RER Group has recorded an $8 million full year profit result mainly thanks to increased revenue from its subsidiary Resource Equipment Rentals.
RER Group has recorded an $8 million full year profit result mainly thanks to increased revenue from its subsidiary Resource Equipment Rentals.
Resource Equipment Rentals continued its year on year growth with a 39 per cent increase in revenue and a 44 per cent increase in EBITDA.
See full statement below:
RER Group Ltd (ASX: RGD) today announced its first full year profit result since emerging as a specialist equipment provider with a net profit of $8.0 million.
This result was achieved primarily from its new subsidiary, Resource Equipment Rentals Pty Ltd, which continued its history of year on year growth since inception with a 39% increase in revenues and a 44% increase in EBITDA.
RER Chief Executive James Cullen said that he was satisfied with the result and was confident that the growth momentum of the new look company would continue.
"As operating mines become larger and deeper, water management requirements typically increase and become more complex. This, together with the strategy we have implemented to deliver our specialist services over an expanded geographical base, should lead to impressive growth in the coming year".
Revenues were boosted by RER's expanding presence on the east-coast, as well as the introduction of new equipment into its fleet. Mr Cullen said that a combination of increased marketing activities and referrals from within the industry were also beginning to pay dividends.
"What was especially pleasing was the way that we finished the year off, with fourth quarter revenues 35% higher than the corresponding time last year and also at record levels" he said.
Whilst the provision of specialist mine water management services made up the majority of revenues, revenues from newly formed business units were also beginning to build and would become part of an emerging earnings profile in the years ahead.
"We formed two new business units during the year - oil & gas and hydromining - as well as expanded our capabilities in remote mine site power supply. All of these moves are showing positive signs with contracts in hand and active negotiations for new work continuing", Mr Cullen said.
The Company's balance sheet remains in a healthy state with net gearing of 20%. The Board has not declared a dividend for the 2010 year because of an absence of franking credits (resulting from carried forward tax losses) and ongoing capital expenditure requirements for fleet expansion.
During the year a process was undertaken to review and make changes to the Company's operating business structure to ensure all business units remained appropriately sized and resourced to achieve success in the current market conditions.
In conjunction with this and in recognition of the expected continuing growth of the business, the directors strengthened the management group. There were a number of key appointments made, principally in the areas of safety management, business development, finance, engineering, operations and Information Technology.
Whilst these appointments add to the fixed overhead cost structure and may have a short term impact on margins, they will enable the Company to stimulate and accommodate growth in the years ahead in a managed and controlled environment.
With favorable market conditions for achieving organic growth in place, a proven business model, strengthened management team and alertness for strategic acquisitions, the Board believes that there are strong foundations for RER to achieve considerable growth and rewards for its shareholders in the years ahead.
