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Ferret's Stock to Watch: RCR TOMLINSON LIMITED
09:41, Friday, 27 May 2011

MINING SERVICES COMPANY NOW HAS A FULL HEAD OF STEAM

Sydney - Friday - May 27 (RWE Aust Business News)
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OVERVIEW
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RCR TOMLINSON LTD (ASX:RCR) has expanded its horizons in
providing a broader cover of mining services to major clients.
This week the company announced that its RCR Energy business has
made a conditional agreement (without naming the price) to acquire the
business and nominated assets of AE&E Australia.
The acquisition will be funded from existing cash holdings which
indicates strengthening liquidity.
With the acquisition of AE&E Australia, RCR now holds all of the
major steam cycle and boiler technologies and licences necessary to
deliver the majority of power and steam generation projects in Australia.
RCR has also secured the services of a number of AE&E Australia
key employees, including vice president Graham Salter, engineering
manager George Gamble, chief estimator Ross McKay and vice president of
finance Ron Salvador, who will oversee the integration into RCR and the
future growth of the business.
The acquisition and appointments will result in RCR acquiring
intellectual property, technologies and know-how along with key data
relating to AE&E Australia's previous installations and maintenance
services, which will further enhance the capability of the RCR Energy
business.
RCR will not be acquiring any project liabilities which AE&E
Australia held prior to it being sold.
It will also acquire fixed assets including plant and equipment
associated with the business.
AE&E Australia and its predecessor companies, Alstom Australia,
Babcock Australia and ABB, have been leading providers of services to the
energy and environmental construction market in Australia and southeast
Asia for over 100 years.
RCR's chief executive officer, Dr Paul Dalgleish, said: "RCR is
now uniquely placed in Australia, New Zealand and Asia as a leading
provider of engineering, and construction services for power generation
projects and the design, manufacture and installation of industrial
boilers.
"With the acquisition of AE&E Australia we have significantly
broadened the range of energy technologies that the RCR Energy business
can offer customers, in both the industrial and utility sectors.
"We can now meet the majority of customer power and steam
generation project requirements, including heat recovery steam generators
(HRSGs), a complete range of boiler technologies and we have the know-how
for both open and closed cycle gas turbine power plants," he said
Completion of the acquisition remains subject to the satisfaction
of a number of conditions.
Meanwhile the company has signed the largest ever single contract
of $57 million for Newcrest Mining.
Revenue in first six months of FY11 was up 13 per cent on the
same period in FY10.
Recurring revenues represented over 50 per cent of FY11 revenues
with project work increasing in FY12, providing a solid backlog for the
second half of 2011.

SHARE PRICE MOVEMENTS
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Shares of RCR Tomlinson yesterday drifted down 1c to $1.65.
Rolling high for the year is $1.87 and low 74c. Dividend is 3c to yield
1.83 per cent. Earnings per share is 13.5c and price/earnings ratio is
12.22. The company has 131.8 million shares with a cap of $217.6 million.
RCR mining performance: 21 per cent increase in revenue based on
strong demand for material handling equipment; bidding activity remains
very active; off site repair margins improving; prospects and outlook
business is actively pursuing a number of prospects for mobile mining
equipment; large client investment programs will improve order book in
second half.
RCR Energy: Delivery of existing backlog provided strong sales
growth in first half; profitability affected by general economic downturn
in the Laser business; further increases in activity expected in second
half as new project work and shutdown activities increase prospects and
outlook; Near and long-term prospects for steam and electricity
generation remain good; business continues to bid larger prospects;
reduced market competition in core activities.
RCR Resources Performance: Revenue remained strong; larger
contract wins (Cadia) will begin delivery in the second half; turnaround
in profitability resulting from improved project margins and branch
activity levels prospects and outlook; major investment programs
announced in iron ore provide strong organic growth platform; revenue
growth in second half is still dependent on timing of new projects;
base metals, LNG and coal provide significant growth opportunities.
RCR POWER: Revenues consistent when compared to previous years;
business is generating positive margins (2.7 per cent); switchboard and
substation work profitable and growing prospects and outlook; second half
prospects predominantly in products business and smaller project work;
larger opportunities directly related to resource projects timing;
significant opportunity for cross selling with other businesses,
particularly RCR Resources.
People: 2,510 employees at December 2010; Zero lost time due to
industrial action; 24 months LTI free for RCR Mining Technologies, Asia,
New Zealand and RCR Power; continued development of RCR's apprenticeship,
indigenous and graduate programs.

BACKGROUND
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RCR is a leading multi-disciplined engineering company in the
provision of integrated solutions to the mining, energy, resources and
power sectors.
The company joined the ASX list on November 15, 1996.
RCR has over 100 years of history, using in-house expertise to
provide a comprehensive range of turnkey services from design and
manufacture, to construction, installation, maintenance and off-site
repair.
Prior to being acquired by RCR, AE&E Australia's business
included design, supply, installation, commissioning, servicing and
upgrading systems for thermal power generation, including combined cycle
power plants, steam and power generation plants, heat recovery steam
generators and industrial boilers in Australia, New Zealand and southeast
Asia.
Its technology base is suitable for coal, biomass, liquid and
gaseous fuels.
ENDS rx