Australian construction and mining services group WestStar Industrial (ASX: WSI) has posted a healthy June quarter performance on the back of record cash receipts and the signing of its largest single contract award to date.
Cash receipts for the quarter hit $17.8 million – representing an increase of over 300% on the previous three-month period and marking a new historical high in the company’s quarterly cash receipts results.
The figure exceeds the total of the previous three quarters combined and has been attributed to increased activity by WestStar’s engineering contractor business SIMPEC, which won a $10 million contract in May for work relating to an 800-room camp at the Eliwana iron ore mine owned by Fortescue Metals Group (ASX: FMG).
The contract was awarded by ATCO Structures & Logistics for the design, supply, construction and commissioning of the camp’s electrical, communications and fire systems.
SIMPEC also won $7.5 million worth of scope extensions across its existing contracts during the quarter, with a further $5 million achieved since the quarter ended.
This amount, combined with WestStar’s strengthened balance sheet, form a “solid platform” for SIMPEC to win and deliver much larger contracts in the near term.
“SIMPEC is positioned strongly for the coming financial year with substantial contracted work in hand and is continuing to tender strongly during the June quarter,” the company said.
“[The business] has exceeded expectations with strong delivery on contracts on notable large resources projects [during the quarter], and has been adept at proving its value to clients.”
WestStar said its operating payments for the period increased proportionately less than receipts, reflecting costs incurred in the March quarter for new projects, while administrative staffing and corporate costs were in line with growth projections.
At midday, shares in WestStar were trading 55.17% higher at $0.045.