Transcription of Finance News Network Interview with SubZero Group Limited (ASX:SZG) Managing Director, Scott FarrellDonna Sawyer: Hello I’m Donna Sawyer from the Finance News Network and joining me from the SubZero Group is Managing Director, Scott Farrell. Scott thanks for joining me.
Scott Farrell: Thanks Donna, it’s great to be here.
Donna Sawyer: Could you start by introducing the SubZero Group. When were you established and where?
Scott Farrell: So SubZero Group was started in 1999 in the Hunter Valley, in a town called Muswellbrook.
Donna Sawyer: You’ve just invited investors to participate in your initial public offering; it’s an enormously exciting time for you. What exactly are you offering?
Scott Farrell: So I began the business in ‘99 with a $10,000 personal loan. We’ve managed to grow that to in excess of 500 people with an expected target revenue of over $90 million per annum. What that’s allowed us to do is to ask investors to come on board and reap the benefits of that investment, through our infrastructure and personal. And we’re looking at 2014, will see the benefits of that investment.
Donna Sawyer: Turning to directorship, can you talk us through the brain power and industry experience of the Board?
Scott Farrell: We attracted a very good Board with a vast industry experience. And we’ve managed to attract Glen Molloy from the PPK Group
(ASX:PPK), and he’s experienced with Industrea
(ASX:IDL) and Rambor in the coal mining sector. Also have another mining sector specialist in Joe Clayton, who is currently the CEO of BDM (Resources) and has vast amounts of knowledge in coal/ironore/gold. And has also worked for major players such as Centennial
(ASX:CEY) and overseas mines in Indonesia.
With that coupled together with financial strength from former CFO of Bradken
(ASX:BKN) in Bruce Arnott. And Bruce brings to our Board a very strong financial background. So it’s really pleasing to be able to work with such professionals.
Donna Sawyer: Obviously mining services is your main game. What’s the biggest challenge would you say, facing the domestic market right now?
Scott Farrell: In recent times, economic and political factors have held some of the market at ransom. But we’ve noticed that the uncertainty in the coal price has been the major thing, that’s created a lot of perception of downturn which has been mostly felt in the project sector, which we don’t participate in. We are a mining maintenance business and that’s the service we provide. The services sector is still fairly buoyant, although it does suffer some pressure from those other factors.
We still have a very strong coal production. If you look at the output from the ports and also the machinery that’s being utilised to get that coal production out, it’s still very much engaged. And as a result, the company that we operate is still very much engaged in that maintenance service sector.
Donna Sawyer: Looking ahead, how does SubZero plan to manage the changes in the industry taking into account your top tier clients, including BHP Billiton
(ASX:BHP) and Rio Tinto
(ASX:RIO).
Scott Farrell: SubZero’s well placed with its clients inasmuch as that we’re very focused on their needs. And their need right now is to optimise their operational efficiencies. SubZero has been able to offer a one-stop shop in as much as offering a complete range of diverse services, both off and onsite. And this has allowed us to keep up pace with - a) their growth and b) their optimisation programs. We think that this’ll keep us in good stead in the short and long term.
Donna Sawyer: Is it fair to say your client relationships with the big guns like BHP and Rio, deliver the lion’s share of your revenue. And would a breakdown in those relationships be a concern for shareholders?
Scott Farrell: Yes certainly we work for all of the top tier mining companies, but our revenue is spread across many of their various operations. And as a result, that certainly mitigates our risk to any one revenue resource being suspended.
Donna Sawyer: Can you talk us through your future revenue growth plans beyond NSW?
Scott Farrell: Yeah in 2013 and 2014, we have an expansion plan to enable us to duplicate the model that we’ve been so successful with in New South Wales. And our intention is to push our products both nationally and internationally, that we’ve developed and have a patent pending on. And also, we expect to be able to make a number of these announcements in the very short term.
Donna Sawyer: And finally, aside from the share market float, what’s ahead for SubZero for 2013?
Scott Farrell: So 2013 will see us bring our new facilities online, which is a completion of an infrastructure expansion. This will increase our capacity, allow us to offer new service and expanded service offerings to our clients from an off sites perspective. This’ll stead us in a good place in terms of efficient maintenance repairs done in a non-mining environment. So that’s the sort of thing that we’re looking at. Beyond that is a whole host of announcements which as I’ve mentioned before, we hope to bring to the market in the very short term.
Donna Sawyer: Scott Farrell, thanks for the introduction to SubZero Group.
Scott Farrell: OK thanks Donna for inviting me.
Ends
