Diversified coal, energy and ferrous resources group Exxaro on Thursday announced a substantially higher interim dividend on iron-ore boosted half-year income inflows in the six months to June 30.
Headline earnings leapt 105% to R6 804-million on the 180% increase to R4 062-million in equity-accounted income from Sishen Iron Ore Company, which benefited from high iron-ore export prices and price premia.
Group revenue of the JSE-listed company increased by 8% to R51.1-billion on higher coal revenue and the inclusion of renewable energy revenue from Cennergi, Exxaro’s diversified independent power producer. Net operating profit rose 29% to R5.2-billion.
While coal production was 12% lower and sales volumes 10% lower than in the first half of last year, a 47% increase in the average benchmark export price provided a positive offset to the impact of the pandemic and the Transnet Freight Rail challenges experienced.
Group core earnings before interest tax depreciation and amortisation increased by 10%, on the inclusion of Cennergi results for the full six-month period compared with only three months in the first half of last year.
After adjusting for non-core adjustments, core headline earnings increased by 103% to R6 804-million.
Cash flow generated by operations of R3 973-million was lower than the R4 732-million in the corresponding period of last year but dividends of R3 684-million received from investments were more than double compares with the corresponding period of last year and sufficient to cover Exxaro’s capital expenditure and ordinary dividends paid.
Following the disposal of Exxaro’s shareholding in Tronox Holdings plc and receipt of the R5 763-million proceeds, a special dividend amounting to R1 947-million was paid to shareholders and a share repurchase programme of R1.5-billion was launched in the second quarter.
Total capital expenditure (capex) decreased by 7% to R1 174-million, made up of sustaining capex of R686 million and expansion capex of R488 million.
DEBT EXPOSURE
Exxaro’s balance sheet has been further strengthened by the monetisation of its investment in Tronox Holdings plc resulting in net debt of R2 431-million at June 30, excluding Cennergi’s net debt of R4 699-million. This compares with R6 335-million at the end of December last year, excluding Cennergi’s net debt then of R4 632-million.
Exxaro also implemented and effected a drawdown on a new facility agreement entered into with various financial institutions on April 26 as a combined facility to refinance the term loans and revolving credit facility.
The R8-billion new facility has a bullet term loan facility of R2.5-billion, an amortising term loan facility of R2.25-billion and a revolving credit facility of R3.25-billion, all with five-year terms.
Exxaro may, at any time during the accordion availability period, increase the revolving credit facility commitment to an amount which, when aggregated with the amount of
any previous accordion increases, does not exceed R2-billion, increasing the facility to R10-billion.
As a result, the group has sufficient liquidity to navigate through the current uncertain operating environment,