Analysis company IES turns a profit in private hands

Geothermal analysis company IES turns a profit six months after leaving university hands

By Fiona Rotherham

June 4 (BusinessDesk) - International Earth Sciences, which specialises in geothermal and micro-seismic analysis, has turned a profit just six months after being taken into private ownership from the University of Auckland.

The Auckland-based company said it had secured multi-million dollar contracts in Mexico, Japan, Germany, Indonesia, and New Zealand that had seen it go from being loss-making under university management to profitable in private hands.

Formerly known as the now-defunct University of Auckland Institute for Earth Sciences and Engineering, the company was taken over last October by chairman Ralf Muller and chief executive Hylton Whyte, who are the majority shareholders.

Muller said the university wanted to be rid of the institute despite it having good staff and being one of the world’s most well-known and respected research institutes in its geothermal niche.

“Usually universities are a hotbed of innovation and research but not of commercial execution and commercialisation,” Muller said.

The new company took on all 11 institute staff and have since hired three more after expanding its reach into Asia and South America. Some of the contracts it has picked up include with the Mexican Federal Electricity Commission and the Michoacan State government which are looking at the viability of two new geothermal energy projects.

IES is one of the few companies in the world that does exploratory geothermal analysis. Its seismic monitoring work includes a project in India, testing at the Koyna Dam in Maharashtra to see if the structure is the cause of seismic activity in the area.

In New Zealand its involved in major roading projects such as the New Zealand Transport Agency’s upgrade of Auckland’s State Highway 16 causeway and work on the Wellington motorway network.

Muller has plans to grow the company into a global centre of excellence in its field which is why it’s spending a lot of money on staff training and he has ambition for an eventual sharemarket listing.

He and Whyte have also set aside 8 percent of the company’s shares which are about to be allocated to staff under an employee stock ownership plan.

Some staff will get shares as a reward for the company’s profitability while others will receive options that can be vested at a later stage at a price determined by cash flow and future profits, Muller said.

“A lot of entrepreneurs make the fundamental mistake of considering staff as just staff and that you buy loyalty by just paying them a salary. To have a good company you need to have good staff who are happy and motivated and having fun doing what they do.”

Muller said the company’s shareholder agreement allows for the amount of shares to be allocated to staff to rise to up to 20 percent over time.

(BusinessDesk)

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