Diversification pays off for Padenga Holdings: FY2023 revenue up 22%, profit rises to US$14m

KINGSTONE ZIMUNYA

HARARE — A decision to venture into Gold Mining for VFEX-listed Padenga Holdings is bearing fruit, according to the crocodile-skin exporter's audited annual report for the year ended 31 December 2023. 

Presenting its financials for the year under review, the Group noted a difficult operating environment whereby costs skyrocked in US$ terms due to global shortages brought about by the Russia-Ukraine conflict; as well as tensions in the Middle East during the last quarter of 2023 that resulted in skyrocketing transport costs. 

However, the strong performance of its mining subsidiary, Dallaglio Investments (Pvt) Ltd, ensured glad tidings for Padenga; which was unbundled from Innscor in 2010 in a dividend-in-specie deal.

Currently, Dallaglio owns Eureka Mine in Guruve and Pickstone Peerless Mine in Chegutu; as well as Giant Gold Mining Claims and Blue Rock Claims close to Pickstone Peerless Mine. In August 2023, Padenga, bought the remaining 49.9% stake in Dallaglio to take full ownership of the entity. 

In September 2023, underground mining operations commenced at Pickstone Peerless. As a result, Dallaglio's gold sales volumes rose 8% to 2,120kgs; making it a Top 3 Gold Producer in Zimbabwe. The subsidiary enjoyed a 20% increase in turnover to US$125.6m, bouyed by increased volumes and higher spot prices for gold. 

The Gold Mining subsidiary in turn contributed 81% (down from 82% in 2022) to Padenga's total revenue which stands at US$155.6m in the year under review. This reflects a 22% rise in revenue for the Group, coupled with a 65% increase in cash generated from operations to US$40.7m. 

Padenga's profit before tax for the period under review is up 3% to USD14.3m, although it's EBITDA was 17% down due to the impact of mandatory surrender requirements, old stock crocodile skins sold at a discount and increased operating costs. 

The Group witnessed a 169% surge in capital expenditure to US$36.3m in 2023, driven by the refurbishment of the Pickstone Peerless Mine; as well as the annual rehabilitation of the crocodile pens at its three farms located on the shores of Lake Kariba. Padenga has also earmarked significant projects for 2024, including a solar project and a Pre-Leach Thickener at Eureka Mine.   

Padenga's agribusiness division, now a wholly owned subsidiary, saw a resurgence in 2023, registering a 129% increase in crocodile skin volumes to 76,108. 78% of Zimbabwe's total annual crocodile wet-salted belly skin exports in 2023 were attributed to Padenga.  

This was in part due to the clearance of crocodile skins whose harvest was deferred from 2022. Revenue, in turn, rose 31% to US$29.9m. 

The Thembinkosi Sibanda-led board has declared a final dividend of 0.26 cents per share, bringing the total dividend for the year to 0.45 cents. 

Basic Earnings per share are up 6% to 0.99 cents, but the share price as at reporting date fell 25% to 17.05 cents per share. 

As at close of business on 29 May, Padenga Holdings [PHL.vx] was trading at 0.165 cents per share on the Victoria Falls Stock Exchange.