On 12 December 2018, The Environmental Group Ltd (ASX: EGL) announced that its wholly-owned subsidiary Baltec IES Pty ltd. has won its first off-shore project with a value of approximately three-quarters of a million dollars.
The project has scope for both on-shore and off-shore work in a very challenging and stringent environment, and it is expected that it will be delivered to a tight schedule. Baltec IES’s consistently good performance in the last three decades is the main reason behind this project win. This Project win is an important milestone in the company’s strategic plan to further expand its repair and maintenance (R&M) activities and diversify its customer portfolio.
In FY 2018, Baltec IES delivered a 3 percent increase in revenue which resulted in a solid EBIT of $2.4 million against FY17 results of $2.7 million. Baltec products include diverter dampers, bypass stacks, inlet filter houses, and power enhancement. EGL’s another subsidiary TAPC revenue increased by 7 percent and delivered an EBIT of $692K in FY 2018 compared to an $830K in FY17.
In FY18, EGL delivered positive results by achieving an EBIT of $2.1 million ($2.2M in FY17) on revenue of $32.1M ($32.7M in FY17). Gross Margins of the company remained strong at 26.8% in FY 2018. During FY 2018, the company secured improved CBA facilities, increasing from $2.5M to $9M which consist a bond facility of $7M and a working capital facility of $2M.
As at 30 June 2018, the company was having cash and cash equivalents of $2.2mn compared to $5.6mn in the corresponding prior year. The decrease in the cash holding was mainly due to the payment of down debt, project timing and the ability to utilize its new funding arrangements and take advantage of contracts with less favorable payment terms.
In FY 2019, the company is expecting short-term tightening of results with an anticipated negative return in 1H19, returning to positive results in the 2H19, however at lower levels than FY 2018. Further, the company is planning to undertake a limited buyback and resale of untradeable share parcels to reduce costs and increase liquidity.
In the month of October, the company successfully purchased Baltec East Asia Pty Ltd (Trading as Baltec Australia) at a purchase value of $240k. In FY 2018, the company’s Board declared a final fully franked dividend of 0.06 cents as a result of the continued stability in operational profitability.
In the six months, the share price of the company increased by 20.00 percent as on 14 November 2018. EGL’s shares traded at $0.048 with a market capitalization of circa $10.44 million as on 12 December 2018 (AEST 4:00 PM).