Redcliffe-based Global Construction Services has increased its net profit after tax for the 2010 financial year 5.4 per cent to $11.4 million.
Redcliffe-based Global Construction Services has increased its net profit after tax for the 2010 financial year 5.4 per cent to $11.4 million.
The construction services company has also forecast earnings before interest and tax of 40 per cent and earning growth of more than 25 per cent for the 2011 financial year.
In a statement GCS said it expects to deliver a net profit next financial year in excess of $14 million.
On the back of the 2010 result, the company's directors have recommended the payment of a fully franked final dividend of 3.25 cents per share.
GCS managing director Enzo Gullotti said the result was satisfactory given the challenging conditions in a number of the Company's markets.
"The result was achieved during a period when we invested heavily in our capacity to grow and to tap into lucrative new markets, notably in the resources sector.
"We now have an outstanding platform for growth and we are confident of delivering substantial rises in revenue and earnings in FY11," he said.
See full company statement below:
Construction services group Global Construction Services Limited (ASX: GCS, "GCS Group") today announced an $11.4 million net profit for the year to 30 June 2010 and forecast EBIT growth of 40% and earnings growth of more than 25% in FY11.
After a commendable performance in challenging conditions in FY10, GCS is now strongly placed to capture significant new contract revenue in FY11 on the back of increased activity in civil construction and burgeoning demand for services to support expansion in the Oil & Gas sector.
On current expectations, GCS will deliver a net profit after tax earnings in excess of $14 million in FY11, a rise of more than 25%.
The FY10 profit - up 5.4 % on FY09 - was achieved on group revenue of $91.6 million, a rise of 7.0%.
Group EBITDA for FY10 was $23.3 million ($23.1 million previously), with operating margins reducing slightly to 25.7% (27.1%).
Earnings per share was 13.1 cents (15.2 cents previously) and the board has maintained a payout ratio of more than 40%, in line with its stated objectives. The total fully franked dividend for the year is 5.5 cents (6.5 cents previously).
The directors have recommended the payment of a fully franked final dividend for FY10 of 3.25 cents per share, with a record date of 14 September, to be paid on 29 September.
The Company Dividend Reinvestment Plan (DRP) will apply to this dividend, providing shareholders with the option to reinvest all or part of their eligible dividends at a price established by applying a discount of 5% to the 5 day VWAP up to and including the record date.
GCS Managing Director Enzo Gullotti said the FY10 result was satisfactory given the challenging conditions in a number of the Company's markets.
"The result was achieved during a period when we invested heavily in our capacity to grow and to tap into lucrative new markets, notably in the resources sector.
"We now have an outstanding platform for growth and we are confident of delivering substantial rises in revenue and earnings in FY11."
Mr Gullotti said the forecast earnings increase will be driven by substantial growth across the group's core business units, especially from the Commercial Division, and increased contributions from start up businesses, in particular the equipment hire operations.
A key driver in the growth forecast is the $79 million contract to provide formwork for the West Australian Department of Health's new flagship Fiona Stanley Hospital. The size of this major infrastructure project has recently been increased from $1.7Bn to $2.0Bn, to include an additional $250m of work for the main contractor.
The contract will be completed over a 20 month period, with just 15% completed at the start of FY11.
The GCS Resource & Industrial division experienced a slowdown in contracted work as a consequence of the Global Financial Crisis and the resources tax proposed earlier this year.
The division is firmly established in WA's North West, serving a significant group of customers, including Chevron, BHP and Monadelphous. GCS is actively pursuing opportunities and tendering for work on major projects for these customers and others.
GCS believes the division is well placed to capture a significant slice of service revenue from the $100 billion in committed projects now being developed in the region, onshore and offshore.
"The pipeline of opportunities for the GCS Group has never been better moving into a new financial year," said Mr Gullotti.
"Aside from the business opportunities GCS now has a footprint across WA and the capacity to participate in major projects to a far greater extent.
"We now have $90 million of contracted work in hand and we are confident that this will rise significantly in the months ahead."
Mr Gullotti said GCS continued to explore additional growth opportunities in complementary areas.
"We will continue to grow GCS, allowing us to take greater advantage of the major scale business opportunities that WA has to offer over the coming decade from already committed projects," he said.
"We will continue to approach this on a disciplined basis, applying a strict focus to all aspects of the business, and will build size in the group through organic and acquisitive growth, nationally and internationally.
"We are seeing a significant rise in corporate activity in our sector as major players position themselves to take best advantage of the abundant opportunities in WA, particularly where the businesses are engaged in providing services to the oil & gas and resources industries.
"GCS will play a central role in that activity and will pursue opportunities that drive shareholders value."
