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LONDON (Alliance News) - Petra Diamonds PLC on Monday swung to a large loss for its recently ended financial year due to increase in financial expenses and an impairment charge on Koffiefontein mine.
The company also said that Chief Executive Officer Johan Dippennar will step down in line with the company's succession plan and upon appointment of a replacement. Dippennar has been chief executive for 13 years since 2005.
Pretax loss for the year to the end of June totaled USD85.0 million, compared with a USD43.0 million profit the year before.
This was due to a near doubling in finance expenses to USD94.3 million from USD47.8 million, coming from a spike in net interest expense on loans and overdrafts, as well as foreign exchange losses.
There was also an impairment of USD66.0 million following a year-long review of the Koffiefontein mine in South Africa, which revealed execution risk related to it expansion targets, and the high sensitivity on the strengthening of the rand on the US dollar operating costs.
Adjusted earnings before interest, taxes, deprecation and amortisation increased by 37% to USD195.4 million from USD142.6 million.
Revenue rose by 25% to USD495.3 million from USD394.8 million the prior year as the number of carats sold during the year increased by 19% to 3.8 million carats from 3.1 million carats.
Including the KEM joint venture, total production increased by 15% to 4.6 million carats from 4.0 million the year before.
In the first two months of its 2019 current financial year, Petra Diamonds reported a total production of 718,635 carats, leaving the company on-track to achieve its guidance for the year of 3.8 to 4.0 million carats, excluding the KEM JV.
In addition, with the focus on operational cost efficiencies, capital expenditure for the 2019 financial year has been guided at USD93 million, down from USD129.6 million, reflecting a declining trend due to advanced expansion programmes within the group.
"Learning from past challenges, the group's focus is to regain investor confidence by the continued optimisation of operations, thereby delivering consistent production output with efficient operating and capital expenditure. Petra remains on track to generate free cash flow, enabling the company to achieve a reduction in leverage to its target of two times or less consolidated net debt to consolidated earnings before interest, taxes, depreciation and amortisation by the end of FY 2020," said Chief Executive Officer Johan Dippenaar.
Shares in Petra Diamonds were up 6.3% at 37.76 pence on Monday.