Underlying earnings before interest, tax, depreciation and amortisation was $1 million, while EBITDA margins contracted to 2.9%.
The non-cash impairment charge removed all goodwill intangible assets from the balance sheet.
The majority of the assets on the balance sheet comprise plant and equipment of $37.6 million, with loan liabilities against this equipment totalling $15 million.
The company’s cash position was affected by various redundancies with the value of employee benefits in the six months reducing by $2.9 million to $4 million.
“This has been an extremely challenging period both for the entire mining services sector and for Delta SBD,” CEO Steve Bizzaca said.
“The management team has been active in reducing our site labour and organisation costs and debt levels.
“The cost reductions achieved have ensured that the company is more competitive, is providing a value-added solution to our clients in this difficult environment and is positioned appropriately when market conditions ultimately begin to improve.
“Pleasingly we have been successful in a number of contract awards for both new and recurring work and contract extensions, evidencing our ability to be competitive.
“As most of the new contracts will be undertaken in the second half, personnel numbers are expected to increase by 20%.”
Major services undertaken/commenced in the first half include Peabody Energy’s Wambo mine in New South Wales, where the company completed conveyor installation and salvage, and in December 2013, commenced mobilisation for a longwall relocation.
Delta SBD also completed longwall relocation and in December 2013 commenced mobilisation for an additional longwall relocation at Whitehaven’s Narrabri mine in NSW.
The company’s expectations for the January to June 2014 period were set against a framework of continuing general weakness in the coal industry in Australia, it said.
“Notwithstanding this the company forecasts improved performance for the second half of the 2014 fiscal year as the company will continue to provide value-added services to Illawarra Coal, as well as undertake a number of longwall relocation projects including recurring work at Wambo, Narrabri [including equipment], Blakefield and Broadmeadow [equipment only], new work at Austar, Ulan West [including equipment] and Tahmoor, and Appin’s Area 9 major civil work over the next 12 months,” the company said.
“To address the group’s ongoing cashflow requirements, the group’s major shareholders have given a commitment to provide an invoice finance facility with a limit of $3.5 million at market terms and conditions.
“This facility is subject to board approval and will only be established in the event that negotiations surrounding the following facility cease.
“The group has accepted indicative terms and conditions from an external financier for an invoice finance facility for $4.65 million.
“The finalisation of the facility and execution of the agreement on the indicative terms and conditions offered is subject to the external financier completing due diligence procedures.
“The directors are of the view that the due diligence procedures will be satisfactorily completed and the $4.65 million facility will be established during March 2014, in sufficient time for the first drawn down need.”
