GCS reports positive first half, full yr on track

Redcliffe-based Global Construction Services Ltd has announced a net profit after tax of $4.7 million for the half year to December 2007, the group's first reporting period as a listed entity.

Group revenue for the period was $28.4 million and EBITDA was $9.1 million. Earnings per share for the first half was 8 cents and the directors have declared an interim dividend of 3.25 cents per share fully franked.

GCS Group managing director Enzo Gullotti said the group had performed exceptionally well during a very busy first half.

"We are very pleased with the December half result and have started the second half strongly," said Mr Gullotti.

"Each of our business divisions performed well during the period thanks to positive conditions in the West Australian construction industry."

GCS listed on the ASX in August 2007 after a $20 million capital raising.

In its prospectus, GCS forecast full year net profit of $8.2 million for FY08 on group revenue of $52.2 million.

Full year EBITDA was forecast at $15.26 million and earnings per share at 12.5 cents.

"With conditions in the construction industry expected to remain buoyant throughout the coming year we continue to feel comfortable with our full year forecast of a net profit of $8.2 million," said Mr Gullotti.

In the six months since listing on the ASX, GCS identified and acquired four businesses in the construction services sector for a total consideration of $17.8 million.

The group also recently expanded into northern Western Australia with the launch of a new business division in Karratha.

Mr Gullotti said integration of the businesses was progressing well.

"In our first reporting period as a listed entity we acquired Budget Portables and Bayswater Scaffold Hire, and as of 1 January 2008, GCS Group also acquired Newave and Blueline, " he said.

"These new businesses have introduced additional products, services and customers to the Group which have already had a positive impact on our bottom line."

Mr Gullotti added that the company would continue to pursue a strategy of acquisitive and organic growth in the second half of the year.

"We believe there is potential for further consolidation in the construction services industry and will continue to evaluate a range of opportunities that have the ability to positively impact growth and earnings."

"We look forward to updating our shareholders with further progress throughout the remainder of the year," he said.

As part of the growth plan, GCS has increased its finance facilities with Westpac Bank to $20 million.

The group's total borrowing facilities are now approximately $38 million including hire purchases, equipment finance, finance leases and the Westpac facility.

GCS chairman Neil Kidd said the board had an active capital management strategy and the finance facility gave the company greater flexibility in relation to how it managed growth, especially acquisitions, in a manner that was beneficial to shareholders.

"This increased finance facility will provide us with greater flexibility to continue with our expansion strategy and pursue other potential growth opportunities as they arise," he said.

The interim dividend is expected to be paid on 7 April 2008 and the record date for entitlement is 12 March 2008.

Shares in the company ended the day 4 cents stronger at $1.30 each.