STRUCTURAL SYSTEMS ANNOUNCES A 72% INCREASE IN NET PROFIT AFTER...

STRUCTURAL SYSTEMS ANNOUNCES A 72% INCREASE IN NET PROFIT
AFTER TAX FOR THE 2008 YEAR AND A FULLY FRANKED FINAL DIVIDEND OF 6.5 CENTS A SHARE

Structural Systems Limited (“Structural” or “the company”) has achieved another year of record earnings and revenue growth. Pre-tax profit increased by 68% to $20.708 million, up $8.39 million from
the record 2007 year result of $12.316 million. This result was achieved on the back of strong organic
growth across all business segments and the successful integration of the major acquisition made during the year. Revenue grew by 100% to $282.57 million, up $141.344 million from the $141.226 million reported in 2007. The after tax profit for the year was $15.181 million, compared with $8.824 million last year. Included in the result was a gain of $1.79 million derived from the restructuring of our equity interest in the UK post tensioning business.

Basic earnings per share grew by 50% to 31.9 cents compared to 21.2 cents for the corresponding period. The total number of shares on issue at 30 June 2008 was 49.141 million, increasing during the year by 2.703 million shares. Diluted earnings per share increased from 20.3 cents to 31.6 cents.

Cashflow from operations was $8.613 million for the twelve months. The working capital requirement of the company has increased considerably during the year with the growth of the existing businesses and the Meridian acquisition. This requirement has been able to be largely funded from the internal cashflow of the company. Borrowings related to acquisition of major plant and equipment increased by $1.3
million during the year to $9.1 million.

The directors resolved to declare a final dividend of 6.5 cents per share, fully franked and payable on 31 October 2008. The record date for determining entitlements is 3 October 2008. The directors have determined that the dividend reinvestment plan remain suspended. The final dividend of 6.5 cents takes the total dividend for the 2008 year to 11.5 cents. This is a 15% increase on the total dividend paid for the 2007 year.

The company has the ability to participate in nearly all segments of the construction, civil and engineering markets. This combined with continued strong demand for service companies in the mining and energy resources sector gives the board great confidence in the future prospects for the company.

The acquisition of Meridian Concrete Australia Pty Ltd (“Meridian”) in November 2007 has assisted in
taking the revenue base for the company to a record level.

Opportunities exist to roll out the construction services currently only offered in Victoria into other states of Australia. As the construction market evolves in Australia to provide a more national approach to the delivery of major infrastructure projects or to meet growth in local markets the company is fielding enquiries to partner with major contractors in the delivery of these projects. The company is well placed to take advantage of these opportunities with established presences and offices in the major capital cities of Australia.

The company continues to invest substantially in its future. The benefits of this investment made in recent years are clearly demonstrated in the growth in earnings from our capital intensive mining services operation. The prospects for this business have never been stronger and the business has a significant part of its ongoing revenue secured in long term contracts. The board is of the view that this business’s future growth strategy is now best suited to a complementary acquisition. With tightening of
credit markets and the retreat of private equity in recent times valuations seem to be returning to more sustainable levels. The company’s gearing level of approximately 30% allows it to undertake strategic acquisitions in the future. A number of these potential acquisitions are currently being evaluated.

Revenue from activities in the Middle East is expected to grow substantially in the 2009 year. After being well established in the UAE for over ten years the company now have projects underway in Qatar, Bahrain and Abu Dhabi. The levels of construction in these regions shows no signs of slowing down and the opportunities are expected to be significant for many years to come.

Work in hand at the end of June was at a record level in excess of $215 million. This secured order book combined with the current project enquiry level underpins the expectation of continued growth of the company.

An overview of the performance of various business segments is discussed below –

• Mining & Civil Services

This business undertakes work in the resource, energy and infrastructure market sectors with its primary activities being engineering, drilling, blasting, geotechnical and environment services. The 2008 year saw significant growth in revenue and profit. Profit before tax rose by 78% to $3.216 million for the year. Revenue increased by 59% to $39.1 million. Demand for the business’s services is at record levels with opportunities being pursued throughout Australia. During the period the business was able to increase the number of long term contracts in hand and work in hand at
June was at record levels.

• Post-tensioning

Overall, the post tensioning activities of the company achieved modest growth of 7% in the 2008 year. Total revenue grew by $4.9 million to $79.3 million. The second half performance of the NSW and QLD businesses was affected by continued periods of inclement weather and this resulted in lower volumes in the second half compared to the first six months of the financial year. Revenue
from manufacturing of post tensioning products was approximately 10% lower in the 2008 year.
This decrease was a direct result of the lower levels of activities in NSW and QLD. Our Western Australian operation achieved solid revenue growth during the year on the back of strong conditions in the Perth construction market. Revenue from operations in the Middle East grew by 16% to a record $9.028 million.

• Construction

The Construction business segment includes structure packages, formwork, concrete supply and place and remedial activities. Revenue from this segment grew by 282% to $171.528 million, an increase of $126.6 million on the $44.8 million in 2007. Approximately half of this growth in revenue was achieved organically with the balance coming from Meridian. Primarily the Construction business derives its income from operations in the Victorian construction market. This market has been very strong throughout the year. With the acquisition of Meridian the Company is now able to provide the full structure package service in house. The synergies between the Construction
operations pre-acquisition and Meridian start at the securing of new work and flow right through to the on-site delivery and completion of the works. The company is confident that further cost savings and efficiency benefits will continue to flow as the integrated model develops.