Golden Energy and Resources posts 18.7% drop in FY2020 earnings after acquisitions

COAL mining and trading company Golden Energy and Resources (Gear) on Monday announced FY2020 net profit of US$8.1 million, 18.7 per cent lower than the previous year's net profit of US$9.9 million a year ago.

This comes after consolidating the results of the group's new subsidiary Stanmore Coal, as well as factoring in the impact of its investment in the Ravenswood Gold project.

Gear increased its stake in Australia-listed Stanmore Coal to 75.33 per cent from 31.35 per cent previously with effect from May 18, 2020. In March 2020, it completed its acquisition of Ravenswood Gold Mine in Queensland.

The group has changed its reportable segments into energy coal, metallurgical coal, and non-coal businesses (compared to coal mining, coal trading and non-coal businesses previously reported in FY2019) to better reflect the consolidated performance of Stanmore Coal.

Earnings per share for the full year fell to 0.34 US cent from 0.42 cent in FY2019.

In its results filing, Gear noted that its revenue grew 4.2 per cent to a record US$1.16 billion compared to US$1.12 billion in the year-ago period due to higher contributions from its metallurgical coal segment from the consolidation of Stanmore Coal.

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The growth was partially offset by a decrease in revenue from the energy coal and non-coal businesses segments, which fell 4.5 per cent and 20.1 per cent respectively, due to lower coal average selling prices and the absence of consultancy services rendered.

Post the consolidation of Stanmore's results as well as higher barging and trucking expenses which came on the back of higher sales volumes, selling and distribution expenses for FY2020 grew 8.6 per cent to US$201.4 million, from US$185.4 million previously.

Administrative expenses increased 7.1 per cent to US$79.3 million from the year before, due to the consolidation of Stanmore's financial results.

The group also booked a US$4.9 million loss of a joint venture (net of tax) over the period due to its investment in the Ravenswood Gold project.

Gear's cash and cash equivalents stood at US$262.8 million as at Dec 31, 2020.

The group will not be paying a dividend for the period under review, compared to an interim dividend of 0.29 Singapore cent declared in the year-ago period.

Looking ahead, the group said it will leverage on its acquisition synergies to fuel longer-term gains for stakeholders.

Gear believes its mining operations in Indonesia are well-positioned to tap the anticipated rising demand of coal from China and the South-east Asia region. It remains cautiously optimistic on the near to medium-term outlook recovery for energy and metallurgical coal demand and prices.

The counter closed at S$0.152 on Monday, down 0.3 cent or about 1.94 per cent.