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Tharisa PLC   -  THS   

Condensed Consolidated Financial Statements H1FY19

Released 07:00 15-May-2019

RNS Number : 0034Z
Tharisa PLC
15 May 2019
 

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" or the "Company")

 

 

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 31 MARCH 2019

 

 

 

Salient features

 

REEF MINED

 

2.22 Mt

down 9.3%

(2018: 2.45 Mt)

PGM PRODUCTION (5PGE+AU)

67.6 koz

down 12.2%

(2018: 77.0 koz)

CHROME CONCENTRATE PRODUCTION

614.1 kt

down 16.2%

(2018: 732.5 kt)




REVENUE

US$166.5 m

down 16.4%

(2018: US$199.2 m)

OPERATING PROFIT

US$14.3 m

down 64.6%

(2018: US$40.4 m)

EBITDA

US$30.1 m

down 44.4%

(2018: US$54.1 m)




PROFIT BEFORE TAX

 

US$10.2 m

down 72.6%

(2018: US$37.2 m)

EARNINGS AND HEADLINE
EARNINGS PER SHARE

US$ 4 cents

down 60.0%

(2018: US$ 10 cents)

INTERIM DIVIDEND

 

US$ 0.5 cents

16.2% of NPAT

 



 

Group statistics

 


Unit

H1 FY2019

H1 FY2018

 Change %

Reef mined

kt

2 223.5

2 451.3

(9.3)

Stripping ratio

m3 waste: m3 reef

7.1

8.1

(12.3)

Reef milled

kt

2 337.5*

2 597.4

(10.0)

PGM flotation feed

kt

1 751.6

1 895.6

(7.6)

PGM rougher feed grade

g/t

1.49

1.52

(2.0)

PGM recovery

%

80.7

83.2

(3.0)

PGM ounces produced

5PGE+Au koz

67.6

77.0

(12.2)

Average PGM basket price

US$/oz

1 017

909

11.9

Average PGM basket price

ZAR/oz

14 382

11 606

23.9

Cr2O3 ROM grade

%

18.2

18.1

0.6

Chrome recovery

%

60.8

65.9

(7.7)

Chrome yield

%

26.3

28.2

(6.7)

Chrome concentrates produced (excluding third party)

kt

614.1

732.5

(16.2)

Metallurgical grade

kt

466.0

558.9

(16.6)

Specialty grades

kt

148.1

173.6

(14.7)

Third-party chrome production

kt

112.5

106.2

5.9

Chrome concentrates sold (including third party)

kt

703.7

811.2

(13.3)

Metallurgical grade chrome concentrate contract price

US$/t CIF China

163

193

(15.5)

Metallurgical grade chrome concentrate contract price

ZAR/t CIF China

2 289

2 436

(6.0)

Average exchange rate

ZAR:US$

14.2

12.8

10.9

Group revenue

US$ million

166.5

199.2

(16.4)

Gross profit

US$ million

32.1

55.7

(42.4)

Net profit for the period

US$ million

8.2

28.4

(71.1)

EBITDA

US$ million

30.1

54.1

(44.4)

Headline profit

US$ million

10.5

25.7

(59.1)

Headline earnings per share

US$ cents

4

10

(60.0)

Earnings per share

US$ cents

4

10

(60.0)

Interim dividend

US$ cents

0.5

2


Gross profit margin

%

19.3

28.0

(31.1)

EBITDA margin

%

18.1

27.2

(33.5)

Net cash flows from operating activities

US$ million

41.4

49.2

(15.9)

Net debt

US$ million

7.9

22.7

(65.2)

Capital expenditure

US$ million

24.3

17.7

37.3

* Includes the processing of 99.0 kt of commissioning tails.

 

 



 

Management report

 

Dear Stakeholder

Safety is a core value and Tharisa continues to strive for zero harm at its operations. Tharisa achieved a lost-time injury frequency rate ('LTIFR') of 0.24 per 200 000 man hours worked at 31 March 2019. This is among the lowest LTIFRs in the PGM and chrome industries in South Africa.

 

The Group reported revenue of US$166.5 million and a profit before tax of US$10.2 million for the interim period with net cash flows from operating activities of US$41.1 million. Earnings per share amounted to US$4 cents and an interim dividend of US$0.5 cent a share was declared. These results were achieved against lower chrome concentrate prices and lower PGM and chrome sales volumes.

 

Key production statistics for the six months ended 31 March 2019:

·      PGM recoveries decreased to 80.7% from 83.2%, remaining above the targeted 80.0%.

·      PGM production at 67.6 koz, down 12.2% from 77.0 koz.

·      Chrome recoveries declined to 60.8% from 65.9%.

·      Chrome production at 614.1 kt, down 16.2% from 732.5 kt.

 

Tharisa's average PGM contained metal basket price benefited from the increases in palladium and rhodium prices, contributing to an increase of 11.9% to US$1 017/oz from US$909/oz in the comparable period.

 

Average contracted metallurgical grade chrome concentrate prices decreased to US$163/t from US$193/t reported in H1 FY2018. Current metallurgical chrome spot prices are trading at US$170/t. Global growth in stainless steel production remains robust.

 

Specialty chrome concentrates, which comprise 24.1% of chrome concentrate production, are sold into the chemical and foundry markets globally and these grades continue to attract a significant premium above the metallurgical chrome concentrate price.

 

Operational overview






Unit

31 March

2019

31 March

2018

Change

%

Reef mined

kt

2 223.5

2 451.3

(9.3)

Reef milled

kt

2 337.5

2 597.4

(10.0)

On-mine cash cost per tonne milled

US$/t

35.2

32.7

7.6

Consolidated cash cost per tonne milled (excluding transport)

US$/t

39.1

36.4

7.4

 

Mining

The Tharisa Mine is unique in that it mines multiple mineralised layers with defined PGM and chrome contents. The mine is a large-scale, highly mechanised open pit with a life of mine of up to 15 years and the potential to extend mine life by a further 40 years by mining underground.

 

During the six months under review, 2.2 Mt of ore was mined, with an average head grade of 1.49 g/t PGMs on a 5PGE+Au basis and 18.2% chrome reporting to the processing plants.

 

In the past six months, Tharisa focused on the pit redesign, which is opening up access to the full mining strike length and the maintenance of the correct multi-reef layer profile to ensure stable feed grades for processing. The pit redesign will achieve the following:

·      The extension and widening of the East Pit to optimise logistics.

·      Improve access to the East Pit from the north side with more regular backfill now possible on the south side as the pit advances to the north.

·      Longer benches and thus better drilling, blasting and hauling continuity as access roads previously ran north to south are now running parallel to the pit as the pit advances.

·      Longer benches will also ensure more optimal product mix and grade control to be delivered to both the Genesis and Voyager plants, which have a chrome and PGM bias respectively.

 

The Tharisa mining division moved an additional 1.3 Mm3 of in-pit material over the six-month period as part of the pit redesign. While the stripping ratio was 7.1 on a m3:m3 basis for the six months, if the additional material is included in the stripping ratio calculation, the stripping ratio tracked the LOM average of 9.5.

 

The transition to a 24-hour continuous operation in the East Pit was completed in the latter part of the six months after a slight delay, resulting in a mining capacity increase of 15%.

 

Processing

Tharisa has two processing plants - the Genesis and Voyager standalone concentrator plants. The Genesis Plant incorporates the Challenger Plant on the feed circuit for the extraction of specialty grade chrome concentrates principally from natural fines.

 

During the six-month period, 2.3 Mt of reef was processed through the two plants, which included 99.0 kt of commissioning tailings. This material supplemented the reduced level of ROM material, however it negatively impacted the overall production and recoveries. For the six months, 67.6 koz of contained PGMs on a 5PGE+Au basis and 614.1 kt of chrome concentrates were produced. Of the 614.1 kt of chrome concentrates produced, 148.1 kt or 24.1% of the chrome concentrate production was specialty grade chrome concentrates.

As a consequence of the pit redesign, the optimal reef mix was not mined and impacted on the PGM rougher feed grade which declined by 2.0% to 1.49 g/t with the Cr2O3 ROM feed grade increasing marginally by 0.6% to 18.2% for the period.

 

While the processing operations are largely insulated from load shedding stage 1 to 3 in South Africa, the unprecedented stage 4 load shedding in March 2019 introduced instability into the processing plants and, at times, necessitated the stopping of certain processing circuits including the crusher circuits and part of the mill circuits, thereby impacting on overall production. Subsequently measures have been put in place to mitigate the risk of further load shedding and the impact on production with alternative standby diesel generator capacity.

 

Overall PGM recovery was 80.7% and the average chrome recovery was 60.8% for the six months, both being impacted from the processing of the commissioning tailings. In the second quarter, PGM and chrome recovery improved to 85.5% and 62.9% respectively. 

 



 

Vision 2020

The Vision 2020 projects are targeting an increase in Tharisa Minerals' production to 200 koz pa of PGMs and 2.0 Mt pa of chrome concentrates in 2020, on an annualised basis.

 

Commodity markets and sales






Unit

31 March

2019

31 March

2018

Change

%

PGM basket price

US$/oz

1 017

909

11.9

PGM basket price

ZAR/oz

14 382

11 606

23.9

42% metallurgical grade chrome concentrate contract price

US$/t

163

193

(15.5)

42% metallurgical grade chrome concentrate contract price

ZAR/t

2 289

2 436

(6.6)

Exchange rate

ZAR:US$

14.2

12.8

10.9

 

The PGM basket price has traded higher compared to H1 FY2018, with the average PGM contained metal basket price increasing 11.9% and ZAR basket price increasing 23.9% following the weakening of the South African rand ('ZAR') against the US$.

 

PGM production continued to be sold to Impala Platinum under the offtake agreement as well as to Lonmin under a research and cooperation agreement. A total of 67.0 koz was sold during the period.

 

The Tharisa Mine's PGM prill split was as follows:


31 March

2019

31 March

2018

Platinum

54.9

56.4

Palladium

17.4

16.3

Rhodium

9.5

9.2

Gold

0.2

0.2

Ruthenium

13.6

13.5

Iridium

4.4

4.4

 

Contracted metallurgical grade chrome concentrate prices decreased over the period to an average US$163/t from the average US$193/t achieved in H1 FY2018. Spot metallurgical chrome prices as quoted by FerroAlloyNet traded between US$155/t and US$185/t during the period. This compares to the US$162/t and US$245/t range in the comparative six months.

 

The demand for chrome concentrate is driven by the increasing demand for stainless steel, which fundamentally remains robust. In CY2018, global stainless steel production increased by 5.5% year on year with Chinese production up 3.6% year on year to 26.7 Mt, according to the International Stainless Steel Forum. The fundamentals of the global stainless steel market remain sound further supporting strong demand for chrome units in the form of ferrochrome and chrome ores.

 

Chinese chrome port stocks were approximately 2.7 Mt at the end of April 2019. With domestic Chinese monthly requirements of approximately 1.2 Mt, this equates to 9 weeks' supply assuming all stocks are immediately available.

 

Tharisa's chrome concentrate sales for the period totalled 618.0 kt, a decrease of 14.8% compared to H1 FY2018 sales of 725.6 kt. Inventory levels totalled 62.6 kt as at end March 2019. Third-party sales totalled 85.7 kt, an increase of 0.1% from 85.6 kt.

 

Third-party sales comprise the sales of the UG2 chrome concentrate produced at Lonmin's K3 UG2 chrome plant, which is operated by Tharisa subsidiary Arxo Metals.

Logistics






Unit

31 March

2019

31 March

 2018

Change

%

Average transport cost per tonne of chrome concentrate - CIF China basis

US$/t

62.8

60.9

3.1

Chrome concentrates shipped

kt

461.2

552.7

(16.6)

 

The chrome concentrate destined for main ports in China is shipped either in bulk from the Richards Bay Dry Bulk Terminal or via containers from Johannesburg and transported by road to Durban from where it is shipped. The economies of scale and in-house expertise have ensured that Tharisa's transport costs, a major cost to the Group, remained competitive.

 

China remains the main market for metallurgical chrome concentrates and the metallurgical grade chrome concentrates produced by the Tharisa Mine were predominantly sold on a CIF main ports China basis. Almost all material was shipped in bulk with a negligible quantity being shipped in containers.

 

Arxo Logistics has sufficient storage capacity at both the Richards Bay Dry Bulk Terminal and the Durban container port to manage the full production capacity of the Tharisa Mine and the third-party production.

 



 

Zimbabwe projects

Karo Mining Holdings

The Karo Platinum project has achieved several key milestones in the last few months, including approval of the Environmental Prospectus by the Environmental Management Agency ('EMA') of Zimbabwe. Stakeholder consultations have been concluded by the environmental consultant over the mining location and the final environmental impact assessment ('EIA') and management programme has been submitted to EMA for approval, post the interim reporting period.

 

Karo Platinum has also been awarded a development permit from the EMA, enabling Karo Platinum to initiate field work and the exploration drilling programme.

 

Drilling of 142 diamond core boreholes totalling over 25 100 m has been completed. The drilling campaign focuses on the western edge of the Great Dyke on the mining location, with boreholes targeting average depths of 50 m to 150 m below surface. The digital terrain mapping and high resolution airborne geophysical surveys have been completed. The quality assurance and quality control programmes are running concurrently with the drilling programme and adhere to industry best practice.

 

Core samples from approximately half of the boreholes are being prepared and assayed, to inform the resource declaration.

 

The shallow depth of the Main Sulphide Zone ('MSZ') of the Great Dyke allows for initial open-cast mining before developing the shallow underground workings. The results from the assay work and metallurgical test work will be used as the basis of the next phase of the project. Subsequent stages would include ongoing drilling, resource estimation and feasibility studies for the mine design, infrastructure and beneficiation plants.

 

Karo Power Generation

Tharisa also has an option to participate in the other downstream projects associated with Karo through discounted farm-in arrangements at a later stage. These include the establishment of a number of solar power sites totalling 300 MW.

 

Karo Power have appointed a technical consultant to conduct the feasibility studies and an environmental consultant to submit the environmental prospectus to the EMA and to complete the necessary EIA on the identified sites. The environmental prospectus for the first site has been approved by EMA.

 

Karo Power had initial engagements with the Zimbabwean Energy Regulator ('ZERA') around the power purchase agreement and independent power producer ('IPP') licence. Substantive negotiations regarding the IPP and power purchase agreement will commence with ZERA in the third quarter of 2019.

 

Salene Chrome

In the last quarter of 2018, Salene Chrome was awarded a development permit from EMA, while the EIA report is being finalised for submission. The development permit has enabled Salene Chrome to initiate field work and the exploration trenching programme.

 

The digital terrain mapping and high resolution airborne geophysical survey over the mining location have been completed. The geophysical data has been interpreted. The first 11 trenches have been completed, totalling over 4 000 m. The trenches have been rehabilitated and the next trenching and pitting targets are being identified.

 

The samples from the first trenches have been prepared and logged and sent for assay. The quality assurance and quality control programme is being carried out concurrently with the exploration programme and adheres to industry best practice.

 

FINANCIAL OVERVIEW

The financial results of the Group were characterised by the pricing metrics for both commodities reflected opposing trends. The overall PGM basket price increased by 11.9% to US$1 017/oz with the Group basket price benefiting from the prill split favouring palladium (at 17.4%) and rhodium (at 9.5%). There was pressure on the metallurgical grade chrome concentrate price which averaged US$163/t (on a CIF main ports China basis) against the prior period average of US$193/t (a decrease of 15.5%).

 

A weak domestic economy and emerging market contagion with uncertainty prior to the national elections held on 8 May 2019 was reflected in the weakening ZAR, being the base cost currency for the Group's mining operations in South Africa, from an average of ZAR12.8 to ZAR14.2 against the US$, an average weakening of 10.9%. The country's foreign debt avoided a further credit downgrading with Moody's retaining an investment grade rating changing the outlook to "stable". The South African domestic interest rate (as measured by the repo rate) remained unchanged at 6.5%. The Group's commodities are priced in US$ and the cost base is mainly in ZAR and therefore the Group is positioned as a rand hedge stock.

 

Group revenue totalled US$166.5 million (2018: US$199.2 million) of which US$58.0 million was derived from the sale of PGM concentrate and US$93.8 million was derived from the sale of chrome concentrates. The agency and trading segment contributed US$14.7 million. This is a decrease in revenue relative to the comparable period of 16.4%. Speciality grade chrome concentrates, comprising 25.4% of overall chrome sales, continued to trade at a premium of approximately US$50/t.

 

On a segmental basis, the movement in revenue is as a result of:

·      A reduction in the unit sales of PGMs by 12.0% from 76.1 koz to 67.0 koz largely offset by the increase in the PGM basket price of 11.9% from US$909/oz to US$1 017/oz.

·      A reduction in the unit sales of metallurgical grade chrome concentrate by 16.6% from 552.7 kt to 461.2 kt. The metallurgical grade chrome concentrate price decreased by 15.5% from US$193/t to US$163/t.

·      A decrease in the unit sales of specialty grade chrome concentrates by 9.3% from 172.9 kt to 156.8 kt.

·      Increase in third-party trading and logistics, which contributed US$14.7 million to revenue.

 

Gross profit amounted to US$32.1 million (2018: US$55.7 million) with a gross profit margin of 19.3% (2018: 28.0%). The gross profit margin was also impacted by the reduced volumes of both commodities produced and sold with the fixed costs inherent to the operation impacting on the unit cost of sales. In addition, diesel cost, a significant component of the mining cost comprising approximately 14% of on-mine cash costs, increased at above inflation on average by 18.1% per litre from ZAR12.04/ (US$0.94/) to ZAR14.22/ (US$1.00/). Costs incurred with the transport of the metallurgical grade chrome concentrates from the mine to the customer increased marginally by 3.1% from US$60.9/t to US$62.8/t, the majority of this increase related to an increase in the freight costs.

 

As a co-producer of PGMs and chrome concentrates, the shared costs of production for segmental reporting purposes are based on the relative contribution to revenue on an ex-works basis, allocated 55% to the PGM segment and 45% to the chrome segment. This is in accordance with the accounting policy of the Group and IFRS. The comparable period was allocated 45% to the PGM segment and 55% to the chrome segment. The change to the basis of allocation of the shared costs is, in effect, a 22.2% increase in respect of the allocation to the PGM segment and a 18.2% decrease in respect of the allocation to the chrome segment.

 

The segmental cost of sales and gross profit contribution, as extracted from the condensed consolidated interim financial statements, is as follows:


31 March 2019

31 March 2018

US$ millions

PGM

Chrome

Agency

and

trading

Total

PGM

Chrome

Agency

and

trading

Total

Revenue

58.0

93.8

14.7

166.5

55.5

130.3

13.4

199.2

Cost of sales









Costs of sales excluding selling costs

(46.2)

(44.2)

(6.7)

(97.1)

(39.8)

(56.3)

(7.2)

(103.3)

Selling costs

(0.2)

(20.7)

(3.9)

(24.8)

(0.2)

(24.4)

(3.7)

(28.3)

Freight services

-

(9.8)

(2.7)

(12.5)

-

(10.4)

(1.5)

(11.9)

Gross profit contribution

11.6

19.1

1.4

32.1

15.5

39.2

1.0

55.7

Gross profit margin (%)

20.0

20.4

9.5

19.3

28.0

30.1

7.5

28.0

Sales volume

67.0 koz

618.0 kt

85.7 kt


76.1 koz

725.6 kt

85.6 kt


 

The PGM segment gross profit margin of 20.0% (2018: 28.0%) is lower than the previous year notwithstanding the increased revenue due, in part, to the revised basis of allocating shared costs.

 

The chrome segment gross profit margin of 20.4% (2018: 30.1%) is lower than the previous year following the weakening of the selling prices for the chrome concentrates notwithstanding benefiting from the revised basis of allocating shared costs.

 

The agency and trading segment contributed US$1.4 million (2018: US$1.0 million) to the Group gross profit at a margin of 9.5% (2018: 7.5%).

 

On a unit cost basis, the reef mining cost per tonne mined increased by 9.8% from US$20.5/t to US$22.5/t. This cost per reef tonne mined was incurred on a stripping ratio of 7.1 on a per cubic metre basis. On a per cube mined basis i.e. including both waste and reef, the cost increased from US$7.9/m3 to US$9.6/m3 (the prior period stripping ratio being 8.1 on a per cubic metre basis).

 

The consolidated cash cost per tonne milled (i.e. including mining and processing but excluding transport and freight) increased by 7.4% from US$36.4/t to US$39.1/t.

 

Administrative expenses decreased from US$20.4 million to US$16.3 million mainly in respect of salary costs, which included discretionary bonuses paid in the prior period and due to the benefit of the weakening of the exchange rate with the administration cost being mainly in ZAR. After accounting for the administrative expenses, the Group achieved an operating profit of US$14.3 million (2018: US$40.4 million).

 

EBITDA amounted to US$30.1 million (2018: US$54.1 million).

 

Finance costs (totalling US$4.5 million) principally relate to the balances owing on the bank facilities and original equipment manufacturer finance for the purchase of the mining fleet, and the Group trade finance facilities.

 

The tax charge amounted to US$2.1 million, an effective charge of 20.2%. The cash tax paid amounted to US$2.9 million. The Group has fully utilised its tax losses. However, as at the period end, the Group had unredeemed capex for tax purposes of US$104.9 million. The net deferred tax liability amounted to US$24.8 million.

 

Foreign currency translation differences for foreign operations arising where the Company has funded the underlying subsidiaries with US$ denominated funding and the reporting currency of the underlying subsidiary is not in US$, amounted to an unfavourable US$3.8 million following the weakening of the ZAR.

 

Basic and diluted earnings per share for the period amounted to US$ 4 cents (2018: US$ 10 cents) with headline earnings per share of US$ 4 cents (2018: US$ 10 cents).

 

Total debt amounted to US$74.7 million, resulting in a debt-to-total equity ratio of 25.0%. This exceeds the long-term targeted debt-to-total equity ratio of 15% principally due to the leveraged purchase of the mining fleet. Group cash and cash equivalents amounted to US$66.8 million resulting in a net debt-to-total equity ratio of 2.6%.

 

The capex spend for the period amounted to US$24.3 million of which US$20.7 million related to the mining fleet and US$3.6 million related to the processing plants including optimisation initiatives. The depreciation charge amounted to US$13.5 million. The mining fleet replacement programme has been accelerated to ensure the optimal mining fleet with the necessary availabilities with the installed capacity to meet the Vision 2020 mining targets is in place. For the second six months the budgeted capex spend on the mining fleet remains at a higher level than the normal sustaining capex at US$14.0 million. Capex for the next six months on the processing plant and additional generators to further derisk the business operations from the risk of load shedding is budgeted at US$15.6 million.

 

The Company committed to spend an amount of up to US$3.2 million on exploration on the special grants held by Salene Chrome. As at 31 March 2019, US$0.9 million had been incurred. The Company has an option to acquire a 90% shareholding in Salene Chrome. In addition, the Company undertook to provide funding of US$8.0 million to Karo Mining Holdings, in which the Company has a 26.8% shareholding, to fund the exploration and development of its exploration rights and project obligations e.g. solar power. As at 31 March 2019, US$2.7 million of this amount had been drawn down. The Company also paid the balance of US$2.0 million for the purchase of its shareholding in Karo Mining Holdings.

 

The Group generated net cash from operations of US$41.4 million (2018: US$49.2 million) and after taking into account the capex, a free cash flow of US$17.1 million. Cash on hand amounted to US$66.8 million.

 

There is continued focus on working capital management with the current ratio at two times.

 

From time to time the Group concludes transactions with related parties. These transactions are concluded on an arms' length basis and are disclosed in the ensuing interim condensed consolidated financial statements (refer to note 16).

 

INTERIM DIVIDEND

In accordance with its dividend policy of distributing at least 15% of annual net profit after tax and following the introduction of an interim dividend, the Board has declared an interim cash dividend of US$ 0.5 cent per ordinary share. The interim dividend will be paid on Wednesday, 19 June 2019. Shareholders on the principal Cyprus register will be paid in US$, shareholders whose shares are held through Central Securities Depositary Participants ('CSDPs') and brokers and are traded on the JSE will be paid in ZAR and holders of depositary interests traded on the LSE will be paid in Sterling (GBP).

 

The timetable for the dividend declaration is as follows:

Declaration and currency conversion date

Tuesday, 14 May 2019

Currency conversion rates announced

Thursday, 16 May 2019

Last day to trade cum dividend rights on the JSE

Tuesday, 4 June 2019

Last day to trade cum dividend rights on the LSE

Wednesday, 5 June 2019

Shares will trade ex dividend rights on the JSE

Wednesday, 5 June 2019

Shares will trade ex dividend rights on the LSE

Thursday, 6 June 2019

Record date for payment on both JSE and LSE

Friday, 7 June 2019

Dividend payment date

Wednesday, 19 June 2019

 

No dematerialisation or rematerialisation of shares within Strate will be permitted between Wednesday, 5 June 2019 and Friday, 7 June 2019, both days inclusive. No transfers between registers will be permitted between Thursday, 16 May 2019 and Friday, 7 June 2019, both days inclusive.

 

Tax implications of the dividend

Shareholders are advised that the dividend declared will be paid out of income reserves and may therefore be subject to dividend withholding tax depending on the tax residency of the shareholder.

 

South African tax residents

South African shareholders are advised that the dividend constitutes a foreign dividend. For individual South African tax resident shareholders, dividend withholding tax of 20% will be applied to the gross dividend of US$ 0.5 cent per share. Therefore, the net dividend of US$ 0.4 cent per share will be paid after US$ 0.1 cent in terms of dividend withholding tax has been applied. Shareholders who are South African tax resident companies are exempt from dividend tax and will receive the dividend of US$ 0.5 cent per share. This does not constitute legal or tax advice and is based on taxation law and practice in South Africa. Shareholders should consult their brokers, financial and/or tax advisers with regard to how they will be impacted by the payment of the dividend.

 

UK tax residents

UK tax residents are advised that the dividend constitutes a foreign dividend and that they should consult their brokers, financial and/or tax advisers with regard to how they will be impacted by the payment of the dividend.

 

Cyprus tax residents

Individual Cyprus tax residents are advised that the dividend constitutes a local dividend and that they should consult their brokers, financial and/or tax advisers with regard to how they will be impacted by the payment of the dividend.

 

Shareholders and depositary interest holders should note that information provided should not be regarded as tax advice.

 

PRINCIPAL BUSINESS RISKS

Tharisa regards principal business risks as the issues that may, if they materialise, substantially affect the Group's ability to create and sustain value in the short, medium and long term.

 

These risks determine how the Group devises and implements its strategy since each risk has the potential to impact the Group's ability to achieve its strategic objectives. Each risk also carries with it challenges and opportunities. The Group's strategy takes into account known risks, but risks may exist of which the Group is currently unaware.

 

An overview of the risks, which could affect the Group's operational and financial performance, was included in the Group's 2018 Annual Report, which is available on http://www.tharisa.com. The following risks have been identified which may impact the Group over the next six months:

 

Regulatory compliance

Tharisa Minerals' right to mine is dependent on strict adherence to legal and legislative requirements. There remains some uncertainty on the proposed amendments to the South African Mineral and Petroleum Resources Development Act ('MPRDA') and the accompanying Mining Charter. The Minerals Council of South Africa in March 2019 filed an application for judicial review and setting aside certain clauses of the 2018 Mining Charter.

 

Unscheduled breakdowns

The Group's performance is reliant on consistent mining and the production of PGM and chrome concentrates from the Tharisa Mine. Any unscheduled breakdown leading to a prolonged reduction in either mining or production may have a material impact on the Group's financial performance and results. The Group has purchased additional mining fleet to optimise the fleet. Long lead items for the fleet and the plant are kept in stock and preventative maintenance programmes are in place for both the fleet and the plant.

 

Global commodity prices and currency risk

The Group's revenues, profitability and future rate of growth depends on the prevailing market prices of PGMs and chrome. A sustained downward movement in the market price for PGMs and/or chrome may negatively affect the Group's profitability and cash flows. The Group's reporting currency is US$. The Group's operations are predominantly based in South Africa with a ZAR cost base while the majority of the revenue stream is in US$ exposing the Group to the volatility and movements in the ZAR. Fluctuations in the US$ and ZAR may have a significant impact on the performance of the Group. To counter this, the Group continues to work on reducing costs and increasing operating efficiencies.

 

 

 

 

Financing and liquidity

The activities of the Group expose it to a variety of financial risks including market, commodity prices, credit, foreign exchange and interest rate risks. The Group closely monitors and manages these risks. Cash forecasts are regularly updated and reviewed including sensitivity scenarios with reference to the above risks.

 

OUTLOOK

Tharisa's business model is robust and cash generative throughout the commodity cycle. The unique coproduct 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 Group expects a strong operational performance for the remainder of the year with a focus on increasing its production through the continual improvement processes and delivery of the first of its Vision 2020 optimisation projects. The benefits of the pit redesign should become evident in the second half of the financial year and Tharisa is on track to achieve its FY2019 guidance of at least 150 koz PGMs and 1.4 Mt chrome concentrates, of which 350 kt will be specialty grade. The Vision 2020 projects aim to take production to 200 kozpa of PGMs and 2.0 Mtpa of chrome concentrates in 2020, on an annualised basis.

 

Our expansion plans and a strong focus on the performance of the mining division and our yellow fleet, will enhance economies of scale, reduce unit costs and improve operating margins.

 

Tharisa would like to thank its staff, management and directors for their continued support in achieving these interim results.

 

STATEMENT BY THE MEMBERS OF THE BOARD OF DIRECTORS AND THE COMPANY OFFICIALS RESPONSIBLE FOR THE PREPARATION OF THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ACCORDING TO THE CYPRUS SECURITIES AND EXCHANGE COMMISSION LEGISLATION

In accordance with sections 10(3)(c) and 10(7) of Law No. 190(I)/2007, as amended, providing for the transparency requirements of issuers whose securities are admitted to trading on a regulated market ('the Transparency Law'), we, the members of the Board of Directors of Tharisa plc, responsible for the preparation of the interim condensed consolidated financial statements of Tharisa plc for the period ended 31 March 2019, hereby declare that to the best of our knowledge:

(a) The interim condensed consolidated financial statements for the period ended 31 March 2019:

·      Have been prepared in accordance with International Accounting Standard 34: Interim Financial Reporting and as stipulated for under section 10(4) of the Transparency Law.

·      Give a true and fair view of the assets and liabilities, the financial position and profit or losses of Tharisa plc and its undertakings, as included in the interim condensed consolidated financial statements as a whole.

(b) The adoption of a going concern basis for the preparation of the financial statements continues to be appropriate based on the foregoing and having reviewed the forecast financial position of the Group.

(c) The interim management report provides a fair review of the information required by section 10(6) of the Transparency Law.

Loucas Pouroulis

Executive Chairman

Phoevos Pouroulis

Chief Executive Officer

Michael Jones

Chief Finance Officer

David Salter

Lead independent non-executive director

Antonios Djakouris

Independent non-executive director

Omar Kamal

Independent non-executive director

Carol Bell

Independent non-executive director

Roger Davey

Independent non-executive director

Joanna Ka Ki Cheng

Non-executive director

Zhong Liang Hong

Non-executive director

 

Paphos, Cyprus

14 May 2019

 



 

REPORT ON REVIEW OF INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

TO THE SHAREHOLDERS OF THARISA PLC

Introduction

We have reviewed the interim condensed consolidated financial statements of Tharisa plc (the 'Company'), and its subsidiaries (collectively referred to as the 'Group') contained in the accompanying interim report, which comprise the interim condensed consolidated statement of financial position as at 31 March 2019 and the interim condensed consolidated statements of profit or loss and other comprehensive income, changes in equity and cash flows for the six-month period then ended and selected explanatory notes. Management is responsible for the preparation and presentation of these interim condensed consolidated financial statements in accordance with International Accounting Standard 34 Interim Financial Reporting. Our responsibility is to express a conclusion on these interim condensed consolidated financial statements based on our review.

 

Scope of review

We conducted our review in accordance with International Standard on Review Engagements 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity". A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

 

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim condensed consolidated financial statements do not present fairly, in all material respects, the financial position of the entity as at 31 March 2019 and of its financial performance and its cash flows for the six-month period then ended in accordance with International Accounting Standard 34 Interim Financial Reporting.

 

Stavros Pantzaris

Certified Public Accountant and Registered Auditor

 

for and on behalf of

 

Ernst & Young Cyprus Limited

Certified Public Accountant and Registered Auditor

 

Nicosia

 

14 May 2019

 

 



 

INTERIM CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

for the six months ended 31 March 2019

 


Notes

Six months

ended

31 March

2019

Reviewed

US$'000

Six months

ended

31 March

2018

Reviewed

US$'000

Year

ended

30 Sept

2018

Audited

US$'000

Revenue

5

166 519

199 179

406 268

Cost of sales

6

(134 384)

(297 782)

Gross profit


32 135

55 743

108 486

Other income


478

2 072

2 432

Net foreign exchange (loss)/gain


(2 030)

3 004

852

Administrative expenses

7

(16 322)

(20 422)

(39 232)

Results from operating activities


14 261

40 397

72 538

Finance income


798

695

1 279

Finance costs


(4 475)

(5 130)

(10 189)

Changes in fair value of financial assets at fair value through profit or loss


132

1 204

1 262

Changes in fair value of financial liabilities at fair value through profit or loss


322

-

155

Share of loss of investment accounted for using the equity method


(816)

-

(62)

Profit before tax


10 222

37 166

64 983

Tax

8

(2 067)

(8 753)

(14 011)

Profit for the period/year


8 155

28 413

50 972

Other comprehensive income





Items that may be classified subsequently to profit or loss:





Foreign currency translation differences for foreign operations, net of tax


(3 772)

35 422

(10 663)

Other comprehensive income, net of tax


(3 772)

35 422

(10 663)

Total comprehensive income for the period/year


4 383

63 835

40 309

Profit for the period/year attributable to:





  Owners of the Company


9 488

25 960

48 433

  Non-controlling interest


(1 333)

2 453

2 539



8 155

28 413

50 972

Total comprehensive income for the period/year attributable to:





  Owners of the Company


7 095

49 433

41 790

  Non-controlling interest


(2 712)

14 402

(1 481)



4 383

63 835

40 309

Earnings per share





Basic earnings per share (US$ cents)

9

4

10

19

Diluted earnings per share (US$ cents)

9

4

10

18

The notes are an integral part of these interim condensed consolidated financial statements.

 

 



 

INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

as at 31 March 2019

 

 


Notes

31 March

2019

Reviewed

US$'000

31 March

2018

Reviewed

US$'000

30 Sept

2018

Audited

US$'000

ASSETS





Non-current assets





Property, plant and equipment

10

269 048

308 534

264 311

Goodwill


785

961

804

Investment accounted for using the equity method

11

3 622

-

4 438

Other financial assets


6 141

5 791

5 012

Deferred tax assets


2 408

2 445

1 880

Total non-current assets


282 004

317 731

276 445

Current assets





Inventories

12

26 411

26 903

23 043

Trade and other receivables


66 727

78 173

86 202

Contract assets


1 059

-

2 229

Other financial assets


656

901

986

Current taxation


597

108

228

Cash and cash equivalents


66 817

59 930

66 791

Total current assets


162 267

166 015

179 479

Total assets


444 271

483 746

455 924

Equity and liabilities





Share capital and premium

13

282 791

280 409

280 806

Other reserve


47 245

47 245

47 245

Foreign currency translation reserve


(82 597)

(50 088)

(80 204)

Retained earnings


80 932

58 399

77 025

Equity attributable to owners of the Company


328 371

335 965

324 872

Non-controlling interests


(29 250)

(10 655)

(26 538)

Total equity


299 121

325 310

298 334

Non-current liabilities





Provisions


11 917

11 114

12 634

Borrowings

14

28 164

35 053

27 281

Deferred tax liabilities


27 227

33 297

29 892

Total non-current liabilities


67 308

79 464

69 807

Current liabilities





Borrowings

14

46 538

42 119

50 138

Other financial liabilities


1 044

-

1 000

Current taxation


390

827

1 013

Trade and other payables


28 811

36 026

33 403

Contract liabilities


1 059

-

2 229

Total current liabilities


77 842

78 972

87 783

Total liabilities


145 150

158 436

157 590

Total equity and liabilities


444 271

483 746

455 924

The interim condensed consolidated financial statements were authorised for issue by the Board of Directors on 14 May 2019.






Phoevos Pouroulis




Michael Jones

Director




Director

The notes are an integral part of these interim condensed consolidated financial statements.

 

 



 

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the six months ended 31 March 2019

 





Attributable to owners of the Company




Notes

Share

capital

US$'000

Share

premium

US$'000

Other

reserve

US$'000

Foreign

currency

translation

reserve

US$'000

Retained

earnings

US$'000

Total

US$'000

Non-

controlling

interest

US$'000

Total

equity

US$'000

Balance at 30 September 2018


261

280 545

47 245

(80 204)

77 025

324 872

(26 538)

298 334

Total comprehensive income for the period










Profit for the period


-

-

-

-

9 488

9 488

(1 333)

8 155

Other comprehensive income:










Foreign currency translation differences


-

-

-

(2 393)

-

(2 393)

(1 379)

(3 772)

Total comprehensive income for the period


-

-

-

(2 393)

9 488

7 095

(2 712)

4 383

Transactions with owners of the Company










Contributions by and distributions to owners:










Issue of ordinary shares

13

3

1 982

-

-

-

1 985

-

1 985

Dividends paid

20

-

-

-

-

(5 276)

(5 276)

-

(5 276)

Equity-settled share-based payments


-

-

-

-

(975)

(975)

-

(975)

Deferred tax on equity-settled share-based payments


-

-

-

-

670

670

-

670

Contributions by owners of the Company


3

1 982

-

-

(5 581)

(3 596)

-

(3 596)

Total transactions with owners of the Company


3

1 982

-

-

(5 581)

(3 596)

-

(3 596)

Balance at 31 March 2019 (reviewed)


264

282 527

47 245

(82 597)

80 932

328 371

(29 250)

299 121

The notes are an integral part of these interim condensed consolidated financial statements.













 





Attributable to owners of the Company




Notes

Share capital

US$'000

Share

premium

US$'000

Other

reserve

US$'000

Foreign

currency

translation

reserve

US$'000

Retained

earnings

US$'000

Total

US$'000

Non-

controlling

interest

US$'000

Total

equity

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


-

-

-

-

(15)

(15)

-

(15)

Balance at 1 October 2017


260

280 082

47 245

(73 561)

42 862

296 888

(25 057)

271 831

Total comprehensive income for the period










Profit for the period


-

-

-

-

25 960

25 960

2 453

28 413

Other comprehensive income:










Foreign currency translation differences


-

-

-

23 473

-

23 473

11 949

35 422

Total comprehensive income for the period


-

-

-

23 473

25 960

49 433

14 402

63 835

Transactions with owners of the Company










Contributions by and distributions to owners:










Issue of ordinary shares*

13

-

67

-

-

-

67

-

67

Dividends paid

20

-

-

-

-

(13 010)

(13 010)

-

(13 010)

Equity-settled share-based payments


-

-

-

-

2 072

2 072

-

2 072

Deferred tax on equity-settled share-based payments


-

-

-

-

515

515

-

515

Contributions by owners of the Company


-

67

-

-

(10 423)

(10 356)

-

(10 356)

Total transactions with owners of the Company


-

67

-

-

(10 423)

(10 356)

-

(10 356)

Balance at 31 March 2018 (reviewed)


260

280 149

47 245

(50 088)

58 399

335 965

(10 655)

325 310

*The value of the issue of ordinary share capital is less than the reporting amount and amounts to US$182.

The notes are an integral part of these interim condensed consolidated financial statements.













 





Attributable to owners of the Company




Notes

Share capital

US$'000

Share

premium

US$'000

Other

reserve

US$'000

Foreign

currency

translation

reserve

US$'000

Retained

earnings

US$'000

Total

US$'000

Non-

controlling

interest

US$'000

Total

equity

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


-

-

-

-

(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:










Issue of ordinary shares

13

1

463

-

-

-

464

-

464

Dividends paid

20

-

-

-

-

(18 214)

(18 214)

-

(18 214)

Equity-settled share-based payments


-

-

-

-

3 638

3 638

-

3 638

Deferred tax on of equity-settled share-based payments


-

-

-

-

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 (audited)


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 interim condensed consolidated financial statements.

 

 



 

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

for the six months ended 31 March 2019

 


Notes

Six months

ended

31 March

2019

Reviewed

US$'000

Six months

ended

31 March

2018

Reviewed

US$'000

Year

 ended

30 Sept

2018

Audited

US$'000

Cash flows from operating activities





Profit for the period/year


8 155

28 413

50 972

Adjustments for:





Depreciation of property, plant and equipment

10

13 517

14 369

29 858

Loss on disposal of property, plant and equipment


15

13

37

Gain on bargain purchase


-

(1 884)

(1 884)

Share of loss of investment accounted for using the equity method

11

816

-

62

Impairment loss/(reversal) and net realisable value write down of inventory

12

799

(13)

117

Impairment and write off of property, plant and equipment


1 909

894

3 897

Changes in fair value of financial assets at fair value through profit or loss


(132)

(1 204)

(1 262)

Changes in fair value of financial liabilities at fair value through profit or loss


(322)

-

(155)

Net foreign exchange loss/(profit)


2 030

(3 004)

(852)

Interest income


(798)

(695)

(1 279)

Interest expense


4 475

5 130

10 189

Tax

8

2 067

8 753

14 011

Equity-settled share-based payments


1 047

1 978

4 019



33 578

52 750

107 730

Changes in:





  Inventories


(4 715)

(1 736)

(2 456)

  Trade and other receivables and contract assets


19 368

576

(18 639)

  Trade and other payables and contract liabilities


(2 892)

(2 702)

2 979

  Provisions


(1 027)

2 454

5 614

Cash from operations


44 312

51 342

95 228

Income tax paid


(2 880)

(2 108)

(5 457)

Net cash flows from operating activities


41 432

49 234

89 771

Cash flows from investing activities





Interest received


746

636

1 172

Additions to property, plant and equipment

10

(24 348)

(17 670)

(40 454)

Net cash outflow from business combination


-

(21 840)

(21 840)

Proceeds from disposal of property, plant and equipment


42

55

119

Additions to investments accounted for using the equity method


(2 000)

-

(2 500)

Additions to other financial assets


(1 563)

(3 951)

(4 008)

Refund of long-term deposits


-

7 609

7 110

Net cash flows used in investing activities


(27 123)

(35 161)

(60 401)

Cash flows from financing activities





Net (repayment)/proceeds from bank credit facilities

14

(12 816)

(8 134)

114

Advances received

14

19 673

62 191

68 220

Repayment of borrowings

14

(9 150)

(41 109)

(48 503)

Lease payments

14

(3 101)

(4 608)

(6 463)

Dividends paid


(5 276)

(13 010)

(18 214)

Interest paid


(2 832)

(2 550)

(6 619)

Net cash flows used in financing activities


(13 502)

(7 220)

(11 465)

Net increase in cash and cash equivalents


807

6 853

17 905

Cash and cash equivalents at the beginning of the period/year


66 791

49 742

49 742

Effect of exchange rate fluctuations on cash held


(781)

3 335

(856)

Cash and cash equivalents at the end of the period/year


66 817

59 930

66 791

The notes are an integral part of these interim condensed consolidated financial statements.

 

 



 

NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

for the period ended 31 March 2019

 

1.

REPORTING ENTITY



Tharisa plc (the 'Company') is a company domiciled in Cyprus. These interim condensed consolidated financial statements of the Company for the period ended 31 March 2019 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 with a secondary listing on the A2X Exchange as well as a secondary standard listing on the main board of the London Stock Exchange.

2.

BASIS OF PREPARATION



Statement of compliance



These interim condensed consolidated financial statements have been prepared in accordance with International Accounting Standard 34 Interim Financial Reporting and the Listings Requirements of the Johannesburg Stock Exchange and the A2X Exchange. Selected explanatory notes are included to explain events and transactions that are significant to obtain an understanding of the changes in the financial position and performance of the Group since the last consolidated financial statements as at and for the year ended 30 September 2018. These interim 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 interim 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.


These interim condensed consolidated financial statements were approved by the Board of Directors on 14 May 2019. These interim condensed consolidated financial statements for the six months ended 31 March 2019 have been reviewed by the Group's external auditors, not audited.


Use of estimates and judgements



Preparing the interim condensed consolidated financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates.


In preparing these interim condensed consolidated financial statements, 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 interim condensed consolidated financial statements are presented in United States dollar (US$) which is the Company's functional and presentation currency. Amounts are rounded to the nearest thousand.


The following US dollar: ZAR exchange rates were used when preparing the interim condensed consolidated financial statements:

·      Closing rate: ZAR14.48 (31 March 2018: ZAR11.83 and 30 September 2018: ZAR14.14)

·      Average rate: ZAR14.16 (31 March 2018: ZAR12.80 and 30 September 2018: ZAR13.08)


Going concern



After making enquiries which include reviews of current cash resources, forecasts and budgets, timing of cash flows, borrowing facilities and sensitivity analyses and considering the associated uncertainties to the Group's operations, the directors have a reasonable expectation that the Group has adequate financial resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the interim condensed consolidated financial statements.


New and revised International Financial Reporting Standards and Interpretations


The Group has early adopted IFRS 9 Financial Instruments, IFRS 15 Revenue from Contracts with Customers and IFRS 16 Leases with effect from 1 October 2017 and the consolidated financial statements for the year ended 30 September 2018 have been prepared in accordance with these standards.


The Group has adopted the following new and/or revised standards and interpretations which became effective for the six months ended 31 March 2019:


·      IFRS 2 Share-based Payment Transactions (amendment).

·      IFRIC 22 Foreign Currency Transactions and Advance Consideration.


The adoption of these new/or revised standards and interpretations did not have a significant impact on the results of the Group.


A number of standards, amendments to standards and interpretations have been issued but are not yet effective for annual periods beginning on 1 October 2018. Other than IFRS 16 Leases, the Group has elected not to early adopt any of these standards, amendments to standards and interpretations.

3.

SIGNIFICANT ACCOUNTING POLICIES



The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those applied in the preparation of the Group's consolidated financial statements for the year ended 30 September 2018.

4.

OPERATING SEGMENTS



For management purposes, the chief operating decision makers of the Group, being the executive directors of the Company and the executive directors of the subsidiaries, report 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 makers 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 on chrome concentrate tonnes production and sales basis. Third-party logistics, third-party trading, third-party chrome operations and external consulting services 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:









PGM

US$'000

Chrome

US$'000

Agency and

trading

US$'000

Total

US$'000


Six months ended 31 March 2019 (reviewed)






Revenue

57 960

93 840

14 719

166 519


Cost of sales






  Manufacturing costs

(46 212)

(44 239)

(6 690)

(97 141)


  Selling costs

(182)

(20 643)

(3 923)

(24 748)


  Freight services

-

(9 803)

(2 692)

(12 495)



(46 394)

(74 685)

(13 305)

(134 384)


Gross profit

11 566

19 155

1 414

32 135


Six months ended 31 March 2018 (reviewed)






Revenue

55 458

130 296

13 425

199 179


Cost of sales






  Manufacturing costs

(39 711)

(56 235)

(7 252)

(103 198)


  Selling costs

(205)

(24 408)

(3 677)

(28 290)


  Freight services

-

(10 419)

(1 529)

(11 948)



(39 916)

(91 062)

(12 458)

(143 436)


Gross profit

15 542

39 234

967

55 743


Year ended 30 Sept 2018

(audited)






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


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 six months ended 31 March 2019, the relative sales value of PGM concentrate increased compared to the relative sales value of chrome concentrates and consequently the allocation basis of shared costs was amended to 55.0% for PGM concentrate and 45.0% for chrome concentrates. The allocation basis of shared costs was 45.0% (PGM concentrate) and 55.0% (chrome concentrates) in the comparative period while for the year ended 30 September 2018, shared costs were allocated equally.


Cost of sales includes a charge for the write off/impairment of property, plant and equipment totalling US$1.9 million (six months ended 31 March 2018: US$0.9 million and year ended 30 September 2018: US$3.6 million) which mainly relates to mining equipment. The write off/impairment has been allocated to the PGM and chrome segments in accordance with the allocation basis of shared costs as described above.



 


Geographical information






The following table sets out information about the geographical location of:

·      The Group's revenue from external customers.

·      The Group's property, plant and equipment, goodwill and the investment accounted for using the equity method ('specified non-current 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 non-current 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







 

PGM

US$'000

Chrome

US$'000

Agency and

trading

US$'000

Total

US$'000



Six months ended 31 March 2019 (reviewed)






South Africa

57 960

20 842

715

79 517


China

-

29 482

286

29 768


Singapore

-

6 163

13 352

19 515


Hong Kong

-

37 353

-

37 353


Other countries

-

-

366

366



57 960

93 840

14 719

166 519


Six months ended 31 March 2018 (reviewed)






South Africa

55 458

28 484

379

84 321


China

-

42 518

4 800

47 318


Singapore

-

532

1 656

2 188


Hong Kong

-

58 762

6 590

65 352



55 458

130 296

13 425

199 179



 

PGM

US$'000

Chrome

US$'000

Agency and

trading

US$'000

Total

US$'000



Year ended 30 Sept 2018 (audited)






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


Revenue represents the sales value of goods supplied to customers, net of value added tax. The following table summarises sales to customers with whom transactions have individually exceeded 10.0% of the Group's revenues:



Six months ended
31 March 2019

Reviewed

Six months ended
31 March 2018

Reviewed

Year ended

30 Sept 2018

Audited





Segment

US$'000

Segment

US$'000

Segment

US$'000


Customer 1

PGM

49 099

PGM

48 757

PGM

101 560


Customer 2

Chrome

21 328

Chrome

28 585

Chrome

62 583


Customer 3

Chrome

19 079

Chrome

22 659

Chrome

46 186



 






31 March

2019

Reviewed

US$'000

31 March

2018

Reviewed

US$'000

30 Sept

2018

Audited

US$'000


Specified non-current assets







South Africa




269 786

309 451

265 042


Zimbabwe




3 622

-

4 438


Cyprus




47

44

73






273 455

309 495

269 553


Non-current assets includes property, plant and equipment, goodwill and the investment accounted for using the equity method.

5.

REVENUE







PGM

US$'000

Chrome

US$'000

Agency and

trading

US$'000

Total

US$'000


Six months ended 31 March 2019 (reviewed)






Revenue recognised at a point in time






  Variable revenue based on initial results

53 372

63 223

10 435

127 030


  Quantity adjustments

263

41

558

862


  Revenue based on fixed selling prices

-

20 773

1 034

21 807


Revenue recognised over time






  Freight services*

-

9 803

2 692

12 495


Revenue from contracts with customers

53 635

93 840

14 719

162 194


Fair value adjustments

4 325

-

-

4 325


Total revenue

57 960

93 840

14 719

166 519


Six months ended 31 March 2018 (reviewed)






Revenue recognised at a point in time






  Variable revenue based on initial results

55 689

92 625

11 526

159 840


  Quantity adjustments

(257)

(1 231)

(10)

(1 498)


  Revenue based on fixed selling prices

-

28 483

380

28 863


Revenue recognised over time






  Freight services

-

10 419

1 529

11 948


Revenue from contracts with customers

55 432

130 296

13 425

199 153


Fair value adjustments

26

-

-

26


Total revenue

55 458

130 296

13 425

199 179


* During the period 31 March 2019, revenue from freight services of US$2.2 million was recognised which was classified as a contract liability at 30 September 2018.



 

PGM

US$'000

 

Chrome

US$'000

Agency and

trading

US$'000

 

Total

US$'000


Year ended 30 Sept 2018 (audited)






Revenue recognised at a point in time






  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


Revenue recognised over time






  Freight services

-

19 836

3 622

23 458


Revenue from contracts with customers

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







 



Six months

ended

31 March

2019

Reviewed

US$'000

Six months

ended

31 March

2018

Reviewed

US$'000

Year

ended

30 Sept

2018

Audited

US$'000


Variable revenue recognised





PGM revenue recognised in preceding period/year based on initial results

(29 743)

(28 994)

(28 994)


PGM revenue based on final results

30 211

30 823

30 823


PGM revenue adjustment recognised in current period/year

468

1 829

1 829


Chrome revenue recognised in preceding period/year based on initial results

(48 460)

(41 197)

(41 197)


Chrome revenue based on final results

48 682

41 177

41 177


Chrome revenue adjustment recognised in current period/year

222

(20)

(20)


The six months ended 31 March 2019 includes PGM revenue of US$31.3 million (six months ended 31 March 2018: US$28.7 million and year ended 30 September 2018: US$29.7 million) and chrome revenue of US$31.0 million (six months ended 31 March 2018: US$46.2 million and year ended 30 September 2018: 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






Six months

ended

31 March

2019

Reviewed

US$'000

Six months

ended

31 March

2018

Reviewed

US$'000

Year

ended

30 Sept

2018

Audited

US$'000


Mining

49 550

55 349

105 376


Salaries and wages

6 843

7 816

15 124


Utilities

4 419

4 770

10 319


Diesel

377

310

650


Materials and consumables

5 774

5 605

11 174


Reagents

2 123

2 287

4 471


Steel balls

2 454

3 773

6 715


Overhead

3 112

3 375

4 117


State royalties

1 277

1 595

2 916


Depreciation - property, plant and equipment

13 139

16 273

29 008


Cost of commodities

6 841

7 252

18 644


Impairment and write off of property, plant and equipment

1 909

894

3 630


Change in inventories - finished products and ore stockpile

(677)

(6 101)

3 781


Total cost of sales excluding selling costs

97 141

103 198

215 925


Selling costs

24 748

28 290

58 453


Freight services

12 495

11 948

23 404


Cost of sales

134 384

143 436

297 782



 

7.

ADMINISTRATIVE EXPENSES






Six months

ended

31 March

2019

Reviewed

US$'000

Six months

ended

31 March

2018

Reviewed

US$'000

Year

ended

30 Sept

2018

Audited

US$'000


Directors and staff costs





Non-executive directors

313

295

612


Employees: Salaries

6 310

8 121

15 459


                 Bonuses

1 171

2 650

3 262


                 Pension fund, medical aid and other contributions

933

843

1 707



8 727

11 909

21 040


Audit - external audit services

143

313

490


Audit - other services*

5

-

90


Consulting

932

697

2 611


Corporate and social investment

55

30

157


Depreciation

378

500

850


Discount facility and related fees

380

432

701


Equity-settled share-based payment expense

1 047

1 978

4 019


Internal audit

39

39

206


Listing fees and investor relations

85

-

461


Health and safety

495

419

1 019


Impairment and write off of property, plant and equipment

-

-

267


Insurance

380

377

697


Legal and professional

206

236

634


Loss on disposal of property, plant and equipment

16

13

37


Office administration, rent and utilities

443

315

1 296


Security

695

1 193

1 776


Telecommunications and IT related

1 425

793

1 374


Training

169

150

504


Travelling and accommodation

397

214

410


Sundry

305

814

593



16 322

20 422

39 232


* Other services paid to the external auditor relates to tax and accounting services as approved by the Audit Committee.



31 March

2019

Reviewed

31 March

2018

Reviewed

30 Sept

2018

Audited


Number of employees

1 787

1 723

1 758



 

8.

TAX






Six months

ended

31 March

2019

Reviewed

US$'000

Six months

ended

31 March

2018

Reviewed

US$'000

Year

ended

30 Sept

2018

Audited

US$'000


Corporate income tax for the period/year





  Cyprus

1 089

1 457

2 913


  South Africa

785

1 300

3 002



1 874

2 757

5 915


Special contribution for defence in Cyprus

3

2

5


Deferred tax





  Originating and reversal of temporary differences

190

5 836

7 933


Dividend withholding tax

-

158

158


Tax charge

2 067

8 753

14 011


Reconciliation between tax charge and accounting profit at applicable tax rates





Profit before tax

10 222

37 166

64 983


Add share of loss of investment accounted for using the equity method

816

-

62


Tharisa plc and subsidiary companies' profit before tax

11 038

37 166

65 045


Notional tax on profit before tax, calculated at the Cypriot income tax rate of 12.5% (31 March 2018 and 30 September 2018: 12.5%)

1 380

4 646

8 131


Tax effects of:





  Different tax rates from the standard Cypriot income tax rate

542

3 485

4 978


Tax exempt income





  Gain on bargain purchase

-

-

(230)


  Interest received

-

(8)

(12)


  Other

(2)

-

-


Non-deductible expenses





  Investment related

78

411

856


  Interest paid

4

2

5


  Capital expenses

33

58

63


  Other

-

134

152


Tax losses not recognised

(3)

-

-


Recognition of deemed interest income for tax purposes

35

25

68


Income tax charge for the period/year

2 067

8 753

14 011


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 period/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 six months ended 31 March 2019 was 20.2% (six months ended 31 March 2018: 23.6% and year ended 30 September 2018: 21.6%).


At 31 March 2019, the Group's unredeemed capital balance available for offset against future mining taxable income in South Africa amounted to US$104.9 million (31 March 2018: US$124.0 million and 30 September 2018: US$111.1 million).


Other than Cyprus and South Africa, no provision for tax in other jurisdictions was made as these entities either sustained losses for taxation purposes or did not earn any assessable profits.



 

9.

EARNINGS PER SHARE




The calculation of basic and diluted earnings per share and headline and diluted earnings per share have been based on the 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.


Basic and diluted earnings per share



Six months

ended

31 March

2019

Reviewed

Six months

ended

31 March

2018

Reviewed

Year

ended

30 Sept

2018

Audited


Profit for the year attributable to ordinary shareholders (US$'000)

9 488

25 960

48 433


Number of shares in issue at the end of the period ('000)

265 000

261 000

265 000


Less: Treasury shares

(1 196)

(806)

(4 098)


Number of shares in issue at the end of the period ('000)

263 804

260 194

260 902


Weighted average number of issued ordinary shares for basic earnings per share ('000)

262 358

260 141

260 329


Weighted average number of issued ordinary shares for diluted earnings per share ('000)

264 171

261 782

264 531


Earnings per share





Basic (US$ cents)

4

10

19


Diluted (US$ cents)

4

10

18







Headline and diluted headline earnings per share



Six months

ended

31 March

2019

Reviewed

Six months

ended

31 March

2018

Reviewed

Year

ended

30 Sept

2018

Audited


Headline earnings for the year attributable to ordinary shareholders (US$'000)

10 513

25 722

49 134


Weighted average number of issued ordinary shares for basic headline earnings per share ('000)

262 358

260 141

260 329


Weighted average number of issued ordinary shares for diluted headline earnings per share ('000)

264 171

261 782

264 531


Headline earnings per share





Basic (US$ cents)

4

10

19


Diluted (US$ cents)

4

10

19



 


Reconciliation of profit to headline earnings



Six months ended 31 March 2019

(Reviewed)

Six months

ended

31 March

2018

Net

Reviewed

US$'000

Year

ended

30 Sept

2018

Net

Audited

US$'000


 

Gross

US$'000

 

Tax

US$'000

Non-

controlling

interest

US$'000

Net

US$'000


Profit attributable to ordinary shareholders




9 488

25 960

48 433


Adjustments:








  Gain on bargain purchase

-

-

-

-

(1 394)

(1 394)


  Impairment of property,
  plant and equipment

1 909

(535)

(357)

1 017

477

2 076


  Exchange loss on net
  change in investment in
  foreign subsidiary

-

-

-

-

672

-


  Loss on disposal of
  property, plant and
  equipment

(4)

(3)

8

7

19


Headline earnings




10 513

25 722

49 134

10.

PROPERTY, PLANT AND EQUIPMENT




31 March

2019

Reviewed

US$'000

31 March

2018

Reviewed

US$'000

30 Sept

2018

Audited

US$'000


Cost

369 603

396 139

353 201


Accumulated depreciation

(100 555)

(87 605)

(88 890)


Net book value

269 048

308 534

264 311


Reconciliation of net book value





Balance at the beginning of the period/year

264 311

232 559

232 559


Adoption of IFRS 16

-

1 166

1 166



264 311

233 725

233 725


Recognition of right-of-use asset

2 220

5 214

7 701


Additions

24 348

17 670

40 454


Business combination

-

29 879

29 879


Remeasurement

17

-

-


Disposal

(57)

(68)

(156)


Depreciation

(13 517)

(14 369)

(29 858)


Impairment and assets written off

(1 909)

(894)

(3 897)


Exchange adjustment on translation

(6 365)

37 377

(13 537)



269 048

308 534

264 311


There were no additions to the deferred stripping asset during the six months ended 31 March 2019. During the six months ended 31 March 2018 and the year ended 30 September 2018, additions to property, plant and equipment includes additions to the deferred stripping asset of US$1.0 million and US$1.3 million respectively.


The estimated economically recoverable proved and probable mineral reserve was reassessed at 1 October 2018 which gave rise to a change in accounting estimate. The remaining reserve that management had previously assessed was 97.0 Mt (at 1 October 2017) and at 1 October 2018 was assessed to be 92.9 Mt. After taking into account depletion of the reserve during the year ended 30 September 2018 (4.9 Mt), the remaining reserve increased by 0.8 Mt at 1 October 2018.


As a result 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$21.4 million (31 March 2018: US$25.3 million and 30 September 2018: US$20.5 million).



 


Securities





At 31 March 2019, US$11.4 million of the carrying amount of the Group's mining fleet was pledged as security against the equipment loan facility (31 March 2018: US$6.1 million and 30 September 2018: US$11.4 million).


Assets written off/impairment





During the six months ended 31 March 2019, the Group impaired and scrapped assets totalling US$1.9 million (six months ended 31 March 2018: US$0.9 million and year ended 30 September 2018: US$3.9 million). The impairment and assets written off relate to mining fleet identified as no longer fit for use and premature component failures.

11.

INVESTMENT ACCOUNTED FOR USING THE EQUITY METHOD



During the year ended 30 September 2018, 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.



31 March

2019

Reviewed

US$'000

31 March

2018

Reviewed

US$'000

30 Sept

2018

Audited

US$'000


Investment in Karo Holdings





Opening balance

4 438

-

-


Shares acquired

-

-

4 500


Share of total comprehensive loss

(816)

-

(62)



3 622

-

4 438


Total share of comprehensive loss

(816)

-

(62)


Summarised consolidated financial information of Karo Holdings





Summarised statement of financial position





Non-current assets

484

-

122


Current assets

174

-

3


Non-current liabilities

(2 250)

-

(264)


Current liabilities

(1 684)

-

(91)


Net deficit (100%)

(3 276)

-

(230)


Summarised statement of comprehensive income





Operating expenses

(2 986)

-

(290)


Tax

(60)

-

60


Total comprehensive loss

(3 046)

-

(230)


Carrying amount of investment





Group's share of net deficit (26.8%)

(878)

-

(62)


Purchase consideration

4 500

-

4 500


Carrying amount

3 622

-

4 438


Karo Holdings entered into an Investment Project Framework Agreement with the Republic of Zimbabwe in terms of which Karo Holdings, through any of its Zimbabwean incorporated subsidiaries (refer to note 16), 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. The functional and presentation currency of Karo Holdings and its subsidiaries is US$.


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.



 

12.

INVENTORIES






31 March

2019

Reviewed

US$'000

31 March

2018

Reviewed

US$'000

30 Sept

2018

Audited

US$'000


Finished products

8 808

8 853

7 199


Ore stockpile

1 186

4 798

1 338


Consumables

17 216

13 239

14 623



27 210

26 890

23 160


(Impairment)/impairment reversal of consumables

(19)

13

(117)


Net realisable value write down of finished products

(780)

-

-



(799)

13

(117)


Total carrying amount

26 411

26 903

23 043


Inventories are stated at the lower of cost or net realisable value. During the period ended 31 March 2019, the Group impaired certain consumables and spares as the operational use became doubtful with no anticipated recoverable amount or value in use. The impairment charge is allocated 55.0% to the PGM segment and 45.0% to the chrome segment (31 March 2018: impairment reversal allocated 45.0% to the PGM segment and 55.0% to the chrome segment and 30 September  2018: allocated equally between the PGM segment and chrome segment).


PGM finished products were written down to the net realisable value during the period ended 31 March 2019. The net realisable value write down amounted to US$0.8 million (31 March 2018 and 30 September 2018: no net realisable write downs) and is allocated to the PGM segment.

13.

SHARE CAPITAL AND PREMIUM





Share capital and premium





The Company did not issue any ordinary shares during the period ended 31 March 2019 and 31 March 2018. Allotments during the year ended 30 September 2018 were in respect of 4 000 000 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.


During the period ended 31 March 2019, 2 901 430 (period ended 31 March 2018: 181 074 and year ended 30 September 2018: 889 703) ordinary shares were transferred from treasury shares to satisfy the transfer of vested conditional awards and the exercise of appreciation rights by the participants of the Tharisa Share Award Plan.


At 31 March 2019, the Company had 265 000 000 (31 March 2018: 261 000 000 and 30 September 2018: 265 000 000) ordinary shares in issue of which 1 196 141 (31 March 2018: 806 200 and 30 September 2018: 4 097 571) were held in treasury.



 

14.

BORROWINGS






31 March

2019

Reviewed

US$'000

31 March

2018

Reviewed

US$'000

30 Sept

2018

Audited

US$'000


Non-current





Facilities

8 937

21 865

13 711


Equipment loan facility

9 742

4 114

1 931


Finance leases

6 466

9 074

7 505


Loan

3 019

-

4 134



28 164

35 053

27 281


Current





Facilities

17 212

10 860

9 104


Equipment loan facility

6 064

5 370

5 564


Finance leases

4 841

4 951

4 299


Loan

1 986

-

1 928


Bank credit facilities

16 435

20 938

29 243



46 538

42 119

50 138


Finance leases





Minimum lease payments due:





  Within one year

5 810

6 103

5 284


  Two to five years

7 759

10 190

8 930



13 569

16 293

14 214


Less: Future finance charges

(2 262)

(2 268)

(2 410)


Present value of minimum lease payments due

11 307

14 025

11 804


Present value of minimum lease payments due:





  Within one year

4 929

4 951

4 293


  Two to five years

6 378

9 074

7 511



11 307

14 025

11 804


During the six months ended 31 March 2019, a financial covenant relating to the facilities of Tharisa Minerals Proprietary Limited was reset with the EBITDA to interest cover being reduced from greater than 4.0 times to greater than 3.0 times as at the 31 March 2019 and 30 September 2019 ratio measurement dates. All other financial covenants remained unchanged.


At 31 March 2019, 31 March 2018 and 30 September 2018 the Group complied with all financial covenants associated to the borrowings.


The Group had unutilised borrowing facilities of US$19.3 million (ZAR280 million) available at 31 March 2019 (31 March 2018: US$33.8 million (ZAR400 million) and 30 September 2018: US$28.3 million (ZAR400 million)).



 

14.

BORROWINGS continued











31 March 2019 (reviewed)

31 March 2019 (reviewed)

31 March

2018

Reviewed

US$'000

30 Sept

2018

Audited

US$'000

Facilities

US$'000

Equipment

loan facility

US$'000

 

Finance

leases

US$'000

Bank credit

facilities

US$'000

Loan

US$'000

Total

borrowings

US$'000


Balance at the beginning of the period/year

22 815

7 495

11 804

29 243

6 062

77 419

49 401

49 401


Adoption of IFRS 16

-

-

-

-

-

-

1 205

1 205



22 815

7 495

11 804

29 243

6 062

77 419

50 606

50 606


Changes from financing cash flows










Advances: bank credit facilities

-

-

-

75 569

-

75 569

90 243

192 834


Repayment: bank credit facilities

-

-

-

(88 385)

-

(88 385)

(98 377)

(192 720)


Net (repayment)/proceeds of bank credit facilities

-

-

-

(12 816)

-

(12 816)

(8 134)

114


Advances received

8 476

11 197

-

-

-

19 673

62 191

68 220


Repayment of borrowings

(4 709)

(3 504)

-

-

(937)

(9 150)

(41 109)

(48 503)


Lease payments

-

-

(3 101)

-

-

(3 101)

(4 608)

(6 463)


Repayment of interest

(1 371)

(335)

-

(273)

(314)

(2 293)

(2 550)

(4 433)


Changes from financing cash flows

2 396

7 358

(3 101)

(13 089)

(1 251)

(7 687)

5 790

8 935


Foreign currency translation differences

(615)

(366)

(268)

-

(120)

(1 369)

5 545

(3 285)


Liability-related changes










Lease agreements entered into

-

-

2 237

-

-

2 237

5 214

7 656


Business combination

-

-

-

-

-

-

7 003

7 003


Interest expense

1 553

414

644

281

314

3 206

4 184

6 021


Revaluation of foreign denominated loan

-

905

(9)

-

-

896

(1 170)

483


Total liability-related changes

1 553

1 319

2 872

281

314

6 339

15 231

21 163


Balance at the end of the period/year

26 149

15 806

11 307

16 435

5 005

74 702

77 172

77 419


Non-current borrowings

8 937

9 742

6 466

-

3 019

28 164

35 053

27 281


Current borrowings

17 212

6 064

4 841

16 435

1 986

46 538

42 119

50 138


Total borrowings

26 149

15 806

11 307

16 435

5 005

74 702

77 172

77 419



 

15.

FINANCIAL RISK MANAGEMENT






Fair

value

level

31 March

2019

Reviewed

US$'000

31 March

2018

Reviewed

US$'000

30 Sept

2018

Audited

US$'000


Financial assets measured at fair value






  Investments in equity instruments

Level 1

22

37

40


  Investments in money markets, current accounts, cash funds and income funds

Level 2

6 141

5 791

5 012


  Discount facility

Level 2

-

676

-


  Forward exchange contracts

Level 2

-

188

804


  Option to acquire shares in Salene Chrome Zimbabwe (Private) Limited

Level 3

634

-

142


Trade and other receivables measured at fair value






PGM receivable

Level 2

24 326

18 261

25 355


Financial liabilities measured at fair value






  Discount facility

Level 2

662

-

1 000


  Forward exchange contracts

Level 2

382

-

-


Financial assets at amortised cost






Trade receivables


24 997

44 634

38 645


Contract assets


1 059

-

2 229


Cash and cash equivalents


66 817

59 930

66 791


Financial liabilities at amortised cost






Borrowings


74 702

77 172

77 419


Contract liabilities


1 059

-

2 229


Trade payables


14 003

30 131

18 363


There were no transfers between level 1 and level 2 fair value measurements during the reporting periods.


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.



 

16.

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 each reporting period are unsecured and settlement occurs in cash. All intergroup transactions have been eliminated on consolidation.

 



31 March

2019

Reviewed

US$'000

31 March

2018

Reviewed

US$'000

30 Sept

2018

Audited

US$'000


Transactions and balances with related parties:





Other financial assets





Option to acquire shares in Salene Chrome Zimbabwe (Private) Limited

634

-

142


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. Salene holds certain special grants under the Zimbabwe Mines and Minerals Act which entitles it to prospect/mine the minerals thereon. 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 reporting dates, 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 at each reporting date represents the aggregate of the initial exploration programme costs.








31 March

2019

Reviewed

US$'000

31 March

2018

Reviewed

US$'000

30 Sept

2018

Audited

US$'000


Trade and other receivables





The Tharisa Community Trust

5

5

1


Rocasize Proprietary Limited

61

103

71


Karo Mining Holdings Limited

61

-

20


Karo Zimbabwe Holdings (Private) Limited

505

-

254


Karo Platinum (Private) Limited

1 998

-

40


Karo Power Generation (Private) Limited

164

-

-


Salene Chrome Zimbabwe (Private) Limited

265

-

12


Salene Technologies Proprietary Limited

-

-

4


Salene Mining Proprietary Limited

16

-

15



3 075

108

417



 



31 March

2019

Reviewed

US$'000

31 March

2018

Reviewed

US$'000

30 Sept

2018

Audited

US$'000


Trade and other payables





The Leto Settlement

-

-

2 000


The Tharisa Community Trust

-

5

-


Rocasize Proprietary Limited

1

103

31



1

108

2 031


Amounts due to directors





A Djakouris

22

21

22


JD Salter

26

24

31


OM Kamal

15

14

16


C Bell

24

20

25


R Davey

19

17

20


J Ka Ki Chen

11

11

11


ZL Hong

11

-

19



128

107

144


Total other payables

129

215

2 175


Interest-bearing - accrued dividends payable to related parties





Arti Trust

-

2 852

-


Ditodi Trust

-

245

-


Makhaye Trust

-

245

-


The Phax Trust

-

488

-


The Rowad Trust

-

245

-


MJ Jacquet-Briner

-

245

-



-

4 320

-



 


Acquisition of 26.8% of Karo Mining Holdings Limited from:





The Leto Settlement

-

-

4 500



Six months

ended

31 March

2019

Reviewed

US$'000

Six months

ended

31 March

2018

Reviewed

US$'000

Year

ended

30 Sept

2018

Audited

US$'000


Cost of sales





Rocasize Proprietary Limited

155

101

234


Consulting fees received





Rocasize Proprietary Limited

16

13

32


Salene Chrome Zimbabwe (Private) Limited

21

-

-


Karo Mining Holdings Limited

16

-

-


Karo Platinum (Private) Limited

181

-

-


Karo Power Generation (Private) Limited

5

-

-


Karo Zimbabwe Holdings (Private) Limited

229

-

128


Consulting fees paid





Rocasize Proprietary Limited

-

-

234


Salene Mining Proprietary Limited

-

15

17


Interest expense





Arti Trust

-

135

514


Ditodi Trust

-

14

47


Makhaye Trust

-

14

47


The Phax Trust

-

27

93


The Rowad Trust

-

14

47


MJ Jacquet-Briner

-

14

47



-

218

795


Compensation to directors and key management


Six months ended

31 March 2019 (reviewed)

Salary and

fees

US$'000

Expense

allowances

US$'000

Share-

based

payments

US$'000

Provident

fund

and risk

benefits

US$'000

Bonus

US$'000

Total

US$'000


Non-executive directors

313

-

-

-

-

313


Executive directors

800

4

1 144

38

145

2 131


Other key management

459

14

745

49

93

1 360



1 572

18

1 889

87

238

3 804


Six months ended

31 March 2018 (reviewed)

Salary and

fees

US$'000

Expense

allowances

US$'000

Share-

based

payments

US$'000

Provident

fund

and risk

 benefits

US$'000

Bonus

US$'000

Total

US$'000


Non-executive directors

295

-

-

-

-

295


Executive directors

703

5

-

27

652

1 387


Other key management

489

16

-

40

366

911



1 487

21

-

67

1 018

2 593



 


Year ended

30 Sept 2018 (audited)

Salary and

fees

US$'000

Expense

allowances

US$'000

Share-

based

payments

US$'000

Provident

fund

and risk

benefits

US$'000

Bonus

US$'000

Total

US$'000


Non-executive directors

612

-

-

-

-

612


Executive 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


Awards to directors and key management


Six months ended 31 March 2019 (reviewed)

Ordinary shares

Opening

balance

Allocated

Vested

Forfeited

Total


LTIP - executive directors

1 605 423

-

-

-

1 605 423


LTIP - key management

1 099 439

-

-

-

1 099 439


Six months ended 31 March 2018 (reviewed)

Ordinary shares

Opening

balance

Allocated

Vested

Forfeited

Total


LTIP - executive directors

1 808 316

-

-

-

1 808 316


LTIP - key management

1 202 153

-

-

-

1 202 153


Year ended 30 Sept 2018 (audited)

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


Six months ended 31 March 2019 (reviewed)

Ordinary shares

Opening

balance

Allocated

Vested

Forfeited

Total


SARS - executive directors

1 118 547

-

-

-

1 118 547


SARS - key management

765 744

-

-

-

765 744


Six months ended 31 March 2018 (reviewed)

Ordinary shares

Opening

balance

Allocated

Vested

Forfeited

Total


SARS - executive directors

1 362 327

-

-

-

1 362 327


SARS - key management

924 136

-

-

-

924 136


* At 30 September 2018 the vested shares had not yet been transferred to the respective employees.


Year ended 30 Sept 2018 (audited)

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



 


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.


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 Jacquet-Briner







MJ Jacquet-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, Karo Platinum (Private) Limited and Karo Power Generation (Private) Limited


The Company owns 26.8% of the issued share capital of Karo Mining Holdings Limited. The controlling shareholder of Karo Mining Holdings Limited is the Leto Settlement.


Karo Mining Holdings Limited owns 100% of the issued share capital of Karo Zimbabwe Holdings (Private) Limited, Karo Platinum (Private) Limited and Karo Power Generation (Private) Limited.

17.

CONTINGENT LIABILITIES






At 31 March 2019, the Group had certain unresolved tax matters. Included in trade and other receivables is an amount of ZAR120.9 million (31 March 2018: ZAR104.4 million and 30 September 2018: ZAR141.3 million) that relates to diesel rebates receivable from the South African Revenue Service ('SARS') in respect of the mining operations. SARS is 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' dispute. The Group will take the necessary action to recover the amount due.


As at 31 March 2019, there is no litigation (31 March 2018 and 30 September 2018: no litigation), current or pending, which is considered likely to have a material adverse effect on the Group.

18.

CAPITAL COMMITMENTS AND GUARANTEES



31 March

2019

Reviewed

US$'000

31 March

2018

Reviewed

US$'000

30 Sept

2018

Audited

US$'000


Capital commitments





Authorised and contracted

4 804

10 841

4 929


Authorised and not contracted

1 284

1 718

1 091



6 088

12 559

6 020


The commitments are with respect to property, plant and equipment and are outstanding at the respective reporting period.


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 of ZAR266.1 million (31 March 2018: ZAR236.8 million and 30 September 2018: ZAR266.1 million) have been issued by third parties and financial institutions on behalf of the Group consisting mainly of guarantees issued to the Department of Mineral Resources in respect of future environmental rehabilitation amounting to ZAR234.7 million (31 March 2018: ZAR205.4 million and 30 September 2018: ZAR234.7 million).



 

19.

EVENTS AFTER THE REPORTING PERIOD





The Board of Directors is not aware of any matter or circumstance arising since the end of the reporting period that will impact these interim consolidated financial statements.

20.

DIVIDENDS





During the period ended 31 March 2019, the Company declared and paid a final dividend of
US$ 2 cents per share in respect of the financial year ended 30 September 2018.


The Company declared and paid an interim dividend of US$ 2 cents per share during the year ended 30 September 2018.


During the period ended 31 March 2018, the Company declared and paid a final dividend of US$ 5 cents per share in respect of the financial year ended 30 September 2017.

 



 

CORPORATE INFORMATION




THARISA PLC

JSE SPONSOR

Incorporated in the Republic of Cyprus with limited liability

Investec Bank Limited

Registration number: HE223412

Registration number: 1969/004763/06

JSE share code: THA

100 Grayston Drive, Sandown, Sandton 2196

LSE share code: THS

South Africa

ISIN: CY0103562118



AUDITORS

REGISTERED ADDRESS

Ernst & Young Cyprus Limited

Office 108 - 110

Registration number: HE222520

S. Pittokopitis Business Centre

Jean Nouvel Tower 6 Stasinos Avenue

17 Neophytou Nicolaides and Kilkis streets

1060 Nicosia, Cyprus

8011 Paphos, Cyprus



JOINT BROKERS

POSTAL ADDRESS

Peel Hunt LLP (UK joint broker)

PO Box 62425, 8064 Paphos, Cyprus

Moore House 120 London Wall EC 2Y 5ET


England United Kingdom

WEBSITE

Contact: Ross Allister/James Bavister/David McKeown

www.tharisa.com

+44 207 7418 8900



DIRECTORS OF THARISA

BMO Capital Markets Limited (UK joint broker)

Loucas Christos Pouroulis (Executive Chairman)

95 Queen Victoria Street London EC4V 4HG

Phoevos Pouroulis (Chief Executive Officer)

England United Kingdom

Michael Gifford Jones (Chief Finance Officer)

Contact: Jeffrey Couch/Thomas Rider

John David Salter (Lead independent non-executive director)

+44 020 7236 1010

Antonios Djakouris (Independent non-executive director)


Omar Marwan Kamal (Independent non-executive director)

Joh. Berenberg, Gossler & Co. KG (UK joint broker)

Carol Bell (Independent non-executive director)

60 Threadneedle Street London EC2R 8HP

Roger Davey (Independent non-executive director)

England United Kingdom

Joanna Ka Ki Cheng (Non-executive director)

Contact: Matthew Armitt/Detlir Elezi

Zhong Liang Hong (Non-executive director)

+44 20 3207 7800



JOINT COMPANY SECRETARIES

Nedbank Limited (acting through its Corporate and Investment Banking division) (RSA broker)

Lysandros Lysandrides

135 Rivonia Road, Sandown, Sandton 2196

26 Vyronos Avenue, 1096 Nicosia, Cyprus

South Africa


Contact: Shabbir Norath/Mlaoli Tonise

Sanet Findlay

+27 11 294 3537/+27 11 294 5382

The Crossing 372 Main Road


Bryanston Johannesburg 2021, South Africa

JSE SPONSOR

Email: secretarial@tharisa.com

Investec Bank Limited



INVESTOR RELATIONS


Daniel Thöle/Ilja Graulich


The Crossing 372 Main Road


Bryanston Johannesburg 2021


South Africa


Email: ir@tharisa.com




FINANCIAL PUBLIC RELATIONS


Buchanan, 107 Cheapside London EC2V 6DN


England United Kingdom


Contact: Bobby Morse/Augustine Chipungu


+44 020 7466 5000




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 Biermann Avenue


Rosebank 2196, South Africa




Computershare Investor Services PLC


Registration number: 3498808


The Pavilions Bridgwater Road Bristol BS13 8AE


England United Kingdom


 

 



 

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 cick on, or paste the following link into your web browser, to view the associated pdf document. www.tharisa.com

 

Paphos, Cyprus

15 May 2019

 


This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
 
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Condensed Consolidated Financial Statements H1FY19 - RNS