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21st
August 2008
Media
Release:
ORBITAL ANNOUNCES 2008 ANNUAL RESULTS
SOLID $0.5 MILLION PROFIT ACHIEVED DESPITE ECONOMIC
SLOWDOWN, RISING AUSTRALIAN DOLLAR
International clean
energy technology group, Orbital Corporation Ltd (ASX: OEC - "Orbital"),
has confirmed plans to continue to expand in aligned business sectors
- particularly the rapidly growing Alternative Fuels market - after
today announcing a $0.5 million net annual profit after tax.
The result, which was in line with the Company's forecast of a second
half and full year 2008 financial year profit, would have been above
last year's $1.3 million net profit but for the stronger Australian
dollar.
Orbital
said today that its bottom line earnings were reduced by approximately
$1.2 million due to the rising Australian currency which negatively
impacted earnings generated from its US manufacturing joint venture,
Synerject, engineering revenue and royalty income.
The profit result
was achieved on total revenue of $14.9 million (2007: $15.2 million),
with the main contributors being a slightly decreased contribution
of $11.7 million from engineering services and increased contribution
of $2.7 million from licence and royalty income.
"Despite a generally
tough operating environment, we are pleased to have achieved a profit
for the year," said Orbital's newly appointed CEO, Mr Terry
Stinson. "Importantly, we are in a strong financial position
with cash on hand of $8.8 million at year-end, which gives us the
balance sheet strength to pursue our growth objectives."
"We have achieved
several important strategic goals during the year, including our
expansion into the alternative fuels business through the acquisition
of Sydney-based Orbital Gas Products," Mr Stinson commented.
"These growth initiatives will add value in future years and
position the Company extremely well in the current environment."
"The acquisition
of OGP marks the first phase of our plans to grow into gaseous fuel
technology and develop additional commercial business opportunities,"
he said.
"These and other
developments in the Liquid Natural Gas (LNG) market provide exciting
new growth avenues for Orbital in the current market environment,
where demand for alternative fuels technology is rapidly increasing."
Mr Stinson added. "We are focusing on implementing our strategic
investment initiatives and targeting continued profitability year
on year."
Synerject
Notwithstanding the
slowdown in the US marine market, Synerject LLC generated a 2% increase
in revenue to US$81 million during the 2008 financial year. Synerject
generated a US$2.6 million operating cash flow, paying its first
dividend of US$840,000 to Orbital, and remains in a strong financial
position with a gearing ratio of 18%.
Orbital CEO Terry
Stinson said: "We are committed to providing Synerject with
technical and financial support and believe we will be seeing much
greater reward for our efforts in the not too distant future. Orbital's
investments in Chinese infrastructure have begun to pay dividends,
with sales in China targeted to increase by US$10 million to US$15
million next financial year.
"We are laying
the foundations to ensure that Synerject is well positioned to win
sales when Chinese emissions legislation is introduced," he
added.
Engineering Services
Engineering Services
generated revenue of $11.7 million for the full year, slightly lower
than the previous year, reflecting the challenges of the downturn
in the general market and the stronger Australian dollar.
The launch of the
new FlexDI™ 'One Engine - Any Fuel' system further cemented
the Company's diversified business direction, expanding Orbital's
Direct injection systems to operate with a wide range of both liquid
and gaseous fuels, generating a significant response from both China
and Europe.
"With the increasing
awareness of global warming, rising fuel costs and depleting availability
of crude oil, the call for alternative fuels and energy and emission
management has never been stronger," said Mr Stinson. "Orbital's
engineering services are well positioned to provide key technology
services in forthcoming years," he continued.
Orbital's commitment
to research and development has resulted in 20 new patent applications
being granted. Four of these have been in the last 12 months, contributing
to and extending the life of current and future royalty streams.
Licensing and
Royalties
The overall number
of Orbital DI engines earning royalties remained steady during 2008
compared to the previous year. The 2008 financial year saw two new
products using Orbital's technologies introduced, including the
first ever 4 stroke engine application the multi-fuel Polaris MV800
ATV.
"Licensing and
Royalty revenue increased by 17% to $2.7 million compared to the
previous financial year. Despite the steady royalty volumes, the
contribution from this sector fell by $0.3 million due to the impact
of the weakening US Dollar but this was offset by increased licence
fees," said Mr Stinson.
"Since product
introduction in 1996, over 1.6 million air injectors/cylinders have
been commercially sold, reducing greenhouse gas emissions and improving
fuel economy," he continued. "Orbital's commitment to
identify and secure alternative fuel opportunities and continued
expansion into aligned businesses will ensure that the Company continues
to grow as a profitable international developer of innovative technical
solutions for a cleaner world."
New Developments
and Growth
Orbital announced
several strategic developments during the year to commence its expansion
into the Alternate Fuels Market.
"We have unveiled
a number of new initiatives aimed at furthering the Company's expansion
into the alternative fuels business, including the formation of
Orbital Gas Products, (formally Boral Alternative Fuel Systems),
a tier 1 supplier of LPG systems to the Ford Motor Corporation and
to the aftermarket operators," Mr Stinson said.
"In addition, our growth in this
area received a further boost with the Federal Government announcing
funding for the installation at our facilities in Perth of a heavy
duty engine testing facility capable of operating engines on natural
gas, LPG and biodiesel as well as diesel and gasoline."
ENDS
About Orbital
Orbital is an international developer of innovative technical solutions
for a cleaner world. Orbital provides innovation, design, product
development and operational improvement services to the world's
producers, suppliers, regulators and end users of engines and engine
management systems for application in motorcycles, marine and recreational
vehicles, automobiles and trucks. Orbital's principal operations
in Perth, Western Australia, provide a world class facility with
capabilities in design, manufacturing, development and testing of
engines and engine management systems. Headquartered in Perth, Western
Australia, Orbital stock is traded on the Australian Stock Exchange
(OEC) and the OTC Bulletin Board (OBTLY).
Forward Looking Statements
This release includes forward-looking statements that involve risks
and uncertainties. These forward-looking statements are based upon
management's expectations and beliefs concerning future events.
Forward-looking statements are necessarily subject to risks, uncertainties
and other factors, many of which are outside the control of the
Company, that could cause actual results to differ materially from
such statements. Actual results and events may differ significantly
from those projected in the forward-looking statements as a result
of a number of factors including, but not limited to, those detailed
from time to time in the Company's Form 20-F filings with the US
Securities and Exchange Commission. Orbital makes no undertaking
to subsequently update or revise the forward-looking statements
made in this release to reflect events or circumstances after the
date of this release.
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