Wrap Text
Reviewed Interim Condensed Consolidated Financial Statements for the six months ended 31 March 2018 & Cash Dividend
THARISA PLC
Incorporated in the Republic of Cyprus with limited liability
Registration number: HE223412
JSE share code: THA
LSE share code: THS
ISIN: CY0103562118
REVIEWED INTERIM
CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
For the six months ended 31 March 2018
CORPORATE INFORMATION
THARISA PLC TRANSFER SECRETARIES
Incorporated in the Republic of Cyprus with limited liability Cymain Registrars Limited
Registration number: HE223412 Registration number: HE174490
JSE share code: THA 26 Vyronos Avenue
LSE share code: THS 1096 Nicosia
ISIN: CY0103562118 Cyprus
Computershare Investor Services Proprietary Limited
REGISTERED ADDRESS Registration number: 2004/003647/07
Rosebank Towers
Office 108 - 110 15 Bierman Avenue
S. Pittokopitis Business Centre Rosebank 2196
17 Neophytou Nicolaides and Kilkis Streets (PO Box 61051 Marshalltown 2107)
8011 Paphos South Africa
Cyprus
POSTAL ADDRESS JSE SPONSOR
PO Box 62425 Investec Bank Limited
8064 Paphos Registration number: 1969/004763/06
Cyprus 100 Grayston Drive
Sandown Sandton 2196
WEBSITE (PO Box 785700 Sandton 2146)
http://www.tharisa.com South Africa
DIRECTORS OF THARISA
Loucas Christos Pouroulis (Executive Chairman) AUDITORS
Phoevos Pouroulis (Chief Executive Officer) Ernst & Young Cyprus Limited
Michael Gifford Jones (Chief Finance Officer) Registration number: HE222520
John David Salter (Lead independent non-executive director) Jean Nouvel Tower
Antonios Djakouris (Independent non-executive director) 6 Stasinos Avenue
Omar Marwan Kamal (Independent non-executive director) 1060 Nicosia
Carol Bell (Independent non-executive director) Cyprus
Roger Davey (Independent non-executive director)
Joanna Ka Ki Cheng (Non-executive director) JOINT BROKERS
Zhong Liang Hong (Non-executive director) Peel Hunt LLP
Moore House
JOINT COMPANY SECRETARIES 120 London Wall
Lysandros Lysandrides EC 2Y 5ET
26 Vyronos Avenue England
1096 Nicosia Contact: Ross Allister/James Bavister/David McKeown
Cyprus +44 207 7418 8900
Sanet de Witt BMO Capital Markets Limited
The Crossing 95 Queen Victoria Street
372 Main Road London EC4V 4HG
Bryanston Johannesburg 2021 England
South Africa Contact: Jeffrey Couch/Neil Haycock/Thomas Rider
Email: secretarial@tharisa.com +44 020 7236 1010
INVESTOR RELATIONS FINANCIAL PUBLIC RELATIONS
Sherilee Lakmidas Buchanan
The Crossing 100 Cheapside
372 Main Road London EC2V 6DN
Bryanston Johannesburg 2021 England
South Africa Contact: Bobby Morse/Anna Michniewicz
Email: ir@tharisa.com +44 020 7466 5000
MISSION
To maximise shareholder returns through innovative exploitation of mineral resources in a responsible manner
INTRODUCTION
Tharisa is an integrated resource group incorporating mining and the processing, beneficiation, marketing,sales and logistics of PGM and chrome concentrates.
Production guidance for FY2018 is 150 koz of PGMs and 1.4 Mt of chrome concentrate. The Vision 2020 strategy for the Group is to increase production to
200 koz of PGMs and 2 Mt of chrome concentrates by year end 2020.
VALUES
- The safety and health of our people is a priority
- We take responsibility for the effect that our operations may have on the environment
- We are committed to the upliftment of our local communities
- We conduct ourselves with integrity and honesty
- We strive to achieve superior returns for our shareholders
- We originate new opportunities and will continue to challenge convention through innovation
STRATEGIC INITIATIVES
- Implementation of optimisation initiatives to maximise value extraction
- Growth through innovative research and development
- To generate value by becoming a globally significant low-cost producer of strategic commodities
- Leveraging off the established platform for expansion into multi-commodities with geographic diversity
- Capital discipline with an annual dividend policy of at least 15% of NPAT and capital allocation to low risk projects
HIGHLIGHTS
REEF MINED
2.45 Mt
(2017: 2.45 Mt)
In line with guidance
PGM
PRODUCTION
(5PGE+Au)
Up 11.4%
77.0 koz
(2017: 69.1 koz)
CHROME
CONCENTRATE
PRODUCTION
Up 15.0%
732.5 kt
(2017: 636.8 kt)
REVENUE
Up 13.8%
US$199.2m
(2017: US$175.1 m)
NET PROFIT
AFTER TAX
Down 44.3%
US$28.4m
(2017: US$51.0 m)
EBITDA
Down 33.2%
US$54.1m
(2017: US$81.0 m)
CASH GENERATED
FROM OPERATIONS
Up 17.9%
US$52.1m
(2017: US$44.2 m)
EARNINGS
PER SHARE
Down 37.5%
US$ 10 cents
(2017: US$ 16 cents)
MAIDEN INTERIM
DIVIDEND
US$ 2 cents
GROUP STATISTICS
Unit H1 FY2018 H1 FY2017 % Change
Reef mined kt 2 451.3 2 449.1 0.1
Stripping ratio m3 waste/m3 reef 8.1 8.4 (3.6)
Reef milled kt 2 597.4 2 417.7 7.4
PGM flotation feed kt 1 895.6 1 783.0 6.3
PGM rougher feed grade g/t 1.52 1.54 (1.3)
PGM ounces produced 5PGE+Au koz 77.0 69.1 11.4
PGM recovery % 83.2 78.3 6.3
Average PGM basket price US$/oz 909 760 19.6
Average PGM basket price ZAR/oz 11 606 10 306 12.6
Cr2O3 ROM grade % 18.1 17.5 3.4
Chrome recovery % 65.9 63.4 3.9
Chrome yield % 28.2 26.3 7.2
Chrome concentrates produced kt 732.5 636.8 15.0
Metallurgical grade kt 558.9 484.3 15.4
Specialty grades kt 173.6 152.5 13.8
Third-party chrome production kt 106.2 - -
Metallurgical grade chrome concentrate
contract price US$/t CIF China 193 278 (30.6)
Metallurgical grade chrome concentrate
contract price ZAR/t CIF China 2 436 3 783 (35.6)
Average exchange rate ZAR:US$ 12.8 13.6 (5.9)
Group revenue US$ million 199.2 175.1 13.8
Gross profit US$ million 55.7 82.4 (32.4)
Net profit for the period US$ million 28.4 51.1 (44.4)
EBITDA US$ million 54.1 81.0 (33.2)
Net cash flows from operating activities US$ million 52.1 44.2 17.9
Headline earnings per share US$ cents 10 16 (37.5)
Earnings per share US$ cents 10 16 (37.5)
Gross profit margin % 28.0 47.0 (40.4)
EBITDA margin % 27.2 46.3 (41.3)
Net debt US$ million 22.7 7.0 224.3
Capital expenditure US$ million 17.7 8.5 108.2
Debt to total equity ratio % 25.4 14.8 71.6
Net debt to total equity ratio % 7.0 2.7 159.3
MANAGEMENT REPORT
DEAR SHAREHOLDER
Tharisa continues being a strong cash generative business which is underpinned by solid operational performance. In the
six months ended 31 March 2018, the Group through its low cost co-production business model delivered robust
operational and financial results.
Safety remains a top priority and Tharisa continues to strive for zero harm at its operations. Tharisa achieved a Lost
Time Injury Frequency Rate (LTIFR) of 0.12 per 200 000 man hours worked at 31 March 2018. This is among the lowest
LTIFRs in the PGM and chrome industries in South Africa. Tharisa continues to implement appropriate risk management
processes, strategies, systems and training to promote a safe working environment for all.
The Group reported a profit before tax of US$37.2 million for the interim period with net cash flows from operating
activities of US$ 52.1 million. Earnings per share amounted to US$ 10 cents and a maiden interim dividend of US$ 2 cents
a share was declared.
The first half of FY2018 marks Tharisa's transition to an owner mining operating model and proves that the Group's
approach to continued improvements delivers tangible results. Production milestones included:
- PGM production at 77.0 koz, up 11.4% from 69.1 koz
- PGM recoveries increased to 83.2% from 78.3%, exceeding the targeted 80.0%
- Chrome production at 732.5 kt, up 15.0% from 636.8 kt
- Chrome recoveries improved to 65.9% from 63.4%, exceeding the targeted 65.0%
Tharisa's average PGM contained metal basket price benefitted from the increases in palladium and rhodium prices,
contributing to an increase of 19.6% to US$909/oz from US$760/oz in the prior year. Average contracted metallurgical
grade chrome concentrate prices decreased to US$193/t from US$278/t reported in H1 FY2017. Current metallurgical
chrome spot prices are trading at similar levels. Global growth in stainless steel production remains robust with an
independent market research company forecasting a further rise in worldwide output of nearly 5% in CY2018.
Specialty chrome concentrates, which comprise 23.7% of chrome concentrate production, are sold into the chemical and
foundry markets globally and these grades continue to attract a significant premium above the contracted metallurgical
chrome concentrate price.
OPERATIONAL OVERVIEW
31 March 31 March Change
Unit 2018 2017 %
Reef mined kt 2 451.3 2 449.1 0.1
Reef milled kt 2 597.4 2 417.7 7.4
On mine cash cost per tonne milled US$ 32.7 31.0 5.5
Consolidated cash cost per tonne milled
(excluding transport) US$ 36.4 34.0 7.1
MINING
The Tharisa Mine is unique in that it mines multiple mineralised layers with defined PGM and chrome contents. The mine
is a large-scale open pit with a life of mine of up to 17 years and the potential to extend the mine by a further 40 years
by mining underground.
During the six months under review, 2.45 Mt of ore at an average grade of 1.52 g/t PGMs on a 5PGE+Au basis and
18.1% chrome was mined. Tharisa aims to mine 5.0 Mt ROM to produce 150.0 koz of PGMs and 1.4 Mt of chrome
concentrates in FY2018.
In the past six months, Tharisa has successfully transitioned to an owner miner operating model following the
US$21.8 million acquisition of the mining fleet from the former contractor, as well as the transfer of 876 employees who
were already in service at the Tharisa Mine, ensuring a seamless changeover.
The change in operating model was the logical progression given the long life of the open pit, allowing Tharisa to take
direct control over its mining operations thereby controlling the reef grades and the delivery of improved quality ore to
the processing plants, optimising the feed, throughput and recovery within the plants.
The fleet purchased from the mining contractor has been supplemented by additional drill rigs and yellow fleet to
optimise the fleet ensuring that it has the capability of achieving the required mining run rates. Employee training remains
a priority and world class on-mine simulators are used to ensure skill competency. This, and the implementation of
preventative maintenance protocols, has improved the effective utilisation of the mining fleet.
The mining team's focus remains on opening up access to the full mining strike length and the maintenance of the correct
multi- reef layer profile to ensure stable feed grades for processing. While the stripping ratio was 8.1 on a per cubic metre
basis for the six months, the plan is to achieve the LOM strip ratio of 9.6 in the second half of the year.
PROCESSING
Tharisa has two processing plants - the Genesis and Voyager standalone concentrator plants. The Genesis Plant
incorporates the Challenger Plant on the feed circuit for the extraction of specialty grade chrome concentrates principally
from natural fines.
During the six-month period, 2.6 Mt of reef was processed through the two plants producing 77.0 koz of contained
PGMs on a 5PGE+Au basis and 732.5 kt of chrome concentrates. Of the 732.5 kt of chrome concentrates produced,
173.6 kt or 23.7% of the chrome concentrate production was specialty grade chrome concentrates.
Overall PGM recovery was 83.2%, an improvement of 6.3% on the H1 FY2017 PGM recovery of 78.3%, and demonstrates
the benefits of stability in the plant feed grades and the increase in competent ores being processed with a lower portion
of "weathered" ore. Recoveries have also benefitted from the successful commissioning of the high energy flotation circuit
at the Genesis Plant in Q4 FY2017. The target PGM recovery was 80.0%.
The average chrome recovery was 65.9%, a 3.9% improvement from the 63.4% recovery recorded for H1 FY2017,
exceeding the chrome recovery target of 65.0%.
VISION 2020
The Vision 2020 projects are targeting an increase in Tharisa Minerals' production to 200 kozpa of PGMs and 2 Mtpa of
chrome concentrates by year end 2020.
The optimisation projects and additional processing plants, together with improved mining grades, are planned to add
61.8 kozpa of PGMs and 602 ktpa of chrome concentrates to the Tharisa Mine's annual production by the end of 2020.
The project details are as follows:
Upgrade of the crusher circuit at the Genesis Plant
The additional crusher circuit at the Genesis Plant will be commissioned in Q4 FY2018. The ZAR90 million
(US$7.5 million) project aims to increase the Genesis Plant throughput by 15.0% or about 180 ktpa, targeting an
increase in the higher value specialty chrome grade production by adding approximately 24 ktpa of chemical grade
chrome concentrate and approximately 18 ktpa of foundry grade chrome concentrate.
PGM optimisation at the Voyager Plant
The addition of flash flotation and a scavenger plant with high energy mechanisms at the Voyager Plant is aimed at
improving PGM recoveries and increasing PGM production by an estimated 14 kozpa. The project is expected to be
commissioned during Q1 FY2019 at an estimated capital cost of approximately ZAR70 million (US$5.8 million).
Vulcan Fine Chrome Recovery Plant
The construction of the Vulcan Plant will facilitate additional recovery of fine chrome from tailings streams.The proprietary
process is being developed by Tharisa and a demonstration scale plant is scheduled to be commissioned in Q3 FY2018.
The feasibility study and process design for a full scale plant will be undertaken in conjunction with the operation of
the demonstration plant. The full scale Vulcan Plant is expected to be commissioned during Q1 FY2019 with projected
chrome concentrate production of 380 ktpa. The estimated capital cost is ZAR300 million (US$25 million).
Apollo Chrome and PGM Plant
The Apollo Plant will be designed and built as an independent chrome plant with PGM flotation to produce chrome
concentrate from UG1 ore that will be mined at the Tharisa Mine's west pit. The plant will also be able to process MG
reef horizons.
The plant will be designed in two phases, the first of which is expected to treat 600 ktpa and the second phase expected
to double capacity. The feasibility study is being undertaken and test work and resource estimation are in progress. Plant
construction is estimated to take approximately 12 months, with commissioning planned for Q2 FY2020. The Apollo
Plant is expected to produce 6 kozpa of PGMs and 180 ktpa of chrome concentrates. The capital cost is estimated at
ZAR300 million (US$25 million).
COMMODITY MARKETS AND SALES
31 March 31 March
Unit 2018 2017 Change %
PGM basket price US$/oz 909 760 19.6
PGM basket price ZAR/oz 11 606 10 306 12.6
42% metallurgical grade chrome concentrate
contract price - CIF China US$/t 193 278 (30.6)
42% metallurgical grade chrome concentrate
contract price - CIF China ZAR/t 2 436 3 783 (35.6)
The PGM basket price has traded higher compared to H1 FY2017, with the average PGM contained metal basket price
benefiting from the rally in palladium, rhodium and ruthenium spot prices over the period under review.The average US$
basket prices increased 19.6% and ZAR basket prices increased 12.6% following the strengthening of the ZAR against
the US$.
PGM production continued to be sold to Impala Refining Services under the off-take agreement as well as to Lonmin
under a research and cooperation agreement. A total of 76.1 koz was sold during the period.
The Tharisa Mine's PGM prill split was as follows:
31 March 31 March
2018 2017
% %
Platinum 56.4 54.6
Palladium 16.3 16.3
Rhodium 9.2 9.7
Gold 0.2 0.2
Ruthenium 13.5 14.3
Iridium 4.4 4.9
Contracted metallurgical grade chrome concentrate prices decreased over the period to an average US$193/t
from the average US$278/t achieved in H1 FY2017 when the market witnessed an unprecedented increase in
spot chrome prices. Spot metallurgical chrome prices as quoted by FerroAlloyNet traded between US$162/t and
US$245/t during the period. This compares to the US$190/t and US$410/t range in the comparative six months.
The demand for chrome concentrate is driven by the increasing demand for stainless steel, which fundamentally
remains robust. In CY2017, global stainless steel production increased by 5.8% year on year with Chinese production
up 4.7% year on year to 25.8 Mt, according to the International Stainless Steel Forum. The fundamentals of the
global stainless steel market remain sound with an independent market research company forecasting a further rise
in worldwide output of nearly 5% in CY2018, further supporting strong demand for chrome units in the form of
ferrochrome and chrome ores.
Chinese chrome port stocks have increased to levels of approximately 3.0 Mt since April 2018. With domestic
Chinese monthly requirements of approximately 1.2 Mt, this equates to 10 weeks' supply assuming all stocks are
immediately available.
Tharisa's chrome concentrate sales for the period totalled 725.6 kt, an increase of 44.4% compared to H1 FY2017
sales of 502.4 kt. Inventory levels totalled 74.9 kt as at end March 2018. Third-party sales totalled 85.6 kt.
Third-party sales comprise the sales of the UG2 chrome concentrate produced at Lonmin's K3 UG2 chrome plant (K3),
which is operated by Tharisa subsidiary Arxo Metals.
LOGISTICS
31 March 31 March
Unit 2018 2017 Change %
Average transport costs per tonne of chrome
concentrate - CIF main ports China basis US$/t 60.9 50.0 21.8
The chrome concentrate destined for main ports in 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 Tharisa's transport costs, a major cost to the Group,
remained competitive.
China remains the main market for metallurgical chrome concentrates and the metallurgical grade chrome concentrates
produced by the Tharisa Mine were sold on a CIF main ports China basis. The majority was shipped in bulk with a
negligible quantity being shipped in containers.
Arxo Logistics has sufficient storage capacity at both the Richards Bay Dry Bulk Terminal and the Durban container port
to manage the full production capacity of the Tharisa Mine and the third-party production.
FINANCIAL OVERVIEW
The financial results of the Group were characterised by firstly increased revenue as volume sales for both PGMs and
chrome concentrates increased while the pricing metrics for both commodities reflected opposing trends. The overall
PGM basket price increased by 19.6% to US$909/oz with the Group basket price, in particular, benefiting from the prill
split favouring palladium (at 16.3%) and rhodium (at 9.2%) while there was a normalisation in the metallurgical grade
chrome concentrate price which averaged US$193/t (on a CIF main ports China basis) against the prior period average
of US$278/t (a decrease of 30.6%). Secondly, with the transition to an owner mining model and the leveraged purchase
of the fleet, the overall gearing of the Group increased to 25.4% (a net debt to equity ratio of 7.0%).
Investor sentiment in South Africa improved following leadership changes within the ruling African National Congress.
This is reflected in the strengthening ZAR, being the base cost currency for the Group's mining operations in South
Africa, from an average of ZAR13.60 to ZAR12.80 against the US$, an average strengthening of 5.9%, impacting on the
overall cost base of the Group. The country's foreign debt avoided a further credit downgrading with Moody's retaining
an investment grade rating changing the outlook to "stable". The South African domestic interest rate (as measured by
the repo rate) was reduced just prior to the reporting period by 25 basis points to 6.50%. The Groups commodities are
priced in US$ and the cost base is mainly in ZAR and therefore the Group is positioned as a Rand hedge stock.
Group revenue totalled US$199.2 million (2017: US$175.1 million) of which US$55.5 million was derived from the sale
of PGM concentrate and US$130.3 million was derived from the sale of chrome concentrates. The agency and trading
segment contributed US$13.4 million.This is an increase in revenue relative to the comparable period of 13.8%. Speciality
grade chrome concentrates, comprising 23.7% of overall chrome sales, continued to trade at a premium of approximately
US$50/t.
On a segmental basis the increase in revenue is as a result of:
- an increase in the unit sales of PGMs by 9.8% from 69.3 koz to 76.1 koz with an increase in the PGM basket price
of 19.6% from US$760/oz to US$909/oz
- an increase in the unit sales of metallurgical grade chrome concentrate by 53.4% from 360.2 kt to 552.7 kt.
However, the metallurgical grade chrome concentrate price decreased by 30.6% from US$278/t to US$193/t
- an increase in the unit sales of specialty grade chrome concentrates by 21.6% from 142.2 kt to 172.9 kt
- increase in third party trading and logistics, building on the existing platforms, which contributed US$13.4 million
to revenue.
Other income includes an amount of US$1.9 million being non-recurring income relating to the discounted purchase
of the mining fleet. Other than for this amount there have been no other non-recurring or exceptional income sources
during the interim period.
Gross profit amounted to US$55.7 million (2017: US$82.4 million) with a gross profit margin of 28.0% (2017: 47.0%).
The mining fleet, infrastructure and human resources were structured to enable the mining to produce at least the
market guidance ROM of 5.0 Mt for the current financial year and to move the required waste to achieve the life of
mine (open pit) stripping ratio of 9.6 on a per cubic metre basis. The fixed costs inherent in catering for this mining
capacity have impacted on the overall cost of sales. With a mining contractor model, the costs were directly linked to
the volumes moved. Included in cost of sales is the depreciation charge arising pursuant to the ownership of the fleet
of US$4.8 million. In addition, diesel cost, a significant component of the mining cost, increased on average by 22.1%
per litre. Costs incurred with the transport of the metallurgical grade chrome concentrates from the mine to the
customer increased by 21.8% from US$50.0/t to US$60.9/t, the majority of this increase related to an increase in the
freight costs.
As a co-producer of PGMs and chrome concentrates the shared costs of production for segmental reporting purposes
are based on the relative contribution to revenue on an ex-works basis, allocated 45% to the PGM segment and 55% to
the chrome segment.This is in accordance with the accounting policy of the Group and IFRS.The comparable period was
allocated 25% to the PGM segment and 75% to the chrome segment. The change to the basis of allocation of the shared
costs is, in effect, an 80.0% increase in respect of the allocation to the PGM segment and a 26.7% decrease in respect of
the allocation to the chrome segment.
The segmental cost of sales and gross profit contribution, as extracted from the condensed consolidated interim financial
statements, is as follows:
31 March 2018 31 March 2017
PGM Chrome PGM Chrome
US$'000 US$'000 US$'000 US$'000
Cost of sales
Excluding selling costs 39 711 56 235 20 837 48 280
Selling costs 205 34 827 180 23 458
Gross profit contribution 15 542 39 234 19 036 63 328
Gross profit margin (%) 28.0 30.1 47.5 46.9
Sales volumes 76.1 koz 725.6 kt 69.3 koz 502.4 kt
Unit cost of sales excluding selling costs US$522/oz US$78/t US$301/oz US$96/t
Variance (%) 73.4 (18.8)
The PGM segment gross profit margin of 28.0% (2017: 47.5%) is lower than the previous year notwithstanding the
increased revenue due, in part, to the revised basis of allocating shared costs.
The chrome segment gross profit margin of 30.1% (2017: 46.9%) is lower than the previous year following the
normalisation of the selling prices for the metallurgical grade chrome concentrate notwithstanding benefitting from the
revised basis of allocating shared costs.
The agency and trading segment contributed US$1.0 million to the Group gross profit at a margin of 7.2%.
The major components of the cash cost of sales for PGMs and chrome concentrates are depicted in the graphs below:
PGMs CHROME CONCENTRATES
Mining 26% Mining 24%
Utilities 7% Utilities 6%
Reagents 6% Reagents 0%
Steel balls 3% Steel balls 5%
Labour 26% Labour 29%
Diesel 14% Diesel 13%
Overheads and other 18% Overheads and other 23%
While not being directly comparable following the transition to an owner mining model effective 1 October 2017, on a
unit cost basis, the reef mining cost per tonne mined increased marginally by 5.1% from US$19.5/t to US$20.5/t.This cost
per reef tonne mined was incurred on a stripping ratio of 8.1 on a per cubic metre basis. On a per cube mined basis i.e.
including both waste and reef, the cost increased marginally from US$7.68/m3 to US$7.84/m3 (the prior period stripping
ratio being 8.3 on a per cubic metre basis).
The consolidated cash cost per tonne milled (i.e. including mining and processing but excluding transport and freight)
increased by 4.3% from US$34.9/t to US$36.4/t, benefitting from the consistent feed into the plant and improved
processing efficiencies as reflected in the recoveries with milling being above the name plate plant capacity.
Administrative expenses increased from US$12.5 million to US$20.4 million mainly due to an increase in employee
costs which included certain bonus payments following the successful transition to an owner mining model and costs
associated with the employment of additional support staff (time and attendance, procurement, human resources and
safety) necessary as an owner miner. After accounting for the administrative expenses, the Group achieved an operating
profit of US$37.4 million (2017: US$69.9 million).
EBITDA amounted to US$54.1 million (2017: US$81.0 million).
Finance costs (totalling US$5.1 million) principally relate to the balance owing on the senior debt facility, the bridge loan
and original equipment manufacturer finance for the purchase of the mining fleet from the contractor as well as additional
mining equipment, and the trade finance facilities of Arxo Resources on the discounting of letters of credit on chrome
concentrate contracted sales as well as the limited recourse discounting of the PGM receivables.
While revenue reflected an increase over the comparable period based on increased volumes sold and an increased
PGM basket price, the lower chrome concentrate prices and costs associated with the transition to the owner mining
model, contributed to a decrease in the net profit before tax to US$37.2 million (2017: US$68.3 million).
The tax charge amounted to US$8.8 million, an effective charge of 23.6%. The cash tax paid amounted to US$2.1 million.
Notwithstanding that the Group has fully utilised its tax losses, as at the period end the Group had unredeemed capex
for tax purposes of US$124.0 million. The deferred tax liability amounted to US$33.3 million.
Foreign currency translation differences for foreign operations arising where the Company has funded the underlying
subsidiaries with US$ denominated funding and the reporting currency of the underlying subsidiary is not in US$,
amounted to a favourable US$35.4 million following the strengthening of the ZAR.
Basic and diluted earnings per share for the period amounted to US$ 10 cents (2017: US$ 16 cents) with headline
earnings per share of US$ 10 cents (2017: US$ 16 cents).
The Group successfully closed the refinancing of the senior debt facility and the bridge loan facility (utilised to part finance
the purchase of the mining fleet) with a three year secured term loan of ZAR400.0 million as well as securing corporate
facilities in the amount of ZAR400 million. As a consequence, the amount held in the designated debt service reserve
account is now available to the Group. The corporate facilities have not been drawn.
Total debt amounted to US$82.6 million, resulting in a debt to total equity ratio of 25.4%. This exceeds the long-term
targeted debt to total equity ratio of 15% principally due to the leveraged purchase of the mining fleet. Group cash and
cash equivalents amounted to US$59.9 million resulting in a net debt to total equity ratio of 7.0%.
The capex spend for the period amounted to US$17.7 million of which US$10.6 million related to the mining fleet
and US$1.3 million related to processing optimisation initiatives. This is in addition to the US$21.8 million paid for the
acquisition of the mining fleet from MCC Contracts (Pty) Limited.The depreciation charge amounted to US$14.4 million.
The Group generated net cash from operations of US$52.1 million (2017: US$44.2 million) and after taking into account
the capex, a free cash flow of US$34.5 million. Cash on hand amounted to US$59.9 million.
There is continued focus on working capital management with the current ratio at 2.1 times.
The Group has early adopted IFRS 9 Financial Instruments, IFRS 15 Revenue from Contracts with Customers and IFRS
16 Leases. The Group entered into a number of new lease agreements for the addition of mining fleet subsequent to
30 September 2017 and consequently decided to early adopt these standards. The early adoption resulted in a negligible
adjustment to retained earnings at 1 October 2017.
From time to time the group concludes transactions with related parties. These transactions are concluded on an arms'
length basis and are disclosed in the ensuing interim condensed consolidated financial statements.
INTERIM DIVIDEND
In accordance with its dividend policy of distributing at least 15% of annual net profit after tax and following the
introduction of an interim dividend, the board has declared its first interim cash dividend of US$ 2 cents per ordinary
share. The interim dividend will be paid on Wednesday, 20 June 2018. Shareholders on the principal Cyprus register will
be paid in US$, shareholders whose shares are held through Central Securities Depositary Participants (CSDPs) and
brokers and are traded on the JSE will be paid in South African Rand (ZAR) and holders of Depositary Interests traded
on the LSE will be paid in Sterling (GBP).
The timetable for the dividend declaration is as follows:
Declaration and currency conversion date Tuesday, 15 May 2018
Currency conversion rates announced Thursday, 17 May 2018
Last day to trade cum-dividend rights on the JSE Tuesday, 5 June 2018
Last day to trade cum-dividend rights on the LSE Wednesday, 6 June 2018
Shares will trade ex-dividend rights on the JSE Wednesday, 6 June 2018
Shares will trade ex-dividend rights on the LSE Thursday, 7 June 2018
Record date for payment on both JSE and LSE Friday, 8 June 2018
Dividend payment date Wednesday, 20 June 2018
No dematerialisation or rematerialisation of shares within Strate will be permitted between Wednesday, 6 June 2018 and
Friday, 8 June 2018, both days inclusive. No transfers between registers will be permitted between Thursday, 17 May 2018
and Friday, 8 June 2018, both days inclusive.
Tax implications of the dividend
Shareholders are advised that the dividend declared will be paid out of income reserves and may therefore be subject
to dividend withholding tax depending on the tax residency of the shareholder.
South African tax residents
South African shareholders are advised that the dividend constitutes a foreign dividend. For individual South African tax
resident shareholders, dividend withholding tax of 20% will be applied to the gross dividend of US$ 2 cents per share.
Therefore, the net dividend of US$ 1.6 cents per share will be paid after US$ 0.4 cents in terms of dividend withholding
tax has been applied. Shareholders who are South African tax resident companies are exempt from dividend tax and will
receive the dividend of US$ 2 cents per share. This does not constitute legal or tax advice and is based on taxation law
and practice in South Africa. Shareholders should consult their brokers, financial and/or tax advisors with regard to how
they will be impacted by the payment of the dividend.
UK tax residents
UK tax residents are advised that the dividend constitutes a foreign dividend and that they should consult their brokers,
financial and/or tax advisors with regard to how they will be impacted by the payment of the dividend.
Cyprus tax residents
Individual Cyprus tax residents are advised that the dividend constitutes a local dividend and that they should consult
their brokers, financial and/or tax advisors with regard to how they will be impacted by the payment of the dividend.
Shareholders and Depositary Interest holders should note that information provided should not be regarded as
tax advice.
PRINCIPAL BUSINESS RISKS
Tharisa regards principal business risks as the issues that may, if they materialise, substantially affect the Group's ability to
create and sustain value in the short-, medium- and long-term.
These risks determine how the Group devises and implements its strategy since each risk has the potential to impact the
Group's ability to achieve its strategic objectives. Each risk also carries with it challenges and opportunities. The Group's
strategy takes into account known risks, but risks may exist of which the Group is currently unaware.
An overview of the risks which could affect the Group's operational and financial performance was included in the
Group's 2017 Annual Report which is available on the Group's website. The following risks have been identified which
may impact the Group over the next six months.
Regulatory compliance
Tharisa Minerals' right to mine is dependent on strict adherence to legal and legislative requirements. While there is still
uncertainty on the proposed amendments to the South African Mineral and Petroleum Resources Development Act
(MPRDA) and the accompanying Mining Charter, the approach taken by the newly appointed Mineral Resources Minister
Gwede Mantashe appears to be more inclusive than his predecessor.
A finalised Mining Charter would provide regulatory certainty and could go some way towards attracting investment in
the sector.
The Group is required to comply with a range of health and safety laws and regulations in connection with its mining,
processing and on mine logistics activities. Regular inspections are conducted by the Department of Mineral Resources
to ensure compliance. Any perceived violation of the regulations could lead to a temporary shutdown of all or a portion
of the Group's mining operations.
Labour unrest in South Africa
While labour relations are currently stable, the risk of potential unrest remains. The Group will start wage negotiations
in Q3 FY2018 to replace the existing three-year wage agreement that expires in June 2018. Negotiations will this year
encompass agreement for both the mining and processing employees. Mining employees were previously represented by
the former contractor and had a separate wage agreement.Tharisa Minerals has recognition agreements with the relevant
trade unions - the Association of Mineworkers and Construction Union and the National Union of Mineworkers.
The Group intends on concluding a further three-year wage agreement.
Unscheduled breakdowns
The Group's performance is reliant on consistent mining and the production of PGM and chrome concentrates from the
Tharisa Mine. Any unscheduled breakdown leading to a prolonged reduction in either mining or production may have a
material impact on the Group's financial performance and results of operations. Tharisa transitioned to the owner mining
model, which has given it greater control of its mining fleet. The Group has purchased additional fleet to optimise the
fleet. Long lead items for the fleet and the plant are kept in stock and preventative maintenance programmes are in place
for both the fleet and the plant.
Global commodity prices and currency risk
The Group's revenues, profitability and future rate of growth depends on the prevailing market prices of PGMs and
chrome. A sustained downward movement in the market price for PGMs and/or chrome may negatively affect the
Group's profitability and cash flows. The Group's reporting currency is US$. The Group's operations are predominantly
based in South Africa with a ZAR cost base while the majority of the revenue stream is in US$ exposing the Group to the
volatility and movements in the ZAR. Fluctuations in the US$ and ZAR may have a significant impact on the performance
of the Group. To counter this, the Group continues to work on reducing costs and increasing operating efficiencies.
Financing and liquidity
The activities of the Group expose it to a variety of financial risks including market, commodity prices, credit, foreign
exchange and interest rate risks. The Group closely monitors and manages these risks. Cash forecasts are regularly
updated and reviewed including sensitivity scenarios with reference to the above risks.
BOARD APPOINTMENT
Tharisa welcomed Zhong Liang Hong to the Board as a non-executive director with effect from 1 April 2018.
Mr Hong represents Fujian Wuhang Stainless Steel Co., Ltd and Hong Kong HeYi Mining Resources Company Ltd,
which respectively hold 7.46% and 1.99% of Tharisa's issued share capital with voting rights as at 31 March 2018.
OUTLOOK
Tharisa's business model is robust with the business cash generative throughout the commodity cycle. The declaration of
a maiden interim dividend is testament to the maturing of the business and is evidence of the capital discipline employed
by the Group.
The Group expects continued strong operational performance for the remainder of the year with a focus on
increasing its production through the continual improvement processes and delivery of the first of its Vision 2020
optimisation projects.
The benefits of the owner mining operational model should become evident in the second half of the financial year and
Tharisa is on track to achieve its FY2018 guidance of 150 koz PGMs and 1.4 Mt chrome concentrates, of which 350 kt
will be specialty grade. The Vision 2020 projects aim to take production to 200 kozpa of PGMs and 2 Mtpa of chrome
concentrates by 2020.
Tharisa would like to thank its staff, management and directors for their continued support in achieving these interim results.
STATEMENT BY THE MEMBERS OF THE BOARD OF DIRECTORS AND THE COMPANY
OFFICIALS RESPONSIBLE FOR THE PREPARATION OF THE INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS ACCORDING TO THE CYPRUS SECURITIES
AND EXCHANGE COMMISSION LEGISLATION
In accordance with sections 10(3)(c) and 10(7) of Law No. 190(I)/2007, as amended, providing for the transparency
requirements of issuers whose securities are admitted to trading on a regulated market (the Transparency Law),
we, the members of the Board of Directors of Tharisa plc, responsible for the preparation of the interim condensed
consolidated financial statements of Tharisa plc for the period ended 31 March 2018, hereby declare that to the
best of our knowledge:
a) the interim condensed consolidated financial statements for the period ended 31 March 2018:
have been prepared in accordance with International Accounting Standard 34: Interim Financial Reporting
and as stipulated for under section 10(4) of the Transparency Law, and
- give a true and fair view of the assets and liabilities, the financial position and profit or losses of Tharisa plc
and its undertakings, as included in the interim condensed consolidated financial statements as a whole; and
b) the adoption of a going-concern basis for the preparation of the financial statements continues to be appropriate
based on the foregoing and having reviewed the forecast financial position of the Group; and
c) the interim management report provides a fair review of the information required by section 10(6) of the
Transparency Law.
Loucas Pouroulis Executive Chairman
Phoevos Pouroulis Chief Executive Officer
Michael Jones Chief Finance Officer
David Salter Lead independent non-executive director
Antonios Djakouris Independent non-executive director
Omar Kamal Independent non-executive director
Carol Bell Independent non-executive director
Roger Davey Independent non-executive director
Joanna Ka Ki Cheng Non-executive director
Zhong Liang Hong Non-executive director
Paphos
15 May 2018
REPORT ON REVIEW OF INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
TO THE SHAREHOLDERS OF THARISA PLC
Introduction
We have reviewed the interim condensed consolidated financial statements of Tharisa Plc (the "Company"), and its
subsidiaries (collectively referred to as "the Group") contained in the accompanying interim report,
which comprise the interim condensed consolidated statement of financial position as at 31 March 2018 and the interim
condensed consolidated statements of profit or loss and other comprehensive income, changes in equity and cash flows
for the six-month period then ended and selected explanatory notes. Management is responsible for the preparation
and presentation of these interim condensed consolidated financial statements in accordance with International Financial
Reporting Standard IAS 34 Interim Financial Reporting (IAS 34). Our responsibility is to express a conclusion on these
interim condensed consolidated financial statements based on our review.
Scope of Review
We conducted our review in accordance with International Standard on Review Engagements 2410, "Review of Interim
Financial Information Performed by the Independent Auditor of the Entity". A review of interim financial information
consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical
and other review procedures. A review is substantially less in scope than an audit conducted in accordance with
International Standards on Auditing and consequently does not enable us to obtain assurance that we would become
aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim
condensed consolidated financial statements do not present fairly, in all material respects, the financial position of the
entity as at 31 March 2018 and of its financial performance and its cash flows for the six-month period then ended in
accordance with International Financial Reporting Standard IAS 34 Interim Financial Reporting (IAS 34).
Stavros Pantzaris
Certified Public Accountant and Registered Auditor
for and on behalf of
Ernst & Young Cyprus Limited
Certified Public Accountants and Registered Auditors
Nicosia
INTERIM CONDENSED CONSOLIDATED STATEMENT OF
PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
for the six months ended 31 March 2018
Six months Six months Year
ended ended ended
31 March 31 March 30 Sept
2018 2017 2017
Reviewed Reviewed Audited
Notes US$'000 US$'000 US$'000
Revenue 5 199 179 175 119 349 443
Cost of sales 6 (143 436) (92 755) (226 789)
Gross profit 55 743 82 364 122 654
Other income 7 2 072 83 160
Administrative expenses 8 (20 422) (12 530) (26 903)
Results from operating activities 37 393 69 917 95 911
Finance income 3 699 4 042 3 580
Finance costs (5 130) (5 090) (7 689)
Changes in fair value of financial assets at fair value
through profit or loss 1 204 (540) (813)
Net finance costs (227) (1 588) (4 922)
Profit before tax 37 166 68 329 90 989
Tax 9 (8 753) (17 316) (23 316)
Profit for the period/year 28 413 51 013 67 673
Other comprehensive income
Items that may be classified subsequently to profit or loss:
Foreign currency translation differences for
foreign operations, net of tax 35 422 5 422 (387)
Other comprehensive income, net of tax 35 422 5 422 (387)
Total comprehensive income for the period/year 63 835 56 435 67 286
Profit for the period/year attributable to:
Owners of the Company 25 960 41 925 57 601
Non-controlling interest 2 453 9 088 10 072
28 413 51 013 67 673
Total comprehensive income for the period/year attributable to:
Owners of the Company 49 433 46 188 57 451
Non-controlling interest 14 402 10 247 9 835
63 835 56 435 67 286
Earnings per share
Basic earnings per share (US$ cents) 10 10 16 22
Diluted earnings per share (US$ cents) 10 10 16 22
INTERIM CONDENSED CONSOLIDATED
STATEMENT OF FINANCIAL POSITION
as at 31 March 2018
31 March 31 March 30 Sept
2018 2017 2017
Reviewed Reviewed Audited
Notes US$'000 US$'000 US$'000
ASSETS
Non-current assets
Property, plant and equipment 11 308 534 225 992 232 559
Goodwill 961 876 838
Long-term deposits 12 - 4 796 4 505
Other financial assets 5 791 3 696 3 767
Deferred tax assets 13 2 445 2 127 1 952
Total non-current assets 317 731 237 487 243 621
Current assets
Inventories 14 26 903 36 353 20 802
Trade and other receivables 15 78 173 52 581 70 374
Other financial assets 901 590 49
Current taxation 108 61 132
Cash and cash equivalents 16 59 930 26 620 49 742
Total current assets 166 015 116 205 141 099
Total assets 483 746 353 692 384 720
EQUITY AND LIABILITIES
Share capital 17 260 257 260
Share premium 17 280 149 277 006 280 082
Other reserve 47 245 47 245 47 245
Foreign currency translation reserve (50 088) (69 148) (73 561)
Retained earnings 58 399 28 076 42 877
Equity attributable to owners of the Company 335 965 283 436 296 903
Non-controlling interests (10 655) (24 645) (25 057)
Total equity 325 310 258 791 271 846
Non-current liabilities
Borrowings 18 35 053 10 495 4 375
Provisions 19 11 114 6 327 6 923
Deferred tax liabilities 13 33 297 20 280 23 823
Total non-current liabilities 79 464 37 102 35 121
Current liabilities
Borrowings 18 42 119 23 080 45 026
Other financial liabilities - - 599
Current taxation 827 505 212
Trade and other payables 36 026 34 214 31 916
Total current liabilities 78 972 57 799 77 753
Total liabilities 158 436 94 901 112 874
Total equity and liabilities 483 746 353 692 384 720
The interim condensed consolidated financial statements were authorised for issue by the Board of Directors on
15 May 2018.
Phoevos Pouroulis Michael Jones
Director Director
Attributable to owners of the Company
Foreign
currency Non-
Share Share Other translation Retained controlling Total
capital premium reserve reserve earnings Total interest equity
Notes US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 30 September 2017 260 280 082 47 245 (73 561) 42 877 296 903 (25 057) 271 846
Impact of adopting IFRS 16 3.3 - - - - (15) (15) - (15)
Balance at 1 October 2017 260 280 082 47 245 (73 561) 42 862 296 888 (25 057) 271 831
Total comprehensive income for the period
Profit for the period - - - - 25 960 25 960 2 453 28 413
Other comprehensive income:
Foreign currency translation differences - - - 23 473 - 23 473 11 949 35 422
Total comprehensive income for the period - - - 23 473 25 960 49 433 14 402 63 835
Transactions with owners of the Company
Contributions by and distributions to owners
Issue of ordinary shares* 17 - 67 - - - 67 - 67
Dividends paid 25 - - - - (13 010) (13 010) - (13 010)
Equity-settled share-based payments - - - - 2 587 2 587 - 2 587
Contributions by owners of the Company - 67 - - (10 423) (10 356) - (10 356)
Total transactions with owners of the Company - 67 - - (10 423) (10 356) - (10 356)
Balance at 31 March 2018 (Reviewed) 260 280 149 47 245 (50 088) 58 399 335 965 (10 655) 325 310
Balance at 30 September 2016 257 456 181 47 245 (73 411) (193 521) 236 751 (34 892) 201 859
Total comprehensive income for the period
Profit for the period - - - - 41 925 41 925 9 088 51 013
Other comprehensive income:
Foreign currency translation differences - - - 4 263 - 4 263 1 159 5 422
Total comprehensive income for the period - - - 4 263 41 925 46 188 10 247 56 435
Transactions with owners of the Company
Contributions by and distributions to owners
Capital reduction 17 - (179 175) - - 179 175 - - -
Capital distribution 17 - - - - (2 570) (2 570) - (2 570)
Equity-settled share-based payments - - - - 3 067 3 067 - 3 067
Contributions by owners of the Company - (179 175) - - 179 672 497 - 497
Total transactions with owners of the Company - (179 175) - - 179 672 497 - 497
Balance at 31 March 2017 (Reviewed) 257 277 006 47 245 (69 148) 28 076 283 436 (24 645) 258 791
* The value of the issued share capital is less than the reporting amount and amounts to US$182.
INTERIM CONDENSED CONSOLIDATED
STATEMENT OF CHANGES IN EQUITY
for the six months ended 31 March 2018
Attributable to owners of the Company
Foreign
currency Non-
Share Share Other translation Retained controlling Total
capital premium reserve reserve earnings Total interest equity
Notes US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 30 September 2016 257 456 181 47 245 (73 411) (193 521) 236 751 (34 892) 201 859
Total comprehensive income for the year
Profit for the year - - - - 57 601 57 601 10 072 67 673
Other comprehensive income:
Foreign currency translation differences - - - (150) - (150) (237) (387)
Total comprehensive income for the year - - - (150) 57 601 57 451 9 835 67 286
Transactions with owners of the Company
Contributions by and distributions to owners
Capital reduction 17 - (179 175) - - 179 175 - - -
Capital distribution 17 - - - - (2 570) (2 570) - (2 570)
Equity-settled share-based payments - - - - 2 192 2 192 - 2 192
Issue of ordinary shares 17 3 3 076 - - - 3 079 - 3 079
Contributions by owners of the Company 3 (176 099) - - 178 797 2 701 - 2 701
Total transactions with owners of the Company 3 (176 099) - - 178 797 2 701 - 2 701
Balance at 30 September 2017 260 280 082 47 245 (73 561) 42 877 296 903 (25 057) 271 846
Companies which do not distribute 70% of their profits after tax, as defined by the Special Contribution for the Defence
of the Republic Law, during the two years after the end of the year of assessment to which the profits refer, will be
deemed to have distributed this amount as dividend. Special contribution for defence at 17% will be payable on such
deemed dividend to the extent that the ultimate shareholders at the end date of the period of two years from the end
of the year of assessment to which the profits refer are both Cypriot tax residents and Cypriot domiciled entities. The
amount of this deemed dividend distribution is reduced by any actual dividend paid out of the profits of the relevant
year at any time. This special contribution for defence is paid by the company for the account of the shareholders. These
provisions do not apply for ultimate beneficial owners that are non-Cyprus tax resident individuals. Retained earnings is
the only reserve that is available for distribution.
The notes on pages 23 to 60 are an integral part of these financial statements.
INTERIM CONDENSED CONSOLIDATED STATEMENT OF
CASH FLOWS
for the six months ended 31 March 2018
Six months Six months Year
ended ended ended
31 March 31 March 30 Sept
2018 2017 2017
Reviewed Reviewed Audited
Notes US$'000 US$'000 US$'000
Cash flows from operating activities
Profit for the period/year 28 413 51 013 67 673
Adjustments for:
Depreciation of property, plant and equipment 11 14 369 8 366 16 929
Loss on disposal of property, plant and equipment 13 - 196
Gain on bargain purchase 20 (1 884) - -
Impairment losses on goodwill - 28 57
Inventory net realisable value adjustment (13) 36 24
Scrapping of property, plant and equipment 894 - -
Changes in fair value of financial assets at fair value
through profit or loss (1 204) 540 813
Interest income (695) (598) (1 122)
Interest expense 5 130 4 355 7 689
Tax 8 753 17 315 23 316
Equity-settled share-based payments 1 978 2 196 4 342
55 754 83 251 119 917
Changes in:
Inventories (1 736) (22 178) (5 063)
Trade and other receivables 485 (211) (21 839)
Trade and other payables (2 702) (16 167) (15 068)
Provisions 2 454 1 377 1 792
Cash from operations 54 255 46 072 79 739
Income tax paid (2 108) (1 852) (3 990)
Net cash flows from operating activities 52 147 44 220 75 749
Cash flows from investing activities
Interest received 636 540 708
Additions to property, plant and equipment 11 (17 670) (8 458) (26 398)
Net cash outflow from business combination 20 (21 840) - -
Proceeds from disposal of property, plant and equipment 55 - -
Additions to other financial assets (3 951) (911) (925)
Refund of long-term deposits 7 609 5 437 5 726
Net cash flows used in investing activities (35 161) (3 392) (20 889)
Cash flows from financing activities
Net repayment of bank credit facilities 18 (8 134) (15 790) 6 073
Advances received 18 62 191 -
Repayment of borrowings 18 (41 109) (10 961) (17 917)
Lease payments 18 (4 608) - -
Dividends and capital reduction paid (13 010) - (2 570)
Interest paid 18 (4 652) (3 574) (6 371)
Net cash flows used in financing activities (9 322) (30 325) (20 785)
Net increase in cash and cash equivalents 7 664 10 503 34 075
Cash and cash equivalents at the beginning of the period/year 16 49 742 15 826 15 826
Effect of exchange rate fluctuations on cash held 2 524 291 (159)
Cash and cash equivalents at the end of the period/year 16 59 930 26 620 49 742
NOTES TO THE INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS
for the six months ended 31 March 2018
1. REPORTING ENTITY
Tharisa plc (the Company) is a company domiciled in Cyprus. These interim condensed consolidated interim
financial statements for the six months ended 31 March 2018 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. The Company is listed on the main board of the Johannesburg Stock
Exchange and has a secondary standard listing on the main board of the London Stock Exchange.
2. BASIS OF PREPARATION
Statement of compliance
These interim condensed consolidated financial statements have been prepared in accordance with International
Accounting Standards 34 Interim Financial Reporting and the Listings Requirements of the Johannesburg Stock
Exchange. Selected explanatory notes are included to explain events and transactions that are significant to obtain
an understanding of the changes in the financial position and performance of the Group since the last consolidated
financial statements as at and for the year ended 30 September 2017. These interim condensed consolidated
financial statements do not include all the information required for full consolidated financial statements prepared in
accordance with IFRS. The interim condensed consolidated financial statements should be read in conjunction with
the annual consolidated financial statements for the year ended 30 September 2017, which have been prepared in
accordance with IFRS.
These interim condensed consolidated financial statements were approved by the Board of Directors on
15 May 2018. These interim condensed consolidated financial statements for the six months ended 31 March
2018 have been reviewed by the Group's external auditors, not audited.
Use of estimates and judgements
Preparing the interim condensed consolidated 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 interim condensed consolidated financial statements, except for the early adoption of new IFRS'
as disclosed in note 3, 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 2017.
Functional and presentation currency
The interim condensed consolidated financial statements are presented in United States Dollars (US$) which is the
Company's functional currency and amounts are rounded to the nearest thousand.
Going concern
After making enquiries which include reviews of current cash resources, forecasts and budgets, timing of cash flows,
borrowing facilities and sensitivity analyses and considering the associated uncertainties to the Group's operations,
the Directors have a reasonable expectation that the Group has adequate financial resources to continue in
operational existence for the foreseeable future. For this reason, they continue to adopt the going-concern basis in
preparing the interim condensed consolidated financial statements.
New and revised International Financial Reporting Standards and Interpretations
The Group has early adopted IFRS 9: Financial Instruments, IFRS 15: Revenue from Contracts with Customers and IFRS
16: Leases. The nature and effect of these adoptions are disclosed in note 3.
Several other amendments and interpretations apply for the first time for the period ended 31 March 2018. Other
than IAS 7: Disclosure Initiative (Amendment) as disclosed in note 18, these did not have an impact on the interim
condensed consolidated financial statements of the Group.
3.SIGNIFICANT ACCOUNTING POLICIES
The accounting policies applied by the Group in these interim condensed consolidated financial statements are in
terms of IFRS. Except as disclosed below, the accounting policies are the same as those applied by the Group in its
audited consolidated financial statements as at and for the year ended 30 September 2017.
3.1 Change in accounting policies - Financial Instruments
The Group has early adopted all of the requirements of IFRS 9: Financial Instruments (IFRS 9) as of
1 October 2017. IFRS 9 replaces IAS 39: Financial Instruments: Recognition and Measurement (IAS 39). IFRS 9
utilises a revised model for recognition and measurement of financial instruments and a single, forward-looking
"expected loss" impairment model. Most of the requirements of IAS 39 for classification and measurements
of financial liabilities were carried forward in IFRS 9, therefore the Group's accounting policy with respect to
financial liabilities remains unchanged.The Group applied IFRS 9 using the full retrospective method of adoption
on initial date of application.
As a result of the early adoption of IFRS 9, management has changed its accounting policy for financial assets
retrospectively for assets that were recognised at the date of application. The change did not impact the
carrying value of any financial assets on transition date.
The Group's new accounting policy for financial instruments according to IFRS 9 is set out below:
Classification
The Group classifies its financial instruments in the following categories:
- At fair value through profit or loss
- At fair value through other comprehensive income
- At amortised cost
The Group determines the classification of financial assets at initial recognition. The classification of debt
instruments is driven by the Group's business model for managing the financial assets and their contractual
cash flow characteristics. Equity instruments that are held for trading are classified at fair value through profit
or loss, for other equity instruments, on the day of acquisition the Group can make an irrevocable election
(on an instrument-by-instrument basis) to designate them as at fair value through other comprehensive income.
Financial liabilities are measured at amortised cost, unless they are required to be measured at fair value through
profit or loss (such as derivatives) or the Group has designated to measure them at fair value through profit
or loss.
The Group completed a detailed assessment of its financial assets and liabilities at 1 October 2017.
The following table presents the original classification according to IAS 39 and the new classification according
to IFRS 9:
Financial assets Original classification IAS 39 New classification IFRS 9
Long-term deposits Amortised cost Amortised cost
Other financial assets
Investments in cash and Amortised cost Amortised cost
income funds
Discount facility Fair value through profit or loss Fair value through profit or loss
Forward exchange contracts Held for trading Fair value through profit or loss
Investment in equity instruments Held for trading Fair value through profit or loss
Trade and other receivables Amortised cost Amortised cost
PGM receivable Held for trading Fair value through profit or loss
Cash and cash equivalents Amortised cost Amortised cost
Financial liabilities Original classification IAS 39 New classification IFRS 9
Borrowings Amortised cost Amortised cost
Income received in advance Amortised cost Amortised cost
Trade and other payables Amortised cost Amortised cost
Upon adoption of IFRS 9, the Group made an irrevocable election to classify marketable securities at fair value
through profit or loss.
Measurement: Financial assets and liabilities at amortised cost
Financial assets and liabilities at amortised cost are initially recognised at fair value, and subsequently carried at
amortised cost less any impairment.
Measurement: Financial assets and liabilities at fair value through profit or loss
Financial assets and liabilities carried at fair value through profit or loss are initially recorded at fair value and
transaction costs are expensed in the statement of profit or loss. Realised and unrealised gains and losses arising
from changes in the fair value of the financial assets and liabilities held at fair value through profit or loss are
included in the statement of profit or loss in the period in which they arise. Where management has designated
to recognise a financial liability at fair value through profit or loss, any changes associated with the Group's own
credit risk will be recognised in other comprehensive income.
Impairment of financial asset at amortised cost
The Group recognises a foward-looking expected credit loss for all financial assets that are measured at
amortised cost. Expected credit losses are based on the difference between the contractual cash flows due
in accordance with the contract and all the cash flows that the Group expects to receive. The shortfall is then
discounted at an approximation to the asset's original effective interest rate.
For contract assets and trade and other receivables, the Group applies the standard's simplified approach and
calculates estimated credit losses based on lifetime expected credit losses. The Group establishes a provision
matrix that is based on the Group's historical loss experience, adjusted for foward-looking factors specific to
the debtors and the economic environment.
For other debt financial assets held at amortised cost, at each reporting date, the Group measures the loss
allowance (if applicable) for the financial asset at an amount equal to the lifetime expected credit losses if the
credit risk on the financial asset has increased significantly since initial recognition. If at the reporting date, the
financial asset has not increased significantly since initial recognition, the Group measures the loss allowance for
the financial asset at an amount equal to twelve months expected credit losses.
Impairment losses on financial assets carried at amortised cost are reversed in subsequent periods if the
amount of the loss decreases and the decrease can be objectively related to an event occurring after the
impairment was recognised.
Decrecognition: Financial assets
The Group derecognises financial assets only when the contractual rights to cash flows from the financial
assets expire, or when it transfers the financial assets and substantially all the associated risks and rewards of
ownership to another entity. Gains and losses on derecognition are generally recognised in the statement of
profit or loss. However, gains and losses on derecognition of financial assets classified as fair value through other
comprehensive income remain within the accumulated other comprehensive income.
Derecognition: Financial liabilities
The Group derecognises financial liabilities only when its obligations under the financial liabilities are discharged,
cancelled or expired. The difference between the carrying amount of the financial liability derecognised and the
consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is recognised in
the statement of profit or loss.
Hedge accounting
The Group does not apply hedge accounting.
Impact of adopting IFRS 9 on the Group's interim condensed consolidated financial statements
The adoption of IFRS 9 did not impact the carrying value of any financial assets on transition date, consequently
adopting IFRS 9 did not result in a restatement of comparative results.
3.2 Change in accounting policies - Revenue from contracts with customers
The Group has early adopted all of the requirements of IFRS 15: Revenue from Contracts with Customers (IFRS 15)
with a date of initial application of 1 October 2017. IFRS 15 supersedes IAS18: Revenue and related Interpretations
and it applies to all revenue arising from contracts with customers, unless those contracts are in the scope of
other standards of IFRS. The Group applied IFRS 15 using the modified retrospective method and therefore,
comparative information has not been restated and continues to be presented in accordance with IAS 18.
IFRS 15 was applied to all open contracts on date of initial application. As a result, the Group has changed its
accounting policy for revenue recognition as detailed below.
Comparative accounting policy in terms of IAS 18
Revenue was measured at the fair value of the consideration received or receivable. Revenue from the sale of
goods was recognised when significant risks and rewards of ownership had been transferred to the customer,
recovery of the consideration was probable, the associated costs and possible return of goods could be
estimated reliably, there was no continuing management involvement with the goods and the amount of
revenue could be measured reliably.
Revenue from the sale of PGMs was initially recognised at the estimated fair value of the consideration
receivable at the date of delivery. Adjustments to the sale price occurred based on movements in the metal
market price and currency up to the date of final pricing. Final pricing was based on the monthly average market
price in the month of settlement. The period between initial recognition and final pricing was typically three
months. The revenue adjustment mechanism embedded within the sale arrangement had the characteristics
of a commodity derivative. Accordingly the fair value of the final sales price adjustment was re-estimated
continuously and changes in fair value were recognised as a re-estimated adjustment to revenue in profit or
loss and trade receivables in the statement of financial position.
The Group entered into contracts for the sale of chrome concentrates. Revenue arising from chrome sales
under these contracts was recognised when the price was determinable, the product had been delivered in
accordance with the terms of the contract, the significant risks and rewards of ownership had been transferred
to the customer, collection of the sale price was probable and associated costs could be reliably estimated.
These criteria might vary per contract. As sales from chrome contracts were subject to a customer survey
adjustment with regards to quality, sales were initially recorded on a provisional basis using management's best
estimate of the chrome quality. Subsequent adjustments were recorded in revenue to take into account final
adjustments, if different from the initial estimates.
Revenue from the rendering of services was recognised in proportion to the stage of completion of the work
performed at the reporting date.
Accounting policy in terms of IFRS 15
Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts
collected on behalf of third parties, unless the Group acts as principal. The Group recognises revenue when it
transfers control over a product or service to a customer. Revenue is presented net of Value Added Tax, rebates
and discounts and after eliminating intergroup sales.
Operating segments, and the amounts of each segment item reported in the consolidated financial statements,
are identified from the financial information provided regularly to the Group's management for the purposes of
allocating resources to, and assessing the performance of, the Group's various lines of business and geographical
locations. The Board of Directors is of the view that the Group had three operating segments during the
reporting period, the PGM segment, the chrome segment and the agency and trading segment.
The following is a description of the Group's current principal activities separated by reportable segment, from
which the Group recognises its revenue.
PGM segment
The PGM segment principally generates revenue from the sale of PGM concentrate, which consists of the
sale of platinum, palladium, rhodium, gold, ruthenium, iridium, nickel and copper. The Group enters into
off-take agreements with customers for the supply of PGM concentrate. Revenue from the sale of PGM
concentrate is recognised at the prevailing market basket price and exchange rates, when delivered to the
customers in terms of the off-take agreements. Revenue recognised includes variable consideration as
revenue is subject to final pricing and currency adjustments after the beneficiation process is completed.
Revenue recognised is adjusted for expected final adjustments based on spot rates, which are estimated
based on prevailing market information and recognised as a separate component within revenue.
Adjustments to the sale price occur based on movements in the metal market price and exchange rates
up to the date of final pricing.
Any subsequent changes that arise due to differences between initial and final assay are still considered within
the scope of IFRS 15 and are subject to the constraint on estimates of variable consideration. When considering
the initial assay estimate, the Group has considered the requirements of IFRS 15 in relation to the constraint on
estimates of variable consideration. It will only include amounts in the calculation of revenue where it is highly
probable that a significant revenue reversal will not occur when the uncertainty relating to final assay/quality is
subsequently resolved.
Consequently, at the time the concentrate passes to the client, the Group will recognise a receivable as
from that time it considers it has an unconditional right to consideration. This receivable is accounted for in
accordance with IRFS 9.
The PGM commodity derivative is no longer separated from the host contract. This is because the existence
of the provisional pricing features means the concentrate receivable fails to meet the requirements to be
measured at amortised cost. Instead, the entire receivable is measured at fair value, with subsequent movements
being recognised in profit or loss.
Chrome segment
The Group currently produces two specifications of chrome concentrates, metallurgical chrome concentrate
and specialty chrome concentrates. It generates revenue from the sale of these products. The chrome market
is typically a "spot" market. The Group enters into short-term sale contracts. The Group also enters into long-
term volume off-take agreements for the supply of chrome concentrates.
Revenue arising from chrome concentrate sales under short-term sale contracts and off-take agreements is
recognised when the chrome concentrate is delivered and a customer takes control of the chrome concentrate.
Revenue is recognised based on the fixed sale price in terms of the contract, the quantity delivered and the
quality as determined by an independent survey. Export sales may, as specified in the contract, be subject to a
final survey upon arrival at destination port. Revenue recognised for export sales is adjusted for expected final
adjustments, which are estimated based on historical data for similar transactions.
Agency and trading segment
The Group operates a third party chrome plant and markets and sells the chrome concentrate produced
at this plant. The Group determines whether it acts as principal or agent by assessing whether the Group
controls the transaction and what its performance obligations are. Considerations to determine control include
whether the Group provides the performance obligation itself, the Group is primarily responsible for fulfilling
the promise to provide the specified chrome concentrates, the Group has inventory risk before the specified
products are transferred to the customer and the Group determines the selling price. In the absence of any of
the aforementioned factors, control of the transaction may be doubtful and the Group would recognise the
margin achieved in revenue as an agent.
Metallurgical and specialty chrome concentrates are produced at this plant. The Group enters into short-
term contracts for the sale of these chrome concentrates. Revenue arising from short-term sale contracts
is recognised when the chrome concentrate is delivered and a customer takes control of the chrome
concentrates. This occurs in accordance with the terms of each contract. Delivery terms also vary between the
sale of metallurgical chrome concentrate and specialty chrome concentrates. Sales from chrome concentrates
are subject to surveys to determine the chrome quality and quantity. Revenue is recognised based on the fixed
sale price in terms of the contract, the quantity delivered and the quality as determined by an independent
survey. Export sales may, as specified in the contract, be subject to a final survey upon arrival at destination port.
Revenue recognised for export sales is adjusted for expected final adjustments, which are estimated based on
historical data for similar transactions.
The Group also provides logistics services to customers. These services include long-term contracts and
ad hoc logistics services. Revenue is recognised at a point in time as the performance obligation has been
fulfilled which is the delivery of the specified goods. Any earned consideration, which is conditional, will be
recognised as a contract asset rather than a trade and other receivable.
Revenue is also generated from consulting services rendered. These services include geological, marketing
and administration services. Revenue is recognised over time, using an input method to measure progress
towards complete customer satisfaction.
Contract balances
Timing of revenue recognition may differ from the timing of invoicing to customers. The Group records a
receivable, included in trade and other receivables in the statement of financial position, when revenue is
recognised prior to invoicing. Similarly, unearned revenue received (income received in advance), is disclosed as
a current liability classified in trade and other payables in the statement of financial position, if it will be earned
within one year.
Payment terms and conditions vary by contract type and delivery method, although for local sales terms
generally include a requirement of payment upon completion of delivery of the products. For export
transactions, payments terms vary from 30 to 90 days, however, the Group obtains a letter of credit from a
reputable bank in most instances before shipment occurs.
In the instance where the timing of revenue recognition differs from the timing of invoicing, the Group
has determined that due to the short-term nature, the contracts with customers generally do not include
a significant financing component. The primary purpose of the Group's invoicing terms is to provide
customers with simplified and predictable ways of purchasing products, not to receive financing from
customers or to provide financing to customers. Similarly, due to the short-term nature of unearned
revenue received, being less than 12 months, no financing component exists.
Commissions recognised from costs to obtain a contract with a customer
The Group recognises the incremental costs, arising from the concluding of sale contracts, as expenses in cost
of sales in the statement of profit or loss when incurred. Such commission fees relate to the chrome segment
and are short-term in nature.
Impact of adopting IFRS 15 on the Group's interim condensed consolidated financial statements
IFRS 15 requires the Group to recognise revenue for sales of products as it transfers control over those
products to customers, which generally occurs on delivery and is determined by the agreed delivery terms.This
is generally consistent with the timing of revenue recognition in accordance with the previous standard, IAS 18.
No incremental costs have been capitalised on adoption of IFRS 15 because lead times for individual orders are
less than one year and costs to fulfil contracts are already recognised as inventories. The Group has used the
modified retrospective transition method, under which the effect of initially applying IFRS 15 is adjusted against
the opening balance of equity at 1 October 2017. For the reasons described above, this effect is not material
to the Group. Under this transition method, comparative information for prior periods has not been restated
and continues to be reported in accordance with the previous standard, IAS 18.
3.3 Change in accounting policies - Leases
The Group has early adopted all of the requirements of IFRS 16: Leases (IFRS 16) effective 1 October 2017
(initial application). IFRS 16 replaces IAS 17: Leases (IAS 17). The Group has applied IFRS 16 using the modified
retrospective approach and therefore the comparative information has not been restated and continues to
be reported in terms of IAS 17 and IFRIC 4 - Determining whether an arrangement contains a lease. The
Group recognised the cumulative effect of initial application of IFRS 16, in terms of the modified retrospective
approach, in retained earnings at 1 October 2017. As a result, the Group has changed its accounting policy for
leases as detailed below.
As a lessee
Comparative accounting policy in terms of IAS 17
In terms of IAS 17, the Group was required to classify its leases as either finance leases or operating leases and
account for those two types of leases differently (both as a lessor or a lessee). A lease was classified as a finance
lease if it transferred substantially all the risks and rewards incidental to ownership. A lease was classified as an
operating lease if all the risks and rewards incidental to ownership did not substantially transfer.
Finance leases were recognised as assets and liabilities in the statement of financial position at amounts equal to the
fair value of the leased property or, if lower, the present value of the minimum lease payments.The corresponding
liability to the lessor was included in the statement of financial position as a finance lease obligation.The discount
rate used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease.
The lease payments are apportioned between the finance charge and reduction of the outstanding liability. The
finance charge is allocated to each period during the lease term so as to produce a constant periodic rate on
the remaining balance of the liability.
Operating lease payments, in the event of the Group operating as lessee, were recognised as an expense on a
straight-line basis over the lease term. The difference between the amounts recognised as an expense and the
contractual payments were recognised as an operating lease asset. The liability was not discounted.
Accounting policy in terms of IFRS 16
The Group recognises a right-of-use asset and a lease liability at the commencement date of the contract for
all leases conveying the right to control the use of identified assets for a specified period. The commencement
date is the date on which a lessor makes an underlying asset available for use by the lessee.
The right-of-use assets are initially measured at cost, which comprises the amount of initial measurement of the
lease liability adjusted for any lease payments made at or before the commencement date plus any initial direct
costs incurred by the lessee and an estimate of costs to be incurred by the lessee in dismantling and removing
the underlying assets or restoring the site on which the assets are located, less any lease incentives.
Subsequent to initial measurement, the right-of-use assets are depreciated from the commencement date using
the straight-line method over the shorter of the estimated useful lives of the right-of-use assets or the end of
lease term. These are as follows:
Right-of-use asset Depreciation term in years
Buildings and premises Straight-line over the respective lease terms, between three and five years
Mining fleet Based on estimated production hours
After the commencement date, the right-of-use assets are measured at cost less any accumulated depreciation
and any accumulated impairment losses and adjusted for any re-measurement of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily
determined, the Group's incremental borrowing rate. Generally, the Group uses its incremental borrowing rate
as the discount rate.
Lease payments included in the measurement of the lease liability include the following:
- Fixed payments, less any lease incentives receivable
- Variable lease payments that depend on an index or rate, initially measured using the index or rate as
at the commencement date
- Amounts expected to be payable by the lessee under residual value guarantees
- The exercise price of a purchase option if the lessee is reasonably certain to exercise that option;
- Lease payments in an optional renewal period if the Group is reasonably certain to exercise an
extension option
- Payments of penalties for early terminating the lease, unless the Group is reasonably certain not to
terminate early
The lease liability is measured at amortised cost using the effective interest rate method. It is remeasured when
there is a change in future lease payments arising from a change in an index or rate, if there is a change in the
Group's estimate of the amount expected to be payable under a residual value guarantee, or if the Group
changes its assessment of whether it will exercise a purchase, an extension or a termination option.
When the lease liability is remeasured, a corresponding adjustment is made to the carrying amount of the
right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been
reduced to zero.
Short-term leases and leases of low-value assets
The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases of vehicles
that have a lease term of 12 months or less and leases of low-value assets such as computer equipment.
As a lessor
In the event of lease contracts based on which the Group is acting as a lessor, each of its leases is classified as
either an operating or finance lease. A lease is classified as a finance lease if it transfers substantially all the risks
and rewards incidental to ownership to the lessee. Indicators of a finance lease include whether the lease is for
the major part of the economic life of the asset, whether the lease transfers ownership of the asset to the lessee
by the end of the lease term and whether at inception date of the lease, the present value of the minimum lease
payments amount to substantially all of the fair value of the leased asset.
Leases where a significant portion of the risks and rewards incidental to ownership are retained by the lessor,
are classified as operating leases.
When the Group is an intermediate lessor, it accounts for its interest in the head lease and the sub-lease
separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from
the head lease, not with reference to the underlying asset. If a head lease is a short-term lease to which the
Group applies the exemption described above, then it classifies the sub-lease as an operating lease.
Rental income is classified in other income.
Impact of adopting IFRS 16 on the Group's interim condensed consolidated financial statements
The adoption of IFRS 16 resulted in the Group recognising a number of leases for buildings and premises on
1 October 2017. These were previously treated as operating leases in terms of IAS 17. On 1 October 2017,
the previously recognised equalisation of operating lease liabilities in terms of IAS 17 was reversed from trade
and other payables and the corresponding after tax impact on retained earnings corrected. Simultaneously the
right-of-use assets and the corresponding lease liabilities were recognised while the after tax depreciation and
finance charges were corrected to retained earnings.
The following table summarises the impact of adopting IFRS 16 on the Group's extracted consolidated
Statement of financial position at 1 October 2017:
As
previously Adjustments
reported at
30 Sept 1 October 1 October
2017 2017 2017
Note US$'000 US$'000 US$'000
Non-current assets
Property, plant and equipment 11 232 559 1 166 233 725
Deferred tax asset 13 1 952 7 1 959
Equity and liabilities
Retained earnings 42 877 (15) 42 862
Non-current liabilities
Borrowings 18 4 375 1 014 5 389
Current liabilities
Borrowings 18 45 026 191 45 217
Trade and other payables 31 916 (17) 31 899
4.OPERATING SEGMENTS
Segmental 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.
Agency and
PGM Chrome trading Total
US$'000 US$'000 US$'000 US$'000
Six months ended 31 March 2018 (Reviewed)
Revenue 55 458 130 296 13 425 199 179
Cost of sales
Cost of sales excluding selling costs (39 711) (56 235) (12 414) (108 360)
Selling costs (205) (34 827) (44) (35 076)
(39 916) (91 062) (12 458) (143 436)
Gross profit 15 542 39 234 967 55 743
Six months ended 31 March 2017 (Reviewed)
Revenue 40 053 135 066 - 175 119
Cost of sales
Cost of sales excluding selling costs (20 837) (48 280) - (69 117)
Selling costs (180) (23 458) - (23 638)
(21 017) (71 738) - (92 755)
Gross profit* 19 036 63 328 - 82 364
Year ended 30 September 2017 (Audited)
Revenue 90 924 252 869 5 650 349 443
Cost of sales
Cost of sales excluding selling costs (54 336) (107 634) (4 241) (166 211)
Selling costs (366) (59 068) (1 144) (60 578)
(54 702) (166 702) (5 385) (226 789)
Gross profit 36 222 86 167 265 122 654
* During the period ended 31 March 2017, US$3.2 million was included in the chrome segment which relates to the agency
and trading segment.
The shared costs relating to the manufacturing of the PGM and the chrome concentrates are allocated to the
relevant operating segments based on the relative sales value per product on an ex-works basis. During the period
ended 31 March 2018, the relative sales value of chrome concentrates decreased compared to the relative sales
value of PGM concentrate and consequently the allocation basis of shared costs was amended to 45% (PGM
concentrate) and 55% (chrome concentrates) respectively. The allocated percentage for PGM concentrate and
chrome concentrates accounted for in the comparative period was 25% for PGM concentrate and 75% for chrome
concentrates while for the year ended 30 September 2017, shared costs were allocated 35% for PGM concentrate
and 65% for chrome concentrates.
The Agency and trading operating segment represents third-party trading and third-party logistics operations and
includes the production, marketing and sales of chrome concentrates produced at a chrome plant owned by a third
party.
Geographical information
The following table sets out information about the geographical location of the Group's revenue from external
customers. The geographical location analysis of revenue from external customers is based on the country of
establishment of each customer.
Six months Six months Year
ended ended ended
31 March 31 March 30 Sept
2018 2017 2017
Reviewed Reviewed Audited
Revenue from external customers US$'000 US$'000 US$'000
South Africa 84 321 73 612 151 886
China 47 318 57 986 86 035
Singapore 2 188 3 215 13 961
Hong Kong 65 352 37 601 94 866
Other countries - 2 705 2 695
199 179 175 119 349 443
Revenue represents the sales value of goods supplied to customers, net of value added tax.
The following table summarises sales to external customers with whom transactions have individually exceeded
10% of Group revenue:
Six months ended Six months ended Year ended
31 March 2018 31 March 2017 30 September 2017
Segment US$'000 Segment US$'000 Segment US$'000
Customer 1 PGM 48 757 PGM 40 052 PGM 88 118
Customer 2 Chrome 28 585 Chrome 33 535 Chrome 60 370
Customer 3 Chrome 22 659 Chrome 23 840 Chrome 43 676
5. REVENUE
Revenue is disaggregated by segments in the following categories:
Six months Six months Year
ended ended ended
31 March 31 March 30 Sept
2018 2017 2017
Reviewed Reviewed Audited
US$'000 US$'000 US$'000
PGM segment
Platinum 31 058 26 067 58 019
Palladium 10 207 6 839 15 939
Rhodium 10 629 4 862 11 045
Gold 131 108 243
Ruthenium 1 250 177 595
Iridium 1 734 1 306 3 292
Copper 136 162 375
Nickel 621 536 1 199
Metal adjustments (308) (4) 217
Total revenue from PGM segment 55 458 40 053 90 924
Chrome segment
Metallurgical 101 812 101 782 193 719
Specialty 28 484 33 284 59 150
Total revenue from chrome segment 130 296 135 066 252 869
Agency and trading segment
Metallurgical chrome 13 045 - 4 399
Specialty chrome 55 - -
Logistics 201 - 1 228
Consulting 124 - 23
Total revenue from agency and trading segment 13 425 - 5 650
Revenue is disaggregated by segments in the following geographical locations:
Agency
PGM Chrome and trading
segment segment segment Total
US$'000 US$'000 US$'000 US$'000
Six months ended 31 March 2018 (Reviewed)
South Africa 55 458 28 484 379 84 321
China - 42 518 4 800 47 318
Singapore - 532 1 656 2 188
Hong Kong - 58 762 6 590 65 352
55 458 130 296 13 425 199 179
Six months ended 31 March 2017 (Reviewed)
South Africa 40 053 33 559 - 73 612
China - 57 986 - 57 986
Singapore - 3 215 - 3 215
Hong Kong - 37 601 - 37 601
Other countries - 2 705 - 2 705
40 053 135 066 - 175 119
Year ended 30 September 2017 (Audited)
South Africa 90 924 59 150 1 811 151 885
China - 82 196 3 839 86 035
Singapore - 13 961 - 13 961
Hong Kong - 94 866 - 94 866
Other countries - 2 696 - 2 696
90 924 252 869 5 650 349 443
Six months Six months Year
ended ended ended
31 March 31 March 30 Sept
2018 2017 2017
Reviewed Reviewed Audited
US$'000 US$'000 US$'000
Revenue recognised in current period for which
performance obligations were partially satisfied in
previous period:
PGM revenue recognised in preceding period/year
based on initial results (28 994) (26 080) (26 080)
PGM revenue based on final results 30 823 26 224 26 224
PGM revenue adjustment recognised
in current period/year 1 829 144 144
Chrome revenue recognised in preceding period/year
based on initial results (41 197) (39 818) (39 818)
Chrome revenue based on final results 41 177 39 672 39 672
Chrome revenue adjustment recognised
in current period/year (20) (146) (146)
Revenue recognised which was included in opening income
received in advance liability:
Chrome revenue recognised upon completion
of performance conditions - - 3 102
The period ended 31 March 2018 includes PGM revenue of US$28.7 million and chrome revenue of
US$46.2 million that was based on provisional results as final prices and surveys were not yet available at the date
of this report. Contract balances are included in trade receivables, refer to note 15.
Six months Six months Year
ended ended ended
31 March 31 March 30 Sept
2018 2017 2017
Reviewed Reviewed Audited
US$'000 US$'000 US$'000
6.COST OF SALES
Mining 56 243 49 262 96 005
Salaries and wages 7 816 5 865 12 467
Utilities 4 770 4 031 9 495
Diesel 310 282 705
Materials and consumables 5 605 4 078 8 274
Re-agents 2 287 1 816 3 653
Steel balls 3 773 3 175 6 757
Overhead 3 375 3 292 8 055
State royalties 1 595 970 1 665
Depreciation - property, plant and equipment 16 273 8 077 16 476
Agency and trading 12 414 3 800 4 241
Selling costs 35 076 23 638 60 578
Change in inventories
- finished products and ore stockpile (6 101) (15 531) (1 582)
Cost of sales 143 436 92 755 226 789
Six months Six months Year
ended ended ended
31 March 31 March 30 Sept
2018 2017 2017
Reviewed Reviewed Audited
US$'000 US$'000 US$'000
7.OTHER INCOME
Gain on bargain purchase (refer to note 20) 1 884 - -
Consulting fees received 143 - 5
Rental income 10 14 20
Sundry sales - 34 91
Other income 35 35 44
2 072 83 160
Six months Six months Year
ended ended ended
31 March 31 March 30 Sept
2018 2017 2017
Reviewed Reviewed Audited
US$'000 US$'000 US$'000
8.ADMINISTRATIVE EXPENSES
Directors and staff costs
Non-executive directors 295 254 536
Employees:salaries 8 121 4 262 9 213
bonuses 2 650 776 1 339
pension fund and medical aid contributions 843 663 1 405
11 909 5 955 12 493
Audit - external audit services 313 142 429
Consulting* 697 884 2 773
Corporate and social investment 30 50 73
Depreciation 500 256 453
Discount facility and related fees 432 257 516
Equity-settled share-based payment expense 1 978 2 196 4 342
Fees for professional services of the listing - - 260
Health and safety 419 122 300
Internal audit 39 - -
Impairment losses - 28 -
Insurance 377 458 914
Legal and professional 236 127 873
Loss on disposal of property, plant and equipment 13 - 196
Office administration, rent and utilities 315 282 660
Security 1 193 485 828
Telecommunications and IT related costs 793 308 719
Training 150 151 313
Travelling and accommodation 214 195 358
Sundry expenses 814 634 403
20 422 12 530 26 903
* Consulting fees includes US$53 thousand (31 March 2017: US$nil and 30 September 2017: US$61 thousand) which
was paid to the former external auditor for tax and accounting services as approved by the Audit Committee.
Six months Six months Year
ended ended ended
31 March 31 March 30 Sept
2018 2017 2017
Reviewed Reviewed Audited
US$'000 US$'000 US$'000
9.TAX
Corporate income tax for the year
Cyprus 1 457 992 1 554
South Africa 1 300 1 381 2 596
Special contribution for defence in Cyprus 2 3 4
Dividend withholding tax 158 - -
Deferred tax
Originating and reversal of temporary differences 5 836 14 940 19 162
Tax charge 8 753 17 316 23 316
Reconciliation between tax charge and accounting profit
at applicable tax rates:
Profit before tax 37 166 68 329 90 989
Notional tax on profit before taxation, calculated at the
rates applicable in the jurisdictions concerned 20 513 19 019 23 165
Non-taxable income
Revaluation of intergroup US$ denominated
preference shares (11 761) (2 045) (695)
Intergroup dividends received (2 007) (1 316) (2 423)
Interest received (8) (1) (6)
Non-deductible expenses
Intergroup dividends paid 1 600 1 195 2 415
Investment related 240 208 526
Interest paid 16 1 51
Capital expenses 123 97 170
Other 10 124 73
Recognition of deemed interest income for tax purposes 27 34 40
Tax charge 8 753 17 316 23 316
Tax is recognised 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 corporation tax rate is 12.5% in Cyprus,
0% in Guernsey and 28.0% in South Africa.
Under certain conditions interest income may be subject to defence contribution at the rate of 30.0% in Cyprus.
Such interest income is treated as non-taxable in the computation of corporation taxable income. In certain
instances, dividends received from abroad may be subject to defence contribution at the rate of 17.0%.
The Group's consolidated effective tax rate for the six months ended 31 March 2018 was 23.6% (31 March 2017:
25.3%; 30 September 2017: 25.6%).
At 31 March 2018, the Group's unredeemed capital balance available for offset against future mining taxable
income in South Africa amounted to US$124.0 million (31 March 2017: US$108.6 million and 30 September 2017:
US$99.6 million).
Other than Cyprus and South Africa, no provision for tax in other jurisdictions was made as these entities either
sustained losses for taxation purposes or did not earn any assessable profits.
10.EARNINGS PER SHARE
Basic and diluted earnings per share
The calculation of basic and diluted earnings per share has been based on the profit attributable to the ordinary
shareholders of the Company and the weighted average number of ordinary shares outstanding. Vested Share
Appreciation Rights (SARS) issued to employees at award prices lower than the current share price, results in a
potential dilutive impact on the weighted average number of issued ordinary shares and have been included in the
calculation of dilutive weighted average number of issued ordinary shares. Vested SARS issued to employees at
award prices higher than the current share price, were excluded from the calculation of diluted weighted average
number of issued ordinary shares because their effect would have been anti-dilutive.
Six months Six months Year
ended ended ended
31 March 31 March 30 Sept
2018 2017 2017
Reviewed Reviewed Audited
Profit attributable to ordinary shareholders (US$'000) 25 960 41 925 57 601
Weighted average number of issued
ordinary shares for basic earnings per share ('000) 260 141 256 178 257 393
Weighted average number of issued
ordinary shares for diluted earnings per share ('000) 261 782 256 178 257 393
Earnings per share
Basic (US$ cents) 10 16 22
Diluted (US$ cents) 10 16 22
Headline and diluted headline earnings per share
The calculation of basic and diluted headline earnings per share has been based on the profit attributable to the
ordinary shareholders of the Company and the weighted average number of ordinary shares outstanding. Vested
Share Appreciation Rights (SARS) issued to employees at award prices lower than the current share price, results
in a potential dilutive impact on the weighted average number of issued ordinary shares and have been included in
the calculation of dilutive weighted average number of issued ordinary shares. Vested SARS issued to employees at
award prices higher than the current share price, were excluded from the calculation of diluted weighted average
number of issued ordinary shares because their effect would have been anti-dilutive.
Six months Six months Year
ended ended ended
31 March 31 March 30 Sept
2018 2017 2017
Reviewed Reviewed Audited
Headline earnings attributable to
ordinary shareholders (US$'000) 24 730 41 953 57 799
Weighted average number of issued ordinary
shares for basic headline earnings per share ('000) 260 141 256 178 257 393
Weighted average number of issued ordinary
shares for diluted headline earnings per share ('000) 261 782 256 178 257 393
Headline earnings per share
Basic (US$ cents) 10 16 22
Diluted (US$ cents) 10 16 22
Reconciliation of profit to headline earnings
Six months Six months Year
ended ended ended
31 March 31 March 30 Sept
Non- 2018 2017 2017
controlling Reviewed Reviewed Audited
Gross Tax interest Net Net Net
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Profit attributable
to ordinary shareholders 25 960 41 925 57 601
Net adjustments:
Gain on bargain purchase (1 884) - 490 (1 394) - -
Scrapping of property, plant
and equipment 894 (250) (167) 477 - -
Exchange loss on net change
in investment in foreign
subsidiary 672 - - 672
Impairment losses on goodwill - - - - 28 57
Loss on disposal of property,
plant and equipment 13 (4) (2) 7 - 141
Headline earnings 25 722 41 953 57 799
Office
equipment
and furniture,
community
Mining Computer and site
Freehold assets and Right-of-use equipment office Right-of-use Leasehold
land and infra- asset: Motor and improve- asset: improve-
buildings structure Mining fleet mining fleet vehicles software ments buildings ments Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
11. PROPERTY, PLANT AND EQUIPMENT
31 March 2018 (Reviewed)
Total cost 17 682 320 597 35 293 11 928 698 6 449 952 2 540 - 396 139
Total accumulated depreciation (781) (77 310) (3 909) (1 542) (367) (2 671) (613) (412) - (87 605)
Net book value at 31 March 2018 16 901 243 287 31 384 10 386 331 3 778 339 2 128 - 308 534
Reconciliation of net book value
Net book value at 30 September 2017 14 762 206 682 6 731 - 305 3 628 278 - 173 232 559
Recognition of right-of-use assets - - - - - - - 1 166 - 1 166
Transfers - - - - - - - 173 (173) -
Net book value at 1 October 2017 14 762 206 682 6 731 - 305 3 628 278 1 339 - 233 725
Additions 68 6 738 10 570 4 438 16 185 93 776 - 22 884
Additions in terms of business combination (note 20) - 1 887 21 466 7 003 - - - - - 30 356
Transfers - 5 720 (5 719) - - - (24) 23 - -
Transferred to trade and other receivables - - - (476) - - - - - (476)
Disposals - - (67) - - - (1) - - (68)
Depreciation (95) (8 561) (3 424) (1 425) (32) (539) (48) (245) - (14 369)
Impairment - - (894) - - - - - - (894)
Exchange adjustment on translation 2 166 30 821 2 721 846 42 504 41 235 - 37 376
Net book value at 31 March 2018 16 901 243 287 31 384 10 386 331 3 778 339 2 128 - 308 534
Included in additions to mining assets and infrastructure are additions to the deferred stripping asset of
US$1.0 million (31 March 2017 and 30 September 2017: no additions).
The estimated economically recoverable proved and probable mineral reserve was reassessed at 30 September
2017 which gave rise to a change in accounting estimate. The remaining reserve that management had previously
assessed was 100.3 Mt and at 30 September 2017 was assessed to be 97.0 Mt. As a result, taking into account
depletion of the reserve during the year ended 30 September 2017, the expected useful life of the plant increased.
The impact of the change on the actual depreciation expense, included in cost of sales, is a reduced depreciation
of US$0.1 million.
Capital commitments
At 31 March 2018, the Group's capital commitments for contracts to purchase property, plant and equipment
amounted to US$10.8 million (31 March 2017: US$3.2 million; 30 September 2017: US$6.5 million).
Securities
At 31 March 2018, US$6.1 million of the carrying amount of the Group's mining fleet was pledged as security
against the equipment loan facility. At 31 March 2017, US$185.1 million (30 September 2017: US$213.5 million) was
secured against the secured bank borrowings.
Office
equipment
and furniture,
community
Mining Computer and site
Freehold assets and Right-of-use equipment office Right-of-use Leasehold
land and infra- asset: Motor and improve- asset: improve-
buildings structure Mining fleet mining fleet vehicles software ments buildings ments Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
31 March 2017 (Reviewed)
Total cost 15 234 260 838 - - 553 4 064 588 - 133 281 410
Total accumulated depreciation (554) (52 423) - - (261) (1 557) (490) - (133) (55 418)
Net book value at 31 March 2017 14 680 208 415 - - 292 2 507 98 - - 225 992
Reconciliation of net book value
Net book value at 1 October 2016 14 090 205 159 - - 317 874 91 - 3 220 534
Additions 369 6 117 - - 25 1 924 23 - - 8 458
Depreciation (128) (7 827) - - (57) (333) (18) - (3) (8 366)
Exchange adjustment on translation 349 4 966 - - 7 42 2 - - 5 366
Net book value at 31 March 2017 14 680 208 415 - - 292 2 507 98 - - 225 992
30 September 2017 (Audited)
Total cost 15 354 266 019 7 030 - 594 5 542 796 - 220 295 555
Total accumulated depreciation (592) (59 337) (299) - (289) (1 914) (518) - (47) (62 996)
Net book value at 30 September 2017 14 762 206 682 6 731 - 305 3 628 278 - 173 232 559
Reconciliation of net book value
Net book value at 1 October 2016 14 090 205 159 - - 317 874 91 - 3 220 534
Additions 666 14 602 7 124 - 73 3 504 240 - 189 26 398
Disposals - (196) - - - - - - - (196)
Depreciation (174) (15 570) (303) - (90) (725) (51) - (16) (16 929)
Exchange adjustment on translation 180 2 687 (90) - 5 (25) (2) - (3) 2 752
Net book value at 30 September 2017 14 762 206 682 6 731 - 305 3 628 278 - 173 232 559
31 March 31 March 30 Sept
2018 2017 2017
Reviewed Reviewed Audited
US$'000 US$'000 US$'000
12.LONG-TERM DEPOSITS
Long-term deposits - 4 796 4 505
The long-term deposits represented restricted cash which was designated as a "debt service reserve account" which
was required by the terms of the Common Terms Agreement for the senior debt facility payable by Tharisa Minerals
Proprietary Limited.
Effective 28 March 2018, the senior debt facility was settled in full (refer to note 18) and consequently the restricted
cash was released and became available to the Group.
31 March 31 March 30 Sept
2018 2017 2017
Reviewed Reviewed Audited
US$'000 US$'000 US$'000
13.DEFERRED TAX
Deferred tax assets 2 445 2 127 1 952
Deferred tax liabilities (33 297) (20 280) (23 823)
Net deferred tax liability (30 852) (18 153) (21 871)
Reconciliation of net deferred tax liability
Balance at the beginning of the period/year (21 871) (3 878) (3 878)
Impact of adoption of IFRS16 7 - -
Balance at the beginning of the period/year (21 864) (3 878) (3 878)
Amounts recognised in:
Profit and loss (5 836) (14 940) (19 162)
Equity 515 802 861
Exchange differences (3 667) (137) 308
Balance at the end of the period/year (30 852) (18 153) (21 871)
Deferred tax assets and deferred tax liabilities are not offset unless the Group has a legally enforceable right to offset
such assets and liabilities.
The recoverability of deferred tax assets was assessed in respect of each individual legal entity. The estimates used to
assess the recoverability of recognised deferred tax assets include a forecast of the future taxable income and future
cash flow projections based on a three-year period. The Group did not have tax losses and temporary differences
for which deferred tax was not recognised.
31 March 31 March 30 Sept
2018 2017 2017
Reviewed Reviewed Audited
US$'000 US$'000 US$'000
14.INVENTORIES
Finished products 8 853 25 594 6 620
Ore stockpile 4 798 5 177 5 807
Consumables 13 252 5 582 8 375
26 903 36 353 20 802
Inventories are stated at the lower of cost or net realisable value. During the period ended 31 March 2018, the
Group reversed inventory previously written down to net realisable value of US$0.1 million (31 March 2017:
net realisable value write-down of US$0.1 million and 30 September 2017: net realisable value write-down of
US$0.1 million) relating to certain consumables and spares.
31 March 31 March 30 Sept
2018 2017 2017
Reviewed Reviewed Audited
US$'000 US$'000 US$'000
15.TRADE AND OTHER RECEIVABLES
Trade receivables 60 040 39 741 55 602
Other receivables - related parties (note 21) 108 48 59
Deposits, prepayments and other receivables 1 720 1 803 1 081
Accrued income 2 747 5 482 3 167
Value added tax (VAT) receivable 12 253 5 507 9 327
Royalty tax 1 305 - 1 138
78 173 52 581 70 374
Ageing of trade receivables:
Current 57 929 33 870 43 677
Less than 90 days past due but not impaired 2 089 3 911 7 540
Greater than 90 days past due but not impaired 22 1 960 4 385
60 040 39 741 55 602
Included in VAT is an amount of ZAR104.4 million (31 March 2017: ZAR50.3 million and 30 September 2017:
ZAR79.5 million) which relates to diesel rebates receivable from the South African Revenue Service (SARS) in
respect of the mining operations. The Group received a letter of demand and rejection from SARS. The Group is
strongly of the view that it fully complies with all the regulations to be entitled to this refund and is appealing SARS's
decision. The Group is taking the necessary legal action to recover the amount due.
Based on past experience, management believes that no impairment allowance (31 March 2017 and 30 September
2017: no impairment allowance) is required in respect of the trade and other receivables as there has not been a
significant change in credit quality and the balances are still considered fully recoverable. The Group does not hold
any collateral over these balances.
31 March 31 March 30 Sept
2018 2017 2017
Reviewed Reviewed Audited
US$'000 US$'000 US$'000
16. CASH AND CASH EQUIVALENTS
Bank balances 56 356 26 425 39 983
Short-term deposits 3 574 195 9 759
59 930 26 620 49 742
Cash at banks earns interest at floating rates based on daily bank deposit rates. Short-term deposits are generally
call deposit accounts and earn interest at the respective short-term deposit rates.
At 31 March 2018, an amount of US$1.9 million (31 March 2017: US$1.7 million and 30 September 2017: US$1.7
million) was provided as security for a bank guarantee issued in favour of a trade creditor and US$0.3 million (31
March 2017 and 30 September 2017: US$0.3 million) was provided as security against certain credit facilities of
the Group.
The Group had unutilised borrowing facilities of ZAR400 million available at 31 March 2018 (refer to note 18)
(31 March 2017 and 30 September 2017: no unutilised facilities available).
17. SHARE CAPITAL AND PREMIUM
Share capital
The Company did not issue any ordinary shares during the six months ended 31 March 2018 and 31 March 2017.
Allotments during the year ended 30 September 2017 were in respect of the award of 2 984 853 ordinary shares
granted in terms of the Share Award Scheme (Conditional Awards) and 1 033 576 ordinary shares issued as
treasury shares to satisfy the potential future settlement of Appreciation Rights of the participants' of the Tharisa
Share Award Plan.
During the period ended 31 March 2018, 181 074 (31 March 2017: nil and year ended 30 September 2017:
46 302) ordinary shares were transferred from treasury shares to satisfy the exercise of Appreciation Rights by the
participants of the Tharisa Share Award Scheme.
At 31 March 2018, the Company had 261 000 000 (31 March 2017: 255 891 886 and 30 September 2017:
261 000 000) ordinary shares in issue of which 806 200 (31 March 2017: nil and 30 September 2017: 987 274)
were held in treasury.
Share premium
The share premium represents the excess of the issue price of the ordinary shares over their nominal value, to the
extent that it is registered at the Registrar of Companies in Cyprus, less share issue costs and any registered transfers
to retained earnings.
During the period ended 31 March 2017, the share premium account was reduced by US$179.2 million with a
corresponding increase in retained earnings to reduce the accumulated losses to US$nil. The required Court Order
was obtained and filed at the Registrar of Companies in Cyprus. This includes a distribution of US$2.6 million (US$1
cent per share) which was approved by way of a Special Resolution on 1 February 2017.The Special Resolution was
ratified by the abovementioned Court Order on 8 March 2017.
During the year ended 30 September 2017, the movement in the share premium account relates to the
aforementioned and the issue and allotment of ordinary shares granted in terms of the Share Award Schemes.
31 March 31 March 30 Sept
2018 2017 2017
Reviewed Reviewed Audited
US$'000 US$'000 US$'000
18.BORROWINGS
Non-current
Facilities 21 865 - -
Equipment loan facility 4 114 - -
Leases 9 074 - 1 497
Secured bank borrowings - 10 495 2 878
35 053 10 495 4 375
Current
Facilities 10 860 - -
Equipment loan facility 5 370 - -
Leases 4 951 611 847
Bank credit facilities 20 938 6 709 29 072
Secured bank borrowings - 14 852 14 876
Guardrisk loan - 908 231
42 119 23 080 45 026
Facilities
Effective 28 March 2018, the Group concluded the ZAR800 million Facilities which comprises of:
- a three-year senior secured amortising term loan of ZAR400 million (Term loan);
- a three-year secured committed revolving facility of ZAR300 million (Revolving facility); and
- an overdraft facility of ZAR100 million (Overdraft).
The financing was obtained by Tharisa Minerals Proprietary Limited and guaranteed by the Company.
The Term loan bears interest at the three-month JIBAR plus 320 basis points nominal annual compounded quarterly
and is repayable in 12 equal consecutive quarterly instalments commencing on 30 June 2018. The Revolving
facility is available for three years and bears interest at the one-month JIBAR plus 340 basis points nominal annual
compounded quarterly and is repayable in full at least once every 12 months. Interest is payable monthly in arrears.
The Overdraft facility is available for one year and bears interest at the South African prime rate payable monthly
in arrears.
The Facilities contain the following financial covenants for Tharisa Minerals Proprietary Limited:
- Debt to equity ratio of less than 0.67 times
- Net debt to EBITDA of less than 2.0 times
- EBITDA to interest of greater than 4.0 times
At 31 March 2018, Tharisa Minerals Proprietary Limited complied with all financial covenants.
The Term loan was utilised, inter alia, to settle the secured bank borrowings at 29 March 2018 and in part to settle
the bridge loan at 31 March 2018. The unutilised facilities at 31 March 2018 amounted to ZAR400 million.
Equipment loan facility
Tharisa Minerals Proprietary Limited entered into an equipment loan facility of US$25 million with Caterpillar
Financial Services Corporation for the funding of certain Caterpillar mining equipment. The funding was partially
utilised for the purchase of existing mining equipment acquired from MCC Contracts Proprietary Limited as well
as replacement parts and new mining equipment. The loan is structured in three tranches and repayment of each
tranche varies between 24 and 48 equal monthly instalments, payable in arrears. Interest is calculated on the three-
month US$ Libor plus between 350 and 400 basis points.
The equipment loan facility is secured by a first notarial bond over the equipment and is guaranteed by the Company.
The equipment loan facility contains the following Group financial covenants:
- Net debt to tangible net worth not higher than 1.4 times
- Net debt to EBITDA lower than 2.0 times
- EBITDA to interest greater than 4.0 times
Leases
The Group entered into a number of lease arrangements for the renting of office buildings, premises, computer
equipment, vehicles and mining fleet. The Group has elected not to recognise right-of-use assets and lease liabilities
for short-term leases of vehicles that have a lease term of 12 months or less and leases of low-value assets such as
computer equipment.
Lease expenses of US$0.2 million (31 March 2017 and 30 September 2017: US$ nil) and US$0.1 million (31 March
2017: US$0.3 million and 30 September 2017: US$0.7 million) were included in cost of sales and administrative
expenses respectively for the period ended 31 March 2018.
The duration of leases relating to buildings and premises are for a period of five years, payments are due at the
beginning of the month escalating annually on average by 8.0%. At 31 March 2018, the remaining term of these leases
vary between four and four and a half years. These leases are secured by cash deposits varying from one to three
times the monthly lease payments.
The duration of leases relating to the mining fleet are for periods between 14 and 36 months and bear interest at
interest rates between the South African prime interest rate and the South African prime interest rate plus 300 basis
points. The leases are secured by the mining fleet leased.
31 March 31 March 30 Sept
2018 2017 2017
Reviewed Reviewed Audited
US$'000 US$'000 US$'000
Minimum lease payments due:
Within one year 6 103 649 1 046
Two to five years 10 190 - 1 620
16 293 649 2 666
Less future finance charges (2 268) (38) (322)
Present value of minimum lease payments due 14 025 611 2 344
Present value of minimum lease payments due:
Within one year 4 951 611 847
Two to five years 9 074 - 1 497
14 025 611 2 344
Bank credit facilities
The bank credit facilities relate to the discounting of the letters of credit by the Group's banks following performance
of the letter of credit conditions by the Group, which results in funds being received in advance of the normal
payment date. Interest on these facilities at the reporting date was US Libor plus 3.5% per annum (31 March 2017:
US Libor plus 2.6% per annum and 30 September 2017: US Libor plus 1.6% per annum).
Secured bank borrowings
Effective 29 March 2018, the secured bank borrowings of ZAR1 billion obtained from a consortium of banks was
prepaid and settled in full. The financing was obtained by Tharisa Minerals Proprietary Limited, a subsidiary of the
Group, and was for a period of seven years repayable in 22 equal quarterly instalments with the first repayment
date at 31 December 2013. The Group was required to maintain funds in a debt service reserve account, which
was consequently released.
Guardrisk loan
The loan payable at 30 September 2017 was settled in full during the period ended 31 March 2018.
Bridge loan
During the period ended 31 March 2018, Tharisa Minerals Proprietary Limited concluded a bridge loan of
ZAR250 million from Absa Bank Limited. The bridge loan part funded the acquisition of mining fleet and equipment
of MCC Contracts Proprietary Limited (refer to note 20). The bridge loan was repayable by 31 March 2018 and
carried interest at JIBAR plus 325 basis points. The bridge loan was repaid in full on 29 March 2018.
Borrowings
Equipment Bank credit Secured bank Guardrisk Bridge Total Current
Facilities loan facility Leases facilities borrowings loan loan borrowing liabilities Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Reconciliation of borrowings to cash flow
from financing activities
Balance 30 September 2017 - - 2 344 29 072 17 754 231 - 49 401 - 49 401
Adoption of IFRS 16 - - 1 205 - - - - 1 205 - 1 205
Balance at 1 October 2017 - - 3 549 29 072 17 754 231 - 50 606 - 50 606
Changes from financing cash flows
Advances received from bank credit facilities - - - 90 243 - - - 90 243 - 90 243
Repayment of bank credit facilities - - - (98 377) - - - (98 377) - (98 377)
Net repayment of bank credit facilities - - - (8 134) - - - (8 134) - (8 134)
Advances received 30 218 12 434 - - - - 19 539 62 191 - 62 191
Repayment of borrowings - (2 499) - - (18 827) (244) (19 539) (41 109) - (41 109)
Lease payments - - (4 608) - - - - (4 608) - (4 608)
Interest paid - (266) - (261) (1 112) (2) (909) (2 550) (2 102) (4 652)
Total changes from financing cash flows 30 218 9 669 (4 608) (8 395) (19 939) (246) (909) 5 790 (2 102) 3 688
Foreign currency translation differences 2 480 719 1 269 - 1 064 13 - 5 545 - 5 545
Liability-related changes
Lease agreements entered into - - 5 214 - - - - 5 214 - 5 214
Business combination (note 20) - - 7 003 - - - - 7 003 - 7 003
Interest expense 27 266 1 598 261 1 121 2 909 4 184 - 4 184
Revaluation of foreign denominated loan - (1 170) - - - - - (1 170) - (1 170)
Total liability-related changes 27 (904) 13 815 261 1 121 2 909 15 231 - 15 231
Balance at 31 March 2018 32 725 9 484 14 025 20 938 - - - 77 172 (2 102) 75 070
31 March 31 March 30 Sept
2018 2017 2017
Reviewed Reviewed Audited
US$'000 US$'000 US$'000
19.PROVISIONS
Provision for rehabilitation
Opening balance 6 923 4 607 4 607
Capitalised to inventories 2 778 1 107 1 340
Capitalised to mining assets and infrastructure (324) 270 451
Recognised as part of business combination (note 20) 133 - -
Recognised in profit or loss 347 210 494
Exchange differences 1 257 133 31
Closing balance 11 114 6 327 6 923
In terms of the Mineral and Petroleum Resources Development Act No 28, of 2002, the Group is required to make
financial provision for its decommissioning and restoration costs that will be incurred upon cessation of mining
activities. The provision has been calculated based on total estimated rehabilitation costs, discounted back to their
present values. The pre-tax discount rates are adjusted annually and reflect current market assessments. These
costs are expected to be utilised mostly towards the end of the life of mine and associated infrastructure, which is
currently estimated to be within 16 years. Financial provision is not required to be made for the decommissioning of
certain structures, such as housing, which may have an alternative use.
The current estimated rehabilitation cost to be incurred mostly at the end of the life of the open pit mine taking
escalation factors into account is US$17.4 million (31 March 2017: US$13.4 million and 30 September 2017:
US$13.7 million). The estimate was calculated by an independent external expert.
In determining the amounts attributable to the rehabilitation provision, management used a discount rate of 8.0%
(31 March 2017: 8.8% and 30 September 2017: 8.5%) which represents the rate associated to the 10-year South
African Bond Yield (31 March 2017 and 30 September 2017: R186 government bond of South Africa), estimated
rehabilitation timing of 16 years (31 March 2017: 19 years and 30 September 2017: 18 years) and an inflation rate of
4.9% (31 March 2017: 4.5% and 30 September 2017: 4.5%) which represents the weighted average of the historical
inflation rate since the mining operations commenced and the average long-term inflation target range of the South
African Reserve Bank.
An insurance company has provided a guarantee to the Department of Mineral Resources to satisfy the legal
requirements with respect to environmental rehabilitation and the Group has pledged as collateral its investments
in interest-bearing debt instruments to the insurance company to support this guarantee.
20.BUSINESS COMBINATION
Effective 1 October 2017, the acquisition of mining equipment, spares and consumables from MCC Contracts
Proprietary Limited (MCC), the previous mining contractor of Tharisa Minerals Proprietary Limited, became
unconditional. The transaction included the transfer of the employment of 876 personnel of MCC. In addition,
Tharisa Minerals Proprietary Limited took cession and assignment of certain leases entered into by MCC.
The fair value of plant and equipment and inventories acquired was determined by an external independent valuator.
The carrying values of trade and other receivables acquired and liabilities assumed were equal to their fair values
on date of acquisition. The bargain purchase gain arose due to differences in the carrying values and fair values of
plant and equipment.
The total cash consideration paid for the acquisition was ZAR279.5 million. No deferred consideration or contingent
consideration exists.
The purchase consideration was funded by a bridge loan from ABSA Bank Limited and an original equipment
manufacturer finance facility from Caterpillar Financial Services Corporation (refer to note 18).
The fair values of the identifiable assets and liabilities of MCC as at the date of acquisition were:
Fair value
recognised on
acquisition
US$'000
Assets
Property, plant and equipment (note 11) 30 356
Inventories 1 051
Trade and other receivables 150
31 557
Liabilities
Borrowings (note 18) (7 003)
Provisions (note 19) (133)
Trade and other payables (697)
(7 833)
Total identifiable net assets at fair value 23 724
Bargain purchase arising on acquisition (1 884)
Purchase consideration transferred 21 840
Net cash flow on acquisition 21 840
Transaction costs of US$0.1 million relating to the acquisition were included in administrative expenses during the
period ended 31 March 2018.
21.RELATED PARTY TRANSACTIONS
Related party transactions exist between shareholders and the Group's directors and key management personnel.
These transactions are concluded at arm's length in the normal course of business. All intergroup transactions have
been eliminated on consolidation.
Six months Six months Year
ended ended ended
31 March 31 March 30 Sept
2018 2017 2017
Reviewed Reviewed Audited
US$'000 US$'000 US$'000
Transactions and balances with related parties:
Other income - Rocasize Proprietary Limited 17 13 28
Cost of sales - Rocasize Proprietary Limited 101 60 154
Administrative expenses - Rocasize Proprietary Limited 15 9 68
Interest expense
Langa Trust - - 3
Arti Trust 135 129 262
Ditodi Trust 14 13 27
Makhaye Trust 14 13 27
The Phax Trust 27 26 53
The Rowad Trust 14 13 27
MJ Jacquet-Briner 14 13 27
218 207 426
Amounts due to directors
A Djakouris 21 21 21
JD Salter 24 24 30
O Kamal 14 13 16
C Bell 20 20 26
R Davey 17 - 19
J Ka Ki Cheng 11 7 11
107 85 123
Six months Six months Year
ended ended ended
31 March 31 March 30 Sept
2018 2017 2017
Reviewed Reviewed Audited
US$'000 US$'000 US$'000
Interest bearing - accrued dividends payable to
related parties
Arti Trust 2 852 2 515 2 486
Ditodi Trust 245 216 214
Makhaye Trust 245 216 214
The Phax Trust 488 430 425
The Rowad Trust 245 216 213
MJ Jacquet-Briner 245 216 213
4 320 3 809 3 765
Trade and other receivables (note 15)
The Tharisa Community Trust 5 5 5
Rocasize Proprietary Limited 103 43 54
108 48 59
Compensation to directors and key management:
Provident
Share- fund and
Salary Expense based risk
and fees allowances payments benefits Bonus Total
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Six months ended
31 March 2018 (Reviewed)
Non-executive directors 295 - - - - 295
Executives directors 703 5 - 27 652 1 387
Other key management 489 16 - 40 366 911
1 487 21 - 67 1 018 2 593
Six months ended
31 March 2017 (Reviewed)
Non-executive directors 254 - - - - 254
Executives directors 688 4 - 20 76 788
Other key management 460 13 - 31 49 553
1 402 17 - 51 125 1 595
Year ended
30 September 2017 (Audited)
Non-executive directors 536 - - - - 536
Executives directors 1 333 9 821 73 143 2 379
Other key management 865 27 518 95 117 1 622
2 734 36 1 339 168 260 4 537
Share-based awards to the directors and to key management were as follows:
Opening
Ordinary shares balance Allocated Vested Total
Six months ended 31 March 2018 (Reviewed)
LTIP - executive directors 1 808 316 - - 1 808 316
LTIP - key management 1 202 153 - - 1 202 153
SARS - executive directors 1 362 327 - - 1 362 327
SARS - key management 924 136 - - 924 136
Six months ended 31 March 2017 (Reviewed)
LTIP - executive directors 1 723 522 - - 1 723 522
LTIP - key management 1 115 106 - - 1 115 106
SARS - executive directors 1 243 870 - - 1 243 870
SARS - key management 885 344 - - 885 344
Year ended 30 September 2017 (Audited)
LTIP - executive directors 1 723 522 842 682 (757 888) 1 808 316
LTIP - key management 1 115 106 564 792 (477 745) 1 202 153
SARS - executive directors 1 243 870 842 682 (724 225) 1 362 327
SARS - key management 885 344 564 792 (526 000) 924 136
Relationships between parties:
The Tharisa Community Trust and Rocasize Proprietary Limited
The Tharisa Community Trust is a shareholder of Tharisa Minerals Proprietary Limited and owns 100% of the issued
ordinary share capital of Rocasize Proprietary Limited.
Langa Trust, Arti Trust, Phax Trust and Rowad Trust
A Director of the Company is a beneficiary of these trusts.
Ditodi Trust and Makhaye Trust
Certain of the non-controlling shareholders of Tharisa Minerals Proprietary Limited are beneficiaries of these trusts.
MJ Jaquet-Briner
MJ Jaquet-Briner is a director of Tharisa Minerals Proprietary Limited and is a shareholder in the non-controlling
interest of Tharisa Minerals Proprietary Limited.
31 March 31 March 30 Sept
2018 2017 2017
Fair value Reviewed Reviewed Audited
level US$'000 US$'000 US$'000
22. FINANCIAL INSTRUMENTS
Financial assets measured at fair value
Investments in equity instrument Level 1 37 42 49
Discount facility Level 2 676 - -
Forward exchange contracts Level 2 188 - -
Trade and other receivables at fair values
PGM receivable Level 2 18 261 12 704 17 254
Financial liabilities measured at fair value
Discount facility Level 2 - - 449
Forward exchange contracts Level 2 - - 150
Financial assets at amortised cost
Long-term deposits - 4 796 4 505
Other financial assets - investment in cash and income funds 5 791 4 244 3 767
Trade and other receivables 44 634 32 567 41 574
Cash and cash equivalents 59 930 26 620 49 742
Financial liabilities at amortised cost
Borrowings 77 172 33 575 49 401
Trade and other payables 30 131 23 231 29 753
There were no transfers between Level 1 and Level 2 fair value measurements during the period.
The Group considers that the fair values of the financial assets and financial liabilities approximate their carrying
values at each reporting date.
Fair value hierarchy
All financial instruments for which fair value is recognised or disclosed are categorised within the fair value hierarchy,
based on the lowest level input that is significant to the fair value measurement as a whole, as follows:
Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities
Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is
directly or indirectly observable
Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is
unobservable.
23. CONTINGENT LIABILITIES
There is no litigation, current or pending, which is considered likely to have a material adverse effect on the Group.
24. EVENTS AFTER THE REPORTING PERIOD
The Board of Directors are not aware of any matter or circumstance arising since the end of the period that will
impact these interim condensed consolidated financial results.
25. DIVIDENDS AND REDUCTION OF SHARE PREMIUM
The Company declared a dividend of US$ 5 cents on 30 November 2017 which was approved at the Annual
General Meeting on 10 January 2018. A capital distribution of US$2.6 million (US$ 1 cent per share) was declared
on 1 February 2017 as a reduction of share premium.
LEGAL DISCLAIMER
Some of the information in these materials may contain projections or forward-looking statements regarding future
events, the future financial performance of the Group, its intentions, beliefs or current expectations and those of its
officers, directors and employees concerning, among other things, the Group's results of operations, financial condition,
liquidity, prospects, growth, strategies and business.You can identify forward looking statements by terms such as "expect",
"believe", "anticipate", "estimate", "intend", "will", "could", "may" or "might" or the negative of such terms or other similar
expressions. These statements are only predictions and actual results may differ materially. Unless otherwise required by
applicable law, regulation or accounting standard, the Group does not intend to update these statements to reflect events
and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors
could cause the actual results to differ materially from those contained in projections or forward-looking statements of
the Group, including, among others, general economic conditions, the competitive environment, risks associated with
operating in South Africa and market change in the industries the Group operates in, as well as many other risks
specifically related to the Group and its operations.
A pdf of this announcement is available on the company's website http://www.tharisa.com.
RNS users, please click on, or paste the following link into your web browser, to view the associated pdf document.
http://www.tharisa.com
Paphos, Cyprus
16 May 2018
JSE Sponsor
Investec Bank Limited
Investor Relations contact:
Tharisa plc
Sherilee Lakmidas
+27 11 996 3538
+27 79 276 2529
slakmidas@tharisa.com
Broker contacts:
Peel Hunt LLP (Joint Broker)
Ross Allister / James Bavister / David McKeown
+44 207 7418 8900
BMO Capital Markets Limited (Joint Broker)
Jeffrey Couch / Neil Haycock / Thomas Rider
+44 020 7236 1010
Financial PR contacts:
Bobby Morse / Anna Michniewicz
+44(0) 20 7466 5000
tharisa@buchanan.uk.com
Date: 16/05/2018 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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