Underground contracts drive Mastermyne's growth

THREE new underground coal contracts in New South Wales and Queensland helped Mastermyne outdo its prospectus forecast for annual revenue by 26% to $164.8 million.
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Mastermyne at work.

Lou Caruana

Growth came from all divisions of the business, with the most significant increase being $62.92 million from its underground division, which provides underground roadway development, installation of conveyors and longwall relocation for its clients.

“The underground mining sector was largely unaffected by the weather events of FY2011 and as a result has continued to grow strongly in both Queensland and New South Wales,” Mastermyne said.

“Underground contract services remain in very high demand and Mastermyne is well placed to capitalise on this.”

Mastermyne also exceeded its prospectus forecast for net profit after tax by 32% to report an $11.7 million result for the 12 months to June 2011.

Mastermyne managing director Tony Caruso said: “Completing the first full year as a public company and exceeding prospectus forecast in a year filled with significant sector interruptions has been a great result.

“Just as pleasing is the contracted order book for FY2012 and beyond, which sets the business up for another strong year.”

Margins were down from IPO prospectus forecast for the full year due to three main factors: the effects of using subcontract labour in the first half of the year, a mine access issue at a major project in January, and a full-year loss in its services division.

Margins started recovering in the second half of the year, Mastermyne said.

Workforce numbers at 823 for the full year were up 46% from the previous corresponding period, with the Myne Start training centre in Mackay in Queensland contributing significantly to the increase.

“We have seen a tightening in the market for human resources but the company has successfully recruited in the FY2011 financial year,” Mastermyne said.

“This was achieved through a well-developed strategy which included domestic and international recruitment as well as the very successful Myne Start training centre based in Mackay.”

The strategies outlined in the IPO prospectus of expanding the range of services and geographical expansion were now well embedded and had led to several new opportunities and contracts which would underpin the business well into the future, Mastermyne said.

“Mastermyne is in the very sound position of having an order book contracted for FY2012 that will deliver growth on the FY2011 results. The company will use this strong position to consolidate and focus on organic growth over FY2012,” it said.

“The sales pipeline beyond FY2012 continues to build, with tier 1 and 2 coal companies well advanced on several large scale underground projects and further projects in the approval stage.”

Safety management continued to be at the core of the company’s operating principles and Mastermyne strengthened its safety team via the appointment of several key positions, resulting in an improved safety performance from the later stages of the financial year.