TIDMPTMN
RNS Number : 5282N
Petmin Limited
09 September 2013
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")
9 September 2013
PETMIN SHAREHOLDER AND TRADING UPDATE FOR THE YEAR ENDED 30 JUNE
2013 AND CAUTIONARY ANNOUNCEMENT
92% increase in expected second half headline earnings per share
(HEPS) from an improved performance at Petmin's Somkhele anthracite
mine.
In terms of the Listings Requirements of JSE Limited ("Listings
Requirements"), listed companies are required to publish a trading
statement as soon as they are satisfied that a reasonable degree of
certainty exists that the financial results for the period to be
reported upon next will differ by at least 20% from those of the
prior comparative period.
Petmin's like for like profit for the year to 30 June 2013 from
continuing operations, before impairments (see below for 2013
Veremo impairment), is expected to be up 18% to R88m (2012
R75m).
Due to Petmin's decision to impair its investment in Veremo
Holdings (Pty) Limited ("Veremo") with R200m (refer to detail
below), earnings per share from continuing operations are expected
to be a loss of approximately 19.42 cents (2012: 9.71 cents
profit).
HEPS of 10.03 cents is expected for the six months to 30 June
2013, an increase of 92% from the 5.22 cents in the six months to
31 December 2012.
Year Year
Unaudited ended ended
------------------------------- --------- --------- ----------
30 June 30 June
2013 2012 Variance
------------------------------- --------- --------- ----------
Headline earnings per share
(cents) 15.25 19.06 -20%
------------------------------- --------- --------- ----------
Like for like earnings
per share (cents)* 15.25 12.98 18%
------------------------------- --------- --------- ----------
Earnings per share (cents)** (19.42) 19.53 -199%
------------------------------- --------- --------- ----------
* = Excludes SamQuarz (sold
in 2012) and impairments
------------------------------- --------- --------- ----------
** = 2013 includes Veremo impairment
(see below), 2012 includes SamQuarz
----------------------------------------------------- ----------
Review of Somkhele anthracite operation
The Somkhele anthracite mine in KwaZulu-Natal is delivering
solid results with anthracite production in the second half year up
80% on the first half. Somkhele now has an installed capacity to
produce 1,2m tonnes of saleable metallurgical anthracite and
480,000 tonnes of energy product from the newly-commissioned third
plant.
The third plant at Somkhele was successfully commissioned and
became fully operational in February/March 2013.
The table below reflects the expected normalised profits from
on-going operations for the year ended 30 June 2013.
Normalised profit Unaudited Unaudited % change Reviewed Audited
from ongoing operations Year ended H2 2013 H1 2013 Year ended
30 June 30 June
2013 2012
-------------------------- ----------- ------------ --------- ------------ -----------
tonnes tonnes tonnes tonnes
-------------------------- ----------- ------------ --------- ------------ -----------
Anthracite tonnes
produced 822,431 528,666 80% 293,765 637,220
-------------------------- ----------- ------------ --------- ------------ -----------
Anthracite tonnes
sold 802,325 431,763 17% 370,562 546,051
-------------------------- ----------- ------------ --------- ------------ -----------
Energy tonnes produced 207,238 207,238 - -
-------------------------- ----------- ------------ --------- ------------ -----------
Energy tonnes sold 178,559 178,559 - -
-------------------------- ----------- ------------ --------- ------------ -----------
R'000 R'000 % change R'000 R'000
-------------------------- ----------- ------------ --------- ------------ -----------
Turnover 833 490 475 857 33% 357 633 516 303
-------------------------- ----------- ------------ --------- ------------ -----------
Results from ongoing
operations 140 599 86 411 59% 54 188 141 763
-------------------------- ----------- ------------ --------- ------------ -----------
Net finance expense (20 354) (13 245) 86% (7 109) (6 988)
-------------------------- ----------- ------------ --------- ------------ -----------
Pre-tax results
from ongoing operations 120 245 73 166 55% 47 079 134 775
-------------------------- ----------- ------------ --------- ------------ -----------
Pre-tax Gross Profit
Margin (includes
corporate costs) 14% 15% 17% 13% 26%
-------------------------- ----------- ------------ --------- ------------ -----------
Assumed tax at 28% (33 669) (20 486) 55% (13 182) (37 737)
-------------------------- ----------- ------------ --------- ------------ -----------
Assumed profit after
tax from ongoing
operations 86 576 52 679 55% 33 897 97 038
-------------------------- ----------- ------------ --------- ------------ -----------
Shares in issue 576,908,188 576,908,188 0% 576,908,188 576,908,188
-------------------------- ----------- ------------ --------- ------------ -----------
Normalised profit
after tax from ongoing
operations per share 15.01 9.13 55% 5.88 16.82
-------------------------- ----------- ------------ --------- ------------ -----------
The table indicates that normalised profit after tax increased
by 55 % from R 33.9 million for the six months to December 2012 to
R 52.7 million for the six months to June 2013.
Somkhele production increased for the year to 822,431 tonnes of
anthracite (2012: 637,220) and 207,238 tonnes of energy product
(2012: nil). Second half anthracite production was 528,666 tonnes,
up 80% on the first half production of 293,765 tonnes.
Somkhele's net profit margins were reduced to 16% (2012: 26%)
for the year ended 30 June 2013 as sales price increases in a
subdued market could not compensate for cost increases.
North Atlantic Iron Corporation (NAIC)
During the year under review, Petmin invested an additional
US$6.5m (2012: US$5m) to acquire an additional 8% of NAIC and
increase its total shareholding to 25%. NAIC is a
highly-prospective iron sands to pig iron project in Canada's
Labrador province, aiming to become one of the lowest cost pig iron
producers in the world. Petmin retains joint management control of
NAIC with an earn-in option to acquire up to 40% of the project for
a total US$25m, with a further option to acquire an additional 9,
9% at a market-related price.
The NAIC project made significant progress in the year ended 30
June 2013, with an extensive Preliminary Economic Assessment (PEA)
due to be published in the fourth quarter of 2013. During the
review period, pig iron has successfully been produced in NAIC's
test furnace under the auspices of HATCH. The PEA will provide
detailed information in respect of geology (resource definition),
mining methodology and mine design, processing, smelting, logistics
and market analysis.
Veremo impairment
Petmin has reported a R200m impairment of its investment in the
Veremo pig iron project in Mpumalanga, South Africa.
The controlling shareholders of Veremo Holdings (Proprietary)
Limited (Veremo) were to fund and develop the project to commence
production within 48 months of 30 April 2008. Veremo was to
distribute to Petmin the larger of a cash payment of R65m per year
for three years, or 25% of the profit after tax from Veremo.
The first of the three cash payments of R65 million fell due on
28 February 2013 and this payment has not been received. Petmin has
entered into discussions with the controlling shareholders
regarding the payment due to Petmin.
Considering the state of the South African and world economies,
Petmin has reviewed the project valuation parameters and recorded
an impairment expense of R200m at 30 June 2013.
The carrying value of the investment in Veremo prior to the
impairment was R497m. Petmin's initial investment in the project
amounted to R95m. The difference between the carrying value and the
cost was an International Financial Reporting Standard (IFRS)
accounting adjustment on acquisition. Neither the IFRS accounting
adjustment nor the impairment has any cash effects. The revised
carrying value of R297m is still materially in excess of the
original cost of the investment.
Significant progress has been made at Veremo and development
capital of R112 million has been invested to date by the
controlling shareholders and the previous owners. MCC International
Incorporation Limited (MCC) was commissioned by Veremo 18 months
ago to perform a feasibility study and, during the year under
review, finalised their report on the project and concluded that it
is economically viable. The Veremo management team are in the
process of evaluating and reviewing this report. Furthermore,
Veremo is awaiting the approval of a new order mining licence
application.
Intention to de-list and terminate Petmin's secondary listing on
the Alternative Investment Market (AIM) of the London Stock
Exchange (LSE)
Petmin is reviewing its costs across the group, including the
reduction of costs at the corporate office and, as part of this
process, Petmin intends to terminate its secondary listing on the
AIM in London.
More detailed information as well as advice to shareholders
regarding the intention to delist from AIM will be announced in due
course.
Over the past twelve months, the average daily volume of Petmin
shares traded on AIM was 10,820 compared to 1,264,977 shares on the
JSE.
Whilst Petmin remains cognisant of the interest of all
shareholders, the rationale for delisting on AIM is informed by the
low volume of trade in the company`s shares on the AIM, with the UK
register comprising less than 3% of the overall total
shareholding.
The Company has determined that the secondary listing is
administratively intensive and costly, and is of the view that the
volume of trade over the past few years does not sufficiently
warrant the expense of maintaining a secondary listing on the
AIM.
Full year results to 30 June 2013
Petmin's full financial reviewed results for the year to 30 June
2013 ("Reviewed Results") will be reported on Monday 30 September
2013 and a detailed presentation will be available on the Company's
website www.petmin.com from 1 October 2013.
Cautionary announcement
Shareholders are advised that the Company has entered into
negotiations (unrelated to Veremo, the AIM delisting or the
Reviewed Results), which if successfully concluded may have a
material effect on the price of the Company's securities.
Accordingly, shareholders are advised to exercise caution when
dealing in the Company`s securities until a further announcement is
made.
Enquiries:
Petmin
Bradley Doig
+27 11 706 1644
Media
Jonathon Rees
+27 76 185 1827
Sponsor and Corporate Advisor (JSE)
River Group
Andrew Lianos
+27 834 408 365
Nominated Adviser and Broker (AIM)
Macquarie Capital (Europe) Limited
Steve Baldwin, Nicholas Harland
+44 20 3037 2000
Johannesburg
9 September 2013
Sponsor and Corporate Adviser
River Group
This information is provided by RNS
The company news service from the London Stock Exchange
END
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