INTERVIEW WITH DAVID PERRY, FINANCIAL DIRECTOR OF STRUCTURAL SYSTEMS LIMITED (STS)

“Structural Systems FY08 Preliminary Final Report”

http://www.brr.com.au/event/51300

THURSDAY, SEPTEMBER 11, 2008, 9:45 AM.

            BRR    Today on Boardroomradio, I’m speaking with Mr. David Perry, the Financial Director of Structural Systems. David, thank you for joining us today.

10        STS     Good morning, James.

            BRR    David, Structural Systems have released the financial year 2008 full year results with a 72% increase in impact. Could you start by covering the key figures in this result and illustrating how they compared to the previous

15                    corresponding period?

            STS     Yes, well the two mines obviously draw up some numbers of the increase in revenue all constitute 100% growth in revenue year-on-year and the increase in profit from $12 million to $20.708 million, very pleasing results for us. The growth was widespread across all the businesses within the group. Mining

20                    area was very strong, mining services was very strong throughout the year and the construction activities in Victoria, WA were very strong as well.

            BRR    Now David the profit result reflects continued growth despite current macroeconomic conditions, have the broader market conditions had much of

25                    impact on STS operations?

            STS     Look, the Australian construction market place is very much stronger in some states as opposed to others. Victoria in the ’08 year was very strong, WA was strong. New South Wales has been a tough market area for a couple of years and our business out there has done a very good result, growing that

30                    business despite the overall construction levels in New South Wales being down year-on-year, so it has been a bit of case of some aren’t performing states as compared to others. The Middle East obviously is an area that represents continued good growth prospects and we can’t see a slowdown coming there. On the resource and energy sectors in Australia that still

35                    remains strong, so the mining services division of our business supporting those sectors. The outlook there is very strong as well.

            BRR    David, the construction and servicing cost is the biggest single mine item on the income statement, are there opportunities to reduce the proportionate

40                    level of this expense or are you comfortable with its existing level?

            STS     Well certainly, cost structure of the business is something but it’s always a key part of our strategy and our focus at any point in time. That one area where we do see a lot of potential upside is the continued integration of the acquisition of Meridian and our Victorian construction market place and the

45                    synergies that are coming from there already we’re seeing good use of resources across the businesses in the commercial and administrative sense. The next step is focusing on the procurement power but now exists within our business in Victoria and trying to maximize the benefits coming out of there. I think in terms of the changed cost date opposed to revenue slight increase up from 82% up to about 86% on the ’08 year, the business obviously preparing itself for the growth and dealing with that growth in the year. We had two major moves occurred during the business and obviously that’s… they call expensive activities in terms of relocating to their operations and adjust the

5                      general establishment cost of dealing with these growth that something to, you know, we did see a thick cost in the ’08 year and we would expect to be after they’ll improve in the ’09 year.

            BRR    You’ve also indicated the mining in several service business segment has

10                    significantly increased work-in-hand and the construction segment has delivered impressive revenue growth. Where do you see the biggest potential for growth in the medium term, both organically and through acquisition?

            STS     Yes, we see good organic growth opportunities still coming out of this strategy of rolling out the full structure service that we provide in Victoria, I

15                    mean throughout the states. There is quite a demand for that in South Australia and particularly Western Australia with existing clients we’ve already got. So, that represents a good opportunity for us. Obviously the resource and energy, as I said before, sectors continues to grow within Australia and so with all contracts in that sector are tending to become longer term, which is

20                    good, and also a broad array of services they’re looking for us to provide, so from an organic point of view, they’re probably the two main areas.

                        A mining services business as we did in our preliminary report is the one part of the business where acquisition which seemed to be more suitable at the

25                    present time. There would be services that are going to be a very complementary to the existing services we provide in that sector and you know I think acquisition would fit nicely with that business (inaudible) (00:04:33) not only to grow but also to increase the range of services growth and enter into new markets in the civil arena, and also the infrastructure side

30                    of the infrastructure has been.

            BRR    Well David, certainly it’s an impressive result and it sounds like the future growth opportunities are quite substantial still for Structural Systems. Thank you very much for your time today and we appreciate that you speak with us

35                    on Boardroomradio.

            STS     Not a problem James, thanks very much.

INTERVIEW CONCLUDED

Contact brr@brr.com.au for more information

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