Wrap Text
Reviewed Condensed Consolidated Interim Financial Statements for the Six Months Ended 31 March 2015
THARISA PLC
Incorporated in the Republic of Cyprus with limited liability
Registration number HE223412
JSE share code: THA
ISIN: CY0103562118
REVIEWED CONDENSED CONSOLIDATED
INTERIM FINANCIAL STATEMENTS
For the six months ended 31 March 2015
Corporate information
REGISTERED ADDRESS
Office 108 – 110
S. Pittokopitis Business Centre
17 Neophytou Nicolaides and Kilkis Streets
8011 Paphos
Cyprus
POSTAL ADDRESS
PO Box 62425
8064 Paphos
Cyprus
WEBSITE
www.tharisa.com
DIRECTORS OF THARISA
Loucas Christos Pouroulis (Executive Chairman)
Phoevos Pouroulis (Chief Executive Officer)
Michael Gifford Jones (Chief Finance Officer)
John David Salter (Lead Independent non-executive director)
Ioannis Drapaniotis (Independent non-executive director)
Antonios Djakouris (Independent non-executive director)
Omar Marwan Kamal (Non-executive director)
Brian Chi Ming Cheng (Non-executive director)
JOINT COMPANY SECRETARIES
Lysandros Lysandrides
26 Vyronos Avenue
1096 Nicosia
Cyprus
Sanet de Witt
Eland House, The Braes
3 Eaton Avenue
Bryanston
Johannesburg 2021
South Africa
Email: secretarial@tharisa.com
INVESTOR RELATIONS
Michelle Taylor
Eland House, The Braes
3 Eaton Avenue
Bryanston
Johannesburg 2021
South Africa
Email: ir@tharisa.com
TRANSFER SECRETARIES
Computershare Investor Services Proprietary Limited
Registration number: 2004/003647/07
70 Marshall Street
Johannesburg 2001
(PO Box 61051, Marshalltown 2107)
South Africa
Cymain Registrars Limited
Registration number: HE174490
26 Vyronos Avenue
1096 Nicosia
Cyprus
SPONSOR
Investec Bank Limited
Registration number: 1969/004763/06
100 Grayston Drive
Sandown
Sandton 2196
(PO Box 785700, Sandton 2146)
South Africa
AUDITORS
KPMG Limited (Cyprus)
Registration number: HE132527
14 Esperidon Street
1087 Nicosia
Cyprus
SALIENT FEATURES
PGM PRODUCTION
(6E)
UP 49.5%
57.4 koz
(2014: 38.4 koz)
CHROME CONCENTRATE
PRODUCTION
DOWN 1.1%
563.3 kt
(2014: 569.4 kt)
partial re-treatment of tails at the Genesis
Plant reduced production of foundry and
chemical grade high value add products
Revenue
DOWN 1.9%
US$123.7m
lower PGM basket price
stable chrome concentrate prices
(2014: US$126.1m)
EBITDA
UP 37.7%
US$17.9m
(2014: US$13.0m)
IMPROVED
Operating PROFIT
UP 63.5%
US$12.1m
(2014: US$7.4m)
HEADLINE PROFIT
PER SHARE
UP 150%
US$0.01
(2014: Pro forma US$0.004)
Dear Shareholder
It is pleasing to report that Tharisa recorded a substantial
turn-around in profitability, generating a profit before tax
of US$7.1 million compared to the comparable period
loss of US$31.1 million. Tharisa has further strengthened
its competitive position benefiting from the shallow
open pit, large scale co-production of PGMs and chrome
concentrates with the consequential low cost of production.
Safety remains a top priority and Tharisa continues to strive
for zero harm at our operations. As previously reported,
production was affected by the suspension of processing
activities following the tragic fatality on 5 November
2014. Tharisa continues to implement appropriate risk
management processes, strategies, systems and training to
promote a safe working environment for all.
Tharisa achieved a Lost Time Injury Frequency Rate
(LTIFR) of 0.07 per 200 000 man hours worked, which
ranks amongst the lowest LTIFRs in the PGM and chrome
industries in South Africa.
A number of milestones were achieved during the interim
period including:
- Record monthly PGM production in March 2015 of
12 874 6E contained PGM ounces
- PGM recoveries at the Voyager Plant of 78.8% in March
2015
- Low cost per PGM ounce produced of US$458
contributing to a PGM gross margin of 39.1%
- Record chrome concentrate shipments of 135 kt in
March 2015
OPERATIONAL OVERVIEW
31 March 31 March
Unit 2015 2014
Tonnes
processed kt 2 198.7 1 919.0 +14.6%
On mine cash
cost per tonne
processed US$ 30.8 34.3 -10.2%
Consolidated
cash cost
per tonne
processed
(excluding
transport) US$ 34.3 38.3 -10.4%
MINING
The Tharisa Mine is unique in that it mines multiple
mineralised layers with different, but defined, PGM and
chrome contents. A multiple contractor mining model was
introduced with effect from 1 November 2014, and has
progressed according to the change management plan and is
yielding major production gains. 1.95 Mt of ore at an average
grade of 1.65 g/t PGMs on a 6E basis and 18.7% chrome
was mined during the period and 5.6 Mm(3) of waste rock
was moved. During the transition period and as planned,
to ensure sufficient feed into the plants, commissioning tails
were re-processed through the Genesis Plant in addition
to mined ore. Steady state mine production of 400 ktpm
of ROM ore was achieved during Q3 2015. The building
of a ROM stockpile including sufficient in-pit exposed reef
remains a key focus to optimise production and provide
stable feed grades for processing.
PROCESSING
The two processing plants being the Voyager Plant with a
nameplate capacity of 300 ktpm and the Genesis Plant with
a nameplate capacity of 100 ktpm, continued to provide
operational flexibility. This allowed the appropriate blend
of ore to be processed through the Voyager Plant while
re-processing commissioning tails through the Genesis
Plant during the change to a multiple mining contractor
model and during periods of power supply reductions.
2.2 Mt of reef and commissioning tails were processed
through the two plants during the six-month period
producing 57.4 koz of contained 6E PGMs and 563.3 kt of
chrome concentrates.
Plant throughput equates to 91.7% of combined name plate
capacity of the plants for the six months.
While overall PGM recovery was at 63.1%, the Voyager
Plant achieved a recovery of 78.8% in March 2015,
demonstrating the significant improvements yielded from
the optimisation initiatives such as the high energy flotation
circuit. PGM production increased by 49.5% over the
comparable period.
Chrome production was marginally lower (1.1%) relative
to the comparable period and was impacted by the re-
processing of commissioning tails through the Genesis
Plant which impacted negatively on the overall chrome
recoveries, particularly chemical and foundry grades.
47.4 kt of higher value add chemical and foundry grade
chrome concentrates were produced compared to 69.4 kt
in the comparable period. The average chrome recovery
across all plants was 56.4% falling short of the current plant
capacity design of 65%.
Production of both PGMs and chrome concentrates is
expected to continue to increase as the mining operation
provides consistent feed and the plants process mined
ore only.
COMMODITY MARKETS AND SALES
31 March 31 March
Unit 2015 2014
PGM basket
price US$/oz 945 1 079 -12.4%
PGM basket
price ZAR/oz 10 885 11 674 -6.8%
42%
metallurgical
grade chrome
concentrate
contract price US$/t 156 151 +3.3%
Chemical
grade chrome
concentrate
price US$/t 198 188 +5.3%
Both PGM and chrome concentrate commodity prices
remain under pressure with the average US$ PGM
contained metal basket price reducing by 12.4% and a
nominal increase of 3.3% in the metallurgical grade chrome
concentrate contract price.
PGM production continues to be sold to Impala Refining
Services in terms of the off-take agreement with a total of
58.4 koz being sold during the period. The Tharisa Mine
PGM prill split is significant in terms of platinum content
with 56.5%, contributing to a favourable PGM basket price
being realised by Tharisa.
31 March 31 March
2015 2014
PRILL SPLIT BY MASS % %
Platinum 56.5 60.5
Palladium 15.6 15.8
Rhodium 9.4 8.1
Gold 0.2 0.2
Ruthenium 13.9 11.7
Iridium 4.4 3.7
Chrome concentrate sales totalled 549.5 kt. China remains
the main market for chrome concentrates and 461.5 kt of
the metallurgical grade chrome concentrates produced by
the Tharisa Mine were sold on a CIF main ports China basis.
Of this quantity, 83% was shipped in bulk with the balance
being shipped in containers.
During the period, Tharisa entered into a further off-take
agreement with Rand York Minerals for the majority of its
production of chemical grade chrome concentrates.
Capital expenditure on the plant, other than for sustaining
capital, has been substantially completed. There are a
number of optimisation initiatives currently being evaluated
by the Tharisa Mine with a focus on improving chrome
recoveries.
LOGISTICS
31 March 31 March
Unit 2015 2014
Average
transport cost
per tonne
of chrome
concentrate
– CIF China
basis US$/t 59 69 -14.5%
The chrome concentrate destined for main ports China
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.
Arxo Logistics has sufficient storage capacity at both the
Richards Bay dry bulk terminal and the Durban container
por t to manage the full production capacity of the
Tharisa Mine.
Negotiations over a planned public private partnership for
an on-site railway siding at the Tharisa Mine are progressing
well.
FINANCIAL OVERVIEW
Group revenue totalled US$123.7 million, a decrease
of 1.9% relative to the comparable period revenue
of US$126.1 million. This decrease in revenue was
notwithstanding an increase in PGM production of 49.5%
and was impacted by a reduction in the average contained
metal basket price from US$1 079/oz to US$945/oz –
a decrease of 12.4%. In addition, chrome concentrate
production was marginally lower (1.1%). The constituent
components reflected an increase of 3.2% in metallurgical
grade chrome concentrates with a 31.7% reduction in the
higher value add chemical and foundry grade sales. The
average 42% metallurgical grade chrome concentrate price
strengthened by 3.3% from US$151/t to US$156/t.
The segmental contribution to revenue and gross profit is
summarised in the table below:
Six months ended
31 March 2015 PGM Chrome Total
US$'000 US$'000 US$'000
Revenue 44 087 79 613 123 700
Cost of sales# 26 861 74 034 100 895
Cost of sales excluding
selling costs 26 766 44 715 71 481
Selling costs 95 29 319 29 414
Gross profit 17 226 5 579 22 805
Gross profit percentage 39.1% 7.0% 18.4%
# The allocation of the shared costs of producing PGMs and
chrome concentrates has, in accordance with the accounting
policy, been revised for the current interim period to an equal
sharing from the previous allocation of 40% to PGMs and 60%
to chrome concentrates.
Six months ended
31 March 2014 PGM Chrome Total
US$'000 US$'000 US$'000
Revenue 35 798 90 340 126 138
Cost of sales 24 707 81 201 105 908
Cost of sales excluding
selling costs 24 650 44 246 68 896
Selling costs 57 36 955 37 012
Gross profit 11 091 9 139 20 230
Gross profit percentage 31.0% 10.1% 16.0%
The gross profit margin of 18.4% compares favourably to
the comparable period gross profit margin of 16.0% and is
attributable primarily to the increased PGM sales volumes
with the costs of production being apportioned over the
increased production. The chrome segment gross margin
reflected a decrease over the comparable period due to
the marginally lower production and the inclusion of the
agency commission payable to the Noble Group Limited
as part of the cost of sales. The Group benefited from
competitively priced freight costs for bulk shipments of
chrome concentrates which contributed to the improved
gross margin. The major constituents of the cash cost of
sales of PGMs and chrome concentrates are set out in the
graphs below.
PGM cash cost of sales
Mining 49%
Utilities 6%
Reagents 9%
Steel balls 3%
Labour 5%
Diesel 18%
Overheads 10%
Chrome cash cost of sales
Mining 46%
Utilities 5%
Steel balls 5%
Labour 9%
Diesel 17%
Overheads 18%
After accounting for administrative expenses of
US$10.7 million which reduced by 16.2%, the Group
achieved an operating profit of US$12.1 million. The
insurance costs included in administrative expenses
increased materially primarily as a result of the change in
the financial structuring of the environmental rehabilitation
guarantee arrangements which released cash collateral
held against the provision.
EBITDA amounted to US$17.9 million (2014:
US$13.0 million).
Finance costs principally relate to the senior debt facility
secured by Tharisa Minerals for the construction of the
Voyager Plant.
Following the listing of the Company on the JSE, the
preference shares in issue were converted into ordinary
shares and accordingly there is no current period charge
for "changes in fair value of financial liabilities at fair value
through profit and loss" (2014: US$30.6 million).
The Group recorded a substantial turn-around in
profitability, generating a profit before tax of US$7.1 million
compared to the prior period loss of US31.1 million.
Foreign currency translation differences for foreign
operations, arising where the Company has funded the
underlying subsidiaries with US$ denominated funding and
the reporting currency of the underlying subsidiary is not in
US$, amounted to US$13.9 million (2014: US$8.9 million).
The increased difference arises mainly from the
strengthening of the US$ against the ZAR.
Basic and diluted profit per share for the period amounted
to US$0.01 (2014: loss of US$0.12).
Interest-bearing debt as at 31 March 2015, totalled
US$99.2 million, resulting in a debt to total equity ratio of
49.4%. The long-term targeted debt to equity ratio is 15%.
The optimisation projects namely the chrome recovery
projects and the public private partnership with Transnet
will be funded through additional debt and cash generated
from operations. The debt to equity ratio may, as a result,
increase in the near term.
Additions to property, plant and equipment for the period
amounted to US$9.1 million, including an amount of
US$4.1 million relating to the capitalisation of deferred
stripping.
During the interim period the Group generated net cash
from operations of US$15.4 million (2014: US$28.8 million).
The reduction in the net cash flows from operations is
due, in part, to the working capital associated with "trade
and other receivables" which increased by an amount
of US$12.8 million as a result of, inter alia, the increased
PGM sales. Cash on hand amounted to US$26.7 million. In
addition, the Group holds US$13.4 million in a debt service
reserve account.
BOARD APPOINTMENT
We welcomed Mr Brian Chi Ming Cheng to the board as a
non-executive director with effect from 19 December 2014.
OUTLOOK
The turnaround in profitability demonstrates the benefits
of being a low cost co-producer of PGM and chrome
concentrates within a challenging commodity environment.
The outlook for Q3 FY2015 has been impacted by
significant planned maintenance programmes, which
included the reconfiguration of the crushing circuit at the
Voyager Plant, with an estimated loss in production time of
approximately 12% for the quarter.
PGM recoveries exceeded plan and the achievement of
steady state production of 144 kozpa is targeted for the
2016 financial year.
Management continues to focus on the improvement of
the chrome recoveries to achieve steady state production.
With the installed wet high intensity magnetic separation
units not achieving the expected improvement in chrome
recoveries and further test work on this and other
technologies ongoing, the steady state chrome production
has been revised to 1.5 Mtpa and is planned to be achieved
in the 2016 financial year.
Appropriately blended mined ore is being fed into the
processing plants on a consistent basis from June 2015. The
resulting stability in feed grade will improve recoveries to
design levels. PGM and chrome concentrate production
in H2 FY2015 is expected to approximate H1 FY2015
production.
We would like to thank the Tharisa team and directors for
their continued support in achieving an improved interim
performance.
Phoevos Pouroulis Michael Jones
Chief Executive Officer Chief Finance Officer
15 June 2015
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).
The auditors' report does not necessarily report on all of
the information contained in this announcement/financial results.
Shareholders are therefore advised that in order to obtain a full
understanding of the nature of the auditors' engagement they should
obtain a copy of the auditors' report together with the accompanying
financial information from the Company’s registered office.
Any reference to future financial performance has
not been reviewed or reported on by the Company's
auditors.
The condensed consolidated interim financial statements
were approved by the board on 15 June 2015.
INDEPENDENT AUDITORS' REVIEW REPORT ON
INTERIM FINANCIAL STATEMENTS
TO THE SHAREHOLDERS OF THARISA PLC
We have reviewed the condensed consolidated financial
statements of Tharisa plc, on pages 10 to 24 contained in
the accompanying interim report, which comprise the
condensed consolidated statement of financial position as at
31 March 2015 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 2015 are not prepared,
in all material respects, in accordance with IAS 34 Interim
Financial Reporting.
EMPHASIS OF MATTER
We draw attention to note 2(c) of the condensed
consolidated interim financial statements which indicates
that as at 31 March 2015 the Group's current liabilities
exceeded its current assets by US$2 831 thousand. The note
states that should the forecast production not be achieved
and/or South African Rand commodity prices weaken, a
material uncertainty exists which may cast doubt on the
Group's ability to continue as a going concern. Our opinion is
not qualified in respect of this matter.
Maria A. Karantoni FCA
Certified Public Accountant and Registered Auditor
for and on behalf of
KPMG Limited
Certified Public Accountants and Registered Auditors
14 Esperidon Street
1087 Nicosia
Cyprus
15 June 2015
Condensed consolidated statement of profit or loss and other
comprehensive income
for the six months ended 31 March 2015
Six months ended
31 March 2015 31 March 2014
Notes US$'000 US$'000
Revenue 4 123 700 126 138
Cost of sales 4 (100 895) (105 908)
Gross profit 22 805 20 230
Other income 27 27
Administrative expenses 5 (10 741) (12 817)
Results from operating activities 12 091 7 440
Finance income 1 415 330
Finance costs (6 443) (8 284)
Changes in fair value of financial liabilities at fair value through
profit or loss – (30 635)
Net finance costs (5 028) (38 589)
Profit/(loss) before tax 7 063 (31 149)
Tax 6 (2 193) 2 911
Profit/(loss) for the period 4 870 (28 238)
Other comprehensive income
Items that will not be classified subsequently to profit or loss – –
Items that may be classified subsequently to profit or loss
Foreign currency translation differences for foreign operations, net of tax (13 905) (8 876)
Other comprehensive income, net of tax (13 905) (8 876)
Total comprehensive expense for the period (9 035) (37 114)
Profit/(loss) for the period attributable to
Owners of the Company 3 361 (28 422)
Non-controlling interests 1 509 184
4 870 (28 238)
Total comprehensive expense for the period attributable to
Owners of the Company (7 104) (35 247)
Non-controlling interests (1 931) (1 867)
(9 035) (37 114)
Profit/(loss) per share
Basic and diluted profit/(loss) per share (US$) 7 0.01 (0.12)
The notes are an integral part of these financial statements.
Condensed consolidated statement of financial position
as at 31 March 2015
30 September
31 March 2015 2014
Notes US$'000 US$'000
Assets
Property, plant and equipment 8 239 190 253 356
Goodwill 1 097 1 211
Other financial assets 10 1 851 5 008
Long-term deposits 9 13 377 14 479
Deferred tax assets 3 672 5 970
Non-current assets 259 187 280 024
Inventories 11 11 310 14 567
Trade and other receivables 45 272 32 515
Other financial assets 10 344 442
Current taxation 5 3
Cash and cash equivalents 26 733 19 629
Current assets 83 664 67 156
Total assets 342 851 347 180
Equity
Share capital 12 255 255
Share premium 452 363 452 363
Other reserve 47 245 47 245
Foreign currency translation reserve (57 826) (47 361)
Revenue reserve (213 135) (216 596)
Equity attributable to owners of the company 228 902 235 906
Non-controlling interests (27 983) (26 052)
Total equity 200 919 209 854
Liabilities
Provisions 13 5 088 4 452
Borrowings 14 50 349 64 223
Deferred tax liabilities – 20
Non-current liabilities 55 437 68 695
Borrowings 14 42 169 30 986
Current taxation 88 421
Trade and other payables 44 238 37 224
Current liabilities 86 495 68 631
Total liabilities 141 932 137 326
Total equity and liabilities 342 851 347 180
The condensed consolidated interim financial statements were authorised for issue by the board of directors on 15 June 2015.
Phoevos Pouroulis Michael Jones
Director Director
The notes are an integral part of these financial statements.
Condensed consolidated statement of changes in equity
for the six months ended 31 March 2015
ATTRIBUTABLE TO OWNERS OF THE COMPANY
Foreign currency
Share Share Other translation Revenue Non-controlling
capital premium reserve reserve reserve Total interests Total equity
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 1 October 2014 255 452 363 47 245 (47 361) (216 596) 235 906 (26 052) 209 854
Total comprehensive income for the period
Net profit for the period - - - - 3 361 3 361 1 509 4 870
Other comprehensive income
Foreign currency translation differences - - - (10 465) - (10 465) (3 440) (13 905)
Total comprehensive income for the period - - - (10 465) 3 361 (7 104) (1 931) (9 035)
Transactions with owners, recognised directly in equity
Equity settled share based payments - - - - 100 100 - 100
Contributions by owners of the Company - - - - 100 100 - 100
Total transactions with owners of the Company - - - - 100 100 - 100
Balance at 31 March 2015 255 452 363 47 245 (57 826) (213 135) 228 902 (27 983) 200 919
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
Net loss for the period - - - - (28 422) (28 422) 184 (28 238)
Other comprehensive income
Foreign currency translation differences - - - (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 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 are an integral part of these financial statements.
Condensed consolidated statement of cash flows
for the six months ended 31 March 2015
Six months ended
31 March 2015 31 March 2014
US$'000 US$'000
Cash flows from operating activities
Profit/(loss) for the period 4 870 (28 238)
Adjustments for
Depreciation of property, plant and equipment 5 421 5 448
Impairment losses on property, plant and equipment 3 –
Impairment losses on goodwill 33 36
Impairment losses on inventory 250 1 729
Changes in fair value of financial liabilities at fair value through profit or loss – 30 635
Interest income (450) (207)
Changes in fair value of financial assets at fair value through profit or loss (727) 1 018
Interest expense 6 392 7 214
Tax 2 193 (2 911)
Equity-settled share based payments 202 –
18 187 14 724
Changes in
Inventories 3 683 4 185
Trade and other receivables (12 754) 6 020
Trade and other payables 7 005 4 402
Provisions (175) (32)
Cash from operations 15 946 29 299
Income tax paid (529) (489)
Net cash flows from operating activities 15 417 28 810
Cash flows from investing activities
Interest received 371 207
Additions to property, plant and equipment (9 113) (10 189)
Refunds/(additions) of other financial assets 2 917 (557)
Net cash flows used in investing activities (5 825) (10 539)
Cash flows from financing activities
Refund/(establishment) of long term deposits 824 (8 159)
Proceeds from/(repayment of) bank credit and other facility borrowings 11 289 (5 825)
Net proceeds from obligations under finance leases 759 –
Repayment of secured bank borrowings and loan to third party (14 072) (15 288)
Interest paid (579) (175)
Net cash flows used in financing activities (1 779) (29 447)
Net increase/(decrease) in cash and cash equivalents 7 813 (11 176)
Cash and cash equivalents at the beginning of the period 19 629 28 017
Effect of exchange rate fluctuations on cash held (709) (2 748)
Cash and cash equivalents at the end of the period 26 733 14 093
The notes are an integral part of these financial statements.
Notes to the condensed consolidated interim
financial statements
for the six months ended 31 March 2015
1. REPORTING ENTITY
Tharisa plc (the Company) is a company domiciled in Cyprus. These condensed consolidated interim financial statements
of the Company as at and for the six months ended 31 March 2015 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,
processing, trading and the associated logistics.
2. BASIS OF PREPARATION
(a) Statement of compliance
These condensed consolidated interim financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRS), International Accounting Standard, IAS 34 Interim Financial Reporting, the Listings
Requirements of the JSE Limited and the Cyprus Companies Law, Cap. 113. 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 consolidated financial statements as at and for the year ended 30 September
2014. These condensed consolidated interim financial statements do not include all the information required for full
annual consolidated financial statements, prepared in accordance with IFRS.
These condensed consolidated interim financial statements were approved by the board of directors on 15 June 2015.
(b) Use of estimates and judgements
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 2014.
(c) Going concern basis
The Group has made a profit for the period ended 31 March 2015 of US$4 870 thousand (2014: loss of
US$28 238 thousand). However, as at that date its current liabilities exceeded its current assets by US$2 831 thousand
(2014: US$1 475 thousand).
The cash flow forecasts of the Group reflect a positive cash flow position sufficient to meet the operational cash
flows, the approved capital expenditure and the debt repayments. Achievement of the near term cash flow forecast
is however dependent on the planned production levels being achieved, recognising that the Group is still in a ramp up
phase, and/or no weakening in future South African Rand commodity prices. Should the forecast production not be
achieved and/or South African Rand commodity prices weaken this may result in a shortfall in working capital. In such
circumstances, a material uncertainty exists which may cast doubt on the ability of the Group to continue as a going
concern and it may be unable to realise its assets and settle its liabilities in the normal course of business without
additional fund raising.
The financial statements, however, continue to be prepared on the going concern basis.
(d) New and revised International Financial Reporting Standards and Interpretations
As from 1 October 2014, the Group adopted all changes to IFRS, which are relevant to its operations. This adoption
did not have a material effect on the accounting policies of the Group.
The following Standards, Amendments to Standards and Interpretations have been issued but are not yet effective
for annual periods beginning on 1 October 2014. The board of directors is currently evaluating the impact of these on
the Group.
Standards and Interpretations
- IFRS 9 "Financial Instruments" (effective the latest as from the commencement date of its first annual period
beginning on or after 1 January 2018).
- IFRS 11 (Amendments) "Accounting for Acquisitions of Interests in Joint Operations" (effective the latest as from
the commencement date of its first annual period beginning on or after 1 January 2016).
- IFRS 14 "Regulatory Deferral Accounts" (effective the latest as from the commencement date of its first annual
period beginning on or after 1 January 2016).
- IFRS 15 "Revenue from Contracts with Customers" (effective the latest as from the commencement date of its
first annual period beginning on or after 1 January 2017).
- Amendments to IAS 16 and IAS 38-Clarification of Acceptable Methods of Depreciation and Amortisation
(effective the latest as from the commencement date of its first annual period beginning on or after
1 January 2016).
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 audited consolidated financial statements as at and for the year ended
30 September 2014.
4. OPERATING Segments
The Group has two reportable segments, the PGM segment and the chrome 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, as included in the internal management reports that are reviewed by the Group's management.
Segment revenue, cost of sales and gross profit are used to measure performance as management believes that such
information is the most relevant in evaluating the results of each segment.
PGM Chrome Total
Six months ended 31 March 2015 US$'000 US$'000 US$'000
Revenue 44 087 79 613 123 700
Cost of sales
Cost of sales excluding selling costs 26 766 44 715 71 418
Selling costs 95 29 319 29 414
26 861 74 034 100 895
Gross profit 17 226 5 579 22 805
The overhead costs relating to the manufacturing of the PGM concentrate and the chrome concentrates are
allocated to the relevant products based on the relative sales value per product. The allocated percentage for
chrome concentrates and PGM concentrate accounted for in the previous reporting period is 60% and 40%
respectively. Due to the increase in the revenue relating to the PGM concentrate for the period under review, the
allocated percentage was amended to 50% each applicable from 1 October 2014.
PGM Chrome Total
Six months ended 31 March 2014 US$'000 US$'000 US$'000
Revenue 35 798 90 340 126 138
Cost of sales
Cost of sales excluding selling costs 24 650 44 246 68 896
Selling costs 57 36 955 37 012
24 707 81 201 105 908
Gross profit 11 091 9 139 20 230
Geographical information
The following table sets out information about the geographical location of the Group's revenue from external
customers. The geographical location analysis of revenue from external customers is based on the country of
establishment of each customer.
Six months ended
31 March 2015 31 March 2014
US$'000 US$'000
Revenue from external customers
China 49 464 36 172
South Africa 49 744 43 030
Singapore 736 25 763
Hong Kong 17 817 16 795
Other countries 5 939 4 378
123 700 126 138
Six months ended
31 March 2015 31 March 2014
US$'000 US$'000
5. ADMINISTRATIVE EXPENSES
Directors and staff costs
Non-executive directors 245 282
Executive directors 713 754
Other key management 510 541
Group employees 4 633 6 047
6 101 7 624
Consulting 832 628
Insurance 694 291
Audit 279 327
Depreciation 127 237
Travelling and accommodation 248 431
Legal and professional 249 341
Listing costs 73 669
Corporate social investment 177 291
Security 302 367
Rent and utilities 408 793
Telecommunications and IT related costs 261 290
Sundry expenses 990 528
10 741 12 817
6. TAX
Tax is recognised based on management's best estimate of the weighted average annual income tax rate expected for
the full financial year applied to the pre-tax income of the interim period.
The Group's consolidated effective tax rate for the six months ended 31 March 2015 and 2014 was 31.0% and 9.3%
respectively.
The change in the effective tax rate for the six months ended 31 March 2015 was mainly attributable to a decrease in
the disallowable taxable expenses of the Company and the deferred tax credit on the taxable losses of subsidiaries
operating in tax jurisdictions with higher tax rates no longer being recognised.
Six months ended
31 March 2015 31 March 2014
7. PROFIT/(LOSS) PER SHARE
(i) Basic and diluted profit/(loss) per share
The calculation of basic and diluted profit/(loss) per share has been based
on the following profit/( loss) attributable to the ordinary shareholders
of the Company and the weighted average number of ordinary shares
outstanding.
Profit/(loss) for the period attributable to ordinary shareholders (US$'000) 3 361 (28 422)
Weighted average number of ordinary shares at 31 March ('000) 254 781 241 591
Basic and diluted profit/(loss) per share (US$) 0.01 (0.12)
31 March 2015 31 March 2014
Number of Number of
shares shares
('000) ('000)
Issued ordinary shares at beginning of period 254 781 6 170
Effect of bonus issue of ordinary shares – 154 247
Effect of convertible redeemable preference shares converted into
ordinary shares – 81 174
Weighted average number of ordinary shares at 31 March 254 781 241 591
For the purpose of calculating basic and diluted profit/(loss) per share, the weighted average number of ordinary shares
used in the above calculations reflects the effect of the bonus issue and the conversion of the redeemable convertible
preference shares as disclosed in the Group's audited consolidated financial statements as at and for the year ended
30 September 2014.
At 31 March 2015, LTIP and SARS awards were excluded from the diluted weighted average number of ordinary shares
calculation because their effect would have been anti-dilutive. The average market value of the Company's shares for
the purposes of calculating the potential dilutive effect of SARS was based on quoted market prices for the year during
which the options were outstanding.
(ii) Headline and diluted headline profit/(loss) per share
The calculation of headline and diluted headline profit/(loss) per share has been based on the following headline
profit/(loss) attributable to the ordinary shareholders and the weighted average number of ordinary shares outstanding.
Six months ended
31 March 2015 31 March 2014
Headline profit/(loss) for the period attributable to the ordinary
shareholders (note 7(iii)) (US$'000) 3 396 (28 386)
Weighted average number of ordinary shares at 31 March (note 7(i)) ('000) 254 781 241 591
Headline and diluted headline profit/(loss) per share (US$) 0.01 (0.12)
Six months ended
31 March 2015 31 March 2014
US$'000 US$'000
(iii) Reconciliation of profit/(loss) to headline profit/(loss) net Net
Profit/(loss) attributable to ordinary shareholders of the Company 3 361 (28 422)
Adjustments
Impairment losses on goodwill 33 36
Impairment losses on property, plant and equipment 3 –
Tax effect of impairment losses on property, plant and equipment (1) –
Headline profit/(loss) 3 396 (28 386)
8. PROPERTY, PLANT AND EQUIPMENT
(a) Acquisitions and disposals
During the six months ended 31 March 2015 and 2014 the Group acquired assets with a cost, excluding capitalised
borrowing costs, of US$9 113 thousand and US$10 189 thousand respectively.
There has been no disposal of assets during the six months ended 31 March 2015 and 2014, thus no gain or loss on
disposal has been recognised in profit or loss.
(b) Impairment losses
During the six months ended 31 March 2015 and 2014 the Group recognised impairment losses of US$3 thousand
and US$ nil 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 2015 and 30 September 2014, the Group's capital commitments for contracts to purchase property, plant
and equipment amounted to US$3 626 thousand and US$4 411 thousand respectively.
(d) Securities
At 31 March 2015 and 30 September 2014, an amount of US$217 196 thousand and US$228 345 thousand of the
carrying amount of the Group's tangible property, plant and equipment was pledged as security against secured bank
borrowing and third party borrowing (see note 14).
31 March 2015 30 September 2014
US$'000 US$'000
9. LONG-TERM DEPOSITS
Long-term deposits 13 377 14 479
The amount of US$13 377 thousand is restricted and designated as a "debt service reserve account" as required by
the terms of the secured bank borrowings.
30 September
Fair value 31 March 2015 2014
hierarchy US$'000 US$'000
10. OTHER FINANCIAL ASSETS
Non-current assets
Investments in cash funds and income funds (note 10(a)) Level 2 1 838 4 969
Interest rate caps (note 10(b)) Level 2 13 39
1 851 5 008
Current assets
Investments at fair value through profit or loss
Level 1 61 86
(note 10(c))
Discount facility (note 10(d)) Level 2 257 356
Loans and receivables (note 10(e)) 26 –
344 442
(a) The investments in cash funds and income funds are unsecured and held at fair value through profit or loss
(designated). Fair values are based on quoted market prices at the end of the reporting period without any
deduction for transaction costs.
Investments in cash funds and income funds totalling US$1 001 thousand are provided to Lombard Insurance
Group as collateral against a guarantee issued by a subsidiary of the Company to Lombard Insurance Group which
guarantees the payment of certain liabilities of the subsidiary to Transnet.
(b) Interest rate caps were obtained from a consortium of financial institutions, against the floating three month
Johannesburg Interbank Agreed Rate (JIBAR) on 25% of the secured bank borrowing. The interest rate caps
have a strike rate of 7.5% and terminate on 31 March 2017. The balance is held at fair value through profit or loss
(held for trading). Fair values are based on quoted market prices at the end of the reporting period without any
deduction for transaction costs.
(c) Investments at fair value through profit or loss are valued based on quoted market prices at the end of the
reporting period without any deduction for transaction costs.
(d) Discount facility relates to fair value adjustments on the limited recourse disclosed receivables discounting facility
(discount facility) with ABSA, Nedbank and HSBC in terms of which 98% of the sales of platinum, palladium
and gold (included in PGM) is sold at an effective finance cost of JIBAR (three month) + 200 basis points.
The facility is for an amount of ZAR300 million. The balance is held at fair value through profit or loss (designated).
The fair values are calculated by multiplying the actual metal quantities per discounted invoice with the difference
between the hedged metal price per discounted invoice and the average spot metal price translated to ZAR using
the average monthly rate.
(e) Loans and receivables are measured at amortised cost.
31 March 2015 30 September 2014
US$'000 US$'000
11. INVENTORIES
Finished products 6 230 6 891
Ore stockpile 956 1 517
PGM residual stockpile 404 3 011
Consumables 3 720 3 148
11 310 14 567
During the six months ended 31 March 2015 and 31 March 2014, the Group wrote down its inventories by
US$250 thousand and US$1 729 thousand respectively. The write down is included in cost of sales in the condensed
consolidated statement of profit or loss and other comprehensive income.
Inventories have a general notarial bond in favour of the lenders of the secured bank borrowings.
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 2015 and 31 March 2014.
13. 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 2015 and 30 September 2014 amounted to US$5 088 thousand
and US$4 452 thousand respectively. During the six months ended 31 March 2015 and 31 March 2014, the provision
for future rehabilitation recognised/(derecognised) to inventories was US$677 thousand and US$(372 thousand)
respectively and to mining assets and infrastructure US$134 thousand and US$(165 thousand) respectively.
The amounts recognised in profit or loss for the same periods amounted to US$182 thousand and US$181 thousand
respectively.
An insurance company provided a guarantee to the Department of Mineral Resources of South Africa to satisfy the
requirements of the Mineral and Petroleum Resources Development Act with respect to environmental rehabilitation.
The fair value is measured using valuation methodologies in which any significant inputs are not based on observable
market data. The balance is considered as level 3 in the fair value hierarchy.
The interest rate used for estimating future costs is the long term risk free rate as indicated by the RI86 government
bond of South Africa, which was 7.8% and 8.3% as at 31 March 2015 and 30 September 2014 respectively. The net
present value of the current rehabilitation estimate is based on the average of the long term inflation target range of
the South African Reserve Bank of between 3% and 6%, as at 31 March 2015 and 30 September 2014.
31 March 2015 30 September 2014
US$'000 US$'000
14. BORROWINGS
Non-current
Secured bank borrowing 50 349 63 333
Other borrowings – loan payable to third party – 890
50 349 64 223
Current
Secured bank borrowing 16 826 17 899
Other borrowings – loan payable to third party 1 350 1 095
Other borrowings – bank credit and other facility 21 064 9 775
Other borrowings – obligations under finance leases 745 –
Other borrowings – loan payable to related party 2 184 2 217
42 169 30 986
There have been no changes in the terms, securities and financial covenants of the above borrowing facilities during
the six months ended 31 March 2015, compared to those disclosed in the Group's consolidated financial statements
as at and for the year ended 30 September 2014 other than insurance premium finance provided under finance lease
to Tharisa Minerals Proprietary Limited, a subsidiary of the Group, for an amount of ZAR13 340 thousand repayable
in 12 monthly instalments commencing 1 December 2014. The finance is guaranteed by Tharisa plc for an amount of
ZAR14 million and bears interest at a rate of 7.92% p.a.
15. FAIR VALUES
The board of directors considers that the fair values of significant financial assets and liabilities approximate their
carrying values at each reporting date.
31 March 2015 31 March 2014
US$'000 US$'000
16. RELATED PARTY TRANSACTIONS
Significant transactions carried at arm's length with related parties during
the period were as follows:
Interest expense
Langa Trust 125 150
Arti Trust 157 338
Ditodi Trust 12 25
Makhaye Trust 12 25
The Phax Trust 24 51
The Rowad Trust 12 25
Moira June Jacquet-Briner 12 25
354 639
Compensation to key management of the Company for the period ended 31 March 2015 and 31 March 2014 is set out
in the tables below:
Salary Other Post Share
and short-term employment based
fees benefits benefits payments Total
US$'000 US$'000 US$'000 US$'000 US$'000
2015 compensation to key management
Non-executive directors' remuneration 245 – – – 245
Executive directors' remuneration 638 21 31 23 713
Other key management remuneration 401 50 43 16 510
Total 1 284 71 74 39 1 468
2014 compensation to key management
Non-executive directors' remuneration 282 – – – 282
Executive directors' remuneration 697 23 34 – 754
Other key management remuneration 462 31 48 – 541
Total 1 441 54 82 – 1 577
17. CONTINGENT LIABILITIES
During the period under review, the Company received a "letter before action" from a firm of solicitors representing
a shareholder which asserts intended claims against, inter alia, the Company for damages purporting to arise in the
context of the listing of the Company on the JSE Limited and the compulsory conversion of the convertible redeemable
preference shares held by that shareholder in the Company into ordinary shares as provided for in the terms of the
convertible redeemable preference shares.
In accordance with paragraph 92 of IAS 37 "Provisions, contingent liabilities and contingent assets" no further information
is disclosed in relation to the subject matter on the grounds that it may prejudice the position of the Company in a
dispute with other parties.
18. MINE RESOURCE AND RESERVE STATEMENT
The Group owns and operates the Tharisa Mine, a co-producing, open pit PGM and chrome mine located in
the Bushveld Complex 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
2015, due to normal mining operations, has been reduced by approximately 4.8 million tonnes. The total mineral
resource similarly decreased as a result of depletion during the period.
19. SUBSEQUENT EVENTS
There were no material events after the reporting period, which have a bearing on the understanding of the condensed
consolidated interim financial statements.
Summarised production data
for the six months ended 31 March 2015
Half year Quarter Quarter Half year Financial
ended ended ended ended year ended
31 March 31 March 31 December 31 March 30 September
2015 2015 2014* 2014 2014
Reef mined kt 1 948.0 1 042.1 905.9 1 957.8 3 908.5
Stripping m(3) waste/
ratio m(3) reef 10.0 9.8 10.1 9.2 10.6
Reef milled kt 2 198.7 1 167.1 1 031.6 1 919.0 3 913.1
PGM rougher feed grade g/t 1.65 1.65 1.67 1.68 1.63
6E PGMs produced koz 57.4 33.0 24.4 38.4 78.2
PGM recovery % 63.1 68.6 56.9 47.7 48.8
Average PGM contained
metal basket price US$/oz 945 935 956 1 079 1 103
Cr2O3 RoM grade % 18.7 18.8 18.5 20.1 19.4
Chrome concentrates
produced kt 563.3 305.5 257.8 569.4 1 085.2
42% metallurgical grade kt 515.9 283.6 232.3 500.0 937.0
Chemical and foundry
grades kt 47.4 21.9 25.5 69.4 148.2
Chrome yield % 25.6 26.2 25.0 29.7 27.7
42% metallurgical grade
chrome concentrate US$/t
contract price CIF China 156 155 159 151 158
Average exchange rate ZAR:US$ 11.5 11.7 11.1 10.5 10.6
*Loss of plant production time of 12% for the quarter, following the fatality on 5 November 2014 and the section 54
www.tharisa.com
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