Precious stone prices fell by an average of 9 per cent in the second half of 2015, which essentially meant Petra Diamonds (PDL) could only break even. The good news is that the market is now showing some signs of recovery, a trend hinted at in Petra's summary of its recent tender offer, the first of four to be held in the six months to June 2016.
There was little in these half-year results investors were unprepared for, including the previously flagged sevenfold swell in net debt. By 31 December, borrowings stood at $324m (£230m), as Petra increased its capital spending to target 5m carats of annual production by 2019.
Until then, finance director David Abery says absolute funding headroom, rather than metrics or ratios, will be the preferred measure of debt exposure. A 21 per cent increase in capital expansion - the bulk of which went towards the new plant at the Cullinan mine - left $177m of facilities undrawn by the end of the period. Management expects funding requirements to be boosted by an improvement in operating cash flows, in addition to the cost benefits provided by the weak South African rand.
Prior to these results, analysts at Canaccord Genuity were forecasting a full-year adjusted net profit of $47.8m, giving EPS of 8.9¢.
PETRA DIAMONDS (PDL) | ||||
|---|---|---|---|---|
| ORD PRICE: | 87p | MARKET VALUE: | £454m | |
| TOUCH: | 86.5-87.25p | 12-MONTH HIGH: | 193p | LOW: 53p |
| DIVIDEND YIELD: | 2.4% | PE RATIO: | 44 | |
| NET ASSET VALUE: | 76.4¢ | NET DEBT: | 76% | |
| Half-year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
|---|---|---|---|---|
| 2014 | 215 | 58.6 | 5.9 | nil |
| 2015 | 154 | 0.1 | -0.7 | nil |
| % change | -28 | -100 | - | - |
£1=$1.417 | ||||
