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August 2015
Stephen Bizzaca, Managing Director & CEOMegan Etcell, CFO & Company Secretary
1. Highlights
2. Financial Review
3. Operational Review
4. Strategy
5. Outlook
6. Summary
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Agenda
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Highlights Maintained top quartile safety performance
Total recordable injury frequency rate further reduced to 10Awarded the BHP Billiton Excellence Award – Health category
Improved financials Improved 2H performance provides positive results
Sector downturn still impacting, but improved competitiveness and cost reductions improving financials
Revenue $67.5m (-3%)Underlying NPAT $0.9m (+164%)Underlying EBITDA $3.5m (+62%)Underlying EBITDA margin 5.1% (+66%)Cash on Hand $3.1m (+99%)Value of NTA per security sustained at $0.34
Debt reduction achieved Equipment Debt $0.9m (-92%)Net Debt* $2.4m** (-82%)
Competitivenessimproved
New Enterprise Agreement introducedExisting Enterprise Agreement varied
Continue to deliver operational excellence
Client relationships extended and createdAnother five longwall projects completed Hours worked at highest level in 24 months (+12%)
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Note: All comparisons are YOY * Interest bearing debt only less cash and cash equivalents . **Includes $4.0m associated with an invoice facility
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Financial Review - Summary
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Change FY2015 FY2014NPAT 102% $0.8m ($42.8m)
Underlying NPAT 164% $0.9m ($1.4m)
Revenue (3%) $67.5m $69.4m
EBITDA >1000% $3.4m $0.0m
Underlying EBITDA 62% $3.5m $2.1m
Underlying EBITDA Margin 66% 5.1% 3.1%
Cash on hand 99% $3.1m $1.6m
Net debt* (82%) $2.4m** $14.1m
Equipment debt (92%) $0.9m $11.2m
Underlying Earning per share 163% 1.84 (2.89)
Net Tangible Assets per security 34c 34c
* Interest bearing debt only less cash and cash equivalents . **Includes $4.0m associated with an invoice facility
All bottom line metrics improved
1H and 2H FY 2015
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2H improvement
* Interest bearing debt only less cash and cash equivalents . **Includes $4.0m associated with an invoice facility
Change 2HFY2015 1HFY2015NPAT 585% $1.0m ($0.2m)
Underlying NPAT 588% $1.1m ($0.2m)
Revenue 16% $36.3m $31.2m
EBITDA 122% $2.4m $1.1m
Underlying EBITDA 218% $2.7m $0.8m
Underlying EBITDA Margin 173% 7.3% 2.7%
Cash on hand 722% $3.1m $0.4m
Net debt* (55%) $2.4m** $5.3m
Equipment debt (25%) $0.9m $1.2m
Debt reduction
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Target achievedAll asset sales proceeds used to reduce debtDebt reduction has delivered a positive cashflow impact of $500k per month
0
5
10
15
20
25
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FY13 FY14 FY14
Debt ($m)
PPE Loans Invoice Facility Shareholder Unsecure Loans
Financial Trends (underlying)
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Impacted by sector downturn – 2H improvement on flat revenue
0.00
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Revenue ($m)
1H 2H
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FY10FY11FY12FY13FY14FY15
NPAT ($m)
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FY10 FY11 FY12 FY13 FY14 FY15
EBITDA ($m)
1H 2H
0%
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4%
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FY10 FY11 FY12 FY13 FY14 FY15
% Margin
1H 2H
Balance Sheet & CashflowBalance Sheet FY15 FY14
Cash ($m) 3.1 1.6
Total Assets ($m) (excluding intangible assets) 31.8 42.8
Total Shareholder funds ($m) (excluding intangible assets) 17.2 16.1
Net Debt ($m) 2.4* 14.1
Net Debt to Equity 14% 87%
Cashflow FY15 FY14
Operating activities ($m) 1.5 (0.6)
Investing activities ($m) 9.6 4.3
Financing activities ($m) (9.5) (8.1)
Net (decrease)/increase in cash ($m) 1.6 (4.4)
Cash at beginning of year ($m) 1.6 5.9
Closing cash ($m) 3.1 1.6
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* Interest being debt and includes $4.0m associated with an invoice facility
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Sustainability & Diversification
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SafetyLeading zero harm initiatives remain on target
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TRIFR FY14: Qld Industry Ave 20.3 & NSW Industry Ave 33.3
Overall safety performance remains in the top quartile
Received the BHP Billiton Excellence Award – Health category in recognition of “Delivering in the Dyke (Illawarra Coal’s Appin mine) – Dyke Occupational Hygiene improvement project”, which was the highest level of recognition within BHP Billiton for health related improvement projects.
People
Coal sector downturn still impacting on hours worked.Hours worked highest level in 24 months389 full time equivalent employees, up 18% (June 14 to June 15)
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New and varied Enterprise Agreements demonstrates employee commitment
Sustainability
Sustaining WorkSouth32’s Appin mine (NSW) -Roadwork development (two units – contract extended), secondary support, civils/drill and blast excavation and other mine services activitiesPeabody’s Metropolitan mine (NSW) - Secondary support and other mine services activities (contract extended)Boral’s Berrima mine (NSW) -Whole mine operations transitioned to closure (contract extended)
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Reoccurring WorkLongwall projects
Whitehaven’s Narrabri mine (NSW)Peabody’s Wambo mine (NSW)Glencore’s Blakefield mine (NSW)
Conveyor projectsSouth32’s Appin mine (NSW)
New Contracts & Work
New WorkLongwall projects
Glencore’s Ulan West and Ulan #3 mines (NSW)
Conveyor projectsSouth32’s Appin mine (NSW)
Development SupportWhitehaven’s Narrabri mine
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New ContractsSouth32’s Appin mine - Inbye and outbye mine services (2 year term, commenced September 2014)South32’s Appin & West Cliff mines - Supplementary labour (2 year term, commenced September 2014)South32’s Appin mine - Tailgate secondary support, conveyor installation and civils at South32’sAppin mine (All FY16)Glencore’s Blakefield mine – 3 longwall projects
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Business Strategy
Proactive Safety Management Providing competitive value-add services to clientsForging profitable long term partnershipsDiversity of client base and service/product offeringsFocus on Asset ManagementDeveloping and implementing innovative mining solutionsRebuilding shareholder value
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Industry Downturn Strategy
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Our Plan Our AchievementsHigher focus on sustainability of work
No material contract work lostAwarded most replacement contracts
Improve value adding to our clients by reducing cost base and improving competitiveness.
New national and varied enterprise agreements and restructuring have significantly lower costs and allowed lower prices to clients and improved competitiveness, resulting in new contracts awarded/extensions
Become cashflow positive PPE debt reduced to $0.9mEDITDA margin increased
Increase pipeline options, target all areas as no labour skills shortage
New conveyor contracts and clientsPreferred contractor for remnant mining proposal
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Outlook SectorMetallurgical coal (currently DSB main client base)
USD coking coal price significantly down with excess supply and subdued demand growth.
Australian production still growing protected by depreciating AUD; US production dropping.
Australian long-term production forecast to remain around current levels, with open cut tonnage progressively replaced by underground production.
Thermal coalPrices also dropping with oversupply and fossil fuel target.
Coal will continue to be major source of energy.
Indonesia closing low quality mines and redirecting export tonnage for domestic use.
Australian long-term production forecast to increase; new tonnage largely open cut.
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Outlook Delta SBDMarket conditions will continue to remain challengingOpportunities due to:
New flexible national EA and revised existing Illawarra EAImproved competitivenessCheaper out sourcing option for clients
Our uniquenessMining innovationWhole mine operation Pillar extraction
Ability and capacity to pursue appropriate growth
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New Contracts commencing in 1QFY16
South32’s Appin mine (NSW)Tailgate secondary support and mine servicesConveyor installation
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Workbook and Pipeline
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Workbook still impacted by sector downtown, but remains positive (excludes uncommitted “Recurring Work”)
Historical workbook consists of 65% longterm contracts and 19% reoccurring work
Active enquires significantly increasedPotential short term revenue in FY16 & 17 increased
FY16, $50m
FY17, $22m
FY18, $1m
Workbook $73m
FY16, $30m
FY17, $125m
FY18, $249m
Target Pipeline Potential Revenue by FY
($400m)
Active Enquiries, $1,055m
Expected Enquiries
FY16, $3m
Future Enquiries,
$9m
Target Pipeline ($1,060m)
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Summary
Personnel Improve our good safety performanceSustained lower cost base and competitiveness in all areasNumbers at highest level in 24 months
Sector Increased metallurgical coal productionSteaming coal production remained subdued
Market Maintained outsourcing competitiveness
Sustainability Maintained our excellent client relationshipsFocused on continuing to improve add value to our clients
Opportunities Targeted all areas of pipeline Focused on innovated & remnant mining projects
Profitability Well positioned to sustain positive profit and growth
Shareholders Focused on improving returns
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Contact Details
Gabe MeenaChief Operating Officer 02 4629 [email protected]
Stephen BizzacaManaging Director & Chief Executive Officer02 4629 [email protected]
Tony McFaddenChief Financial Officer &Company Secretary02 4629 [email protected]
Address: Suite 220, 4 Hyde Parade Centric Park, Campbelltown NSW 2560
Corporate Overview
Capital structureShares on issues 47,628,648Options 3,437,500Share price (30 June 15) $0.075Market Capital $3.6M
BoardGordon Galt Non-executive ChairmanStephen Bizzaca Managing Director/Chief Executive OfficerGlyn Dawkins Non-executive DirectorGeoff Garside Non-executive Director
Shareholders – Top fiveStephen Bizzaca entities 36.0%Glyn Dawkins entities 27.0%Delta SBD Employee Trust 7.0%*Nehemine Pty Ltd 1.8%Omicron Enterprises Pty Ltd 1.4%
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* excludes Stephen Bizzaca shares, included in “Stephen Bizzaca entities”
About Delta SBD Limited
Delta SBD is one of the largest contract companies servicing Australia’s underground coal mining industry. The Group is geographically diverse, with operations across NSW at the Southern, Western, Hunter Valley and Narrabri coalfields and across the Bowen Basin in Queensland
The Group’s objective is to provide value-added services to clients by forging profitable long term partnerships. Delta SBD provides each project/mine with competent work teams, fit for purpose equipment and excellent site management backed by a supportive corporate management. The Group uses safe and efficient work methods enabling on-time completion of all works and services to client requirements
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Diversity & ReliabilityRange of Services provided has large spread & consistency
Thirteen active minesites in FY15
High focus on “Asset Management”
Reduced risk pricing structure
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0%
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100%
FY10 FY11 FY12 FY13 FY14 FY15
Range of Services
Complete Mine Development Longwall Moves
Conveyor Secondary Support Supplement Labour
Mine Services Plant
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FY10 FY11 FY12 FY13 FY14 FY15
Asset Life Cycle Revenue Mix
Asset Management Asset Creation
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FY10 FY11 FY12 FY13 FY14 FY15
Pricing Structure
Fixed Price Rates with Performance Margin Day Rates
Important Notice and Disclaimer
The following disclaimer applies to this presentation and any information provided regarding the information contained in this presentation (the Information). You are advised to read this disclaimer carefully before reading or making any other use of this presentation or any information contained in this presentation.
Except as required by law, no representation or warranty, express or implied, is made as to the fairness, accuracy, completeness, reliability or correctness of the Information, opinions and conclusions, or as to the reasonableness of any assumption contained in this document. By receiving this document and to the extent permitted by law, you release Delta SBD Limited (“Delta SBD”), and its officers, employees, agents and associates from any liability (including in respect of direct, indirect or consequential loss or damage or loss or damage arising by negligence) arising as a result of the reliance by you or any other person on anything contained in or omitted from this document.
Statements contained in this material, particularly those regarding the possible or assumed future performance, costs, dividends, returns, production levels or rates, prices, reserves, potential growth of Delta SBD, industry growth or other trend projections and any estimated company earnings are or may be forward looking statements. Such statements relate to future events and expectations and as such involve known and unknown risks and uncertainties, many of which are outside the control of, and are unknown to, Delta SBD and its officers, employees, agents or associates. In particular, factors such as variable climatic conditions and regulatory decisions and processes may cause or may affect the future operating and financial performance of Delta SBD. Actual results, performance or achievement may vary materially from any forward looking statements and the assumptions on which those statements are based. The Information also assumes the success of Delta SBD’s business strategies. The success of the strategies is subject to uncertainties and contingencies beyond Delta SBD’s control, and no assurance can be given that the anticipated benefits from the strategies will be realised in the periods for which forecasts have been prepared or otherwise. Given these uncertainties, you are cautioned to not place undue reliance on any such forward looking statements. Delta SBD undertakes no obligation to revise the forward looking statements included in this presentation to reflect any future events or circumstances.
In addition, Delta SBD’s results are reported under Australian International Financial Reporting Standards, or AIFRS. This presentation includesreferences to EBITDA and NPAT. These references to EBITDA and NPAT should not be viewed in isolation or considered as an indication of, or as analternative to, measures AIFRS or as an indicator of operating performance or as an alternative to cash flow as a measure of liquidity.
The distribution of this Information in jurisdictions outside Australia may be restricted by law and you should observe any such restrictions. This Information does not constitute investment, legal, accounting, regulatory, taxation or other advice and the Information does not take into account any investment objectives or legal, accounting, regulatory, taxation or financial situation or particular needs. You are solely responsible for forming your own opinions and conclusions on such matters and the market and for making your own independent assessment of the Information.
You are solely responsible for seeking independent professional advice in relation to the Information and any action taken on the basis of the Information. Noresponsibility or liability is accepted by Delta SBD or any of its officers, employees, agents or associates, nor any other person, for any of theInformation or for any action taken by you or any of your officers, employees, agents or associates on the basis of the Information.
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