RAIDEN RESOURCES LIMITED — Interim / Quarterly Report 2014

Feb 27, 2014

SubZero Group Limited Appendix 4D Half-year ended 31 December 2013

Results for Announcement to the Market

				$'000
Revenue from ordinary activities	down	27%	to	33,841
Profit/(loss) from ordinary activities after taxattributable to members	down		to	(2,233)
Net profit/(loss) for the period attributable tomembers	down		to	(2,233)

	2013	2012
Net tangible asset backing per ordinary	2.3 cents	Not applicable
share

The statutory comparative numbers for 2012 were before the Group was a listed and do not reflect the costs of being a public company or a relevant share capital level

Contents

	Page
Directors' report	2
Interim financial report
Consolidated statement of comprehensive income	4
Consolidated balance sheet	5
Consolidated statement of changes in equity	6
Consolidate statement of cash flows	7
Notes to the consolidate financial statements	8
Directors' declaration	11
Independent auditor's review report to the members	12

This interim financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 June 2013 and any public announcements made by SubZero Group Limited during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001 .

Directors' report

Your directors present their report on the consolidated entity consisting of SubZero Group Limited and the entities it controlled at the end of, or during, the half year ended 31 December 2013.

Directors

The following persons were directors of SubZero Group Limited during the half year and up to the date of this report:

Name Mr Malcolm Jackman Mr Scott Farrell Mr Glenn Molloy Mr Graeme (Joe) Clayton Mr Bruce Arnott Mr Frank O'Halloran (appointed 20 December 13)

Mr Frank O'Halloran was appointed a director on 20 December 2013 and continues in office at the date of this report.

Mr Glenn Molloy was a director from the beginning of the financial year until his resignation on 25 November 2013.

Review of operations

SubZero Group Limited (ASX:SZG) today reported a statutory net loss after tax for the half year ended 31 December 2013 of $2.233m.

Underlying EBITDA of $0.946million was outside the range provided by the Company in its trading update provided on 29 January 2014. Since the announcement the Directors and management have become aware that an invoice requested by a customer in December is for work to be carried subsequent to half-year end and have deferred the booking of that invoice to the second half.

Market conditions in the six months ended December 2013 continued to be soft. Although coal production continues to operate at record levels in the Hunter Valley with high equipment utilisation, customers have maintained tight controls over expenditure in order to conserve cash and improve profitability. As such revenue for the Group was softer than in the previous six months. Commensurate with these market conditions, SubZero has been maintaining tight cost controls and conserving cash.

During the period SubZero continued to be awarded new contracts as well as the roll over of current contracts. In order to support this growth SubZero has increased levels of inventory and work in progress. However, the deferral in start dates of planned contracts continues to adversely impact revenue and the ability to recover these sunk costs in a timely manner. Wet weather in late November also negatively impacted on operations.

SubZero occupied its major facility in Muswellbrook, the largest climate controlled workshop in the Hunter Valley. During the six months we have continued to improve our safety systems and training programs for our personnel. We have restructured our management team and continue to refine our processes further. A review of our future business systems requirements has been undertaken and the Board has approved a $1.2m investment over the next 2 financial years for the replacement of the Company's existing business and IT platform. From an equipment and personnel perspective, SubZero is well positioned with the capacity and capability to meet its customer's current and future needs.

Clear indications from customers support our outlook that with the reduction in capital expenditure on new equipment and high levels of production, maintenance expenditure will increase over the balance calendar 2014 and beyond.

Auditor's Independence declaration

A copy of the auditors' independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 3.

Rounding of amounts

The Company is of a kind referred to in Class Order 98/0100, issued by the Australian Securities and Investments Commission, relating to the 'rounding off' of amounts in the directors' report. Amounts in the directors' report have been rounded off in accordance with that Class Order to the nearest thousand dollars, or in certain cases, to the nearest dollar.

This report is made in accordance with a resolution of the directors:

Mr Malcolm Jackman Chairman

Mr Scott Farrell Sydney Managing Director 28 February 2014

Auditor's Independence Declaration

As lead auditor for the review of SubZero Group Limited for the half-year ended 31 December 2013, I declare that to the best of my knowledge and belief, there have been:

• a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and
• b) no contraventions of any applicable code of professional conduct in relation to the review.

This declaration is in respect of SubZero Group Limited and the entities it controlled during the period.

Darren Turner

Partner Newcastle PricewaterhouseCoopers 28 February 2014

PricewaterhouseCoopers, ABN 52 780 433 757 PricewaterhouseCoopers Centre, 26 Honeysuckle Drive, PO Box 798, NEWCASTLE NSW 2300 T: +61 2 4925 1100, F: +61 2 4925 1199, www.pwc.com.au

SubZero Group Limited Consolidated statement of comprehensive income For the half year ended 31 December 2013

	Half-year
	2013$'000	2012$'000
Revenue from continuing operations	33,841	46,539
Cost of sales	(23,354)	(33,129)
Gross profit	10,487	13,410
Other income	-	413
General and administration expenses	(3,253)	(3,176)
Vehicle and equipment costs	(1,178)	(483)
Depreciation and amortisation	(1,893)	(2,005)
Finance costs	(1,020)	(1,196)
Employee benefits expense	(3,844)	(5,179)
Rental expense	(1,266)	(935)
Profit/(loss) before income tax	(1,967)	849
Income tax (expense)/benefit	(266)	(255)
Profit/(loss) for the year	(2,233)	594
Profit/(loss) is attributable to:
Owners of SubZero Group Limited	(2,233)	594
	(2,233)	594
Other comprehensive income
Other comprehensive income for the year net of tax	-	-
Total comprehensive income for the year	(2,233)	594
Total comprehensive income for the year is attributable to:
Owners of SubZero Group Limited	(2,233)	594
	(2,233)	594
Earnings per share for profit attributable to theordinary equity holders of the company:	Cents	Cents
Basic earnings per ordinary share:(cents per share)	(1.2)	0.4
Diluted earnings per ordinary share:	(1.2)	0.4

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

(cents per share)

		31 December2013	30 June2013
	Notes	$'000	$'000
Current assets
Cash and cash equivalents		1,045	125
Trade and other receivables		13,697	14,961
Inventories		5,279	2,601
Total current assets		20,022	17,687
Non-current assets
Property, plant and equipment		16,016	17,431
Deferred tax assets		-	166
Financial assets	3	150	300
Intangible assets		1,602	1,391
Total non-current assets		17,768	19,288
Total assets		37,789	36,975
Current liabilities
Trade and other payables		16,508	18,012
Borrowings		8,882	9,297
Current tax liabilities		424	424
Provisions		142	44
Total current liabilities		25,956	27,777
Non-current liabilities
Borrowings		4,374	7,511
Provisions		119	227
Total non-current liabilities		4,493	7,738
Total liabilities		30,448	35,515
Net assets		7,341	1,460
Equity
Contributed equity	4	18,397	10,286
Reserves		(502)	(502)
Retained earnings		(10,554)	(8,324)
Capital and reserves attributable toowners of SubZero Group Limited		7,341	1,460
Total equity		7,341	1,460

The above consolidated balance sheet should be read in conjunction with the accompanying notes.

SubZero Group Limited Consolidated statement of changes in equity For the half year ended 31 December 2013

			Attributable to owners of SubZero Group Limited
	Notes	ContributedEquity	Reserves	Retainedearnings	Total	Noncontrollinginterest	Total equity
		$'000	$'000	$'000	$'000	$'000	$'000
Balance as at 1 July 2012		556	-	(2,261)	(1,705)	154	(1,551)
Profit for the half year		-	-	594	594	-	594
Other comprehensive income		-	-	-	-	-	-
Total comprehensive income for the halfyear		-	-	594	594	-	594
Transactions with owners in their capacityas owners:
Transactions with non-controlling interests					-	(154)	(154)
Contributions of equity, net of transaction costs	4	-	-	-	-	-	-
Balance at 31 December 2012		556	-	(1,667)	(1,111)	-	(1,111)
Balance as at 1 July 2013		10,286	(502)	(8,324)	1,460	-	1,460
Profit for the half year		-	-	(2,233)	(2,233)	-	(2,233)
Other comprehensive income		-	-	-	-	-
Total comprehensive incomefor the half year		-	-	(2,233)	(2,233)	-	(2,233)
Transactions with owners in their capacityas owners:
Contributions of equity, net of transaction costsand tax	4	8,111	-	-	8,111	-	8,111
Balance at 31 December 2013		18,397	(502)	(10,554)	7,341	-	7,341

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

Page 6

SubZero Group Limited

		Half-year
		2013	2012
	Notes	$'000	$'000
Cash flows from operating activities
Receipts from customers (inclusive of goods and services tax)		34,507	54,805
Payments to suppliers and employees (inclusive of goods and services tax)		(36,121)	(44,846)
Other revenue		(12)	413
Interest paid		(1,020)	(1,196)
Net cash (outflow) inflow from operating activities		(2,646)	9,177
Cash flows from investing activities
Payment for capitalised R&D & patent costs		(10)	(236)
Payment for property, plant and equipment		(982)	(1,998)
Net cash (outflow) inflow from investing activities		(992)	(2,233)
Cash flows from financing activities
Transaction costs from issue of shares	4	(591)	-
Proceeds from issue of shares	4	8,701	-
Repayment of borrowings		(4,365)	(6,794)
Proceeds from borrowings		813	628
Net cash (outflow) inflow from financing activities		4,558	(6,166)
Net increase (decrease) in cash and cash equivalents		920	778
Cash and cash equivalents at the beginning of the year		125	320
Cash and cash equivalents at the end of the year		1,045	1,098

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

1 Basis of preparation of the half-year report

This condensed consolidated interim financial report for the half-year reporting period ended 31 December 2013 has been prepared in accordance with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001 .

This condensed consolidated interim financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 30 June 2013 and any public announcements made by SubZero Group Limited during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001 .

The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period.

(a) Going Concern

As at 31 December 2013, the Group has incurred a loss after tax for the half year of ($2.3m) (2012: profit of $0.6m), the Group has a deficiency in net current assets of $5.9m (30 June 2013: deficiency of $10.1m). The Group has a net asset position at 31 December 2013 of $7.3m (30 June 2013: $1.5m) following the successful equity raisings of $8.2m (net of transaction costs) during the half year.

As a result of these matters, there is a material uncertainty that may cast significant doubt on the Company's ability to continue as a going concern and, therefore, that it may be unable to realise its assets and discharge its liabilities in the normal course of business.

The Group is well advanced in pursuing refinancing initiatives to better fund the company's working capital and growth, following the equity raisings completed during the half year. The directors believe that the company and Group will be successful in the above matters and, accordingly, have prepared the financial report on a going concern basis. The directors are also of the opinion that no asset is likely to be realised for an amount less than the amount at which it is recorded in the financial report. Accordingly, no adjustments have been made to the financial report relating to the carrying amounts and classifications of assets and liabilities that might be necessary should the Group not continue as a going concern.

(b) Impact of standards issued but not yet applied by the entity

There are standards issued not yet applied by the entity which will have a material impact on the Group.

2 Segment information

(a) Description of segments

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.

3 Fair value measurement of financial instruments

(a) Fair value hierarchy

AASB 13 required disclosure of fair value measurements by level of the following fair value measurement hierarchy:

(a) quoted prices (unadjusted) inactive markets for identical assets or liabilities (level 1)

(b) inputs other than quoted prices included within level 1 that are observable for the asset or liability either directly or indirectly (level 2), and

(c) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3).

The following table presents the group's financial assets and financial liabilities measured and recognised at fair value at 31 December and 30 June 2013 on a recurring basis:

At 31 December 2013Held to maturity investments	Level 1$'000150150	Level 2$'000--	Level 3$'000--	Level 4$'000--
At 30 June 2013Held to maturity investments	Level 1$'000300300	Level 2$'000--	Level 3$'000--	Level 4$'000--

The group's policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period. The group did not measure any financial assets or financial liabilities at fair value on a non-recurring basis as at 31 December 2013.

(b) Fair values of other financial instruments

The group also has a number of financial instruments which are not measured at fair value in the balance sheet. These had the following fair values at 31 December 2013:

	CarryingAmount	Fair Value
Non-current borrowings	$'000	$'000
Bank facilities	4,374	4,388
	4,374	4,388

Due to their short term nature, the carrying amounts of the current receivables, current payables and current borrowings is assumed to approximate their fair value.

4 Equity Securities issued

Issues of ordinary shares during the half-year

		31 December2013Shares	30 JuneShares	2013	31 December2013$'000	30 June$'000	2013
(a) Share capitalShare capital
Fully paid		252,915,402	165,900,455		18,397		10,286
	Total contributed equity				18,397		10,286
Date	(b) Movements in ordinary share capital:Details				Number ofshares	$'000
1-Jul-13	Opening balance				165,900,455		10,286
11-Nov-13	Issue of shares				24,195,000		2,420
6-Dec-13	Capital raising (net of transaction costs)				62,819,947		5,691
					252,915,402		18,397

In the directors' opinion:

• (a) the financial statements and notes set out on pages 4 to 10 are in accordance with the Corporations Act 2001, including
  • (i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
  • (ii) giving a true and fair view of the consolidated entity's financial position as at 31 December 2013 and of it's performance for the half year ended on that date and
• (b) there are reasonable grounds to believe that SubZero Group Limited will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the directors.

Mr Malcolm Jackman Chairman

Mr Scott Farrell 28 February 2014 Managing Director

Sydney

Independent auditor's review report to the members of SubZero Group Limited

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of SubZero Group Limited (the Company), which comprises the balance sheet as at 31 December 2013, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the half-year ended on that date, selected explanatory notes and the directors' declaration for SubZero Group Limited (the consolidated entity). The consolidated entity comprises the company and the entities it controlled during that halfyear.

Directors' responsibility for the half-year financial report

The directors of the company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that is free from material misstatement whether due to fraud or error.

Auditor's responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Australian Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity's financial position as at 31 December 2013 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of SubZero Group Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001.

PricewaterhouseCoopers, ABN 52 780 433 757 PricewaterhouseCoopers Centre, 26 Honeysuckle Drive, PO Box 798, NEWCASTLE NSW 2300 T: +61 2 4925 1100, F: +61 2 4925 1199, www.pwc.com.au

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of SubZero Group Limited is not in accordance with the Corporations Act 2001 including:

• a) giving a true and fair view of the consolidated entity's financial position as at 31 December 2013 and of its performance for the half-year ended on that date;
• b) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.

Material Uncertainty Regarding Continuation as a Going Concern

Without qualifying our opinion, we draw attention to Note 1 in the financial report, which indicates that the company incurred a net loss of ($2.3m) during the half year ended 31 December 2013, and, as of that date; the company's current liabilities exceeded its current assets by $5.9m and that the group is currently pursuing refinancing initiatives. These conditions, along with other matters set forth in Note 1, indicate the existence of a material uncertainty that may cast significant doubt about the company's ability to continue as a going concern and therefore the company may be unable to realise its assets and discharge its liabilities in the normal course of business and at the amounts stated in the financial report.

Other Matter

The Company was not required to prepare or lodge a financial report for half year end 31 December 2012. The comparative amounts included in the financial report are therefore unaudited.

PricewaterhouseCoopers

Darren Turner Newcastle Partner 28 February 2014