The industry sectors serviced by RCR continue to
experience strong growth and the outlook for the second half of the financial year is buoyant, with a record order book in hand and tender levels very high.

RCR Engineering’s Bunbury facility received record
orders for Apron Feeders and Belt Feeders, totalling 36 to the end of December. Tenders currently pending for a further 18 Apron Feeders with decisions expected to be announced prior to April.

The integration of recent acquisitions is progressing well, and the worth of the acquisitions to RCR is reflected not just in the Company’s record result, but in the breadth of new business being won by RCR. The acquisition of Positron, a major Australian electrical services business,
has now been finalised and will begin making a
significant contribution in the second half of the year. The acquisition has reinforced the Company’s leadership in delivering integrated engineering solutions and has provided a broader client base to provide combined electrical and mechanical tenders.

In January, the company was awarded a combined
electrical/mechanical contract from a new mining
customer for RCR valued at $12 million. This is expected to be the first of numerous packages, for which RCR will be considered for tendering due to our ability to provide a single price for both disciplines.

The 2006 acquisition of VRBT, a specialist power
station maintenance shutdown company, has provided strong exposure to the infrastructure services sector of New South Wales. With the existing Positron exposure to this market sector in NSW, RCR is now firmly entrenched into this significant new market for your Company. By way of illustration of the work that RCR is now completing in the market segment, RCR has recently been awarded an alliance contract with a major power company in NSW for two maintenance shutdowns during this financial year. The first shutdown has been successfully completed and the second is scheduled for commencement in March 2008.

In December, the Company embarked on a very exciting journey with the commencement of the implementation of a new company-wide Management Information System, which is scheduled for completion in March 2009. As well as providing a base for further acquisitions that will add significant value to your Company in the future, this system will allow increasingly large, diverse and complex projects to be managed with a higher level of transparency than is presently
possible. The Board is confident that the current consolidation of business information into a single management system and the continuous improvements taking place across the Company are building even stronger foundations for substantial and sustainable growth in both revenue and profits.

At the end of December, Mr Raymond (Ray) Lynch retired as Chairman. He has been replaced in this role by Mr Roderick (Rod) James McKenzie Brown. Mr Charles (Charlie) Birmingham also retired as an Executive Director; however he will continue to serve as a Non Executive Director. Positron founder and former CEO Mr Jeffrey (Jeff) Hogan has joined the Board as an Executive Director.

RCR’s current focus for 2008 is on organic growth, margin expansion and the continued assessment of acquisitions that add scale and complementary market position to RCR.

We take this opportunity to thank all employees for their ongoing dedication and contributions.

Yours sincerely,

Roderick J M Brown
Chairman

John L Noordhoek
Chief Executive Officer

Phillip J Crighton
Chief Financial Officer