An­a­lyt­i­cal new fo­cus

Finweek English Edition - - Companies & Markets - SIKONATHI MANTSHANTSHA

THE PAST FI­NAN­CIAL YEAR was good for in­dus­trial and min­ing sup­port ser­vices com­pany Set Point. Al­though the group recorded a 6% de­cline in rev­enue it in­creased head­line earn­ings 88%, af­ter hav­ing paid only 25% of what it paid the pre­vi­ous year in fi­nance ex­penses. Those R4m fi­nance ex­penses in the year to Au­gust com­pare favourably to the R16,9m Set Point paid the pre­vi­ous year. It says it’s made ad­min­is­tra­tive sav­ings af­ter it bought back mi­nor­ity in­ter­ests in all its op­er­at­ing sub­sidiaries. Its pre-tax profit of R75m was 81% up on the pre­vi­ous year, while 14,7c head­line earn­ings per share were 88% higher.

Set Point has changed fo­cus and ditched elec­tron­ics to con­cen­trate on spe­cialised chem­i­cal anal­y­sis for the ex­plo­ration of pre­cious min­er­als, fluid han­dling for the petro­chem­i­cals and min­ing in­dus­try and other min­ing ser­vices.

The vi­brant com­mod­ity mar­kets of early 2008 pro­vided Set Point with sus­tained busi­ness ac­tiv­ity in min­ing ex­plo­ration, which re­sulted in a 52% in­crease in op­er­at­ing prof­its at its an­a­lyt­i­cal ser­vices divi­sion. That also re­ceived ac­cred­i­ta­tion from the Na­tional Nu­clear Reg­u­la­tor of SA to an­a­lyse ura­nium in nat­u­rally oc­cur­ring ra­dioac­tive iso­tope-bear­ing ma­te­ri­als.

All the group’s di­vi­sions in­creased their op­er­at­ing prof­its in the year, with fluid han­dling record­ing a 29% in­crease, mainly on de­wa­ter­ing op­er­a­tions at mines, while min­ing ser­vices in­creased its rev­enue 20%. Be­cause most of Set Point’s op­er­a­tions are in the min­ing in­dus­try it’s likely to suf­fer (par­tic­u­larly in the ex­plo­ration field) in the year ahead as min­ing houses have been forced to scale down op­er­a­tions due to a com­bi­na­tion of fac­tors in SA and over­seas.

How­ever, man­age­ment has cho­sen to ig­nore the de­pressed mar­kets since sec­ond half 2008. It says it’s bud­geted for an in­crease in rev­enue in the year to Au­gust 2009. Chair­man Chris Seabrooke has bought into the story, show­ing his con­fi­dence by buy­ing more than 7m shares at 85c last week. Set Point’s price has since dropped to around 68c/share. That’s a good price to pay to earn the 14,7c/share (al­ready paid: 5c div­i­dend).

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