JOHANNESBURG (miningweekly.com) - JSE- and Aim-listed Petmin on Wednesday declared a maiden dividend and introduced a conservative dividend policy that will initially be 20% of headline earnings a share.

The multi-commodity mining and processing company declared a 6c a share dividend for the year ended June 30, 2010, while its like-for-like headline earning rose with 5% to 19,09c a share for the year ended June 20, 2010, compared to 2009 figures.

"With the payment of this dividend we are pleased to be able to reward shareholders as we continue to nurture and grow the company for the future," said Petmin chairperson Ian Cockerill.

The declared dividend includes 4c a share based on earnings, and 2c a share special dividend from the sale of the company's Springlake Colliery. The total cost to Petmin would be about R34,9-million.

Further, the company reported profit before tax of R154-million, which was a reduction of R17-million from the previous year, owing to the inclusion of the R33-million profit made from the Springlake Colliery disposal in the 2009 numbers.

Net profit for the year amounted to R107-million, compared with R118-million in the previous financial year,

The group achieved a gross profit margin of 37% as a result of improved cost and revenue management and improved prices for anthracite in particular.

"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.

"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," said Cockerill.

Petmin reported cash-on-hand of R283-million for the year, compared with R91-million the previous year and undrawn bank facilities of R110-million.

Its net cash flow from operating activities also increased by 43% to R321-million.

"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," said Cockerill.

The group would also continue to focus on organic growth, with its phase-two expansion at Somkhele to double sales volume now approved, as well as an R18-million exploration programme following the renewal of prospecting rights at Somkhele.

"With a combination of internal expansion programmes and acquisitive growth opportunities currently being evaluated, Petmin presents exciting opportunities for shareholders. 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," concluded Cockerill.

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