Geo Energy?s revenue jumps 735%, swings to profit

By Romel S. Gurky

SGX-listed Geo Energy Resources Limited saw its revenue in the first quarter (1Q) of this year soared by 735 percent compared to the same period of last year, helping the company to return to profit, thanks to higher selling price and coal production from its mine in Indonesia?s South Kalimantan Province.

The company said in a statement on Thursday that revenue jumped to US$99.3 million in the January-March period of this year from $11.9 million in 1Q2016.

?This was mainly driven by the increased volume of coal delivered from the Group?s SDJ mine, and higher coal prices,? the company said, referring to its coal subsidiary PT Sungai Danau Jaya which operates coal mines in Tanah Bumbu Regency, South Kalimantan.

The group?s revenue of $99.3 million in 1Q2017 was also an increase of 8.0 percent from $91.9 million in 4Q2016, including the revenue from coal trading and new coal mining management services during the period.

SDJ delivered 2.2 million tons of coal, compared to 0.5 million tons in 1Q2016. despite it being the wet season for 1Q2017, where production is typically lower due to heavy rains. ?This compares favorably to the 2.4 million tons of coal delivered in 4Q2016, marking good progress towards achieving the group?s target sales of 10 million tons of coal in 2017,? Geo Energy said.

Coal prices remained strong in 1Q2017, reflected by Geo Energy?s average selling price of coal increasing from $38.93 per ton in 4Q2016 to $39.45 per ton in 1Q2017.

The Indonesian Coal Index (ICI) for 4200 GAR (Gross As Received) price index remained strong in 1Q2017 with an average index price at $42.77 per ton, up from $41.95 per ton in 4Q2016. This translated to stable cash profits, averaging of $13.52 per ton in 1Q2017 as compared to an average of $13.86 per ton in 4Q2016.

Compared to a loss of $2.9 million from continuing operations in 1Q2016, the group booked a net profit from continuing operations of $14.6 million in 1Q2017.

Commenting on the financial results and outlook of the group, Tung Kum Hon, Chief Executive Officer of Geo Energy said, ?Geo Energy continues to execute on its turnaround and its journey towards becoming one of Indonesia?s top 10 coal producers. From net losses of $2.6 million just one year ago in 1Q2016, we have turned around and reported a net profit of $14.6 million in 1Q2017.?

He added that ICI 4200 GAR coal prices to date are still continuing to show promising signs of a sustained recovery in 2017 as compared to a year ago. The average ICI 4200 GAR coal price for 1Q2017 of $42.77 per ton was 60 percent higher compared to the price of $26.69 per ton recorded in January 2016. ?This bodes well for our commitment to accretive acquisitions. We are currently in the process of acquiring PJA, a mining concession in East Kalimantan, and TBR, which is a mining concession strategically located next to the group?s SDJ coal mine. Once completed, these acquisitions will almost double our coal reserves to more than 90 million tons.?

Geo Energy said coal trading and coal mining management services contributed $11.7 million and $0.3 million respectively to 1Q2017?s revenues. Geo Energy said it did not have any revenues from these two segments in 1Q2016.

Gross profit was $25.3 million in 1Q2017, of which $0.4 million was contributed by coal trading and coal mining management services segments.

Finance costs increased by 15 percent from $1.6 million in 1Q2016 to $1.8 million in 1Q2017, driven by higher bank administrative charges incurred in processing Letters of Credit for sale of coal.

The Group?s balance sheet remains robust, with cash and bank balances at $56.6 million. The decrease of $11.1 million from 31 December 2016 was mainly due to an advance paid in relation to the proposed acquisition of PT Tanah Bumbu Resources (TBR) mining concession of $13.0 million.

Net asset value per share increased from 10.3 US cents or 14.8 SG cents per share as of 31 December 2016 to 11.5 US cents or 16.0 SG cents per share as of 31 March 2017, while total number of shares issued remained unchanged.

The company?s balance sheet has also materially strengthened, with net gearing at just 11.4 percent as at 31 March 2017. The company said it will continue to explore options to optimize capital structure.

Editing by Reiner Simanjuntak