agm notes

I attended the AGM today at the last minute but took notes throughout so here it is.........

Chairman Address - IMO a bit of a waste of time unless you’re a newbie as Ross was reading his notes (which I am sure is all in the annual report), but nothing new here.

CEO Address (C.Lange) - From 13 of the presentation onwards.
- As per pgs 13-15, Lange gave a summary of where NMS came from and where they are going. Emphasising Strategy is essentially evolving towards a whole lifecycle services model but will be achieved through the factors described on pg13. Got the feeling more acquisitions are nearby as that was listed at the top and he stated "as opportunities arise" - My guess is the Middle East in Qatar, especially since there is a lot of LNG work coming out of the region
- pg 16 - emphasised the value chain of a project lifecycle and that NMS are trying to create an end to end service model. Nothing new here really but good for newbie’s to appreciate the business model, which I believe will be a long term winner
-pg 17 - If anyone is dying to know that 'X' was 60%. Quite proud of the safety programs they have running/created (i.e one of the new board committees created)
- pg 18 - nothing new
- pg 19 - Mentioned the North Sea job, but nothing other than they are still working on this project, so have to assume it hasn’t been cancelled/failed until we are told otherwise. Again, as per the BRR interviews, Lange very proud of the pipeline project. The Pluto and Enfield projects were mentioned briefly, however, an interesting point was that Lange said that out of all the major offshore projects in Australia, NMS was involved with ALL of them in some shape of form.
- pg 20 - This was rather strange as the slide was on the screen for literally 1 sec. Lange said " Our Share price.....ah it’s Okay" and then moved on - weird I thought, not sure what to read into that??
- pg 21 - quite a lengthy explanation on the macro factors in the oil n gas industry. Pretty self explanatory.
- pg 22 - Not much discussed here other than NMS is doing well comparatively, but I didn’t pay much interested as it’s not really comparing 'apples and apples' in terms of what each company does.
- pg 24 - The main thing out of this slide was in regards to the fact that Lange said they already have offices in Qatar(must be quite recent), and will have in Brazil very soon.
- pg 25 - Lange stated that he was quite concerned specifically with the US and UK economies, which might impact economic growth within each region, with obvious impacts. However, he was bullish about Oz, China and the Middle East. Although not mentioned on the slide he mentioned West Africa (but this is not really new either)

I believe Lange eluded to guidance during this slide (or the next can’t read my writing) by using an analogy that "Its like picking a seed out of a tomato”. So maybe Management aren’t sure due to the volatile economic conditions and are probably playing it safe in not giving guidance, well that’s my theory.
- pg 26 - as per the slide
-pg 27 - Lange did mention that tendering is now able to focused more on "multiple year" projects due to the increased range of end-to-end services. Good but probably inferred by most.
- pg 28 - Obvious disappointment that NPAT will be down for the 1H (09/10) compared to the previous years. Did explain that engineering is growing but never going to have the margins as the offshore division. Now something I am not sure about and didn’t think of during the AGM, is whether they expect NPAT of 1H10 to be less than Normalised NPAT ($15.6M) or reported NPAT ($12.9M) of the 1H09?????? Might not be so bad if its Normalised NPAT?? Nothing else other than what is on the slide

On to the Q & A Session (might not be in order)

1st person: Ask for a explanation between the 08/09 NPAT full year numbers and the adjusted number (i.e $25.1M and `$21M) A standard accounting answer provided. Answer can be found in the annual report.

2nd person: A question was asked in regards to providing more detail on the failed acquisition. Lange stated that it wasn’t because they didn’t think it would fit the NMS value chain model, but there was enough "Murkiness" during due diligence that caused them to pull out. I presume, in tongue and cheek Christian said "Didn’t even leave a scratch". He went on to say how they are happy with their due diligence process.

3rd Question: This question dragged on took up quite a bit of time. The questionnaire wanted to know whether NEPSYS was a basis for the business model?? Lange stated that NEPSYS was a 'Differentiator' for the company whereas the Vessels are an 'Enabler'. Only interesting thing out of this question was the Lange stated that for an NEPSYS project, they always used the clients vessels, not their own.

4th Question: A question in regards to the growth rates of China and India and why NMS haven’t done any work in each country. Lange answered by first stating that they have done work in both areas, however, he doesn’t feel (at this stage, maybe later) that they need to set up a 'presence' there. He said he felt that they India and China could/would provide work for NMS but not to the level where they need a "presence”. I believe NMS recently created 4 x Vice President Positions (i.e UK, Aust, US, Middle East) which these countries would be a subset of that region.

5th Question: A question was raised about dividend payments and MMA(Mermaid) was used as an example. The response was given by Geoff Newman. Essentially his answer and personal view was, as long as they have capital expenditure opportunities that can provide further growth, they believe that is the best direction to take for the company. Although he mentioned that this is a 'hot' topic among the board. I personal prefer no dividend, however I can understand other’s viewpoint.

I left straight after as I had to get back to a work meeting but that’s all I had written down. Sorry a bit messy but better than nothing hey :)