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pcg ..wow " review of operations" REVIEW OF OPERATIONS
1. Chairman and Managing Director’s Report
The past year produced a third consecutive record financial result for the Company and saw it commence a series
of new growth initiatives to expand its growth horizons.
KEY FINANCIAL INDICATORS
2005
$’000
2004
$’000
Revenue from services and sale of goods 81,495 48,915
EBITDA 15,876 10,910
Net profit before tax 12,865 8,284
Net profit after tax 9,888 6,930
Operating cash flow 4,465 10,801
EPS 6.9 cps 4.9 cps
DPS (fully franked) 1.25 cps 1.0 cps
These reported figures reflect continuing favourable conditions and performance across most sectors in which the
Company operates. Sales revenue was up 66% from the previous year while EBIT increased 58% to $13.4 million
and net profit before tax increased 55% to $12.9 million. Net profit after tax of $9.9 million reflected the benefit
of an additional $0.9 million tax credit (2004: $1.0 million) resulting from entry into the tax consolidation regime.
Return on average equity was 30% (2004: 29%).
The Company has positioned itself in a number of key markets which are expected to remain buoyant for at least
the next several years. Whilst the Company’s existing operational base stands to benefit from these conditions,
several expansionary moves are also underway to broaden and diversify the Company’s revenue base, both
through the introduction of complimentary hire products and through geographical expansion. These moves are
expected to provide sound growth prospects in coming years.
Operating margins were down from the previous year due to a number of projects involving high labour
components, however this is reflected in the higher than expected revenue figure for the year. These projects
were funded through working capital, the timing of which had the effect of reducing operating cash flow for the
year. Revenue contributions from these projects were particularly high towards the end of the financial year,
contributing to a higher than normal accounts receivable balance at year-end. Personnel costs also increased
during the year, largely due to these projects, with the majority of increases being for site based staff supplied on
charge out rates to customers.
The Company continues to derive its revenues in roughly equal proportions from within Australia and overseas.
A comparison of sales and services revenue by geographical sector is as follows:
2005
$’000
2004
$’000
2003
$’000
Australia 40,187 22,618 14,557
International 41,308 26,297 19,044
81,495 48,915 33,601

In Australia, the Company achieved high utilisation rates in both the resources and two-storey housing sectors,
where strong demand fuelled heavy capital expenditure requirements. High rise and commercial activities on the
east-coast were impacted by a softening in market conditions.
PCH’s operations in the international energy and mining sectors continued to grow, with its Caspian Sea and
Thailand activities performing well and both having ongoing work on hand. PCH’s operations in the UAE were
somewhat subdued in 2005, principally because the Company remains very selective about work in that market
and there was little opportunity for the types of projects we seek. Our focus has broadened, however, to nearby
markets such as Oman and Qatar, where strong oil and gas activity is forecast to continue for at least five years.
The Company commenced business development activities in these markets during the year.
2005 Achievements and Initiatives
As previously mentioned, the Company has embarked on a strategy to expand its product range to incorporate a
number of complimentary products that can be provided to its customers. During 2005 significant resources
were invested to lay the foundations for these products, being:
• Formwork;
• Temporary fencing;
• Light access; and
• Materials hoists
These products, like scaffolding, have unusually long useful lives and comparatively low maintenance requirements.
With the exception of materials hoists, there were virtually no contributions to results from these new products
in 2005 as activities were largely in the product development and start-up phase, although in the last few months
of the financial year formwork activities were well underway.
We are enthusiastic about the Company’s prospects with these new product lines. They will take some time to
“roll-out” but there is a clear expectation that over time they will broaden our revenue base, deliver increasing
returns and contribute to continuing growth for the Company.
The Company’s core scaffolding operations continued to expand during the year, with the following highlights and
initiatives:
• An excellent safety record on all client sites.
• Establishment of operations in Victoria.
• Securing and commencing works on BP’s Shah Deniz project in Baku.
• Acquisition of a Perth based competitor.
• Securing various new contract awards on BP’s ACG project in the Caspian Sea, supplementing additional
contracts already on hand there.
• First project in Queensland.
• Scaffolding supply on various major Australian projects such as the Burrup Fertilisers project, the Worsley
Alumina expansion project, the HIsmelt project, the Alcoa Pinjarra expansion project, the Rio Tinto
Dampier upgrade project and the Ravensthorpe Nickel project (where formwork is also being supplied).
• Initiation of business development work in major new oil and gas markets, including Kazakhstan, Qatar
and Oman.
• Successfully completing our work on the “LNG 4” expansion project.
• Securing various maintenance supply contracts.

Cash Flow and Capital Expenditure
The Company’s operating cash flow was well down from the previous year. The principal reasons for this were:
• Working capital requirements on two major projects with high labour components ($10 million);
• Increase in corporate tax payments ($2.4 million); and
• Slower collections across the industry, although this trend is now reversing.
Operating cash flow in 2006 is expected to increase.
Capital expenditure for 2005 was significantly higher than expected. This was due to:
• Strong demand for scaffolding in the resources and two storey markets.
• Expansion of scaffolding activities into Victoria and Queensland
• Introduction of new product lines.
With respect to capital expenditure on new product lines, purchases will not translate into immediate returns as
previously mentioned. Whereas scaffolding is typically purchased to meet demand and generates almost instant
hire income, there will be a revenue lag for the new products as the Company’s approach is to put its people and
products in place before commencing marketing. From August 2005 PCH had base stocks of all new products in
place and marketing activities have now commenced. It is expected that utilisation will build up gradually during
the year and that further capital expenditure will then be required.
Capital Raising
On 9 September 2005 PCH Group Ltd embarked on a capital raising programme to raise $10 million to support
the company’s various growth initiatives.
The capital raising comprised a placement of 12,903,226 shares at an issue price of 62 cents to professional and
sophisticated investors to raise $8 million and a share purchase plan (“SPP”) of up to 3,225,000 shares at 62 cents
to raise up to $2 million.
The $8 million placement was successfully completed and the Company is currently in the process of completing
the SPP to raise an additional $2 million.
Dividends
The directors have approved a 25% increase in dividends to 1.25 cents per share, fully franked, and expect to
maintain or increase this in future years.
Occupational Health and Safety
With the significant increase in personnel the Company continues to have a major focus on the safety of its
employees and contractors. The following table shows the increase in personnel over the past four years:
30 June 2005 30 June 2004 30 June 2003 30 June 2002
Number of staff 1,111 781 470 158

In all years, PCH has achieved an exceptional safety record at its customers’ sites. However, in 2005 there was a
notable increase in the number of incidents occurring at the Company’s head office yard operations. This was a
most disappointing outcome and one serious accident occurred. The directors and management have a strong
focus to bring this trend back into line in the coming year.

Outlook
In conclusion, the directors are pleased with the Company’s profitability and financial health. The returns being
generated for shareholders are particularly strong.
The outlook in most Australian sectors is buoyant over the next two to three years and in the international oil
and gas markets the Company’s view is that strong activity will continue for five or more years.
This, together with the new product lines being introduced should enable the Company to build a larger and
more profitable business in the coming years.
_________________________________ ___________________________
WB RYAN JD CULLEN
Chairman Managing Director