TIDMPTMN
RNS Number : 1297Z
Petmin Limited
12 March 2012
Petmin Limited
(Incorporated in the Republic of South Africa)
(Registration number 1972/001062/06)
"Committed to growth, dedicated to value"
JSE code: PET AIM code: PTMN
ISIN: ZAE000076014
("Petmin" or "the Group")
Condensed Consolidated Interim Financial Statements for the six
months
ended 31 December 2011
R362 million invested to double anthracite production and
execute diversification strategy
- Cash produced from operations increased from R191 million to
R200 million.
- Earnings stable with costs well controlled despite increased
strip ratios at Somkhele.
- Second plant at Somkhele anthracite mine commissioned in
February 2012 on time and within budget with capacity to more than
double saleable tonnes produced.
- Business of Tomorrow process has resulted in increased stakes
in foreign projects.
- Investment in North Atlantic Iron Corporation to be
accelerated as the project is technically and economically
robust.
- Sale of SamQuarz for R258 million prohibited by Competition
Commission. Petmin and the purchaser have appealed the
decision.
Condensed Consolidated Interim Income Statement
for the six months ended 31 December 2011
Reviewed Reviewed
------------------------------------- -------- ------------- ------------ ------------
Six Six
months months Audited
------------------------------------- -------- ------------- ------------ ------------
ended ended Year ended
------------------------------------- -------- ------------- ------------ ------------
31 Dec 31 Dec 30 Jun
------------------------------------- -------- ------------- ------------ ------------
2011 2010 2011
------------------------------------- -------- ------------- ------------ ------------
Note R'000 R'000 R'000
------------------------------------- -------- ------------- ------------ ------------
Revenue 216 328 237 274 471 385
------------------------------------- -------- ------------- ------------ ------------
Cost of sales (165 367) (166 780) (354 683)
------------------------------------- -------- ------------- ------------ ------------
Gross profit 50 961 70 494 116 702
------------------------------------- -------- ------------- ------------ ------------
Operational income/(expenses) 17 968 (2 801) 7 433
------------------------------------- -------- ------------- ------------ ------------
Administration expenses (12 635) (12 139) (13 694)
------------------------------------- -------- ------------- ------------ ------------
Results from operating activities 56 294 55 554 110 441
------------------------------------- -------- ------------- ------------ ------------
Mark-to-market of listed securities (2 396) - 346
------------------------------------- -------- ------------- ------------ ------------
Net finance (expense)/income 173 774 3 698
------------------------------------- -------- ------------- ------------ ------------
- Finance income 1 926 2 534 4 889
------------------------------------- -------- ------------- ------------ ------------
- Finance expenses (1 753) (1 760) (1 191)
------------------------------------- -------- ------------- ------------ ------------
Share of losses of equity
------------------------------------- -------- ------------- ------------ ------------
accounted investees - - (524)
------------------------------------- -------- ------------- ------------ ------------
Profit before income tax 54 071 56 328 113 961
------------------------------------- -------- ------------- ------------ ------------
Income tax expenses (18 428) (21 100) (37 060)
------------------------------------- -------- ------------- ------------ ------------
Profit for the period from
------------------------------------- -------- ------------- ------------ ------------
continuing operations 35 643 35 228 76 901
------------------------------------- -------- ------------- ------------ ------------
Profit for the period from
------------------------------------- -------- ------------- ------------ ------------
discontinued operation
------------------------------------- -------- ------------- ------------ ------------
(net of income tax) 11 380 12 047 24 081
------------------------------------- -------- ------------- ------------ ------------
Profit for the period 47 023 47 275 100 982
------------------------------------- -------- ------------- ------------ ------------
Earnings per share
------------------------------------- -------- ------------- ------------ ------------
Basic earnings per ordinary
------------------------------------- -------- ------------- ------------ ------------
share (cents) 7 8.15 8.19 17.50
------------------------------------- -------- ------------- ------------ ------------
Diluted earnings per
------------------------------------- -------- ------------- ------------ ------------
ordinary share (cents) 7 8.01 8.14 17.40
------------------------------------- -------- ------------- ------------ ------------
Earnings per share from
------------------------------------- -------- ------------- ------------ ------------
continuing operations
------------------------------------- -------- ------------- ------------ ------------
Basic earnings per ordinary
------------------------------------- -------- ------------- ------------ ------------
share (cents) 7 6.18 6.11 13.33
------------------------------------- -------- ------------- ------------ ------------
Diluted earnings per
------------------------------------- -------- ------------- ------------ ------------
ordinary share (cents) 7 6.07 6.07 13.25
------------------------------------- -------- ------------- ------------ ------------
Condensed Consolidated Interim Statement of Comprehensive
Income
for the six months ended 31 December 2011
Reviewed Reviewed
--------------------------------- ------------ ------------ ------------
Six Six
months months Audited
--------------------------------- ------------ ------------ ------------
ended ended Year ended
--------------------------------- ------------ ------------ ------------
31 Dec 31 Dec 30 Jun
--------------------------------- ------------ ------------ ------------
2011 2010 2011
--------------------------------- ------------ ------------ ------------
R'000 R'000 R'000
--------------------------------- ------------ ------------ ------------
Profit for the period 47 023 47 275 100 982
--------------------------------- ------------ ------------ ------------
Other comprehensive income
--------------------------------- ------------ ------------ ------------
Foreign currency translation
--------------------------------- ------------ ------------ ------------
differences 3 243 (143) (319)
--------------------------------- ------------ ------------ ------------
Effective portion of changes in
--------------------------------- ------------ ------------ ------------
fair value of cash flow hedges (4 370) - -
--------------------------------- ------------ ------------ ------------
Other comprehensive income for
--------------------------------- ------------ ------------ ------------
the period, net of income tax (1 127) (143) (319)
--------------------------------- ------------ ------------ ------------
Total comprehensive income for
--------------------------------- ------------ ------------ ------------
the period 45 896 47 132 100 663
--------------------------------- ------------ ------------ ------------
Condensed Consolidated Interim Statement of Financial
Position
at 31 December 2011
Reviewed Reviewed Audited
--------------------------------------- ----------- ------------ -----------
as at as at as at
--------------------------------------- ----------- ------------ -----------
31 Dec 31 Dec 30 Jun
--------------------------------------- ----------- ------------ -----------
2011 2010 2011
--------------------------------------- ----------- ------------ -----------
R'000 R'000 R'000
--------------------------------------- ----------- ------------ -----------
ASSETS
--------------------------------------- ----------- ------------ -----------
1 362 1 029 1 126
Non-current assets 551 413 251
--------------------------------------- ----------- ------------ -----------
Property, plant and equipment 860 612 530 604 620 662
--------------------------------------- ----------- ------------ -----------
Intangible assets 629 3 148 1 889
--------------------------------------- ----------- ------------ -----------
Investment in equity accounted
investee 470 145 470 661 470 138
--------------------------------------- ----------- ------------ -----------
Investments 31 165 25 000 33 562
--------------------------------------- ----------- ------------ -----------
Current assets 468 466 585 376 664 515
--------------------------------------- ----------- ------------ -----------
Inventories 29 642 10 635 22 134
--------------------------------------- ----------- ------------ -----------
Trade and other receivables 101 934 76 618 117 496
--------------------------------------- ----------- ------------ -----------
Current tax assets 4 655 4 624 4 656
--------------------------------------- ----------- ------------ -----------
Cash and cash equivalents 26 524 185 880 227 792
--------------------------------------- ----------- ------------ -----------
Assets classified as held for
sale 305 711 307 619 292 437
--------------------------------------- ----------- ------------ -----------
1 831 1 614 1 790
Total assets 017 789 766
--------------------------------------- ----------- ------------ -----------
EQUITY AND LIABILITIES
--------------------------------------- ----------- ------------ -----------
1 334 1 243 1 317
Ordinary share capital and reserves 995 224 162
--------------------------------------- ----------- ------------ -----------
Share capital 143 763 141 790 143 398
--------------------------------------- ----------- ------------ -----------
Share premium 334 105 321 523 337 807
--------------------------------------- ----------- ------------ -----------
Share option reserve 3 978 3 112 5 627
--------------------------------------- ----------- ------------ -----------
Hedging reserve (4 370) - -
--------------------------------------- ----------- ------------ -----------
Foreign currency translation reserve 2 924 (143) (319)
--------------------------------------- ----------- ------------ -----------
Retained earnings 854 595 776 942 830 649
--------------------------------------- ----------- ------------ -----------
Non-current liabilities 260 422 170 004 249 604
--------------------------------------- ----------- ------------ -----------
Interest-bearing loans and borrowings 90 048 34 069 96 674
--------------------------------------- ----------- ------------ -----------
Deferred taxation liabilities 20 849 18 600 19 724
--------------------------------------- ----------- ------------ -----------
Current liabilities 235 600 201 561 224 000
--------------------------------------- ----------- ------------ -----------
Trade and other payables 97 697 83 972 88 131
--------------------------------------- ----------- ------------ -----------
Current portion of non-current
liabilities 23 466 14 379 23 466
--------------------------------------- ----------- ------------ -----------
Shareholders for dividend 1 419 1 042 996
--------------------------------------- ----------- ------------ -----------
Liabilities classified as held
for sale 113 018 102 168 111 407
--------------------------------------- ----------- ------------ -----------
1 831 1 614 1 790
Total equity and liabilities 017 789 766
--------------------------------------- ----------- ------------ -----------
Condensed Consolidated Interim Statement of Cash Flows
for the six months ended 31 December 2011
Reviewed Reviewed
----------------------------------------- ----------- ------------ ------------
Six Six
months months Audited
----------------------------------------- ----------- ------------ ------------
ended ended Year ended
----------------------------------------- ----------- ------------ ------------
31 Dec 31 Dec 30 Jun
----------------------------------------- ----------- ------------ ------------
2011 2010 2011
----------------------------------------- ----------- ------------ ------------
R'000 R'000 R'000
----------------------------------------- ----------- ------------ ------------
Cash generated by operations 72 089 71 105 142 018
----------------------------------------- ----------- ------------ ------------
Adjustments for:
----------------------------------------- ----------- ------------ ------------
- depreciation and amortisation 110 605 74 946 185 792
----------------------------------------- ----------- ------------ ------------
- fair value of derivatives included
----------------------------------------- ----------- ------------ ------------
in payables/receivables (4 370) - -
----------------------------------------- ----------- ------------ ------------
- impairment charges 2 715 852 3 769
----------------------------------------- ----------- ------------ ------------
- notional interest 1 421 2 022 3 187
----------------------------------------- ----------- ------------ ------------
- loss on disposal of property,
plant
----------------------------------------- ----------- ------------ ------------
and equipment - - 10
----------------------------------------- ----------- ------------ ------------
- share-based payments included
in
----------------------------------------- ----------- ------------ ------------
expenses - - 22 336
----------------------------------------- ----------- ------------ ------------
- decommissioning asset - new
mining
----------------------------------------- ----------- ------------ ------------
areas - - 1 008
----------------------------------------- ----------- ------------ ------------
- management share options granted 1 269 - 2 532
----------------------------------------- ----------- ------------ ------------
Operating cash flows before changes
----------------------------------------- ----------- ------------ ------------
in working capital 183 729 148 925 360 652
----------------------------------------- ----------- ------------ ------------
Decrease/(Increase) in trade and
----------------------------------------- ----------- ------------ ------------
other receivables 18 872 26 178 (14 775)
----------------------------------------- ----------- ------------ ------------
(Increase)/Decrease in inventories (12 167) 16 583 834
----------------------------------------- ----------- ------------ ------------
Increase in trade and other payables 8 877 1 937 13 159
----------------------------------------- ----------- ------------ ------------
Cash generated by operations 199 311 193 623 359 870
----------------------------------------- ----------- ------------ ------------
Income tax refunded/(paid) 782 (4 440) (4 590)
----------------------------------------- ----------- ------------ ------------
Finance income 2 054 3 887 7 073
----------------------------------------- ----------- ------------ ------------
Finance expenses (1 870) (1 933) (1 548)
----------------------------------------- ----------- ------------ ------------
Net cash flow from operating activities 200 277 191 137 360 805
----------------------------------------- ----------- ------------ ------------
Cash flows from investing activities
----------------------------------------- ----------- ------------ ------------
Long-term rehabilitation expenditure
----------------------------------------- ----------- ------------ ------------
incurred - (236) (236)
----------------------------------------- ----------- ------------ ------------
Investment in jointly controlled
----------------------------------------- ----------- ------------ ------------
entities (22 964) (10 786) (13 552)
----------------------------------------- ----------- ------------ ------------
Investment in listed shares - - (8 216)
----------------------------------------- ----------- ------------ ------------
Acquisition of property, plant
and
----------------------------------------- ----------- ------------ ------------
equipment (339 417) (137 903) (361 376)
----------------------------------------- ----------- ------------ ------------
- to expand operations (173 587) (59 588) (148 056)
----------------------------------------- ----------- ------------ ------------
- to expand operations - capitalised
----------------------------------------- ----------- ------------ ------------
pre-strip (159 313) (71 809) (181 565)
----------------------------------------- ----------- ------------ ------------
- to maintain operations (6 517) (6 506) (31 755)
----------------------------------------- ----------- ------------ ------------
Proceeds from sale of property,
plant
----------------------------------------- ----------- ------------ ------------
and equipment - - 5
----------------------------------------- ----------- ------------ ------------
Net cash flows from investing
----------------------------------------- ----------- ------------ ------------
activities (362 381) (148 925) (383 375)
----------------------------------------- ----------- ------------ ------------
Cash flows from financing activities
----------------------------------------- ----------- ------------ ------------
Proceeds from specific and general
----------------------------------------- ----------- ------------ ------------
share issues for cash during the
period 3 335 10 29
----------------------------------------- ----------- ------------ ------------
Treasury shares acquired (9 590) (10 724) (15 204)
----------------------------------------- ----------- ------------ ------------
Payment on options forfeited - - ( 55)
----------------------------------------- ----------- ------------ ------------
Repayment of borrowings (11 987) (11 259) (22 718)
----------------------------------------- ----------- ------------ ------------
Increase in borrowings 2 139 - 80 152
----------------------------------------- ----------- ------------ ------------
Dividends paid (22 654) (33 573) (33 617)
----------------------------------------- ----------- ------------ ------------
Net cash flows from financing
----------------------------------------- ----------- ------------ ------------
activities (38 757) (55 546) 8 587
----------------------------------------- ----------- ------------ ------------
Net decrease in cash and cash
----------------------------------------- ----------- ------------ ------------
equivalents (200 861) (13 334) (13 983)
----------------------------------------- ----------- ------------ ------------
Cash and cash equivalents at
----------------------------------------- ----------- ------------ ------------
beginning of period 269 031 283 014 283 014
----------------------------------------- ----------- ------------ ------------
Cash and cash equivalents at end
of
----------------------------------------- ----------- ------------ ------------
period 68 170 269 680 269 031
----------------------------------------- ----------- ------------ ------------
Transferred to assets held for
sale (41 646) (83 800) (41 239)
----------------------------------------- ----------- ------------ ------------
Cash and cash equivalents at end
of
----------------------------------------- ----------- ------------ ------------
period - continuing operations 26 524 185 880 227 792
----------------------------------------- ----------- ------------ ------------
Condensed Consolidated Interim Statement of Changes in
Equity
for the six months ended 31 December 2011
Foreign
------------------------------ ---------- ---------- --------- -------------
Share currency
------------------------------ ---------- ---------- --------- -------------
Share Share option translation
------------------------------ ---------- ---------- --------- -------------
capital premium reserve reserve
------------------------------ ---------- ---------- --------- -------------
R'000 R'000 R'000 R'000
------------------------------ ---------- ---------- --------- -------------
Balance at 30 June 2010 142 681 331 337 3 121 -
------------------------------ ---------- ---------- --------- -------------
Total comprehensive income
------------------------------ ---------- ---------- --------- -------------
for the period - - - (319)
------------------------------ ---------- ---------- --------- -------------
Foreign currency translation
------------------------------ ---------- ---------- --------- -------------
differences - - - (319)
------------------------------ ---------- ---------- --------- -------------
Profit for the period - - - -
------------------------------ ---------- ---------- --------- -------------
Transactions with owners,
------------------------------ ---------- ---------- --------- -------------
recorded directly in equity 717 6 470 2 506 -
------------------------------ ---------- ---------- --------- -------------
Shares issued during the
------------------------------ ---------- ---------- --------- -------------
period - share options
------------------------------ ---------- ---------- --------- -------------
exercised 11 43 (26) -
------------------------------ ---------- ---------- --------- -------------
Share-based payments 1 986 20 350 - -
------------------------------ ---------- ---------- --------- -------------
Treasury shares acquired
------------------------------ ---------- ---------- --------- -------------
during the period (1 280) (13 923) - -
------------------------------ ---------- ---------- --------- -------------
Share options granted - - 2 546 -
------------------------------ ---------- ---------- --------- -------------
Share options forfeited
------------------------------ ---------- ---------- --------- -------------
during the period - - (14) -
------------------------------ ---------- ---------- --------- -------------
Dividend paid - - - -
------------------------------ ---------- ---------- --------- -------------
Balance at 30 June 2011 143 398 337 807 5 627 (319)
------------------------------ ---------- ---------- --------- -------------
Total comprehensive income - - - 3 243
------------------------------ ---------- ---------- --------- -------------
Effective portion of changes
------------------------------ ---------- ---------- --------- -------------
in fair value of cash
flow
------------------------------ ---------- ---------- --------- -------------
hedges - - - -
------------------------------ ---------- ---------- --------- -------------
Foreign currency translation
------------------------------ ---------- ---------- --------- -------------
differences - - - 3 243
------------------------------ ---------- ---------- --------- -------------
Profit for the period - - - -
------------------------------ ---------- ---------- --------- -------------
Transactions with owners,
------------------------------ ---------- ---------- --------- -------------
recorded directly in equity 365 (3 702) (1 649) -
------------------------------ ---------- ---------- --------- -------------
Shares issued during the
------------------------------ ---------- ---------- --------- -------------
period - share options
------------------------------ ---------- ---------- --------- -------------
exercised 1 281 4 972 (2 918) -
------------------------------ ---------- ---------- --------- -------------
Share options forfeited
------------------------------ ---------- ---------- --------- -------------
during the period - - (160) -
------------------------------ ---------- ---------- --------- -------------
Treasury shares acquired
------------------------------ ---------- ---------- --------- -------------
during the period (916) (8 674) - -
------------------------------ ---------- ---------- --------- -------------
Share options granted - - 1 429 -
------------------------------ ---------- ---------- --------- -------------
Dividend paid - - - -
------------------------------ ---------- ---------- --------- -------------
Balance at 31 December
2011 143 763 334 105 3 978 2 924
------------------------------ ---------- ---------- --------- -------------
Hedging Retained
------------------------------------------ --------- ---------- -----------
reserve earnings Total
------------------------------------------ --------- ---------- -----------
R'000 R'000 R'000
------------------------------------------ --------- ---------- -----------
1 241
Balance at 30 June 2010 - 764 282 421
------------------------------------------ --------- ---------- -----------
Total comprehensive income for
the period - 100 982 100 663
------------------------------------------ --------- ---------- -----------
Foreign currency translation differences - - (319)
------------------------------------------ --------- ---------- -----------
Profit for the year - 100 982 100 982
------------------------------------------ --------- ---------- -----------
Transactions with owners, recorded
directly
------------------------------------------ --------- ---------- -----------
in equity - (34 614) (24 921)
------------------------------------------ --------- ---------- -----------
Shares issued during the period
- share
------------------------------------------ --------- ---------- -----------
options exercised - - 29
------------------------------------------ --------- ---------- -----------
Share-based payments - - 22 336
------------------------------------------ --------- ---------- -----------
Treasury shares acquired during
the period - - (15 204)
------------------------------------------ --------- ---------- -----------
Share options granted - - 2 546
------------------------------------------ --------- ---------- -----------
Share options forfeited during
the period - - (14)
------------------------------------------ --------- ---------- -----------
Dividend paid - (34 614) (34 614)
------------------------------------------ --------- ---------- -----------
1 317
Balance at 30 June 2011 - 830 649 162
------------------------------------------ --------- ---------- -----------
Total comprehensive income for
the period (4 370) 47 023 45 896
------------------------------------------ --------- ---------- -----------
Effective portion of changes in
fair value
------------------------------------------ --------- ---------- -----------
of cash flow hedges (4 370) - (4 370)
------------------------------------------ --------- ---------- -----------
Foreign currency translation differences - - 3 243
------------------------------------------ --------- ---------- -----------
Profit for the period - 47 023 47 023
------------------------------------------ --------- ---------- -----------
Transactions with owners, recorded
directly
------------------------------------------ --------- ---------- -----------
in equity - (23 077) (28 063)
------------------------------------------ --------- ---------- -----------
Shares issued during the period
- share
------------------------------------------ --------- ---------- -----------
options exercised - - 3 335
------------------------------------------ --------- ---------- -----------
Share options forfeited during
the year - - (160)
------------------------------------------ --------- ---------- -----------
Treasury shares acquired during
the year - - (9 590)
------------------------------------------ --------- ---------- -----------
Share options granted - - 1 429
------------------------------------------ --------- ---------- -----------
Dividend paid - (23 077) (23 077)
------------------------------------------ --------- ---------- -----------
1 334
Balance at 31 December 2011 (4 370) 854 595 995
------------------------------------------ --------- ---------- -----------
Segment reporting
Segment information is presented in the condensed consolidated
interim financial statements in respect of the Group's segments.
The segment reporting format reflects the Group's management and
internal reporting structure as reviewed by the chief operating
decision makers.
Segment revenue represents revenue to external customers. There
was no inter-segment revenue during the period ended 31 December
2011 or in the prior periods. Inter-segment pricing is determined
on an arm's length basis.
Segment results include items directly attributable to a segment
as well as those that can be allocated on a reasonable basis.
Reportable segments
The Group comprises the following main reportable segments:
- Silica mining and marketing ("Silica") - Discontinued
operation;
- Anthracite mining and marketing ("Anthracite"); and
- Business of Tomorrow, which includes Petmin's exploration and
development projects. This segment has been designated as a
reportable segment in order to achieve fairer presentation due to
its significance.
Segment Report
for the six months ended 31 December 2011
Silica (Discontinued)
Six Six
----------------------------- ----------- --------- --------- ----------
months months Year
----------------------------- ----------- --------- --------- ----------
Units ended ended ended
----------------------------- ----------- --------- --------- ----------
of 31 Dec 31 Dec 30 Jun
----------------------------- ----------- --------- --------- ----------
measure 2011 2010 2011
----------------------------- ----------- --------- --------- ----------
1 325
Saleable tonnes produced (tonnes) 680 312 647 088 868
----------------------------- ----------- --------- --------- ----------
1 248
Tonnes sold (tonnes) 628 870 622 927 989
----------------------------- ----------- --------- --------- ----------
Segment revenue R'000 94 436 83 623 170 082
----------------------------- ----------- --------- --------- ----------
Segment revenue per tonne (R/tonne) R150.17 R134.24 R136.18
sold
----------------------------- ----------- --------- --------- ----------
Segment finance
----------------------------- ----------- --------- --------- ----------
(expense)/income
----------------------------- ----------- --------- --------- ----------
Finance income R'000 128 1 353 1 838
----------------------------- ----------- --------- --------- ----------
Finance expense R'000 (118) (172) (357)
----------------------------- ----------- --------- --------- ----------
Segment profit per tonne (R/tonne) R25.13 R26.86 R26.47
sold
----------------------------- ----------- --------- --------- ----------
Segment profit/(loss)
before
----------------------------- ----------- --------- --------- ----------
tax R'000 15 803 16 730 33 058
----------------------------- ----------- --------- --------- ----------
Segment tax (expense) R'000 (4 425) (4 685) (8 977)
----------------------------- ----------- --------- --------- ----------
Segment profit/(loss)
after tax R'000 11 378 12 045 24 081
----------------------------- ----------- --------- --------- ----------
Segment capital expenditure
-
----------------------------- ----------- --------- --------- ----------
combined R'000 20 516 33 131 65 494
----------------------------- ----------- --------- --------- ----------
Segment capital expenditure R'000 20 516 33 131 65 494
----------------------------- ----------- --------- --------- ----------
Segment capital expenditure
-
----------------------------- ----------- --------- --------- ----------
pre-strip R'000 - - -
----------------------------- ----------- --------- --------- ----------
Segment depreciation -
combined R'000 10 647 7 358 16 560
----------------------------- ----------- --------- --------- ----------
Segment depreciation R'000 10 647 7 358 16 560
----------------------------- ----------- --------- --------- ----------
Segment depreciation - R'000 - - -
pre-strip
----------------------------- ----------- --------- --------- ----------
Share option costs included
in
----------------------------- ----------- --------- --------- ----------
segment
----------------------------- ----------- --------- --------- ----------
profit/(loss) before tax R'000 - - -
----------------------------- ----------- --------- --------- ----------
Segment assets R'000 305 711 307 619 292 437
----------------------------- ----------- --------- --------- ----------
Segment liabilities R'000 113 018 102 168 111 407
----------------------------- ----------- --------- --------- ----------
Anthracite
Six Six
---------------------------------- ---------- ---------- ----------
months months Year
---------------------------------- ---------- ---------- ----------
ended ended ended
---------------------------------- ---------- ---------- ----------
31 Dec 31 Dec 30 Jun
---------------------------------- ---------- ---------- ----------
2011 2010 2011
---------------------------------- ---------- ---------- ----------
Saleable tonnes produced 203 425 245 791 524 006
---------------------------------- ---------- ---------- ----------
Tonnes sold 227 041 309 347 579 087
---------------------------------- ---------- ---------- ----------
Segment revenue 216 328 237 274 471 385
---------------------------------- ---------- ---------- ----------
Segment revenue per tonne sold R952.81 R767.02 R814.01
---------------------------------- ---------- ---------- ----------
Segment finance (expense)/income
---------------------------------- ---------- ---------- ----------
Finance income 256 417 569
---------------------------------- ---------- ---------- ----------
Finance expense (1 482) (1 596) (852)
---------------------------------- ---------- ---------- ----------
Segment profit per tonne sold R247.69 R198.84 R202.05
---------------------------------- ---------- ---------- ----------
Segment profit/(loss) before tax 56 235 61 512 117 006
---------------------------------- ---------- ---------- ----------
Segment tax (expense) (16 120) (17 638) (33 599)
---------------------------------- ---------- ---------- ----------
Segment profit/(loss) after tax 40 115 43 874 83 407
---------------------------------- ---------- ---------- ----------
Segment capital expenditure -
combined 286 115 99 092 276 179
---------------------------------- ---------- ---------- ----------
Segment capital expenditure 126 802 27 283 94 828
---------------------------------- ---------- ---------- ----------
Segment capital expenditure -
pre-strip 159 313 71 809 181 351
---------------------------------- ---------- ---------- ----------
Segment depreciation - combined 98 476 66 133 172 460
---------------------------------- ---------- ---------- ----------
Segment depreciation 8 819 10 598 18 980
---------------------------------- ---------- ---------- ----------
Segment depreciation - pre-strip 89 657 55 535 153 480
---------------------------------- ---------- ---------- ----------
Share option costs included in
segment
---------------------------------- ---------- ---------- ----------
profit/(loss) before tax - - -
---------------------------------- ---------- ---------- ----------
Segment assets 876 746 717 998 805 728
---------------------------------- ---------- ---------- ----------
Segment liabilities 470 440 386 645 435 167
---------------------------------- ---------- ---------- ----------
Business of Tomorrow
Six Six
---------------------------------- ---------- --------- ---------
months months Year
---------------------------------- ---------- --------- ---------
ended ended ended
---------------------------------- ---------- --------- ---------
31 Dec 31 Dec 30 Jun
---------------------------------- ---------- --------- ---------
2011 2010 2011
---------------------------------- ---------- --------- ---------
Saleable tonnes produced - - -
---------------------------------- ---------- --------- ---------
Tonnes sold - - -
---------------------------------- ---------- --------- ---------
Segment revenue - - -
---------------------------------- ---------- --------- ---------
Segment revenue per tonne sold
---------------------------------- ---------- --------- ---------
Segment finance (expense)/income
---------------------------------- ---------- --------- ---------
Finance income - - -
---------------------------------- ---------- --------- ---------
Finance expense - - -
---------------------------------- ---------- --------- ---------
Segment profit per tonne sold
---------------------------------- ---------- --------- ---------
Segment profit/(loss) before tax (136) 729 (566)
---------------------------------- ---------- --------- ---------
Segment tax (expense) - - -
---------------------------------- ---------- --------- ---------
Segment profit/(loss) after tax (136) 729 (566)
---------------------------------- ---------- --------- ---------
Segment capital expenditure -
combined 32 744 5 605 19 312
---------------------------------- ---------- --------- ---------
Segment capital expenditure 32 744 5 605 19 312
---------------------------------- ---------- --------- ---------
Segment capital expenditure - - - -
pre-strip
---------------------------------- ---------- --------- ---------
Segment depreciation - combined - - -
---------------------------------- ---------- --------- ---------
Segment depreciation - - -
---------------------------------- ---------- --------- ---------
Segment depreciation - pre-strip - - -
---------------------------------- ---------- --------- ---------
Share option costs included in
segment
---------------------------------- ---------- --------- ---------
profit/(loss) before tax - - -
---------------------------------- ---------- --------- ---------
Segment assets 586 225 497 412 527 676
---------------------------------- ---------- --------- ---------
Segment liabilities 1 495 190 428
---------------------------------- ---------- --------- ---------
Other (Corporate office)
Six Six
---------------------------------- --------- --------- ---------
months months Year
---------------------------------- --------- --------- ---------
ended ended ended
---------------------------------- --------- --------- ---------
31 Dec 31 Dec 30 Jun
---------------------------------- --------- --------- ---------
2011 2010 2011
---------------------------------- --------- --------- ---------
Saleable tonnes produced - - -
---------------------------------- --------- --------- ---------
Tonnes sold - - -
---------------------------------- --------- --------- ---------
Segment revenue - - -
---------------------------------- --------- --------- ---------
Segment revenue per tonne sold
---------------------------------- --------- --------- ---------
Segment finance (expense)/income
---------------------------------- --------- --------- ---------
Finance income 1 670 2 117 4 666
---------------------------------- --------- --------- ---------
Finance expense (2 667) (164) (339)
---------------------------------- --------- --------- ---------
Segment profit per tonne sold
---------------------------------- --------- --------- ---------
Segment profit/(loss) before tax (2 027) (5 911) (2 479)
---------------------------------- --------- --------- ---------
Segment tax (expense) (2 308) (3 462) (3 461)
---------------------------------- --------- --------- ---------
Segment profit/(loss) after tax (4 335) (9 373) (5 940)
---------------------------------- --------- --------- ---------
Segment capital expenditure -
combined 42 75 491
---------------------------------- --------- --------- ---------
Segment capital expenditure 42 75 491
---------------------------------- --------- --------- ---------
Segment capital expenditure - - - -
pre-strip
---------------------------------- --------- --------- ---------
Segment depreciation - combined 222 293 408
---------------------------------- --------- --------- ---------
Segment depreciation 222 293 408
---------------------------------- --------- --------- ---------
Segment depreciation - pre-strip - - -
---------------------------------- --------- --------- ---------
Share option costs included in
segment
---------------------------------- --------- --------- ---------
profit/(loss) before tax 1 429 - 2 546
---------------------------------- --------- --------- ---------
Segment assets 373 920 450 873 427 743
---------------------------------- --------- --------- ---------
Segment liabilities 20 712 59 485 28 525
---------------------------------- --------- --------- ---------
Eliminations
Six Six
---------------------------------- ----------- ----------- -----------
months months Year
---------------------------------- ----------- ----------- -----------
ended ended ended
---------------------------------- ----------- ----------- -----------
31 Dec 31 Dec 30 Jun
---------------------------------- ----------- ----------- -----------
2011 2010 2011
---------------------------------- ----------- ----------- -----------
Saleable tonnes produced - - -
---------------------------------- ----------- ----------- -----------
Tonnes sold - - -
---------------------------------- ----------- ----------- -----------
Segment revenue - - -
---------------------------------- ----------- ----------- -----------
Segment revenue per tonne sold
---------------------------------- ----------- ----------- -----------
Segment finance (expense)/income
---------------------------------- ----------- ----------- -----------
Finance income - - -
---------------------------------- ----------- ----------- -----------
Finance expense - - -
---------------------------------- ----------- ----------- -----------
Segment profit per tonne sold
---------------------------------- ----------- ----------- -----------
Segment profit/(loss) before tax - - -
---------------------------------- ----------- ----------- -----------
Segment tax (expense) - - -
---------------------------------- ----------- ----------- -----------
Segment profit/(loss) after tax - - -
---------------------------------- ----------- ----------- -----------
Segment capital expenditure - - - -
combined
---------------------------------- ----------- ----------- -----------
Segment capital expenditure - - -
---------------------------------- ----------- ----------- -----------
Segment capital expenditure - - - -
pre-strip
---------------------------------- ----------- ----------- -----------
Segment depreciation - combined - - -
---------------------------------- ----------- ----------- -----------
Segment depreciation - - -
---------------------------------- ----------- ----------- -----------
Segment depreciation - pre-strip - - -
---------------------------------- ----------- ----------- -----------
Share option costs included in
segment
---------------------------------- ----------- ----------- -----------
profit/(loss) before tax - - -
---------------------------------- ----------- ----------- -----------
Segment assets (311 585) (359 113) (262 818)
---------------------------------- ----------- ----------- -----------
Segment liabilities (109 643) (176 923) (101 495)
---------------------------------- ----------- ----------- -----------
Consolidated
Six Six
---------------------------------- ----------- ----------- ----------
months months Year
---------------------------------- ----------- ----------- ----------
ended ended ended
---------------------------------- ----------- ----------- ----------
31 Dec 31 Dec 30 Jun
---------------------------------- ----------- ----------- ----------
2011 2010 2011
---------------------------------- ----------- ----------- ----------
1 849
Saleable tonnes produced 883 737 892 879 874
---------------------------------- ----------- ----------- ----------
1 828
Tonnes sold 855 911 932 274 076
---------------------------------- ----------- ----------- ----------
Segment revenue 310 764 320 897 641 467
---------------------------------- ----------- ----------- ----------
Segment revenue per tonne sold
---------------------------------- ----------- ----------- ----------
Segment finance (expense)/income
---------------------------------- ----------- ----------- ----------
Finance income 2 054 3 887 7 073
---------------------------------- ----------- ----------- ----------
Finance expense (4 267) (1 932) (1 548)
---------------------------------- ----------- ----------- ----------
Segment profit per tonne sold
---------------------------------- ----------- ----------- ----------
Segment profit/(loss) before tax 69 875 73 060 147 019
---------------------------------- ----------- ----------- ----------
Segment tax (expense) (22 853) (25 785) (46 037)
---------------------------------- ----------- ----------- ----------
Segment profit/(loss) after tax 47 022 47 275 100 982
---------------------------------- ----------- ----------- ----------
Segment capital expenditure -
combined 339 417 137 903 361 476
---------------------------------- ----------- ----------- ----------
Segment capital expenditure 180 104 66 094 180 125
---------------------------------- ----------- ----------- ----------
Segment capital expenditure -
pre-strip 159 313 71 809 181 351
---------------------------------- ----------- ----------- ----------
Segment depreciation - combined 109 345 73 784 189 427
---------------------------------- ----------- ----------- ----------
Segment depreciation 19 688 18 249 35 947
---------------------------------- ----------- ----------- ----------
Segment depreciation - pre-strip 89 657 55 535 153 480
---------------------------------- ----------- ----------- ----------
Share option costs included in
segment
---------------------------------- ----------- ----------- ----------
profit/(loss) before tax 1 429 - 2 546
---------------------------------- ----------- ----------- ----------
1 831 1 614 1 790
Segment assets 017 789 766
---------------------------------- ----------- ----------- ----------
Segment liabilities 496 022 371 565 473 604
---------------------------------- ----------- ----------- ----------
*The open pit mining profile at Somkhele requires that
overburden be removed from the pit before coal can be extracted.
This overburden removal is capitalised to the development cost of
the open pit (so called "pre-strip") and is then expensed on a
units-of-production basis as the coal is extracted from the open
pits. The pre-strip expenditure in the six months ended 31 December
2011 reflects the increased investment to ensure supply of
run-of-mine coal to feed both the existing and the second plant at
Somkhele.
Notes to the Condensed Consolidated Interim Financial
Statements
for the six months ended 31 December 2011
1. Reporting entity
Petmin is a company domiciled in South Africa. The condensed
interim consolidated financial statements of the Group for the six
months ended 31 December 2011 comprise the Company and its
subsidiaries (together referred to as the "Group") and the Group's
interests in associates and jointly controlled entities.
The condensed consolidated interim financial statements were
authorised for issue by the directors on 12 March 2012.
2. Statement of compliance
These condensed consolidated interim financial statements have
been prepared under the supervision of Petmin's financial director,
Mr BP Tanner CA(SA) and in accordance with the framework concepts
and the measurement and recognition requirements of International
Financial Reporting Standards (IFRS), the recognition, measurement,
presentation and disclosure requirements of IAS 34 - Interim
Financial Reporting, the AC 500 Standards as published by the
Accounting Practices Board and the South African Companies Act. The
condensed consolidated interim financial statements do not include
all of the information required for full annual financial
statements and should be read in conjunction with the consolidated
annual financial statements for the year ended 30 June 2011, which
are available upon request from the company's registered office at
37 Peter Place, Bryanston, 2021, Johannesburg or at
www.petmin.co.za.
3. Significant accounting policies
The accounting policies have been applied consistently by the
Group to all periods presented in these condensed consolidated
interim financial statements and are consistent to those applied by
the Group in its consolidated financial statements as at and for
the year ended 30 June 2011.
Functional and presentation currency:
The condensed consolidated interim financial statements are
presented in South African Rands ("Rands"), which is the Company's
functional currency. All financial information presented in Rands
has been rounded to the nearest thousand.
4. Estimates and judgements
The preparation of the condensed consolidated interim financial
statements in conformity with IAS 34 - Interim Financial Reporting
requires management to make judgements, estimates and assumptions
that affect the application of policies and reported amounts of
assets and liabilities, income and expenses. The estimates and
associated assumptions are based on historical experience and
various other factors that are believed to be reasonable under the
circumstances, the results of which form the basis for making the
judgements about carrying values of assets and liabilities that are
not readily apparent from other sources.
Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an
on-going basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period or in the period of the revision and future
periods if the revision affects both current and future
periods.
In the six months ended 31 December 2011, as a result of
management innovation, Tendele Coal Mining (Pty) Limited commenced
the re-processing of discard material at its Somkhele anthracite
mine. As a result of the change in processing, management has
reviewed the method of allocation of mining costs to the products
produced by both the first wash of the run of mine coal and the
second wash of the discard. This change of method of allocation of
mining costs meets the definition of a change in accounting
estimate and has therefore been applied prospectively in the six
months ended 31 December 2011. The adjustment resulted in an
increase in work-in-progress inventory of R19.6 million and a
reduction in cost of sales of R19.6 million.
This adjustment has not been applied retrospectively for the
discard stockpile.
Other than noted above, the significant judgements made by
management in applying the Group's accounting policies and the key
sources of estimation uncertainty were the same as those applied to
the consolidated financial statements as at and for the year ended
30 June 2011.
5. Review of results
The results of the Group as set out above have been reviewed by
the Group's auditors, KPMG Inc. The unqualified review report is
available for inspection at the Group's registered offices.
6. Discontinued operation
As disclosed in the annual financial statements for the year
ended 30 June 2011, Petmin agreed to the sale of SamQuarz (Pty) Ltd
to Thaba Chueu Mining (Pty) Limited ("Thaba"). The sale was subject
to approval by the Competition Commission ("the Commission") and by
the Department of Mineral Resources. As disclosed on 16 January
2012, Petmin was informed that the Commission had ruled against the
transaction. Petmin announced on 30 January 2012 that, together
with the purchaser have appealed the decision and expect a ruling
on the appeal in June 2012. Consequently, SamQuarz, the silica
segment, continues to be classified as held for sale or a
discontinued operation.
Reviewed Reviewed
--------------------------------------- ------------ ----------- ------------
Six months Six
months Audited
--------------------------------------- ------------ ----------- ------------
ended ended Year ended
--------------------------------------- ------------ ----------- ------------
31 Dec 31 Dec 30 Jun
--------------------------------------- ------------ ----------- ------------
2011 2010 2011
--------------------------------------- ------------ ----------- ------------
R'000 R'000 R'000
--------------------------------------- ------------ ----------- ------------
Results of discontinued operation
--------------------------------------- ------------ ----------- ------------
Revenue 94 436 83 623 170 082
--------------------------------------- ------------ ----------- ------------
Cost of sales (60 896) (59 826) (111 289)
--------------------------------------- ------------ ----------- ------------
Gross profit 33 540 23 797 58 793
--------------------------------------- ------------ ----------- ------------
Operating expenses (11 663) (6 886) (24 515)
--------------------------------------- ------------ ----------- ------------
Administration expenses (6 082) (1 360) (2 701)
--------------------------------------- ------------ ----------- ------------
Results from operating activities 15 795 15 550 31 577
--------------------------------------- ------------ ----------- ------------
Net finance income/(expense) 10 1 181 1 481
--------------------------------------- ------------ ----------- ------------
- Finance income 128 1 353 1 838
--------------------------------------- ------------ ----------- ------------
- Finance expenses (118) (172) (357)
--------------------------------------- ------------ ----------- ------------
Profit before income tax 15 805 16 731 33 058
--------------------------------------- ------------ ----------- ------------
Income tax expense (4 425) (4 684) (8 977)
--------------------------------------- ------------ ----------- ------------
Profit for the period 11 380 12 047 24 081
--------------------------------------- ------------ ----------- ------------
Earnings per share
--------------------------------------- ------------ ----------- ------------
Basic earnings per share (cents) 1.97 2.08 4.17
--------------------------------------- ------------ ----------- ------------
Diluted earnings per share (cents) 1.94 2.07 4.15
--------------------------------------- ------------ ----------- ------------
Cash flows from/(used in)
--------------------------------------- ------------ ----------- ------------
discontinued operation
--------------------------------------- ------------ ----------- ------------
Net cash from operating activities 23 483 13 830 46 742
--------------------------------------- ------------ ----------- ------------
Net cash used in investing activities (19 854) (29 813) (62 286)
--------------------------------------- ------------ ----------- ------------
Net cash used in financing activities (3 222) (3 200) (6 200)
--------------------------------------- ------------ ----------- ------------
Net cash from/(used in) discontinued
--------------------------------------- ------------ ----------- ------------
operation 407 (19 183) (21 744)
--------------------------------------- ------------ ----------- ------------
7. Earnings per share
Earnings per share ("EPS") are based on the Group's profit for
the period, divided by the weighted average number of shares in
issue during the period.
Reviewed
six months ended
31 Dec
2011
Profit Number
for of
--------------------------------- ------------ ----------- -----------
the period shares Per share
in
--------------------------------- ------------ ----------- -----------
R'000 thousands in cents
--------------------------------- ------------ ----------- -----------
Basic earnings per share 47 023 576 908 8.15
--------------------------------- ------------ ----------- -----------
Share options - 10 147 (0.14)
--------------------------------- ------------ ----------- -----------
Diluted EPS 47 023 587 055 8.01
--------------------------------- ------------ ----------- -----------
Reconciliation between earnings
--------------------------------- ------------ ----------- -----------
and headline earnings per share
--------------------------------- ------------ ----------- -----------
Basic EPS 47 023 576 908 8.15
--------------------------------- ------------ ----------- -----------
Headline EPS 47 023 576 908 8.15
--------------------------------- ------------ ----------- -----------
Share options - 10 147 (0.14)
--------------------------------- ------------ ----------- -----------
Diluted headline
--------------------------------- ------------ ----------- -----------
EPS 47 023 587 055 8.01
--------------------------------- ------------ ----------- -----------
Reviewed
six months ended
31 Dec
2010
Profit Number
for of
--------------------------------- ------------ ----------- -----------
the period shares Per share
in
--------------------------------- ------------ ----------- -----------
R'000 thousands in cents
--------------------------------- ------------ ----------- -----------
Basic earnings per share 47 275 576 908 8.19
--------------------------------- ------------ ----------- -----------
Share options - 3 559 (0.05)
--------------------------------- ------------ ----------- -----------
Diluted EPS 47 275 580 467 8.14
--------------------------------- ------------ ----------- -----------
Reconciliation between earnings
--------------------------------- ------------ ----------- -----------
and headline earnings per share
--------------------------------- ------------ ----------- -----------
Basic EPS 47 275 576 908 8.19
--------------------------------- ------------ ----------- -----------
Headline EPS 47 275 576 908 8.19
--------------------------------- ------------ ----------- -----------
Share options - 3 559 (0.05)
--------------------------------- ------------ ----------- -----------
Diluted headline
--------------------------------- ------------ ----------- -----------
EPS 47 275 580 467 8.14
--------------------------------- ------------ ----------- -----------
Reviewed
Year ended
30 Jun
2011
Profit Number
for of
--------------------------------- ----------- ----------- -----------
the year shares Per share
in
--------------------------------- ----------- ----------- -----------
R'000 thousands in cents
--------------------------------- ----------- ----------- -----------
Basic earnings
--------------------------------- ----------- ----------- -----------
per share 100 982 576 908 17.50
--------------------------------- ----------- ----------- -----------
Share options - 3 514 (0.10)
--------------------------------- ----------- ----------- -----------
Diluted EPS 100 982 580 422 17.40
--------------------------------- ----------- ----------- -----------
Reconciliation between earnings
--------------------------------- ----------- ----------- -----------
and headline earnings per share
--------------------------------- ----------- ----------- -----------
Basic EPS 100 982 576 908 17.50
--------------------------------- ----------- ----------- -----------
Headline EPS 100 982 576 908 17.50
--------------------------------- ----------- ----------- -----------
Share options - 3 514 (0.10)
--------------------------------- ----------- ----------- -----------
Diluted headline
--------------------------------- ----------- ----------- -----------
EPS 100 982 580 422 17.40
--------------------------------- ----------- ----------- -----------
Headline earnings per share
Headline earnings per share is based on the Group's headline
earnings divided by the weighted average number of shares in issue
during the period.
8. Investments in jointly controlled entities
Petmin previously announced its strategy to become a globally
diversified mining company with a focus on those specific
commodities that feed into the steel value chain. Petmin's
investment philosophy is to reduce risk of entry into new
geographic areas and commodities by contracting on an earn-in,
stepped acquisition basis with joint management control from
inception and not as an investor in a portfolio of minority stakes
without control. As previously announced and in line with this
investment philosophy, in the six months ended 31 December 2011
Petmin has made the following investments:
Investment in North Atlantic Iron Corporation
In the six months ended 31 December 2011, Petmin invested an
additional US$2 million in the jointly managed North Atlantic Iron
Corporation ("NAIC") acquiring an additional 5.17% interest to take
Petmin's shareholding in NAIC to 10.17%. Petmin's investment in
NAIC has been proportionately consolidated in accordance with the
accounting policy for investments in jointly controlled
entities.
Investment in Iron Bird Resources Inc
In the six months ended 31 December 2011, Petmin invested an
additional US$1.5 million in the jointly managed Iron Bird
Resources Inc, increasing its shareholding in Iron Bird to 50%.
Red Crescent Resources Limited ("RCR")
In the six months ended 31 December 2011, Petmin invested C$3
055 000 to increase its equity holding in RCR to approximately
10.1%. The funds are to be applied to the exploration programme at
RCR's Sivas copper project and therefore the additional investment
has been accounted for as an investment in mineral assets. Petmin
has the right to earn up to a 37.5% interest in the Sivas
project.
9. Related parties
9.1 Exercise of options
As announced on 30 June 2011, the Company was informed that
executive directors exercised 5 070 250 options with an exercise
price of 65 cents per share. Additionally, 100 000 options with a
strike price of 65 cents per share were bought by the Company for
275 cents per share.
On 30 June 2011, the Company was informed that employees
exercised 55 000 options with an exercise price of 65 cents per
share. Additionally, 180 000 options with a strike price of 65
cents per share were bought by the Company for 275 cents per
share.
The options were the final remaining options awarded in terms of
a share incentive scheme approved by shareholders on 19 July 2005
and there are now no further outstanding options with a strike
price of 65 cents.
9.2 Fees charged to equity accounted investee
In the six months ended 31 December 2011, Petmin charged Veremo
Holdings Limited management fees amounting to R2 495 156 (2010:
Nil). Petmin holds 25% of the issued share capital of Veremo
Holdings Limited.
9.3 Other transactions with related parties
No other related party transactions were entered into.
10. Change in directors
As announced on 13 September 2011, Petmin appointed Mr Trevor
Petersen with effect from 12 September 2011 as an independent
non-executive director and as a member of Petmin's audit and risk
committee. Mr Petersen is a Chartered Accountant and is a former
Managing Partner of the Cape Town office of audit firm
PricewaterhouseCoopers ("PwC"). He also held the position of
Chairman of PwC Western Cape and is the past Chairman of the South
African Institute of Chartered Accountants. Mr Petersen has also
been a member of the University of Cape Town Council since
2002.
11. Subsequent events
11.1 Appointment of Macquarie Capital (Europe) Limited as
Nominated Adviser and Broker
On 1 February 2012, Petmin announced that it had appointed
Macquarie Capital (Europe) Limited as its Nominated Adviser and
Broker. The appointment was with effect from 1 February 2012 and is
in respect of the Alternative Investment Market of the London Stock
Exchange plc. Petmin believes that this appointment will assist
Petmin in its long term stated objective to migrate its listing to
the main board of the London Stock Exchange and to initially form
part of the FTSE 250 index, and ultimately the FTSE 100 index.
11.2 Update on proposed sale of SamQuarz
On 30 January 2012, Petmin announced that Petmin and the
proposed buyer of its SamQuarz silica mine, Thaba Chueu Mining
(Pty) Limited ("Thaba"), have appealed against a decision by the
Competition Commission to prohibit the sale.
A formal notice was filed with the Competition Tribunal by
Petmin and Thaba on Friday, 27 January 2012, asking the Tribunal to
reconsider the Commission's decision.
This follows Petmin's statement of 16 January 2012, in which it
advised that the Commission had said it would not authorise the
sale of SamQuarz due to its strategic importance as a supplier to
the producers of ferrosilicon and silicon metal in South Africa.
Petmin had announced on 13 September 2011 that it had sold SamQuarz
to Thaba for R259 million (plus all profits made after 1 July 2011
until closing of the transaction) subject to approval from the
Commission and the Department of Mineral Resources.
It is anticipated that the appeal process will take
approximately six months. During this time, Petmin will continue to
operate SamQuarz as a profitable and productive mining
business.
On 23 February 2012, Petmin announced that it had received
notification from the Department of Mineral Resources of its
consent to the sale.
11.3 Renewable 600 000 tonne anthracite export capacity
agreement with Grindrod
As announced on 22 February 2012, Petmin has signed a renewable
five-year agreement which will enable it to export up to 600 000
tonnes of metallurgical anthracite a year from Grindrod Terminal's
Kusasa dry bulk facility in Richards Bay, located in the
KwaZulu-Natal province of South Africa.
The agreement, effective from 1 February 2012, gives Petmin the
capacity to transport by road and then ship its expanded anthracite
production from the Somkhele mine 85km north of Richards Bay.
11.4 North Atlantic Iron Corporation maiden inferred resource
statement
Petmin today announced its maiden CIM (Canada's equivalent of
SAMREC) inferred resource of 594 million tonnes at its joint
venture Iron Sands/Pig-iron project in Canda, NAIC. Please refer to
the detailed announcement published on 12 March 2012.
11.5 Subsequent events
There have been no other events that have occurred subsequent to
31 December 2011 which require adjustment of, or disclosure in the
financial statements or notes thereto in accordance with IAS 10 -
Events After the Reporting Date.
General overview of performance
Revenues of R311 million, down 3% from R321 million in 2010,
generated a profit after tax of R47 million (2010: R47 million).
Sales volumes reduced at Somkhele by 82 000 tonnes due to reduced
production (42 000 tonnes) and due to the sale of stockpiles in
2010. Demand for Somkhele's product exceeded production.
The group's operations remain strongly cash generative, with net
cash flow from operating activities of R200 million in the six
months to 31 December 2011 (2010: R191 million).
Average selling prices at Somkhele increased to R952.81/tonne or
24% from the R767.02/tonne achieved in 2010. United States Dollar
("Dollar") prices on export sales increased by 18% and the
Rand/Dollar exchange rate assisted with weakening of the Rand to an
average of 7.61 (2010: 6.79) for the six months ended 31 December
2011.
Production tonnes for the Group were flat at 883 737 tonnes
(2010: 892 879) and sales tonnes decreased by 8% to 855 911 (2010:
932 274). Production volumes were disappointing at Somkhele, being
affected by poor geological conditions in the shallow, weathered
sections of the new pits opened in Area 1. The weathered material
also affected yields in the wash plant resulting in a 38% yield in
the six months to 31 December 2011 (2010: 42%). Production was
further hampered by delays caused by rain and by late delivery of
additional opencast mining equipment. Management anticipates yields
and geological conditions to improve as the deeper sections of the
pits are mined going forward.
In the period under review, discard was re-processed at Somkhele
in the existing plants and produced encouraging yields. In the six
months ended 31 December 2011, the Petmin board approved the
construction of an additional processing plant to re-treat discard
subject to securing off-take agreements. Once in operation, this is
expected to increase the overall plant yield from the current 42%
to in excess of 50%.
Operating income was R18.0 million compared to an expense of
R2.8 million in 2010 as foreign exchange gains of R9.5 million
(2010: losses of R6.8 million) were recorded with the weakening of
the Rand against the US Dollar in the six months ended 31 December
2011 and Petmin earned fee income from Veremo of R2.5 million
(2010: R nil).
In the six months to 31 December 2011, Petmin made significant
investments to secure its future expansion strategy. Capital
expenditure increased to R339 million (2010: R138 million) of which
R159 million (2010: R72 million) was spent on pre-stripping the
open pits at Somkhele in anticipation of doubling production in
order to feed Somkhele's second plant which has commenced its
commissioning process in February 2012. Capital expenditure of R90
million (2010: R7 million) was incurred on the second plant at
Somkhele, with R15 million spent on exploration at Somkele (2010:
R4 million), and an additional R23 million (2010: R nil) to fund
the exploration programme at RCR's Sivas copper project.
Petmin invested R23 million (2010: R11 million) in its jointly
controlled entities (North Atlantic Iron Corporation and Iron Bird
Resources).
The Group's interest bearing debt to equity ratio increased to
10.58% (2010: 6.63%) with the R80 million five-year term loan from
the Industrial Development Corporation to partially finance the
construction of the second wash plant at Somkhele being drawn down
in June 2011. The loan has a fixed interest rate of 6.3% per annum
until 1 April 2015, whereafter the interest rate will be 0.7% below
prime. At 31 December 2011, Petmin had cash on hand of R68 million
(2010: R270 million) and has overdraft facilities of R110 million.
In light of the delayed sale of SamQuarz, Petmin is reviewing its
financing options and is likely to raise additional medium-term
debt funding in the near term.
Anthracite Division
Somkhele anthracite mine and Petmin Logistics
The Anthracite division produced 203 425 tonnes (2010: 245 791
tonnes) and sold 227 041 tonnes (2010: 309 347 tonnes) of
anthracite in the six months ended 31 December 2011. Production
volumes are expected to increase significantly with the
commencement of the second plant and with improved geological
conditions and the arrival of additional earthmoving equipment for
the open-pit mining operations.
Net profit margins were maintained at 26% (2010: 26%) with
assistance from improved Dollar prices for exports (2011:
$119/tonne 2010: $100.72/tonne) and a weaker Rand/Dollar exchange
rate (2011: 7.61 2010: 6.79). The increase in sales prices was
offset by increased mining cost due to a greater proportion of
production emanating from Area 1 (2011: 63% of production from Area
1; 2010: 27% of production from Area 1). As previously announced in
September 2011 it was anticipated that mining costs would increase
due to the increased strip ratios in the deeper reserves in Area 1.
Management estimated an increase in mining cost of 56% when moving
from a strip ratio of less than 2:1 in Area 2 to a strip ratio of
almost 4:1 in Area 1.
In a drive to improve operating efficiencies at the mine,
management approved the construction of a discard reprocessing
plant with a budgeted capital cost of R50 million. Based on the
results of a trial washing of 20 000 tonnes of discard in December
2011, it is anticipated that the re-washing of the discard will
improve plant yield from the historic 42% to in excess of 50%.
The commissioning of the second wash plant at Somkhele has
commenced in February 2012 and is expected to be in full production
by the end of the first quarter of calendar 2012. The project is on
time and within budget and has the capacity to more than double the
current saleable production at Somkhele to in excess of 1.2 million
tonnes per annum.
Somkhele has signed an additional export sales contract for 250
000 tonnes for calendar year 2012 (150 000 tonnes are firm with 100
000 tonnes at the customers option), enhancing visibility of
revenues with the existing take or pay export contract for 200 000
tonnes per annum until December 2013. Demand from domestic
customers exceeded Somkhele's production capacity in the six months
ended 31 December 2011 and the commissioning of the second plant
will assist in the servicing of the demand from this market.
Somkhele has signed off-take agreements with domestic customers for
approximately 650 000 tonnes per annum.
The following market summary indicates forces affecting
competition for our product in the export market. With European
stock levels increasing, international trade volumes are coming
under pressure. The European market for anthracite has seen
significant downward pressure and is 5% to 7% down on July 2011
prices. (Max 10% Ash, 3% Volatiles, 1.2% Sulphur).
The Vietnamese government upped the export tax on anthracite to
15% effective September 2011 in line with its stated policy of
discouraging exports to conserve coal for local consumption.
Vietnamese anthracite prices for the last quarter have seen
reductions from the previous period, reflecting the relative
strength of Chinese export prices for blast furnace coke against
which they are sold.
Demand from our primary market, Brazil, is steady with firm
orders being placed until June 2012 and we see demand remaining
consistent until December 2012, albeit at lower than anticipated
prices.
In the local market, despite the downturn in the ferrochrome
industry with a number of furnaces being switched off, demand from
our principle customers remains firm, given the nature of our
supply to the lower cost furnaces using proprietary technology.
We continue to evaluate new products and markets.
Silica Division
SamQuarz silica mine
SamQuarz produced 680 312 tonnes (2010: 647 088 tonnes) of
silica and chert in the six months ended 31 December 2011. Sales
volumes were maintained at 628 870 tonnes (2009: 622 927
tonnes).
The Silica division's profit before tax declined by 6% to R16
million (2010: R17 million) as profit margins continue to be
squeezed by the effects of long term sales contract pricing
mechanisms that do not match the inflationary increases of mining
costs. Management continues to negotiate improved contract price
adjustments to reverse this trend. Sales in the glass sector remain
steady in line with expectations. The recent decline in demand from
the metallurgical sector is viewed as temporary and is anticipated
to return to normal levels by May 2012.
Capital expenditure for the six months ended 31 December 2011
amounted to R20 million (2010: R31 million), spent primarily on the
development of the open pit.
Business of Tomorrow Division ("BOT")
In the six months to 31 December 2011, Petmin is pleased to
report on the progress made in the BOT projects:
Pig-iron - Canada
In the six months ended 31 December 2011, Petmin invested an
additional US$2 million in the jointly managed North Atlantic Iron
Corporation ("NAIC") acquiring an additional 5.17% interest to take
Petmin's shareholding in NAIC to 10.17%.
The project is progressing very well and in line with our
projections. After having drilled more than 4 500 metres and
analysed more than 1 400 samples, management today released NAIC's
CIM compliant maiden resource statement.
Iron-ore - Liberia
In the six months ended 31 December 2011, Petmin invested an
additional US$1.5 million in the jointly managed Iron Bird
Resources Inc, increasing its shareholding in Iron Bird to 50%.
An aeromagnetic survey shows a continuous magnetic unit
interpreted as an iron formation that is 20km long up to 250m wide
and 1 000m deep. Early samples of the ore range from 33% to 54%
magnetite iron. 151 trench samples have been submitted for
geochemical and metallurgical testing to determine whether a
saleable concentrate can be economically obtained from the ore. The
results of the initial test work are expected in the second quarter
of calendar 2012.
Copper - Turkey
In the six months ended 31 December 2011, Petmin invested C$3
055 000 to increase its equity holding in RCR to approximately
10.1%.
Drilling commenced on the project and the initial drill results
noted 10 metres at 0.5% Cu (and 5 metres at 0.6% Cu). Management
expects the initial 14 drill-hole programme and test work to be
complete by the second quarter of calendar 2012 and will then
assess the project on the merits of the results achieved.
Iron-ore - South Africa (Veremo project)
Veremo continues to await the outcome of its application for a
mining license with the Department of Mineral Resources.
Subsequent to 31 December 2011, Kermas Limited, the ultimate
controlling shareholder of Veremo signed an agreement with
Metallurgical Group Corporation Limited, an international plant
construction entity, to complete a feasibility study on the
project.
Prospects
Anthracite division
In the six months to 30 June 2012, management expects monthly
production to double after the commissioning of the second wash
plant during the first quarter of calendar 2012.
Sales are expected to increase in line with the production
increase as demand from our domestic customers remains firm and
with the export market being underpinned by the export contracts
for calendar 2012 totalling 350 000 tonnes.
The exploration and evaluation programme has identified seven
targets in the exploration area and work to quantify the resources
in these targets continues. Management expects to announce updated
resource estimates over the new exploration areas by September 2012
and anticipates that this will increase the life of mine to
approximately 20 years at full production.
Silica division
We anticipate current sales and production volumes to be
maintained in the year ahead. Petmin will continue to manage this
asset pending the outcome of the appeal process with the
Competition Tribunal. In terms of the sale agreement, all
undistributed profits from 30 June 2011 are for Petmin's benefit
and the sale price will be adjusted accordingly.
Capital expenditure to 30 June 2012 is expected to remain
consistent with the R20 million spent in the six months ended 31
December 2011.
Business of Tomorrow division
With the publishing of the updated resource statement at NAIC,
Petmin expects to complete smelt tests and thereafter issue an
updated National Instrument 43-101(*)("NI 43-101") compliant
statement for the project. Petmin views this project as extremely
robust, from both an economic and a technical perspective and it is
Petmin's intention to accelerate the development of NAIC as a key
asset for the future.
*(NI 43-101 is a mineral resource classification scheme used for
the public disclosure of information relating to mineral properties
in Canada. The NI 43-101 is a strict guideline for how public
companies can disclose scientific and technical information about
mineral projects on bourses supervised by the Canadian Securities
Administrators. The NI 43-101 is broadly comparable to the Joint
Ore Reserves Committee Code (JORC Code) which regulates the
publication of mineral exploration reports on the Australian Stock
Exchange (ASX). It is also broadly comparable with the South
African Code for the Reporting of Mineral Resources and Mineral
Reserves (SAMREC).
Iron Bird Resources, being fully funded, will continue with the
current metallurgical testing and budgeted large diameter drill
programme whereafter Petmin and Hummingbird, its partner, will
decide the appropriate course of action going forward.
The drilling programme at the RCR Sivas copper project in Turkey
continued as planned and Petmin awaits the final drill results from
the initial 14-hole drill campaign, whereafter Petmin will decide
on its next course of action.
General
With the expansion at Somkhele nearing completion and with the
promising developments at NAIC, Petmin is well positioned to
significantly increase earnings and enhance shareholder value with
the increase in value of its BOT projects as they near development
stage.
Renewal of cautionary announcement
Further to the cautionary announcements dated 9 January 2012 and
20 February 2012, shareholders are advised that the negotiations
are still in progress which, if successfully concluded may have a
material effect on the price of the Company's securities.
Consequently, shareholders are advised to continue to exercise
caution when dealing in the Company's securities until a further
announcement is made.
More details on Petmin can be found on our website
www.petmin.com.
By order of the Board
I D Cockerill J C du Preez
Executive Chairman Chief Executive Officer
Sponsor (JSE) Nominated Adviser and Broker (LSE: AIM) River Group
River Group Macquarie Capital (Europe) Limited
Johannesburg
12 March 2012
Directors: I Cockerill# (Executive Chairman) L Mogotsi (Deputy
Chairman)
J du Preez (Chief Executive Officer) B Doig B Tanner (Financial
Director)
M Arnold*+ E de V Greyling* K Kalyan* A Martin* T Petersen* J
Taylor*
*Non-executive #British +American
Registered office: 37 Peter Place Bryanston 2021
Corporate office: 37 Peter Place Bryanston 2021
Tel: (011) 706 1644 Fax: (011) 706 1594 Website:
www.petmin.co.za
Sponsor - JSE: River Group Tel: +27 (0)12 346 8540
Nominated adviser - AIM: Macquarie Capital (Europe) Limited
Company secretary: Mondial Consultants (Pty) Limited
Transfer secretaries: JSE: Computershare Investor Services
(Proprietary)
Limited
AIM: Computershare Investor Services PLC
Auditors: KPMG Inc.
A PDF version of these results is available on our website:
www.petmin.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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