Wrap Text
Condensed Consolidated Interim Financial Statements for the six months ended 31 December 2014
Petmin Limited
(Incorporated in the Republic of South Africa)
(Registration number 1972/001062/06)
JSE code: PET ISIN: ZAE000076014
("Petmin" or "the Group")
"Committed to growth, dedicated to value"
Condensed Consolidated Interim Financial Statements
for the six months ended 31 December 2014
"Headline Earnings Per Share up 25%.
Continuing growth in a tough environment"
Salient features:
- Somkhele: Anthracite production up 27%, anthracite sales volumes up 89%
- Somkhele: Energy coal production up 55% and sales volumes up 943%
- Operating cost per tonne reduced by 7% despite a weakening Rand
- Shareholding in North Atlantic Iron Corporation (NAIC) increased to 34%
- NAIC site selection and unbundling process on track
Preparation
These condensed consolidated interim financial statements for
the six months ended 31 December 2014 have been prepared
under the supervision of Petmin's financial director, Mr BP Tanner
CA(SA).
Review of results
These condensed consolidated interim financial statements for
the six months ended 31 December 2014 have been reviewed
by the Group's auditors, KPMG Inc.
Condensed Consolidated Interim Income Statement
for the six months ended 31 December 2014
Reviewed Reviewed Audited
Six months ended Six months ended Year ended
31 December 31 December 30 June
2014 2013 2014
Note R'000 R'000 R'000
Revenue 693 939 355 888 1 019 789
Cost of sales (596 794) (254 932) (824 760)
Gross profit 97 145 100 956 195 029
Operating expenses (662) (12 996) (14 527)
Administration expenses (9 263) (11 423) (20 597)
Profit from operating
activities 87 220 76 537 159 905
– Fair value adjustments
on listed securities – (9 713) (13 464)
Net finance expense (17 931) (16 099) (32 546)
– Finance income 3 639 3 168 6 537
– Finance expenses (21 570) (19 267) (39 083)
Separately disclosed
items:
Impairment of
investments in equity
accounted investees, net
of tax – – (199 676)
Share of (loss)/profit
of equity accounted
investees, net of tax (242) 700 7 813
Profit/(loss) before
income tax 69 047 51 425 (77 968)
Income tax expense (21 894) (18 659) (41 457)
Profit/(loss) for the
period 47 153 32 766 (119 425)
Earnings per share
Basic earnings/(loss) per
ordinary share (cents) 6 8,40 5,68 (20,70)
Diluted earnings/(loss)
per ordinary share
(cents) 6 8,40 5,68 (20,70)
Condensed Consolidated Interim Statement of Comprehensive Income
for the six months ended 31 December 2014
Reviewed Reviewed Audited
Six months ended Six months ended Year ended
31 December 31 December 30 June
2014 2013 2014
R'000 R'000 R'000
Profit/(loss) for the period 47 153 32 766 (119 425)
Other comprehensive income
(after tax)
Items that may be reclasssified
to profit or loss
Foreign currency translation
differences on equity accounted
investees 2 351 11 224 6 862
Share of fair value gain in equity
accounted investee 16 564 – 16 251
Cash flow hedges reclassified to
profit or loss (952) 2 619 2 619
Other comprehensive income
for the period, net of income
tax 17 963 13 843 25 732
Total comprehensive income
for the period 65 116 46 609 (93 693)
Condensed Consolidated Interim Statement of Financial Position
at 31 December 2014
Reviewed Reviewed Audited
31 December 31 December 30 June
2014 2013 2014
Note R'000 R'000 R'000
ASSETS
Non-current assets 1 539 500 1 702 000 1 552 484
Property, plant and
equipment 1 086 638 1 118 587 1 122 531
Investment in equity
accounted investee 8 369 981 490 359 337 572
Loans due from equity
accounted investees 57 881 64 303 67 381
Investments 25 000 28 751 25 000
Current assets 449 815 429 266 482 951
Inventories 11 216 761 296 518 264 532
Trade and other receivables 172 648 109 843 121 549
Current tax assets 10 350 2 772 2 095
Cash and cash equivalents 50 056 20 133 94 775
Total assets 1 989 315 2 131 266 2 035 435
EQUITY AND LIABILITIES
Ordinary share capital and
reserves 1 199 163 1 306 043 1 169 304
Share capital 140 259 143 575 143 150
Share premium 313 592 332 654 328 927
Share option reserve 20 297 12 582 20 297
Hedging reserve (952) – –
Foreign currency translation
reserve 20 213 22 224 17 862
Retained earnings 705 754 795 008 659 068
Non-current liabilities 481 381 624 476 602 692
Interest-bearing loans and
borrowings 144 045 358 500 289 159
Deferred taxation liabilities 268 909 226 092 246 670
Environmental rehabilitation
provision 68 427 39 884 66 863
Current liabilities 308 771 200 747 263 439
Trade and other payables 75 486 74 030 115 182
Revenue in advance – 61 103 –
Current portion of interest-
bearing loans and borrowings 12 190 571 21 340 75 042
Hedge liability 1 322 – –
Shareholders for dividend 1 560 1 398 1 339
Bank overdraft 39 832 42 876 71 876
Total equity and liabilities 1 989 315 2 131 266 2 035 435
Condensed Consolidated Interim Statement of Cash Flows
for the six months ended 31 December 2014
Reviewed Reviewed Audited
Six months ended Six months ended Year ended
31 December 31 December 30 June
2014 2013 2014
R'000 R'000 R'000
Profit from operating activities before finance (expense)/income 87 220 76 537 159 905
Adjustments for:
– depreciation 294 295 252 441 567 215
– notional interest 1 564 1 125 2 250
– Loss on disposal of property, plant and equipment 12 8 332 8 332
– long-term rehabilitation expenditure incurred – (429) (429)
– impairment of receivable on sale of subsidiary – 1 158 1 158
– reversal of accrual – (8 132) (8 132)
– write down to net realisable value of inventory – 1 591 1 591
– share options granted – 3 142 10 857
Operating cash flows before changes in working capital 383 091 335 765 742 747
(Increase)/decrease in trade and other receivables (51 099) 88 044 76 338
Decrease/(increase) in inventories 47 772 (137 072) (105 087)
Decrease in trade and other payables (39 963) (52 591) (11 440)
Increase in revenue received in advance – 61 103 –
Cash generated by operations 339 801 295 249 702 558
Income tax paid (9 052) – (1 542)
Interest received 3 639 3 168 6 537
Interest paid (21 570) (19 267) (39 083)
Net cash flow from operating activities 312 818 279 150 668 470
Cash flows from investing activities
Acquistion of subsidiary (net of cash acquired) 7 (11 974) – –
Investment in equity accounted investees 8 (13 731) 39 579) (67 459)
Decrease/(increase) in loans to equity accounted investees 9 496 (3 348) (6 434)
Acquisition of property, plant and equipment (244 663) (249 718) (542 580)
– to expand operations (5 029) (11 693) (25 326)
– to expand operations – capitalised pre-strip 9 (226 528) (225 599) (497 773)
– to maintain operations (13 106) (12 426) (19 481)
Proceeds from sale of property, plant and equipment – 1 000 1 000
Net cash flows used in investing activities (260 872) (291 645) (615 473)
Cash flows from financing activities
Treasury shares acquired 6 (18 226) – (4 152)
Repayment of borrowings (29 585) (10 670) (19 562)
Increase in borrowings – 46 828 40 081
Dividends paid (16 810) (17 186) (17 245)
Net cash flows from financing activities (64 621) 18 972 ( 878)
Net (decrease)/increase in cash and cash equivalents (12 675) 6 477 52 119
Cash and cash equivalents at beginning of period 22 899 (29 220) (29 220)
Cash and cash equivalents at end of period 10 224 (22 743) 22 899
Condensed Consolidated Interim Statement of Changes in Equity
for the six months ended 31 December 2014
Foreign
Share Cash flow currency
Share Share option hedging translation Retained
capital premium reserve reserve reserve earnings Total
GROUP R'000 R'000 R'000 R'000 R'000 R'000 R'000
Balance at 30 June 2013 143 575 332 654 9 440 (2 619) 11 000 779 471 1 273 521
Total comprehensive income for the period, net of income tax – – – 2 619 6 862 (103 174) (93 693)
Loss for the period – – – – – (119 425) (119 425)
Share of fair value gain in equity accounted investee – – – – – 16 251 16 251
Effective portion of changes in fair value of cash flow hedges – – – 2 619 – – 2 619
Foreign currency translation differences – – – – 6 862 – 6 862
Transactions with owners, recorded directly in equity (425) (3 727) 10 857 - – (17 229) (10 524)
Treasury shares acquired during the period (425) (3 727) – – – – (4 152)
Share options granted – – 10 857 – – – 10 857
Dividend paid – – – – – (17 229) (17 229)
Balance at 30 June 2014 143 150 328 927 20 297 – 17 862 659 068 1 169 304
Total comprehensive income for the period, net of income tax – – – (952) 2 351 63 717 65 116
Profit for the period – – – – – 47 153 47 153
Share of fair value gain in equity accounted investee – – – – – 16 564 16 564
Effective portion of changes in fair value of cash flow hedges – – – (952) – – (952)
Foreign currency translation differences – – – – 2 351 – 2 351
Transactions with owners, recorded directly in equity (2 891) (15 335) – - – (17 031) (35 257)
Treasury shares acquired during the period (2 891) (15 335) – – – – (18 226)
Dividends paid – – – – – (17 031) (17 031)
Balance at 31 December 2014 140 259 313 592 20 297 (952) 20 213 705 754 1 199 163
Condensed Consolidated Interim Financial Statements
for the six months ended 31 December 2014
Segment reporting
Segment information is presented in the financial statements in respect of the Group's segments. The segment reporting format reflects the Group's management and internal reporting structure as reviewed by the chief operating decision
makers. Segment revenue represents revenue to external customers. There was no inter-segment revenue. Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.
Reportable segments
The Group comprises the following main reportable segments:
- Anthracite mining and marketing ("Anthracite")
- Expansion projects, which includes Petmin's exploration and development projects.
Anthracite Expansion projects Eliminations Consolidated
Six months Six months Year Six months Six months Year Six months Six months Year Six months Six months Year
Units ended ended ended ended ended ended ended ended ended ended ended ended
of 31 Dec 31 Dec 30 June 31 Dec 31 Dec 30 June 31 Dec 31 Dec 30 June 31 Dec 31 Dec 30 June
measure 2014 2013 2014 2014 2013 2014 2014 2013 2014
2014 2013 2014
Anthracite – Saleable tonnes produced (tonnes) 678 002 534 523 1 125 089 – – – – – – 678 002 534 523 1 125 089
Anthracite – Tonnes sold (tonnes) 659 754 349 414 1 026 250 – – – – – – 659 754 349 414 1 026 250
Energy – Saleable tonnes produced (tonnes) 171 474 110 349 244 298 – – – – – – 171 474 110 349 244 298
Energy – Tonnes sold (tonnes) 268 788 25 777 174 556 – – – – – – 268 788 25 777 174 556
Segment revenue R'000 693 939 355 888 1 019 789 – – – – – – 693 939 355 888 1 019 789
Segment finance (expense)/income R'000
Finance income R'000 3 325 2 703 5 768 – – – 314 465 769 3 639 3 168 6 537
Mark to market of listed securities R'000 – – – – (9 713) (13 464) – – – – (9 713) (13 464)
Finance expense R'000 (18 700) (17 845) (35 576) – – – (2 870) (1 422) (3 507) (21 570) (19 267) (39 083)
Segment profit/(loss) before tax R'000 75 933 68 621 149 782 (831) (10 998) (198 725) (6 055) (6 198) (29 025) 69 047 51 425 (77 968)
Segment tax expense R'000 (21 097) (18 658) (39 237) – – – (796) – (2 220) (21 894) (18 659) (41 457)
Segment profit/(loss) after tax R'000 54 836 49 963 110 545 (831) (10 998) (198 725) (6 851) (6 198) (31 244) 47 153 32 766 (119 425)
Segment capital expenditure – combined R'000 242 928 247 158 562 791 – – – 1 736 2 560 5 644 244 663 249 718 568 434
Segment capital expenditure R'000 16 400 21 559 65 018 – – – 1 736 2 560 5 644 18 135 24 119 70 662
Segment capital expenditure – pre-strip* R'000 226 528 225 599 497 773 – – – – – – 226 528 225 599 497 773
Segment depreciation – combined R'000 294 117 252 240 566 824 – – – 178 201 391 294 295 252 441 567 215
Segment depreciation R'000 28 666 20 045 45 837 – – – 178 201 391 28 843 20 246 46 228
Segment depreciation – pre-strip* R'000 265 451 232 195 520 987 – – – – – – 265 451 232 195 520 987
Share option costs included in segment
profit/(loss) before tax R'000 – – – – – – – 3 142 10 857 – 3 142 10 857
Segment assets R'000 1 572 295 1 602 831 1 667 713 384 145 516 056 352 018 32 875 12 379 15 704 1 989 315 2 131 266 2 035 435
Percentage of segment assets to total assets (percent) 79 75 82 19 24 17 2 1 1 100 100 100
Segment liabilities R'000 875 864 1 040 864 1 037 165 – – – (85 712) (215 641) (171 034) 790 152 825 223 866 131
Percentage of segment liabilities to total liabilities (percent) 111 126 120 – – – (11) (26) (20) 100 100 100
* See note 9.
Notes to the Condensed Consolidated Interim Financial Statements
for the six months ended 31 December 2014
1. Reporting entity
Petmin is a company domiciled in South Africa. The condensed consolidated interim financial statements of the Group for the six months ended 31 December 2014 comprise the
Company and its subsidiaries and the Group's interests in associates and joint arrangements (together referred to as the "Group").
The condensed consolidated interim financial statements were authorised for issue by the directors on 23 February 2015.
2. Basis of preparation
These condensed consolidated financial statements are prepared in accordance with IAS 34 – Interim Financial Reporting as well as the SAICA Financial Reporting Guides as issued
by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council, the South African Companies Act and the JSE Listings
Requirements. The accounting policies applied in the preparation of the condensed consolidated interim financial statements are in terms of IFRS and are consistent with those applied
in the previous consolidated annual financial statements. The condensed consolidated interim financial statements do not include all of the information required for full annual financial
statements purposes and should be read in conjunction with the consolidated annual financial statements for the year ended 30 June 2014, which are available upon request from the
Company's registered office at 37 Peter Place, Bryanston, 2021, Johannesburg or at www.petmin.co.za.
3. Accounting policies
The accounting policies have been applied consistently by the Group to all periods presented in these condensed consolidated interim financial statements and are consistent to those
applied by the Group in its consolidated financial statements for the year ended 30 June 2014.
Functional and presentation currency
The condensed consolidated interim financial statements are presented in South African Rands ("Rands"), which is the Company's functional currency. All financial information presented
in Rands has been rounded to the nearest thousand.
4. Estimates and judgements
The preparation of the condensed consolidated interim financial statements, in conformity with IAS 34 – Interim Financial Reporting, requires management to make judgements, estimates
and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on
historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making the judgements about carrying
values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision
affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.
The 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 annual financial statements as at and for the year ended 30 June 2014.
5. Review of results
The results of the Group as set out in these condensed consolidated interim financial statements have been reviewed by the Group's auditors, KPMG Inc. The unqualified review report
is available for inspection at the Group's registered office.
The auditor's report does not necessarily report on all of the information contained in these financial results. Shareholders are therefore advised that in order to obtain a full
understanding of the nature of the auditor's engagement they should obtain a copy of the auditor's report together with the accompanying financial information from the issuer's
registered office.
6. Earnings and diluted earnings per share
Earnings per share ("EPS") are based on the Group's profit for the period, divided by the weighted average number of shares in issue during the period.
Reviewed Reviewed Audited
Six months ended 31 December 2014 Six months ended 31 December 2013 Year ended 30 June 2014
Profit for Number of Profit for Number of Profit for Number of
the period shares in Per share the period shares in Per share the year shares in Per share
R'000 thousands in cents R'000 thousands in cents R'000 thousands in cents
Basic earnings per share 47 153 561 031 8,40 32 766 576 908 5,68 (119 425) 576 908 (20,70)
Share options and contingent consideration* – – – – – – – – –
Diluted EPS 47 153 561 031 8,40 32 766 576 908 5,68 (119 425) 576 908 (20,70)
Headline earnings per share
Headline earnings per share is based on the
Group's headline earnings divided by the weighted
average number of shares in issue during the
period.
Reconciliation between earnings and headline
earnings per share
Basic EPS 47 153 561 031 8,40 32 766 576 908 5,68 (119 425) 576 908 (20,70)
Adjustments:
– Loss on sale of property, plant and equipment 9 – 0,00 6 028 – 1,04 5 999 – 1,04
– Impairment of equity accounted investees – – – – – – 199 676 – 34,61
Headline EPS 47 162 561 031 8,40 38 794 576 908 6,71 86 250 576 908 14,95
Share options and contingent consideration* – – – – – – – – –
Diluted headline EPS 47 162 561 031 8,40 38 794 576 908 6,71 86 250 576 908 14,95
* At the reporting dates, the ruling share price of Petmin's shares was below the strike price of the options. As the exercise of the options would be anti-dilutive, they have been ingored for the dilution calculations.
During the six months ended 31 December 2014, the Group acquired 11 565 606 of its own shares at an average acquisition price of R1,58 per share. At 31 December 2014 the
Group held, 15 877 062 of its own shares in treasury stock, representing 2,75% of the total issued shares.
7. Acquisition of subsidiary
On 1 December 2014, Petmin acquired 100% of the shares and loans of West Road Property 1 Proprietary Limited ("WRP") for a total purchase consideration of R12.5 million. WRP
owns the premises occupied by the Petmin corporate team. The acquisition has been treated as an asset acquisition.
The acquistion had the following effect on the Group's assets and liabilities at acquisition on 1 December 2014:
Recognised values Adjustment Carrying amount
R'000 R'000 R'000
Deferred tax (1 512) (350) (1 162)
Fixed assets 13 750 1 250 12 500
Bank and cash 526 526
Creditors (264) (264)
12 500 900 11 600
Paid in cash (12 500)
Cash acquired 526
Net cash outflow (11 974)
8. Investment equity accounted investee
During the six months ended 31 December 2014 Petmin invested an additional US$1 million [approximately R11 million] (2013: US$4 million [approximately R40 million]) in North
Atlantic Iron Corporation (NAIC). Petmin's shareholding in NAIC is now 34% (30 June 2014: 33%).
9. Pre-stripping cost
Six months Six months Year
ended ended ended
31 December 2014 31 December 2013 30 June 2014
R million R million R million
Opening balance on balance sheet 305 328 328
Cash spend in the period 227 226 498
Mining – expensed on a units-of-production basis (depreciation) (265) (232) (521)
Closing balance on the balance sheet 267 322 305
Petmin incurred cash stripping costs amounting to R227 million during the current period (2013: R226 million). It is Petmin's accounting policy to record the cash cost incurred on these
stripping activities as additions to mine development cost under property, plant and equipment (a non-current asset).
These capitalised cash costs are expensed (depreciated) as coal is extracted. This is done on a units-of-production basis over the life of the component of the ore body to which access
is improved and amounted to R265 million during the current period (2013: R232 million). This resulted in a decrease in the amount recorded on the balance sheet as capitalised pre-
stripping by R38 million during the current period (2013: decrease of R6 million).
The depreciation is, in reality, the mining cost (stripping cost) that is expensed during the period when anthracite is produced (removed from the pit).
10. Liquidity and going concern
The Group remains strongly cash generative and the directors believe that there is sufficient liquidity and funding available to finance the Group's operations for the foreseeable future
and that the going-concern assumption is appropriate.
At 31 December 2014, the Group had cash on hand of R10 million and undrawn overdraft facilities of R140 million with Standard Bank (at 30 June 2014: cash on hand of R23 million
and undrawn overdraft facilities of R170 million).
During the six months ended 31 December 2014, the Group transferred R30 million of the overdraft facilities to environmental guarantee facilities.
11. Inventories
R36 million (2013: R43.4 million) of inventory is plant feed that will only be processed in greater than 12 months.
12. Borrowings
The short-term portion of borrowings has increased as the R100 million Standard Bank term loan is repayable in one lump-sum on 31 December 2015. The first of the 13 quarterly
capital repayments on the R225 million Standard Bank Revolving Credit Facility was paid in December 2014.
13. Contingent liability
The dispute with one of Tendele's customers over the interpretation of the contracted qualities of Tendele's energy product (please refer to note 28 of Petmin's June 2014 financial
statements) has been scheduled for arbitration during May 2015 as there was insufficient time to complete the process during the hearings held during December 2014. Tendele and
its legal advisors believe that the claims are unlikely to be successful hence no liability has been recognised at 31 December 2014.
14. Proceedings instituted for recovery of payments due to Petmin from the Veremo project
On 25 November 2014, Petmin instituted proceedings against Framework Investments Limited ("Framework") and Kermas Limited ("Kermas") for the payment of the three R65 million
distributions payable from the Veremo project to Petmin. Petmin awaits confirmation of the scheduled dates for the arbitration. (Please refer to note 4 of the annual financial statements
for the year ended 30 June 2014.)
15. Related parties
The group entered into various transactions with related parties which occurred under terms that are no more favourable than those arranged with independent third parties.
16. Subsequent events
There have been no events that have occurred subsequent to 31 December 2014 and before the condensed preliminary consolidated financial statements are authorised for issue
which require adjustment of, or disclosure in the financial statements or notes thereto in accordance with IAS 10 – Events After the Reporting Period.
This management commentary has been prepared by management and has not been reviewed by the Group's auditors.
(i) General overview of performance
Petmin's headline earnings per share were up 25% and normalised earnings per share (see table below) were up 8% from 2013.
Earnings per share increased by 48% largely as a result of the non-recurring mark-to-market and impairment charges recorded in the comparative period in 2013.
Operating expenses reduced by R12.3 million to R0.7 million (2013: R13 million) as the Group recorded foreign exchange gains of R3.8 million (2013: losses of R1.3 million) and other
income of R0.3 million (2013: loss on sale of PPE R8.2 million).
Administration expenses reduced by R2.2 million reflecting management's efforts to reduce corporate costs.
Normalised earnings 6 months ended 6 months ended Year ended
(R000) 31 December 2014 31 December 2013 30 June 2014
Profit/(loss) for the period 47 153 32 766 (119 425)
Adjust for after-tax effect of:
– Loss on sale of PPE 9 5 999 5 999
– Mark to market of listed investments – 9 713 13 464
– Impairments – 1 158 200 834
– NRV impairment of inventory – 1 146 6 703
– Reversal of accrual – (5 855) (5 855)
Normalised profit after tax 47 162 44 927 101 720
Adjusted profit per share 8,40 7,79 17,63
% increase 8
Capital expenditure in the six months to 31 December 2014 was R18 million (2013: R24 million). The table below summarises the Group capital expenditure for the six months ended
31 December 2014.
6 months ended 6 months ended Year ended
31 December 2014 31 December 2013 30 June 2014
R million R million R million
Total capital expenditure excluding pre-strip 18 24 45
– Somkhele 18 24 39
– Group – – 6
Capital expenditure at Somkhele mine 18 24 39
– Exploration, development, resource definition 7 12 21
– Mobile plant 4 – –
– Third wash plant – 3 3
– Other 7 9 15
Capital pre-strip (38) (6) (23)
Capital expenditure including pre-strip (20) (18) 22
Additionally, Petmin made the following investments in subsidiaries and equity accounted investees:
- Petmin acquired 100% of the shares and loans in WRP whose only asset is the office building which houses the head office team for a total purchase consideration of
R12,5 million. (In line with the strategy to reduce corporate costs, approximately 43% of the office space will be rented out at market related prices and Petmin's total cash cost
to occupy will reduce as a result.)
- Petmin invested an additional US$1 million (2013: US$4 million) in NAIC, taking its shareholding in NAIC to 34%.
Dividends and share buy-backs
In the six months ended 31 December 2014, Petmin paid a dividend of 3 cents per share and also acquired 11 565 606 of its own shares for a total investment of R18 million, or
R1,58 per share. In 2014, an updated Competent Persons Report valued the Somkhele anthracite mine at R1,6 billion or approximately R2,84 per share for Somkhele only. Management
believes that Petmin's current share price significantly undervalues the Group's assets and Petmin will continue with a share buy-back programme when the opportunity arises.
Anthracite Division
Somkhele anthracite mine
Six months Six months Year
ended ended ended
31 December Percentage 31 December 30 June
Somkhele production performance 2014 change 2013 2014
Run of Mine (ROM) tonnes washed 1 523 051 23% 1 234 380 2 688 563
Yield 44.52% 3% 43.30% 41.85%
Anthracite saleable tonnes produced 678 002 27% 534 523 1 125 089
Anthracite tonnes sold 659 754 89% 349 414 1 026 250
Discard tonnes washed 669 292 26% 530 215 1 174 419
Yield 25.62% 23% 20.81% 20.80%
Energy coal saleable tonnes produced 171 474 55% 110 349 244 298
Energy coal sold 268 788 943% 25 777 174 556
Production of saleable anthracite increased by 27% in the six months ended 31 December 2014 compared to 2013, with a 3% improvement in the yields achieved and a 23% increase
in ROM tonnes washed. Production of energy coal increased by 55% with the yield improving by 23%.
Anthracite sales volumes increased by 89% as export volumes increased by 231%. Sales volumes to inland metallurgical customers increased by 25%, as customers' expansion projects
were commissioned and ramped up to full production.
Energy coal sales volumes increased by 943% as energy coal sales were temporarily suspended in the comparative period. The previous build-up of energy coal inventory has been sold.
Average dollar export prices reduced in line with movements in the international commodity markets and also due to product mix sold compared to 2013. We have managed to
achieve pricing better than market due to specific supply interruptions in Eastern Europe and South Africa. Inland prices were more stable and reduced by only 2% from 2013.
The exemplary safety record at Somkhele has been maintained and the lost-time injury frequency rate remained zero.
Expansion projects division
Petmin's focus remains on the development of the NAIC pig-iron project in North America.
North Atlantic Iron Corporation ("NAIC")
During the six months ended 31 December 2014, Petmin invested a further US$1 million (2103: US$4 million) to take its shareholding in NAIC to 34%.
The final site selection process for the first pig iron plant remains the key focus with the two final sites selected from a short list of 13, being a site in Ashtabula, Ohio, and the second
in Quebec. The independent trade-off analysis between the sites will be concluded in the second quarter of calendar year 2015, coinciding with the completion of the pre-feasibility
study (PFS) by Hatch Engineering.
Once the site selection has been finalised, the detailed engineering design and project costing will commence.
Unbundling
The unbundling of the NAIC shares to shareholders remains on track for June 2015 after completion of the PFS. It is anticipated that a dividend in-specie of approximately 50 cents per
share will be declared, following the primary listing of NAIC in North America and a secondary listing on the JSE.
Pig-iron – South Africa (Veremo project)
Veremo awaits the execution of the Mining Right for which notification of its award was received in January 2014. The Veremo management team is in the process of finalising smelt
tests and the mine design and, once the Mining Right is executed, mine development can commence. All development capital is funded by Framework (the 75% shareholder in Veremo)
and supported by Kermas, its holding company.
(ii)Prospects
Anthracite division
Production and sales volumes of both anthracite and energy coal are expected to be maintained at current levels for the six months ending 30 June 2015.
Confirmed orders have been received for 94% of anticipated anthracite production to June 2015. Anticipated energy coal production is fully committed to confirmed orders. We expect
that local supply constraints and the continued effects of the Eastern European crisis to have a positive effect on our market, with demand and pricing becoming more favourable for all
of Somkhele's products. Our continued efforts to refine our product mix and find new markets with our trading partners are also expected to enhance overall performance.
Capital expenditure to June 2015 is expected to be approximately R38 million with no additional capital pre-stripping forecast to June 2015.
We continue to evaluate how best to permanently protect the interests of shareholders by facilitating empowerment at both the asset and the corporate level in Petmin and Tendele,
the final proposal in respect of which will be communicated with shareholders in due course.
Expansion projects division
In the period to June 2015, Petmin expects to invest a further US$5 million to take its shareholding in NAIC to 40%.
It remains the intention of NAIC's shareholders to list NAIC and then to unbundle their interests in NAIC to shareholders, given the investment's fundamentally different risk profile
and investment offering compared to Somkhele. In Petmin's case, the anticipated unbundling is expected to result in a dividend in-specie of approximately ZAR0.50 per Petmin share.
Additional details on Petmin, including a detailed presentation on the results (which will be available from 24 February 2015) can be found on our website www.petmin.co.za.
By order of the Board
ID Cockerill JC du Preez Johannesburg
Chairman Chief Executive Officer 23 February 2015
Directors: I Cockerill# (Chairman)* L Mogotsi (Deputy Chairman) J du Preez (Chief Executive Officer)
B Doig B Tanner (Financial Director) M Arnold*† E de V Greyling* K Kalyan* T Petersen*
*Non-executive #British †American
Registered office: 37 Peter Place Bryanston 2021
Corporate office: 37 Peter Place Bryanston 2021 Tel: (011) 706 1644 Fax: (011) 706 1594 Website: www.petmin.co.za
Sponsor – JSE: River Group Tel: +27 (0) 12 346 8540
Company secretary: Mondial Consultants (Proprietary) Limited
Transfer secretaries: JSE: Computershare Investor Services (Proprietary) Limited
Auditors: KPMG Inc.
A PDF version of these results is available on our website: www.petmin.co.za
www.petmin.co.za
Johannesburg
24 February 2014
Sponsor
River Group
Date: 24/02/2015 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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