AusGroup Q2 profit tumbles 88% on delays, absence of completions; balance sheet stronger

SINGAPORE - AusGroup's fiscal second-quarter net profit fell 87.9 per cent to A$492,000 (S$474,200) on the absence of completed major works from a year ago and delays in anticipated new work, the offshore and marine company announced on Wednesday (Feb 13) before the market opened.

Earnings per share decreased to 0.03 Australian cent, compared with 0.28 Australian cent the year before. For the first half of 2019, net profit fell 74.9 per cent to A$1.8 million, or 0.11 Australian cent per share. AusGroup shares traded at 3.5 cents as at 9.43am on Wednesday, flat on the day.

Second-quarter revenue decreased by 61.2 per cent to A$58.3 million from A$150.2 million the year before.

The company cut finance costs by almost half, to A$1.9 million from A$3.3 million in the previous year, reflecting the reduction in the interest rates for long term debt. This was following the completion of the company's debt re-financing.

On Dec 19, 2018, AusGroup completed a rights issue and share placement to raise S$46.4 million, with S$29.2 million used to retire debt and S$17.2 million injected as working capital. Net asset value stood at 3.1 Australian cents per share as at end-December, from 2.8 Australian cents as at end-June, 2018. The group cut total borrowings to A$89.9 million from A$120.9 million over the same period, and reduced the amount repayable in one year or less to A$19.1 million from A$86.8 million.

"In the last quarter, the re-financing of the long term debt with our noteholders has been successfully completed resulting in the financial position of the group being the best it has for over three years. Our net worth has improved by A$54.2 million in the last quarter and now stands at A$95.9 million," chief executive and executive director Shane Kimpton said.

He added that the working capital injection received through the funds raised under the share placement and rights issue "significantly improved the current liquidity" as the debt has been extended for four years at vastly reduced interest rates. Mr Kimpton also said the company's order book is now "diversified across all sectors".

The company said that its main focus is to convert "key pursuits" in the months ahead while maintaining focus on safe working, operational delivery excellence and building a solid pipeline of new work. There is also "renewed optimism" now after the re-basing of its debt and the injection of working capital, enabling AusGroup to pursue new work on an equitable basis to competition, the company said.

"In the short term however there will still be a challenging environment until the emergence of the key work prospects being pursued in H2 2019 are converted to work in hand," the company added.