Petmin Limited today (11 September 2006) announced a 72% increase in net profit after tax to R48.6 million for the year ended 30 June 2006.
The company’s results for the period under review reflect the inclusion of the results of wholly owned silica producer SamQuarz for 12 months (previously nine months) and those of wholly owned anthracite producer Springlake for seven months (previously not included due to the conclusion of the acquisition of Springlake during the year).
Headline earnings per share (HEPS) increased by 54% to 4.98 cents ((2005: 3.24 cents), while earnings per share (EPS) were 2% lower at 16.38 cents (2005: 16.74 cents), reflecting dilution resulting from the issue of 83 million new shares to fund the development of the Somkhele Anthracite Project in KwaZulu-Natal. Net asset value (NAV) per share was 53% higher at 81.94 cents.
In view of funding requirements for Petmin’s new Somkhele Anthracite Project in KwaZulu-Natal and for expansion at its SamQuarz silica operation in Mpumalanga, the board has recommended that no dividend be paid for the year.
Revenue for the year was 201% higher at R176.7 million. The contribution from SamQuarz’ silica mining and marketing increased by 54% to R90.6 million, while that from newly acquired Springlake’s anthracite mining and marketing was R86.10 million.
During the year, R58 million in cash was generated from operations. Share issues raised R84.6 million for the development of the Somkhele Anthracite Project and R13 million for the acquisition of SamQuarz preference shares from related parties.
At year-end, the cash balance – after capital expenditure of R7 million at SamQuarz, R16 million at Springlake and R47 million at Somkhele – was R70 million.
SamQuarz retains its position as South Africa’s largest silica producer, producing about 35% of the country’s total consumption in the past year, most of which was absorbed by the metallurgical and glass production sectors. While pressure on international ferrochrome prices contributed to difficult market conditions, the company performed exceptionally well and exceeded its targets.
A four-shift system was introduced during September 2005 in preparation for increased demand, particularly from glass producing clients. Operational efficiencies continued to improve, reflecting the implementation of better process control parameters on the two main sand production plants.
Springlake experienced a number of operational difficulties at both its underground and opencast operations since acquisition in November 2005, reflecting issues identified during the due diligence exercise.
While performance since acquisition has been disappointing, a number of critical interventions have been made in line with the company’s Performance Improvement Programme. Management is confident that these will deliver a significant turnaround during the next 12 months, ensuring long-term sustainable earnings and cash flows.
Key elements of the programme include:
The development of Somkhele’s high-quality anthracite reserve is on track and the plant, with a design capacity of some 120 000 tonnes per month (tpm), will be commissioned during November 2006.
It is expected the new mine will have a run-of-mine production of 40 000tpm during Phase 1 of operations, rising to 80 000tpm in Phase 2. First sales of production are expected during the second quarter of 2007.
Petmin advised its shareholders on 20 July 2006 that it has obtained an in-principle approval from the South African Reserve Bank to list its securities on the London Stock Exchange’s Alternative Investment Market (AIM).
Looking ahead, Petmin intends to:
© 2009 Petmin Limited