Resources Prima posts net profit of $0.6m in Q1

By Romel S. Gurky

SGX listed Resources Prima Group Limited, a coal mining company with integrated operations in Indonesia including coal mining facilities, reported on Monday a net profit of US$0.6 million in the first quarter of the year (1QFYE12/16), compared to a net profit of $5.8 million in the same period of last year (4QFYE03/15)

The lower net profit came mainly a result of a lower gross profit margin and a significant drop in other income which included non-recurring items in 4QFYE03/15 such as the gain on the waiver of an amount due to a former subsidiary, gain on the waiver of interest payable on convertible bonds and foreign exchange gains.

Revenue for the group in 1QFYE12/16 improved marginally by 1.5 percent to $18.7 million from $18.4 million in 4QFYE03/15, primarily due to higher coal sales revenue partially offset by lower facility usage income. Coal sales revenue in 1QFYE12/16 increased by 4.4 percent to $18.6 million from $17.8 million in 4QFYE03/15 as a result of higher coal sales quantity which was offset by a lower average sales price of coal. The Group managed to maintain strong coal shipments in 1QFYE12/16 with coal sales quantity rising by 42.6 percent to 489,374 tons compared with 343,215 tons in 4QFYE03/15. However, the average sales price of coal decreased by 24.8 percent to $37.6 per ton in 1QFYE12/16 from $50.0 per ton in 4QFYE03/15 due to the depressed market conditions for the coal industry. Additionally, as a result of lower throughput of coal from a third party mine owner, facilities usage income for the Group decreased by 86.2 percent to $0.1 million in 1QFYE12/16 from $0.6 million in 4QFYE03/15.

The group?s gross profit in 1QFYE12/16 decreased by 21.7 percent to $4.3 million from $5.5 million in 4QFYE03/15 as the increase in cost of goods sold was greater than the increase in revenue, resulting in a lower gross profit margin for the Group. In 1QFYE12/16, the group?s gross profit margin decreased to 23.2 percent from 30.1 percent in 4QFYE03/15 due to higher cost of goods sold and lower average sales price of coal.

Cost of goods sold in 1QFYE12/16 rose 11.5 percent to $14.3 million from $12.9 million in 4QFYE03/15 mainly due to the increase in other costs relating to inventory value at year end and a credit adjustment in 4QFYE03/15. Waste mining costs, which is the single largest component and accounted for 53.1 percent of costs of goods sold in 1QFYE12/16, rose marginally by 1.7 percent to $7.6 million from $7.5 million in 4QFYE03/15. The other main costs included coal hauling costs and depreciation & amortization, which in total accounted for 8.7 percent and 9.9 percent respectively of the total costs of goods sold in 1QFYE12/16.

In 1QFYE12/16, net cash generated from operating activities amounted to $3.3 million. Net cash used in investing activities of $0.4 million was primarily used for securing licenses and permits relating to IPPKH2. Net cash used in financing activities of $1.1 million for 1QFYE12/16 was mainly in relation to the repayment of loans from related and third parties and finance leases.

The group?s cash and cash equivalents as at 31 March 2016 was $6.5 million compared to $5.5 million as at 31 March 2015.

Resources Prima Group Limited is a mine owner and primarily engages in the business of coal exploration and coal mining, currently, in East Kalimantan.

Executive Chairman and Chief Executive Officer, Agus Sugiono said, ?The operating environment in 1QFYE12/16 remained challenging as reflected by the further decline in the selling price of coal and a drop in facility usage income for the Group. However, I am pleased to see that our cost advantage and focus on operational efficiencies such as cost discipline and active review and management of the stripping ratio has put us in a better position than some of our peers. In 1QFYE12/16, we managed to increase production quantity by 24.1 percent to 452,740 tons from 364,710 tons in 4QFYE03/15 and we also exited the quarter with a higher cash balance of $6.5 million as at 31 March 2016 compared to $4.7 million as at 31 December 2015. The Group has focused on maintaining sufficient cash flow for operations and for the development of IPPKH2 through the restructuring of the outstanding debt owed to our waste mining contractor and has adopted a conservative approach to other investment activities. In light of current market conditions, having sufficient cash flow for operations is a priority for the Group.?

Editing by Johannes Simbolon