Q: What timeline are you looking at for approval for the fuel facility?
Concerns were raised by the Australian Department of the Environment over the impact the port would have on kiwi birds and turtles. For example, there was concern that the artificial light emanating from the port would disrupt the nesting habits of turtles, which rely heavily on moonlight.

We engaged an environmental expert from the Charles Darwin University to study this. Two weeks ago, we submitted the luminescence report to the Department of the Environment. The port does not interact with nesting sites, as the nearest one is 7km away.

We already have a facility at the Gorgon project on Barrow Island that is grade A internationally in terms of its impact on the environment. The facility has full-time monitoring of vessels. So, we expect an approval for the fuel facility at Melville Port any day now, conditional on our implementation of a monitoring program to make sure any impact on the environment is continually monitored. We have just brought in an environmental specialist into the business in anticipation of that.
CK Eng 31.8.2015Non-executive non-independent director Eng Chiaw Koon.
Photo by Sim Kih

Q: Do you have committed clients for the tanks at Port Melville?

Yes, the client will pay us A$2.4 million a year for the entire fuel storage facility. We will also take a cut of their distribution proceeds.


Q: Finance costs for FY2015 have doubled year-on-year to A$7.5 million. What do you expect to be the refinancing rate, considering that the SGD bond is now trading below par?

Once we have the approval for the fuel facility, we will have strong cash flow coming in from the fuel supply and the wood chip export service in USD. We will then be looking at repaying our MTN program. We hope to complete the refinancing by November 2015.

Q: What is your outlook for the resources industry in Australia?

We made a decision to get out of the resources industry in 2013. We expect very low capital expenditure in this area. We are doing work in the industrial post processing sector related to resources, but not in mining.

T
here has been structural change in the tender process that has been helpful for AusGroup. In the past when we tendered for a project, we ran into impairment charges because of variation orders. Now, rather than bidding on a lump sum, the bidding is measured on quantities. Under lump sum contracts, we had to state what the contingency sum would be. Now, the variation work is chargeable by hours.

Also, the cost of operating in Australia is now down by 40% in USD terms. The AUD has depreciated by about 30% against the USD. Secondly, negotiation at the labor union has resulted in a reduction of wages by about 8% to 10%.

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