TIDMPDL
PETRA DIAMONDS LIMITED
13 September 2022 LSE: PDL
Preliminary Results for FY 2022 (unaudited)
Record results and a significant turnaround in Petra's net debt
Petra announces its preliminary results (unaudited) for the year ended 30 June
2022 (Year or FY 2022). Separate announcement on the 2026 Loan Notes Tender
offer issued today.
Financial highlights
* Revenue up 44% to US$585 million
* Doubling of adjusted EBITDA to US$265 million
* Adjusted basic earnings per share up 219% to USc42.93
* Operational free cash flow up 91% to US$230 million
* Consolidated net debt of US$40.6 million, with leverage of 0.15x
Enabling
* Launch of US$150 million tender offer to reduce gross debt
* Announcement of dividend policy
Richard Duffy, Chief Executive Officer of Petra, commented:
"We are delighted with our overall performance, which caps the turnaround begun
three years ago. Our continued focus on safety has supported a 48% improvement
in our LTIFR. Additionally, sustainability is being integrated across our
business through the implementation of our new Sustainability Framework.
Project 2022, now concluded, has delivered US$265 million in net free cash over
its three years, contributing to our record financial results for FY2022.
In addition to Project 2022, the key drivers were our record recovery of
Exceptional Stones[1], the resumption of operations at the Williamson mine, and
a 41.5% increase in like-for-like[2] diamond prices. The diamond market remains
broadly supportive as a result of the prevailing structural supply deficit,
although ongoing macro-economic uncertainties may lead to some volatility in
the short term.
Our strong cash generation in FY 2022 has enabled us to target a further
reduction in our gross debt through a tender offer for US$150 million of our
2nd lien notes, detailed in a separate release today. This will see us saving
up to US$15 million annually in interest expenses.
I am also very pleased to announce that, on the back of our much improved
financial position, the Board has approved a dividend policy."
HIGHLIGHTS
Strong financial performance driving the reduction in consolidated net debt
US$m unless stated otherwise FY 2022 FY 20212 Variance
Revenue 585.2 406.9 +44%
Adjusted EBITDA1 264.9 130.2 +103%
Adjusted EBITDA margin (%)1 45% 32% +44%
Adjusted profit / (loss) before tax1 141.9 (18.3) +875%
Adjusted net profit / (loss) after tax1 102.0 (25.5) +500%
Net profit after tax 88.1 196.6 -55%
Operational free cashflow1 230.0 120.1 +91%
Consolidated net debt1 40.6 228.2 -82%
Unrestricted cash 271.9 147.7 +84%
Consolidated net debt : Adjusted EBITDA1 0.15x 1.75x -91%
Basic earnings per share (USc) 35.53 260.70 -86%
Adjusted basic earnings / (loss) per share1 42.93 (36.20) +219%
(USc)
Note 1: For all non-GAAP measures refer to the Summary of Results table within
the Financial Results section below.
Note 2: For comparative purposes, the FY 2021 income statement figures include
Williamson as it is no longer a discontinued operation - refer to note 2.
Consolidated net debt and cash balances for FY 2021 have not been adjusted.
Note 3: The comparative basic profit per share and adjusted profit per share
have been adjusted to give effect to the share consolidation of one new share
for every 50 existing shares completed on 29 November 2021 with the Company's
resultant issued share capital now consisting of 194,201,785 ordinary shares of
0.05 pence each.
* FY 2022 total revenue of US$585.2 million comprises revenue from rough
diamond sales of US$584.1 million and additional revenue from profit share
agreements on partnership stones of US$1.1 million. The 44% increase in
revenue from rough diamond sales was driven by:
+ A 41.5% increase in year-on-year like-for-like prices
+ The contribution from the sale of a record number of Exceptional Stones
of US$89.1 million; this compares with an average of US$39.2 million
over the last five years
* Adjusted EBITDA rose 103% to US$264.9 million, reflecting the positive
operational leverage from our revenue growth, as well as improved
efficiencies from Project 2022; Adjusted EBITDA margin rose to 45%
* Adjusted net profit after tax rose to US$102.0 million (reversing a US$25.5
million adjusted net loss after tax last year). Net profit after tax fell
55% to US$88.1 million largely driven by a prior year gain of US$213.3
million on the extinguishing of the Notes as part of the Group's capital
restructuring, and unrealised foreign exchange losses of US$34.3 million
net of tax (FY 2021 unrealised gain of US$54.7 million net of tax)
* Adjusted basic earnings per share was USc42.93 up 219%
* Operational free cash flow rose 91% to US$230.0 million driven by increased
EBITDA
* Consolidated net debt reduced 82% to US$40.6 million which is 0.15x EBITDA,
reflecting this strong free cash flow generation
Efficient production with excellent safety performance and a focus on
sustainability
FY 22 FY 211 Variance
LTIFR 0.23 0.44 +48%
LTIs (number) 15 25 +40%
Ore processed (Mt) 11.7 8.1 +44%
Diamonds recovered (carats) 3,353,670 3,240,312 +3%
Rough diamonds sold (carats) 3,536,316 3,960,475 -11%
Revenue from rough diamond sales 584.1 406.9 +44%
(US$m)
Adjusted mining and processing costs 307.1 276.1 +11%
(US$m)
Capital expenditure (US$m) 52.2 22.8 +129%
Note 1: For comparative purposes, the FY 21 production, diamond sales and cost
figures have been restated to include Williamson as it is no longer a
discontinued operation
* LTIFR improved 48% to 0.23, and LTIs improved 40% to 15 including an LTI
which occurred during FY 2022 but was recorded post year-end
* Production increased 3% to 3,353,670 carats, largely owing to the
resumption of mining at Williamson
* Cash-on-mine costs remained within guidance despite inflationary pressures
* Capital expenditure, which comprises expansion and sustaining capex, was
below guidance largely attributable to expenditure of around US$12 million
being deferred from FY 2022 to FY 2023
* Our new Sustainability Framework is being fully integrated into Petra's
operating model. Sustainability targets will be detailed in the FY 2022
Sustainability Report in October
* Petra is targeting zero greenhouse gasses (GHG) emissions on a net basis by
2050. This commitment includes an aspirational goal to reach net-zero
emissions for Scope 1 and 2 GHG by 2040 or earlier. Additional details will
be provided in the Annual Report and Sustainability Report in October
Key operational guidance maintained
FY 23E FY 24E FY 25E
Total carats recovered (Mcts) 3.3 - 3.6 3.3 - 3.6 3.6 - 3.9
Cash on-mine costs and G&A1 (US$m) 300 - 320 300 - 320 300 - 320
Expansion capex1(US$m) 115 - 125 125 - 135 115 - 120
Sustaining capex1(US$m) 33 - 36 30 - 32 26 - 28
Note 1: Opex and capex guidance is stated in FY 22 real terms and based on an
exchange rate of ZAR15 / USD1.
More detailed guidance is available on Petra's website at https://
www.petradiamonds.com/investors/analysts/analyst-guidance/
Petra reaffirms its operational guidance provided for the FY 2023 to FY 2025
period, noting the following:
* While Cullinan Mine recorded lower grades towards the end of the Year, a
study is underway to inform our mine planning as a result of a higher
proportion of ROM tonnes from our more mature drawpoints
* The impact of waste dilution on grades experienced at Finsch in Q4 FY2022
has continued into Q1 of this year, with ongoing monitoring and mitigation
plans to address this
* Options for a responsible exit at Koffiefontein, including the evaluation
of non-binding expressions of interest.
New dividend policy
The Board approved a dividend policy targeting an ordinary dividend within the
range of 15% to 35% of adjusted free cash flows after interest and tax and
having adjusted for any windfall earnings.
The Board would ordinarily look to the annual dividend being paid 1/3 following
its interim results and 2/3 after its full year results. The dividend policy
will take effect from 1 July 2022 and the Board will consider whether to pay a
maiden dividend under this policy following publication of Petra's interim
results for the six months ending 31 December 2022. In a year where Petra
generates windfall earnings, the Board may consider paying a special dividend.
Prior to declaring or recommending any dividend, the Board will consider the
Group's capital commitments, including, amongst other things, approved
expansion projects and debt servicing and repayment commitments and associated
covenant requirements, to ensure that the Group maintains a healthy balance
sheet and sufficient liquidity and headroom.
Debt tender offer
Petra today also announced its intention to reduce its gross debt through a
tender offer to bondholders to purchase US$150 million of the Senior Secured
Second Lien Notes due in 2026 in line with our stated intent to further
optimise our capital structure through a reduction of gross debt. If
completed, the transaction will see Petra saving up to US$15 million per annum
in interest expenses, while we remain confident that we will continue to fund
our ongoing capital programmes from existing and internally generated cash
resources. Further detail on the tender offer is covered in a separate
announcement which can be found on Petra's website at https://
www.petradiamonds.com/investors/news/
Outlook
FY2023 - 2025 production, cost and capex guidance remains unchanged. We
continue to monitor the evolving macro-economic environment that has seen
higher inflation and interest rates. Our ability to absorb inflationary
pressures is assisted by our disciplined cost management, relatively low fuel
consumption, and any weakening of the South African Rand.
The backdrop of structural changes to the supply and demand fundamentals in the
diamond market remains unchanged and we anticipate that it will continue to be
supportive going forward, notwithstanding possible volatility in the short
term.
The implementation of our new operating model, that formed part of Project
2022, has provided a more stable and resilient operating platform supporting
ongoing cash generation, enabling our self-funded expansion programme, the
US$150 million tender offer for our 2nd lien notes and the potential payment of
dividends under our new dividend policy.
PRESENTATION DETAILS
Richard Duffy, CEO, Jacques Breytenbach, CFO, will present the results to
investors and analysts.
Online and in person at 09.30 BST
In-person: One Heddon Street, London, W1B 4BF
Webcast: To join https://stream.brrmedia.co.uk/broadcast/
630f7aa6da906b287e9a3218
Online only at 16.00 BST
Webcast: To join https://stream.brrmedia.co.uk/broadcast/
630f7c97da906b287e9a335f
Dial in details for both 09:30 BST and 16:00 BST
* Johannesburg, toll/tollfree: +27 (0) 11 589 8302 / 0800 980 512
* UK: +44 (0)33 0551 0200
* New York: +1 212 999 6659
Password: Quote PetraDiamonds when prompted by the operator
Recording of presentation
A recording of the webcast will be available later today on Petra's website at
https://www.petradiamonds.com/investors/presentations
Investor Meet company presentation 11.30 BST
Petra will present the results on the Investor Meet company platform,
predominantly aimed at retail investors. To join: https://
www.investormeetcompany.com/petra-diamonds-limited/register-investor
FURTHER INFORMATION
Petra Diamonds, London +44 207 494
8203
Patrick Pittaway
investorrelations@petradiamonds.com
Jill Sherratt
Julia Stone
This announcement includes inside information as defined in Article 7 of the
Market Abuse Regulation No. 596/2014 and is being released on behalf of Petra
by the Company Secretary.
ABOUT PETRA DIAMONDS
Petra Diamonds Limited is a leading independent diamond mining group and a
consistent supplier of gem quality rough diamonds to the international market.
The Company has a diversified portfolio incorporating interests in three
underground producing mines in South Africa (the Finsch, Cullinan and
Koffiefontein Mines) and one open pit mine in Tanzania (Williamson).
Petra's strategy is to focus on value rather than volume production by
optimising recoveries from its high-quality asset base in order to maximise
their efficiency and profitability. The Group has a significant resource base
of 226.6 million carats, which supports the potential for long-life operations.
Petra strives to conduct all operations according to the highest ethical
standards and will only operate in countries which are members of the Kimberley
Process. The Company aims to generate tangible value for each of its
stakeholders, thereby contributing to the socio-economic development of its
host countries and supporting long-term sustainable operations to the benefit
of its employees, partners and communities.
Petra is quoted with a premium listing on the Main Market of the London Stock
Exchange under the ticker 'PDL'. The Company's US$336.7 million Senior Secured
Second Lien Notes due in 2026 are listed on the Irish Stock Exchange and
admitted to trading on the Global Exchange Market. For more information, visit
www.petradiamonds.com
CEO'S REVIEW
Strong revenue growth, profitability and cash generation in a robust diamond
market
US$m unless otherwise stated FY 22 FY 21 Variance
Sales
Rough diamonds sold (carats) 3,536,316 3,960,475 -11%
Revenue from rough diamond and partnership 585.2 406.9 +44%
sales
Contribution to rough revenue from Exceptional 89.1 62.0 +44%
Stones
Profitability
Adjusted EBITDA1 264.9 130.2 +103%
Adjusted EBITDA margin (%) 45 32 +44%
Cash generation
Operational free cash flow1 230.0 120.1 +91%
Consolidated net debt1 40.6 228.2 -82%
Unrestricted cash 271.9 147.7 +84%
Note 1: For all non-GAAP measures refer to the Summary of Results table within
the Financial Results section below.
Note 2: For comparative purposes, the FY 2021 income statement figures include
Williamson as it is no longer a discontinued operation - refer to note 2.
Consolidated net debt and cash balances for FY 2021 have not been adjusted.
Overall revenue increased 44% to US$585.2 million, comprising US$584.1 million
from rough diamond sales and an additional US$1.1 million from our first
partnership stone sale. The drivers of this revenue growth were the
year-on-year 41.5% increase in like-for-like diamond prices and record recovery
and sale of Exceptional Stones, totalling US$89.1 million (FY 2021: US$62.0
million).
The 11% reduction in rough diamonds sold reflects the particularly high volumes
sold in FY 2021, mostly off-tender, as the inventory build-up after the initial
COVID-19 outbreak was released.
Adjusted EBITDA rose 103% to US$264.9 million with an Adjusted EBITDA margin of
45% reflecting the strong revenue growth and positive operational leverage,
supported by the recovery of Exceptional Stones.
The 91% improvement in operating free cash flow generation has been supported
by the Project 2022 initiatives. Over the three years since its commencement
the Project has contributed US$265.4 million of net free cash flow benefits,
exceeding our revised target of delivering net free cash flow of between US$100
million and US$150 million.
This cash generation means that we lowered our consolidated net debt to US$40.6
million as at 30 June 2022, down from US$228.2 million as at 30 June 2021.
Safe and efficient production
FY 22 FY 211 Variance
LTIFR 0.23 0.44 -48%
LTIs 15 25 -40%
Ore processed (Mt) 11.7 8.1 +44%
Diamonds recovered (carats) 3,353,670 3,240,312 +3%
Adjusted mining and processing costs 307.1 276.1 +11%
(US$m)
Capital expenditure (US$m) 52.2 22.8 +129%
Note1: For comparative purposes, the FY 21 production and cost figures have
been restated to include Williamson as it is no longer a discontinued operation
We strive to achieve a zero-harm working environment. Petra has focused on
improving safety performance through remedial actions and behaviour-based
intervention programmes. As a result, we have improved the Lost Time Injury
Frequency Rate (LTIFR) by 48% to pre-pandemic levels, and Lost Time Injuries
(LTIs) by 40% which were of low severity and mostly behavioural in nature. We
continue the roll-out of COVID-19 vaccinations for employees and 64% of the
workforce in South Africa and 15% of the workforce in Tanzania have been
vaccinated. The vaccination rate in South Africa is well ahead of the national
average of 51%.
The vast majority of the 44% increase in ore processed is attributable to
Williamson recommencing operations in August 2021 following a 17-month period
of care and maintenance. Williamson ore is lower grade in comparison to our
South African mines and this translated into a 3% increase in diamonds
recovered, within our guidance range.
Project 2022 has, as part of the focus on cash generation, been highly
effective in addressing both operational efficiencies as well as the efficiency
of our operational and capital expenditure. We have created a Business
Improvement function to ensure that the systems and processes developed as part
of Project 2022, which concluded this Year, will continue to deliver benefits
and seek out further improvement opportunities. Supporting this culture of
continuous improvement, our new operating model has clarified lines of
accountability and further empowers our people.
Cash on-mine costs and G&A costs were in line with guidance. The 11% increase
in adjusted mining and processing costs was principally due to the resumption
of operations at Williamson during the first quarter of the Year, the stronger
average ZAR/USD exchange rate and inflationary increases.
Group capex of US$52.2 million was below guidance following delayed delivery of
certain capital items planned for FY 2022 due to increased lead-times. As a
result, around US$12 million of capex that was due to be incurred in FY 2022 is
now expected to be incurred in FY 2023. US$34.5 million of the FY 2022 capital
spend was expansionary capex and the vast majority of total capex was invested
at the Cullinan and Finsch Mines (US$35.0 million and US$12.0 million
respectively).
Load shedding and energy reform in South Africa
The recent increase in load shedding in South Africa is currently having
minimal impact on our operations. Our excess processing capacity at both
Cullinan Mine and Finsch allows us to reduce our processing energy draw to meet
the prescribed load curtailment requirements whilst maintaining mining at full
production and catching up on processing when conditions return to normal.
The regulator in South Africa has increased the allowance for self-generation
without requiring a generation licence to a maximum of 100 MW. This has opened
up opportunities for high energy-users to integrate renewables on their own
sites and Petra is actively looking at options that are optimal from a
financing and partnering perspective that would enable us to integrate
renewables into our energy mix, lower our cost of energy, secure our energy
supply and support our target of achieving net zero GHG emissions by 2050 or
earlier.
Extending our mine plans
Resources
Petra manages one of the world's largest gross diamond resources (inclusive of
reserves) of 226.6 Mcts, supporting a potential mine life well beyond the
current mine plans. The 2% reduction compared to 230.64 Mcts in 30 June 2021,
was predominantly due to depletions resulting from mining at all our assets in
FY 2022.
Petra's gross diamond reserves decreased 10% to 29.97 Mcts (30 June 2021: 33.33
Mcts) primarily due to mining depletions with minor changes in mine plans and
Williamson remaining on care and maintenance until August 2021.
Life extension projects approved during the Year
As announced previously, the Board approved extension projects at our major
South African mines, the Cullinan and Finsch Mines, during the Year.
* At the Cullinan Mine we will establish a CC1 East sub-level cave, on the
same level as the current C-Cut operation, extending the mine plan to 2031.
The capital investment is estimated at US$173 million over the life of the
project and is expected to deliver a project internal rate of return (IRR)
of more than 30% and incremental project NPV of more than US$70 million.
Capital expenditure began during the Year and production is expected to
begin in FY 2024, ramping up to a steady state in FY 2026.
* At Finsch, we will extend the mine below the current area, creating a Lower
Block 5 3-level sub-level cave, extending the mine plan to 2030. The
capital investment is estimated at US$216 million and the IRR is also
expected to be in excess of 30% with incremental NPV of more than US$90
million. Capital expenditure for this project will commence during FY 2023
and we expect production to commence in FY 2025.
* The capex involved in these projects is expected to be self-funded.
There are further opportunities beyond these mine extension plans, given the
significant scale of the orebodies at the Cullinan, Williamson and Finsch
Mines.
Diamond market remains buoyant despite uncertainties
Despite significant global economic uncertainties resulting from the war in
Ukraine, like-for-like rough diamond prices increased 41.5% for the Year,
driven in particular by record jewellery retail demand in the US. Overall we
saw strength of demand across our product mix, both in white and coloured
gem-quality stones, with some increased demand for smaller diamonds in the
final tender of the Year in June.
Tender 1 FY 2023, announced today
We have achieved strong sales in the first tender of FY 2023, realising
US$102.9 million due to a high proportion of high-value gem-quality single
stones particularly from the Cullinan Mine. This has resulted in a 21% increase
in our average realised price against Tender 6 in FY 2022, more than offsetting
the 4.5% softening of like-for-like prices.
The supportive structural supply deficit in the diamond market
Growth in demand was driven by mid-stream inventory restocking and continued
strong jewellery retail sales associated with a delayed wedding boom and a
growing trend in diamonds being given as meaningful gifts post COVID-19. While
the diamond market is strong, macroeconomic uncertainties caused by the rise in
inflation are a potential dampener of demand.
Global supply is expected to remain broadly flat for the next ten years at
between 115 and 125 Mcts. This is driven by the reduction in the number of
producing mines, the long lead-times for open-pit mines to transition to
underground mining, as well as the very limited investment in exploration.
Given that less than 1% of kimberlites discovered are economic, we do not
expect this to change in the medium term.
Sustainability performance to benefit from new Sustainability Framework
FY 22 FY 211 Variance
Carbon intensity (tCO2-e/ct) 0.139 0.126 +10%
Energy intensity (kWh/t) 38.1 46.1 -17%
Water intensity (M3/t) 1.0 0.55 +82%
Women in the workforce (%) 20 20 flat
Staff turnover (%) 9.8 9.6 +2%
Training spend (US$m) 6.1 5.8 +5%
Social spend (US$m) 0.9 0.7 +29%
Note 1: FY 21 metrics are affected by Williamson being on care and maintenance
The comparability of FY 2022 and FY 2021 performance is distorted by the
resumption of the open-pit operations at Williamson in August 2021.
Petra is embedding its new Sustainability Framework so that environmental,
social and governance improvements are further integrated throughout our
operations. Targets will be published in our FY 2022 Sustainability Report in
October.
Petra remains committed to reducing our GHG profile and to generate zero
emissions on a net basis for Scopes 1 and 2 (emissions from sources we own and
control directly and those through the energy we purchase) by 2050, although we
aspire to reach this goal by 2040 or earlier. Our emissions profile is heavily
weighted to our Scope 2 emissions which comprise 97% of total emissions in
South Africa, and 92% including Tanzania. We will announce targets for 2030 in
the FY 2022 Annual and Sustainability Reports to be published in October. Our
Scope 3 reductions will be pursued once our Scope 1 and 2 roadmap has been
developed. Our Climate Change Adaptation Strategy is being updated in
accordance with TCFD requirements.
Framework Agreement with the Government of Tanzania and MOU with Caspian
In December 2021, Petra announced that it had entered into two agreements with
the objective of reducing its exposure to Tanzania while still retaining
control of Williamson.
The Framework Agreement between Petra and the Government of Tanzania will
become effective after a number of conditions are satisfied, including
obtaining various government approvals. The agreement, which will result in the
reduction of Petra's indirect shareholding in Williamson Diamonds Limited (WDL)
from 75% to 63% and establish a sustainable future for Williamson, is
progressing and is now expected to become effective in the first half of FY
2023.
Petra expects to further reduce its indirect shareholding in WDL from 63% to
31.5% via a sale to Caspian Limited but with Petra retaining a controlling
interest in WDL as Petra have the controlling vote on the WDL Board via its
controlling interest in the intermediate holding company. The transaction
remains subject to the parties first agreeing definitive transaction agreements
and then obtaining all necessary government, regulatory and lender approvals
which are also expected to be obtained in the first half of FY 2023.
Independent Grievance Mechanism and community projects at Williamson
Petra has implemented remedial programmes and initiatives and is establishing
the Independent Grievance Mechanism (IGM) to address the historical allegations
of human rights abuses at Williamson. The second phase of engagements with the
Government of Tanzania and local stakeholders on the IGM has been completed and
the focus is now on updating the IGM processes and appointing the various
organs that will make up the IGM, with the current target for the IGM to become
operational remaining Q4 of CY 2022.
While the IGM is still being finalised, a mechanism has been set up to enable
community members to confidentially and securely register alleged historical
human rights grievances. This mechanism continues to receive grievances, with a
significant amount of grievances having been registered to date. As the IGM is
not yet operational (and therefore unable to start investigating these
grievances), it is too early to evaluate the merits of these grievances.
A number of other initiatives are being put in place to provide sustainable
benefits to the communities located close to the mine, funded by the £1 million
Escrow account established by Petra. Having completed all planned activities in
Q1 CY 2022, the Gender Based Violence initiative is now training young men as
champions and first responders and setting up survivor self-help groups within
the surrounding communities. The medical services project has been expanded to
provide further services, including surgery, medication and psychological
support. Feasibility studies for income generating projects (agriculture
businesses and artisanal mining) are also progressing and a radio programme to
improve awareness and understanding of the IGM and community projects amongst
the local community has been set up.
More information on the IGM, the community projects and illegal incursions into
the Williamson mine lease area can be found on Petra's website at: https://
www.petradiamonds.com/our-operations/our-mines/williamson/
allegations-of-human-rights-abuses-at-the-williamson-mine/.
The Board
As previously announced, Jon Dudas joined the Board as an independent
Non-Executive Director effective from 1 March 2022, further strengthening the
Board through his broad experience across the mining and resources sectors, in
operations, general management, information technology, finance and strategy.
Also, as previously announced, Matthew Glowasky stepped down from the Board as
a non-independent, Non-Executive Director on 17 May. His appointment became
effective in March 2021, following completion of the Restructuring pursuant to
a Nomination Agreement between Petra and Monarch. While Monarch does not
currently intend to nominate a director to replace Mr Glowasky, it retains its
right to do so.
OPERATIONS REVIEW
Cullinan Mine - strong performance and extension work under way
Cullinan Mine - South Africa FY 22 FY 21 Variance
Sales
Revenue (US$m) 322.4 250.6 +29%
Diamonds sold (carats) 1,899,011 2,261,058 -16%
Average price per carat (US$) 169 111 +52%
Total production
Tonnes treated (tonnes) 4,865,065 5,060,339 -4%
Diamonds produced (carats) 1,814,975 1,943,942 -7%
Grade1
ROM (cpht) 36.2 38.2 -5%
Tailings (cpht) 49.6 41.0 +21%
Segment result2 (US$m) 154.4 76.8 +101%
Costs and capex
On-mine cash cost per total tonne treated 312 260 +20%
(ZAR/t)
Total capex (US$m) 35.0 16.8 +108%
1. Petra is not able to precisely measure the ROM / tailings grade split
because ore from both sources is processed through the same plant; the
Company therefore back-calculates the grade with reference to resource
grades
2. The segment result includes depreciation of US$52.5 million
At the Cullinan Mine we came in at the upper end of our production guidance
ranges on all criteria except tailings. Diamonds produced were 7% below last
year's, largely as a result of the convergence in Tunnel 41 early in the Year,
and the planned depletion of a mining block which had contributed to production
in FY 2021. The convergence has now been effectively mitigated and factored
into our guidance.
The Cullinan Mine's revenue increased 29% to US$322.4 million due to a 52%
increase in the average price achieved per carat and the US$75.2 million
realised for Exceptional Stones. Together, these more than offset the 16%
reduction in diamonds sold, which was mainly the result of a higher volume of
sales in FY 2021 caused by the release of the inventory build-up during the
COVID-19 crisis into the market. Additional revenue of US$1.1 million was
generated from Petra's 50% share of profit from the sale of polished stones cut
from the 18.30ct Type II blue diamond sold as a partnership stone in August
2021.
The convergence of Tunnel 41 in the C-Cut impacted 18 of a total of 187 draw
points. Remedial action was focused on arresting convergence by reinforcing the
affected pillars and protecting the tunnel, so that access can be
re-established once the area has been stabilised. We continue to monitor it to
determine when we will be able to re-access this tunnel.
Grade was in line with guidance, notwithstanding the decline towards the end of
the Year due to a change in the composition of ore within the C-Cut block cave
resulting in a higher proportion of lower-grade and greater-density ore. We are
monitoring these changes together with options to mitigate the grade
differential.
During the Year, the efficiency of the X-Ray Luminescence technology (XRL),
introduced in FY 2021, to reduce the risk of damage to larger stones in our
processing circuit, was tested through the addition of a modular X-Ray
Transmission (XRT) unit. This unit recovered only 11 additional diamonds of low
value, validating the decision to use XRL technology in the recovery process.
The on-mine unit cash cost per total tonne treated increased to ZAR312/t due to
inflationary increases, increased social expenditure and direct costs
previously included under Group G&A costs. FY 2022 capex was US$35.0 million,
the majority of which was spent on the commencement of the newly approved CC1
East mine extension project. The balance included spend on the projects already
underway in the current mining area, development of a crusher, and improved
long-term accessibility in an area of the C-Cut.
Guidance
FY 2023 to FY 2025 production, cost and capex guidance for the Cullinan Mine
remain unchanged.
* Our production guidance for FY 2023 is between 4.1 and 4.3 Mt ROM material
to be treated, and ROM grade of between 36.5 and 38.5cpht, including the
ore from the portions of the current mining area, the C-Cut, that is lower
grade and higher in density.
* Tailings production is expected to increase to between 0.56 and 0.59 Mt
material treated. ROM production will be prioritised, supplemented by low
volumes of recovery tailings. The economic evaluation of the Cullinan
Mine's substantial tailings resource will be monitored continuously and
could be included in future mine plans dependent on market conditions and
the pricing of smaller diamonds.
* The on-mine cash cost for FY 2023 guidance is between ZAR1,413 and ZAR1,486
million in real terms.
* We are guiding FY 2023 capex of between US$72 and US$79 million. In
addition to sustaining capex, it primarily relates to underground
development of the new CC1 East production areas of our extension project,
explained above.
* We expect to commence mining from the higher grade CC1 East section from FY
2024.
Finsch - managing cost and production profile
Finsch - South Africa FY 22 FY 21 Variance
Sales
Revenue (US$m) 165.7 123.4 +34%
Diamonds sold (carats) 1,402,654 1,602,312 -12%
Average price per carat (US$) 118 77 +53%
Total production
Tonnes treated (tonnes) 2,732,982 2,311,195 +18%
Grade - ROM1 (cpht) 46.7 53.5 -13%
Diamonds produced (carats) 1,275,323 1,237,219 +3%
Segment result1 (US$m) 34.8 (0.5) +7060%
Costs and capex
On-mine cash cost per total tonne treated 493 536 -8%
(ZAR/t)
Total capex (US$m) 12.0 4.0 +200%
1 The segment result includes depreciation of US$24.4 million
While the previously reported waste ingress at Finsch has been largely
mitigated through the implementation of enhanced drill and blast and draw
controls, this requires continuous management.
We saw steady production in the final quarter of the Year leading to an overall
increase of 3%, just below guidance.
Finsch revenue increased 34% to US$165.7 million due to a 53% increase in the
average price per carat which more than offset a 12% reduction in diamonds
sold. As with the Cullinan Mine, this reduction was mainly the result of a
higher volume of sales in FY 2021 which was caused by the inventory build-up
during the COVID-19 pandemic being released into the market.
The Business Re-engineering (BRE) project recommendations being implemented at
Finsch are designed to match its cost base to the revised production levels,
taking into account waste ingress issues.
Finsch has already reduced on-mine cash unit costs by 8% to ZAR493/t due to the
cost curtailment measures undertaken as part of the BRE project and increased
production volumes.
FY 2022 capex was US$12.0 million which was mainly spent on underground
projects. The expansion to the new 78 Level Phase 2 project has commenced, with
ramp-up to full production in progress. In addition, capital has been spent on
early mobilisation to de-risk the new Lower Block 5 3-Level sub-level cave
project.
Guidance
FY 2023 to FY 2025 production, cost and capex guidance for Finsch remain
unchanged , although
lower grades experienced at Finsch in Q4 FY 2022 have continued into Q1 of this
year, with ongoing monitoring and mitigation plans to address this waste
dilution. We will continue to implement the BRE project recommendations to
align costs with production.
* FY 2023 production is planned at between 2.9 and 3.0 Mt ROM including
tonnage from the new section and with waste ingress being continually
monitored. Tailings production is expected to be c.0.6 Mt of treated
material.
* Finsch's underground ROM grade is expected to remain within guidance of
between 43.6 and 46.0 cpht. While tailings production after FY 2023 does
not form part of the current mine plan, lower grade tailings material
remains available to supplement Finsch's underground operations in the
future. The total on-mine cash cost for FY 2023 is guided at between
ZAR1,293 and ZAR1,359 million in real terms. We are continuing to implement
the BRE project outcomes to enhance margins at Finsch.
* FY 2023 capex is guided at between US$65 and US$71 million, primarily
relating to the new Lower Block 5 3-Level sub-level cave project which was
approved during the Year.
* We expect underground development to commence during FY 2023 with
production from the new Sub-Level Cave in FY 2025.
Williamson - resumed production in Q1 FY 2022
Williamson - Tanzania FY 22 FY 211
Sales
Revenue (US$m) 75.9 4.6
Diamonds sold (US$m) 197,756 30,339
Average price per carat (US$) 384 150
Total production
Tonnes treated (tonnes) 3,591,099 0
Grade (cpht) 6.4 0
Diamonds produced (carats) 228,070 0
Segment result2 (US$m) 22.2 (14.3)
Costs and capex
On-mine cash cost per total tonne 13.9 0
treated (US$/t)
Total capex (US$m) 3.3 0.3
Note 1: Williamson was on care and maintenance during FY 2021
2 The segment result includes depreciation of US$5.0 million
Operations at Williamson recommenced in August 2021, having been on care and
maintenance from April 2020. FY 2022 was a year of improving the performance of
the mine after this 17-month period of shutdown and the operations are now
fully ramped up.
Williamson's production and grade were in line with guidance. Revenue was
US$75.9 million, compared with US$4.6 million in FY 2021 when the only diamond
sales were the final parcel recovered prior to the mine being placed on care
and maintenance. We benefitted from the recovery of an exceptional 32.32 carat
pink diamond which was sold for US$13.8 million in the December 2021 tender.
The on-mine cash unit cost of US$13.9/t was in line with guidance. FY 2022
capex was US$3.3 million, which included the costs of preparing the mine for
reopening and sustaining the operations.
Guidance
The focus will be the continued stabilisation of operations following the
period of care and maintenance, including increasing throughput and diamond
recovery, while ensuring waste-stripping is undertaken at the required rate.
FY 2023 to FY 2025 production, cost and capex guidance remain unchanged for
Williamson.
* We are guiding between 5.2 and 5.5 Mt of ROM material to be treated during
FY 2023 which reflects the fully ramped up production.
* The total on-mine cash cost for FY 2023 is guided at between US$66 and
US$69 million in real terms.
* Capex guidance for FY 2023 is approximately US$9 million and relates to
sustaining capital largely associated with waste stripping and
fines-residue infrastructure.
Koffiefontein - approaching the end of its mine plan
Koffiefontein - South Africa FY 22 FY 21 Variance
Sales
Revenue (US$m) 21.5 27.9 -23%
Diamonds sold (carats) 36,950 66,650 -45%
Average price per carat (US$) 581 419 +39%
Total production
Tonnes treated (tonnes) 466,957 754,369 -38%
Diamonds produced (carats) 35,302 59,151 -40%
Grade (cpht)1 7.6 7.8 -3%
Segment result1 (US$m) (13.8) (8.1) -70%
Costs and capex
On-mine cash cost per total tonne treated 1,106 651 +70%
(ZAR/t)
Total capex (US$m) 0.6 1.7 -65%
1 Segment result includes depreciation US$0.3 million, Williamson US$5.0
million
Koffiefontein's production metrics, except grade, were below guidance. Revenue
decreased 23% to US$21.5 million as the 39% increase in the average price per
carat was more than offset by the 45% decline in the number of diamonds sold.
As Koffiefontein approaches the end of its mine plan in 2025, Petra is
exploring options for a responsible exit. We are evaluating non-binding
expressions of interest, received post year-end for the mine. If a sales
transaction does not eventuate, Petra will evaluate its options and continue to
operate the mine responsibly.
The BRE project at Koffiefontein, which is independent of the disposal process,
aims to provide for sustainable operations until the mine's closure and has
resulted in a labour reduction process to align the operation with the reduced
tonnage profile. This process was concluded and the mine started on a new shift
configuration with the reduced labour structure on 30 June 2022.
The on-mine cash unit cost increased to ZAR1,106/t, mainly due to decreased
tonnages and inflationary increases. FY 2022 capex was US$0.6 million and this
was spent mainly on the completion of a workshop underground.
Guidance
FY 2023 to FY 2025 production, cost and capex guidance is maintained and takes
into account the lower production and cost profile we have put in place.
* The total on-mine cash cost for FY 2023 is guided at between ZAR415 and
ZAR437 million in real terms.
* FY 2023 capex guidance is between c.US$1 and US$2 million, primarily
relating to sustaining costs.
FINANCIAL RESULTS
SUMMARY RESULTS (unaudited)
Year ended 30 Restated
June 2022 Year ended 30
("FY 2022") June 2021
("FY 2021") 15
US$ million US$ million
Revenue 585.2 406.9
Adjusted mining and processing costs1 (307.1) (276.1)
Other direct income (0.8) 6.8
Profit from mining activity2 277.3 137.6
Other corporate income 0.6 -
Adjusted corporate overhead (13.0) (7.4)
Adjusted EBITDA3 264.9 130.2
Depreciation and Amortisation (85.3) (80.8)
Share-based expense (1.1) (0.5)
Net finance expense (36.6) (67.2)
Adjusted profit/(loss) before tax 141.9 (18.3)
Tax expense (excluding taxation credit / charge on (39.9) (7.2)
impairment charge and unrealised foreign exchange
gain / (loss))12
Adjusted net profit/(loss) after tax4 102.0 (25.5)
Impairment reversal / (charge) - operations and 19.6 (38.4)
other receivables5
Impairment of BEE loans receivable - expected credit - 5.8
loss release 6
Gain on extinguishment of Notes net of unamortised - 213.3
costs
Profit on disposal of subsidiary7 - 14.7
Recovery / (costs) and fees relating to 0.8 (12.7)
investigation and settlement of human rights abuse
claims
Provision for unsettled and disputed tax claims - (19.5)
Net unrealised foreign exchange (loss) / gain (36.5) 74.6
Taxation credit / (charge) on unrealised foreign 2.2 (19.9)
exchange (loss) / gain12
Taxation credit on impairment charge - 4.2
Net profit after tax 88.1 196.6
Earnings per share attributable to equity holders of
the Company -
USc
Basic profit per share 35.53 260.70
Adjusted profit / (loss) per share8 42.93 (36.20)
As at
30 June 2022 As at
30 June 2021
(US$ million)
Unit (US$
million)
Cash at bank - (including restricted US$m 288.2 173.0
amounts)
Diamond debtors US$m 37.4 38.3
Diamond inventories13 US$m 52.7 56.5
/Cts 453,380 637,676
US$336.7m loan notes (issued March 2021)9 US$m 366.2 327.3
Bank loans and borrowings10 US$m - 103.0
Consolidated Net debt11 US$m 40.6 228.2
Bank facilities undrawn and available10 US$m 61.5 7.7
Consolidated net debt : Adjusted EBITDA 0.15x 1.75x
The following exchange rates have been used for this announcement: average for
FY 2022 US$1:ZAR15.22 (FY 2021: US$1:ZAR15.41); closing rate as at 30 June 2022
US$1:ZAR16.27 (30 June 2021: US$1:ZAR14.27).
Notes:
The Group uses several non-GAAP measures above and throughout this report to
focus on actual trading activity by removing certain non-cash or non-recurring
items. These measures include adjusted mining and processing costs, profit from
mining activities, adjusted EBITDA, adjusted net profit after tax, adjusted
earnings per share, adjusted US$ loan note, net debt and consolidated net debt
for covenant measurement purposes. As these are non-GAAP measures, they should
not be considered as replacements for IFRS measures. The Group's definition of
these non-GAAP measures may not be comparable to other similarly titled
measures reported by other companies. The Board believes that such alternative
measures are useful as they exclude one-off items such as the impairment
charges and non-cash items to provide a clearer understanding of the underlying
trading performance of the Group.
1. Adjusted mining and processing costs are mining and processing costs stated
before depreciation.
2. Profit from mining activities is revenue less adjusted mining and
processing costs plus other direct income.
3. Adjusted EBITDA is stated before depreciation, amortisation of right-of-use
asset, share-based expense, net finance expense, tax expense, impairment
reversal/charges, expected credit loss release/ (charge), gain on
extinguishment of Notes net of unamortised costs, profit on disposal of
subsidiary, costs and fees relating to investigation and settlement of
human rights abuse claims, provision for unsettled and disputed tax claims
and net unrealised foreign exchange gains and losses.
4. Adjusted net profit/(loss) after tax is net profit/(loss) after tax stated
before impairment reversal/charge, expected credit release (loss)
provision, gain on extinguishment of Notes net of unamortised costs, costs
and fees relating to investigation and settlement of human rights abuse
claims, profit on disposal net unrealised foreign exchange gains and
losses, and excluding taxation (charge) credit on net unrealised foreign
exchange gains and losses and excluding taxation credit on impairment
charge.
5. Impairment reversal of US$19.6 million (30 June 2021: US$38.4 million
charge) was due to the Group's impairment review of its operations and
other receivables. Refer to note 15 below for further details.
6. Reversal of impairment of BEE loans receivable of US$nil (30 June 2021:
US$5.8 million) is due to the Group's expected credit loss assessment of
its BEE loans receivable. Refer to note 11 below for further details.
7. The profit on disposal of subsidiary of US$14.7 million in FY2021 includes
the reclassification of foreign currency translation reserve, net of tax of
Sekaka Diamonds (Pty) Ltd.
8. Adjusted EPS is stated before impairment charge, expected credit release
(loss) provision, gain on extinguishment of Notes net of unamortised costs,
profit on disposal of subsidiary, acceleration of unamortised costs on
restructured loans and borrowings, costs and fees relating to investigation
and settlement of human rights abuse claims, provision for unsettled and
disputed tax claims, net unrealised foreign exchange gains and losses, and
excluding taxation (charge) credit on net unrealised foreign exchange gains
and losses and excluding taxation credit/charge on impairment reversal/
charge.
The comparative basic profit per share and adjusted profit per share have been
adjusted to give effect to the share consolidation of one new share for every
50 existing shares completed on 29 November 2021 with the Company's resultant
issued share capital now consisting of 194,201,785 ordinary shares of 0.05
pence each.
1. The US$336.7 million loan notes have a carrying value of US$366.2 million
(FY2021: US$327.3 million) which represents the gross capital of US$336.7
million of notes, plus accrued interest and net of unamortised transaction
costs capitalised, issued following the capital restructuring (the
"Restructuring") completed during March 2021. Refer to detailed Debt
Restructuring Note 18.
2. Bank loans and borrowings represent amounts drawn under the Group's
refinanced South African banking facility with ABSA, completed in June
2022. As at 30 June 2022 the new facility with ABSA comprises a ZAR1
billion (US$61.5 million) revolving credit facility which remains undrawn
and available.
During the Year, the South African banking facilities held with the Group's
previous consortium of South African lenders were settled and cancelled,
comprising of the revolving credit facility of ZAR404.6 million (US$24.9
million) (capital plus interest) and the term loan of ZAR893.2 million (US$54.9
million) (capital plus interest).
1. Consolidated Net Debt is bank loans and borrowings plus loan notes, less
cash, less diamond debtors plus BEE partner bank facilities. In FY2021
Williamson was classified as held for sale, if Williamson was consolidated
as at 30 June 2021 consolidated net debt would have reduced by cash and
cash equivalents held by Williamson of US$9.2 million to US$219.0 million.
2. Tax (expense) / credit is the tax (expense) / credit for the Period
excluding taxation credit / (charge) on impairment charge and unrealised
foreign exchange gain / (loss) generated during the Period, such exclusion
more accurately reflects resultant Adjusted net profit / (loss).
3. Williamson's diamond inventory includes the 71,654.45 carat parcel of
diamonds blocked for export during August 2017, with a carrying value of
US$12.5 million. In terms of the framework agreement reached with the
Government of Tanzania, as announced on 13 December 2021, the proceeds from
the sale of this parcel will be allocated to Williamson.
4. Operational free cashflow is defined as cash generated from operations less
acquisition of property, plant and equipment.
5. The results for FY2021 has been restated with the operating results of
Williamson which were previously classified under loss on discontinued
operations, for further detail refer to note 17.
Revenue
Total revenue for FY 2022 amounted to US$585.2 million (FY 2021: US$406.9
million), comprising revenue from rough diamond sales of US$584.1 million (FY
2021: US$406.9 million) and additional revenue from profit share agreements of
US$1.1 million (FY 2021: nil).
FY 2022 revenue from rough diamond sales increased 44% to US$584.1 million (FY
2021: US$406.9 million) driven by sales from a higher than average number of
Exceptional Stones contributing US$89.1 million during the Year (FY 2021:
US$62.0 million); supported by the strong diamond market, and a 41.5% increase
in like-for-like diamond prices.
Mining and processing costs
The mining and processing costs for FY 2022 comprised on-mine cash costs as
well as other operational expenses. A breakdown of the total mining and
processing costs for the Year is set out below.
On-mine Diamond Diamond Group Adjusted Depreciation3 Total
cash royalties inventory technical, mining and mining and
costs1 and support processing US$m processing
US$m stockpile and costs costs
US$m movement marketing (IFRS)
costs2 US$m
US$m US$m
US$m
FY 2022 272.3 14.6 0.5 19.7 307.1 84.4 391.5
FY 20214 208.9 3.2 42.2 21.8 276.1 80.0 356.1
Notes:
1. Includes all direct cash operating expenditure at operational level, i.e.
labour, contractors, consumables, utilities and on-mine overheads.
2. Certain technical, support and marketing activities are conducted on a
centralised basis.
3. Includes amortisation of right-of-use assets under IFRS 16 of US$2.3
million (FY 2021: US$0.6 million) and excludes exploration and corporate /
administration.
4. For comparative purposes, the FY 2021 figures include Williamson as it is
no longer held for sale at 30 June 2022.
Absolute on-mine cash costs in FY 2022 increased by c.30% compared to FY 2021
and in line with expectations, due to:
* The effect of translating ZAR denominated costs at the South African
operations at a stronger ZAR/USD average exchange rate (1.4% increase)
* Williamson mine resuming production in FY 2022 after being on care and
maintenance throughout FY 2021 and changes in volumes at South-African
operations (18.3% increase);
* Other cost movements, due to increased social expenditure and costs
previously included under Group technical, support and marketing costs
(1.2% increase)
* Inflationary increases (c.6.8% increase), the impact of electricity costs
(0.9% increase) and annual labour increases and voluntary separation
pay-outs (1.4% increase)
Royalties increased to US$14.6 million (FY 2021: US$3.2 million) due to
increased profits net of capex across the SA operations resulting in higher
royalty percentages, as defined in the royalty legislation of South Africa and
Williamson recommencing operations during the Year.
Profit from mining activities
Profit from mining activities increased 102% to US$277.3 million (FY 2021:
US$137.6 million), mainly due to improved diamond pricing and the contributions
from Exceptional Stones.
Adjusted corporate overhead - general and administration
Corporate overhead (before depreciation and share based payments) increased to
US$13.0 million for the Year (FY 2021: US$7.4 million) mainly attributable to
the increase in corporate governance structures, strategic developments and
Board appointments introduced during the Year.
Adjusted EBITDA
Adjusted EBITDA, being profit from mining activities less adjusted corporate
overhead, increased 103% to US$264.9 million (FY 2021: US$130.2 million),
representing an adjusted EBITDA margin of 45% (FY 2021: 32%) driven by the
stronger diamond market and resultant improved diamond pricing coupled with the
contribution from Exceptional Stones.
Depreciation and amortisation
Depreciation and amortisation for the Period increased to US$85.3 million (FY
2021: US$80.8 million), mainly due to production recommencing at Williamson.
Impairment reversal / charge
As a result of the impairment reviews carried out at the Cullinan, Finsch,
Koffiefontein and Williamson Mines, and the Group's other receivables during
the Year, the Board recognised an overall net impairment reversal of US$19.6
million (FY 2021: US$38.4 million impairment charge), comprising:
US$ million FY 2022 FY 2021
Asset class
Reversal of impairment - property, plant & equipment (Refer 21.4 -
note 15)
Impairment - property, plant & equipment (Refer note 15) (0.3) (38.7)
Impairment (charge)/reversal - other current receivables (1.5) 0.3
(refer note 15)
19.6 (38.4)
Impairment reviews carried out at the Cullinan, Finsch, and Williamson Mines'
operational assets did not result in an impairment charge or reversal during
the Year (FY 2021: US$38.7 million). Asset level impairments at Koffiefontein
amount to US$0.3 million (FY 2021: US$38.7 million in respect of Finsch,
Koffiefontein and Williamson), of the Group's carrying value of property, plant
and equipment of US$608.2 million (FY 2021: US$764.5 million) pre-impairment.
There was an impairment reversal of US$21.4 million relating to an IFRS 5
impairment adjustment for Williamson as the results for Williamson have been
re-consolidated.
Impairment of BEE loans receivable - expected credit loss provision
The Group has applied the expected credit loss impairment model to its BEE
loans receivable. In determining the extent to which expected credit losses may
apply, the Group assessed the future free cashflows to be generated by the
mining operations based on the current mine plans. This assessment indicated a
net credit loss reversal / charge of US$nil (FY 2021: US$5.8 million expected
credit loss reversal); refer to note 2 for further detail.
Net financial (expense)/income
Net financial expense of US$73.1 million (FY 2021: US$220.7 million income)
comprises:
US$ million FY 2022 FY 2021
Net realised foreign exchange gain / (loss) on 12.6 (6.1)
settlement of forward exchange contracts
Interest received on bank deposits 1.3 0.7
Net interest receivable / (payable) on the BEE partner 1.8 (3.0)
loans and amortisation of lease liabilities in
accordance with IFRS 16
Net gain on extinguishment of Notes - 213.3
Offset by:
Interest on the Group's debt and working capital (45.3) (51.5)
facilities
Unwinding of the present value adjustment for Group (5.4) (4.6)
rehabilitation costs
Acceleration of unamortised bank facility and Notes (1.6) (2.7)
costs
Net unrealised foreign exchange (losses) / gains (36.5) 74.6
Net financial (expense) / income (73.1) 220.7
Tax credit / charge
The tax charge of US$37.8 million (FY 2021: US$23.0 million) comprising
deferred tax charge of US$30.4 million (FY 2021: US$22.7 million) and a net
current tax charge of US$7.4 million (FY 2021: US$0.3 million).
The Consolidated Income Statement deferred tax charge for the Year reflects
movements in deferred tax of US$35.5 million (30 June 2021: US$3.4 million) in
respect of property, plant and equipment and associated capital allowances,
US$2.5 million deferred tax credit (30 June 2021: US$2.8 million) relating to
provisions and a US$2.6 million deferred tax credit (30 June 2021: US$nil) due
to the change in the South African corporate tax rate from 28% to 27% reducing
the deferred tax liabilities recognised at the Finsch and Cullinan Mines at
Year end.
The net current tax charge of US$7.4 million (30 June 2021: US$0.3 million
includes a current tax charge of US$7.6 million at Finsch for the Year (FY
2021: US$nil million).
Profit on disposal of subsidiary including associated impairment, net of tax
In FY 2021, the profit on disposal of subsidiary including associated
impairment, net of tax of US$14.7 million relates to the Group's disposal of
its interests in Sekaka, its exploration operations in Botswana, and is made up
of a US$0.3 million disposal consideration, net profit of US$1.3 million for
the Period 1 July 2020 to the 30 November 2020 disposal date and the recycling
of the foreign currency translation reserve of US$13.3 million, offset by a net
asset disposal amount of US$0.2 million. Refer to Note 16 for further detail.
Williamson
At the end of FY 2021, the Board had decided to review its strategic options at
Williamson and the asset was classified as an asset held for sale.
In terms of the IFRS requirements to measure the assets of a disposal group at
the lower of carrying amount and fair value less costs to sell, the
determination of the fair value is complex and subject to considerable
judgement. Based on management's best estimate of the fair value at 30 June
2021, the following amounts were recognised as a result of that
reclassification:
* An impairment charge of US$21.4 million in respect of property, plant and
equipment
* A US$11.2 million charge attributable to Williamson's net loss for FY 2021
* A US$19.5 million provision for unsettled and disputed tax claims arising
from the ordinary course of business
During H1 FY 2022, the Group entered into a Framework Agreement with the
Government of Tanzania regarding the Williamson mine which will reduce Petra's
indirect shareholding from 75% to 63%. Petra also entered into a non-binding
Memorandum of Understanding ("MoU") to sell 50% less one share of the entity
that holds Petra's shareholding in Williamson ("WDL") to Caspian Limited. Upon
completion of the transactions contemplated by the MoU and the capital
restructuring in the Framework Agreement becoming effective (expected in H1 FY
2023), Petra and Caspian will each indirectly hold a 31.5% stake in WDL, but
with Petra retaining a controlling interest in WDL, and the Government of
Tanzania holding the remaining 37%. These agreements are in line with Petra's
objective of reducing its exposure in Tanzania while retaining control, through
its controlling interest in the entity that holds Petra's shares in WDL. The
Williamson mine is therefore no longer classified as an asset held for sale in
FY 2022 and was reconsolidated into the Group results for FY 2022. As a result
the Group also reversed a Group level impairment charge relating to Williamson,
previously recognised under IFRS 5, of US$21.4 million. Refer to Note 17 for
additional detail.
Earnings per share
Basic profit per share from continuing operations of USc35.53 was recorded (FY
2021: USc260.70, including gain on extinguishment of Notes).
Adjusted profit per share from continuing operations (adjusted for impairment
charges, taxation credit on net unrealised foreign exchange losses and net
unrealised foreign exchange gains and losses) of USc42.93 was recorded (FY
2021: USc36.20 loss (adjusted for impairment charges, taxation charge on net
unrealised foreign exchange gains and net unrealised foreign exchange gains and
losses)).
The comparative basic profit per share and adjusted profit per share have been
adjusted to give effect to the share consolidation of one new share for every
50 existing shares completed on 29 November 2021, with the Company's resultant
issued share capital now consisting of 194,201,785 ordinary shares of 0.05
pence each.
Operational free cash flow
During the Year, operational free cash flow of US$230.0 million (FY 2021:
US$120.1 million before restructuring fees of US$15.5 million) reflects the
impact from the sale of a high number of Exceptional Stones and stronger
diamond prices. This strong cash flow performance was positively impacted by:
* US$7.6 million inflow (FY 2021: US$12.1 million outflow) cash finance
expenses net of finance income and net realised foreign exchange gains/
(losses).
This was offset by:
* Restructuring fees settled during the Year of US$nil (FY 2021 US$29.9
million)
* Income tax paid of US$7.8 million (FY 2021: US$0.3 million inflow)
* US$3.5 million dividend paid to BEE partners (FY 2021: US$7.0 million
advances to BEE partners, largely related to servicing of BEE bank debt,
with the advances recoverable against future BEE partner distributions)
Cash and Diamond Debtors
As at 30 June 2022, Petra had cash at bank of US$288.2 million (FY 2021:
US$163.9 million). Of these cash balances, US$271.9 million was held as
unrestricted cash (FY 2021: US$147.8 million), US$15.5 million was held by
Petra's reinsurers as security deposits on the Group's cell captive insurance
structure (with regards to the Group's environmental guarantees) (FY 2021:
US$15.3 million) and US$0.8 million was held by Petra's bankers as security for
other environmental rehabilitation bonds lodged with the Department of Mineral
Resources and Energy in South Africa (FY 2021: US$0.8 million).
Diamond debtors at 30 June 2022 were US$37.4 million (FY 2021: US$38.3
million).
Loans and Borrowings
The Group had loans and borrowings (measured under IFRS) at Year end of
US$366.2 million (FY 2021: US$430.3 million) comprised of US$366.2 million
Notes (includes US$50.3 million accrued interest and unamortised transaction
costs of US$15.2 million), bank loans and borrowings of US$nil (FY 2021:
US$103.0 million). Bank debt facilities undrawn and available to the Group at
30 June 2022 were US$61.5 million (FY 2021: US$7.7 million).
Consolidated net debt at 30 June 2022 was US$40.6 million (FY2021: US$228.2
million).
Covenant Measurements attached to banking facilities
The Company's revised EBITDA-related covenants associated with its restructured
banking facilities are as outlined below:
* To maintain a net debt : EBITDA ratio tested semi-annually on a rolling
12-month basis
* To maintain an Interest Cover Ratio (ICR) tested semi-annually on a rolling
12-month basis
* To maintain minimum 12 month forward looking liquidity requirement that
consolidated cash and cash equivalents (excluding diamond debtors) shall
not fall below US$20.0 million
The Company's new covenant levels for the respective measurement periods are
outlined below:
FY22 H2 FY23 H1 FY23 H2 FY24 H1 FY24 H2 FY25 H1 FY25 H2 FY26 H1
Consolidated net debt :
EBITDA Leverage ratio 4.00 4.00 3.50 3.50 3.25 3.25 3.00 3.00
(maximum)
Interest Cover Ratio 1.85 1.85 2.50 2.50 2.75 2.75 3.00 3.00
(minimum)
For further detail on the restructuring of the SA Lender facilities refer to
Note 8 below.
Going concern considerations
The Board has reviewed the Group's forecasts with various sensitivities
applied, for the 18 months to December 2023, including both forecast liquidity
and covenant measurements. As per the First Lien agreements, the liquidity and
covenant measurements exclude contributions from Williamson's trading results
and only recognises cash distributions payable to Petra upon forecasted
receipt, or Petra's funding obligations towards Williamson upon payment. The
review took into account the Groups intention to purchase up to US$150 million
of the Senior Secured Second Lien Notes due in 2026 through a tender offer to
bondholders.
The Board has given careful consideration to potential risks identified in
meeting the forecasts under the review period. The following sensitivities have
been performed in assessing the Group's ability to operate as a going concern
(in addition to the Base Case) at the date of this report:
* A 10% decrease in forecast rough diamond prices from July 2022 to December
2023
* A 10% strengthening in the forecast South African Rand (ZAR) exchange rate
against the US Dollar from July 2022 to December 2023
* A 10% increase in operating costs from July 2022 to December 2023
* A US$15 million reduction in revenue contribution from Exceptional Stones
* A production disruption sensitivity assuming no carat production across the
Group for two weeks in February 2023 (could be due to extreme weather
conditions or supply chain disruptions or any other unexpected event)
* Combined sensitivity: Prices down 10% and ZAR stronger by 10%, reduced
contribution from Exceptional Stones and operating costs up 5%
Under all the cases, the forecasts indicate that the Group's liquidity outlook
over the 18-month period to December 2023 remains strong, even when applying
the above sensitivities to the base case forecast.
The forward-looking covenant measurements associated with the new First Lien
(1L) facility do not indicate any breaches during the 18-month review period
for the base case as well as all the above sensitivities, except for the
combined sensitivity, which shows a covenant breach for the required ICR in the
December 2023 measurement period. While the ICR is projected to be breached in
this combined sensitivity, neither the Net Debt : EBITDA covenant nor the
liquidity covenant is projected to be breached, while the revolving credit
facility (RCF) remains undrawn. It is therefore assumed that the RCF remains
available on the expectation that the 1L lender will agree to an ICR covenant
waiver given that the Group does not expect to utilise the RCF for servicing of
its Second Lien (2L) interest obligations. Furthermore, this potential ICR
breach may be cured by means of reducing of our gross debt by utilising
existing available cash reserves and/or marginally increasing our projected
EBITDA for the preceding 12-month period.
As a result, the Board concluded that there are no material uncertainties that
would cast doubt on the Company continuing as a going concern. See 'Basis of
preparation including going concern' in the Financial Statements for further
information.
Capex
Total Group capex for the Year increased to US$52.2 million (FY 2021: US$23.8
million), comprising:
* US$34.5 million expansion capex (FY 2021: US$16.9 million)
* US$17.7 million sustaining capex (FY 2021: US$6.9 million).
Capex (US$m) FY 2022 FY 2021
Cullinan 35.0 16.8
Finsch 12.0 4.0
Williamson 3.3 0.3
Koffiefontein 0.6 1.7
Subtotal - capex incurred by operations 50.9 22.8
Corporate 1.3 1.0
Total Group capex 52.2 23.8
Dividend
No dividend was declared for FY 2022 (FY2021: US$nil).
PRINCIPAL BUSINESS RISKS
The Group is exposed to a number of risks and uncertainties which could have a
material impact on its long-term development, and performance and management of
these risks is an integral part of the management of the Group.
A summary of the risks identified as the Group's principal external, operating
and strategic risks (in no order of priority), which may impact the Group over
the next twelve months, is listed below.
Risk Risk Risk Nature Change in FY 2022
appetite rating of risk
External Risks
1. Rough High Medium Long Lower - like for like diamond prices
diamond price term increased 41.5% (FY 2021: 9%) during FY 2022
which was largely attributable to mid-stream
inventory restocking and continued strong
jewellery retail sales. Lower global diamond
production also resulted in a more positive
outlook for the diamond market whilst
macroeconomic uncertainties caused by rising
interest rates and inflation are potential
dampeners of demand.
2. Currency High Medium Long No change - whilst initially stable, the ZAR/
term USD exchange rate experienced significant
volatility during FY 2022, closing the Year
at 16.27 ZAR/USD, compared to 14.27 ZAR/USD
on 30 June 2021. The impact of the war in
Ukraine benefitted the Rand, though over the
longer term the Rand is expected to weaken as
South Africa's inflation rate remains high.
3. Country High Medium Long Lower - while the risk of political
and political term instability remains in South Africa, the
outcomes of the ruling party's policy
conference were positive and markets were
encouraged by party support for the
President's proposals. After the South
African High Court judgement in favour of the
Minerals Council SA, the DMRE has indicated
it will seek legislative amendments of the
Mineral and Petroleum Resources Development
Act which could reverse aspects of the
judgement, in particular the legal status of
the Mining Charter. In Tanzania, the risk of
political instability remains lower under the
new President and following entry by Petra
into a Framework Agreement with the
Government that is yet to become effective
4. COVID-19 Medium Medium Short to Lower COVID-19 restrictions in South Africa
pandemic medium and Tanzania have been gradually lifted
(operational term during the Year due to the decreasing numbers
impact) of individuals contracting the virus which
led, in South Africa, to the termination of
the national state of emergency. The emphasis
has shifted to continuing the promotion of
the administration of vaccinations, including
booster shots, as this remains the best
protection against COVID-19.
Strategic
Risks
5. Group Medium Medium Short to Lower - a combination of higher diamond
Liquidity medium prices, robust production levels in line with
term guidance and record proceeds from the sale of
Exceptional Stones contributed to increased
revenue, strong free cash flow and a
reduction in net debt to US$40.6 million as
at 30 June 2022, thereby significantly
strengthening the balance sheet. The Company
also completed the refinancing of its first
lien debt facility which will deliver some
US$5 million in savings over the next two
years as a result of reduced utilisation and
more favorable terms than the previous
facility.
6. Licence to Medium Medium Long No change - Petra continued to comply in all
operate: term material respects with relevant laws and
regulatory and regulations in the countries in which it
social impact operates. In FY 2022, local operations
& community conducted 451 (FY 21: 658) social engagements
relations which included internal (employees and
committees) and external (Government,
communities, forums and SMMEs) engagements.
Stakeholder engagement plans (SEPs) continue
to be reviewed and updated to increase
value-add engagements at Government and
community levels.
Following the Company's May 2021 announcement
on the alleged human rights breaches in
Tanzania, Petra has continued to progress the
design and implementation of the IGM for
Williamson. This has involved extensive
stakeholder engagements with all levels of
Government and the local community to create
awareness of the IGM process and to obtain
initial feedback on how the IGM is envisaged
to operate. The current target is for the
IGM to become operational during Q2 CY
2023.
The Company has also progressed a number of
projects to provide sustainable benefits to
the communities located close to the
Williamson mine which include (1) a medical
support project, (2) an artisanal and
small-scale mining project, (3) an
agribusiness development initiative, (4)
improved delineation of the Williamson mine
boundaries, including access to the mine
lease area for the collection of firewood and
(5) an awareness initiative in respect of
sexual and gender-based violence.
Operating
Risks
7. Mining and Medium Medium Long Lower - positive throughput improvements
production term supported by Project 2022 (which completed
in June 2022) continued to yield good
results. Group production for FY 2022
increased by 3% in line with guidance,
largely owing to the resumption of mining at
Williamson. Production at the Cullinan Mine
during Q4 FY 2022 was lower due to the
depletion of the current CC1E mining area
and a difference in the make-up of
kimberlite in the C-Cut. When compared with
FY2021, production at the Finsch Mine
stabilised in the second half of FY 2022,
although ROM grade was 13% lower as a result
of waste dilution despite the implementation
of controls which were continuously
monitored. Group production guidance for
FY2023 to FY 2025 remains unchanged at this
stage.
8. ROM grade Medium Medium Short No change - the current mining blocks at the
and product term South African operations are reaching
mix volatility maturity and while the current orebody
footprints are still large enough to deliver
relative consistency and product mix,
increasing levels of variability in terms of
ROM Grade and product mix can be expected
going forwards which will be mitigated by
the ramp up of the new mining blocks at CDM
and FDM.
9. Labour Medium Medium Short to No change - stable labour relations were
relations medium experienced during FY 2022. The Company
term reached agreement with NUM on a new
three-year wage agreement for employees in
the Paterson A and B Bands at the South
African operations. The Company also
concluded a three-year wage agreement for
employees on the Paterson C-Lower Band with
both NUM and UASA at the SA operations.
Review of the collective bargaining
agreement at WDL is ongoing with the
majority union (TAMICO).
10. Safety Medium Medium Short to Lower - Petra's safety performance saw a 40%
medium reduction in Lost Time Injuries (LTIs) to 15
term for the Year and a corresponding 48%
improvement in the Lost Time Injury Frequency
Rate for the Year. The only metric on which
Petra's performance deteriorated was in
respect of Non-Lost Time Injuries, which saw
an increase of 11% but this was against a
backdrop of (i) an increased number of LTIs
incurred in FY 2021 versus the low number of
incurred NLTIs in FY 2021 and (ii) an
increased number of shifts worked in FY 2022
which meant Petra's Non-Lost Time Injury
Frequency Rate improved by 7%. The Cullinan
Mine in particular, had an exceptional year,
celebrating a LTI-free year on 25 April 2022.
11. Medium Medium Long No change - implementation of waste
Environment term management procedures and the setting of
annual objectives to improve waste management
has resulted in higher waste recycling (25%
more waste was recycled in FY 2022 than in
the previous year) and lowered the risk
caused by landfilling. On land
rehabilitation, Petra has positively
transformed 120 hectares of previously
disturbed land during FY 2022. The
implementation of annual objectives for
improved water efficiency has seen Petra
reach internal water recycling figures
averaging 80% over the last four years.
12. Climate High Medium Long No change - the Group's Climate Change
Change term Adaption Policy and strategy is currently in
year 3 of the 5 year implementation plan.
Petra uses the World Bank Climate Change
Knowledge Portal ("CCKP") to estimate
physical climate change impacts on, and
opportunities for, our operations. Petra has
initiated various climate change projections
and scenarios analysis to determine the
impact on its operations in the short, medium
and long term. During FY 2022, mitigating
action plans were developed for the top rated
climate change risks that have been
identified. Climate related disclosures were
further aligned to the Taskforce on Climate
Related Financial Disclosure (TCFD)
recommendations. Petra will produce its
second TCFD report as part of its annual
reporting process for FY 2022.
13. Supply Medium Medium Short to Higher - a comprehensive review of the Supply
Chain medium Chain function's operating structure and
Governance term people competencies in line with Petra's
business strategy is currently underway.
Processes and systems across the Supply Chain
function are further being reviewed with the
aim of improving internal controls and
governance. A new Third Party Due Diligence
Policy and Procedure and online platform is
currently being finalised to ensure that
supplier risks relating to bribery &
corruption, sanctions, trade restrictions and
human rights violations are adequately
identified and mitigated accordingly.
14. Capital Medium High Short to Higher - the CC1E SLC and Lower Block 5
Projects medium 3-level SLC expansion projects at the
term Cullinan and Finsch Mines were approved by
the Board in FY 2022 and as a result various
governance initiatives have been launched to
ensure efficient and effective management of
these projects, including the identification
and management of key project risks. The
Executive, Investment Committee and Board
continue to regularly monitor progress of
both projects, including tracking of spend
against budgets and progress against the
approved baseline schedules.
Richard Duffy
Chief Executive Officer
13 September 2022
Notes
The following definitions have been used in this announcement:
a. Exceptional Stones: diamonds with a valuation and selling price of US$5m or
more per stone
b. cpht: carats per hundred tonnes
c. Kcts: thousand carats
d. Kt: thousand tonnes
e. LTI: lost time injury
f. LTIFR: lost time injury frequency rate
g. Mcts: million carats
h. Mt: million tonnes
i. FY: financial year
j. CY: calendar year
k. Q: quarter of the financial year
l. ROM: run-of-mine (i.e. production from the primary orebody)
m. SLC: sub level cave
n. m: million
PETRA DIAMONDS LIMITED
CONDENSED CONSOLIDATED INCOME STATEMENT
FOR THE YEARED 30 JUNE 2022
US$ million Notes (Unaudited) (Restated -
Year ended audited)
30 June Year ended
2022 30 June
20211
Revenue 585.2 406.9
Mining and processing costs (391.5) (356.1)
Other direct income (0.8) 6.8
Corporate expenditure including settlement costs 5 (14.1) (40.8)
Other corporate income 0.6 -
Impairment reversal / (charge) of non-financial assets 15 21.1 (38.7)
Impairment (charge) / reversal other receivables 15 (1.5) 0.3
Impairment of other receivables - expected credit loss 15 - 5.8
release
Total operating costs (386.2) (422.7)
Profit on disposal of subsidiary including associated 16 - 14.7
impairment, net of tax
Financial income 6 19.0 81.6
Financial expense 6 (92.1) (74.2)
Gain on extinguishment of Notes net of unamortised costs 6 - 213.3
Profit before tax 125.9 219.6
Income tax charge (37.8) (23.0)
Profit for the Year 88.1 196.6
Attributable to:
Equity holders of the parent company 69.0 187.1
Non-controlling interest 19.1 9.5
88.1 196.6
Profit per share attributable to the equity holders of
the parent during the Year:
Continuing operations:
Basic earnings per share - USc 13 35.53 260.70
Diluted earnings per share - USc 13 35.53 260.70
1 The condensed consolidated income statement for FY2021 has been restated with
the operating results of Williamson which were previously classified under loss
on discontinued operations, for further detail refer to note 17 and the basic
and diluted profit per share have been restated and adjusted for the 50 for 1
share consolidation which became effective in November 2021, in accordance with
IAS 33 Earning per Share, refer to note 13 for further detail.
PETRA DIAMONDS LIMITED
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEARED 30 JUNE 2022
US$ million (Unaudited) (Restated -
Year ended audited)
30 June Year ended
2022 30 June
2021
Profit for the Year 88.1 196.6
Exchange differences on translation of the share-based (0.3) 0.2
payment reserve
Exchange differences on translation of foreign operations1 (46.8) 64.2
Exchange differences on non-controlling interest1 (0.4) (1.2)
Total comprehensive income for the Year 40.6 259.8
Total comprehensive income and expense attributable to:
Equity holders of the parent company 21.9 251.5
Non-controlling interest 18.7 8.3
40.6 259.8
¹ These items will be reclassified to the consolidated income statement if
specific future conditions are met.
PETRA DIAMONDS LIMITED
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2022
US$ million Notes (Unaudited) (Audited)
30 June 30 June
2022 2021
ASSETS
Non-current assets
Property, plant and equipment 7 633.2 696.8
Right-of-use assets 21.9 1.2
BEE loans and receivables 11 44.6 46.6
Other receivables 2.6 -
Total non-current assets 702.3 744.6
Current assets
Trade and other receivables 49.8 50.7
Inventories 70.6 59.9
Cash and cash equivalents (including restricted 288.2 163.8
amounts)
Total current assets 408.6 274.4
Non-current assets classified as held for sale 17 - 59.6
Total assets 1,110.9 1,078.6
EQUITY AND LIABILITIES
Equity
Share capital 12 145.7 145.7
Share premium account 959.5 959.5
Foreign currency translation reserve (448.9) (402.1)
Share-based payment reserve 1.9 1.8
Other reserves (0.8) (0.8)
Accumulated losses (183.6) (253.3)
Attributable to equity holders of the parent company 473.8 450.8
Non-controlling interest 4.7 (10.5)
Total equity 478.5 440.3
Liabilities
Non-current liabilities
Loans and borrowings 8 353.9 400.0
Lease liabilities 19.2 0.5
Provisions 97.7 71.3
Deferred tax liabilities 71.3 48.9
Total non-current liabilities 542.1 520.7
Current liabilities
Loans and borrowings 8 12.3 30.3
Lease liabilities 3.2 0.5
Trade and other payables 74.8 49.1
Provisions - 4.2
Total current liabilities 90.3 84.1
Liabilities directly associated with non-current
assets classified as held for sale 17 - 33.5
Total liabilities 632.4 638.3
Total equity and liabilities 1,110.9 1,078.6
In FY2021, the Company disclosed the net assets of the Williamson mine under
non-current assets held for sale and liabilities directly associated with
non-current assets held for sale in the Statement of Financial Position. As at
30 June 2022 the Williamson assets and liabilities have been re-consolidated,
for further detail refer to note 17.
PETRA DIAMONDS LIMITED
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEARED 30 JUNE 2022
US$ million Notes (Unaudited) (Restated -
Year ended audited)
30 June Year ended
2022 30 June
20211
Profit before taxation for the Year 125.9 219.6
Depreciation of property plant and equipment 82.8 76.2
Amortisation of right-of-use asset 2.5 4.6
Unrealised gain on lease liability - (3.7)
Impairment (reversal) / charge - non financial assets 15 (21.1) 38.7
Impairment (reversal) / charge- other receivables 15 1.5 (0.3)
Impairment of BEE loans receivable - expected credit 11
loss (release) / charge - (5.8)
Gain on extinguishment of Notes net of unamortised 6 - (213.3)
costs
Profit on disposal of subsidiary 16 - (14.7)
Movement in provisions 1.6 24.3
Dividend received (0.6) -
Financial income 6 (19.0) (81.6)
Financial expense 6 92.1 74.2
Loss/(profit) on disposal of property, plant and 1.5 (0.6)
equipment
Share based payment provision 1.1 0.5
Operating profit before working capital changes 268.3 118.1
Increase in trade and other receivables (7.1) (26.9)
Increase in trade and other payables 24.5 5.5
(Increase) / decrease in inventories (1.7) 42.8
Cash generated from operations 284.0 139.5
Net realised gains / (losses) on foreign exchange 12.6 (6.1)
contracts
Finance expense (6.3) (6.7)
Income tax (paid) / received (7.8) 0.3
Net cash generated from operating activities 282.5 127.0
Cash flows from investing activities
Acquisition of property, plant and equipment (54.0) (19.4)
Proceeds from sale of property, plant and equipment - 0.3
Loan repayment from / (advanced to) BEE partners 0.2 (7.0)
Dividend paid to BEE partners (3.5) -
Dividend received from BEE partners 0.6 -
Repayment from KEMJV 2.5 -
Finance income 1.3 0.7
Net cash utilised in investing activities (52.9) (25.4)
Cash flows from financing activities
Cash transaction costs settled - Debt Restructuring - (29.9)
Cash paid on lease liabilities (0.7) (0.7)
Increase in borrowings - 30.0
Repayment of borrowings (98.2) (7.4)
Net cash generated from financing activities (98.9) (8.0)
Net increase in cash and cash equivalents 130.7 93.6
Cash and cash equivalents at beginning of the Year 156.9 53.6
Effect of exchange rate fluctuations on cash held (15.7) 9.7
Cash and cash equivalents at end of the Year2 271.9 156.9
¹ The condensed consolidated statement of cash flows for FY2021 has been
restated with the operating results of Williamson which were previously
classified under loss on discontinued operations, for further detail refer to
note 17.
2 Cash and cash equivalents in the Consolidated Statement of Financial Position
includes restricted cash of US$16.3 million (30 June 2021: US$16.1 million) and
unrestricted cash of US$271.9 million (30 June 2021: US$147.7 million (excludes
unrestricted cash attributable to Williamson of US$9.2 million)).
PETRA DIAMONDS LIMITED
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 JUNE 2022
(Unaudited) Share Share Foreign Share-based Other
capital premium currency payment reserves
account translation reserve
US$ million reserve
At 1 July 2021 145.7 959.5 (402.1) 1.8 (0.8)
Profit for the Year - - - - -
Other comprehensive (expense) / - - (46.8) (0.3) -
income
Dividend paid to Non-controlling - - - - -
interest shareholders
Equity settled share based - - - 1.1 -
payments
Transfer between reserves - - - - (0.7) -
equity settled share based
payments
At 30 June 2022 145.7 959.5 (448.9) 1.9 (0.8)
(Unaudited) Accumulated Attributable Non-controlling Total
losses to the interest equity
parent
US$ million
At 1 July 2021 (253.3) 450.8 (10.5) 440.3
Profit for the Year 69.0 69.0 19.1 88.1
Other comprehensive (expense) / income - (47.1) (0.4) (47.5)
Dividend paid to Non-controlling - - (3.5) (3.5)
interest shareholders
Equity settled share based payments - 1.1 - 1.1
Transfer between reserves - equity 0.7 - - -
settled share based payments
At 30 June 2022 (183.6) 473.8 4.7 478.5
PETRA DIAMONDS LIMITED
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEARED 30 JUNE 2022
(Audited) Share Share Foreign Share-based Other
capital premium currency payment reserves
account translation reserve
US$ million reserve
At 1 July 2020 133.4 790.2 (453.0) 1.1 (0.8)
Profit for the Year - - - - -
Other comprehensive income / - - 64.2 0.2 -
(expense)
Recycling of foreign currency - - (13.3) - -
translation reserve on disposal
of Sekaka
Equity settled share based - - - 0.5 -
payments
Allotments during the Year:
- Ordinary shares - Debt for 12.3 169.3 - - -
equity issue (net of US$12.3
million issue costs)
At 30 June 2021 145.7 959.5 (402.1) 1.8 (0.8)
(Audited) Accumulated Attributable Non-controlling Total
losses to the interest equity
parent
US$ million
At 1 July 2020 (440.4) 30.5 (18.8) 11.7
Profit for the Year 187.1 187.1 9.5 196.6
Other comprehensive income / (expense) - 64.4 (1.2) 63.2
Recycling of foreign currency - (13.3) - (13.3)
translation reserve on disposal of
Sekaka
Equity settled share based payments - 0.5 - 0.5
Allotments during the Year:
- Ordinary shares - Debt for equity - 181.6 - 181.6
issue (net of US$12.3 million issue
costs)
At 30 June 2021 (253.3) 450.8 (10.5) 440.3
NOTES TO THE CONDENSED CONSOLIDATED PRELIMINARY FINANCIAL STATEMENTS
FOR THE YEARED 30 JUNE 2022
1. GENERAL INFORMATION
Petra Diamonds Limited (the "Company"), a limited liability company listed on
the Main Market of the London Stock Exchange, is registered in Bermuda with its
Group management office domiciled in the United Kingdom. The Consolidated
Interim Financial Statements of the Company for the year ended 30 June 2022
comprise the Company and its subsidiaries, joint operations and associates
(together referred to as the "Group").
2. ACCOUNTING POLICIES
This preliminary report, which is unaudited, does not include all the notes of
the type normally included in an annual financial report. This condensed report
is to be read in conjunction with the Annual Report for the year ended 30 June
2021, and any public announcements made by the Group during the reporting
period. The annual financial report for the year ended 30 June 2021 was
prepared in accordance with International Financial Reporting Standards as
adopted by the European Union ("IFRS's") and the accounting policies applied in
this condensed preliminary report are consistent with the polices applied in
the annual financial report for the year ended 30 June 2021 unless otherwise
noted. The preliminary report has been prepared in accordance with accounting
policies compliant with International Financial Reporting Standards as adopted
by the European Union.
Basis of preparation including going concern
The twelve-month period to 30 June 2022 delivered US$264.9 million in EBITDA
and US$230.0 million in operational free cash flow for the Group, while
Consolidated Net Debt reduced from $228.2 million as at 30 June 2021 to US$40.6
million at 30 June 2022.
Production
Production at both CDM and FDM were generally in line with guidance. The
Group's overall production also benefitted with the restart of operations at
Williamson during Q1 FY2022 following an 18-month period of care and
maintenance, with Williamson ramping up towards steady-state operations. During
the Year, the Group also announced expansion capital projects at both the
Cullinan and Finsch Mines, which will extend their Life of Mine plans to 2031
and 2030 respectively. The expansion project at Cullinan Mine is progressing
well, while the expansion project at Finsch is slightly behind schedule on
account of delay in delivery of long-lead items given the global disruption in
supply chains experienced over the past 6 months. Both projects, however,
remain within guidance for cost and schedule, as mitigation steps have been
identified and being implemented to catch-up on the schedule delays at Finsch.
Diamond prices and diamonds market
Diamond prices strengthened over FY 2022, with a 41.5% increase on a
like-for-like basis compared to the preceding twelve-month period. In addition,
CDM's run of Exceptional Stone recovery and sales continued with a total of
US$75.2 million realised in the Year. Williamson also benefited from the sale
of an exceptional pink diamond at its first tender after restarting operations,
yielding $13.8 million and significantly de-risking Williamson's own liquidity
profile.
The market witnessed robust price recovery and are now close to prices last
seen during pre-COVID-19 levels. In general, the market is supported by a
fundamental supply deficit, with robust demand recovery experienced post
COVID-19. While some of the price recovery may have been helped by sanctions on
Russian goods, it appears that these goods have continued to flow into the
market. From a demand perspective, the Chinese lockdown has moderated demand
for certain categories of polished goods, while the rising inflation and
interest rate cycles may impact disposable income and therefore further
moderate/reduce short-term demand for diamonds. This may lead to some
short-term price volatility, but the medium-long term supply/demand
fundamentals are expected to support the diamond price outlook.
Williamson framework agreement and MOU
The Group announced reaching a framework agreement with the Government of
Tanzania in December 2021, which sets out key principles on the economic
benefit sharing amongst shareholders, treatment of outstanding VAT balances, as
well as agreement reached on the blocked parcel of diamonds and settlement of
historic disputes, amongst others. This agreement should provide important
fiscal stability for the mine and its investors and is expected to become
effective during the first half of FY2023, pending completion of certain
suspensive conditions. At the same time, Petra also announced entering into a
Memorandum of Understanding (MOU) with Caspian Ltd to sell 50% less 1 share of
Petra's stake in Williamson to this Tanzanian company for a purchase
consideration of US$15 million, which is also expected to be effective in the
first half of FY2023.
COVID-19
Petra's approach to managing COVID-19 has seen the Group not experiencing
interruptions to our day-to-day operational/business activities specifically
related to COVID-19 during the Year. During FY2022, we successfully reverted to
hosting all of our tenders for our South African goods in South Africa, while
the Williamson goods continue to be auctioned in Belgium (as per our normal
tender process for Williamson goods).
South African banking facilities
During the Year, the South African banking facilities held with the Group's
previous consortium of South African lenders were settled and cancelled,
comprising of the revolving credit facility of ZAR404.6 million (US$24.9
million) (capital plus interest) and the term loan of ZAR893.2 million (US$54.9
million) (capital plus interest).
The Group entered into a new ZAR 1 billion senior Revolving Credit Facility
(RCF) facility in June 2022. The Group will benefit from reduced interest rates
compared to the previous facilities coupled with more appropriate
leverage-based covenants (Net Debt : EBITDA, Interest Cover Ratio and minimum
liquidity). This new facility has a longer tenure, with the facility expiring
on January 7, 2026. As at June 30, 2022, the RCF remains undrawn, with the
Group having access to the full ZAR 1 billion (US$ 61.5 million).
The factors above, coupled with the further significant progress towards
stabilising the Group's balance sheet and strengthening cash reserves as at the
date of this report positions the Group well for this Going Concern period.
Forecast liquidity and covenants
The Board has reviewed the Group's forecasts with various sensitivities applied
for the 18 months to December 2023, including both forecast liquidity and
covenant measurements. As per the First Lien agreements, the liquidity and
covenant measurements exclude contributions from Williamson's trading results
and only recognises cash distributions payable to Petra upon forecasted
receipt, or Petra's funding obligations towards Williamson upon payment.
Debt tender offer
The Group intends to reduce its gross debt through a tender offer to
bondholders to purchase up to US$150 million of the Senior Secured Second Lien
Notes due in 2026 in line with our stated intent to further optimise our
capital structure through a reduction of gross debt. If completed, the
transaction will see Petra saving up to US$15 million per annum in interest
expenses while we remain confident in our liquidity outlook to continue to fund
our ongoing capital programmes from existing and internally generated cash
resources.
The Board has given careful consideration to potential risks identified in
meeting the forecasts under the review period. The following sensitivities have
been performed in assessing the Group's ability to operate as a going concern
(in addition to the Base Case) at the date of this report:
* a 10% decrease in forecast rough diamond prices from July 2022 to Dec 2023
* a 10% strengthening in the forecast South African Rand (ZAR) exchange rate
from July 2022 to Dec 2023
* a 10% increase in Operating Costs from July 2022 to Dec 2023
* a US$15 million reduction in revenue contribution from Exceptional Stones
* a production disruption sensitivity assuming no carat production across the
Group's operations for a period of two weeks in February 2023 (could be due
to extreme weather conditions or supply chain events or any other
unexpected event)
* Combined sensitivity: Prices down 10% and ZAR stronger by 10% and
Exceptional Stones contributions reduced by US$15 million and Operating
Costs up 5%
Under all the cases, the forecasts indicate the Group's liquidity outlook over
the 18-month period to December 2023 remains strong, even when applying the
above sensitivities to the base case forecast.
The forward-looking covenant measurements associated with the new First Lien
facility do not indicate any breaches during the 18-month review period for the
base case as well as all the above sensitivities, except for the worse case
combined sensitivity, which shows a covenant breach for the required interest
cover ratio in the December 2023. While the ICR is projected to be breached in
this combined sensitivity, both the Net Debt : EBITDA covenant and the
liquidity covenant remain healthy, while the RCF remains undrawn. It is
therefore assumed that the RCF remains available, with the 1L lender assumed to
agree to an ICR covenant waiver, given that the Group does not expect to
utilise the RCF for servicing of its 2L interest obligations. Furthermore, this
potential ICR breach may be cured by means of reducing of our gross debt by
utilising our cash reserves and/or marginally increasing our EBITDA for the
preceding 12-month period.
Conclusion
The Board is of the view that the longer-term fundamentals of the diamond
market remain sound and that the Group will continue to benefit from the
recently embedded new operating model throughout the review period and beyond.
Based on its assessment of the forecasts, principal risks and uncertainties and
mitigating actions considered available to the Group in the event of downside
scenarios, the Board confirms that it is satisfied the Group will be able to
continue to operate and meet its liabilities as they fall due over the going
concern period to December 2023. Accordingly, the Board have concluded that the
going concern basis in the preparation of the financial statements is
appropriate and that there are no material uncertainties that would cast doubt
on that basis of preparation.
New standards and interpretations applied
The IASB has issued new standards, amendments and interpretations to existing
standards with an effective date on or after 1 July 2021 which are not
considered to have a material impact on the Group during the Period under
review.
New standards and interpretations not yet effective
Certain new standards, amendments and interpretations to existing standards
have been published that are mandatory for the Group's accounting periods
beginning after 1 July 2022 or later periods. The only standard which is
anticipated to be significant or relevant to the Group is:
Amendments to IAS 1: Classification of Liabilities as Current or Non-current
Amendments to IAS 1, which are intended to clarify the requirements that an
entity applies in determining whether a liability is classified as current or
non-current. The amendments are intended to be narrow scope in nature and are
meant to clarify the requirements in IAS 1 rather than modify the underlying
principles. The amendments include clarifications relating to:
* how events after the end of the reporting period affect liability
classification;
* what the rights of an entity must be in order to classify a liability as
non-current;
* how an entity assesses compliance with conditions of a liability (e.g. bank
covenants); and
* how conversion features in liabilities affect their classification.
The amendments were originally effective for periods beginning on or after 1
January 2022 which was deferred to 1 January 2023 by the IASB in July 2020.
Earlier application is permitted but Amendments to IAS 1 has not yet been
endorsed for application by the European Union.
Significant assumptions and judgements:
The preparation of the condensed consolidated interim financial statements
requires management to make estimates and judgements and form assumptions that
affect the reported amounts of the assets and liabilities, reported revenue and
costs during the periods presented therein, and the disclosure of contingent
liabilities at the date of the interim financial statements. Estimates and
judgements are continually evaluated and based on management's historical
experience and other factors, including future expectations and events that are
believed to be reasonable. The estimates and assumptions that have a
significant risk of causing a material adjustment to the financial results of
the Group in future reporting periods are discussed below.
Key estimates and judgements:
Impairment reviews
The Group prepares impairment models and assesses mining assets for impairment
or reversals of previous impairments. While conducting an impairment test of
its assets using recoverable values using the current life of mine plans, the
Group exercised judgement in making assumptions about future rough diamond
prices, foreign exchange rates, volumes of production, ore reserves and
resources included in the current life of mine plans, future development and
production costs and factors such as inflation and discount rates. Changes in
estimates used can result in significant changes to the 'Consolidated Income
Statement' and 'Statement of Financial Position'.
Cullinan, Finsch, Koffiefontein and Williamson
The impairment tests for the Cullinan and Finsch Mines indicated no further
impairment charges or reversals to be recognised. The impairment test for
Koffiefontein indicated an impairment of US$0.3 million on a carrying value of
the Group's property, plant and equipment of US$608.2 million (pre-impairment).
This follows US$17.3 million recognised at 30 June 2021 (comprising Finsch
impairment of US$15.1 million and Koffiefontein impairment of US$2.2 million)
on a carrying value of the Group's property, plant and equipment of US$711.8
million (pre-impairment) at the time of recognition. The Group also recognised
an impairment reversal of US$21.4 million relating to an IFRS 5 impairment
adjustment for Williamson as the results for Williamson have been
re-consolidated in FY2022. For further details of the inputs, assumptions and
sensitivities in the impairment model, refer to note 15.
Recoverability and ownership of diamond parcel in Tanzania
The Group holds diamond inventory valued at US$12.5 million (30 June 2021:
US$10.6 million) in the Statement of Financial Position in respect of the
Williamson mine's confiscated diamond parcel. The diamond inventory parcel was
written up from the net realisable value of prior periods to cost during the
current year. The recommencing of operations and the sales tenders at
Williamson during the Year provided additional information for management to
assess the value of the diamond parcel and was the basis used to revalue the
diamond parcel to the lower of cost or net realisable value. During FY 2018, an
investigation into the Tanzanian diamond sector by a parliamentary committee in
Tanzania was undertaken to determine if diamond royalty payments were being
understated. In connection with this, Petra announced on 11 September 2017 that
a parcel of diamonds (71,654.45 carats) from the Williamson mine in Tanzania
(owned 75% by Petra and 25% by the Government of the United Republic of
Tanzania ("GoT")) had been blocked for export to Petra's marketing office in
Antwerp.
The assessment of the recoverability of the diamond parcel required significant
judgement. In making such a judgement, the Group considered the Framework
Agreement that was signed with the GoT on 13 December 2021, confirmation was
received from the GoT in FY 2018 that they held the diamond parcel of 71,654.45
carats, ongoing discussions held with the GoT, an assessment of the internal
process used for the sale and export of diamonds confirming such process is in
full compliance with legislation in Tanzania and the Kimberley Process, and
legal advice received from the Group's in-country attorneys which supports the
Group's position.
The Framework Agreement which refers to the diamond parcel as the "Government
Diamond Parcel" sets out that the proceeds from the sale of the Parcel will
flow to Williamson Diamonds Limited ("WDL").
While a resolution has not yet been reached with regards to the mechanism to
sell the parcel of diamonds that was blocked from export, based on the above
judgements and assessment thereof, management remain confident that based on
the signed Framework Agreement, and the legal advice received from the Group's
in-country attorneys, the diamond parcel will be made available for future
sale, and that WDL will derive future economic benefit from the sales proceeds.
Recoverability of VAT in Tanzania
The Group has VAT receivable of US$2.7 million (30 June 2021: US$0.7 million)
in respect of the Williamson mine, all of which are past due and have therefore
been classified, after provision including amounts related to providing for a
time-value of money inclusive of risk adjustments for various factors, as
non-current given the potential delays in receipt.
The VAT receivable as at 30 June 2022, can be split into three identifiable
component time periods as set out below:
US$ million VAT Provision Written Carrying
Receivable off value
July 2017 to June 2020 26.9 - (26.9) -
Pre July 2017 and Post June 8.6 (6.0) - 2.6
2020
35.5 (6.0) (26.9) 2.6
July 2017 to June 2020
A further US$26.9.million (30 June 2021: US$26.9 million) of VAT is receivable
which relates to VAT under the legislation, effective from July 2017 to 30 June
2020.
In prior periods management considered the amendment to the VAT legislation for
the period July 2017 to July 2020 and based on legal advice and the confirmed
application of the legislation by the TRA considered that the input VAT was not
recoverable and a full provision was recorded in prior periods. Further to
this, the Framework Agreement provisions do not allow for offsetting of these
historically disputed amounts and as such the full US$26.9 million has been
written off. There has been no income statement impact as a result of this
write-off as the US$26.9 million was fully provided for in prior periods.
Pre July 2017 and Post June 2020
An amount of US$8.6 million (30 June 2021: US$2.6 million) of VAT is receivable
for the period pre July 2017 and subsequent to 1 July 2020. During FY2021, the
Group received US$10.0 million in VAT refunds from the Tanzanian Revenue
Authority in respect of the pre July 2017 period and US$1.2 million was
disallowed by the Tanzanian Revenue Authority.The Group is considering various
alternatives in pursuing payment in accordance with legislation. A provision of
US$6.0 million, given the uncertainty around the timing of receipts of the
amount outstanding, has been provided for against the US$8.6 million receivable
resulting in a carrying value of US$2.6 million.
While the remaining pre July 2017 and post 1 July 2020 VAT balance is
considered receivable, significant uncertainty exists regarding the timing of
receipt. A discount rate of 14.00% has been applied to the expected cash
receipts inclusive of estimated country credit risk. A 1% increase in the
discount rate would increase the provision by US$0.04 million and a one year
delay would increase the provision by US$0.1 million.
The provision against the VAT balance is US$6.0 million (30 June 2021: US$28.8
million). The provision relates to US$6.0 million that is recorded against the
pre July 2017 and post June 2020 amount. The full disputed July 2017 to June
2020 amount of US$ US$26.9 million, which was fully provided for as at 30 June
2021 has been written off. During the Year, an impairment charge of US$4.1
million (30 June 2021: US$0.7 million (impairment reversal recognised in the
Loss on discontinued operations)) was recognised in the Consolidated Income
Statement.
BEE receivables - expected credit loss provision
The Group has applied the expected credit loss impairment model to its BEE
loans receivable. In determining the extent to which expected credit losses may
apply, the Group assessed the future free cashflows to be generated by the
mining operations, based on the current mine plans. In assessing the future
cashflows, the Group considered the diamond price outlook and the probability
of reaching an offset agreement. Based on the assessment, the analysis
generated an expected credit loss charge/reversal totalling US$nil (30 June
2021: US$5.8 million expected credit loss reversal), comprising of US$nil
provision charge/reversal in respect of the Cullinan and Finsch Mines (30 June
2021: US$5.8 million provision comprising of US$6.1 million provision reversal
in respect of the Cullinan and Finsch Mines and US$0.3 million expected credit
loss provision in respect of Koffiefontein).
Life of mine and ore reserves and resources
There are numerous risks inherent in estimating ore reserves and resources and
the associated current life of mine plan. The life of mine plan is the current
approved management plan for ore extraction that considers specific resources
and associated capital expenditure. The life of mine plan frequently includes
less tonnes than the total reserves and resources that are set out in the
Group's Resource Statement and which management may consider to be economically
viable and capable of future extraction.
Management must make a number of assumptions when making estimates of reserves
and resources, including assumptions as to exchange rates, rough diamond and
other commodity prices, extraction costs, recovery and production rates. Any
such estimates and assumptions may change as new information becomes available.
Changes in exchange rates, commodity prices, extraction costs, recovery and
production rates may change the economic viability of ore reserves and
resources and may ultimately result in the restatement of the ore reserves and
resources and potential impairment to the carrying value of the mining assets
and life of mine plans.
The current life of mine plans are used to determine the ore tonnes and capital
expenditure in the impairment tests. Ore reserves and resources, both those
included in the life of mine and certain additional tonnes which form part of
reserves and resources considered to be sufficiently certain and economically
viable, also impact the depreciation of mining assets depreciated on a unit of
production basis. Ore reserves and resources, outside the current mine plan
further impact the estimated date of decommissioning and rehabilitation.
Restructuring (30 June 2021)
Transaction costs associated with the restructuring exercise were apportioned
to the listed debt, equity issued and ZAR banking facilities based on the value
of each element at the date of restructuring.
Williamson Diamond Mine (30 June 2022)
At 30 June 2021, the accounting treatment of Williamson as an AHFS was in line
with the conditions required under IFRS 5 Asset Held for Sale and Discontinued
Operations.
During the current Year, an amended MOU was entered into with Caspian. Per the
amended MOU, the Put Option in the Draft MOU was removed and PDL will now sell
50% less one share in the entity that holds Petra's shares in WDL to Caspian.
With the amendment to the MOU an assessment was required to determine if
Williamson still met the asset held for sale criteria or if Williamson (through
the proposed shareholding structure in the MOU) should be reconsolidated into
the results of the Group. Consideration was also given on the long-term
intention of Williamson remaining in the Group for the foreseeable future.
IFRS 10 Consolidated Financial Statements sets out the criteria required for a
company to consolidate an entity in which it has an investment or interest in.
A company determines whether it is a parent by assessing whether it controls
one or more investees, considering all relevant facts, circumstances and rights
(through voting rights) to variable returns from its involvement with the
investee and has the ability to affect those returns through its power over the
investee.
An investor controls an investee if and only if the investor has all of the
following elements:
* power over the investee, i.e. the investor has existing rights that give it
the ability to direct the relevant activities (the activities that
significantly affect the investee's returns);
* exposure, or rights, to variable returns from its involvement with the
investee; and
* the ability to use its power over the investee to affect the amount of the
investor's returns.
Management considered the terms of the MOU where the Company will retain a 50%
plus one share shareholding in the entity that holds Petra's shares in WDL
which entity will have a right to appoint three directors to WDL's Board, thus
having the ability to use its power to affect the decision making and the
strategy of WDL. The Framework Agreement sets out a change in the shareholdings
in WDL whereby the Government of Tanzania (GoT) shall receive a 16% free carry
interest, as required by local legislation, while GoT's existing 25%
shareholding, as well as Petra's existing 75% shareholding will dilute to 21%
and 63% respectively. The structure of the WDL Board comprises 5 Board members,
comprising three appointments by the entity that holds Petra's shares in WDL
and the remaining two Board members being GoT representatives. Petra will,
through its control of the entity that holds Petra's shares in WDL, therefore
control WDL.
Based on the Group meeting the requirements of control under IFRS 10 and the
intention that the Group will not dispose of its remaining interest in
Williamson in the near future, Williamson is longer considered to be an asset
held for sale at 30 June 2022 and has been reconsolidated into the Group
results for the Year refer to note 17 for further detail.
Taxation
The Group operates in South Africa and Tanzania, and accordingly it is subject
to, and pays annual income taxes under the various income tax regimes in the
countries in which it operates. From time to time the Group is subject to a
review of its income tax filings and in connection with such reviews, disputes
can arise with the taxing authorities over the interpretation or application of
certain rules to the Group's business conducted within the country involved.
Management evaluates each of the assessments and recognises a provision based
on its best estimate of the ultimate resolution of the assessment, through
either negotiation or through a legal process.
Other key estimates and judgements
In addition to the key estimates and judgements disclosed above, the following
estimates and judgements have not significantly changed from those disclosed in
the FY 2021 Annual Report and will be discussed in further detail in the FY
2022 Annual Report:
* Provision for rehabilitation
* Inventory and inventory stockpile
* Depreciation
* Pension and post-retirement medical fund schemes
* Net investments in foreign operations
3. DIVIDS
No dividends have been declared in respect of the Year under review (30 June
2021: US$nil).
4. SEGMENTAL INFORMATION
Segment information is presented in respect of the Group's operating and
geographical segments:
Mining - the extraction and sale of rough diamonds from mining operations in
South Africa and Tanzania.
Corporate - administrative activities in the United Kingdom.
Beneficiation - beneficiation activities in South Africa.
Exploration assets in Botswana were disposed of during FY 2021 via the sale of
the Group's interest in Sekaka Diamonds Exploration (Pty) Ltd.
Segments are based on the Group's management and internal reporting structure.
Management reviews the Group's performance by reviewing the results of the
mining activities in South Africa, Tanzania and reviewing the results of
reviewing the corporate administration expenses in the United Kingdom. Each
segment derives, or aims to derive, its revenue from diamond mining and diamond
sales, except for the corporate and administration cost centre.
Segment results, assets and liabilities include items directly attributable to
a segment, as well as those that can be allocated on a reasonable basis.
Segment results are calculated after charging direct mining costs, depreciation
and other income and expenses. Unallocated items comprise mainly
interest-earning assets and revenue, interest-bearing borrowings and expenses
and corporate assets and expenses. Segment capital expenditure is the total
cost incurred during the year to acquire segment assets that are expected to be
used for more than one period. Eliminations comprise transactions between Group
companies that are cancelled on consolidation. The results are not materially
affected by seasonal variations. Revenues are generated from tenders held in
South Africa and Antwerp for external customers from various countries, the
ultimate customers of which are not known to the Group.
4. SEGMENTAL INFORMATION (continued)
Operating segments South Africa - Mining activities Tanzania
-Mining
activities
***
Cullinan Finsch Koffiefontein Williamson
US$ million
2022 2022 2022 2022
Revenue¹ 322.4 165.7 21.5 75.9
Segment result2 154.4 34.8 (13.8) 22.2
Impairment charge - operations - - (0.3) 21.4
Impairment reversal / (charge) - other - - - (4.1)
receivables
Other direct income / (loss) (0.7) (0.4) 0.2 0.1
Operating profit / (loss)3 153.7 34.4 (13.9) 39.6
Financial income
Financial expense
Income tax charge
Non-controlling interest
Profit attributable to equity holders
of the parent company
Segment assets 463.9 229.8 6.0 123.2
Segment liabilities 384.0 111.2 17.1 75.1
Capital expenditure 35.0 12.0 0.6 3.3
Operating segments United South Africa
Kingdom
***
Corporate Beneficiation4 Inter-segment Consolidated
US$ million and
treasury
2022 2022 2022 2022
Revenue¹ - 2.2 (2.5) 585.2
Segment result2 (14.1) 0.4 (4.3) 179.6
Impairment charge - operations - - - 21.1
Impairment reversal / (charge) - other 2.6 - - (1.5)
receivables
Other direct income / (loss) 0.6 - - (0.2)
Operating profit / (loss)3 (10.9) 0.4 (4.3) 199.0
Financial income 19.0
Financial expense (92.1)
Income tax charge (37.8)
Non-controlling interest (19.1)
Profit attributable to equity holders 69.0
of the parent company
Segment assets 3,575.2 5.1 (3,292.3) 1,110.9
Segment liabilities 2,430.1 5.9 (2,391.0) 632.4
Capital expenditure 1.6 - (0.3) 52.2
¹ The Group's revenue comprises the sale of rough diamonds and polished stones.
The sale of rough diamonds contributed US$584.1 million (30 June 2021: US$406.6
million) with polished stones contributing US$3.3 million (30 June 2021: US$0.3
million). Included within the US$3.3 million polished stones contribution is
US$1.1 million from a profit share agreement.
2 Total depreciation of US$82.8 million included in the segmental result
comprises depreciation incurred at the Cullinan Mine US$52.5 million, Finsch
US$24.4 million, Koffiefontein US$0.3 million, Williamson US$5.0 million and
Corporate and treasury US$0.6 million.
3 Operating profit is equivalent to revenue of US$585.2 million less total
costs of US$386.2 million as disclosed in the Consolidated Income Statement.
4 The beneficiation segment represents Tarorite, a cutting and polishing
business in South Africa, which can on occasion cut and polish select rough
diamonds.
4. SEGMENTAL INFORMATION (continued)
Operating segments South Africa - Mining activities Tanzania Botswana
-Mining
activities
Cullinan Finsch Koffiefontein Williamson Exploration4
US$ million
2021 2021 2021 2021 2021
Revenue 250.6 123.5 27.9 4.6 -
Segment result¹ 76.8 (0.5) (8.1) (14.3) -
Impairment charge - operations - (15.1) (2.2) (21.4) -
Impairment charge - other - - - 0.7 -
receivables
Impairment of BEE loans - - - -
receivable - expected credit -
loss release
Expenditure for unsettled and - - - (19.5) -
disputed tax claims
Other direct income 0.6 1.0 0.1 5.1 -
Operating profit / (loss)² 77.4 (14.6) (10.2) (49.4) -
Financial income
Financial expense
Gain on extinguishment of Notes
and unamortised costs
Profit on disposal of
subsidiary
Income tax charge
Non-controlling interest
Profit attributable to equity
holders of the parent company
Segment assets 559.0 249.9 6.9 59.6 -
Segment liabilities 559.2 119.7 22.1 33.5 -
Capital expenditure 16.8 4.0 1.7 0.3 -
Operating segments United South Africa
Kingdom
Corporate Beneficiation3 Inter-segment Consolidated
US$ million and
treasury
2021 2021 2021
Revenue - 0.3 - 406.9
Segment result¹ (21.2) (1.6) (1.6) 29.5
Impairment charge - operations - - - (38.7)
Impairment charge - other (0.4) - - 0.3
receivables
Impairment of BEE loans 5.8 - - 5.8
receivable - expected credit
loss release
Expenditure for unsettled and - - - (19.5)
disputed tax claims
Other direct income - - - 6.8
Operating profit / (loss)² (15.8) (1.6) (1.6) (15.8)
Financial income 81.6
Financial expense (74.2)
Gain on extinguishment of Notes 213.3
and unamortised costs
Profit on disposal of 14.7
subsidiary
Income tax charge (23.0)
Non-controlling interest (9.5)
Profit attributable to equity 187.1
holders of the parent company
Segment assets 3,488.7 4.5 (3,290.0) 1,078.6
Segment liabilities 2,134.7 5.5 (2,236.4) 638.3
Capital expenditure 1.0 - - 23.8
¹ Total depreciation of US$76.2 million included in the segmental result
comprises depreciation incurred at the Cullinan Mine of US$52.2 million, Finsch
of US$23.0 million, Koffiefontein US$ 0.1 million, Williamson US$0.3 million
and Corporate and treasury of US$0.6 million.
² Operating loss is equivalent to revenue of US$406.9 million less total costs
of US$422.7 million as disclosed in the Consolidated Income Statement.
3 The beneficiation segment represents Tarorite, a cutting and polishing
business in South Africa, which on occasion cuts and polishes select rough
diamonds.
4 In FY 2021, Petra sold its exploration assets in Botswana to Botswana
Diamonds PLC via the sale of its interest in Sekaka Diamonds Exploration (Pty)
Ltd, refer to note 16 for further detail.
US$ million 2022 Restated
2021
5. CORPORATE EXPITURE
Corporate expenditure includes:
Depreciation of property, plant and equipment 0.6 0.6
Amortisation of right-of-use asset 0.2 0.3
London Stock Exchange and other regulatory expenses 1.5 1.5
Unsettled and disputed tax claims at Williamson¹ - 19.5
Settlement (reversal) / costs - human rights claims at (0.8) 12.7
Williamson2
Share-based expense - Directors and management 1.1 0.5
Other staff costs 5.1 2.3
Total staff costs 6.2 2.8
1 During FY2021 the Company provided for costs in respect of unsettled and
disputed tax claims in respect of Williamson as set out in the Framework
Agreement.
2 During FY2021, the settlement costs for the human rights claims at Williamson
comprised US$4.8 million for the part settlement of the claimant's legal costs
and for distribution to the claimants and US$1.3 million to invest in
programmes dedicated to providing sustainable support to the communities living
around the Williamson mine as a condition of the Settlement. The Company
incurred and provided for additional total costs of US$6.6 million relating to
this matter, the majority of which relate to legal, consultant, investigation
and expert fees.
3 Included in corporate expenditure and mining and processing costs for FY2021
are COVID-19 TERS payments received from the South African government of US$0.3
million and US$1.4 million respectively. No COVID-19 TERS payments were
received during FY2022.
6. FINANCING (EXPENSE) / INCOME
US$ million 2022 Restated
2021
Net unrealised foreign exchange gains - 74.6
Interest received on BEE loans and other receivables 4.1 5.4
Interest received bank deposits 1.3 0.7
Realised foreign exchange gains on the settlement of 13.6 0.9
foreign loans and forward exchange contracts
Financial income 19.0 81.6
Gross interest on senior secured second lien notes, (45.3) (51.5)
bank loans and overdrafts
Other debt finance costs, including BEE loan interest, (2.3) (8.4)
facility fees and IFRS 16 charges
Unwinding of present value adjustment for (5.4) (4.6)
rehabilitation costs
Net unrealised foreign exchange losses1 (36.5) -
Acceleration of unamortised bank facility and Notes (1.6) (2.7)
costs
Realised foreign exchange losses on the settlement of (1.0) (7.0)
foreign loans and forward exchange contracts
Financial expense (92.1) (74.2)
Loss on substantial modification of Notes2 - (7.7)
Gain on extinguishment of Notes - debt for equity - 221.0
conversion2
Net gain on extinguishment of Notes - 213.3
Net financial (expense) / income (73.1) 220.7
1 .The Group predominantly enters into hedge contracts where the risk being
hedged is the volatility in the South African Rand, Pound Sterling and US
Dollar exchange rates affecting the proceeds in South African Rand of the
Group's US Dollar denominated diamond tenders. The fair value of the Group's
hedges as at the end of the Period are based on Level 2 mark-to-market
valuations performed by the counterparty financial institutions. The contracts
are all short dated in nature and mature within the next 12 months. A weakening
of the South African Rand against the US Dollar from ZAR14.27 (30 June 2021) to
ZAR16.27 (30 June 2022) resulted in an unrealised loss of US$36.5 million (30
June 2021: US$77.1 million unrealised gain) comprising a unrealised gain on
foreign exchange contracts held at Year end of US$0.7 million (30 June 2021:
US$12.4 million unrealised gain) and losses on inter-group foreign denominated
loans of US$37.2 million (30 June 2021: US$64.7 million unrealised gain); and a
net realised foreign exchange gain of US$12.6 million (30 June 2021: US$6.1
million realised loss) in respect of foreign exchange contracts closed during
the Year is included in the net finance and expense amount.
2 The loss on substantial modification and gain on extinguishment of Notes in
FY2021 arose from the Debt Restructuring completed by the Group on 10 March
2021.
7. PROPERTY, PLANT AND EQUIPMENT
The net movement in property, plant and equipment for the Period is a decrease
of US$63.6 million (30 June 2021: US$21.0 million increase). This is primarily
as a result of:
* the movement in the US$/ZAR foreign exchange rate resulting in a foreign
exchange decrease on Rand based assets of US$83.4 million (30 June 2021:
US$136.8 million increase);
* an increase in property, plant and equipment from capital expenditure of
US$52.2 million (30 June 2021: US$23.8 million),
* the transfer of the Williamson assets from non-current assets held for sale
of US$31.2 million, net of IFRS 5 adjustment (30 June 2021: US$31.3 million
transfer to non-current assets held for sale);
* an increase in the rehabilitation asset of US$nil (30 June 2021: US$6.4
million (due to the Cullinan Mine's estimated period to decommissioning
reducing from 45 years to 25 years reflecting updated scoping studies for
future development outside of its current approved mine plan));
* a reversal of IFRS 5 adjustment in respect of the Williamson assets of
US$21.4 million (30 June 2021: US$21.4 million impairment charge);
* depreciation of US$82.8 million (30 June 2021: US$75.9 million);
* the impairment of the Koffiefontein assets of US$0.3 million (30 June
2021: US$17.3 million (Finsch and Koffiefontein)); and
* assets of US$1.9 million (30 June 2021: US$0.1 million) disposed of during
the Year.
8. LOANS AND BORROWINGS
US$ million 30 June 30 June
2022 2021
Non-current liabilities
Loans and borrowings - Senior secured second lien 353.9 327.3
notes
Loans and borrowings - Senior secured lender debt - 72.7
facilities
353.9 400.0
Current liabilities
Loans and borrowings - Senior secured second lien 12.3 -
notes
Loans and borrowings - senior secured lender debt - 30.3
facilities
12.3 30.3
Total loans and borrowings - bank facilities 366.2 430.3
a) US$336.7 million Senior Secured Second Lien Notes
As part of the Debt Restructuring, a wholly owned subsidiary of the Company,
Petra Diamonds US$ Treasury Plc, issued debt securities consisting of US$336.7
million five-year senior secured second lien loan notes ("Notes"), with a
maturity date of 8 March 2026. The Notes are guaranteed by the Company and by
the Group's material subsidiaries and are secured on a second lien basis on the
assets of the Group's material subsidiaries. The Notes carry a coupon from:
* 9 March 2021 to 31 December 2022 of 10.50% per annum, which is capitalised
to the outstanding principal amount semi-annually in arrears on 31 December
and 30 June of each year;
* 1 January 2023 to 30 June 2023 of 10.50% per annum on 37.7778% of the
aggregate principal amount outstanding, which is capitalised to the
outstanding principal amount semi-annually in arrears on 31 December and 30
June of each year and 9.75% per annum on 62.2222% of the aggregate
principal amount outstanding which is payable in cash semi-annually in
arrears on 31 December and 30 June of each year;
* 1 July 2023 to 31 December 2025 of 9.75% per annum on the aggregate
principal amount outstanding which is payable in cash semi-annually in
arrears on 31 December and 30 June of each year; and
* 1 January 2026 to 8 March 2026 (final coupon payment) of 9.75% per annum on
the aggregate principal amount outstanding which is payable in cash
The costs associated with issuing the Notes of US$20.7 million have been
capitalised against the principal amount and US$15.2 million remains
unamortised as at year end (30 June 2021: US$19.4 million). Interest of US$50.3
million (30 June 2021: US$11.1 million) had been accrued as at 30 June 2022.
Further details about the Notes (including security) have been included in the
Group's FY 2022 Annual Report.
b) Senior Secured Lender Debt Facilities
During June 2022, the Group restructured its existing banking facilities
providing for more favourable terms than the Group's current first lien
facilities and resulting in Absa Corporate and Investment Banking ("Absa")
becoming the Group's banking partner under the new banking facilities.
A new Revolving Credit Facility ("RCF") with Absa replaces the existing RCF and
term lending arrangements with the previous South African lender syndicate
comprising Absa, Nedbank, RMB and NinetyOne. The new terms include, inter alia:
* improved structure with a single ZAR1 billion RCF replacing the existing
amortising term loan of ZAR1.2 billion and the ZAR408.8 million RCF;
* more appropriate covenant package resulting in improved headroom and
flexibility on the balance sheet;
* extended tenure for the RCF with a maturity date of December 2025 and a
more usual bullet payment at maturity; and
* reduced financing costs with improved margin and commitment fees. The costs
associated with restructuring of the banking facilities of US$0.5 million
has been expensed in the Consolidated Income Statement under net finance
charges.
The revised terms under the RCF are:
* maturity date December 2025 with a 60 day buffer between the redemption of
the Notes and the maturity of the RCF;
* to maintain a Net Debt : EBITDA ratio tested semi-annually on a rolling
12-month basis;
* to maintain an Interest Cover Ratio tested semi-annually on a rolling
12-month basis, which if breached will give rise to an event of default
under the new bank facilities; and
* interest rate of SA JIBAR + 4.15% per annum (with the margin to be
reconsidered annually based on Petra's credit metrics with a view of
further optimising the margin to be achieved).
The Group's debt and hedging facilities are detailed in the table below:
Senior Lender Debt Facilities 2022 2021
Facility Facility
amount amount
ZAR Debt Facilities:
ZAR Lenders RCF ZAR1.0 billion ZAR560 million
ZAR Lenders Term loan ZAR nil ZAR1.2 billion
Absa/RMB - FX Hedging facilities ZAR300 million ZAR150 million
The terms and conditions of the Group facilities are detailed in the Group's FY
2022 Annual Report.
The facilities are secured on the Group's interests in the Cullinan, Finsch and
Koffiefontein Mines.
As at date of this report, the RCF was undrawn and ZAR1.0 billion (US$61.5
million) remained available for drawdown. On 24 January 2022, the Company paid
ZAR404.6 million (US$24.9 million) (capital plus interest) to settle the old
RCF and on 18 March 2022 the Company paid ZAR893.2 million (US$54.9 million)
(capital plus interest to settle the Term Loan.
Covenant ratios
As part of the revised RCF facility entered into with ABSA in FY2022, the
Company is required:
* to maintain a Net Debt : EBITDA ratio tested semi-annually on a rolling
12-month basis; and
* to maintain an Interest Cover Ratio tested semi-annually on a rolling
12-month basis and
* to maintain minimum 12 month forward looking liquidity requirement that
consolidated cash and cash equivalents (excluding diamond debtors) shall
not fall below US$20.0 million.
The Company's new covenant levels for the respective measurement periods are
outlined below:
FY22 H2 FY23 H1 FY23 H2 FY24 H1 FY24 H2 FY25 H1 FY25 H2 FY26 H1
Consolidated net debt :
EBITDA Leverage ratio 4.00 4.00 3.50 3.50 3.25 3.25 3.00 3.00
(maximum)
Interest Cover Ratio 1.85 1.85 2.50 2.50 2.75 2.75 3.00 3.00
(minimum)
Refer to the Financial Review for further commentary regarding the covenants.
c) BEE Partner debt facilities
The BEE Partner debt facilities have been restructured and formed part of the
Term Loan in FY2021.
9. COMMITMENTS
As at 30 June 2022, the Company had committed to future capital expenditure
totalling US$49.5 million (30 June 2021: US$10.2 million), mainly comprising
the Cullinan Mine US$25.2 million (30 June 2021: US$8.1 million), Finsch
US$23.7 million (30 June 2021: US$1.5 million), Koffiefontein US$0.3 million
(30 June 2021: US$0.6 million) and Williamson US$0.3 million (30 June 2021:
US$nil).
10. RELATED PARTY TRANSACTIONS
The Group's related party BEE partners, Kago Diamonds (Pty) Ltd ("Kago
Diamonds") and its gross interests in the mining operations of the Group are
disclosed in the table below.
Mine Partner and respective Partner and respective
interest interest
as at 30 June 2022 (%) as at 30 June 2021 (%)
Cullinan Kago Diamonds (14%) Kago Diamonds (14%)
Finsch Kago Diamonds (14%) Kago Diamonds (14%)
Koffiefontein Kago Diamonds (14%) Kago Diamonds (14%)
The Itumeleng Petra Diamonds Employee Trust ("IPDET") holds a 12% interest in
each of the Group's South African operations, with Petra's commercial BEE
Partners holding the remaining 14% interest through their respective
shareholdings in Kago Diamonds, in which Petra has a 31.46% interest. The
effective interest percentages attributable to the remaining operations for the
Group's shareholders is 78.4%.
The non-current loans receivable, non-current loans payable, finance income and
finance expense, due from and due to the related party BEE partners and other
related parties, including dividends paid are disclosed in the table below:
US$ million 2022 2021
Non-current receivable
Kago Diamonds1 26.6 33.5
26.6 33.5
Current trade and other receivables
KEM JV2 3.7 9.7
Impairment provision2 (2.0) (8.4)
1.7 1.3
1 July 2021 -
30 June 2022 1 July 2020 -
30 June 2021
Finance income
Kago Diamonds 2.1 3.7
2.1 3.7
Finance expense
Kago Diamonds - 3.8
- 3.8
Dividend paid
Kago Diamonds3 1.3 -
1.3 -
¹ The movement in the Kago Diamonds receivable of US$6.9 million (30 June 2021:
US$38.6 million) is mainly attributable to amounts advanced to Kago Diamonds
during the Year totalling US$nil (30 June 2021: US$3.8 million), a foreign
exchange decrease of US$4.1 million (30 June 2021: US$15.4 million increase)
and offset by the reversal of prior year expected credit loss provision of
US$nil million (30 June 2021: US$4.2 million reversal) and the loan payable of
US$nil (30 June 2021: US$62.1 million) by the Group to Kago against the Kago
receivable.
2 Included in current trade and other receivables are amounts advanced to KEM
JV in respect of a working capital facility and equipment finance facility of
US$1.7 million (30 June 2021: US$1.0 million) and the balance of the KEM JV
purchase consideration of US$nil (30 June 2021: US$0.3 million). During FY2022
the Group received payments of US$2.5 million (FY 2021 US$nil) from the KEM JV
as settlement of the outstanding purchase consideration this also resulted in
an expected credit loss reversal of US$2.9 million (FY2021: US$nil) during the
Year. The Group has applied the expected credit loss impairment model to the
KEM JV receivables, taking into account various factors, and the expected
credit loss was deemed to be US$2.0 million (30 June 2021: US$8.4 million).
3 During the Year, Finsch declared and paid a dividend out of profits generated
in FY2021 to its shareholders. The BEE partners received a total net dividend
payment of US$2.5 million comprising Kago US$1.3 million and IPDET US$1.2
million.
Kago Diamonds is one of the BEE partners which obtained bank financing from
ABSA, RMB and Ninety-One (the "BEE Lenders") to acquire its interests in the
Cullinan and Finsch MInes. The Group had previously provided a guarantee to the
BEE Lenders for repayment of loans advanced to the Group's BEE Partners,
however during FY2021 as part of the Debt Restructuring, the BEE Partner debt
facilities were restructured which formed part of the Group's Term Loan (refer
to note 8 for further detail).
11. BEE LOANS RECEIVABLE
BEE Loans Receivable
The non-current BEE loans receivable represents those amounts receivable from
the Group's BEE Partners (Kago Diamonds and the IPDET) in respect of advances
historically provided to the Group's BEE Partners to enable them to discharge
interest and capital commitments under the BEE Lender facilities, advances to
the BEE Partners to enable trickle payment distributions to both Kago Diamonds
shareholders and to the beneficiaries of the IPDET (Petra Directors and Senior
Managers do not qualify as beneficiaries under the IPDET Trust Deed), and
financing of their interests in the Koffiefontein mine. In addition, US$42.0
million (30 June 2021: US$45.4 million) has been recorded as part of the gross
receivable (before expected credit loss provisions) in respect of amounts to be
reimbursed to the Group in respect of the guarantee under the BEE Lender
facilities. Judgment was required in determining the extent to which
reimbursement is applicable based on the terms of the agreements, South African
legislation and discussions with the BEE partners.
As a result of historical delays in the Cullinan Mine plant ramp-up and the
Finsch SLC ramp-up, the Group has historically and through the Period elected
to advance the BEE Partners' funds using Group treasury to enable the BEE
Partners to service their interest and capital commitments under the BEE Lender
facilities (refer below). These BEE receivables, including interest raised,
will be recoverable from the BEE Partners' share of future cashflows from the
underlying mining operations.
As part of the in principle agreement reached during the Period as part of the
Restructuring, Petra will assume the BEE Lender facility obligations under the
terms outlined in note 8.
As part of the Debt Restructuring in FY2021, Petra has assumed the BEE Lender
facility obligations under the terms outlined in notes 8 and 18.
For detail on expected credit loss provision and reversal associated with the
BEE loans receivable refer to note 2.
1 July 2021 - 1 July 2020 -
US$ million 30 June 2022 30 June 2021
As at 1 July 46.6 137.0
Foreign exchange movement on opening balance (5.9) 30.7
Discretionary advance - capital and interest 4.7
commitment (BEE Lender facility) -
Discretionary advance - distributions to - 2.0
beneficiaries
Interest receivable 4.1 5.2
Reversal of BEE loans receivable - expected - 5.8
credit loss provision
Repayment of loan from BEE partner (0.2) -
BEE payable restructuring - offset against BEE - (138.8)
receivable
As at 30 June 44.6 46.6
BEE loans payable
BEE loans payable represent those loans advanced by the BEE partners to the
Group to acquire their interest in the Cullinan and Finsch Mines. Details of
the movements are set out below.
1 July 2021 - 1 July 2020 -
US$ million 30 June 2022 30 June 2021
As at 1 July - 108.6
Foreign exchange movement on opening balance - 23.2
Interest payable - 7.0
BEE payable restructuring - offset against BEE - (138.8)
receivable
As at 30 June - -
12. SHARES ISSUED
During the Year, the Company's shareholders approved at the FY2021 Annual
General Meeting a 50 for 1 Share Consolidation.
Admission of the Company's New Ordinary Shares took place on 29 November 2021.
As a result of the Share Consolidation, the Company's shares in issue comprise
of 194,201,785 ordinary shares of 0.05 pence each.
In FY2021, as part of the Restructuring and subsequent to the approval by
shareholders at a special general meeting held on 13 January 2021, the Company
allotted 8,844,657,929 Ordinary Shares to the Noteholders valued at US$194.0
million (comprising Ordinary shares valued at US$12.3 million and share premium
of US$181.7 million before capitalised costs), based on the share price at 9
March 2021 (the date upon which all implementation steps for the Debt
Restructuring were met). The allotment was pursuant to the Debt for Equity
Conversion, announced on 22 December 2020, which resulted in the Noteholders
holding 91% of the enlarged share capital of the Company in the following
proportions:
- 56.0% of the enlarged share capital was issued to all Noteholders,
including the New Money Noteholders, pro rata to their holdings of existing
Notes at the close of the Restructuring (to the extent any Noteholder did not
take up their equity entitlement, such entitlement was allocated to the
remaining Noteholders who did not opt out of their equity entitlement, on a pro
rata basis); and
- 35.0% of the enlarged share capital was issued to the New Money
Noteholders only, pro rata to their contribution of the New Money (to the
extent any such Noteholders did not take up their equity entitlement, such
entitlement was allocated to the remaining Noteholders who contributed to the
New Money and who did not opt out of their equity entitlements, on a pro rata
basis).
As a consequence of the Debt for Equity Conversion, 9% of the Company's
enlarged share capital remains with the previous shareholders (subject to
dilution as a result of standard management equity incentive arrangements). The
costs associated with the allotment of the new ordinary shares of US$12.3
million were capitalised against share premium. For additional information
regarding the Restructuring refer to note 18.
13. EARNINGS PER SHARE
Total Total
2022 2021
US$ US$
Numerator
Profit for the Year 68,995,537 187,021,893
Denominator
Shares Shares
Weighted average number of ordinary shares used in
basic EPS
Brought forward 9,710,089,272 865,431,343
Effect of shares issued during the Year - 2,721,433,209
Effect of 50 for 1 share consolidation November (9,515,887,487) (3,515,127,261)
2021
Carried forward 194,201,785 71,737,291
Shares Shares
Dilutive effect of potential ordinary shares - -
Weighted average number of ordinary shares in 194,201,785
issue used in diluted EPS 71,737,291
USc USc
Basic profit per share - USc 35.53 260.70
Diluted profit per share - USc 35.53 260.70
The number of potentially dilutive ordinary shares, in respect of employee
share options, Executive Director and Senior Management share award schemes is
nil (30 June 2021: nil).
For the 12 months ending 30 June 2021, the basic and diluted profit per share
have been restated and adjusted for the 50 for 1 share consolidation which
became effective in November 2021, in accordance with IAS 33 Earning per Share.
14. ADJUSTED EARNINGS PER SHARE (non-GAAP measure)
In order to show earnings per share from operating activities on a consistent
basis, an adjusted earnings per share is presented which excludes certain items
as set out below. It is emphasised that the adjusted earnings per share is a
non-GAAP measure. The Petra Board considers the adjusted earnings per share to
better reflect the underlying performance of the Group. The Company's
definition of adjusted earnings per share may not be comparable to other
similarly titled measures reported by other companies.
Total Total
2022 2021
US$ US$
Numerator
Profit for the Year 68,995,537 187,021,893
Net unrealised foreign exchange loss / (gain) 34,851,735 (59,819,931)
Present value discount - Williamson VAT receivable 4,076,760 (763,537)
Profit on disposal of subsidiary - (14,696,171)
Impairment (reversal) / charge - operations* (21,206,735) 34,989,716
Impairment (reversal) / charge - other receivables (2,544,704) 439,236
Reversal of BEE loans receivable - expected credit - (5,824,201)
loss provision
Taxation charge / (credit) on unrealised foreign (1,618,908) 17,228,580
exchange (gain) / loss
Taxation credit on impairment charge* - (3,308,166)
Gain on extinguishment of Notes - (213,349,503)
Transaction costs - acceleration of unamortised 1,628,757 -
costs on restructured loans and borrowings
Transaction costs (reversal) / expense - Human (816,270) 31, 110,891
rights settlement agreement and provisions for
unsettled and disputed tax claims
Adjusted loss for the Year attributable to parent 83,366,172
(25,971,193)
*Portion attributable to equity shareholders of
the Company
Denominator
Shares Shares
Weighted average number of ordinary shares used in
basic EPS
As at 1 July 9,710,089,272 865,431,343
Effect of shares issued during the Year - 2,721,433,209
Effect of 50 for 1 share consolidation November (9,515,887,487) (3,515,127,261)
2021
Carried forward 194,201,785 71,737,291
Shares Shares
Dilutive effect of potential ordinary shares - -
Weighted average number of ordinary shares in 194,201,785 71,737,291
issue used in diluted EPS
USc USc
Adjusted basic profit / (loss) per share - USc 42.93 (36.20)
Adjusted diluted profit / (loss) per share - USc 42.93 (36.20)
For the 12 months ending 30 June 2021, the basic and diluted profit per share
have been restated and adjusted for the 50 for 1 share consolidation which
became effective in November 2021, in accordance with IAS 33 Earning per Share.
15. IMPAIRMENT CHARGE
The current market conditions in the global rough diamond market, volatility of
and variability in product mix are all factors impacting the rough diamond
prices achieved by Petra during the Year, resulting in management taking a
critical review of the Group's business models and operational assets. The
carrying amounts of the Group's assets are reviewed at each reporting date to
determine whether there is any indication of impairment. If there is any
indication that an asset may be further impaired or an impairment reversal may
apply, its recoverable amount is estimated. The recoverable amount is
determined on a fair value less cost to develop basis.
The operations of the Cullinan, Finsch, Koffiefontein and Williamson Mines are
held at recoverable value as a result of FY2021 impairments. During the Year
under review, the Group reviewed the carrying value of its investments, loan
receivables and operational assets for indicators of impairment. Following the
assessment, no further impairment of property, plant and equipment was
considered appropriate for the Cullinan, Finsch and Williamson Mines, nor was
any impairment reversal considered appropriate in the current Year. The Group
recognised an asset level impairment charge of US$0.3 million being
managements' estimate of the decrease in the value of the Koffiefontein assets.
The Group also reversed a Group level impairment charge relating to Williamson,
previously recognised under IFRS 5, of US$21.4 million as Williamson is no
longer considered an asset held for sale.
The Group recognised a consolidated income statement charge of US$4.1 million
comprising management's estimate of the recoverability of the Tanzania VAT
receivable, an impairment charge of US$0.3 million related to other receivables
and an impairment reversal of US$2.9 million of the KEM JV receivable.
.
Impairment Asset class Carrying Impairment Carrying
(US$ million) value pre value post
impairment impairment
Impairment
operations:
Cullinan Property, plant & equipment 419.9 - 419.9
Finsch Property, plant & equipment 157.9 - 157.9
Koffiefontein Property, plant & equipment 1.1 (0.3) 0.8
Williamson Property, plant & equipment 29.3 21.4 50.7
Sub-total 608.2 21.1 629.3
Impairment -
non-financial
receivables:
Other - current KEM JV receivable (refer to (1.2) 2.9 1.7
receivable note 10)
Other - current Other receivables 0.3 (0.3) -
receivable
Other - non-current Tanzania VAT receivable 6.8 (4.1) 2.7
(refer to note 2)
Sub-total 5.9 (1.5) 4.4
Total 614.1 19.6 633.7
30 June 2021
The operations of the Cullinan, Finsch and Koffiefontein Mines were held at
recoverable value as a result of FY 2020 impairments. During FY 2021, the Group
reviewed the carrying value of its investments, loan receivables and
operational assets for indicators of impairment. Following the assessment,
impairment of property, plant and equipment was considered appropriate for
Finsch and Koffiefontein. No impairment was considered necessary for the
Cullinan Mine, nor was any impairment reversal considered appropriate in the
current year. The Group recognised a consolidated income statement charge of
US$17.3 million being the amount required to write down management's estimate
of recoverable value of the Finsch and Koffiefontein assets. Williamson was
classified as Held for Sale as at 30 June 2021 (refer to note 17).
Impairment Asset class Carrying Impairment Carrying
(US$ million) value pre value post
impairment impairment
Impairment
operations:
Cullinan Property, plant & equipment 497.9 - 497.9
Finsch Property, plant & equipment 210.6 (15.1) 195.5
Koffiefontein Property, plant & equipment 3.3 (2.2) 1.1
Williamson Property, plant & equipment 52.7 (21.4) 31.3
(refer note 17)
Sub-total 764.5 (38.7) 725.8
Impairment -
non-financial
receivables:
Other - current Tanzanian VAT receivable 0.7 0.7
reversal (refer note 2) -
Other - current Other receivables 0.6 (0.4) 0.2
Sub-total 0.6 0.3 0.9
Total 765.1 (38.4) 726.7
Cullinan, Finsch, Koffiefontein and Williamson impairment considerations and
assumptions
The Group performs impairment testing on an annual basis of all operations and
when there are potential indicators of impairment. The impairment testing
performed resulted in impairments of the Koffiefontein and Williamson assets.
The key assumptions used in determining the recoverable value calculations,
determined on fair value less cost to develop basis, are listed in the table
below:
Group assumptions for 30 June 2022 and 30 June 2021:
Key assumptions Explanation
Current mine plan and Economically recoverable reserves and resources are based on
recoverable value of management's expectations based on the availability of reserves
reserves and resources and resources at mine sites and technical studies undertaken in
house and by third party specialists.
The end of life of mine based on current mine plans for the
operations are as follows:
Cullinan Mine: FY 2031 (FY 2021: FY 2031)
Finsch: FY 2030 (FY 2021: FY 2030)
Koffiefontein: FY 2025 ( (FY 2021: FY 2023)
Williamson: FY 2030
Resources remaining after the current mine plans have not been
included in impairment testing for the operations.
Current mine plan reserves Cullinan Mine: Current mine plan over the next nine years;
and resources total resource processed 36.4 Mt (FY 2021: Current mine plan
over the next nine years; total resource processed 38.6 Mt).
Finsch: Current mine plan over the next eight years; total
resource processed 23.2 Mt (FY 2021: Current mine plan over the
next nine years; total resource processed 26.8 Mt).
Koffiefontein: Current mine plan over the next three years;
total resource processed 1.9 Mt (FY 2021: Current mine plan
over the next three years; total resource processed 2.2 Mt).
Williamson: Current mine plan over the next eight years, total
resource processed 43.3 Mt (FY2021: Williamson was on care and
maintenance).
Current mine plans - Management has estimated the timing and quantum of the capital
capital expenditure expenditure based on the Group's current mine plans for each
operation. There is no inclusion of capital expenditure to
enhance the asset beyond exploitation of the current mine plan
orebody.
Residual Value Cullinan Mine: Management included a residual value of
property, plant and equipment to be used beyond the current
mine plan, given the significant resource base estimated to be
available at the end of the current mine plan.
No residual values were included in the impairment assessments
of the other mining operations.
Diamond prices The diamond prices used in the impairment test have been set
with reference to recently achieved pricing and market trends,
and long-term diamond price escalators are informed by industry
views of long-term market supply/demand fundamentals. Given the
current market uncertainty, the assessment of short-term
diamond prices and the rate and extent of pricing recovery,
together with the longer-term pricing escalators, represented a
critical judgement
The 30 June 2022 impairment testing models starting price
assumptions have been adjusted to reflect the improved pricing
achieved during the Year when compared to the 30 June 2021
impairment models. Diamond prices (excluding Exceptional
Stones) have been assumed to remain unchanged during FY2023,
then increase by 3.9% from FY2024 onwards. The long-term models
incorporate normalised diamond price escalation of 1.9% above a
long-term US inflation rate of 2.0% per annum from FY 2024 to
FY 2030. Estimates for the contribution of Exceptional Diamonds
sold for more than US$5.0 million each are determined with
reference to historical trends. Based on the historical trends,
management have increased the contribution from Exceptional
Stones at the Cullinan Mine from US$25.0 million to US$35.0
million per annum.
The 30 June 2021 impairment testing models starting price
assumptions have been updated to reflect the improved pricing
achieved during the Year when compared to the 30 June 2020
impairment models. Diamond prices have been assumed to increase
from FY 2022 and then 4.4% from FY 2024, returning to pricing
levels achieved before the impact of COVID-19, representing an
increase of 25-30% from pricing achieved at the lowest point
during FY2020. The long-term models incorporate normalised
diamond price escalation of 1.9% above a long-term US inflation
rate of 2.5% per annum from FY 2025 to FY 2030. Estimates for
the contribution of Exceptional Diamonds sold for more than
US$5.0 million each are determined with reference to historical
trends.
Discount rate A ZAR discount rate of 13.0% (30 June 2021: 12.0%) was used for
the South African operations in and a USD discount rate of
14.00% (30 June 2021: 13.50%) for Williamson. Discount rates
calculated based on a nominal weighted average cost of capital
including the effect of factors such as market risk and country
risk as at the Year end. USD and ZAR discount rates are applied
based on respective functional currency of the cash generating
unit. As Williamson was held for sale as at 30 June 2021, the
discount rate was applied to cashflows expected from a disposal
transaction.
Cost inflation rate Long-term inflation rates of 3.5%-7.5% (30 June 2021:
3.5%-7.8%) above the long-term US$ inflation rate were used for
opex and capex escalators. Management have taken into account
the current short-term pressures in the inflation environment
and the impact on Opex and capex costs, allowing for the
inflation rate to normalise over the longer-term.
Exchange rates Exchange rates are estimated based on an assessment of current
market fundamentals and long-term expectations. The US$/ZAR
exchange rate range used for all South African operations
commenced at ZAR16.04 (30 June 2021: ZAR14.50) for FY2023
reflecting the current volatility, inflationary pressures and
quantitative tightening by Central banks, and ZAR16.24 for
FY2024 and thereafter devaluing at 3.5% per annum. Given the
volatility in the USD/ZAR exchange rate and the current levels
of economic uncertainty, the determination of the exchange rate
assumptions required significant judgement.
Valuation basis Discounted present value of future cash flows.
Williamson During the Year, Williamson recommenced production. For
impairment testing at Williamson, management have used the
above assumptions.
During FY2021, Williamson was classified as an asset held for
sale, for further detail refer to note 17.
Sensitivity analysis
The impact of applying reasonable downside sensitivities under the base case,
on the key inputs based on management's assumptions at 30 June 2022 is noted
below:
Additional Impairment charge
(US$ million) Cullinan Finsch Koffiefontein Williamson
Base case
Increase in discount rate by 2% 9.2 20.2 13.3 0.5
Reduction in pricing by 5% over current 44.1 44.5 36.4 19.8
mine plan
Reduction in short-term production by 10% 10.9 12.6 32.4 n/a
Increase in Opex by 5% 22.0 23.3 32.4 24.3
Reduction in Exceptional Stones 41.4 n/a n/a n/a
contribution by US$10.0 million per annum
Strengthening of the ZAR from US$/ZAR16.04 n/a 0.6 32.4 n/a
to US$/ZAR15.23
16. DISPOSAL OF OPERATION (30 June 2021)
a. Disposal of Botswana (exploration)
During FY 2021, the Company disposed of its exploration assets in Botswana via
the sale of 100% of its holding in Sekaka Diamonds Exploration (Pty) Limited
("Sekaka") to Botswana Diamonds PLC for a total consideration of US$300,000 and
a 5% royalty on future diamond revenues should any of the prospects within the
exploration licences be brought into production. Refer to note 36 of FY2021
Annual Report for details.
The profit on disposal of subsidiary of US$14.7 million comprises a US$0.3
million disposal consideration, net profit of US$1.3 million for the Period 1
July 2020 to the 30 November 2020 disposal date, and the recycling of the
foreign currency translation reserve of US$13.3 million, offset by a net asset
disposal amount of US$0.2 million.
17. WILLIAMSON
a. Framework Agreement
On 13 December 2021, the Company signed an agreement in principle with the
Government of Tanzania relating to the Williamson operations. Williamson
resumed operations and sales during the Year, having been on care and
maintenance since April 2020.
The Framework Agreement provides for a capital restructuring of the Williamson
Diamonds Limited ("WDL"), the entity that owns the Williamson Mine, including
the 16% free carried interest that the Government of Tanzania is entitled to
receive in WDL and its shareholder loans under Section 10 of the Tanzanian
Mining Act, 2017 and Regulation 10 of the Tanzanian Mining (State
Participation) Regulations, 2020. The capital restructuring will include:
* a WDL share issue with the effect of reducing Petra's indirect shareholding
from 75% to 63% and consequently increasing the Government of Tanzania's
shareholding from 25% to 37%;
* a contribution to the Government of Tanzania of 16% of the principal
outstanding value of the Group's shareholder loans payable by WDL, with the
remaining 84% of such principal outstanding loans continuing to be owed to
the Group; and
* the transfer of the WDL shares held by the Group to another member of the
Petra Group (either Petra itself or a special purpose subsidiary). Petra
have registered Mwadui Mining Holdings Ltd, a subsidiary registered in the
United Kingdom, for this purpose.
With respect to the reorganisation of the parties' legal interests in WDL, the
Framework Agreement also provides for an overall 55:45 economic benefit sharing
ratio between the Government of Tanzania and Petra in relation to future
economic benefits from the Williamson Mine. This arrangement is intended to
capture the parties' entitlements as shareholders as well as, with respect to
the Government of Tanzania, the revenue it collects from WDL arising from
taxes, royalties, duties, fees and other fiscal levies ("Government Imposed
Charges"). The Framework Agreement also provides that WDL shall be entitled to
off-set its undisputed unpaid and overdue VAT receivables against future
Government Imposed Charges, whereby such Government Imposed Charges will be
off-set and treated as paid for the purposes of the economic benefit sharing
ratio.
The Framework Agreement provides that Petra and the Government of Tanzania will
provide financial assistance for the restart of operations at the Williamson
Mine. The Government of Tanzania has agreed to allocate the sales proceeds of
the 71,654.45 carat diamond parcel from the Williamson Mine that was previously
confiscated and blocked for export. The original value of this parcel was
assessed in September 2017 at approximately US$15 million, as previously
disclosed, although Petra has not had the parcel independently valued.
The Framework Agreement records an important US$20.0 million settlement between
the parties concerning long-standing historic disputes with the Government of
Tanzania. In FY2021, as at 30 June 2021 the Group raised a provision of US$19.5
million (adjusted for time-value of money) in respect of the aforementioned
settlement. This settlement payment shall be made in instalments, with the
first instalment of US$5.0 million to be paid when the Framework Agreement
becomes effective and upon receipt of proceeds by WDL from the sale of the
confiscated diamond parcel. The subsequent annual instalments of the
settlement amount are to be made annually at amounts as determined by WDL's
board of directors.
The Framework Agreement is subject to a number of conditions, including
Tanzanian regulatory approvals and the consent of Petra's South African lender
group, and is therefore not yet effective as at 30 June 2022. Petra is entering
into the Framework Agreement with the Government of Tanzania in the latter's
capacity principally as a regulator and collector of taxes in Tanzania.
However, the Government of Tanzania is also a related party to Petra for the
purposes of the UK Listing Rules, due to the Government's shareholding in WDL.
The Framework Agreement could not become legally binding on the parties until
approval was obtained from Petra's shareholders. On 9 February 2022, Petra
received shareholder approval of the Framework Agreement. Notwithstanding, the
Government of Tanzania's right to a 16% free carried interest under the
Tanzanian Mining Act, 2017 is an entitlement as a matter of Tanzanian law, and
is not of itself ultimately subject to any approval or condition in any
respect. Accordingly, Petra acknowledges that arrangements to reflect this will
need to be implemented regardless of the Framework Agreement becoming
effective.
Memorandum of Understanding with Caspian Limited ("MOU")
On 15 December 2021, the Company announced that it had signed a non-binding
Memorandum of Understanding ("MoU") to sell 50% less one share of the entity
that holds the Group's shareholding in Williamson Diamonds Limited ("WDL"),
along with a pro rata portion of shareholder loans owed by WDL, to Caspian
Limited or its nominee ("Caspian") for a total consideration of US$15.0
million. Caspian is the long-term technical services contractor at the
Williamson Mine.
Upon completion of the transactions contemplated by the MoU and the capital
restructuring in the aforementioned Framework Agreement becoming effective,
Petra and Caspian will each indirectly hold a 31.5% stake in WDL but Petra
retains a controlling interest in Williamson.
Caspian's purchase will be funded through the settlement of US$11.1 million of
past technical services payments owed by WDL to Caspian, including services
rendered during the recent restart of operations following the care and
maintenance period, with the remaining amount being funded by Caspian rendering
US$3.9 million of technical services to WDL in order to ramp-up operations at
the Williamson Mine.
The sale of the 50% less 1 share stake in the entity that holds Petra's shares
in WDL is subject to the parties obtaining all necessary Governmental,
regulatory and lender approvals, including approvals from the Tanzanian Mining
Commission, the Tanzanian Fair Competition Commission and The Bank of Tanzania,
and a binding ruling from the Tanzania Revenue Authority on the tax treatment
of the transaction. The parties are seeking to obtain such approvals by the
end of Q1 FY 2023.
As at 30 June 2021, the criteria for classification as Asset Held for sale was
met. Refer to (b) below for FY2021 disclosures). Subsequently, the signing of
the MOU will result in Petra retaining its controlling interest in WDL and will
see Petra consolidating WDL's operating and financial results, with an
appropriate recognition of non-controlling interest attributable to both
Caspian and the Government of Tanzania. As neither agreement mentioned above is
effective as at 30 June 2022, WDL has been consolidated in the same proportions
as prior to its Held for Sale classification being 75% Petra and 25% Government
of Tanzania.
a. Asset Held for Sale (30 June 2021)
As at 30 June 2021, the assets and liabilities of the Williamson operation
(being Petra's 75.0% interest) were classified as held for sale in the
Statement of Financial Position at 30 June 2021, in accordance with IFRS 5. The
financial results of the Williamson operation for FY2021 were disclosed in the
Consolidated Income Statement in Loss on discontinued operation. These have
been restated for the year ending 30 June 2022. The Williamson mining operation
is a separate operating segment for the purposes of the Group's segmental
reporting.
i. Net assets of Williamson:
US$ million Book value prior Impairment 30 June
to 2021
reclassification
of as held for
sale
Mining property, plant and equipment 52.7 (21.4)¹ 31.3
Non-current trade and other receivables 0.7 - 0.7
Trade and other receivables 2.9 - 2.9
Inventory 15.5 - 15.5
Cash and cash equivalents 9.2 - 9.2
Non-current assets held for sale 81.0 (21.4) 59.6
Environmental liabilities, provisions (22.9) - (22.9)
and other non-current trade and other
payables
Trade and other payables and provisions (10.6) - (10.6)
Non-current liabilities associated with
non-current assets held for sale (33.5) - (33.5)
Net assets 47.5 (21.4) 26.1
i. Result of Williamson:
1 July 2020 - 1 July 2019
US$ million 30 June 2021 - 30 June
2020
Revenue 4.6 52.5
Cost of sales (13.8) (68.7)
Gross loss (9.2) (16.2)
Impairment charge - operations - (34.6)
Impairment reversal / (charge) - other 0.7 (6.8)
receivables
Provisions for unsettled and disputed tax (19.5) -
claims
Financial income - 0.6
Financial expense (2.7) (0.8)
Loss before tax (30.7) (57.8)
Income tax charge - (0.2)
Loss after tax before impairment charge (30.7) (58.0)
Impairment charge1 (21.4) -
Net loss for the Year (52.1) (58.0)
Attributable to:
* Equity holders of the parent (52.1) (58.0)
* Non-controlling interest - -
(52.1) (58.0)
The US$21.4 million impairment loss recorded on the Williamson assets
represented the difference between the assets measured at the lower of their
carrying amount and fair value less costs to sell considering the best
available information at the present time with reference to ongoing discussions
with a potential investor. The impairment charge of US$21.4 million was
recognised to reduce assets of Williamson to equal the fair value less costs to
sell.
a. Consolidated balance reconciliation - Williamson (30 June 2022)
US$ million Consolidated Williamson Consolidated
(excluding WDL) 30 June 2022 (including WDL)
30 June 2022 30 June 2022
ASSETS
Non-current assets
Property, plant and equipment 582.5 50.7 633.2
Right-of-use assets 1.6 20.3 21.9
BBE loans and receivables 44.6 - 44.6
Other receivables - 2.7 2.7
Total non-current assets 628.6 73.7 702.3
Current assets
Trade and other receivables 37.3 12.5 49.8
Inventories 45.1 25.5 70.6
Cash and cash equivalents 259.4 28.8 288.2
(including restricted amounts)
Total current assets 341.8 66.8 408.6
Total assets 970.4 140.5 1,110.9
EQUITY AND LIABILITIES
Equity
Share capital 145.7 - 145.7
Share premium account 959.5 - 959.5
Foreign currency translation (449.5) 0.6 (448.9)
reserve
Share-based payment reserve 1.9 - 1.9
Other reserves (0.8) - (0.8)
Accumulated losses (248.2) 64.6 (183.6)
Attributable to equity holders 108.6 65.2 473.8
of the parent company
Non-controlling interest 4.7 - 4.7
Total equity 413.3 65.2 478.5
Liabilities
Non-current liabilities
Loans and borrowings 353.9 - 353.9
Lease liabilities (1.7) 20.9 19.2
Provisions 69.6 28.1 97.7
Deferred tax liabilities 71.3 - 71.3
Total non-current liabilities 493.2 49.0 542.1
Current liabilities
Loans and borrowings 12.3 - 12.3
Lease liabilities 0.4 2.8 3.2
Trade and other payables 51.3 23.5 74.8
Total current liabilities 64.0 26.3 90.3
Total liabilities 557.2 75.3 632.4
Total equity and liabilities 970.4 140.5 1,110.9
Consolidated Williamson Consolidated
US$ million (excluding WDL) 1 July 2021 - (including WDL)
1 July 2021 - 30 June 2022 1 July 2021 -
30 June 2022 30 June 2022
Revenue 509.3 75.9 585.2
Mining and processing costs (339.3) (52.2) (391.5)
Other direct income (0.9) 0.1 (0.8)
Corporate expenditure including (14.1) - (14.1)
settlement costs
Other corporate income 0.6 - 0.6
Expenditure for unsettled and - - -
disputed tax claims
Impairment (charge) / reversal of (0.3) 21.4
non-financial assets 21.1
Impairment (charge) / reversal 2.6 (4.1) (1.5)
other receivables
Impairment of BEE loans receivable - -
- expected credit loss release -
Total operating costs (351.4) (34.8) (386.2)
Profit on disposal including - -
associated impairment, net of tax -
Financial income 17.5 1.5 19.0
Financial expense (90.6) (1.5) (92.1)
Profit before tax 84.8 41.1 125.9
Income tax charge (37.8) - (37.8)
Profit for the Period 47.0 41.1 88.1
Attributable to:
Equity holders of the parent 69.0
Non-controlling interest 19.1
88.1
18. EVENTS AFTER THE REPORTING PERIOD
Petra has announced its intention to reduce its gross debt through a tender
offer to bondholders to purchase up to US$150 million of the Senior Secured
Second Lien Notes due in 2026 in line with its stated intent to further
optimise its capital structure through a reduction of gross debt.
RESPONSIBILITY STATEMENT
We confirm that to the best of our knowledge:
a. the preliminary financial statements have been prepared in accordance with
International Financial Reporting Standards as adopted by the European
Union, and give a true and fair view of the assets, liabilities, financial
position and profit of the Group for the Year;
a. the preliminary management report for the Year includes a fair review of
the information required by the FCA's Disclosure and Transparency Rules
(DTR 4.1.8 R and 4.1.9 R).
By order of the Board
Richard Duffy
Chief Executive
Officer
13 September 2022
[1] Petra classifies "Exceptional Stones" as rough diamonds which sell for US$5
million or more each
[2] Like-for-like refers to the change in realised prices between tenders and
excludes revenue from all single stones and Exceptional Stones, while
normalising for the product mix impact
END
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