Centamin plc (LON:CEY) has today published its audited annual results for the twelve months ended 31 December 2019.
FINANCIAL HIGHLIGHTS[1]
FY2019 vs FY2018
· Gross revenues[2] of US$658.1 million for the twelve months ending 31 December 2019, up 7% compared to the prior year
· Costs within annual guidance: cash costs of US$699 per ounce produced1, up 12%; all-in sustaining costs (“AISC”) 1 of US$943 per ounce sold, up 7%
· EBITDA1 improved 10% to US$284.0 million, at a 43% EBITDA margin[3]
· Profit after tax increased 13% to US$172.9 million
· Basic earnings per share (“EPS”) increased 17% to 7.59 US cents
· Operational cash flow improved by 11% to US$249.0 million, after gross capital expenditure of US$97.6 million predominantly invested in the long-term sustainability of the business
· Adjusted Group free cash flow improved by 17% to US$74.3 million, after profit share distribution of US$87.1 million and royalty payments of US$19.7 million to our local partner, the Egyptian government
· Debt-free balance sheet, with no hedging and cash & liquid assets[4] of US$348.9 million, as at 31 December 2019, which has increased further to US$379.2 million[5], as at 31 March 2020[6]
· To give shareholders greater certainty and expedite the dividend timetable, the previously proposed 2019 final dividend of 6 US cents per share was replaced[7] with a 2020 first interim dividend of 6 US cents per share, equating to c.US$69.4 million, and paid on 15 May 2020
| Group Financial Summary | |||||||
| units | FY 2019 | FY 2018 | H2 2019 | H1 2019 | |||
| Gold produced | oz | 480,528 | 472,418 | 2% | 246,433 | 234,096 | |
| Gold sold | oz | 470,020 | 484,322 | (3%) | 245,891 | 224,129 | |
| Cash cost of production 1 | US$’000 | 333,037 | 289,394 | 15% | 173,592 | 159,445 | |
| Unit cash cost of production 1 | US$/oz produced | 699 | 624 | 12% | 706 | 692 | |
| AISC 1 | US$’000 | 439,317 | 420,116 | 5% | 231,956 | 207,361 | |
| Unit AISC 1 | US$/oz sold | 943 | 884 | 7% | 946 | 940 | |
| Average realised gold price | US$/oz | 1,399 | 1,267 | 10% | 1,485 | 1,305 | |
| Gross revenue 2 | US$’000 | 658,111 | 614,771 | 7% | 365,266 | 292,845 | |
| EBITDA 1,3 | US$’000 | 283,968 | 258,804 | 10% | 166,654 | 117,314 | |
| Profit before tax | US$’000 | 173,029 | 152,702 | 13% | 113,402 | 59,627 | |
| Basic EPS | US cents | 7.59 | 6.50 | 17% | 5.88 | 1.71 | |
| Capital expenditure | US$’000 | 97,580 | 96,778 | 1% | 49,593 | 47,987 | |
| Operating cash flow | US$’000 | 249,004 | 223,404 | 11% | 132,706 | 116,298 | |
| Adjusted free cash flow 1 | US$’000 | 74,341 | 63,429 | 17% | 38,711 | 35,630 |
GOVERNANCE HIGHLIGHTS
· Substantial Board refreshment delivered in 2019, and thus far in 2020, including:
– Appointment of Dr Sally Eyre, Dr Catharine Farrow, Marna Cloete and James “Jim” Rutherford as independent Non-Executive Directors in 2019
– Josef El-Raghy, Chairman, Gordon “Ed” Haslam, Senior Independent Director and Mark Arnesen, Non-Executive Director will not stand for re-election at the upcoming 2020 annual general meeting (“2020 AGM”) on 29 June 2020
· Completing a comprehensive handover, Jim Rutherford will become the independent Non-Executive Chairman (“NEC”), effective 29 June 2020, following the 2020 AGM
· Dr Sally Eyre will become the Senior Independent Director, effective 29 June 2020
2020 OUTLOOK
· The impact and potential duration of the COVID-19 pandemic remain uncertain. The Company has taken prudent steps including risk scenario analysis and put in place contingency plans for the business to navigate these difficult times. Centamin is closely monitoring the situation, with an active response framework in place to manage and mitigate future impacts within its control
· Sukari operations have continued to be uninterrupted with sufficient staffing resources and critical supplies in to Q3, during which it is expected global travel restrictions may begin to ease. Should such restrictions be extended well into H2, it is possible that operations may be affected
· Centamin maintains its 2020 full year guidance[8], targeting production between 510,000-540,000 ounces of gold (production weighted 55% to H2), at cash costs between US$630-680 per ounce produced and AISC between US$870-920 per ounce sold. Open pit material is expected to contribute 80% of the full year production driven by higher grade Stage 4 ore. The balance is scheduled to come from the underground, specifically Ptah as infrastructure upgrades are being implemented at Amun
· As a precautionary move to protect the health and wellbeing of the workforce, non-essential capital expenditure has been temporarily deferred, including the Sukari solar plant. This is in order to minimise additional contractors and other non-operating traffic on and off site, while restrictions related to COVID-19 remain in place. As a result, 2020 capital expenditure is expected to be in the range of US$150-US$170 million (previously US$190 million)
· The Sukari life of asset review is ongoing. A series of independent optimisation studies across each section of the mine are underway, with results expected in H2 2020, identifying areas of improvement
Ross Jerrard, Centamin plc CFO, commented on the Company’s full year audited results to 31 December 2019:
“2019 was characterised by continued operational improvements at Sukari, a strong financial performance, excellent exploration target generation, significant progress meeting our ESG initiatives and a continued focus on delivering returns to all of our stakeholders. Underlying EBITDA improved 10% on 2018 and profit after tax improved 13%, demonstrating growing margins, assisted by solid cost management and improved grade, delivering costs per ounce produced and sold in the bottom half of the guidance range.
We have made a good start to 2020 with production and costs on track. The global uncertainty around the impact of the COVID-19 pandemic has created significant volatility in the global investment markets, resulting in increased safe-haven investing. Our clean balance sheet, with no debt nor hedging, offers pure exposure to the gold price and our long cash position of c.US$379 million[9][10] underpins the financial strength of the business and self-funds current growth investment.
We continue to maintain focus on cost discipline and achieving greater operational efficiency as the key margin and cash flow drivers. ESG is rooted at the centre of our decision-making framework, including water efficiency and air quality initiatives, improved workplace training and a Board of Directors all focused on accretive growth of Centamin over the coming years.”
[1] Adjusted EBITDA, Cash cost of production, AISC, Cash and cash equivalents, bullion on hand, gold sales receivables and financial assets at fair value through profit or loss and Adjusted free cash flow are non-GAAP measures, referenced in 2019 Audited Annual Report and Accounts
[2] Gross revenue from gold sales includes US$5.8 million in pre-production gold sales from Cleopatra development ore.
[3] EBITDA margin is EBITDA as a percentage of gross revenue
[4] Cash and cash equivalents, bullion on hand, gold sales receivables and financial assets at fair value through profit or loss
[5] Unaudited, as per Q1 2020 Report, published 21 April 2020. Audited cash and liquid assets of US$348.9 million as at 31 December 2019
[6] Before 2020 first interim dividend distribution of US$69.4 million on 15 May 2020
[7] On 21 April 2020, the Board declared the 2020 first interim dividend to equally replace the proposed 2019 final dividend
[8] Centamin is closely monitoring the global COVID-19 pandemic and the Company guidance may be impacted if the workforce, operation or projects are disrupted due to the virus or efforts to slow the spread of the virus.
[9] Unaudited, as per Q1 2020 Report, published 21 April 2020. Audited cash and liquid assets of US$348.9 million as at 31 December 2019
[10] Before 2020 first interim dividend distribution of US$69.4 million on 15 May 2020
