Half-year Report

RNS Number : 1806O
Tharisa PLC
16 May 2018
 

THARISA PLC
Incorporated in the Republic of Cyprus with limited liability
Registration number: HE223412
JSE share code: THA
LSE share code: THS
ISIN: CY0103562118

REVIEWED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the six months ended 31 March 2018

MISSION

To maximise shareholder returns through innovative exploitation of mineral resources in a responsible manner

INTRODUCTION

Tharisa is an integrated resource group incorporating mining and the processing, beneficiation, marketing, sales and logistics of PGM and chrome concentrates. Production guidance for FY2018 is 150 koz of PGMs and 1.4 Mt of chrome concentrate. The Vision 2020 strategy for the Group is to increase production to 200 koz of PGMs and 2 Mt of chrome concentrates by year end 2020. 

VALUES

·      The safety and health of our people is a priority

·      We take responsibility for the effect that our operations may have on the environment

·      We are committed to the upliftment of our local communities

·      We conduct ourselves with integrity and honesty

·      We strive to achieve superior returns for our shareholders

·      We originate new opportunities and will continue to challenge convention through innovation

STRATEGIC INITIATIVES

·      Implementation of optimisation initiatives to maximise value extraction

·      Growth through innovative research and development

·      To generate value by becoming a globally significant low-cost producer of strategic commodities

·      Leveraging off the established platform for expansion into multi-commodities with geographic diversity

·      Capital discipline with an annual dividend policy of at least 15% of NPAT and capital allocation to low risk projects

HIGHLIGHTS

REEF MINED
2.45 Mt
(2017: 2.45 Mt)
In line with guidance

PGM PRODUCTION (5PGE+Au)
Increased 11.4%
77.0 koz
(2017: 69.1 koz)

CHROME CONCENTRATE PRODUCTION
Increased 15.0%
732.5 kt
(2017: 636.8 kt)

REVENUE
Increased 13.8%
US$199.2m
(2017: US$175.1 m)

NET PROFIT AFTER TAX
Decreased 44.3%
US$28.4m
(2017: US$51.0 m)

EBITDA
Decreased 33.2%
US$54.1m
2017: US$81.0 m)

CASH GENERATED FROM OPERATIONS
Increased 17.9%
US$52.1m
(2017: US$44.2 m)

 

EARNINGS PER SHARE
Decreased 37.5%
US$ 10 cents
(2017: US$ 16 cents)

MAIDEN INTERIM DIVIDEND
US$ 2 cents

 

GROUP STATISTICS

 

 Unit

H1 FY2018

H1 FY2017

% Change

Reef mined

kt

2 451.3

2 449.1

0.1

Stripping ratio

m3 waste/m3 reef

8.1

8.4

(3.6)

Reef milled

kt

2 597.4

2 417.7

7.4

PGM flotation feed

kt

1 895.6

1 783.0

6.3

PGM rougher feed grade

g/t

1.52

1.54

(1.3)

PGM ounces produced

5PGE+Au koz

77.0

69.1

11.4

PGM recovery

%

83.2

78.3

6.3

Average PGM basket price

US$/oz

909

760

19.6

Average PGM basket price

ZAR/oz

11 606

10 306

12.6

Cr2O3 ROM grade

%

18.1

17.5

3.4

Chrome recovery

%

65.9

63.4

3.9

Chrome yield

%

28.2

26.3

7.2

Chrome concentrates produced

kt

732.5

636.8

15.0

Metallurgical grade

kt

558.9

484.3

15.4

Specialty grades

kt

173.6

152.5

13.8

Third-party chrome production

kt

106.2

-

-

Metallurgical grade chrome concentrate contract price

US$/t CIF China

193

278

(30.6)

Metallurgical grade chrome concentrate contract price

ZAR/t CIF China

2 436

3 783

(35.6)

Average exchange rate

ZAR:US$

12.8

13.6

(5.9)

Group revenue

US$ million

199.2

175.1

13.8

Gross profit

US$ million

55.7

82.4

(32.4)

Net profit for the period

US$ million

28.4

51.1

(44.4)

EBITDA

US$ million

54.1

81.0

(33.2)

Net cash flows from operating activities

US$ million

52.1

44.2

17.9

Headline earnings per share

US$ cents

10

16

(37.5)

Earnings per share

US$ cents

10

16

(37.5)

Gross profit margin

%

28.0

47.0

(40.4)

EBITDA margin

%

27.2

46.3

(41.3)

Net debt

US$ million

22.7

7.0

224.3

Capital expenditure

US$ million

17.7

8.5

108.2

Debt to total equity ratio

%

25.4

14.8

71.6

Net debt to total equity ratio

%

7.0

2.7

159.3

 

MANAGEMENT REPORT

DEAR SHAREHOLDER

Tharisa continues being a strong cash generative business which is underpinned by solid operational performance. In the six months ended 31 March 2018, the Group through its low cost co-production business model delivered robust operational and financial results.

Safety remains a top priority and Tharisa continues to strive for zero harm at its operations. Tharisa achieved a Lost Time Injury Frequency Rate (LTIFR) of 0.12 per 200 000 man hours worked at 31 March 2018. This is among the lowest LTIFRs in the PGM and chrome industries in South Africa. Tharisa continues to implement appropriate risk management processes, strategies, systems and training to promote a safe working environment for all.

The Group reported a profit before tax of US$37.2 million for the interim period with net cash flows from operating activities of US$ 52.1 million. Earnings per share amounted to US$ 10 cents and a maiden interim dividend of US$ 2 cents a share was declared.

The first half of FY2018 marks Tharisa's transition to an owner mining operating model and proves that the Group's approach to continued improvements delivers tangible results. Production milestones included:

·      PGM production at 77.0 koz, up 11.4% from 69.1 koz

·      PGM recoveries increased to 83.2% from 78.3%, exceeding the targeted 80.0%

·      Chrome production at 732.5 kt, up 15.0% from 636.8 kt

·      Chrome recoveries improved to 65.9% from 63.4%, exceeding the targeted 65.0%

Tharisa's average PGM contained metal basket price benefitted from the increases in palladium and rhodium prices, contributing to an increase of 19.6% to US$909/oz from US$760/oz in the prior year. Average contracted metallurgical grade chrome concentrate prices decreased to US$193/t from US$278/t reported in H1 FY2017. Current metallurgical chrome spot prices are trading at similar levels. Global growth in stainless steel production remains robust with an independent market research company forecasting a further rise in worldwide output of nearly 5% in CY2018.

Specialty chrome concentrates, which comprise 23.7% of chrome concentrate production, are sold into the chemical and foundry markets globally and these grades continue to attract a significant premium above the contracted metallurgical chrome concentrate price.

OPERATIONAL OVERVIEW

 

Unit

31 March
2018

31 March
2017

Change

%

Reef mined

kt

2 451.3

2 449.1

0.1

Reef milled

kt

2 597.4

2 417.7

7.4

On mine cash cost per tonne milled

US$

32.7

31.0

5.5

Consolidated cash cost per tonne milled (excluding transport)

US$

36.4

34.0

7.1

 

MINING

The Tharisa Mine is unique in that it mines multiple mineralised layers with defined PGM and chrome contents. The mine is a large-scale open pit with a life of mine of up to 17 years and the potential to extend the mine by a further 40 years by mining underground.

During the six months under review, 2.45 Mt of ore at an average grade of 1.52 g/t PGMs on a 5PGE+Au basis and 18.1% chrome was mined. Tharisa aims to mine 5.0 Mt ROM to produce 150.0 koz of PGMs and 1.4 Mt of chrome concentrates in FY2018.

In the past six months, Tharisa has successfully transitioned to an owner miner operating model following the US$21.8 million acquisition of the mining fleet from the former contractor, as well as the transfer of 876 employees who were already in service at the Tharisa Mine, ensuring a seamless changeover.

The change in operating model was the logical progression given the long life of the open pit, allowing Tharisa to take direct control over its mining operations thereby controlling the reef grades and the delivery of improved quality ore to the processing plants, optimising the feed, throughput and recovery within the plants.

The fleet purchased from the mining contractor has been supplemented by additional drill rigs and yellow fleet to optimise the fleet ensuring that it has the capability of achieving the required mining run rates. Employee training remains a priority and world class on-mine simulators are used to ensure skill competency. This, and the implementation of preventative maintenance protocols, has improved the effective utilisation of the mining fleet.

The mining team's focus remains on opening up access to the full mining strike length and the maintenance of the correct multi- reef layer profile to ensure stable feed grades for processing. While the stripping ratio was 8.1 on a per cubic metre basis for the six months, the plan is to achieve the LOM strip ratio of 9.6 in the second half of the year.

PROCESSING

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

During the six-month period, 2.6 Mt of reef was processed through the two plants producing 77.0 koz of contained PGMs on a 5PGE+Au basis and 732.5 kt of chrome concentrates. Of the 732.5 kt of chrome concentrates produced, 173.6 kt or 23.7% of the chrome concentrate production was specialty grade chrome concentrates.

Overall PGM recovery was 83.2%, an improvement of 6.3% on the H1 FY2017 PGM recovery of 78.3%, and demonstrates the benefits of stability in the plant feed grades and the increase in competent ores being processed with a lower portion of "weathered" ore. Recoveries have also benefitted from the successful commissioning of the high energy flotation circuit at the Genesis Plant in Q4 FY2017. The target PGM recovery was 80.0%.

The average chrome recovery was 65.9%, a 3.9% improvement from the 63.4% recovery recorded for H1 FY2017, exceeding the chrome recovery target of 65.0%.

VISION 2020

The Vision 2020 projects are targeting an increase in Tharisa Minerals' production to 200 kozpa of PGMs and 2 Mtpa of chrome concentrates by year end 2020.

The optimisation projects and additional processing plants, together with improved mining grades, are planned to add 61.8 kozpa of PGMs and 602 ktpa of chrome concentrates to the Tharisa Mine's annual production by the end of 2020. The project details are as follows:

Upgrade of the crusher circuit at the Genesis Plant

The additional crusher circuit at the Genesis Plant will be commissioned in Q4 FY2018. The ZAR90 million (US$7.5 million) project aims to increase the Genesis Plant throughput by 15.0% or about 180 ktpa, targeting an increase in the higher value specialty chrome grade production by adding approximately 24 ktpa of chemical grade chrome concentrate and approximately 18 ktpa of foundry grade chrome concentrate.

PGM optimisation at the Voyager Plant

The addition of flash flotation and a scavenger plant with high energy mechanisms at the Voyager Plant is aimed at improving PGM recoveries and increasing PGM production by an estimated 14 kozpa. The project is expected to be commissioned during Q1 FY2019 at an estimated capital cost of approximately ZAR70 million (US$5.8 million).

Vulcan Fine Chrome Recovery Plant

The construction of the Vulcan Plant will facilitate additional recovery of fine chrome from tailings streams. The proprietary process is being developed by Tharisa and a demonstration scale plant is scheduled to be commissioned in Q3 FY2018. The feasibility study and process design for a full scale plant will be undertaken in conjunction with the operation of the demonstration plant. The full scale Vulcan Plant is expected to be commissioned during Q1 FY2019 with projected chrome concentrate production of 380 ktpa. The estimated capital cost is ZAR300 million (US$25 million).

Apollo Chrome and PGM Plant

The Apollo Plant will be designed and built as an independent chrome plant with PGM flotation to produce chrome concentrate from UG1 ore that will be mined at the Tharisa Mine's west pit. The plant will also be able to process MG reef horizons.

The plant will be designed in two phases, the first of which is expected to treat 600 ktpa and the second phase expected to double capacity. The feasibility study is being undertaken and test work and resource estimation are in progress. Plant construction is estimated to take approximately 12 months, with commissioning planned for Q2 FY2020. The Apollo Plant is expected to produce 6 kozpa of PGMs and 180 ktpa of chrome concentrates. The capital cost is estimated at ZAR300 million (US$25 million).

COMMODITY MARKETS AND SALES

 

Unit

31 March

2018

31 March

2017

Change %

PGM basket price

US$/oz

909

760

19.6

PGM basket price

ZAR/oz

11 606

10 306

12.6

42% metallurgical grade chrome concentrate contract price - CIF China

US$/t

193

278

(30.6)

42% metallurgical grade chrome concentrate contract price - CIF China

ZAR/t

2 436

3 783

(35.6)

 

The PGM basket price has traded higher compared to H1 FY2017, with the average PGM contained metal basket price benefiting from the rally in palladium, rhodium and ruthenium spot prices over the period under review. The average US$ basket prices increased 19.6% and ZAR basket prices increased 12.6% following the strengthening of the ZAR against the US$.

PGM production continued to be sold to Impala Refining Services under the off-take agreement as well as to Lonmin under a research and cooperation agreement. A total of 76.1 koz was sold during the period.

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

 

31 March
2018

31 March
2017

 

%

%

Platinum

56.4

54.6

Palladium

16.3

16.3

Rhodium

9.2

9.7

Gold

0.2

0.2

Ruthenium

13.5

14.3

Iridium

4.4

4.9

 

Contracted metallurgical grade chrome concentrate prices decreased over the period to an average US$193/t from the average US$278/t achieved in H1 FY2017 when the market witnessed an unprecedented increase in spot chrome prices. Spot metallurgical chrome prices as quoted by FerroAlloyNet traded between US$162/t and US$245/t during the period. This compares to the US$190/t and US$410/t range in the comparative six months.

The demand for chrome concentrate is driven by the increasing demand for stainless steel, which fundamentally remains robust. In CY2017, global stainless steel production increased by 5.8% year on year with Chinese production up 4.7% year on year to 25.8 Mt, according to the International Stainless Steel Forum. The fundamentals of the global stainless steel market remain sound with an independent market research company forecasting a further rise in worldwide output of nearly 5% in CY2018, further supporting strong demand for chrome units in the form of ferrochrome and chrome ores.

Chinese chrome port stocks have increased to levels of approximately 3.0 Mt since April 2018. With domestic Chinese monthly requirements of approximately 1.2 Mt, this equates to 10 weeks' supply assuming all stocks are immediately available.

Tharisa's chrome concentrate sales for the period totalled 725.6 kt, an increase of 44.4% compared to H1 FY2017 sales of 502.4 kt. Inventory levels totalled 74.9 kt as at end March 2018. Third-party sales totalled 85.6 kt.

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

LOGISTICS

 

Unit

31 March

2018

31 March

2017

Change %

Average transport costs per tonne of chrome concentrate - CIF main ports China basis

US$/t

60.9

50.0

21.8

 

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

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

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

FINANCIAL OVERVIEW

The financial results of the Group were characterised by firstly increased revenue as volume sales for both PGMs and chrome concentrates increased while the pricing metrics for both commodities reflected opposing trends. The overall PGM basket price increased by 19.6% to US$909/oz with the Group basket price, in particular, benefiting from the prill split favouring palladium (at 16.3%) and rhodium (at 9.2%) while there was a normalisation in the metallurgical grade chrome concentrate price which averaged US$193/t (on a CIF main ports China basis) against the prior period average of US$278/t (a decrease of 30.6%). Secondly, with the transition to an owner mining model and the leveraged purchase of the fleet, the overall gearing of the Group increased to 25.4% (a net debt to equity ratio of 7.0%).

Investor sentiment in South Africa improved following leadership changes within the ruling African National Congress. This is reflected in the strengthening ZAR, being the base cost currency for the Group's mining operations in South Africa, from an average of ZAR13.60 to ZAR12.80 against the US$, an average strengthening of 5.9%, impacting on the overall cost base of the Group. The country's foreign debt avoided a further credit downgrading with Moody's retaining an investment grade rating changing the outlook to "stable". The South African domestic interest rate (as measured by the repo rate) was reduced just prior to the reporting period by 25 basis points to 6.50%. The Groups commodities are priced in US$ and the cost base is mainly in ZAR and therefore the Group is positioned as a Rand hedge stock.

Group revenue totalled US$199.2 million (2017: US$175.1 million) of which US$55.5 million was derived from the sale of PGM concentrate and US$130.3 million was derived from the sale of chrome concentrates. The agency and trading segment contributed US$13.4 million. This is an increase in revenue relative to the comparable period of 13.8%. Speciality grade chrome concentrates, comprising 23.7% of overall chrome sales, continued to trade at a premium of approximately US$50/t.

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

an increase in the unit sales of PGMs by 9.8% from 69.3 koz to 76.1 koz with an increase in the PGM basket price of 19.6% from US$760/oz to US$909/oz

·      an increase in the unit sales of metallurgical grade chrome concentrate by 53.4% from 360.2 kt to 552.7 kt. However, the metallurgical grade chrome concentrate price decreased by 30.6% from US$278/t to US$193/t

·      an increase in the unit sales of specialty grade chrome concentrates by 21.6% from 142.2 kt to 172.9 kt

·      increase in third party trading and logistics, building on the existing platforms, which contributed US$13.4 million to revenue.

Other income includes an amount of US$1.9 million being non-recurring income relating to the discounted purchase of the mining fleet. Other than for this amount there have been no other non-recurring or exceptional income sources during the interim period.

Gross profit amounted to US$55.7 million (2017: US$82.4 million) with a gross profit margin of 28.0% (2017: 47.0%). The mining fleet, infrastructure and human resources were structured to enable the mining to produce at least the market guidance ROM of 5.0 Mt for the current financial year and to move the required waste to achieve the life of mine (open pit) stripping ratio of 9.6 on a per cubic metre basis. The fixed costs inherent in catering for this mining capacity have impacted on the overall cost of sales. With a mining contractor model, the costs were directly linked to the volumes moved. Included in cost of sales is the depreciation charge arising pursuant to the ownership of the fleet of US$4.8 million. In addition, diesel cost, a significant component of the mining cost, increased on average by 22.1% per litre. Costs incurred with the transport of the metallurgical grade chrome concentrates from the mine to the customer increased by 21.8% from US$50.0/t to US$60.9/t, the majority of this increase related to an increase in the freight costs.

As a co-producer of PGMs and chrome concentrates the shared costs of production for segmental reporting purposes are based on the relative contribution to revenue on an ex-works basis, allocated 45% to the PGM segment and 55% to the chrome segment. This is in accordance with the accounting policy of the Group and IFRS. The comparable period was allocated 25% to the PGM segment and 75% to the chrome segment. The change to the basis of allocation of the shared costs is, in effect, an 80.0% increase in respect of the allocation to the PGM segment and a 26.7% decrease in respect of the allocation to the chrome segment.

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

 

 

31 March 2018

31 March 2017

 

 

PGM

US$'000

Chrome

US$'000

PGM

US$'000

Chrome

US$'000

Cost of sales

 

 

 

 

 

Excluding selling costs

 

39 711

56 235

20 837

48 280

Selling costs

 

205

34 827

180

23 458

Gross profit contribution

 

15 542

39 234

19 036

63 328

Gross profit margin

(%)

28.0

30.1

47.5

46.9

Sales volumes

 

76.1 koz

725.6 kt

69.3 koz

502.4 kt

Unit cost of sales excluding selling costs

 

US$522/oz

US$78/t

US$301/oz

US$96/t

Variance

(%)

73.4

(18.8)

 

 

 

The PGM segment gross profit margin of 28.0% (2017: 47.5%) is lower than the previous year notwithstanding the increased revenue due, in part, to the revised basis of allocating shared costs.

The chrome segment gross profit margin of 30.1% (2017: 46.9%) is lower than the previous year following the normalisation of the selling prices for the metallurgical grade chrome concentrate notwithstanding benefitting from the revised basis of allocating shared costs.

The agency and trading segment contributed US$1.0 million to the Group gross profit at a margin of 7.2%.

pgms

Mining 26%

Utilities 7%

Reagents 6%

Steel balls 3%

Labour 26%

Diesel 14%

Overheads and other 18%

Chrome concentrates

Mining 24%

Utilities 6%

Reagents 0%

Steel balls 5%

Labour 29%

Diesel 13%

Overheads and other 23%

While not being directly comparable following the transition to an owner mining model effective 1 October 2017, on a unit cost basis, the reef mining cost per tonne mined increased marginally by 5.1% from US$19.5/t to US$20.5/t. This cost per reef tonne mined was incurred on a stripping ratio of 8.1 on a per cubic metre basis. On a per cube mined basis i.e. including both waste and reef, the cost increased marginally from US$7.68/m3 to US$7.84/m3 (the prior period stripping ratio being 8.3 on a per cubic metre basis).

The consolidated cash cost per tonne milled (i.e. including mining and processing but excluding transport and freight) increased by 4.3% from US$34.9/t to US$36.4/t, benefitting from the consistent feed into the plant and improved processing efficiencies as reflected in the recoveries with milling being above the name plate plant capacity.

Administrative expenses increased from US$12.5 million to US$20.4 million mainly due to an increase in employee costs which included certain bonus payments following the successful transition to an owner mining model and costs associated with the employment of additional support staff (time and attendance, procurement, human resources and safety) necessary as an owner miner. After accounting for the administrative expenses, the Group achieved an operating profit of US$37.4 million (2017: US$69.9 million).

EBITDA amounted to US$54.1 million (2017: US$81.0 million).

Finance costs (totalling US$5.1 million) principally relate to the balance owing on the senior debt facility, the bridge loan and original equipment manufacturer finance for the purchase of the mining fleet from the contractor as well as additional mining equipment, and the trade finance facilities of Arxo Resources on the discounting of letters of credit on chrome concentrate contracted sales as well as the limited recourse discounting of the PGM receivables.

While revenue reflected an increase over the comparable period based on increased volumes sold and an increased PGM basket price, the lower chrome concentrate prices and costs associated with the transition to the owner mining model, contributed to a decrease in the net profit before tax to US$37.2 million (2017: US$68.3 million).

The tax charge amounted to US$8.8 million, an effective charge of 23.6%. The cash tax paid amounted to US$2.1 million. Notwithstanding that the Group has fully utilised its tax losses, as at the period end the Group had unredeemed capex for tax purposes of US$124.0 million. The deferred tax liability amounted to US$33.3 million.

Foreign currency translation differences for foreign operations arising where the Company has funded the underlying subsidiaries with US$ denominated funding and the reporting currency of the underlying subsidiary is not in US$, amounted to a favourable US$35.4 million following the strengthening of the ZAR.

Basic and diluted earnings per share for the period amounted to US$ 10 cents (2017: US$ 16 cents) with headline earnings per share of US$ 10 cents (2017: US$ 16 cents).

The Group successfully closed the refinancing of the senior debt facility and the bridge loan facility (utilised to part finance the purchase of the mining fleet) with a three year secured term loan of ZAR400.0 million as well as securing corporate facilities in the amount of ZAR400 million. As a consequence, the amount held in the designated debt service reserve account is now available to the Group. The corporate facilities have not been drawn.

Total debt amounted to US$82.6 million, resulting in a debt to total equity ratio of 25.4%. This exceeds the long-term targeted debt to total equity ratio of 15% principally due to the leveraged purchase of the mining fleet. Group cash and cash equivalents amounted to US$59.9 million resulting in a net debt to total equity ratio of 7.0%.

The capex spend for the period amounted to US$17.7 million of which US$10.6 million related to the mining fleet and US$1.3 million related to processing optimisation initiatives. This is in addition to the US$21.8 million paid for the acquisition of the mining fleet from MCC Contracts (Pty) Limited. The depreciation charge amounted to US$14.4 million.

The Group generated net cash from operations of US$52.1 million (2017: US$44.2 million) and after taking into account the capex, a free cash flow of US$34.5 million. Cash on hand amounted to US$59.9 million.

There is continued focus on working capital management with the current ratio at 2.1 times.

The Group has early adopted IFRS 9 Financial Instruments, IFRS 15 Revenue from Contracts with Customers and IFRS 16 Leases. The Group entered into a number of new lease agreements for the addition of mining fleet subsequent to 30 September 2017 and consequently decided to early adopt these standards. The early adoption resulted in a negligible adjustment to retained earnings at 1 October 2017.

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

INTERIM DIVIDEND

In accordance with its dividend policy of distributing at least 15% of annual net profit after tax and following the introduction of an interim dividend, the board has declared its first interim cash dividend of US$ 2 cents per ordinary share. The interim dividend will be paid on Wednesday, 20 June 2018. Shareholders on the principal Cyprus register will be paid in US$, shareholders whose shares are held through Central Securities Depositary Participants (CSDPs) and brokers and are traded on the JSE will be paid in South African Rand (ZAR) and holders of Depositary Interests traded on the LSE will be paid in Sterling (GBP).

The timetable for the dividend declaration is as follows:

Declaration and currency conversion date

Tuesday, 15 May 2018

Currency conversion rates announced

Thursday, 17 May 2018

Last day to trade cum-dividend rights on the JSE

Tuesday, 5 June 2018

Last day to trade cum-dividend rights on the LSE

Wednesday, 6 June 2018

Shares will trade ex-dividend rights on the JSE

Wednesday, 6 June 2018

Shares will trade ex-dividend rights on the LSE

Thursday, 7 June 2018

Record date for payment on both JSE and LSE

Friday, 8 June 2018

Dividend payment date

Wednesday, 20 June 2018

 

No dematerialisation or rematerialisation of shares within Strate will be permitted between Wednesday, 6 June 2018 and Friday, 8 June 2018, both days inclusive. No transfers between registers will be permitted between Thursday, 17 May 2018 and Friday, 8 June 2018, both days inclusive.

Tax implications of the dividend

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

South African tax residents

South African shareholders are advised that the dividend constitutes a foreign dividend. For individual South African tax resident shareholders, dividend withholding tax of 20% will be applied to the gross dividend of US$ 2 cents per share. Therefore, the net dividend of US$ 1.6 cents per share will be paid after US$ 0.4 cents in terms of dividend withholding tax has been applied. Shareholders who are South African tax resident companies are exempt from dividend tax and will receive the dividend of US$ 2 cents per share. This does not constitute legal or tax advice and is based on taxation law and practice in South Africa. Shareholders should consult their brokers, financial and/or tax advisors with regard to how they will be impacted by the payment of the dividend.

UK tax residents

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

Cyprus tax residents

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

Shareholders and Depositary Interest holders should note that information provided should not be regarded as tax advice.

PRINCIPAL BUSINESS RISKS

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

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

An overview of the risks which could affect the Group's operational and financial performance was included in the Group's 2017 Annual Report which is available on the Group's website. The following risks have been identified which may impact the Group over the next six months.

Regulatory compliance

Tharisa Minerals' right to mine is dependent on strict adherence to legal and legislative requirements. While there is still uncertainty on the proposed amendments to the South African Mineral and Petroleum Resources Development Act (MPRDA) and the accompanying Mining Charter, the approach taken by the newly appointed Mineral Resources Minister Gwede Mantashe appears to be more inclusive than his predecessor.

A finalised Mining Charter would provide regulatory certainty and could go some way towards attracting investment in the sector.

The Group is required to comply with a range of health and safety laws and regulations in connection with its mining, processing and on mine logistics activities. Regular inspections are conducted by the Department of Mineral Resources to ensure compliance. Any perceived violation of the regulations could lead to a temporary shutdown of all or a portion of the Group's mining operations.

Labour unrest in South Africa

While labour relations are currently stable, the risk of potential unrest remains. The Group will start wage negotiations in Q3 FY2018 to replace the existing three-year wage agreement that expires in June 2018. Negotiations will this year encompass agreement for both the mining and processing employees. Mining employees were previously represented by the former contractor and had a separate wage agreement. Tharisa Minerals has recognition agreements with the relevant trade unions - the Association of Mineworkers and Construction Union and the National Union of Mineworkers.

The Group intends on concluding a further three-year wage agreement.

Unscheduled breakdowns

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

Global commodity prices and currency risk

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

Financing and liquidity

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

BOARD APPOINTMENT

Tharisa welcomed Zhong Liang Hong to the Board as a non-executive director with effect from 1 April 2018. Mr Hong represents Fujian Wuhang Stainless Steel Co., Ltd and Hong Kong HeYi Mining Resources Company Ltd, which respectively hold 7.46% and 1.99% of Tharisa's issued share capital with voting rights as at 31 March 2018.

OUTLOOK

Tharisa's business model is robust with the business cash generative throughout the commodity cycle. The declaration of a maiden interim dividend is testament to the maturing of the business and is evidence of the capital discipline employed by the Group.

The Group expects continued strong operational performance for the remainder of the year with a focus on increasing its production through the continual improvement processes and delivery of the first of its Vision 2020 optimisation projects.

The benefits of the owner mining operational model should become evident in the second half of the financial year and Tharisa is on track to achieve its FY2018 guidance of 150 koz PGMs and 1.4 Mt chrome concentrates, of which 350 kt will be specialty grade. The Vision 2020 projects aim to take production to 200 kozpa of PGMs and 2 Mtpa of chrome concentrates by 2020.

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

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

In accordance with sections 10(3)(c) and 10(7) of Law No. 190(I)/2007, as amended, providing for the transparency requirements of issuers whose securities are admitted to trading on a regulated market (the Transparency Law), we, the members of the Board of Directors of Tharisa plc, responsible for the preparation of the interim condensed consolidated financial statements of Tharisa plc for the period ended 31 March 2018, hereby declare that to the best of our knowledge:

a)            the interim condensed consolidated financial statements for the period ended 31 March 2018:

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

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

b)            the adoption of a going-concern basis for the preparation of the financial statements continues to be appropriate

based on the foregoing and having reviewed the forecast financial position of the Group; and

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

Loucas Pouroulis

Executive Chairman

Phoevos Pouroulis

Chief Executive Officer

Michael Jones

Chief Finance Officer

David Salter

Lead independent non-executive director

Antonios Djakouris

Independent non-executive director

Omar Kamal

Independent non-executive director

Carol Bell

Independent non-executive director

Roger Davey

Independent non-executive director

Joanna Ka Ki Cheng

Non-executive director

Zhong Liang Hong

Non-executive director

 

Paphos

15 May 2018

 

 

REPORT ON REVIEW OF INTERIM CONDENSED

CONSOLIDATED FINANCIAL STATEMENTS

TO THE SHAREHOLDERS OF THARISA PLC

Introduction

We have reviewed the interim condensed consolidated financial statements of Tharisa Plc (the "Company"), and its subsidiaries (collectively referred to as "the Group") contained in the accompanying interim report, which comprise the interim condensed consolidated statement of financial position as at 31 March 2018 and the interim condensed consolidated statements of profit or loss and other comprehensive income, changes in equity and cash flows for the six-month period then ended and selected explanatory notes. Management is responsible for the preparation and presentation of these interim condensed consolidated financial statements in accordance with International Financial Reporting Standard IAS 34 Interim Financial Reporting (IAS 34). Our responsibility is to express a conclusion on these interim condensed consolidated financial statements based on our review.

Scope of Review

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

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim condensed consolidated financial statements do not present fairly, in all material respects, the financial position of the entity as at 31 March 2018 and of its financial performance and its cash flows for the six-month period then ended in accordance with International Financial Reporting Standard IAS 34 Interim Financial Reporting (IAS 34).

Stavros Pantzaris

Certified Public Accountant and Registered Auditor

for and on behalf of

Ernst & Young Cyprus Limited
Certified Public Accountants and Registered Auditors

Nicosia

 

 

 

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

for the six months ended 31 March 2018

 

 

Six months

 ended

Six months

 ended

Year

ended

 

 

31 March

31 March

30 Sept

 

 

2018

2017

2017

 

 

Reviewed

Reviewed

Audited

 

Notes

US$'000

US$'000

US$'000

Revenue

5

199 179

175 119

349 443

Cost of sales

6

(143 436)

(92 755)

(226 789)

Gross profit

 

55 743

82 364

122 654

Other income

7

2 072

83

160

Administrative expenses

8

(20 422)

(12 530)

(26 903)

Results from operating activities

 

37 393

69 917

95 911

Finance income

 

3 699

4 042

3 580

Finance costs

 

(5 130)

(5 090)

(7 689)

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

 

 

1 204

(540)

(813)

Net finance costs

 

(227)

(1 588)

(4 922)

Profit before tax

 

37 166

68 329

90 989

Tax

9

(8 753)

(17 316)

(23 316)

Profit for the period/year

 

28 413

51 013

67 673

Other comprehensive income

 

 

 

 

Items that may be classified subsequently to profit or loss:

 

 

 

 

Foreign currency translation differences for foreign operations, net of tax

 

 

35 422

5 422

(387)

Other comprehensive income, net of tax

 

35 422

5 422

(387)

Total comprehensive income for the period/year

 

63 835

56 435

67 286

Profit for the period/year attributable to:

 

 

 

 

Owners of the Company

 

25 960

41 925

57 601

Non-controlling interest

 

2 453

9 088

10 072

 

 

28 413

51 013

67 673

Total comprehensive income for the period/year attributable to:

 

 

 

 

Owners of the Company

 

49 433

46 188

57 451

Non-controlling interest

 

14 402

10 247

9 835

 

 

63 835

56 435

67 286

Earnings per share

 

 

 

 

Basic earnings per share                 (US$ cents)

10

10

16

22

Diluted earnings per share               (US$ cents)

10

10

16

22

 

 

 

 

interim CONDENSED CONSOLIDATED
STATEMENT OF FINANCIAL POSITION

as at 31 March 2018

 

 

31 March

31 March

30 Sept

 

2018

2017

2017

 

Reviewed

Reviewed

Audited

 

Notes

US$'000

US$'000

US$'000

Assets

 

 

 

 

Non-current assets

 

 

 

 

Property, plant and equipment

11

308 534

225 992

232 559

Goodwill

 

961

876

838

Long-term deposits

12

-

4 796

4 505

Other financial assets

 

5 791

3 696

3 767

Deferred tax assets

13

2 445

2 127

1 952

Total non-current assets

 

317 731

237 487

243 621

Current assets

 

 

 

 

Inventories

14

26 903

36 353

20 802

Trade and other receivables

15

78 173

52 581

70 374

Other financial assets

 

901

590

49

Current taxation

 

108

61

132

Cash and cash equivalents

16

59 930

26 620

49 742

Total current assets

 

166 015

116 205

141 099

Total assets

 

483 746

353 692

384 720

Equity and liabilities

 

 

 

 

Share capital

17

260

257

260

Share premium

17

280 149

277 006

280 082

Other reserve

 

47 245

47 245

47 245

Foreign currency translation reserve

 

(50 088)

(69 148)

(73 561)

Retained earnings

 

58 399

28 076

42 877

Equity attributable to owners of the Company

 

335 965

283 436

296 903

Non-controlling interests

 

(10 655)

(24 645)

(25 057)

Total equity

 

325 310

258 791

271 846

Non-current liabilities

 

 

 

 

Borrowings

18

35 053

10 495

4 375

Provisions

19

11 114

6 327

6 923

Deferred tax liabilities

13

33 297

20 280

23 823

Total non-current liabilities

 

79 464

37 102

35 121

Current liabilities

 

 

 

 

Borrowings

18

42 119

23 080

45 026

Other financial liabilities

 

-

-

599

Current taxation

 

827

505

212

Trade and other payables

 

36 026

34 214

31 916

Total current liabilities

 

78 972

57 799

77 753

Total liabilities

 

158 436

94 901

112 874

Total equity and liabilities

 

483 746

353 692

384 720

 

The interim condensed consolidated financial statements were authorised for issue by the Board of Directors on 15 May 2018.

Phoevos Pouroulis

Michael Jones

Director

Director

 

 

 

 

 

 

 

 

Attributable to owners of the Company

 

 

 

 

Share

capital

Share

premium

Other

reserve

Foreign

 currency

 translation

reserve

Retained

earnings

Total

Non-

controlling

 interest

Total

equity

 

Notes

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

Balance at 30 September 2017

 

260

280 082

47 245

(73 561)

42 877

296 903

(25 057)

271 846

Impact of adopting IFRS 16

3.3

-

-

-

-

(15)

(15)

-

(15)

Balance at 1 October 2017

 

260

280 082

47 245

(73 561)

42 862

296 888

(25 057)

271 831

Total comprehensive income for the period

 

 

 

 

 

 

 

 

 

Profit for the period

 

-

-

-

-

25 960

25 960

2 453

28 413

Other comprehensive income:

 

 

 

 

 

 

 

 

 

Foreign currency translation differences

 

-

-

-

23 473

-

23 473

11 949

35 422

Total comprehensive income for the period

 

-

-

-

23 473

25 960

49 433

14 402

63 835

Transactions with owners of the Company

 

 

 

 

 

 

 

 

 

Contributions by and distributions to owners

 

 

 

 

 

 

 

 

 

Issue of ordinary shares*

17

-

67

-

-

-

67

-

67

Dividends paid

25

-

-

-

-

(13 010)

(13 010)

-

(13 010)

Equity-settled share-based payments

 

-

-

-

-

2 587

2 587

-

2 587

Contributions by owners of the Company

 

-

67

-

-

(10 423)

(10 356)

-

(10 356)

Total transactions with owners of the Company

 

-

67

-

-

(10 423)

(10 356)

-

(10 356)

Balance at 31 March 2018 (Reviewed)

 

260

280 149

47 245

(50 088)

58 399

335 965

(10 655)

325 310

Balance at 30 September 2016

 

257

456 181

47 245

(73 411)

(193 521)

236 751

(34 892)

201 859

Total comprehensive income for the period

 

 

 

 

 

 

 

 

 

Profit for the period

 

-

-

-

-

41 925

41 925

9 088

51 013

Other comprehensive income:

 

 

 

 

 

 

 

 

 

Foreign currency translation differences

 

-

-

-

4 263

-

4 263

1 159

5 422

Total comprehensive income for the period

 

-

-

-

4 263

41 925

46 188

10 247

56 435

Transactions with owners of the Company

 

 

 

 

 

 

 

 

 

Contributions by and distributions to owners

 

 

 

 

 

 

 

 

 

Capital reduction

17

-

(179 175)

-

-

179 175

-

-

-

Capital distribution

17

-

-

-

-

(2 570)

(2 570)

-

(2 570)

Equity-settled share-based payments

 

-

-

-

-

3 067

3 067

-

3 067

Contributions by owners of the Company

 

-

(179 175)

-

-

179 672

497

-

497

Total transactions with owners of the Company

 

-

(179 175)

-

-

179 672

497

-

497

Balance at 31 March 2017 (Reviewed)

 

257

277 006

47 245

(69 148)

28 076

283 436

(24 645)

258 791

 

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

 

 

 

INTERIM CONDENSED CONSOLIDATED
STATEMENT OF CHANGES IN EQUITY

for the six months ended 31 March 2018

 

 

 

Attributable to owners of the Company

 

 

 

 

Share

capital

Share

premium

Other

reserve

Foreign

 currency

 translation

reserve

Retained

earnings

Total

Non-

controlling

 interest

Total

equity

 

Notes

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

Balance at 30 September 2016

 

257

456 181

47 245

(73 411)

(193 521)

236 751

(34 892)

201 859

Total comprehensive income for the year

 

 

 

 

 

 

 

 

 

Profit for the year

 

-

-

-

-

57 601

57 601

10 072

67 673

Other comprehensive income:

 

 

 

 

 

 

 

 

 

Foreign currency translation differences

 

-

-

-

(150)

-

(150)

(237)

(387)

Total comprehensive income for the year

 

-

-

-

(150)

57 601

57 451

9 835

67 286

Transactions with owners of the Company

 

 

 

 

 

 

 

 

 

Contributions by and distributions to owners

 

 

 

 

 

 

 

 

 

Capital reduction

17

-

(179 175)

-

-

179 175

-

-

-

Capital distribution

17

-

-

-

-

(2 570)

(2 570)

-

(2 570)

Equity-settled share-based payments

 

-

-

-

-

2 192

2 192

-

2 192

Issue of ordinary shares

17

3

3 076

-

-

-

3 079

-

3 079

Contributions by owners of the Company

 

3

(176 099)

-

-

178 797

2 701

-

2 701

Total transactions with owners of the Company

 

3

(176 099)

-

-

178 797

2 701

-

2 701

Balance at 30 September 2017

 

260

280 082

47 245

(73 561)

42 877

296 903

(25 057)

271 846

 

Companies which do not distribute 70% of their profits after tax, as defined by the Special Contribution for the Defence of the Republic Law, during the two years after the end of the year of assessment to which the profits refer, will be deemed to have distributed this amount as dividend. Special contribution for defence at 17% will be payable on such deemed dividend to the extent that the ultimate shareholders at the end date of the period of two years from the end of the year of assessment to which the profits refer are both Cypriot tax residents and Cypriot domiciled entities. The amount of this deemed dividend distribution is reduced by any actual dividend paid out of the profits of the relevant year at any time. This special contribution for defence is paid by the company for the account of the shareholders. These provisions do not apply for ultimate beneficial owners that are non-Cyprus tax resident individuals. Retained earnings is the only reserve that is available for distribution.

 

 

 

INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

for the six months ended 31 March 2018

 

 

Six months

 ended

Six months

 ended

Year

ended

 

 

31 March

31 March

30 Sept

 

 

2018

2017

2017

 

 

Reviewed

Reviewed

Audited

 

Notes

US$'000

US$'000

US$'000

Cash flows from operating activities

 

 

 

 

Profit for the period/year

 

28 413

51 013

67 673

Adjustments for:

 

 

 

 

Depreciation of property, plant and equipment

11

14 369

8 366

16 929

Loss on disposal of property, plant and equipment

 

13

-

196

Gain on bargain purchase

20

(1 884)

-

-

Impairment losses on goodwill

 

-

28

57

Inventory net realisable value adjustment

 

(13)

36

24

Scrapping of property, plant and equipment

 

894

-

-

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

 

(1 204)

540

813

Interest income

 

(695)

(598)

(1 122)

Interest expense

 

5 130

4 355

7 689

Tax

 

8 753

17 315

23 316

Equity-settled share-based payments

 

1 978

2 196

4 342

 

 

55 754

83 251

119 917

Changes in:

 

 

 

 

Inventories

 

(1 736)

(22 178)

(5 063)

Trade and other receivables

 

485

(211)

(21 839)

Trade and other payables

 

(2 702)

(16 167)

(15 068)

Provisions

 

2 454

1 377

1 792

Cash from operations

 

54 255

46 072

79 739

Income tax paid

 

(2 108)

(1 852)

(3 990)

Net cash flows from operating activities

 

52 147

44 220

75 749

Cash flows from investing activities

 

 

 

 

Interest received

 

636

540

708

Additions to property, plant and equipment

11

(17 670)

(8 458)

(26 398)

Net cash outflow from business combination

20

(21 840)

-

-

Proceeds from disposal of property, plant and equipment

 

55

-

-

Additions to other financial assets

 

(3 951)

(911)

(925)

Refund of long-term deposits

 

7 609

5 437

5 726

Net cash flows used in investing activities

 

(35 161)

(3 392)

(20 889)

Cash flows from financing activities

 

 

 

 

Net repayment of bank credit facilities

18

(8 134)

(15 790)

6 073

Advances received

18

62 191

-

 

Repayment of borrowings

18

(41 109)

(10 961)

(17 917)

Lease payments

18

(4 608)

-

-

Dividends and capital reduction paid

 

(13 010)

-

(2 570)

Interest paid

18

(4 652)

(3 574)

(6 371)

Net cash flows used in financing activities

 

(9 322)

(30 325)

(20 785)

Net increase in cash and cash equivalents

 

7 664

10 503

34 075

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

16

49 742

15 826

15 826

Effect of exchange rate fluctuations on cash held

 

2 524

291

(159)

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

16

59 930

26 620

49 742

 

NOTES TO THE INTERIM CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS

for the six months ended 31 March 2018

1. REPORTING ENTITY

Tharisa plc (the Company) is a company domiciled in Cyprus. These interim condensed consolidated interim financial statements for the six months ended 31 March 2018 comprise the Company and its subsidiaries (together referred to as the Group). The Group is primarily involved in platinum group metals (PGM) and chrome mining, processing, trading and the associated logistics. The Company is listed on the main board of the Johannesburg Stock Exchange and has a secondary standard listing on the main board of the London Stock Exchange.

2. BASIS OF PREPARATION

Statement of compliance

These interim condensed consolidated financial statements have been prepared in accordance with International Accounting Standards 34 Interim Financial Reporting and the Listings Requirements of the Johannesburg Stock Exchange. Selected explanatory notes are included to explain events and transactions that are significant to obtain an understanding of the changes in the financial position and performance of the Group since the last consolidated financial statements as at and for the year ended 30 September 2017. These interim condensed consolidated financial statements do not include all the information required for full consolidated financial statements prepared in accordance with IFRS. The interim condensed consolidated financial statements should be read in conjunction with the annual consolidated financial statements for the year ended 30 September 2017, which have been prepared in accordance with IFRS.

These interim condensed consolidated financial statements were approved by the Board of Directors on 15 May 2018. These interim condensed consolidated financial statements for the six months ended 31 March 2018 have been reviewed by the Group's external auditors, not audited.

Use of estimates and judgements

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

In preparing these interim condensed consolidated financial statements, except for the early adoption of new IFRS' as disclosed in note 3, significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated financial statements as at and for the year ended 30 September 2017.

Functional and presentation currency

The interim condensed consolidated financial statements are presented in United States Dollars (US$) which is the Company's functional currency and amounts are rounded to the nearest thousand.

Going concern

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

New and revised International Financial Reporting Standards and Interpretations

The Group has early adopted IFRS 9: Financial Instruments, IFRS 15: Revenue from Contracts with Customers and IFRS 16: Leases. The nature and effect of these adoptions are disclosed in note 3.

Several other amendments and interpretations apply for the first time for the period ended 31 March 2018. Other than IAS 7: Disclosure Initiative (Amendment) as disclosed in note 18, these did not have an impact on the interim condensed consolidated financial statements of the Group.

3. SIGNIFICANT ACCOUNTING POLICIES

The accounting policies applied by the Group in these interim condensed consolidated financial statements are in terms of IFRS. Except as disclosed below, the accounting policies are the same as those applied by the Group in its audited consolidated financial statements as at and for the year ended 30 September 2017.

3.1 Change in accounting policies - Financial Instruments

The Group has early adopted all of the requirements of IFRS 9: Financial Instruments (IFRS 9) as of 1 October 2017. IFRS 9 replaces IAS 39: Financial Instruments: Recognition and Measurement (IAS 39). IFRS 9 utilises a revised model for recognition and measurement of financial instruments and a single, forward-looking "expected loss" impairment model. Most of the requirements of IAS 39 for classification and measurements of financial liabilities were carried forward in IFRS 9, therefore the Group's accounting policy with respect to financial liabilities remains unchanged. The Group applied IFRS 9 using the full retrospective method of adoption on initial date of application.

As a result of the early adoption of IFRS 9, management has changed its accounting policy for financial assets retrospectively for assets that were recognised at the date of application. The change did not impact the carrying value of any financial assets on transition date.

The Group's new accounting policy for financial instruments according to IFRS 9 is set out below:

Classification

·      The Group classifies its financial instruments in the following categories:

·      At fair value through profit or loss

·      At fair value through other comprehensive income

·      At amortised cost

The Group determines the classification of financial assets at initial recognition. The classification of debt instruments is driven by the Group's business model for managing the financial assets and their contractual cash flow characteristics. Equity instruments that are held for trading are classified at fair value through profit or loss, for other equity instruments, on the day of acquisition the Group can make an irrevocable election (on an instrument-by-instrument basis) to designate them as at fair value through other comprehensive income. Financial liabilities are measured at amortised cost, unless they are required to be measured at fair value through profit or loss (such as derivatives) or the Group has designated to measure them at fair value through profit or loss.

The Group completed a detailed assessment of its financial assets and liabilities at 1 October 2017. The following table presents the original classification according to IAS 39 and the new classification according to IFRS 9:

 

Financial assets

Original classification IAS 39

New classification IFRS 9

Long-term deposits

Amortised cost

Amortised cost

Other financial assets

 

 

Investments in cash and income funds

Amortised cost

Amortised cost

Discount facility

Fair value through profit or loss

Fair value through profit or loss

Forward exchange contracts

Held for trading

Fair value through profit or loss

Investment in equity instruments

Held for trading

Fair value through profit or loss

Trade and other receivables

Amortised cost

Amortised cost

PGM receivable

Held for trading

Fair value through profit or loss

Cash and cash equivalents

Amortised cost

Amortised cost

Borrowings

Amortised cost

Amortised cost

Income received in advance

Amortised cost

Amortised cost

Trade and other payables

Amortised cost

Amortised cost

 

Upon adoption of IFRS 9, the Group made an irrevocable election to classify marketable securities at fair value through profit or loss.

Measurement: Financial assets and liabilities at amortised cost

Financial assets and liabilities at amortised cost are initially recognised at fair value, and subsequently carried at amortised cost less any impairment.

Measurement: Financial assets and liabilities at fair value through profit or loss

Financial assets and liabilities carried at fair value through profit or loss are initially recorded at fair value and transaction costs are expensed in the statement of profit or loss. Realised and unrealised gains and losses arising from changes in the fair value of the financial assets and liabilities held at fair value through profit or loss are included in the statement of profit or loss in the period in which they arise. Where management has designated to recognise a financial liability at fair value through profit or loss, any changes associated with the Group's own credit risk will be recognised in other comprehensive income.

Impairment of financial asset at amortised cost

The Group recognises a foward-looking expected credit loss for all financial assets that are measured at amortised cost. Expected credit losses are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive. The shortfall is then discounted at an approximation to the asset's original effective interest rate.

For contract assets and trade and other receivables, the Group applies the standard's simplified approach and calculates estimated credit losses based on lifetime expected credit losses. The Group establishes a provision matrix that is based on the Group's historical loss experience, adjusted for foward-looking factors specific to the debtors and the economic environment.

For other debt financial assets held at amortised cost, at each reporting date, the Group measures the loss allowance (if applicable) for the financial asset at an amount equal to the lifetime expected credit losses if the credit risk on the financial asset has increased significantly since initial recognition. If at the reporting date, the financial asset has not increased significantly since initial recognition, the Group measures the loss allowance for the financial asset at an amount equal to twelve months expected credit losses.

Impairment losses on financial assets carried at amortised cost are reversed in subsequent periods if the amount of the loss decreases and the decrease can be objectively related to an event occurring after the impairment was recognised.

Decrecognition: Financial assets

The Group derecognises financial assets only when the contractual rights to cash flows from the financial assets expire, or when it transfers the financial assets and substantially all the associated risks and rewards of ownership to another entity. Gains and losses on derecognition are generally recognised in the statement of profit or loss. However, gains and losses on derecognition of financial assets classified as fair value through other comprehensive income remain within the accumulated other comprehensive income.

Derecognition: Financial liabilities

The Group derecognises financial liabilities only when its obligations under the financial liabilities are discharged, cancelled or expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is recognised in the statement of profit or loss.

Hedge accounting

The Group does not apply hedge accounting.

3.2 Change in accounting policies - Financial Instruments continued

Impact of adopting IFRS 9 on the Group's interim condensed consolidated financial statements

The adoption of IFRS 9 did not impact the carrying value of any financial assets on transition date, consequently adopting IFRS 9 did not result in a restatement of comparative results.

Change in accounting policies - Revenue from contracts with customers

The Group has early adopted all of the requirements of IFRS 15: Revenue from Contracts with Customers (IFRS 15) with a date of initial application of 1 October 2017. IFRS 15 supersedes IAS18: Revenue and related Interpretations and it applies to all revenue arising from contracts with customers, unless those contracts are in the scope of other standards of IFRS. The Group applied IFRS 15 using the modified retrospective method and therefore, comparative information has not been restated and continues to be presented in accordance with IAS 18. IFRS 15 was applied to all open contracts on date of initial application. As a result, the Group has changed its accounting policy for revenue recognition as detailed below.

Comparative accounting policy in terms of IAS 18

Revenue was measured at the fair value of the consideration received or receivable. Revenue from the sale of goods was recognised when significant risks and rewards of ownership had been transferred to the customer, recovery of the consideration was probable, the associated costs and possible return of goods could be estimated reliably, there was no continuing management involvement with the goods and the amount of revenue could be measured reliably.

Revenue from the sale of PGMs was initially recognised at the estimated fair value of the consideration receivable at the date of delivery. Adjustments to the sale price occurred based on movements in the metal market price and currency up to the date of final pricing. Final pricing was based on the monthly average market price in the month of settlement. The period between initial recognition and final pricing was typically three months. The revenue adjustment mechanism embedded within the sale arrangement had the characteristics of a commodity derivative. Accordingly the fair value of the final sales price adjustment was re-estimated continuously and changes in fair value were recognised as a re-estimated adjustment to revenue in profit or loss and trade receivables in the statement of financial position.

The Group entered into contracts for the sale of chrome concentrates. Revenue arising from chrome sales under these contracts was recognised when the price was determinable, the product had been delivered in accordance with the terms of the contract, the significant risks and rewards of ownership had been transferred to the customer, collection of the sale price was probable and associated costs could be reliably estimated. These criteria might vary per contract. As sales from chrome contracts were subject to a customer survey adjustment with regards to quality, sales were initially recorded on a provisional basis using management's best estimate of the chrome quality. Subsequent adjustments were recorded in revenue to take into account final adjustments, if different from the initial estimates.

Revenue from the rendering of services was recognised in proportion to the stage of completion of the work performed at the reporting date.

Accounting policy in terms of IFRS 15

Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected on behalf of third parties, unless the Group acts as principal. The Group recognises revenue when it transfers control over a product or service to a customer. Revenue is presented net of Value Added Tax, rebates and discounts and after eliminating intergroup sales.

Operating segments, and the amounts of each segment item reported in the consolidated financial statements, are identified from the financial information provided regularly to the Group's management for the purposes of allocating resources to, and assessing the performance of, the Group's various lines of business and geographical locations. The Board of Directors is of the view that the Group had three operating segments during the reporting period, the PGM segment, the chrome segment and the agency and trading segment.

The following is a description of the Group's current principal activities separated by reportable segment, from which the Group recognises its revenue.

PGM segment

The PGM segment principally generates revenue from the sale of PGM concentrate, which consists of the sale of platinum, palladium, rhodium, gold, ruthenium, iridium, nickel and copper. The Group enters into off-take agreements with customers for the supply of PGM concentrate. Revenue from the sale of PGM concentrate is recognised at the prevailing market basket price and exchange rates, when delivered to the customers in terms of the off-take agreements. Revenue recognised includes variable consideration as revenue is subject to final pricing and currency adjustments after the beneficiation process is completed. Revenue recognised is adjusted for expected final adjustments based on spot rates, which are estimated based on prevailing market information and recognised as a separate component within revenue. Adjustments to the sale price occur based on movements in the metal market price and exchange rates up to the date of final pricing.

Any subsequent changes that arise due to differences between initial and final assay are still considered within the scope of IFRS 15 and are subject to the constraint on estimates of variable consideration. When considering the initial assay estimate, the Group has considered the requirements of IFRS 15 in relation to the constraint on estimates of variable consideration. It will only include amounts in the calculation of revenue where it is highly probable that a significant revenue reversal will not occur when the uncertainty relating to final assay/quality is subsequently resolved.

Consequently, at the time the concentrate passes to the client, the Group will recognise a receivable as from that time it considers it has an unconditional right to consideration. This receivable is accounted for in accordance with IRFS 9.

The PGM commodity derivative is no longer separated from the host contract. This is because the existence of the provisional pricing features means the concentrate receivable fails to meet the requirements to be measured at amortised cost. Instead, the entire receivable is measured at fair value, with subsequent movements being recognised in profit or loss.

Chrome segment

The Group currently produces two specifications of chrome concentrates, metallurgical chrome concentrate and specialty chrome concentrates. It generates revenue from the sale of these products. The chrome market is typically a "spot" market. The Group enters into short-term sale contracts. The Group also enters into long-term volume off-take agreements for the supply of chrome concentrates.

Revenue arising from chrome concentrate sales under short-term sale contracts and off-take agreements is recognised when the chrome concentrate is delivered and a customer takes control of the chrome concentrate. Revenue is recognised based on the fixed sale price in terms of the contract, the quantity delivered and the quality as determined by an independent survey. Export sales may, as specified in the contract, be subject to a final survey upon arrival at destination port. Revenue recognised for export sales is adjusted for expected final adjustments, which are estimated based on historical data for similar transactions.

Agency and trading segment

The Group operates a third party chrome plant and markets and sells the chrome concentrate produced at this plant. The Group determines whether it acts as principal or agent by assessing whether the Group controls the transaction and what its performance obligations are. Considerations to determine control include whether the Group provides the performance obligation itself, the Group is primarily responsible for fulfilling the promise to provide the specified chrome concentrates, the Group has inventory risk before the specified products are transferred to the customer and the Group determines the selling price. In the absence of any of the aforementioned factors, control of the transaction may be doubtful and the Group would recognise the margin achieved in revenue as an agent.

Metallurgical and specialty chrome concentrates are produced at this plant. The Group enters into short-term contracts for the sale of these chrome concentrates. Revenue arising from short-term sale contracts is recognised when the chrome concentrate is delivered and a customer takes control of the chrome concentrates. This occurs in accordance with the terms of each contract. Delivery terms also vary between the sale of metallurgical chrome concentrate and specialty chrome concentrates. Sales from chrome concentrates are subject to surveys to determine the chrome quality and quantity. Revenue is recognised based on the fixed sale price in terms of the contract, the quantity delivered and the quality as determined by an independent survey. Export sales may, as specified in the contract, be subject to a final survey upon arrival at destination port. Revenue recognised for export sales is adjusted for expected final adjustments, which are estimated based on historical data for similar transactions.

The Group also provides logistics services to customers. These services include long-term contracts and ad hoc logistics services. Revenue is recognised at a point in time as the performance obligation has been fulfilled which is the delivery of the specified goods. Any earned consideration, which is conditional, will be recognised as a contract asset rather than a trade and other receivable.

Revenue is also generated from consulting services rendered. These services include geological, marketing and administration services. Revenue is recognised over time, using an input method to measure progress towards complete customer satisfaction.

Contract balances

Timing of revenue recognition may differ from the timing of invoicing to customers. The Group records a receivable, included in trade and other receivables in the statement of financial position, when revenue is recognised prior to invoicing. Similarly, unearned revenue received (income received in advance), is disclosed as a current liability classified in trade and other payables in the statement of financial position, if it will be earned within one year.

Payment terms and conditions vary by contract type and delivery method, although for local sales terms generally include a requirement of payment upon completion of delivery of the products. For export transactions, payments terms vary from 30 to 90 days, however, the Group obtains a letter of credit from a reputable bank in most instances before shipment occurs.

In the instance where the timing of revenue recognition differs from the timing of invoicing, the Group has determined that due to the short-term nature, the contracts with customers generally do not include a significant financing component. The primary purpose of the Group's invoicing terms is to provide customers with simplified and predictable ways of purchasing products, not to receive financing from customers or to provide financing to customers. Similarly, due to the short-term nature of unearned revenue received, being less than 12 months, no financing component exists.

Commissions recognised from costs to obtain a contract with a customer

The Group recognises the incremental costs, arising from the concluding of sale contracts, as expenses in cost of sales in the statement of profit or loss when incurred. Such commission fees relate to the chrome segment and are short-term in nature.

Impact of adopting IFRS 15 on the Group's interim condensed consolidated financial statements

IFRS 15 requires the Group to recognise revenue for sales of products as it transfers control over those products to customers, which generally occurs on delivery and is determined by the agreed delivery terms. This is generally consistent with the timing of revenue recognition in accordance with the previous standard, IAS 18. No incremental costs have been capitalised on adoption of IFRS 15 because lead times for individual orders are less than one year and costs to fulfil contracts are already recognised as inventories. The Group has used the modified retrospective transition method, under which the effect of initially applying IFRS 15 is adjusted against the opening balance of equity at 1 October 2017. For the reasons described above, this effect is not material to the Group. Under this transition method, comparative information for prior periods has not been restated and continues to be reported in accordance with the previous standard, IAS 18.

3.3 Change in accounting policies - Leases

The Group has early adopted all of the requirements of IFRS 16: Leases (IFRS 16) effective 1 October 2017 (initial application). IFRS 16 replaces IAS 17: Leases (IAS 17). The Group has applied IFRS 16 using the modified retrospective approach and therefore the comparative information has not been restated and continues to be reported in terms of IAS 17 and IFRIC 4 - Determining whether an arrangement contains a lease. The Group recognised the cumulative effect of initial application of IFRS 16, in terms of the modified retrospective approach, in retained earnings at 1 October 2017. As a result, the Group has changed its accounting policy for leases as detailed below.

As a lessee

Comparative accounting policy in terms of IAS 17

In terms of IAS 17, the Group was required to classify its leases as either finance leases or operating leases and account for those two types of leases differently (both as a lessor or a lessee). A lease was classified as a finance lease if it transferred substantially all the risks and rewards incidental to ownership. A lease was classified as an operating lease if all the risks and rewards incidental to ownership did not substantially transfer.

Finance leases were recognised as assets and liabilities in the statement of financial position at amounts equal to the fair value of the leased property or, if lower, the present value of the minimum lease payments. The corresponding liability to the lessor was included in the statement of financial position as a finance lease obligation. The discount rate used in calculating the present value of the minimum lease payments is the interest rate implicit in the lease. The lease payments are apportioned between the finance charge and reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant periodic rate on the remaining balance of the liability.

Operating lease payments, in the event of the Group operating as lessee, were recognised as an expense on a straight-line basis over the lease term. The difference between the amounts recognised as an expense and the contractual payments were recognised as an operating lease asset. The liability was not discounted.

Accounting policy in terms of IFRS 16

The Group recognises a right-of-use asset and a lease liability at the commencement date of the contract for all leases conveying the right to control the use of identified assets for a specified period. The commencement date is the date on which a lessor makes an underlying asset available for use by the lessee.

The right-of-use assets are initially measured at cost, which comprises the amount of initial measurement of the lease liability adjusted for any lease payments made at or before the commencement date plus any initial direct costs incurred by the lessee and an estimate of costs to be incurred by the lessee in dismantling and removing the underlying assets or restoring the site on which the assets are located, less any lease incentives.

Subsequent to initial measurement, the right-of-use assets are depreciated from the commencement date using the straight-line method over the shorter of the estimated useful lives of the right-of-use assets or the end of lease term. These are as follows:

Right-of-use asset

Depreciation term in years

Buildings and premises

Straight-line over the respective lease terms, between three and five years

Mining fleet

Based on estimated production hours

 

After the commencement date, the right-of-use assets are measured at cost less any accumulated depreciation and any accumulated impairment losses and adjusted for any re-measurement of the lease liability.

The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the Group's incremental borrowing rate. Generally, the Group uses its incremental borrowing rate as the discount rate.

Lease payments included in the measurement of the lease liability include the following:

·      Fixed payments, less any lease incentives receivable

·      Variable lease payments that depend on an index or rate, initially measured using the index or rate as at the commencement date

·      Amounts expected to be payable by the lessee under residual value guarantees

·      The exercise price of a purchase option if the lessee is reasonably certain to exercise that option;

·      Lease payments in an optional renewal period if the Group is reasonably certain to exercise an extension option

·      Payments of penalties for early terminating the lease, unless the Group is reasonably certain not to terminate early

The lease liability is measured at amortised cost using the effective interest rate method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in the Group's estimate of the amount expected to be payable under a residual value guarantee, or if the Group changes its assessment of whether it will exercise a purchase, an extension or a termination option.

When the lease liability is remeasured, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

Short-term leases and leases of low-value assets

The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases of vehicles that have a lease term of 12 months or less and leases of low-value assets such as computer equipment.

As a lessor

In the event of lease contracts based on which the Group is acting as a lessor, each of its leases is classified as either an operating or finance lease. A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership to the lessee. Indicators of a finance lease include whether the lease is for the major part of the economic life of the asset, whether the lease transfers ownership of the asset to the lessee by the end of the lease term and whether at inception date of the lease, the present value of the minimum lease payments amount to substantially all of the fair value of the leased asset.

Leases where a significant portion of the risks and rewards incidental to ownership are retained by the lessor, are classified as operating leases.

When the Group is an intermediate lessor, it accounts for its interest in the head lease and the sub-lease separately. It assesses the lease classification of a sub-lease with reference to the right-of-use asset arising from the head lease, not with reference to the underlying asset. If a head lease is a short-term lease to which the Group applies the exemption described above, then it classifies the sub-lease as an operating lease.

Rental income is classified in other income.

Impact of adopting IFRS 16 on the Group's interim condensed consolidated financial statements

The adoption of IFRS 16 resulted in the Group recognising a number of leases for buildings and premises on 1 October 2017. These were previously treated as operating leases in terms of IAS 17. On 1 October 2017, the previously recognised equalisation of operating lease liabilities in terms of IAS 17 was reversed from trade and other payables and the corresponding after tax impact on retained earnings corrected. Simultaneously the right-of-use assets and the corresponding lease liabilities were recognised while the after tax depreciation and finance charges were corrected to retained earnings.

The following table summarises the impact of adopting IFRS 16 on the Group's extracted consolidated Statement of financial position at 1 October 2017:

 

 

As

 previously

 reported

Adjustments

 at

 

 

 

30 Sept

1 October

1 October

 

 

2017

2017

2017

 

Note

US$'000

US$'000

US$'000

Non-current assets

 

 

 

 

Property, plant and equipment

11

232 559

1 166

233 725

Deferred tax asset

13

1 952

7

1 959

Equity and liabilities

 

 

 

 

Retained earnings

 

42 877

(15)

42 862

Non-current liabilities

 

 

 

 

Borrowings

18

4 375

1 014

5 389

Current liabilities

 

 

 

 

Borrowings

18

45 026

191

45 217

Trade and other payables

 

31 916

(17)

31 899

 

4. OPERATING SEGMENTS

Segmental performance is measured based on segment revenue, cost of sales and gross profit, as included in the internal management reports that are reviewed by the Group's management.

 

PGM

Chrome

Agency and trading

Total

 

US$'000

US$'000

US$'000

US$'000

Six months ended 31 March 2018 (Reviewed)

 

 

 

 

Revenue

55 458

130 296

13 425

199 179

Cost of sales

 

 

 

 

Cost of sales excluding selling costs

(39 711)

(56 235)

(12 414)

(108 360)

Selling costs

(205)

(34 827)

(44)

(35 076)

 

(39 916)

(91 062)

(12 458)

(143 436)

Gross profit

15 542

39 234

967

55 743

Six months ended 31 March 2017 (Reviewed)

 

 

 

 

Revenue

40 053

135 066

-

175 119

Cost of sales

 

 

 

 

Cost of sales excluding selling costs

(20 837)

(48 280)

-

(69 117)

Selling costs

(180)

(23 458)

-

(23 638)

 

(21 017)

(71 738)

-

(92 755)

Gross profit*

19 036

63 328

-

82 364

Year ended 30 September 2017 (Audited)

 

 

 

 

Revenue

90 924

252 869

5 650

349 443

Cost of sales

 

 

 

 

Cost of sales excluding selling costs

(54 336)

(107 634)

(4 241)

(166 211)

Selling costs

(366)

(59 068)

(1 144)

(60 578)

 

(54 702)

(166 702)

(5 385)

(226 789)

Gross profit

36 222

86 167

265

122 654

 

* During the period ended 31 March 2017, US$3.2 million was included in the chrome segment which relates to the agency and trading segment.

The shared costs relating to the manufacturing of the PGM and the chrome concentrates are allocated to the relevant operating segments based on the relative sales value per product on an ex-works basis. During the period ended 31 March 2018, the relative sales value of chrome concentrates decreased compared to the relative sales value of PGM concentrate and consequently the allocation basis of shared costs was amended to 45% (PGM concentrate) and 55% (chrome concentrates) respectively. The allocated percentage for PGM concentrate and chrome concentrates accounted for in the comparative period was 25% for PGM concentrate and 75% for chrome concentrates while for the year ended 30 September 2017, shared costs were allocated 35% for PGM concentrate and 65% for chrome concentrates.

The Agency and trading operating segment represents third-party trading and third-party logistics operations and includes the production, marketing and sales of chrome concentrates produced at a chrome plant owned by a third party.

Geographical information

The following table sets out information about the geographical location of the Group's revenue from external customers. The geographical location analysis of revenue from external customers is based on the country of establishment of each customer.

 

 

Six months

 ended

Six months

 ended

Year

ended

 

31 March

31 March

30 Sept

 

2018

2017

2017

 

Reviewed

Reviewed

Audited

Revenue from external customers

US$'000

US$'000

US$'000

South Africa

84 321

73 612

151 886

China

47 318

57 986

86 035

Singapore

2 188

3 215

13 961

Hong Kong

65 352

37 601

94 866

Other countries

-

2 705

2 695

 

199 179

175 119

349 443

 

Revenue represents the sales value of goods supplied to customers, net of value added tax.

The following table summarises sales to external customers with whom transactions have individually exceeded 10% of Group revenue:

 

Six months ended

Six months ended

Year ended

 

31 March 2018

31 March 2017

30 September 2017

 

Segment

US$'000

Segment

US$'000

Segment

 US$'000

Customer 1

PGM

48 757

PGM

40 052

PGM

88 118

Customer 2

Chrome

28 585

Chrome

33 535

Chrome

60 370

Customer 3

Chrome

22 659

Chrome

23 840

Chrome

43 676

 

5. REVENUE

Revenue is disaggregated by segments in the following categories:

 

Six months

 ended

Six months

 ended

Year

ended

 

31 March

31 March

30 Sept

 

2018

2017

2017

 

Reviewed

Reviewed

Audited

 

US$'000

US$'000

US$'000

PGM segment

 

 

 

Platinum

31 058

26 067

58 019

Palladium

10 207

6 839

15 939

Rhodium

10 629

4 862

11 045

Gold

131

108

243

Ruthenium

1 250

177

595

Iridium

1 734

1 306

3 292

Copper

136

162

375

Nickel

621

536

1 199

Metal adjustments

(308)

(4)

217

Total revenue from PGM segment

55 458

40 053

90 924

Chrome segment

 

 

 

Metallurgical

101 812

101 782

193 719

Specialty

28 484

33 284

59 150

Total revenue from chrome segment

130 296

135 066

252 869

Agency and trading segment

 

 

 

Metallurgical chrome

13 045

-

4 399

Specialty chrome

55

-

-

Logistics

201

-

1 228

Consulting

124

-

23

Total revenue from agency and trading segment

13 425

-

5 650

 

Revenue is disaggregated by segments in the following geographical locations:

 

 

PGM

segment

Chrome

 segment

Agency

 and trading

 segment

Total

 

US$'000

US$'000

US$'000

US$'000

Six months ended 31 March 2018 (Reviewed)

 

 

 

 

South Africa

55 458

28 484

379

84 321

China

-

42 518

4 800

47 318

Singapore

-

532

1 656

2 188

Hong Kong

-

58 762

6 590

65 352

 

55 458

130 296 

13 425

199 179

Six months ended 31 March 2017 (Reviewed)

 

 

 

 

South Africa

40 053

33 559

-

73 612

China

-

57 986

-

57 986

Singapore

-

3 215

-

3 215

Hong Kong

-

37 601

-

37 601

Other countries

-

2 705

-

2 705

 

40 053

135 066

-

175 119

Year ended 30 September 2017 (Audited)

 

 

 

 

South Africa

90 924

59 150

1 811

151 885

China

-

82 196

3 839

86 035

Singapore

-

13 961

-

13 961

Hong Kong

-

94 866

-

94 866

Other countries

-

2 696

-

2 696

 

90 924

252 869

5 650

349 443

 

 

Six months

 ended

Six months

 ended

Year

ended

 

31 March

31 March

30 Sept

 

2018

2017

2017

 

Reviewed

Reviewed

Audited

 

US$'000

US$'000

US$'000

Revenue recognised in current period for which performance obligations were partially satisfied in previous period:

 

 

 

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

(28 994)

(26 080)

(26 080)

PGM revenue based on final results

30 823

26 224

26 224

PGM revenue adjustment recognised in current period/year

1 829

144

144

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

(41 197)

(39 818)

(39 818)

Chrome revenue based on final results

41 177

39 672

39 672

Chrome revenue adjustment recognised in current period/year

(20)

(146)

(146)

Revenue recognised which was included in opening income received in advance liability:

 

 

 

Chrome revenue recognised upon completion of performance conditions

-

-

3 102

 

The period ended 31 March 2018 includes PGM revenue of US$28.7 million and chrome revenue of US$46.2 million that was based on provisional results as final prices and surveys were not yet available at the date of this report. Contract balances are included in trade receivables, refer to note 15.

 

 

 

Six months

 ended

Six months

 ended

Year

ended

 

 

31 March

31 March

30 Sept

 

 

2018

2017

2017

 

 

Reviewed

Reviewed

Audited

 

 

US$'000

US$'000

US$'000

6.

COST OF SALES

 

 

 

 

Mining

56 243

49 262

96 005

 

Salaries and wages

7 816

5 865

12 467

 

Utilities

4 770

4 031

9 495

 

Diesel

310

282

705

 

Materials and consumables

5 605

4 078

8 274

 

Re-agents

2 287

1 816

3 653

 

Steel balls

3 773

3 175

6 757

 

Overhead

3 375

3 292

8 055

 

State royalties

1 595

970

1 665

 

Depreciation - property, plant and equipment

16 273

8 077

16 476

 

Agency and trading

12 414

3 800

4 241

 

Selling costs

35 076

23 638

60 578

 

Change in inventories

- finished products and ore stockpile

(6 101)

(15 531)

(1 582)

 

Cost of sales

143 436

92 755

226 789

 

 

 

Six months

 ended

Six months

 ended

Year

ended

 

 

31 March

31 March

30 Sept

 

 

2018

2017

2017

 

 

Reviewed

Reviewed

Audited

 

 

US$'000

US$'000

US$'000

7.

OTHER INCOME

 

 

 

 

Gain on bargain purchase (refer to note 20)

1 884

-

-

 

Consulting fees received

143

-

5

 

Rental income

10

14

20

 

Sundry sales

-

34

91

 

Other income

35

35

44

 

 

2 072

83

160

 

 

 

Six months

 ended

Six months

 ended

Year

ended

 

 

31 March

31 March

30 Sept

 

 

2018

2017

2017

 

 

Reviewed

Reviewed

Audited

 

 

US$'000

US$'000

US$'000

8.

ADMINISTRATIVE EXPENSES

 

 

 

 

Directors and staff costs

 

 

 

 

Non-executive directors

295

254

536

 

Employees: salaries

8 121

4 262

9 213

 

                     bonuses

2 650

776

1 339

 

                     pension fund and medical aid contributions

843

663

1 405

 

 

11 909

5 955

12 493

 

Audit - external audit services

313

142

429

 

Consulting*

697

884

2 773

 

Corporate and social investment

30

50

73

 

Depreciation

500

256

453

 

Discount facility and related fees

432

257

516

 

Equity-settled share-based payment expense

1 978

2 196

4 342

 

Fees for professional services of the listing

-

-

260

 

Health and safety

419

122

300

 

Internal audit

39

-

-

 

Impairment losses

-

28

-

 

Insurance

377

458

914

 

Legal and professional

236

127

873

 

Loss on disposal of property, plant and equipment

13

-

196

 

Office administration, rent and utilities

315

282

660

 

Security

1 193

485

828

 

Telecommunications and IT related costs

793

308

719

 

Training

150

151

313

 

Travelling and accommodation

214

195

358

 

Sundry expenses

814

634

403

 

 

20 422

12 530

26 903

 

* Consulting fees includes US$53 thousand (31 March 2017: US$nil and 30 September 2017: US$61 thousand) which was paid to the former external auditor for tax and accounting services as approved by the Audit Committee.

 

 

 

Six months

 ended

Six months

 ended

Year

ended

 

 

31 March

31 March

30 Sept

 

 

2018

2017

2017

 

 

Reviewed

Reviewed

Audited

 

 

US$'000

US$'000

US$'000

9.

TAX

 

 

 

 

Corporate income tax for the year

 

 

 

 

Cyprus

1 457

992

1 554

 

South Africa

1 300

1 381

2 596

 

Special contribution for defence in Cyprus

2

3

4

 

Dividend withholding tax

158

-

-

 

Deferred tax

 

 

 

 

Originating and reversal of temporary differences

5 836

14 940

19 162

 

Tax charge

8 753

17 316

23 316

 

Reconciliation between tax charge and accounting profit at applicable tax rates:

 

 

 

 

Profit before tax

37 166

68 329

90 989

 

Notional tax on profit before taxation, calculated at the rates applicable in the jurisdictions concerned

20 513

19 019

23 165

 

Non-taxable income

 

 

 

 

Revaluation of intergroup US$ denominated preference shares

(11 761)

(2 045)

(695)

 

Intergroup dividends received

(2 007)

(1 316)

(2 423)

 

Interest received

(8)

(1)

(6)

 

Non-deductible expenses

 

 

 

 

Intergroup dividends paid

1 600

1 195

2 415

 

Investment related

240

208

526

 

Interest paid

16

1

51

 

Capital expenses

123

97

170

 

Other

10

124

73

 

Recognition of deemed interest income for tax purposes

27

34

40

 

Tax charge

8 753

17 316

23 316

 

Tax is recognised on management's best estimate of the weighted average annual income tax rate expected for the full financial year applied to the pre-tax income of the interim period. The corporation tax rate is 12.5% in Cyprus, 0% in Guernsey and 28.0% in South Africa.

Under certain conditions interest income may be subject to defence contribution at the rate of 30.0% in Cyprus. Such interest income is treated as non-taxable in the computation of corporation taxable income. In certain instances, dividends received from abroad may be subject to defence contribution at the rate of 17.0%.

The Group's consolidated effective tax rate for the six months ended 31 March 2018 was 23.6% (31 March 2017: 25.3%; 30 September 2017: 25.6%).

At 31 March 2018, the Group's unredeemed capital balance available for offset against future mining taxable income in South Africa amounted to US$124.0 million (31 March 2017: US$108.6 million and 30 September 2017: US$99.6 million).

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

10. EARNINGS PER SHARE

Basic and diluted earnings per share

The calculation of basic and diluted earnings per share has been based on the profit attributable to the ordinary shareholders of the Company and the weighted average number of ordinary shares outstanding. Vested Share Appreciation Rights (SARS) issued to employees at award prices lower than the current share price, results in a potential dilutive impact on the weighted average number of issued ordinary shares and have been included in the calculation of dilutive weighted average number of issued ordinary shares. Vested SARS issued to employees at award prices higher than the current share price, were excluded from the calculation of diluted weighted average number of issued ordinary shares because their effect would have been anti-dilutive.

 

 

Six months

 ended

Six months

 ended

Year

ended

 

 

31 March

31 March

30 Sept

 

 

2018

2017

2017

 

 

Reviewed

Reviewed

Audited

Profit attributable to ordinary shareholders

(US$'000)

25 960

41 925

57 601

Weighted average number of issued ordinary shares for basic earnings per share

('000)

260 141

256 178

257 393

Weighted average number of issued ordinary shares for diluted earnings per share

('000)

261 782

256 178

257 393

Earnings per share

 

 

 

 

Basic

(US$ cents)

10

16

22

Diluted

(US$ cents)

10

16

22

 

Headline and diluted headline earnings per share

The calculation of basic and diluted headline earnings per share has been based on the profit attributable to the ordinary shareholders of the Company and the weighted average number of ordinary shares outstanding. Vested Share Appreciation Rights (SARS) issued to employees at award prices lower than the current share price, results in a potential dilutive impact on the weighted average number of issued ordinary shares and have been included in the calculation of dilutive weighted average number of issued ordinary shares. Vested SARS issued to employees at award prices higher than the current share price, were excluded from the calculation of diluted weighted average number of issued ordinary shares because their effect would have been anti-dilutive.

 

Six months

 ended

Six months

 ended

Year

ended

 

 

31 March

31 March

30 Sept

 

 

2018

2017

2017

 

 

Reviewed

Reviewed

Audited

Headline earnings attributable to ordinary shareholders

(US$'000)

24 730

41 953

57 799

Weighted average number of issued ordinary shares for basic headline earnings per share

('000)

260 141

256 178

257 393

Weighted average number of issued ordinary shares for diluted headline earnings per share

('000)

261 782

256 178

257 393

Headline earnings per share

 

 

 

 

Basic

(US$ cents)

10

16

22

Diluted

(US$ cents)

10

16

22

 

Reconciliation of profit to headline earnings

 

Gross

Tax

Non-controlling interest

Six months

 ended

Six months

 ended

Year

ended

31 March

31 March

30 Sept

2018

2017

2017

Reviewed

Reviewed

Audited

Net

Net

Net

 

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

Profit attributable to ordinary shareholders

 

 

 

25 960

41 925

57 601

Net adjustments:

 

 

 

 

 

 

Gain on bargain purchase

(1 884)

-

490

(1 394)

-

-

Scrapping of property, plant and equipment

894

(250)

(167)

477

-

-

Exchange loss on net change in investment in foreign subsidiary

672

-

-

672

 

 

Impairment losses on goodwill

-

-

-

-

28

57

Loss on disposal of property, plant and equipment

13

(4)

(2)

7

-

141

Headline earnings

 

 

 

25 722

41 953

57 799

 

 

 

 

 

Freehold

land and

 buildings

Mining

 assets and

 infra-

structure

Mining fleet

Right-of-use

 asset:

mining fleet

Motor

 vehicles

Computer

equipment

 and

software

Office

 equipment and furniture,

community

and site

 office

improve-

ments

Right-of-use

 asset:

buildings

Leasehold

 improve-

ments

Total

 

 

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

11.

PROPERTY, PLANT AND EQUIPMENT

 

 

 

 

 

 

 

 

 

 

 

31 March 2018 (Reviewed)

 

 

 

 

 

 

 

 

 

 

 

Total cost

17 682

320 597

35 293

11 928

698

6 449

952

2 540

-

396 139

 

Total accumulated depreciation

(781)

(77 310)

(3 909)

(1 542)

(367)

(2 671)

(613)

(412)

-

(87 605)

 

Net book value at 31 March 2018

16 901

243 287

31 384

10 386

331

3 778

339

2 128

-

308 534

 

Reconciliation of net book value

 

 

 

 

 

 

 

 

 

 

 

Net book value at 30 September 2017

14 762

206 682

6 731

-

305

3 628

278

-

173

232 559

 

Recognition of right-of-use assets

-

-

-

-

-

-

-

1 166

-

1 166

 

Transfers

-

-

-

-

-

-

-

173

(173)

-

 

Net book value at 1 October 2017

14 762

206 682

6 731

-

305

3 628

278

1 339

-

233 725

 

Additions

68

6 738

10 570

4 438

16

185

93

776

-

22 884

 

Additions in terms of business combination (note 20)

-

1 887

21 466

7 003

-

-

-

-

-

30 356

 

Transfers

-

5 720

(5 719)

-

-

-

(24)

23

-

-

 

Transferred to trade and other receivables

-

-

-

(476)

-

-

-

-

-

(476)

 

Disposals

-

-

(67)

-

-

-

(1)

-

-

(68)

 

Depreciation

(95)

(8 561)

(3 424)

(1 425)

(32)

(539)

(48)

(245)

-

(14 369)

 

Impairment

-

-

(894)

-

-

-

-

-

-

(894)

 

Exchange adjustment on translation

2 166

30 821

2 721

846

42

504

41

235

-

37 376

 

Net book value at 31 March 2018

16 901

243 287

31 384

10 386

331

3 778

339

2 128

-

308 534

 

Included in additions to mining assets and infrastructure are additions to the deferred stripping asset of US$1.0 million (31 March 2017 and 30 September 2017: no additions).

The estimated economically recoverable proved and probable mineral reserve was reassessed at 30 September 2017 which gave rise to a change in accounting estimate. The remaining reserve that management had previously assessed was 100.3 Mt and at 30 September 2017 was assessed to be 97.0 Mt. As a result, taking into account depletion of the reserve during the year ended 30 September 2017, the expected useful life of the plant increased. The impact of the change on the actual depreciation expense, included in cost of sales, is a reduced depreciation of US$0.1 million.

Capital commitments

At 31 March 2018, the Group's capital commitments for contracts to purchase property, plant and equipment amounted to US$10.8 million (31 March 2017: US$3.2 million; 30 September 2017: US$6.5 million).

Securities

At 31 March 2018, US$6.1 million of the carrying amount of the Group's mining fleet was pledged as security against the equipment loan facility. At 31 March 2017, US$185.1 million (30 September 2017: US$213.5 million) was secured against the secured bank borrowings.

 

Freehold

land and

 buildings

Mining

 assets and

 infra-

structure

Mining fleet

Right-of-use

 asset:

mining fleet

Motor

 vehicles

Computer

equipment

 and

software

Office

 equipment and furniture,

community

and site

 office

improve-

ments

Right-of-use

 asset:

buildings

Leasehold

 improve-

ments

Total

 

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

31 March 2017 (Reviewed)

 

 

 

 

 

 

 

 

 

 

Total cost

15 234

260 838

-

-

553

4 064

588

-

133

281 410

Total accumulated depreciation

(554)

(52 423)

-

-

(261)

(1 557)

(490)

-

(133)

(55 418)

Net book value at 31 March 2017

14 680

208 415

-

-

292

2 507

98

-

-

225 992

Reconciliation of net book value

 

 

 

 

 

 

 

 

 

 

Net book value at 1 October 2016

14 090

205 159

-

-

317

874

91

-

3

220 534

Additions

369

6 117

-

-

25

1 924

23

-

-

8 458

Depreciation

(128)

(7 827)

-

-

(57)

(333)

(18)

-

(3)

(8 366)

Exchange adjustment on translation

349

4 966

-

-

7

42

2

-

-

5 366

Net book value at 31 March 2017

14 680

208 415

-

-

292

2 507

98

-

-

225 992

30 September 2017 (Audited)

 

 

 

 

 

 

 

 

 

 

Total cost

15 354

266 019

7 030

-

594

5 542

796

-

220

295 555

Total accumulated depreciation

(592)

(59 337)

(299)

-

(289)

(1 914)

(518)

-

(47)

(62 996)

Net book value at 30 September 2017

14 762

206 682

6 731

-

305

3 628

278

-

173

232 559

Reconciliation of net book value

 

 

 

 

 

 

 

 

 

 

Net book value at 1 October 2016

14 090

205 159

-

-

317

874

91

-

3

220 534

Additions

666

14 602

7 124

-

73

3 504

240

-

189

26 398

Disposals

-

(196)

-

-

-

-

-

-

-

(196)

Depreciation

(174)

(15 570)

(303)

-

(90)

(725)

(51)

-

(16)

(16 929)

Exchange adjustment on translation

180

2 687

(90)

-

5

(25)

(2)

-

(3)

2 752

Net book value at 30 September 2017

14 762

206 682

6 731

-

305

3 628

278

-

173

232 559

 

 

 

 

31 March

31 March

30 Sept

 

 

2018

2017

2017

 

 

Reviewed

Reviewed

Audited

 

 

US$'000

US$'000

US$'000

12.

LONG-TERM DEPOSITS

 

 

 

 

Long-term deposits

-

4 796

4 505

 

The long-term deposits represented restricted cash which was designated as a "debt service reserve account" which was required by the terms of the Common Terms Agreement for the senior debt facility payable by Tharisa Minerals Proprietary Limited.

Effective 28 March 2018, the senior debt facility was settled in full (refer to note 18) and consequently the restricted cash was released and became available to the Group.

 

 

31 March

31 March

30 Sept

 

 

2018

2017

2017

 

 

Reviewed

Reviewed

Audited

 

 

US$'000

US$'000

US$'000

13.

DEFERRED TAX

 

 

 

 

Deferred tax assets

2 445

2 127

1 952

 

Deferred tax liabilities

(33 297)

(20 280)

(23 823)

 

Net deferred tax liability

(30 852)

(18 153)

(21 871)

 

Reconciliation of net deferred tax liability

 

 

 

 

Balance at the beginning of the period/year

(21 871)

(3 878)

(3 878)

 

Impact of adoption of IFRS16

7

-

-

 

Balance at the beginning of the period/year

(21 864)

(3 878)

(3 878)

 

Amounts recognised in:

 

 

 

 

Profit and loss

(5 836)

(14 940)

(19 162)

 

Equity

515

802

861

 

Exchange differences

(3 667)

(137)

308

 

Balance at the end of the period/year

(30 852)

(18 153)

(21 871)

 

Deferred tax assets and deferred tax liabilities are not offset unless the Group has a legally enforceable right to offset such assets and liabilities.

The recoverability of deferred tax assets was assessed in respect of each individual legal entity. The estimates used to assess the recoverability of recognised deferred tax assets include a forecast of the future taxable income and future cash flow projections based on a three-year period. The Group did not have tax losses and temporary differences for which deferred tax was not recognised.

 

 

 

31 March

31 March

30 Sept

 

 

2018

2017

2017

 

 

Reviewed

Reviewed

Audited

 

 

US$'000

US$'000

US$'000

14.

INVENTORIES

 

 

 

 

Finished products

8 853

25 594

6 620

 

Ore stockpile

4 798

5 177

5 807

 

Consumables

13 252

5 582

8 375

 

 

26 903

36 353

20 802

 

Inventories are stated at the lower of cost or net realisable value. During the period ended 31 March 2018, the Group reversed inventory previously written down to net realisable value of US$0.1 million (31 March 2017: net realisable value write-down of US$0.1 million and 30 September 2017: net realisable value write-down of US$0.1 million) relating to certain consumables and spares.

 

 

 

31 March

31 March

30 Sept

 

 

2018

2017

2017

 

 

Reviewed

Reviewed

Audited

 

 

US$'000

US$'000

US$'000

15.

TRADE AND OTHER RECEIVABLES

 

 

 

 

Trade receivables

60 040

39 741

55 602

 

Other receivables - related parties (note 21)

108

48

59

 

Deposits, prepayments and other receivables

1 720

1 803

1 081

 

Accrued income

2 747

5 482

3 167

 

Value added tax (VAT) receivable

12 253

5 507

9 327

 

Royalty tax

1 305

-

1 138

 

 

78 173

52 581

70 374

 

Ageing of trade receivables:

 

 

 

 

Current

57 929

33 870

43 677

 

Less than 90 days past due but not impaired

2 089

3 911

7 540

 

Greater than 90 days past due but not impaired

22

1 960

4 385

 

 

60 040

39 741

55 602

 

Included in VAT is an amount of ZAR104.4 million (31 March 2017: ZAR50.3 million and 30 September 2017: ZAR79.5 million) which relates to diesel rebates receivable from the South African Revenue Service (SARS) in respect of the mining operations. The Group received a letter of demand and rejection from SARS. The Group is strongly of the view that it fully complies with all the regulations to be entitled to this refund and is appealing SARS's decision. The Group is taking the necessary legal action to recover the amount due.

Based on past experience, management believes that no impairment allowance (31 March 2017 and 30 September 2017: no impairment allowance) is required in respect of the trade and other receivables as there has not been a significant change in credit quality and the balances are still considered fully recoverable. The Group does not hold any collateral over these balances.

 

 

31 March

31 March

30 Sept

 

 

2018

2017

2017

 

 

Reviewed

Reviewed

Audited

 

 

US$'000

US$'000

US$'000

16.

CASH AND CASH EQUIVALENTS

 

 

 

 

Bank balances

56 356

26 425

39 983

 

Short-term deposits

3 574

195

9 759

 

 

59 930

26 620

49 742

 

Cash at banks earns interest at floating rates based on daily bank deposit rates. Short-term deposits are generally call deposit accounts and earn interest at the respective short-term deposit rates.

At 31 March 2018, an amount of US$1.9 million (31 March 2017: US$1.7 million and 30 September 2017: US$1.7 million) was provided as security for a bank guarantee issued in favour of a trade creditor and US$0.3 million (31 March 2017 and 30 September 2017: US$0.3 million) was provided as security against certain credit facilities of the Group.

The Group had unutilised borrowing facilities of ZAR400 million available at 31 March 2018 (refer to note 18) (31 March 2017 and 30 September 2017: no unutilised facilities available).

17. SHARE CAPITAL AND PREMIUM

Share capital

The Company did not issue any ordinary shares during the six months ended 31 March 2018 and 31 March 2017. Allotments during the year ended 30 September 2017 were in respect of the award of 2 984 853 ordinary shares granted in terms of the Share Award Scheme (Conditional Awards) and 1 033 576 ordinary shares issued as treasury shares to satisfy the potential future settlement of Appreciation Rights of the participants' of the Tharisa Share Award Plan.

During the period ended 31 March 2018, 181 074 (31 March 2017: nil and year ended 30 September 2017: 46 302) ordinary shares were transferred from treasury shares to satisfy the exercise of Appreciation Rights by the participants of the Tharisa Share Award Scheme.

At 31 March 2018, the Company had 261 000 000 (31 March 2017: 255 891 886 and 30 September 2017: 261 000 000) ordinary shares in issue of which 806 200 (31 March 2017: nil and 30 September 2017: 987 274) were held in treasury.

Share premium

The share premium represents the excess of the issue price of the ordinary shares over their nominal value, to the extent that it is registered at the Registrar of Companies in Cyprus, less share issue costs and any registered transfers to retained earnings.

During the period ended 31 March 2017, the share premium account was reduced by US$179.2 million with a corresponding increase in retained earnings to reduce the accumulated losses to US$nil. The required Court Order was obtained and filed at the Registrar of Companies in Cyprus. This includes a distribution of US$2.6 million (US$1 cent per share) which was approved by way of a Special Resolution on 1 February 2017. The Special Resolution was ratified by the abovementioned Court Order on 8 March 2017.

During the year ended 30 September 2017, the movement in the share premium account relates to the aforementioned and the issue and allotment of ordinary shares granted in terms of the Share Award Schemes.

 

 

31 March

31 March

30 Sept

 

 

2018

2017

2017

 

 

Reviewed

Reviewed

Audited

 

 

US$'000

US$'000

US$'000

18.

BORROWINGS

 

 

 

 

Non-current

 

 

 

 

Facilities

21 865

-

-

 

Equipment loan facility

4 114

-

-

 

Leases

9 074

-

1 497

 

Secured bank borrowings

-

10 495

2 878

 

 

35 053

10 495

4 375

 

Current

 

 

 

 

Facilities

10 860

-

-

 

Equipment loan facility

5 370

-

-

 

Leases

4 951

611

847

 

Bank credit facilities

20 938

6 709

29 072

 

Secured bank borrowings

-

14 852

14 876

 

Guardrisk loan

-

908

231

 

 

42 119

23 080

45 026

 

Facilities

Effective 28 March 2018, the Group concluded the ZAR800 million Facilities which comprises of:

·      a three-year senior secured amortising term loan of ZAR400 million (Term loan);

·      a three-year secured committed revolving facility of ZAR300 million (Revolving facility); and

·      an overdraft facility of ZAR100 million (Overdraft).

The financing was obtained by Tharisa Minerals Proprietary Limited and guaranteed by the Company.

The Term loan bears interest at the three-month JIBAR plus 320 basis points nominal annual compounded quarterly and is repayable in 12 equal consecutive quarterly instalments commencing on 30 June 2018. The Revolving facility is available for three years and bears interest at the one-month JIBAR plus 340 basis points nominal annual compounded quarterly and is repayable in full at least once every 12 months. Interest is payable monthly in arrears. The Overdraft facility is available for one year and bears interest at the South African prime rate payable monthly in arrears.

The Facilities contain the following financial covenants for Tharisa Minerals Proprietary Limited:

·      Debt to equity ratio of less than 0.67 times

·      Net debt to EBITDA of less than 2.0 times

·      EBITDA to interest of greater than 4.0 times

At 31 March 2018, Tharisa Minerals Proprietary Limited complied with all financial covenants.

The Term loan was utilised, inter alia, to settle the secured bank borrowings at 29 March 2018 and in part to settle the bridge loan at 31 March 2018. The unutilised facilities at 31 March 2018 amounted to ZAR400 million.

Equipment loan facility

Tharisa Minerals Proprietary Limited entered into an equipment loan facility of US$25 million with Caterpillar Financial Services Corporation for the funding of certain Caterpillar mining equipment. The funding was partially utilised for the purchase of existing mining equipment acquired from MCC Contracts Proprietary Limited as well as replacement parts and new mining equipment. The loan is structured in three tranches and repayment of each tranche varies between 24 and 48 equal monthly instalments, payable in arrears. Interest is calculated on the three- month US$ Libor plus between 350 and 400 basis points.

The equipment loan facility is secured by a first notarial bond over the equipment and is guaranteed by the Company.

The equipment loan facility contains the following Group financial covenants:

·      Net debt to tangible net worth not higher than 1.4 times

·      Net debt to EBITDA lower than 2.0 times

·      EBITDA to interest greater than 4.0 times

Leases

The Group entered into a number of lease arrangements for the renting of office buildings, premises, computer equipment, vehicles and mining fleet. The Group has elected not to recognise right-of-use assets and lease liabilities for short-term leases of vehicles that have a lease term of 12 months or less and leases of low-value assets such as computer equipment.

Lease expenses of US$0.2 million (31 March 2017 and 30 September 2017: US$ nil) and US$0.1 million (31 March 2017: US$0.3 million and 30 September 2017: US$0.7 million) were included in cost of sales and administrative expenses respectively for the period ended 31 March 2018.

The duration of leases relating to buildings and premises are for a period of five years, payments are due at the beginning of the month escalating annually on average by 8.0%. At 31 March 2018, the remaining term of these leases vary between four and four and a half years. These leases are secured by cash deposits varying from one to three times the monthly lease payments.

The duration of leases relating to the mining fleet are for periods between 14 and 36 months and bear interest at interest rates between the South African prime interest rate and the South African prime interest rate plus 300 basis points. The leases are secured by the mining fleet leased.

 

 

 

31 March

31 March

30 Sept

 

 

2018

2017

2017

 

 

Reviewed

Reviewed

Audited

 

 

US$'000

US$'000

US$'000

 

Minimum lease payments due:

 

 

 

 

Within one year

6 103

649

1 046

 

Two to five years

10 190

-

1 620

 

 

16 293

649

2 666

 

Less future finance charges

(2 268)

(38)

(322)

 

Present value of minimum lease payments due

14 025

611

2 344

 

Present value of minimum lease payments due:

 

 

 

 

Within one year

4 951

611

847

 

Two to five years

9 074

-

1 497

 

 

14 025

611

2 344

 

Bank credit facilities

The bank credit facilities relate to the discounting of the letters of credit by the Group's banks following performance of the letter of credit conditions by the Group, which results in funds being received in advance of the normal payment date. Interest on these facilities at the reporting date was US Libor plus 3.5% per annum (31 March 2017: US Libor plus 2.6% per annum and 30 September 2017: US Libor plus 1.6% per annum).

Secured bank borrowings

Effective 29 March 2018, the secured bank borrowings of ZAR1 billion obtained from a consortium of banks was prepaid and settled in full. The financing was obtained by Tharisa Minerals Proprietary Limited, a subsidiary of the Group, and was for a period of seven years repayable in 22 equal quarterly instalments with the first repayment date at 31 December 2013. The Group was required to maintain funds in a debt service reserve account, which was consequently released.

Guardrisk loan

The loan payable at 30 September 2017 was settled in full during the period ended 31 March 2018.

Bridge loan

During the period ended 31 March 2018, Tharisa Minerals Proprietary Limited concluded a bridge loan of ZAR250 million from Absa Bank Limited. The bridge loan part funded the acquisition of mining fleet and equipment of MCC Contracts Proprietary Limited (refer to note 20). The bridge loan was repayable by 31 March 2018 and carried interest at JIBAR plus 325 basis points. The bridge loan was repaid in full on 29 March 2018.

 

 

 

 

 

Borrowings

 

 

 

Facilities

Equipment loan facility

Leases

Bank credit facilities

Secured bank borrowings

Guardrisk loan

Bridge loan

Total borrowing

Current liabilities

Total

 

 

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

 

Reconciliation of borrowings to cash flow from financing activities

 

 

 

 

 

 

 

 

 

 

 

Balance 30 September 2017

-

-

2 344

29 072

17 754

231

-

49 401

-

49 401

 

Adoption of IFRS 16

-

-

1 205

-

-

-

-

1 205

-

1 205

 

Balance at 1 October 2017

-

-

3 549

29 072

17 754

231

-

50 606

-

50 606

 

Changes from financing cash flows

 

 

 

 

 

 

 

 

 

 

 

Advances received from bank credit facilities

-

-

-

90 243

-

-

-

90 243

-

90 243

 

Repayment of bank credit facilities

-

-

-

(98 377)

-

-

-

(98 377)

-

(98 377)

 

Net repayment of bank credit facilities

-

-

-

(8 134)

-

-

-

(8 134)

-

(8 134)

 

Advances received

30 218

12 434

-

-

-

-

19 539

62 191

-

62 191

 

Repayment of borrowings

-

(2 499)

-

-

(18 827)

(244)

(19 539)

(41 109)

-

(41 109)

 

Lease payments

-

-

(4 608)

-

-

-

-

(4 608)

-

(4 608)

 

Interest paid

-

(266)

-

(261)

(1 112)

(2)

(909)

(2 550)

(2 102)

(4 652)

 

Total changes from financing cash flows

30 218

9 669

(4 608)

(8 395)

(19 939)

(246)

(909)

5 790

(2 102)

3 688

 

Foreign currency translation differences

2 480

719

1 269

-

1 064

13

-

5 545

-

5 545

 

Liability-related changes

 

 

 

 

 

 

 

 

 

 

 

Lease agreements entered into

-

-

5 214

-

-

-

-

5 214

-

5 214

 

Business combination (note 20)

-

-

7 003

-

-

-

-

7 003

-

7 003

 

Interest expense

27

266

1 598

261

1 121

2

909

4 184

-

4 184

 

Revaluation of foreign denominated loan

-

(1 170)

-

-

-

-

-

(1 170)

-

(1 170)

 

Total liability-related changes

27

(904)

13 815

261

1 121

2

909

15 231

-

15 231

 

Balance at 31 March 2018

32 725

9 484

14 025

20 938

-

-

-

77 172

(2 102)

75 070

 

 

 

 

31 March

31 March

30 Sept

 

 

2018

2017

2017

 

 

Reviewed

Reviewed

Audited

 

 

US$'000

US$'000

US$'000

19.

PROVISIONS

 

 

 

 

Provision for rehabilitation

 

 

 

 

Opening balance

6 923

4 607

4 607

 

Capitalised to inventories

2 778

1 107

1 340

 

Capitalised to mining assets and infrastructure

(324)

270

451

 

Recognised as part of business combination (note 20)

133

-

-

 

Recognised in profit or loss

347

210

494

 

Exchange differences

1 257

133

31

 

Closing balance

11 114

6 327

6 923

 

In terms of the Mineral and Petroleum Resources Development Act No 28, of 2002, the Group is required to make financial provision for its decommissioning and restoration costs that will be incurred upon cessation of mining activities. The provision has been calculated based on total estimated rehabilitation costs, discounted back to their present values. The pre-tax discount rates are adjusted annually and reflect current market assessments. These costs are expected to be utilised mostly towards the end of the life of mine and associated infrastructure, which is currently estimated to be within 16 years. Financial provision is not required to be made for the decommissioning of certain structures, such as housing, which may have an alternative use.

The current estimated rehabilitation cost to be incurred mostly at the end of the life of the open pit mine taking escalation factors into account is US$17.4 million (31 March 2017: US$13.4 million and 30 September 2017: US$13.7 million). The estimate was calculated by an independent external expert.

In determining the amounts attributable to the rehabilitation provision, management used a discount rate of 8.0% (31 March 2017: 8.8% and 30 September 2017: 8.5%) which represents the rate associated to the 10-year South African Bond Yield (31 March 2017 and 30 September 2017: R186 government bond of South Africa), estimated rehabilitation timing of 16 years (31 March 2017: 19 years and 30 September 2017: 18 years) and an inflation rate of 4.9% (31 March 2017: 4.5% and 30 September 2017: 4.5%) which represents the weighted average of the historical inflation rate since the mining operations commenced and the average long-term inflation target range of the South African Reserve Bank.

An insurance company has provided a guarantee to the Department of Mineral Resources to satisfy the legal requirements with respect to environmental rehabilitation and the Group has pledged as collateral its investments in interest-bearing debt instruments to the insurance company to support this guarantee.

20. BUSINESS COMBINATION

Effective 1 October 2017, the acquisition of mining equipment, spares and consumables from MCC Contracts Proprietary Limited (MCC), the previous mining contractor of Tharisa Minerals Proprietary Limited, became unconditional. The transaction included the transfer of the employment of 876 personnel of MCC. In addition, Tharisa Minerals Proprietary Limited took cession and assignment of certain leases entered into by MCC.

The fair value of plant and equipment and inventories acquired was determined by an external independent valuator. The carrying values of trade and other receivables acquired and liabilities assumed were equal to their fair values on date of acquisition. The bargain purchase gain arose due to differences in the carrying values and fair values of plant and equipment.

The total cash consideration paid for the acquisition was ZAR279.5 million. No deferred consideration or contingent consideration exists.

The purchase consideration was funded by a bridge loan from ABSA Bank Limited and an original equipment manufacturer finance facility from Caterpillar Financial Services Corporation (refer to note 18).

The fair values of the identifiable assets and liabilities of MCC as at the date of acquisition were:

 

 

Fair value

 recognised on

acquisition

 

US$'000

Assets

 

Property, plant and equipment (note 11)

30 356

Inventories

1 051

Trade and other receivables

150

 

31 557

Liabilities

 

Borrowings (note 18)

(7 003)

Provisions (note 19)

(133)

Trade and other payables

(697)

 

(7 833)

Total identifiable net assets at fair value

23 724

Bargain purchase arising on acquisition

(1 884)

Purchase consideration transferred

21 840

Net cash flow on acquisition

21 840

Transaction costs of US$0.1 million relating to the acquisition were included in administrative expenses during the period ended 31 March 2018.

 

21. RELATED PARTY TRANSACTIONS

Related party transactions exist between shareholders and the Group's directors and key management personnel.

These transactions are concluded at arm's length in the normal course of business. All intergroup transactions have been eliminated on consolidation.

 

Six months

 ended

Six months

 ended

Year

ended

 

31 March

31 March

30 Sept

 

2018

2017

2017

 

Reviewed

Reviewed

Audited

 

US$'000

US$'000

US$'000

Transactions and balances with related parties:

 

 

 

Other income - Rocasize Proprietary Limited

17

13

28

Cost of sales - Rocasize Proprietary Limited

101

60

154

Administrative expenses - Rocasize Proprietary Limited

15

9

68

Interest expense

 

 

 

Langa Trust

-

-

3

Arti Trust

135

129

262

Ditodi Trust

14

13

27

Makhaye Trust

14

13

27

The Phax Trust

27

26

53

The Rowad Trust

14

13

27

MJ Jacquet-Briner

14

13

27

 

218

207

426

Amounts due to directors

 

 

 

A Djakouris

21

21

21

JD Salter

24

24

30

O Kamal

14

13

16

C Bell

20

20

26

R Davey

17

-

19

J Ka Ki Cheng

11

7

11

 

107

85

123

 

 

 

 

Six months

 ended

Six months

 ended

Year

ended

 

 

31 March

31 March

30 Sept

 

 

2018

2017

2017

 

 

Reviewed

Reviewed

Audited

 

 

US$'000

US$'000

US$'000

21.

RELATED PARTY TRANSACTIONS continued

 

 

 

 

Interest bearing - accrued dividends payable to related parties

 

 

 

 

Arti Trust

2 852

2 515

2 486

 

Ditodi Trust

245

216

214

 

Makhaye Trust

245

216

214

 

The Phax Trust

488

430

425

 

The Rowad Trust

245

216

213

 

MJ Jacquet-Briner

245

216

213

 

 

4 320

3 809

3 765

 

Trade and other receivables (note 15)

 

 

 

 

The Tharisa Community Trust

5

5

5

 

Rocasize Proprietary Limited

103

43

54

 

 

108

48

59

 

Compensation to directors and key management:

 

Salary

and fees

Expense

allowances

Share-

based

 payments

Provident

 fund and

 risk

benefits

Bonus

Total

 

US$'000

US$'000

US$'000

US$'000

US$'000

US$'000

Six months ended 31 March 2018 (Reviewed)

 

 

 

 

 

 

Non-executive directors

295

-

-

-

-

295

Executives directors

703

5

-

27

652

1 387

Other key management

489

16

-

40

366

911

 

1 487

21

-

67

1 018

2 593

Six months ended

31 March 2017 (Reviewed)

 

 

 

 

 

 

Non-executive directors

254

-

-

-

-

254

Executives directors

688

4

-

20

76

788

Other key management

460

13

-

31

49

553

 

1 402

17

-

51

125

1 595

Year ended 30 September 2017 (Audited)

 

 

 

 

 

 

Non-executive directors

536

-

-

-

-

536

Executives directors

1 333

9

821

73

143

2 379

Other key management

865

27

518

95

117

1 622

 

2 734

36

1 339

168

260

4 537

 

Share-based awards to the directors and to key management were as follows:

Ordinary shares

Opening
balance

Allocated

Vested

Total

Six months ended 31 March 2018 (Reviewed)

 

 

 

 

LTIP - executive directors

1 808 316

-

-

1 808 316

LTIP - key management

1 202 153

-

-

1 202 153

SARS - executive directors

1 362 327

-

-

1 362 327

SARS - key management

924 136

-

-

924 136

Six months ended 31 March 2017 (Reviewed)

 

 

 

 

LTIP - executive directors

1 723 522

-

-

1 723 522

LTIP - key management

1 115 106

-

-

1 115 106

SARS - executive directors

1 243 870

-

-

1 243 870

SARS - key management

885 344

-

-

885 344

Year ended 30 September 2017 (Audited)

 

 

 

 

LTIP - executive directors

1 723 522

842 682

(757 888)

1 808 316

LTIP - key management

1 115 106

564 792

(477 745)

1 202 153

SARS - executive directors

1 243 870

842 682

(724 225)

1 362 327

SARS - key management

885 344

564 792

(526 000)

924 136

 

Relationships between parties:

The Tharisa Community Trust and Rocasize Proprietary Limited

The Tharisa Community Trust is a shareholder of Tharisa Minerals Proprietary Limited and owns 100% of the issued ordinary share capital of Rocasize Proprietary Limited.

Langa Trust, Arti Trust, Phax Trust and Rowad Trust

A Director of the Company is a beneficiary of these trusts.

Ditodi Trust and Makhaye Trust

Certain of the non-controlling shareholders of Tharisa Minerals Proprietary Limited are beneficiaries of these trusts.

MJ Jaquet-Briner

MJ Jaquet-Briner is a director of Tharisa Minerals Proprietary Limited and is a shareholder in the non-controlling interest of Tharisa Minerals Proprietary Limited.

 

 

 

 

31 March

31 March

30 Sept

 

 

 

2018

2017

2017

 

 

Fair value

Reviewed

Reviewed

Audited

 

 

 level

US$'000

US$'000

US$'000

22.

FINANCIAL INSTRUMENTS

 

 

 

 

 

Financial assets measured at fair value

 

 

 

 

 

Investments in equity instrument

Level 1

37

42

49

 

Discount facility

Level 2

676

-

-

 

Forward exchange contracts

Level 2

188

-

-

 

Trade and other receivables at fair values

 

 

 

 

 

PGM receivable

Level 2

18 261

12 704

17 254

 

Financial liabilities measured at fair value

 

 

 

 

 

Discount facility

Level 2

-

-

449

 

Forward exchange contracts

Level 2

-

-

150

 

Financial assets at amortised cost

 

 

 

 

 

Long-term deposits

 

-

4 796

4 505

 

Other financial assets - investment in cash and income funds

 

5 791

4 244

3 767

 

Trade and other receivables

 

44 634

32 567

41 574

 

Cash and cash equivalents

 

59 930

26 620

49 742

 

Financial liabilities at amortised cost

 

 

 

 

 

Borrowings

 

77 172

33 575

49 401

 

Trade and other payables

 

30 131

23 231

29 753

 

There were no transfers between Level 1 and Level 2 fair value measurements during the period.

The Group considers that the fair values of the financial assets and financial liabilities approximate their carrying values at each reporting date.

Fair value hierarchy

All financial instruments for which fair value is recognised or disclosed are categorised within the fair value hierarchy, based on the lowest level input that is significant to the fair value measurement as a whole, as follows:

Level 1 - Quoted (unadjusted) market prices in active markets for identical assets or liabilities

Level 2 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable

Level 3 - Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

23. CONTINGENT LIABILITIES

There is no litigation, current or pending, which is considered likely to have a material adverse effect on the Group.

24. EVENTS AFTER THE REPORTING PERIOD

The Board of Directors are not aware of any matter or circumstance arising since the end of the period that will impact these interim condensed consolidated financial results.

25. DIVIDENDS AND REDUCTION OF SHARE PREMIUM

The Company declared a dividend of US$ 5 cents on 30 November 2017 which was approved at the Annual General Meeting on 10 January 2018. A capital distribution of US$2.6 million (US$ 1 cent per share) was declared on 1 February 2017 as a reduction of share premium.

 

CORPORATE INFORMATION 

THARISA PLC

Incorporated in the Republic of Cyprus with limited liability

Registration number: HE223412

JSE share code: THA

LSE share code: THS

ISIN: CY0103562118

 

REGISTERED ADDRESS

Office 108 - 110

S. Pittokopitis Business Centre

17 Neophytou Nicolaides and Kilkis Streets

8011 Paphos

Cyprus

 

POSTAL ADDRESS

PO Box 62425

8064 Paphos

Cyprus

 

WEBSITE

www.tharisa.com

 

DIRECTORS OF THARISA

Loucas Christos Pouroulis (Executive Chairman)

Phoevos Pouroulis (Chief Executive Officer)

Michael Gifford Jones (Chief Finance Officer)

John David Salter (Lead independent non-executive director)

Antonios Djakouris (Independent non-executive director)

Omar Marwan Kamal (Independent non-executive director)

Carol Bell (Independent non-executive director)

Roger Davey (Independent non-executive director)

Joanna Ka Ki Cheng (Non-executive director)

Zhong Liang Hong (Non-executive director)

 

JOINT COMPANY SECRETARIES

Lysandros Lysandrides

26 Vyronos Avenue

1096 Nicosia

Cyprus

Sanet de Witt

The Crossing

372 Main Road

Bryanston Johannesburg 2021

South Africa

Email: secretarial@tharisa.com

 

INVESTOR RELATIONS

Sherilee Lakmidas

The Crossing

372 Main Road

Bryanston Johannesburg 2021

South Africa

Email: ir@tharisa.com

 

TRANSFER SECRETARIES

Cymain Registrars Limited

Registration number: HE174490

26 Vyronos Avenue

1096 Nicosia

Cyprus

Computershare Investor Services Proprietary Limited

Registration number: 2004/003647/07

Rosebank Towers

15 Bierman Avenue

Rosebank 2196

(PO Box 61051 Marshalltown 2107)

South Africa

 

JSE SPONSOR

Investec Bank Limited

Registration number: 1969/004763/06

100 Grayston Drive

Sandown Sandton 2196

(PO Box 785700 Sandton 2146)

South Africa

 

AUDITORS

Ernst & Young Cyprus Limited

Registration number: HE222520

Jean Nouvel Tower

6 Stasinos Avenue

1060 Nicosia

Cyprus

 

JOINT BROKERS

Peel Hunt LLP

Moore House

120 London Wall

EC 2Y 5ET

England

Contact: Ross Allister/James Bavister/David McKeown

+44 207 7418 8900

BMO Capital Markets Limited

95 Queen Victoria Street

London EC4V 4HG

England

Contact: Jeffrey Couch/Neil Haycock/Thomas Rider

+44 020 7236 1010

 

FINANCIAL PUBLIC RELATIONS

Buchanan

100 Cheapside

London EC2V 6DN

England

Contact: Bobby Morse/Anna Michniewicz

+44 020 7466 5000

 

LEGAL DISCLAIMER

Some of the information in these materials may contain projections or forward-looking statements regarding future events, the future financial performance of the Group, its intentions, beliefs or current expectations and those of its officers, directors and employees concerning, among other things, the Group's results of operations, financial condition, liquidity, prospects, growth, strategies and business. You can identify forward looking statements by terms such as "expect", "believe", "anticipate", "estimate", "intend", "will", "could", "may" or "might" or the negative of such terms or other similar expressions. These statements are only predictions and actual results may differ materially. Unless otherwise required by applicable law, regulation or accounting standard, the Group does not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in projections or forward-looking statements of the Group, including, among others, general economic conditions, the competitive environment, risks associated with operating in South Africa and market change in the industries the Group operates in, as well as many other risks specifically related to the Group and its operations.

A pdf of this announcement is available on the company's website www.tharisa.com.

 

RNS users, please click on, or paste the following link into your web browser, to view the associated pdf document. http://www.rns-pdf.londonstockexchange.com/rns/1806O_-2018-5-15.pdf

 

www.tharisa.com

 

Paphos, Cyprus

16 May 2018


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