Thungela Resources Ltd has released its first set of full-year results as a publicly listed company since its debut on the Johannesburg and the London Stock Exchanges on 7 June 2021. This set of results underscores its successful transition to a profitable, highly cash-generative pure-play thermal coal business.
Thungela delivered adjusted EBITDA of ZAR 10 billion (2021: ZAR 286 million); while net profit was ZAR 6.9 billion vs a loss of ZAR 362 million in 2021; while headline earning per share was at ZAR 66.57 (2021: loss of 531 cents). Favourable coal prices combined with a strong operational focus, resulted in a net cash position of ZAR 8.7 billion at year end.
July Ndlovu, CEO of Thungela, commented: “Thungela has delivered record full year results, despite the on-going effects of COVID-19 on our operations and rail infrastructure constraints. The tragic loss of life recorded in June 2021 has reinforced our unwavering commitment to achieve our goal of becoming a fatality-free business. This is and will remain a non-negotiable objective. Our operational focus delivered substantial shareholder returns while maintaining disciplined capital allocation, balance sheet flexibility, and sufficient liquidity to withstand market and coal price volatility. Shareholders are set to benefit substantially as 63% of Adjusted operating free cash flow – ZAR 2.5 billion – will be paid out as a dividend, well above the stated dividend policy of a minimum pay-out ratio of 30% of Adjusted operating free cashflow. This corresponds to a maiden dividend of [ZAR 18.00] per share. Furthermore, the Employee and Community Partnership Trusts, the two share ownership schemes that we established to enable employees and our communities to share in the value we create, will receive ZAR 273 million collectively.”
Improvement in safety performance with a total recordable case frequency rate of 1.35 in 2021 (2020: 1.51). Tragically, a fatality was recorded at Goedehoop in June 2021.
Employee and Nkulo Community Partnership Trusts to benefit from shared value and receive an inaugural cash dividend of ZAR 273 million.
Thungela contributed ZAR 7.1 billion to society through wages and related payments (ZAR 4.1 billion), inclusive procurement (ZAR 2.3 billion), royalties and mining taxes (ZAR 570 million) and social and labour plans and CSI (ZAR 118 million).
Return to profitability with profit for the reporting period of ZAR 6.9 billion (2020: loss of ZAR 362 million).
Robust cash generation with net cash of ZAR 8.7 billion (2020: net debt of ZAR 388 million).
Maiden dividend declared with ZAR 2.5 billion returned to shareholders in total at [ZAR 18.00] per share, representing 82% of Thungela’s day one closing market capitalisation.
Demand for South Africa coal
Thungela exports most of its coal, and its revenue was positively impacted by the Benchmark thermal coal price which strengthened by 90% to US$124/t, although the stronger Rand did offset some gains. The demand for high quality South African coal underpinned Thungela’s performance. Developing economies in India, Pakistan, Sri Lanka and Vietnam are on a path of recovery, post COVID-19, and are experiencing an increased demand for energy. The discount to benchmark prices has narrowed substantially in 2021 to 16% compared to 26% in 2020, resulting in higher realised coal prices of US$104/t in 2021 (2020: US$48/t). Thungela reported export equity sales of 15 million t, which reflects a decrease of 16% in 2021. Export sales and production were severely impacted by TFR constraints, and the company was forced to curtail lower margin production from late in 3Q21 as stockpiles reached capacity.
“We remain committed to working with TFR, government and the industry to resolve the issues experienced in 2021 and the start of 2022. We believe the challenges are transient and have planned our operational performance on a gradual, rather than an immediate recovery in rail performance. This is of national concern given that coal exports constitute one of the primary sources of foreign currency generation for South Africa.”
The company expects a gradual rather than immediate recovery in TFR performance, the 2022 export saleable production is expected to be between 14 million t and 15 million t, before returning to 16 million tpy from 2023.
“While the current geopolitical unrest in Europe is resulting in an unprecedented escalation in energy and commodity prices, including thermal coal prices, the impact on input cost inflation and volatility will remain a risk to global growth. We believe that thermal coal remains a key pillar of the global energy mix and as Thungela we have an important ongoing role as a responsible producer. We recognise and balance society’s needs, environmental expectations, and the vital role we play in the economy and our communities. Our foundations are firmly in place and our journey to value creation has just begun. We will continue our focus on what we can control: achieving our goal of becoming a fatality-free business, realising further operational improvements and cost efficiencies, and seamlessly executing our life extension and production replacement projects,” Ndlovu concluded.
Read the article online at: https://www.worldcoal.com/coal/23032022/thungela-releases-first-fy21-results/