Sapphire Corporation, the manufacturer of steel and vanadium products, posted a net profit of $43.5 million in the year ended 31 December 2009 (FY2009), up from $1.1 million in FY2008, buoyed by contribution from 51%-owned Neijiang Chuanwei Special Steel Co. and the dilution gain of its 9.2%-owned mine operator which was recently listed on the Mainboard of The Stock Exchange of Hong Kong.

The increase came on the back of $133.8 million in revenue as it recognised seven months of results contributed from Neijiang Chuanwei Special Steel, a leading manufacturer of hot-roll coils (HRC) and vanadium pentoxide flakes in Sichuan Province, China.

In addition to recognising a gross profit of $17.6 million, the group also recognised a dilution gain of $26.2 million included in the share of profit from associates arising from the successful listing on the HKSE of its Chengdu-based associate company China Vanadium Titano-Magnetite Mining Company (China VTM).

Profit attributable to equity holders surged to $35.3 million in FY2009 from $1.1 million in FY2008. Gross and net profit margins were 13.2% and 32.5%, respectively.

Basic earnings per share based on weighted average number of shares rose to 0.38 cents in FY2009 from 0.01 cents in FY2008. The group continues to maintain healthy cash and cash balance, with cash and cash balances of $8.3 million as at 31 December 2009, following the consolidation of Neijiang Chuanwei Special Steel.

The group is currently executing technical enhancements to its vanadium pentoxide production facility in Neijiang, Sichuan. Following the completion of Phase 1 of the technical enhancements, production at the facility has been increased to 3,500 tonnes per annum from its original 2,500 tonnes per annum.

On 8 October 2009, the Group’s indirectly held China VTM, a China-based iron ore mine operator in Sichuan, was successfully listed on HKSE. Sapphire had earlier acquired China VTM through its associates, Kingston Grand Limited and Trisonic International. Carrying value of its stake in China VTM – reduced from 9.5% to 9.2% post-IPO, was recorded in its balance sheets under Interest in Associates at $23.1 million as at 30 June 2009.

During the year under review, the group successfully also concluded the purchase and sale of iron ore with contract value of US$6.3 million ($8.9 million). It has initiated discussions with Cliffs Asia Pacific Iron Ore Pty, Australia, to enter into a long-term supply contract for iron ore. Moving forward, the group will continue to actively pursue opportunities to seal additional mineral resources trading contracts.