HCI coal unit likely to fuel listing talk

Empowerment conglomerate Hosken Consolidated Investments (HCI) continues to build a head of steam in its coal division, a development that is likely to fuel speculation of a separate listing for the mining business on the JSE.

Results for the year end to march released on Wednesday showed the coal mining segment generating revenue of over R1.2bn and more than doubling profit before tax to R362m.

The group’s coal mining interests and its property division are the two significant unlisted components of HCI’s investment portfolio.

The group’s main investment is in listed gaming and leisure group Tsogo Sun, with the bulk of the remaining investments in listed counters like e-broadcast group eMedia Holdings, industrial group Deneb, investment firm Niveus as well as recently listed transport group Hosken Passenger Logistics and Rail.

HCI’s profitable progress in the coal division is bound to spark speculation around a possible JSE listing for the coal division, although market watchers have persistently argued that such a development might be preceded by efforts to bulk up the coal division through corporate action.

In commentary accompanying the financial results, HCI CEO Johnny Copelyn said revenue increases were recorded at the Palesa (1%) and Mbali (24%) collieries.

But sales volumes edged down 1% at the Palesa colliery following an extended closure in April after a work fatality.

Sales volumes at the Mbali colliery increased 11%, with Copelyn reporting that export sales prices were on average 20% higher than the previous financial year.

The coal division’s earnings before interest, tax, depreciation and amortisation increased 27% to R312m as a result of increased export sales prices as well as an improvement in gross profit margins.

HCI is also making headway in its property segment, which grew revenue 7% to R503m.

Copelyn said new development revenue rose due to the Whale Coast Village Mall, The Palms, the Makro Port Elizabeth premises and Shell House, with annual escalations in the portfolio offset slightly by a reduction in revenue in the Gallagher Estate exhibition business.