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PET
PET
PET - Petmin Limited - Condensed consolidated interim financial statements for
the six months ended 31 December 2009
Petmin Limited
(Incorporated in the Republic of South Africa)
(Registration number 1972/001062/06)
JSE code: PET AIM code: PTMN
ISIN: ZAE000076014
("Petmin" or "the Group")
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS
ENDED 31 DECEMBER 2009
Cash on hand of R145 million (2008: R75 million) and unutilised banking
facilities of R150 million
Normalised HEPS from continuing operations increased 10% from 7.55 cents to
8.28 cents
Operating margin increased to 30% (2008: 19%)
"Petmin remains profitable and cash-generative despite extremely tough trading
conditions"
Condensed Consolidated Interim Income Statement
for the six months ended 31 December 2009
Reviewed
Six months
ended
31 December
2009
Note R`000
Revenue 214 555
Cost of sales (127 070)
Gross profit 87 485
Operating (expenses)/income (12 398)
Administration expenses (11 062)
Results from operating activities 64 025
Net finance income/(expense) 1 895
- Finance income 4 582
- Finance expenses (2 687)
Profit before tax and separately disclosed items 65 920
Separately disclosed items:
Loss on sale of subsidiary -
Impairment loss on goodwill acquired -
Share of profit of equity-accounted investee -
Profit before income tax 65 920
Income tax expense (19 545)
Profit for the period 46 375
Attributable to:
- Equity holders of Petmin Limited 46 375
- Non-controlling interest -
Profit for the period 46 375
Basic earnings per ordinary
share (cents) 6 8.28
Diluted earnings per ordinary
share (cents) 6 8.17
Reviewed Audited
Six months Year
ended ended
31 December 30 June
2008 2009
R`000 R`000
Revenue 490 359 788 624
Cost of sales (375 569) (578 419)
Gross profit 114 790 210 205
Operating (expenses)/income 1 381 (9 300)
Administration expenses (22 821) (27 011)
Results from operating activities 93 350 173 894
Net finance income/(expense) (3 773) (969)
- Finance income 5 460 11 270
- Finance expenses (9 233) (12 239)
Profit before tax and separately disclosed items 89 577 172 925
Separately disclosed items:
Loss on sale of subsidiary (13 392) (79 170)
Impairment loss on goodwill acquired (1 327) (1 327)
Share of profit of equity-accounted investee 32 635 78 185
Profit before income tax 107 493 170 613
Income tax expense (26 346) (52 627)
Profit for the period 81 147 117 986
Attributable to:
- Equity holders of Petmin Limited 81 525 118 364
- Non-controlling interest (378) (378)
Profit for the period 81 147 117 986
Basic earnings per ordinary
share (cents) 15.15 21.86
Diluted earnings per ordinary
share (cents) 14.72 20.68
Condensed Consolidated Interim Statement of Comprehensive Income
for the six months ended 31 December 2009
Reviewed Reviewed Audited
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2009 2008 2009
R`000 R`000 R`000
Profit for the period 46 375 81 147 117 986
Other comprehensive income/(expense)
Effective portion of changes in
fair value of cash flow hedges 636 (877) 241
Other comprehensive income/(expense)
for the period, net of income tax 636 (877) 241
Total comprehensive income for the
period 47 011 80 270 118 227
Attributable to:
- Equity holders of Petmin Limited 47 011 80 648 118 605
- Non-controlling interest - (378) (378)
Total comprehensive income for the
period 47 011 80 270 118 227
Condensed Consolidated Interim Statement of Financial Position
as at 31 December 2009
Reviewed
31 December
2009
Note R`000
ASSETS
Non-current assets 1 140 819
Property, plant and equipment 639 492
Intangible assets 5 666
Investment in equity-accounted investee 470 661
Investments 25 000
Long-term receivables -
Current assets 347 002
Inventories 43 998
Trade and other receivables 151 964
Current tax assets 6 220
Cash and cash equivalents 144 820
Assets classified as held for sale -
Total assets 1 487 821
EQUITY AND LIABILITIES
Ordinary share capital and reserves 1 170 295
Share capital 138 479
Share premium 315 854
Share option reserve 13 022
Hedging reserve -
Retained earnings 702 940
Non-current liabilities 193 975
Interest-bearing loans and borrowings 57 362
Deferred taxation liabilities 114 658
Environmental rehabilitation provision 21 955
Current liabilities 123 551
Trade and other payables 76 731
Current portion of non-current liabilities 46 820
Current tax liabilities -
Liabilities classified as held for sale -
Total equity and liabilities 1 487 821
Net asset value ("NAV") per
share (cents) 7 208.69
Fully diluted NAV per share (cents) 7 200.52
Reviewed Audited
31 December 30 June
2008 2009
R`000 R`000
ASSETS
Non-current assets 1 038 661 1 131 688
Property, plant and equipment 585 102 629 102
Intangible assets 8 184 6 925
Investment in equity-accounted investee 423 875 470 661
Investments - 25 000
Long-term receivables 21 500 -
Current assets 409 774 341 642
Inventories 32 829 30 373
Trade and other receivables 105 831 214 239
Current tax assets 3 128 5 934
Cash and cash equivalents 75 290 91 096
Assets classified as held for sale 192 696 -
Total assets 1 448 435 1 473 330
EQUITY AND LIABILITIES
Ordinary share capital and reserves 1 085 049 1 119 101
Share capital 135 236 134 686
Share premium 307 223 304 745
Share option reserve 23 741 23 741
Hedging reserve (877) (636)
Retained earnings 619 726 656 565
Non-current liabilities 164 336 181 192
Interest-bearing loans and borrowings 66 394 57 664
Deferred taxation liabilities 78 999 100 901
Environmental rehabilitation provision 18 943 22 627
Current liabilities 199 050 173 037
Trade and other payables 104 375 119 101
Current portion of non-current liabilities 10 942 53 936
Current tax liabilities 474 -
Liabilities classified as held for sale 83 259 -
Total equity and liabilities 1 448 435 1 473 330
Net asset value ("NAV") per
share (cents) 199.26 205.51
Fully diluted NAV per share (cents) 184.36 190.14
Condensed Consolidated Interim Statement of Cash Flows
for the six months ended 31 December 2009
Audited
Reviewed Reviewed Year ended
31 December 31 December 30 June
2009 2008 2009
R`000 R`000 R`000
Net cash flow from operating
activities 112 508 165 059 225 348
Cash flows from investing activities
Increase in investment in
rehabilitation funds - (622) (5 115)
Investment in equity-accounted investee - (15 352) (16 589)
Investment in preference share - - (25 000)
Acquisition of property, plant
and equipment (55 560) (170 113) (290 991)
- to expand operations (23 649) (80 367) (188 092)
- to expand operations -
capitalised pre-strip (27 418) (79 906) (86 408)
- to maintain operations (4 493) (9 840) (16 491)
Proceeds from sale of
subsidiary net of cash disposed - - 77 707
Proceeds from sale of property,
plant and equipment 11 - 47
Net cash flow from investing
activities (55 549) (186 087) (259 941)
Cash flows from financing activities
Proceeds from specific and
general share issues for cash
during the period 16 792 4 907 4 907
Treasury shares acquired (12 609) (5 748) (8 775)
Repayment of contingent
consideration - (3 991) (4 005)
Repayment of borrowings (45 418) (6 342) (16 776)
Increase in borrowings 38 000 18 781 61 627
Net cash flows from financing
activities (3 235) 7 607 36 978
Net (decrease) / increase in cash
and cash equivalents 53 724 (13 421) 2 385
Cash and cash equivalents at
beginning of period 91 096 88 711 88 711
Cash and cash equivalents at end
of period 144 820 75 290 91 096
Segment reporting
Segment information is presented in the condensed consolidated reviewed
financial statements in respect of the Group`s business segments, which are the
primary basis of segment reporting. The business segment reporting format
reflects the Group`s management and internal reporting structure.
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.
Business segments
The Group comprises the following main business segments:
- Silica mining and marketing ("Silica")
- Anthracite mining and marketing ("Anthracite")
- Iron ore project ("Iron Ore")
Condensed Consolidated Interim Financial Statements
for the six months ended 31 December 2009
Silica
Reviewed Reviewed Audited
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2009 2008 2009
R`000 R`000 R`000
Saleable tonnes produced 607 140 815 235 1 333 613
Tonnes sold 547 359 902 513 1 511 850
Segment revenue 73 202 101 139 180 795
Segment revenue
per tonne sold (R/t) 133.74 112.06 119.59
Segment profit/
(loss) before tax
Segment profit per tonne sold (R/t) 40.70 28.54 31.43
- segment result 22 277 25 758 47 524
- impairment loss on assets
classified as held for sale - - -
- loss on sale of subsidiary - - -
- impairment loss on goodwill acquired - - -
- share of profit of equity-accounted
investee - - -
Segment profit/(loss) before tax 22 277 25 758 47 524
Segment capital
expenditure - combined 5 379 10 128 16 327
Segment capital expenditure 5 379 10 128 16 327
Segment capital expenditure - pre-strip - - -
Segment depreciation
and amortisation - combined 6 038 4 105 10 335
Segment depreciation and amortisation 6 038 4 105 10 335
Segment depreciation
and amortisation - pre-strip - - -
Segment assets 274 060 217 368 228 612
Segment liabilities 94 778 71 529 66 931
Anthracite
Reviewed Reviewed Audited
Six months Six months Year
ended ended ended
31 Decembe 31 December 30 June
2009 2008 2009
R`000 R`000 R`000
Saleable tonnes produced 202 800 637 325 1 016 940
Tonnes sold 171 867 682 879 960 764
Segment revenue 141 353 389 220 607 829
Segment revenue
per tonne sold (R/t) 822.46 569.97 632.65
Segment profit/
(loss) before tax
Segment profit per
tonne sold (R/t) 273.03 97.50 134.10
- segment result 46 924 66 584 128 840
- impairment loss on assets
classified as held for sale - (13 392) -
- loss on sale of subsidiary - - -
- impairment loss on goodwill acquired - (1 327) (1 327)
- share of profit of equity-accounted
investee - - -
Segment profit/(loss) before tax 46 924 51 865 127 513
Segment capital
expenditure - combined 46 895 160 592 277 327
Segment capital expenditure 19 479 80 686 190 919
Segment capital
expenditure - pre-strip 27 416 79 906 86 408
Segment depreciation
and amortisation - combined 40 266 53 212 120 702
Segment depreciation
and amortisation 7 916 16 992 29 425
Segment depreciation
and amortisation - pre-strip 32 350 36 220 91 277
Segment assets 701 728 805 186 653 148
Segment liabilities 467 808 556 781 451 964
Iron Ore
Reviewed Reviewed Audited
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2009 2008 2009
R`000 R`000 R`000
Saleable tonnes produced - - -
Tonnes sold - - -
Segment revenue - - -
Segment revenue
per tonne sold (R/t) - - -
Segment profit/ (loss) before tax
Segment profit per tonne sold (R/t) - - -
- segment result - - -
- impairment loss on assets classified
as held for sale - - -
- loss on sale of subsidiary - - -
- impairment loss on goodwill acquired - - -
- share of profit of equity-accounted
investee - 32 635 78 185
Segment profit/(loss) before tax - 32 635 78 185
Segment capital
expenditure - combined - - -
Segment capital expenditure - - -
Segment capital
expenditure - pre-strip - - -
Segment depreciation
and amortisation - combined - - -
Segment depreciation
and amortisation - - -
Segment depreciation
and amortisation - pre-strip - - -
Segment assets 495 661 423 875 495 661
Segment liabilities - - -
Other (corporate office)
Reviewed Reviewed Audited
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2009 2008 2009
R`000 R`000 R`000
Saleable tonnes
produced - - -
Tonnes sold - - -
Segment revenue - - -
Segment revenue
per tonne sold (R/t) - - -
Segment profit/
(loss) before tax
Segment profit per
tonne sold (R/t) - - -
- segment result (3 281) 1 178 504
- impairment loss on assets
classified as held for sale - - -
- loss on sale of subsidiary - - (79 170)
- impairment loss on goodwill acquired - - -
- share of profit of equity-accounted
investee - - -
Segment profit/(loss) before tax (3 281) 1 178 (78 666)
Segment capital
expenditure - combined 3 284 2 365 2 598
Segment capital expenditure 3 284 2 365 2 598
Segment capital
expenditure - pre-strip - - -
Segment depreciation
and amortisation - combined 123 84 177
Segment depreciation and amortisation 123 84 177
Segment depreciation
and amortisation - pre-strip - - -
Segment assets 353 080 394 631 355 908
Segment liabilities 25 356 29 332 42 497
Eliminations
Reviewed Reviewed Audited
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2009 2008 2009
R`000 R`000 R`000
Saleable tonnes
produced - - -
Tonnes sold - - -
Segment revenue - - -
Segment revenue
per tonne sold (R/t) - - -
Segment profit/ (loss) before tax
Segment profit per tonne sold (R/t) - - -
- segment result - (3 943) (3 943)
- impairment loss on assets
classified as held for sale - - -
- loss on sale of subsidiary - - -
- impairment loss on
goodwill acquired - - -
- share of profit of equity-accounted
investee - - -
Segment profit/(loss) before tax - (3 943) (3 943)
Segment capital
expenditure - combined - (2 972) (2 288)
Segment capital expenditure - (2 972) (2 288)
Segment capital
expenditure - pre-strip - - -
Segment depreciation
and amortisation - combined - - -
Segment depreciation and amortisation - - -
Segment depreciation
and amortisation - pre-strip - - -
Segment assets (336 708) (392 625) (259 999)
Segment liabilities (270 416) (294 256) (207 163)
Consolidated
Reviewed Reviewed Audited
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2009 2008 2009
R`000 R`000 R`000
Saleable tonnes produced 809 940 1 452 560 2 350 553
Tonnes sold 719 226 1 585 392 2 472 614
Segment revenue 214 555 490 359 788 624
Segment revenue
per tonne sold (R/t) - - -
Segment profit/ (loss) before tax
Segment profit per tonne sold (R/t) - - -
- segment result 65 920 89 577 172 925
- impairment loss on assets classified
as held for sale - (13 392) -
- loss on sale of subsidiary - - (79 170)
- impairment loss on goodwill acquired - (1 327) (1 327)
- share of profit of equity-accounted
investee - 32 635 78 185
Segment profit/(loss) before tax 65 920 107 493 170 613
Segment capital
expenditure - combined 55 558 170 113 293 964
Segment capital expenditure 28 142 90 207 207 556
Segment capital
expenditure - pre-strip 27 416 79 906 86 408
Segment depreciation
and amortisation - combined 46 427 57 401 131 214
Segment depreciation
and amortisation 14 077 21 181 39 937
Segment depreciation
and amortisation - pre-strip 32 350 36 220 91 277
Segment assets 1 487 821 1 448 435 1 473 330
Segment liabilities 317 526 363 386 354 229
The open pit mining profile at Somkhele requires that waste overburden be
removed from the pit before coal may be extracted. This overburden removal is
capitalised to the development cost of the open pit (so called "pre-stripping")
and is then expensed on a units-of-production basis as the coal is extracted
from the open pits.
The comparative results for the anthracite division for the periods ended 31
December 2008 and 30 June 2009 include the results of Springlake. Springlake
was sold on 29 June 2009. The table below depicts the anthracite division`s
operating performance for the comparative periods with Springlake shown
separately.
Segment report - continued
Anthracite - analysis of comparative periods
Anthracite Excl Springlake
Reviewed Reviewed
six months six months
ended ended
31 December 31 December
2009 2008
R`000 R`000
Saleable tonnes produced 202 800 282 930
Tonnes sold 171 867 321 825
Segment revenue 141 353 194 008
Segment revenue per tonne sold (R/t) R822.46 R602.84
Segment profit before tax
Segment profit per tonne sold (R/t) R273.03 R109.58
- segment result 46 924 35 266
- impairment loss on assets classified as
held for sale - -
- loss on sale of subsidiary - -
- impairment loss on goodwill acquired - (1 327)
- share of profit of equity accounted
investee - -
Segment profit before tax 46 924 33 939
Segment capital expenditure - combined 46 895 155 376
Segment capital expenditure 19 479 75 470
Segment capital expenditure - pre-strip 27 416 79 906
Segment depreciation and amortisation -
combined 40 266 45 377
Segment depreciation and amortisation 7 916 9 157
Segment depreciation and amortisation
-pre-strip 32 350 36 220
Springlake Combined
Reviewed Reviewed
six months six months
ended ended
31 December 31 December
2008 2008
R`000 R`000
Saleable tonnes produced 354 395 637 325
Tonnes sold 361 054 682 879
Segment revenue 195 212 389 220
Segment revenue per tonne sold (R/t) R540.67 R569.97
Segment profit before tax
Segment profit per tonne sold (R/t) R86.74 R97.50
- segment result 31 318 66 584
- impairment loss on assets classified as
held for sale (13 392) (13 392)
- loss on sale of subsidiary - -
- impairment loss on goodwill acquired - (1 327)
- share of profit of equity accounted
investee - -
Segment profit before tax 17 926 51 865
Segment capital expenditure - combined 5 216 160 592
Segment capital expenditure 5 216 80 686
Segment capital expenditure - pre-strip - 79 906
Segment depreciation and amortisation -
combined 7 835 53 212
Segment depreciation and amortisation 7 835 16 992
Segment depreciation and amortisation
-pre-strip - 36 220
Excl Springlake Springlake Combined
Audited Audited Audited
Year Year Year
ended ended ended
30 June 30 June 30 June
2009 2009 2009
R`000 R`000 R`000
Saleable tonnes produced 454 187 562 753 1 016 940
Tonnes sold 481 638 479 126 960 764
Segment revenue 343 506 264 323 607 829
Segment revenue per tonne sold (R/t) R713.20 R551.68 R632.65
Segment profit before tax
Segment profit per tonne sold (R/t) R198.34 R69.53 R134.10
- segment result 95 526 33 314 128 840
- impairment loss on assets
classified as held for sale - - -
- loss on sale of subsidiary - - -
- impairment loss on goodwill
acquired (1 327) - (1 327)
- share of profit of equity
accounted investee - - -
Segment profit before tax 94 199 33 314 127 513
Segment capital expenditure -
combined 263 409 13 918 277 327
Segment capital expenditure 177 001 13 918 190 919
Segment capital expenditure -
pre-strip 86 408 - 86 408
Segment depreciation and
amortisation - combined 104 660 16 042 120 702
Segment depreciation and
amortisation 13 383 16 042 29 425
Segment depreciation and
amortisation - pre-strip 91 277 - 91 277
The anthracite segment revenue comprises a combination of local sales
denominated in Rands and export sales predominantly denominated in US Dollar
s. At 31 December 2009, Petmin had $1 million hedged at an average rate of
R9.91/USD1.00. These hedges were closed out on 22 January 2010. Subsequent to
31 December 2009, Petmin has entered into zero cost collar and cap hedges for
$9.9 million which represents approximately 50% of anticipated export revenue
to June 2010. These hedges protect a downside of R7.60/$1.00 and with caps
ranging from R7.7854/$1.00 to R8.2862/$1.00. Management continues to monitor
the foreign exchange rates and may enter into new hedges to secure Rand profit
levels as the opportunity arises.
Condensed Consolidated Interim Statement of Changes in Equity
for the six months ended 31 December 2009
Attributable to equity holders of the Company
Share Contingent
Share Share option consideration
capital premium reserve reserve
R`000 R`000 R`000 R`000
Balance at 1 July 2008 133 704 304 545 27 494 1 480
Shares issued during
the period
- To acquire 30% of
Petmin Logistics (Pty)
Limited 188 3 188 - -
- Share options exercised 1 945 7 161 (4 199) -
- Issued to Springlake
Vendors 117 163 - (280)
Treasury shares acquired
during the period (1 768) (11 012) - -
Treasury shares transferred
to Spinglake Vendors 500 700 - (1 200)
Share options granted - - 446 -
Effective portion of
changes in fair value
of cash flow hedges - - - -
Profit for the period - - - -
Balance at 30 June 2009 134 686 304 745 23 741 -
Shares issued during
the period
- Share options exercised 4 063 16 298 (10 719) -
Treasury shares acquired
during the period (1 663) (10 946) - -
Treasury shares transferred
on share-based payment 181 1 273 - -
Treasury shares transferred
on exercise of options 1 212 4 484 - -
Effective portion of
changes in fair value
of cash flow hedges - - - -
Profit for the period - - - -
Balance at 31 December
2009 138 479 315 854 13 022 -
Attributable to equity holders of the Company
Hedging Retained
reserve earnings Total
R`000 R`000 R`000
Balance at 1 July 2008 - 538 201 1 005 424
Shares issued during the period
- To acquire 30% of Petmin Logistics
(Pty) Limited - - 3 376
- Share options exercised - - 4 907
- Issued to Springlake Vendors - - -
Treasury shares acquired during the period - - (12 780)
Treasury shares transferred to Spinglake
Vendors - - -
Share options granted - - 446
Effective portion of changes in fair
value of cash flow hedges (636) - (636)
Profit for the period - 118 364 118 364
Balance at 30 June 2009 (636) 656 565 1 119 101
Shares issued during the period
- Share options exercised - - 9 642
Treasury shares acquired during the period - - (12 609)
Treasury shares transferred on
share-based payment - - 1 454
Treasury shares transferred on exercise
of options - - 5 696
Effective portion of changes in fair
value of cash flow hedges 636 - 636
Profit for the period - 46 375 46 375
Balance at 31 December 2009 - 702 940 1 170 295
Non-
controlling Total
interest equity
R`000 R`000
Balance at 1 July 2008 2 434 1 007 858
Shares issued during the period
- To acquire 30% of Petmin Logistics (Pty) Limited (2 056) 1 320
- Share options exercised - 4 907
- Issued to Springlake Vendors - -
Treasury shares acquired during the period - (12 780)
Treasury shares transferred to Spinglake Vendors - -
Share options granted - 446
Effective portion of changes in fair value of
cash flow hedges - (636)
Profit for the period (378) 117 986
Balance at 30 June 2009 - 1 119 101
Shares issued during the period
- Share options exercised - 9 642
Treasury shares acquired during the period - (12,609)
Treasury shares transferred on share-based payment - 1 454
Treasury shares transferred on exercise of options - 5 696
Effective portion of changes in fair value of
cash flow hedges - 636
Profit for the period - 46 375
Balance at 31 December 2009 - 1 170 295
Notes to the Condensed Consolidated Interim Financial Statements
for the six months ended 31 December 2009
1. Reporting entity
Petmin is a company domiciled in South Africa. The condensed consolidated
interim financial statements of the Company as at and for the six months ended
31 December 2009 comprise the Company and its subsidiaries (together referred
to as the "Group") and the Group`s interest in associates.
The condensed consolidated interim financial statements were authorised for
issue by the directors on 1 March 2010.
2. Statement of compliance
The condensed consolidated interim financial statements have been prepared in
accordance with the recognition and measurement requirements of International
Financial Reporting Standards (IFRSs) and the presentation and disclosure
requirements of IAS 34 - Interim Financial Reporting 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 2009, which are available upon request
from the Company`s registered office at Parc Nouveau, First Floor, Block C, 225
Veale Street, Brooklyn, Pretoria or at www.petmin.co.za.
3. Significant accounting policies
The condensed consolidated interim financial statements are prepared on the
historical cost basis, except for financial instruments which are stated at
fair value, where applicable, in terms of IAS 32 - Financial Instruments:
Disclosure and Presentation and IAS 39 - Financial instruments: Recognition and
Measurement.
The accounting policies have been applied consistently by Group entities and
have been applied consistently to all periods presented in these condensed
consolidated interim financial statements.
Functional and presentation currency:
The consolidated financial statements are presented in 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 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 ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period or in the period
of the revision and future periods if the revision affects both current and
future periods.
The significant judgements made by management in applying the Group`s
accounting policies and the key sources of estimation uncertainty were the same
as those applied to the consolidated financial statements as at and for the
year ended 30 June 2009.
5. Review of results
The results of the Group as set out above have been reviewed by the Group`s
auditors, KPMG Inc. The review report is available for inspection at the
Group`s registered offices.
6. Earnings per ordinary share
Earnings per ordinary share ("EPS") are based on the Group`s profit for the
period, divided by the weighted average number of shares in issue during the
year.
Reviewed
six months ended
31 December 2009
Profit for Number of Per
the period shares in share
R`000 thousands in cents
Basic earnings per share 46 375 560 285 8.28
Share options and contingent
consideration - 7 424 (0.11)
Diluted EPS 46 375 567 709 8.17
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.
Reconciliation between earnings and headline earnings per share:
Basic EPS 46 375 560 285 8.28
Adjustments:
- Impairment of goodwill - - -
- Fair value impairment on assets held - - -
- Share of profit of equity
accounted investee - - -
Headline EPS 46 375 560 285 8.28
Share options and contingent consideration - 7 424 (0.11)
Diluted headline EPS 46 375 567 709 8.17
Reviewed
six months ended
31 December 2008
Profit for Number of Per
the period shares in share
R`000 thousands in cents
Basic earnings per share 81 525 538 244 15.15
Share options and contingent
consideration - 15 629 (0.43)
Diluted EPS 81 525 553 873 14.72
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.
Reconciliation between earnings and headline earnings per share:
Basic EPS 81 525 538 244 15.15
Adjustments:
- Impairment of goodwill 1 327 - 0.25
- Fair value impairment on assets held 13 392 - 2.48
- Share of profit of equity accounted
investee (32 635) - (6.06)
Headline EPS 63 609 538 244 11.82
Share options and contingent consideration - 15 629 (0.34)
Diluted headline EPS 63 609 553 873 11.48
Reviewed
six months
ended
31 December
2008 excluding
Springlake
Per
share
in cents
Basic earnings per share 13.37
Share options and contingent consideration (0.38)
Diluted EPS 12.99
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.
Reconciliation between earnings and headline earnings per share:
Basic EPS 13.37
Adjustments:
- Impairment of goodwill 0.25
- Fair value impairment on assets held -
- Share of profit of equity accounted investee (6.06)
Headline EPS 7.55
Share options and contingent consideration (0.21)
Diluted headline
EPS 7.34
7. Net asset value ("NAV") per share
Reviewed Reviewed Audited
six months six months Year
ended ended ended
31 December 31 December 30 June
2009 2008 2009
Ordinary share capital and
reserves (R`000) 1 170 295 1 085 049 1 119 101
Total number of shares in
issue (`000) 560 788 544 538 544 538
NAV per share (cents) 208.69 199.26 205.51
Ordinary share capital and
reserves (R`000) 1 170 295 1 085 049 1 119 101
Total number of shares in
issue (`000) 560 788 544 538 544 538
Share options and contingent
consideration (`000) 22 845 44 019 44 019
Fully diluted number of
shares (`000) 583 633 588 557 588 557
Fully diluted NAV per share (cents) 200.52 184.36 190.14
NAV per share increased 3.18 cents or 1.6% compared to 30 June 2008. Fully
diluted NAV per share increased 10.38 cents or 5.5% compared to 30 June 2009.
The NAV above includes the value of assets on an historical cost and fair value
at acquisition basis. The directors` valuation of the Group`s life of mine cash
flows (taking into account the corporate office costs) amounts to R2.096
billion or 359 cents per share on a fully diluted basis.
This valuation is based on current operations and takes no account for possible
future expansion programmes at Somkhele.
8. Related parties
Dark Capital (Pty) Limited ("Dark Capital"), Petmin`s anchor Black Economic
Empowerment shareholder, is a material shareholder in Petmin and is therefore a
related party as defined by Section 10 of the Listings Requirements.
8.1 Loan to related party
As disclosed in the annual financial statements for the year ended 30 June
2009, the Company advanced a loan of R11 million to Dark Capital (Pty) Limited.
The loan is secured by the cession of the shareholders claim held by the Dark
Trust in Dark Capital (Pty) Limited. The loan is repayable on or before 18 July
2010. This loan is to be repaid on the conclusion of the financing arrangements
which were approved by shareholders at the AGM held on 27 January 2010 detailed
in note 10.1 below.
8.2 Exercise of options and share based payment
As disclosed in the post balance sheet events note in the annual financial
statements for the year ended 30 June 2009, on 30 June 2009, the Company was
informed that Lebo Mogotsi and Bradley Doig (both executive directors) directly
exercised 4 000 000 options each at an exercise price of 65 cents per share.
Dawie Warmenhoven, who resigned as a director of the company on 28 February
2009, exercised 3 000 000 options at an exercise price of 65 cents per share.
An employee who is a director of a subsidiary company directly exercised 1 050
000 options each at an exercise price of 65 cents per share and 500 000 options
each at an exercise price of 45 cents per share. The shares were issued in July
2009 after receiving the requisite regulatory approvals.
On 30 June 2009, the Company was informed that Numis Securities Limited
exercised 4 798 900 options at an exercise price of 9 British pence per share.
These options were granted pursuant to the placement agreement on Petmin`s
admission to AIM in December 2006. The shares were issued in July 2009.
On 31 August 2009, the Company was informed that a former employee of the Group
would exercise 250 000 options and an investment vehicle in which Jan du Preez
has an indirect non-beneficial interest would exercise 3 500 000 options. These
options had an exercise price of 45 cents per share.
On 16 September 2009, the Company transferred 727 222 Petmin shares from the
treasury to Bradley Doig, in accordance with his contract of employment with
the Company, signed in 2006.
As outlined in the 2008 annual report, the Petmin Executive Remuneration Scheme
was renewed for a three-year period ending 30 June 2011. The Petmin
remuneration committee continues to monitor the remuneration scheme to ensure
effective alignment of the interests of management to those of Petmin`s
shareholders. As further evidence of this alignment, in the six months to 31
December 2009, Jan du Preez acquired 2 545 000 Petmin shares on the open market
for a total consideration of R4.8 million and Bradley Doig acquired
1 500 000 Petmin shares on the open market for a total consideration of
R3 million.
Please refer to separate SENS announcements for more information on these
transactions.
9. Appointment of director
On 7 July 2009, Petmin announced the appointment of Bruce Tanner as Financial
Director of Petmin with effect from 1 July 2009. Bruce joined Petmin in 2005 as
Group Financial Manager and Chief Financial Officer and has served on the
Executive Committee since joining the Group.
10. Subsequent events
10.1 Financial assistance to Dark Capital
On 27 January 2010, at the Company`s Annual General Meeting, it was resolved
that the Company is authorised to provide Dark Capital with financial
assistance in terms of Section 38 of the Companies Act whereby the Company will
provide a suretyship in favour of a financial institution for the obligations
of Dark Capital relating to certain debt previously incurred by Dark Capital in
order to purchase and/or subscribe for shares in the Company. At the time of
this report, Dark Capital, Petmin and the financial institution had not yet
finalised the terms of their financing arrangement and Petmin has consequently
not yet provided the suretyship to the financial institution.
There have been no other events that have occurred subsequent to 31 December
2009 which require adjustment of, or disclosure in the financial statements or
notes thereto in accordance with IAS 10 - Events After the Balance Sheet Date.
10.2 Appointment of Executive Chairman Designate
Petmin is pleased to announce that Ian Cockerill has been appointed as an
executive director with effect from 1 March 2010 and will assume the role of
Executive Chairman with effect from 1 July 2010. Ian will guide the Petmin team
in pursuit of its aggressive growth strategy. Ian has served Petmin as a
non-executive director since 1 October, 2007.
Please refer to the separate press release for more information on his
appointment.
Management commentary
(i) Operations
The 2009 calendar year has been the most difficult year experienced in Petmin`s
history. Despite the turmoil in the worldwide financial markets and its
consequential impact on the world commodity markets, Petmin generated a profit
before tax of R66 million and cash from operating activities of R113 million.
Normalised headline earnings per share from continuing operations increased by
10% from 7.55 cents to 8.28 cents.
The management teams at SamQuarz and Somkhele have settled in well and, in line
with Petmin`s six pillar strategy, act as "owners" of their business units.
Revenue for the six months ended 31 December 2009 was R215 million (2008: R490
million) and gross profit was R87 million (2008: R115 million). The decreased
revenue and gross profit is largely due to the exclusion of the results of
Springlake Colliery in the current period and reduced sales volumes due to the
slowdown experienced in the world economy in the latter half of calendar year
2009. In the six months to 31 December 2008, the Group`s revenue excluding
Springlake was R295 million.
Management is pleased to report that the operating margin achieved in the six
months to 31 December 2009 was 30% (2008: 19%). This is as a result of
effective cost management, improved prices achieved at Somkhele and due to the
disposal of the less profitable Springlake Colliery.
In the six months to December 2009, the Company consolidated its financial
position in anticipation of difficult financial and operational conditions in
this period and reduced its production and capital expenditure programmes
accordingly, resulting in a healthy balance sheet position at 31 December 2009.
At 31 December 2009, Petmin had R145 million cash on hand (30 June 2009: R91
million), its interest bearing debt to equity ratio was 8.90% (30 June 2009:
9.97%) and it had unutilised banking facilities of approximately R150 million
bearing interest at or below prime and currency hedging facilities of $50
million.
The operations remained cash generative and cash of R113 million (2008
excluding Springlake: R125 million; 2008 including Springlake: R165 million)
was generated by the operations in the six months to 31 December 2009.
Capital expenditure of R56 million (2008: R170 million) was incurred in the six
months to 31 December 2009. The reduced capital spend reflects the reduced
development expenditure requirement at Somkhele as the Phase 1 development of
Somkhele is complete. The main areas of capital expenditure were capital
pre-stripping of the open pits at Somkhele of R27 million (2008: R80 million),
road and infrastructural development at Somkhele and pit development
expenditure at SamQuarz.
In the six months ended 31 December 2009, Petmin acquired 6 653 180 (2008: 4
869 390) of its own shares at an average price of 188 cents per share (2008:
200 cents per share).
Anthracite division
Somkhele anthracite mine and Petmin Logistics
In the first three months of the period under review, the anthracite market was
severely curtailed with the local ferrochrome industry reducing production by
90% due to a significant reduction in demand in the export market. However,
with signs of the economic recovery emerging, we are pleased to report that the
local market demand is now almost at levels last seen before the worldwide
financial crisis and the export market demand has improved significantly.
Profit before tax and impairment charges was R47 million, a reduction of R20
million compared to 2008. If Springlake is excluded from the comparative
period, Somkhele`s profit before tax and impairment charges increased by R12
million over the comparative period. This improved profitability is as a result
of improved cost control and due to improved volumes and prices achieved in the
latter part of the period under review.
Silica division
SamQuarz silica mine
SamQuarz produced 607 140 (2008: 815 235) and sold 547 359 (2008: 902 513)
tonnes of silica and chert in the six months ended 31 December 2009.
Revenue reduced by R28 million or 28% to R73 million (2008: R101 million) due
to a 39% reduction in sales volumes in the period under review. Reduced sales
volumes of silica rock to the metallurgical industry (down 24% from 2008) and
of lower value chert to the metallurgical and construction industry (down 64%
from 2008) were the main drivers behind the reduced revenues generated.
The silica division`s margins improved from 26% in 2008 to 30% in the period
under review due to the changed sales mix and, as a result, the division`s
profit before tax was R22 million, down only 14% from the R26 million despite
the 39% reduction in sales volumes for the six months to 31 December 2008.
Capital expenditure of R5 million (2008: R10 million) was focused on the
development of the open-pit to ensure safe mining conditions and to ensure
continued supply of correct quality material to customers.
Iron ore project division
During the six months under review, Veremo finalised a core drilling and core
sampling programme together with a trenching campaign as part of a final
geological scoping study. The infill drill programme covered high priority
areas identified from previous drilling campaigns with the aim of delineating a
SAMREC-compliant measured resource for the weathered zone.
This drilling programme has delineated an updated measured resource of 44.3
million tonnes (previously 11.6 million tonnes) in the weathered zone of the
ore body. This weathered material is easier and cheaper to mine and process
than the fresh ore and as a result, additional weathered material is beneficial
to the project economics.
The following SAMREC compliant Resources were calculated by MSA Geoservices
(Pty) Limited for the weathered portion of the Resource:
Combined weathered resources for Blocks 1 to 5
Tonnes Bulk Al2O3 CaO Fe Fe2O3
Density
`000 % % % %
Measured 44 252 3.51 5.01 0.71 43.39 61.99
Indicated 29 099 3.54 5.19 0.96 42.99 61.41
Measured and
indicated 73 352 3.52 5.08 0.81 43.23 61.76
Inferred 12 825 3.63 4.48 0.78 45.70 65.29
Combined weathered resources for Blocks 1 to 5
MgO P205 SiO2 TiO2 V2O5
% % % % %
Measured 1.83 0.07 12.86 14.69 0.15
Indicated 1.80 0.07 12.54 15.08 0.15
Measured and
indicated 1.82 0.07 12.73 14.84 0.15
Inferred 1.79 0.08 10.22 15.96 0.15
(ii) Prospects
Anthracite division
The outlook for the anthracite market has significantly improved for the
remainder of the calendar year to 30 June 2010. The demand for our product in
the inland market is at our production capacity and the outlook for the export
market has also improved, with the division currently negotiating an export
contract for an additional 100 000 tonnes for the calendar year 2010 and a
domestic contract for approximately 120 000 tonnes per annum for three years at
market related prices. With the current sales profile, the production for the
2010 calendar year is almost fully committed.
Management is investigating various projects with a view to expand the
anthracite division and create new markets. This may lead to a decision to
build a second coal processing plant in order to double the existing production
capacity at Somkhele to 1.2 million sales tonnes per annum.
Silica division
Management expects SamQuarz to maintain profitability levels to 30 June 2010.
Capital expenditure is forecast to increase in the six months to 30 June 2010
to R17 million as the development expenditure in the open-pit is incurred to
secure sufficient production to meet future customer demand. Included in the
R17 million is capital expenditure of R7.5 million to be spent to make a slip
in the highwall of the pit safe for future mining operations.
Iron ore project division
Veremo is considering the consolidation of the Veremo management team whose key
tasks will be to procure a bankable feasibility study and to submit a mining
right application for the project.
The presented Weathered Resource at Veremo, determined over the entire strike
length and currently subdivided into 5 structural domains, is to be reviewed
and re-calculated according to the layout of individual mining blocks. This
exercise will require mine planning/engineering input and an assessment of the
potential processing and mining costs to constrain unit costs, cut-off grades,
stripping ratios, etc.
(iii) Building a world class mining company
We have created an excellent platform for growth. Our disciplined
entrepreneurial approach combined with the operating excellence achieved at our
current operations is an ideal base from which to launch and execute our growth
strategy. The objective of this strategy is to significantly increase the size
of Petmin and to provide superior returns to our shareholders.
By order of the Board
P J Nel J C du Preez
Chairman Chief Executive Officer
Johannesburg
1 March 2010
www.petmin.co.za
Directors: P J Nel* (Chairman), L Mogotsi (Deputy Chairman), J C du Preez
(Chief Executive Officer), B B Doig (Chief Operating Officer), I Cockerill#,
E de V Greyling*, A Martin*, J A Strijdom*, J Taylor*, B Tanner (Financial
Director) *Non-executive #British
Registered office: Parc Nouveau, First Floor, Block C, 225 Veale Street,
Brooklyn, Pretoria, 0002 (PO Box 899, Groenkloof, 0027)
Corporate office: 37 Peter Place, Bryanston, 2021, Tel: (011) 706 1644 Fax:
(011) 706 1594, website: www.petmin.co.za
Secretary and sponsor - JSE: River Group
Nominated adviser - AIM: Numis Securities Limited, Tel: +44 (0) 207 260 1000
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.co.za
Date: 01/03/2010 08:31:06 Produced by the JSE SENS Department.
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employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
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