IFS Construction Services Limited 332 Treasure Road Welshpool. WA. 6106 Ph:- 08 6253 6888 Fax:- 08 6253 6889
PO Box 686 Welshpool DC 6986
Monday, 2
nd
November 2009
The Manager
Company Announcements
Australian Securities Exchange Limited
4
th
Floor, 20 Bridge Street
SYDNEY NSW 2000
Dear Sir
BUSINESS UPDATE
HIGHLIGHTS
·
Significant new contract wins including the company's first project in the Middle East
·
Merger with Hire Access completed with synergies continuing to emerge
·
Priority focus on cost reductions, IT management and stock control
·
Much brighter outlook for 2010 after difficult trading conditions in 2009
·
Reviewing strategic opportunities to broaden the product range and capabilities
·
Major resource, industrial and infrastructure projects ready to proceed in Australia, Asia
and the Middle East underpin the 2010 strategy plan
·
Scott Williams to succeed John Yeudall as Group Managing Director as from 1 January
2010
The Directors of IFS Construction Services Limited (ASX:IFS) advise that trading conditions
remained difficult in the September 2009 quarter with margins under pressure from
discounting as industry utilisation rates fall. The strength of the Australia dollar also
adversely affected the translation values of contracts written in Asia and the Middle East.
Nonetheless, significant contracts have been won by the company in all regions in recent
weeks which together with the continuing synergies and efficiency gains that are flowing
from the merger of International Formwork and Scaffolding and Hire Access point to a much
better year in 2010.
Incorporating
IFS Construction Services Limited 332 Treasure Road Welshpool. WA. 6106 Ph:- 08 6253 6888 Fax:- 08 6253 6889
PO Box 686 Welshpool DC 6986
IFS has reported a net operating cash out flow for the September 2009 quarter of $1.7
million. This was attributable to lower than expected revenues as the construction sector
weakened, with a build up in receivables. Cash outflows were also boosted by payments
associated with the re-listing on ASX in July and the merger with Hire Access. As at 30
September, the company had cash resources of $284K. In addition, receivables exceeded
payables by approximately $1.5 million.
New Contracts
A number of significant contracts have been won in recent weeks including:
Singapore
IFS has received a preliminary order for the supply of system formwork and shoring for a 7-
storey
Hotel at the Sentosa Cove
project at a total contract value in excess of S$1M. IFS will
supply all primary products including its new safety screens.
Middle East
The company has secured its first contract in the Middle East with the first phase of a series
of contracts to be awarded in the region. This first phase is indicative of the confidence that
this major international client has with IFS and the increased mood of optimism in the
region. IFS have provided the engineering designs, all specifications along with the
formwork and scaffolding components.
Perth
Hire Access has secured the contract to supply scaffolding on the 1
st
Stage of the $1.8 billion
Fiona Stanley Hospital project. This is a very large project which will cover a vast
construction site of 32.4 Hectares. The value of the contract is undetermined at this time
and is a major breakthrough for the company which positions it to secure future stages, as
the project gains momentum towards its anticipated completion and opening in 2014
Hire Access has also secured the contract to provide scaffold access services for the $30M
Edith Cowan University Student Village at the Mount Lawley Campus, Perth. This contract is
valued at circa $500K.
The company expects to be able to report further significant contract wins prior to the end
of the year.
Merger Synergies and Cost Realignment
The merger of International Formwork and Scaffolding with Hire Access was completed
ahead of the "IFS" listing on the ASX in July of this year. Both businesses relocated to single
premises, as a result, significant operating efficiencies have been realised with some
IFS Construction Services Limited 332 Treasure Road Welshpool. WA. 6106 Ph:- 08 6253 6888 Fax:- 08 6253 6889
PO Box 686 Welshpool DC 6986
rationalisation of overheads. Integrating IT systems and inventory management are more
challenging and time consuming with programs currently being developed which will be
implemented during 2010.
The company has appointed Scott Williams to succeed John Yeudall as Group Managing
Director as from 1 January 2010. John successfully steered the company after the ASX re-
listing process and the merger with Hire Access and has helped position the company to
capture the opportunities that will flow from the anticipated recovery in the construction
industry. Scott was the founder and owner of Hire Access and over 10 years successfully
built the company to be a significant force in the Perth scaffolding market. Scott's role will
be to take IFS through to the next phase of its development in Australia, Asia and the Middle
East.
Outlook 2010
The Directors are completing a 2010 strategy plan and are confident about the outlook for
2010 and beyond. Whilst 2009 has been far more challenging than expected and financial
performance has been disappointing, the opportunity has been taken to adjust the
company's cost base, focus on realising merger and integration synergies and to address
longer term marketing and business positioning strategies. The Directors believe that the
company is now very well placed to grow as the construction cycle turns, with its internal
engineering design capabilities providing a major competitive advantage.
The Directors have commenced an analysis and review of options and opportunities to
broaden the company's product range and capabilities with a view to strengthening its
position as the construction market recovers.
John Yeudall
Group Managing Director
IFS Construction Services Limited
IFS Construction Services Limited 332 Treasure Road Welshpool. WA. 6106 Ph:- 08 6253 6888 Fax:- 08 6253 6889
PO Box 686 Welshpool DC 6986
About IFS:
IFS Construction Services (IFS) provides scaffolding and formwork services to the building and
engineering construction industry.
International Formwork and Scaffolding was established in January 2008 by a group of executives
who had previously been pivotal in the development of the then industry leader PCH Group Ltd,
which was taken over by UK based Cape Industrial PLC in December 2007. IFS have established offices
in Perth, Sydney, Singapore and Bahrain to provide a comprehensive regional service.
In September 2008, Perth based Hire Access Scaffold, which has been providing scaffolding services in
Western Australia since 2000, was acquired and the two businesses were subsequently merged. In
July 2009, IFS merged with ASX listed Advanced Ocular Systems Ltd and was then renamed as IFS
Construction Services Limited (ASX code: IFS).
Visit the IFS website at
www.ifsgroup.net.au
for further information.
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