SDS attributes part of its 38.2% or $9.5 million revenue growth for this September quarter to the acquisition of drill bit competitor International Drill Quip in June, following a bitter legal dispute with the company earlier this year.
Total revenue of nearly $34.4 million compares with a September 2004 revenue of almost $24.9 million. SDS said the purchase of Maley Steels in September last year had also contributed to this boost.
Company secretary Kevin Benson said further improvements were expected in the second and later quarters of this financial year.
“SDS has achieved a strong first quarter result,” said company secretary Kevin Benson.
“The integration of the International Drill Quip business into the SDS structure has been completed with further synergies and cost savings are expected later this year...[while] the performance of Manley Steels is improving and should make positive contributions to the group’s result for 2006."
All other business units were performing to expectation, he said.
The company also recorded a net profit before tax of $5 million, up from nearly $3 million in September 2004. In addition, its organic revenue increased 22.6%.
Meanwhile, SDS said its inventories had grown to support increased sales growth, while a strategic plan had been developed to reduce inventory holdings. This plans is expected to begin in the second quarter, said the company.
Also, the company’s net debt for this period was slightly over $16 million or 36% gearing ratio.
In March, the company found itself amid speculation of relationship breakdown between the company’s then managing director, Christian Lange, and its major shareholder Fred Moir, who was understood to hold about 44% of the company. It called for a halt in the trading of its shares when Lange resigned from the company at this time.
Meanwhile, SDS finally acquired Drill Quip four months ago for $844,477, after the deal was originally announced in early 2002. Earlier this year, SDS told the stock exchange it had launched legal proceedings against Drill Quip in the WA Supreme Court in order to get access to information to carry out due diligence, which it claims was being withheld.
At this time, SDS managing director Fred Moir claimed Drill Quip had refused to provide crucial information such as work in progress and stock figures. The Supreme Court of Western Australia handed a subsequent judgement to SDS. An appeal brought by International Drill Quip was dismissed.
In September 2004, SDS announced it completed the acquisition of Canadian drilling consumables manufacturer Manley Steels for $2.1 million, which followed on from the May purchase of fellow Canadian tool makers Saxum Rock Tools for $1.8 million.
