3rd Feb 2005 07:27
Rio Tinto PLC03 February 2005 Rio Tinto's 75.7 per cent owned subsidiary, Coal & Allied Industries Limited,issued the following news release in Australia. All dollars are Australiancurrency. Coal & Allied benefits from improved market conditions - 2004 full year results SUMMARY • Net profit after tax was $111.4 million compared with $0.1 million profit after tax in 2003 • Net debt in Australian dollar terms reduced by 45.9% in 2004 to $246.2 million • A fully franked dividend of $1.00 per share will be paid on ordinary shares Commenting on the result, Coal & Allied's Managing Director, Dr Grant Thornesaid, "This result reflects the improved market conditions for seaborne tradedcoal in 2004. "Throughout the year, revenues increased because of higher coal prices andincreased production. We also benefited from demurrage costs falling to anaverage of US$0.19 per tonne in the second half as a result of the PortAllocation System and more efficient use of infrastructure along the HunterValley coal chain." Coal & Allied's net profit was positively affected by the recognition of inpitinventory, by depreciating mining properties over their estimated life and bydepreciating Hunter Valley property, plant and equipment on aunits-of-production basis. These accounting adjustments, which were indicatedin the first half results, had a positive effect of $25.5 million on the fullyear net profit after tax. "The new management services agreement with Rio Tinto Coal Australia wasimplemented at a much lower cost than expected, and delivered benefits of $15million for the year," Dr Thorne said. "However, the strong Australian dollar, increased oil prices and the higher coalroyalty introduced by the New South Wales Government in mid-year had a negativeeffect on the result. "Despite the absence of capacity in coal infrastructure in New South Wales toaccept expanded production in response to the stronger market, the outlook forCoal & Allied for 2005 is strong." Summary of financial performance Coal & Allied's results for 2004 are shown below, along with comparative resultsfor 2003. Year to 31 December Change 2004 2003 % Sales revenue ($ millions) 1,024.5 895.71 14%Net profit after tax ($ millions) 111.4 0.1Operating cash flow ($ millions) 224.7 16.7Dividends (cents per share) 100.0 NilCoal production2 (million tonnes) 29.1 27.2 7%Coal shipments2 (million tonnes) 28.7 27.9 3% 1 Comparative information for 2003 has been reclassified to include seafreight receipts and foreign exchange gains. 2 Production and shipments are on a 100% basis. Shipments exclude purchasedcoal. Details of full production and shipments are shown in the Financial andOperating Statistics appendix. Restructure On 1 February 2004, Rio Tinto Coal Australia (100 per cent Rio Tinto) beganmanaging Coal & Allied's assets in the Hunter Valley under a management servicesagreement. Changes to head office administration and support structuresdelivered annual pre-tax savings of $20 million to Coal & Allied. Arestructuring provision of $15 million before tax was raised in 2003 to coverone-off implementation costs but actual costs totalled only $10.5 million. Sales revenue Sales revenue of $1,024.5 million was 14 per cent higher than in 2003,reflecting higher prices for export thermal coal in the second half of 2004,which were partially offset by a stronger Australian dollar. Production Managed production of saleable coal was up by seven per cent (1.9 milliontonnes) to 29.1 million tonnes, consistent with allocation through Port Waratahand domestic contracts. Coal & Allied's share of saleable coal production was22.1 million tonnes. Dividends A fully franked final dividend of $1.00 per ordinary share will be paid. Therewas no interim dividend paid during 2004. A dividend of 1.75 cents perpreference share, fully franked, will be paid, making the total preferencedividend for the year 3.5 cents per share, fully franked. Cash flow Net operating cash was $224.7 million compared with $16.7 million in 2003. Thesignificant change in operating cash flow reflected the effect of higherearnings resulting from better operating performance and improved coal prices inAustralian dollar terms, and the timing of taxation payments/receipts in 2003and 2004. Debt Net debt was lower in Australian dollar terms in 2004 at $246.2 million.Gearing (net debt to net debt + equity) was 21.2 per cent at 31 December 2004,compared with 36.2 per cent at 31 December 2003. Capital expenditure Total capital expenditure for the year was $29.5 million compared with $55.2million in 2003. Expenditure was predominantly for sustaining purposes, thepurchase of land and the upgrade of the Coal Preparation Plant at Hunter ValleyOperations. Capital expenditure in 2003 included land acquisitions for MountPleasant. Port Allocation System Extraordinarily long vessel queues at Port Waratah resulted in demurrage ofUS$1.83 per tonne in the first half. With the introduction of the PortAllocation System queues were reduced to fewer than 15 vessels, with full yeardemurrage averaging US$0.99 per tonne. Stakeholders in the Hunter Valley coalchain collaborated during the year through a logistics team aimed at maximisingoutput from existing infrastructure. Market conditions Global thermal coal spot prices continued to rise in the first half of 2004. Byyear-end, average prices had drifted down by around 20 per cent, but were stillvery high by historical standards. Strong demand in Asia and Europe combinedwith a stabilising of coal exports from China, heavy rains in Indonesia early inthe year and the infrastructure constraints in Australia all contributed to thestrength of the seaborne thermal coal market. For further information, please contact: LONDON AUSTRALIA Media Relations Media RelationsLisa Cullimore Ian HeadOffice: +44 (0) 20 7753 2305 Office: +61 (0) 3 9283 3620Mobile: +44 (0) 7730 418 385 Mobile: +61 (0) 408 360 101 Investor Relations Investor RelationsPeter Cunningham Dave SkinnerOffice: +44 (0) 20 7753 2401 Office: +61 (0) 3 9283 3628Mobile: +44 (0) 7711 596 570 Mobile: +61 (0) 408 335 309Richard Brimelow Susie CreswellOffice: +44 (0) 20 7753 2326 Office: +61 (0) 3 9283 3639Mobile: +44 (0) 7753 783 825 Mobile: +61 (0) 418 933 792 Website: www.riotinto.com Coal & Allied Financial and Operating Statistics 2004 2003Production and shipments '000 tonnes '000 tonnes Total shipments 1 28,677 27,887Total saleable production 2Hunter Valley Operations 13,269 12,008Mount Thorley Operations 3,547 3,152Bengalla 5,312 6,203Warkworth 6,955 5,869Total 29,083 27,232 Coal & Allied equity share of productionHunter Valley Operations (100%) 13,269 12,008Mount Thorley Operations (80%) 2,838 2,522Bengalla (40%) 2,125 2,481Warkworth (55.57%) 3,865 3,261Total 22,097 20,272 Shipments by market 1Japan 14,441 14,876Asia (excluding Japan) 8,630 7,388Europe 1,564 2,349Other 796 512Domestic 3,246 2,762Total 28,677 27,887 Shipments by product 1Export thermal 20,172 20,316Domestic thermal 4,306 2,762Coking 4,198 4,809Total 28,677 27,887 Financial 2004 2003 $ million $ million Total assets 1,782 1,805 Capital expenditure and investments 30 55Depreciation and amortisation 115 121Employees 1,400 1,516Net debt to net debt + equity (%) 21.2 36.2Earnings per share (cents) 128.6 0.1 1 Shipments are on a 100% basis and exclude purchased coal2 Production is on a 100% basis This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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