CFO Riaan Koppeschaar: Strength and resilience resulted in positive operational and financial results.
Exxaro Resources has reported group revenue increase of 18 percent to R14.1 billion during the six months ended June, mainly due to a 15 percent increase in coal revenue and the consolidation of energy revenue relating to Cennergi from 1 April.
The higher coal revenue was mainly driven by 3 percent higher local volumes and 39 percent higher export volumes. This average, together with the weaker exchange rate, more than offset the lower export and local price impact.
“Complex business combination accounting for the acquisition of Cennergi was completed during the lockdown period and in a very short timeframe,” says Exxaro CFO Riaan Koppeschaar.
He explains that the company had to use technology to assist with multi-party discussions, presentations, training and the valuation of the tagine assets (for example using Google earth) since they were unable to perform physical inspections of these assets.
“We were further challenged with reporting our results a week earlier than previously, and this under the pandemic circumstances,” he says. “Even though the JSE offered an extended period within which to report interim results, we are pleased that we managed to report our results within the original timelines.”
However, what the process has shown Riaan is that Exxaro needs to find better ways of paperless working, especially when reviewing their financial statements, as with people working from home, printers were not always available to work with hard copies.
Furthermore, moving from an open plan set-up with face-to-face communication during “set” working hours to a virtual working arrangement with everybody working from home presented a few challenges. “But the team quickly adapted to the ‘new’ way of work, making sure that we had the right tools to continue with our deliverables,” he says.
From an interaction perspective, Riaan says that communication was key during this critical time of reporting and regular check-ins were held to ensure everyone was on track to deliver on agreed deadlines. “This was made possible through Microsoft Teams or Skype for business, which presented a platform for easy communication and interaction,” he says. “The team became creative in finding ways to get tasks completed in different ways and during flexible hours, depending on personal circumstances.”
Exxaro CEO Mxolisi Mgojo says that, despite sustainable global and domestic economic headwinds compounded by market challenges and Covid-19, the mining company maintained a resilient financial and operational performance, continuing its positive trajectory year-on-year.
The financial highlights included:
- Interim dividend of R2.3 billion or R6.43 per share down from R3.09 billion or R8.64 per share
- Consolidated group core Ebitda increased by 40 percent, mainly as a result of the higher revenue
- Headline earning were down 24 percent to R3.3 billion from R4.34 billion, mainly due to the accounting of non-controlling interest of R1.22 billion, which equated to basic headline earnings per share of R13.21 per share from R17.30 per share.
“The key areas of financial reporting that was or could have been impacted by Covid-19 were identified and additional work was performed,” Riaan says. “Whilst Exxaro’s operations were declared an ‘essential service’ during the lockdown period, and hence able to operate, the environment remained challenging. However, our managed operations were able to show strength and resilience resulting in positive operational and financial results.”
