RNS Number:3080S
Petmin Limited
05 March 2007
5th March 2007
Petmin Limited
("Petmin" or "the Company")
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE
SIX MONTHS ENDED 31 DECEMBER 2006
Petmin, the Johannesburg-based AIM and JSE-listed (AIM: PTMN) (JSE: PET) mining
company, today announces its interim financial results for the six months to 31
December 2006.
HIGHLIGHTS
*Successful secondary listing on AIM raises GBP3.5 million (R49 million)
*Headline EPS increases by 27%
*Somkhele development nearing completion and first sales expected 2nd
quarter 2007 as planned
*Agreement concluded to dispose of Baobab investment for GBP2.5 million
(R35 million)
NB: The amounts listed in Pounds Sterling (GBP) and Rand (R) have been based on
an exchange rate of GBP1:R14.
For the full interim financial statements, please see http://www.petmin.com
Enquiries:
Petmin
Jan Du Preez (CEO) +27 825 571 979
Bradley Doig (COO) +27 824 597 818
www.petmin.co.za
Numis Securities Limited +44 207 776 1500
John Harrison
Nick Stamp
Parkgreen Communications +44 207 851 7480
Justine Howarth
Victoria Thomas
CHAIRMAN'S STATEMENT
I have the pleasure of announcing Petmin's Interim Results for the period ending
December 31st 2006. In this period, Petmin concluded its successful secondary
listing on the London Stock Exchange's Alternative Investment Market ("AIM") on
20 December, 2006. Petmin issued 40 million new shares at 9 British pence per
share in a general issue of shares for cash on the listing, raising
approximately R49 million gross proceeds. Capital raising expenses of R15
million were posted to share premium. This London listing presents Petmin with a
platform for future growth by:
- improving the acceptability of the Company's shares as a global
currency for the purpose of acquiring or developing new assets
- gaining access to the international pool of capital in the London
market with a view to widening the Company's institutional and retail investors
shareholder base
- increasing the Company's international profile and research coverage
- improving share liquidity in the longer term
PJ Nel
Chairman
5th March 2007
OPERATIONS UPDATE
Revenue for the six months ended 31 December 2006 increased by R102 million
compared to the same period in 2005 as the revenues reflect a full six months of
Springlake's operations whereas the comparatives only included one month after
its acquisition on 30 November 2005.
Gross profit increased by R12.5 million or 112% from the same period in 2005.
The improved performance was largely due to an exceptional profit reported by
SamQuarz (Pty) Limited ("SamQuarz") as production and sales volumes improved and
certain chert stocks, which were previously ascribed a zero value, were sold.
Cash of R30 million was generated by operations before outflows from changes in
working capital of R48 million. Investment in trade receivables increased by R25
million largely due to export shipments made by Springlake Colliery in the
latter part of the reporting period. Trade payables reduced by R15 million as
the trade payables balance at 30 June 2006 included R17 million capital work in
progress related to the Somkhele project which was paid in the period under
review. Capital expenditure of R68 million was incurred in the period under
review, R53 million of which related to the development of the Somkhele project.
SamQuarz silica mine
Production at SamQuarz has increased approximately 46% in the six months ended
31 December 2006 when compared to 31 December 2005.The increased production is
in line with improved demand from customers for SamQuarz product. Profitability
was further enhanced by disciplined cost control by mine management. The results
for the six months to 31 December 2006 include the recognition of additional
profits after tax on the sale of certain chert stocks, that were previously
ascribed a zero value, to an amount of R2.9 million.
The production from the newly developed areas of the SamQuarz open pit, whilst
generating the same overall product yield, has resulted in a different sizing
distribution of products. This may necessitate additional capital expenditure at
SamQuarz in order to meet the increased demand from key customers. Management
does not foresee any material effect on the profitability of SamQuarz.
Springlake Colliery
Springlake's performance was disappointing in the six months to 31 December
2006. Although the monthly average run-of-mine ("ROM") production has increased
by 40% when compared to the average monthly production for the seven months to
30 June 2006, this has come mainly from an improved performance from the
opencast sections. Management's focus for the next six months will be on
reducing the unit cost of production by increasing production volumes and
improving efficiencies in the underground sections.
With increased opencast production planned in the second quarter of 2007 and
with the measures introduced to the underground operations, management expects a
significantly improved performance in the six months to 30 June 2007. The coal
market remains buoyant and Springlake is expected to enjoy these prices for the
remainder of the calendar year.
Somkhele anthracite project
The Somkhele anthracite project is nearing completion with first sales predicted
in the second quarter of calendar 2007 as budgeted. The Group has drawn down R36
million on the R40 million banking facilities negotiated with The Standard Bank
of South Africa Limited ("Standard Bank").
With first sales from this project expected in the second quarter of 2007,
management expects a positive, although small, contribution from Somkhele in the
six months to 30 June 2007.
Mining rights
In October 2006, Springlake Colliery was granted a new order mining right on
portions of the farm Besterdale. The granting of this mining right paves the way
for Springlake to increase the capacity of its opencast operations from
approximately 40 000 run-of-mine tonnes ("ROM(t)") per month to approximately 70
000 ROM(t) per month.
Increase in authorised share capital
In the period under review, the Company increased its authorised share capital
from 500,000,000 ordinary shares of 25 cents each to 1,000,000,000 ordinary
shares of 25 cents each.
Disposal of investment in Baobab Mining and Exploration (Pty) Limited ("Baobab")
The Company has reached an agreement with GVM Metals Limited to dispose of its
investment in Baobab for an amount of GBP 2.5 million (+/- R35 million). The
sale is subject to ministerial approval, by no later than 30 April 2007, in
terms of the Mineral and Petroleum Resource Development Act, 2002. In accordance
with IFRS, assets of R1.5 million have been disclosed as assets held for sale
and are carried at cost which is lower than their net realisable value. Revenue
on the sale will be recorded when the last remaining suspensive condition is
satisfied.
An amount of R1.5 million will only become payable to a third-party mineral
consultant should the remaining suspensive clause be satisfied and the sale of
Baobab be concluded.
Contingent consideration reserve - Springlake profit warranty
As noted in the 30 June 2006 Annual Report, the directors have given further
consideration to the financial performance of the Springlake Colliery. Petmin
has reached an agreement with the Springlake Vendors that the profit warranty
will not be met. The contingent consideration has been re-estimated to R1.5
million, resulting in an amount of R26.052 million being recognised as "profit
on acquisition of subsidiary" in the income statement during the period under
review.
Condensed Consolidated Income Statement
GROUP Reviewed Reviewed Audited
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2006 2005 2006
Note R'000 R'000 R'000
Revenue 159,500 57,661 176,676
Cost of sales -135,737 -46,430 -145,663
--------- --------- ---------
Gross profit 23,763 11,231 31,013
Other Income
- Profit on acquisition of
subsidiary 26,052 33,822 33,822
Other expenses (Including
administration expenses) -6,020 -4,195 -7,859
--------- --------- ---------
Operating profit before
financing costs 43,795 40,858 56,976
Net finance (expense) / income -488 57 -800
--------- --------- ---------
- Financial income (interest
received) 874 387 1,923
- Financial expenses (interest
paid) -1,362 -330 -2,723
--------- --------- ---------
--------- --------- ---------
Profit before tax 43,307 40,915 56,176
Income tax expense -4,809 -1,916 -7,576
--------- --------- ---------
Profit for the period 38,498 38,999 48,600
========= ========= =========
Basic earnings per ordinary
share (cents) 4 8.73 17.64 16.38
Diluted earnings per ordinary
share (cents) 4 8.34 16.60 14.85
Condensed Consolidated Cashflow Statement
PETMIN LIMITED
GROUP Reviewed Reviewed Audited
Six months Six months Year
ended ended ended
31 December 31 December 30 June
2006 2005 2006
R'000 R'000 R'000
----------- ----------- ---------
Net cash flow from operating
activities (20 459) 14 014 58 218
----------- ----------- ---------
Cash flows from investing activities
Acquisition of subsidiary,
net of cash acquired - (4 850) (4 850)
Increase in investment in
rehabilitation funds ( 351) - (1 430)
Acquisition of property,
plant and equipment (67 881) (8 318) (70 308)
Proceeds from sale of
property, plant and
equipment 273 - 240
----------- ----------- ---------
Net cash flow from investing
activities (67 959) (13 168) (76 348)
------------ ---------- ---------
Cash flows from financing activities
Proceeds from specific and
general share issues for
cash during the year 34 091 - 95 842
Investment in preference
shares in subsidiary - - (13 000)
Repayment of borrowings (4 771) (1 355) (5 414)
Increase in borrowings 36 529 41 333 1 753
----------- ---------- ----------
Net cash flows from
financing activities 65 849 39 978 79 181
----------- ---------- ----------
Net (decrease)/increase in
cash and cash equivalents (22 569) 40 824 61 051
Cash and cash equivalents at
beginning of period 70 134 9 083 9 083
----------- ---------- ----------
Cash and cash equivalents at
end of period 47 565 49 907 70 134
----------- ---------- ----------
Condensed Consolidated Balance Sheet
GROUP Reviewed Reviewed Audited
31 December 31 December 30 June
2006 2005 2006
ASSETS Note R'000 R'000 R'000
Non-current assets 423,018 310,072 365,772
--------- --------- ---------
Property, plant and equipment 406,718 295,065 349,775
Intangible asset 6,556 6,913 6,735
Investments 2 2 2
Other financial assets 9,742 8,092 9,260
--------- --------- ---------
Current assets 167,418 115,270 155,929
--------- --------- ---------
Assets classified as held for sale 3 1,485 - -
Inventories 49,482 28,760 41,228
Trade and other receivables 68,886 36,603 44,181
Taxation prepaid - - 386
Cash and cash equivalents 47,565 49,907 70,134
--------- --------- ---------
--------- --------- ---------
Total assets 590,436 425,342 521,701
========= ========= =========
EQUITY AND LIABILITIES
Ordinary share capital and reserves 408,985 265,073 360,466
--------- --------- ---------
Share capital 119,972 87,139 109,972
Share premium 158,912 74,812 134,821
Share option reserve 7,123 2,191 5,141
Contingent consideration 3 1,500 27,552 27,552
Retained earnings 121,478 73,379 82,980
--------- --------- ---------
Non-current liabilities 111,966 112,332 82,780
--------- --------- ---------
Shareholder's loan - 40,000 -
Interest bearing loans and
borrowings 41,272 17,740 14,052
Deferred taxation 56,321 41,293 54,495
Environmental rehabilitation
provisions 14,373 13,299 14,233
--------- --------- ---------
Current liabilities 69,485 47,937 78,455
--------- --------- ---------
Trade and other payables 52,513 31,900 67,522
Interest bearing loans and
borrowings 15,387 10,800 10,849
Taxation payable 1,585 5,237 84
--------- --------- ---------
--------- --------- ---------
Total equity and liabilities 590,436 425,342 521,701
========= ========= =========
- - -
Net asset value ("NAV") per share
(cents) 5 85.22 76.05 81.94
Fully diluted NAV per share (cents) 5 79.94 64.58 70.16
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
for the six months ended 31 December 2006
1. SIGNIFICANT ACCOUNTING POLICIES
for the six months ended 31 December 2006
Petmin is domiciled in South Africa. The condensed consolidated interim
financial statements of the Company for the six months ended 31 December 2006
comprise the Company and its subsidiaries (together referred to as the "Group").
The condensed consolidated financial statements were authorised for issue by the
directors on 1 March 2007.
Statement Of Compliance
The condensed consolidated interim financial statements have been prepared in
accordance with International Financial Reporting Standards ("IFRS") for interim
financial statements and the South African Companies Act. The condensed
consolidated interim financial statements do not include all of the information
required for full annual financial statements and should be read in conjunction
with the consolidated annual financial statements for the year ended 30 June
2006.
Basis of preparation
The financial statements are prepared on the historical cost basis, except for
financial instruments which are stated at fair value, where applicable, in terms
of IAS 32 - Financial Instruments: Disclosure and Presentation and IAS 39 -
Financial Instruments: Recognition and Measurement.
The preparation of interim financial statements in conformity with IAS 34 -
Interim Financial Reporting, requires management to make judgements, estimates
and assumptions that affect the application of policies and reported amounts of
assets and liabilities, income and expenses. The estimates and associated
assumptions are based on historical experience and various other factors that
are believed to be reasonable under the circumstances, the results of which form
the basis of making the judgements about carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future periods if the revision affects both current and
future periods. The accounting policies have been applied consistently by Group
entities and have been applied consistently to all periods presented in these
condensed consolidated interim financial statements.
2. Review Of Results
The interim results of the Group as set out above have been reviewed by the
Group's auditors, KPMG Inc., as required by the JSE Limited ("JSE"). The review
report is available for inspection at the Group's registered office.
3. MANAGEMENT COMMENTARY
OPERATIONS
Revenue for the six months ended 31 December 2006 increased by R102 million
compared to the same period in 2005 as the revenues reflect a full six months of
Springlake's operations whereas the comparatives only included one month after
its acquisition on 30 November 2005.
Gross profit increased by R12.5 million or 112% from the same period in 2005.
The improved performance was largely due to an exceptional profit reported by
SamQuarz (Pty) Limited ("SamQuarz") as production and sales volumes improved and
certain chert stocks, which were previously ascribed a zero value, were sold.
Cash of R30 million was generated by operations before out flows from changes in
working capital of R48 million. Investment in trade receivables increased by R25
million largely due to export shipments made by Springlake Colliery in the
latter part of the reporting period. Trade payables reduced by R15 million as
the trade payables balance at 30 June 2006 included R17 million capital work in
progress related to the Somkhele project which was paid in the period under
review. Capital expenditure of R68 million was incurred in the period under
review, R53 million of which related to the development of the Somkhele project.
- SamQuarz silica mine
Production at SamQuarz has increased approximately 46% for the six months ended
31 December 2006 when compared to 31 December 2005. The increased production is
in line with improved demand from customers for SamQuarz product. Profitability
was further enhanced by disciplined cost control by mine management. The results
for the six months to 31 December 2006 include the recognition of additional
profits after tax on the sale of certain chert stocks, that were previously
ascribed a zero value, to an amount of R2.9 million.
- Springlake colliery
Springlake's performance was disappointing for the six months ended 31 December
2006. Although the monthly average Run-of-mine ("ROM") production has increased
by 40% when compared to the average monthly production for the seven months to
30 June 2006, this has come mainly from an improved performance from the
opencast sections. Management's focus for the next six months will be on
reducing the unit cost of production by increasing production volumes and
improving efficiencies in the underground sections.
- Somkhele anthracite project
The Somkhele anthracite project is nearing completion with its first sales
predicted in the second quarter of calendar 2007 as budgeted. The Group has
drawn down R36 million on the R40 million banking facilities negotiated with The
Standard Bank of South Africa Limited ("Standard Bank").
Mining rights
In October 2006, Springlake Colliery was granted a new order mining right on
portions of the farm Besterdale. The granting of this mining right paves the way
for Springlake to increase the capacity of its opencast operations from
approximately 40,000 run-of-mine tonnes ("ROM(t)") per month to approximately
70,000 ROM(t) per month.
Increase in authorised share capital
In the period under review, the Company increased its authorised share capital
from 500,000,000 ordinary shares of 25 cents each to 1,000,000,000 ordinary
shares of 25 cents each.
General issue of shares for cash - Listing on AIM
Petmin concluded its successful secondary listing on the London Stock Exchange's
Alternative Investment Market ("AIM") on 20 December, 2006. Petmin issued 40
million new shares at 9 British pence per share in a general issue of shares for
cash on the listing, raising approximately R49 million gross proceeds. Capital
raising expenses of R15 million were posted to share premium. The listing
presents Petmin with a platform for future growth by:
- improving the acceptability of the Company's shares as a global currency for
the purpose of acquiring or developing new assets;
- gaining access to the international pool of capital in the London market with
a view to widening the Company's institutional and retail investors shareholder
base;
- increasing the Company's international profile and research coverage; and
- improving share liquidity in the longer term.
Disposal of investment in Baobab Mining and Exploration (Pty) Ltd ("Baobab")
The Company has reached an agreement with GVM Metals Limited to dispose of its
investment in Baobab for an amount of GBP 2.5 million (+/- R35 million). The
sale is subject to ministerial approval, by no later than 30 April 2007, in
terms of the Mineral and Petroleum Resource Development Act, 2002. In accordance
with IFRS, assets of R1.5 million have been disclosed as assets held for sale
and are carried at cost which is lower than their net realisable value. Revenue
on the sale will be recorded when the last remaining suspensive condition is
satisfied. An amount of R1.5 million will only become payable to a third-party
mineral consultant should the remaining suspensive clause be satisfied and the
sale of Baobab Mining and Exploration (Pty) Limited be concluded.
Contingent consideration reserve - Springlake profit warranty
As noted in the 30 June 2006 Annual Report, the Directors have given further
consideration to the financial performance of the Springlake Colliery. It is the
opinion of the Directors that the warranted profit will not be met. Petmin has
reached agreement that the profit warranty will not be met with Springlake
Vendors representing 91% of the shares to be issued under the profit warranty.
The contingent consideration has been re-estimated to R1.5 million, resulting in
an amount of R26.052 million being recognised as "profit on acquisition of
subsidiary" in the income statement during the period under review.
4. EARNINGS PER ORDINARY SHARE
Earnings per share ("EPS") is based on the Group's profit for the period, divided by the weighted average number
of shares in issue during the period.
Six months ended Six months ended
31 December 31 December
2006 2005
Net Number of Net Number
income Shares Per share income of Per
Shares share
(R'000) (000) (cents) (R'000) (000) (cents)
Basic EPS 38 498 441 205 8.73 38 999 221 084 17.64
Share options and contingent consideration 20 275 (0.39) - 13 915 (1.04)
Diluted EPS 38 498 461 480 8.34 38 999 234 999 16.60
Headline earnings per share
Headline earnings per share is based on
the group's headline earnings
divided by the weighted average number of
shares in issue during the year.
Reconciliation between earnings and headline
earnings
Basic EPS 38 498 441 205 8.73 38 999 221 084 17.64
Adjustments:
- AIM listing expenses 663 - 0.15
- profit on acquisition of subsidiary (26 052) - (5.90) (33 822) - (15.30)
Headline EPS 13 109 441 205 2.97 5 177 221 084 2.34
Share options and contingent consideration - 20 275 (0.13) - 13 915 (0.14)
Diluted headline EPS 13 109 461 480 2.84 5 177 234 999 2.20
Headline EPS increased by 0.63 cents or 27% compared to 2005.
Diluted Headline EPS increased by 0.64 cents or 29% compared to 2005.
Reviewed Reviewed Audited
Six months Six months Year
ended Ended ended
31 December 31 December 30 June
2006 2005 2006
5. NET ASSET VALUE ("NAV")
PER SHARE
Ordinary share capital 408 985 265 073 360 466
and reserves (R'000)
Total number of shares in 479 889 348 557 439 889
issue ('000)
NAV per share (cents) 85.22 76.05 81.94
Reconciliation between
NAV and fully diluted NAV
Ordinary share capital 408 985 265 073 360 466
and reserves (R'000)
Total number of shares in 479 890 348 557 439 889
issue ('000)
Share options and 31 706 61 920 73 920
contingent consideration
('000)
Fully diluted number of 511 596 410 477 513 809
shares ('000)
Fully diluted NAV per 79.94 64.58 70.16
share (cents)
NAV per share increased 3.28 cents per share or 4% when compared to 30 June
2006. Fully diluted NAV per share increased 9.78 cents per share or 14% when compared
to 30 June 2006.
6. Related Parties
NAMF Nominees (Proprietary) Limited, Dark Capital (Pty) Limited and PSG Limited
are material shareholders in Petmin, and are therefore related parties as
defined by Section 10 of the Listings Requirements. Dark Capital (Pty) Limited
is the anchor entity of the broad-based black economic empowerment consortium.
River Corporate Finance (Proprietary) Limited, is a related party by virtue of
its advisory role to Petmin.
6.1 Profit on acquisition of subsidiary -Springlake
The re-estimation of the contingent consideration related to the Springlake
acquisition constitutes a related party transaction, as NAMF Nominees is a
material shareholder in Petmin. Refer to amounts disclosed in note 3.
6. 2 Petmin executive committee remuneration scheme and share option trust
As disclosed in the annual financial statements for the year ended 30 June 2006,
the Petmin executive committee remuneration scheme and share option scheme
affects the executive directors of the Company and constitutes a related party
transaction. Amounts due to the executive directors are included in the table of
compensation to directors and key management below.
Reviewed Reviewed Audited
Six months Six months Year
Ended Ended Ended
31 December 31 December 30 June
2006 2005 2006
R'000 R'000 R'000
Key management emoluments
- Short term emoluments *9 855 **3 305 ***10 448
- Retirement fund contributions 79 69 139
- Share based payments 1 302 492 2 321
--------- --------- ---------
11 236 3 866 12 908
--------- --------- ---------
--------- --------- ---------
Amounts payable to directors and key
management included in Trade and other
payables 6 817 1 554 5 698
--------- --------- ---------
* includes Springlake key management for six months
** includes Springlake key management for one month
*** includes Springlake key management for seven months
7. Increase in Borrowings
During the period under review a loan of R36 million was advanced to fund
capital expenditure at the Somkhele Anthracite Project by the Standard Bank of
South Africa Limited. In terms of the asset based finance facility, interest is
payable at the prime lending rate less 1% and the loan is repayable over 72
months.
8. Subsequent events
There have been no events that have occurred subsequent to the balance sheet
date which require adjustment of, or disclosure in the financial statements or
notes thereto in accordance with IAS 10 Events After the Balance Sheet Date.
9. Dividends
Due to the development of the Somkhele Anthracite Project and the associated
cash requirements and Petmin's focus on acquisitive growth, the Board has
resolved that no interim dividend will be declared.
10. Prospects
- SamQuarz
The production from the newly developed areas of the SamQuarz open pit, whilst
generating the same overall product yield, has resulted in a different sizing
distribution of products. This may necessitate additional capital expenditure at
SamQuarz in order to meet the increased demand from key customers. Management
does not foresee any material effect on the profitability of SamQuarz.
- Springlake Colliery
With increased opencast production planned in the second quarter of 2007 and
with the measures introduced to the underground operations, management expects a
significantly improved performance in the six months to 30 June 2007. The coal
market remains buoyant and Springlake is expected to enjoy these prices for the
remainder of the calendar year.
- Somkhele anthracite project
With first sales from the project expected in the second quarter of 2007,
management expects a positive, although small, contribution from Somkhele in the
six months to 30 June 2007.
- New business
Acquisitive growth remains a focus of Petmin and management is continuously
reviewing potential new business opportunities.
By order of the Board
PJ Nel JC du Preez
Chairman Chief Executive Officer
Pretoria
5 March 2007
This information is provided by RNS
The company news service from the London Stock Exchange
END
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