MCS Services : Presentations at AGM

For personal use only

10 December 2021

CEO's Address

Good morning, ladies, and gentlemen.

My name is Paul Simmons. I am the Chief Executive Officer of MCS Security and Managing Director of MCS Services.

I welcome all shareholders to this, our sixth AGM.

I firstly would like to thank our Chairman, The Hon Bob Kucera for his leadership and control of MCS Services and the other board members for their effort and skills over the course of the year. I would also like to thank Jonathan Asquith for his professional and diligent role as Company Secretary.

Our sixth year and full first year dealing with COVID has been demanding, challenging, and rewarding. Where other companies have struggled and, in many cases, closed, MCS has advanced and grown. We have continued to expand in shopping centres and commercial buildings and are also developing and expanding our services in the health care industry.

Having commenced our electronics division, in some three years the division has grown from one technician to three, a trades assistant and an apprentice. This division of the business, I believe, will continue to grow, and produce good returns for the business.

Our Covert division has recently expanded its services and is now fully operational in South Australia. This alone gives us a very good footprint in this state.

COVID impact began to be an area of concern in March 2020. We put in place many strategies and protocols and worked within all government guidelines which kept our business operational and our staff safe. MCS were assigned one of the quarantine hotels and have had many officers performing the duty requirements there for 18 months. This was a positive for the business. The negative was that COVID impeded expansion to the other states, due to obvious factors including the frequent border closures.

We have secured all required operating licences in Queensland, New South Wales, Australian Capital Territory and Victoria and our intention is, when possible, to reignite the move into the other states.

Strategy:

Our strategy has not changed and still includes organic growth, eastern states development and acquisition targets. We have conducted due diligence on several companies but, not proceeded due to several factors which included the wrong fit and profitability. As stated, previous, we continue to look at developing in other areas including health and the electronics division, that will benefit all shareholders. Again, I must stress regarding acquisitions we will only pursue if the acquisition will benefit all shareholders.

For personal use only

Quality Standards:

We continue to invest in our ISO area having attained certification some two years ago. We are investing in online training programmes and demonstrations for all our front-line staff. The programmes will give us state of the art training and data that will benefit the business, staff, and clients.

Business Development:

Frome FY 20 to FY 21 we increased revenue by 52% through several factors being new contract wins, growth of our electronics division, expansion of the covert division and the assignment of one of the quarantine hotels.

The growth could have been greater had our expansion into the eastern states not been deferred due to COVID.

High quality tenders are still being submitted and we are confident on securing a number that have already been submitted and are awaiting confirmation.

Challenges:

Staff shortages has been an issue with COVID having had an impact with border closures and available staff. We have addressed this by advertising and offering incentives. The security industry is no different to the many suffering from staff shortages and non-availability, but I believe we are better situated than most to provide the services required but it will not be 100%.

The springing up of small businesses offering to sub-contract work to the larger businesses, thus taking staff from the pool. These companies have unscrupulous operating methodologies, particularly when coming to wages and employees' entitlements and conditions. These are continually identified and reported to the relevant authorities.

The above challenges also put additional workload on departments in head office such as recruitment, business operations and rostering, so to ensure the best possible outcome we have added additional staff in areas to ensure that during our busiest time and the challenges we face we are still able to provide a fully 24/7 integrated head office.

Opportunities:

Growth in the retail sector and commercial building area still exists, especially when we can begin to concentrate unimpeded with expansion into the eastern states.

The Electronics Division continues rapid growth and will continue to do so with new clients being attained on a weekly basis.

We have been very successful with the supply of staff for the North Metropolitan Health Department so much, so we have been asked to tender for the same work in two other health areas.

For personal use only

With the possible growth in this area evident we have recently employed a very experienced Business Operations and Development Manager solely for the area of health.

We are the leader in retail security in Western Australia and will continue to service existing clients but also looking to add new ones to the already large portfolio of retail.

Events security did take a hit due to restrictions and capacity leading to many cancellations, however we were able to retain staff by deploying them into other divisions. Of late we have seen a recommencement of events and are again heavily involved. Other opportunities still exist in commercial buildings, health, as I have said, aged care, government, and tourism. We will actively pursue all avenues.

Some main areas that we are waiting to break into continue to be, mines, oil and gas and ports and harbours and we are hopeful of security a contract sometime when tenders become available.

Future:

I, as are the rest of my team, are completely focused on

• Servicing existing clients to the highest standards
• Leveraging into new sectors
• Building long term, respected and trusted relationships with all clients
• Continuing our compliance to all ISO requirements
• Maintaining all staffing levels, at efficient numbers
• Expansion to the eastern states
• Identifying suitable acquisition targets and finally
• Maximising shareholder value

Immediate Future:

This is exciting with having secured all a major centre operators' portfolio in Western Australia and to shortly commence operations at another large shopping centre operators three of four centres here in Western Australia of which we already provide the services at their fourth centre.

We are heading into our busiest time of the year and the second half of the year is always our highest revenue time due to extended trade over the Christmas and Easter holidays with events and sporting games increasing.

We have several tenders pending and are hopeful of attaining some of these in the second half of this year.

PAUL R. SIMMONS

Chief Executive Officer