Wrap Text
Condensed Consolidated Interim Financial Statements and Withdrawal of Cautionary Announcement
Petmin Limited
(Incorporated in the Republic of South Africa)
(Registration number 1972/001062/06)
JSE code: PET
ISIN: ZAE000076014
("Petmin" or "the Group")
Condensed
Consolidated
Interim Financial
Statements
for the six months
ended 31 December
2013 and withdrawal
of cautionary
announcement
"NAIC
moving
rapidly up
the value
curve"
"Headline Earnings
Per Share up 29%
and production levels
maintained despite
strike and reduced
anthracite prices."
Salient features:
- R279 million net cash flow from operating
activities (2012:R122 million)
- Updated Competent Person's Report for
Somkhele values the anthracite mine at
R1.64 billion
- Shareholding in North Atlantic Iron Corporation
(NAIC) increased to 30% based
Corporation on encouraging results from the preliminary
economic assessment (PEA)
on encouraging results from the preliminary
economic assessment (PEA)
- Mining Right granted for the Veremo Pig-Iron
Project
- 9% reduction in production cost per tonne
at Somkhele despite inflationary pressures
from wage increases and a weaker rand.
Cost reduction programme expected
to yield further improvements
Condensed Consolidated Interim Income Statement
for the six months ended 31 December 2013
Reviewed *Restated *Restated
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2013 2012 2013
Note R'000 R'000 R'000
Revenue 355 888 357 633 833 490
Cost of sales (254 932) (292 949) (665 930)
Gross profit 100 956 64 684 167 560
Operating (expenses)/income (12 996) 1 854 (589)
Administration expenses (11 423) (12 349) (22 534)
Profit from operating activities 76 537 54 189 144 617
– Fair value adjustments on
listed securities (9 713) (2 003) 5 683
Net finance expense (16 099) (7 109) (20 354)
– Finance income 3 168 1 918 5 229
– Finance expenses (19 267) (9 027) (25 583)
Separately disclosed items:
Impairment loss on equity
accounted investee – – (200 000)
Share of equity accounted
investees, net of tax 700 (655) (6 327)
Profit/(Loss) before income tax 51 425 44 422 (76 381)
Income tax expense (18 659) (14 291) (35 651)
Profit/(Loss) for the period 32 766 30 131 (112 032)
Earnings per share
Basic earnings per ordinary
share (cents) 6 5,68 5,22 (19,42)
Diluted earnings per ordinary
share (cents) 6 5,68 5,22 (19,42)
Condensed Consolidated Interim Statement of
Comprehensive Income
for the six months ended 31 December 2013
Reviewed *Restated
Six months Six months *Restated
ended ended Year ended
31 December 31 December 30 June
2013 2012 2013
R'000 R'000 R'000
Profit/(Loss) for the period 32 766 30 131 (112 032)
Other comprehensive income
(after tax)
Items that may be reclasssified to
profit or loss
Foreign currency translation differences
on equity accounted investees 11 224 2 111 7 442
Cash flow hedges reclassified to profit
or loss 2 619 – –
Effective portion of changes in
fair value cash flow hedges – – (2 619)
Other comprehensive income for
the period, net of income tax 13 843 2 111 4 823
Total comprehensive income for
the period 46 609 32 242 (107 209)
Condensed Consolidated Interim Statement of
Financial Position
as at 31 December 2013
Reviewed *Restated *Restated
31 December 31 December 30 June
2013 2012 2013
Note R'000 R'000 R'000
ASSETS
Non-current assets 1 702 000 1 769 367 1 668 918
Property, plant and equipment 1 118 587 1 132 150 1 130 643
Investment in equity accounted
investee 7 490 359 606 440 438 856
Loan due from joint venture 64 303 – 60 955
Investments 28 751 30 777 38 464
Current assets 429 266 233 532 363 199
Inventories 10 296 518 86 661 161 036
Trade and other receivables 109 843 142 694 197 887
Receivable on sale of subsidiary – 1 158 1 158
Current tax assets 2 772 2 772 2 772
Cash and cash equivalents 20 133 247 346
Total assets 2 131 266 2 002 899 2 032 117
EQUITY AND LIABILITIES
Ordinary share capital
and reserves 1 306 043 1 409 952 1 273 521
Share capital 143 575 143 589 143 575
Share premium 332 654 332 759 332 654
Share option reserve 12 582 6 303 9 440
Hedging reserve – – (2 619)
Foreign currency translation
reserve 22 224 5 669 11 000
Retained earnings 795 008 921 632 779 471
Non-current liabilities 624 476 391 212 567 945
Interest bearing loans and
borrowings 358 500 183 553 322 342
Deferred taxation liabilities 226 092 184 339 206 415
Environmental rehabilitation
provision 39 884 23 320 39 188
Current liabilities 200 747 201 735 190 651
Trade and other payables 74 030 133 376 134 753
Revenue in advance 61 103 – –
Current portion of interest
bearing loans and borrowings 21 340 35 799 21 340
Hedge liability – – 3 637
Shareholders for dividend 1 398 1 366 1 355
Bank overdraft 42 876 31 194 29 566
Total equity and liabilities 2 131 266 2 002 899 2 032 117
* = The comparative period financial statements have been restated following the change in accounting policy related to mandatory changes in IFRS. Refer to Note 3 of these financial statements.
Condensed Consolidated Interim Statement of Cash Flows
for the six months ended 31 December 2013
Reviewed Restated Restated
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2013 2012 2013
Note R'000 R'000 R'000
Profit from operating activities before finance (expense)/income 76 537 54 189 144 617
Adjustments for:
– depreciation 252 441 154 184 464 711
– notional interest 1 125 1 125 2 250
– Loss/(Profit) on disposal of property, plant and equipment 8 332 – (330)
– impairment of receivable on sale of subsidiary 1 158 – –
– reversal of accrual (8 132) – –
– write down to net realisable value of inventory 10 1 591 – –
– share options granted 3 142 2 795 5 932
– long-term rehabilitation expenditure incurred (429) – –
Operating cash flows before changes in working capital 335 765 212 293 617 180
Decrease/(Increase) in trade and other receivables 88 044 (36 524) (98 995)
(Increase)/Decrease in inventories 10 (137 072) 13 651 (60 724)
(Decrease) in trade and other payables (52 591) (22 936) (21 558)
Increase in revenue received in advance 61 103 – –
Cash generated by operations 295 249 166 484 435 903
Income tax (paid)/refunded – (37 588) (37 588)
Interest received 3 168 1 918 5 229
Interest paid (19 267) (9 027) (25 583)
Net cash flow from operating activities 279 150 121 787 377 961
Cash flows from investing activities
Investment in joint venture 7 (39 579) (41 650) (65 396)
Increase in loans to equity accounted investees (3 348) – (60 955)
Investment in listed shares – (2 838) (2 838)
Acquisition of property, plant and equipment (249 718) (334 712) (635 632)
– to expand operations (11 693) (76 969) (93 202)
– to expand operations – capitalised pre-strip 8 (225 599) (256 416) (529 701)
– to maintain operations (12 426) (1 327) (12 729)
Proceeds on sale of subsidiary, net of cash disposed – 279 906 279 906
Proceeds from sale of property, plant and equipment 1 000 – 6 975
Net cash flows used in investing activities (291 645) (99 294) (477 940)
Cash flows from financing activities
Treasury shares acquired – (1 518) (1 638)
Repayment of borrowings (10 670) (58 312) (68 982)
Increase in borrowings 46 828 150 000 285 000
Dividends paid (17 186) (28 766) (28 777)
Net cash flows from financing activities 18 972 61 404 185 603
Net increase/(decrease) in cash and cash equivalents 6 477 83 897 85 624
Cash and cash equivalents at beginning of period (29 220) (114 844) (114 844)
Cash and cash equivalents at end of period (22 743) (30 947) (29 220)
Condensed Consolidated Interim Statement of Changes in Equity
for the six months ended 31 December 2013
Foreign
Share Cash flow currency
Share Share option hedging translation Retaine
capital premium reserve reserve reserve earnings Total
GROUP R'000 R'000 R'000 R'000 R'000 R'000 R'000
Balance at 30 June 2012 – restated* 143 763 334 104 3 508 – 3 558 920 255 1 405 188
Total comprehensive income for the period – – – – 2 111 30 131 32 242
Profit for the period – – – – – 30 131 30 131
Foreign currency translation differences – – – – 2 111 – 2 111
Transactions with owners, recorded directly in equity (174) (1 345) 2 795 – – (28 754) (27 478)
Treasury shares acquired during the period (174) (1 345) – – – – (1 519)
Share options granted – – 2 795 – – – 2 795
Dividend paid – – – – – (28 754) (28 754)
Balance at 31 December 2012 143 589 332 759 6 303 – 5 669 921 632 1 409 952
Balance at 30 June 2012 – restated* 143 763 334 104 3 508 – 3 558 920 255 1 405 188
Total comprehensive income for the year – – – (2 619) 7 442 (112 032) (107 209)
Loss for the year – – – – – (112 032) (112 032)
Effective portion of changes in fair value of cash flow hedges – – – (2 619) – – (2 619)
Foreign currency translation differences – – – – 7 442 – 7 442
Transactions with owners, recorded directly in equity (188) (1 450) 5 932 – (28 752) (24 458)
Treasury shares acquired during the year (188) (1 450) – – – – (1 638)
Share options granted – – 5 932 – – – 5 932
Dividend paid – – – – – (28 752) (28 752)
Balance at 30 June 2013 – restated* 143 575 332 654 9 440 (2 619) 11 000 779 471 1 273 521
Total comprehensive income for the period – – – 2 619 11 224 32 766 46 609
Profit for the period – – – – – 32 766 32 766
Cash flow hedges reclassified to profit or loss – – – 2 619 – – 2 619
Foreign currency translation differences – – – – 11 224 – 11 224
Transactions with owners, recorded directly in equity – – 3 142 – (17 229) (14 087)
Share options granted – – 3 142 – – – 3 142
Dividend paid – – – – – (17 229) (17 229)
Balance at 31 December 2013 143 575 332 654 12 582 – 22 224 795 008 1 306 043
*No change from balances previously reported.
Condensed Consolidated Interim Financial Statements
for the six months ended 31 December 2013
Segment reporting
Segment information is presented in the condensed consolidated interim financial statements in respect of the Group's segments.
The segment reporting format reflects the Group's management and internal reporting structure as reviewed by the chief operating decision makers.
Segment revenue represents revenue to external customers. There was no inter-segment revenue.
Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.
Reportable segments
The group comprises the following main reportable segments:
– Anthracite mining and marketing ("Anthracite")
– Expansion projects, which includes Petmin's exploration and development projects.
Anthracite Expansion projects Eliminations Consolidated
Six months Six months Year Six months Six months Year Six months Six months Year Six months Six months Year
Units ended ended ended ended ended ended ended ended ended ended ended ended
of 31 Dec 31 Dec 30 June 31 Dec 31 Dec 30 June 31 Dec 31 Dec 30 June 31 Dec 31 Dec 30 June
measure 2013 2012 2013 2013 2012 2013 2013 2012 2013 2013 2012 2013
Anthracite – Saleable tonnes produced (tonnes) 534 523 287 765 822 431 – – – – – – 534 523 287 765 822 431
Anthracite – Tonnes sold (tonnes) 349 414 370 562 802 325 – – – – – – 349 414 370 562 802 325
Energy – saleable tonnes produced (tonnes) 110 349 – 207 238 – – – – – – 110 349 – 207 238
Energy – tonnes sold (tonnes) 25 777 – 178 559 – – – – – – 25 777 – 178 559
Segment revenue R'000 355 888 357 633 833 490 – – – – – – 355 888 357 633 833 490
Segment revenue per tonne sold (Anthracite) (R/tonne) 934,51 965,11 996,99 – – – – – – – – –
Segment revenue per tonne sold (Energy) (R/tonne) 276,00 – 188,06 – – – – – – – – –
Segment finance (expense)/income R'000
Finance income R'000 2 703 6 2 373 – – – 465 1 912 2 856 3 168 1 918 5 229
Mark to market of listed securities R'000 – – – (9 713) (2 003) 5 683 – – – (9 713) (2 003) 5 683
Finance expense R'000 (17 845) (6 356) (21 139) – – – (1 422) (2 671) (4 444) (19 267) (9 027) (25 583)
– segment result R'000 68 621 51 038 129 086 (10 998) (2 683) (197 947) (6 198) (3 933) (7 520) 51 425 44 422 (76 381)
Segment profit/(loss) before tax R'000 68 621 51 038 129 086 (10 998) (2 683) (197 947) (6 198) (3 933) (7 520) 51 425 44 422 (76 381)
Segment tax expense R'000 (18 658) (14 291) (35 651) – – – – – – (18 659) (14 291) (35 651)
Segment profit/(loss) after tax R'000 49 963 36 747 93 435 (10 998) (2 683) (197 947) (6 198) (3 933) (7 520) 32 766 30 131 (112 032)
Segment capital expenditure – combined R'000 247 158 345 329 653 473 – – – 2 560 (10 617) (17 841) 249 718 334 712 635 632
Segment capital expenditure R'000 21 559 88 913 123 772 – – – 2 560 (10 617) (17 841) 24 119 78 296 105 931
Segment capital expenditure – pre-strip* R'000 225 599 256 416 529 701 – – – – – – 225 599 256 416 529 701
Segment depreciation – combined R'000 252 240 153 978 464 294 – – – 201 207 417 252 441 154 185 464 711
Segment depreciation R'000 20 045 12 314 34 854 – – – 201 207 417 20 246 12 521 35 271
Segment depreciation – pre-strip* R'000 232 195 141 664 429 440 – – – – – – 232 195 141 664 429 440
Share option costs included in segment profit/(loss)
before tax R'000 – – – – – – 3 142 2 795 5 932 3 142 2 795 5 932
Segment assets R'000 1 602 831 1 341 109 1 545 632 516 056 637 217 475 561 12 379 24 573 12 943 2 131 266 2 002 899 2 034 136
Percentage of segment assets to total assets (percent) 75 67 76 24 32 23 1 1 1 100 100 100
Segment liabilities R'000 1 040 864 836 945 1 017 263 – – – (215 641) (243 998) (388 315) 825 223 592 947 628 948
Percentage of segment liabilities to total liabilities (percent) 126 141 162 – – – (26) (41) (62) 100 100 100
*See note 8.
Notes to the Condensed Consolidated Interim Financial Statements
for the six months ended 31 December 2013
1. Reporting entity
Petmin is a company domiciled in South Africa. The condensed consolidated interim financial statements of the Group for the six months ended 31 December 2013 comprise the
Company and its subsidiaries and the Group's interests in associates and joint ventures (together referred to as the "Group").
The condensed consolidated interim financial statements were authorised for issue by the directors on 3 March 2014.
2. Basis of preparation
The condensed consolidated interim financial statements have been prepared under the supervision of Petmin's financial director, Mr BP Tanner CA(SA) and in accordance with the
International Financial Reporting Standard, (IAS) 34 – Interim Financial Reporting, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial
Pronouncements as issued by the Financial Reporting Standards Council and the requirements of the Companies Act of South Africa.The accounting policies applied in the preparation
of these interim financial statements are in terms of International Financial Reporting Standards and are consistent with those applied in the previous annual financial statements unless
indicated otherwise. The condensed consolidated interim financial statements do not include all of the information required for full annual financial statements purposes and should
be read in conjunction with the consolidated annual financial statements for the year ended 30 June 2013, which are available upon request from the Company's registered office at
37 Peter Place, Bryanston, 2021, Johannesburg or at www.petmin.co.za.
3. Change in accounting policies
Petmin has adopted the new Consolidation Suite of standards:
- IFRS 10: Consolidated Financial Statements,
- IFRS 11: Joint Arrangements,
- IFRS 12: Disclosure of Interests in Other Entities,
- IFRS 13: Fair value measurement,
- IAS 27: Separate Financial Statements, and
- IAS28: Investment in Associates and Joint Ventures effective from 1 July 2013.
In terms of IFRS 11, the proportionate consolidation of joint ventures is no longer permitted. Joint arrangements are now classified as either joint ventures or joint operations. Joint
ventures are required to be equity accounted. Equity accounting of Petmin's joint ventures has resulted in a restatement of the income statement, statement of comprehensive income,
statement of financial position and statement of cash flows for the year ended 30 June 2013 and the six months ended 31 December 2012.
Equity accounting of Petmin's joint ventures had no impact on the statement of changes in equity.
Petmin also adopted IFRIC 20: Stripping costs in the production phase of a surface mine with effect from 1 July 2013. The adoption of this interpretation had no impact on these
condensed consolidated interim financial statements.
Other than as noted above, the accounting policies have been applied consistently by the Group to all periods presented in these condensed consolidated interim financial statements
and are consistent to those applied by the Group in its consolidated financial statements for the year ended 30 June 2013.
Functional and presentation currency
The condensed consolidated interim financial statements are presented in South African Rand ("Rand"), which is the Company's functional currency. All financial information presented
in Rand has been rounded to the nearest thousand.
Change in accounting policy: Income Statement
Reviewed
Six months Audited
ended Restated Year ended
31 December Impact of Six months 30 June Impact of Restated
2012 change in ended 2013 change in Year ended
as previously accounting 31 December as previously accounting 30 June
reported policy 2012 reported policy 2013
R'000 R'000 R'000 R'000 R'000 R'000
Revenue 357 633 – 357 633 833 490 – 833 490
Cost of sales (292 949) – (292 949) (664 100) (1 830) (665 930)
Gross profit 64 684 – 64 684 169 390 (1 830) 167 560
Operating (expenses)/income 1 854 – 1 854 (589) – (589)
Administration expenses (12 349) – (12 349) (24 384) 2 030 (22 354)
Results from operating activities 54 189 – 54 189 144 417 200 144 617
– Mark to market of listed securities (2 003) – (2 003) 5 683 – 5 683
Net finance expense (7 109) – (7 109) (24 172) 3 818 (20 354)
– Finance income 1 918 – 1 918 4 306 923 5 229
– Finance expenses (9 027) – (9 027) (28 478) 2 895 (25 583)
Separately disclosed items:
Impairment loss on equity accounted investee – – – (200 000) – (200 000)
Share of equity accounted investees, net of tax (655) – (655) (1 625) (4 702) (6 327)
(Loss)/Profit before income tax 44 422 – 44 422 (75 697) (684) (76 381)
Income tax expense (14 291) – (14 291) (36 335) 684 (35 651)
(Loss)/Profit for the period 30 131 – 30 131 (112 032) – (112 032)
Earnings per share
Basic earnings per ordinary share (cents) 5,22 – 5,22 (19,42) – (19,42)
Diluted earnings per ordinary share (cents) 5,22 – 5,22 (19,42) – (19,42)
Change in Accounting Policy: Statement of Comprehensive Income
Reviewed
Six months Audited
ended Restated Year ended
31 December Impact of Six months 30 June Impact of Restated
2012 change in ended 2013 change in Year ended
as previously accounting 31 December as previously accounting 30 June
reported policy 2012 reported policy 2013
R'000 R'000 R'000 R'000 R'000 R'000
(Loss)/Profit for the period 30 131 – 30 131 (112 032) – (112 032)
Other comprehensive income (after tax)
Items that may be reclasssified to profit and loss
Foreign currency translation differences 2 111 – 2 111 7 442 – 7 442
Effective portion of changes in fair value of cash fiow hedges – – – (2 619) – (2 619)
Other comprehensive income for the period, net of income tax 2 111 – 2 111 4 823 – 4 823
Total comprehensive income for the period 32 242 – 32 242 (107 209) – (107 209)
Change in Accounting Policy: Statement of Cash Flows
Reviewed
Six months Audited
ended Restated Year ended
31 December Impact of Six months 30 June Impact of Restated
2012 change in ended 2013 change in Year ended
as previously accounting 31 December as previously accounting 30 June
reported policy 2012 reported policy 2013
R'000 R'000 R'000 R'000 R'000 R'000
Profit from operations before finance (expense)/income 54 189 – 54 189 144 417 200 144 617
Adjustments for:
– depreciation and amortisation 154 185 (1) 154 184 474 562 (9 851) 464 711
– notional interest 1 125 – 1 125 2 250 – 2 250
– profit on disposal of property, plant and equipment – – – (340) 10 (330)
– share options granted 2 795 – 2 795 5 932 – 5 932
Operating cash flows before changes in working capital 212 294 (1) 212 293 626 821 (9 641) 617 180
Increase in trade and other receivables (35 783) (741) (36 524) (68 270) (30 725) (98 995)
(Increase)/Decrease in inventories 13 651 – 13 651 (62 061) 1 337 (60 724)
(Decrease)/Increase in trade and other payables (22 463) (473) (22 936) (42 894) 21 336 (21 558)
Cash generated by operations 167 699 (1 215) 166 484 453 596 (17 693) 435 903
Income tax (paid)/refunded (37 588) – (37 588) (37 588) – (37 588)
Finance income 1 918 – 1 918 4 306 923 5 229
Finance expenses (9 027) – (9 027) (28 478) 2 895 (25 583)
Net cash flow from operating activities 123 002 (1 215) 121 787 391 836 (13 875) 377 961
Cash flows from investing activities
Investment in jointly controlled entities (28 692) (12 958) (41 650) (91 765) 26 369 (65 396)
Investment in equity accounted investee – loan to JV – – – – (60 955) (60 955)
Investment in listed shares (2 836) (2) (2 838) (2 838) – (2 838)
Acquisition of property, plant and equipment (347 906) 13 194 (334 712) (672 594) 36 962 (635 632)
– to expand operations (90 163) 13 194 (76 969) (130 164) 36 962 (93 202)
– to expand operations – capitalised pre-strip (256 416) – (256 416) (529 701) – (529 701)
– to maintain operations (1 327) – (1 327) (12 729) – (12 729)
Proceeds on sale of subsidiary, net of cash disposed 279 906 – 279 906 279 906 – 279 906
Proceeds from sale of property, plant and equipment – – – 7 068 (93) 6 975
Net cash flows used in investing activities (99 528) 234 (99 294) (480 223) 2 283 (477 940)
Cash flows from financing activities
Treasury shares acquired (1 518) – (1 518) (1 638) – (1 638)
Repayment of borrowings (58 312) – (58 312) (78 997) 10 015 (68 982)
Increase in borrowings 150 000 – 150 000 286 122 (1 122) 285 000
Dividends paid (28 766) – (28 766) (28 777) – (28 777)
Net cash flows from financing activities 61 404 – 61 404 176 710 8 893 185 603
Net increase/(decrease) in cash and cash equivalents 84 878 (981) 83 897 88 323 (2 699) 85 624
Cash and cash equivalents at beginning of period (113 307) (1 537) (114 844) (113 307) (1 537) (114 844)
Cash and cash equivalents at end of period (28 429) (2 518) (30 947) (24 984) (4 236) (29 220)
Change in Accounting Policy: Statement of Financial Position (Note 3)
Reviewed Audited
31 December Impact of 30 June Impact of Audited Impact of
2012 change in Restated 2013 change in 30 June 2012 change in
as previously accounting 31 December as previously accounting Restated as previously accounting Restated
reported policy 2012 reported policy 30 June 2013 reported policy 30 June 2012
R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
ASSETS
Non-current assets 1 765 402 3 965 1 769 367 1 765 955 (97 037) 1 668 918 1 541 541 3 361 1 544 902
Property, plant and equipment 1 265 868 (133 718) 1 132 150 1 425 327 (294 684) 1 130 643 1 042 840 (91 217) 951 623
Investment in equity accounted investee 468 757 137 683 606 440 271 686 167 170 438 856 468 757 94 578 563 335
Loan due from joint venture – – – 30 478 30 477 60 955 – – –
Investments 30 777 – 30 777 38 464 – 38 464 29 944 – 29 944
Current assets 239 563 (6 031) 233 532 374 425 (11 226) 363 199 494 701 (5 467) 489 234
Inventories 86 661 – 86 661 163 779 (2 743) 161 036 100 312 – 100 312
Trade and other receivables 146 207 (3 513) 142 694 201 768 (3 881) 197 887 111 741 (3 930) 107 811
Receivable on sale of subsidiary 1 158 – 1 158 1 158 - 1 158 281 064 – 281 064
Current tax assets 2 772 – 2 772 2 772 – 2 772 – – –
Cash and cash equivalents 2 765 (2 518) 247 4 948 (4 602) 346 1 584 (1 537) 47
Total assets 2 004 965 (2 066) 2 002 899 2 140 380 (108 263) 2 032 117 2 036 242 (2 106) 2 034 136
EQUITY AND LIABILITIES
Ordinary share capital and reserves 1 409 952 – 1 409 952 1 273 521 – 1 273 521 1 405 188 – 1 405 188
Share capital 143 589 – 143 589 143 575 – 143 575 143 763 – 143 763
Share premium 332 759 – 332 759 332 654 – 332 654 334 104 – 334 104
Share option reserve 6 303 – 6 303 9 440 – 9 440 3 508 – 3 508
Hedging reserve – – – (2 619) – (2 619) – – –
Foreign currency translation reserve 5 669 – 5 669 11 000 – 11 000 3 558 – 3 558
Retained earnings 921 632 – 921 632 779 471 – 779 471 920 255 – 920 255
Non-current liabilities 391 600 (388) 391 212 649 478 (81 533) 567 945 262 502 (451) 262 051
Interest free loan – – – 1 122 (1 122) – – – –
Interest bearing loans and borrowings 183 553 – 183 553 372 032 (49 690) 322 342 68 074 – 68 074
Loan due to venturer in joint venture – – – 30 478 (30 478) – – – –
Deferred taxation liabilities 184 727 (388) 184 339 206 658 (243) 206 415 172 233 (451) 171 782
Environmental rehabilitation provision 23 320 – 23 320 39 188 – 39 188 22 195 – 22 195
Current liabilities 203 413 (1 678) 201 735 217 381 (26 730) 190 651 368 552 (1 655) 366 897
Trade and other payables 135 054 (1 678) 133 376 131 023 3 730 134 753 157 968 (1 655) 156 313
Current portion of interest bearing
loans and borrowings 35 799 – 35 799 51 434 (30 094) 21 340 59 590 – 59 590
Hedge liability – – – 3 637 – 3 637 – – –
Current tax liabilities – – – – – – 34 816 – 34 816
Shareholders for dividend 1 366 – 1 366 1 355 – 1 355 1 287 – 1 287
Bank overdraft 31 194 – 31 194 29 932 (366) 29 566 114 891 – 114 891
Total equity and liabilities 2 004 965 (2 066) 2 002 899 2 140 380 (108 263) 2 032 117 2 036 242 (2 106) 2 034 136
4. Estimates and judgements
The preparation of the condensed consolidated interim financial statements, in conformity with IAS 34 – Interim Financial Reporting, requires management to make judgements,
estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are
based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making the judgements
about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the
revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.
The significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the
consolidated annual financial statements as at and for the year ended 30 June 2013.
5. Review of condensed consolidated interim financial statements
These condensed consolidated interim financial statements for the period ended 31 December 2013 have been reviewed by KPMG Inc., who expressed an unmodified review
conclusion. A copy of the auditor's review report is available for inspection at the company's registered office together with the interim financial statements identified in the auditor's
report.
The auditor's review report does not necessarily report on all of the information contained in these financial results. Shareholders are therefore advised that in order to obtain a full
understanding of the nature of the auditor's review engagement they should obtain a copy of the auditor's review report together with the accompanying financial information from
the issuer's registered office.
6. Earnings and diluted earnings per share
Earnings per share ("EPS") are based on the Group's profit for the period, divided by the weighted average number of shares in issue during the period.
Reviewed Restated Restated
Six months ended 31 December 2013 Six months ended 31 December 2012 Year ended 30 June 2013
Profit for Number of Profit for Number of Profit for Number of
the period shares in Per share the period shares in Per share the year shares in Per share
R'000 thousands in cents R'000 thousands in cents R'000 thousands in cents
Basic earnings per share 32 766 576 908 5,68 30 131 576 908 5,22 (112 032) 576 908 (19,42)
Share options and contingent consideration* – – – – – – – – –
Diluted EPS 32 766 576 908 5,68 30 131 576 908 5,22 (112 032) 576 908 (19,42)
Headline earnings per share
Headline earnings per share is based on the
Group's headline earnings divided by
the weighted average number of shares
in issue during the year.
Reconciliation between earnings and headline
earnings per share
Basic EPS 32 766 576 908 5,68 30 131 576 908 5,22 (112 032) 576 908 (19,42)
Adjustments:
– Loss on sale of property, plant and equipment 6 028 – 1,04 – – – – – –
– Impairment of equity accounted investee – – – – – – 200 000 – 34,67
Headline EPS 38 794 576 908 6,71 30 131 576 908 5,22 87 968 576 908 15,25
Share options and contingent consideration* – – – – – – – – –
Diluted headline EPS 38 794 576 908 6,71 30 131 576 908 5,22 87 968 576 908 15,25
*At the reporting dates, the ruling share price of Petmin's shares was below the strike price of the options. As the exercise of the options would be anti-dilutive, they have been ingored for the dilution calculations.
7. Investment in Joint Venture
During the six months ended 31 December 2013 Petmin invested an additional US$4 million [approximately R40 million] (2012: $4,5 million [approximately R37 million]) in North
Atlantic Iron Corporation (NAIC). Petmin's shareholding in NAIC is now 30% (30 June 2013: 25%).
8. Pre-stripping cost
Six months Six months Year
ended ended ended
Somkhele: Pre-strip costs December 2013 December 2012 June 2013
Opening balance on balance sheet 328 227 227
Cash spend in the period 226 256 530
Mining – expensed on a units of production basis (depreciation) (232) (142) (429)
Closing balance on balance sheet 322 341 328
Petmin incurred cash stripping costs amounting to R226 million during the current period (2012: R256 million). It is Petmin's accounting policy to record the cash cost incurred on these
stripping activities as additions to mine development cost under property plant and equipment (a non-current asset).
These capitalised cash costs are expensed (depreciated) as coal is extracted.This is done on a units-of-production basis over the life of the component of the ore body to which access
is improved and amounted to R232 million during the current period (2012: R142 million).This resulted in a net decrease in the capital expenditure capitalised to pre-stripping activities
of R6 million during the current period (2012: increase of R114 million).
The depreciation is, in reality, the mining cost (stripping cost) that is expensed during the period when run of mine coal is removed from the pit.
9. Liquidity and going concern
The Group remains strongly cash generative and the directors believe that the there is sufficient liquidity and funding available to finance the Group's operations for the foreseeable
future and that the going concern assumption is appropriate.
During the period under review, the Group signed an amendment to its short-term banking facilities with Standard Bank, securing overdraft facilities of R170 million (previously
R100 million). At 31 December 2013 R127 million (2012: R69 million) of the facilities remain unutilised.
10. Inventory
The increase in inventory at 31 December 2013 resulted from improved production at the Somkhele Anthracite Mine and reduced demand from the export markets. Sales volumes
have improved in the first two months of 2014 and management expects inventory reserves to materially decrease by 30 June 2014. R43,4 million of inventory is plant feed that will
only be processed in greater than 12 months. Inventory with a carrying value of R10,3 million (2012: nil) is measured at its net realisable value.
11. Contingent liability
The dispute with one of Tendele's customers over the interpretation of the contracted qualities of Tendele's energy product (please refer to note 29 of Petmin's June 2013 financial
statements) has been scheduled for arbitration during August 2014.Tendele and its legal advisors believe that the claim is unlikely to be successful hence no liability has been recognised
at 31 December 2013.
12. Related parties
The group entered into various transactions with related parties which occurred under terms that are no more favourable than those arranged with independent third parties.
13. Change in board of directors
As announced on 16 October 2013, it was with deep regret and sadness that the board informed shareholders of the death of John Taylor after a long illness. John served as a Petmin
non-executive director since 2006. He will be greatly missed.
As noted in Petmin's June 2013 Integrated Report, with effect from 22 February 2014, Ian Cockerill has assumed the role of non-executive chairman of Petmin (previously executive
chairman).
14. Subsequent events
14.1 Updated Competent Persons Report (CPR) for the Somkhele Anthracite Mine
Tendele has received an updated, SAMREC and SAMVAL compliant CPR indicating a base case valuation of the Somkhele Anthracite Mine of R1.64 billion.
A summary of this report is available on www.petmin.co.za. Please refer to the seperate announcement dated 3 March 2014
14.2 Results of AGM
At the AGM held on 21 February 2014, all the resolutions were passed with the requisite majority.
14.3 Retirement of director
On 3 March 2014, Mr Alwyn Martin retired as a director of Petmin Limited. Mr Martin has been a non-executive director of Petmin since 30 November 2005 and has played an
active role in the Company's development. The board of directors thanks Mr Martin for his valuable contribution and wishes him well in the future.
14.4 Withdrawal of cautionary announcement
Shareholders are referred to the cautionary announcements dated 9 September 2013, 30 September 2013, 12 November 2013, 23 December 2013 and 6 February 2014
and are advised that the contents referred to therein have ceased to have any relevance or effect on the Company, therefore caution is no longer required to be exercised by
shareholders when dealing in their securities.
14.5 Other subsequent events
There have been no other events that have occurred subsequent to 31 December 2013 and before the condensed preliminary consolidated financial statements are authorised
for issue which require adjustment of, or disclosure in the financial statements or notes thereto in accordance with IAS 10 – Events After the Reporting Period.
Management commentary for the six months ended 31 December 2013
This management commentary included below, has been prepared by management and has not been reviewed by the Group's auditors.
(i) General overview of performance
Petmin's headline earnings per share were up 29% and normalised earnings (see table below) were up 40% from 2012, this was despite the reduced selling prices of anthracite in a
difficult market for metallurgical coal and despite the 37 day strike that affected operations in September and October 2013. Headline earnings included a mark to market expense of
R10 million (2012: R2 million) on Petmin's investment in Red Crescent Resources (RCR).
Earnings per share were up by 3% as an after-tax loss on the sale of plant and equipment amounting to R6 million was recorded during the period.
Actual Actual Actual Actual
Normalised earnings six months ended six months ended six months ended Year ended
(R'000) 31 Dec 2013 31 Dec 2012 30 June 2013 30 June 2013
Profit/(Loss) for the year 32 766 30 131 (142 163) (112 032)
Adjust for after-tax effect of:
– Loss on sale of PPE 5 999 – – –
– Mark to market of listed investments 9 713 2 003 (7 686) (5 683)
– Impairments 1 158 – 200 000 200 000
– NRV impairment of inventory 1 146 – – –
– Reversal of accrual (5 855) – – –
Normalised profit after tax 44 927 32 134 50 151 82 285
Adjusted profit per share 7,79 5,57 8,69 14,26
Percentage increase 40
Petmin invested R58 million (2012: R237 million) to deliver on its growth and diversification strategy. R18 million (2012: R193 million) was invested in Somkhele and R40 million in NAIC
(2012: R44 million at NAIC and Red Crescent Resources)..
The Group's operations remain cash generative, generating R279 million (2012: R402 million which included the after-tax proceeds on the sale of SamQuarz amounting to R242 million).
Profit after tax was up 9% to R33 million (2012: R30 million).
Petmin's interest bearing debt to equity ratio increased to 32.37% from the 29.31% recorded at 30 June 2013 as Petmin drew an additional R40 million of the R325 million Standard
Bank loan facilities.
Anthracite Division
Somkhele anthracite mine
Six months Six months Year
ended ended ended
31 December Percentage 31 December 30 June
Somkhele production performance 2013 change 2012 2013
Run of Mine (ROM) tonnes washed 1 234 380 77 697 703 2 078 360
Yield (%) 43,30 5 41,24 39,57
Anthracite saleable tonnes produced 534 523 86 287 765 822 431
Anthracite tonnes sold 349 414 (6) 370 562 802 325
Discard tonnes washed 530 215 206 173 223 744 547
Yield (%) 20,81 (23) 26,96 33,28
Energy coal saleable tonnes produced 110 349 820 11 989 207 238
Anthracite saleable tonnes produced from discard – (100) 34 705 40 518
Energy coal sold 25 777 – – 178 559
Production in the six months ended 31 December 2013 was hampered by a 37-day strike at Somkhele, despite this, production of saleable anthracite was up 86% from 2012.
In the comparative period, production was affected by a 15-day illegal strike and excessive rainfall which hampered operations for an additional 15 days. Management implemented
mitigating actions after the 2012 strikes and we are pleased to report the increased production levels in 2013 as evidence of the efficacy of these measures.
Somkhele sales performance Six months Six months Year
ended ended ended
31 December Percentage 31 December 30 June
Volume 2013 change 2012 2013
Inland anthracite – tonnes sold 240 861 30 185 856 442 540
Export anthracite – tonnes sold 108 553 (42) 186 863 359 785
Total anthracite tonnes sold 349 414 (6) 372 719 802 325
Energy coal tonnes sold 25 777 – – 178 559
Price
Inland anthracite selling price (at mine gate) – R 1 025 6 963 983
Export anthracite selling price (at mine gate) – R 717 (4) 748 823
Export price R (FOB) 896 (4) 933 1 020
Export price US$ (FOB) 91 (17) 109 112
Average Rand/Dollar exchange rate achieved 9,89 17 8,45 9,07
Energy coal selling price (at mine gate) – R 276 – – 188
Anthracite sales volumes were down 6% from 2012 with lower pricing and volumes on the export markets as world demand for metallurgical coal declined.
As disclosed in Petmin's financial statements for the year ended 30 June 2013, sales of energy coal were suspended in the period July 2013 to September 2013 during the dispute with the
energy coal customer (refer to note 11 of these interim financial statements). Sales have resumed with new customers at more advantageous prices to Somkhele. The dispute with
the customer is scheduled for arbitration August 2014.
Capital expenditure at Somkhele was R18 million (2012: R193 million). A credit to the capitalised pre-strip of R6 million was recorded (2012: debit R114 million), R9 million was spent
on development of new mining areas at Somkhele, R3 million on exploration, R2 million for a new screening plant, R3 million on upgrades to the third wash plant, R1 million on social
and labour plan commitments, and expenditure on sundry other items amounting to R6 million.
Expansion projects division
Petmin's strategy remains focussed on the steel value chain and commodities required for infrastructure development and urbanization.
During the six months ended 31 December 2013, Petmin invested R40 million (2012: R44 million) in its expansion projects.
North Atlantic Iron Corporation ("NAIC")
During the six months ended 31 December 2013, R40 million was invested in NAIC, increasing Petmin's shareholding to 30% (30 June 2013: 25%).
At NAIC, the Preliminary Economic Assessment (PEA) is being finalised and no fatal flaws have been identified in the project.
Successful smelt tests were conducted in June 2013 at a smelter commissioned in Forks, Pennsylvania, for evaluating cold briquetted feed and pre-reduced briquettes using a rotary hearth
for pre-reduction. A second smelt test in Forks was completed in Q4 2013 with seven large US steel mills (key pig iron customers) invited to attend. This successful test used briquettes
pre-reduced at Midrex's facility in Charlotte, North Carolina, also under the auspices of Hatch.
An alternative coal-fired smelting process using the Outotec AusIron technology was also successfully tested, using cold concentrate and Australian coals, in Outotec's facility in Australia.
Further tests conducted in Q4 2013, using pre-selected coals from the US, established the economic viability of this alternative process.
Iron Bird Resources Plc. ("Iron Bird")
As previously announced, Petmin and its joint venture partners are considering their options to either merge with a larger iron ore company or to sell the investment in the Mt Ginka
iron ore project in northern Liberia.
Red Crescent Resources Limited ("RCR")
Petmin retains its approximate 10% shareholding in RCR. On 3 February 2014, RCR announced that it had concluded an agreement to sell its subsidiary RCR Holding Anonim S°irketi
("RCR Holding").
The sale of RCR Holding constitutes the sale of substantially all of RCR's assets. Upon completion of the Transaction the only assets of the RCR's will be the consideration paid to RCR
from the purchaser, being, (i) US$500 000 in cash; and (ii) an unsecured promissory note (the "Promissory Note") for a principal amount of
US$ 9 500 000 bearing interest at a rate of 10% per annum, and payable by the purchaser on the fourth anniversary of the completion of the Transaction. RCR has agreed not to dispose
of the note for a period of two years following closing, in case the purchaser has a claim against RCR pursuant to the sale. The Purchaser will also settle outstanding debts of RCR and
its subsidiaries up to limits agreed to by the parties.
Upon completion of the Transaction, it is the intention of RCR to voluntarily de-list its shares from the Toronto and Frankfurt Stock Exchanges, to cease filing financial statements and
other timely disclosure documents under applicable securities law in order the preserve the value of the Promissory Note for its shareholders as it will have no business. It is also the
RCR's intention to dividend the principal amount of the Promissory Note to its shareholders approximately two years following completion of the transaction.
It is estimated that the value of the final cash distribution will be approximately 6 cents per share, the quoted share price at 31 December at which RCR shares are currently recorded
was 2 cents per share.
Pig-iron – South Africa (Veremo project)
Management is pleased to report that the Department of Mineral Resources notified Veremo on 31 January 2014 that it has been awarded a Mining Right for the Veremo project. The
Veremo board is evaluating alternative development strategies with a view to accelerate the generation of cash flow from the project.
Discussions continue with the controlling shareholders of Veremo over the settlement of the minimum cash payments of R65 million per year for three years the first of which was due
on 28 February 2013 and the last of which is due on 28 February 2015.
(ii) Prospects
Anthracite division
After the strike in the first-half, production volumes at Somkhele are expected to improve by at least 20% in the six months to June 2014.
Sales volumes in the inland market have improved since December 2013 and are expected to improve by at least 20% in the six months to June 2014.
Export sales volumes are expected to more than double in the six months to June 2014, however, prices on the export market are expected to remain under pressure, in line with
global trends.
Energy coal sales in the six months to June 2014 are expected to increase to approximately 200 000 tonnes as agreements are signed with new energy coal customers.
Capital expenditure to June 2014 is expected to be approximately R26 million with no additional capital pre-stripping forecast to June 2014.
NAIC
The PEA for NAIC is expected to be published at the end of March 2014 where after Petmin expects to invest up to a further US$8 million to take its shareholding in NAIC to 40%.
Petmin is considering the separate listing of NAIC on the TSX and JSE and a possible unbundling to shareholders thereafter.
Additional details on Petmin, including a detailed presentation on the results (which will be available from 4 March 2014) can be found on our website www.petmin.co.za.
By order of the Board
ID Cockerill JC du Preez Johannesburg
Chairman Chief Executive Officer 4 March 2014
Directors: I Cockerill# (Chairman)* L Mogotsi (Deputy Chairman) J du Preez (Chief Executive Officer)
B Doig B Tanner (Financial Director) M Arnold*† E de V Greyling* K Kalyan* A Martin*† † T Petersen*
*Non-executive #British †American ††retired 3 March 2014
Registered office: 37 Peter Place Bryanston 2021
Corporate office: 37 Peter Place Bryanston 2021 Tel: (011) 706 1644 Fax: (011) 706 1594 Website: www.petmin.co.za
Sponsor – JSE: River Group Tel: +27 (0) 12 346 8540
Company secretary: Mondial Consultants (Proprietary) Limited
Transfer secretaries: JSE: Computershare Investor Services (Proprietary) Limited
Auditors: KPMG Inc.
A PDF version of these results is available on our website: www.petmin.co.za
Date: 04/03/2014 07:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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