Exxaro announces record dividend on earnings leap in fourth fatality-free year
JOHANNESBURG – The black-empowered and black-led diversified mining company Exxaro Resources on Thursday announced a record dividend distribution on 25%-higher earnings and another year without occupational loss of life, taking the safety achievement to four years of fatality-free operation.
Cash of R7.8-billion was generated by operations, which is 47% higher than in the 2019 financial year.
The JSE-listed company’s portfolio of coal operations includes mines in Mpumalanga and Limpopo, one of which is South Africa’s largest coal asset, Grootegeluk, supplying to Eskom, other domestic markets and the export markets.
With its Cennergi renewable energy company facilitating participation in the global clean energy market that is projected to grow at around 5% a year to 2025, Exxaro intends also to leverage existing assets, capabilities and relationships to create a scalable provider of utility and distributed renewable energy solutions and services.
“These are very pleasing results and I must commend all our people for this resilient performance,” said Exxaro CEO Mxolisi Mgojo in a release to.
Highlights of Exxaro’s 2020 financial year compared with the prior year included 12%-higher group revenue to R28.9-billion; 26%-higher headline earnings a share to R29.7-billion; 25%-higher earnings before interest, taxes, depreciation and amortisation (Ebitda) to R7 291-million; and 48 consecutive fatality-free months to March 1, plus a 58%-improved lost-time-injury frequency rate.
Revenue growth was attributed to R27 875-million from coal, R889-million from energy, R148-million from ferrous, and R12-million from items including noncore assets.
Overall coal production volumes, excluding buy-ins, increased by 4% to 47.4-million tonnes, mainly attributable to higher production at Grootegeluk and the Belfast mine, which was fully ramped-up from March 2020.
The increase was partly offset by lower production at Leeuwpan and ECC coal mines owing to the Covid-19 lockdown.
Coal sales improved by 5% to 46.8-million tonnes as a result of increased exports as well as higher domestic sales from Grootegeluk.
Cennergi, with one of South Africa’s largest renewable asset bases as an established manager of renewable energy assets, is seen as a solid platform for expansion.
“Exxaro is well positioned to take advantage of momentum to liberalise South Africa’s energy sector. The combination of energy production and asset management will create an annuity income stream in the long term for the group. In the short term, the aim is to establish credentials as a distributed energy solutions producer while reducing Exxaro’s carbon footprint,” Mgojo stated, adding the company’s recognition and acknowledgement of climate-change risk as well as the opportunities it brings for future development.
“We’ll also ensure our response strategy to climate change develops and progresses alongside our stakeholders and we will share more details of progress in this at our capital markets day later this year,” he said.
Aligned with the Paris Climate Agreement, Exxaro is committed to the 2050 carbon-neutrality target through 2.5% to 5% yearly emission reductions. Exxaro’s sustainable growth and impact strategy published separately addresses the gaps identified during its introspection.
The recommendations of Exxaro’s Task Force on Climate Financial Disclosures (TCFD) are being implemented, with TCFD’s assessment concluding that, with emissions management a key focus, Exxaro is more than 90% aligned across all categories,.
Exxaro is leveraging capabilities to capture the opportunities of the low-carbon transition while putting South Africa first.
The record ordinary dividend distribution involved a cash dividend of 1 243c a share, which is 84% up and a 32%-higher total 2020 dividend of 1 886c a share.
Proceeds from the sale of shares in mineral sands company Tronox proceeds are estimated at R5.6-billion from a special dividend of 543c a share and a R1.5-billion share buy-back programme.