Table of Contents
Income Statement
Balance Sheet
Cash Flow Statement
Statement of Changes in Equity
FULL ANNUAL REPORT
Website
Chairman's Letter
Dear Shareholder,
On behalf of the board of directors of Swick Mining Services Ltd, it gives me great pleasure to present to you our 2008 Annual Report.
The 2008 financial year has been another year of excellent achievement for the Company, delivering further significant growth in the size of our operations and record revenue and profits for our shareholders. I am pleased to report that in FY08 we generated net profit after tax of $10.3 million on revenue of $84.2 million, increases of 164% and 121% on FY07 net profit and revenue respectively. One of the standout features of this outstanding result was the ability to improve our profitability margins at a time when the Company is ramping up its rig rollout program and at a time when the mining industry is facing significant cost pressures in an inflationary economy.
Our performance in FY08 and the growth of our Company over the last five years can be attributed to the quality of our rigs and the quality of our people. Swick Mining Services has worked hard at building a strong reputation in the mining industry for delivering a premium quality mineral drilling service. We are able to deliver a premium quality service time and time again through capitalising on our key competitive advantages in productivity, safety and versatility. These competitive advantages are generated through our ability to engineer innovative drilling solutions and unique rig designs that are at the forefront of new technology developments in the mineral drilling industry.
Technological innovation provides the platform for our success but it needs to be matched with a motivated and skilled workforce to capitalise on the competitive advantages offered by our rigs and deliver a superior level of service. As a Company, we invest heavily in the training of our people and strengthening of our culture to ensure that we have both the best rigs and the best people manning them. It gives the Company a great sense of pride that this investment is resulting in a consistent flow of promotions through the operational ranks and delivering one of the best safety records in the mineral drilling industry.
The 2008 financial year again saw the underground diamond division underpin the Company’s revenue. This division has successfully secured a large share of the Australian market and strong relationships with the likes of Barrick, Newmont, Xstrata and Oz Minerals. This is a testament to the world class jumbo mounted rigs we have developed in-house. The 2009 financial year will however see Swick Mining Services move beyond its primary reliance on underground diamond drilling through an aggressive and sustained expansion into the surface drilling market.
The foundations for surface expansion have been laid for both the surface reverse circulation and diamond drilling divisions, with breakout growth expected in FY09. The surface reverse circulation division in particular has a very bright future, with strong demand anticipated from Western Australia’s booming iron ore sector. In addition, the recently established surface multi-purpose drilling division is forecast to quickly deliver a significant financial impact through a fleet of eight new rigs and contracts with the likes of Newcrest and Barrick.
The 2009 financial year will also represent a watershed year for the underground diamond drilling division in its pursuit of building a global brand and strong footprint in the major international mining markets. During the year, the Board of Directors made the decision to expand into North America, initially into Canada. Along with Australia, Canada is recognised as a world leader in mining and exploration activity, with the Canadian mining industry contributing C$40 billion to its economy in CY06. This exciting new frontier offers excellent opportunities for strong growth for the underground diamond division and will be a major focus over the next 24 months.
I am pleased to advise that we have recruited a highly experienced General Manager, Will Gove, to coordinate our expansion into North America. Will comes to the Company with more than 12 years experience in the mining services industry and an extensive network of contacts within the major mining houses operating in North America. Our first underground diamond rigs will land in Canada in a few months time with the aim of replicating the success we have had in penetrating the underground diamond drilling market in Australia.
Swick Mining Services has rapidly grown to become one of the largest mineral drilling companies in Australia. Over the next 12 months we are expecting further strong growth to deliver forecast revenue of $155 million. Despite a recent softening in some commodity prices, we believe that demand for mineral drilling services will remain strong in FY09. The Company is well positioned to continue to generate strong growth in the current market conditions owing to its ability to deliver upon the key performance indicators of productivity, safety and value most prized by the mid-to-large tier mining houses. We look forward to another prosperous and exciting 12 months ahead both in Australia and overseas.
Yours faithfully
Andrew Simpson
Chairman
