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SAUNDERS INTERNATIONAL LIMITED (SND)

Please refer to the relevant stock exchange if any of the above information is incorrect

SAUNDERS INTERNATIONAL LIMITED (SND) Events

Company (Stock Code)	Date/Time	Event	Timezone: Australia/NSW
SAUNDERS INTERNATIONAL LIMITED (SND) Earnings Guidance for FY2008	Wed, 23 Jul 2008 05:00PM	SND - Market Update - Mr John Power, Managing Director and CEO
SAUNDERS INTERNATIONAL LIMITED (SND)	Sat, 15 Nov 2008 10:30AM	Annual General Meeting Sydney Harbour Marriott Hotel, 30 Pitt St, Sydney, NSW
SAUNDERS INTERNATIONAL LIMITED (SND)	Thu, 2 Oct 2008	Full Year Results
SAUNDERS INTERNATIONAL LIMITED (SND)	Thu, 25 Sep 2008	Date Payable
SAUNDERS INTERNATIONAL LIMITED (SND)	Mon, 8 Sep 2008	Record Date
SAUNDERS INTERNATIONAL LIMITED (SND)	Tue, 2 Sep 2008	Ex Div Date
SAUNDERS INTERNATIONAL LIMITED (SND)	Thu, 27 Mar 2008	Date Payable
SAUNDERS INTERNATIONAL LIMITED (SND)	Thu, 6 Mar 2008	Record Date
SAUNDERS INTERNATIONAL LIMITED (SND)	Fri, 29 Feb 2008	Ex Div Date
SAUNDERS INTERNATIONAL LIMITED (SND)	Mon, 18 Feb 2008	Interim Results
SAUNDERS INTERNATIONAL LIMITED (SND)	Fri, 30 Nov 2007	Full Year Results
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SAUNDERS INTERNATIONAL LIMITED (SND)

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INTERVIEW WITH JOHN POWER, MANAGING DIRECTOR AND CEO, SAUNDERS INTERNATIONAL LIMITED (SND)

“Earnings Guidance for FY2008”

http://www.brr.com.au/event/48070

 

WEDNESDAY, JULY 23, 2008, 5:00 PM

 

BRR Hello and welcome to Boardroom Radio. Today, we're joined by Mr. John Power, the Managing Director and Chief Executive Officer of Saunders.

10 Saunders is a listed ASX company having been listed for about eight months now. John, thanks for joining us.

SND Thanks, Cameron.

 

BRR John, to begin with, it's your first time on Boardroomradio. Could you tell us a

15 little bit about the core activities of the business, please, and why the business came to float and some of your background, please.

SND Saunders' basically operating two divisions, Facilities Maintenance, the division that maintains the tanks in six of the seven refineries in Australia as well as on terminals and other operating facilities. The other division is Design

20 and Construct, which mainly constructs new facilities for a range of blue chip clients and water industry, mineral processing and in terminaling as well as refineries. My own background is being 30 years in the construction business and 25 years of those with the leading worldwide tank builder, Chicago Bridge, and five years ago, I joined Saunders.

25

BRR John, Saunders listed late last year. Can you give us an idea on what was the purpose of the listing, please.

SND The purpose of listing last November was to give ourselves the opportunity to raise capital if so required at a future date. There was no intent at that time.

30 We had a very strong private company and we had a vendor selldown. The regional vendors retained 70% of the stock and still do. That stock is in escrow until September of this year.

 

BRR Even in a difficult stock market environment, John, the company has

35 managed to exceed expectations and continue with the good flow of news with last week's announcement resulting in strong forecast expected for the four-year result. What's driven the strong growth and do you expect this to continue.

SND The growth, again, in both divisions, the Facilities Maintenance Division has

40 grown and added two refineries to our original four, so we now have six of the seven refineries in Australia and the strong demand from terminal operators opened down the East Coast and also the mineral processing facilities such as Olympic Diamond and QNI in Townsville. On top of that, we have the strong growth in water infrastructure mainly in Melbourne and Sydney and

45 that looks like that's going to continue for many years to come.

 

BRR John, you mentioned that the business is a national business. Can you give us an idea of your competitive space, please, and some of the bottlenecks that you're encountering at the moment.

SND Yes, we operate all over Australia from Darwin to Melbourne and Perth to Townsville. Our competitors....the main competitors in Australia are CBR or Chicago Bridge, as commonly known, a major global company. They concentrate mainly on mega projects such as the Norway Shelf and medium

5 refineries. Regionally, our competitors are, we have one competitor in Melbourne which operates around that space and just a couple of small competitors in Queensland and WA, but apart from Chicago Bridge, we're the only one that has an in-house IP capacity so we can offer a one-stop shop to our customers on a national basis. The main issue facing our industry in

10 general is the scarcity of skilled labor. This affects everybody and the strong group being driven by the resources in terminaling and water industries show no sign of abatement on this shortage of skilled labor will be a problem into the future. We're overcoming that by strong recruiting and a lot of training of new people which has shown progress. We've increased our revenue on

15 profit by about 50% in the past year and that's a result of new recruitment and very focused effort on training.

 

BRR John, just turning to your client base, who are your major clients and how much of your revenue would you say is recurrent.

20 SND Mainly we have a suite of blue chip customers, all the main refiners, Caltex, Mobile, BP, Shell, as well as main water authorities, Goulbourn Valley, Melbourne Water, Sydney Water; terminaling groups such as Marstel, Bopack Resource Group such as BHP, QNI, all of which are recurring customers, recurring business. Most of the facility and maintenance business

25 is on three-year term contract so that's recurring on an annual basis. So a strict definition of that represents about 40% of our business. So 40% of our business would be a recurring revenue.

 

BRR How many employees do you have, John, where are they located?

30 SND There's just over two hundred employees right now. The core group is located here at Condell Park where we have our engineering, drafting, procurements and support services. Our field crews are located all over the country, and, of course, we have a major stable crew in six of the seven refineries located in Melbourne, two in Sydney, two in Brisbane and one in

35 Perth. Of course, all our shop employees are in our shop here at Condell Park where all our fabrication is done. Our shop is specifically set up for tank fabrication.

 

BRR Directors have also declared dividend, what's the dividend policy going

40 forward?

SND You know, in our prospectus, we stated that we have a dividend policy of 55% to 60% and that will be reviewed continually. In the prospectus, we also said we will have 2-1/2% dividend, 1 cent + 1-1/2, and that’s under review at the moment as well due to the strong growth in profits

45

BRR John, just a quick question on the board. Who is on the board and what's skills do they have.

SND We have myself on the board and three others. The chairman is ex-national director of Saunders, Tim Burnett, he is now chairman. We also have two independent directors, David Smart, who has the financial background and strong financial credit and Kim Tronson who has a long career in management of coal plants and understands that industry very well form the Saunders board.

5

BRR In terms of your outlook, John, in your announcement you said the pipeline is still airful. How confident are you that your revenue growth and obviously your APS can continue growing at the rate you've done over the last 12 months.

SND The pipeline is very strong, we had a very strong growth in the last twelve

10 months and we are not planning on the same level of growth. We are ...we do expect growth this year, we see a time of consolidation and that's...from an organic point of view, we see some growth and also we intend to look at possible acquisition this year which would add to growth as well.

 

15 BRR John, what's the strategy of the management team around the growth...certainly organic growth within the existing client base?

SND We find that our customers are busy focusing on their own business and want to have this simple structure as possible in their contracting efforts so we're looking at providing more services to our existing customers. We believe this

20 is what they want and this will help us to have some organic growth. It's also the general growth and there's more business out there but we will look, if we were to look at an acquisition, we would look in that area, either upstream or downstream with the main aim of providing a better and more services and a better service to our existing customers.

25

BRR John, thanks for your time today. We appreciate getting to know Saunders a little bit better. Congratulations on obviously a very good first six or seven months of listing. We look forward to catching up with you again soon.

SND Thanks, Cameron.

 

 

INTERVIEW CONCLUDED

 

 

 

Contact brr@brr.com.au for more information

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