felix (coal) resources quarterly

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    DIRECTORS’ REPORT
    Your directors submit the financial report of the economic entity for the half-year ended 31
    December 2003 – the first financial report since acquisition of the Yarrabee Coal Company Pty

    HIGHLIGHTS
    • Profit for the consolidated entity before tax was $0.85 million.
    • Post-merger integration is complete and overhead costs are now expected to stabilise.
    • Yarrabee earnings before interest and tax of $3.65 million exceed budget, profit for the full
    financial year expected to exceed budget also.
    • Coal sales are 23% up on the equivalent period for the previous year, full financial year
    sales are expected to be 0.2 million tonnes above budget at 1.4 million tonnes.
    • PCI and thermal coal markets are very strong.
    • Operations are to be expanded to 1.7 million tonnes for FY 2004/05.
    • Sales for each of FY 2004/05 and FY 2005/06 are now expected to be at 1.7 million tonnes.

    Felix Resources Limited, the holding company, reported an unconsolidated loss of $2.7 million for the half-year to December 31.
    Felix’ non-recurring expenses included settlement of a litigation claim for $500,000,
    consolidation and redundancy payments for Sydney/Brisbane offices of $334,000, costs related
    to Yarrabee Coal Company’s acquisition of $202,000 and foreign currency loss on cash held in
    British pounds of $156,000.
    Felix’ overhead costs are expected to stabilise now that post-merger integration is complete.
    Felix is required to make a net SASE R&D Start Grant repayment of $416,250 in May 2004.
    THE CONSOLIDATED ENTITY AND FELIX RESOURCES
    The consolidated entity for the half-year to 31 December 2003 reported a profit from ordinary
    activities before tax of $0.85 million and net profit after tax of $0.23 million. This is pleasing in
    light of corporate activity undertaken during the period.

    YARRABEE COAL COMPANY
    Operating and financial performance
    Yarrabee Coal Company Pty Ltd (YCC), a wholly owned subsidiary and the primary revenueproducing
    asset, reported $3.65 million earnings before interest and tax.
    YCC performance data for the first half of the current and previous year are shown in Table 1.
    Performance improved on all measures compared to the previous period. Total Coal Sales
    increased by 23%, Revenue at Spot increased by 8% and EBIT increased by 4%.

    Coal sales for the first half-year totalled 693,369 tonnes and sales for the full financial year are
    now forecast at 1.4 million tonnes compared to the 1.2 million tonne budget.
    EBIT for the full year is expected to exceed the budget of $4.98 million despite unexpected
    demurrage charges of $857,983 in the first half of the year. These charges arose due to
    capacity limitations and equipment breakdown at the Gladstone Port.
    YCC stock levels were increased in preparation for the Christmas shutdown and impending
    wet season, and also to enable an increase in production rate. Consequently, working capital
    rose from $7.6 million to $13.1 million during the period.
 
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