pch group - the future's looking good

PCH GROUP LIMITED 2003-05-09 ASX-SIGNAL-G

HOMEX - Perth

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As we have now entered the final quarter of the 2003 financial year,
it is an opportune time for me to update you on your Company's
activities, its financial position and the outlook ahead.

SUMMARY OF TRADING TO 31 MARCH 2003

I am pleased to report that our quarter by quarter results continue
to grow as the various projects we are working on move into full
swing. Below is a year-to-date quarterly financial summary taken from
our September 2002 and March 2003 unaudited management accounts, as
well as our 31 December 2002 audit reviewed accounts ($'000's):

QUARTER ENDED
30/09/2002 31/12/2002 31/03/2003
$ $ $

Revenues 7,546 15,723 23,346
EBITDA 1,248 2,922 4,625
Net Profit Before Tax 832 2,036 3,350

I am confident of achieving further earnings growth and more
importantly sustaining the increased earnings levels. This confidence
is supported by our strong order book along with the robust outlook
we have for market conditions in general as more fully described
elsewhere in this update. At this stage, we expect to deliver a full
year return on shareholders' funds in excess of 20% for fiscal 2003
and 2004.

Whilst it is not normally the Company's practice to comment on share
trading activity, most shareholders will be aware of rising interest
in PCH shares over recent months. As a result of this, I am pleased
to welcome a number of important new shareholders to our register.

SUMMARY OF ACTIVITIES

All of our divisions are trading well, with utilisation rates at very
high levels and several new contracts having been secured recently. A
brief review of activity and the outlook in each of our key sectors
is provided below:

AUSTRALIAN RESOURCES SECTOR

In November 2002 PCH secured an initial two year contract with BHP
Billiton's Boodarie Iron operation at the HBI plant in Port Hedland.
The contract requires PCH to provide scaffolding equipment and
management services and follows the custom design specialised access
systems for this important client, which have saved them a
considerable amount of downtime and money.

On the high profile North West Shelf Train IV Expansion Project, the
Company has now been established on site for some nine months and is
busy hiring scaffolding to various con tractors on site. We are also
busy at various other sites such as Hamersley Iron, Iluka and BP
servicing maintenance requirements.

As advised in previous Activity Updates to Shareholders, the outlook
in this sector continues to be very positive indeed. There are a
number of large engineering projects that have either commenced or
are likely to commence in coming years. This sector appears to be set
for a buoyant four or five years and PCH is well positioned to secure
additional projects and further extend our order book.

INTERNATIONAL OIL AND GAS

We were pleased to have recently received a two year renewal of our
initial two year contract in Thailand with the Clough-Unithai Joint
Venture. This renewal endorses the high quality of equipment and
expertise that we provide in this specialist sector.

In Baku, where a number of projects are proceeding in connection with
the development of the Caspian oilfields, we have secured a further
$1.3 million in contracts, adding to the $23 million secured at the
end of the last financial year and which are now well underway. We
have a workforce of some 200 personnel and an established
infrastructure to support the provision of our specialist services on
this very important BP led project.

Based on our track record to date and with around six years still to
run on the BP project, PCH is confident of securing further contracts
in this market to further extend its order book.

Interestingly, recent world events in the Middle East, Venezuela and
West Africa have lifted the already high profile of the Caspian
oilfields and it is indeed now a "hot spot" in terms of global oil
supply. Significant future developments are likely to occur here and
PCH is in a good position to capitalise on the opportunities that
arise.

RESIDENTIAL

Activity in the West Australian two-storey housing market continues
to run at levels similar to the "pre-GST boom". Anecdotal evidence
from our major clients suggests that these levels will continue for
at least 12 to 18 months.

Unlike the severe post-GST downturn recently seen in the industry, we
predict a relatively soft landing towards the end of the current
cycle. This view is based on the positive outlook for the West
Australian economy and the continuing prevalence of small block sizes
(which forces more two-storey houses to be built) in a relatively low
interest rate environment.

COMMERCIAL AND HIGH RISE

PCH continues to build its profile in the NSW market. Utilisation
rates are at record levels and we are in the process of acquiring
additional stock to support demand. We are currently tendering work
with completion dates as far out as 18 months away and are confident
of increasing our market share.

Whilst we expect activity levels in this market to eventually fall,
the very favourable reception we have received since entering the NSW
market and the level of repeat business we are building give us
confidence in the future.

BALANCE SHEET AND FINANCIAL POSITION

A summary of our unaudited financial position at 31 March 2003 is as
follows:
$'000's
ASSETS
Cash 1,147
Receivables 7,192
Other Current Assets 770
Plant and Equipment 22,418
Other Non-current Assets 2,828
TOTAL ASSETS 34,355

LIABILITIES
Payables 5,303
Debt - Current 451
Provisions - Current 697
Debt - Non-current 4,703
Other Non-current Liabilities 4,956
TOTAL LIABILITIES 16,110

NET TANGIBLE ASSETS 18,245

FINANCIAL ANALYSIS
Net Debt 4,007
Net Debt/Equity 24%
Current Ratio 1.4 times
Net Tangible Assets per share 13 cents

Due to the strong and sustainable demand being experienced in all
sectors, PCH is in the midst of a stock expansion programme to
increase our income generating capacity. Whilst this necessarily
requires a reasonable level of capital expenditure, I am pleased to
report that operating cash flows have been sufficiently strong to
cover most of our capital requirements. Consequently, debt levels
have remained fairly constant and gearing at a comfortable level of
under 25%. Debt levels are forecast to reduce reasonably quickly at
the conclusion of the existing capital expenditure programme.

It is most pleasing that we are able to build our income generating
asset base without affecting debt levels.

Because our hire equipment generally has a long useful life - well in
excess of 15 years - this creates an enduring and strong financial
platform for the years ahead.

ANNUAL REPORT COSTS

In the continuing effort to lower costs, we are requesting
shareholders to notify us if they do not wish to receive the Annual
Report. Please note that the Annual Report will be available on the
Company's website. I would be grateful if you could review the
enclosed form and, if applicable, complete and return it in the reply
paid envelope provided.

CONCLUSION

As we enter the last quarter of the financial year your Company is in
good shape. All sectors of the business are operating profitably , we
have considerable work on hand out to early FY '05 and are highly
likely to secure new work that will further extend our order book.

We have been adding to the earnings power of the Company by building
our stock levels to meet sustainable demand, whilst maintaining
borrowings at a relatively constant and comfortable level.
Utilisation rates are forecast to remain high for the foreseeable
future and profit levels expected to increase. All of these factors
point to PCH having a successful 2003 fiscal year and an even better
2004 fiscal year.

I look forward to further updating you on your Company's progress in
the future.


James Cullen
GROUP MANAGING DIRECTOR