Shares in Brisbane based testing group ALS jumped nearly 12% as investors reacted favourably to the release of the 216-17 results late on Tuesday night.
The shares surged 12.8% to $6.60 after hitting a day’s high of $6.85 in the wake of the company revealing a return to the black – and a lift in the final dividend.
ALS said it earned an underlying net profit after tax from continuing operations of $112.7 million for the year to March 31
Directors said the result was assisted by a second half underlying result of $53.1 million (excluding non-laboratory operations of Oil & Gas most of which is being sold), "which is within the guidance range of $50 to $60 million (excluding Oil & Gas) announced to the market in November 2016.”
The result was 4.0% higher than the $108.4 million comparative (also excluding non- laboratory operations of Oil & Gas) underlying net profit after tax for 2015-16.
Revenue from continuing operations rose 2.7% to $1,272 million.
Director declared a final partly franked (40%) dividend for the year of 8.0 cents a share (2016: 6.0 cents, 40% franked).
With the interim dividend of 5.5 cents a share (60% franked) the total partly franked dividend for the year will be an unchanged 13.5 cents a share.
Directors said the “(final) dividend is in line with the Board’s policy of paying out at the upper end of its 50-60% range of underlying NPAT in a market where the Commodities sector is cycling up.”
Statutory profit from all operations for2916-17 was $81.6 million compared with the net loss after tax of $240.7 million the previous year. Total revenue from all operations was $1,366 million, virtually unchanged from the $1,365 million generated in FY2016.
And what excited the market wasn’t the result, but the news that the company could be on the verge of getting rid of its trouble oil and gas assets.
"As announced in November 2016 following a strategic review, the Company intends to divest the majority of its assets in the Oil & Gas technical services sector,” directors reminded shareholders in yesterday’s statement.
"Simmons & Company International, energy specialists of Piper Jaffray, were engaged to advise the Group on options to transact the divestment and they are currently assessing a number of offers to acquire the business. It is the Company’s intention to retain the laboratory services component.
"The Oil & Gas businesses being divested incurred underlying losses of $14.5 million during the year as the markets they service continued to suffer from reduced exploration and production activity, whilst the Oil & Gas laboratories not being divested delivered an underlying operational loss of $6.3 million,” directors said.
Looking to the 2017-18 financial year directors said they would be looking to grow the company;s food safety business beyond the current revenue level of $200 million.
"During FY2018 the Company will be rolling out its new five-year strategic plan under the stewardship of Raj Naran in his new role of Managing Director and CEO, commencing in July 2017.
"The Group is confident that the quality of its assets, its operating model, and its strategic disciplined focus, will see it continue to increase its market share despite the challenges of current conditions.
"ALS will continue to pursue growth opportunities in Life Sciences; particularly in the food sector where it is evaluating a select number of high quality bolt-on acquisition targets.
"The Group remains focused on being ready to take advantage of future opportunities by targeting organic and acquired growth in the more stable Environmental and Food sectors (Life Sciences) and by maintaining its assets, market share and reputation in the more cyclical Commodities division so as to continue responding quickly as those markets recover further.”
Directors said the company will follow its usual practice of providing formal guidance for the first half at the AGM on July 20.
