Wrap Text
Interim Report for the six months ended 30 June 2013
Pallinghurst Resources Limited
(Incorporated in Guernsey)
(Guernsey registration number: 47656)
(South African external company registration number 2009/012636/10)
Share code on the BSX: PALLRES
ISIN: GG00B27Y8Z93
Share code on the JSE: PGL
(Pallinghurst or the Company)
Interim Report for the six months ended 30 June 2013
I am happy to report great progress within each of our three Investment Platforms. During the first half of 2013,
Pallinghurst achieved a number of its key milestones, which will support the continued unlocking of value as we enter
the harvesting stage of our investments. These include:
PGM production at record level in H1 2013 66,000 oz dispatched
IPO process has commenced for PGM platform IPO set for 2014
Successful ramp-up of manganese production 230,000 tonnes in H1 2013
Transnet has increased the train allocation for Tshipi at least two trains per week
New emerald auction record $31.5m or $54/carat for delayed June auction
Rubies inventory build-up around 2m carats
Notwithstanding this progress and incremental value addition to the real underlying businesses, our accounts show a
loss for the period. This was caused by unrealised marked-to-market valuations rather than by operational losses and
arises primarily as a result of the falls in the share prices of Jupiter and Gemfields in the currently depressed and
volatile mining sector. We believe those share prices significantly undervalue each of the businesses and that both
will swing back into the black as shareholder value is recognised and as we continue to deliver on our strategic
objectives.
Arne H. Frandsen
Chief Executive
Investment Managers Report
Platinum Group Metals (PGM)
The consolidation into Sedibelo Platinum Mines (formerly Platmin) of all of the Groups PGM investments on the Western
Limb of the Bushveld Complex during the last quarter of 2012 has realised the objectives to which we have been working
over the past five years. The consolidation was a key step to unlocking the significant investment value inherent in
this Investment Platform and the large and shallow resources base promises safe and low cost operations for many years
to come. The subsequent equity investment by the Industrial Development Corporation (IDC), its largest to date into
the mining industry, has provided funding for the next phase of development of the consolidated operations and will act
as a catalyst for wealth and job creation which will benefit all stakeholders.
The focus at Sedibelo Platinum Mines during the first half of 2013 has been the build-up of operations at its
Pilanesberg Platinum Mine (PPM) and the integration of the other properties forming the consolidation. Following the
restructuring of the mining contracts and after taking direct control of the pit and plant, Sedibelo Platinum Mines has
seen significant improvements in its key operating parameters, including record production of 66,000 ounces of 4E PGMs
for the first six months of 2013.
The Department of Minerals and Resources (DMR) has approved Sedibelo Platinum Mines revised environmental management
plan that provides for the conversion of the PPM pit into a water capture and storage facility at the end of the mines
life, for the benefit of the local community. In addition to the environmental and local developmental benefits, the
plan involves significantly lower costs than full rehabilitation of the pit. Applications have therefore been made to
the DMR to approve the release of a portion of Sedibelo Platinum Mines statutorily mandated rehabilitation escrow funds.
In January 2013, Sedibelo Platinum Mines formed a team led by Pallinghurst representatives to prepare for an IPO. Global
mining industry experts, SRK Consulting, have been appointed to complete geological, structural and resource modelling,
along with a consolidated life of mine plan as part of a Competent Persons Report. Sedibelo Platinum Mines improving
operational results, long-life assets and strong growth profile are expected to attract broad investor interest. As a
debt-free company with one of the industrys strongest balance sheets, Sedibelo Platinum Mines also remains alert to
potential opportunities triggered by the recent falls in PGM prices. If the recent improvement in equity markets and
sentiment continues, Sedibelo Platinum Mines is well set for a successful IPO in 2014.
Steel Making Materials
Manganese production has continued to ramp up at Tshipi Borwa through the use of temporary mining facilities with 230,000
metric tonnes of medium grade lump ore dispatched and railed to Port Elizabeth during the first six months of 2013. The
rapid load-out station is expected to be commissioned in October 2013 and completion of all of the remaining permanent
infrastructure to support a 2.4 million tonne per annum operation is expected by mid-2014. Since 30 June 2013, production
volumes have increased in line with Tshipis ramp-up plan and its rail allocation from Transnet, the South African state
rail operator.
Transnet has committed to make available to Tshipi Borwa two bulk trains per week, while an additional train may be
provided at Transnets discretion. Alternative road/rail solutions are being adopted to increase capacity, including
containers and skiptainers. The first such consignment of containers to Port Elizabeth occurred in June 2013.
In March 2013, Jupiter announced that the estimated capital expenditure for the construction of Tshipi Borwa had
increased to ZAR1,878 million (US$200 million), approximately ZAR160 million (US$17 million) higher than the original
budget. This increase is primarily a consequence of the phased introduction of the permanent infrastructure. Jupiters
49.9% share of the increase will be met out of its cash reserves, which were AUD63.5 million (US$58 million) at 30 June
2013.
In the Central Yilgarn region of Western Australia, work continued on optimising the capital and operating expenditure
at Mount Mason as part of the hematite projects Feasibility Study. All baseline environmental surveys and studies were
completed and Jupiter is expected to receive all project approvals by the end of the year. However, port access remains
the key infrastructure obstacle to the development of Mount Mason.
The port of Esperance is a deep water port capable of taking Capesize vessels, with proven ability to handle bulk
commodities, in particular iron ore. It is located approximately 650 kilometres from Mount Mason and is serviced by a
rail line running approximately 110 kilometres from Mount Mason. Currently, there is no spare capacity at Esperance, but
in June 2013 the port authorities announced two preferred proponents to expand the iron ore handling capacity. The final
decision of who will undertake the multi-user facility expansion is expected to be announced by the end of the year. If
Jupiter can secure access, Mount Mason has the potential to rapidly generate significant free cash flows and to establish
Jupiter as a producer in the Central Yilgarn region.
Following completion of site rehabilitation, Jupiters Mount Ida magnetite project remains suspended pending clarity
regarding access to the port of Esperance. Accordingly, a number of Jupiter staff have been made redundant leaving a team
sufficient to ensure that the necessary permits are obtained at Mount Mason. Priyank Thapliyal, a partner of the
Investment Manager, has been appointed as Acting Chief Executive Officer following the departure of the former CEO.
The Group acquired 40.8 million Jupiter shares during June/July 2013, increasing its interest to 18.45%. A further
22.4 million shares were acquired by other Pallinghurst Co-Investors in July 2013, taking the consortiums collective
interest in Jupiter to 86.69%.
In September 2013, Tshipi entered a Joint Venture Agreement whereby a new entity, OM Tshipi (OMT), jointly owned by
Jupiter, Ntsimbintle and OM Holdings will market all of the manganese ore produced by Tshipi and any other similar grade
South African manganese ore sourced by the OM Holdings Group. OMT will combine the network and management expertise of
all of its shareholders and is poised to become a major marketer of manganese.
Gemfields
Only one auction was held by Gemfields during the first six calendar months of 2013, being a lower quality emerald and
beryl auction in Lusaka during April 2013. A total of 6.3 million carats were sold for US$15.2 million, representing an
average price of US$2.42 per carat. The high quality emerald auction scheduled to take place in Singapore in June 2013
was delayed because of the Zambian Governments request to hold this auction in Zambia. As a result, Gemfields will
report revenues in the year to 30 June 2013 from only the two auctions of US$42 million, a 46% decline on the US$77.9
million achieved in the four auctions of the prior year.
Gemfields eventually held the higher quality emerald and beryl auction in Lusaka, Zambia during July 2013. A total of
0.58 million carats were sold for US$31.5 million representing an average price of US$54.00 per carat which is a new
auction record (an increase of 26% over the previous high of US$42.71 per carat achieved in the July 2011 Singapore
auction). In addition, an exceptional 54 carat rough gem, offered as a single lot at the auction, set a new per carat
record for prices achieved at a Gemfields auction.
Gemfields auctions have achieved more than US$207 million in revenue across thirteen auctions held since July 2009.
Gemfields continues to achieve increases in per carat prices (on a quality-for-quality basis) underpinned by solid demand
for its ethically sourced and transparently supplied emeralds.
In order to facilitate dialogue between key stakeholders within the emerald industry, Gemfields hosted the '2013 Zambian
Emerald Summit' in Lusaka, Zambia in May 2013. The summit considered how the Zambian emerald sector might best be
developed into a world leader whilst ensuring that the relevant revenues and profits continue to accrue within Zambia.
Gemfields continues to interact with its partner, the Government of Zambia, on the choice of locations for its auctions
in order to sustain the current levels of growth in demand and maximise revenues for all stakeholders.
Annual emerald gemstone production to 30 June 2013 increased by 42% to 30 million carats and saw a 38% increase in the
grade to 283 carats per tonne. Gemfields also reduced its per carat production costs by 26% to US$0.55 per carat. The
high wall push back programme saw ten million tonnes of waste mined as part of the initiative to open new areas of ore
for future production and to increase the level of ore mined.
The Gemfields initiative to increase consumer awareness saw Hollywood actress Mila Kunis appointed as its brand
ambassador in February 2013. The long-term partnership will feature Mila wearing Gemfields coloured gemstones at high
profile events and endorsing Gemfields as the worlds leading coloured gemstone company.
Gemfields completed construction of the core infrastructure required for bulk-sampling operations at its Montepuez ruby
operation in Mozambique. Preliminary bulk sampling commenced in August 2012 and production has improved progressively
through process optimisation, with 1.8 million carats produced in the year to 30 June 2013. A bespoke ruby grading and
sorting framework has been developed, similar to that undertaken by Gemfields for its emerald operations. This pioneering
system categorises the rubies into multiple classifications and is to be used in Gemfields first ruby auction in 2014.
Gemfields completed its merger with Fabergé in January 2013, with the high-end luxury goods brand that was previously
part of the Companys Investment Portfolio being acquired for 214 million new Gemfields shares. As a result of the merger,
the Groups interest in Gemfields increased from 33% to 48%. The transaction consolidates Gemfields position as the
worlds leading coloured gemstone company, creating a platform to increase Gemfields market share within the coloured
gemstone sector, with Fabergé becoming the obvious consumer choice for high-end, ethically supplied coloured gemstone
jewellery.
By utilising the iconic Fabergé name to boost the international presence and perception of coloured gemstones, Gemfields
will also gain entry to the global luxury goods market and further progress its mine and market vision, operating at
both ends of the value chain. The transaction should result in marketing, communication, management and supply synergies,
improving the operational efficiency of the enlarged entity. The business combination creates a platform to further
increase Gemfields market share within the coloured gemstone sector and to provide greater influence over product
positioning and consumer awareness.
Fabergé has continued to expand its global retail presence. Agreements with retail partners led to a standalone Fabergé
store opening in Kiev, Ukraine in December 2012 and to Fabergé products now being sold in Sydney, Australia and in Dubai
within the Burj Al Arab hotel, the Dubai Mall and the Mall of the Emirates.
Future growth for Gemfields is likely to be seen as the benefits of the merger with Fabergé are realised, the high wall
push back programme opens up additional areas of emerald production at Kagem, production ramps up at the Montepuez
ruby operation and new coloured gemstone assets are added to the portfolio.
Pallinghurst (Cayman) GP L.P.
September 2013
CONDENSED CONSOLIDATED INCOME STATEMENT
for the six months ended 30 June 2013
1 January 2013 1 January 2012 1 January 2012
to 30 June 2013 to 30 June 2012 to 31 December 2012
US$ US$ US$
INCOME Notes (reviewed) (reviewed) (audited)
Investment Portfolio
Realised fair value loss
on disposal of Fabergé equity shares 4 (7,952,380) - -
Realised loss on conversion of Fabergé loan
to Gemfields shares 4 (12,027,277) - -
Impairment of Fabergé loan 4 - - (1,638,471)
Realised gain on Sedibelo Platinum Mines
transaction 5 - - 50,932,811
Realised fair value gain on Jupiter shares 6 - - 3,250,521
Realised loss on Jupiter foreign exchange
contract 6 - - (318,880)
Unrealised fair value gains 8 17,787,178 23,478,958 18,255,119
Unrealised fair value losses 8 (34,155,899) (38,990,401) (119,429,986)
Unrealised foreign exchange gains 8 - 412,653 12,148,997
Unrealised foreign exchange losses 8 (36,339,667) (398,049) -
Realised foreign exchange gains - - 1,440,847
(72,688,045) (15,496,839) (35,359,042)
Investment Portfolio revenue
Loan interest income - - 1,681,340
Accrued interest and structuring fee - 576,608 375,000
- 576,608 2,056,340
Net losses on investments and income
from operations (72,688,045) (14,920,231) (33,302,702)
EXPENSES
Investment Managers Benefit (2,732,450) (2,313,887) (5,102,237)
Operating expenses (448,317) (388,168) (806,588)
Foreign exchange gains - 4,211 -
Foreign exchange losses (26,170) (354,508) (1,237,920)
(3,206,937) (3,052,352) (7,146,745)
Loss from operations (75,894,982) (17,972,583) (40,449,447)
Finance income 17,573 253,781 281,198
Finance costs - - -
Net finance income 17,573 253,781 281,198
Loss before share in (loss)/profit of associates (75,877,409) (17,718,802) (40,168,249)
Share in (loss)/profit of associates (473,989) 3,134,545 1,119,941
Loss before tax (76,351,398) (14,584,257) (39,048,308)
Tax - - -
NET LOSS AFTER TAX (76,351,398) (14,584,257) (39,048,308)
Basic and diluted loss per ordinary share 11 (0.10) (0.03) (0.06)
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 30 June 2013
1 January 2013 1 January 2012 1 January 2012
to 30 June 2013 to 30 June 2012 to 31 December 2012
US$ US$ US$
(reviewed) (reviewed) (audited)
NET LOSS AFTER TAX (76,351,398) (14,584,257) (39,048,308)
Items of other comprehensive income - - -
TOTAL COMPREHENSIVE EXPENSE FOR THE PERIOD/YEAR (76,351,398) (14,584,257) (39,048,308)
CONDENSED CONSOLIDATED BALANCE SHEET
as at 30 June 2013
30 June 2013 30 June 2012 31 December 2012
US$ US$ US$
Notes (reviewed) (reviewed) (audited)
ASSETS
Non-current assets
Investments in associates 1,011,353 3,824,226 1,936,241
Investment Portfolio
Quoted investments 8 117,967,762 109,963,001 97,675,366
Unquoted investments 8 176,202,162 210,566,459 217,951,326
Loans and receivables 8 - 36,137,699 50,599,070
294,169,924 356,667,159 366,225,762
Total non-current assets 295,181,277 360,491,385 368,162,003
Current assets
Trade and other receivables 1,514,819 1,426,402 1,379,301
Cash and cash equivalents 28,313,565 38,034,988 31,975,952
Other investments 58,851 - -
Total current assets 29,887,235 39,461,390 33,355,253
Total assets 325,068,512 399,952,775 401,517,256
LIABILITIES
Current liabilities
Trade and other payables 61,998 729,587 159,344
Total current liabilities 61,998 729,587 159,344
Total liabilities 61,998 729,587 159,344
Net assets 325,006,514 399,223,188 401,357,912
Capital and reserves attributable to equity holders
Share capital 7,606 6,637 7,606
Share premium 375,227,145 348,629,339 375,227,145
Retained (losses)/earnings (50,228,237) 50,587,212 26,123,161
EQUITY 325,006,514 399,223,188 401,357,912
NAV and tangible NAV per share 11 0.43 0.60 0.53
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended 30 June 2013
1 January 2013 1 January 2012 1 January 2012
to 30 June 2013 to 30 June 2012 to 31 December 2012
US$ US$ US$
Notes (reviewed) (reviewed) (audited)
Cash outflows from operations 9 (3,384,759) (2,422,780) (5,777,691)
Additions to investments (632,207) (20,378,146) (33,699,110)
Loans extended to investments - (13,125,000) (28,120,111)
Finance income received 17,573 253,781 281,198
Net cash outflows from operating activities (3,999,393) (35,672,145) (67,315,714)
Cash flows from investing activities
Amounts invested in associates (71,356) - (141,729)
Decrease in investments in associates - 20,378,146 20,393,255
Amounts returned from associates 434,532 - -
Net cash from investing activities 63,176 20,378,146 20,251,526
Cash flows from financing activities
Rights Offer- proceeds 7 - 50,638,596 77,241,092
Rights Offer- costs 7 - (2,184,255) (2,187,704)
Rights Offer- foreign exchange losses 7 - (49,384) (49,655)
Net cash generated from financing activities - 48,404,957 75,003,733
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS (3,636,217) 33,110,958 27,939,545
Cash and cash equivalents at the beginning of
the period/year 31,975,952 5,274,327 5,274,327
Foreign exchange gain on cash - 4,211 -
Foreign exchange loss on cash (26,170) (354,508) (1,237,920)
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD/YEAR 28,313,565 38,034,988 31,975,952
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 30 June 2013
Share Share Retained Total equity
capital premium earnings/losses
US$ US$ US$ US$
Balance at 1 January 2012 4,760 300,226,258 65,171,469 365,402,487
Rights Offer- proceeds 1,877 50,636,720 - 50,638,597
Rights Offer- costs - (2,184,255) - (2,184,255)
Rights Offer- foreign exchange losses - (49,384) - (49,384)
Total comprehensive loss for the period - - (14,584,257) (14,584,257)
Balance at 30 June 2012 (reviewed) 6,637 348,629,339 50,587,212 399,223,188
Rights Offer- proceeds 969 26,601,526 - 26,602,495
Rights Offer- costs - (3,449) - (3,449)
Rights Offer- foreign exchange losses - (271) - (271)
Total comprehensive loss for the period - - (24,464,051) (24,464,051)
Balance at 31 December 2012 (audited) 7,606 375,227,145 26,123,161 401,357,912
Total comprehensive loss for the period - - (76,351,398) (76,351,398)
Balance at 30 June 2013 (reviewed) 7,606 375,227,145 (50,228,237) 325,006,514
NOTES TO THE INTERIM FINANCIAL STATEMENTS
for the six months ended 30 June 2013
1. General information
These financial statements within the Interim Report are for the interim period from 1 January 2013 to 30 June 2013 (the
Interim Financial Statements). The financial information for the year ended 31 December 2012 included in these Interim
Financial Statements does not constitute statutory Financial Statements as defined in The Companies (Guernsey) Law, 2008.
The information included in this document for the comparative year was derived from the Annual Report and Financial
Statements for the year ended 31 December 2012 (the Annual Financial Statements), a copy of which has been delivered
to the Guernsey Financial Services Commission, the Johannesburg Stock Exchange (JSE) and the Bermuda Stock Exchange.
he auditors report on the Annual Financial Statements was unqualified, did not draw attention to any matters by way of
emphasis, and stated that the Annual Financial Statements had been properly prepared in accordance with The Companies
(Guernsey) Law, 2008.
2. Accounting policies
Basis of accounting
These Interim Financial Statements have been prepared in accordance with IAS34 Interim Financial Reporting (IAS34) and
applicable legal and regulatory requirements of The Companies (Guernsey) Law, 2008. They do not include all of the
information required for full financial statements and are to be read in conjunction with the Groups most recent Annual
Financial Statements. The Groups Annual Financial Statements were prepared under International Financial Reporting
Standards (IFRS) and the financial reporting guides issued by the Accounting Practices Committee of the South African
Institute of Chartered Accountants (the SAICA Reporting Guides).
The Interim Financial Statements have been prepared on the historic cost basis, except for the valuation of certain
equity investments held within the Investment Portfolio. These equity investments are measured at fair value not historic
cost. Historic cost is generally based on the fair value of the consideration given in exchange for the assets. Other
than information contained within the Condensed Consolidated Statement of Cash Flows, the Interim Financial Statements
have been prepared on the accruals basis.
As the Group is an investment holding company, materially all of the Groups results are related to the Groups investment
valuations. As such, the Groups interim results are not directly affected by seasonality or the cyclicality of
operations. The portfolio companys most recent financial results do not usually directly impact upon the fair value of
that portfolio company. There is no direct link between the fair value of the Groups mining investments and their
seasonal operating cycle. All the Groups investments are at an early stage of their development and other factors are
usually more relevant in determining fair value than seasonality or cyclicality of operations.
The principal accounting policies applied are consistent with those adopted and disclosed in the Annual Financial
Statements other than as follows:
Segmental reporting
Gemfields completed its merger with Fabergé on 28 January 2013, as described in Note 4 Realised loss on Gemfields/Fabergé
Merger. The Group no longer holds a direct interest in Fabergé and will present segmental information for its enlarged
interest in Gemfields as a single Coloured Gemstones & Luxury Brands segment. The Groups comparative information has
been reclassified to align with the revised current year presentation. Restated balance sheets for the relevant prior
periods have not been presented as the restatement would not have any impact on these balance sheets.
Adoption of new accounting standards
The Group has adopted IFRS10 Consolidated Financial Statements (IFRS10), IFRS11 Joint Arrangements (IFRS11), and
IFRS12 Disclosures of Involvement with Other Entities (IFRS12) effective 1 January 2013. IFRS10 has replaced the
elements of IAS27 Consolidated and Separate Financial Statements (IAS27) that relate to consolidated financial
statements, and SIC-12 Consolidation Special Purpose Entities.
Under IFRS10, the Group is deemed to control an investee if it has all of the following:
Power over the investee.
Exposure, or rights, to variable returns from its involvement with the investee.
The ability to use its power over the investee to affect the Groups returns.
The Group has also adopted IAS28 Investment in Associates and Joint Ventures ("IAS28") and the revised IAS27 Separate
Financial Statements. These five new and revised standards are known together as the package of five. The adoption of
the package of five has not had any material impact on the Groups accounting for its subsidiaries, associates or joint
ventures.
Associates and joint ventures that are part of the Group's Investment Portfolio
Associates and joint ventures that are held as part of the Group's Investment Portfolio are measured at fair value under
IAS39 Financial Instruments: Recognition and Measurement (IAS39) in line with the exemptions contained within IAS28.
Investment entities
In October 2012, the IASB issued Investment Entities (Amendments to IFRS10, IFRS12 and IAS27) (the Investment Entities
Amendments). These amendments including the following:
The creation of a definition of an investment entity.
The requirement that investment entities measure investments in subsidiaries at fair value through profit or
loss (rather than consolidating such interests).
New disclosure requirements.
Requirements for an investment entitys separate financial statements.
The Investment Entities Amendments are effective from 1 January 2014 with early adoption permitted. The Directors have
not early adopted the Investment Entities Amendments in the period to 30 June 2013. The Directors believe that the early
adoption of the Investment Entities Amendments would not have had an impact on the Groups balance sheet in this
reporting period although the adoption of the Investment Entities Amendments may affect the Groups accounting in the
future.
Early adoption of IFRS13 and revised definition of fair value
The Group early adopted IFRS13 Fair Value Measurement (IFRS13) during 2011. IFRS13 defines fair value as the price
that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market
participants at the measurement date. The revised definition of fair value has not had a material impact on the
valuation of the Groups Investment Portfolio since 2011.
Other investments
The Groups balance sheet includes certain listed equity investments which do not form part of the Investment Portfolio.
These investments are designated at fair value through profit or loss (FVTPL) at inception and are initially measured
at the fair value of consideration paid. Listed equity investments are usually valued at the mid- price on the valuation
date. These investments do not form part of the Investment Portfolio and are immaterial.
Headline Loss Per Share
Circular 2/2013 Headline Earnings (the Circular) was released during the six months ended 30 June 2013 and has been
formally incorporated into the JSE Listing Requirements.
The Circular is effective for financial periods ending on or after 31 July 2013 and can also be voluntarily early
adopted. The Group has chosen to early adopt the Circular in the current period. This has had no impact on headline
earnings in either the current or any comparative period.
3. Segmental reporting
The Groups segmental reporting is based around three investment platforms (PGMs, Steel Making Materials and Coloured
Gemstones & Luxury Brands), each of which is categorised as an operating segment. The Chief Operating Decision Maker
(CODM) is Mr Gilbertson, the Chairman, who measures the performance of each operating segment on a regular basis.
The Income Statement segmental information provided to the CODM for the six months ended 30 June 2013 is as follows:
Coloured
Gemstones
Steel Making & Luxury
PGMs Materials Brands Unallocated Total
30 June 2013 US$ US$ US$ US$ US$
(reviewed) (reviewed) (reviewed) (reviewed) (reviewed)
Realised fair value loss
on disposal of Fabergé
equity shares - - (7,952,380) - (7,952,380)
Realised loss on conversion
of Fabergé loan to
Gemfields shares - - (12,027,277) - (12,027,277)
Unrealised fair value gains 17,787,178 - - - 17,787,178
Unrealised fair value losses - (7,807,483) (26,348,416) - (34,155,899)
Unrealised foreign exchange
losses (26,080,468) (4,558,312) (5,700,887) - (36,339,667)
Net segmental expense (8,293,290) (12,365,795) (52,028,960) - (72,688,045)
Other income - -
Net losses on investments
and income from operations (72,688,045)
Expenses, net finance income,
share of loss of associates and
taxation (3,663,353) (3,663,353)
Net segmental (loss)/profit (8,293,290) (12,365,795) (52,028,960) (3,663,353) (76,351,398)
The Income Statement segmental information provided to the CODM for the six months ended 30 June 2012 is as follows:
Coloured
Gemstones
Steel Making & Luxury
PGMs Materials Brands Unallocated Total
30 June 2012 US$ US$ US$ US$ US$
(reviewed) (reviewed) (reviewed) (reviewed) (reviewed)
(restated) (restated) (restated) (restated) (restated)
Unrealised fair value gains - - 23,478,958 - 23,478,958
Unrealised fair value losses - (38,990,401) - - (38,990,401)
Unrealised foreign exchange
gains - - 412,653 - 412,653
Unrealised foreign exchange
losses (268,249) (129,800) - - (398,049)
Loan interest income - - 576,608 - 576,608
Net segmental (expense)/income(268,249) (39,120,201) 4,468,219 - (14,920,231)
Other income - -
Net losses on investments
and income from operations (14,920,231)
Expenses, net finance income,
share of profit of associates
and taxation 335,974 335,974
Net segmental (loss)/profit (268,249) (39,120,201) 24,468,219 335,974 (14,584,257)
The Income Statement segmental information provided to the CODM for the year ended 31 December 2012 is as follows:
Coloured
Gemstones
Steel Making & Luxury
PGMs Materials Brands Unallocated Total
31 December 2012 US$ US$ US$ US$ US$
(audited) (audited) (audited) (audited) (audited)
(restated) (restated) (restated) (restated) (restated)
Impairment of Fabergé loan - - (1,638,471) - (1,638,471)
Realised gain on Sedibelo
Platinum Mines transaction 50,932,811 - - - 50,932,811
Realised loss on Jupiter
foreign exchange contract - (318,880) - - (318,880)
Realised fair value gain
on Jupiter shares - 3,250,521 - - 3,250,521
Unrealised fair value gains - - 18,255,119 - 18,255,119
Unrealised fair value losses - (65,879,656) (53,550,330) - (119,429,986)
Unrealised foreign exchange
gains 8,293,290 1,977,488 1,878,219 - 12,148,997
Realised foreign exchange gain 1,440,847 - - - 1,440,847
Loan interest income - - 1,681,340 - 1,681,340
Net segmental income/(expense) 60,666,948 (60,970,527) (33,374,123) - (33,677,702)
Other income 375,000 375,000
Net losses on investments and
income from operations (33,302,702)
Expenses, net finance income,
share of profit of associates and
taxation (5,745,606) (5,745,606)
Net segmental profit/ (loss) 60,666,948 (60,970,527) (33,374,123)(5,370,606) (39,048,308)
The segmental information provided to the CODM for the reportable segments for the period ended 30 June 2013 is as
follows:
Coloured
Gemstones
Steel Making & Luxury
PGMs Materials Brands Total
30 June 2013 US$ US$ US$ US$
(reviewed) (reviewed) (reviewed) (reviewed)
Investment Portfolio
Listed investments - 26,372,627 91,595,135 117,967,762
Unlisted investments 176,202,162 - - 176,202,162
Total segmental assets 176,202,162 26,372,627 91,595,135 294,169,924
Investments in associates,
current assets and liabilities 30,836,590
Net assets 325,006,514
The comparative segmental information provided for the period ended 30 June 2012 is as follows:
Coloured
Gemstones
Steel Making & Luxury
PGMs Materials Brands Total
30 June 2012 US$ US$ US$ US$
(reviewed) (reviewed) (reviewed) (reviewed)
(restated) (restated) (restated) (restated)
Investment Portfolio
Listed investments - 46,635,577 63,327,424 109,963,001
Unlisted investments 123,560,255 - 87,006,204 210,566,459
Loans and receivables - - 36,137,699 36,137,699
Total segmental assets 123,560,255 46,635,577 186,471,327 356,667,159
Investments in associates, current assets and liabilities 42,556,029
Net assets 399,223,188
The comparative segmental information provided for the year ended 31 December 2012 is as follows:
Coloured
Gemstones
Steel Making & Luxury
PGMs Materials Brands Total
31 December 2012 US$ US$ US$ US$
(audited) (audited) (audited) (audited)
(restated) (restated) (restated) (restated)
Investment Portfolio
Listed investments - 38,106,215 59,569,151 97,675,366
Unlisted investments 184,495,452 - 33,455,874 217,951,326
Loans and receivables - - 50,599,070 50,599,070
Total segmental assets 184,495,452 38,106,215 143,624,095 366,225,762
Investments in associates, current assets and liabilities 35,132,150
Net assets 401,357,912
4. Realised loss on Gemfields/Fabergé Merger
Gemfields completed its merger with Fabergé during the period. The shareholders of Fabergé (including the Group) vended
their equity interests in Fabergé in return for 213,999,999 new shares in Gemfields representing approximately 40% of
Gemfields fully diluted enlarged share capital. The Group previously owned equity interests of 33% in Gemfields and 49%
in Fabergé. The Group vended its shares in Fabergé into Gemfields in return for new Gemfields shares effective 28 January
2013.
The Group had also made certain loans to Fabergé totalling US$50 million at 31 December 2012 (excluding interest,
including structuring fees). The US$50 million loan was convertible into Fabergé shares at US$35 per share under certain
conditions. These conditions were either if the loan was not repaid by 31 August 2013; or if a transaction or corporate
event occurred which affected more than 30% of Fabergés shares in issue. The Gemfields/Fabergé Merger met the latter
criterion and the Group therefore decided to convert its loan interests in Fabergé to equity (conditional upon completion
of the transaction). The Group converted its loan into new Fabergé shares which were immediately vended into Gemfields
in return for new Gemfields shares, also effective 28 January 2013.
The Group realised a loss for accounting purposes on completion of the Gemfields/Fabergé Merger, as follows:
US$
Realised fair value loss on disposal of Fabergé equity shares
Fair value of 60,290,905 Gemfields shares receivable 25,503,494
Fair value of Fabergé equity interest at 31 December 2012 (33,455,874)
(7,952,380)
Realised loss on conversion of Fabergé loan to Gemfields shares
Fair value of 91,184,694 Gemfields shares receivable 38,571,793
Previous carrying value of Fabergé loan at 31 December 2012 (50,599,070)
(12,027,277)
Post completion of the transaction, the Group owns a 48% interest in the enlarged Gemfields. The fair value of the
Gemfields shares acquired at 28 January 2013 was US$64,075,287.
There were no comparative amounts at 30 June 2012.
At 31 December 2012, the terms of the Gemfields/Fabergé Merger had been agreed but the transaction had not yet completed.
The valuation of the Groups interest in Fabergé at 31 December 2012 was based on the number of Gemfields shares
receivable, multiplied by the prevailing Gemfields share price and exchange rate. The unrealised fair value losses
included in the Consolidated Income Statement for the year to 31 December 2012 were based on the difference between
these valuations and the previous carrying values of these assets. This resulted in an unrealised fair value loss of
US$53,550,330 which is included within the total unrealised fair value loss of US$119,429,968 in the year to 31
December 2012, see Note 8 Investments for more detail.
The Fabergé loan was assessed for impairment at 31 December 2012. The fair value of the loan (based on the number of
Gemfields shares into which it would subsequently be converted), was lower than the previous carrying value of the loan,
which resulted in an impairment of US$1,638,471 in the year to 31 December 2012.
5. Realised gain on Sedibelo Platinum Mines transaction
The consolidation of the three contiguous properties of Pilanesberg Platinum Mines (PPM), Sedibelo and Magazynskraal,
in the North West Province of South Africa (the Consolidation) was identified at the outset of Pallinghursts
investment into PGMs as the key to unlocking significant value by creating a low cost PGM producer of industry
significance with a shallow resource base. The assets were vended into Platmin (which is to be renamed Sedibelo Platinum
Mines (1)) in return for new equity shares.
The completion of the Consolidation enabled the IDC to complete its investment into Sedibelo Platinum Mines on 3
December 2012, as this had been one of the conditions precedent for the IDCs investment. The completion of these
transactions gave an implied fair value for the Groups 6.73% interest in Sedibelo Platinum Mines of US$176,202,162.
The Groups gain on completion in the comparative year to 31 December 2012 was as follows:
US$
Fair value of net assets acquired
Acquisition of 202,364,933 shares in Sedibelo Platinum Mines 176,202,162
Fair value of assets disposed
Fair value of interest in Platmin (54,896,546)
Fair value of interest in the Moepi Group (13,373,315)
Fair value of interest in Magazynskraal (38,477,293)
Fair value of interest in Sedibelo (18,522,197)
(125,269,351)
Realised gain on Sedibelo Platinum Mines transaction 50,932,811
There are no equivalent amounts in either the current period to 30 June 2013 or the comparative period to 30 June 2012.
(1) It is anticipated that Platmin will be renamed Sedibelo Platinum Mines. Platmin has been referred to as Sedibelo
Platinum Mines throughout this Interim Report, although the change of name is not yet in effect.
6. Realised gain on subscription for Jupiter shares
Jupiter completed a capital raising during 2012 to support the development of its assets.
The Group subscribed for its full entitlement under the terms of the Jupiter Rights Offer, which was for 79,216,009
shares at a cost of AUD12,674,561. The Group received the shares on 3 September 2012. The Groups revised Jupiter
shareholding was 380,236,843 shares (of 2,281,835,383 shares in issue), which maintained the Groups percentage interest
in Jupiter at 16.66% both pre and post the Jupiter Rights Offer.
The Group realised the following gain on the acquisition:
Number of shares Price per share in AUD AUD US$
Realised fair value gain on acquisition
of Jupiter shares
Subscription price for new Jupiter shares
(21 August 2012) 79,216,009 0.16 (12,674,561) (13,002,084)
Fair value of Jupiter shares
at date of receipt (3 September 2012) 79,216,009 0.20 15,843,202 16,252,605
Realised fair value gain on
Jupiter acquisition 3,168,641 3,250,521
In addition, the Group entered into a contract to hedge the foreign exchange risk relating to the potential movement in
the US$/AUD foreign exchange rate between the date of commitment to acquire new shares and the date of completion. The
loss on this contract was as follows:
AUD US$
Realised foreign exchange loss on forward contract to acquire Jupiter shares
Fair value of foreign exchange contract at date of commitment (21 August 2012) (12,674,561) (13,320,964)
Fair value of foreign exchange contract at completion (3 September 2012) 12,674,561 13,002,084
Realised loss on Jupiter foreign exchange contract - (318,880)
There are no equivalent amounts in either the current period or the comparative period to 30 June 2012.
7. Completion of Rights Offer during 2012
The Company completed a rights offer (the Rights Offer) to shareholders on 25 July 2012. Shareholders had the right
to subscribe for new shares, proportionate to their existing shareholdings, at ZAR2.24 per share. The Company issued
284,648,771 new shares, raising ZAR637,613,247 before foreign exchange and transaction costs. This impacted on both
share capital and share premium in the six months ended 30 June 2012 and the year ended 31 December 2012.
The Rights Offer did not have a financial impact on the Group in the current period.
Impact of Rights Offer
The Rights Offer raised proceeds of US$77,241,092 in the year to 31 December 2012 (six months ended 30 June 2012:
US$50,638,596).
The costs associated with the Rights Offer in the year to 31 December 2012 can be broken down as follows:
Costs US$
Pre-placement fee 1,519,158
Investment bank fee 500,000
Legal fees 49,009
Stock exchange costs 39,834
Bank costs 35,640
Independent reporting accountants fee 6,055
Printing, publication, distribution and advertising expenses 38,008
2,187,704
The Group incurred foreign exchange losses related to the Rights Offer of US$49,655 in the year to 31 December 2012
(six months ended 30 June 2012: US$49,384).
8. Investments
The reconciliation of the Investment Portfolio from 1 January 2013 to 30 June 2013 is as follows:
Realised
Unrealised Unrealised loss on
Unrealised Unrealised foreign foreign Gemfields/ Additions
Opening at 1 fair value fair value exchange exchange Faberge and Closing at 30
January 2013 gains losses gains losses Merger (1) disposals(2),(3) June 2013
US$ US$ US$ US$ US$ US$ US$ US$
(reviewed) (reviewed) (reviewed) (reviewed) (reviewed) (reviewed) (reviewed) (reviewed)
Investment
Listed equity investments
Gemfields 59,569,151 - (26,348,416) - (5,700,887) - 64,075,287 91,595,135
Jupiter 38,106,215 - (7,807,483) - (4,558,312) - 632,207 26,372,627
97,675,366 - (34,155,899) - (10,259,199) - 64,707,494 117,967,762
Unlisted equity investments
Fabergé 33,455,874 - - - - (7,952,380) (25,503,494) -
Sedibelo
Platinum
Mines 184,495,452 17,787,178 - - (26,080,468) - - 176,202,162
217,951,326 17,787,178 - - (26,080,468) (7,952,380) (25,503,494) 176,202,162
Loans and receivables
Fabergé-
US$50 mil
lion loan 50,599,070 - - - - (12,027,277) (38,571,793) -
50,599,070 - - - - (12,027,277) (38,571,793) -
Total 366,225,762 17,787,178 (34,155,899) - (36,339,667) (19,979,657) 632,207 294,169,924
(1) See Note 4 Realised loss on Gemfields/Fabergé Merger.
(2) See Note 4 Realised loss on Gemfields/Fabergé Merger.
(3) The Group acquired 9,432,978 Jupiter shares during June 2013 for a cost of US$632,207.
The reconciliation of the Investment Portfolio from 1 January 2012 to 30 June 2012 is as follows:
Unrealised Unrealised Accrued Renego-
Unrealised Unrealised foreign foreign Additions interest & tiation of
Opening at 1 fair value fair value exchange exchange and restructuring Faberge Closing
January 2012 gains losses gains losses disposalse fee 2013 loan fac at 30
US$ US$ US$ US$ US$ US$ US$ US$ June 2012
(reviewed) (reviewed) (reviewed) (reviewed) (reviewed) (reviewed) (reviewed) (reviewed) (reviewed)
Investment
Listed equity investments
Jupiter 85,755,778 - (38,990,401) - (129,800) - - - 46,635,577
Gemfields 39,435,813 23,478,958 - 412,653 - - - - 63,327,424
125,191,591 23,478,958 (38,990,401) 412,653 (129,800) - - - 109,963,001
Unlisted equity investments
Platmin 53,455,699 - - - (268,249) - - - 53,187,450
Moepi Grp 13,373,315 - - - - - - - 13,373,315
Richtrau 36,621,344 - - - - 1,855,949 - - 38,477,293
Sedibelo - - - - - 18,522,197 - - 18,522,197
Fabergé 87,006,204 - - - - - - - 87,006,204
190,456,562 - - - (268,249) 20,378,146 - - 210,566,459
Loans and receivables
Fabergé-
US$25 million
loan 22,436,091 - - - - 3,125,000 505,970 (26,067,061) -
Fabergé-
US$50 million
loan - - - - - 10,000,000 70,638 26,067,061 36,137,699
22,436,091 - - - - 13,125,000 576,608 - 36,137,699
Total
Investment
Portfolio 338,084,244 23,478,958 (38,990,401) 412,653 (398,049) 33,503,146 576,608 - 356,667,159
The reconciliation of the Investment Portfolio from 1 January 2012 to 31 December 2012 is as follows:
Unrealised Unrealised Accrued Renego-
Unrealised Unrealised foreign foreign Additions interest & tiation of
Opening at 1 fair value fair value exchange exchange and restructuring Faberge Closing
January 2012 gains losses gains losses disposalse fee 2013 loan fac at 31
US$ US$ US$ US$ US$ US$ US$ US$ Dec 2012
(audited) (audited) (audited) (audited) (audited) (audited) (audited) (audited) (audited)
Investment
Listed equity investments
Gemfields 39,435,813 18,255,119 - 1,878,219 - - - - 59,569,151
Jupiter 85,755,778 - (65,879,656) 1,977,488 - 16,252,605 - - 38,106,215
125,191,591 18,255,119 (65,879,656) 3,855,707 - 16,252,605 - - 97,675,366
Unlisted equity investments
Fabergé 87,006,204 - (53,550,330) - - - - - 33,455,874
Moepi
Group (1) 13,373,315 - - - - (13,373,315) - - -
Richtrau(1)36,621,344 - - - - (36,621,344) - - -
Platmin(1) 53,455,699 - - - 1,440,847 (54,896,546) - - -
Sedibelo
Platinum
Mines1 - - - 8,293,290 - 176,202,162 - - 184,495,452
190,456,562 - (53,550,330) 8,293,290 1,440,847 71,310,957 - - 217,951,326
Loans and receivables
Fabergé-
US$25 million
loan 22,436,091 - - - - (22,942,061) - 505,970 -
Fabergé-
US$50 million
loan - - - - - 51,062,172 (1,638,471) 1,175,369 50,599,070
22,436,091 - - - - 28,120,111 (1,638,471) 1,681,339 50,599,070
Total 338,084,244 18,255,119 (119,429,986) 12,148,997 1,440,847 115,683,673 (1,638,471) 1,681,339 366,225,762
(1) The Group vended its interests in Moepi Group, Richtrau (Magazynskraal) and Sedibelo into Sedibelo Platinum Mines for new
shares during the year ending 31 December 2012, see Note 5 Realised gain on Sedibelo Platinum Mines transaction for more
detail.
The valuation methodologies and other details for the Groups investments at 30 June 2013 are detailed below. The JSE
requires certain further information to be disclosed on the Groups ten largest investments. Since incorporation, the Group
has made eleven separate equity investments. In line with its strategic objectives, and in order to maximise value for
shareholders, the Group has consolidated these investments into its three current Investment Platforms through various
corporate actions including mergers and disposals. This has occurred most recently through the Gemfields/Fabergé Merger,
completed in January 2013 (see Note 4 Realised loss on Gemfields/Fabergé Merger) and the completion of the Consolidation of
the Groups African Queen interests in December 2012 (see Note 5 Realised gain on Sedibelo Platinum Mines transaction).
Although the reduction in the number of Investment Platforms has occurred in line with the Groups strategic objectives,
shareholders should be aware that the number of separate Investment Platforms has reduced. The impact of these transactions is
that the three Investment Platforms now account for the following proportion of the Groups NAV: African Queen: 54%,
Gemfields/Fabergé: 28% and Jupiter/Tshipi: 8%. In addition, the current cash balance accounts for a further 9% of NAV. The
Directors do not anticipate any change to the number of Investment Platforms in the foreseeable future.
Accordingly, fewer than ten separate investments were held at balance sheet date and following details are included for each
investment in the Investment Portfolio.
Sedibelo Platinum Mines Limited- equity
Nature of investment
The Group holds an equity interest in Sedibelo Platinum Mines, a producer of PGMs with interests in the Bushveld
Complex in South Africa.
The Consolidation of the three contiguous properties of PPM, Sedibelo and Magazynskraal was completed on 3 December 2012
and is described in Note 5 Realised gain on Sedibelo Platinum Mines transaction.
The Groups cash cost of investment for Sedibelo Platinum Mines is approximately US$123 million. The Groups first African
Queen investment was the acquisition of an interest in the Moepi Group made in August 2008.
Fair value methodology
Price of recent investment
The Groups interest in Sedibelo Platinum Mines has been valued using the Price of recent investment methodology. This
valuation is based on the Consolidation and the investment by the IDC.
The completion of the Consolidation and the investment by the IDC gave an implied fair value for the Groups 6.73%
indirect interest of US$176,202,162. The Directors believe that this US$ value best represents the fair value of the
Groups interes in Sedibelo Platinum Mines at 30 June 2013.
In reaching this conclusion, the Directors have noted that Sedibelo Platinum Mines operational results have improved
during 2013 and that most analysts and brokers forecast that PGM prices will increase over time. The industry consensus
is that there will likely be further supply-side constraints which may affect other platinum producers, primarily in
South Africa, combined with the likelihood of increased platinum consumption in the industrial, jewellery, chemical and
investment sectors.
The Groups interest is denominated in ZAR and has been revalued for the movement in the US$/ZAR exchange rate during the
period. The rate at 31 December 2012 was US$1/ZAR8.4726, compared to US$1/ZAR9.8675 at 30 June 2013. This has resulted in a
foreign exchange loss of US$26,080,468 during the period. The Directors do not believe that the valuation of the investment
should be reduced below US$176,202,162, whether due to foreign exchange movements or otherwise, as the valuation set on
3 December 2012 in US$ terms best reflects fair value. The Directors have not found any specific indicators of impairment.
The Directors have therefore included a fair value gain of US$17,787,178. The closing fair value of the Groups interest in
Sedibelo Platinum Mines is US$176,202,162.
Gemfields plc- equity
Nature of investment
The Group holds an equity interest in Gemfields, a leading international coloured gemstone producer, primarily focussed on
emeralds and rubies. Gemfields completed the 100% acquisition of Fabergé on 28 January 2013. Gemfields is listed on AIM.
The Group owns a see-through interest of approximately 48% in Gemfields at 30 June 2013. The Groups cost of investment is
approximately US$119 million and the Groups initial investment was made in October 2007.
Fair value methodology
Listed share price (Gemfields)
The Groups interest in Gemfields is valued at the 30 June 2013 mid-price of GBP0.2325 per share, translated at the closing
rate of US$1/GBP0.6572.
Jupiter Mines Limited- equity
Nature of investment
The Group holds an equity interest in Jupiter. Jupiter is based in Perth, Western Australia and its main asset is a 49.9%
interest in the Tshipi manganese joint venture in South Africa. Jupiter is listed on the ASX.
The Groups initial investment into Jupiter was made in May 2008. The Group owned an effective 17.08% interest in Jupiter
at 30 June 2013. During July 2013, the Group acquired a further 31,372,272 shares in Jupiter, see Note 15 Events occurring
after the end of the period for detail. The Groups percentage interest in Jupiter has increased to 18.45%.
The Groups cash cost of investment is approximately US$27 million.
Fair value methodology Listed share price (Jupiter)
The Groups interest in Jupiter is valued at the 30 June 2013 mid-price of AUD0.0740 per share, translated at the closing rate of
US$1/AUD1.0934.
9. Cash flows from operations
1 January to 1 January to 1 January to
30 June 2013 30 June 2012 31 December 2012
US$ US$ US$
Notes (reviewed) (reviewed) (audited)
Net loss for the period/year (76,351,398) (14,584,257) (39,048,308)
Realised fair value loss on disposal of
Fabergé equity 4 7,952,380 - -
Realised loss on conversion of
Fabergé loan to Gemfields shares 4 12,027,277 - -
Impairment of Fabergé loan 4 - - 1,638,471
Realised gain on Sedibelo Platinum Mines
transaction 5 - - (50,932,811)
Realised loss on Jupiter foreign exchange
contract 6 - - 318,880
Realised fair value gain on Jupiter shares 6 - - (3,250,521)
Unrealised fair value gains 8 (17,787,178) (23,478,958) (18,255,119)
Unrealised fair value losses 8 34,155,899 38,990,401 119,429,986
Unrealised foreign exchange gains 8 - (412,653) (12,148,997)
Unrealised foreign exchange losses 8 36,339,667 398,049 -
Unrealised fair value loss on other investments 25,502 - -
Unrealised foreign exchange loss on other investments 3,370 - -
Realised foreign exchange gains 8 - - (1,440,847)
Accrued interest - (576,608) (1,681,340)
Foreign exchange gain on cash balances - (4,211) -
Foreign exchange loss on cash balances 26,170 354,508 1,237,920
Finance income (17,573) (253,781) (281,198)
Share in loss/(profit) of associates 473,989 (3,134,545) (1,119,941)
Increase in trade and other receivables (135,518) (246,670) (199,569)
(Decrease)/increase in trade and other payables (97,346) 525,945 (44,297)
Net cash outflows from operations (3,384,759) (2,422,780) (5,777,691)
10. Related parties
The Groups subsidiaries, joint ventures and associates are related parties. Investments within the Groups Investment
Portfolio are also usually related parties; the Investment Portfolio consists of investments held at fair value and loans
to portfolio companies. Related party transactions include entering into equity investments, exiting from equity investments
and loan transactions. The relevant related party transactions in the current and comparative periods are detailed in
Note 8 Investments.
Certain Directors act on the boards of the Groups portfolio companies. Mr Gilbertson is the Chairman of Sedibelo Platinum
Mines and Jupiter, and Mr Frandsen is a director of Sedibelo Platinum Mines.
The Investment Manager is a related party to the Group. Certain amounts are payable by the Group to the Investment Manager
as disclosed in the most recent Annual Report. The Investment Manager acts through its general partner, Pallinghurst
(Cayman) GP Limited. The directors of Pallinghurst (Cayman) GP Limited are Mr Gilbertson, Mr Frandsen, Mr Willis, Mr Harris
and Mr Tolcher.
Legis Fund Services Ltd (Legis) acts as the Groups administrator, company secretary and registrar. Mr Platt-Ransom,
Mr OMahoney and Ms White are directors of Legis and/or certain entities within the Legis group. Ms White resigned from the
Board on 15 March 2013. The Groups relationship with Legis is at arms length.
The Non-Executive Directors each receive a Directors fee of US$25,000 per annum, pro rated as necessary. In addition,
Mr Tolcher, Mr Platt-Ransom and Mr Harris each receive an additional US$3,000 for their roles as members of the Audit
Committee; Mr Tolcher receives an additional US$2,000 for his role as chair of the Audit Committee; and Mr Platt-Ransom
receives an extra US$2,000 for his role as the Lead Independent Director.
Transactions entered into with related parties were under terms no more favourable than those with third parties.
11. Net Asset Value and Headline Loss Per Share
NAV per share
The Groups US$ NAV per share is as follows:
30 June 2013 30 June 2012 31 December 2012
US$ US$ US$
(reviewed) (reviewed) (audited)
Net assets 325,006,514 399,223,192 401,357,918
Number of shares 760,452,631 663,451,510 760,452,631
NAV per share 0.43 0.60 0.53
Headline Loss Per Share
There are no reconciling items between Headline Loss Per Share (HLPS) and Loss Per Share (LPS). There are no dilutive
items to LPS. LPS is therefore equal to Diluted LPS.
The Groups HLPS is as follows:
30 June 2013 30 June 2012 31 December 2012
US$ US$ US$
(reviewed) (reviewed) (audited)
Loss for the period/year (76,351,398) (14,584,257) (39,048,308)
Weighted average number of shares 760,452,631 498,611,862 625,490,450
Headline Loss Per Share (0.10) (0.03) (0.06)
12. Financial instruments
The Group owns certain financial instruments that are measured at fair value subsequent to initial recognition. The equity
investments held within the Investment Portfolio fall into this category. In addition the Group owns certain other equity
investments which do not form part of the Investment Portfolio, held within Other investments on the balance sheet. The
following table provides an analysis of these financial instruments, grouped into Levels 1 to 3 based on the degree to
which fair value is observable:
Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical
assets or liabilities;
Level 2 fair value measurements are those derived from inputs (other than quoted prices included within Level 1)
that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices);
and
Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or
liability that are not based on observable market data (unobservable inputs).
30 June 2013 Level 1 Level 2 Level 3 Total
US$ US$ US$ US$
Financial assets at FVTPL
Equity investments 117,967,762 - 176,202,162 294,169,924
Other investments 58,851 - - 58,851
118,026,613 - 176,202,162 294,228,775
30 June 2012 Level 1 Level 2 Level 3 Total
US$ US$ US$ US$
Financial assets at FVTPL
Equity investments 109,963,001 - 210,566,459 320,529,460
Other investments - - - -
109,963,001 - 210,566,459 320,529,460
31 December 2012 Level 1 Level 2 Level 3 Total
US$ US$ US$ US$
Financial assets at FVTPL
Equity investments 97,675,366 - 217,951,326 315,626,692
Other investments - - - -
97,675,366 - 217,951,326 315,626,692
IFRS requires the presentation of a reconciliation of the Groups Level 3 financial assets from the beginning to the end of
the period. A reconciliation of the Groups equity investments, from 1 January 2013 to 30 June 2013 is provided below:
Level 1 Level 2 Level 3 Total
US$ US$ US$ US$
Financial assets at FVTPL
Balance at 1 January 2013 97,675,366 - 217,951,326 315,626,692
Realised fair value loss on
disposal of Fabergé equity - - (7,952,380) (7,952,380)
Fair value gains - - 17,787,178 17,787,178
Fair value losses (34,206,903) - - (34,206,903)
Foreign exchange losses (10,265,939) - (26,080,468) (36,346,407)
Additions 64,824,089 - - 64,824,089
Disposals - - (25,503,494) (25,503,494)
Balance at 30 June 2013 118,026,613 - 176,202,162 294,228,775
The comparative reconciliation of the Groups equity investments, from 1 January 2012 to 30 June 2012 is provided below:
Level 1 Level 2 Level 3 Total
US$ US$ US$ US$
Financial assets at FVTPL
Balance at 1 January 2012 125,191,591 - 190,456,562 315,648,153
Unrealised fair value gains 23,478,958 - - 23,478,958
Unrealiesd fair value losses (38,990,401) - - (38,990,401)
Unrealiesd foreign exchange gains 412,653 - - 412,653
Unrealised foreign exchange losses (129,800) - (268,249) (398,049)
Additions - - 20,378,146 20,378,146
Balance at 30 June 2012 109,963,001 - 210,566,459 320,529,460
The comparative reconciliation of the Groups equity investments, from 1 January 2012 to 31 December 2012 is provided below:
Level 1 Level 2 Level 3 Total
US$ US$ US$ US$
Financial assets at FVTPL
Balance at 1 January 2012 125,191,591 - 190,456,562 315,648,153
Unrealised fair value gains 18,255,119 - - 18,255,119
Unrealised fair value losses (65,879,656) - (53,550,330) (119,429,986)
Unrealised foreign exchange gains 3,855,707 - 8,293,290 12,148,997
Realised foreign exchange gains - - 1,440,847 1,440,847
Sedibelo Platinum Mines- additions - - 176,202,162 176,202,162
Sedibelo Platinum Mines- disposals - - (125,269,351) (125,269,351)
Additions 13,320,964 - 20,378,146 33,699,110
Realised loss on Jupiter foreign
exchange contract (318,880) - - (318,880)
Realised fair value gain
on Jupiter shares 3,250,521 - - 3,250,521
Balance at 31 December 2012 97,675,366 - 217,951,326 315,626,692
13. Contingent liabilities and contingent assets
The Group has acted as a limited guarantor for the lease of Fabergés New York retail outlet at 694 Madison Avenue since
31 August 2011. The circumstances relating to the guarantee have not changed since 31 December 2012. Since the completion
of the Gemfields/Fabergé Merger, it is the intention that Gemfields either undertake this guarantee on Fabergés behalf or
indemnify the Group against any potential liability to the landlord. The Directors assessment is that the maximum amount
of the Groups contingent liability continues to be US$219,000.
The Group had no other significant contingent liabilities or contingent assets at 30 June 2013, 30 June 2012 or 31 December
2012.
14. Commitments
The Group had no material commitments at the balance sheet date or the date of signature of these Financial Statements.
15. Events occurring after the end of the period
Acquisition of Jupiter shares
The Group acquired 9,432,978 Jupiter shares during June 2013 for a cost of US$632,207. These shares are included as
additions to the Groups investment in Jupiter, see Note 8 Investments. The Group also acquired 31,372,272 additional
Jupiter shares for US$2,008,995 during July 2013. This acquisition will be accounted for in the second half of the year.
The Group also acquired 22,404,185 Jupiter shares on behalf of certain Pallinghurst Co-Investors for US$1,450,156 during
July 2013. These shares have subsequently been disposed of at cost to the relevant Pallinghurst Co-Investors.
Interim Review Report
The Interim Report has been reviewed by the Groups auditor, Saffery Champness who have provided a report to the Company
(the Independent Review Report). The Independent Review Report is available from the registered office of the Company.
The Independent Review Report confirms that nothing has come to the auditors attention that might cause them to believe
that the Interim Report was not prepared, in all material respects, in accordance with IAS34 and the SAICA Reporting Guides.
Directors
Brian Gilbertson
Arne H. Frandsen
Andrew Willis (1)
Dr Christo Wiese (2)
Stuart Platt-Ransom (3)
Martin Tolcher
Clive Harris
Patricia White (4)
Chris Powell1
Brian OMahoney (3)
(1)The Board resolved to appoint Mr Powell as Permanent Alternate to Mr Willis on 15 March 2013. The appointment became
effective 22 March 2013.
(2) Dr Wiese was appointed to the Board effective 11 February 2013.
(3) Mr OMahoney acts as Permanent Alternate to Mr Platt-Ransom.
(4) Ms White resigned from the Board on 15 March 2013.
Investment Manager Administrator, Company Secretary and Registrar
Pallinghurst (Cayman) GP L.P. Legis Fund Services Limited
190 Elgin Avenue 11 New Street
George Town St Peter Port
Grand Cayman Guernsey
KY1-9005 GY1 2PF
Cayman Islands Channel Islands
Investment Advisor (London) Registered Office
Pallinghurst Advisors LLP 11 New Street
54 Jermyn Street St Peter Port
London Guernsey
SW1Y 6LX GY1 2PF
United Kingdom Channel Islands
Legal Advisor (Guernsey) Investment Advisor (South Africa)
Mourant Ozannes Pallinghurst Advisors (Pty) Limited
1 Le Marchant Street PO Box 12160
St Peter Port Die Boord
Guernsey Western Cape, 7613
GY1 4HP South Africa
Channel Islands
Legal Advisor (Bermuda) Legal Advisor (South Africa)
Appleby Global Edward Nathan Sonnenbergs Inc
Canons Court 150 West Street
22 Victoria Street Sandton, 2196
Hamilton HM12 South Africa
Bermuda
Investment Bank and JSE Sponsor BSX Sponsor
Investec Bank Limited Capital G BSX Services Limited
100 Grayston Drive 25 Reid Street, 4th Floor
Sandton, 2196 Hamilton HM11
South Africa Bermuda
South African Transfer Secretary Auditor
Computershare Investor Services Saffery Champness Chartered Accountants
(Proprietary) Limited PO Box 141
Ground Floor St Sampson
70 Marshall Street Guernsey
Johannesburg, 2001 GY1 3HS
South Africa Channel Islands
Date: 27/09/2013 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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