The company is now expecting steadily improving results in the second half, Mastermyne managing director Tony Caruso said.

“The first half has seen the return to more stable conditions following a period where the sector has acted aggressively to reduce costs across their operations,” he said.

“We are confident going into the second half that we will continue to see our business improve its financial performance before moving back into growth in FY2015.”

Revenue for the half of $77.2 million was above the guidance range of $72-76 million and net debt was down $6.2 million to $1.7 million. The company declared a 1c per share dividend.

“We have continued to maintain an overall steady state operation across the period by maintaining existing contracts, renewing contracts and securing new framework agreements,” Caruso said.

“We are confident that we have moved past the bottom of the downward cycle for Mastermyne.”

During the period Mastermyne mobilised equipment and labour to existing projects and to new projects secured in the second half FY2013.

Two projects that were scheduled to start late in first half have been deferred into the early part of the second half and will require manning increases during February and March.

During the first half Mastermyne maintained stable operating conditions across its contracts and focused its efforts on improving productivity and reducing costs across projects.

This has seen contractor maintain historical margins on the contracting stream albeit on decreased revenue.

At the end of the half-year period, workforce numbers were at 735, which is below what was forecast but due to the deferral of mobilisation of two new projects. These projects are now mobilising and will require manning to increase to 880 personnel by the middle of March.

The engineering division has also maintained similar performance to the previous period and margins again have remained at normal levels. The services division contribution has been minimal in the first half but has started projects early in this current period.

Mynesight, the training division, of which Mastermyne has 66% shareholding, has continued to generate revenue in line with expectations.

Fleet utilisation continues to slowly improve and two miners remain on hire, with the third unit now undergoing an overhaul. Mobile fleet utilisation has improved noticeably, but prices remain below what was being achieved previously and this is not expected to change in the near term.

Development mining equipment, whilst experiencing increased enquiry’s, has not recovered in the half and continues to dilute Mastermyne’s overall margin performance.

At the start of FY2014, the total order book was $236.4 million with the FY2014 contribution made up from $112.8 million of underground contracted projects and $30 million of recurring revenue from the other divisions and non-contracted work.

FY2014 also included a further $20 million from expected contracted renewals.

“We are pleased to report that the total order book remains steady at $208 million,” Caruso said.

“The tendering pipeline is above $800 million with $447 million in active tenders. We have submitted roadway development tenders of approximately $100 million [which is included in the active tender number].”

The HY2014 safety performance has continued the trend of strong performance with lagging statistics continuing to reduce. Total recordable injury frequency rate (TRIFR) for the group is 2.25, down from 3.28 at the close of FY2013.

“This continuing downward trend demonstrates the maturity of the safety management systems which are held in high regard by our clients,” Caruso said.

“Our focus remains on the two critical components of safety management being behaviour and compliance.

“During the period we have reported margins slightly above guidance. We reinforce the link in margin recovery with fleet utilisation which will be driven by a return of roadway development projects.

“We are actively tendering these projects but do not expect any to commence in the current financial year.

“The company continues to generate strong cash flow and is well positioned for upcoming projects.”

With the first half demonstrating that the sector has stabilised and the secure order book underpinning the second-half revenue, Mastermyne is confident of delivering a full-year revenue of $155-165 million with net profit of between $2-3 million.