Neptune consolidates to record maiden profit For personal ...

Media Release 28 February 2008

Neptune consolidates to record maiden profit

• Maiden net profit after tax of $845K • Normalised net profit after tax of $2.2m (ex IFRS adjustments) • Revenue of $31.7m • Completion of Tri-Surv Geomatics acquisition • Successful capital raising totalling $61m • On track to deliver estimated EPS of 6-7c/share

Perth, Western Australia: Leading engineering services company Neptune Marine Services (ASX: NMS) has consolidated its place in the market after announcing a maiden net profit after tax of $845k and a normalised profit after tax of $2.2m (ex IFRS adjustments) for the six months to 31 December, 2007. The result represents a significant turn around on the same period last year when the company posted a $1.1 million loss.

Revenue for the period totalled $31.7m, representing a significant increase of over the same period last year. This result was due largely to the successful completion of pending acquisitions and the significant growth experienced by both the Fabrication and Engineering Divisions during the period.

While these figures remained in line with H1 expectations, they were impacted by several project delays that either have been completed or are scheduled for completion in the second half of the year.

• Two NEPSYS projects in the Gulf of Mexico (GoM) - adverse weather conditions and vessel availability.

• The Apache Energy Bambra East Integrated Project – vessel availability – completed February 2008.

• Completion of the Tri-Surv Geomatics acquisition that settled in August 2007.

Total estimated revenue from these delays is estimated at $6.7 million, with an estimated EBIT contribution of $3.15 million.

Concurrently, a successful capital raising project generated $61m that the company used to expand its operational capabilities both within Australia as well as into the lucrative North Sea and European oil and gas markets.

Neptune’s Managing Director and CEO, Christian Lange, said the period represented a phase of both significant consolidation and further expansion for the company that continued to enjoy positive integration, cohesion and commitment to a common goal across the four business divisions.

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“Our enhanced management structure and ongoing strategy for growth is ensuring that Neptune Marine Services continues to develop as a leading provider of integrated engineering solutions to the international oil and gas, marine and renewable energy industries,” he said.

“These results put us a good 12 months ahead of where we expected to be at this point in time last year. Our maiden profit is a significant achievement, particularly as the group is still in the early stages of development. It represents a solid foundation on which we can build and expand into the future.

“We are experiencing excellent growth, not only in Australia, but also in a number of major offshore markets that we are making inroads to.

“Both the completion of the Tri-Surv Geomatics acquisition and our expansion into the ROV market further strengthens our integrated subsea services model, while the $61m in capital raised will help fund additional growth opportunities that we are actively pursuing,” he added.

Second half weighting

A significant weighting in second half revenue and earnings is anticipated due to a number of contributing factors:

• Advance diving contracts (awarded) for a variety of projects within Australia, the United States and Europe.

• Advance orders for the NEPSYS dry underwater welding technology valued at approximately $9m.

• Significant growth in the Offshore Services division through a combination of a full six month contribution from Tri-Surv Geomatics and the expansion into the remotely operated vehicle (ROV) and vessel supply market.

• The $8m integrated services project offshore Varanus Island, Western Australia, for Apache Energy.

• The jacket leg strengthening project in the Gulf of Thailand with Mermaid Offshore Services Ltd as prime contractor to Chevron Thailand Exploration and Production Ltd.

• Contribution from the UK-based acquisition Ross Deeptech Initiatives Limited/Ross Deeptech Symons Limited that was completed 29 January 2008.

• Contribution from the Perth-based acquisition Sea Struct P/L that is anticipated to be completed during the period.

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Divisional Highlights

Major highlights from the four divisions of Diving Services, Project Management & Engineering Services, Offshore Services and Fabrication Services comprised:

Diving Services

Half year revenue of $10.1m increased from a full year result last year of $8.7m.

In Australia, geotech drilling and seabed probing activities completed for the Water Corporation returned better than anticipated revenues and a number of offshore projects were completed including:

• Riser installation works (WA) for Apache Energy

• MGPS maintenance (Timor Sea) for Coogee Resources

• Underwater inspections/installations for Songa Offshore, Modec, Conoco Phillips • Emergency response in New Zealand for Diamond Offshore

In the United States, a 1.6km pipe laying project valued at more than $1m was awarded from Oscar Renda Construction and repair projects using the NEPSYS dry underwater welding technology were completed for Helix Energy and ENI. A number of offshore inspections were also completed for Diamond Offshore, Pride Offshore and Transocean.

NEPSYS Commitment to the ongoing and extensive investment in the research and development of the NEPSYS technology resulted in higher than budgeted R&D spending during the period.

The main contributor to the increased spending was an intensive program of diver training involving both Australian and US personnel and the achievement of improved weld qualification standards to the stringent and internationally recognised American Bureau of Shipping (ABS) standard. While attaining the qualification required a significant commitment of both time and resources, it represents an excellent achievement that further emphasises the superiority of the technology over conventional practices.

Additional R&D conducted on the NEPSYS process resulted in a number of design and material/equipment improvements associated with the habitat, electrode port, dryer and heater, gas delivery, amperage control and knife switch. Major advances were also made in electrode coating and expansion of sufficient consumables. In addition, the development of a new semi automated process that could be applied to repairs conservatively valued at $5-6m returned promising results in testing.

Project Management & Engineering Services

Half year revenue of $5.7m increased from a full year result last year of $3.5m.

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The period was dominated by the ongoing pipeline engineering works carried out for the Coogee Resources Montara project located in the southern Timor Sea, 650km west of Darwin. Additional pipeline design work was also carried out for the offshore Kupe Gas Project located to the south of New Zealand's Taranaki Peninsula. Offshore WA, engineering and installation requirements for pipeline span rectification works were completed for Roc Oil Company.

Offshore Services

Half year inaugural revenue of $6.7m.

Master Service Agreements with industry majors, Santos and Conoco Philips was a major highlight of the period as was the completion of a 95km pipeline geophysical survey for the Apache Energy Reindeer Development, offshore WA. The identification of additional opportunities for the Neptune group resulted in the establishment of a ROV and vessel sub-division that commenced negotiations for the acquisition of appropriate assets.

Fabrication Services

Half year revenue of $9.2m increased from a full year result last year of $3.6m.

The demand for on and offshore fabrication, welding, piping and associated services remained high during the period with a variety of projects completed for a comprehensive client list.

Measuring 27m long x 23m wide x 3.5m high, the Enfield Subsea Spool for Technip Subsea 7 AP was fabricated and assembled at the Australian Marine Complex before being transferred to barge for transport to the North West Cape off Exmouth, WA.

Site works for the Stage 5 Looping MLV’s associated with the Bunbury to Perth Natural Gas Line were completed for Saipem as were ballast pipe spooling and ballast pump replacement works onboard the Ocean Bounty for Diamond Offshore and various pipe spooling and crossover projects for Expro Group.

Outlook

Christian Lange commented that the immediate and longer term forecasts for the company were very positive.

“The outlook for the oil & gas sector remains robust. Over US$106bn is to be spent on the global subsea market over the next five years, representing a 65% increase on the previous five years to 2003/07. This sector growth underpins our longer term confidence and the fact that Neptune is operating in a high growth market.

“We have some excellent organic growth prospects and we continue to evaluate other opportunities for growth that deliver value for our shareholders.

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“Looking to the immediate future, we have a major integrated project to complete offshore WA as well as numerous and significant advance orders in place for both our conventional and NEPSYS diving and welding services in Australia, the United States, Asia and New Zealand,” he explained.

“Beyond that, we have expansion in our Offshore Services Division as we reap the benefits of full contributions from our Tri-Surv acquisition and our move into the provision of support vessels and ROVs.

“Add to that the additional contributions from our UK subsidiary, Ross Deeptech Initiatives, and our latest pending local subsidiary, Sea-Struct P/L, and we remain very much on course to delivering our anticipated EPS of 6-7c/share for the full year 2008.”

Further information

Christian Lange Managing Director Neptune Marine Services Limited Ph: (08) 9226 5722 About Neptune Marine Services Limited  Listed on the Australian Stock Exchange (ASX: NMS) Neptune Marine Services is emerging as one of Australia’s leading providers of integrated engineering solutions to the international oil and gas, marine and renewable energy industries. The company employs more than 500 people in Australia, the UK and USA and provides a full suite of innovative engineering services including subsea and pipeline engineering; commercial diving; specialist fabrication; inspection, repair & maintenance; pipeline stabilisation and grouting; subsea consultancy; ROV and vessel supply; hydrographic surveying, project management and dry underwater welding using the group’s patented NEPSYS technology. For more information visit www.neptunems.com

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28 February 2008

Neptune Marine Services

Half Year Results to 31 December 2007

Engineered Solutions for the Offshore Industry

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Summary

Revenue of $31.7m

Pretax Profit of $1.8m (after IFRS adjustments)

Maiden Net Profit after tax of $845K

Normalised Net Profit after tax of $2.2m

(ex IFRS adjustments)

Successful capital raising totalling $61m

Cash in bank $33.5m

Acquisition of Tri-Surv Geomatics completed

All acquisitions integrated and performing well

Strong second half outlookFor

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Financial Position – 1H08

Turnover $31.7m

EBITDA $3.6m

Normalised Net Profit $3.1m

Normalised NPAT $2.2m

NPAT $0.85m

Normalised EPS 1 cent

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NPAT IFRS Adjustments

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NMS Integrated Divisions

• TRI-SURV GEOMATICS

• ROVS/VESSELS

• SEA-STRUCT PL (PENDING)

• LINKWELDENGINEERING

• ROSS DEEPTECH(29 January 2008)

• SUBSEADEVELOPMENTS

• ALLIED DIVINGSERVICES

• TERRITORY DIVINGSERVICES

• US UNDERWATER SERVICES Diving

Services

Project Management

& Engineering Services

Offshore Services

Fabrication Services

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NMS Integrated Divisions

DIVISIONREVENUE ($m)

H108 H107

EBIT* ($m)

H108 H107

H108EBIT/Sales

Diving Services 10.2 1.7 1.9 1.2 19%

Fabrication Services 9.2 - 1.0 - 11%

Project Management

& Engineering

Services

5.7 - 1.0 - 18%

Offshore Services 6.7 - 2.9 - 43%

* Pre corporate overheads and R&D expenditure

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Revenue: Division %

18%

29%

21%

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EBIT*: Division %

* Pre corporate overheads and R&D expenditure

15%

15%42%

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Corporate Highlights

Substantial revenue increase

• $31.7m (H107: $1.24m)

Successful capital raising

• $61m - funding for acquisitions and strategy for growth

Tri-Surv Geomatics

• acquisition completed 17 August, 2007

Ross Deeptech Initiatives Limited (UK)

• acquisition completed 29 January, 2008

Sea-Struct P/L

• acquisition on track for March 31, 2008 completionFor

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Divisional Highlights

• Half year revenue of $10.1m increased from a full year

result last year of $8.7m

• Major IRM projects completed offshore Australia, USA, NZ

• NEPSYS - improvements to existing process; new semi

automated process; class approval (ABS); intensive diver

training

• USUS – ‘preferred vendor’ status (State of California)

• Expanded services to include geotech drilling/seabed probing

• Half year inaugural revenue of $6.7m

• Master Service Agreements: Santos & Conoco Phillips

• 95km pipeline geophysical survey: Reindeer Development

• Establishment of new ROV/Vessel supply sub division

Diving Services

Offshore Services

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Divisional Highlights

• Half year revenue of $9.2m increased from a full year

result last year of $3.6m

• Ongoing high demand from comprehensive client list

• Fabrication and assembly of Enfield Subsea Spool for Technip

Subsea 7 AP

• Site works for Stage 5 Looping MLV’s associated with Bunbury

to Perth Natural Gas Line

• Ballast pipe spooling & pump replacement - Ocean Bounty

• Half year revenue of $5.7m increased from a full year

result last year of $3.5m

• Pipeline engineering - Coogee Resources Montara project

• Pipeline design - Kupe Gas Project (offshore NZ)

• Pipeline span rectification - engineering and installation (WA)

Fabrication Services

Project

Management

& Engineering

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Global Subsea Market

Forecast $AUS110.3b in global spending over next five years

65% increase on the previous five years to 2003/07

Australasia: increase from $AUS3.85b to $AUS17.5b

Europe and North America: 20% increase to $AUS41.3b

Global subsea industry growing at almost 25% a year

Source: Global Perspectives Subsea Market Update 2008-2012 (4th Edition)

Source: Subsea UK (2008)

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Outlook – second half

Major integrated services project for Apache Energy

Advance contracts for diving services in Australia, USA and UK

Advance orders for NEPSYS valued at approximately $9m

Significant growth in Offshore Services – Tri-Surv

Contribution from acquisitions:

• Ross Deeptech; Sea-Struct; Tri-Surv

Additional new opportunities to be

actively pursued as part of

Strategy for Growth

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Forecast NPAT 07/08

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Contact Details

Christian Lange, CEO and Managing Director

Phone: 08 9226 5722

Fax: 08 9226 0354

Email: [email protected]

Geoff Edwards, Chief Financial Officer

Phone: 08 9226 5722

Fax: 08 9226 0354

Email: [email protected]

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Results for announcement to the market

December 2007

December 2006

Financial Results $'000 $'000 Revenue from ordinary activities Up

4,001% to 31,740 774

Profit from ordinary activities after tax attributable to members Up NA to

845

(1,114)

Net profit for the period attributable to members Up NA to

845

(1,114)

Dividends Amount per Ordinary Security

Franked amount per security

2008 interim dividend

NA NA

2007 interim dividend

NA NA

Record date for determining entitlements to the 2008 interim dividends

To be announced

Net Tangible Asset Backing 31 December 2007 31 December 2006

Net tangible asset backing per ordinary security $0.10 $0.26

Other explanatory notes

The information required by listing rule 4.2A is contained in both this Appendix 4D and the attached half-year report. This half-yearly reporting information should be read in conjunction with the most recent annual financial report of the company. F

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Au: NEP5401/Decl letter Dec 2007(s) 5

28 February 2008 Board of Directors Neptune Marine Services Limited Level 16, 140 St Georges Terrace PERTH WA 6000 Dear Sirs RE: NEPTUNE MARINE SERVICES LIMITED In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the directors of Neptune Marine Services Limited. As Audit Director for the review of the financial statements of Neptune Marine Services Limited for the period ended 31 December 2007, I declare that to the best of my knowledge and belief, there have been no contraventions of: (i) the auditor independence requirements of the Corporations Act 2001 in relation to the

review; and (ii) any applicable code of professional conduct in relation to the review. Yours sincerely STANTONS INTERNATIONAL (Authorised Audit Company)

John Van Dieren Director

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INDEPENDENT AUDITOR’S REVIEW REPORT TO THE MEMBERS OF

NEPTUNE MARINE SERVICES LIMITED

Report on the Half-Year Financial Report We have reviewed the accompanying condensed half-year financial report of Neptune Marine Services Limited, which comprises the consolidated balance sheet as at 31 December 2007, and the consolidated income statement, statement of changes in equity and cash flow statement for the half-year ended on that date, a condensed statement of accounting policies, other selected explanatory notes and the directors’ declaration. Directors’ Responsibility for the Half-Year Financial Report The directors of the Company are responsible for the preparation and fair presentation of the half-year financial report in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001. This responsibility includes designing, implementing and maintaining internal controls relevant to the preparation and fair presentation of the half-year financial report that is free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor’s Responsibility Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of an Interim Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including giving a true and fair view of the consolidated entity’s financial position as at 31 December 2007 and its performance for the half year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of Neptune Marine Services Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report. A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

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Independence In conducting our review, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, has been provided to the directors of Neptune Marine Services Limited on 28 February 2008. Conclusion Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of Neptune Marine Services Limited is not in accordance with the Corporations Act 2001 including: (a) giving a true and fair view of the consolidated entity’s financial position as at 31 December

2007 and of its performance for the half-year ended on that date; and (b) complying with Accounting Standard AASB 134 Interim Financial Reporting and

Corporations Regulations 2001. STANTONS INTERNATIONAL (Authorised Audit Company) J P Van Dieren Director West Perth, Western Australia 28 February 2008

Au:Nep5401\IAR - Dec-07(s) 17

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