Industrea have announced an adjusted net profit after tax (NPAT) of $41.3 million for the 12 months to 30 June 2008, up 122% from the previous year’s result.
EBITDA rose to $77.6 million, fuelled by record operating revenue of $192.0 million, a 192% increase over the previous corresponding period. The increase in FY08 revenue was primarily due to the acquisitions made over the last two years.
Adjusted net profit after tax represents underlying profit after tax prior to amortisation of intangible assets recognised on acquisitions and other purchase accounting adjustments.
Robin Levison, Managing Director and Chief Executive Officer of Industrea said that the company was well positioned both operationally and financially with a strong balance sheet and significant capacity for further growth.
Financial year 2007/2008 has been a landmark for Industrea with record profits, its inclusion in the ASX 300 and a $250 million acquisition, he had added.
The 12 month period also saw Industrea secure a series of significant new clients and contracts. Industrea’s geographical spread of customers now includes Australia, China, Russia, South Africa, South America, Papua New Guinea and South East Asia.
In the key growth market of China, Industrea have successfully established themselves in the local mining industry.
The Directors have declared a fully franked dividend of 1.0 cent per share.
The record date for the dividend will be Friday, 3 October 2008 with payment scheduled for Thursday, 23 October 2008.
Industrea announced the largest acquisition yet for the company in February 2008 with the purchase of mining contractor Huddy’s Plant Hire (Huddy’s) for $250 million.
According to Robin Levison, this purchase increased and enhanced the quality of Industrea’s already strong cash flows by providing greater diversity of earnings and significant, reliable and recurring monthly revenue.
The Huddy’s acquisition followed the purchase in August 2007 of Boart Longyear’s mining capital equipment business for $10 million.
The Boart Longyear business, which had a record of sustained profitability and strong cash flow, was coupled with Industrea’s existing PJ Berriman & Company (PJB) business to form the mining capital equipment division which has accelerated the expansion of Industrea’s mining products business.
The Boart Longyear business - which builds mining capital equipment used underground for carrying large loads such as in coal mining – complements PJB which builds lighter, people-carrying equipment.
Like Industrea, the new business had already sold products into the China market and under Industrea ownership, Chinese distribution has been directed through Industrea’s WADAM business, providing additional synergies.
New contracts and clients
Robin Levison said China has shown continued growth in FY08 with contract wins reaching new heights. For example, in May and June 2008 alone, Industrea secured contracts in China totalling more than $20 million. These were with major Chinese coal mining companies Jincheng Mining Group and the Longmei Mining Group as well as a maiden contract with Zhengzhou Coal Group, he had added.
According to Robin Levison, these three contracts all involved the provision of directional drilling and coal degasification equipment, underlining the success of Industrea as a leading provider of mining safety and productivity equipment in China.
Beyond China, Industrea continue to expand its geographical spread of clients.
In March 2008, Industrea announced that their wholly-owned subsidiary, Advanced Mining Technologies, had been awarded a major contract in South America by mining company Anglo American Chile, a member of the Anglo American Group.
In Australia, Industrea announced in November 2007 it had beaten significant international competition to secure a $16.7 million contract to supply a range of underground longwall transport equipment to Anglo Coal Australia’s Moranbah North mine in Queensland’s Bowen Basin.
The contract is for the supply of equipment weighing up to 85 tonnes with a carrying capacity of up to 70 tonnes. This specialised equipment with its large carrying capacity is increasingly in demand as technology improves and producers focus on larger coal seams.
Industrea have their maiden contact win in Russia with a deal to supply directional drilling and coal seam degasification equipment from AMT. This contract opened the Russian market to Industrea’s growing range of products and services.
Russia is one of Industrea’s strategic target markets along with China, India and South America.
Russia is a large coal producer and its resources sector is in the process of large-scale modernisation which will continue to fuel demand for Industrea’s products and services.
In May 2008, Industrea won a contract with PT Inco (Vale Inco) in Indonesia to provide its CAS-CAM collision avoidance mining technology. The contract with PT Inco have allowed Industrea to tap into the fast-growing South East Asian mining market for the first time and provides a reference platform to network with other potential buyers in the region.
With the mining industry enjoying rapid growth worldwide, particularly in Asia, South America and South Africa in recent years, there is a large and global market for a highly accurate collision avoidance system in mines.
This system has now been embraced by a number of mining companies.
Grants and awards
In October 2007, Industrea was awarded a $2.2 million grant by the Australian Government to develop a Driver Safety Management System that targets a reduction in the number of incidents on mining sites caused by driver fatigue.
Later that same month, Industrea was runner-up in the Large Advanced Manufacturer category of the Premier of Queensland’s Export Awards 2007.
In August 2007, Industrea announced that they have been awarded the exclusive agency for the sale and service of US-based Petitto underground mining equipment and parts in Australia, New Zealand, China, and Mongolia.
Petitto Mine Equipment are manufacturers of electrically powered longwall equipment and installation and removal machines, with significant numbers of ‘Petitto Mules’, ‘Pack Mules’ and ‘Mule Haul’ machines already operating in Australia.
Petitto Mine Equipment have recently developed a new machine capable of lifting and carrying longwall equipment up to 50 tons. There are significant opportunities for the sale of this larger machine in Australia and China.
Post year end
The momentum developed by Industrea over 2007/2008 with a steady flow of significant new contracts and clients has continued into the new financial year.
Industrea have already announced a $2.5 million sale of two underground long wall roof support carriers to a new client in Inner Mongolia with the contract being negotiated by WADAM.
Inner Mongolia’s mining sector is rapidly expanding to meet greater Chinese demand with significant new mining leases being granted. Many of Industrea’s existing key Chinese Mining Bureau customers already have or are developing mining leases in Mongolia.
Industrea have further strengthened their management team with the appointment of Kieran Wallis (Chief Financial Officer).
The outlook for Industrea is strong with the current Order Book including existing long term integrated mining services contracts equating to 75 % of forecast revenue for FY09.
Directors remain confident that assuming no material negative changes in current trading patterns or economic conditions, Industrea will post another record years profit for the Year End June 2009 with forecast revenues of between $330-$350m and NPAT (pre amortisation and purchase accounting adjustments) being in the range of $55-$60m.
This forecast is based on current demand conditions, the current forward sales pipeline and the recurring revenue from the sale of spare parts and associated service and support revenues being derived from the global population of mining equipment sold by Industrea.