Forgot to post subject of email:Following was the complete text...

Forgot to post subject of email:
Following was the complete text of email forwarded by Jason to me.


From: Mathew Fernley [mailto:[email protected]]
Sent: Monday, September 03, 2012 02:59 PM
Subject: GMP comment on Continental Coal: Gross profit in line but US$30m exceptionals widen loss

SUBJECT: Gross profit in line but US$30m of exceptionals widen loss

SUMMARY: This morning Continental Coal reported FY/12 results with gross profit of A$15.5m vs our expectations of A$15.7m. However it reported a net loss of A$48m, significantly lower than our estimates of a loss of US$7m, due to US$20m of impairment charges and US$10.4m of additional royalty expenses. The company is spending close to A$30m every year in administration and other expenses.

While the company is performing ok operationally despite low coal prices the significantly higher than expected other costs are disappointing. CCC is spending around 40% of its revenues on administration expenses which is substantially higher than accepted for a company of this size.

DETAILS:

· FY/12 results

o Revenue of A$82m vs GMPe of A$83.6m

o Gross profit of A$15.5m vs our expectations of A$15.7m

o Administration expenses substantially higher and more than double our estimate of A$8m.

o CCC has accounted for a A19.8m impairment loss arising from revaluation of lower resources at Project X, Vaalbank and Lemoenfontein.

o It has also recorded an additional royalty expense of A$10.4m which was treated as a contingent liability at the end of FY/11 in relation to US$1/t of coal produced at its South African operations, capped at 15Mt. The royalty has been completed by 30 June 2012.

o These additional costs resulted in a net loss of A$48m vs our expectations of A$7m.