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DIRECTORS’ REPORT
70 Independence Group NL
Directors' report
30 June 2015
Operating and financial review (continued)
The objective and strategy of the Group is to create long-term shareholder value through the discovery, development
and acquisition of low cost and high grade projects. Since incorporation in 2002, and including the current financial year,
the Company has returned to shareholders in excess of $119 million by way of a combination of $110.0 million fully
franked dividends and a $9.7 million share buy back in 2009. The Company currently has 235,580,187 shares
outstanding.
The Group’s future prospects are dependent on a number of external factors that are summarised towards the end of
this report.
At the end of the financial year, the Group had cash and cash equivalents of $121.3 million (2014: $57.0 million).
Cash flows from operating activities achieved a record for the Group of $201.7 million (an increase of 57% during the
year). Contributing to this result was a full year contribution of gold sales from Tropicana as against nine months
production in 2014. Segment contribution increases arose from both Tropicana (37%) and the Jaguar Operations (54%)
with a reduction of 4% from the Long Operation. Payments for exploration expenditure fell by 15% to $25.7 million.
Cash flows from investing activities fell 12% during the year. This fall was primarily due to higher construction and
development spend at Tropicana during its final pre-operating financial year; development capital expenditure fell by
73% to $44.1 million. Other movements comprised a $7.7 million increase in property plant and equipment expenditure
to $16.6 million (primarily at Jaguar), and the acquisition of approximately 33.8 million shares in Gold Road Resources
Limited (ASX: GOR) for a total consideration of $13.1 million in the second half of FY2015.
Cash flows from financing activities during the financial year rose significantly from “neutral” in 2014 to an outflow of
$54.4 million in FY2015. Significant movements include the repayment of $25.0 million in debt from the Company’s
corporate finance facility with National Australia Bank ($47.0 million debt was drawn from the facility in FY2014), and
higher dividends paid of $25.8 million (2014: $9.3 million). The finance facility matures in December 2015 and as at 30
June 2015 was fully repaid. The facility currently is undrawn. On 16 July 2015, the Company entered into a new
syndicated facility agreement ("Debt 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 Debt Agreement comprises a five year $350 million amortising term loan facility that will be
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 will be 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.
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 increased relative to the previous financial year as can be seen in the following chart:
Independence Group NL
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