KS Energy Buoyed by 107% Jump in First Quarter Net Profit
The company's net profit after tax rose 107.4% from $5.3 million to $11.1 million, while revenue rose 69.6% from $63.5 million to $107.7 million, leading the company to a highly optimistic conclusion about FY2008 performance.
Mainboard listed KS Energy Services Limited announced strong financial performance for the financial quarter ended March 31, 2008. The quarter saw the completion of the acquisition of KS Medstar-1, a 300-feet cantilever jackup rig. This rig secured a US$130 million time charter in March 2008, and it commenced operation in April 2008 in the Mediterranean Sea. At the same time, the Discoverer III, a 1500 horse power land rig, which secured a US$22.5 million contract, also commenced operation in the Badin Field in Pakistan for British Petroleum.
Both the capital equipment and services business and the distribution business turned in strong performance this quarter. The improvement in the gross profit margin is mainly due to the higher margin contribution from the capital equipment and services business and distribution business. Included in the Group’s revenues this quarter is the first stream of revenue contribution from Atlantic Oilfield Services (AOS), a wholly-owned subsidiary of the Group that was acquired in May 2007.
Corresponding to the higher business activities, operating expenses were also higher this quarter. The accounts of AOS were also consolidated into the Group’s operating expenses this quarter. At the Group level, total operating expenses in 1Q FY2008 reported an increase of 89.0% or $10.5 million, rising from $11.8 million (1Q FY2007) to $22.3 million.
Non-current bank borrowings saw a $30.5 million reduction due to the repayment of loans undertaken for asset acquisition. On the other hand, funding requirements of capital equipment and services projects resulted in an increase in current bank borrowings, which reported a $61.1 million increase. At the close of the quarter, the Group’s gearing stood at approximately 1.57 times.
In Singapore, by the second half of 2008, the integration efforts will culminate into a 55,000 square metres office and warehouse facilities that will house the operations of KS Energy, Aqua-Terra Supply Co., Ltd and SSH Corporation Ltd. Working in the new facilities located in Jurong Port Road, will bring the Group closer together and achieve better cost and operational efficiencies.