S$’000 FY2015 Change over FY14
Revenue 80,491 11%
Gross profit margin 27.9% 1.5 percentage points
Profit after tax 10,505 34%
Net profit margin 13.1% 2.2 percentage points
EPS (cents) 2.6 30%

NORDIC GROUP has demonstrated that it can perform well despite the oil & gas market being in the dumps.

For FY15, it had nothing but good news on many key fronts: For example, revenue and net profit rose, gross profit margin expanded as did net profit margin (see table).

Revenue from "maintenance services" -- which reflects recurring income -- surged 46% to $21.65 million.

"Project services" -- which reflects customers' capital projects and are thus lumpy in nature -- was stable with a 2% growth to $58.8 million.

ChangYehHong2.16Chang Yeh Hong, executive chairman of Nordic Group, speaking with analysts and fund managers at a FY15 results briefing.
Photo by Leong Chan Teik
The latter segment missed out on the contributions from two major projects of ExxonMobil and Chevron which were to have started in 4Q2015 but were delayed.

They have since taken off in 1Q this year, said Mr Chang Yeh Hong, the executive chairman of Nordic, during a FY15 results briefing.

As at end-2015, cash levels had risen from $32.3 million a year earlier to $35.6 million, placing Nordic in a net cash position.

Borrowings stood at $32.2 million (up from $25.3 million to help fund the acquisition of Austin Energy last year).

"It's a credible result given that the oil & gas market is so bad," said Mr Chang. "Our scaffolding and insulation services for the downstream of the oil & gas industry provide us stability and recurring income. We are looking for more good results this year."

He acknowledged the lucky contribution of a strengthening USD as well as Nordic's cost-savings efforts.

Austin workshop@ Austin Energy's workshop, where insulation materials are fabricated for use on petrochemical facilities. NextInsight file photo.
A significant positive was the acquisition In June last year of Austin Energy, which provides insulation services mainly to petrochem companies. This is the latest and fifth business division of Nordic.

In 1H this year, Austin Energy's -- likely positive -- contribution will be felt for the first time on a year-on-year basis. (This, coupled with the Chevron and ExxonMobil projects mentioned above, could provide a boost to the 1H results). 

The hoped-for synergy between Austin Energy and MultiHeight Scaffolding, which is Nordic's other key business division, has started to materialise, with cross-selling leading to several contract wins.

(It's a case of the whole being bigger than the sum of the parts.)

MultiHeight provides scaffolding services for petrochem companies, and this business continued to be steady and highly cash-generative.

Where things did not look great for Nordic: The shipbuilding industry continued to be in the doldrums. Nordic's systems integration division has clients among 28 shipyards out of the 45 in China's whitelist of shipyards.

That division has shifted its focus to existing ships which undergo conversions, and offer the shipowners a wide suite of services and products.

The overall fundamentals (plus investor relations efforts and share buybacks, etc) of Nordic have underpinned its share price, which has gained a whopping 68% in the past 12 months (from 11.4 cents to 18.9 cents recently).

Nordic is proposing a final dividend of 0.65 cents a share. Together with the interim dividend of 0.4 cent a share, the total payout amounts to 1.05 cents -- a record since Nordic's listing in 2010.

It is equivalent to a payout ratio of 40%, in line with the dividend policy set (for the first time) by Nordic last year. (See story on Nordic's dividend policy)

The dividends translate into a yield of 5.6% based on a recent share price of 18.9 cents.

Nordic's Powerpoint materials for the FY15 results briefing are here. 

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