Stanmore Resources (SMR) H2 2018 earnings summary

Executive summary

• FY2018 strategy execution drove record earnings, 29% higher coal sales and a maiden 2 cents per share dividend.

• Isaac Plains East began pre-mining in June 2018, while Isaac Plains Underground advanced toward a FY19 investment decision.

Financial highlights

• Revenue was $208.1m, up 51% YoY; gross profit was $52.3m, up 55%, and underlying EBITDA was $45.5m, up 70%.

• Net profit after tax was $6.0m vs $12.0m; FY2017 included a $5.6m income tax benefit, while FY2018 other expenses reflected a $25.8m contingent consideration fair value movement.

• Average sales price rose to A$144.8/t from A$135.1/t; unit costs increased to A$110.0/t from A$104.5/t, and margin improved to A$34.8/t from A$30.6/t.

Outlook and guidance

• FY19 guidance: 1.8Mt product sales and underlying FOB costs of $86/t, excluding State royalty estimated at $14/t.

• Isaac Plains East’s lower depth of cover and improved coal quality and yield are expected to lower operating costs and improve margins in FY19.

• Isaac Plains Underground BFS was expected to be finalised in September 2018, enabling an investment decision during FY19.