Scoop has an Ethical Paywall
Work smarter with a Pro licence Learn More

Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 

Solid Energy annual losses mount with another $110.6 mln in

Solid Energy annual losses mount with another $110.6 mln in write-downs

By Paul McBeth

Oct. 31 (BusinessDesk) - Solid Energy posted its third annual loss in a row as the financially distressed state-owned coal miner wrote down the value of its export operations amid lower coal price assumptions, and warned of more red ink to come.

The Christchurch-based state-owned enterprise reported a loss of $181.9 million in the 12 months ended June 30, compared to a loss of $335.4 million a year earlier, it said in its annual report tabled in Parliament today. The company's board doesn't anticipate it will return to profitability until the 2017 financial year, based on its current projections.

The SOE had a gross loss of $25.6 million as revenue sank 29 percent to $449.1 million, outpacing a 20 percent drop in the cost of sales to $474.8 million. Solid Energy took a $110.6 million impairment charge, largely due to the write down in the value of its export operations.

"The priority of reshaping the company to withstand a challenging economic environment resulted in substantial cost reductions and simplification in the company's operations," chief executive Dan Clifford said in his report. "A successful operational performance against plan has assisted us to maintain market relevance and a long-term ability to supply current and expected customer demand."

A restructuring of Solid Energy was announced last October, coinciding with the publication of the annual reports, after collapsing coking coal prices on world markets exposed the company's over-commitment to a range of development initiatives, including development of options to turn lignite coal into diesel and urea, and renewable energy products such as pellets for wood burners.

Advertisement - scroll to continue reading

Are you getting our free newsletter?

Subscribe to Scoop’s 'The Catch Up' our free weekly newsletter sent to your inbox every Monday with stories from across our network.

Last month, Solid Energy received an extension of its $103 million remediation indemnity with the Crown to reimburse the cost of rehabilitation expenses of the company, Pike River (2012) and Spring Creek Mining Co.

Chair Pip Dunphy said the company had a tough year "compounded by continued weakness in coal prices and strength in the NZ dollar exchange rate," and is forecasting a gradual improvement in coal prices, with a budget of NZ$153/tonne for 2015.

The board signed off on the financial statements as a going concern, while noting that's based on a recovery in coking coal prices and that there's a near-term risk that doesn't happen or the kiwi dollar remains stronger than anticipated.

The accounts were tagged by auditor KPMG, which said there is "material uncertainty relating to the level of future coal prices, exchange rates and operating costs that will determine the group's ability to generate sufficient cash flows to operate within the group financing arrangements or for any repayment or refinancing requirements at the maturity of the group financing arrangements."

The auditor also noted the assumptions used in projections for export operations were sensitive to the same issues.

Solid Energy cut permanent and fixed-term staff numbers to 862 by the end of the 2014 year from 1029 a year earlier, having already stripped out more than 600 jobs in 2013.

The company generated an operational cash inflow of $7.5 million in the 2014 year compared to an outflow of $49.8 million in 2013, and had cash and equivalents of $71.7 million as at June 30.

(BusinessDesk)

© Scoop Media

Advertisement - scroll to continue reading
 
 
 
Business Headlines | Sci-Tech Headlines

 
GenPro: General Practices Begin Issuing Clause 14 Notices

GenPro has been copied into a rising number of Clause 14 notices issued since the NZNO lodged its Primary Practice Pay Equity Claim against General Practice employers in December 2023.More

SPADA: Screen Industry Unites For Streaming Platform Regulation & Intellectual Property Protections

In an unprecedented international collaboration, representatives of screen producing organisations from around the world have released a joint statement.More

 
 
 
 
 
 
 
 
 
 
 
 

Join Our Free Newsletter

Subscribe to Scoop’s 'The Catch Up' our free weekly newsletter sent to your inbox every Monday with stories from across our network.