Byrnecut suffers big fall in profit

Mining contractor Byrnecut Australia has recorded strong growth in revenue but a large fall in profit driven by higher expenses, two big impairments and bad and doubtful debts.

The Steve Coughlan-chaired company brought in $1.9 billion worth of revenue in the financial year to December 2022, up from $1.7 billion in 2021, according to financial statements lodged by the privately-owned company with the Australian Securities and Investments Commission.

Perth Airport-based Byrnecut’s net profit after tax dropped significantly to $7 million in FY22, down from $75 million in FY21.

Byrnecut recorded $18 million worth of bad and doubtful debt expenses for the financial year, up from $91,270 in 2021.

The company also recorded a $14.9 million impairment of its investment in ASX-listed company Wiluna Mining Corporation.

Byrnecut had been the underground contractor for Wiluna, which went into voluntary administration in July 2022.

Wiluna’s directors appointed voluntary administrators after struggling with cost pressures, staff shortages and issues ramping up its primary gold project in the Mid West.  

Before collapsing, the gold player was trying to raise $84.5 million through an entitlement offer in May 2022.

Part of that raise included an agreement from Byrnecut, which Wiluna claimed at the time would convert $13.4 million of expected payments into any shortfall on the offer.

“This [bad and doubtful debts] relates primarily to debts owing from Wiluna Mining Corporation, following it falling into administration, and doubtful debt provisions relating to financially underperforming mining contracts,” Mr Coughlan said.

The accounts also disclose an $18 million loan impairment related to its subsidiary, Murray Engineering.

Mr Coughlan acknowledged the company’s financial performance as disappointing.  

“Ordinary would be putting it politely,” he said.

“Apart from Wiluna falling over, 2022 was problematic when COVID infection rates took off following WA opening the boarders with subsequent high absenteeism.

“Labour shortages, logistics and supply chain issues and major cost increase in goods and services also had a significant effect.”

Mr Coughlan said the company would be resetting in the year ahead.

“Fortunately, we have a very strong balance sheet across the whole group (not just BAPL) to weather the storm,” he said.

“[This year] will be a year of reset.”

Byrnecut’s total equity was $326 million while its total liabilities were $667 million as at December 31 2022.

The report indicates that Byrnecut’s management team took a big pay cut in 2022.

The report revealed short term employee benefits for key management personnel were cut back from $16.3 million in 2021 to $11 million in 2022.

The company employed 4,637 people, as of December 2022.

Byrnecut holds second rank after Thiess in Data & Insights mining services list, ranked by staff numbers in Western Australia.