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PET
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PET - Petmin Limited - Petmin declares maiden dividend Deliberate focus on
quality assets in the right markets delivers margin
PETMIN LIMITED
INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA
REGISTRATION NUMBER 1972/001062/06
SHARE CODE JSE: PET & ISIN: ZAE000076014
SHARE CODE AIM: PTMN
("PETMIN" OR "THE COMPANY")
8 September 2010
Petmin declares maiden dividend Deliberate focus on quality assets in the right
markets delivers margin
Key features:
- Maiden dividend of 6 cents per share declared - 4 cents per share based on
earnings, and 2 cents per share special dividend from the sale of Springlake
- Like-for-like headline earnings per share up by 5% to 19.09 cents per share
- Gross profit margin improved from 27% to 37%
- Substantial cash-on-hand of R283 million (2009: R91 million) and undrawn bank
facilities of R110 million
- Net cash flow from operating activities increased by 43% to R321 million
- Continued focus on organic growth:
- Phase 2 expansion at Somkhele to double sales volume approved
- R18 million exploration programme approved at Somkhele following renewal of
prospecting rights
- Well positioned for continued delivery and growth.
JSE- and AIM-listed multi-commodity mining and processing company Petmin Limited
today reported results for the year-ended June 2010, declaring a dividend of 6
cents per share. Petmin Chairman, Ian Cockerill, commented that, "These results
are very pleasing, particularly given the difficult trading conditions
experienced for most of the financial year.
"Our deliberate focus on quality assets, in the right markets, combined with a
disciplined approach to cost management, has continued to deliver results for
Petmin. With the payment of this dividend we are pleased to be able to reward
shareholders today as we continue to nurture and grow the company for the
future."
"The performance of our assets, combined with the company`s ability to generate
strong cash flows and healthy balance sheet mean that Petmin is well- positioned
to continue to deliver on its organic and acquisitive growth strategy.
"We announced capital expenditure of R120 million for the construction of the
second coal processing plant at Somkhele in KwaZulu-Natal, South Africa in
August 2010. This second plant will double current production capacity to
approximately 1.1 million sales tonnes a year, and will be commissioned by the
end of the first quarter of the 2012 calendar year. Further expenditure of R18
million has now also been approved for exploration at Somkhele, following the
renewal of new order prospecting rights over Areas 4 and 5 by the Department of
Mineral Resources.
Operating and financial results
Revenue for the year ended 30 June 2010 was R489 million. On a like-for-like
basis (that is excluding the sale of Springlake), revenue for the 2009 financial
year was R524 million.
Revenues at both the Silica (SamQuarz) and Anthracite (Somkhele) divisions were
affected by poor market conditions in the first quarter of FY2010, although
market conditions steadily improved throughout the remainder of the financial
year.
Profit before tax was R154 million (2009: R171 million). Again, the reduction of
R17 million from 2009 was owing to the comparative number including profit
before tax of R33 million from the Springlake Colliery disposed of in 2009.
Pleasingly, the group achieved a gross profit margin of 37% (2009: 27%) as a
result of improved cost and revenue management and improved prices for
anthracite in particular.
Operations remained strongly cash generative, producing R321 million (2009: R225
million), including inflows from changes in working capital of R51 million
(2009: outflows of R62 million).
Capital expenditure of R123 million (2009: R291 million) was incurred in the
year to 30 June 2010, with R57 million spent on pre-stripping of the open pits
at Somkhele (2009: R86 million), R55 million to expand operations (2009: R188
million) and R11 million to maintain operations (2009: R17 million).
The ratio of interest-bearing debt to equity at 30 June 2010 was 7.55% (2009:
9.97%). An amount of R35 million was drawn on the medium-term facility at
SamQuarz during FY2010. The Rand Asia debtor financing facility of R38 million
was repaid during FY2010.
Based on the current position of the company, the directors have declared a
maiden dividend. and introduced a conservative yet meaningful dividend policy.
Given the inherent volatility associated with the commodities market and taking
into account Petmin`s relative size, the dividend will initially be 20% of
headline earnings per share and the payment of dividends will be considered
annually after year-end.
The total dividend proposed is 6 cents per share comprising 4 cents based on
headline earnings and a 2 cents special dividend from the cash received on the
sale of Springlake in July 2009. The total cost to Petmin will be R34.9 million
(before STC).
Ian Cockerill concludes that, "Petmin is well positioned for acquisitive growth
with low gearing and substantial cash resources. The objective of this growth
strategy is to significantly increase the size of Petmin and provide superior
returns to investors. All the opportunities being assessed relate primarily to
commodities that feed into infrastructure growth and urbanisation (in essence
the steel value chain) and comprise a mix of cash-producing assets and projects
with a diverse geographic spread.
"Our strategy of rewarding shareholders through a combination of growth and
dividend flow, which is a key differentiator of Petmin within its market
segment, ensures a focused approach by management to both current operations and
new acquisitions: the company must ensure that all operations and projects
deliver sufficient returns to cover expenses, fund the required capital
expenditure and growth, and recompense shareholders for their investment."
"With a combination of internal expansion programmes and acquisitive growth
opportunities currently being evaluated, Petmin presents exciting opportunities
for shareholders and other stakeholders. Combined with the expected recovery in
the silica sector, we are confident of the excellent prospects for the business,
having developed a sound platform for growth in anticipation of market
recovery."
More details on Petmin can be found on our website www.petmin.co.za
Queries:
Petmin
Bradley Doig (COO)
+27 82 459 7818
Nominated Advisor (AIM)
Numis Securities Limited
John Harrison
+44 20 7260 1000
Sponsor and Corporate Advisor (JSE)
River Group
Andrew Lianos
+27 83 440 8365
Disclaimer:
This media release may contain certain forward-looking statements concerning
Petmin`s operations, economic performance and financial condition, and plans and
expectations. These statements, including without limitation, those concerning
the market outlook for the company`s products, expectations of prices,
production, the commencement and completion of certain exploration and
production projects, may contain forward-looking views. Such views involve both
known and unknown risks, assumptions, uncertainties and other important factors
that could materially influence the actual performance of the company. No
assurance can be given that these will prove to be correct and no representation
or warranty express or implied is given as to the accuracy or completeness of
such views or as to any of the other information in this media release. Petmin`s
future results may differ materially from past or current results, and actual
results may differ materially from those projected in the forward-looking
statements. Petmin will not be responsible for any loss or damage howsoever
arising of any nature, including consequential loss or damage suffered or
incurred, directly or indirectly, pursuant to or as a result of the use of, or
any reliance on, this media release or the information contained herein.
Date: 08/09/2010 09:30:01 Produced by the JSE SENS Department.
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