Coal & Allied - FY2005
Rio Tinto PLC
31 January 2006
Rio Tinto's 75.7 per cent owned subsidiary, Coal & Allied Industries Limited,
issued the following news release in Australia.
All dollars are Australian currency.
Coal & Allied record earnings and cashflow - 2005 full year results
SUMMARY
• Net profit after tax was $290.1 million compared with $116.6 million profit after tax in 2004
• Net debt in Australian dollar terms reduced by 73 per cent in 2005 to $69.2 million
• A fully franked dividend of $1.20 per share will be paid on ordinary shares
Commenting on the result, Coal & Allied's Managing Director, Dr Grant Thorne
said, 'This financial result reflects a continuation of strong demand for coal
in 2005.
'Although a capacity balancing system remained in place at Port Waratah to
manage vessel queues liable to arise through constrained infrastructure, Coal &
Allied managed to increase total sales by 1.3 per cent over 2004.'
'Overall shipments, and hence production, were aligned with port and rail
capacity. New investments in rail and port infrastructure, announced in 2005,
are expected to provide increasing capacity from mid-2006.'
With buoyant market conditions applying to all mineral and metal sectors, there
was unprecedented competition for business inputs - notably heavy mobile
equipment, off road tyres, explosives, skilled labour, and maintenance
materials. Like all industry participants, Coal & Allied faced unremitting cost
pressures. Higher fuel prices alone increased
Coal & Allied's costs by $19 million over 2004.
Coal & Allied's net profit was positively affected by higher export prices and
business improvement initiatives, offset by higher input costs (including fuel,
tyres and explosives) and engagement of mining contractors. The net profit
after tax was $290.1 million.
SUMMARY OF PERFORMANCE
Coal & Allied's results for 2005 are shown below, along with AIFRS restated
comparative results for 2004.
Year to 31 December Change
2005 2004 %
Sales revenue ($ millions) 1,442.0 1,058.2 +36%
Net profit after tax ($ millions) 290.1 116.6 +149%
Operating cash flow ($ millions) 449.8 224.7 +100%
Dividends (cents per share) 120.0 100.0 +20%
Coal production2 (million tonnes) 28.6 29.1 (2%)
Coal shipments2 (million tonnes) 29.0 28.7 +1%
Lost time injury frequency rate3 1.75 3.80 54%
1 Comparative information has been reclassified to include sea freight receipts
and foreign exchange gains
2 Production and shipments are on a 100% basis. Shipments exclude purchased
coal.
Details of full production and shipments are shown in the Financial and
Operating Statistics appendix.
3 Per million person hours
Sales revenue
Sales revenue of $1,442.0 million was 36 per cent higher than in 2004,
reflecting higher prices for export thermal coal and semi-soft coal in 2005,
which were partially offset by the stronger Australian dollar.
Production
Managed production of saleable coal was down by two per cent (0.5 million
tonnes) to 28.6 million tonnes, consistent with allocation through Port Waratah
Coal Services and domestic contracts. Coal & Allied's share of saleable coal
production was 21.4 million tonnes.
Dividends
A fully franked final dividend of $1.20 per ordinary share will be paid. An
interim dividend of $1.10 was paid during 2005. A dividend of 1.75 cents per
preference share, fully franked, will be paid, making the total preference
dividend for the year 3.5 cents per share, fully franked.
Cash flow
Net operating cash was $449.8 million compared with $224.7 million in 2004. The
significant change in operating cash flow reflected the effect of higher
earnings resulting from improved coal prices, partially offset by higher
operating costs.
Debt
Net debt was lower in Australian dollar terms at the end of 2005 at $69.2
million. Gearing (net debt to net debt + equity) was 7.8 per cent at 31
December 2005, compared with 27.1 per cent at 31 December 2004.
Capital expenditure
Total capital expenditure for the year was $65.1 million compared with $29.5
million in 2004. Expenditure was predominantly for sustaining purposes and the
purchase of land surrounding the Mount Pleasant deposit.
Capacity Balancing System
The capacity balancing system at Port Waratah Coal Services continued to manage
the vessel queues, with a total of 80.9 million tonnes loaded through the port
in 2005, an increase of 4.1 per cent on 2004. Stakeholders in the Hunter Valley
coal chain collaborated throughout the year with the aim of maximising output
from existing infrastructure. In addition, a commitment to expand annual port
capacity to 102 million tonnes by late 2007 combined with continued
de-bottlenecking of the rail system, should create the opportunity to access
additional capacity.
Market conditions
Commodity markets continued to surge throughout 2005, on the back of strong
economic growth and increased energy demands. Despite spot prices for thermal
coal declining in late 2005, the volume of transactions was small and some
recovery is expected. The year was very positive for thermal coal producers and
demand fundamentals remain sound. Record prices for semi-soft coals were
achieved in the first half of 2005. Strong supply growth of thermal coal from
Indonesia was largely offset by a reduction in Chinese exports.
Safety performance
Significant progress was made in reducing the frequency of injury (1.75 LTIFR
compared with 3.80 in 2004) with all operations contributing to this
improvement. A number of initiatives were identified and implemented at the
operations.
Coal & Allied was again represented at the NSW Minerals Council Occupational
Health and Safety Innovation Awards with Mount Thorley/Warkworth winning the
State Award for the development of a grease system pressure checking and
reducing device. Mount Thorley/ Warkworth's mines rescue team also won first
place in the 2005 Hunter Valley Mines Rescue Competition.
Sustainable development / Environment
Coal & Allied's focus on sustainable development continued in 2005 through both
internal and external engagement programs. Environmental achievement was
recognised through Bengalla's receipt of the Banksia Environmental Foundation
Awards for 'Sustainable Development Leadership in the Minerals Industry.'
For further information, please contact:
LONDON AUSTRALIA
Media Relations Media Relations
Maria Darby Walker Ian Head
Office: +44 (0) 20 7753 2305 Office: +61 (0) 3 9283 3620
Mobile: +44 (0) 7725 036 544 Mobile: +61 (0) 408 360 101
Investor Relations Investor Relations
Nigel Jones Dave Skinner
Office: +44 (0) 20 7753 2401 Office: +61 (0) 3 9283 3628
Mobile: +44 (0) 7917 227 365 Mobile: +61 (0) 408 335 309
David Ovington Susie Creswell
Office: +44 (0) 20 7753 2326 Office: +61 (0) 3 9283 3639
Mobile: +44 (0) 7920 010 978 Mobile: +61 (0) 418 933 792
Website: www.riotinto.com
Coal & Allied Financial and Operating Statistics
2005 2004
Production and shipments '000 tonnes '000 tonnes
Total shipments 1 29,042 28,677
Total saleable production 2
Hunter Valley Operations 12,374 13,269
Mount Thorley Operations 3,962 3,547
Bengalla 5,965 5,312
Warkworth 6,293 6,955
Total 28,594 29,083
Coal & Allied equity share of production
Hunter Valley Operations (100%) 12,374 13,269
Mount Thorley Operations (80%) 3,170 2,838
Bengalla (40%) 2,386 2,125
Warkworth (55.57%) 3,497 3,865
Total 21,427 22,097
Shipments by market 1
Japan 16,353 14,441
Asia (excluding Japan) 6,347 8,630
Europe 2,026 1,564
Other 241 796
Domestic 4,075 3,246
Total 29,042 28,677
Shipments by product 1
Export thermal 21,493 20,173
Domestic thermal 4,075 4,306
Coking 3,474 4,198
Total 29,042 28,677
Financial 2005 2004
$ million $ million
Total assets 1,829 1,795
Capital expenditure and investments 65 30
Depreciation and amortisation 105 117
Employees 1,433 1,400
Net debt to net debt + equity (%) 7.8 27.1
Earnings per share (cents) 335.1 134.8
1 Shipments are on a 100% basis and exclude purchased coal
2 Production is on a 100% basis
This information is provided by RNS
The company news service from the London Stock Exchange