Sentula's stock price plunged a full 25% on Monday, on news from the South African coal- and earth-moving company that its earnings would fall by more than 20% for its financial year to March 30 2008. In its results for the six months ended 30 September 2007, Sentula reported core earnings up by 71% to 74c a share. Its guidance on Monday for the full year is for core earnings of between 100 and 102 cents a share.
Sentula's core earnings in its full 2007 financial year were 104 cents a share. In Monday's announcement, Sentula outlined a number of reasons for the dramatic changes in its fortunes, not least a (well known) dilution in shares on occasion of shares issued for a number of acquisitions, delays in obtaining various regulatory approvals, high rainfall earlier this year, amortization of intangibles, and delays in the awarding of three material contracts to Sentula.
Sentula also advised that its financial results for the year ended 31 March 2007 would be restated, essentially, after amendment of a number, if not plethora, of accounting errors that had been identified.
On Monday, a number of investors exposed to Sentula were also voicing concern over a corporate exercise just months ago, when 31.25m Sentula shares were placed with institutional investors at a price of R21.75 a share, raising some R680m, for two shareholders outside Sentula.
On 11 March 2008, Sentula detailed how the shares had been sold off by two big existing shareholders, Sam Jonah's Jonah Capital, and Cape Town-based Coronation Capital, after original acquisition costs of around R5 a share. The March placing would have raised a net R322m for Jonah Capital, and R201m for Coronation Capital.
Johannesburg-based Barnard Jacobs Mellet Corporate Finance acted as sole agents for the bookbuilding exercise during March, when the Sentula shares were moved around the markets. On Monday, while Sentula's shares fell the most on the day on the JSE, to R11.90 a share, the second-biggest fall was recorded by Barnard Jacobs Mellet, which contracted 10% on the day to R3.50 a share.
Sentula, until recently Scharrighuisen, traces its roots back more than 30 years. Its activities in road and dam building in the Drakensberg and Transkei areas spread to earthmoving operations on opencast mines, including topsoil stripping, access roads, rehabilitation and closure of old mines and opencast mining projects for major mining and engineering companies. Today Sentula's operates a fleet of more than 720 major machine items.