| Wed 8 Sep 2010, 8:18 | | PET - Petmin Limited - Condensed preliminary consolidated financial statements |
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PET
PET
PET - Petmin Limited - Condensed preliminary consolidated financial statements
for the year ended 30 June 2010
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 Company" or "the Group")
"platform established for organic and acquisitive growth"
Condensed Preliminary Consolidated Financial Statements
for the year ended 30 June 2010
Maiden Dividend Declared
Achievements:
- Like-for-like headline earnings per share 19.09 cents, up 5% from 18.26 cents
in 2009 (18.26 cents excludes 2009 earnings from Springlake)
- Gross profit margin increased to 37% (2009: 27%), despite difficult trading
conditions
- Cash on hand R283 million (2009: R91 million) and undrawn bank facilities of
R110 million
- Net cash flow from operating activities increased by 43% to R321 million from
R225 million
- Interest-bearing debt-to-equity ratio of 7.55% (2009: 9.97%)
Condensed Preliminary Consolidated Income Statement
for the year ended 30 June 2010
Reviewed Audited
Year ended Year ended
30 June 2010 30 June 2009
Note R`000 R`000
Revenue 489 354 788 624
Cost of sales (310 449) (578 419)
Gross profit 178 905 210 205
Operating expenses (14 248) (18 501)
Administration expenses (15 208) (17 810)
Results from operating activities 149 449 173 894
Net finance income/(expense) 4 168 (969)
- Finance income 9 116 11 270
- Finance expenses (4 948) (12 239)
Profit before tax and separately
disclosed items 153 617 172 925
Separately disclosed items:
Loss on sale of subsidiary - (79 170)
Impairment loss on goodwill acquired - (1 327)
Share of profit of equity accounted investee - 78 185
Profit before income tax 153 617 170 613
Income tax expense (45 900) (52 627)
Profit for the year 107 717 117 986
Attributable to:
- Equity holders of Petmin 107 717 118 364
- Non-controlling interest - (378)
Profit for the year 107 717 117 986
Basic earnings per ordinary share (cents) 6 19.09 21.86
Diluted earnings per ordinary share
(cents) 6 18.97 20.68
Condensed Preliminary Consolidated Statement of Comprehensive Income
for the year ended 30 June 2010
Reviewed Audited
Year ended Year ended
30 June 2010 30 June 2009
R`000 R`000
Profit for the year 107 717 117 986
Other comprehensive income
Effective portion of changes in fair value of
cash flow hedges 636 241
Other comprehensive income for the year,
net of income tax 636 241
Total comprehensive income for the year 108 353 118 227
Attributable to:
- Equity holders of Petmin Limited 108 353 118 605
- Non-controlling interest - (378)
Total comprehensive income for the year 108 353 118 227
Condensed Preliminary Consolidated Statement of Financial Position
at 30 June 2010
Reviewed Audited
Year ended Year ended
30 June 2010 30 June 2009
Note R`000 R`000
ASSETS
Non-current assets 1 131 293 1 131 688
Property, plant and equipment 631 225 629 102
Intangible assets 4 407 6 925
Investment in equity accounted investee 470 661 470 661
Investments 25 000 25 000
Current assets 465 044 341 642
Inventories 48 935 30 373
Trade and other receivables 127 118 214 239
Current tax assets 5 977 5 934
Cash and cash equivalents 283 014 91 096
Total assets 1 596 337 1 473 330
EQUITY AND LIABILITIES
Ordinary share capital and reserves 1 241 421 1 119 101
Share capital 142 681 134 686
Share premium 331 337 304 745
Share option reserve 3 121 23 741
Hedging reserve - (636)
Retained earnings 764 282 656 565
Non-current liabilities 202 092 181 192
Interest-bearing loans and borrowings 42 128 57 664
Deferred taxation liabilities 136 744 100 901
Environmental rehabilitation provision 23 220 22 627
Current liabilities 152 824 173 037
Trade and other payables 101 245 119 101
Current portion of non-current liabilities 51 579 53 936
Total equity and liabilities 1 596 337 1 473 330
Condensed Preliminary Consolidated Statement of Cash Flows
for the year ended 30 June 2010
Reviewed Audited
Year ended Year ended
30 June 2010 30 June 2009
R`000 R`000
Cash generated by operations 149 449 173 894
Adjustments for:
- depreciation and amortisation of intangible assets 118 226 134 209
- fair value of derivatives included in
payables/(receivables) 636 (636)
- impairment charges 4 983 3 211
- notional interest 2 733 1 539
- profit on disposal of property, plant and equipment - (12)
- decommissioning asset - new mining areas - 4 642
- management share options granted - 446
Operating cash flows before changes in
working capital 276 027 317 293
Increase/(Decrease) in trade and other receivables 87 121 (32 733)
Increase in inventories (18 562) (39 757)
(Decrease)/Increase in trade and other payables (17 886) 10 317
Cash generated by operations 326 700 255 120
Income tax paid (10 010) (28 804)
Finance income 9 116 11 270
Finance expenses (4 948) (12 238)
Net cash flow from operating activities 320 858 225 348
Cash flows from investing activities
Long-term rehabilitation expenditure incurred (2 140) -
Increase in investment in rehabilitation funds - (5 115)
Investment in equity accounted investee - (16 589)
Investment in preference share - (25 000)
Acquisition of property, plant and equipment (122 825) (290 991)
- To expand operations (54 855) (188 092)
- To expand operations - capitalised pre-strip (56 725) (86 408)
- To maintain operations (11 245) (16 491)
Proceeds from sale of subsidiary, net of cash disposed - 77 707
Proceeds from sale of property, plant and equipment 10 47
Net cash flows from investing activities (124 955) (259 941)
Cash flows from financing activities
Proceeds from specific and general share issues for
cash during the year 26 640 4 907
Treasury shares acquired (14 085) (8 775)
Share-based payment included in expenses 1 454 -
Payment on options forfeited (101) -
Repayment of contingent consideration - (4 005)
Repayment of borrowings (53 093) (16 776)
Increase in borrowings 35 200 61 627
Net cash flows from financing activities (3 985) 36 978
Net increase in cash and cash equivalents 191 918 2 385
Cash and cash equivalents at beginning of year 91 096 88 711
Cash and cash equivalents at end of year 283 014 91 096
Condensed Preliminary Consolidated Statement of Changes in Equity
for the year ended 30 June 2010
Attributable to equity holders of the Company
Share
Share Share option
capital premium reserve
R`000 R`000 R`000
Balance at 1 July 2008 133 704 304 545 27 494
Shares issued during the year
- 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 -
Treasury shares acquired during the year (1 768) (11 012) -
Treasury shares transferred to Springlake
Vendors 500 700 -
Share options granted - - 446
Effective portion of changes in fair value
of cash flow hedges - - -
Profit for the year - - -
Balance at 30 June 2009 134 686 304 745 23 741
Shares issued during the year
- Share options exercised 9 617 37 661 (20 578)
Share issue costs capitalised to share premium - (60) -
Treasury shares acquired during the year (1 804) (12 281) -
Share options forfeited during the year - - (42)
Share-based payment 182 1 272 -
Effective portion of changes in fair value
of cash flow hedges - - -
Profit for the year - - -
Balance at 30 June 2010 142 681 331 337 3 121
Attributable to equity holders of the Company
Contingent
consideration Hedging Retained
reserve reserve earnings Total
R`000 R`000 R`000 R`000
Balance at 1 July 2008 1 480 - 538 201 1 005 424
Shares issued during the year
- To acquire 30% of
Petmin Logistics (Pty) Limited - - - 3 376
- Share options exercised - - - 4 907
- Issued to Springlake Vendors (280) - - -
Treasury shares acquired
during the year - - - (12 780)
Treasury shares transferred to
Springlake Vendors (1 200) - - -
Share options granted - - - 446
Effective portion of
changes in fair value of
cash flow hedges - (636) - (636)
Profit for the year - - 118 364 118 364
Balance at 30 June 2009 - (636) 656 565 1 119 101
Shares issued during the year
- Share options exercised - - - 26 700
Share issue costs
capitalised to share premium - - - (60)
Treasury shares acquired
during the year - - - (14 085)
Share options forfeited
during the year - - - (42)
Share-based payment - - - 1 454
Effective portion of
changes in fair value of
cash flow hedges - 636 - 636
Profit for the year - - 107 717 107 717
Balance at 30 June 2010 - - 764 282 1 241 421
Non-
controlling Total
interest equity
R`000 R`000
Balance at 1 July 2008 2 434 1 007 858
Shares issued during the year
- 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 year - (12 780)
Treasury shares transferred to Springlake Vendors - -
Share options granted - 446
Effective portion of changes in fair value of cash
flow hedges - (636)
Profit for the year (378) 117 986
Balance at 30 June 2009 - 1 119 101
Shares issued during the year
- Share options exercised - 26 700
Share issue costs capitalised to share premium - (60)
Treasury shares acquired during the year - (14 085)
Share options forfeited during the year - (42)
Share-based payment - 1 454
Effective portion of changes in fair value of cash
flow hedges - 636
Profit for the year - 107 717
Balance at 30 June 2010 - 1 241 421
Segment reporting
Segment information is presented in the condensed consolidated reviewed
financial statements in respect of the Group`s business segments.
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 mining and beneficiation ("Iron Ore").
- Corporate office.
Silica Anthracite
Units in Year Year Year Year
R`000 ended ended ended ended
unless 30 June 30 June 30 June 30 June
otherwise 2010 2009 2010 2009
specified R`000 R`000 R`000 R`000
Saleable
tonnes
produced (tonnes) 1 255 559 1 333 613 467 843 1 016 940
Tonnes sold (tonnes) 1 171 355 1 511 850 411 630 960 764
Segment revenue 154 474 180 795 334 880 607 829
Segment revenue per
tonne sold (R/tonne) 131.88 119.59 813.55 632.65
Segment profit/(loss)
before tax
Segment profit
per tonne sold (R/tonne) 33.05 31.43 292.50 134.10
- Segment result 38 715 47 524 120 402 128 840
- Impairment loss on
goodwill acquired - - - (1 327)
- Loss on sale of subsidiary - - - -
- Share of profit of equity
accounted investee - - - -
Segment profit/(loss) before tax 38 715 47 524 120 402 127 513
Segment capital
expenditure - combined 21 614 16 327 81 384 277 327
Segment capital expenditure 21 614 16 327 24 659 190 919
Segment capital
expenditure - pre-strip** - - 56 725 86 408
Segment depreciation - combined 12 433 10 335 102 984 120 702
Segment depreciation 12 433 10 335 15 288 29 425
Segment depreciation - pre-strip** - - 87 696 91 277
Share option costs included in segment
profit/(loss) before tax - - - -
Segment assets 296 714 228 612 690 707 653 148
Segment liabilities 107 453 66 931 407 959 451 964
Iron ore Corporate office
Year Year Year Year
ended ended ended ended
30 June 30 June 30 June 30 June
2010 2009 2010 2009
R`000 R`000 R`000 R`000
Saleable tonnes produced - - - -
Tonnes sold - - - -
Segment revenue - - - -
Segment revenue per tonne sold
Segment profit/(loss) before tax
Segment profit per tonne sold
- Segment result - - (5 501)* 504
- Impairment loss on goodwill acquired - - - -
- Loss on sale of subsidiary - - - (79 170)
- Share of profit of equity
accounted investee - 78 185 - -
Segment profit/(loss) before tax - 78 185 (5 501) (78 666)
Segment capital expenditure - combined - - 19 827 2 598
Segment capital expenditure - - 19 827 2 598
Segment capital expenditure -
pre-strip** - - - -
Segment depreciation - combined - - 293 177
Segment depreciation - - 293 177
Segment depreciation - pre-strip** - - - -
Share option costs included in segment
profit/(loss) before tax - - - 446
Segment assets 495 661 495 661 486 516 355 908
Segment liabilities - - 40 473 42 497
Eliminations Consolidated
Year Year Year Year
ended ended ended ended
30 June 30 June 30 June 30 June
2010 2009 2010 2009
R`000 R`000 R`000 R`000
Saleable tonnes produced - - 1 723 402 2 350 553
Tonnes sold - - 1 582 985 2 472 614
Segment revenue - - 489 354 788 624
Segment revenue per tonne sold
Segment profit/(loss) before tax
Segment profit per tonne sold
- Segment result - (3 943) 153 616 172 925
- Impairment loss on
goodwill acquired - - - (1 327)
- Loss on sale of subsidiary - - - (79 170)
- Share of profit of
equity accounted investee - - - 78 185
Segment profit/(loss) before tax - (3 943) 153 616 170 613
Segment capital
expenditure - combined - (2 288) 122 825 293 964
Segment capital expenditure - (2 288) 66 100 207 556
Segment capital
expenditure - pre-strip** - - 56 725 86 408
Segment depreciation - combined - - 115 710 131 214
Segment depreciation - - 28 014 39 937
Segment depreciation - pre-strip** - - 87 696 91 277
Share option costs included in
segment
profit/(loss) before tax - - - 446
Segment assets (367 108) (259 999) 1 602 490 1 473 330
Segment liabilities (194 816) (207 163) 361 069 354 229
*The losses in the Corporate Office in 2010 include an impairment charge of
R4.98 million against capital projects that are work-in-progress. In the year
ahead, this impairment charge will be re-assessed.
**The open pit mining profile at Somkhele requires that 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 year ended 30 June
2009 include the results of Springlake. Springlake was sold on 29 June 2009. The
table included in the operational review depicts the Anthracite division`s
operating performance for the comparative year with Springlake shown separately.
Notes to the Condensed Preliminary Consolidated Financial Statements
for the year ended 30 June 2010
1. Reporting entity
Petmin is a company domiciled in South Africa. The condensed preliminary
consolidated financial statements of the Group for the year ended 30 June 2010
comprise the Company and its subsidiaries (together referred to as the "Group")
and the Group`s interests in associates.
The condensed preliminary consolidated financial statements were authorised for
issue by the directors on 6 September 2010.
2. Statement of compliance
The condensed preliminary consolidated financial statements have been prepared
in accordance with the recognition and measurement requirements of International
Financial Reporting Standards (IFRS), the AC 500 Standards, the presentation and
disclosure requirements of IAS 34 - Interim Financial Reporting, the JSE Limited
("JSE") Listings Requirements and the South African Companies Act. The condensed
preliminary consolidated 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, Third Floor, Block C, 225 Veale Street, Brooklyn,
Pretoria or at www.petmin.co.za.
3. Significant accounting policies
The condensed preliminary consolidated 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:
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
preliminary consolidated financial statements, with the exception of the
adoption of the following amendments, standards or interpretations with effect
from 1 July 2009:
IFRS 8 - Operating Segments
IFRS 8 introduces a management reporting approach to identifying and measuring
the results of reportable segments. The characteristics of the reportable
segments are no longer strictly linked to geography or product line. The
adoption of IFRS 8 had no material effect on the disclosures in the financial
statements.
IAS 27 (revised) - Consolidated and Separate Financial Statements
The adoption of IAS 27 will primarily impact on future business combinations
with the main changes being the expensing of transaction costs, accounting for
contingent consideration and step acquisitions and additional disclosure
requirements.
Functional and presentation currency:
The condensed preliminary consolidated financial statements are presented in
Rand, which is the Company`s functional currency. All financial information
presented in Rand has been rounded to the nearest thousand.
4. Estimates and judgements
The preparation of the condensed preliminary consolidated reviewed 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 office.
6. Earnings per share
Earnings per share ("EPS") are based on the Group`s profit for the year, divided
by the weighted average number of shares in issue during the year.
Reviewed
Year ended
30 June
2010
Profit for Number of
the year shares in Per share
R`000 thousands in cents
Basic earnings per share 107 717 564 135 19.09
Share options and contingent
consideration - 3 559 (0.12)
Diluted EPS 107 717 567 694 18.97
Headline earnings per share
Headline earnings per share is based on the Group`s headline earnings divided by
the weighted average number of shares in issue during the year.
Reconciliation between earnings and headline earnings per share:
Basic EPS 107 717 564 135 19.09
Adjustments:
- Impairment of goodwill - - -
- Loss on sale of subsidiary - - -
- Share of profit of equity accounted
investee - - -
Headline EPS 107 717 564 135 19.09
Share options and contingent
consideration - 3 559 (0.12)
Diluted headline EPS 107 717 567 694 18.97
Audited
Year ended
30 June
2009
Profit for Number of
the year shares in Per share
R`000 thousands in cents
Basic earnings per share 118 364 541 354 21.86
Share options and contingent consideration - 31 035 (1.18)
Diluted EPS 118 364 572 389 20.68
Headline earnings per share
Headline earnings per share is based on the Group`s headline earnings divided by
the weighted average number of shares in issue during the year.
Reconciliation between earnings and headline earnings per share:
Basic EPS 118 364 541 354 21.86
Adjustments:
- Impairment of goodwill 1 327 - 0.25
- Loss on sale of subsidiary 79 170 - 14.62
- Share of profit of equity accounted
investee (78 185) - (14.44)
Headline EPS 120 676 541 354 22.29
Share options and contingent consideration - 31 035 (1.21)
Diluted headline EPS 120 676 572 389 21.08
Headline earnings in the 2009 comparatives included R21.848 million of earnings
from Springlake which was disposed of in June 2009. If these earnings are
removed from the comparative headline earnings, "like-for-like" headline
earnings for the year ended 30 June 2009 were 18.26 cents per share.
7. Directors` valuation
The directors` valuation of the Group`s life of mine cash flows including the
cost of the Corporate Office (discounted on a real basis at 10%), amounts to 445
cents per share on a fully diluted basis. This valuation is based on current
operations plus the second coal processing plant at Somkhele, but excludes any
benefits from the exploration programme 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 JSE Listings Requirements.
8.1 Loan to and transactions with related party
As disclosed in the annual financial statements for the year ended 30 June 2009,
the Company advanced an interest-bearing loan of R11 million to Dark Capital.
The loan is secured by the cession of the shareholders` claim held by the Dark
Trust in Dark Capital.
The Company paid corporate and deal structuring advisory fees of GBP 184,241.00
(2009: nil) to Dark Research Limited, a company in the Dark Capital group of
companies.
8.2 Exercise of options and share-based payment
As disclosed in the interim results for the six months ended 31 December 2009,
the Company was informed that directors and employees exercised 4 250 000
options with an exercise price of 45 cents per share and 12 050 000 options with
an exercise price of 65 cents per share during the six months to 31 December
2009.
Between 1 January 2010 and 30 June 2010, the Company was informed that executive
directors and employees exercised 17 370 000 options with an exercise price of
65 cents per share.
The options were awarded in terms of a share incentive scheme approved by
shareholders on 19 July 2005.
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.
8.3 Executive remuneration scheme
In order to attract and retain quality management and as an incentive to ensure
the continued growth of the Group, and at all times to ensure alignment with
shareholders, the Remuneration Committee established the original incentive
scheme on 1 July 2005. The original scheme continued for three years to 30 June
2008 and the Executive Committee ("Exco") at the time agreed to renew their
employment agreements for a further three-year period to 30 June 2011 ("the
Amended Scheme").
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 evidence of this alignment, in the twelve months to 30
June 2010, Petmin executive directors acquired 18 734 000 Petmin shares on the
open market at an average price of R2.57 per share for a total consideration of
R48 241 400.
With the appointment of Ian Cockerill as executive chairman for an initial
period of three years from 1 July 2010, Jan du Preez, Bradley Doig, Lebo Mogotsi
and Bruce Tanner have extended their individual service contracts with the
Company for a further two years to 30 June 2013.
In respect of the three years to 30 June 2013, the Amended Scheme is to be
further amended ("the June 2013 Scheme") to take into account various views from
shareholders in order to align the goals of the executives more closely with
shareholders. The June 2013 Scheme is to be presented to shareholders for their
approval at the next Annual General Meeting.
8.4 Other transactions with related parties
No other related party transactions were entered into.
9. Change in directors
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.
On 1 March 2010, Petmin announced that Ian Cockerill was appointed as an
executive director with immediate effect and he assumed the role of Executive
Chairman with effect from 1 July 2010. Ian`s role is to guide the Petmin team in
pursuit of its aggressive growth strategy. Ian has served Petmin as a non-
executive director since 1 October 2007.
Petmin extends its thanks to former Chairman Piet Nel who has guided Petmin
through its formative years. Piet remains a director of Petmin.
10. Subsequent events
10.1 Declaration of Dividend
The Company approved a dividend policy whereby a dividend of 20% of headline
earnings per share will be paid annually after year-end, with consideration
being given to the underlying growth in earnings, working capital and capital
expenditure requirements.
The Company declared a dividend of 6 cents per share, comprising 4 cents per
share which is in line with the approved dividend policy and a special dividend
of 2 cents per share which is based on the proceeds received on the sale of
Springlake. The record date for payment of the cash dividend is 1 October 2010.
Please refer to the separate announcement of the notice of declaration of
dividend dated 8 September 2010 for more details.
10.2 Financial assistance to Dark Capital
As approved by shareholders at the AGM held on 27 January 2010. Petmin provided
the financial assistance to Dark Capital on 20 August 2010 in order to maintain
Petmin`s BEE shareholding for a three-year period.
As security for Petmin`s assistance, Dark Capital has pledged to Petmin 45
million Petmin shares registered in the name of Dark Capital and has furthermore
agreed to a lock-in clause for a further 75 million Petmin shares held by the
Dark Capital group. The lock-in clause precludes Dark Capital from selling, or
otherwise alienating or encumbering the 75 million lock-in shares until such
time as there are no further actual or contingent obligations arising from
Petmin`s financial assistance.
There have been no other events that have occurred subsequent to 30 June 2010
which require adjustment of, or disclosure in the financial statements or notes
thereto in accordance with IAS 10 - Events After the Reporting Date.
(i) Operations
Revenue for the year ended 30 June 2010 was R489 million (2009: R789 million).
The comparative revenue amount included R264 million from Springlake Colliery,
which was sold on 29 June 2009.
Revenues at both the Silica and Anthracite divisions were affected by poor
market conditions in the first quarter of financial year ("FY") 2010, with
market conditions steadily improving throughout the remainder of FY 2010.
Profit before tax was R154 million (2009: R171 million). The reduction of R17
million from 2009 was principally due to the comparative number including profit
before tax of R33 million from Springlake.
The Group achieved a gross profit margin of 37% (2009: 27%) as a result of
improved cost management and an increase in selling prices at both the Silica
and Anthracite segments.
Operations remained strongly cash generative with cash of R321 million (2009:
R225 million) being generated by operations after inflows from changes in
working capital of R51 million (2009: outflows of R62 million).
Capital expenditure of R123 million (2009: R291 million) was incurred in the
year to 30 June 2010, with R57 million spent on pre-stripping of the open pits
at Somkhele (2009: R86 million), R55 million to expand operations (2009: R188
million) and R11 million to maintain operations (2009: R17 million).
The ratio of interest-bearing debt to equity at 30 June 2010 was 7.55% (2009:
9.97%). An amount of R35 million was drawn on the medium-term facility at
SamQuarz during FY 2010. The Rand Asia debtor financing facility of R38 million
was repaid during FY 2010.
The Group currently has unutilised debt facilities of approximately R110 million
with its bankers.
With significant cash resources, low gearing and available debt facilities,
Petmin has created a platform for future growth.
Anthracite division
Somkhele anthracite mine, Springlake Colliery (sold effective 29 June 2009) and
Petmin Logistics
Management is pleased to report that the Anthracite division produced 467 843
tonnes (2009: excluding Springlake 454 187 tonnes) (2009: including Springlake 1
016 940 tonnes) and sold 411 630 tonnes (2009: excluding Springlake 481 638
tonnes) (2009: including Springlake 960 764 tonnes) of anthracite in the year to
30 June 2010.
During the first three months of FY 2010 the anthracite market was severely
curtailed with the local ferrochrome industry reducing production by 90%. We are
pleased to report that the market for metallurgical anthracite has subsequently
recovered and, during the second half of FY 2010, we were in a fully sold
position.
A net profit margin of 36% was achieved in the Anthracite division during the
year ended 30 June 2010 (2009: 21%) (2009: 28% excluding Springlake). This was a
result of improved selling prices and effective cost control at the Somkhele
colliery.
Due to market conditions prevailing in the first half of FY 2010, commencement
of extraction of coal from Area 1 was delayed, pending a visible sustainable
increase in market demand. Mine development has commenced in Area 1 subsequent
to 30 June 2010.
Anthracite - analysis of comparative periods
Excluding
Anthracite Springlake
Units in Year Year
R`000 ended ended
unless 30 June 30 June
otherwise 2010 2009
specified R`000 R`000
Saleable tonnes produced (tonnes) 467 843 454 187
Tonnes sold (tonnes) 411 630 481 638
Segment revenue 334 880 343 506
Segment revenue per tonne sold* (R/tonne) 813.55 713.20
Segment profit/(loss) before tax:
Segment profit per tonne sold** (R/tonne) 292.50 198.34
- segment result 120 402 95 526
- Impairment loss on goodwill acquired - (1 327)
Segment profit before tax 120 402 94 199
Segment capital expenditure - combined 81 384 263 409
Segment capital expenditure 24 659 177 001
Segment capital expenditure - pre-strip 56 725 86 408
Segment depreciation - combined 102 984 104 660
Segment depreciation 15 288 13 383
Segment depreciation - pre-strip 87 696 91 277
Springlake Combined
Year Year
ended ended
30 June 30 June
2009 2009
R`000 R`000
Saleable tonnes produced 562 753 1 016 940
Tonnes sold 479 126 960 764
Segment revenue 264 323 607 829
Segment revenue per tonne sold* 551.68 632.65
Segment profit/(loss) before tax:
Segment profit per tonne sold** 69.53 134.10
- segment result 33 314 128 840
- Impairment loss on goodwill acquired - (1 327)
Segment profit before tax 33 314 127 513
Segment capital expenditure - combined 13 918 277 327
Segment capital expenditure 13 918 190 919
Segment capital expenditure - pre-strip - 86 408
Segment depreciation - combined 16 042 120 702
Segment depreciation 16 042 29 425
Segment depreciation - pre-strip - 91 277
*The weighted average Rand/US Dollar exchange rate for the year ended 30 June
2010 was 7.4092 (2009: 9.090).
**Segment profit per tonne sold is the segment profit before tax (after
depreciation, amortisation and interest) divided by the tonnes sold.
Silica division
SamQuarz silica mine
SamQuarz produced 1 255 559 tonnes (2009: 1 333 613 tonnes) of silica and chert
in the year ended 30 June 2010. Sales volumes reduced by 22.5% to 1 171 355
tonnes (2009: 1 511 850 tonnes).
Silica rock sales were affected by poor market conditions for the first three-
quarters of the period under review but subsequently improved. Chert rock sales
declined as sales into parastatal infrastructure development in areas within an
economic transport radius of SamQuarz declined.
With the reduced sales volumes, the Silica division`s profit before tax declined
by 18.5% to R39 million (2009: R48 million). Profit margin per tonne sold
improved by 5% in 2010.
Capital expenditure totalling R21.6 million (2009: R16.3 million) was incurred
in the year ended 30 June 2010. 72% of the capital spend was focused on the
development of the open pit to ensure safe mining conditions and to ensure
continued supply of correct quality material to our customers. 26% of the
capital spend was on plant and equipment to maintain production, with the
remaining balance on office and computer equipment.
(ii) Investment in the Veremo pig-iron project
Petmin is a 25 percent shareholder in Veremo Holdings (Pty) Limited and 75
percent is ultimately controlled by Kermas Limited ("Kermas"). Veremo is the
owner of the Stoffberg magnetite project containing iron ore and titanium ("the
Project").
During the year 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. The prime objective of the drilling programme was to
establish the thickness of the highly weathered "cap" of Ti-magnetite Layer 21
("L21") in the so-called "platform" areas where L21 outcrops over a width of up
to 600 metres.
As disclosed in the interim financial statements for the six months ended 31
December 2009, this drilling programme has delineated measured and inferred
resources 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.
Petmin`s position in Veremo remains unchanged and Petmin is working closely with
Kermas on all aspects of the Project and believes these recent events signal a
positive trend for the future development of the Project.
(iii) Prospects
Anthracite division
The colliery is operating at full production capacity and is currently in a
fully sold position.
Consequently, as announced on 22 July 2010, the Petmin Board has approved
capital expenditure of R120 million for the construction of a second coal
processing plant at Somkhele. The construction of the second plant will double
the current production capacity to approximately 1.1 million sales tonnes a
year.
It is anticipated that construction and commissioning will be completed during
the first quarter of 2012.
We have also approved an R18 million accelerated exploration programme for FY
2011 at Somkhele with the aim of significantly increasing our measured
resources.
Silica division
We anticipate improved sales volumes in the year ahead with demand from the
metallurgical sector resulting in increased sales of silica rock and with
requests for increased off-take of glass-grade silica from our glass customers.
Capital expenditure is expected to increase to approximately R60 million in the
year ahead with increased investment in pit development, production expansion
and plant optimisation programmes at SamQuarz in order to meet increased demand
from our glass industry customers.
Iron ore project
Our focus in the year ahead will be to assist our partners in the Veremo Project
with the finalisation of the mining right application over the Project area. A
Veremo project team is in the process of completing a bankable feasibility study
in support of the mining right application.
(iv) General
Petmin is well positioned for organic and acquisitive growth with low gearing
and substantial cash resources. The objective of our growth strategy is to
provide superior returns to investors. The opportunities currently being
assessed relate primarily to commodities that feed into infrastructure growth
and urbanisation (in essence the steel value chain) and comprise a mix of cash
producing assets and projects with a diverse geographic spread.
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
Pretoria Sponsor
8 September 2010 River Group
Directors: I Cockerill# (Executive Chairman), L Mogotsi (Deputy Chairman),
J C du Preez (Chief Executive Officer), B B Doig (Chief Operating Officer),
B Tanner (Financial Director), E de V Greyling*, A Martin*, P J Nel*,
J A Strijdom*, J Taylor*
*Non-executive #British
Registered office: Parc Nouveau, Third 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: 08/09/2010 08:18:01 Produced by the JSE SENS Department.
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