underground mining excellence



25 Sep 2015

Barminco Releases FY2015 Results

Leading underground hard-rock mining contractor Barminco Holdings Limited is pleased to report its full year results for the year ended 30 June 2015.


  • Lost Time Injury Frequency Rate of zero for FY2015
  • Revenue of $492.9 million (FY2014: $537.9 million)
  • EBITDA of $96.8 million (FY2014 : $111.7 million).
  • Proportionately consolidated EBITDA, includes share of AUMS joint venture, of $126.3 million (FY2014 $134.6 million)
  • Trading EBIT1 of $43.6 million (FY2014 trading EBIT: $52.3 million)
  • Proportionately consolidated EBIT, includes share of AUMS joint venture, of $58.4 million (FY2014 $50.6 million)
  • Approximately $700 million in new contracts and contract extensions awarded in the year
  • Strong liquidity position, with $104.8 million cash on hand at 30 June 2015 (30 June 2014: $95.8 million) as well as approximately $79 million capacity in undrawn facilities
  • Buy back of US$99.0 million in high yield bonds, funded through resetting a cross-currency swap, delivering an annual $6.3 million reduction in cash interest
  • Continued investment in the Company’s people and assets, with capital expenditure of $48.8 million (FY2014: $53.0 million)
  • Strong order book, with nine mining projects in Australia and Africa across a range of precious and base metals, principally gold, nickel, zinc, and tin

Barminco reported earnings before interest, tax, depreciation, and amortisation (EBITDA) of $96.8 million, down from $111.7 million in FY2014. Revenue was $492.9 million, 8.4 per cent lower than FY2014 ($537.9 million).

Importantly, Barminco maintained a strong EBITDA margin at 19.6 per cent (FY2014: 20.8 per cent), reflecting the Company’s focus on driving efficiency and productivity improvements in response to challenging market conditions.

1 Trading EBIT excludes one-off redundancy costs (FY2015: $1.7 million, FY2014: $5.2 million)

Although Barminco does not report consolidated results for statutory reporting purposes, the proportionally consolidated result including Barminco’s share of its 50 per cent joint venture interest in African Underground Mining Services (AUMS), would be an EBIT of $58.4 million, a 15.4 per cent increase (FY2014: $50.6 million).

AUMS generated strong cash flow, with $25.1 million in dividends and loan repayments to Barminco in FY2015 (FY2014: nil).

Barminco Chief Executive Officer Peter Stokes said that although Barminco was not immune from the challenging market conditions in the resources sector, the Company has had good success in delivering improvements on what it can control.

“We have worked hard to achieve targeted efficiency improvements and providing productivity gains for our clients, which is reflected in solid margins despite the broader market conditions,” Mr Stokes said.

“We have focused on delivering the most efficient outcomes for our clients to maintain our standing as a leading, quality service provider.

“A big part of being a leading provider is delivering on work safely, I am particularly pleased with our safety performance with no lost time injuries in the year. These achievements are reflected in our success in winning more work in this environment, with approximately $700million in new contracts and contract extensions awarded this year.”

During FY2015, Barminco was awarded:

  • A three year, $270 million contract extension at Barminco’s largest single contract, AngloGold Ashanti’s Sunrise Dam, securing work until Q4 FY19.
  • A two-year, $190 million contract extension at Western Areas’ Spotted Quoll and Flying Fox nickel mines, securing work to Q4 FY16 with options to extend.
  • A new three year, $110 million contract at MMG’s Rosebery mine, securing work until Q3 FY18, with an option to extend.
  • A new three-year, $130 million contract at Sirius Resources’ (now Independence Group’s) Nova Bollinger mine, securing work to Q4 FY18, with an option to extend.

At a statutory level, Barminco reported a net loss after tax of $52.7 million (FY2014: $58.5 million loss), which is significantly impacted by the Company’s private equity capital structure.

Financial position

Barminco entered FY2015 with long-term funding through US$485 million high yield bonds, maturing June 2018, providing the Company with financial flexibility. In the year, Barminco repaid US$99.0 million in high yield bonds. This was funded through the resetting of a cross-currency swap, utilising a favourable AUD-USD exchange rate movement since the original issuance of the bonds in May 2013. Since year end, Barminco repaid a further US$25 million in high yield bonds, again through resetting the swap as the AUD-USD depreciated further.

As a result of the repayments, Barminco currently holds US$361 million high yield bonds. This bond facility has been fully hedged into Australian dollars, at $487 million, representing no change from when the bonds were first issued in May 2013.

Importantly, the repayment of bonds during the financial year delivered Barminco a $6.3 million reduction in its annual cash interest cost. Adding in the US$25 million repayment subsequent to year end, Barminco expects to achieve an annualised $7.6 million reduction in cash interest going forward.

Barminco also strengthened its cash position in the year, with cash on hand at 30 June 2015 of $104.8 million (30 June 2014: $95.8 million). The liquidity provided by this strong cash position is supported by an undrawn revolving credit facility of $49.7 million and available equipment finance lines of approximately $29 million.

Barminco’s strong financial position enabled continued investment in the business, with capital expenditure of $48.8 million (FY2014: $53.0 million)

Mr Stokes said: “With an increase in our cash position, long-term debt structure, and strong liquidity, Barminco has the financial capability to continue investing in our fleet and people to ensure we maintain our position as a high quality provider.”

Private equity capital structure

Barminco’s capital structure continues to reflect its current private equity ownership, with the investment from the owners being made through Redeemable Preference Shares (“RPS”) and Shareholder Loan Notes (“SLN”). The RPS/SLN’s are, however, classified as debt rather than equity for accounting purposes. This treatment skews the reported non-current liabilities and net asset position, and non-cash financing costs (interest) in comparison to peers listed on the ASX.

During FY2015, $360.4 million of RPS/SLN’s were classified as debt in the statutory accounts. Additionally, $44.3 million of associated non-cash interest related to the RPS/SLN was recorded as an interest expense, however this interest is capitalised and has no cash cost to the business.

Mr Stokes said: “In order to compare our bottom line results to listed peers you would need to view the preference shares and shareholder loans as equity rather than debt.'

“That means reclassifying $360.4 million from long-term debt into equity and removing $44.3 million in interest costs from our income statement.

“We present our balance sheet to US bondholders in this manner and this is how it would look if it was not under private equity ownership.

“To directly compare our reported financial statements under our current ownership structure with those of a listed company would be quite misleading.”


Barminco continues to operate in challenging conditions, however the Company has entered the year in a solid position, supported by a broad suite of contracts both in Australia and Africa, including those in the AUMS joint venture, and across a range of precious and base metals, principally gold, nickel, zinc, and tin.

These contracts provide Barminco with the platform to grow earnings in FY2016, particularly as the Company drives improvements on new contracts that were awarded in FY2015.

“We expect to achieve efficiency gains at the Rosebery and Nova Bollinger mine sites progressively during the year as they transition from the initial ramp up phase of our contract to efficient production,” Mr Stokes said.

“More broadly, our priorities for the year are to drive ongoing innovation across the business to increase efficiencies – delivering further productivity improvements for our clients – seek contract extensions, and target new work opportunities.

“It’s a tough environment, but if we continue to invest in our people and equipment, maintain our focus on safety, and work closely with our clients, Barminco will be well placed for another successful year and maintain its leading position in the underground mining sector.”