RAIDEN RESOURCES LIMITED — Annual Report 2014

Aug 28, 2014

29 August 2014

==> picture [304 x 60] intentionally omitted <==

ASX Announcement

PRELIMINARY FINAL REPORT

SubZero Group Limited (ASX: SZG) submits its Appendix 4E preliminary financial report for the year ended 30 June 2014.

For further information:

Scott Farrell

Managing Director P: +61 2 6540 9400 F: +61 2 6540 9444 M: +61 438 251 699 E: sfarrell@subzeroservices.com.au

Robert Lojszczyk

Chief Financial Officer P: +61 2 6540 9400 F: +61 2 6540 9444 M: +61 418 362 283 E: rlojszczyk@subzeroservices.com.au

==> picture [457 x 32] intentionally omitted <==

About SubZero Group Limited

The SubZero Group carries on an established mining service business based in the Hunter Valley, New South Wales. Its clients are almost exclusively involved in the Hunter Valley thermal coal mining industry. SubZero Group’s services include Mechanical Support (on and off-site mining machinery support), Structural Support (on and off-site engineering support) and Production Support (mining production support). SubZero has a presence in over 25 coal mines and over 90 clients including Rio Tinto, BHP Billiton and Xstrata. Further information can be found at the SubZero website: http://subzeroservices.com.au/

==> picture [596 x 47] intentionally omitted <==

SubZero Group Limited ASX Preliminary final report – 30/06/2014

Lodged with the ASX under Listing Rule 4.3A

Contents

Results for Announcement to the Market	2
Preliminary consolidated comprehensive income statement	3
Preliminary consolidated statement of financial position	4
Preliminary consolidated statement of cash flows	5
Preliminary consolidated statement of changes in equity	6
Notes to the preliminary consolidated financial statements	7
Other Appendix 4E Information	10

SubZero Group Limited Page 1

SubZero Group Limited Year ended 30 June 2014 (Previous corresponding period: Year ended 30 June 2013)

Results for Announcement to the Market

$'000	$'000	$'000	$'000	$'000
Revenue from ordinaryactivities	down	24.9%	to	63,786
Profit/(loss) from ordinary activities after tax attributable to members	down	114.4%	to	(12,998)
Net profit/(loss) for the period attributable to members	down	114.4%	to	(12,998)

Commentary on the results

SubZero Group Limited’s (SZG) statutory net loss after tax attributable to members for the year ended 30 June 2014 (FY14) was $12.998 million, underlying net loss after tax was $10.054 million as per the attached reconciliation. Underlying earnings before interest, tax, depreciation and amortization (EBITDA) was a loss of $3.935 million.

The underlying sales and profit results in FY14 continued to be negatively impacted by the general downturn in the mining sector resulting in continued delays in scheduled maintenance work from customers which has led to underutilization of SZG people and plant.

In addition the following factors have impacted the FY14 results;

• a) Write downs in work in progress and other capitalized expenses

• b) Impairment of goodwill and other intangibles

• c) Non recurring costs relating to prior years

Gross debt at 30 June 2014 was $23.824 million, an increase of $7.239 million from 30 June 2013. The debt is represented by loans of $16.000 million and finance leases of $7.824 million for equipment. As at 30 June 2014, the Group had breached its debt covenants with respect to its major banking facilities. Subsequent to 30 June 2014, the Group's financiers waived compliance with the June 2014 covenants within the testing period and agreed to new covenants for FY15.

On the 28th August 2014 SZG notified the ASX that the Company has continued to experience disappointing operating results and cashflow due to weak trading conditions as a number of the Company’s customers have delayed and continue to delay scheduled maintenance work. In these circumstances the Board has initiated an internal review of the Company’s business operations, in particular cost savings to offset anticipated revenue weakness.

SubZero Group Limited Page 2

SubZero Group Limited Preliminary consolidated statement of comprehensive income For the year ended 30 June 2014

Revenue from continuing operations Cost of sales Gross profit Other income General and administration expenses Vehicle and equipment costs Depreciation and amortisation Finance costs Employee benefits expense Rental expense Costs of listing Other expenses Profit/(loss) before income tax Income tax (expense)/benefit Profit/(loss) for the year Other comprehensive income Total comprehensive income for the year is attributable to: Basic earnings per ordinary Diluted earnings per ordinary Profit/(loss) is attributable to: Owners of SubZero Group Total comprehensive income Owners of SubZero Group Earnings per share for profit Non-controlling interests Non-controlling interests Other comprehensive income for	2014 $'000 63,786 (49,162) 14,624 1,340 (5,766) (2,365) (5,444) (2,274) (9,834) (3,064) - (93) (12,876) (69) (12,945) (12,998) 53 (12,945) - (12,945) (12,998) 53 (12,945) Cents (6.0) (6.0)	2013 $'000
		84,903 (55,463)
		29,439
		593 (3,712) (5,144) (4,230) (2,253) (14,879) (1,957) (3,468) -
		(5,611)
		(453)
		(6,064)
		(6,064) -
		(6,064)
		-
		(6,064)
		(6,064) -
		(6,064)
		Cents (3.9)
		(3.9)

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

SubZero Group Limited Page 3

SubZero Group Limited Preliminary consolidated statement of financial position As at 30 June 2014

Current assets Cash and cash equivalents Trade and other receivables Inventories Total current assets Non-current assets Property, plant and equipment Deferred tax assets Financial assets Intangible assets Total non-current assets Total assets Current liabilities Trade and other payables Borrowings Current tax liabilities Provisions Total current liabilities Non-current liabilities Borrowings Provisions Total non-current liabilities Total liabilities Net assets Equity Share capital Reserves Retained earnings Total equity Capital and reserves attributable Non-controlling interests	2014 $'000 782 12,927 4,402 18,111 14,865 198 188 542 15,793 33,904 14,672 17,865 234 29 32,800 4,102 390 4,492 37,292 (3,388) 18,383 (502) (21,322) (3,441) 53 (3,388)	2013 $'000
		125 14,961 2,601
		17,687
		17,431 166 300 1,391
		19,288
		36,975
		18,012 9,297 424 44
		27,777
		7,511 227
		7,739
		35,515
		1,460
		10,286 (502) (8,324)
		1,460 -
		1,460

The above consolidated statement of financial position should be read in conjunction with the accompanying notes.

SubZero Group Limited Page 4

SubZero Group Limited Preliminary consolidated statement of cash flows For the year ended 30 June 2014

Cash flows from operating activities Payments to suppliers and employees (inclusive of goods and services tax) Other revenue Interest paid Income taxes paid Net cash (outflow) inflow from operating activities Cash flows from investing activities Payment for non-controlling interest Payment for intangibles Payment for property, plant and equipment Proceeds from held-to-maturity investments Proceeds from sale of property, plant and equipment Net cash (outflow) inflow from investing activities Cash flows from financing activities Proceeds from capital raising, net of transaction costs Repayment of borrowings Proceeds from borrowings Net cash (outflow) inflow from financing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year Receipts from customers	2014 $'000 70,744 (79,451) 1,251 (2,274) - (9,730) - (602) (1,954) 112 49 (2,395) 8,097 (12,101) 16,786 12,782 657 125 782	2013 $'000
		94,906 (87,932) 531 (2,416) -
		5,089
		(659) (558) (3,186) - 64
		(4,339)
		6,262 (7,507) 300
		(945)
		(195) 320
		125

The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.

SubZero Group Limited Page 5

SubZero Group Limited Preliminary consolidated statement of changes in equity For the year ended 30 June 2014

Attributable to owners of SubZero Group Limited

Profit for the year Transactions with non-controlling interests Balance at 30 June 2014 Total comprehensive income for the year Transactions with owners in their capacity as owners: Other comprehensive income Contributions of equity, net of transaction costs and tax Total equity at the beginning of the financial year 30 June 2013	Contributed Equity $'000	Reserves $'000	Retained earnings $'000	Total $'000	Non- controlling interest $'000 - 53 - 53 - - 53	Total equity $'000
	10,286	(502)	(8,324)	1,460		1,460
	- -	- -	(12,998) -	(12,998) -		(12,945) -
	-	-	(12,998)	(12,998)		(12,945)
	8,097 -	- -	- -	8,097 -		8,097 -
	18,383	(502)	(21,322)	(3,441)		(3,388)

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

SubZero Group Limited Page 6

SubZero Group Limited Notes to the preliminary consolidated financial statements For the year ended 30 June 2014

Note 1 Segment information

The SubZero Group operates in a single segment, Mining Services, in Australia. The various products and services all relate to the same economic characteristics and are sold to a common set of customers. Based on the operation of a single segment and geography separate segment numbers have not been provided as the financial statements represent the one segment.

Note 2 Profit from ordinary activities Revenue from continuing operations Sales revenue Other Expenses Profit before income tax includes the following specific expenses: Depreciation Motor vehicles Plant & equipment Leasehold improvements Office furniture & equipment Low value asset pool Total depreciation Amortisation Intangibles assets Borrowing costs Total amortisation Impairment Impairment of goodwill Impairment of research and development Total impairment	2014 $'000 63,786 1,340 65,126 1,082 2,752 17 103 51 4,005 6 11 17 833 589 1,422	2013 $'000
		84,903 593
		85,496
		1,322 2,667 8 159 55
		4,212
		1 17
		18
		- -
		-

Note 3 Events occurring after the balance sheet date

As at 30 June 2014, the Group had breached its debt covenants with respect to its major banking facilities. Subsequent to 30 June 2014, the Group’s financiers waived compliance with the Interest Cover Ratio and Net leverage Ratio.

As a result of the amendment not being in place at 30 June 2014, the Group has classified $16 million of borrowings as current liabilities on the balance sheet notwithstanding that at the date of this report they are not due to be repaid within twelve months.

SubZero Group Limited Page 7

SubZero Group Limited Notes to the preliminary consolidated financial statements For the year ended 30 June 2014

Note 4 Reconciliation of profit from ordinary activities after income tax to net cash flow from operating activities

net cash flow from operating activities	activities
Profit for the year Cost of listing Depreciation and amortisation Bad Debts Expense Net (gain) loss on sale of non-current assets (Increase) / decrease in trade debtors (Increase) / decrease in inventories (Increase) / decrease in deferred tax assets Increase / (decrease) in trade creditors Increase / (decrease) in provision for income taxes payable Increase / (decrease) in other provisions Net cash inflow from operating activities Note 5 Contributed equity (a) Share capital Share Capital Fully paid (b) Movements in ordinary share capital: Details Opening Balance Issue of Shares Capital raising (net of transaction costs) Balance 1 July 2013 11 November 2013 6 December 2013 30 June 2014 Date 252,915,402 165,900,455 2014 Shares 2013 Shares	2013 Shares		2014 $'000 (12,945) - 5,444 199 185 1,923 (1,382) 32 (3,203) (21) 39 (9,730) 2014 $'000 18,383 18,383 Number of shares 165,900,455 24,195,000 62,819,947	2013 $'000
				(6,064) 3,468 4,207 21 7 1,513 (1,292) 224 2,660 229 116
				5,089
				2013 $'000
				10,286
				10,286
				$’000 10,286 2,420 5,677
			252,915,402	18,383

SubZero Group Limited Page 8

SubZero Group Limited Notes to the preliminary consolidated financial statements For the year ended 30 June 2014

Note 6 Reconciliation of income tax expense 2014 (a) Income tax expense $'000 Current tax 101 Deferred tax (32) 69 Income tax expense is attributable to: Profit from continuing operations 69 Aggregate income tax expense 69 Deferred income tax (revenue) expense included in income tax expense comprises: Decrease (increase) in deferred tax assets (347) (Decrease) increase in deferred tax liabilities 315 (32) (b) Profit from continuing operations before income tax expense (12,876) Tax at the Australian tax rate of 30% (2013: 30%) (3,863) Tax effect of amounts which are not deductible (taxable) in calculating taxable income: Listing costs - Trust distribution taxable within the group - Entertainment 5 Fines 8 Research and development rebate - Legal Fees 212 Distribution - (3,638) Recognition of deferred tax balances previously not recognised (1) Current year revenue losses not recognised as DTA 3,569 Income tax expense (70) Numerical reconciliation of	2013 $'000
	229 224
	453
	453
	453
	(86) 310
	224
	(5,611)
	(1,683) 1,040 15 16 2 (54) 235 93
	(336) (42) 831
	453

SubZero Group Limited Page 9

SubZero Group Limited Supplementary Appendix 4E information

Audit

This report is based on accounts, which are in the process of being audited.

The Audit report will be made available with the Company's financial report as part of the Company's Annual Report which is still being completed and will be released before the end of September 2014.

Other significant information

Reconciliation of Underlying Profit to Statutory Profit

Statutory financial statements Net loss after tax Tax expense Finance costs Depreciation and amortisation Statutory EBITDA Inventory write-off Redundancies Impairment costs Non-recurring expenses Underlying profit	EBITDA (12,945) 69 2,274 5,444	Net Profit/(loss) After Tax (12,945) 160 94 1,422 1,215 (10,054)
	(5,159) 160 94 - 970
	(3,935)

Net Tangible Asset Backing

Net Tangible Assetsper Security	2014 -1.56 centsp/s	2013 0.04 centsp/s

Controlled Entities acquired

Controlled Entities acquired
	Milford Hills PtyLtd
Date controlgained	30 April 2014
Contribution to profit / (loss) from ordinary activities after tax in currentperiod	158,473 $

SubZero Group Limited Page 10