It is with great pride that we present ARA Group’s 2017 Annual Report.
ARA has been on a focused journey for the past sixteen years. We have attempted to consistently grow the business, keep our financial leverage at a reasonable and safe amount and provide an above average return to our shareholders. Although we have had setbacks along the way, we have largely accomplished these three objectives. We are proud of our achievements and accomplishments and where the ARA Group is now positioned.
The senior management team and ARA employees have worked very hard this past financial year. This exceptional effort resulted in a record year of sales and earnings for ARA for the second consecutive year. Sales grew to $372 million, an increase of $20 million, or 6%, from $352 million in 2016. This is the fifteenth year out of the sixteen years of ARA’s operations, that sales increased from the prior year. The growth in EBITDA in 2017 was very significant. EBITDA in 2017, before acquisition expenses, was $22.9 million, an increase of $6.3 million, or 38%, from $16.6 million in 2016.
The theme of the 2017 Annual Report is a step change in the evolution of the ARA Group. The strong operating result was enhanced by the completion of complementary acquisitions. A few small bolt-on acquisitions were finalised during the year. An acquisition of a financially troubled high voltage electrical business was successfully completed in November.
During the fourth quarter of this financial year, ARA completed the largest acquisition in our history. Effective on the 1st of May 2017, ARA acquired 100% of the CMC Property Services Group (CMC). CMC is principally a commercial cleaning business and also does other integrated property maintenance services and emergency response repairs. This acquisition successfully added a soft service to complement our existing technical services. CMC’s annual sales are approximately $56 million with strong profit margins.
Another aspect of the merger of our groups is that CMC has an Indigenous service business with a current focus on commercial cleaning. ARA acquired 49% of CMC Indigenous Services. Our partner in CMC Indigenous Services is Michael O’Loughlin, the former Sydney Swans star. We will now be in a position to fulfill an important social responsibility goal to have a meaningful engagement with the Indigenous community in Australia.
Each of our divisions had strong operating results in 2017 and each is well positioned to begin the new financial year.
During the year just completed, we reorganised our divisions. The Manufacture and Distribution Divisions were combined to create our Products Division.
Our shareholders’ equity has grown considerably this past financial year. ARA is genuinely an employee owned company. Approximately 80 employees own shares in ARA.
It has taken a great team effort by everyone associated with ARA to develop and grow our company to the strong position where we find ourselves today. Our senior management team, our employees, the Board of Directors and our shareholders have all worked together to make ARA a leading services business in Australia and New Zealand.