THE managing director of Muswellbrook-based mining services company, SubZero Group Limited, has taken a 15 per cent pay cut to $380,000.
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In an announcement to shareholders on Tuesday, the Board told the ASX that Graeme (Joe) Clayton was willing to reduce his compensation ‘in recognition of the Company’s present circumstances and the difficulties that all stakeholders are experiencing in the Hunter Valley region.’
The Chronicle contacted Mr Clayton who told us he has never taken a pay cut during his nearly four decades in the mining industry.
“I’m doing it with SubZero because it’s a great company, I believe in it, it has good bones and we have a stellar board.
“We’re trying to save costs everywhere in the business, we’ve had a big cost-cutting campaign, I’m the leader and I’m the highest-paid guy, so I have to demonstrate my bit to keep overheads down,” he said.
Mr Clayton was appointed SubZero Group’s interim CEO in November 2014 and Executive Director in January 2015.
The 2015 Annual Report noted he has 38 years experience in mining, most recently leading the exploration and development phases of the Shenhua Watermark project in the Gunnedah Basin and the Anvil Hill Project in the Hunter Valley.
The announcement of Mr Clayton’s offer to take a reduction in base salary follows the release last month of the company’s 73-page 2014/15 Annual Report.
SubZero Group reported a statutory net loss after tax of $29.52 million for the year ended June 30, 2015 compared with a loss of $12.94 million the previous year.
The underlying net loss after tax, excluding one-off items, was $15.28 million.
A review of operations for the 2014/15 financial year showed SubZero Group Limited achieved $11.5 million in cost savings, including:
- a reduction in the workforce from 500 to 350 full-time equivalent (FTE) jobs;
- increased casualisation of the workforce from 35 per cent to 51 per cent;
- asset sales of $2.1 million; and
- consolidation of premises from 10 to five.
While the annual report to shareholders noted the financial performance for the last quarter of FY15 and the beginning of FY16 demonstrated a ‘marked improvement in the order book and trading results,’ it also indicated the road ahead for the business in the current climate will not be easy.
SubZero Group reported a deficiency in net current assets of $39.34 million compared to last year’s figure of $14.68 million, leading the Group’s auditors to note ‘there still remains doubt on the ability of the Group to continue as a going concern.’
On Friday, in his Chairman's address to the Annual General Meeting, Malcolm Jackman said the continuing viability of the SubZero Group, and its ability to continue as a going concern and meet debt obligations, will depend on:
- 'the completion of a successful recapitalisation;
- ensuring the continued support from its financiers;
- negotiating settlement terms on liabilities to creditors; and
- continued improvement in the order book and trading results throughout FY16.'
In August, SubZero Group was awarded a $10 million contract with Glencore to carry out rehabilitation work at its Bulga open-cut mine.
That same month SubZero was also selected as one of four service providers to share in a $20 million-a-year contract for onsite and offsite repair, refurbishment and fabrication of mining equipment and components at BHP Billiton’s Mount Arthur Coal Mine.
Overall, the SubZero Group Limited operational and financial review noted the fall in revenue - from $63.78 million in 2014 to $56.84 million in 2015 – was due to the downturn in the mining services sector which the report said ‘has affected the substantial majority of mining service providers.'
