BAUBA PLATINUM LIMITED - Reviewed Provisional Condensed Consolidated Results for the Year Ended 30 June 2018

Release Date: 30/08/2018 15:02
Code(s): BAU
 
Wrap Text
Reviewed Provisional Condensed Consolidated Results for the Year Ended 30 June 2018

Bauba Platinum Limited
Incorporated in the Republic of South Africa
(Registration number 1986/004649/06) 
JSE share code: BAU
ISIN: ZAE000145686
(Bauba or the Company or the Group) 

Reviewed provisional condensed consolidated results
for the year ended 30 June 2018

Highlights
- Revenue R234,261 million (2017: R205,318 million). 
Up 14,1%
- Headline earnings per share 10,09 cents (2017: 14,71 cents). Down 31,4%
- 12-month offtake agreement concluded subsequent to year-end, with
R73,500 million part-payment received
- Investment in tangible assets R72,908 million (2017: R11,602 million). 
Up 528,4%
- EBITDA R110,679 million (2017: R122,587 million). Down 9,7%
- CSI spend R7,838 million (2017: R3,066 million). Up 155,6%

Commentary
Financial review
Bauba has reported profit before tax for the year ended 30 June 2018 of 
R104,857 million (2017: R134,144 million) and profit attributable to 
equity holders of the parent of R38,248 million (2017: R55,756 million), 
resulting in diluted headline earnings per share of 10,02 cents (2017:
14,65 cents).

This was primarily due to a weaker chrome ore market and a delay in 
excess of the timeframes stipulated by legislation for the Department 
of Water & Sanitation (DWS) to grant an application for an amended water 
use licence (WULA), which resulted in no opencast production for the 
months of May and June.

Bauba sold 204 494t (2017: 112 152t) of chrome ore at an average Cr2O3 
grade of 38,72% (2017: 39,68%).

Operating cash flows before working capital changes of R107,075 million 
(2017: R140,909 million) were reinvested into the future profitability 
of the Moeijelijk Mine with an investment in property, plant and 
equipment and intangible assets of R75,101 million (2017: R12,474 million).

Consequently, no distribution has been declared.

At 30 June 2018 there was 37 200t of inventory on hand.

These investments in inventory and fixed assets are expected to help 
generate improved future performance through increased sales in a 
favourable market.

Outlook
There was a weak start to the chrome ore market in the 2019 financial 
year with record inventory levels in Chinese ports, partly due to 
higher imports from South African producers and lower consumption in 
June, a consequence of environmental inspections. Further, market 
confidence was negatively impacted by the US - China "trade war".

Bauba has since received the above-mentioned WULA and re-commenced 
opencast production. The result of this will be reflected in the 
2019 financial year.

The delay in the granting of Moeijelijk's Section 102 application 
with the Department of Mineral Resources (DMR) to amend its 
environmental programme (which is a prerequisite to operate the 
wash plant) has impacted the commissioning of Moeijelijk's wash 
plant. Bauba is of the view that this is only an administrative 
delay by the DMR, and the board is cautiously optimistic that the 
aforesaid authorisation may be granted shortly.

Once operational, this wash plant will enhance Bauba's profit 
margins and diversify its revenue streams away from the Chinese 
metallurgical market into less volatile chemical and foundry grade 
chrome ore concentrate markets.

The development of the underground operation at Moeijelijk is 
progressing well, with stable underground production to reach 30 000t 
per month of LG6 chrome ore run of mine (ROM) before the end of the 
first half of the 2019 financial year.

In spite of a weaker chrome ore market, Bauba is optimistic about 
the 2019 financial year considering the developments of the 
underground operation and the wash plant mentioned above, and 
that Bauba's business model and Moeijelijk's low cost of 
production ensures that Bauba is able to operate sustainably in 
a stressed chrome ore market, if need be.

Reviewed condensed consolidated statement of comprehensive income 
for the year ended 30 June 2018
                                                    2018           2017
                                                    R’000         R’000
Revenue                                           234 261       205 318
Cost of sales                                     (81 595)      (63 318) 
Gross profit                                      152 666       142 000
Other income                                        1 169        24 015
Bad debt recovery                                       -        10 392
Operating and administrative expenses             (56 259)      (46 250) 
Finance income                                      7 281         3 987
Profit before taxation                            104 857       134 144
Income tax                                        (32 947)      (38 615) 
Profit for the year                                71 910        95 529
Other comprehensive income                              -             - 
Comprehensive profit for the year                  71 910        95 529
Profit attributable to:
Equity holders of the parent                       38 248        55 756
Non-controlling interest                           33 662        39 773
Comprehensive profit attributable to:
Equity holders of the parent                       38 248        55 756
Non-controlling interest                           33 662        39 773
Basic earnings per share (cents)                    10,09         14,71
Diluted earnings per share (cents)                  10,02         14,65
Headline earnings per share (cents)                 10,09         14,71
Diluted headline earnings per share (cents)         10,02         14,65

Reviewed condensed consolidated statement of financial position 
as at 30 June 2018
                                                     2018          2017
                                         Note       R'000         R'000
Assets
Non-current assets                                231 965       170 231
Intangible assets                           6     149 010       158 304
Property, plant and equipment               7      82 955        11 880
Deferred tax                                            -            47
Current assets                                     90 805       132 351
Inventory                                          17 441         8 064
Trade and other receivables                         3 287         2 089
Cash and cash equivalents                          70 077       122 198
Total assets                                      322 770       302 582
Equity and liabilities
Equity                                            284 937       270 940
Share capital and premium                         512 500       550 402
Reverse asset acquisition reserve                (282 988)     (282 988) 
Share option reserve                                1 294           477
Retained loss                                        (792)      (39 040) 
Non-controlling interest                           54 923        42 089
Non-current liabilities                            23 082         3 388
Provision for rehabilitation                8       3 620         3 388
Deferred tax                                       19 462             -
Current liabilities                                14 751        28 254
Trade and other payables                           10 994        20 876
Other financial liabilities                 9         461         1 425
Provision for rehabilitation                8           -         4 870
Current tax payable                                 3 296         1 083
Total equity and liabilities                      322 770       302 582

Reviewed condensed consolidated statement of cash flow 
for the year ended 30 June 2018
                                                     2018          2017
                                                    R'000         R'000
Cash flow from operating activities
Operating profit before working capital
changes                                           107 075       140 909
Working capital changes                           (21 421)        9 009
Taxation paid                                     (11 225)      (30 972) 
Distribution/dividend paid                        (58 730)            - 
Net cash effects from operating
activities                                         15 699       118 946
Cash flow from investing activities
Net cash effects from investing activities        (67 820)       (8 487) 
Investments in intangible asset                    (2 193)         (872)
Investments in property, plant and equipment      (72 908)      (11 602) 
Interest received                                   7 281         3 987
Total cash movement for the year                  (52 121)      110 459
Cash and cash equivalents at the
beginning of the year                             122 198        11 739
Cash and cash equivalents at the end of
the year                                           70 077       122 198

Reviewed condensed consolidated statement of changes in equity 
for the year ended 30 June 2018
                                      Share        Reverse
                                    capital          asset        Share
                                        and    acquisition       option
                                    premium        reserve      reserve
                                      R'000          R'000        R'000     
Balance at 1 July 2016              550 402       (282 988)           - 
Share-based payment reserve
movement                                  -              -          477
Total comprehensive profit
for the year                              -              -            - 
Balance at 30 June 2017             550 402       (282 988)         477
Share-based payment reserve
movement                                  -              -          817
Total comprehensive profit
for the year                              -              -            - 
Distribution/dividend paid          (37 902)             -            -
Balance at 30 June 2018             512 500       (282 988)       1 294

                                                       Non-
                                   Retained     controlling       Total
                                       loss        interest      equity
                                      R'000           R'000       R'000
Balance at 1 July 2016             (94 796)           2 316     174 934
Share-based payment reserve
movement                                 -                -         477
Total comprehensive profit
for the year                        55 756           39 773      95 529
Balance at 30 June 2017            (39 040)          42 089     270 940
Share-based payment reserve
movement                                 -                -         817
Total comprehensive profit
for the year                        38 248           33 662      71 910
Distribution/dividend paid               -          (20 828)    (58 730)
Balance at 30 June 2018               (792)          54 923     284 937


Notes to the reviewed provisional
Condensed consolidated results for the year ended 30 June 2018

1. Basis of preparation
These provisional condensed consolidated results have been prepared under the 
supervision of Jonathan Knowlden CA(SA), the financial director, in accordance
with IAS 34: Interim Financial Reporting, the framework concepts and the 
measurement and recognition requirements of International Financial Reporting 
Standards (IFRS) as issued by the International Accounting Standards Board 
(IASB), SAICA Financial Reporting Guides as issued by the Accounting Practices 
Committee, the Financial Reporting Pronouncements as issued by the Financial 
Reporting Standards Council, the requirements of the Companies Act and the 
Listings Requirements of the JSE Limited (JSE Listings Requirements).

The same accounting policies, presentation and measurement principles have 
been followed in the preparation of the provisional condensed consolidated 
results for the year ended 30 June 2018 as were applied in the preparation 
of the group's annual financial statements for the year ended 30 June 2017.

2. Auditor's review conclusion
These provisional condensed consolidated results for the year ended
30 June 2018 have been reviewed by BDO South Africa Incorporated, who 
expressed an unmodified conclusion. A copy of the auditor's review report 
is available for inspection at the company's registered office.

3. Distribution
A maiden distribution of 10,0 cents per share was declared on 1 September
2017 and paid to shareholders on 30 October 2017. No further distribution 
or dividend has been declared for the year under review.

4. Board
During the year under review, up to the date of this report, no changes 
were made to the board.

5. Changes in share capital
There were no changes to the issued share capital during the year 
under review.

6.Intangible assets
                                                Accumulated
                                                amortisaton
                                                        and    Carrying
                                       Cost     impairments       value
                                      R'000           R'000       R'000
30 June 2018
Platinum mineral rights              30 555        (10 394)      20 161
Chrome mineral rights               156 907        (28 058)     128 849
Total mineral rights                187 462        (38 452)     149 010
30 June 2017
Platinum mineral rights              30 555        (10 394)      20 161
Chrome mineral rights               154 714        (16 571)     138 143
Total mineral rights                185 269        (26 965)     158 304


Reconciliation
                       Opening                                  Closing
                       balance    Additions   Amortisation      balance
                         R'000        R'000          R'000        R'000
30 June 2018
Platinum mineral
rights                  20 161            -              -       20 161
Chrome mineral
rights                 138 143        2 193        (11 487)     128 849
Total mineral
rights                 158 304        2 193        (11 487)     149 010
30 June 2017
Platinum mineral
rights                  20 161            -              -       20 161
Chrome mineral
rights                 144 163          872         (6 892)     138 143
Total mineral
rights                 164 324          872         (6 892)     158 304



7. Property, plant and equipment
                                                      Mine
                                  Furniture         infra-
                         Motor   and office  structure and   
                      vehicles    equipment      equipment        Total
                         R'000        R'000          R'000        R'000
Cost
At 1 July 2017           2 849          191         10 497        13 537
Additions                  406          148         72 354        72 908
Disposals                 (257)           -              -          (257) 
At 30 June 2018          2 998          339         82 851        86 188
Accumulated depreciation
At 1 July 2017             796           56            805         1 657
Depreciation               460           75          1 080         1 615
Disposals                  (39)           -              -           (39) 
At 30 June 2018          1 217          131          1 885         3 233
Carrying value at
30 June 2018             1 781          208         80 966        82 955
Cost
At 1 July 2016           1 073           92            798         1 963
Additions                1 776          127          9 699        11 602
Disposals                    –          (28)             -           (28) 
At 30 June 2017          2 849          191         10 497        13 537
Accumulated
depreciation
At 1 July 2016             578           54            376         1 008
Depreciation               218           30            429           677
Disposals                    –          (28)             -           (28) 
At 30 June 2017            796           56            805         1 657
Carrying value at
30 June 2017             2 053          135          9 692        11 880

During the current year there were additions of R72,354 million (2017: 
R9,699 million) to mine infrastructure and equipment. The additions 
relate mainly to the development of the Moeijelijk underground mine of
R28,743 million (2017: R7,907 million), construction of the wash plant 
of R23,699 million (2017: nil) and capitalisation of the pre-stripping 
costs in accordance with IFRIC 20 of R17,624 million (2017: nil).

None of the items of property, plant and equipment have been encumbered.

8.Provision for rehabilitation
                                                     2018          2017
                                                    R'000         R'000
Balance at the beginning of the year                8 258         5 552
Movement in provision during the year
recognised in profit or loss                       (4 638)        2 706
Balance at the end of the year                      3 620         8 258
Due within one year or less                             -         4 870
Due after more than one year                        3 620         3 388

Environmental obligations are based on the group's environmental plans. 
Full provision is made based on the net present value of the estimated 
cost of restoring the environmental disturbance that has occurred up to 
the reporting date.

9. Other financial liabilities
                                                     2018          2017
                                                    R'000         R'000
Current liabilities
At amortised cost                                     461         1 425
Royalty taxes1                                        205             - 
Chrome ore advance receipt                              -         1 242
Other                                                 256           183
                                                      461         1 425

1 The amount relates to royalty taxes due according to the Mineral and
Petroleum Resources Royalty Act.

10. Operating segments
                                     Chrome        Platinum
                                   projects     exploration   Corporate
                                      R'000           R'000       R'000
30 June 2018
Revenue                             234 261               -      11 750
Profit/(loss) before tax            105 953               -      (1 096)
Taxation                            (32 947)              -           -
Profit/(loss) after tax              73 006               -      (1 096) 
Interest received                     5 433               -       2 452
Depreciation, amortisation
and impairment                      (13 048)              -         (54)
Investment in intangible
assets                                2 193               -           - 
Total assets                        283 124          20 161      26 448
Total liabilities                   (43 498)              -      (1 298)
30 June 2017
Revenue                             205 318               -      10 435
Profit before tax                   131 359               -       2 785
Taxation                            (38 615)              -           - 
Profit after tax                     92 744               -       2 785
Interest received                     1 913               -       2 074
Depreciation, amortisation
and impairment                       (7 543)              -         (26) 
Investment in intangible assets         872               -           -
Total assets                        249 058          20 161      45 036
Total liabilities                   (30 368)              -     (12 947)


                                                 Intragroup
                                                elimination       Total
                                                      R'000       R'000
30 June 2018
Revenue                                             (11 750)    234 261
Profit/(loss) before tax                                  -     104 857
Taxation                                                  -     (32 947) 
Profit/(loss) after tax                                   -      71 910
Interest received                                      (604)      7 281
Depreciation, amortisation and impairment                 -     (13 102) 
Investment in intangible assets                           -       2 193
Total assets                                         (6 963)    322 770
Total liabilities                                     6 963     (37 833)
30 June 2017
Revenue                                             (10 435)    205 318
Profit before tax                                         -     134 144
Taxation                                                  -     (38 615) 
Profit after tax                                          -      95 529
Interest received                                         -       3 987
Depreciation, amortisation and impairment                 -      (7 569) 
Investment in intangible assets                           -         872
Total assets                                        (11 673)    302 582
Total liabilities                                    11 673     (31 642)

Bauba’s segmental analysis is based on the Moeijelijk chrome project, 
platinum exploration and corporate activities. The group was reliant 
on one major customer in respect of chrome ore sales.

11. Earnings per share
                                                     2018          2017
                                                    R'000         R'000
Headline earnings reconciliation:
Profit attributable to equity holders of
the parent                                         38 248        55 756
Headline earnings                                  38 248        55 756
Basic earnings per share (cents)                    10,09         14,71
Diluted earnings per share (cents)                  10,02         14,65
Headline earnings per share (cents)                 10,09         14,71
Diluted headline earnings per share (cents)         10,02         14,65
Number of shares in issue at the end of the
year ('000)                                       379 020       379 020

Reconciliation of weighted average number 
of shares to diluted weighted average 
number of shares:
Weighted average number of shares ('000)          379 020       379 020
Dilutive effect of share options ('000)             2 560         1 563
Diluted weighted average number of shares ('000)  381 580       380 583

12. Fair value and financial instruments
The carrying value of all financial instruments approximates fair value. 
All financial instruments are measured at amortised cost.

13. Going concern
Despite the payment of a dividend/distribution of R58,730 million 
(2017: nil) and significant cash investment in the development of the 
Moeijelijk mine of R72,908 million (2017: R11,602 million), Bauba ended 
the 2018 financial year with a cash and cash equivalents balance of 
R70,077 million (2017: R122,198 million) and no interest-bearing borrowings.

The group has net current assets of R76,054 million (2017: R104,097 million) 
and shareholder’s equity of R284,937 million (2017: R270,940 million). The 
cash flow forecast prepared by Bauba management, based on current available 
information, indicates that the group will be able to meet its commitments 
within the next 12 months as they fall due. The group has sufficient 
resources to continue as a going concern and has therefore concluded that 
it is appropriate to prepare the provisional condensed consolidated results 
on a going concern basis.

14. Subsequent events
After year-end, Bauba successfully concluded an offtake agreement for the 
supply of 240 000t of chrome ore to be supplied over a 12-month period.
In August 2018, Bauba received a prepayment of R73,500 million which 
represents a part-payment of the offtake agreement.

The directors are not aware of any significant matter or circumstance 
arising since the end of the financial year, not otherwise dealt with 
in this report or the financial results, which significantly affects
the financial position of the group or the results of its operations 
to the date of this report.

30 August 2018
Johannesburg

Corporate information
Nature of business
Exploration and mining of mineral resources

Registration number 1986/004649/06

Country of incorporation
Republic of South Africa

Registered address
Cube Workspace
1 Wedgewood Link, Bryanston, Johannesburg, 2191
Republic of South Africa
Telephone +27 (0) 11 699 5720
Fax +27 (0) 11 388 3962
E-mail: info@bauba.co.za
Web: www.bauba.co.za

Postal address
PO Box 1658, Witkoppen, 2068



Directors
Non-executive
Mr NPJ van der Hoven
Mr M Luyt*
Mr SM Dolamo* 
Mr D Smith*
Dr NM Phosa
King TV Thulare (Alternate)
* Independent

Executive
Mr NW van der Hoven
Mr JA Knowlden

Company secretary
Merchantec Proprietary Limited

Bankers
Nedbank Limited

Transfer secretaries
Computershare Investor Services Proprietary Limited

Sponsor
Merchantec Capital

Auditors
BDO South Africa Incorporated

Attorneys
Venter de Villiers
Tabacks Legal Advisors


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