Wrap Text
Consolidated annual results for the year ended 30 September 2018
THARISA PLC
(Incorporated in the Republic of Cyprus with limited liability)
Registration number: HE223412
JSE share code: THA
LSE share code: THS
ISIN: CY0103562118
('Tharisa')
CONSOLIDATED ANNUAL RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2018
HIGHLIGHTS
REEF MINED
4.9 Mt down 3.0%
(2017: 5.0 Mt)
PGM PRODUCTION (5PGE+Au)
152.2 koz up 6.0%
(2017: 143.6 koz)
CHROME CONCENTRATE PRODUCTION
1.4 Mt up 8.8%
(2017: 1.3 Mt)
REVENUE
US$406.3 m up 16.3%
(2017: US$349.4 m)
OPERATING PROFIT
US$72.5 m down 26.3%
(2017: US$98.4 m)
EBITDA
US$101.9 m down 11.8%
(2017: US$115.6 m)
PROFIT BEFORE TAX
US$65.0 m down 28.6%
(2017: US$91.0 m)
EARNINGS AND HEADLINE EARNINGS PER SHARE
US$ 19 cents down 13.6%
(2017: US$ 22 cents)
PROPOSED TOTAL DIVIDEND
US$ 4 cents 20.5% of NPAT
(2017: US$ 5 cents)
Includes interim dividend of US$ 2 cents
LEADERSHIP REVIEW
Financial year ended 30 September 2018
Executive Chairman Loucas Pouroulis, Chief Executive Officer Phoevos Pouroulis and Chief Finance Officer
Michael Jones.
Dear Stakeholder
In compiling this report, we have been guided by materiality so that we report concisely on those issues most material
to our stakeholders and our ongoing ability to create value. More detailed information is available on our website,
www.tharisa.com
FY2018 was a year of record production achieved with increased plant throughput and metal recovery. The prill split of
the PGM concentrate, which favours palladium and rhodium, contributed to an overall increase in the PGM basket price
despite the lacklustre pricing seen in platinum. Metallurgical chrome concentrate prices were muted. Against the backdrop
of increased production volumes and prevailing commodity markets and notwithstanding material increases in both fuel
prices and freight rates, we still generated strong cash flows from operations. Our mining operations took a major step
forward, as we became owner operator of our mining fleet in the year under review. We also continued to effectively
leverage the business model with third party agency and trading activities. Our commitment to innovation is visible in the
improvements we delivered in processing, and we added further value via our extensive research and development activities.
We believe these strategic advances will lead to further improvements in production and provide a strong base for the
Company to continue its growth.
Tharisa Minerals recorded production of 152.2 koz of contained PGMs and production of 1.4 Mt of chrome concentrates
for the financial year. Of the chrome concentrates, 367.7 kt comprised higher value specialty grade products.
Tharisa is now firmly established as a trusted supplier of quality metallurgical chrome, specialty chrome and PGM
concentrates. This allowed us to begin the implementation of our diversification strategy, and we have secured early
mover optionality in two exploration projects on the mineral rich Great Dyke of Zimbabwe.
Our approach to growth has always been measured and deliberate. We believe this discipline has been central to the
success of the Tharisa story, which has led us to become a low cost, highly integrated and innovative co-producer of
PGMs and chrome.
During the year under review, the PGM basket price increased by US$137/oz on the back of the rally in the rhodium,
ruthenium, and iridium prices underpinned by strong palladium prices to average at US$923/oz. Palladium continued to
trade at a premium to platinum on the back of growing deficit forecasts. The platinum price, however, remained subdued,
trading at ten-year lows. Following the previous year where metallurgical chrome concentrates prices reached unprecedented
highs of approximately US$390/t, FY2018 saw chrome concentrate prices fall below US$200/t. This was mainly due to
increasing stock levels of chrome ores in Chinese main ports peaking at 3.8 Mt. The average metallurgical chrome
contract price achieved was US$186/t CIF China for FY2018.
Operating profit for the year amounted to US$72.5 million (2017: US$98.4 million), with a net profit after tax of
US$51.0 million (2017: US$67.7 million) generating HEPS of US$ 19 cents (2017: US$ 22 cents). Importantly the Group
generated net cash from operations of US$89.8 million (2017: US$75.7 million) and after taking into account the capex,
a free cash flow of US$49.3 million (2017: US$53.1 million).
It is the Group's policy to pay a minimum of 15% of its consolidated net profit after tax as a dividend. This year the
Group paid its maiden interim dividend of US$ 2 cents per share. The directors are pleased to announce that based on
solid earnings and subject to the necessary shareholder approvals, the Board has proposed a final dividend to shareholders
of US$ 2 cents per share, totalling US$ 4 cents for FY2018 (2017: US$ 5 cents), equating to 20.5% of its consolidated
net profit after tax.
The dividend pay out takes into consideration various factors, including overall market and economic conditions, the
Group's financial position, capital investment plans as well as earnings growth.
Safety
Safety is a core value and Tharisa continues to strive for zero harm at its operations. Tharisa achieved an LTIFR of
0.18 per 200 000 man hours worked at 30 September 2018 and was fatality free for the third year in succession. Tharisa
continues to implement appropriate risk management processes, strategies, systems and training to promote a safe working
environment for all.
In line with the Department of Mineral Resources' ('DMR') drive to minimise all injuries within the South African
mining industry, the Group is committed to ensuring a safer workplace. To that end, it is pleasing to report that Tharisa
Minerals was awarded a Best in Class safety award at MineSafe 2018 and in September 2018 the Tharisa operations achieved
4 000 fatality free production shifts.
South Africa
South Africa's DMR, under the leadership of Honourable Minister Gwede Mantashe, issued a new Mining Charter in October
2018, aimed at promoting much needed investment in the resources sector by ensuring greater investor certainty. While
Tharisa came into existence after new mining regulations were promulgated in 2004, we nevertheless welcome the new Mining
Charter, as it sets guidelines and structures for future investments. Given our further 15 year open pit life with a
potential further 40 year underground life at the Tharisa Mine, we are comfortable that this Mining Charter will bring
the necessary certainty we, as long-term investors, require.
Tharisa joined South Africa's Minerals Council this year, an industry body aimed at promoting dialogue between the
mining industry and government. We have joined the Platinum Leadership Forum, focusing on supporting and growing demand
for the platinum industry, and also proposed the formation of the Chrome Leadership Forum within the Minerals Council
structures. Chrome continues to play a significant role in South Africa's economy, with the country producing 16.6 Mt or
54.7% of global supply, and exports generating more than ZAR12.6 billion in revenue for the national current account.
Tharisa is the fourth largest primary producer of chrome in South Africa and accounts for 8.7% of South African chrome
production. PGM exports account for ZAR85.1 billion for the current account and Tharisa is the seventh largest producer
of PGMs in South Africa.
Operational overview
A number of milestones were achieved during the financial year including:
- 5.1 Mt ROM milled, an increase of 3.9%
- 84.1% overall PGM recovery, an increase of 5.5%
- 152.5 koz 5PGE + Au contained PGM production, up by 6.0%
- 66.0% chrome recovery, an increase of 3.0%
- 1.4 Mt production of chrome concentrates from the Tharisa operations, up by 8.8%
- 367.7 kt specialty grade chrome production, an increase of 13.8%
- exceeded targeted production at Lonmin K3 chrome plant by 10.9% at 221.8 kt
- 1.6 Mt of chrome concentrates sold, an increase of 24.8%
Mining
Tharisa's mining division mined 4.9 Mt of ROM for FY2018, a 3.0% decrease year on year. A total of 11.1 Mm3 of waste
was moved for the year. Whilst the stripping ratio of 7.9 on a m3:m3 basis remained below the LOM average of 9.5, it
represented a 5.3% increase from the previous year. There was a reduction in year on year mining, mainly due to
availability of equipment. This was as a result of an ongoing comprehensive maintenance plan to return the used mining fleet,
purchased by Tharisa from the previous contractor, to OEM standards. The implementation of the necessary maintenance systems
will see availability and utilisation increasing for FY2019, enabling the fleet to achieve the required mining rate of
5.2 Mtpa. A key focus of the mining division is improving the efficiencies of the drill and blast operations, which is
essential to achieving the required stripping ratio. This will ensure ongoing access to the reef horizons and maintaining
the supply of ore to the processing plants. The introduction and implementation of systems and connectivity across the
mining fleet coupled with state of the art simulator operator training are key focus areas for the Tharisa mining division
to achieve the same levels of integration and efficiency as has been achieved in the processing division. The mining
operations are transitioning to a 24 hour four shift operation, thereby increasing mining capacity by approximately 15%.
Processing
Plant throughput for FY2018 at 5.1 Mt exceeded the nameplate capacity. This is attributable to consistent feed and
preventative maintenance resulting in improved plant availability and utilisation. The further optimisation of the high
energy PGM flotation circuit at the Genesis Plant further increased recoveries.
With a PGM rougher feed grade of 1.51 g/t and recoveries improving to 84.1% (against a target of 80%), PGM production
(5PGE + Au) was 152.2 koz, an improvement of 6.0%. Chrome feed grade was 18.2% and with chrome recoveries improving to
66.0% (target 65%), chrome concentrate production increased by 8.8% to 1.4 Mt. The production of specialty grade chrome
concentrates of 367.7 kt increased 13.8% and constitutes approximately 25.4% of total chrome concentrate production.
Specialty grade chrome concentrates continue to command on average a US$50/t premium on a CIF China equivalent basis
over standard metallurgical grade chrome concentrates.
Arxo Metals surpassed its chrome concentrate production target at the Lonmin K3 chrome plant by 10.9%, to produce
221.8 kt of chrome concentrates mainly through applying the operational skills and standards deployed at the Tharisa
processing division. Further upgrades are proposed for the K3 plant in FY2019 which, if implemented, will see further
improvements in chrome production.
Vision 2020
The Vision 2020 projects are targeting an increase in Tharisa Minerals' production to 200 kozpa of PGMs and 2.0 Mt of
chrome concentrates by the end of 2020 on an annualised basis.
The optimisation projects and additional processing plants, together with improved mining grade, are planned to add
40 kozpa of PGMs and 500 ktpa of chrome concentrates to the Tharisa Mine's annual production guidance for FY2019 of
160 kozpa of PGMs and 1.5 Mt of chrome concentrates.
Upgrade of the crusher circuit at the Genesis Plant
The additional crusher circuit at the Genesis Plant was commissioned in Q1 FY2019. The 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
grade chrome concentrates by adding approximately 24 ktpa of chemical grade chrome concentrate with, approximately
18 ktpa of foundry grade chrome concentrate and approximately 19 ktpa of metallurgical grade chrome concentrate.
PGM optimisation at the Voyager Plant
The addition of flotation capacity and the installation of 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 being implemented in a
staged approach. The first phase of the project, the increase in high grade flotation capacity, has been commissioned.
The second phase of the project will be implemented in FY2019.
Vulcan Fine Chrome Recovery Plant
The construction of the Vulcan Plant will facilitate additional recovery of fine chrome from tailings streams. This
proprietary process has been developed by Arxo Metals and a demonstration scale plant has been commissioned at Tharisa
Minerals and through systematic operation has proven the concept and process flow. The feasibility study based on the
operation of the demonstration scale plant has been concluded. An engineering company has been awarded the FEED study.
Apollo PGM and Chrome Plant
A decision has been taken to suspend the Apollo Plant project. This is in light of the additional testwork and studies
that indicate the potential for an additional PGM recovery circuit following the Vulcan Plant, which would yield a
better investment return.
Exploration projects
Our exploration focus is on the Great Dyke in Zimbabwe, which, just like our existing operations in the Bushveld
Complex in South Africa, represents a unique, resource rich geological formation. We believe that being an early mover
in this territory positions us strategically to benefit from current reforms that are transforming the mining sector in
Zimbabwe. Our approach in developing these exciting projects will be gradual, staged and measured, with the necessary
protections and approvals in place before we commit capital.
Karo Mining Holdings
In June 2018, Tharisa acquired a 26.8% shareholding in Karo Mining Holdings at a low-cost entry point of US$4.5 million.
Karo Mining Holdings has been awarded a Special Grant over an area covering 23 903 ha on the Great Dyke of Zimbabwe.
In terms of the Investment Project Framework Agreement with the Government of Zimbabwe, the plan is to establish a
vertically integrated PGM mining complex. Based on historic testwork, this area is purported to contain some 96 Moz
of PGMs at an average grade of 3.2 g/t (3PGE + Au).
Salene Chrome Zimbabwe
Tharisa was granted a call option to acquire a 90% shareholding in Salene Chrome Zimbabwe, exercisable on completion
of the exploration programme. Salene Chrome Zimbabwe was awarded three Special Grants covering an area of approximately
9 500 ha on the eastern side of the Great Dyke in Zimbabwe. The Special Grants entitle Salene Chrome Zimbabwe to mine
the minerals thereon, including illuvial chrome, which are at surface chrome fines generated from seams as a result of
weathering. Salene Chrome Zimbabwe has also been awarded three additional Prospecting Special Grants on the western
side of the Great Dyke, over an area of approximately 12 000 ha.
Research and development
Our approach to research and development is founded in our core value of innovation. We strive to push through
established boundaries and limitations within existing processing and product development, optimizing processes and
challenging convention. The successful commissioning and operation of our PGM DC smelter is a case in point. We have
successfully produced 12 t of smelter matte and are in the process of commissioning our PGM converter to upgrade the
matte to an alloy with a 6 to 10-fold upgrade in the PGM concentration per tonne. The development of this downstream
beneficiation of our PGMs is part of our philosophy of capturing value and margin down the supply chain and ultimately
being in control of metal flows through direct sales. On fulfillment of the current Tharisa Mineral's PGM offtake
obligation, the intention would be to construct a larger smelter and refining complex to refine our PGMs to final
concentrate or refined metal, subject to final viability.
The proprietary Vulcan process was developed in-house and has proven to be economically viable in the recovery of fine
chrome particles that traditionally have not been recoverable within the chrome industry. FY2019 will see the
commencement of the construction of the full scale 500 tph Vulcan Plant with an estimated completion in Q2 2020.
Commodity markets and sales
30 September 30 September Change
2018 2017 %
PGM basket price US$/oz 923 786 17.4
PGM basket price ZAR/oz 12 038 10 492 14.7
42% metallurgical grade chrome
concentrate contract price US$/t 186 200 (7.0)
42% metallurgical grade chrome
concentrate contract price ZAR/t 2 415 2 667 (9.4)
Exchange rate ZAR:US$ 13.1 13.4 (2.2)
Tharisa Minerals continues to supply the majority of its PGM concentrate to Impala Platinum in terms of its offtake
agreement, with the balance of the PGM concentrate processed in the 1MW research and development furnace that was
recently commissioned and/or sold to Lonmin.
A total of 152.2 koz of contained PGMs (on a 5PGE + Au basis) was sold during the year. This is an increase of
6.1% over the previous year's sales of 143.5 koz of contained PGMs (on a 5PGE + Au basis).
The PGM prill split by mass is as follows:
30 September 30 September
2018 2017
Platinum 54.9% 55.2%
Palladium 16.7% 16.1%
Rhodium 9.8% 9.5%
Gold 0.2% 0.2%
Ruthenium 14.0% 14.3%
Iridium 4.4% 4.7%
Tharisa Minerals is paid a variable percentage of the market value of the contained PGMs in terms of an agreed
formula. The PGM basket price improved, with the average PGM basket price per ounce increasing by 17.4% to
US$923/oz (2017: US$786/oz) for the financial year.
Tharisa's own chrome concentrate sales totalled 1.4 Mt, 371.9 kt of which was higher value-add specialty chemical and
foundry grade chrome concentrates with the bulk of the sales being metallurgical grade chrome concentrate. The average
price for metallurgical grade chrome concentrate on a CIF main ports China basis decreased to US$186/t (2017: US$200/t).
Third party sales amounted to 216.6 kt for the year, resulting in Tharisa marketing and selling a total of 1.6 Mt of
chrome concentrate products during the year.
Logistics
30 September 30 September Change
2018 2017 %
Average transport cost per tonne
of chrome concentrate - CIF China basis US$/t 62 52 19.2
Chrome concentrates shipped
(including third party materials) kt 1 247.8 995.8 25.3
The chrome concentrates destined for main ports in China were shipped either in bulk from the Richards Bay Dry Bulk
Terminal or via containers and transported from Johannesburg by road to Durban for shipment. The economies of scale
and in-house expertise have ensured that our transport costs, a major cost of the group, remain competitive.
Arxo Logistics has sufficient storage capacity at both the Richards Bay Dry Bulk Terminal and the Durban container
port to manage Tharisa Minerals' full production capacity.
A total of 1.3 Mt (2017: 995.8 kt) of chrome concentrates was shipped by Arxo Logistics in FY2018, mostly to main
ports in China. Of this, 99.6% was shipped in bulk, with bulk shipments being preferred by customers due to ease of
handling and reduced port charges, as well as reduced levels of administration.
Arxo Logistics provided third party logistics services during the period under review and is planning to expand this
service offering in the year ahead.
Labour relations
Labour relations at the Tharisa Mine remained stable during the year. The establishment of the in-house Tharisa mining
division saw the recognition of AMCU as the majority trade union representing employees at the Tharisa Mine. Tharisa
Minerals and AMCU have concluded a two year wage agreement post year end.
Sustainability
Sustainability is at the heart of the business model. Tharisa is proud of its track record in minimising the
environmental impact of its operations and, while striving to improve further, takes pride in the mature and mutually
beneficial relationships with the communities that border the Tharisa Mine.
Tharisa Minerals not only understands its obligations to create social capital as enshrined in the Minerals and
Petroleum Resources Development Act, but also strives to achieve these obligations in ways that create ongoing
sustainable social capital. Its commitment to the neighbouring communities is evidenced in all aspects of the
business, not only from the corporate social initiatives and local economic development plans, but also underpinned
by equity ownership by the community in Tharisa Minerals.
Tharisa has policies in place to ensure that neither it nor its suppliers participate in any form of human rights
violation, including human trafficking and modern slavery.
Tharisa acts ethically and with integrity in all business dealings and is committed to ensuring systems and controls
are in place to safeguard against corruption.
Financial overview
The financial results of the Group benefited from the co-product business model with increased revenue from higher
volume sales for both PGMs and chrome concentrates while the commodity prices reflected opposing trends. The PGM basket
price increased by 17.4% to US$923/oz (2017: US$786/oz), benefiting from the prill split favouring palladium (at 16.7%)
and rhodium (at 9.8%). The metallurgical grade chrome concentrate price decreased by 7.0% to US$186/t (2017: US$200/t)
with specialty grade chrome concentrates comprising 25.6% of concentrate sales and continuing to trade at a premium
of at least US$50/t on a CIF equivalent basis to the metallurgical grade sales prices.
The Group commodities are priced in US$ and the base cost currency for the Group mining operations, being South
African, is mainly in ZAR. While the ZAR exchange rate was volatile over the financial year, on average the exchange
rate strengthened by 2.2% at ZAR13.1 to the US$ (2017: ZAR13.4 to the US$).
The funding position of the Group was impacted by the leveraged purchase of the mining fleet with the transition to an
owner mining model effective 1 October 2017, with the overall gearing (total interest bearing debt to total equity) of
the Group at 25.8% (2017: 19.9%). With the strong net cash flows from operations the net debt to total equity was 3.3%.
Group revenue totalled US$406.3 million (2017: US$349.4 million) of which US$117.4 million was derived from the sales
of PGM concentrate and US$250.4 million was derived from the sale of chrome concentrates. The agency and trading segment
contributed US$38.5 million. This is an increase in revenue of 16.3% relative to the prior year.
On a segmental basis, the increase in revenue is as a result of an increase in:
- unit sales of PGMs by 6.1% from 143.5 koz to 152.2 koz with an increase in the PGM basket price by 17.4% from
US$786/oz to US$923/oz
- unit sales of metallurgical grade chrome concentrates by 6.5% from 995.8 kt to 1 060.3 kt notwithstanding a
decrease in the metallurgical grade chrome concentrate price of 7.0% from US$200/t to US$186/t
- unit sales of specialty grade chrome concentrates (25.4% of production) by 13.2% from 321.5 kt to 364.0 kt
- third party trading and logistics businesses building on the existing platforms, which contributed US$38.5 million
to revenue.
Other income includes an amount of US$1.9 million being non-recurring income relating to the gain on the bargain
purchase of the mining fleet. Other than for this amount, there have been no other non-recurring or exceptional
income sources during the period.
Gross profit amounted to US$108.5 million (2017: US$122.7 million) with a gross profit margin of 26.7% (2017: 35.1%).
The reduction in the gross profit margin may be attributed to a number of above inflation cost pressures and a change
in the fixed cost element, particularly within mining. The mining fleet has installed capacity to move the required waste
(both overburden and interburden) and mine the required ROM to at least produce the market guidance production for
FY2019 of 160 koz of PGMs and 1.5 Mt of chrome concentrates. This installed capacity has an embedded fixed cost
component, whereas with a mining contractor model, the costs were variable being based on the volumes moved. Diesel
consumption comprises 13.7% of the on-mine cost of production and, with the increase in the average Brent crude price
by US$55.2/bbl to US$78.9/bbl, the price per litre of diesel increased on average by 38.4% per litre. Overall
inflationary pressures in South Africa as measured by the PPI averaged 6.2% (2017: 5.2%).
Furthermore, selling costs incurred with the transport of the metallurgical grade chrome concentrate from the mine to
the customer at main ports China increased by 19.2% from US$52.0/t to US$62.0/t, the majority of this increase related
to an increase in freight costs.
As a co-producer of PGMs and chrome concentrates, the shared costs of production for segmental reporting purposes are
based on the relative contribution to revenue on an ex-works basis, allocated 50% to the PGM segment and 50% to the
chrome segment. This is in accordance with the accounting policy of the Group and IFRS. The comparable period allocations
were 35% to the PGM segment and 65% to the chrome segment. The change to the basis of allocation of the shared costs is,
in effect, a 42.9% increase in respect of the allocation to the PGM segment and a 23.1% decrease in respect of the
allocation to the chrome segment.
The segmental contribution to revenue and gross profit from the respective segments is summarised below:
30 September 2018 30 September 2017
Agency and Agency and
US$ millions PGM Chrome trading Total PGM Chrome trading Total
Revenue 117.4 250.4 38.5 406.3 90.9 252.9 5.6 349.4
Cost of sales 88.2 174.7 34.9 297.8 54.7 166.7 5.3 226.7
Costs of sales
excluding selling
costs 87.8 106.5 21.6 215.9 54.3 107.6 4.2 166.1
Selling costs 0.4 62.8 13.3 81.9 0.4 59.1 1.1 60.6
Freight services - 19.8 3.6 23.4 - 14.3 - 14.3
Gross profit
contribution 29.2 75.7 3.6 108.5 36.2 86.2 0.3 122.7
Gross profit margin 24.9% 30.2% 9.4% 26.7% 39.8% 34.1% 5.4% 35.1%
Sales volume 152.2 koz 1 429.6 kt 143.5 koz 1 317.3 kt
In addition to the inflationary pressures detailed above, the PGM segment gross profit margin of 24.9% (2017: 39.8%)
was lower than the previous year, mainly due to the revised basis of allocating shared costs.
The chrome segment gross profit margin of 30.2% (2017: 34.1%) was lower than the year before largely due to the
decrease in the chrome concentrate sales price and increased transport costs notwithstanding benefitting from the
reduction in the basis of allocation of the shared production costs. Freight costs for bulk shipments of chrome
concentrates, a significant component of the cost of chrome sales, increased by 38.4% from US$13.8/t to US$19.1/t
resulting in the average transport cost per chrome tonne increasing from US$52.0/t to US$62.0/t.
The agency and trading segment contributed US$3.6 million to the Group gross profit at a margin of 9.4%.
On a unit cost basis, the reef mining cost per tonne increased by 11.7% from US$18.8/t to US$21.0/t. This cost
per reef tonne was incurred on a stripping ratio of 7.9 (m3 waste : m3 reef). On a per cube mined basis i.e.
including both waste and reef, the cost increased by 3.8% from US$7.9/m3 to US$8.2/m3 (the prior year stripping
ratio was 7.5).
Administrative expenses increased from US$26.9 million to US$39.2 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 (training, time and attendance, procurement, human resource and safety)
necessary as an owner miner. After accounting for administrative expenses, the Group achieved an operating profit of
US$72.5 million (2017: US$98.4 million).
The consolidated cash cost per tonne milled (i.e. including mining but excluding transport and freight) increased by
7.4% from US$34.9/t to US$37.5/t.
EBITDA amounted to US$101.9 million (2017: US$115.6 million).
Finance costs (totalling US$10.2 million) principally relate to the term loan and various OEM financing facilities due
by Tharisa Minerals for the funding of mining fleet additions, the trade finance facilities of Arxo Resources and the
limited recourse discounting of the PGM receivables.
The Group generated a profit before tax of US$65.0 million compared to the comparable period of US$91.0 million.
The tax charge amounted to US$14.0 million, an effective rate of 21.6%. The cash tax paid amounted to US$5.5 million.
The Group has fully utilised its tax losses however, as at the year end, the Group had unredeemed capex for tax
purposes available for off-set against taxable mining income of US$111.1 million. The net deferred tax liability
amounted to US$28.0 million.
Basic earnings per share for the year amounted to US$ 19 cents (2017: US$ 22 cents) with headline earnings per share
of US$ 19 cents (2017: US$ 22 cents). Diluted earnings per share were USS$ 18 cents (2017: US$ 22 cents), with diluted
headline earnings per share of US$ 19 cents (2017: US$ 22 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. Consequently, the amount held in the debt service reserve account
is now available to the Group. The corporate facilities have not been drawn. In addition, US$37 million of financing
facilities from original equipment manufacturers and asset backed facilities were arranged of which US$23.2 million was
drawn at year end. Arxo Resources secured a US$20 million trade finance facility to fund pre-shipment chrome concentrate
sales pipelines. As at the year end the facility was not yet accessed.
The total debt amounted to US$77.4 million, resulting in a debt to total equity ratio of 26.0%. This exceeds the
long-term targeted debt to equity ratio of 15% principally due to the leveraged purchase of the mining fleet.
Tharisa had cash and cash equivalent of US$66.8 million at year end resulting in a net debt to total equity ratio
of 3.3%.
The current capex spend focused on stay in business capex, mining fleet additions to optimise the fleet and ongoing
projects aimed at improving recoveries of both PGMs and chrome concentrates. Additions to property, plant and equipment
for the year amounted to US$48.2 million of which US$23.4 million related to additions to the mining fleet including
US$6.9 million related to right of use (leased) assets. This is in addition to the US$21.5 million paid for the
acquisition of the mining fleet. The depreciation charge amounted to US$29.9 million (2017: US$16.9 million). The mining
fleet was purchased from the mining contractor at a discount to the replacement value thereby having a favourable
impact on the current depreciation charge.
The environmental rehabilitation provision was historically calculated based on the rates as prescribed by the DMR
escalated by South African CPI. In the current year, the Group reviewed the basis of its estimates and judgements and
the basis for the calculation of the environmental rehabilitation provision was amended to that of prevailing commercial
rates.
The Company acquired a 26.8% shareholding in Karo Mining Holdings Limited for a cash consideration of US$4.5 million.
This investment is accounted for using the equity method.
The Company has an option to acquire a 90% shareholding in Salene Chrome Zimbabwe (Pvt) Limited. It has a commitment
to fund the exploration spend of up to US$3.2 million. This investment is accounted for as other financial asset at
the cost of the exploration spend.
The Group generated net cash from operations of US$89.8 million (2017: US$75.7 million) and after taking into
account the capex and a free cash flow of US$49.3 million (2017: US$53.1 million). Cash on hand amounted to
US$66.8 million (2017: US$49.7 million).
There is continued focus on working capital management, with the current ratio at 2.0 times.
The Group has early adopted IFRS 9 Financial Instruments, IFRS 15 Revenue from Contracts with Customers and IFRS 16
Leases. The Group entered into a number of new lease agreements for the addition of mining fleet subsequent to 30
September 2017 and consequently decided to early adopt these standards. The early adoption resulted in negligible
adjustments to retained earnings at 1 October 2017.
From time to time, the Group concludes transactions with related parties. These transactions are disclosed in the
ensuing condensed consolidated annual financial statements (refer to note 23).
Dividend
In accordance with Tharisa's dividend policy of distributing at least 15% of annual net profit after tax, the board
has proposed a final dividend of US$ 2 cents per ordinary share, subject to the necessary shareholder approval.
The Company declared its first interim cash dividend during the year of US$ 2 cents per share.
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 Huachuang Singapore Pte Ltd, which respectively hold 7.44%
and 1.98% of Tharisa's issued share capital with voting rights as at 30 September 2018.
Outlook
Our unique co-product mix, coupled with an open pit mine ensures we remain consistently at the low end of the
production cost curve and, while we believe commodity prices will remain stable, we are well insulated against
price volatility.
That said, fundamentals for the global stainless steel market support stable demand for chrome concentrates.
Our specialty chrome products are in demand and given the premium pricing of this product, we benefit from
strong margins.
The maturation of the business beyond the development stage has positioned the Group to implement the next phase
of growth. The focus is not only on continuous improvements in feed grade and recoveries, but on expanding the
business into new jurisdictions.
The production outlook for FY2019 is 160 koz of PGMs and 1.5 Mt of chrome concentrates, of which 375 kt will be
specialty grade chrome concentrates. Our vision for 2020 is to produce 200 koz of PGMs and 2.0 Mt of chrome
from the Tharisa Mine, on an annualised basis.
The management team is positive about the prospects for the year ahead and believes that with the various expansion
plans, a strong focus on our mining division delivering quality ROM and managing the extensive yellow fleet to OEM
standards, economies of scale will be demonstrated through reduced unit costs and increasing operating margins.
Ultimately, our success is measured by our consistent operational and financial delivery, and we have again set
ourselves robust targets in line with our drive to grow this business. We are confident of meeting these as we
deliver against our Vision 2020 strategy.
We thank our Board, management, employees, customers, suppliers and partners who have assisted the Company during
this profitable year.
CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2018
The condensed consolidated financial statements for the year ended 30 September 2018 have been extracted from the
audited financial statements of the Group, but have not been audited. The auditor's report on the audited financial
statements does not report on all of the information contained herein. Shareholders are therefore advised that in
order to obtain a full understanding of the financial position and results of the Group, these condensed
consolidated financial statements should be read together with the full audited financial statements and
full audit report.
These condensed consolidated financial statements and the audited financial statements, together with the audit
report, are available on the Company's website, www.tharisa.com and are available for inspection at the
registered address of the Company.
The directors take full responsibility for the preparation of this report and the correct extraction of the financial
information from the underlying financial statements.
The directors of the Company are responsible for the maintenance of adequate accounting records and the preparation of
the financial statements and related information in a manner that fairly presents the state of affairs of the Company.
These financial statements are prepared in accordance with International Financial Reporting Standards and incorporate
full and responsible disclosure in line with the accounting policies of the Group, which are supported by prudent
judgement.
The directors are also responsible for the maintenance of effective systems of internal control, which are based on
established organisational structure and procedures. These systems are designed to provide reasonable assurance
as to the reliability of the financial statements, and to prevent and detect material misstatement and loss.
The consolidated financial statements have been reported on without qualification by Ernst & Young Cyprus Limited.
The preparation of these condensed results was supervised by the Chief Finance Officer, Michael Jones, a Chartered
Accountant (SA).
The condensed consolidated financial statements have been prepared on a going concern basis, as the directors believe
that the Company and Group will continue to be in operation in the foreseeable future.
The consolidated annual financial statements have been approved by the Board on 26 November 2018.
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
For the year ended 30 September 2018
2018 2017
Notes US$'000 US$'000
Revenue 5 406 268 349 443
Cost of sales 6 (297 782) (226 789)
Gross profit 108 486 122 654
Other income 2 432 160
Net foreign exchange gain 852 2 458
Administrative expenses 7 (39 232) (26 903)
Results from operating activities 72 538 98 369
Finance income 1 279 1 122
Finance costs (10 189) (7 689)
Changes in fair value of financial assets
at fair value through profit or loss 1 262 (813)
Changes in fair value of financial liabilities at
fair value through profit or loss 155 -
Share of loss of investment accounted for using
the equity method (62) -
Profit before tax 64 983 90 989
Tax 8 (14 011) (23 316)
Profit for the year 50 972 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 (10 663) (387)
Other comprehensive income, net of tax (10 663) (387)
Total comprehensive income for the year 40 309 67 286
Profit for the year attributable to:
Owners of the company 48 433 57 601
Non-controlling interest 2 539 10 072
50 972 67 673
Total comprehensive income for the year attributable to:
Owners of the company 41 790 57 451
Non-controlling interest (1 481) 9 835
40 309 67 286
Earnings per share
Basic earnings per share (US$ cents) 9 19 22
Diluted earnings per share (US$ cents) 9 18 22
The notes are an integral part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
For the year ended 30 September 2018
2018 2017
Notes US$'000 US$'000
Assets
Non-current assets
Property, plant and equipment 10 264 311 232 559
Goodwill 804 838
Investment accounted for using the equity method 11 4 438 -
Long-term deposits - 4 505
Other financial assets 12 5 012 3 767
Deferred tax assets 13 1 880 1 952
Total non-current assets 276 445 243 621
Current assets
Inventories 14 23 043 20 802
Trade and other receivables 15 86 202 70 374
Contract assets 2 229 -
Other financial assets 986 49
Current taxation 228 132
Cash and cash equivalents 16 66 791 49 742
Total current assets 179 479 141 099
Total assets 455 924 384 720
Equity and liabilities
Share capital and premium 17 280 806 280 342
Other reserve 17 47 245 47 245
Foreign currency translation reserve (80 204) (73 561)
Retained earnings 77 025 42 877
Equity attributable to owners of the Company 324 872 296 903
Non-controlling interests (26 538) (25 057)
Total equity 298 334 271 846
Non-current liabilities
Provisions 18 12 634 6 923
Borrowings 19 27 281 4 375
Deferred tax liabilities 13 29 892 23 823
Total non-current liabilities 69 807 35 121
Current liabilities
Borrowings 19 50 138 45 026
Other financial liabilities 1 000 599
Current taxation 1 013 212
Trade and other payables 20 33 403 31 916
Contract liabilities 2 229 -
Total current liabilities 87 783 77 753
Total liabilities 157 590 112 874
Total equity and liabilities 455 924 384 720
The condensed consolidated financial statements were authorised for issue by the Board of Directors on
26 November 2018.
Phoevos Pouroulis Michael Jones
Director Director
The notes are an integral part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 September 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 27 - - - - (2 570) (2 570) - (2 570)
Issue of ordinary shares 17 3 3 076 - - - 3 079 - 3 079
Equity-settled share
based payments 17 - - - - 1 331 1 331 - 1 331
Deferred tax on equity-settled
share based payments 13 - - - - 861 861 - 861
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
The notes are an integral part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 September 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 2017 260 280 082 47 245 (73 561) 42 877 296 903 (25 057) 271 846
Impact of adopting IFRS 16 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 year
Profit for the year - - - - 48 433 48 433 2 539 50 972
Other comprehensive income:
Foreign currency
translation differences - - - (6 643) - (6 643) (4 020) (10 663)
Total comprehensive
income for the year - - - (6 643) 48 433 41 790 (1 481) 40 309
Transactions with
owners of the Company
Contributions by and
distributions to owners
Dividends paid 27 - - - - (18 214) (18 214) - (18 214)
Issue of ordinary shares 17 1 463 - - - 464 - 464
Equity-settled share
based payments 17 - - - - 3 638 3 638 - 3 638
Deferred tax on of
equity-settled share
based payments 13 - - - - 306 306 - 306
Contributions by owners
of the Company 1 463 - - (14 270) (13 806) - (13 806)
Total transactions with
owners of the Company 1 463 - - (14 270) (13 806) - (13 806)
Balance at 30 September 2018 261 280 545 47 245 (80 204) 77 025 324 872 (26 538) 298 334
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-Cypriot tax resident individuals.
Retained earnings is the only reserve that is available for distribution.
The notes are an integral part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 September 2018
2018 2017
Notes US$'000 US$'000
Cash flows from operating activities
Profit for the year 50 972 67 673
Adjustments for:
Depreciation of property, plant and equipment 10 29 858 16 929
Loss on disposal of property, plant and equipment 37 196
Gain on bargain purchase 21 (1 884) -
Share of loss of investment accounted for using
the equity method 11 62 -
Impairment loss on goodwill - 57
Impairment (reversal)/loss on inventory (13) 24
Impairment and write off of property, plant and equipment 10 3 897 -
Changes in fair value of financial assets at fair value
through profit or loss (1 262) 813
Changes in fair value of financial liabilities at
fair value through profit or loss (155) -
Interest income (1 279) (1 122)
Interest expense 10 189 7 689
Tax 14 011 23 316
Equity-settled share based payments 4 019 4 342
108 452 119 917
Changes in:
Inventories (2 326) (5 063)
Trade and other receivables and contract assets (19 491) (21 839)
Trade and other payables and contract liabilities 2 979 (15 068)
Provisions 5 614 1 792
Cash from operations 95 228 79 739
Income tax paid (5 457) (3 990)
Net cash flows from operating activities 89 771 75 749
Cash flows from investing activities
Interest received 1 172 708
Additions to property, plant and equipment 10 (40 454) (26 398)
Net cash outflow from business combination 21 (21 840) -
Proceeds from disposal of property, plant and equipment 119 -
Additions to investments accounted for using
the equity method 11 (2 500) -
Additions to other financial assets (4 008) (925)
Refund of long term deposits 7 110 5 726
Net cash flows used in investing activities (60 401) (20 889)
Cash flows from financing activities
Net proceeds from bank credit facilities 19 114 6 073
Advances received 19 68 220 -
Repayment of borrowings 19 (48 503) (17 917)
Lease payments 19 (6 463) -
Dividends and capital distribution paid 27 (18 214) (2 570)
Interest paid (6 619) (6 371)
Net cash flows used in financing activities (11 465) (20 785)
Net increase in cash and cash equivalents 17 905 34 075
Cash and cash equivalents at the beginning of the year 49 742 15 826
Effect of exchange rate fluctuations on cash held (856) (159)
Cash and cash equivalents at the end of the year 16 66 791 49 742
The notes below are an integral part of these condensed consolidated financial statements.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 September 2018
1. REPORTING ENTITY
Tharisa plc (the Company) is a company domiciled in Cyprus. These condensed consolidated financial statements
of the Company for the year ended 30 September 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 condensed consolidated financial statements have been prepared in accordance with the Listings Requirements
of the Johannesburg Stock Exchange and as a minimum, contain the information required by International Accounting
Standards 34 Interim Financial Reporting. 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 condensed consolidated financial statements do not include all the information
required for full consolidated financial statements prepared in accordance with International Financial
Reporting Standards ('IFRS'). The condensed consolidated financial statements should be read in conjunction
with the consolidated financial statements for the year ended 30 September 2018, which have been prepared
in accordance with IFRS and the Cyprus Companies Law, Cap.113.
These condensed consolidated financial statements were approved by the Board of Directors on 26 November 2018.
Use of estimates and judgements
Preparing the 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 condensed consolidated financial statements, significant judgements made by management
in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as
those applied to the consolidated financial statements at and for the year ended 30 September 2018.
Functional and presentation currency
The condensed consolidated financial statements are presented in United States Dollars (US$) which is the
Company's functional and presentation currency. 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 consolidated financial statements and the 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 year ended 30 September 2018.
Other than IAS 7: Disclosure Initiative (Amendment) as disclosed in note 19, these did not have an impact
on the condensed consolidated financial statements of the Group.
3. CHANGE IN ACCOUNTING POLICIES
IFRS 9 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.
Classification
The Group classifies its financial instruments in the following categories:
(i) At fair value through profit or loss
(ii) At fair value through other comprehensive income
(iii) 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:
Original classification New classification
Financial assets IAS 39 IFRS 9
Long-term deposits Amortised cost Amortised cost
Other financial assets
Investments in money markets, Fair value through profit or loss Fair value through profit or loss
current accounts, cash funds
and 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
Option to acquire shares Fair value through profit or loss Fair value through profit or loss
Trade and other receivables Amortised cost Amortised cost
Contract asset Amortised cost Amortised cost
PGM receivable Held for trading Fair value through profit or loss
Cash and cash equivalents Amortised cost Amortised cost
IFRS 9 Financial Instruments (continued)
Original classification New classification
Financial liabilities IAS 39 IFRS 9
Borrowings Amortised cost Amortised cost
Discount facility Fair value through profit or loss Fair value through profit or loss
Trade and other payables Amortised cost Amortised cost
Contract liability 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
The classification of financial assets at initial recognition depends on the financial asset's contractual
cash flow characteristics and the Group's business model for managing them. In order for a financial asset
to be classified and measured at amortised cost, it needs to give rise to cash flows that are 'solely payments
of principal and interest' ('SPPI') on the principal amount outstanding. This assessment is referred to as the
SPPI test and is performed at an instrument level.
The Group's business model for managing financial assets refers to how it manages its financial assets in order
to generate cash flows. The business model determines whether cash flows will result from collecting contractual
cash flows, selling the financial assets, or both.
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.
Derecognition: 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 equity.
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 profit or loss.
Hedge accounting
The Group does not apply hedge accounting.
Impact of adopting IFRS 9 on the Group's 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.
IFRS 15 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 IAS 18 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 in the accounting policies.
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
Sales revenue is recognised on individual sales when control transfers to the customer. Control transfers to the
customer upon satisfaction of performance obligations within each contract. In most instances, control passes
and sales revenue is recognised when the product is delivered to the vessel or vehicle on which it will be
transported once loaded, the destination port or the customer's premises. There may be circumstances when
judgment is required based on the five indicators of control below.
- The customer has the significant risks and rewards of ownership and has the ability to direct the use of,
and obtain substantially all of the remaining benefits from the good or service.
- The customer has a present obligation to pay in accordance with the terms of the sales contract. For shipments
under the Incoterms Cost, Insurance and Freight ('CIF') this is generally when the ship is loaded, at which
time the obligation for payment is for both product and freight.
- The customer has accepted the asset. Sales revenue may be subject to adjustment if the product specification
does not conform to the terms specified in the sales contract but this does not impact the passing of control.
Assay and specification adjustments have been immaterial historically.
- The customer has legal title to the asset. The Group usually retains legal title until payment is received
for credit risk purposes only.
- The customer has physical possession of the asset. This indicator may be less important as the customer may
obtain control of an asset prior to obtaining physical possession, which may be the case for goods in transit.
Revenue is presented net of Value Added Tax, rebates and discounts and after eliminating intergroup sales.
Multiple performance obligations exist which are described in the following paragraphs.
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 based on the quantity of PGM concentrate delivered, prevailing market prices 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 quantity adjustments, final pricing and currency adjustments after
the beneficiation process is completed. Revenue recognised is adjusted for expected final adjustments based on
finally determined quantity and 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 quantity/assay/quality is subsequently resolved.
Consequently, at the time the concentrate passes to the customer, 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 IFRS 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.
The majority of the Group's metallurgical chrome concentrate is exported. For these export sales, the point
of revenue recognition is dependent on the contract sales terms, known as the International Commercial Terms
('Incoterms'). For the Incoterms CIF the seller must contract for and pay the costs and freight necessary to
bring the goods to the named port of destination. This means that the Group is responsible (acts as principal)
for providing shipping services and, in some instances, insurance after the date at which control of goods passes
to the customer at the loading port.
Consequently, the freight service on export commodity contracts with CIF Incoterms represents a separate
performance obligation as defined under IFRS 15 and as such, a portion of the revenue earned under these contracts,
representing the obligation to perform the freight service, is deferred and recognised when this obligation has
been fulfilled, along with the associated costs.
Since separate performance conditions exist for export commodity contracts with CIF Incoterms, the Group allocates
the transaction price to the separate performance conditions on a relative stand-alone selling price basis.
Observable information with specific reference to sea freight costs is used for allocation of the transaction
price.
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
ecognised for export sales is adjusted for expected final adjustments, which are estimated based on historical
data for similar transactions.
The majority of the Group's metallurgical chrome concentrate produced at the third party chrome plant is
exported. For these export sales, the point of revenue recognition is dependent on the contract sales terms,
known as the Incoterms. For the Incoterms CIF the seller must contract for and pay the costs and freight
necessary to bring the goods to the named port of destination. This means that the Group is responsible
(acts as principal) for providing shipping services and, in some instances, insurance after the date at
which control of goods passes to the customer at the loading port.
Consequently, the freight service on export commodity contracts with CIF Incoterms represents a separate
performance obligation as defined under IFRS 15 and as such, a portion of the revenue earned under these
contracts, representing the obligation to perform the freight service, is deferred and recognised when this
obligation has been fulfilled, along with the associated costs.
Since separate performance conditions exist for export commodity contracts with CIF Incoterms, the Group
allocates the transaction price to the separate performance conditions on a relative stand-alone selling
price basis. Observable information with specific reference to sea freight costs is used for allocation
of the transaction price.
The Group also provides inland 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 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 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 chrome concentrate
transactions, payment 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 in line with the practical expedient.
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 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.
Impact of adopting IFRS 15 on the Group's consolidated financial statements
As stated in the new accounting policy, the freight service on export commodity contracts with CIF Incoterms
represents a separate performance obligation as defined under the new standard, and a portion of the revenue
earned under these contracts, representing the obligation to perform the freight service, is deferred and
recognised over time as this obligation is fulfilled, along with the associated costs.
The impact of this transition difference is not considered material to the Group and hence comparative values
have not been restated. If comparative values had been restated, the impact would have been to reduce revenue
and cost of sales respectively for the year ended 30 September 2017 by $1.3 million with no impact on profit.
Current assets and current liabilities as at 30 September 2017 would each have been higher by $1.3 million.
IFRS 16 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. Contracts previously assessed not to be a lease in terms
of IAS 17 were not reassessed. As a result, the Group has changed its accounting policy for leases as detailed
in the accounting policies.
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.
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 3 and 5 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; and
- 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 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
reported
Adjustments at
30 September 1 October 1 October
2017 2017 2017
Note US$'000 US$'000 US$'000
Non-current assets
Property, plant and equipment 10 232 559 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 19 4 375 1 014 5 389
Current liabilities
Borrowings 19 45 026 191 45 217
Trade and other payables 31 916 (17) 31 899
4. OPERATING SEGMENTS
For management purposes, the chief operating decision maker of the Group, being the executive directors of the
Company and the executive directors of the subsidiaries, reports its results per segment. The Group currently
has the following three segments:
- PGM segment
- Chrome segment
- Agency and trading segment
The operating results of each segment are monitored separately by the chief decision maker in order to assist
them in making decisions regarding resource allocation as well as enabling them to evaluate performance. Segment
performance is evaluated on a PGM ounce production and sales basis and a chrome concentrate tonnes production
and sales basis. Third-party logistics, third-party trading and third party chrome operations are evaluated
individually but aggregated together as the agency and trading segment.
The Group's administrative costs, financing (including finance income and finance costs) and income taxes are
managed on a group basis and are not allocated to a segment.
The accounting policies used by the Group in reporting segments internally are the same as those contained in
the consolidated financial statements.
Due to the intrinsic nature of the Group's PGM and chrome concentrate production processes, assets are reported
on a consolidated basis and cannot necessarily be allocated to a specific segment. Consequently, assets are not
disclosed per segment in the following segmental information.
Agency and
PGM Chrome trading Total
US$'000 US$'000 US$'000 US$'000
2018
Revenue 117 381 250 351 38 536 406 268
Cost of sales
Manufacturing costs (87 745) (106 485) (21 695) (215 925)
Selling costs (399) (48 343) (9 711) (58 453)
Freight services - (19 836) (3 568) (23 404)
(88 144) (174 664) (34 974) (297 782)
Gross profit 29 237 75 687 3 562 108 486
2017
Revenue 90 924 252 869 5 650 349 443
Cost of sales
Manufacturing costs (54 336) (107 634) (4 241) (166 211)
Selling costs (366) (44 780) (1 144) (46 290)
Freight services - (14 288) - (14 288)
(54 702) (166 702) (5 385) (226 789)
Gross profit 36 222 86 167 265 122 654
The shared costs relating to the manufacturing of PGM and chrome concentrates are allocated to the relevant
operating segments based on the relative sales value per product on an ex-works basis. During the year ended
30 September 2018, the relative sales value of PGM concentrate increased compared to the relative sales value
of chrome concentrates and consequently shared costs were allocated equally. The allocation basis of shared
costs was 65.0% (chrome concentrates) and 35.0% (PGM concentrate) in the comparative period.
Cost of sales includes a charge for the write off/impairment of property, plant and equipment totalling
US$3.6 million (2017: no charge) which mainly relates to mining equipment. The write off/impairment has
been allocated on an equal basis to the PGM and chrome segments.
Geographical information
The following table sets out information about the geographical location of:
- the Group's revenue from external customers and
- the Group's property, plant and equipment and goodwill ('specified noncurrent assets').
The geographical location analysis of revenue from external customers is based on the country of establishment
of each customer. The geographical location of the specified noncurrent assets is based on the physical location
of the asset in the case of property, plant and equipment and the location of the operation to which they are
allocated in the case of goodwill.
Revenue from external customers
Agency and
PGM Chrome trading Total
US$'000 US$'000 US$'000 US$'000
2018
South Africa 117 381 62 464 969 180 814
China - 86 866 9 894 96 760
Singapore - 10 942 17 088 28 030
Hong Kong - 89 733 9 453 99 186
Other countries - 346 1 132 1 478
117 381 250 351 38 536 406 268
Agency and
PGM Chrome trading Total
US$'000 US$'000 US$'000 US$'000
2017
South Africa 90 924 59 150 1 811 151 885
China - 82 196 3 839 86 035
Singapore - 13 961 - 13 961
Hong Kong - 94 866 - 94 866
Other countries - 2 696 - 2 696
90 924 252 869 5 650 349 443
Revenue represents the sales value of goods supplied to customers, net of valueadded tax. The following table
summarises sales to customers with whom transactions have individually exceeded 10.0% of the Group's revenues.
2018 2017
Segment US$'000 Segment US$'000
Customer 1 PGM 101 560 PGM 88 118
Customer 2 Chrome 62 583 Chrome 60 370
Customer 3 Chrome 46 186 Chrome 43 676
2018 2017
US$'000 US$'000
Specified non-current assets
South Africa 264 933 233 394
Zimbabwe 4 438 -
Cyprus 73 3
269 444 233 397
Non-current assets includes property, plant and equipment, goodwill and the investment accounted for using
the equity method.
5. REVENUE
Agency and
PGM Chrome trading Total
US$'000 US$'000 US$'000 US$'000
2018
Revenue
Variable revenue based on initial results 110 619 169 092 33 957 313 668
Quantity adjustments 254 (1 041) 42 (745)
Revenue based on fixed selling prices - 62 464 915 63 379
Freight services - 19 836 3 622 23 458
110 873 250 351 38 536 399 760
Fair value adjustments 6 508 - - 6 508
Total revenue 117 381 250 351 38 536 406 268
2017
Total revenue 90 924 252 869 5 650 349 443
2018 2017
US$'000 US$'000
Variable revenue recognised:
PGM revenue recognised in preceding year based on initial results (28 994) -
PGM revenue based on final results 30 823 -
PGM revenue adjustment recognised in current year 1 829 -
Chrome revenue recognised in preceding year based on initial results (41 197) -
Chrome revenue based on final results 41 177 -
Chrome revenue adjustment recognised in current year (20) -
The period ended 30 September 2018 includes PGM revenue of US$42.5 million and chrome revenue of
US$48.5 million that was based on provisional results as final prices and surveys were not yet available
at the date of this report.
6. COST OF SALES
2018 2017
US$'000 US$'000
Mining 105 376 96 005
Salaries and wages 15 124 12 467
Utilities 10 319 9 495
Diesel 650 705
Materials and consumables 11 174 8 274
Re-agents 4 471 3 653
Steel balls 6 715 6 757
Overhead 4 117 8 055
State royalties 2 916 1 665
Depreciation - property, plant and equipment 29 008 16 476
Cost of commodities 18 644 4 241
Impairment and write off of property, plant and equipment 3 630 -
Change in inventories - finished products and ore stockpile 3 781 (1 582)
Total cost of sales excluding selling costs 215 925 166 211
Selling costs 58 453 46 290
Freight services 23 404 14 288
Cost of sales 297 782 226 789
7. ADMINISTRATIVE EXPENSES
2018 2017
US$'000 US$'000
Directors and staff costs
Non-Executive Directors 612 536
Employees: salaries 15 459 9 213
bonuses 3 262 1 339
pension fund, medical aid and other contributions 1 707 1 405
21 040 12 493
Audit - external audit services 490 429
Audit - other services* 90 -
Consulting 2 611 2 773
Corporate and social investment 157 73
Depreciation 850 453
Discount facility and related fees 701 516
Equity-settled share based payment expense 4 019 4 342
Internal audit 206 -
Listing fees and investor relations 461 260
Health and safety 1 019 300
Impairment and write off of property, plant and equipment 267 -
Insurance 697 914
Legal and professional 634 873
Loss on disposal of property, plant and equipment 37 196
Office administration, rent and utilities 1 296 660
Security 1 776 828
Telecommunications and IT related 1 374 719
Training 504 313
Travelling and accommodation 410 358
Sundry 593 403
39 232 26 903
2018 2017
Number of employees 1 758 701
* Other services paid to the former external auditor relates to tax and accounting services as approved by
the Audit Committee.
8. TAX
2018 2017
US$'000 US$'000
Corporate income tax for the year
Cyprus 2 913 1 554
South Africa 3 002 2 596
5 915 4 150
Special contribution for defence in Cyprus 5 4
Deferred tax
Originating and reversal of temporary differences (note 13) 7 933 19 162
Dividend withholding tax 158 -
Tax charge 14 011 23 316
Reconciliation between tax charge and accounting profit at applicable tax rates:
Profit before tax 64 983 90 989
Notional tax on profit before taxation, calculated at the rates applicable
in the jurisdictions concerned 10 181 23 165
Non taxable income
Profits on revaluation of intergroup US$ denominated preference shares - (695)
Gain on bargain purchase (516) -
Intergroup dividends received (4 300) (2 423)
Interest received (13) (6)
Non deductible expenses
Losses on revaluation of intergroup US$ denominated preference shares 4 070 -
Intergroup dividends paid 3 001 2 415
Investment related 877 526
Interest paid 10 51
Capital expenses 161 170
Other 472 73
Recognition of deemed interest income for tax purposes 68 40
Tax charge 14 011 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 year.
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 year ended 30 September 2018 was 21.6% (2017: 25.6%).
At 30 September 2018, the Group's unredeemed capital balance available for offset against future mining
taxable income in South Africa amounted to US$111.1 million (2017: US$99.6 million).
Special contribution for defence is provided in Cyprus on certain interest income at the rate of 30%.
100% of such interest income is treated as non taxable in the computation of chargeable income for
corporation tax purposes.
Other than Cyprus and South Africa, no provision for tax in other jurisdictions was made as these entities
either sustained losses for taxation purposes or did not earn any assessable profits.
9. EARNINGS PER SHARE
Basic and diluted earnings per share
The calculation of basic and diluted earnings per share has been based on the following profit attributable
to the ordinary shareholders of the Company and the weighted average number of ordinary shares outstanding.
Treasury shares are excluded from the weighted average number of ordinary shares outstanding. Vested Share
Appreciation Rights ('SARS') issued to employees at award prices lower than the current share price,
results in a potential dilutive impact on the weighted average number of issued ordinary shares and have
been included in the calculation of dilutive weighted average number of issued ordinary shares. Vested SARS
issued to employees at award prices higher than the current share price, were excluded from the calculation
of diluted weighted average number of issued ordinary shares because their effect would have been anti-
dilutive. Vested but unissued Conditional Awards ('LTIP') have been included in the calculation of dilutive
weighted average number of issued ordinary shares. The average market value of the Company's shares for the
purposes of calculating the potential dilutive effect of SARS was based on quoted market prices for the year
during which the options were outstanding.
2018 2017
Profit for the year attributable to ordinary
shareholders (US$'000) 48 433 57 601
Weighted average number of issued ordinary shares for
basic earnings per share ('000) 260 329 257 393
Weighted average number of issued ordinary shares for
diluted earnings per share ('000) 264 531 257 393
Earnings per share
Basic (US$ cents) 19 22
Diluted (US$ cents) 18 22
Headline and diluted headline earnings per share
The calculation of basic and diluted headline earnings per share has been based on the following profit
attributable to the ordinary shareholders of the Company and the weighted average number of ordinary
shares outstanding. Treasury shares are excluded from the weighted average number of ordinary shares
outstanding. Vested 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. Vested but unissued LTIP have been included in the calculation of dilutive
weighted average number of issued ordinary shares.
2018 2017
Headline earnings for the year attributable to
ordinary shareholders (US$'000) 49 134 57 799
Weighted average number of issued ordinary shares for
basic headline earnings per share ('000) 260 329 257 393
Weighted average number of issued ordinary shares for
diluted headline earnings per share ('000) 264 531 257 393
Headline earnings per share
Basic (US$ cents) 19 22
Diluted (US$ cents) 19 22
Reconciliation of profit to headline earnings
2018 2017
Non-
controlling
Gross Tax interest Net Net
US$'000 US$'000 US$'000 US$'000 US$'000
Profit attributable to ordinary shareholders 48 433 57 601
Adjustments:
Gain on bargain purchase (1 884) - 490 (1 394) -
Impairment of property, plant and equipment 3 897 (1 091) (730) 2 076 -
Impairment losses on goodwill - - - 57
Loss on disposal of property, plant and equipment 36 (10) (7) 19 141
Headline earnings 49 134 57 799
10. PROPERTY, PLANT AND EQUIPMENT
Mining Right-of-
Freehold assets use asset:
land and and infra- Mining mining Motor
buildings structure fleet fleet vehicles
30 September 2018 US$'000 US$'000 US$'000 US$'000 US$'000
Cost
Balance at
30 September 2017 15 354 266 019 7 030 - 594
Adoption of IFRS 16
(refer note 3) - - - - -
Balance at
1 October 2017 15 354 266 019 7 030 - 594
Additions 150 21 429 16 473 6 910 88
Business combination
(note 21 - 1 886 21 466 6 527 -
Transfers - - (2 203) 2 203 -
Disposals - - (145) - -
Assets written off - (266) (2 539) (159) -
Exchange differences on
translation (643) (12 723) (3 210) (1 299) (31)
Balance at
30 September 2018 14 861 276 345 36 872 14 182 651
Accumulated depreciation
Balance at
30 September 2017 592 59 337 299 - 289
Adoption of IFRS 16 - - - - -
Balance at 1 October 2017 592 59 337 299 - 289
Charge for the year 188 16 761 7 700 2 963 69
Transfers - - (80) 80 -
Disposals - - - - -
Impairment/assets
written off - - 1 020 (88) -
Exchange differences
on translation (40) (3 708) (665) (223) (17)
Balance at
30 September 2018 740 72 390 8 274 2 732 341
10. PROPERTY, PLANT AND EQUIPMENT (continued)
Office
equipment and
furniture,
Computer community and Right-of-
equipment site office use asset: Leasehold
and software improvements buildings improvements Total
30 September 2018 US$'000 US$'000 US$'000 US$'000 US$'000
Cost
Balance at
30 September 2017 5 542 796 - 220 295 555
Adoption of IFRS 16
(refer note 3) - - 1 503 (220) 1 283
Balance at
1 October 2017 5 542 796 1 503 - 296 838
Additions 2 167 147 791 - 48 155
Business combination
(note 21 - - - - 29 879
Transfers (15) (114) 129 - -
Disposals (97) (29) - - (271)
Assets written off (1) - - - (2 965)
Exchange differences on
translation (373) (29) (127) - (18 435)
Balance at
30 September 2018 7 223 771 2 296 - 353 201
Accumulated depreciation
Balance at
30 September 2017 1 914 518 - 47 62 996
Adoption of IFRS 16 - - 164 (47) 117
Balance at 1 October 2017 1 914 518 164 - 63 113
Charge for the year 1 712 93 372 - 29 858
Transfers (6) (23) 29 - -
Disposals (87) (28) - - (115)
Impairment/assets
written off - - - - 932
Exchange differences
on translation (193) (19) (33) - (4 898)
Balance at
30 September 2018 3 340 541 532 - 88 890
Office
equipment and
Mining furniture,
Freehold assets Computer community and
land and and infra- Mining Leasehold equipment Motor site office
buildings structure fleet improvements and software vehicles improvements Total
30 September 2017 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 30 September 2016
Opening balance 14 504 248 588 - 130 2 077 515 554 266 368
Additions 666 14 602 7 124 189 3 504 73 240 26 398
Disposals - (231) - (99) (19) - - (349)
Exchange differences 184 3 060 (94) - (20) 6 2 3 138
Balance at 30 September 2017 15 354 266 019 7 030 220 5 542 594 796 295 555
Accumulated depreciation
Balance at 30 September 2016 414 43 429 - 127 1 203 198 463 45 834
Charge for the year 174 15 570 303 16 725 90 51 16 929
Disposals - (35) - (99) (19) - - (153)
Exchange differences 4 373 (4) 3 5 1 4 386
Balance at 30 September 2017 592 59 337 299 47 1 914 289 518 62 996
30 September 30 September
2018 2017
US$'000 US$'000
Net book value
Freehold land and buildings 14 121 14 762
Mining assets and infrastructure 203 955 206 682
Mining fleet 28 598 6 731
Right-of-use mining fleet 11 450 -
Motor vehicles 310 305
Computer equipment and software 3 883 3 628
Office equipment and furniture, community and site office improvements 230 278
Right-of-use buildings and premises 1 764
Leasehold improvements - 173
264 311 232 559
Included in additions to mining assets and infrastructure are additions to the deferred stripping asset of
US$1.3 million (2017: no additions).
The estimated economically recoverable proved and probable mineral reserve was reassessed at 1 October 2017
which gave rise to a change in accounting estimate. The remaining reserve that management had previously
assessed was 100.3 Mt (at 30 September 2016) and at 30 September 2017 was assessed to be 97.0 Mt.
As a result, and taking into account depletion of the reserve during the year ended 30 September 2017 (5.0 Mt),
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 charge of US$0.2 million.
Included in mining assets and infrastructure are projects under construction of US$20.5 million
(2017: US$9.0 million).
Freehold land and buildings comprises various portions of the farms Elandsdrift 467 JQ, Buffelspoort 343 JQ and
342 JQ, North West Province, South Africa. All land is freehold.
Property, plant and equipment, with the exception of motor vehicles, is insured at approximate cost of replacement.
Motor vehicles are insured at market value. Land is not insured.
Capital commitments
At 30 September 2018, the Group's capital commitments for contracts to purchase property, plant and equipment amounted
to US$6.0 million (2017: US$6.5 million).
Securities
At 30 September 2018, US$11.4 million of the carrying amount of the Group's mining fleet was pledged as security
against the equipment loan facility. At 30 September 2017, US$213.5 million was secured against the secured bank
borrowings. The secured bank borrowings was settled in full during the year ended 30 September 2018.
Assets written off/impairment
During the year ended 30 September 2018, the Group impaired and scrapped assets totalling US$3.9 million. The
impairment and assets written off relate to costs capitalised to the construction of a new plant and to yellow
fleet equipment identified as no longer fit for use and premature component failures. The Group decided not to
proceed with the construction of the new plant.
11. INVESTMENT ACCOUNTED FOR USING THE EQUITY METHOD
The Group acquired 26.8% of the issued share capital of Karo Mining Holdings Limited (Karo Holdings), a company
incorporated in Cyprus, for a total cash consideration of US$4.5 million from the Leto Settlement, a
related party.
Karo Holdings entered into an Investment Project Framework Agreement with the Republic of Zimbabwe in terms
of which Karo Holdings, through any of its subsidiaries, has undertaken to establish a platinum group metals
mine, concentrators, smelters, a base metal and precious metals refinery as well as power generation capacity
for the operations with surplus energy capacity made available to the Zimbabwe power grid (collectively
referred to as 'the Project').
Karo Holdings' principal place of business is in Cyprus. The table below details Karo Holdings' interest in
subsidiaries as at 30 September 2018:
Effective Country of incorporation and
Company name interest principal place of business Principal activity
Karo Zimbabwe Holdings (Private) Limited 100% Zimbabwe Investment holding
Karo Platinum (Private) Limited* 100% Zimbabwe Platinum mining
Karo Coal Mines (Private) Limited** 100% Zimbabwe Coal
Karo Power Generation (Private) Limited** 100% Zimbabwe Power generation
Karo Refinery (Private) Limited** 100% Zimbabwe PGM smelting and refining
* In terms of the Investment Project Framework Agreement, 50% of the shareholding in this company will
transfer to an investment entity wholly-owned by the Republic of Zimbabwe.
** In terms of the Investment Project Framework Agreement, 25% of the shareholding in these companies
will transfer to an investment entity wholly-owned by the Republic of Zimbabwe.
The Group entered into a Shareholders Agreement with Leto Settlement whereby management of the Project will
exclusively vest in the Company or any of its subsidiaries. The Group has determined that a joint arrangement
exists and consequently has classified its investment in Karo Holdings as a joint venture. The Group accounts
for joint ventures using the equity method in the consolidated financial statements.
2018 2017
US$'000 US$'000
Investment in Karo Holdings
Opening balance - -
Shares acquired 4 500 -
Share of total comprehensive loss (62) -
4 438 -
Total share of comprehensive loss from joint venture (62) -
2018 2017
US$'000 US$'000
Summarised consolidated financial information of Karo Holdings
Summarised statement of financial position
Non-current assets 122 -
Current assets 3 -
Non-current liabilities (264) -
Current liabilities (91) -
Net deficit (100%) (230) -
Summarised statement of comprehensive income
Operating expenses (290) -
Tax 60 -
Total comprehensive loss (230) -
Carrying amount of investment in joint venture
Group's share of net deficit (26.8%) (62) -
Purchase consideration 4 500 -
Carrying amount 4 438 -
Contingencies and commitments
The Group has undertaken to provide funding up to US$8.0 million to Karo Holdings as a repayable debt facility.
This will be utilised to undertake initial geological exploration and sampling work to determine a compliant
mineral resource which will enhance the value of the investment in Karo Holdings.
Unrecognised losses
The Group has not recognised any cumulative losses in relation to its interest in Karo Holdings.
OTHER FINANCIAL ASSETS
2018 2017
US$'000 US$'000
Fair value hierarchy
Non-current assets:
Investments in money markets, current accounts,
cash funds and income funds Level 2 5 012 3 767
Current assets:
Investments in equity instruments Level 1 40 49
Forward exchange contracts Level 2 804 -
Option to acquire shares in Salene
Chrome Zimbabwe (Private) Limited Level 3 142 -
986 49
Investments in money markets, current accounts, cash funds and income funds - fair value through
profit or loss
Investment in Money Market and Current Accounts totalling US$3.8 million (2017: US$2.6 million) is managed
by Centriq Insurance Company Limited ('Centriq') (2017: Guardrisk Insurance Company Limited). The investment
serves as security for the guarantee issued by Centriq (2017: Guardrisk Insurance Company Limited) to the
Department of Mineral Resources (DMR) for the rehabilitation provision. The guarantee issued by Centriq has
a fixed cover period from 1 December 2014 to 30 November 2020.
Investment in Cash Funds and Income Funds of US$1.2 million (2017: US$1.2 million) managed by Stanlib
Collective Investments. The investment is ceded to Lombard Insurance Group ('Lombard') against a
ZAR12.0 million (2017: ZAR12.0 million) guarantee issued by Lombard on behalf of Arxo Logistics Proprietary
Limited to Transnet Freight Rail, a division of Transnet SOC Limited.
The investments in cash funds and income funds are unsecured and held at fair value through profit or loss
(designated). The underlying investments are in money market and other funds and the fair value has been
determined by reference to their quoted prices.
Investments in equity instruments - fair value through profit or loss
Investments at fair value through profit or loss are valued based on quoted market prices at the end of the
reporting period without any deduction for transaction costs. The investment represents shares in the Bank
of Cyprus Public Co Limited.
Forward exchange contracts - fair value through profit or loss
The Group entered into a number of forward exchange contracts to hedge certain aspects of the foreign exchange
risk associated to the conversion of the US$ to the ZAR. The net exposure of these contracts is US$28.6 million
(2017: US$36.2 million) with various expiries no later than 20 December 2018 (2017: no later than 30 November 2017).
Option to acquire shares in Salene Chrome Zimbabwe (Private) Limited
The Company has been granted a call option to acquire a 90.0% shareholding in Salene Chrome Zimbabwe (Private)
Limited ('Salene') a company incorporated in Zimbabwe from the Leto Settlement, a related party (refer note 36).
Salene has been awarded three special grants under the Zimbabwe Mines and Minerals Act covering an area of
approximately 9 500 hectares (95 km²) on the eastern side of the Great Dyke in Zimbabwe, which entitles it
to mine the minerals thereon including illuvial chrome, being at surface chrome fines generated from seams
as a result of weathering. The call option is exercisable upon completion of an initial exploration programme.
In consideration of the call option, the Group will undertake the initial exploration programme including the
costs thereof up to an amount of US$3.2 million. The decision to exercise the call option is at the Group's
election.
At the date of this report, insufficient information was available to accurately determine the fair value
of the call option, more specifically the value of the net assets of the special grants or the profits
attributable thereto. The Group believes this may only be possible once the initial exploration programme
has been completed. As a result, the fair value represents the aggregate of the initial exploration
programme costs incurred to 30 September 2018.
13. DEFERRED TAX
2018 2017
US$'000 US$'000
Deferred tax assets 1 880 1 952
Deferred tax liabilities (29 892) (23 823)
Net deferred tax liability (28 012) (21 871)
Deferred tax assets
Property, plant and equipment (35) (54)
Unrealised foreign currency exchange losses 610 752
Accrued leave 165 164
Share based payments 1 040 1 073
Other 100 17
1 880 1 952
Deferred tax liabilities
Property, plant and equipment 63 212 57 765
Tax losses not utilised (28 755) (30 065)
Accrued leave (3 573) (1 977)
Share based payments (782) (809)
Other (210) (1 091)
29 892 23 823
Reconciliation of deferred tax liability
Balance at the beginning of the year (21 871) (3 878)
Adoption of IFRS 16 (refer note 3) 7 -
(21 864) (3 878)
Temporary differences recognised in profit or loss and
equity in relation to:
Capital allowances on property, plant and equipment (8 470) (2 731)
Provisions 440 649
Tax losses (79) (17 364)
Other 482 1 145
(7 627) (18 301)
Exchange differences 1 479 308
Balance at the end of the year (28 012) (21 871)
Amounts recognised in:
Profit and loss (note 8) (7 933) (19 162)
Equity 306 861
(7 627) (18 301)
Deferred tax assets and deferred tax liabilities are not offset unless the Group has a legally enforceable
right to offset such assets and liabilities.
All of the above amounts have used the currently enacted income taxation rates of the respective tax
jurisdictions the Group operates in. South African taxation losses normally expire within 12 months of
the respective entities not trading. The deductible temporary timing differences do not expire under
current taxation legislation. Deferred tax assets have only been recognised in terms of these items when
it is probable that taxable profit will be available in the immediate future against which the respective
entities can utilise the benefits therefrom.
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.
14. INVENTORIES
2018 2017
US$'000 US$'000
Finished products 7 199 6 620
Ore stockpile 1 338 5 807
Consumables 14 623 8 399
23 160 20 826
Impairment of consumables (117) (24)
Total carrying amount 23 043 20 802
Inventories are stated at the lower of cost or net realisable value. The Group impaired certain
consumables and spares as the operational use became doubtful with no anticipated recoverable amount
or value in use. The impaired consumables are allocated equally to the PGM and chrome operating segments
(2017: 35.0% and 65.0% respectively to the PGM and chrome operating segments). There were no write-downs
to net realisable value during the year (2017: no write downs).
15. TRADE AND OTHER RECEIVABLES
2018 2017
US$'000 US$'000
Trade receivables 38 645 55 602
PGM receivable 25 355 -
Total trade receivables 64 000 55 602
Other receivables - related parties (note 23) 417 59
Deposits, prepayments and other receivables 1 000 1 081
Accrued income 5 088 3 167
Value added tax receivable (VAT) 14 577 9 327
Provision for royalty tax 1 120 1 138
86 202 70 374
Trade and other receivables of the Group are expected to be recoverable within one year from each reporting
date. Trade receivables terms vary from 0 to 120 days (2017: 0 to 120 days). No impairment of trade
receivables was recognised during the year ended 30 September 2018 (2017: no impairment).
The Group applies a simplified approach to measure the loss allowance for trade receivables classified at
amortised cost, using the lifetime expected loss provision. The expected credit loss on trade receivables
is estimated using a provision matrix by reference to past default experience and credit rating if available,
adjusted as appropriate for current observable data. The following table details the risk profile of trade
receivables based on the Group's provision matrix.
2018 2017
US$'000 US$'000
Current 61 674 43 677
Less than 90 days past due but not impaired 2 143 7 540
Greater than 90 days past due but not impaired 183 4 385
64 000 55 602
Included in VAT is an amount of US$10.0 million (ZAR141.3 million) (2017: US$5.9 million (ZAR79.5 million))
that relates to diesel rebates receivable from the South African Revenue Service ('SARS') in respect of the
mining operations. The Group received a letter of intent from SARS disputing the refundability of this amount.
The Group is strongly of the view that it fully complies with all the regulations to be entitled to this
refund and is opposing SARS's intent not to pay out this claim. The Group will take the necessary legal
action to recover the amount due.
Based on current observable data, available credit quality information of clients and client's past default
experience, management believes that no impairment allowance (2017: no impairment allowance) is required in
respect of the trade and other receivables as balances are still considered fully recoverable. The Group
does not hold any collateral over these balances.
16. CASH AND CASH EQUIVALENTS
2018 2017
US$'000 US$'000
Bank balances 55 433 39 983
Short-term bank deposits 11 358 9 759
66 791 49 742
The amounts reflected above approximate fair value.
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 30 September 2018, an amount of US$1.6 million (2017: US$1.6 million) was provided as security for a
bank guarantee issued in favour of a trade creditor of a subsidiary of the Group and US$0.3 million (2017:
US$0.3 million) was provided as security against certain credit facilities of the Group.
17. SHARE CAPITAL AND RESERVES
30 September 2018 30 September 2017
Number of Number of
Share capital Shares US$'000 Shares US$'000
Authorised - ordinary shares of US$0.001 each
As at 30 September 10 000 000 000 10 000 10 000 000 000 10 000
Authorised - convertible redeemable preference
shares of US$1 each
As at 30 September 1 051 1 1 051 1
Issued
Ordinary shares
Balance at the beginning of the year 261 000 000 261 256 981 571 257
Issued as part of management share award plans - - 2 984 853 3
Issued to treasury shares 4 000 000 4 1 033 576 1
Balance at the end of the year 265 000 000 265 261 000 000 261
Treasury shares
Balance at the beginning of the year 987 274 1 - -
Issued 4 000 000 4 1 033 576 1
Transferred as part of management share award plans (889 703) (1) (46 302) -
Balance at the end of the year 4 097 571 4 987 274 1
Issued and fully paid 260 902 429 261 260 012 726 260
30 September 2018 30 September 2017
Number of Number of
Share premium Shares US$'000 Shares US$'000
Balance at the beginning of the year 260 012 726 280 082 256 981 571 456 181
Capital reduction - - - (179 175)
Shares issued 889 703 463 3 031 155 3 076
Balance at the end of the year 260 902 429 280 545 260 012 726 280 082
Share capital
Allotments during the year were in respect of 4 000 000 (2017: 1 033 576) ordinary shares issued as treasury
shares to satisfy the vesting of Conditional Awards and potential future settlement of Appreciation Rights
of the participants' of the Tharisa Share Award Plan. Allotments during the previous year were in respect
of the award of 2 984 853 ordinary shares granted in terms of the Share Award Plan (Conditional Awards) of
the participants' of the Tharisa Share Award Plan.
During the year ended 30 September 2018, 889 703 (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 Plan.
At 30 September 2018, 4 097 571 (2017: 987 274) ordinary shares were held in treasury.
All shares rank equally with regard to the Company's residual assets. The holders of ordinary shares, other
than treasury shares, are entitled to receive dividends as declared from time to time and are entitled to
one vote per share at meetings of the Company.
Share premium
The share premium represents the excess of the issue price of ordinary shares over their nominal value, to
the extent that it is registered at the Registrar of Companies in Cyprus, less share issue costs. The share
premium is not distributable for dividend purposes.
During the year ended 30 September 2017, the share premium account was reduced by US$179.2 million with a
corresponding increase in the retained earnings to reduce the accumulated losses to US$nil. The required
Court Order was obtained on 8 March 2017 and filed at the Registrar of Companies on 9 March 2017.
The distribution during the year ended 30 September 2017 of US$2.6 million (US$1 cent per share) was approved
by way of a Special Resolution on 1 February 2017. The Special Resolution was ratified by the Court Order
on 8 March 2017.
During the years ended 30 September 2018 and 30 September 2017, the increases in the share premium account
related to the issue and allotment of ordinary shares granted in terms of the Share Award Plan.
Other reserve
Other reserve represents the discount between the fair value and the acquisition consideration paid at the
time for the Company's 74.0% shareholding in Tharisa Minerals Proprietary Limited. The Company acquired
the shares from its non-controlling shareholders and in accordance with the requirements of IAS 1, the gain
on bargain purchase was recognised in equity.
Retained earnings
The retained earnings includes the accumulated retained profits and losses of the Group and the share based
payment reserve. Retained earnings are distributable for dividend purposes.
18. PROVISIONS
2018 2017
Provision for Decommis- Total Decommis- Total
rehabilitation Restoration sioning provision Restoration sioning provision
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Opening balance 3 962 2 961 6 923 2 343 2 264 4 607
Recognised in profit and loss 1 693 - 1 693 1 340 - 1 340
Capitalised to mining assets
and infrastructure - 3 922 3 922 - 451 451
Business combination (note 21) 76 57 133 - - -
Unwinding of discount 529 212 741 269 225 494
Exchange differences (339) (439) (778) 10 21 31
Closing balance 5 921 6 713 12 634 3 962 2 961 6 923
The Group has a legal obligation to rehabilitate the mining area, once the mining operations cease. The provision
has been calculated based on total estimated rehabilitation costs, discounted back to their present values. The
pre-tax discount rates are adjusted annually and reflect current market assessments. These costs are expected
to be utilised mostly towards the end of the life of mine and associated infrastructure, which is currently
estimated to be within 15 years. The provision is determined using commercial closure cost assessments and
not the inflation adjusted Department of Mineral Resources published rates as were used during 2017.
The table below illustrates the movement in the provision as a result of mining operations, changes in variables
and adopting commercial rates in comparison to the previously used Department of Mineral Resources rates.
Opening Mining Changes in Commercial Exchange Closing
balance operations variables rates differences Balance
30 September 2018 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Provision for
restoration 3 962 1 839 882 (423) (339) 5 921
Provision for
decommissioning 2 961 (597) 368 4 420 (439) 6 713
6 923 1 242 1 250 3 997 (778) 12 634
The current estimated rehabilitation cost to be incurred mostly at the end of the life of mine taking
escalation factors into account is US$21.8 million (2017: US$13.7 million). The estimate was calculated
by an independent external expert.
In determining the amounts attributable to the rehabilitation provisions at 30 September 2018, management
used a discount rate of 9.4% (2017: 8.6%) which represents the rate associated to a 10-year and longer
daily average yield based on South African government bonds (2017: R186 government bond of South Africa),
estimated rehabilitation timing of 15 years (2017: 18 years) and an inflation rate of 6.3% (2017: 4.5%).
An insurance company has provided a guarantee to the Department of Mineral Resources to satisfy the legal
requirements with respect to environmental rehabilitation and the Group has pledged as collateral its
investments in interestbearing debt instruments to the insurance company to support this guarantee.
19. BORROWINGS
2018 2017
US$'000 US$'000
Non-current
Facilities 13 711 -
Equipment loan facility 1 931 -
Finance leases 7 505 1 497
Loan 4 134 -
Secured bank borrowings - 2 878
27 281 4 375
Current
Facilities 9 104 -
Equipment loan facility 5 564 -
Finance leases 4 299 847
Loan 1 928 -
Bank credit facilities 29 243 29 072
Secured bank borrowings - 14 876
Guardrisk loan - 231
50 138 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 twelve 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 twelve
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 contains 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; and
- EBITDA to interest of greater than 4.0 times.
At 30 September 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 30 September 2018
amounted to ZAR400 million.
Equipment loan facility
Tharisa Minerals Proprietary Limited entered into an equipment loan facility of US$25 million with
Caterpillar Financial Services Corporation for the funding of certain Caterpillar mining equipment.
The funding was partially utilised for the purchase of existing mining equipment acquired from MCC
Contracts Proprietary Limited as well as replacement parts and new mining equipment. The loan is
structured in three tranches and repayment of each tranche varies between twenty four and forty
ight equal monthly instalments, payable in arrears. Interest is calculated on the three month US$
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; and
- EBITDA to interest greater than 4.0 times.
At 30 September 2018, the Group complied with all financial covenants.
Finance 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$0.2 million (2017: US$ nil) and US$0.1 million (2017: US$0.7 million) were
included in cost of sales and administrative expenses respectively for the year ended
30 September 2018.
The duration of leases relating to buildings and premises are for a period of five years, payments
are due at the beginning of the month escalating annually on average by 8.0%. At 30 September 2018,
the remaining term of these leases vary between four and four and a half years. These leases are
secured by cash deposits varying from one to three times the monthly lease payments.
The duration of leases relating to the mining fleet are for periods between fourteen and thirty-six
months and bear interest at interest rates between the South African prime interest rate and the
South African prime interest rate plus 300 basis points. The leases are secured by the mining
fleet leased.
2018 2017
US$'000 US$'000
Minimum lease payments due:
Within one year 5 284 1 046
Two to five years 8 930 1 620
14 214 2 666
Less future finance charges (2 410) (322)
Present value of minimum lease payments due 11 804 2 344
Present value of minimum lease payments due:
Within one year 4 293 847
Two to five years 7 511 1 497
11 804 2 344
Loan
A subsidiary of the Company, Arxo Metals Proprietary Limited, entered into a loan agreement with Rand
York Minerals Proprietary Limited for the advance of ZAR90 million. The loan is repayable in thirty six
equal monthly instalments that commenced on 31 August 2018. The loan is unsecured and interest is
calculated at the South African prime rate plus 100 basis points.
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 1.6% pa (2017: US Libor plus 1.6% pa).
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 twenty two 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 year ended 30 September 2018.
Bridge loan
During the year ended 30 September 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 21). 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.
Equipment Bank
loan Finance credit
Facilities facility leases facilities Loan
US$'000 US$'000 US$'000 US$'000 US$'000
Balance 30 September 2017 - - 2 344 29 072 -
Adoption of IFRS 16
(refer note 3) - - 1 205 - -
Balance at 1 October 2017 - - 3 549 29 072 -
Changes from financing
cash flows
Advances: bank
credit facilities - - - 192 834 -
Repayment: bank
credit facilities - - - (192 720) -
Net repayment of bank
credit facilities - - - 114 -
Advances received 29 523 12 694 - - 6 883
Repayment of borrowings (5 099) (5 295) - - (326)
Lease payments - - (6 463) - -
Repayment of interest (1 464) (528) - (395) (62)
Changes from
financing cash flows 22 960 6 871 (6 463) (281) 6 495
Foreign currency
translation
differences (1 865) (612) (982) - (495)
Liability-related changes
Lease agreements
entered into - - 7 656 - -
Business combination
(note 21) - - 7 003 - -
Interest expense 1 720 708 1 086 452 62
Revaluation of foreign
denominated loan - 528 (45) - -
Total liability-
related changes 1 720 1 236 15 700 452 62
Balance at
30 September 2018 22 815 7 495 11 804 29 243 6 062
Non-current borrowings 13 711 1 931 7 505 - 4 134
Current borrowings 9 104 5 564 4 299 29 243 1 928
Total borrowings 22 815 7 495 11 804 29 243 6 062
(continued)
Secured
bank Guardrisk Bridge Total
borrowings loan loan borrowings
US$'000 US$'000 US$'000 US$'000
Balance 30 September 2017 17 754 231 - 49 401
Adoption of IFRS 16
(refer note 3) - - - 1 205
Balance at 1 October 2017 17 754 231 - 50 606
Changes from financing
cash flows
Advances: bank
credit facilities - - - 192 834
Repayment: bank
credit facilities - - - (192 720)
Net repayment of bank
credit facilities - - - 114
Advances received - - 19 120 68 220
Repayment of borrowings (18 424) (239) (19 120) (48 503)
Lease payments - - - (6 463)
Repayment of interest (1 088) (7) (889) (4 433)
Changes from
financing cash flows (19 512) (246) (889) (8 935)
Foreign currency
translation
differences 661 8 - (3 285)
Liability-related changes
Lease agreements
entered into - - - 7 656
Business combination
(note 21) - - - 7 003
Interest expense 1 097 7 889 6 021
Revaluation of foreign
denominated loan - - - 483
Total liability-
related changes 1 097 7 889 21 163
Balance at
30 September 2018 - - - 77 419
Non-current borrowings - - - 27 281
Current borrowings - - - 50 138
Total borrowings - - - 77 419
20. TRADE AND OTHER PAYABLES
2018 2017
US$'000 US$'000
Trade payables 18 363 14 958
Accrued expenses 8 314 9 922
Interest bearing - accrued dividends - 4 750
Leave pay accrual 3 738 1 932
Value added tax payable 794 192
Other payables - related parties (note 23) 2 175 123
Operating lease payable - 18
Other payables 19 21
33 403 31 916
The amounts above are payable within one year from the reporting period.
21. 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 19).
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 10) 29 879
Inventories 1 051
Trade and other receivables 150
31 080
Liabilities
Borrowings (note 19) (7 003)
Provisions (note 18) (133)
Trade and other payables (220)
(7 356)
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$0.1 million relating to the acquisition were included in administrative expenses
during the year ended 30 September 2018.
22. FINANCIAL RISK MANAGEMENT
Fair value 2018 2017
level US$'000 US$'000
30 September 2018
Financial assets measured at fair value
Investments in equity instruments Level 1 40 49
Investments in money markets, current accounts,
cash funds and income funds Level 2 5 012 3 767
Forward exchange contracts Level 2 804 -
Option to acquire shares in Salene Chrome Zimbabwe
(Private) Limited Level 3 142 -
Trade and other receivables measured at fair value
PGM receivable Level 2 25 355 -
Financial liabilities measured at fair value
Discount facility Level 2 1 000 449
Forward exchange contracts Level 2 - 150
Financial assets at amortised cost
Long-term deposits - 4 505
Trade and other receivables 38 645 55 602
Contract assets 2 229 -
Cash and cash equivalents 66 791 49 742
Financial liabilities at amortised cost
Borrowings 77 419 49 401
Contract liabilities 2 229 -
Trade and other payables 18 363 19 708
There were no transfers between Level 1 and Level 2 fair value measurements during the year.
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: fair values measured using quoted prices (unadjusted) in active markets for identical financial
instruments (highest level).
Level 2: fair values measured using quoted prices in active markets for similar financial instruments, or
using valuation methodologies in which all significant inputs are directly or indirectly based on
observable market data.
Level 3: fair values measured using valuation methodologies in which any significant inputs are not based
on observable market data.
23. RELATED PARTY TRANSACTIONS AND BALANCES
In the normal course of the business, the Group enters into various transactions with related parties.
Related party transactions exist between shareholders, directors, directors of subsidiaries and key
management personnel. Outstanding balances at the year-end are unsecured and settlement occurs in cash.
All intergroup transactions have been eliminated on consolidation.
2018 2017
US$'000 US$'000
Transactions and balances with related parties:
Trade and other receivables (note 15)
The Tharisa Community Trust 1 5
Rocasize Proprietary Limited 71 54
Karo Mining Holdings Limited 20 -
Karo Zimbabwe Holdings (Private) Limited 254 -
Karo Platinum (Private) Limited 40 -
Salene Chrome Zimbabwe (Private) Limited 12 -
Salene Technologies Proprietary Limited 4 -
Salene Mining Proprietary Limited 15 -
417 59
Trade and other payables (note 20)
The Leto Settlement 2 000 -
Rocasize Proprietary Limited 31 -
2 031 -
Amounts due to Directors
A Djakouris 22 21
JD Salter 31 30
OM Kamal 16 16
C Bell 25 26
R Davey 20 19
J Ka Ki Chen 11 11
ZL Hong 19 -
144 123
Total other payables 2 175 123
Interest bearing - accrued dividends to related parties
Arti Trust - 2 486
Ditodi Trust - 214
Makhaye Trust - 214
The Phax Trust - 425
The Rowad Trust - 213
MJ Jacquet-Briner - 213
- 3 765
Acquisition of 26.8% of Karo Mining Holdings Limited from:
The Leto Settlement 4 500 -
Cost of sales
Rocasize Proprietary Limited 234 -
Consulting fees received
Rocasize Proprietary Limited 32 -
Karo Zimbabwe Holdings (Private) Limited 128 -
Consulting fees paid
Rocasize Proprietary Limited 234 -
Salene Mining Proprietary Limited 17 -
Interest expense
Langa Trust - 3
Arti Trust 514 262
Ditodi Trust 47 27
Makhaye Trust 47 27
The Phax Trust 93 53
The Rowad Trust 47 27
MJ Jacquet-Briner 47 27
795 426
Compensation to key management:
Provident
Salary Expense Share based fund and
and fees allowances payments risk benefits Bonus Total
2018 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Non-Executive Directors 612 - - - - 612
Executives Directors 1 361 9 760 83 700 2 913
Other key management 932 31 1 222 107 420 2 712
2 905 40 1 982 190 1 120 6 237
Provident
Salary Expense Share based fund and
and fees allowances payments risk benefits Bonus Total
2017 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
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
Awards to key management in the period under review are as follows:
2018 Ordinary shares Opening
balance Allocated Vested* Forfeited Total
LTIP - executive directors 1 808 316 697 206 (900 099) - 1 605 423
LTIP - key management 1 202 153 483 348 (586 062) - 1 099 439
2017 Ordinary shares
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
2018 Ordinary shares Opening
balance Allocated Vested Forfeited Total
SARS - executive directors 1 362 327 697 206 (940 986) - 1 118 547
SARS - key management 924 136 483 348 (641 740) - 765 744
2017 Ordinary shares
SARS - executive directors 1 243 870 842 682 (724 225) - 1 362 327
SARS - key management 885 344 564 792 (526 000) - 924 136
* At 30 September 2018 the vested shares have not yet been transferred to the respective employees.
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.
The Leto Settlement
The beneficial shareholder of Medway Developments Limited, a material shareholder in the Company.
Salene Chrome Zimbabwe (Private) Limited
This company is a wholly owned subsidiary of the Leto Settlement, the beneficial shareholder of Medway
Developments Limited, a material shareholder in the Company.
Salene Mining Proprietary Limited and Salene Technologies Proprietary Limited
A Director of the Company is a director of these entities.
Karo Mining Holdings Limited, Karo Zimbabwe Holdings (Private) Limited and Karo Platinum (Private) LImited
The Company owns 26.8% of the issued share capital of Karo Mining Holdings Limited. Karo Mining Holdings
Limited owns 100% of the issued share capital of Karo Zimbabwe Holdings (Private) Limited and Karo
Platinum (Private) Limited.
24. CONTINGENT LIABILITIES
As at 30 September 2018, there is no litigation (2017: no litigation), current or pending, which is
considered likely to have a material adverse effect on the Group.
25. CAPITAL COMMITMENTS AND GUARANTEES
2018 2017
US$'000 US$'000
Capital commitments
Authorised and contracted 4 929 6 455
Authorised and not contracted 1 091 25
6 020 6 480
The above commitments are with respect to property, plant and equipment and are outstanding at the respective
reporting period. All contracted amounts will be funded through existing funding mechanisms within the Group
and cash generated from operations. Balances denominated in currencies other than the US$ were converted at
the closing rates of exchange ruling at 30 September 2018.
The Company has made a commitment to Karo Mining Holdings Limited to fund the initial exploration programme,
feasibility study and development of the projects in Zimbabwe not exceeding US$8.0 million. Refer to note 11.
Guarantees
The Company issued a guarantee to ABSA Bank Limited and Nedbank Limited amounting to ZAR800 million for the
Facilities entered into with Tharisa Minerals Proprietary Limited.
Tharisa Minerals Proprietary Limited entered into an equipment loan facility of US$25.0 million with Caterpillar
Financial Services Corporation. The equipment loan facility is secured by a first notarial bond over the equipment
and is guaranteed by the Company.
The Company issued a guarantee to ABSA Bank Limited which guarantees the payment of certain liabilities of
Arxo Logistics Proprietary Limited to Transnet totalling ZAR19.4 million (2017: ZAR19.4 million).
The Company guarantees performance of payment due from time to time between a third party supplier and
Tharisa Minerals Proprietary Limited for the supply and sale of mining materials.
The Company issued guarantees limited to US$12.5 million (2017: US$12.5 million) and US$20.0 million
(2017: no guarantee) as securities for trade finance facilities provided by two banks to Arxo Resources Limited.
A guarantee was issued to Lombard Insurance Company Limited which guarantees the payment of certain liabilities
of Arxo Logistics Proprietary Limited to Transnet totalling ZAR12.0 million (2017: ZAR12.0 million).
The Company and Arxo Metals Proprietary Limited jointly indemnify a third party for any claims which may result
from negligence or breach in terms of the plant operating agreement between Arxo Metals Proprietary Limited and
the third party.
The Company holds an indirect 100% equity interest in Tharisa Fujian Industrial Co., Limited, the registered capital
of which is US$10.0 million. Up to 30 September 2018, US$6.5 million has been paid up. The remaining US$3.5 million
needs to be paid up by 14 February 2021.
26. EVENTS AFTER THE REPORTING PERIOD
On 26 November 2018, the Board has proposed a final dividend of US$ 2 cents per share, subject to the necessary
shareholder approval at the Annual General Meeting.
The Board of Directors are not aware of any matter or circumstance arising since the end of the financial year that
will impact these financial results.
27. DIVIDENDS AND CAPITAL DISTRIBUTION
During the year ended 30 September 2018, the Company declared and paid a final dividend of US$ 5 cents per share
in respect of the year ended 30 September 2017.
During the year ended 30 September 2018, an interim dividend of US$ 2 cents per share was declared and paid.
On 26 November 2018, the Board has proposed a final dividend of US$ 2 cents per share with respect to the year
ended 30 September 2018. The proposed dividend is subject to shareholder approval at the Annual General Meeting.
A capital distribution of US$2.6 million (US$ 1 cent per share) was declared as a reduction of share premium
during the year ended 30 September 2017.
The full audited Annual Financial Statements and the results presentation will be available for download in the
Investor Relations section of the website on 28 November 2018.
Further details about the distribution to shareholders will be announced in due course via SENS/RNS.
CORPORATE INFORMATION
THARISA PLC
Incorporated in the Republic of Cyprus with limited liability
Registration number: HE223412
JSE share code: THA
LSE share code: THS
ISIN: CY0103562118
REGISTERED ADDRESS
Office 108 - 110
S. Pittokopitis Business Centre
17 Neophytou Nicolaides and Kilkis Streets
8011 Paphos
Cyprus
POSTAL ADDRESS
PO Box 62425
8064 Paphos
Cyprus
WEBSITE
www.tharisa.com
DIRECTORS OF THARISA
Loucas Christos Pouroulis (Executive Chairman)
Phoevos Pouroulis (Chief Executive Officer)
Michael Gifford Jones (Chief Finance Officer)
John David Salter (Lead independent non-executive director)
Antonios Djakouris (Independent non-executive director)
Omar Marwan 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)
JOINT COMPANY SECRETARIES
Lysandros Lysandrides
26 Vyronos Avenue
1096 Nicosia
Cyprus
Sanet Findlay
The Crossing
372 Main Road
Bryanston Johannesburg 2021
South Africa
Email: secretarial@tharisa.com
INVESTOR RELATIONS
Daniel Thole/Ilja Graulich
The Crossing 372 Main Road
Bryanston Johannesburg 2021
South Africa
Email: ir@tharisa.com
TRANSFER SECRETARIES
Cymain Registrars Limited
Registration number: HE174490
26 Vyronos Avenue
1096 Nicosia
Cyprus
Computershare Investor Services Proprietary Limited
Registration number: 2004/003647/07
Rosebank Towers
15 Bierman Avenue
Rosebank 2196
(PO Box 61051 Marshalltown 2107)
South Africa
JSE SPONSOR
Investec Bank Limited
Registration number: 1969/004763/06
100 Grayston Drive
Sandown Sandton 2196
(PO Box 785700 Sandton 2146)
South Africa
AUDITORS
Ernst & Young Cyprus Limited
Registration number: HE222520
Jean Nouvel Tower
6 Stasinos Avenue
1060 Nicosia
Cyprus
JOINT BROKERS
Peel Hunt LLP
Moore House
120 London Wall
EC 2Y 5ET
England
Contact: Ross Allister/James Bavister/David McKeown
+44 207 7418 8900
BMO Capital Markets Limited
95 Queen Victoria Street
London EC4V 4HG
England
Contact: Jeffrey Couch/Thomas Rider
+44 020 7236 1010
Joh. Berenberg, Gossler & Co. KG (UK joint broker)
60 Threadneedle Street London EC2R 8HP
England United Kingdom
Contact: Matthew Armitt/Sara MacGrath
+44 20 3207 7800
Nedbank Limited (acting through its Corporate and Investment
Banking division) (RSA broker)
135 Rivonia Road
Sandown, Sandton 2196
South Africa
Contact: Shabbir Norath/Reginald Demana
+27 11 295 6575
FINANCIAL PUBLIC RELATIONS
Buchanan
107 Cheapside
London EC2V 6DN
England
Contact: Bobby Morse/Augustine Chipingu
+44 020 7466 5000
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 www.tharisa.com
RNS users, please click on, or paste the following link into your web browser, to view the associated pdf document.
www.tharisa.com
Paphos, Cyprus
28 November 2018
Date: 28/11/2018 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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