The company reported a significant improvement in operational and financial performance as it focuses on overhead reduction, productivity initiatives and securing “quality business” – all initiatives that helped it post an improved underlying before tax profit of $9.4 million.
This figure was an improvement of $9.2 million, or 4510%, on the previous year’s $200,000 profit despite a drop of consolidated revenue from $227.9 million to $145 million.
The loss included impairment charges of $5.9 million and higher finance costs of $26.2 million.
AJL managing director Russell Eggers said trading conditions remained challenging throughout the year, particularly for the drilling division in the mining and materials sector, but he believes the company is prepared to take advantage of the upswing.
“Despite no indication of material improvements in market conditions in the near term, we continue to win significant production related work in the underground coal sector, demonstrating our expert knowledge and ability to operate in highly technical projects concerning gas drainage,” he said.
"The engineering and construction division substantially completed two major projects in partnership with Spiecapag Australia during the year, including the construction of the 300km Eastern Goldfields Pipeline in WA.”
The company provides pipelines, specialist infrastructure, construction and drilling services to the energy, water and wastewater, resources and public infrastructure sectors.
Its drilling division continued to experience subdued market conditions and reductions in exploration expenditure by the major coal mining companies, with revenue down 11.3% to $83.5 million, reflecting an ongoing contraction in the exploration market.
Underlying EBITDA decreased by 12.7% to $9.4 million, partly due to measures previously taken to reduce costs and re-focus on the Group’s core strength of directional drilling, however Eggers said the result was “pleasing” when viewed in the context of depressed coal prices.
The engineering and construction division reported revenue of $61.5 million, a decrease of 54%, which reflect the timing differences in the award and execution of work, substantial completion of two major pipeline projects, and a focus towards smaller non-joint venture drilling and construction projects compared to last year.
Underlying EBITDA increased substantially from the comparative period to $8.6 million, reflecting the positive impact of the divisional restructuring, greater focus on the division’s core skill capability of pipeline construction and a renewed emphasis on project execution and cost control.
A reduction of legacy projects requiring resolution also benefited the business, helping deliver a reported EBITDA of $7.3 million.
The company’s third leg is its 45% interest in UK fraccing concern Cuadrilla Resources, and various other licence applications owned directly in Australia and the UK.
Cuadrilla’s application to drill and frac up to four wells in the Bowland Basin, at Preston New Road and Roseacre Wood, was rejected and the company is now appealing. Its oil and gas arm is otherwise fairly quiet.
AJL’s debts are now to $78.9 million, predominantly as a result of unfavourable currency translations between the Australian dollar and US dollar, accounting for $10.5 million of a $15.7 million increase.
A further $3.1 million in interest also added to the debt.
The company needs to start repaying the principal debt in early 2017 and has deferred almost $2 million in interest repayments while it reviews its capital structure.
The company has $16 million in cash despite financing and tax payments of $12.4 million last year, reflecting the significant improvement in cash flows from operations of $1.2 million.
