Wrap Text
Interim condensed consolidated financial statements for the six months ended 31 March 2019
THARISA PLC
Incorporated in the Republic of Cyprus with limited liability
Registration number: HE223412
JSE share code: THA
LSE share code: THS
ISIN: CY0103562118
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 31 MARCH 2019
SALIENT FEATURES
- REEF MINED
2.22 Mt
down 9.3% (2018: 2.45 Mt)
- PGM PRODUCTION (5PGE+AU)
67.6 koz
down 12.2% (2018: 77.0 koz)
- CHROME CONCENTRATE PRODUCTION
614.1 kt
down 16.2% (2018: 732.5 kt)
- REVENUE
US$166.5 m
down 16.4% (2018: US$199.2 m)
- OPERATING PROFIT
US$14.3 m
down 64.6% 2018: US$40.4 m)
- EBITDA
US$30.1 m
down 44.4% (2018: US$54.1 m)
- PROFIT BEFORE TAX
US$10.2 m
down 72.6% (2018: US$37.2 m)
- EARNINGS AND HEADLINE EARNINGS PER SHARE
US$ 4 cents
down 60.0% (2018: US$ 10 cents)
- INTERIM DIVIDEND
US$ 0.5 cents
16.2% of NPAT
GROUP STATISTICS
Unit H1 FY2019 H1 FY2018 Change %
Reef mined kt 2 223.5 2 451.3 (9.3)
Stripping ratio m3 waste: m3 reef 7.1 8.1 (12.3)
Reef milled kt 2 337.5* 2 597.4 (10.0)
PGM flotation feed kt 1 751.6 1 895.6 (7.6)
PGM rougher feed grade g/t 1.49 1.52 (2.0)
PGM recovery % 80.7 83.2 (3.0)
PGM ounces produced 5PGE+Au koz 67.6 77.0 (12.2)
Average PGM basket price US$/oz 1 017 909 11.9
Average PGM basket price ZAR/oz 14 382 11 606 23.9
Cr2O3 ROM grade % 18.2 18.1 0.6
Chrome recovery % 60.8 65.9 (7.7)
Chrome yield % 26.3 28.2 (6.7)
Chrome concentrates produced
(excluding third party) kt 614.1 732.5 (16.2)
Metallurgical grade kt 466.0 558.9 (16.6)
Specialty grades kt 148.1 173.6 (14.7)
Third-party chrome production kt 112.5 106.2 5.9
Chrome concentrates sold
(including third party) kt 703.7 811.2 (13.3)
Metallurgical grade chrome
concentrate contract price US$/t CIF China 163 193 (15.5)
Metallurgical grade chrome
concentrate contract price ZAR/t CIF China 2 289 2 436 (6.0)
Average exchange rate ZAR:US$ 14.2 12.8 10.9
Group revenue US$ million 166.5 199.2 (16.4)
Gross profit US$ million 32.1 55.7 (42.4)
Net profit for the period US$ million 8.2 28.4 (71.1)
EBITDA US$ million 30.1 54.1 (44.4)
Headline profit US$ million 10.5 25.7 (59.1)
Headline earnings per share US$ cents 4 10 (60.0)
Earnings per share US$ cents 4 10 (60.0)
Interim dividend US$ cents 0.5 2
Gross profit margin % 19.3 28.0 (31.1)
EBITDA margin % 18.1 27.2 (33.5)
Net cash flows from operating
activities US$ million 41.4 49.2 (15.9)
Net debt US$ million 7.9 22.7 (65.2)
Capital expenditure US$ million 24.3 17.7 37.3
* Includes the processing of 99.0 kt of commissioning tails.
MANAGEMENT REPORT
Dear Stakeholder
Safety is a core value and Tharisa continues to strive for zero harm at its operations. Tharisa achieved a lost-time
injury frequency rate ('LTIFR') of 0.24 per 200 000 man hours worked at 31 March 2019. This is among the lowest LTIFRs
in the PGM and chrome industries in South Africa.
The Group reported revenue of US$166.5 million and a profit before tax of US$10.2 million for the interim period with
net cash flows from operating activities of US$41.1 million. Earnings per share amounted to US$4 cents and an interim
dividend of US$0.5 cent a share was declared. These results were achieved against lower chrome concentrate prices and
lower PGM and chrome sales volumes.
Key production statistics for the six months ended 31 March 2019:
- PGM recoveries decreased to 80.7% from 83.2%, remaining above the targeted 80.0%.
- PGM production at 67.6 koz, down 12.2% from 77.0 koz.
- Chrome recoveries declined to 60.8% from 65.9%.
- Chrome production at 614.1 kt, down 16.2% from 732.5 kt.
Tharisa's average PGM contained metal basket price benefited from the increases in palladium and rhodium prices,
contributing to an increase of 11.9% to US$1 017/oz from US$909/oz in the comparable period.
Average contracted metallurgical grade chrome concentrate prices decreased to US$163/t from US$193/t reported in
H1 FY2018. Current metallurgical chrome spot prices are trading at US$170/t. Global growth in stainless steel
production remains robust.
Specialty chrome concentrates, which comprise 24.1% of chrome concentrate production, are sold into the chemical and
foundry markets globally and these grades continue to attract a significant premium above the metallurgical chrome
concentrate price.
Operational overview
Unit 31 March 31 March Change
2019 2018 %
Reef mined kt 2 223.5 2 451.3 (9.3)
Reef milled kt 2 337.5 2 597.4 (10.0)
On-mine cash cost per tonne milled US$/t 35.2 32.7 7.6
Consolidated cash cost per tonne milled (excluding transport) US$/t 39.1 36.4 7.4
Mining
The Tharisa Mine is unique in that it mines multiple mineralised layers with defined PGM and chrome contents. The mine
is a large-scale, highly mechanised open pit with a life of mine of up to 15 years and the potential to extend mine
life by a further 40 years by mining underground.
During the six months under review, 2.2 Mt of ore was mined, with an average head grade of 1.49 g/t PGMs on a
5PGE+Au basis and 18.2% chrome reporting to the processing plants.
In the past six months, Tharisa focused on the pit redesign, which is opening up access to the full mining strike
length and the maintenance of the correct multi-reef layer profile to ensure stable feed grades for processing.
The pit redesign will achieve the following:
- The extension and widening of the East Pit to optimise logistics.
- Improve access to the East Pit from the north side with more regular backfill now possible on the south side
as the pit advances to the north.
- Longer benches and thus better drilling, blasting and hauling continuity as access roads previously ran north
to south are now running parallel to the pit as the pit advances.
- Longer benches will also ensure more optimal product mix and grade control to be delivered to both the Genesis
and Voyager plants, which have a chrome and PGM bias respectively.
The Tharisa mining division moved an additional 1.3 Mm3 of in-pit material over the six-month period as part of the
pit redesign. While the stripping ratio was 7.1 on a m3:m3 basis for the six months, if the additional material is
included in the stripping ratio calculation, the stripping ratio tracked the LOM average of 9.5.
The transition to a 24-hour continuous operation in the East Pit was completed in the latter part of the six months
after a slight delay, resulting in a mining capacity increase of 15%.
Processing
Tharisa has two processing plants - the Genesis and Voyager standalone concentrator plants. The Genesis Plant
incorporates the Challenger Plant on the feed circuit for the extraction of specialty grade chrome concentrates
principally from natural fines.
During the six-month period, 2.3 Mt of reef was processed through the two plants, which included 99.0 kt of
commissioning tailings. This material supplemented the reduced level of ROM material, however it negatively impacted
the overall production and recoveries. For the six months, 67.6 koz of contained PGMs on a 5PGE+Au basis and 614.1 kt
of chrome concentrates were produced. Of the 614.1 kt of chrome concentrates produced, 148.1 kt or 24.1% of the chrome
concentrate production was specialty grade chrome concentrates.
As a consequence of the pit redesign, the optimal reef mix was not mined and impacted on the PGM rougher feed grade
which declined by 2.0% to 1.49 g/t with the Cr2O3 ROM feed grade increasing marginally by 0.6% to 18.2% for the period.
While the processing operations are largely insulated from load shedding stage 1 to 3 in South Africa, the
unprecedented stage 4 load shedding in March 2019 introduced instability into the processing plants and, at times,
necessitated the stopping of certain processing circuits including the crusher circuits and part of the mill circuits,
thereby impacting on overall production. Subsequently measures have been put in place to mitigate the risk of further
load shedding and the impact on production with alternative standby diesel generator capacity.
Overall PGM recovery was 80.7% and the average chrome recovery was 60.8% for the six months, both being impacted from
the processing of the commissioning tailings. In the second quarter, PGM and chrome recovery improved to 85.5% and
62.9% respectively.
Vision 2020
The Vision 2020 projects are targeting an increase in Tharisa Minerals' production to 200 koz pa of PGMs and
2.0 Mt pa of chrome concentrates in 2020, on an annualised basis.
Commodity markets and sales
Unit 31 March 31 March Change
2019 2018 %
PGM basket price US$/oz 1 017 909 11.9
PGM basket price ZAR/oz 14 382 11 606 23.9
42% metallurgical grade chrome concentrate contract price US$/t 163 193 (15.5)
42% metallurgical grade chrome concentrate contract price ZAR/t 2 289 2 436 (6.6)
Exchange rate ZAR:US$ 14.2 12.8 10.9
The PGM basket price has traded higher compared to H1 FY2018, with the average PGM contained metal basket price
increasing 11.9% and ZAR basket price increasing 23.9% following the weakening of the South African rand ('ZAR')
against the US$.
PGM production continued to be sold to Impala Platinum under the offtake agreement as well as to Lonmin under a
research and cooperation agreement. A total of 67.0 koz was sold during the period.
The Tharisa Mine's PGM prill split was as follows:
31 March 31 March
2019 2018
Platinum 54.9 56.4
Palladium 17.4 16.3
Rhodium 9.5 9.2
Gold 0.2 0.2
Ruthenium 13.6 13.5
Iridium 4.4 4.4
Contracted metallurgical grade chrome concentrate prices decreased over the period to an average US$163/t from the
average US$193/t achieved in H1 FY2018. Spot metallurgical chrome prices as quoted by FerroAlloyNet traded between
US$155/t and US$185/t during the period. This compares to the US$162/t and US$245/t range in the comparative
six months.
The demand for chrome concentrate is driven by the increasing demand for stainless steel, which fundamentally
remains robust. In CY2018, global stainless steel production increased by 5.5% year on year with Chinese production
up 3.6% year on year to 26.7 Mt, according to the International Stainless Steel Forum. The fundamentals of the
global stainless steel market remain sound further supporting strong demand for chrome units in the form of
ferrochrome and chrome ores.
Chinese chrome port stocks were approximately 2.7 Mt at the end of April 2019. With domestic Chinese monthly
requirements of approximately 1.2 Mt, this equates to 9 weeks' supply assuming all stocks are immediately available.
Tharisa's chrome concentrate sales for the period totalled 618.0 kt, a decrease of 14.8% compared to H1 FY2018
sales of 725.6 kt. Inventory levels totalled 62.6 kt as at end March 2019. Third-party sales totalled 85.7 kt,
an increase of 0.1% from 85.6 kt.
Third-party sales comprise the sales of the UG2 chrome concentrate produced at Lonmin's K3 UG2 chrome plant, which
is operated by Tharisa subsidiary Arxo Metals.
Logistics
Unit 31 March 31 March Change
2019 2018 %
Average transport cost per tonne of chrome concentrate
- CIF China basis US$/t 62.8 60.9 3.1
Chrome concentrates shipped kt 461.2 552.7 (16.6)
The chrome concentrate destined for main ports in China is shipped either in bulk from the Richards Bay Dry Bulk
Terminal or via containers from Johannesburg and transported by road to Durban from where it is shipped. The
economies of scale and in-house expertise have ensured that Tharisa's transport costs, a major cost to the Group,
remained competitive.
China remains the main market for metallurgical chrome concentrates and the metallurgical grade chrome concentrates
produced by the Tharisa Mine were predominantly sold on a CIF main ports China basis. Almost all material was shipped
in bulk with a negligible quantity being shipped in containers.
Arxo Logistics has sufficient storage capacity at both the Richards Bay Dry Bulk Terminal and the Durban container
port to manage the full production capacity of the Tharisa Mine and the third-party production.
Zimbabwe projects
Karo Mining Holdings
The Karo Platinum project has achieved several key milestones in the last few months, including approval of the
Environmental Prospectus by the Environmental Management Agency ('EMA') of Zimbabwe. Stakeholder consultations have
been concluded by the environmental consultant over the mining location and the final environmental impact assessment
('EIA') and management programme has been submitted to EMA for approval, post the interim reporting period.
Karo Platinum has also been awarded a development permit from the EMA, enabling Karo Platinum to initiate field work
and the exploration drilling programme.
Drilling of 142 diamond core boreholes totalling over 25 100 m has been completed. The drilling campaign focuses on
the western edge of the Great Dyke on the mining location, with boreholes targeting average depths of 50 m to 150 m
below surface. The digital terrain mapping and high resolution airborne geophysical surveys have been completed.
The quality assurance and quality control programmes are running concurrently with the drilling programme and adhere
to industry best practice.
Core samples from approximately half of the boreholes are being prepared and assayed, to inform the resource
declaration.
The shallow depth of the Main Sulphide Zone ('MSZ') of the Great Dyke allows for initial open-cast mining before
developing the shallow underground workings. The results from the assay work and metallurgical test work will be
used as the basis of the next phase of the project. Subsequent stages would include ongoing drilling, resource
estimation and feasibility studies for the mine design, infrastructure and beneficiation plants.
Karo Power Generation
Tharisa also has an option to participate in the other downstream projects associated with Karo through discounted
farm-in arrangements at a later stage. These include the establishment of a number of solar power sites totalling
300 MW.
Karo Power have appointed a technical consultant to conduct the feasibility studies and an environmental consultant
to submit the environmental prospectus to the EMA and to complete the necessary EIA on the identified sites. The
environmental prospectus for the first site has been approved by EMA.
Karo Power had initial engagements with the Zimbabwean Energy Regulator ('ZERA') around the power purchase agreement
and independent power producer ('IPP') licence. Substantive negotiations regarding the IPP and power purchase agreement
will commence with ZERA in the third quarter of 2019.
Salene Chrome
In the last quarter of 2018, Salene Chrome was awarded a development permit from EMA, while the EIA report is being
finalised for submission. The development permit has enabled Salene Chrome to initiate field work and the exploration
trenching programme.
The digital terrain mapping and high resolution airborne geophysical survey over the mining location have been
completed. The geophysical data has been interpreted. The first 11 trenches have been completed, totalling over
4 000 m. The trenches have been rehabilitated and the next trenching and pitting targets are being identified.
The samples from the first trenches have been prepared and logged and sent for assay. The quality assurance and
quality control programme is being carried out concurrently with the exploration programme and adheres to
industry best practice.
FINANCIAL OVERVIEW
The financial results of the Group were characterised by the pricing metrics for both commodities reflected opposing
trends. The overall PGM basket price increased by 11.9% to US$1 017/oz with the Group basket price benefiting from
the prill split favouring palladium (at 17.4%) and rhodium (at 9.5%). There was pressure on the metallurgical
grade chrome concentrate price which averaged US$163/t (on a CIF main ports China basis) against the prior
period average of US$193/t (a decrease of 15.5%).
A weak domestic economy and emerging market contagion with uncertainty prior to the national elections held on
8 May 2019 was reflected in the weakening ZAR, being the base cost currency for the Group's mining operations
in South Africa, from an average of ZAR12.8 to ZAR14.2 against the US$, an average weakening of 10.9%. The
country's foreign debt avoided a further credit downgrading with Moody's retaining an investment grade rating
changing the outlook to "stable". The South African domestic interest rate (as measured by the repo rate)
remained unchanged at 6.5%. The Group's commodities are priced in US$ and the cost base is mainly in ZAR and
therefore the Group is positioned as a rand hedge stock.
Group revenue totalled US$166.5 million (2018: US$199.2 million) of which US$58.0 million was derived from the sale
of PGM concentrate and US$93.8 million was derived from the sale of chrome concentrates. The agency and trading segment
contributed US$14.7 million. This is a decrease in revenue relative to the comparable period of 16.4%. Speciality grade
chrome concentrates, comprising 25.4% of overall chrome sales, continued to trade at a premium of approximately US$50/t.
On a segmental basis, the movement in revenue is as a result of:
- A reduction in the unit sales of PGMs by 12.0% from 76.1 koz to 67.0 koz largely offset by the increase in
the PGM basket price of 11.9% from US$909/oz to US$1 017/oz.
- A reduction in the unit sales of metallurgical grade chrome concentrate by 16.6% from 552.7 kt to 461.2 kt.
The metallurgical grade chrome concentrate price decreased by 15.5% from US$193/t to US$163/t.
- A decrease in the unit sales of specialty grade chrome concentrates by 9.3% from 172.9 kt to 156.8 kt.
- Increase in third-party trading and logistics, which contributed US$14.7 million to revenue.
Gross profit amounted to US$32.1 million (2018: US$55.7 million) with a gross profit margin of 19.3% (2018: 28.0%).
The gross profit margin was also impacted by the reduced volumes of both commodities produced and sold with the
fixed costs inherent to the operation impacting on the unit cost of sales. In addition, diesel cost, a significant
component of the mining cost comprising approximately 14% of on-mine cash costs, increased at above inflation on
average by 18.1% per litre from ZAR12.04/l (US$0.94/l) to ZAR14.22/l (US$1.00/l). Costs incurred with the
transport of the metallurgical grade chrome concentrates from the mine to the customer increased marginally
by 3.1% from US$60.9/t to US$62.8/t, the majority of this increase related to an increase in the freight costs.
As a co-producer of PGMs and chrome concentrates, the shared costs of production for segmental reporting purposes
are based on the relative contribution to revenue on an ex-works basis, allocated 55% to the PGM segment and 45%
to the chrome segment. This is in accordance with the accounting policy of the Group and IFRS. The comparable
period was allocated 45% to the PGM segment and 55% to the chrome segment. The change to the basis of allocation
of the shared costs is, in effect, a 22.2% increase in respect of the allocation to the PGM segment and a 18.2%
decrease in respect of the allocation to the chrome segment.
The segmental cost of sales and gross profit contribution, as extracted from the condensed consolidated interim
financial statements, is as follows:
31 March 2019 31 March 2018
Agency Agency
and and
US$ millions PGM Chrome trading Total PGM Chrome trading Total
Revenue 58.0 93.8 14.7 166.5 55.5 130.3 13.4 199.2
Cost of sales
Costs of sales
excluding selling costs (46.2) (44.2) (6.7) (97.1) (39.8) (56.3) (7.2) (103.3)
Selling costs (0.2) (20.7) (3.9) (24.8) (0.2) (24.4) (3.7) (28.3)
Freight services - (9.8) (2.7) (12.5) - (10.4) (1.5) (11.9)
Gross profit contribution 11.6 19.1 1.4 32.1 15.5 39.2 1.0 55.7
Gross profit margin (%) 20.0 20.4 9.5 19.3 28.0 30.1 7.5 28.0
Sales volume 67.0 koz 618.0 kt 85.7 kt 76.1 koz 725.6 kt 85.6 kt
The PGM segment gross profit margin of 20.0% (2018: 28.0%) is lower than the previous year notwithstanding the
increased revenue due, in part, to the revised basis of allocating shared costs.
The chrome segment gross profit margin of 20.4% (2018: 30.1%) is lower than the previous year following the
weakening of the selling prices for the chrome concentrates notwithstanding benefiting from the revised basis
of allocating shared costs.
The agency and trading segment contributed US$1.4 million (2018: US$1.0 million) to the Group gross profit at
a margin of 9.5% (2018: 7.5%).
On a unit cost basis, the reef mining cost per tonne mined increased by 9.8% from US$20.5/t to US$22.5/t. This
cost per reef tonne mined was incurred on a stripping ratio of 7.1 on a per cubic metre basis. On a per cube mined
basis i.e. including both waste and reef, the cost increased from US$7.9/m3 to US$9.6/m3 (the prior period stripping
ratio being 8.1 on a per cubic metre basis).
The consolidated cash cost per tonne milled (i.e. including mining and processing but excluding transport and freight)
increased by 7.4% from US$36.4/t to US$39.1/t.
Administrative expenses decreased from US$20.4 million to US$16.3 million mainly in respect of salary costs, which
included discretionary bonuses paid in the prior period and due to the benefit of the weakening of the exchange
rate with the administration cost being mainly in ZAR. After accounting for the administrative expenses, the Group
achieved an operating profit of US$14.3 million (2018: US$40.4 million).
EBITDA amounted to US$30.1 million (2018: US$54.1 million).
Finance costs (totalling US$4.5 million) principally relate to the balances owing on the bank facilities and original
equipment manufacturer finance for the purchase of the mining fleet, and the Group trade finance facilities.
The tax charge amounted to US$2.1 million, an effective charge of 20.2%. The cash tax paid amounted to US$2.9 million.
The Group has fully utilised its tax losses. However, as at the period end, the Group had unredeemed capex for tax
purposes of US$104.9 million. The net deferred tax liability amounted to US$24.8 million.
Foreign currency translation differences for foreign operations arising where the Company has funded the underlying
subsidiaries with US$ denominated funding and the reporting currency of the underlying subsidiary is not in US$,
amounted to an unfavourable US$3.8 million following the weakening of the ZAR.
Basic and diluted earnings per share for the period amounted to US$ 4 cents (2018: US$ 10 cents) with headline
earnings per share of US$ 4 cents (2018: US$ 10 cents).
Total debt amounted to US$74.7 million, resulting in a debt-to-total equity ratio of 25.0%. This exceeds the long-term
targeted debt-to-total equity ratio of 15% principally due to the leveraged purchase of the mining fleet. Group cash
and cash equivalents amounted to US$66.8 million resulting in a net debt-to-total equity ratio of 2.6%.
The capex spend for the period amounted to US$24.3 million of which US$20.7 million related to the mining fleet and
US$3.6 million related to the processing plants including optimisation initiatives. The depreciation charge amounted to
US$13.5 million. The mining fleet replacement programme has been accelerated to ensure the optimal mining fleet with the
necessary availabilities with the installed capacity to meet the Vision 2020 mining targets is in place. For the second
six months the budgeted capex spend on the mining fleet remains at a higher level than the normal sustaining capex at
US$14.0 million. Capex for the next six months on the processing plant and additional generators to further derisk the
business operations from the risk of load shedding is budgeted at US$15.6 million.
The Company committed to spend an amount of up to US$3.2 million on exploration on the special grants held by Salene
Chrome. As at 31 March 2019, US$0.9 million had been incurred. The Company has an option to acquire a 90% shareholding
in Salene Chrome. In addition, the Company undertook to provide funding of US$8.0 million to Karo Mining Holdings, in
which the Company has a 26.8% shareholding, to fund the exploration and development of its exploration rights and project
obligations e.g. solar power. As at 31 March 2019, US$2.7 million of this amount had been drawn down. The Company also
paid the balance of US$2.0 million for the purchase of its shareholding in Karo Mining Holdings.
The Group generated net cash from operations of US$41.4 million (2018: US$49.2 million) and after taking into account
the capex, a free cash flow of US$17.1 million. Cash on hand amounted to US$66.8 million.
There is continued focus on working capital management with the current ratio at two times.
From time to time the Group concludes transactions with related parties. These transactions are concluded on an arms'
length basis and are disclosed in the ensuing interim condensed consolidated financial statements (refer to note 16).
INTERIM DIVIDEND
In accordance with its dividend policy of distributing at least 15% of annual net profit after tax and following the
introduction of an interim dividend, the Board has declared an interim cash dividend of US$ 0.5 cent per ordinary share.
The interim dividend will be paid on Wednesday, 19 June 2019. Shareholders on the principal Cyprus register will be paid
in US$, shareholders whose shares are held through Central Securities Depositary Participants ('CSDPs') and brokers and
are traded on the JSE will be paid in ZAR and holders of depositary interests traded on the LSE will be paid in
Sterling (GBP).
The timetable for the dividend declaration is as follows:
Declaration and currency conversion date Tuesday, 14 May 2019
Currency conversion rates announced Thursday, 16 May 2019
Last day to trade cum dividend rights on the JSE Tuesday, 4 June 2019
Last day to trade cum dividend rights on the LSE Wednesday, 5 June 2019
Shares will trade ex dividend rights on the JSE Wednesday, 5 June 2019
Shares will trade ex dividend rights on the LSE Thursday, 6 June 2019
Record date for payment on both JSE and LSE Friday, 7 June 2019
Dividend payment date Wednesday, 19 June 2019
No dematerialisation or rematerialisation of shares within Strate will be permitted between
Wednesday, 5 June 2019 and Friday, 7 June 2019, both days inclusive. No transfers between registers will be
permitted between Thursday, 16 May 2019 and Friday, 7 June 2019, both days inclusive.
Tax implications of the dividend
Shareholders are advised that the dividend declared will be paid out of income reserves and may therefore be subject
to dividend withholding tax depending on the tax residency of the shareholder.
South African tax residents
South African shareholders are advised that the dividend constitutes a foreign dividend. For individual South African
tax resident shareholders, dividend withholding tax of 20% will be applied to the gross dividend of US$ 0.5 cent per
share. Therefore, the net dividend of US$ 0.4 cent per share will be paid after US$ 0.1 cent in terms of dividend
withholding tax has been applied. Shareholders who are South African tax resident companies are exempt from dividend
tax and will receive the dividend of US$ 0.5 cent per share. This does not constitute legal or tax advice and is based
on taxation law and practice in South Africa. Shareholders should consult their brokers, financial and/or tax advisers
with regard to how they will be impacted by the payment of the dividend.
UK tax residents
UK tax residents are advised that the dividend constitutes a foreign dividend and that they should consult their
brokers, financial and/or tax advisers with regard to how they will be impacted by the payment of the dividend.
Cyprus tax residents
Individual Cyprus tax residents are advised that the dividend constitutes a local dividend and that they should
consult their brokers, financial and/or tax advisers with regard to how they will be impacted by the payment
of the dividend.
Shareholders and depositary interest holders should note that information provided should not be regarded as tax
advice.
PRINCIPAL BUSINESS RISKS
Tharisa regards principal business risks as the issues that may, if they materialise, substantially affect the Group's
ability to create and sustain value in the short, medium and long term.
These risks determine how the Group devises and implements its strategy since each risk has the potential to impact
the Group's ability to achieve its strategic objectives. Each risk also carries with it challenges and opportunities.
The Group's strategy takes into account known risks, but risks may exist of which the Group is currently unaware.
An overview of the risks, which could affect the Group's operational and financial performance, was included in the
Group's 2018 Annual Report, which is available on http://www.tharisa.com. The following risks have been identified
which may impact the Group over the next six months:
Regulatory compliance
Tharisa Minerals' right to mine is dependent on strict adherence to legal and legislative requirements. There remains
some uncertainty on the proposed amendments to the South African Mineral and Petroleum Resources Development Act
('MPRDA') and the accompanying Mining Charter. The Minerals Council of South Africa in March 2019 filed an application
for judicial review and setting aside certain clauses of the 2018 Mining Charter.
Unscheduled breakdowns
The Group's performance is reliant on consistent mining and the production of PGM and chrome concentrates from the
Tharisa Mine. Any unscheduled breakdown leading to a prolonged reduction in either mining or production may have a
material impact on the Group's financial performance and results. The Group has purchased additional mining fleet to
optimise the fleet. Long lead items for the fleet and the plant are kept in stock and preventative maintenance
programmes are in place for both the fleet and the plant.
Global commodity prices and currency risk
The Group's revenues, profitability and future rate of growth depends on the prevailing market prices of PGMs and
chrome. A sustained downward movement in the market price for PGMs and/or chrome may negatively affect the Group's
profitability and cash flows. The Group's reporting currency is US$. The Group's operations are predominantly based
in South Africa with a ZAR cost base while the majority of the revenue stream is in US$ exposing the Group to the
volatility and movements in the ZAR. Fluctuations in the US$ and ZAR may have a significant impact on the performance
of the Group. To counter this, the Group continues to work on reducing costs and increasing operating efficiencies.
Financing and liquidity
The activities of the Group expose it to a variety of financial risks including market, commodity prices, credit,
foreign exchange and interest rate risks. The Group closely monitors and manages these risks. Cash forecasts are
regularly updated and reviewed including sensitivity scenarios with reference to the above risks.
OUTLOOK
Tharisa's business model is robust and cash generative throughout the commodity cycle. The unique
co-product mix, coupled with an open-pit mine ensures we remain consistently at the low end of the production cost
curve and, while we believe commodity prices will remain stable, we are well insulated against price volatility.
That said, fundamentals for the global stainless steel market support stable demand for chrome concentrates. Our
specialty chrome products are in demand and given the premium pricing of this product, we benefit from strong margins.
The Group expects a strong operational performance for the remainder of the year with a focus on increasing its
production through the continual improvement processes and delivery of the first of its Vision 2020 optimisation projects.
The benefits of the pit redesign should become evident in the second half of the financial year and Tharisa is on track to
achieve its FY2019 guidance of at least 150 koz PGMs and 1.4 Mt chrome concentrates, of which 350 kt will be specialty
grade. The Vision 2020 projects aim to take production to 200 kozpa of PGMs and 2.0 Mtpa of chrome concentrates in 2020,
on an annualised basis.
Our expansion plans and a strong focus on the performance of the mining division and our yellow fleet, will enhance
economies of scale, reduce unit costs and improve operating margins.
Tharisa would like to thank its staff, management and directors for their continued support in achieving these interim
results.
STATEMENT BY THE MEMBERS OF THE BOARD OF DIRECTORS AND THE COMPANY OFFICIALS RESPONSIBLE FOR THE PREPARATION OF THE
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS ACCORDING TO THE CYPRUS SECURITIES AND EXCHANGE COMMISSION LEGISLATION
In accordance with sections 10(3)(c) and 10(7) of Law No. 190(I)/2007, as amended, providing for the transparency
requirements of issuers whose securities are admitted to trading on a regulated market ('the Transparency Law'), we, the
members of the Board of Directors of Tharisa plc, responsible for the preparation of the interim condensed consolidated
financial statements of Tharisa plc for the period ended 31 March 2019, hereby declare that to the best of our knowledge:
(a) The interim condensed consolidated financial statements for the period ended 31 March 2019:
- Have been prepared in accordance with International Accounting Standard 34: Interim Financial Reporting and as
stipulated for under section 10(4) of the Transparency Law.
- Give a true and fair view of the assets and liabilities, the financial position and profit or losses of Tharisa plc
and its undertakings, as included in the interim condensed consolidated financial statements as a whole.
(b) The adoption of a going concern basis for the preparation of the financial statements continues to be appropriate
based on the foregoing and having reviewed the forecast financial position of the Group.
(c) The interim management report provides a fair review of the information required by section 10(6) of the
Transparency Law.
Loucas Pouroulis Executive Chairman
Phoevos Pouroulis Chief Executive Officer
Michael Jones Chief Finance Officer
David Salter Lead independent non-executive director
Antonios Djakouris Independent non-executive director
Omar Kamal Independent non-executive director
Carol Bell Independent non-executive director
Roger Davey Independent non-executive director
Joanna Ka Ki Cheng Non-executive director
Zhong Liang Hong Non-executive director
Paphos, Cyprus
14 May 2019
REPORT ON REVIEW OF INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
TO THE SHAREHOLDERS OF THARISA PLC
Introduction
We have reviewed the interim condensed consolidated financial statements of Tharisa plc (the 'Company'), and
its subsidiaries (collectively referred to as the 'Group') contained in the accompanying interim report, which
comprise the interim condensed consolidated statement of financial position as at 31 March 2019 and the interim
condensed consolidated statements of profit or loss and other comprehensive income, changes in equity and cash
flows for the six-month period then ended and selected explanatory notes. Management is responsible for the
preparation and presentation of these interim condensed consolidated financial statements in accordance with
International Accounting Standard 34 Interim Financial Reporting. Our responsibility is to express a conclusion
on these interim condensed consolidated financial statements based on our review.
Scope of review
We conducted our review in accordance with International Standard on Review Engagements 2410, "Review of Interim
Financial Information Performed by the Independent Auditor of the Entity". A review of interim financial information
consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying
analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing and consequently does not enable us to obtain assurance that we would become
aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim
condensed consolidated financial statements do not present fairly, in all material respects, the financial position
of the entity as at 31 March 2019 and of its financial performance and its cash flows for the six-month period then
ended in accordance with International Accounting Standard 34 Interim Financial Reporting.
Stavros Pantzaris
Certified Public Accountant and Registered Auditor
for and on behalf of
Ernst & Young Cyprus Limited
Certified Public Accountant and Registered Auditor
Nicosia
14 May 2019
INTERIM CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
for the six months ended 31 March 2019
Six months Six months Year
ended ended ended
31 March 31 March 30 Sept
2019 2018 2018
Reviewed Reviewed Audited
Notes US$'000 US$'000 US$'000
Revenue 5 166 519 199 179 406 268
Cost of sales 6 (134 384) (143 436) (297 782)
Gross profit 32 135 55 743 108 486
Other income 478 2 072 2 432
Net foreign exchange (loss)/gain (2 030) 3 004 852
Administrative expenses 7 (16 322) (20 422) (39 232)
Results from operating activities 14 261 40 397 72 538
Finance income 798 695 1 279
Finance costs (4 475) (5 130) (10 189)
Changes in fair value of financial assets
at fair value through profit or loss 132 1 204 1 262
Changes in fair value of financial liabilities
at fair value through profit or loss 322 - 155
Share of loss of investment accounted for using
the equity method (816) - (62)
Profit before tax 10 222 37 166 64 983
Tax 8 (2 067) (8 753) (14 011)
Profit for the period/year 8 155 28 413 50 972
Other comprehensive income
Items that may be classified subsequently
to profit or loss:
Foreign currency translation differences
for foreign operations, net of tax (3 772) 35 422 (10 663)
Other comprehensive income, net of tax (3 772) 35 422 (10 663)
Total comprehensive income for the period/year 4 383 63 835 40 309
Profit for the period/year attributable to:
Owners of the Company 9 488 25 960 48 433
Non-controlling interest (1 333) 2 453 2 539
8 155 28 413 50 972
Total comprehensive income for the period/year
attributable to:
Owners of the Company 7 095 49 433 41 790
Non-controlling interest (2 712) 14 402 (1 481)
4 383 63 835 40 309
Earnings per share
Basic earnings per share (US$ cents) 9 4 10 19
Diluted earnings per share (US$ cents) 9 4 10 18
The notes are an integral part of these interim condensed consolidated financial statements.
INTERIM CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 March 2019
31 March 31 March 30 Sept
2019 2018 2018
Reviewed Reviewed Audited
Notes US$'000 US$'000 US$'000
Assets
Non-current assets
Property, plant and equipment 10 269 048 308 534 264 311
Goodwill 785 961 804
Investment accounted for using the equity method 11 3 622 - 4 438
Other financial assets 6 141 5 791 5 012
Deferred tax assets 2 408 2 445 1 880
Total non-current assets 282 004 317 731 276 445
Current assets
Inventories 12 26 411 26 903 23 043
Trade and other receivables 66 727 78 173 86 202
Contract assets 1 059 - 2 229
Other financial assets 656 901 986
Current taxation 597 108 228
Cash and cash equivalents 66 817 59 930 66 791
Total current assets 162 267 166 015 179 479
Total assets 444 271 483 746 455 924
Equity and liabilities
Share capital and premium 13 282 791 280 409 280 806
Other reserve 47 245 47 245 47 245
Foreign currency translation reserve (82 597) (50 088) (80 204)
Retained earnings 80 932 58 399 77 025
Equity attributable to owners of the Company 328 371 335 965 324 872
Non-controlling interests (29 250) (10 655) (26 538)
Total equity 299 121 325 310 298 334
Non-current liabilities
Provisions 11 917 11 114 12 634
Borrowings 14 28 164 35 053 27 281
Deferred tax liabilities 27 227 33 297 29 892
Total non-current liabilities 67 308 79 464 69 807
Current liabilities
Borrowings 14 46 538 42 119 50 138
Other financial liabilities 1 044 - 1 000
Current taxation 390 827 1 013
Trade and other payables 28 811 36 026 33 403
Contract liabilities 1 059 - 2 229
Total current liabilities 77 842 78 972 87 783
Total liabilities 145 150 158 436 157 590
Total equity and liabilities 444 271 483 746 455 924
The interim condensed consolidated financial statements were authorised for issue by the Board of Directors
on 14 May 2019.
Phoevos Pouroulis Michael Jones
Director Director
The notes are an integral part of these interim condensed consolidated financial statements.
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 31 March 2019
Attributable to owners of the Company
Foreign
currency Non-
Share Share Other translation Retained controlling Total
capital premium reserve reserve earnings Total interest equity
Notes US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 30 September 2018 261 280 545 47 245 (80 204) 77 025 324 872 (26 538) 298 334
Total comprehensive
income for the period
Profit for the period - - - - 9 488 9 488 (1 333) 8 155
Other comprehensive income:
Foreign currency translation
differences - - - (2 393) - (2 393) (1 379) (3 772)
Total comprehensive income
for the period - - - (2 393) 9 488 7 095 (2 712) 4 383
Transactions with owners
of the Company
Contributions by and
distributions to owners:
Issue of ordinary shares 13 3 1 982 - - - 1 985 - 1 985
Dividends paid 20 - - - - (5 276) (5 276) - (5 276)
Equity-settled
share-based payments - - - - (975) (975) - (975)
Deferred tax on equity-settled
share-based payments - - - - 670 670 - 670
Contributions by
owners of the Company 3 1 982 - - (5 581) (3 596) - (3 596)
Total transactions with
owners of the Company 3 1 982 - - (5 581) (3 596) - (3 596)
Balance at 31 March 2019
(reviewed) 264 282 527 47 245 (82 597) 80 932 328 371 (29 250) 299 121
The notes are an integral part of these interim condensed consolidated financial statements.
Attributable to owners of the Company
Foreign
currency Non-
Share Share Other translation Retained controlling Total
capital premium reserve reserve earnings Total interest equity
Notes US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 30 September 2017 260 280 082 47 245 (73 561) 42 877 296 903 (25 057) 271 846
Impact of adopting IFRS 16 - - - - (15) (15) - (15)
Balance at 1 October 2017 260 280 082 47 245 (73 561) 42 862 296 888 (25 057) 271 831
Total comprehensive
income for the period
Profit for the period - - - - 25 960 25 960 2 453 28 413
Other comprehensive income:
Foreign currency
translation differences - - - 23 473 - 23 473 11 949 35 422
Total comprehensive
income for the period - - - 23 473 25 960 49 433 14 402 63 835
Transactions with
owners of the Company
Contributions by and
distributions to owners:
Issue of ordinary shares* 13 - 67 - - - 67 - 67
Dividends paid 20 - - - - (13 010) (13 010) - (13 010)
Equity-settled
share-based payments - - - - 2 072 2 072 - 2 072
Deferred tax on
equity-settled share-based
payments - - - - 515 515 - 515
Contributions by owners
of the Company - 67 - - (10 423) (10 356) - (10 356)
Total transactions with
owners of the Company - 67 - - (10 423) (10 356) - (10 356)
Balance at 31 March 2018
(reviewed) 260 280 149 47 245 (50 088) 58 399 335 965 (10 655) 325 310
* The value of the issue of ordinary share capital is less than the reporting amount and amounts to US$182.
The notes are an integral part of these interim condensed consolidated financial statements.
Attributable to owners of the Company
Foreign
currency Non-
Share Share Other translation Retained controlling Total
capital premium reserve reserve earnings Total interest equity
Notes US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at 30 September 2017 260 280 082 47 245 (73 561) 42 877 296 903 (25 057) 271 846
Impact of adopting IFRS 16 - - - - (15) (15) - (15)
Balance at 1 October 2017 260 280 082 47 245 (73 561) 42 862 296 888 (25 057) 271 831
Total comprehensive
income for the year
Profit for the year - - - - 48 433 48 433 2 539 50 972
Other comprehensive income:
Foreign currency
translation differences - - - (6 643) - (6 643) (4 020) (10 663)
Total comprehensive
income for the year - - - (6 643) 48 433 41 790 (1 481) 40 309
Transactions with
owners of the Company
Contributions by and
distributions to owners:
Issue of ordinary shares 13 1 463 - - - 464 - 464
Dividends paid 20 - - - - (18 214) (18 214) - (18 214)
Equity-settled
share-based payments - - - - 3 638 3 638 - 3 638
Deferred tax on of
equity-settled share-based
payments - - - - 306 306 - 306
Contributions by owners
of the Company 1 463 - - (14 270) (13 806) - (13 806)
Total transactions with
owners of the Company 1 463 - - (14 270) (13 806) - (13 806)
Balance at 30 September 2018
(audited) 261 280 545 47 245 (80 204) 77 025 324 872 (26 538) 298 334
Companies which do not distribute 70% of their profits after tax, as defined by the special contribution for the
defence of the Republic Law, during the two years after the end of the year of assessment to which the profits refer,
will be deemed to have distributed this amount as dividend. Special contribution for defence at 17% will be payable on
such deemed dividend to the extent that the ultimate shareholders at the end date of the period of two years from the
end of the year of assessment to which the profits refer are both Cypriot tax residents and Cypriot domiciled entities.
The amount of this deemed dividend distribution is reduced by any actual dividend paid out of the profits of the
relevant year at any time. This special contribution for defence is paid by the Company for the account of the
shareholders. These provisions do not apply for ultimate beneficial owners that are non-Cypriot tax resident
individuals. Retained earnings is the only reserve that is available for distribution.
The notes are an integral part of these interim condensed consolidated financial statements.
INTERIM CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended 31 March 2019
Six months Six months Year
ended ended ended
31 March 31 March 30 Sept
2019 2018 2018
Reviewed Reviewed Audited
Notes US$'000 US$'000 US$'000
Cash flows from operating activities
Profit for the period/year 8 155 28 413 50 972
Adjustments for:
Depreciation of property, plant and equipment 10 13 517 14 369 29 858
Loss on disposal of property, plant and equipment 15 13 37
Gain on bargain purchase - (1 884) (1 884)
Share of loss of investment accounted for
using the equity method 11 816 - 62
Impairment loss/(reversal) and net realisable
value write down of inventory 12 799 (13) 117
Impairment and write off of property,
plant and equipment 1 909 894 3 897
Changes in fair value of financial assets at
fair value through profit or loss (132) (1 204) (1 262)
Changes in fair value of financial liabilities
at fair value through profit or loss (322) - (155)
Net foreign exchange loss/(profit) 2 030 (3 004) (852)
Interest income (798) (695) (1 279)
Interest expense 4 475 5 130 10 189
Tax 8 2 067 8 753 14 011
Equity-settled share-based payments 1 047 1 978 4 019
33 578 52 750 107 730
Changes in:
Inventories (4 715) (1 736) (2 456)
Trade and other receivables and contract assets 19 368 576 (18 639)
Trade and other payables and contract liabilities (2 892) (2 702) 2 979
Provisions (1 027) 2 454 5 614
Cash from operations 44 312 51 342 95 228
Income tax paid (2 880) (2 108) (5 457)
Net cash flows from operating activities 41 432 49 234 89 771
Cash flows from investing activities
Interest received 746 636 1 172
Additions to property, plant and equipment 10 (24 348) (17 670) (40 454)
Net cash outflow from business combination - (21 840) (21 840)
Proceeds from disposal of property,
plant and equipment 42 55 119
Additions to investments accounted
for using the equity method (2 000) - (2 500)
Additions to other financial assets (1 563) (3 951) (4 008)
Refund of long-term deposits - 7 609 7 110
Net cash flows used in investing activities (27 123) (35 161) (60 401)
Cash flows from financing activities
Net (repayment)/proceeds from bank
credit facilities 14 (12 816) (8 134) 114
Advances received 14 19 673 62 191 68 220
Repayment of borrowings 14 (9 150) (41 109) (48 503)
Lease payments 14 (3 101) (4 608) (6 463)
Dividends paid (5 276) (13 010) (18 214)
Interest paid (2 832) (2 550) (6 619)
Net cash flows used in financing activities (13 502) (7 220) (11 465)
Net increase in cash and cash equivalents 807 6 853 17 905
Cash and cash equivalents at the beginning
of the period/year 66 791 49 742 49 742
Effect of exchange rate fluctuations
on cash held (781) 3 335 (856)
Cash and cash equivalents at the
end of the period/year 66 817 59 930 66 791
The notes are an integral part of these interim condensed consolidated financial statements.
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the period ended 31 March 2019
1. REPORTING ENTITY
Tharisa plc (the 'Company') is a company domiciled in Cyprus. These interim condensed consolidated financial
statements of the Company for the period ended 31 March 2019 comprise the Company and its subsidiaries
(together referred to as the 'Group'). The Group is primarily involved in platinum group metals ('PGM') and
chrome mining, processing, trading and the associated logistics. The Company is listed on the main board of
the Johannesburg Stock Exchange with a secondary listing on the A2X Exchange as well as a secondary standard
listing on the main board of the London Stock Exchange.
2. BASIS OF PREPARATION
Statement of compliance
These interim condensed consolidated financial statements have been prepared in accordance with International
Accounting Standard 34 Interim Financial Reporting and the Listings Requirements of the Johannesburg Stock
Exchange and the A2X Exchange. Selected explanatory notes are included to explain events and transactions
that are significant to obtain an understanding of the changes in the financial position and performance
of the Group since the last consolidated financial statements as at and for the year ended 30 September 2018.
These interim condensed consolidated financial statements do not include all the information required for
full consolidated financial statements prepared in accordance with International Financial Reporting
Standards ('IFRS'). The interim condensed consolidated financial statements should be read in conjunction
with the consolidated financial statements for the year ended 30 September 2018, which have been prepared
in accordance with IFRS.
These interim condensed consolidated financial statements were approved by the Board of Directors on
14 May 2019. These interim condensed consolidated financial statements for the six months ended 31 March 2019
have been reviewed by the Group's external auditors, not audited.
Use of estimates and judgements
Preparing the interim condensed consolidated financial statements requires management to make judgements,
estimates and assumptions that affect the application of accounting policies and the reported amounts of
assets and liabilities, income and expenses. Actual results may differ from these estimates.
In preparing these interim condensed consolidated financial statements, significant judgements made by
management in applying the Group's accounting policies and the key sources of estimation uncertainty were the
same as those applied to the consolidated financial statements at and for the year ended 30 September 2018.
Functional and presentation currency
The interim condensed consolidated financial statements are presented in United States dollar (US$) which is
the Company's functional and presentation currency. Amounts are rounded to the nearest thousand.
The following US dollar: ZAR exchange rates were used when preparing the interim condensed consolidated
financial statements:
- Closing rate: ZAR14.48 (31 March 2018: ZAR11.83 and 30 September 2018: ZAR14.14)
- Average rate: ZAR14.16 (31 March 2018: ZAR12.80 and 30 September 2018: ZAR13.08)
Going concern
After making enquiries which include reviews of current cash resources, forecasts and budgets, timing of
cash flows, borrowing facilities and sensitivity analyses and considering the associated uncertainties
to the Group's operations, the directors have a reasonable expectation that the Group has adequate
financial resources to continue in operational existence for the foreseeable future. For this reason,
they continue to adopt the going concern basis in preparing the interim condensed consolidated financial
statements.
New and revised International Financial Reporting Standards and Interpretations
The Group has early adopted IFRS 9 Financial Instruments, IFRS 15 Revenue from Contracts with Customers and
IFRS 16 Leases with effect from 1 October 2017 and the consolidated financial statements for the year ended
30 September 2018 have been prepared in accordance with these standards.
The Group has adopted the following new and/or revised standards and interpretations which became effective
for the six months ended 31 March 2019:
- IFRS 2 Share-based Payment Transactions (amendment).
- IFRIC 22 Foreign Currency Transactions and Advance Consideration.
The adoption of these new/or revised standards and interpretations did not have a significant impact on the
results of the Group.
A number of standards, amendments to standards and interpretations have been issued but are not yet effective
for annual periods beginning on 1 October 2018. Other than IFRS 16 Leases, the Group has elected not to early
adopt any of these standards, amendments to standards and interpretations.
3. SIGNIFICANT ACCOUNTING POLICIES
The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are
consistent with those applied in the preparation of the Group's consolidated financial statements for the year
ended 30 September 2018.
4. OPERATING SEGMENTS
For management purposes, the chief operating decision makers of the Group, being the executive directors of
the Company and the executive directors of the subsidiaries, report its results per segment. The Group currently
has the following three segments:
- PGM segment
- Chrome segment
- Agency and trading segment
The operating results of each segment are monitored separately by the chief decision makers in order to assist
them in making decisions regarding resource allocation as well as enabling them to evaluate performance.
Segment performance is evaluated on a PGM ounce production and sales basis and on chrome concentrate tonnes
production and sales basis. Third-party logistics, third-party trading, third-party chrome operations and
external consulting services are evaluated individually but aggregated together as the agency and
trading segment.
The Group's administrative costs, financing (including finance income and finance costs) and income taxes are
managed on a group basis and are not allocated to a segment.
The accounting policies used by the Group in reporting segments internally are the same as those contained in
the consolidated financial statements.
Due to the intrinsic nature of the Group's PGM and chrome concentrate production processes, assets are reported
on a consolidated basis and cannot necessarily be allocated to a specific segment. Consequently, assets are not
disclosed per segment in the following segmental information:
Agency and
PGM Chrome trading Total
US$'000 US$'000 US$'000 US$'000
Six months ended 31 March 2019 (reviewed)
Revenue 57 960 93 840 14 719 166 519
Cost of sales
Manufacturing costs (46 212) (44 239) (6 690) (97 141)
Selling costs (182) (20 643) (3 923) (24 748)
Freight services - (9 803) (2 692) (12 495)
(46 394) (74 685) (13 305) (134 384)
Gross profit 11 566 19 155 1 414 32 135
Six months ended 31 March 2018 (reviewed)
Revenue 55 458 130 296 13 425 199 179
Cost of sales
Manufacturing costs (39 711) (56 235) (7 252) (103 198)
Selling costs (205) (24 408) (3 677) (28 290)
Freight services - (10 419) (1 529) (11 948)
(39 916) (91 062) (12 458) (143 436)
Gross profit 15 542 39 234 967 55 743
Year ended 30 Sept 2018
(audited)
Revenue 117 381 250 351 38 536 406 268
Cost of sales
Manufacturing costs (87 745) (106 485) (21 695) (215 925)
Selling costs (399) (48 343) (9 711) (58 453)
Freight services - (19 836) (3 568) (23 404)
(88 144) (174 664) (34 974) (297 782)
Gross profit 29 237 75 687 3 562 108 486
The shared costs relating to the manufacturing of PGM and chrome concentrates are allocated to the relevant
operating segments based on the relative sales value per product on an ex-works basis. During the six months
ended 31 March 2019, the relative sales value of PGM concentrate increased compared to the relative sales
value of chrome concentrates and consequently the allocation basis of shared costs was amended to 55.0% for
PGM concentrate and 45.0% for chrome concentrates. The allocation basis of shared costs was 45.0%
(PGM concentrate) and 55.0% (chrome concentrates) in the comparative period while for the year ended
30 September 2018, shared costs were allocated equally.
Cost of sales includes a charge for the write off/impairment of property, plant and equipment totalling
US$1.9 million (six months ended 31 March 2018: US$0.9 million and year ended 30 September 2018:
US$3.6 million) which mainly relates to mining equipment. The write off/impairment has been allocated
to the PGM and chrome segments in accordance with the allocation basis of shared costs as described above.
Geographical information
The following table sets out information about the geographical location of:
- The Group's revenue from external customers.
- The Group's property, plant and equipment, goodwill and the investment accounted for using the
equity method ('specified non-current assets').
The geographical location analysis of revenue from external customers is based on the country of
establishment of each customer. The geographical location of the specified non-current assets is
based on the physical location of the asset in the case of property, plant and equipment and the
location of the operation to which they are allocated in the case of goodwill.
Revenue from external customers
Agency and
PGM Chrome trading Total
US$'000 US$'000 US$'000 US$'000
South Africa 57 960 20 842 715 79 517
China - 29 482 286 29 768
Singapore - 6 163 13 352 19 515
Hong Kong - 37 353 - 37 353
Other countries - - 366 366
57 960 93 840 14 719 166 519
Six months ended 31 March 2018 (reviewed)
South Africa 55 458 28 484 379 84 321
China - 42 518 4 800 47 318
Singapore - 532 1 656 2 188
Hong Kong - 58 762 6 590 65 352
55 458 130 296 13 425 199 179
Agency and
PGM Chrome trading Total
US$'000 US$'000 US$'000 US$'000
Year ended 30 Sept 2018 (audited)
South Africa 117 381 62 464 969 180 814
China - 86 866 9 894 96 760
Singapore - 10 942 17 088 28 030
Hong Kong - 89 733 9 453 99 186
Other countries - 346 1 132 1 478
117 381 250 351 38 536 406 268
Revenue represents the sales value of goods supplied to customers, net of value added tax. The following
table summarises sales to customers with whom transactions have individually exceeded 10.0% of the
Group's revenues:
Six months ended Six months ended Year ended
31 March 2019 31 March 2018 30 Sept 2018
Reviewed Reviewed Audited
Segment US$'000 Segment US$'000 Segment US$'000
Customer 1 PGM 49 099 PGM 48 757 PGM 101 560
Customer 2 Chrome 21 328 Chrome 28 585 Chrome 62 583
Customer 3 Chrome 19 079 Chrome 22 659 Chrome 46 186
31 March 31 March 30 Sept
2019 2018 2018
Reviewed Reviewed Audited
US$'000 US$'000 US$'000
Specified non-current assets
South Africa 269 786 309 451 265 042
Zimbabwe 3 622 - 4 438
Cyprus 47 44 73
273 455 309 495 269 553
Non-current assets includes property, plant and equipment, goodwill and the investment accounted for
using the equity method.
5. REVENUE
Agency and
PGM Chrome trading Total
US$'000 US$'000 US$'000 US$'000
Six months ended 31 March 2019 (reviewed)
Revenue recognised at a point in time
Variable revenue based on initial results 53 372 63 223 10 435 127 030
Quantity adjustments 263 41 558 862
Revenue based on fixed selling prices - 20 773 1 034 21 807
Revenue recognised over time
Freight services* - 9 803 2 692 12 495
Revenue from contracts with customers 53 635 93 840 14 719 162 194
Fair value adjustments 4 325 - - 4 325
Total revenue 57 960 93 840 14 719 166 519
Six months ended 31 March 2018 (reviewed)
Revenue recognised at a point in time
Variable revenue based on initial results 55 689 92 625 11 526 159 840
Quantity adjustments (257) (1 231) (10) (1 498)
Revenue based on fixed selling prices - 28 483 380 28 863
Revenue recognised over time
Freight services - 10 419 1 529 11 948
Revenue from contracts with customers 55 432 130 296 13 425 199 153
Fair value adjustments 26 - - 26
Total revenue 55 458 130 296 13 425 199 179
* During the period 31 March 2019, revenue from freight services of US$2.2 million was recognised which
was classified as a contract liability at 30 September 2018.
Agency and
PGM Chrome trading Total
US$'000 US$'000 US$'000 US$'000
Year ended 30 Sept 2018 (audited)
Revenue recognised at a point in time
Variable revenue based on initial results 110 619 169 092 33 957 313 668
Quantity adjustments 254 (1 041) 42 (745)
Revenue based on fixed selling prices - 62 464 915 63 379
Revenue recognised over time
Freight services - 19 836 3 622 23 458
Revenue from contracts with customers 110 873 250 351 38 536 399 760
Fair value adjustments 6 508 - - 6 508
Total revenue 117 381 250 351 38 536 406 268
Six months Six months Year
ended ended ended
31 March 31 March 30 Sept
2019 2018 2018
Reviewed Reviewed Audited
US$'000 US$'000 US$'000
Variable revenue recognised
PGM revenue recognised in preceding period/year
based on initial results (29 743) (28 994) (28 994)
PGM revenue based on final results 30 211 30 823 30 823
PGM revenue adjustment recognised in
current period/year 468 1 829 1 829
Chrome revenue recognised in preceding period/year
based on initial results (48 460) (41 197) (41 197)
Chrome revenue based on final results 48 682 41 177 41 177
Chrome revenue adjustment recognised in current period/year 222 (20) (20)
The six months ended 31 March 2019 includes PGM revenue of US$31.3 million (six months ended
31 March 2018: US$28.7 million and year ended 30 September 2018: US$29.7 million) and chrome revenue
of US$31.0 million (six months ended 31 March 2018: US$46.2 million and year ended 30 September 2018:
US$48.5 million) that was based on provisional results as final prices and surveys were not yet
available at the date of this report.
6. COST OF SALES
Six months Six months Year
ended ended ended
31 March 31 March 30 Sept
2019 2018 2018
Reviewed Reviewed Audited
US$'000 US$'000 US$'000
Mining 49 550 55 349 105 376
Salaries and wages 6 843 7 816 15 124
Utilities 4 419 4 770 10 319
Diesel 377 310 650
Materials and consumables 5 774 5 605 11 174
Reagents 2 123 2 287 4 471
Steel balls 2 454 3 773 6 715
Overhead 3 112 3 375 4 117
State royalties 1 277 1 595 2 916
Depreciation - property, plant and equipment 13 139 16 273 29 008
Cost of commodities 6 841 7 252 18 644
Impairment and write off of property, plant and equipment 1 909 894 3 630
Change in inventories - finished products and ore stockpil (677) (6 101) 3 781
Total cost of sales excluding selling costs 97 141 103 198 215 925
Selling costs 24 748 28 290 58 453
Freight services 12 495 11 948 23 404
Cost of sales 134 384 143 436 297 782
7. ADMINISTRATIVE EXPENSES
Six months Six months Year
ended ended ended
31 March 31 March 30 Sept
2019 2018 2018
Reviewed Reviewed Audited
US$'000 US$'000 US$'000
Directors and staff costs
Non-executive directors 313 295 612
Employees: Salaries 6 310 8 121 15 459
Bonuses 1 171 2 650 3 262
Pension fund, medical aid and other contributions 933 843 1 707
8 727 11 909 21 040
Audit - external audit services 143 313 490
Audit - other services* 5 - 90
Consulting 932 697 2 611
Corporate and social investment 55 30 157
Depreciation 378 500 850
Discount facility and related fees 380 432 701
Equity-settled share-based payment expense 1 047 1 978 4 019
Internal audit 39 39 206
Listing fees and investor relations 85 - 461
Health and safety 495 419 1 019
Impairment and write off of property, plant and equipment - - 267
Insurance 380 377 697
Legal and professional 206 236 634
Loss on disposal of property, plant and equipment 16 13 37
Office administration, rent and utilities 443 315 1 296
Security 695 1 193 1 776
Telecommunications and IT related 1 425 793 1 374
Training 169 150 504
Travelling and accommodation 397 214 410
Sundry 305 814 593
16 322 20 422 39 232
* Other services paid to the external auditor relates to tax and accounting services as approved by
the Audit Committee.
31 March 31 March 30 Sept
2019 2018 2018
Reviewed Reviewed Audited
Number of employees 1 787 1 723 1 758
8. TAX
Six months Six months Year
ended ended ended
31 March 31 March 30 Sept
2019 2018 2018
Reviewed Reviewed Audited
US$'000 US$'000 US$'000
Corporate income tax for the period/year
Cyprus 1 089 1 457 2 913
South Africa 785 1 300 3 002
1 874 2 757 5 915
Special contribution for defence in Cyprus 3 2 5
Deferred tax
Originating and reversal of temporary differences 190 5 836 7 933
Dividend withholding tax - 158 158
Tax charge 2 067 8 753 14 011
Reconciliation between tax charge and accounting
profit at applicable tax rates
Profit before tax 10 222 37 166 64 983
Add share of loss of investment accounted for
using the equity method 816 - 62
Tharisa plc and subsidiary companies' profit before tax 11 038 37 166 65 045
Notional tax on profit before tax, calculated at
the Cypriot income tax rate of 12.5% 1 380 4 646 8 131
(31 March 2018 and 30 September 2018: 12.5%)
Tax effects of:
Different tax rates from the standard
Cypriot income tax rate 542 3 485 4 978
Tax exempt income
Gain on bargain purchase - - (230)
Interest received - (8) (12)
Other (2) - -
Non-deductible expenses
Investment related 78 411 856
Interest paid 4 2 5
Capital expenses 33 58 63
Other - 134 152
Tax losses not recognised (3) - -
Recognition of deemed interest income for tax purposes 35 25 68
Income tax charge for the period/year 2 067 8 753 14 011
Tax is recognised on management's best estimate of the weighted average annual income tax rate expected
for the full financial year applied to the pre-tax income of the period/year.
Under certain conditions interest income may be subject to defence contribution at the rate of 30.0%
in Cyprus. Such interest income is treated as non-taxable in the computation of corporation taxable
income. In certain instances, dividends received from abroad may be subject to defence contribution
at the rate of 17.0%.
The Group's consolidated effective tax rate for the six months ended 31 March 2019 was 20.2% (six months
ended 31 March 2018: 23.6% and year ended 30 September 2018: 21.6%).
At 31 March 2019, the Group's unredeemed capital balance available for offset against future mining
taxable income in South Africa amounted to US$104.9 million (31 March 2018: US$124.0 million and
30 September 2018: US$111.1 million).
Other than Cyprus and South Africa, no provision for tax in other jurisdictions was made as these
entities either sustained losses for taxation purposes or did not earn any assessable profits.
9. EARNINGS PER SHARE
The calculation of basic and diluted earnings per share and headline and diluted earnings per share
have been based on the profit attributable to the ordinary shareholders of the Company and the
weighted average number of ordinary shares outstanding. Treasury shares are excluded from the
weighted average number of ordinary shares outstanding. Vested share appreciation rights ('SARS')
issued to employees at award prices lower than the current share price, results in a potential
dilutive impact on the weighted average number of issued ordinary shares and have been included
in the calculation of dilutive weighted average number of issued ordinary shares. Vested SARS issued
to employees at award prices higher than the current share price, were excluded from the calculation
of diluted weighted average number of issued ordinary shares because their effect would have been
anti-dilutive.
Basic and diluted earnings per share
Six months Six months Year
ended ended ended
31 March 31 March 30 Sept
2019 2018 2018
Reviewed Reviewed Audited
Profit for the year attributable to
ordinary shareholders (US$'000) 9 488 25 960 48 433
Number of shares in issue at the end of the
period ('000) 265 000 261 000 265 000
Less: Treasury shares (1 196) (806) (4 098)
Number of shares in issue at the end of the
period ('000) 263 804 260 194 260 902
Weighted average number of issued ordinary shares
for basic earnings per share ('000) 262 358 260 141 260 329
Weighted average number of issued ordinary shares
for diluted earnings per share ('000) 264 171 261 782 264 531
Earnings per share
Basic (US$ cents) 4 10 19
Diluted (US$ cents) 4 10 18
Headline and diluted headline earnings per share
Six months Six months Year
ended ended ended
31 March 31 March 30 Sept
2019 2018 2018
Reviewed Reviewed Audited
Headline earnings for the year attributable to
ordinary shareholders (US$'000) 10 513 25 722 49 134
Weighted average number of issued ordinary
shares for basic headline earnings per share ('000) 262 358 260 141 260 329
Weighted average number of issued ordinary
shares for diluted headline earnings per share ('000) 264 171 261 782 264 531
Headline earnings per share
Basic (US$ cents) 4 10 19
Diluted (US$ cents) 4 10 19
Reconciliation of profit to headline earnings
Six months ended 31 March 2019 Six months Year
(Reviewed) ended ended
31 March 30 Sept
Non- 2018 2018
controlling Net Net
Gross Tax interest Net Reviewed Audited
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Profit attributable
to ordinary
shareholders 9 488 25 960 48 433
Adjustments:
Gain on bargain
purchase - - - - (1 394) (1 394)
Impairment of
property, plant and
equipment 1 909 (535) (357) 1 017 477 2 076
Exchange loss on
net change in
investment in
foreign subsidiary - - - - 672 -
Loss on disposal of
property, plant and
equipment 15 (4) (3) 8 7 19
Headline earnings 10 513 25 722 49 134
10. PROPERTY, PLANT AND EQUIPMENT
31 March 31 March 30 Sept
2019 2018 2018
Reviewed Reviewed Audited
US$'000 US$'000 US$'000
Cost 369 603 396 139 353 201
Accumulated depreciation (100 555) (87 605) (88 890)
Net book value 269 048 308 534 264 311
Reconciliation of net book value
Balance at the beginning of the period/year 264 311 232 559 232 559
Adoption of IFRS 16 - 1 166 1 166
264 311 233 725 233 725
Recognition of right-of-use asset 2 220 5 214 7 701
Additions 24 348 17 670 40 454
Business combination - 29 879 29 879
Remeasurement 17 - -
Disposal (57) (68) (156)
Depreciation (13 517) (14 369) (29 858)
Impairment and assets written off (1 909) (894) (3 897)
Exchange adjustment on translation (6 365) 37 377 (13 537)
269 048 308 534 264 311
There were no additions to the deferred stripping asset during the six months ended 31 March 2019.
During the six months ended 31 March 2018 and the year ended 30 September 2018, additions to property,
plant and equipment includes additions to the deferred stripping asset of US$1.0 million and
US$1.3 million respectively.
The estimated economically recoverable proved and probable mineral reserve was reassessed at
1 October 2018 which gave rise to a change in accounting estimate. The remaining reserve that
management had previously assessed was 97.0 Mt (at 1 October 2017) and at 1 October 2018 was
assessed to be 92.9 Mt. After taking into account depletion of the reserve during the year ended
30 September 2018 (4.9 Mt), the remaining reserve increased by 0.8 Mt at 1 October 2018.
As a result the expected useful life of the plant increased. The impact of the change on the actual
depreciation expense, included in cost of sales, is a reduced depreciation charge of US$0.2 million.
Included in mining assets and infrastructure are projects under construction of US$21.4 million
(31 March 2018: US$25.3 million and 30 September 2018: US$20.5 million).
Securities
At 31 March 2019, US$11.4 million of the carrying amount of the Group's mining fleet was pledged as
security against the equipment loan facility (31 March 2018: US$6.1 million and 30 September 2018:
US$11.4 million).
Assets written off/impairment
During the six months ended 31 March 2019, the Group impaired and scrapped assets totalling
US$1.9 million (six months ended 31 March 2018: US$0.9 million and year ended 30 September 2018:
US$3.9 million). The impairment and assets written off relate to mining fleet identified as no
longer fit for use and premature component failures.
11. INVESTMENT ACCOUNTED FOR USING THE EQUITY METHOD
During the year ended 30 September 2018, the Group acquired 26.8% of the issued share capital
of Karo Mining Holdings Limited ('Karo Holdings'), a company incorporated in Cyprus, for a total
cash consideration of US$4.5 million from the Leto Settlement, a related party.
31 March 31 March 30 Sept
2019 2018 2018
Reviewed Reviewed Audited
US$'000 US$'000 US$'000
Investment in Karo Holdings
Opening balance 4 438 - -
Shares acquired - - 4 500
Share of total comprehensive loss (816) - (62)
3 622 - 4 438
Total share of comprehensive loss (816) - (62)
Summarised consolidated financial information
of Karo Holdings
Summarised statement of financial position
Non-current assets 484 - 122
Current assets 174 - 3
Non-current liabilities (2 250) - (264)
Current liabilities (1 684) - (91)
Net deficit (100%) (3 276) - (230)
Summarised statement of comprehensive income
Operating expenses (2 986) - (290)
Tax (60) - 60
Total comprehensive loss (3 046) - (230)
Carrying amount of investment
Group's share of net deficit (26.8%) (878) - (62)
Purchase consideration 4 500 - 4 500
Carrying amount 3 622 - 4 438
Karo Holdings entered into an Investment Project Framework Agreement with the Republic of Zimbabwe
in terms of which Karo Holdings, through any of its Zimbabwean incorporated subsidiaries (refer to
note 16), has undertaken to establish a platinum group metals mine, concentrators, smelters, a base
metal and precious metals refinery as well as power generation capacity for the operations. The
functional and presentation currency of Karo Holdings and its subsidiaries is US$.
Contingencies and commitments
The Group has undertaken to provide funding up to US$8.0 million to Karo Holdings as a repayable
debt facility. This will be utilised to undertake initial geological exploration and sampling work
to determine a compliant mineral resource which will enhance the value of the investment in
Karo Holdings.
12. INVENTORIES
31 March 31 March 30 Sept
2019 2018 2018
Reviewed Reviewed Audited
US$'000 US$'000 US$'000
Finished products 8 808 8 853 7 199
Ore stockpile 1 186 4 798 1 338
Consumables 17 216 13 239 14 623
27 210 26 890 23 160
(Impairment)/impairment reversal of consumables (19) 13 (117)
Net realisable value write down of finished products (780) - -
(799) 13 (117)
Total carrying amount 26 411 26 903 23 043
Inventories are stated at the lower of cost or net realisable value. During the period ended
31 March 2019, the Group impaired certain consumables and spares as the operational use became
doubtful with no anticipated recoverable amount or value in use. The impairment charge is allocated
55.0% to the PGM segment and 45.0% to the chrome segment (31 March 2018: impairment reversal
allocated 45.0% to the PGM segment and 55.0% to the chrome segment and 30 September 2018: allocated
equally between the PGM segment and chrome segment).
PGM finished products were written down to the net realisable value during the period ended
31 March 2019. The net realisable value write down amounted to US$0.8 million (31 March 2018 and
30 September 2018: no net realisable write downs) and is allocated to the PGM segment.
13. SHARE CAPITAL AND PREMIUM
Share capital and premium
The Company did not issue any ordinary shares during the period ended 31 March 2019 and 31 March 2018.
Allotments during the year ended 30 September 2018 were in respect of 4 000 000 ordinary shares issued
as treasury shares to satisfy the vesting of conditional awards and potential future settlement of
appreciation rights of the participants' of the Tharisa Share Award Plan.
During the period ended 31 March 2019, 2 901 430 (period ended 31 March 2018: 181 074 and year ended
30 September 2018: 889 703) ordinary shares were transferred from treasury shares to satisfy the transfer
of vested conditional awards and the exercise of appreciation rights by the participants of the Tharisa
Share Award Plan.
At 31 March 2019, the Company had 265 000 000 (31 March 2018: 261 000 000 and 30 September 2018:
265 000 000) ordinary shares in issue of which 1 196 141 (31 March 2018: 806 200 and 30 September 2018:
4 097 571) were held in treasury.
14. BORROWINGS
31 March 31 March 30 Sept
2019 2018 2018
Reviewed Reviewed Audited
US$'000 US$'000 US$'000
Non-current
Facilities 8 937 21 865 13 711
Equipment loan facility 9 742 4 114 1 931
Finance leases 6 466 9 074 7 505
Loan 3 019 - 4 134
28 164 35 053 27 281
Current
Facilities 17 212 10 860 9 104
Equipment loan facility 6 064 5 370 5 564
Finance leases 4 841 4 951 4 299
Loan 1 986 - 1 928
Bank credit facilities 16 435 20 938 29 243
46 538 42 119 50 138
Finance leases
Minimum lease payments due:
Within one year 5 810 6 103 5 284
Two to five years 7 759 10 190 8 930
13 569 16 293 14 214
Less: Future finance charges (2 262) (2 268) (2 410)
Present value of minimum lease payments due 11 307 14 025 11 804
Present value of minimum lease payments due:
Within one year 4 929 4 951 4 293
Two to five years 6 378 9 074 7 511
11 307 14 025 11 804
During the six months ended 31 March 2019, a financial covenant relating to the facilities of Tharisa
Minerals Proprietary Limited was reset with the EBITDA to interest cover being reduced from greater
than 4.0 times to greater than 3.0 times as at the 31 March 2019 and 30 September 2019 ratio measurement
dates. All other financial covenants remained unchanged.
At 31 March 2019, 31 March 2018 and 30 September 2018 the Group complied with all financial covenants
associated to the borrowings.
The Group had unutilised borrowing facilities of US$19.3 million (ZAR280 million) available at
31 March 2019 (31 March 2018: US$33.8 million (ZAR400 million) and 30 September 2018:
US$28.3 million (ZAR400 million)).
31 March 2019 (reviewed) 31 March 2019 (reviewed)
Equipment Bank 31 March 30 Sept
loan Finance credit Total 2018 2018
Facilities facility leases facilities Loan borrowings Reviewed Audited
US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Balance at the beginning
of the period/year 22 815 7 495 11 804 29 243 6 062 77 419 49 401 49 401
Adoption of IFRS 16 - - - - - - 1 205 1 205
22 815 7 495 11 804 29 243 6 062 77 419 50 606 50 606
Changes from financing
cash flows
Advances: bank credit
facilities - - - 75 569 - 75 569 90 243 192 834
Repayment: bank credit
facilities - - - (88 385) - (88 385) (98 377) (192 720)
Net (repayment)/proceeds
of bank credit facilities - - - (12 816) - (12 816) (8 134) 114
Advances received 8 476 11 197 - - - 19 673 62 191 68 220
Repayment of borrowings (4 709) (3 504) - - (937) (9 150) (41 109) (48 503)
Lease payments - - (3 101) - - (3 101) (4 608) (6 463)
Repayment of interest (1 371) (335) - (273) (314) (2 293) (2 550) (4 433)
Changes from
financing cash flows 2 396 7 358 (3 101) (13 089) (1 251) (7 687) 5 790 8 935
Foreign currency
translation differences (615) (366) (268) - (120) (1 369) 5 545 (3 285)
Liability-related changes
Lease agreements entered into - - 2 237 - - 2 237 5 214 7 656
Business combination - - - - - - 7 003 7 003
Interest expense 1 553 414 644 281 314 3 206 4 184 6 021
Revaluation of foreign
denominated loan - 905 (9) - - 896 (1 170) 483
Total liability-related
changes 1 553 1 319 2 872 281 314 6 339 15 231 21 163
Balance at the end
of the period/year 26 149 15 806 11 307 16 435 5 005 74 702 77 172 77 419
Non-current borrowings 8 937 9 742 6 466 - 3 019 28 164 35 053 27 281
Current borrowings 17 212 6 064 4 841 16 435 1 986 46 538 42 119 50 138
Total borrowings 26 149 15 806 11 307 16 435 5 005 74 702 77 172 77 419
15. FINANCIAL RISK MANAGEMENT
31 March 31 March 30 Sept
Fair 2019 2018 2018
value Reviewed Reviewed Audited
level US$'000 US$'000 US$'000
Financial assets measured at fair value
Investments in equity instruments Level 1 22 37 40
Investments in money markets, current
accounts, cash funds and income funds Level 2 6 141 5 791 5 012
Discount facility Level 2 - 676 -
Forward exchange contracts Level 2 - 188 804
Option to acquire shares in Salene
Chrome Zimbabwe (Private) Limited Level 3 634 - 142
Trade and other receivables
measured at fair value
PGM receivable Level 2 24 326 18 261 25 355
Financial liabilities measured
at fair value
Discount facility Level 2 662 - 1 000
Forward exchange contracts Level 2 382 - -
Financial assets at amortised cost
Trade receivables 24 997 44 634 38 645
Contract assets 1 059 - 2 229
Cash and cash equivalents 66 817 59 930 66 791
Financial liabilities at
amortised cost
Borrowings 74 702 77 172 77 419
Contract liabilities 1 059 - 2 229
Trade payables 14 003 30 131 18 363
There were no transfers between level 1 and level 2 fair value measurements during the reporting periods.
The Group considers that the fair values of the financial assets and financial liabilities approximate
their carrying values at each reporting date.
Fair value hierarchy
All financial instruments for which fair value is recognised or disclosed are categorised within the fair
value hierarchy, based on the lowest level input that is significant to the fair value measurement as a
whole, as follows:
- Level 1: fair values measured using quoted prices (unadjusted) in active markets for identical
financial instruments (highest level).
- Level 2: fair values measured using quoted prices in active markets for similar financial instruments,
or using valuation methodologies in which all significant inputs are directly or indirectly based on
observable market data.
- Level 3: fair values measured using valuation methodologies in which any significant inputs are not
based on observable market data.
16. RELATED PARTY TRANSACTIONS AND BALANCES
In the normal course of the business, the Group enters into various transactions with related parties.
Related party transactions exist between shareholders, directors, directors of subsidiaries and key
management personnel. Outstanding balances at each reporting period are unsecured and settlement
occurs in cash. All intergroup transactions have been eliminated on consolidation.
31 March 31 March 30 Sept
2019 2018 2018
Reviewed Reviewed Audited
US$'000 US$'000 US$'000
Transactions and balances with related parties:
Other financial assets
Option to acquire shares in Salene Chrome
Zimbabwe (Private) Limited 634 - 142
The Company has been granted a call option to acquire a 90.0% shareholding in Salene Chrome Zimbabwe
(Private) Limited ('Salene') a company incorporated in Zimbabwe from the Leto Settlement, a related party.
Salene holds certain special grants under the Zimbabwe Mines and Minerals Act which entitles it to
prospect/mine the minerals thereon. The call option is exercisable upon completion of an initial
exploration programme.
In consideration of the call option, the Group will undertake the initial exploration programme including
the costs thereof up to an amount of US$3.2 million. The decision to exercise the call option is at the
Group's election.
At the reporting dates, insufficient information was available to accurately determine the fair value
of the call option, more specifically the value of the net assets of the special grants or the profits
attributable thereto. The Group believes this may only be possible once the initial exploration programme
has been completed. As a result, the fair value at each reporting date represents the aggregate of the
initial exploration programme costs.
31 March 31 March 30 Sept
2019 2018 2018
Reviewed Reviewed Audited
US$'000 US$'000 US$'000
Trade and other receivables
The Tharisa Community Trust 5 5 1
Rocasize Proprietary Limited 61 103 71
Karo Mining Holdings Limited 61 - 20
Karo Zimbabwe Holdings (Private) Limited 505 - 254
Karo Platinum (Private) Limited 1 998 - 40
Karo Power Generation (Private) Limited 164 - -
Salene Chrome Zimbabwe (Private) Limited 265 - 12
Salene Technologies Proprietary Limited - - 4
Salene Mining Proprietary Limited 16 - 15
3 075 108 417
Transactions and balances with related parties (continued)
31 March 31 March 30 Sept
2019 2018 2018
Reviewed Reviewed Audited
US$'000 US$'000 US$'000
Trade and other payables
The Leto Settlement - - 2 000
The Tharisa Community Trust - 5 -
Rocasize Proprietary Limited 1 103 31
1 108 2 031
Amounts due to directors
A Djakouris 22 21 22
JD Salter 26 24 31
OM Kamal 15 14 16
C Bell 24 20 25
R Davey 19 17 20
J Ka Ki Chen 11 11 11
ZL Hong 11 - 19
128 107 144
Total other payables 129 215 2 175
Interest-bearing - accrued dividends payable
to related parties
Arti Trust - 2 852 -
Ditodi Trust - 245 -
Makhaye Trust - 245 -
The Phax Trust - 488 -
The Rowad Trust - 245 -
MJ Jacquet-Briner - 245 -
- 4 320 -
Acquisition of 26.8% of Karo Mining Holdings Limited from:
The Leto Settlement - - 4 500
Six months Six months Year
ended ended ended
31 March 31 March 30 Sept
2019 2018 2018
Reviewed Reviewed Audited
US$'000 US$'000 US$'000
Cost of sales
Rocasize Proprietary Limited 155 101 234
Consulting fees received
Rocasize Proprietary Limited 16 13 32
Salene Chrome Zimbabwe (Private) Limited 21 - -
Karo Mining Holdings Limited 16 - -
Karo Platinum (Private) Limited 181 - -
Karo Power Generation (Private) Limited 5 - -
Karo Zimbabwe Holdings (Private) Limited 229 - 128
Consulting fees paid
Rocasize Proprietary Limited - - 234
Salene Mining Proprietary Limited - 15 17
Interest expense
Arti Trust - 135 514
Ditodi Trust - 14 47
Makhaye Trust - 14 47
The Phax Trust - 27 93
The Rowad Trust - 14 47
MJ Jacquet-Briner - 14 47
- 218 795
Compensation to directors and key management
Provident
Share- fund
Salary and Expense based and risk
Six months ended fees allowances payments benefits Bonus Total
31 March 2019 (reviewed) US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Non-executive directors 313 - - - - 313
Executive directors 800 4 1 144 38 145 2 131
Other key management 459 14 745 49 93 1 360
1 572 18 1 889 87 238 3 804
Provident
Share- fund
Salary and Expense based and risk
Six months ended fees allowances payments benefits Bonus Total
31 March 2018 (reviewed) US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Non-executive directors 295 - - - - 295
Executive directors 703 5 - 27 652 1 387
Other key management 489 16 - 40 366 911
1 487 21 - 67 1 018 2 593
Provident
Share- fund
Salary and Expense based and risk
Year ended fees allowances payments benefits Bonus Total
30 Sept 2019 (audited) US$'000 US$'000 US$'000 US$'000 US$'000 US$'000
Non-executive directors 612 - - - - 612
Executive directors 1 361 9 760 83 700 2 913
Other key management 932 31 1 222 107 420 2 712
2 905 40 1 982 190 1 120 6 237
Awards to directors and key management
Six months ended
31 March 2019 (reviewed) Opening
Ordinary shares balance Allocated Vested Forfeited Total
LTIP - executive directors 1 605 423 - - - 1 605 423
LTIP - key management 1 099 439 - - - 1 099 439
Six months ended
31 March 2018 (reviewed) Opening Allocated Vested Forfeited Total
Ordinary shares balance
LTIP - executive directors 1 808 316 - - - 1 808 316
LTIP - key management 1 202 153 - - - 1 202 153
Year ended
30 Sept 2018 (audited) Opening Allocated Vested* Forfeited Total
Ordinary shares balance
LTIP - executive directors 1 808 316 697 206 (900 099) - 1 605 423
LTIP - key management 1 202 153 483 348 (586 062) - 1 099 439
Six months ended
31 March 2019 (reviewed) Opening
Ordinary shares balance Allocated Vested Forfeited Total
SARS - executive directors 1 118 547 - - - 1 118 547
SARS - key management 765 744 - - - 765 744
Six months ended
31 March 2018 (reviewed) Opening Allocated Vested Forfeited Total
Ordinary shares balance
SARS - executive directors 1 362 327 - - - 1 362 327
SARS - key management 924 136 - - - 924 136
* At 30 September 2018 the vested shares had not yet been transferred to the respective employees.
Year ended
30 Sept 2018 (audited) Opening Allocated Vested Forfeited Total
Ordinary shares balance
SARS - executive directors 1 362 327 697 206 (940 986) - 1 118 547
SARS - key management 924 136 483 348 (641 740) - 765 744
Relationships between parties
The Tharisa Community Trust and Rocasize Proprietary Limited
The Tharisa Community Trust is a shareholder of Tharisa Minerals Proprietary Limited and owns 100% of
the issued ordinary share capital of Rocasize Proprietary Limited.
Arti Trust, Phax Trust and Rowad Trust
A director of the Company is a beneficiary of these trusts.
Ditodi Trust and Makhaye Trust
Certain of the non-controlling shareholders of Tharisa Minerals Proprietary Limited are beneficiaries of
these trusts.
MJ Jacquet-Briner
MJ Jacquet-Briner is a director of Tharisa Minerals Proprietary Limited and is a shareholder in the
non-controlling interest of Tharisa Minerals Proprietary Limited.
The Leto Settlement
The beneficial shareholder of Medway Developments Limited, a material shareholder in the Company.
Salene Chrome Zimbabwe (Private) Limited
This company is a wholly owned subsidiary of the Leto Settlement, the beneficial shareholder of Medway
Developments Limited, a material shareholder in the Company.
Salene Mining Proprietary Limited and Salene Technologies Proprietary Limited
A director of the Company is a director of these entities.
Karo Mining Holdings Limited, Karo Zimbabwe Holdings (Private) Limited, Karo Platinum (Private) Limited
and Karo Power Generation (Private) Limited
The Company owns 26.8% of the issued share capital of Karo Mining Holdings Limited. The controlling
shareholder of Karo Mining Holdings Limited is the Leto Settlement.
Karo Mining Holdings Limited owns 100% of the issued share capital of Karo Zimbabwe Holdings (Private)
Limited, Karo Platinum (Private) Limited and Karo Power Generation (Private) Limited.
17. CONTINGENT LIABILITIES
At 31 March 2019, the Group had certain unresolved tax matters. Included in trade and other receivables
is an amount of ZAR120.9 million (31 March 2018: ZAR104.4 million and 30 September 2018: ZAR141.3 million)
that relates to diesel rebates receivable from the South African Revenue Service ('SARS') in respect of
the mining operations. SARS is disputing the refundability of this amount. The Group is strongly of the
view that it fully complies with all the regulations to be entitled to this refund and is opposing SARS'
dispute. The Group will take the necessary action to recover the amount due.
As at 31 March 2019, there is no litigation (31 March 2018 and 30 September 2018: no litigation), current
or pending, which is considered likely to have a material adverse effect on the Group.
18. CAPITAL COMMITMENTS AND GUARANTEES
31 March 31 March 30 Sept
2019 2018 2018
Reviewed Reviewed Audited
US$'000 US$'000 US$'000
Capital commitments
Authorised and contracted 4 804 10 841 4 929
Authorised and not contracted 1 284 1 718 1 091
6 088 12 559 6 020
The commitments are with respect to property, plant and equipment and are outstanding at the respective
reporting period.
The Company has made a commitment to Karo Mining Holdings Limited to fund the initial exploration programme,
feasibility study and development of the projects in Zimbabwe not exceeding US$8.0 million
(refer to note 11).
Guarantees of ZAR266.1 million (31 March 2018: ZAR236.8 million and 30 September 2018: ZAR266.1 million)
have been issued by third parties and financial institutions on behalf of the Group consisting mainly of
guarantees issued to the Department of Mineral Resources in respect of future environmental rehabilitation
amounting to ZAR234.7 million (31 March 2018: ZAR205.4 million and 30 September 2018: ZAR234.7 million).
19. EVENTS AFTER THE REPORTING PERIOD
The Board of Directors is not aware of any matter or circumstance arising since the end of the reporting
period that will impact these interim consolidated financial statements.
20. DIVIDENDS
During the period ended 31 March 2019, the Company declared and paid a final dividend of
US$ 2 cents per share in respect of the financial year ended 30 September 2018.
The Company declared and paid an interim dividend of US$ 2 cents per share during the year ended
30 September 2018.
During the period ended 31 March 2018, the Company declared and paid a final dividend of
US$ 5 cents per share in respect of the financial year ended 30 September 2017.
A pdf of this announcement is available on the company's website http://www.tharisa.com.
RNS users, please click on, or paste the following link into your web browser, to view
the associated pdf document. http://www.tharisa.com
Paphos, Cyprus
15 May 2019
JSE Sponsor
Investec Bank Limited
Investor relations contact:
Tharisa plc
Daniel Thole/Ilja Graulich
+27 61 400 2939/+27 83 604 0820
Financial PR contacts:
Bobby Morse/Augustine Chipungu
+44 020 7466 5000
tharisa@buchanan.uk.com
Broker contacts:
Peel Hunt LLP (UK Joint Broker)
Ross Allister/James Bavister/David McKeown
+44 207 7418 8900
BMO Capital Markets Limited (UK Joint Broker)
Jeffrey Couch/Thomas Rider
+44 020 7236 1010
Berenberg (UK Joint Broker)
Matthew Armitt/Detlir Elezi
+44 20 3207 7800
Nedbank Limited (acting through its Corporate and Investment
Banking division) (RSA Broker)
Shabbir Norath/Mlaoli Tonise
+27 11 294 3537/+27 11 294 5382
LEGAL DISCLAIMER
Some of the information in these materials may contain projections or forward looking statements regarding future
events, the future financial performance of the Group, its intentions, beliefs or current expectations and those of its
officers, directors and employees concerning, among other things, the Group's results of operations, financial condition,
liquidity, prospects, growth, strategies and business. You can identify forward looking statements by terms such as
"expect", "believe", "anticipate", "estimate", "intend", "will", "could", "may" or "might" or the negative of such terms or
other similar expressions. These statements are only predictions and actual results may differ materially. Unless
otherwise required by applicable law, regulation or accounting standard, the Group does not intend to update these statements to
reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events.
Many factors could cause the actual results to differ materially from those contained in projections or forward
looking statements of the Group, including, among others, general economic conditions, the competitive environment, risks
associated with operating in South Africa and market change in the industries the Group operates in, as well as many other
risks specifically related to the Group and its operations.
Date: 15/05/2019 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, 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, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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