Universal Coal reports stable results for 4Q18
Published by Claire Cuddihy,
Universal Coal Plc (Universal) has reported a significant increase in sales and normalised EBITDA for the quarter ending December 2018. A significant portion of the increase in earnings has been contributed by the North Block Complex, a going concern acquisition that transferred to Universal’s management from 1 November 2018.
The company has achieved an EBITDA of AUS$30.5 million (AUS$17 million attributable) for the quarter ending December 2018, an increase of 53% on the previous quarter EBITDA of AUS$20million (AUS$11 million attributable).
The company expects normalised* EBITDA for the first half of the year to reach AUS$51 million and is on track to achieve forecast guidance of AUS$93 million for FY19.
Group cash balance at the end of December closed on AUS$46.8 million (previous quarter of AUS$39.4 million). The balance includes restricted cash of AUS$0.7 million, which decreased from AUS$3.2 million since the previous quarter.
The company’s attributable total cash increased by AUS$2 million during the quarter, even after the cash dividend distribution of AUS$5.2 million to Universal Coal PLC shareholders. The total cash balance was also affected by the release of deposit for acquisition guarantees. Operational cash flows were impacted by significant provisional tax, royalty payments of AUS$15.2 million and the repayment of AUS$2.9 million of debt.
The company has received favourable funding terms from Capital Harvest Emerging Farmers Finance (Pty) Ltd for a 10 year mortgage loan covering the agricultural properties acquired within the Eloff project. The Eloff project includes substantial quantities of surface rights and the company was able to obtain a total of R95 million of finance and executed on the funding end of October 2018. The funding was utilised in the funding of the acquisition price of the 51% of Eloff project acquired from Exxaro.
The company’s attributable net interest-bearing asset position at September 2018 decreased to AUS$19million compared to the previous quarter AUS$19.3 million**.
Dividends paid to shareholders for FY2018 totalled AUS$0.02 per share, delivering solid annual cash returns to shareholders.
The company is committed to increasing shareholder wealth by strengthening its portfolio of coal exploration, development and mining assets in South Africa. The inclusion of the new NBC colliery and the commencement of our Ubuntu project (Brakfontein) occurring in the current quarter reflect this strategy. Another focus is continuing with dividend payments in the remaining months of FY19.
The quarter operational EBITDA excludes any fair value and goodwill adjustments relating to the business combination adjustments for the inclusion of NBC and the increase in ownership for the Eloff project. These adjustments will be included in the Interim financial statement release at the end of February 2019.
* Normalised EBITDA: The Quarter operational EBITDA excludes any fair value and goodwill adjustments relating to the business combination adjustments for the inclusion of NBC and the increase in ownership for the Eloff project. These adjustment will be included in the Interim financial statement release at the end of February 2019.
**Net asset position is calculated as follows: long term debt + short term debt – cash balance – net shareholder receivable.
The company produced an additional 427 000 t of ROM during the current quarter compared to the previous, and this is largely contributed by the additional ROM from NBC. The second and third quarter is usually expected to be affected by the rainy summer season in South Africa, but with delayed summer rain experiences in the country, the company was able to benefit from uninterrupted production rates.
The second quarter delivered a 51% increase in total sales volumes, once again largely from by the additional volumes of domestic product supplied to Eskom from NBC, as well NCC now delivering on its increased tonnages to Eskom.
The total sales volume for the 6 months ending December 2018 approximates to 297 million t (attr. 1.7 million t) and is in line with the guidance of 6 million tpy (attr. 3.4 million tpy) sold to market. The company is on track to deliver previously stated EBITDA guidance of AUS$93.1million and 6 million tpy (attr. 3.4 million tpy) sold to market.
Commenting on the NBC Reserve increase, Universal’s CEO, Tony Weber said: “Following the acquisition of NBC during the quarter, Universal delivered record sales in what is traditionally one of the two weaker quarters due in part to the occurrence of the rainy season. This solid trading result is underpinned by the speedy integration of the operation, which is testament to the hard work by both the Universal and the incumbent mine team in delivering a smooth transition.”
Read the article online at: https://www.worldcoal.com/coal/22012019/universal-coal-reports-stable-results-for-4q18/
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