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Chairman's and Managing Director's Letter
»
» Financially, the company
recorded a strong performance
posting a net profit after tax of
$9.8 million on revenue of
$69.05 million for the year ended
30 June 2008.
Dear Shareholders,
On behalf of the Board, we are delighted to present the Global Construction Services Limited 2008 Annual Report.
GCS Group's first full year as an ASX listed company has been a success on both financial and operational criteria.
Strong financial result
Financially, the company recorded a strong performance posting a net profit after tax of $9.8 million ($4.9m 2007) on revenue
of $69.05 million ($33.8m 2007) for the year ended 30 June 2008.
The profit result is above both the revised forecast provided in April of this year and the forecast initially provided in the
Company's 2007 Prospectus.
Following the strong result, Directors have declared a final dividend of 4 cents per share, fully franked ($2,626,456). Earnings per
share were 16 cents. GCS announced a Dividend Reinvestment Plan (DRP), providing shareholders with an option of reinvesting
all or part of dividends at a discount to the 5 day VWAP. We are pleased to report that the take-up on the DRP represented 42%
of the total dividend payable with $1,089,011 being reinvested at $0.97829 per share.
The strong performance was driven by solid contributions from each division (residential, commercial and industrial) and initial
positive contributions from recently acquired assets.
Implementation of growth strategy
Operationally, it has been a busy and rewarding year for the Group.
Just over a year since listing on the Australian Securities Exchange, we are pleased to report that we have significantly advanced
the growth strategy outlined to shareholders in the 2007 Prospectus.
During the year, GCS acquired four companies in the construction services sector: Bayswater Scaffold Hire, Budget Portables,
Newave Contracting Pty Ltd and Blueline Contracting Pty Ltd.
Each acquisition has been earnings accretive and has greatly added to both the client base and service offering of the Group.
With the integration of these businesses, we expect further growth to come from these new assets in the current financial year.
2 GCS Limited - 2008 Annual Report
A key highlight for the Group during the year was the launch of GCS Northwest in Karratha in January of this year. Establishing
a presence in the North West of Western Australia was a strategic move given the level of activity in the region generated by the
resources boom.
The new business division is already securing significant projects in the area and we are confident of securing further contracts
going forward.
In July 2008, GCS also expanded into the South West of Western Australia through the acquisition of a 75% interest in hire and
sales provider Coastal Hire Pty Ltd for $4.5 million.
Coastal has operations throughout the South West and will provide us with an excellent entry into this high growth region.
We look forward to integrating this new business into the Group.
Coastal offers a similar suite of products and services to GCS and will give the Group excellent exposure across a wide
geographical area.
In September 2008, GCS launched a new business division in the Perth metropolitan market, operating as GCS Hire.
This new division represents an important target market as we seek to grow the business, particularly in the industrial/
commercial sector.
Corporate Governance
The Board continues to review its corporate governance policies and procedures to ensure it fulfils its obligations and meets the
expectations of stakeholders and we detail this further in our Corporate Governance Statement on page 18 of this report.
GCS People
The increased level of activity during the year resulted in a significantly heavier workload for the Group's dedicated team of
employees. On behalf of the GCS Board, we would like to take this opportunity to thank them sincerely for their loyalty and
tremendous efforts over the past 12 months.
During the year we further strengthened our experienced team with new additional key managers. GCS Group continues to
focus on achieving its strategic objectives and increasing shareholder value.
We are delighted to welcome David Kiggins to the role of Chief Financial Officer. David commenced with us in September 2008
and his experience in the listed market, particularly business development, will be invaluable as we grow the Company.
Outlook 2009
Looking forward, we believe the outlook for GCS is very positive.
With record high employment levels and population growth in WA, conditions in the local construction services industry are
buoyant. This is expected to continue for some years, though growth rates may moderate slightly.
In 2009, we expect ongoing organic growth from our existing and integrated acquisitions as we further realise synergies and
scale benefits.
We will also continue to review acquisitions which we believe will add value to the Group and have a positive impact
on earnings.
We thank shareholders for their ongoing support and look forward to reporting further success in the future.
Neil Kidd Enzo Gullotti
Chairman Managing Director
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