Deterra Royalties (DRR) H2 2024 earnings summary

Executive summary

• Revenue for FY 2024 increased 5% year-over-year to AUD 241 million (or $240.5 million), driven by stronger pricing despite slightly lower sales volumes and the absence of a capacity payment from Mining Area C.

• Net profit after tax reached AUD 155 million (or $154.9 million), with a 95% EBITDA margin, reflecting the high-margin royalty business model.

• The Mining Area C (MAC) Royalty remained the primary revenue contributor, achieving a milestone as BHP's South Flank mine reached nameplate capacity.

• Fully franked final dividend of AUD 0.144 per share was declared, totaling AUD 0.2929 per share for the year, representing a 100% payout of NPAT.

• Announced and advanced the acquisition of Trident Royalties Plc, approved by Trident shareholders and pending UK court approval, marking the first step in portfolio diversification and growth strategy.

Financial highlights

• MAC Royalty revenue rose 11% year-over-year to AUD 239 million (or $239.3 million), offsetting the absence of a AUD 13 million capacity payment received in FY 2023.

• Realized price per dry metric tonne increased 13% to AUD 167, while sales volumes declined 2% to 116 million dry metric tonnes.

• Total operating costs rose to AUD 13.1 million, mainly due to inflation, increased headcount, and Trident due diligence.

• Business development costs rose to AUD 3.5 million, reflecting increased activity related to the Trident acquisition.

• Net financing costs increased to AUD 1.7 million, mainly due to expanded credit facilities.

Outlook and guidance

• Growth strategy focuses on building a globally diversified royalty portfolio with resilient cash flows and multiple earnings growth sources.

• Continued evaluation of value-accretive investments in bulk, base, and battery commodities, leveraging strong liquidity and access to capital.

• Trident acquisition expected to complete in the current quarter, adding immediate and future cash flow sources.

• Dividend payout ratio will be at least 50% of NPAT going forward, with flexibility to adjust based on investment opportunities and balance sheet needs.

• FY25 growth expected to be funded within the current capital management framework.