RAIDEN RESOURCES LIMITED — Interim / Quarterly Report 2013

Aug 29, 2013

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ASX Announcement

Friday 30 August 2013

FY13 Results Announcement

	June 13	June 12	Change
	(12 months)	(9 months)
NPAT	($2.6m)	$3.7m
EBITDA	$4.3m	$8.7m	-51%
Underlying NPAT	($0.134m)	N/A
Underlying EBITDA	$6.2m	N/A
Underlying EBITDA Margin	7.3%	N/A
Sales Revenue	$84.9m	$64.3m	+32%
Operating Cash Flow	$5.4m	$4.0m	+35%
Earnings per Share	(1.71c)	N/A
Dividend per share	Nil	N/A

SubZero Group Limited (ASX:SZG) today reported a statutory net loss after tax for the year ended 30 June 2013 of $2.596 million and underlying net loss after tax of $0.134 million, as per the attached reconciliation.

Underlying EBITDA of $6.215 million was within the range of guidance provided on 2 July 2013 of $6 million to $7 million.

SZG was formed by the acquisition of the group’s entities by SVC on 10 April 2013 and its subsequent reinstatement on the ASX on 22 April 2013. For accounting purposes the entities were consolidated in September 2011, thus providing comparative numbers for FY12 for 9 months from October 2011 to June 2012 in the statutory results.

The underlying sales and profit results in FY13 were negatively impacted by the general downturn in the sector and in particular by;

• a) Unrecovered personnel costs incurred in maintaining a labour pool in anticipation of normally scheduled labour hire requirements.

• b) Delays in occupying the new workshop at Muswellbrook due to sewerage and water mains issues which impacted SZG’s ability to carry out mining equipment refurbishment and maintenance works.

• c) Deferral in start dates of planned contract works by customers which has led to underutilisation of SZG people and plant.

• d) Delays in corporate restructuring, refinancing and the ASX listing process.

Cash Flow and Borrowings

Gross debt at 30 June 2013 was $16.585 million, a reduction of $7.1 million from 30 June 2012. The debt is represented by finance leases of $12.475 million for equipment, $3.277 million from the factoring of invoices and $0.833 million from loans. This represents 2.7 times the underlying EBITDA. The Company is currently pursuing refinancing initiatives to provide additional facilities to better fund the Company’s working capital and growth.

SubZero Group Limited ABN 68 009 161 522 PO Box 561 Muswellbrook NSW 2333 | P: 02 6540 9400 | F: 02 6540 9444 www.subzeroservices.com.au

Date: Friday 30 August 2013

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Human Resources

SZG achieved a Lost Time Injury Frequency Rate (LTIFR) of 0.00 across the group for FY13, consistent with the FY12 result. SZG achieved these outcomes by adherence to the company’s integrated safety management plan and dedicated safety team, who continue to focus on our commitment of achieving “Zero Harm”.

Moderate employment downsizing (-8%) has occurred from FY12 to FY13 due to corporate restructuring with a focus on creating greater efficiencies at all levels of the business.

SZG continues to develop a strong culture of organic staff development that focuses on the up skilling of employees from within the business and employing people from the local community. SZG offers an integrated apprenticeship scheme and currently employs 52 apprentices across a range of trades.

SZG expects their workforce to expand in late FY14 to fulfill its planned growth strategies.

Strategy and Outlook

SZG’s business strategy is to provide a broad range of essential mining services and products to resources companies in the Hunter Valley region under a ‘one-stop-shop’ model. It is focused on providing critical tasks and services, which involve preventative, regular and planned maintenance activities. The majority of these services are non-discretionary in nature and critical to clients in maximising production and minimising downtime. This approach delivers low execution risk and provides certainty over revenue.

Even as mining capital investment slows, production levels continue to rise and SZG is strongly positioned to take advantage of the emerging maintenance boom as the market leader due to its long-term investment in both infrastructure and personnel.

SZG expects expansion into Queensland and Western Australia to have a positive impact on its FY14 and FY15 earnings.

Since listing, SZG has been awarded a number of contracts that secure an estimated $130 million in additional revenue over the next 3 years. The majority of these contracts have an option to extend for a further 2 years and secure SZG a strong base workload in the coming years. In response to this increase in workload, SZG has increased its maintenance facility capacity by over 200%. SZG’s total capacity now stands at 17,283 sqm of climate controlled workshop facilities.

We expect to see maintenance services spend in SZG’s areas of expertise to increase in NSW by 36% annually through to FY17. Accordingly, SZG will remain focussed on a growth strategy over the next three years.

For more information contact:

Scott Farrell

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

Date: Friday 30 August 2013

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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/

Reconciliation of Underlying Profit to Statutory Profit

		Net
	EBITDA	Profit/(loss)
		**After tax **
	$’000	$’000
Statutory financial statements	4,315	(2,596)
Consulting costs- restructure & listing	333	233
Legal costs - restructure & listing	804	563
Other costs for the restructure	405	283
One offcosts (includes redundancy)	358	251
Tax losses unable to be utilised		1,132
Underlying Profit/(loss)	6,215	(134)