Ann: GCS FY16 Results - Reports Strong Underlying Performance-GCS.AX, page-3

I agree the company could have flagged the impairment prior to the results, but a quick look at the current market cap vs the value of assets on the balance sheet suggested that they were inflated and needed to be impaired. GCS was nearly trading on half of it's NTA prior to the impairment!

Looking past that, I thought the result was really good. In the current climate, revenue growth of 22.6% is brilliant, and margins remained strong. Underlying NPAT of $12m leaves GCS trading on a very undemanding P/E of 7.5x, but the highlight of the report is the cash generation. $25m in FCF gives GCS so much flexibility, and like last year management were prudent and decided to pay down debt again. With net debt of $14m, GCS could be debt free next year if they choose to be.

However, it looks like management are gearing up for growth with a few acquisition targets lined up on the East Coast. Assuming the market remains strong, GCS should be able to put some cash to work (or tap into the new debt facility) to accelerate the East Coast expansion and really drive the business moving forward. Management have set an ambitious goal to generate half a billion of revenue in the next 3-5 years.

Plus GCS is lined up to present at an upcoming presentation day for CCZ in Sydney, hopefully they will be able to get the growth story out there and generate some interest in the share price. A quick look at others in the mining services/construction space suggests GCS has some catching up to do.