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THARISA PLC - Reviewed Condensed Consolidated Interim Financial Statements for the 6 months ended 31 March 2014

Release Date: 17/06/2014 09:00
Code(s): THA     PDF:  
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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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