Shaft Sinker Holdings expects fall in annual revenues and profits

Shaft Sinker Holdings expects to report a 13 per cent fall in 2012 revenues after labour strikes in South Africa hit operations.

Shaft Sinker Holdings expects to report a 13 per cent fall in 2012 revenues after labour strikes in South Africa hit operations.

The shaft sinking and underground infrastructure group said last year presented difficulties in the midst of protests at its sites and weakening of the South African Rand currency.

Revenues are pegged at £197m in the year to December 31st, down from £227m in 2011.

Profit before tax is also anticipated to drop significantly from the previous year's £13.5m with a guidance of £3.0m to £4.0m.

The group forecast a decrease in gross profit margin to 10% from 16.9%.

The company ended the year with net borrowings of about £2.8m, compared to £8.6m in the first half, as operations began to recover.

In the second half interest bearing debt was reduced by £2.7m to £11.2m and gross cash increased by £3.2m to £8.4m.

"The 2012 financial year presented us with a number of challenges," said Chief Executive Alon Davidov.

"We encountered a number of operational difficulties, some of which have been resolved and others where actions are beginning to impact and restore operational productivity.

"There were also challenges out of our control in terms of exchange rates and labour unrest in South Africa. Management worked hard to mitigate the effects of the strike action however we could not escape the general impact on the entire industry. We are looking ahead into 2013 with cautious optimism that this does not repeat itself."

He added that despite the challenges the company continued to sign new contracts including for a vertical shaft at the Kibali gold mines in Congo and for work at the Rampura Agucha mine in India with Hindustan Zinc.

The market also reacted positively to the outlook and stronger performance in the second half as shares rose 12.92% to 50.25p at 8:27 Wednesday.

RD

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