Delta SBD : 21-10-2016 DSB ASX Announcement - Annual Report to Shareholders - 30 June 2016

Delta SBD is one of Australia's leading Mining Services companies. We operate in the underground coal mine sector and have been providing high quality services for over fifteen years.

We take pride in delivering value added solutions for clients built on a long term track record of safe and efficient work practices.

Dear Fellow Shareholder,

Delta SBD's operating results and Annual Report for the 2015/16 year are presented herein.

The year continued to be very difficult for Australia's coal industry, however there has been recent modest increases in prices for all export coal types over the past few months giving some relief to the industry. Producers are continuing to look at ways they can reduce operating and capital expenditure outlays - resulting in Delta SBD having fewer opportunities, lower margins and strong competition.

During the year some competitors ceased to be in business due to the financial pressures placed upon them, and it is a tribute to the management and workforce at Delta SBD in accepting and implementing the debt and cost reduction measures and workplace initiatives that have been put in place, thereby enabling Delta SBD to successfully retain and win new contracts with our clients throughout the year. A combination of all these factors has enabled us to increase our underlying profitability over the previous year.

Directors are pleased to report that we maintained a good safety performance this year. This has been achieved at a time where workforce numbers have been significantly reduced throughout the industry resulting in the focus on safety being challenged by job losses. The annual result demonstrates the attention that our workforce and management place on working safely

Since the end of the 2015/2016 year Delta SBD has also been successful in executing a major contract with Wollongong Coal for the total operation of the Wongawilli Mine located in the Wollongong Area. The Wollongong Coal contract enables Delta SBD to demonstrate its uniqueness over its competitors in having the experience and skills to manage and operate a complete mine.

There have been a number of Board and Executive Management changes during the year with Gordon Galt retiring from the position of Chairman, Steve Bizzaca stepping down from the role of Chief Executive Officer to Managing Director and Neville McAlary joining the Company as Chief Executive Officer. On behalf of all employees and shareholders, I would like to formally acknowledge the effort demonstrated by both Gordon and Steve in leading Delta SBD through what has been an unprecedented period for the industry and look forward to a bright future with Neville leading the operations of our Company. I also look forward, as Chairman, to building on the foundations set by Gordon, with an aim of sustaining profitability and employment of our workforce, with a clear view to achieve returns for our shareholders.

It is the Directors goal for Delta SBD to be viewed as a company that pays dividends and have set a target of 60% of underlying NPAT in future years. However the Directors are mindful that dividends can only be paid in periods where there is sufficient profit to enable the dividend to be paid without adversely impacting on the repayment of debt obligations and ongoing operational needs of the company. With this goal in mind the Directors have decided to declare a final dividend for the year of 0.8 cents per share payable in September 2016.

On behalf of the Board and shareholders, I would like to thank all employees, led by Stephen Bizzaca our Managing Director and Neville McAlary our CEO, for the significant contributions they have made to Delta SBD this year. We have worked closely and successfully with clients to overcome the challenges that the current market has thrust upon us, keeping our employees safe and largely profitably employed. I wish to thank all DSB shareholders for your support and believe sentiment and corporate valuation will improve with continued profitability. I look forward to reporting on further positive progress as the FY17 year unfolds.

Glyn Dawkins

Chairman, Delta SBD Ltd