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34 Independence Group NL
DIRECTORS’ REPORT
Directors' report
30 June 2016
(continued)
Operating and financial review (continued)
Cash outflows from investing activities increased during the year to $423.5 million, primarily due to the cash payment for
the acquisition of Sirius ($202.1 million, net of cash acquired) and payments towards the construction of the Nova
Project ($179.5 million). Other movements comprised $10.6 million for capitalised exploration expenditure and $10.7
million associated with acquisition of property, plant and equipment, primarily driven by Tropicana improvement work
aimed at delivering higher plant throughput. The Group also realised $16.0 million from the sale of its investment in Gold
Road Resources Ltd.
On 16 July 2015, the Company entered into a new Syndicated Facility Agreement (Facility Agreement) with National
Australia Bank Limited, Australia and New Zealand Banking Group Limited and Commonwealth Bank of Australia
Limited for a $550 million committed term finance facility on an unsecured basis. The Facility Agreement comprises a
five year $350 million amortising term loan facility that was used to refinance Sirius' existing Nova Project finance
facility, and provide funds for the continued development, construction and operation of the Nova Project; and a five
year $200 million revolving loan facility that was used to partially fund the payment of the cash component of the
Acquisition Scheme and transaction costs, in addition to providing funding for general corporate purposes.
Cash flows from financing activities during the financial year predominantly comprised drawdowns from the debt facility,
which totalled $271.0 million for the period. In addition, the Group paid $12.8 million in dividends during the year. Total
cash flows relating to capitalised transaction costs associated with the Facility Agreement were $5.3 million. These
costs are incremental costs that are directly attributable to the Facility Agreement and include loan origination fees, legal
fees and other costs relating to the establishment of the loan.
During discussions of the operating results of its business, the Group’s Board and management monitor a measure
known as Underlying EBITDA. The Board considers this measure to be important to the Group and investors alike, as it
represents a useful proxy to measuring an operation’s cash generating capabilities. Underlying EBITDA is calculated as
profit after tax adjusted for income tax expense, finance costs, interest income, asset impairments, depreciation and
amortisation. Underlying EBITDA decreased relative to the previous financial year as can be seen in the following chart:
Net profit/(loss) after tax (NPAT) for the year was a loss of $58.8 million compared to a profit of $76.8 million in the
previous financial year. The current year loss includes $65.1 million of acquisition and related integration costs relating
to the acquisition of Sirius, $35.5 million of impairments of capitalised exploration costs (primarily Stockman Project) and
$19.7 million of exploration expenditure. The chart below outlines the key drivers of the results for FY16 compared to
the prior corresponding year.
Independence Group NL
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