AJ Lucas Group revenue climbed by 96% from $216.4 million at the same time last year and its net profit after tax rose by 110% to $13.5 million.
AJ Lucas chief executive Allan Campbell said the results reflected the company’s strategic moves.
“The margin I am more pleased about because as the business matures the management of it gets better,” Campbell told a teleconference yesterday.
“What we are trying to get here is a company which produces a sustainable, high quality, maintainable earning stream which is quite well balanced.”
Lucas is one of the largest providers of drilling services to the coal and coal seam gas industries, working in Queensland and New South Wales.
Revenue for the drilling side of the business in 2007-08 was $88.4 million, up from $67.6 million the previous year.
Last Friday AJ Lucas settled its acquisition of Mitchell Drilling and now has 88 drill rigs in its portfolio.
Campbell labelled the Mitchell deal as a “significant and strategic acquisition” but said he did not think it was cheap and AJ Lucas had paid market value.
He is hoping to capitalise on the move.
“We will be disappointed if we can’t beat the cash produced by that business [Mitchell] by some 15 to 20 per cent in the first year,” Campbell said.
Looking forward to the results of the Mitchell transaction he predicted the combined business would produce $200–250 million of revenue.
“I think it will be impossible for us to restrain that business to under $350 million,” Campbell said.
The company has relocated the Lucas business to the Mitchell head office in Brisbane.
Drilling continued to be a strong asset for AJ Lucas.
“Drilling is a side of the business where clearly we are doing well and it has very substantial growth prospects,” he said.
The drilling business is exposed to coal, coal seam gas, underground, horizontal directional drilling and oil and gas drilling.
Campbell said the market was strong and “we are basically flat out at the moment, with rig utilisation at 92 per cent”.
“What we are trying to do is play with those rigs to get the most bang for the buck,” he said.
AJ Lucas said it was looking down the line for the next eight to 10 years at how it wanted to reshape the business in regards to capital expenditure.
Meanwhile, Campbell said the outlook for the company was “another year of growth” with AJ Lucas entering the 2008-09 financial year in a strong position.
“We are very interested in the sustainable, alternative energies to our traditional, conventional stuff, but which also support the underlying business,” he said.
AJ Lucas is upscaling its systems and procedures including spending $32 million on its drilling division.
