Diversified mining services company Ausdrill Limited’s (ASX: ASL) revenue increased 13.4% to $580.2 million during the six months to 31 December 2012.
All key divisions of the Group recorded an increase in revenue as a result of Ausdrill’s strategy of increasing its operational capacity to meet ongoing demand from the mining sector, along with increased activity in Africa. However, the Group’s profits were impacted by a number of significant items as well as a general slowdown in activity in the Australian mining sector from September 2012 onwards.

As a result, the Group has reported attributable net profit of $48.1 million for the period, a decrease of 11.9% over the prior corresponding period. The result includes a number of significant items principally relating to the restructure of financing arrangements, the acquisition of Best Tractor Parts (BTP) and a large bad debt provision.
After adjusting for the effects of the significant items of $9.3 million, Ausdrill recorded an adjusted profit after tax of $57.4 million (see Attachment A), which is in line with the prior corresponding period’s adjusted profit after tax of $56.9 million. This demonstrates the benefits of the Group’s strategy of providing a diverse and vertically integrated service to the mining industry.Earnings per share fell by 13.1%. However, when significant items are excluded, earnings per share fell by 0.5%.

A fully franked interim dividend of 6.5 cents per share will be paid to Ausdrill Shareholders on 15 May 2013. Shareholders will be entitled to participate in the dividend reinvestment plan at a 2.5% discount. Ausdrill Managing Director Mr Ron Sayers said: “By making strategic acquisitions and building businesses from the ground up, we have put together a very comprehensive portfolio of services we can offer our customers across every stage of the mining process. This strategy has resulted in Ausdrill maintaining operating profitability even though the mining sector experienced a slowdown in activities from September 2012 onwards.”
“Our diversity and in particular the continued strong growth from Africa places Ausdrill in good stead as the mining sector resumes activity in 2013.”

Outlook
At an operating level the second half should see the benefit of a full six month contribution from the BTP acquisition as well as the ramp-up at the Syama project in Mali, where Ausdrill is carrying out work under a US$540 million contract. Improved trading conditions are also expected in Western Australia as a result of improved confidence from a higher iron ore price, with conditions for coal related services in Queensland and NSW also expected to recover during the period albeit at a slower rate. This is however tempered by the fact that the mining industry is seeking to reduce costs and defer discretionary expenditure which, along with increased competition and surplus equipment, may lead to tightening margins.

Taking into consideration these matters, and subject to any change in circumstances, the Company expects that the second half performance for FY2013 will be better than that reported in the first half with an overall target of at least matching the reported net profit after tax for the year ended 30 June 2012 of $112 million. The resource industry is expected to remain strong over the medium term in Australia and Africa where Ausdrill has a long established presence and local know-how and, as a consequence, Ausdrill remains very well placed for continued growth beyond the current financial year. Mining services company Ausdrill Limited is taking a leading role in providing training for the next generation of mining workers, through the establishment of a specialised facility near Perth with its training partner Site Group International.

Ausdrill CEO Mr Ron Sayers and Site Group International CEO Mr Vernon Wills have signed a Memorandum of Understanding (MOU) with the Honourable Murray Cowper, the Minister for Training and Workplace Development, to establish a Mine Workers’ Training Academy at Muresk Institute. This initiative has been developed over the last two years in response to the increased shortage of skilled people in the resources sector.

The Academy, which is located at Curtin University's Muresk campus in the town of Northam, 90 kilometres east of Perth, will deliver specific training in the operation of all heavy earthmoving equipment, blast hole drilling, exploration drilling and shot firing. The Academy will run as a campus-style facility incorporating a working hard rock mine and provide hands-on training in a controlled environment. Its primary aims are to bring people into the industry, produce site-ready workers and high quality, safety conscious workers. The Academy will be targeting young people, Indigenous Australians and experienced workers seeking to add to their skills.

In addition, the Academy will examine the feasibility of providing prisoners from nearby Wooroloo Prison Farm with resources industry training as part of their pre-release program. Mr Sayers, the driving force behind the Academy, welcomed today’s signing, highlighting the significant benefits the Academy will provide to the resources sector which currently requires more than 1,000 extra people each week. “The Academy will address the skills shortage that is currently plaguing the resources sector by combining employment offices as well as training facilities to deliver a ‘one-stop-shop’ bringing people into our industry,” he said.

“As someone who has worked in this industry all my life, I only wish that something like this had existed when I was younger. My sincere hope is that it will provide young people with the best possible training as they embark on their careers in the mining industry.” Ausdrill has received a high level of support for the Academy from numerous organisations within the mining industry who have previously made pledges.

Mr Wills endorsed Mr Sayers’ comments:

“Ron and I share the belief that there is not a people shortage in Australia but a skilled people shortage. Providing people with an accredited pathway into the mining and resources sector that delivers practical training aligned to industry requirements is a major step forward. Site Group is excited to be working with Ausdrill by delivering training and assessment services to this important initiative.” The signing of the MOU was also attended by the Hon Jim Chown MLC, Member for Agricultural Region, Liberal Party; Hon Philip Gardiner MLC, Member for Agricultural Region, the National Party and Hon Mia Davies MLC, Member for Agricultural Region, the National Party representing the Hon Brendon Grylls MLA.