ASX Announcements 27 February 2012 ASX: DSB Board of Directors Gordon Galt Chairman Stephen Bizzaca Managing Director CEO Glyn Dawkins Non Executive Director Geoff Garside - Non Executive Director To : Australian Securities Exchange 27 February 2012 Australian Stock Exchange Company Announcements HALF YEAR RESULTS Company Secretary Tony McFadden Principal Contact Stephen Bizzaca Managing Director CEO Phone: 02 4629 0300 Please find attached the following: 1. Appendix 4D - Half Year Report 2. Half Year Report incorporating the Directors Report and the consolidated financial report. Yours Faithfully Tony McFadden Company Secretary - CFO Phone: 02 4629 0300 Registered office Suite 220, Centric 4 Hyde Parade Campbelltown NSW 2560 Telephone: 02 4629 0300 Facsimile: 02 4629 0399 Website: www.deltasbd.com.au Tony McFadden Chief Financial Officer and Company Secretary Page 1 of 22
Delta SBD Limited and its controlled entities Appendix 4D Half Year Report Appendix 4D 1. This statement presents results for Delta SBD Limited for the half year ended 31 December 2011 and, where applicable, comparative results for the relevant previous period. 2. Financial Results for announcement to the market: Statutory Profits The Group s net profit after tax for the six months ended 31 December 2011 amounted to $3,317,000 (31 December 2010: $1,705,000). In thousands of AUD Revenue from ordinary activities Profit/(loss) from ordinary activities after tax attributable to members Net profit/(loss) for the period attributable to members Half Year 31 Dec 2011 Half Year 31 Dec 2010 Change 55,628 39,650 40.3% 3,317 1,705 94.5% 3,317 1,705 94.5% Adjusted Underlying Profit (not subject to review procedures) Delta SBD Limited allowed for underlying profits adjustments including costs of valuation of options being a non cash item which was not part of our normal course of business but was directly related to the IPO ($91,000) and a non-recurring item ($80,000 refer note 7 of interim financial report). The prior period comparison figures include interest on shareholder loans repaid as part of the IPO ($155,000), costs of employee share-offer as part of the IPO ($97,000), and the valuation of options being a noncash item which was not part of our normal course of business also directly related to the IPO ($209,000). In thousands of AUD Revenue from ordinary activities Profit/(loss) from ordinary activities after tax attributable to members Net profit/(loss) for the period attributable to members Half Year 31 Dec 2011 Half Year 31 Dec 2010 Change % 55,628 39,650 40.3% 3,488 2,166 61.0% 3,488 2,166 61.0% Page 2 of 22
Delta SBD Limited and its controlled entities Appendix 4D Half Year Report 3. Review of Results Revenue of $55.6 million and underlying EBITDA of $6.5 million. Underlying profit - NPAT of $3.488 million, up 61.0% compared with the corresponding period and in line with expectations. Strong financial position with net assets of $50.4 million. Net debt is $21.6 million ($28.5 million interest bearing liabilities less $4.9 million cash, less security deposits of cash $2.0 million) versus $6.2 million at 30 June 2011. The acquisition of capital equipment for future growth increased interest bearing liabilities during the period. Cash at bank at 31 December 2011 was $4.9 million. Underlying EBITDA margin improved to 11.7% compared to 11.4% for the corresponding prior period. Basic earnings per share increased to 7.52 cents per share from 4.64 cents per share for the corresponding prior period. 4. Net Tangible Assets (NTA) per security: Half Year 31 Dec 2011 31 Dec 2010 NTA per security 49c/share 36c/share 5. All other information can be obtained from the attached interim financial report, accompanying notes and Directors report. 6. Dividends A dividend of $1,587,463 was paid during the six months ended 31 December 2011 (December 2010: $1,376,488). This dividend was paid in September 2011 at a rate of 3.6 cents per share, was fully franked and related to the year ended 30 June 2011. The Directors have declared a fully franked maiden interim dividend of 1.5 cents per share for the six months to December 2011. Record date for determining entitlement to interim dividend 8 March 2012 Date dividend is payable 15 March 2012 Page 3 of 22
Delta SBD Limited and its controlled entities ABN 18 127 894 893 31 December 2011 Interim Financial Report Page 4 of 22
CONTENTS Page Directors report 6 Lead Auditor s independence declaration 10 Condensed consolidated interim statement of financial position 11 Condensed consolidated interim statement of comprehensive income 12 Condensed consolidated interim statement of changes in equity 13 Condensed consolidated interim statement of cash flows 15 Condensed notes to the consolidated interim financial statements 16 Directors declaration 20 Independent Auditor s review report 21 Page 5 of 22
Directors Report The Directors present their report, together with the consolidated interim financial report of Delta SBD Limited ( the Company ) for the six months ended 31 December 2011, and the auditor s review report thereon. The consolidated Delta SBD Group ( the Group ) includes: - Delta SBD Limited - Delta Mining Pty Ltd - SBD Services Pty Ltd - Delta Coal Mining Pty Ltd Directors The Directors of the Company at any time during or since the end of the interim period are: Name Position Date of appointment Non-executive Directors Gordon Thomas Galt Chairman Non-executive Director 8 October 2007 Glyn Dawkins Non-executive Director 8 October 2007 Geoff Garside Non-executive Director 5 May 2011 Executive Director Stephen John Bizzaca Managing Director and Chief Executive Officer 8 October 2007 Company secretary Anthony McFadden Chief Financial Officer and Company Secretary 28 May 2010 Review of Operations Objective Delta SBD is one of the largest contractor 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 the Bowen Basin in Queensland. The Group s objective is to provide value-add services to clients by forging profitable long term partnerships. Delta SBD provides each project/mine at which it works 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 works and services to client requirements. Page 6 of 22
Principal activities The principal activities of the Group during the course of the interim period were the provision of contract mine services for the underground coal industry within Australia embodying the following activities: Total mine operation Roadway development Longwall relocations Equipment rental Mine services including: - Secondary support - Underground civil works - Dyke excavation - Longwall and development support - Supplementary labour There were no significant changes in the nature of the activities of the Group during the interim period. Operational Highlights Striving for a zero harm workplace continues to be the target for our Group, with the health and safety of our employees being a core value for the Group. This commitment is demonstrated by the continued improvement in the Group s safety performance for the year to date, with reductions in both the Lost Time Injury Frequency Rate (LTIFR) and the Total Recordable Injury Frequency Rate (TRIFR) (15% and 15% respectively). With clear performance expectations being set by leading zero harm initiatives, the number of leading initiatives being undertaken has increased by 80% compared to the corresponding reporting period in FY11. The Group s operations during the half-year focused on our existing client base and successful implementation of new contracts. New work undertaken included- Narrabri mine longwall surface build on behalf of Caterpillar Global Products Whitehaven Coal Narrabri development contract. To undertake this contract Delta SBD recruited 60 employees on a fly in fly out basis to man two development panels using the client s equipment. Ulan (twice) and Ravensworth longwall move contracts Dyke extraction at Grasstree In ongoing work, the company successfully completed six longwall moves projects, including Ulan, Ravensworth, Wambo, Grasstree, Integra and Narrabri. Production at Boral s Berrima mine site was 139k tonnes for the period, up 40% from the comparative period. The company continued to successfully sustain our operations at BHP Illawarra Coal s Appin mine and at Peabody Energy Australia Metropolitan mine. The Company s workforce continued to increase from 418 in June 2011 to 489 in December 2011. A further rise in employee numbers is expected as industry growth continues. Demand for equipment hire from our expanding fit for purpose equipment fleet increased, with hire utilisation up from 50% to 62%. Page 7 of 22
Our commitment to expand our fit for purpose longwall relocation and development equipment continued, with the following notable items occurring during the period: New longwall relocation equipment delivered included a 60 tonne heavy lift machine and two 15 tonne loaders. (The 130 tonne shearer carrier is due for delivery in February 2012). The company purchased additional coal drivage development equipment, positioning the company well for further contract work. The development equipment included a continuous miner, a feeder breaker, four ram cars, a shuttle car, two substations, two auxiliary ventilation fans, a pipe trailer, a Brumby tool carrier and two distribution control boxes. Other capital acquisitions included four personnel drift runners (personnel and equipment transporters), a jumbo dyke extraction drill and blast rig and two 7 tonne loaders. The previously ordered new Joy 12CM 30 Continuous miner remains on schedule for delivery in July 2012. These acquisitions demonstrate the company s focus on continually expanding our fit-for-purpose equipment to ensure we are in a strong position to respond to demand from clients as new mines are developed and existing clients look to increase production. Financial Results for announcement to the market: Statutory profits The Group s net profit after tax for the six months ended 31 December 2011 amounted to $3,317,000 (2010: $1,705,000). In thousands of AUD Revenue from ordinary activities Profit/(loss) from ordinary activities after tax attributable to members Net profit/(loss) for the period attributable to members Half Year 31 Dec 2011 Half Year 31 Dec 2010 Change 55,628 39,650 40.3% 3,317 1,705 94.5% 3,317 1,705 94.5% Adjusted Underlying Profit (not subject to review procedures) Delta SBD allowed for underlying profits adjustments including non-recurring costs of valuation of options being a non cash item which was not part of our normal course of business but was directly related to the IPO ($91,000) and a non-recurring item ($80,000 refer note 7 of interim financial report). The prior period comparison figures included interest on shareholder loans repaid as part of the IPO ($155,000), costs of employee share-offer as part of the IPO ($97,000), and the valuation of options being a non-cash item which was not part of our normal course of business directly related to the IPO ($209,000). In thousands of AUD Revenue from ordinary activities Profit/(loss) from ordinary activities after tax attributable to members Net profit/(loss) for the period attributable to members Half Year Half Year Change % 31 Dec 2011 31 Dec 2010 55,628 39,650 40.3% 3,488 2,166 61.0% 3,488 2,166 61.0% Page 8 of 22
Events subsequent to reporting date No item, transaction or event of a material or unusual nature has arisen in the interval between the end of the financial period and the date of this report which is likely, in the opinion of the Directors of the Company, to affect significantly the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity. Lead Auditor s Independence Declaration The lead auditor s independence declaration is set out on page 10 and forms part of the Directors report for the six months ended 31 December 2011. Rounding The Company is of a kind referred to in ASIC Class Order 98/100, and in accordance with that Class Order, all financial information presented in Australian dollars has been rounded to the nearest thousand dollars unless otherwise stated. Signed in accordance with a resolution of the Directors: Gordon Galt Chairman Dated at Campbelltown this 24th day of February 2012 Page 9 of 22
Lead Auditor s Independence Declaration under Section 307C of the Corporations Act 2001 To: the directors of Delta SBD Limited I declare that, to the best of my knowledge and belief, in relation to the review for the half-year ended 31 December 2011 there have been: (i) (ii) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the review; and no contraventions of any applicable code of professional conduct in relation to the review. KPMG David Willcocks Partner Signed in Wollongong on this 24 th day of February 2012. Page 10 of 22
Condensed consolidated interim statement of financial position As at 31 December 2011 In thousands of AUD Consolidated 31 Dec 2011 Consolidated 30 June 2011 Assets Cash and cash equivalents 4,882 9,847 Trade and other receivables 20,008 16,173 Inventories 352 192 Other current assets 421 137 Total current assets 25,663 26,349 Deferred tax assets 1,204 1,145 Trade and other receivables 2,933 2,256 Other non current assets 1,960 - Property, plant and equipment 34,946 20,150 Intangible assets 29,432 29,443 Total non-current assets 70,475 52,994 Total Assets 96,138 79,343 Liabilities Trade and other payables 10,040 9,174 Loans and borrowings 9,789 5,023 Employee benefits 4,130 3,819 Current tax payable 844 19 Total current liabilities 24,803 18,035 Loans and borrowings 18,706 11,023 Employee benefits 565 223 Deferred tax liabilities 1,630 1,449 Total non-current liabilities 20,901 12,695 Total liabilities 45,704 30,730 Net assets 50,434 48,613 Equity Share capital 36,572 36,613 Reserves 865 732 Retained earnings 12,997 11,268 Total equity attributable to equity holders of the Company 50,434 48,613 Total equity 50,434 48,613 The condensed notes on pages 16 to 19 are an integral part of the consolidated interim financial report. Page 11 of 22
Condensed consolidated interim statement of comprehensive income For the six months ended 31 December 2011 In thousands of AUD Consolidated 31 Dec 2011 Consolidated 31 Dec 2010 Continuing operations Revenue 55,628 39,650 Employee benefits expense 33,760 25,810 Materials and consumables 11,876 7,695 Other expenses 3,625 1,934 Depreciation 1,472 1,430 Intangibles amortisation 27 1 Results from operating activities 4,868 2,780 Finance income 82 43 Finance costs (619) (851) Net finance costs (537) (808) Profit before income tax 4,331 1,972 Income tax expense 1,014 267 Profit from continuing operations 3,317 1,705 Other comprehensive income - - Total comprehensive income for the period 3,317 1,705 Profit attributable to: Owners of the company 3,317 1,705 Non-controlling interests - - Profit for the period 3,317 1,705 Total comprehensive income attributable to: Owners of the company 3,317 1,705 Non-controlling interests - - Total comprehensive income for the period 3,317 1,705 Earnings per share Basic Earnings per share (cents) 7.52c 4.64c Diluted Earnings per share (cents) 6.98c 4.64c The condensed notes on pages 16 to 19 are an integral part of the consolidated interim financial report. Page 12 of 22
Condensed consolidated interim statement of changes in equity For the six months ended 31 December 2011 In thousands of AUD Share capital Reserve Retained earnings Balance at 1 July 2011 36,613 732 11,268 48,613 Total comprehensive income for the period Profit for the period - - 3,317 3,317 Total other comprehensive income - - - - Total comprehensive income for the period - - 3,317 3,317 Total Transactions with owners, recorded directly in equity Contributions by and distributions to owners Dividend to equity holders - - (1,588) (1,588) (September 2011) Share-based payment - 133-133 transactions IPO costs (41) - - (41) Total transactions with owners (41) 133 (1,588) (1,496) Balance at 31 December 2011 36,572 865 12,997 50,434 In thousands of AUD Share capital Reserve Retained earnings Balance at 1 July 2010 29,160 376 7,889 37,425 Total comprehensive income for the period Profit for the period - - 1,705 1,705 Total other comprehensive income - - - - Total comprehensive income for the period - - 1,705 1,705 Total Transactions with owners, recorded directly in equity Contributions by and distributions to owners Employee Share Plan July 2010 1,717 - - 1,717 Information memorandum (rights issue) November 2010 3,475 - - 3,475 Page 13 of 22
Listing ASX Capital Raising 3,300 - - 3,300 IPO Costs December 2010 (1,596) - - (1,596) Dividend to equity holders - - (1,376) (1,376) (November 2010) Share-based payment - 213-213 transactions Total transactions with owners 6,896 213 (1,376) 5,733 Balance at 31 December 2010 36,056 589 8,218 44,863 The condensed notes on pages 16 to 19 are an integral part of the consolidated interim financial report. Page 14 of 22
Condensed consolidated interim statement of cash flows For the six months ended 31 December 2011 In thousands of AUD Consolidated 31 Dec 2011 Consolidated 31 Dec 2010 Cash flows from operating activities Cash receipts from customers 52,108 35,549 Cash paid to suppliers and employees (47,440) (31,543) Cash generated from operations 4,668 4,006 Interest paid (619) (851) Income taxes paid (67) (508) Net cash from operating activities 3,982 2,647 Cash flows from investing activities Interest received 82 43 Proceeds from sale of assets 18 - Acquisition of property, plant and equipment (16,274) (902) Acquisition of intangibles (16) (23) Net cash (used in) investing activities (16,190) (882) Cash flows from financing activities Proceeds from the issue of share capital - 6,482 HP funding received for Acquisition of PP&E 14,125 - Repayments from employee share plan loans 273 - Payment of IPO costs - (943) Payment of hire purchase loan liabilities (2,594) (1,295) Repayment of loans from shareholders (1,000) (5,043) Payment of security deposit (1,960) - Payment of finance lease liabilities (13) (5) Cash payment of dividends to ordinary shareholders (1,588) (1,376) Net cash (used in) financing activities 7,243 (2,180) Net decrease in cash and cash equivalents (4,965) (415) Cash and cash equivalents at the beginning of the period 9,847 6,255 Cash and cash equivalents at the end of the period 4,882 5,840 The condensed notes on pages 16 to 19 are an integral part of the consolidated interim financial report. Page 15 of 22
Condensed notes to the consolidated interim financial statements 31 December 2011 1 Reporting entity Delta SBD Limited (the Company ) is a company domiciled in Australia. The consolidated interim financial report of the Company as at and for the six months ended 31 December 2011 comprises the Company and its subsidiaries (together referred to as the Group ). The consolidated annual financial report of the Group as at and for the year ended 30 June 2011 is available from the Company s website www.deltasbd.com.au or upon request from the Company s registered office at Suite 220, 4 Hyde Parade, Campbelltown NSW 2560. 2 Statement of compliance The consolidated interim financial report is a general purpose financial report which has been prepared in accordance with AASB 134 Interim Financial Reporting and the Corporations Act 2001. The consolidated interim financial report does not include all of the information required for a full annual financial report, and should be read in conjunction with the consolidated annual financial report of the Group as at and for the year ended 30 June 2011 and any public announcements made by Delta SBD Limited during the interim reporting period in accordance with the continuous disclosure requirements of the ASX listing rules. This consolidated interim financial report was approved by the Board of Directors on 24 February 2012. The Company is of a kind referred to in ASIC Class Order 98/100, and in accordance with the Class order, amounts in the consolidated interim financial report have been rounded off to the nearest thousand dollars, unless otherwise stated. The preparation of interim financial reports requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. In preparing this consolidated interim financial report, the significant judgements made by management in applying the Group s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 30 June 2011. 3 Significant accounting policies The accounting policies applied by the Group in this consolidated interim financial report are the same as those applied by the Group in its consolidated financial report as at and for the year ended 30 June 2011. Page 16 of 22
Condensed notes to the consolidated interim financial statements 31 December 2011 4 Operating Segments Identification of reportable segments The Delta SBD Group has only one segment being underground mining services. This includes the whole of mine operation, labour hire, equipment hire, longwall relocations and support, roadway development, conveyor installations and maintenance and mine services. The following table represents revenue and profit information for the reportable segment for the halfyears ended 31 December 2011 and 31 December 2010. In thousands of AUD Operating segment Half-year ended 31 December 2011 Revenue $55,628 Net profit after tax as per condensed consolidated interim statement of $3,317 comprehensive income Half-year ended 31 December 2010 Operating segment Revenue $39,650 Net profit after tax as per condensed consolidated interim statement of $1,705 comprehensive income Page 17 of 22
Condensed notes to the consolidated interim financial statements 31 December 2011 5 Cash and cash equivalents In thousands of AUD Consolidated 31 Dec 2011 Consolidated 30 June 2011 Cash 4,882 9,847 6 Share capital In thousands of AUD (except for shares) Consolidated 31 Dec 2011 Consolidated 30 June 2011 a) Share capital Authorised, issued and fully paid up ordinary shares 44,096,195 36,572 36,613 b) Movements in shares on issue Consolidated 31 Dec 2011 No. of shares $000 s Beginning of the period 44,096,195 36,613 Options - (41) Total 44,096,195 36,572 Page 18 of 22
Condensed notes to the consolidated interim financial statements 31 December 2011 7 Contingent Liabilities Nil outstanding as at 31 December 2011. As previously highlighted in note 25 (page 64) of the Delta SBD Annual Report 2011, Delta Mining Pty Limited was being prosecuted over an incident that occurred on 7 July 2006 under the Occupational Health and Safety Act 2000. The company paid eighty thousand dollars in full and final settlement of the matter in the period. 8 Income tax expense Income tax expense is recognised based on management s best estimate of the weighted average annual income tax rate expected for the full financial year applied to the pre-tax income of the interim period. The Group s consolidated effective tax rate in respect of continuing operations for the six months ended 31 December 2011 was 23.4% (for the six months ended 31 December 2010, 13.5%). This change in effective tax rate was caused mainly by the continuation of research and development initiatives from the six months ended 30 June 2011, together with legislative changes. 9 Subsequent events There has not arisen in the interval between the end of the financial period and the date of this report any item, transaction or event of a material nature and unusual nature likely, in the opinion of the Directors of the Company, to affect significantly the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity. Page 19 of 22
Directors declaration In the opinion of the Directors of Delta SBD Limited ( the Company ): 1 The interim financial statements and notes set out on pages 11 to 19, are in accordance with the Corporations Act 2001 including: a) giving a true and fair view of the Group s financial position as at 31 December 2011 and of its performance for the six month period ended on that date; and b) complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001; and 2 there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. Signed in accordance with a resolution of the Directors. Gordon Galt Chairman Stephen Bizzaca Director Page 20 of 22
Independent auditor s review report to the members of Delta SBD Limited Report on the financial report We have reviewed the accompanying interim financial report of Delta SBD Limited, which comprises the condensed consolidated statement of financial position as at 31 December 2011, condensed consolidated statement of comprehensive income, condensed consolidated statement of changes in equity and condensed consolidated statement of cash flows for the half-year ended on that date, notes 1 to 9 comprising a summary of significant accounting policies and other explanatory information and the directors declaration of the Group comprising the company and the entities it controlled at the half-year s end or from time to time during the half-year. Directors responsibility for the interim financial report The directors of the company are responsible for the preparation of the interim financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such control as the directors determine is necessary to enable the preparation of the interim financial report that is free from material misstatement, whether due to fraud or error. Auditor s responsibility Our responsibility is to express a conclusion on the interim financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the interim financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the Group s financial position as at 31 December 2011 and its performance for the half-year ended on that date; and complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As auditor of Delta SBD Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report. A review of an interim financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Independence In conducting our review, we have complied with the independence requirements of the Corporations Act 2001. Page 21 of 22
Conclusion Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the interim financial report of Delta SBD Limited is not in accordance with the Corporations Act 2001, including: (a) giving a true and fair view of the Group s financial position as at 31 December 2011 and of its performance for the half-year ended on that date; and (b) complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. KPMG David Willcocks Partner Wollongong 24 February 2012 Page 22 of 22