Net profit reached $A81.7 million, while earnings before interest, taxes, depreciation and amortisation was 186% higher at $119.9 million, despite hefty corporate transaction costs associated with recent changes in the company’s management.
After a proposed merger with Whitehaven Coal, commodities trader Noble Group ended up winning the battle for control of Gloucester in June, lifting its stake to 87.71% via a $7 per share cash offer.
After eliminating the impact of $9 million post tax in transaction costs, Gloucester delivered a record operational profit after tax of $90.7 million, representing $46 per tonne of coal sold.
The strong profit results were on the back of the boom coal prices in 2008, with production falling in the last financial year.
Total production of coal was 4% lower year-on-year to 1.73 million tonnes while run-of-mine coal was 8% lower at 2.69Mt.
Duralie’s output was 9% lower to 1.6Mt of production, Bowens Road North increased 2% to 944,000 tonnes, and Roseville was 44% down to 125,000t.
But Gloucester is moving towards increasing capacity at its Duralie mine saying its environmental assessment is well advanced.
Contractor Leighton Mining has a new fleet of CAT 785C XQ haul trucks due for staged delivery this financial year to replace the CAT 789 trucks at the mine.
Gloucester said its ramp-up to total production of 2.8Mt per annum was on track with the stockpile expansion expected to be operational next month.
To process the additional tonnage from Duralie, Gloucester said the coal handling and processing plant upgrade and refurbishing was on target for staged completion through to 2010.
Gloucester had sales of 1.99Mt for 2008-09, including 496,000t of coking coal, 1.45Mt of thermal coal and 96,000t of purchased coal.
Net sales reached 1.89Mt, 6% higher year-on-year.
Despite a 60% fall in coking coal prices for the current Japanese financial year, Gloucester said these would still represent the third-highest prices received by the company.
“Recent discussions with the company’s customers indicate a more positive outlook for coking coal and the company is positioning itself to take advantage of the expected increase in demand for coking coal,” Gloucester said.
The producer said there was continued strong demand for its thermal coal, having recently agreed to a contract to supply the commodity in 2011 and 2012, “fixed at a historically high” Australian dollar margin.
Gloucester said it would seek more thermal coal contracts to maximise profit margin and ensure a consistent offtake.
During the recent financial year Gloucester had to face higher New South Wales government royalties, which increased from 7% to 8.2% and worked out to be a jump of $8/t due to the higher sales prices achieved in the period.
Gloucester’s new management team is conducting a strategic review and further announcements on the strategic direction of the company will be made once the review is complete.
While the company has paid a fully franked dividend of 13.5c during the recent financial year, the directors have not declared a final dividend while the strategic review is underway.
Gloucester ended June with a cash position of $65.77 million.
Shares in the company are up 9c this morning to $6.30.
