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Universal Coal announces financial results for second half of 2017

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World Coal,

Universal Coal (UNV) has announced its financial results for the six months ending 31 December 2017.

Net profit after tax increased to AUS$14.1 million (PCP: a loss of AUS$1.7 million) and half year EBITDA of AUS$29.6 million (attributable of AUS$20.4 million) is in line with the guidance provided on 17 January 2018. This represents an increase of 162% on the prior period. Earnings per share were AUS2.05 cents per share. Revenue was strong at AUS$136.5 million, and a 124% increase on the prior period’s revenue of AUS$61.0 million.

Given the solid financial performance this half, the Directors have again taken the decision to reward shareholders, declaring an interim dividend of AUS$0.01 per share unfranked, payable 28 March to shareholders on the register as at 8 March 2018.

The company’s financial performance is underpinned by solid half year coal sales of 2.3 Mt, with ~1.96Mt being domestic sales and ~0.37Mt being export sales generated from the company’s two operating mines in South Africa, Kangala Colliery and New Clydesdale Colliery (NCC). UNV has every confidence of meeting full year sales target of 4.6 million tpy for the year ended 30 June 2018.

During the half, UNV further strengthened its balance sheet, reducing net debt by 54% to AUS$6.7 million (December 2016: AUS$14.7 million). Strong cash generation from operations sees UNV’s holding cash reserves at AUS$19.2 million as at 31 December 2017. Solid cash balance, growing cash flows and supportive financiers has given the company the necessary financial flexibility to pursuing growth opportunities including strategic earnings accretive acquisitions and organic growth initiatives.

UNV’s CEO, Tony Weber, said: “This has been a game changing half for Universal Coal with our two producing coal mines delivering an exceptional financial result, positive cash flows, and thus more dividends for shareholders. We also completed the acquisition of an additional 51% of Eloff Mining company, which will deliver potential increased sales and longevity to Kangala in the future.

“Our strategy of becoming a mid-tier, multi-mine coal producer remains well and truly on track, underpinned by a healthy balance sheet and a pipeline of organic growth and attractive acquisition opportunities that will strengthen our production profile and revenue streams. With improved market conditions for the coal sector, we are progressing numerous opportunities to deliver more shareholder value.”

The second half has commenced well for UNV; a full year production target of approximately 4.6Mt (attributable of 2.9Mt) and EBITDA of circa AUS$55 million has been confirmed.

A near term organic growth milestone is commencing the development of the 75.8Mt Brakfontein project, which has already received all regulatory approvals. Following settlement of the surface rights and confirmation of feasible offtake agreements, development can commence. Brakfontein is expected to boost Group production by approximately 1.2 million tpy of saleable product. The company hopes to update shareholders on other growth prospects in the very near term.

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