Bathurst Resources : Appendix 4D and interim financial report

For personal use only

Interim financial report

for the six months ended 31 December 2021

Incorporating the requirements of Appendix 4D. This interim financial report announcement incorporates the half year report given to the Australian Securities Exchange (ASX) under Listing Rule 4.2A.

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Contents
	Page
Results for announcement to the market	............................................................................................................................................................................3
Financial and operating overview ..............................................................................................................................................................................................	4
Income statement.................................................................................................................................................................................................................................	9
Statement of comprehensive income......................................................................................................................................................................................	9
Statement of financial position....................................................................................................................................................................................................	9
Statement of changes in equity .................................................................................................................................................................................................	11
Statement of cash flows.................................................................................................................................................................................................................	12
Notes to the financial statements............................................................................................................................................................................................	13
Additional information.....................................................................................................................................................................................................................	23
Independent auditor's review report.....................................................................................................................................................................................	26

Bathurst Resources Limited | Interim financial statements

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For personal use only

Results for announcement to the market

For the six months ended 31 December 2021

	H1 FY22		H1 FY21	% change
Financial measures	$000	$000
Sales revenue and other income	20,910	33,399	(37%)
Profit from ordinary activities after tax	10,615	3,710	186%
Profit after tax	4,580		3,710	23%

	H1 FY22	H1 FY21	% change
Per share measures	Amount per	Amount per
	share (cents)	share (cents)
Basic earnings per share	2.68	2.17	23%
Diluted earnings per share	2.68	2.17	23%
Net tangible assets per share
71.85	41.24	74%

There were no interim dividends paid or declared in respect of the six-month period ended 31 December 2021.

The difference between profit from ordinary activities and profit after tax is the non-cash fair value movement on the AUD convertible bonds derivative liability ($6.0m expense).

Included in profit after tax is $15.1m profit after tax relating to Bathurst's 65 percent equity share of profit in joint venture BT Mining Limited (31 December 2020: $4.1m).

The auditor's review report contains an emphasis of matter paragraph. This draws reader's attention to note 7 in the interim financial statements regarding the legal proceedings brought against Bathurst by L&M Coal Holdings Limited. The review opinion was not modified in respect of this matter.

Note that prior period earnings per share and net tangible assets per share calculations have been re-stated to reflect the 10:1 share consolidation that occurred in April 2021.

Bathurst Resources Limited | Interim financial statements

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Financial and operating overview

For the six months ended 31 December 2021

Letter from the Chief Executive Officer

The H1 FY22 results are underpinned by a strong recovery in our export segment pricing. The benchmark that our export sales are priced against increased significantly in the first six months. This was largely due to ongoing tight supply particularly of premium hard coking coal from major producers and limited spot cargo availability, against an increase in steel demand. Demand has been influenced by COVID infrastructure stimulus packages that require steel, and key market recoveries.

More recently, ongoing coal supply issues in Australia due to heavy rainfall and worker availability impacted by COVID have influenced pricing levels which have recently exceeded previous records set late last year, which will flow into our H2 results. It is expected that the high pricing environment may continue for the remainder of this financial year, before prices return to more sustainable levels, however continued demand and supply uncertainty could keep the benchmark buoyant.

Like the rest of the world we are seeing a rise in inflation from COVID related supply chain disruptions, labour supply shortages and fuel price increases. Consumer prices in New Zealand have risen at the fastest pace since 1990 with average inflation reaching 5.9 percent at the end of 2021, and fuel costs at our operations have risen approximately 60 percent since June. These factors coupled with some operational challenges at our largest mine from a significant flooding event have caused a dampening effect on profit margins.

Rehabilitation at the Canterbury mine is progressing well, with approximately 21 hectares rehabilitated in the first six months. All coal stocks have been fully depleted, with most surplus equipment now sold and infrastructure removed to allow for the rehabilitation.

The strategy of using coal price hedging to help protect revenue in our export segment from sharp dips in pricing levels was reassessed by the Board. The realised hedging expense has increased in line with the sharp rise in pricing levels, that have significantly exceeded the market consensus of forward pricing when these hedges were contracted. It was reaffirmed that we continue to see the value in adopting a hedging strategy, which over the last few financial years, has provided essential additional revenue.

Looking ahead, the greatest uncertainty comes from the impact that community transmission of COVID and in particular the Omicron variant will have on our workforce, and New Zealand's supply chain. We as a business have decided to provide additional leave support to our workforce in addition to that provided by the government. Additionally, a company-wide reporting tool has been rolled out which enables real-time access to data on employees impacted by COVID, which will help us to better ensure we keep our people healthy and our operations can continue to operate.

Financial overview

Note that figures in this section are 100 percent Bathurst and 65 percent BT Mining.

	H1 FY22	H1 FY21
Financial measures	$m	$m
Revenue1	124.6	97.8
EBITDA2	34.7	26.8
Net profit after tax	4.6	3.7
Cash	41.8	21.7

1 Coal sales revenue to customers, including realised FX and coal pricing hedges. Unrealised movements in coal pricing and FX hedging go through other comprehensive income.

3 Earnings before net finance costs (including interest), tax, depreciation, amortisation, impairment, non-cash fair value movements on deferred consideration and rehabilitation provisions.

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For personal use only

Financial and operating overview

For the six months ended 31 December 2021

Financial overview continued

			Net profit after tax ($m)
							(1.9)
		(6.9)				11.0		(6.0)
	9.6
					(2.8)				(2.1)
			6.5
3.7										4.6
H1 FY21 NPAT	PY	PY FX gain on Normalised H1	BRL gross	BT Mining	Admin	Convertible	Other	H1 FY22
	Impairment	deferred FY21 NPAT	profit	profit	expenses	bond		NPAT
		consideration				derivative

Key movements in net profit after tax:

Impairment	+$9.6m	The Canterbury assets were impaired in the previous period after the decision to cease
		operating the Canterbury mine at the end of June 2021.
PY FX gain on	-$6.9m	A favourable movement in the translation of USD denominated deferred consideration into
deferred		NZD in the prior period lead to significant unrealised foreign exchange income. The deferred
consideration		consideration was subsequently reversed at 30 June 2021 due to a favourable ruling by the
		Supreme Court on the issue.
BRL gross operating	-$2.8m	The cessation of operating at the Canterbury mine, and a reduction in net freight revenue are
profit		key drivers. Refer to domestic operations overview (South Island domestic) for further
		information.
Equity share of joint	+$11.0m	Increase from export operations driven by higher pricing received on sales, partially offset by a
venture BT Mining		decrease in earnings for the North Island domestic segment. Refer to export and domestic
profit		operations overview for further information.
Admin expenses	-$1.9m	An increase in corporate administration costs, largely driven by increased legal fees incurred in
		defending Bathurst against claims bought by L&M, and overhead salary costs that included
		short term incentive performance payments in the current period (nil in prior period).
Fair value	-$6.0m	This movement reflects the valuation of the conversion option of the AUD convertible bonds.
movement on		This is a non-cash item that will either move to equity (if converted) or reverse through the
convertible bond		income statement (if redeemed). The expense has increased in correlation to the increase in
derivative		Bathurst's share price which has been recently trading at a significantly higher value than the
		strike price of the bonds.

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