NEPTUNE MARINE SERVICES LIMITED
Christian Lange Speaks on Profits, Expansion and Strategy
NMS - Neptune posts record FY08 profit of 10.9 million - Mr Christian Lange, MD
Wed, 3 Sep 2008 07:00AM
Consensus Data
| Broker | EPS (A$) | Sales (A$) | ||
|---|---|---|---|---|
| 2009 | 2010 | 2009 | 2010 | |
| Patersons | 45.8 | 52.9 | 182 | 209 |
| ABN AMRO Morgans | 0.1 | 0.1 | 179.3 | 198.3 |
| Hartleys | 0.1 | 0 | 230.1 | 0 |
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Mr Christian Lange
Wed, 3 Sep 2008
07:00AM Australia/NSW
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NEPTUNE MARINE SERVICES LIMITED (NMS)
ASX code: NMS
Website:
Industry: Energy
Principal Activities:
Engineered services and solutions for the offshore oil & gas industry
Address:
, 140 St Georges Terrace, AMP Building, Level 16,
PERTH
WA
Phone: 08 9226 5722
Fax: 08 9226 0534
Executives & Directors
Mr Ross Kennan , Chairman
Mr Christian Lange , Managing Director
Mr David Agostini , Non Exec. Director
Mr Geoff Newman , Non Exec. Director
Mr Robert Scott , Non Exec. Director
Mr Geoff Edwards , CFO
Mr Gabriel Chiappini , Company Secretary
Company Podcasts
Company ASX Announcements
Company ASX announcements can be viewed on the ASX website.
Announcements from the preceding six months are shown below.
Please refer to the relevant stock exchange if any of the above information is incorrect
NEPTUNE MARINE SERVICES LIMITED (NMS) Events
Australia/NSW
NEPTUNE MARINE SERVICES LIMITED (NMS)
| Appendix 3B | Fri, 26 Jun 2009 |
| Appendix 3B | Thu, 25 Jun 2009 |
| Share Purchase Plan Mail Out | Tue, 23 Jun 2009 |
| SPP Revised ASIC Class Order | Fri, 19 Jun 2009 |
| Revised Record Date Share Purchase Plan | Wed, 17 Jun 2009 |
| Appendix 3B | Fri, 12 Jun 2009 |
| Notice of General Meeting/Proxy Form | Fri, 12 Jun 2009 |
| Ceasing to be a substantial holder from MQG | Wed, 10 Jun 2009 |
| SPP offer and timetable | Tue, 9 Jun 2009 |
| $40m Capital Raising, Earnings Upgrade and SPP | Fri, 5 Jun 2009 |
Please note: This company appears on this website as a result of its listing on the Australian Securities Exchange. Boardroom Radio does not claim any association with any company listed on this site.
INTERVIEW WITH CHRISTIAN LANGE, MANAGING DIRECTOR OF NEPTUNE MARINE SERVICES LIMITED (NMS)
“Neptune Posts Record FY08 Profit of 10.09 million”
http://www.brr.com.au/event/50855
WEDNESDAY, SEPTEMBER 3, 2008, 7:00 AM.
BRR Good afternoon and welcome to Boardroom Radio. Today, we’re talking to Christian Lange, Managing Director of Neptune Marine Services. Good
10 afternoon, Christian, and thanks for joining me today.
NMS Good afternoon, Tom, my pleasure.
BRR Christian, today Neptune has reported a net profit of $10.9 million and a revenue of $86.7 million. What were the main drivers of these results?
15 NMS Yes, it’s a good result and is within our revised guidance which is actually a very good indication of where Neptune is now heading. But before we talk about the drivers, it’s good to put things in a perspective in terms of what has been achieved in the last year. In terms of financial year 08, normalized after tax profit is up fourfold on the first half of $2.2 million to about $8.4 and
20 revenue of $55 million in the second half compared to $31 million in the first half and that compares to a bit over $15 million in 2007. So really it’s best to look at Neptune in light of its second half performance as a true reflection of where the growth is starting to generate.
25 BRR So in terms of the drivers?
NMS Well yes, coming back to the growth drivers, it’s really a combination of very strong organic growth across the businesses and the contributions from three new acquisitions. Also, the businesses that we acquired during the year have grown in their own right and the businesses that we acquired prior to last year
30 have grown quite strongly, and diving services is perhaps the best example of that where the Australian diving business grew 117% year-on-year, and of course, we’ve owned those for the full 12 months. So that’s’ truly an outstanding result and a real indicator of how the pool of businesses that we have contributes to each other’s growth in particularly, engineering. So really
35 better systems, better processes, businesses are benefiting from…in our Neptune stronger balance sheet, a bigger pool of customers, centralized and engaged business development function, and of course. a stronger pool of talents. So all of these things are really….the benefit is being part of a larger group, but I think overall, the real message is that it’s a clear reflection of the
40 fact that our strategy is delivering. We said we wanted to assemble our suite of services that customers can choose from and the benefit of these is starting to flow through. Also, you know, our customers are after an integrated solution and we have started to see an uptake and demand for integrated services and the big headline banner project for Apache last year was really a
45 true reflection of our capability in customer acceptance.
So across the board, I think, we achieved good growth in each of our divisions, very pleasing since we really are a new business which has just come out of its (inaudible) (00:02:56) construction site.
BRR And, Christian, you previously said that Neptune starting to pick up larger projects? Was this one of the main reasons for the significant increase in revenue this year?
5 NMS Yes, Tom. Some did kick in during the second half, but probably not really the main revenue driver. I think in the coming year you’ll see larger projects have a much greater impact from the revenue line, but last year, we’ve seen revenue growth across all of the divisions, the key driver of which is very much relative to ’09 as well is the relationship we’ve developed with our
10 customers. With that, it was proven that we can deliver on-site, and typically when we are on-site, the scope and the value of the contract grows as the customers get more confidence in us and they continue to add additional work scopes onto the original, and we’ve seen quite a lot of it.
15 We had one integrated project that I mentioned earlier that, you know, essentially has almost doubled in terms of value because we’re on-site. The project is technically more difficult than originally budgeted for and so forth. So that’s fairly typical and I think in that regard, given that first real headline project, I think we exceeded customers’ expectations and we’re cost effective.
20 So I think that, you know, in this current market we’ve got the opportunity to grow work scopes pretty drastically.
BRR Okay, and can you give our listeners a quick summary of some of the highlights of the past year?
25 NMS Yes, absolutely. How long have we got? You know, I think the last year was very, very positive for a lot of reasons. As I’ve said, the last year was really…. we were all wearing hard hats and hi viz vest because we very much building a business. This year, the hats are off, the vests are off and we are operating our business model. So going back to 2008 and what’s been achieved? You
30 know, we delivered on our model. I think that’s the one true measure is that, you know, we’ve proven our model works. We’ve got good customer relationships, customer uptake is significant, and that really underpins our entire future. I think attracting and retaining these blue chip customers, you know, our customer list is really who’s who in the industry here in Australia.
35 So we’ve really managed to attract excellent customers. We continue to build those relationships, customers like Apache, Konica, Philips, Sandoz, Impex, Woodside, you know, these are excellent customers and most of them have a global presence so we would expect to grow these relationships with them over time.
40
People, I can’t really talk enough about our people, I mean we’ve got a very strong committed team of about 550 people. The quality and commitment of the management team has been outstanding in what really is this first year of our business model. The senior team is made up of people that have vended
45 their business into Neptune. The senior management team own about 15% of Neptune’s stock, and you know, will clearly drive and benefit from the company’s long-term growth. Their commitment, their energy, the fact that you know we all sit around the table and look at the long term but also ensure that we’re doing things in the short term to improve where we are in the future, I think it’s been incredibly positive.
And the geographic expansion, you know, we set a platform that we wanted
5 to do with that business in Australia. We’d keep an eye on the major offshore regions, and we’ve done that, and by and large we are….you know, we’re executing to that plan and we’ve some good businesses overseas. We’ve picked up another one in the late October, November time Sub-sea Engineering Service which will have great knock on benefits to the business.
10 So I think they are a few of the, you know, the very important highlights for us last year.
BRR Okay, and you announced recently that you’ve secured finance and a charter for the second vessel to be named the Neptune North Sea and the contract
15 valued at $7.5 million. Are you looking to continue to build this side of your business?
NMS Actually Tom, the vessel will be renamed the Neptune Trident. As it turns out, the North Sea wasn’t particularly original, so we decided to change that name and conventions to something more consistent with our brand, so the vessel
20 will be named the Neptune Trident and I would expect that subsequent vessels will be consistent with that theme.
Anyway to answer your question, you know of course, in due course we’re really looking to build our offshore services division, but right now I would say
25 our objective is really to maximize the existing infrastructure. Securing the finance in this market under terms we did has been a major achievement for our finance team and really need to be commended on their efforts. What is pleasing though is that we see ….with the Neptune Trident as it will be known as with the case of the Neptune ROV Supporter, that boat will come to us
30 with a secure charter underway which really will serve to strengthen our cash flow quite considerably. So that charter is firm till the end of February with two 30-day extensions which are fully expect our clients to take up. So that’s very important to have those two vessels under charter, the first of our ROV is at work, the second one is already under contract and currently in its finally
35 acceptance testing. So when that is ready in the next week or so that would move immediately to our contract and that’s very important. The third ROV will come out sometime in the new calendar year, in January, February time.
BRR And what’s Neptune’s forward growth strategy from this point on?
40 NMS Let’s look at the media then and press the longer term. To date, our business is being characterized by acquisitions. We’ve done nine acquisitions to date with the tenth in process. You know, in the latter half of last year it was all about organic growth with the addition of a few acquisitions and over the last two years, it’s been very active from both organic and acquisitional fronts and
45 now we’ve moved forward and we have a business to run. You know, our focus now will be on looking at our book of business and growing that organically for the most part. So you know, that strategy really commence when I started with the company in 2006. You know, we built that strategy of being able to provide and build an integrated service capability in Australia, and we’ve done that and we’re ahead of time. Now the plan is to look at ways to build that business model outside of the Australian market, because one thing I’ve always maintained is that, if you can do a successful business and operate it successfully in the environment in Australia, you’ll be able to do it
5 anywhere because Australia is, for our oil and gas markets, is logistically challenging. We have some of the toughest safety and other regulations going, so should the business be successful in this environment then you should be able to immigrate this and that’s certainly is our plan to do that in the international markets.
10
So you know, this year we certainly won’t have the same inquisitive phase that you’ve seen. You know, organic growth really is the story and that has started to kick in, and realistically, it kicks in not very much as the big banner projects to level although we do love, you know, the big projects, but really
15 there are a large number of projects where you know, engineering and diving, engineering and fabrication, engineering and survey, engineering and you know the vessels and ROVs, and engineering and the Pipeline stabilization. This level between two or more businesses, there’s an awful lot of work going on right now, and our integrated project group is very busy with all those
20 opportunities but also looking at the big headline one which obviously you know, everybody loves to see. So that’s going particularly well.
You know, I won’t say that we’ve stopped on the acquisitions front, Tom, I think that if something presents itself, you know, we will have a look at it.
25 Obviously, today’s market is a bit more restrictive than it was in the past. However, you know, we have a plan and strategy which we maintain, will execute along those lines as we move forward.
We’ve just completed the acquisition of the vessel North Sea, which as I said,
30 will now be named the Neptune Trident. That’s the $30-million investment plus the two ROVs, and you know, I would imagine that we’re probably look at ordering a couple more ROVs this year because the market is incredibly buoyant. The North Sea is an area of significant growth. We are currently on a project in the North Sea which really is quite exciting because it’s an
35 integrated project that involves our engineering business. It involves the NEPSYS underwater welding, diving business. It involves Neptune Ross Deeptech in Aberdeen. In partnership with one of our larger construction clients that we’re really….you know, that’s a very technically challenging project and could only be done, you know, in the current form of our business
40 structure today, so we’re very pleased with that opportunity. You know, that’s a deep market and we plan on participating in that in a big way.
So I think, you know, other things such as de-risking the business, you know, I previously said that we’re not going to chase projects just for revenue.
45 We’ve got some pretty strict guidelines in place. You know, we won’t risk the company balance sheet to simply chase low-margin worth. We’ll stick to our niche in that regards.
Our cost base, you’ve always got look at that, and now that we’ve built a pretty comprehensive business we need to make sure that we’re financially strong, conservatively geared, and a strong balance sheet., and then growth our strategy, I guess, is the final thing, you know. Of course, we’re aware of
5 the fact that we need to meet our short-term financial measures, we’re comfortable that we can meet the market’s expectations. You know, we’re looking at Neptune in terms of three to five years and beyond so, you know, we need to be consistent with our long-term strategy. We’ll undo that sustainable business which will ultimately make Neptune a very compelling
10 investment, and quite frankly, that’s our job.
So, you know as I’ve said, and I’ve hoped to convey, we’re…you know, we’re still in pretty early stages of building the company. We’re happy with what has happened, so far. We’re quite small compared to the international peer group
15 but we do like to play in this league, it’s a big sector and I think we’ve got a great foundation to do a global business.
BRR And finally, Christian, what’s the financial year 2009 outlook for Neptune?
NMS Well, I guess, in terms of outlook, we should really start with the market
20 dynamics and unlock a load of other industry. We’re in a sector that has been probably not even in mid-cycle in terms of the stage it’s in. You’ve heard me talk about Sub-sea oil and gas sector that’s worth billions of dollars, you’ve got real supply constraints at the moment and therefore, I believe that this so called cycle is going to last quite a while. So that, I think, sets the context to
25 the price of oil and you know, whether it’s a $140 or whether $70 a barrel, I really don’t think it’s going to make much difference. You know the real driver is that the need to maintain existing infrastructure and more importantly, is to continue to explore and improve the quality of reserves. So market dynamics is very solid and for Neptune that’s obviously a good place.
30
In terms of the numbers which are, I guess, is a real measure of how successful we are as the business stands today in its current structure, we’re, you know, very comfortable with the market forecast. We’ve got five brokers out there who are currently reporting on us, and they’re broadly in line with
35 our expectation. I think consensus after tax profit is about $22 million in revenues in the 150 range and we’re comfortable with that. So we see a pretty strong year really and the year has started off very strongly in the first three months. We’ve got….you know, quite a lot of the first half revenue is visible which is unique for this organization to have sort of graded in 70%,
40 75% of the first half business locked away, so to speak, and you know, demand continues to grow at a strong rate. So I guess, you know, on that side we’ll, you know, we’ll update the market at the half year and we’ll see how it goes from there.
45 BRR Christian, thanks for speaking with me today. Listeners, that was Christian Lange, Managing Director of Neptune Marine Services. If you have any questions for Christian or you’d like more information about this broadcast, please email brr@brr.com.au. I’m Tom McKay, thanks for listening to Boardroom Radio.
INTERVIEW CONCLUDED
Contact brr@brr.com.au for more information
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