEPSYS® businesses generating excellent returns over the 12 month period.
Against the backdrop of a cautious financial market, Neptune also successfully initiated a capital raising program (concluded July 09) that generated $53 million; funds that will be used to drive the group's next phase of expansion. Already, the company has announced that a portion of the funds will be allocated to the acquisition of Singapore's Core IRM Pte Ltd, a major provider of inspection, repair and maintenance (IRM) services to the oil & gas and petrochemical industries. Expected to be completed during 2HFY10, the proposed acquisition is subject to the completion of satisfactory due diligence and contractual documentation.
Neptune's Managing Director and CEO, Christian Lange, said the period represented a phase of accelerated growth during which the group consolidated its international operations and asset base. "After more than doubling both revenues and profit from FY08 to FY09, Neptune is well positioned to take advantage of a range of growth opportunities that have and continue to present themselves across the global market," he said. "Our recent capital injection will help to fund the next phase of development that will principally focus on migrating our services model into the major regional hubs of Asia, North America and Europe."
Operationally, Mr Lange said the more than $100 million worth of new and extended contracts that were secured during the period spoke volumes for the recognition that Neptune's unique service offering is generating among its target industries. "The combination of conservative gearing (seven percent), strong funding, a growing global foot print, expanding blue chip customer base and stable, experienced workforce provides us with a solid foundation on which to build in FY10 and beyond," he added.
A combination of consistently high levels of organic growth and the contribution of new acquisitions resulted in the division generating revenues of $128.1 million for the full year.
Early in the period the capabilities of the division were expanded via the acquisition of Perth based Access Management (WA) Pty Ltd, one of the largest specialist (difficult) access companies in the Asia Pacific region. With operations in both Perth and Singapore, the services provided by Access Management (subsequently renamed Neptune Access IRM) directly complement Neptune's integrated service offering and its focus on developing a greater presence in the Australasian region.
Contributing further to this focus was the acquisition of the Nor Sea, a 70.05 metre dynamically positioned anchor handling, tug and supply (AHTS) construction support vessel. Renamed the MV Neptune Trident, the vessel generated consistent revenues throughout the year.
The MV Neptune Trident complements the service provided by the recently refurbished MV Neptune ROV Supporter and provides the business with greater scope and flexibility in the execution of offshore projects. Both vessels were fitted with Neptune's new build Swift XL remotely operated vehicles (ROVs) during the year. A total of three ROVs were purchased during the period.
A major highlight during the year was the completion, by the Neptune Geomatics business unit, of the subsea gas pipeline route survey on the Ichthys Gas Field Development offshore Western Australia. At some 860 kilometres, the survey was one of the longest of its type to be completed in Australian waters.
With its comprehensive range of subsea inspection, maintenance and repair solutions, Neptune Diving Services (Australia) continued to be a reliable performer throughout the Australasian region while, in the United States, US Underwater Services benefitted from increased industry demand for the NEPSYS® dry underwater welding technology. The unique advantages of NEPSYS® were realised further during the year with international contracts awarded and completed in the Gulf of Mexico and the historically challenging North Sea. Representing a first for the technology in the UK, the North Sea project was mobilised out of Neptune's Aberdeen base following a comprehensive phase of prequalification and associated engineering design and fabrication.
The effective solution to subsea pipeline stabilisation and protection provided by Neptune's Sea-Struct business unit resulted in the award and completion of numerous contracts throughout Australia, Brunei, China, Indonesia, Vietnam, Malaysia, Taiwan and Hong Kong. The synergies that exist in South East Asia between Sea-Struct, Neptune Access IRM and the ROV & Vessel Division are expected to result in further growth opportunities across the region for the Neptune group.
Additional international capacity and an industry reputation for quality and capability resulted in the division generating revenues of $60.8 million for the full year.
As was the case for Offshore Services, the Engineering Services division was strengthened further during the period via the acquisition of Aberdeen based Subsea Engineering Services, a specialist provider of subsea consultancy and project services to the global oil and gas industry.
Regarded as a vital component in Neptune's international growth strategy, the acquisition of Subsea Engineering Services (subsequently renamed Neptune Engineering Services) further enhances Neptune's subsea capabilities and builds on the successful integration of Neptune Deeptech to provide significant growth opportunities for the group in the resurgent North Sea region. Additionally, the acquisition provides Neptune with greater market presence in the UK and advanced technical capabilities in the design of specialist subsea equipment.
The addition of Neptune Engineering Services also brought with it complementary engineering support to Neptune Deeptech that continued to operate at or near capacity throughout most of the year. In addition to the fabrication of specialist subsea and offshore oil and gas equipment for its blue chip client base, Neptune Deeptech also advanced its partnership in the development of marine renewable energy (wave) technologies for commercial application.
Locally, Perth based Link Weld Engineering maintained a full order book throughout the year, headlined by the fabrication of two major subsea spool packages for Woodside's Pluto LNG Project and Greater Enfield Area Project 09, both of which are located offshore Western Australia.
Providing engineering support to these and a range of other projects was the Perth based team from Subsea Developments Australasia.
Building on its excellent FY09 result, Neptune has commenced the new financial year with a robust pipeline of confirmed orders, tendering and future project opportunities, predominantly in the global oil and gas industry.
Moving forward, Mr Lange said the business would continue to focus on fostering organic growth while also investigating a range of strategic prospects for additional expansion.
"We anticipate growth in FY10 will be equally balanced between our organic and acquisition lead progression," he suggested. "Similarly, revenue generation is expected to reflect the geographical diversity that has already become evident in FY09."
Between FY08 and FY09, the revenue generated by Neptune's Australian and international operations shifted from a 76/24 (FY08) to 44/56 (FY09) percent split, with the 56 percent spread fairly evenly between Asia, the USA and UK.
"In Asia, the high demand for vessel and ROV services, increasing regulatory requirements and our pending expansion in Singapore will combine to drive additional growth across that region, while, locally, the large LNG projects such as Pluto and Gorgon have provided and will continue to provide us with numerous opportunities, particularly in the disciplines of survey, engineering and fabrication.
"With some 40 major projects earmarked for development between 2010 and 2012, the Australian industry will continue to provide us with growth stimulus in the short to medium term."
At the group level, Mr Lange said there would be an increased focus on further developing Neptune's survey and inspection expertise, while new and emerging prospects in regions such as the Middle East and Brazil would continue to be investigated in line with the development of its deepwater capabilities.
"Early indications for FY2010 suggest that Neptune will continue to generate consistent revenue and profit growth from principal operations, enhanced by new acquisitions we have announced and emerging opportunities we are currently pursuing. Neptune is still in the very early stages of its growth," he added. Mr. Lange said Neptune would update shareholders on its progress at the company's annual general meeting in November.