“The increased revenue from commercial mines was due to higher selling prices as well as an increase in Eskom volumes. This was partly offset by lower semi-coke domestic sales volumes,” the company said yesterday.
Exxaro sells coal overseas, as well as to parastatal Eskom and to Africa’s biggest steel producer, ArcelorMittal South Africa.
Headline earnings at R1.56bn plummeted 66 percent to R5.02 a share, compared to R4.62bn in 2016, primarily driven by the R4.3bn cost of the black economic empowerment (BEE) replacement transaction.
Last November, Exxaro announced a scheme that would result in a new BEE entity owning 30 percent of the group.
When Exxaro was established in November 2006, BEE entity Main Street 333 (MS333) became Exxaro’s controlling BEE shareholder, owning 50.19percent of Exxaro. Former Exxaro chief executive Sipho Nkosi and current chief executive Mxolisi Mgojo are shareholders in MS333.
Under the new BEE deal, MS333 was obliged to hold more than 50percent of its shares.
Cash flow generated by operations increased by R1.27bn to R6.8bn compared to R5.5bn in 2016, mainly due to higher revenue. Operating profit was 17percent higher in the year ended December, at R6.1bn.
The group was in a net cash position of R84 million compared to a net debt position of R1.322bn in 2016. The net cash position of R84m is net of a R2.47bn net preference share liability recognised as a result of consolidating the BEE scheme.
A final dividend of R4 a share was declared and will be paid to shareholders next month. Exxaro paid R2.22bn in total dividend, including a R1.2bn final dividend last April, and an interim dividend of R943m paid last September.
Last month Exxaro rose the most on the JSE after it declared a special dividend amounting to R4.5bn, or R12.55 a share, from the proceeds of the part-sale of its shares in titanium dioxide producer Tronox.
Exxaro acquired its Tronox shares through a deal in 2011 in which Tronox’s Tiwest operations in Western Australia were combined with Exxaro’s 76percent stakes in the operations of KwaZulu-Natal Sands near Mtunzini and Namakwa Sands on the West Coast.
Exxaro also owns 20percent of Sishen Iron Ore Mine, which is part of the Kumba Iron Ore group.
Cash flows from investing activities increased by R6.5bn to a net inflow of R4.3bn compared to a R2.1bn net outflow. The share price yesterday declined 4.52percent to R121.38.
- BUSINESS REPORT