Northam declares maiden dividend, share buy-back after rocky year

Northam Platinum Holdings declared its first dividend today, following a rocky year that saw the company’s earnings per share drop by 75%.

Northam released its annual financial statements for the year ended 30 June 2023 today, which saw the company declare its maiden dividend and a share buyback programme.

FY2023 was a challenging year for Northam, reflected in the company’s mixed results.

Sales revenue was up 16.1% to R39.55 billion, and operating profit increased 3.8% to R15.45 billion.

The company said its profit margin reflected increased production against a largely fixed cost base and maintaining cost discipline and efficiencies.

However, this is notwithstanding a 12.6% increase in group cash cost per equivalent refined 4E ounce “amidst a higher inflationary environment and ongoing Eskom load curtailment events”.

However, the company’s earnings per share fell by 75% from 2,614.9 cents in FY2022 to 654.5 cents in FY2023.

Headline earnings per share also fell by a far smaller margin of 7.5%.

The company’s EBITDA increased by 0.2%, while its EBITDA margin fell by 13.7%.

Northam’s earnings drop is mainly due to a R4.1 billion non-cash impairment cost related to its Royal Bafokeng Platinum (RBPlat) investment.

In addition, earnings were affected by a R2.7 billion non-cash impairment relating to its Eland operation due to a substantial deterioration in the pricing of Platinum Group Metals, “which will be reversed should market conditions improve in the future”.

Despite these mixed results, Northam said the sale of its investment in RBPlat after 30 June 2023 presented an opportunity for the company to strengthen its balance sheet and liquidity position significantly.

This, in turn, enabled the company to declare its first dividend in over ten years – R6 per share – which also constitutes a maiden dividend for Northam. 

In addition to the dividend, Northam’s board approved a share buyback programme of up to R1 billion and limited to a maximum of 5% of Northam Holdings’ issued share capital.

This capital return comes less than five months after Northam backed out of the proposed takeover of RBPlat after competing for it against Impala Platinum (Implats).

In accepting Implats’ competing bid for RBPlat, Northam received R9 billion in cash and over 30 million Implats shares.

Northam said today that it had concluded on-market disposals of over 27 million Implats shares, representing around 91.6% of the share consideration.

The total cash consideration received regarding the Implats share disposal amounts to around R2.9 billion, representing a volume-weighted average price of R104.36 per Implats share.