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Reviewed Condensed Consolidated Interim Financial Statements for the 6 months ended 31 March 2014
Tharisa plc
(Incorporated in the Republic of Cyprus with limited liability)
(Registration number: HE223412)
(Date of incorporation: 28 February 2008)
JSE code: THA
ISIN: CY0103562118
(“Tharisa” or the “Company”)
REVIEWED CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 31 MARCH 2014
SALIENT FEATURES
- Continued excellent safety performance with a Lost Time Injury Frequency
Rate of 0.15 per 200,000 man hours
- Revenue increased by 22.6% to US$126.1 million notwithstanding lower
commodity prices
- PGM production (5PGE + Au) increased to 38,400oz (2013: 28,000oz)
- Metallurgical grade chrome concentrate production of 500,000t
(2013: 584,700t)
- Foundry and chemical grade chrome concentrates production of
69,400t (2013: nil)
- Operating profit increased by 19.2% to US$7.4 million
- Basic and diluted loss per share of US$3.71
- Headline loss per share of US$3.70
- Net cash generated from operations of US$28.8 million
SUBSEQUENT EVENTS
- Listing on the JSE on 10 April 2014
- Capital raised of US$47.9 million (ZAR500.0 million)
- Pro forma cash on hand of US$50.7 million
- Pro forma earnings and headline earnings per share US$0.4 cents
- First phase magnetic separation test units installed and high energy
flotation cells commissioned
COMMENTARY
Dear Shareholder
Our concerted focus on safety resulted in the Tharisa Mine achieving a Lost
Time Injury Frequency Rate (LTIFR) of 0.15 per 200,000 man hours worked,
which ranks amongst the lowest LTIFRs in the PGM and chrome industries in
South Africa.
The Group continued the ramp-up of production at the Tharisa Mine with
increased revenue and operating profit being recorded during the six month
period under review. The increased revenue was achieved notwithstanding lower
commodity prices, through increased PGM production and the commencement of
production of premium chemical and foundry grade chrome concentrates.
The six months under review pre-dates the listing of the Company on the
Johannesburg Stock Exchange.
OPERATIONAL OVERVIEW
THARISA MINERALS
During the period the open pit mining footprint was increased in order to
expose the multiple middle-group (MG) layers, such that the blend of run of
mine feed stock into the Genesis and Voyager Plants could be optimised to
enhance the PGM recoveries and chrome concentrate yields. 1,957,800t of reef
was mined, an increase of 31.7% over the comparable period, equating to
81.6% of plant nameplate capacity. The PGM plant feed grade was 1.68g/t and
the chrome feed grade was 20.1% as planned.
Unseasonal heavy rains restricted access to the deeper levels in the open
pits. In order to maintain plant throughput, weathered ore from the shallower
sections of the pits was mined and ore stockpiles drawn down to supplement
fresh ore.
Pre-stripping was accelerated to increase mine flexibility and availability
of ore from each of the MG layers. As a consequence, the stripping ratio for
the period averaged 9.2 (on a cube for cube basis) against the life of mine
average of 8.5. The cost of this pre-stripping has been capitalised to
property, plant and equipment.
Plant availability, which is planned at 95%, averaged 90% due to equipment
failures on the Genesis and Voyager Plants. Plant redundancy limited total
plant downtime. To ensure similar equipment failures will not disrupt
production in future, long lead spares have been ordered. In line with the
transition from a development asset to an operating asset, a preventative
maintenance programme has been implemented.
Production of PGM concentrate (5PGE + Au) totalled 38,400oz, an increase of
21.7% over the comparable period. PGM recoveries averaged 48% for the period,
below the planned average of 61% due to the processing of more weathered ore
than planned and sub-optimal blending of feedstock to the Genesis and Voyager
Plants. The PGM concentrate is sold to Impala Refinery Services Limited
(“Impala”) in terms of the off-take agreement. The average PGM metal basket
price declined by approximately 5% over the comparable period.
Production of chrome concentrates totalled 569,400t with the inclusion for
the first time of 69,400t of premium chemical and foundry grade concentrates.
Chrome yield averaged 30% against the planned yield of 34.4%.
ARXO LOGISTICS
During the period, the bulk of the metallurgical grade chrome concentrates
was sold on a CIF basis to main ports in China, with the logistics chain
managed by Arxo Logistics. The chrome is shipped either in bulk from the
Richards Bay dry bulk terminal or via containers from Johannesburg and
transported by road to Durban from where it is shipped. The economies of
scale and in-house expertise have ensured that our transport costs, a major
cost of the Group, remain competitive. Approximately 40.6% of the chrome
concentrate export sales were shipped in bulk with the balance shipped via
containers. The premium foundry and chemical grade products are sold
primarily on an ex works basis and the logistics managed by the off-taker.
The PGM concentrate is transported by road from the Tharisa Mine to the
Impala refinery in terms of the off-take agreement.
ARXO RESOURCES
Chrome concentrate sales undertaken by Arxo Resources mainly into the Chinese
markets totalled 564,000t. The commodity prices have remained under pressure
with the average contract price being approximately 14% lower than the
average price for the comparable period.
Subsequent to the financial year end, Arxo Resources entered into a marketing
arrangement with Noble Resources International Pte Limited in relation to the
sale of 50,000tpm of metallurgical chrome concentrate, which equates to one
third of the steady state production of the Tharisa Mine.
GROUP OPERATING AND FINANCIAL PERFORMANCE
Group revenue totalled US$126.1 million, an increase of 22.6% relative to the
comparable period. The increase in revenue, notwithstanding lower commodity
prices, is as a result of an increase in PGM production as well as increased
revenue from the introduction of premium foundry and chemical grade products.
The gross profit margin reduced to 16.0% with a gross profit of
US$20.2 million from the comparable period gross profit margin of 21.1%.
This was mainly attributed to an increase in the mining costs due to the
operations being ramped up towards steady state and higher engineering costs
being incurred due to post-commissioning engineering optimisation including
accelerated mill re-linings, equipment repairs and maintenance costs.
After accounting for administration expenses the Group achieved an operating
profit of US$7.4 million, an increase of 19.2% over the comparable period.
Finance costs relate principally to the senior debt facility secured by
Tharisa Minerals. Debt repayments (capital and interest) effected on this
facility during the period amounted to US$15.3 million.
Changes in fair value of financial liabilities incurred a non-recurring
charge of US$30.6 million and relate to the fair value adjustment arising
from the internal rate of return of 25% that was payable to the preference
shareholders. These preference shares were subsequently converted into
ordinary shares (refer to section on subsequent events).
After accounting for the above financing costs, the Group incurred an
increased loss before taxation of US$31.1 million compared to the prior
period loss of US$22.1 million.
Foreign currency differences which are applicable where the Company has
funded the underlying subsidiaries with US$ funding and the reporting
currency of the underlying subsidiary is not in US$, amounted to
US$8.9 million against the comparable period charge of US$20.9 million.
Total comprehensive income remained substantially unchanged at
US$37.1 million.
The Group generated net cash from operations of US$28.8 million, a
significant turnaround from the comparable period when cash used in
operations totalled US$32.6 million. Overall there was a net decrease in cash
of US$11.2 million against the net decrease in cash over the comparable
period of US$28.7 million, leaving cash on hand of US$14.1 million. This cash
on hand excludes the required senior debt facility debt service reserve
account obligations in terms of which the funds held on long term deposits
increased by US$8.2 million to US$15.9 million.
SUBSEQUENT EVENTS
On 10 April 2014, the Company listed its ordinary share capital in the
“General Mining” sector of the Main Board of the Johannesburg Stock Exchange.
In terms of a private placement undertaken at the time of the listing, the
Company raised US$47.9 million (ZAR500.0 million) through the issue of new
ordinary shares at an issue price of ZAR38 per share. As a consequence of the
listing, the issued preference shares of the Company were converted into new
ordinary shares.
Pro forma financial statements are set out in the supplementary information.
The pro forma financial position taking into account the subsequent events
increases the net tangible asset value per share from a negative US$14.71 to
a positive US$0.96 and changes the headline loss per share from US$3.70 to
headline earnings per share of US$0.4 cents. Pro forma cash on hand totals
US$50.7 million.
The majority of the private placement proceeds, after listing costs and fees,
have been allocated to capital projects, the purchase of long lead item
spares and to working capital. The capital projects currently being
undertaken are focused on optimising chrome yield and PGM recovery. The
magnetic separation project to recover chrome fines has commenced with the
installation of two production scale magnetic separation units. To enhance
PGM recovery, three high energy flotation cells have been commissioned on the
cleaner flotation circuit while the remaining four planned high energy
flotation cells will be installed on the rougher and recleaner circuits by
the end of the current quarter.
OUTLOOK
The economic demand fundamentals for both PGMs and chrome remain sound
underpinned by supply constraints providing a platform for more favourable
commodity prices. Since 31 March 2014, the PGM basket price and chrome
concentrate prices have increased and continue to show signs of
strengthening.
The capital projects being undertaken by the Group are being implemented as
planned.
The production outlook for the current financial year is between 80,000oz and
90,000oz of PGMs (5PGE + Au) and between 1,150,000t and 1,300,000t of chrome
concentrates.
The Group remains on track to achieve steady state annualised production
during the 2016 financial year.
On behalf of the Board
Phoevos Pouroulis Michael Jones
Chief Executive Officer Chief Finance Officer
11 June 2014
PREPARATION OF CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
The condensed consolidated interim financial statements as set out within
this report have been prepared and presented in accordance with International
Accounting Standard, (IAS) 34 Interim Financial Reporting. Their preparation
was supervised by the Chief Finance Officer, Michael Jones, a Chartered
Accountant (SA).
These results have been reviewed by Tharisa plc’s auditors, KPMG Limited.
Their unqualified review report is available for inspection at the Company’s
registered office. Any reference to future financial performance included in
this announcement, has not been reviewed or reported on by the Company’s
auditors.
The condensed consolidated interim financial statements were published on
17 June 2014.
INDEPENDENT AUDITOR’S REVIEW REPORT ON INTERIM FINANCIAL STATEMENTS
To the shareholders of Tharisa plc
We have reviewed the condensed consolidated financial statements of Tharisa
plc, contained in the accompanying interim report, which comprise the
condensed consolidated statement of financial position as at 31 March 2014
and the condensed consolidated statements of profit or loss and other
comprehensive income, changes in equity and cash flows for the six months
then ended, and selected explanatory notes.
Directors’ responsibility for the interim financial statements
The directors are responsible for the preparation and presentation of these
interim financial statements in accordance with the International Accounting
Standard, (IAS) 34 Interim Financial Reporting, and for such internal control
as the directors determine is necessary to enable the preparation of interim
financial statements that are free from material misstatement, whether due to
fraud or error.
Auditors’ responsibility
Our responsibility is to express a conclusion on these interim financial
statements. We conducted our review in accordance with International Standard
on Review Engagements (ISRE) 2410, Review of Interim Financial Information
Performed by the Independent Auditor of the Entity. ISRE 2410 requires us to
conclude whether anything has come to our attention that causes us to believe
that the interim financial statements are not prepared in all material
respects in accordance with the applicable financial reporting framework.
This standard also requires us to comply with relevant ethical requirements.
A review of interim financial statements in accordance with ISRE 2410 is a
limited assurance engagement. We perform procedures, primarily consisting of
making inquiries of management and others within the entity, as appropriate,
and applying analytical procedures, and evaluate the evidence obtained.
The procedures performed in a review are substantially less than and differ
in nature from those performed in an audit conducted in accordance with
International Standards on Auditing. Accordingly, we do not express an audit
opinion on these financial statements.
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the accompanying condensed consolidated interim financial
statements of Tharisa plc for the six months ended 31 March 2014 are not
prepared, in all material respects, in accordance with the International
Accounting Standard, (IAS) 34 Interim Financial Reporting.
Other matters
The salient features, commentary and supplementary information do not form
part of the condensed consolidated interim financial statements and are
presented as additional information. We have not audited this information and
accordingly we do not express an opinion thereon.
Michael M. Antoniades, FCA
Certified Public Accountant and Registered Auditor for and on behalf of
KPMG Limited
Certified Public Accountants and Registered Auditors
14 Esperidon Street
1087, Nicosia
Cyprus
11 June 2014
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME
Six months ended 31 March
2014 2013
Note US$’000 US$’000
Revenue 4 126,138 102,864
Cost of sales 4 (105,908) (81,161)
Gross profit 20,230 21,703
Other income 27 29
Administrative expenses (12,817) (15,488)
Results from operating activities 7,440 6,244
Finance income 330 357
Finance costs (8,284) (7,785)
Changes in fair value of financial liabilities
at fair value through profit or loss (30,635) (20,920)
Net finance costs (38,589) (28,348)
Loss before tax (31,149) (22,104)
Income tax credit 6 2,911 5,478
Loss for the period (28,238) (16,626)
Other comprehensive income
Items that will never be classified to
profit or loss - -
Items that are or may be reclassified
subsequently to profit or loss
Foreign currency translation differences for
foreign operations, net of tax (8,876) (20,936)
Other comprehensive income for the period,
net of tax (8,876) (20,936)
Total comprehensive income for the period (37,114) (37,562)
Loss for the period attributable to:
Owners of the Company (28,422) (18,153)
Non-controlling interests 184 1,527
Loss for the period (28,238) (16,626)
Total comprehensive income for the period
attributable to:
Owners of the Company (35,247) (33,253)
Non-controlling interests (1,867) (4,309)
Total comprehensive income for the period (37,114) (37,562)
Loss per share
Basic and diluted loss per share 5 (3.71) (2.37)
The notes that follow form part of the condensed consolidated interim
financial statements.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 March 2014 30 Sept 2013
Note US$’000 US$’000
ASSETS
Property, plant and equipment 7 261,286 269,130
Goodwill 8 1,327 1,427
Deferred tax assets 23,221 20,623
Long term deposits 9 15,867 7,708
Other financial assets 10 4,250 3,774
Non-current assets 305,951 302,662
Inventories 11 17,757 24,043
Trade and other receivables 23,103 29,123
Other financial assets 10 98 311
Current tax asset 39 -
Cash and cash equivalents 14,093 28,017
Current assets 55,090 81,494
Total assets 361,041 384,156
EQUITY
Ordinary share capital 12 6 6
Share premium 113,342 113,342
Other reserve 47,245 47,245
Foreign currency translation reserve (36,995) (30,170)
Accumulated losses (196,281) (167,859)
Equity attributable to owners of
the Company (72,683) (37,436)
Non-controlling interests (18,072) (16,205)
Total equity (90,755) (53,641)
LIABILITIES
Provisions 14 4,170 4,738
Borrowings 15 69,928 84,855
Non-current liabilities 74,098 89,593
Convertible redeemable preference shares 13 290,926 260,291
Class B preference shares 13 12,221 12,171
Borrowings 15 38,896 44,645
Current taxation 451 294
Trade and other payables 35,204 30,803
Current liabilities 377,698 348,204
Total liabilities 451,796 437,797
Total equity and liabilities 361,041 384,156
The condensed consolidated interim financial statements were approved by the
Board of Directors on 11 June 2014
PHOEVOS POUROULIS MICHAEL JONES
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to owners of the Company
Foreign
currency Non-
Ordinary trans- Accum- control-
share Share Other lation ulated ling Total
capital premium reserve reserve losses Total interests equity
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
Balance at
1 October 2013 6 113,342 47,245 (30,170) (167,859) (37,436) (16,205) (53,641)
Total comprehensive
income for the period
Loss for the period - - - - (28,422) (28,422) 184 (28,238)
Other comprehensive
income - - - (6,825) - (6,825) (2,051) (8,876)
Total comprehensive
income for the period - - - (6,825) (28,422) (35,247) (1,867) (37,114)
Transactions with
owners of the Company
recognised directly
in equity
Contributions by
owners of the Company - - - - - - - -
Total contributions
by owners of the
Company - - - - - - - -
Total transactions
with owners of
the Company - - - - - - - -
Balance at
31 March 2014 6 113,342 47,245 (36,995) (196,281) (72,683) (18,072) (90,755)
The notes that follow form part of the condensed consolidated interim financial statements.
Attributable to owners of the Company
Foreign
currency Non-
Ordinary trans- Accum- control-
share Share Other lation ulated ling Total
capital premium reserve reserve losses Total interests equity
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
Balance at
1 October 2012 6 113,342 47,245 (2,528) (119,512) 38,553 (5,970) 32,583
Total comprehensive
income for the period
Loss for the period - - - - (18,153) (18,153) 1,527 (16,626)
Other comprehensive
income - - - (15,100) - (15,100) (5,836) (20,936)
Total comprehensive
income for the period - - - (15,100) (18,153) (33,253) (4,309) (37,562)
Transactions with
owners of the Company
recognised directly
in equity
Contributions by
owners of the Company - - - - - - - -
Total contributions
by owners of the
Company - - - - - - - -
Total transactions
with owners of the
Company - - - - - - - -
Balance at
31 March 2013 6 113,342 47,245 (17,628) (137,665) 5,300 (10,279) (4,979)
The notes that follow form part of the condensed consolidated interim financial statements.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Six months ended 31 March
2014 2013
Note US$’000 US$’000
Cash flows from operating activities
Loss for the period (28,238) (16,626)
Adjustments for:
Impairment loss on property, plant
and equipment 7(b) - 835
Allowance for credit losses on trade
and other receivables 16(a) - 245
Amounts written off directly in profit
or loss 16(a) - 58
Impairment of goodwill 36 -
Depreciation 5,448 7,077
Impairment loss on inventory 11 1,729 -
Changes in fair value of financial
assets at fair value through profit or loss 1,018 24
Changes in fair value of financial liabilities
at fair value through profit or loss 30,635 20,920
Interest income (207) (358)
Interest expense 7,214 7,153
Income tax (2,911) (5,478)
14,724 13,850
Changes in:
Inventories 4,185 (73)
Trade and other receivables 6,020 (34,692)
Trade and other payables 4,402 (5,372)
Provisions (32) (6,175)
Cash from/(used in) operations 29,299 (32,462)
Income tax paid (489) (123)
Net cash from/(used in) operating activities 28,810 (32,585)
Cash flows from investing activities
Interest received 207 254
Additions to long term deposits (8,159) -
Additions to property, plant and equipment 7(a) (10,189) (17,226)
Additions and disposals of investments (557) (199)
Net cash used in investing activities (18,698) (17,171)
Cash flows from financing activities
(Repayments)/proceeds of bank and other
credit facilities (5,825) 21,171
Repayment of borrowings (15,288) -
Interest paid (175) (123)
Net cash (used in)/ from financing activities (21,288) 21,048
Net decrease in cash and cash equivalents (11,176) (28,708)
Cash and cash equivalents at the beginning
of the period 28,017 52,805
Effect of exchange rate fluctuations on
cash held (2,748) (344)
Cash and cash equivalents at the end
of the period 14,093 23,753
The notes that follow form part of the Condensed Consolidated
Interim Financial Statements.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. Reporting entity
Tharisa plc (“the Company”) is a company domiciled in Cyprus. The condensed
consolidated interim financial statements of the Company as at and for the six
months ended 31 March 2014 comprise the Company and its subsidiaries (together
referred to as the “Group”). The Group is primarily involved in platinum group
metals (“PGM”) and chrome mining and processing, the trading of the chrome
concentrate and the associated logistics. The Group holds the mining rights to
5,590 hectares of the Bushveld Complex located on the farms Kafferskraal and
Rooikoppies near Marikana in the North West Province of South Africa.
2. Basis of preparation
(a) Statement of compliance
These condensed consolidated interim financial statements have been prepared in
accordance with International Accounting Standard, IAS 34 Interim Financial
Reporting. Selected explanatory notes are included to explain events and
transactions that are significant to an understanding of the changes in
financial position and performance of the Group since the last annual
consolidated financial statements as at and for the year ended
30 September 2013.
These condensed consolidated interim financial statements do not include all
the information required for full annual financial statements, prepared in
accordance with International Financial Reporting Standards.
These condensed consolidated interim financial statements were approved by the
Board of Directors on 11 June 2014.
(b) Judgements and estimates
Preparing the condensed consolidated interim financial statements requires
management to make judgements, estimates and assumptions that affect the
application of accounting policies and the reported amounts of assets and
liabilities, income and expenses. Actual results may differ from these
estimates.
In preparing these condensed consolidated interim financial statements,
significant judgements made by management in applying the Group’s accounting
policies and the key sources of estimation uncertainty were the same as those
applied to the consolidated financial statements as at and for the year ended
30 September 2013.
(c) Going concern
At 31 March 2014, the Group’s current liabilities exceeded current assets by
US$322.6 million and its total liabilities exceeded total assets by
US$90.8 million. A significant portion of the Group’s current and total
liabilities relate to convertible redeemable preference shares, Class B
preference shares and loan from Langa Trust, the carrying amounts of which at
31 March 2014 amounted to US$290.9 million, US$12.2 million and US$2.9 million
respectively. The convertible redeemable preference shares were, subsequent to
the reporting period as described in note 19, converted into ordinary shares on
listing of the Company’s ordinary shares on the Johannesburg Stock Exchange
(“JSE”). In addition, the capital subscription amount of the Class B preference
shares was redeemed and the loan from the Langa Trust was partly repaid from
the proceeds of the private placement undertaken in conjunction with the
listing. Revised terms for the Class B preference shares and the loan from the
Langa Trust have been agreed.
3. Significant accounting policies
The accounting policies applied by the Group in these condensed consolidated
interim financial statements are the same as those applied by the Group in
its consolidated financial statements as at and for the year ended
30 September 2013. Additionally during the period, the Group has met IFRIC 20
criteria for the first time in relation to recognising stripping costs in
non-current assets.
4. Segment reporting
Throughout the period, the Group had two reportable segments, the chrome
segment and the PGM segment. Information regarding the results of each
reportable segment is included below. Performance is measured based on
segment revenue, cost of sales and gross profit or loss, as included in the
internal management reports that are reviewed by the Group’s senior executive
management. Segment revenue, cost of sales and gross profit or loss are used
to measure performance as management believes that such information is the
most relevant in evaluating the results of each segment.
Six months ended 31 March 2014
Chrome PGM Total
US$’000 US$’000 US$’000
Revenue 90,340 35,798 126,138
Cost of sales (81,201) (24,707) (105,908)
Gross profit 9,139 11,091 20,230
Six months ended 31 March 2013
Chrome PGM Total
US$’000 US$’000 US$’000
Revenue 76,250 26,614 102,864
Cost of sales (57,697) (23,464) (81,161)
Gross profit 18,553 3,150 21,703
Geographical information
The following tables set out information about the geographical location (i)
of the Group’s revenue from external customers and (ii) the Group’s property,
plant and equipment and goodwill (“specified non-current assets”).
The geographical location analysis of revenue from external customers is
based on the country of establishment of each customer. The geographical
location of the specified non-current assets is based on the physical
location of the asset in the case of property, plant and equipment and the
location of the operation to which they are allocated in the case of
goodwill.
Six months ended
(i) Revenue from external customers 31 March 2014 31 March 2013
US$’000 US$’000
China 36,172 41,215
South Africa 43,030 27,764
Hong Kong 16,795 26,558
Singapore 25,763 7,327
Other countries 4,378 -
126,138 102,864
(ii) Specified non-current assets 31 March 2014 30 Sept 2013
US$’000 US$’000
South Africa 262,543 270,441
Cyprus 27 61
China 43 55
262,613 270,557
5. Loss per share
The calculation of basic loss per share was based on the loss attributable to
the owners of the Company and the weighted average number of shares
outstanding during each period.
31 March 2014 31 March 2013
Loss for the period attributable to the
owners of the Company (US$’000) (28,422) (18,153)
Weighted average number of ordinary
shares outstanding during the period 7,662,320 7,662,320
Basic and diluted loss per share (US$) (3.71) (2.37)
Headline loss per share (US$) (3.70) (2.29)
The weighted average number of ordinary shares outstanding during the period
is the number of ordinary shares outstanding at the beginning of the period,
adjusted by the number of ordinary shares issued during the period multiplied
by a time-weighting factor and increased by the weighted average number of
shares attributable to the holders of the Company’s convertible redeemable
preference shares as detailed below:
31 March 2014 31 March 2013
Issued ordinary shares at beginning
and end of period 6,169,900 6,169,900
Weighted number of convertible
redeemable preference shares 1,492,420 1,492,420
Weighted average number of shares for
determination of loss per share 7,662,320 7,662,320
The Company’s convertible redeemable preference shares are potential dilutive
shares, but were anti-dilutive during the reporting period. Accordingly,
diluted loss per share is the same as basic loss per share for the reporting
period.
Reconciliation of losses to headline losses 31 March 2014 31 March 2013
US$’000 US$’000
Loss for the period (28,422) (18,153)
Adjustments:
Impairment of goodwill 36 -
Impairment loss of property,
plant and equipment – mining assets
and infrastructure - 835
Tax effect on impairment of property,
plant and equipment - (234)
Total headline losses (28,386) (17,552)
6. Income tax credit
Income tax credit is recognised based on management’s best estimate of the
weighted average annual income tax rate expected for the full financial year
applied to the pre-tax income of the interim period. The Group’s consolidated
effective tax rate for the six months ended 31 March 2014 and 2013 was 9.3% and
26% respectively.
The change in the effective tax rate for the six months ended 31 March 2014
was mainly attributable to the deferred tax credit on the taxable losses of
subsidiaries operating in tax jurisdictions with higher tax rates.
7. Property, plant and equipment
(a) Acquisitions and disposals
During the six months ended 31 March 2014 and 2013 the Group acquired assets
with a cost, excluding capitalised borrowing costs, of US$10.2 million and
US$17.2 million respectively.
There has been no disposal of assets during the six months ended 31 March 2014
and 2013, thus no gain or loss on disposal has been recognised in profit or
loss.
(b) Impairment losses
During the six months ended 31 March 2014 and 2013, the Group recognised
impairment losses of US$nil and US$0.8 million respectively, on the carrying
amount of mining assets and infrastructure. The impairment loss resulted from
assets damaged in mining operations and is recognised in cost of sales in the
condensed consolidated statement of profit or loss and other comprehensive
income.
(c) Capital commitments
At 31 March 2014 and 30 September 2013, the Group’s capital commitments for
contracts to purchase property, plant and equipment amounted to US$4.2 million
and US$10.7 million respectively.
(d) Securities
At 31 March 2014 and 30 September 2013 an amount of US$256.6 million and
US$264.4 million of the carrying amount of the Group’s property, plant and
equipment was pledged as security against secured bank borrowing (see note 15).
(e) Deferred stripping costs
At 31 March 2014 the Group recognised for the first time stripping costs in
non-current assets as a result of meeting the criteria set out by IFRIC 20.
8. Goodwill
(a) Impairment test for goodwill
Impairment losses were recognised in relation to goodwill which arose from the
acquisition of Arxo Logistics (Pty) Ltd and Braeston Corporate Consulting
Services (Pty) Ltd, as follows:
Six months ended
31 March 2014 31 March 2013
US$’000 US$’000
Arxo Logistics (Pty) Ltd (note 8(a)(i)) 27 -
Braeston Corporate Consulting Services
(Pty) Ltd (note 8(a)(ii)) 9 -
Impairment loss 36 -
(i) Impairment assessment – Arxo Logistics (Pty) Ltd
At 31 March 2014, the recoverable amount of goodwill that arose from the
acquisition of Arxo Logistics (Pty) Ltd Cash Generating Unit (“CGU”) exceeded
its carrying amount after impairment losses and thus no further impairment was
recognised. The recoverable amount is determined based on value-in-use
calculation.
This calculation uses cash flow projections approved by management covering a
fifty four year period. The growth rates used do not exceed the long term
average growth rates for the business in which the CGU operates. The cash flows
are discounted using a nominal discount rate of 13.83%. The discount rate used
is a pre-tax nominal rate and reflects specific risks relating to the relevant
segment.
(ii) Impairment assessment – Braeston Corporate Consulting Services (Pty) Ltd
At 31 March 2014, the recoverable amount of goodwill that arose from the
acquisition of Braeston Corporate Consulting Services (Pty) Ltd Cash Generating
Unit (“CGU”) exceeded its carrying amount after impairment losses and thus no
further impairment was recognised. The recoverable amount is determined based
on value-in-use calculation. This calculation uses cash flow projections
approved by management covering a fifty four year period. The growth rates used
do not exceed the long term average growth rates for the business in which the
CGU operates. The cash flows are discounted using a nominal discount rate of
13.83%. The discount rate used is a pre-tax nominal rate and reflects specific
risks relating to the relevant segment.
9. Long term deposits
As at 31 March 2014 and 30 September 2013, the amounts of US$15.9 million and
US$7.7 million respectively are restricted and designated as a “debt service
reserve account” as required by the terms of the secured bank borrowings
(note 15). As at 31 March 2014 and 30 September 2013, long term deposits of
US$8.5 million and US$nil respectively were deposited in a one month notice
account with interest of 0.01% p.a and US$7.4 million and US$7.7 million were
deposited in a one month notice account with interest of 0.003% p.a and nil
respectively.
10. Other financial assets
31 March 2014 30 Sept 2013
US$’000 US$’000
Non-current:
Investments in cash funds and income
funds (note 10(a)) 4,149 3,656
Interest rate caps (note 10(b)) 101 118
4,250 3,774
Current:
Investments at fair value through
profit or loss 86 86
Discount facility (note 10(c)) 12 225
98 311
(a) The investment in cash funds and income funds is provided to Lombard
Insurance Group as collateral against the guarantee issued by Lombard
Insurance Group to the Department of Mineral Resources of South Africa in the
amount of South African Rand (“ZAR”) 78 million. The balance is unsecured and
is considered as level 1 in the fair value hierarchy and held at fair value
through profit or loss (designated).
(b) Interest rate caps were obtained from a consortium of financial
institutions, against the floating 3 month Johannesburg Interbank Agreed Rate
(“JIBAR”) on 25% of the secured bank borrowing. The interest rate caps have a
strike rate of 7.5% and terminate on 31 March 2017. The balance is considered
as level 2 in the fair value hierarchy and held at fair value through profit
or loss (held for trading).
(c) Discount facility relates to fair value adjustments on the limited
recourse disclosed receivables discounting facility (“Discount facility”)
with certain banks in terms of which 98% of the receivables from the sale of
platinum, palladium and gold (included in PGM) is sold at an effective
finance cost of JIBAR (3 month) + 2%. The facility is for an amount of
ZAR300 million. The balance is considered as level 2 in the fair value
hierarchy and held at fair value through profit or loss (designated). During
the six months ended 31 March 2014, the negative change in the fair value of
US$0.2 million arose as a consequence of the embedded derivative and has been
included in “finance costs” in profit or loss.
11. Inventories
31 March 2014 30 Sept 2013
US$’000 US$’000
Finished products 6,674 13,037
In progress metal 5,562 1,247
Ore stockpile 2,284 6,841
Consumables 3,237 2,918
17,757 24,043
During the six months ended 31 March 2014, the Group wrote down its
inventories by US$1.7 million. The write down is included in cost of sales in
the condensed consolidated statement of profit or loss and other
comprehensive income. There was no inventory write down recognised during the
six months ended 31 March 2013.
12. Ordinary share capital
The Company did not issue any ordinary share capital and did not declare or pay
any dividends during the six months ended 31 March 2014 and 2013.
13. Redeemable preference shares
31 March 2014 30 Sept 2013
US$’000 US$’000
Convertible redeemable preference
shares of the Company 290,926 260,291
Class B preference shares of a subsidiary 12,221 12,171
There have been no changes in the terms of the convertible redeemable
preference shares of the Company and Class B preference shares of a subsidiary
and remain the same as those disclosed in the Group’s consolidated financial
statements as at and for the year ended 30 September 2013.
Convertible redeemable preference shares of the Company are stated at fair
value. The fair value is measured using a probability weighted expected return
method as set out in note 16(c)(iii). Subsequent to the period end, the
convertible redeemable preference shares were converted to ordinary shares
following the listing of the Company’s ordinary shares on the JSE as set out in
note 19.
The Class B preference shares are stated at amortised cost at ZAR prime rate
plus 2%, compounded monthly. Subsequent to the period end, the capital
subscription amount of the Class B preference shares was redeemed in May 2014
as set out in note 19.
14. Provisions
The Group has a legal obligation to rehabilitate the site where the Group’s
mine is located, once the mining operations cease which would be when the
current mine life of the project expires.
The provision for future rehabilitation at 31 March 2014 and 30 September 2013
amounted to US$4.2 million and US$4.7 million respectively. During the six
months ended 31 March 2014 and 31 March 2013, the provision for future
rehabilitation capitalised to inventories was US$0.4 million and US$3.7 million
respectively and to mining assets and infrastructure US$0.2 million and
US$1.7 million respectively. The amounts recognised in profit or loss for the
same periods amounted to US$0.2 million and US$0.2 million respectively.
An insurance company provided a guarantee to the Department of Mineral
Resources of South Africa to satisfy the requirements of the Mineral and
Petroleum Resources Development Act with respect to environmental
rehabilitation, and the Group ceded its investments in interest bearing debt
instruments of US$4.1 million and US$3.7 million as at 31 March 2014 and
30 September 2013 respectively, to the insurance company to support this
guarantee.
The interest rate used for estimating future costs is the long term risk free
rate as indicated by the R186 government bond of South Africa, which was
8.4% and 7.92% as at 31 March 2014 and 30 September 2013 respectively. The net
present value of the current rehabilitation estimate is based on the average of
the long term inflation target range of the South African Reserve Bank of
between 3% and 6%, as at 31 March 2014 and 30 September 2013.
15. Borrowings
31 March 2014 30 Sept 2013
US$’000 US$’000
Non-current:
Secured bank borrowing 68,562 82,876
Other borrowings – loan payable to
third parties 1,366 1,979
69,928 84,855
Current:
Secured bank borrowing 27,930 27,811
Other borrowings – loans payable to third parties 1,292 1,354
Other borrowings – bank and other credit facility 6,786 12,610
Other borrowings – loan payable to Langa Trust 2,888 2,870
38,896 44,645
There have been no changes in the terms, securities and financial covenants
of the above borrowing facilities during the six months ended 31 March 2014,
compared to those disclosed in the Group’s consolidated financial statements
as at and for the year ended 30 September 2013.
16. Financial risk management
The aspects of the Group’s financial risk management objectives and policies
are consistent with those disclosed in the Group’s consolidated financial
statements as at and for the year ended 30 September 2013.
(a) Credit risk
The Group establishes an allowance for credit losses that represents its
estimate of incurred losses in respect of trade and other receivables.
The main component of this allowance is a specific loss component that
relates to individually significant exposures.
The movement in allowance for credit losses during the period under review
was as follows:
31 March 2014 31 March 2013
US$’000 US$’000
Balance 1 October - 163
Amounts written off during the period - (154)
Allowance for credit losses recognised
in profit or loss - 245
Exchange differences - (9)
Balance 31 March - 245
The allowance for credit losses is used to record credit losses unless the
Group is satisfied that no recovery of the amount owing is possible, at that
point the amount considered irrecoverable is written off against the
financial asset directly. During the six months ended 31 March 2014 and 2013,
the Group wrote off directly in profit or loss, an amount of US$nil and
US$0.1 million respectively, which represent amounts for which the Group is
satisfied that no recovery is possible.
Based on past experience, the Group believes that no further allowance for
credit losses is necessary as the amounts that have not been provided for
relate to counterparties that have a good trade record with the Group.
(b) Fair values
The Board of Directors considers that the fair values of significant
financial assets and financial liabilities approximate to their carrying
values at each reporting date.
Financial instruments carried at fair value:
The following table presents the carrying values of financial instruments
measured at fair value at the end of each reporting period across the three
levels of the fair value hierarchy defined in IFRS 13, Fair Value
Measurement, with the fair value of each financial instrument categorised in
its entirety based on the lowest level of input that is significant to that
fair value measurement.
Level 1 Level 2 Level 3
US$’000 US$’000 US$’000
31 March 2014
Assets
Investments in cash funds and income funds 4,149 - -
Interest rate caps - 101 -
Discount facility - 12 -
Investments at fair value through
profit or loss 86 - -
4,235 113 -
Liabilities
Convertible redeemable preference shares - - 290,926
Level 1 Level 2 Level 3
US$’000 US$’000 US$’000
30 September 2013
Assets
Investments in cash funds and income funds 3,656 - -
Interest rate caps - 118 -
Discount facility - 225 -
Investments at fair value through
profit or loss 86 - -
3,742 343 -
Liabilities
Convertible redeemable preference shares - - 260,291
The movement of Level 3 fair value measurements is as follows:
Six months ended
31 March 2014 31 March 2013
US$’000 US$’000
Convertible redeemable preference shares
At the beginning of the period 260,291 212,791
Changes in fair value of financial liabilities
at fair value through profit or loss 30,635 19,950
At the end of the period 290,926 232,741
Total gains or losses for the period included
in profit or loss 30,635 19,950
Class B preference shares
At the beginning of the period - 12,548
Changes in fair value of financial liabilities
at fair value through profit or loss - 778
Derecognition from fair value basis to amortised
cost upon term changes - (13,326)
At the end of the period - -
Total gains or losses for the period included
in profit or loss - 778
Borrowings – loan from Langa Trust
At the beginning of the period - 2,935
Changes in fair value of financial liabilities
at fair value through profit or loss - 192
Derecognition from fair value basis to
amortised cost upon term changes - (3,127)
At the end of the period - -
Total gains or losses for the period included
in profit or loss - 192
(c) Estimation of fair values
The following summarises the major methods and assumptions used in estimating
the fair values of financial instruments.
(i) Investments in cash funds and income funds, investments at fair value
through profit or loss and interest rate caps
Fair values are based on quoted market prices at the end of the reporting
period without any deduction for transaction costs.
(ii) Discount facility
The fair values are calculated by multiplying the actual metal quantities per
discounted invoice with the difference between the hedged metal price per
discounted invoice and the average spot metal price translated to ZAR using
the average monthly rate.
(iii) Convertible redeemable preference shares
The estimate of the fair value of the convertible redeemable preference
shares as at 31 March 2014 and 30 September 2013 is measured using the
probability weighted expected return method, which values the financial
liabilities based on the likelihood and expected settlement values of the
respective expected settlement scenarios, discounted to their present value
at the valuation date. Estimation of the settlement values of the financial
liabilities requires an estimation of the equity value of the Group using
discounted cash flow techniques. Estimated future cash flows of the Group are
based on management’s best estimates and the discount rates used are market
related rates reflecting the risks specific to the respective operations of
the Group.
The underlying assumptions in the fair value measurements include a nominal
discount rate of 13.83% and 11.53% as at 31 March 2014 and 30 September 2013
respectively, which is a pre-tax nominal rate and reflects specific risks
relevant to the operations of the Group, a risk free rate of 8.45% and
2.14% as at 31 March 2014 and 30 September 2013 respectively, which is the
average yield of the 10 year South African Government bond and 10 year
US treasury bond respectively, and an inflation rate of 5.4% and 2.1% as at
31 March 2014 and 30 September 2013 respectively, which is the South African
inflation rate and projected long term US inflation treasury rate
respectively. The Board of Directors is of the opinion that the use of the
equivalent South African rates as at 31 March 2014 is more relevant to the
operations of the Group, since the Group’s mining activities are concentrated
in South Africa.
No sensitivity analysis is presented as at 31 March 2014 and 30 September
2013, as changes in the assumptions would have no effect on the fair value of
the convertible redeemable preference shares, as the fair value of the
instruments is limited as per their terms to a minimum return by applying an
IRR of 25%.
17. Related party transactions
(a) Parent and ultimate controlling party
At 31 March 2014, the Board of Directors considers the parent and ultimate
controlling party of the Group to be Medway Developments Limited and
Mr Adonis Pouroulis respectively.
(b) Transactions with related parties
Significant transactions carried out at arm’s length with related parties
during the six months ended 31 March 2014 and 2013 were as follows:
31 March 2014 31 March 2013
US$’000 US$’000
Revenue
Rocasize (Pty) Ltd 10 -
Kameni (Pty) Ltd 4 -
14 -
Finance expense
Langa Trust 150 159
Arti Trust 338 358
Ditodi Trust 25 27
Makhaye Trust 25 27
The Phax Trust 51 54
The Rowad Trust 25 27
Moira June Jacquet-Briner 25 27
639 679
Donation
Rocasize (Pty) Ltd 288 -
18. Mine resource and reserve statement
The Group owns and operates the mining rights to 5,590 hectares of the
Bushveld Complex located on the farms Kafferskraal and Rooikoppies near
Marikana in the North West Province of South Africa. The proven and probable
open pit and underground mine reserve as at 31 December 2013 certified by
independent experts amounted to 125.9 million tonnes. This reserve as at
31 March 2014, due to normal mining operations, has been reduced by
approximately 0.9 million tonnes.
19. Subsequent events
On 10 April 2014 the Company listed its ordinary share capital on the JSE.
The following significant changes were made to its share capital structure:
(i) The issue of an additional 154,247,500 ordinary shares as a bonus issue
of 25 ordinary shares for each share held.
(ii) The issue of 13,157,895 new ordinary shares issued at a price of
ZAR38 per share with a par value of US$0.001 per share.
(iii) The issue of 81,173,716 new ordinary shares to holders of the
convertible redeemable preference shares of the Company on their conversion
in terms of the Articles of Association.
On 4 April 2014, the Group entered into a marketing agreement with Noble
Resources International Pte Limited to market, in all countries excluding
South Africa, a minimum of 50,000 dry metric tonnes per month of the
metallurgical grade chrome concentrate produced by Tharisa Minerals (Pty)
Ltd.
During May 2014, the Group repaid US$0.7 million of the amounts owing to the
Langa Trust and redeemed the Class B preference share capital subscription of
US$6.8 million from the proceeds of the private placement undertaken in
conjunction with the listing. Revised terms of the Class B preference shares
and the loan from the Langa Trust have been agreed.
There were no other material subsequent events between the reporting date and
the date of approval of these condensed consolidated interim financial
statements.
SUPPLEMENTARY INFORMATION – PRO FORMA CONDENSED INTERIM FINANCIAL STATEMENTS
for the six months ended 31 March 2014
INDEPENDENT REPORTING ACCOUNTANTS’ REASONABLE ASSURANCE REPORT ON THE
PRO FORMA FINANCIAL INFORMATION
The Directors
Tharisa plc
S. Pittokopitis Business Centre
17 Neophytou Nicolaides and Kilkis Streets
8011, Paphos
Cyprus
Report on the Compilation of Pro Forma Financial Information
We have completed our assurance engagement to report (“Report”) on the
compilation of pro forma earnings and diluted earnings, headline and diluted
headline earnings, net asset value and net tangible asset value per share of
Tharisa plc (“Tharisa plc” or “the Company”), pro forma consolidated
statement of financial position of Tharisa plc, the pro forma consolidated
statement of profit or loss and other comprehensive income of Tharisa plc and
the related notes, including a reconciliation showing all of the pro forma
adjustments to the share capital, reserves and other equity items relating to
Tharisa plc, (collectively “Pro forma Financial Information”). The Pro forma
Financial Information is set out below.
The Pro forma Financial Information has been compiled by the directors of
Tharisa plc to illustrate the impact of the listing of the Company’s shares
on the Johannesburg Stock Exchange (“JSE”) and the issue of bonus shares to
ordinary shareholders of Tharisa plc prior to the listing, the private
placement, the conversion of the redeemable preference shares to ordinary
shares, as well as the part settlement of the Class B Preference shares and
Langa Trust loan in Tharisa Minerals (Pty) Ltd from the proceeds of the
private placement (“Transaction”) on the Company’s consolidated financial
position and changes in equity as at 31 March 2014 and the Company’s
consolidated financial performance for the six months ended 31 March 2014.
As part of this process, the Company’s consolidated statement of
comprehensive income and consolidated statement of financial position have
been extracted by the directors from the Company’s interim condensed
consolidated financial statements for the six months ended 31 March 2014
(“Published Financial Information”), on which a review report on the
condensed interim consolidated financial statements has been published.
In addition, the directors have calculated the earnings, diluted earnings,
headline earnings and diluted headline earnings per share for the six months
ended 31 March 2014, and also the net asset value and net tangible asset
value per share as at 31 March 2014 based on financial information extracted
from the Published Financial Information.
Directors’ Responsibility for the Pro forma Financial Information
The directors of Tharisa plc are responsible for compiling the Pro forma
Financial Information on the basis of the applicable criteria as detailed in
paragraphs 8.15 to 8.33 of the Listings Requirements of the JSE Limited and
the SAICA Guide on Pro forma Financial Information, revised and issued in
September 2012 (“Applicable Criteria”).
Reporting Accountants’ responsibility
Our responsibility is to express an opinion about whether the Pro forma
Financial Information has been compiled, in all material respects, by the
directors on the basis of the Applicable Criteria, based on our procedures
performed.
We conducted our engagement in accordance with International Standard on
Assurance Engagements (ISAE) 3420, Assurance Engagements to Report on the
Compilation of Pro Forma Financial Information Included in a Prospectus,
issued by the International Auditing and Assurance Standards Board. This
standard requires that the reporting accountants’ comply with ethical
requirements and plan and perform procedures to obtain reasonable assurance
about whether the directors have compiled, in all material respects, the Pro
forma Financial Information on the basis of the Applicable Criteria.
For purposes of this engagement, we are not responsible for updating or
reissuing any reports or opinions on any Published Financial Information used
in compiling the Pro forma Financial Information, nor have we, in the course
of this engagement, performed an audit or review of the Published Financial
Information used in compiling the Pro forma Financial Information.
The purpose of Pro forma Financial Information included in this report is
solely to illustrate the impact of the Transaction on the unadjusted
Published Financial Information as if the Transaction had been undertaken on
1 October 2013 for purposes of the pro forma earnings, diluted earnings,
headline and diluted headline earnings per share and the pro forma
consolidated statement of comprehensive income and on 31 March 2014 for
purposes of the net asset value and net tangible asset value per share and
consolidated statement of financial position. Accordingly, we do not provide
any assurance that the actual outcome of the Transaction, subsequent to its
implementation, will be as presented in the Pro forma Financial Information.
A reasonable assurance engagement to report on whether the Pro forma
Financial Information has been properly compiled, in all material respects,
on the basis of the Applicable Criteria involves performing procedures to
assess whether the Applicable Criteria used by the directors in the
compilation of the Pro forma Financial Information provide a reasonable basis
for presenting the significant effects directly attributable to the
Transaction and to obtain sufficient appropriate evidence about whether:
- The related pro forma adjustments give appropriate effect to the
Applicable Criteria; and
- The Pro forma Financial Information reflects the proper application of
those pro forma adjustments to the unadjusted Published Financial
Information.
The procedures selected depend on the reporting accountant’s judgement,
having regard to the reporting accountant’s understanding of the nature of
the Company, the Transaction in respect of which the Pro forma Financial
Information has been compiled and other relevant engagement circumstances.
The engagement also involves evaluating the overall presentation of the
Pro forma Financial Information.
We believe that the evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
Opinion
In our opinion, the Pro forma Financial Information has been compiled, in all
material respects, on the basis of the Applicable Criteria.
Yours faithfully
KPMG Inc.
Per Shaun van den Boogaard
Chartered Accountant (SA)
Director
11 June 2014
INTRODUCTORY STATEMENT
Tharisa plc was listed on the Johannesburg Stock Exchange on 10 April 2014.
The pro forma financial information has been compiled to present the before
and after effect of the issue of bonus shares to ordinary shareholders of
Tharisa plc prior to the listing, the private placement, the conversion of
the redeemable preference shares to ordinary shares, as well as the part
settlement of the Class B Preference shares and Langa Trust loan in Tharisa
Minerals (Pty) Ltd from the proceeds of the private placement (“the
transaction”).
The pro forma consolidated statement of financial position and statement of
comprehensive income of the Group prior to and after the implementation of
the transaction is set out below. The pro forma consolidated statement of
financial position and statement of comprehensive income of the Group have
been presented for illustrative purposes only and may, because of their
nature, not give a fair reflection of the Company’s results, financial
position and changes in equity following the implementation of the
transaction. It has been assumed for purposes of the pro forma financial
effects that the transaction was implemented with effect from 1 October 2013
and 31 March 2014 for the statement of comprehensive income and statement of
financial position purposes respectively.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME INCLUDING NOTES
Six months ended 31 March
2014 2014
Before Pro forma After
transaction adjustments transaction
US$’000 US$’000 US$’000
Revenue 126,138 126,138
Cost of sales (105,908) (105,908)
Gross profit 20,230 20,230
Other income 27 27
Administrative expenses (12,817) (1,558) 2 (14,375)
Results from operating activities 7,440 5,882
Finance income 330 330
Finance costs (8,284) 385 3 (7,899)
Changes in fair value of financial
liabilities at fair value through
profit or loss (30,635) 30,635 4 -
Net finance costs (38,589) (7,569)
Loss before tax (31,149) (1,687)
Income tax credit 2,911 2,911
(Loss)/profit for the period (28,238) 1,224
Other comprehensive income
Items that will never be classified
to profit or loss - -
Items that are or may be reclassified
subsequently to profit or loss
Foreign currency translation
differences for foreign operations,
net of tax (8,876) (8,876)
Other comprehensive income for
the period, net of tax (8,876) (8,876)
Total comprehensive income for
the period (37,114) (7,652)
(Loss)/profit for the period
attributable to:
Owners of the Company (28,422) 29,362 940
Non-controlling interests 184 100 284
(Loss)/profit for the period (28,238) 1,224
Total comprehensive income for
the period attributable to:
Owners of the Company (35,247) 29,362 (5,885)
Non-controlling interests (1,867) 100 (1,767)
Total comprehensive income for
the period (37,114) (7,652)
Six months ended 31 March
2014 2014
Before Pro forma After
transaction adjustments transaction
US$’000 US$’000 US$’000
Reconciliation to headline earnings
(Loss)/profit for the period (28,422) 940
Impairment of goodwill 36 36
Tax effect of goodwill impairment - -
Headline (loss)/earnings (28,386) 976
Weighted average number of shares 7,662,320 254,253,702 6
Profit/(loss) per share
Basic and diluted (loss)/profit
per share (US$) (3.71) 0.004
Headline (loss)/earnings per
share (US$) (3.70) 0.004
Notes to the pro forma statement of profit or loss and other comprehensive
income
1. The figures in the “Before transaction” column have been extracted
without adjustment from the reviewed condensed consolidated interim financial
statements of the Company as at 31 March 2014.
2. Transaction costs of approximately US$1.6 million have been charged to
the statement of profit or loss and other comprehensive income.
3. The finance costs on the capital subscription amount of the Class B
preference shares and the Langa Trust loan, that has been part settled, have
been reversed.
4. The fair value adjustment on the convertible redeemable preference shares
has been reversed.
5. No interest benefit has been taken into account in regards to the cash
received as the proceeds from the private placement will be applied to
optimisation initiatives, for working capital funding of the product
pipeline, purchase of long-lead items, strategic spares, further de-risking
of the operation by building a run of mine stockpile and to settle unsecured
debt funders of Tharisa Minerals (Pty) Ltd.
6. Shares in issue have been adjusted for the private placement undertaken
by the Company on 10 April 2014, conversion of convertible redeemable
preference shares and bonus issue, such that there are 254,253,702 shares in
issue post the listing.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION INCLUDING
NOTES
31 March 2014 31 March 2014
Before Pro forma After
transaction adjustments transaction
US$’000 US$’000 US$’000
ASSETS
Property, plant and equipment 261,286 261,286
Goodwill 1,327 1,327
Deferred tax assets 23,221 23,221
Long term deposits 15,867 15,867
Other financial assets 4,250 4,250
Non-current assets 305,951 305,951
Inventories 17,757 17,757
Trade and other receivables 23,103 23,103
Other financial assets 98 98
Current tax asset 39 39
Cash and cash equivalents 14,093 36,596 4 50,689
Current assets 55,090 91,686
Total assets 361,041 397,637
EQUITY
Ordinary share capital 6 248 2 254
Share premium 113,342 336,305 2,3 449,647
Other reserve 47,245 47,245
Foreign currency translation reserve (36,995) (36,995)
Accumulated losses (196,281) (1,558) 3 (197,839)
Equity attributable to owners
of the Company (72,683) 262,312
Non-controlling interests (18,072) (18,072)
Total equity (90,755) 244,240
LIABILITIES
Provisions 4,170 4,170
Borrowings 69,928 69,928
Non-current liabilities 74,098 74,098
Convertible redeemable preference
Shares 290,926 (290,926) 2 -
Class B preference shares 12,221 (6,811) 4 5,410
Borrowings 38,896 (662) 4 38,234
Current taxation 451 451
Trade and other payables 35,204 35,204
Current liabilities 377,698 79,299
Total liabilities 451,796 153,397
Total equity and liabilities 361,041 397,637
Shares in issue 6,169,900 254,253,702
Net asset value per share (US$) (14.71) 0.96
Tangible net asset value per
share (US$) (14.92) 0.96
Notes to the pro forma statement of financial position
1. The figures in the “Before transaction” column have been extracted
without adjustment from the reviewed condensed consolidated interim financial
statements of the Company.
2. Share capital and share premium have been adjusted to include the effects
of:
– the issue of an additional 154,247,500 shares to existing shareholders in
terms of the bonus issue;
– the issue of 13,157,895 shares in terms of the private placement, issued
at a price of ZAR38 (converted at a US$/ZAR exchange rate of 1:10.5708).
ZAR500 million was raised in the private placement before expenses
(approximately US$3.2 million) based on the spot exchange rate as at
31 March 2014 of US$1/ZAR of 1:10.5708; and
– the issue of 80,678,407 shares in terms of the conversion of the
convertible redeemable preference shares.
3. Transaction costs of approximately US$3.2 million have been taken into
account against share premium and statement of profit or loss and other
comprehensive income as applicable.
4. Cash and cash equivalents have been adjusted for the proceeds received
from the private placement, transaction costs and the redemption of the
capital subscription amounts of the Class B preference shares
(US$6.8 million) and the part payment of the Langa Trust loan
(US$0.7 million).
5. All adjustments are expected to have a continuing effect on the Company
with the exception of the transaction costs.
6. Shares in issue have been adjusted for the private placement conversion
of convertible redeemable preference shares and bonus issue, such that there
are 254,253,702 shares in issue post the listing.
Paphos, Cyprus
17 June 2014
Sponsor
Investec Bank Limited
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