REG - Petra Diamonds Ltd - H1 FY 2024 Interim Results
20/02/2024 07:00
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RNS Number : 6820D Petra Diamonds Limited 20 February 2024
20 February 2024 LSE: PDL
Petra Diamonds Limited
Interim results for the six months ended 31 December 2023
Building a resilient business through improved efficiencies and cost control
Petra Diamonds Limited ("Petra" or the "Company" or the "Group") announces its
unaudited interim results for the six months ended 31 December 2023 (the
"Period" or "H1 FY 2024").
Richard Duffy, Chief Executive Officer at Petra Diamonds commented:
"Petra has reacted swiftly to diamond market uncertainty, taking steps to
improve resilience through ongoing cost and capital optimisation. Whilst we
believe that prices have now bottomed, we expect pricing to recover more
slowly than initially thought. We continue to see a supportive market in the
medium to longer-term.
We are on track to deliver the US$75 million cash savings announced in
November 2023, with cost savings expected to contribute c.US$10 million. We
are replanning the resumption of our capital projects to deliver a smoothed
capital and growth profile, with a commensurately lower cost structure to be
sustainably net cash generative from FY 2025.
We have progressed towards our target of a zero harm workplace in delivering
an improved LTIFR of 0.15 in H1 FY2024 as compared to 0.19 in H1 FY2023 and
0.24 for the full year FY 2023. Production at Cullinan Mine has largely
stabilised and the ramp-up at Williamson is now complete. Post-period end, as
a result of underground mechanical issues at Finsch, Group production in FY
2024 is expected to be 2.75 - 2.85Mcts, compared to prior guidance of 2.9 to
3.2Mcts.
We have also commenced trials to further support the traceability of our
product. We believe that offering verifiable origin and provenance has
potential to significantly enhance the purchase experience, highlighting the
inherent rarity and uniqueness of natural diamonds to consumers."
Mining and processing costs in-line with expectations; reduction in capex
owing to project deferrals with further reductions expected in H2 FY 2024
· Revenue amounted to US$187.8 million (H1 FY 2023: US$208.5 million)
with no contribution from profit share arrangements in the Period (H1 FY 2023:
US$1.4 million)
· The average realised price per carat in H1 FY 2024 was US$113/ct, in
line with prices achieved in H2 FY 2023 but down 29% from US$159/ct in H1 FY
2023, partly driven by a 13.3% reduction in like-for-like prices with the
balance due to product mix
· Adjusted mining and processing costs remained within expectations
despite inflationary pressures. The year-on-year increase was largely
attributable to diamond inventory release following the deferral of diamond
sales from FY 2023, while cash on-mine costs remained largely flat
· Adjusted EBITDA (excluding discontinued operations) reduced to
US$38.9 million (H1 FY 2023: US$85.7 million) due to lower revenues and an
increase in mining and processing costs driven by diamond inventory release;
although the EBITDA margin reduced from 41% in H1 FY 2023 to 21% in the
Period, the margin was only slightly below the 23% margin recorded in H2 FY
2023 at similar price levels
· Basic loss per share from continuing operations of USc4.87 and
USc4.72 on an adjusted basis after accounting for non-controlling interests
· Capital expenditure reduced to US$50.5 million, down from US$51.9
million in H1 FY 2023 and US$65.2 million in H2 FY 2023
· Operational free cash outflow of US$21.1 million compared to US$12.5m
inflow in H1 FY 2023, due mainly to lower average prices received on diamond
sales in H1 FY 2024, but improving from the US$79.0 million outflows recorded
in H2 FY 2023, partially attributed to the deferral of sales from H2 FY 2023
· During December 2023, the Company announced Absa Bank's approval to
increase commitments under the existing ZAR 1 billion (c. US$53m) revolving
credit facility to ZAR1.75 billion (c. US$93m), providing an additional c.
US$40 million of liquidity headroom; this increase in the facility is now
fully available following execution and completion of the associated amendment
agreement
· Unrestricted cash increased to US$56.6 million (from US$44.1 million
at 30 June 2023) largely due to the US$45.5 million drawdown on the Company's
revolving credit facility and US$29.4 million of cash generated from
operations (H1 FY 2023: US$63.4 million), partly offset by US$50.5 million of
capital expenditure (H1 FY 2023: US$50.9 million) and US$12.0 million of net
cash finance charges for the Period (H1 FY 2023: US$1.3 million net cash
finance income with the Loan Notes coupon settled via PIK)
· Consolidated net debt increased to US$212.4 million from US$176.8
million as at 30 June 2023 due to negative operational free cash flow, cash
coupon settlement on the Loan Notes, working capital funding for the
resumption of mining at Williamson and continued capital expenditure, albeit
slightly curtailed following the project deferrals announced in November 2023
· In December 2023, Petra announced the potential sale of Koffiefontein
after entering into a Non-Binding Term Sheet. The Company continues to work
closely with the prospective buyer, the Department of Mineral Resources and
Energy, community representatives and other key stakeholders and will provide
further updates as appropriate
Summary of financial results
US$m unless stated otherwise H1 FY 2024 H1 FY 2023(2) H2 FY 2023(2) FY 2023(2)
(restated)
Rough diamonds sold (carats) 1,659,620 1,304,969 1,024,848 2,329,817
Revenue 187.8 208.5 116.8 325.3
Average realised price per carat (US$/carat) 113 159 114 139
Adjusted mining and processing costs 144.1 118.5 83.6 202.1
Adjusted EBITDA(1) 38.9 85.7 27.4 113.1
Adjusted EBITDA margin (%)(1) 21% 41% 23% 35%
Adjusted (loss) / profit before tax(1) (16.0) 40.5 (32.2) 8.3
Adjusted net (loss) / profit after tax(1) (11.5) 26.1 (28.4) (2.3)
Net loss after tax (11.3) (17.6) (84.8) (102.4)
Basic loss per share (USc) (4.87) (9.86) (28.24) (38.10)
Adjusted basic (loss) / earnings per share(1) (USc) (4.72) 9.46 (12.42) (2.96)
Capital expenditure 50.5 51.9 65.2 117.1
Operational free cash flow(1) (21.1) 12.5 (79.0) (66.5)
Consolidated net debt(1) 212.4 90.2 176.8 176.8
Unrestricted cash & available facilities 64.8(3) 189.2 97.2 97.2
Consolidated net debt : Adjusted EBITDA(1) 3.2x 0.5x 1.6x 1.6x
Note 1: For all non-GAAP measures refer to the Summary of Results table within
the Financial Results section below
Note 2: During FY 2023, Koffiefontein was place on care and maintenance
activities in the run-up to a responsible closure. Koffiefontein was
classified as a discontinued operation in FY 2023 as it has been 'abandoned'
in terms of IFRS 5. For comparative purposes, the relevant H1 FY 2023 results
have been re-presented to exclude Koffiefontein.
Note 3: In December 2023, the Group announced that Absa Bank had approved an
increase in the commitments under the Group's revolving credit facility by
ZAR750 million. This increase was subject to the completion of an amendment to
the existing facility agreement, which became effective 15 February 2024. The
ZAR750 million increase has been excluded from the numbers in the table above.
Safety
5 lost time injuries (LTIs) were recorded, a 29% decrease on the prior year
Period, which translated to a lost time injury frequency rate (LTIFR) of 0.15
per 200,000 hours worked. Petra continues to strive towards a zero-harm
environment in focusing on behaviour-based intervention programmes across its
operations
Adjusted profit contribution per mine
US$ millions H1 FY 2024(1) H1 FY 2023 Restated(1,2)
CDM FDM WDL Central Total CDM FDM WDL Central Total
Revenue 96.5 67.0 24.3 - 187.8 104.1 55.3 49.1 - 208.5
Adjusted mining and processing costs(3) (60.5) (56.7) (26.9) - (144.1) (38.3) (37.3) (43.2) 0.3 (118.5)
Other direct income/(expenses) 0.6 - 0.2 - 0.8 - 0.5 0.1 - 0.6
Adjusted profit from mining activities 36.7 10.2 (2.4) - 44.5 65.8 18.5 6.0 0.3 90.6
Adjusted profit margin 38% 15% -10% 24% 63% 33% 12% 43%
Other corporate income Not allocated per mine 0.4 Not allocated per mine 0.5
Adjusted Group G&A (6.0) (5.4)
Adjusted EBITDA(1) 38.9 85.7
Note 1: For all non-GAAP measures refer to the Summary of Results table within
the Financial Results section below.
Note 2: H1 FY 2023 re-presented to exclude Koffiefontein which is classified
as a discontinued operation.
Note 3: Adjusted mining and processing costs include certain technical and
support activities which are conducted on a centralised basis; these include
sales & marketing, human resources, finance and supply chain, technical,
and other functions. For purposes of above, these costs have been allocated
60% to Cullinan Mine and 40% to Finsch. For more information, refer to
operational cost reconciliation available on the analyst guidance pages on our
website.
Adjusted profit from mining activities decreased 51% to US$44.5 million (H1 FY
2023: US$90.6 million), mainly due to diamond prices being 29% lower and
higher costs owing to the release of inventory during H1 FY 2024 as a result
of the deferral of the June 2023 tender to H1 FY 2024
Capital expenditure breakdown
US$ millions H1 FY 2024(1) H1 FY 2023 Adjusted(1)
Cullinan Finsch Williamson Central Total Cullinan Finsch Williamson Central Total
Mine Mine
Extension 22.8 11.7 - - 34.5 20.1 18.2 - - 38.3
Stay in Business 4.5 4.2 6.6 0.7 16.0 3.5 4.9 3.2 2.0 13.6
Total 27.3 15.9 6.6 0.7 50.5 23.6 23.1 3.2 2.0 51.9
Note 1: H1 FY 2023 adjusted to exclude Koffiefontein, which is classified as a
discontinued operation.
Total capital expenditure amounted to US$50.5 million for the Period mainly
due to the ongoing underground extension projects at both Cullinan Mine and
Finsch. These extension projects were affected by the deferrals to capital
programmes announced by the Company during H1 FY 2024.
Group production summary
Below is a summary of Group production for H1 FY 2024 (excluding
Koffiefontein)
Production H1 FY 2024 H1 FY 2023
ROM tonnes Tonnes 5,592,896 5,156,124
Tailings and other tonnes Tonnes 187,243 187,252
Total tonnes treated Tonnes 5,780,139 5,343,376
ROM diamonds Carats 1,346,905 1,331,816
Tailings and other diamonds Carats 80,636 61,563
Total diamonds Carats 1,427,541 1,393,379
Group pricing assumptions FY 2024
Given the likely slower recovery in diamond prices, we have slightly lowered
our FY 2024 pricing assumptions as reflected in the table below. Future
diamond prices are influenced by a range of factors outside of Petra's control
and so these assumptions are internal estimates only and no reliance should be
placed on them. The Company's pricing assumptions will be considered on an
ongoing basis and may be updated as appropriate.
Previous Current
US$ per carat Oct 2023 Feb 2024
Cullinan Mine 110 - 130 105 - 125
Finsch 100 - 115 95 - 110
Williamson 225 - 250 200 - 225
Outlook
Given the revised diamond pricing assumptions, we are focusing on improved
business resilience. Work is ongoing to further optimise costs and future
extension capital expenditure, the results of which will be presented at an
Investor event later in 2024, along with details of the life-of-mine potential
of Petra's assets.
In respect of FY 2024 Group production guidance, unforeseen underground
mechanical issues which emerged at Finsch post-Period end, relating to the
protracted replacement of a winder rope and accelerated wear on the chute
feeding the material sizer on 78 level, are likely to see Group production for
the year being between 2.75 and 2.85 Mcts compared to the previous guidance of
2.9 to 3.2Mcts.
The traceability of natural diamonds is a priority for the Company, and the
group continues to monitor consumer requirements for greater transparency
around provenance. The G7 requirement for certification of origin, due to be
phased in by September 2024, further supports the need for traceability and
verification. Petra is now trialling technologies to enable tracing of our
diamonds from mine-to-finger, which will considerably enhance our product
offering by giving consumers confidence in the provenance of our diamonds.
RESULTS PRESENTATION DETAILS
Richard Duffy, CEO, and Jacques Breytenbach, CFO, will present the results to
investors and analysts.
Webcast presentation at 9.30am GMT
To join: https://stream.brrmedia.co.uk/broadcast/65c638d23542db7be03f7c82
(https://stream.brrmedia.co.uk/broadcast/65c638d23542db7be03f7c82)
Recording of presentation
A recording of the webcast will be available later today on Petra's website
at: https://www.petradiamonds.com/investors/results-reports-presentations/
(https://www.petradiamonds.com/investors/results-reports-presentations/)
Investor Meet Company presentation at 2.00pm GMT
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
(https://www.investormeetcompany.com/petra-diamonds-limited/register-investor)
INSIDE INFORMATION
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.
FURTHER INFORMATION
Petra Diamonds, London
Patrick Pittaway
Telephone: +44 207 494 8203
Julia
Stone
investorrelations@petradiamonds.com
(mailto:investorrelations@petradiamonds.com)
Kelsey Traynor
Financial PR (Camarco)
Gordon
Poole
Telephone: +44 20 3757 4980
Owen
Roberts
petradiamonds@camarco.co.uk (mailto:petradiamonds@camarco.co.uk)
Elfie Kent
ABOUT PETRA DIAMONDS
Petra Diamonds is a leading independent diamond mining group and a supplier of
gem quality rough diamonds to the international market. The Company's
portfolio incorporates interests in three underground mines in South Africa
(Cullinan Mine, Finsch and Koffiefontein) and one open pit mine in Tanzania
(Williamson). The Koffiefontein mine is currently on care and maintenance in
preparation for sale or closure.
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
which supports the potential for long-life operations.
Petra strives to conduct all operations according to the highest ethical
standards and only operates 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 loan 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
FINANCIAL RESULTS
SUMMARY RESULTS (unaudited)
6 months to 31 December 2023 (Restated) Year ended 30 June 2023
("H1 FY 2024") 6 months to 31 December 2022 ("FY 2023")
("H1 FY 2023")(8)
US$ million US$ million US$ million
Revenue 187.8 208.5 325.3
Adjusted mining and processing costs(1) (144.1) (118.5) (202.1)
Other net direct mining income / (expense) 0.8 0.6 (0.5)
Adjusted profit from mining activity(2) 44.5 90.6 122.7
Other corporate income 0.4 0.5 1.0
Adjusted corporate overhead(3) (6.0) (5.4) (10.6)
Adjusted EBITDA(4) 38.9 85.7 113.1
Depreciation and Amortisation (42.9) (37.1) (80.5)
Share-based payment expense (0.7) (0.9) (2.3)
Net finance expense (11.3) (7.2) (22.0)
Adjusted (loss) / profit before tax (16.0) 40.5 8.3
Tax credit / (charge) (excluding taxation credit on unrealised foreign 4.5 (14.4) (10.6)
exchange gain / (loss))(5)
Adjusted net (loss) / profit after tax(6) (11.5) 26.1 (2.3)
Impairment (charge) / reversal - operations and other receivables(7) - (3.5) 52.7
Impairment charge - operations and non-financial receivables(7) - - (37.6)
Transaction costs and acceleration of unamortised costs on partial redemption - (9.0) (9.1)
of Notes(9)
Gain on extinguishment of Notes - - 0.6
Williamson tailings facility - remediation costs - (5.9) (10.7)
Williamson tailings facility - accelerated depreciation - (5.2) (5.2)
WDL blocked parcel inventory write down and related receivable recognition(14) - - (12.5)
WDL receivable recognition(14) - - 12.4
Movement in provision for unsettled and disputed tax claims - - 0.3
Human rights IGM claims provision and transaction costs of settlement (0.6) - (8.5)
agreement
Net unrealised foreign exchange gain / (loss) 0.7 (14.1) (29.4)
Taxation (charge) / credit on unrealised foreign exchange gain / loss(5) (0.3) 0.2 1.2
Taxation charge on impairment reversal - - (13.8)
Loss from continuing operations (11.7) (11.4) (61.9)
Profit / (loss) on discontinued operations, net of tax(8) 0.4 (6.2) (40.5)
Net loss after tax (11.3) (17.6) (102.4)
Earnings per share attributable to equity holders of the Company - US cents
Basic loss per share - from continuing and discontinued operations (4.69) (12.23) (54.21)
Basic loss per share - from continuing operations (4.87) (9.86) (38.10)
Adjusted (loss) / profit per share(10) (4.72) 9.46 (2.96)
As at 31 December 2023 As at 31 December 2022
As at
(US$ million) (US$ million) 30 June 2023
Unit (US$ million)
Cash at bank - (including restricted amounts) US$m 75.3 146.6 61.8
Diamond debtors US$m 8.1 4.9 8.9
Diamond inventories(14) US$m 53.5 59.9 65.9
/Cts 483,142 540,153 715,222
Loan notes (issued March 2021)(11) US$m 249.2 241.7 247.5
Bank loans and borrowings(11) US$m 46.5 - -
Consolidated net debt(12) US$m 212.4 90.2 176.8
Bank facilities undrawn and available(11) US$m 8.2 58.8 53.1
Consolidated net debt : Adjusted EBITDA (rolling twelve months) 3.2x 0.5x 1.6x
The following exchange rates have been used for this announcement: average for
H1 FY 2024 US$1: ZAR18.69 (H1 FY 2023: US$1: ZAR17.32; FY 2023: US$1:
ZAR17.77); closing rate as at 31 December 2023 US$1: ZAR18.28 (31 December
2022: US$1: ZAR17.00, 30 June 2023: US$1: ZAR18.83).
Notes:
The Group uses several non-GAAP measures above and throughout this report to
focus on actual trading activity by removing certain non-cash or non-recurring
items. These measures include adjusted mining and processing costs, profit
from mining activities, adjusted EBITDA, adjusted net profit after tax,
adjusted earnings per share, adjusted US$ loan note, 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 and amortisation and Williamson tailings
facility remediation costs.
6 months to 31 December 2023 (Restated) Year ended 30 June 2023
("H1 FY 2024") 6 months to 31 December 2022 ("FY 2023")
("H1 FY 2023")(8)
US$ million US$ million US$ million
Mining and processing costs 186.5 166.4 297.6
Depreciation and Amortisation (42.4) (42.0) (84.8)
Williamson tailings facility - remediation costs - (5.9) (10.7)
Adjusted mining and processing costs 144.1 118.5 202.1
2. Adjusted profit from mining activities is revenue less adjusted
mining and processing costs plus other direct mining income.
3. Adjusted corporate overhead is corporate overhead expenditure
less corporate depreciation costs, share-based expense and non-recurring costs
related to the tender offer transaction and the IGM claims.
6 months to 31 December 2023 (Restated) Year ended 30 June 2023
("H1 FY 2024") 6 months to 31 December 2022 ("FY 2023")
("H1 FY 2023")(8)
US$ million US$ million US$ million
Corporate expenditure including settlement costs 7.8 7.4 22.9
Depreciation and Amortisation (0.5) (0.3) (0.8)
Share-based payment expense (0.7) (0.9) (2.3)
Tender offer transaction costs - (0.8) (0.7)
Human rights IGM claims provision and transaction costs of settlement (0.6) - (8.5)
agreement
Adjusted corporate overhead 6.0 5.4 10.6
4. Adjusted EBITDA is stated before depreciation, amortisation of
right-of-use asset, share-based payment expense, net finance expense, tax
credit/(charge), impairment reversal/(charges), expected credit loss release/
(charge), recovery of fees relating to investigation and settlement of human
rights abuse claims, Williamson tailings facility remediation costs and
accelerated depreciation, unrealised foreign exchange gains and losses and
discontinued operations.
5. Tax credit/(charge) is the tax credit/(charge) for the Period
excluding taxation (charge)/credit on unrealised foreign exchange
gains/(losses) generated during the Period; such exclusion more accurately
reflects resultant adjusted net profit.
6. Adjusted net (loss)/profit after tax is net (loss)/profit after
tax stated before impairment (charge)/reversal, Williamson tailings facility
remediation costs and accelerated depreciation, recovery of fees relating to
investigation and settlement of human rights abuse claims net unrealised
foreign exchange movements for the Period and related tax adjustments.
7. Impairment of US$nil million (30 June 2023: US$15.1 million
reversal and 31 December 2022: US$3.5 million charge) was due to the Group's
impairment review of its operations and other receivables. Refer to note 5 for
further details. The impairment of US$nil comprises an impairment reversal of
US$0.2 million (H1 FY 2023: US$3.5 million charge) relating to VAT receivable
at Williamson. This is offset by an impairment charge of US$0.2 million
relating to outstanding proceeds amounting to US$0.2 million on the disposal
of Sekaka Diamonds to Botswana Diamonds in FY 2021.
8. The profit on discontinued operations reflects the results of the
Koffiefontein operation (net of tax), including impairment of US$nil, (30 June
2023: US$40.5 million charge and 31 December 2022: US$0.3 million charge). H1
FY 2023 results have been re-presented for comparability as per the
requirements of IFRS 5 for an abandoned operation; refer to Note 11.
9. Transaction costs and acceleration of unamortised costs on
partial redemption of Notes during H1 FY 2023 comprise transaction costs of
US$0.8 million included within Corporate expenditure and US$8.3 million in
respect of the redemption premium and acceleration of unamortised costs
included within Finance expense.
10. Adjusted EPS from continuing operations is stated before impairment
reversal, gain on extinguishment of Notes net of unamortised costs,
acceleration of unamortised costs on Notes, Williamson tailings facility
remediation costs and accelerated depreciation, costs relating to
investigation and settlement of human rights abuse claims, net unrealised
foreign exchange gains and losses, and excluding taxation credit on net
unrealised foreign exchange gains and losses and excluding a taxation charge
on impairment reversals.
11. The 2026 US$336.7 million loan notes, originally issued following
the capital restructuring (the "Restructuring") completed during March 2021,
have a carrying value of US$249.2 million which represents the outstanding
principal amount of US$209.7 million (after the early participation phase of
the debt tender offers as announced in September and October 2022) plus
US$48.2 million of accrued interest and net of unamortised transaction costs
capitalised of US$8.7 million.
Bank loans and borrowings represent the Group's ZAR1.0 billion (US$54.7
million) revolving credit facility. In December 2023, the Group announced that
Absa Bank had approved an increase in the commitments under the Group's
revolving credit facility by ZAR750 million, bringing the total commitments
under the facility to ZAR1.75 billion (US$95.7 million). This increase in the
facility is now fully available following execution and completion of the
associated amendment agreement on 15 February 2024. The amended facility's
existing covenants, margin, fees, and maturity date remain unchanged. A total
of ZAR850 million (US$46.5 million) is currently drawn leaving a further
balance of ZAR900 million (US$49.2 million) available for drawdown under the
upsized facility. The ZAR750 million increase has been excluded from the
numbers in the table above.
12. Consolidated Net Debt is bank loans and borrowings plus loan notes,
less cash and less diamond debtors.
13. Operational free cashflow is defined as cash generated from
operations less capital expenditure.
14. Diamond inventories for periods prior to 30 June 2023 include the
71,654.45 carat Williamson parcel of diamonds blocked for export during August
2017, with a carrying value of US$12.5 million. Under the Framework Agreement
entered into with the Government of Tanzania (GoT) in December 2021, it is
stated that the proceeds from the sale of this parcel are to be applied to the
Williamson mine to assist with the restart of operations and that, in the
event such proceeds are not received by Williamson, WDL is not required to pay
a US$20 million liability relating to the settlement of past tax disputes.
During discussions in FY 2023, the GoT confirmed that the blocked parcel was
partially sold during FY 2023 and this parcel was excluded from diamond
inventories and expensed to other direct mining expense with the calculated
fair value proceeds of US$12.3 million for the blocked parcel recognised as
other direct mining income and trade and other receivables in the Group's FY
2023 financial statements. During these discussions, the parties also
confirmed their intent to resolve the treatment of the blocked parcel sale
proceeds and the related US$20 million settlement liability.
Revenue
H1 FY 2024 amounted to US$187.8 million (H1 FY 2023: US$208.5 million),
comprising revenue from rough diamond sales of US$187.8 million (H1 FY 2023:
US$207.1 million) and no revenue from profit share agreements (H1 FY 2023:
US$1.4 million).
H1 FY 2024 revenue from rough diamond sales decreased 9% to US$187.8 million
(H1 FY 2023: US$207.1 million) as result of like-for-like prices being down
13.3% compared to H1 FY 2023 sales, with the balance of revenue movements
attributable to increased sales volumes and product mix.
Mining and processing costs
The mining and processing costs for H1 FY 2024 comprised on-mine cash costs as
well as other operational expenses. A breakdown of the total mining and
processing costs for the Period is set out below.
On-mine cash costs increased by US$3.4 million (2.9%) compared to H1 FY 2023,
in line with expectations, due to:
· Increased direct production expenditure due to higher production
volumes (3.4% increase)
· Inflationary increases (4.5% increase)
· Above-inflation increases in electricity and labour (1.2% increase)
Offset by:
· Weaker ZAR leading to an associated reduction in USD reported costs
(5.5% decrease)
· Cost reduction efforts (0.7% decrease)
Royalties decreased to US$2.9 million (H1 FY 2023: US$3.7 million) driven by
reduced revenues.
Adjusted profit from mining activities
Adjusted profit from mining activities decreased 51% to US$44.5 million (H1 FY
2023: US$90.6 million). The decrease was largely attributable to weaker
diamond prices and diamond inventory release following deferral of diamond
sales from FY 2023, while cash on-mine costs remained largely flat.
Adjusted corporate overhead - general and administration
Corporate overhead (before depreciation and share based payments) increased to
US$6.0 million for the Period (H1 FY 2023: US$5.4 million).
Adjusted EBITDA
Adjusted EBITDA, being profit from mining activities less adjusted corporate
overhead, decreased 55% to US$38.9 million (H1 FY 2023 US$85.7 million),
representing an adjusted EBITDA margin of 21% (H1 FY 2023: 41%) driven by
weaker diamond prices.
Depreciation and amortisation
Depreciation and amortisation for the Period increased to US$42.9 million (H1
FY 2023: US$37.1 million), due to higher depreciable value of assets at Finsch
following the US$52.7 million impairment reversal processed at 30 June 2023.
Impairment reversal / charge
Impairment reviews carried out at the Cullinan, Finsch and Williamson Mines
did not result in an impairment charge or reversal for operational assets
during the Period (H1 FY 2023: US$nil).
During the Period, an impairment reversal of US$0.2 million (H1 FY 2023:
US$3.5 million charge) relating to VAT receivables at Williamson was
recognised in the Condensed Consolidated Income Statement. This was offset by
an impairment charge of US$0.2 million relating to outstanding proceeds
amounting to US$150,000 on the disposal of Sekaka Diamonds to Botswana
Diamonds in FY 2021.
Net financial expense
Net financial expense of US$10.6 million (H1 FY 2023: US$29.5 million)
comprises:
US$ million H1 FY 2024 H1 FY 2023
Interest received on BEE loans and other receivables 2.8 2.2
Interest received bank deposits 2.8 1.7
Foreign exchange gains on settlement of forward exchange contracts 2.6 7.1
Net foreign exchange gains 0.5 -
Offset by:
Interest on senior secured second lien notes, bank loans and overdrafts (16.6) (13.6)
Other debt finance costs, including BEE loan interest, facility fees and IFRS (1.7) (1.5)
16 charges
Unwinding of the present value adjustment for Group rehabilitation costs (1.0) (3.1)
Acceleration of unamortised bank facility and Notes transaction costs - (8.2)
Net foreign exchange losses - (14.1)
Net financial expense (10.6) (29.5)
Tax credit / charge
The tax credit of US$4.2 million (H1 FY 2023: US$14.2 million tax charge)
comprised a deferred tax credit of US$4.6 million (H1 FY 2023: US$14.0 million
deferred tax charge) and a net current tax charge of US$0.3 million (H1 FY
2023: US$0.2 million). The deferred tax credit of US$4.6 million (H1 FY 2023:
US$14.0 million charge) comprised a deferred tax credit of US$4.9 million (H1
FY 2023: US$14.4 million charge) in respect of the reversal of temporary
differences at the Cullinan, Finsch and Williamson Mines and a US$0.3 million
deferred tax charge (H1 FY 2023: US$0.2 million credit) relating to unrealised
foreign exchange gains during the Period, which reduced existing deferred tax
liabilities. The current tax charge of US$0.3 million (H1 FY 2023: US$0.2
million) includes a current tax charge of US$nil (H1 FY 2023: US$nil) and a
US$0.3 million (H1 FY 2023: US$0.2 million) prior year under provision of
current tax at Williamson.
The current period effective tax rate is higher than the South African tax
rate of 27% (the Group's primary tax paying jurisdiction) primarily due to
foreign exchange losses and permanent differences as a result of the loss
making companies (within the Group) where deferred tax assets on operating
losses are not recognised. When consolidated, this increases the Group's
overall loss before tax resulting in an increased effective tax rate.
Earnings per share
Basic loss per share from continuing operations of USc4.87 was recorded (H1 FY
2023: USc9.86).
Adjusted loss per share from continuing operations (adjusted for impairment
charges, transaction costs and accelerated unamortised costs, taxation credit
on net unrealised foreign exchange losses and net unrealised foreign exchange
gains and losses) of USc4.72 was recorded (H1 FY 2023: USc9.46 - earnings
(adjusted for impairment charges, taxation charge on net unrealised foreign
exchange gains and net unrealised foreign exchange gains and losses)).
Operational free cash flow
During the Period, operational free cash outflow of US$21.2 million (H1 FY
2023: inflow US$11.7 million) reflects the impact from reduced revenues
coupled with continued increased capital expenditure. This cash flow
performance was further impacted by:
· US$2.6 million inflow (H1 FY 2023: US$4.1 million inflow) of net
realised foreign exchange gains;
· US$12.5 million (H1 FY 2023: US$nil) coupon payment related to the
Company's Loan Notes following the cessation of the two-year PIK (Payment in
Kind) coupon payment period during H2 FY 2023.
Cash and Diamond Debtors
As at 31 December 2023, Petra had cash at bank of US$75.3 million (H1 FY 2023:
US$146.6 million). Of these cash balances, US$56.6 million was held as
unrestricted cash (H1 FY 2023: US$130.4 million), US$17.9 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) (H1 FY 2023:
US$15.4 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 (H1 FY 2023: US$0.8 million).
Diamond debtors as at 31 December 2023 were US$8.1 million (H1 FY 2023: US$4.9
million).
Loans and Borrowings
The Group had loans and borrowings (measured under IFRS) at Period end of
US$295.8 million (H1 FY 2023: US$241.7 million) comprised of US$249.2 million
of Second Lien Notes (net of unamortised transaction costs of US$8.7 million)
and a drawdown of bank loans and borrowings of US$46.5 million (H1 FY 2023:
US$nil). Bank debt facilities undrawn and conditionally available to the Group
as at 31 December 2023 were US$49.2 million (H1 FY 2023: US$58.8 million),
following an increase in the Company's Revolving Credit Facility amounting to
ZAR750 million (US$41.0 million) during the Period, with final amendment
agreements executed and completed after Period end. Refer to note 6 for
further details relating to the movement in loans and borrowings during the
Period.
Consolidated net debt as at 31 December 2023 was US$212.4 million (H1 FY 2023:
US$90.2 million).
Covenant Measurements attached to banking facilities
The Company's covenants associated with its banking facilities are as outlined
below:
· To maintain a Consolidated Net Debt: Adjusted EBITDA ratio tested
semi-annually on a rolling12-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 covenant levels, which have not been breached during the Period
under review, for the respective measurement periods are outlined below:
FY23 H1 FY23 H2 FY24 H1 FY24 H2 FY25 H1 FY25 H2 FY26 H1
Consolidated Net Debt : EBITDA Leverage ratio (maximum)
4.00 3.50 3.50 3.25 3.25 3.00 3.00
Interest Cover Ratio (ICR) (minimum) 1.85 2.50 2.50 2.75 2.75 3.00 3.00
For further detail on the SA Lender facilities refer to Note 6 below.
Going concern considerations
The Board has reviewed the Group's forecasts with various sensitivities
applied, for the 18 months to June 2025, 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 recognise cash distributions payable to Petra upon forecasted
receipt, or Petra's funding obligations towards Williamson upon payment.
The Board has given careful consideration to potential risks identified in
meeting the forecasts under the review Period. The following sensitivities (in
addition to the Base Case) have been performed in assessing the Group's
ability to operate as a going concern as at the date of these results:
· A 10% decrease in forecast rough diamond prices from January 2024 to
June 2026
· A 5% strengthening in the forecast South African Rand (ZAR) exchange
rate against the US Dollar from January 2024 to June 2026
· A 5% increase in operating costs from January 2024 to June 2026
· Combined sensitivity: prices down 5% and ZAR stronger by 5% from
January 2025 to June 2026 (effectively resulting in opex and total capex up by
5% in USD terms)
Except for the liquidity covenant measured at June 2025, the forecast covenant
measurements for the base case and each of the sensitised cases do not project
any breaches for any of the covenants during the 18-month review period to
June 2025. The liquidity covenant for the base and each of the sensitised
cases projects a breach in June 2025 because of the liquidity covenant being a
12 month forward looking covenant. Consequently, the liquidity covenant review
period extends to June 2026. The projected liquidity covenant breach in June
2025 is due to both the RCF and the 2L debt currently maturing and assumed to
be settled in January and March 2026 respectively, thereby indicating a
liquidity breach during Q1 CY 2026. As previously stated, the Group may have
to refinance the full outstanding 2L debt of c. US$250 million, which is
likely to be pursued prior to the debt becoming a current liability in March
2025. The Group remains confident in its ability to refinance its debt on the
back of the underlying operational cashflow generation, as well as strong net
cashflow generation projection post the deferred peak extension project
capital period of FY 2025 to FY 2027. The outcome of a refinance, however,
remains outside of the Group's control and therefore constitutes a material
uncertainty. If the Group is unable to successfully refinance the existing
debt on account of the willingness of existing Noteholders and/or the terms
and conditions of such a refinance or new debt instrument, the Group may have
to resort to an equity raise or asset sales to settle its obligations. The
Group is of the view that a successful equity raise would be supported by the
long-term resource potential at both Cullinan Mine and Finsch, extending their
current mine plans to mid-2030s and beyond.
The Board is of the view that despite the current market volatility being
experienced, the supply / demand fundamentals of the diamond market remain
intact.
Based on its assessment of the forecasts, principal risks and uncertainties
and mitigation actions considered available to the Group, including steps
already undertaken or planned to be undertaken by management to improve
resilience in the business, in the event of downside sensitivities, the Board
confirms that it is satisfied that the Group will be able to continue to
operate and meet its liabilities as they fall due over the next 18-month
period.
However, the Board recognises the risks associated with persisting market
volatility which may lead to lower diamond prices for longer, as well as the
risk to refinancing the Group's 2L debt, given this remains outside of the
Group's control. These factors indicate the existence of material
uncertainties which may cast significant doubt on the Group's ability to
continue as a going concern and therefore it may be unable to realise its
assets and discharge its liabilities in the normal course of business. The
Financial Statements do not include the adjustments that would result if the
Group were unable to continue as a going concern.
See 'Basis of preparation including going concern' in the Financial Statements
for further information.
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, strategic
and operational risks (in no order of priority), which may impact the Group
over the next 12 months is listed below.
External Risks Change in FY 2024: H1
1. Rough diamond prices Higher - Continued softer prices resulting from elevated inventory levels in
the mid-stream, prolonged weakness in the Chinese market, lab-grown diamond
Risk appetite: High sales in the bridal jewellery segment and higher interest rates impacting the
mid-stream resulted in like-for-like prices decreasing by 13.3% in H1 FY 2024
Risk Rating: Severe compared to sales in H1 FY 2023.
Nature of risk: Long term Actions taken by major producers to curb supply and the two month Indian
moratorium that came to an end on 15 December 2023, together with strengthened
retail sales in the US, have improved market conditions as inventory levels
across the pipeline have started to rebalance. This saw Tender 3 of FY 2024
delivering a 19.3% increase in like-for-like prices compared to Tender 2 of FY
2024, reaffirming Petra's belief that diamond prices have likely bottomed.
However, the Company continues to adopt a cautious approach to the market in
the near-term, with prices likely to remain volatile and ongoing discipline by
major producers being key to providing some price stability for CY 2024.
In December 2023, G7 members announced import restrictions on non-industrial
diamonds, mined, processed or produced in Russia, with such restrictions
coming into effect on 1 January 2024 and to be followed by further phased
restrictions on the import of Russian diamonds processed in third countries.
It remains to be seen what impact these restrictions may have on pricing.
2. Currency No change - Support from a weaker South African Rand continued throughout the
period, with the Rand averaging ZAR 18.69: US$1 (H1 FY 2023: ZAR 17.32 :
Risk appetite: High US$1). The Rand's weakness is due to a combination of domestic South African
factors and positively impacted Petra's H1 FY 2024 financial results.
Risk Rating: Medium
Nature of risk: Long term
3. Country and political No change - The risk of political instability remains in South Africa and with
a general election due in 2024, is expected to increase. Country and political
Risk appetite: High risk in Tanzania remains lower due to the positive economic and structural
changes implemented by the Government which were well received by the
Risk Rating: Medium international community. Internationally, increased geopolitical risks
resulting from the Middle East conflict and the continuing war in Ukraine are
Nature of risk: Long term impacting other principal risks, in particular Rough Diamond Prices, Currency
and Group Liquidity (see above
and below).
Strategic Risks Change in FY 2024: H1
4. Group Liquidity Higher - Softening rough diamond prices (see above) have adversely impacted
Petra's liquidity position in H1 FY 2024. This resulted in the Company
Risk appetite: Medium announcing, in November 2023, certain amendments and deferrals to capital
projects and operating and group cost savings which are targeting aggregate
Risk Rating: High cash savings of up to US$75m by June 2024. The replanning and
value-engineering work associated with the deferred capital projects continues
Nature of risk: Short to long term and once completed, the Company will inform the market of the expected impact
on forward looking guidance. Following the operational challenges experienced
at the Cullinan, Finsch and Williamson mines in FY 2023 and the impact this
had on Petra's liquidity, production in H1 FY 2024 has largely stabilised,
although certain issues experienced at Finsch post period-end may see the
Company falling marginally short of earlier production guidance for FY 2024.
Consolidated net debt increased to US$212.3 million as at 31 December 2023 (30
June 2023: US$176.8 million) due to the timing of closing the Company's sales
tenders, the continued lower diamond pricing environment, working capital
funding for the resumption of mining at Williamson and the increasing capex
spend profile to extend the life of our operations at the Cullinan and Finsch
mines.
Absa Bank has approved a ZAR750 million (c. US$40 million) increase in
commitments under Petra's Revolving Credit Facility which, once completed,
will improve Petra's liquidity position and its operational and sales
flexibility in in the event of a weaker-for-longer diamond market.
Petra has also entered into a non-binding term sheet on an exclusive basis
with an interested party for the potential sale of the Koffiefontein mine. If
the sale does not complete, then Petra intends to proceed with its
decommissioning, rehabilitation and closure programme for this mine. A
successful sale or decommissioning and closure process will contribute to
improved liquidity.
As described in the 'Basis of preparation including going concern' in the
Financial Statements, certain factors indicate the existence of material
uncertainties which may cast significant doubt on the Group's ability to
continue as a going concern.
5. Licence to operate: regulatory and social impact & community relations No Change - At Cullinan Mine, two projects were successfully handed over to
the community, while eight community projects have been approved focusing on
Risk appetite: Medium disability, food security and sports activities to promote social cohesion
within the Cullinan communities. At Finsch, two informal settlement projects
Risk Rating: Medium were completed and handed over to the Local Municipality as part of SLP3.
Nature of risk: Long term At Koffiefontein, there were slight delays in the implementation of some SLP3
projects, whilst others were completed creating temporary employment
opportunities. The DMRE has agreed to engage with community members on the
delivery of Koffiefontein SLP projects regarding certain community grievances.
The first phase of the Home Ownership Program at Koffiefontein was completed
resulting in the sale by Petra of 96 houses out of 163 to current and former
employees who did not previously own houses.
WDL made significant progress on various remediation initiatives to address
the impact of the TSF failure. The payment of compensation to project affected
persons (PAPs) was completed, as were grave re-locations, cash crop top-ups
and final food parcel distributions.
The IGM continues to investigate historic allegations of severe human rights
impacts in connection with security operations at Williamson, having
implemented various actions to address findings from the IGM's pilot phase
(completed towards the end of FY 2023) and the Independent Monitors' initial
report which was published in October 2023.
The risk of illegal mining at Williamson is ongoing, given the nature and
scale of the operation and challenges associated with securing such a large
perimeter. During H1 FY 2024, a total of 599 incidents of illegal incursions
onto the Williamson mine lease area were reported, with 27 illegal miners, 7
security officers and 4 police officers sustaining minor injuries and 81
illegal miners being apprehended.
Operating Risks Change in FY 2024: H1
6. Mining; production (including ROM grade and product mix volatility) Higher - Ore processed increased 8% to 5.8Mt largely due to the successful
ramp-up of production at Williamson. Total diamond production increased 2% to
Risk appetite: Medium 1.43 million carats mainly due to resuming operations at Williamson and
increased ROM contribution at Finsch, partially offset by slightly lower
Risk Rating: High grades at the Cullinan Mine. Post-Period end, as a result of underground
mechanical issues at Finsch, Group production in FY 2024 is expected to be
Nature of risk: Long term 2.75 - 2.85Mcts, compared to prior guidance of 2.9 to 3.2Mcts.
Lower grades at the Cullinan Mine have continued due to the C-Cut cave
maturity and earlier than anticipated waste ingress. Several mitigating
actions are underway to address these grade issues, including:
· tailings treatment has been maximised to partially offset lower
carats from the C-Cut;
· the re-opening of Tunnel 36 (which has already occurred) and
Tunnel 41; and
· as part of the CC1E project, continuing to develop the 813 and
833 Levels of the Sub-Level Cave (SLC) to ensure higher-grade ore is brought
into production from the end of June 2024.
At Finsch, the 78-level project continues as planned to bring these production
areas online during FY 2024 to supplement production from the existing SLC
which is nearing its end of life and therefore experiencing increased
production volatility. Williamson resumed production ahead of schedule at the
start of H1 FY 2024 and continues its ramp-up to full production.
7. Labour relations No Change - Stable labour relations were experienced at all operations
throughout H1 FY 2024. Petra continues to prepare for discussions with
Risk appetite: Medium organised labour regarding a new wage agreement for the South African
operations, with the current agreement ending in June 2024. Discussions are
Risk Rating: Medium expected to commence in February 2024.
Nature of risk: Short to medium term
8. Safety No Change - In H1 FY 2024, LTIFR decreased to 0.15 (H1 FY 2023: 0.19) and LTI
decreased to 5 (H1 FY 2023: 7). These improvements follow a variety of
Risk appetite: Medium initiatives, including remedial actions, Group-wide learnings, visible felt
leadership and behaviour intervention programmes with various focus areas,
Risk Rating: Medium that were undertaken by Petra to address a regression in safety performance in
FY 2023. As at 31 December 2023, Petra has been fatality free for 6.8 years.
Nature of risk: Short to medium term
9. Environment No Change - Following the TSF failure at Williamson in November 2022, several
environmental remediation initiatives continue to progress and remain on
Risk appetite: Medium track. An investigation continues to be conducted to determine the root cause
of the TSF failure.
Risk Rating: Medium
Authorisations relating to KDM mine closure plans are progressing, which will
Nature of risk: Long term result in an amended EMPR submission scheduled for February 24.
Water levels at the tailings facility (No 7 Dam) at the Cullinan Mine have now
reduced to acceptable levels through effective dewatering activities, avoiding
the need for emergency releases of water to be made. Management's focus is now
shifting towards developing mitigation strategies in the medium to long-term
to manage water levels and quality.
10. Climate Change No Change - Petra is progressing the implementation of its renewables strategy
which was approved by the Board in FY 2023, with the Company targeting a
Risk appetite: High 35-40% reduction in Scope 1 & 2 emissions by 2030 (against Petra's 2019
baseline). Petra continues to explore an option to source renewable energy
Risk Rating: Medium from an energy supplier to help meet this target and reduce its energy cost.
Nature of risk: Long term Management is further working to operationalise the outcomes of its Climate
Change strategy which includes the integration of physical risks into its
tailings management processes and the identification of operational projects
to improve energy efficiency, reduce total energy consumption and transition
to alternative energy sources.
Following the development of a Climate Scenario Analysis in FY 2023 (which was
supported by Ernst & Young), management has initiated a further climate
change risk assessment process at each operation to identify, mitigate and
manage climate change risk at a mine level with the aim of integrating these
risks into existing baseline risk assessments.
11. Capital Projects Higher - Prior to the capital project amendments and deferrals announced in
November 2023, management had initiated various mitigating actions and
Risk appetite: Medium expedited Trackless Mining Machinery and drill rig availability to address the
risk of the capital projects falling behind schedule. Since the announcement
Risk Rating: High of the capital project amendments and deferrals, Petra has made good progress
on the CC1E development project at the Cullinan Mine and the 78-Level Phase II
Nature of risk: Short to medium term development project at Finsch and the resumption of the deferred capital
programmes remains on target for July 2024. The replanning and
value-engineering work associated with the deferred capital projects continues
and the Capital Projects risk will be reassessed once that work has been
completed.
12. Supply Chain Governance No Change - Following a gap analysis of existing Supply Chain processes and
systems by an independent external expert, management initiated a project to
Risk appetite: Medium address areas that require improvement, with implementation of that project
taking place during H1 FY 2024 and now nearing completion. The project focuses
Risk Rating: High on Supply Chain processes, systems and structures with enhancements expected
in compliance, governance and risk management, improved procurement, tender
Nature of risk: Short to medium term and supplier registration procedures and filling critical roles in the
function. A new Supply Chain policy reflecting these improvements is currently
being developed.
PETRA DIAMONDS LIMITED
CONDENSED CONSOLIDATED INTERIM INCOME STATEMENT
FOR THE 6 MONTH PERIOD ENDED 31 DECEMBER 2023
US$ million Notes (Unaudited) (Unaudited) (Audited)
1 July 2023-31 December 2023 1 July 2022-31 December 2022(1) Year ended 30 June
2023
Revenue 187.8 208.5 325.3
Mining and processing costs (186.5) (166.4) (297.6)
Other direct mining expense - - (12.9)
Other direct mining income 0.8 0.6 12.3
Corporate expenditure including settlement costs (7.8) (7.4) (22.9)
Other corporate income 0.4 0.5 1.0
Impairment reversal of non-financial assets 5 - - 20.0
Impairment charge of other receivables 5 - (3.5) (4.9)
Total operating costs (193.1) (176.2) (305.0)
Financial income 8.7 23.4 11.1
Financial expense (19.3) (52.9) (70.8)
Gain on extinguishment of Notes net of unamortised costs - - 0.6
(Loss)/profit before tax (15.9) 2.8 (38.8)
Income tax credit/(charge) 4.2 (14.2) (23.1)
Loss for the period from continuing operations (11.7) (11.4) (61.9)
Profit/(loss) on discontinued operations including associated impairment 11 0.4 (6.2)
charges (net of tax)
(40.5)
Loss for the Period (11.3) (17.6) (102.4)
Attributable to:
Equity holders of the parent company (9.1) (23.7) (105.3)
Non-controlling interest (2.2) 6.1 2.9
(11.3) (17.6) (102.4)
Loss per share attributable to the equity holders of the parent during the
Period:
Basic (loss) / earnings per share from continuing and discontinued operations: (4.69) (12.23) (54.21)
- continuing operations - US cents((2)) 9 (4.87) (9.86) (38.10)
- discontinued operations - US cents((2)) 9 0.18 (2.37) (16.11)
Diluted (loss) / earnings per share from continuing and discontinued (4.69) (12.23) (54.21)
operations:
- continuing operations - US cents((3)) 9 (4.87) (9.86) (38.10)
- discontinued operations - US cents((3)) 9 0.18 (2.37) (16.11)
((1)) The comparative period for the six months ended 31 December 2022 has
been re-presented in accordance with IFRS 5, refer to note 11.
((2)) Calculated on the basic weighted average number of ordinary shares
((3)) Calculated on the diluted weighted average number of ordinary shares
PETRA DIAMONDS LIMITED
CONDENSED CONSOLIDATED INTERIM STATEMENT OF OTHER COMPREHENSIVE INCOME
FOR THE 6 MONTH PERIOD ENDED 31 DECEMBER 2023
US$ million (Unaudited) (Unaudited) (Audited)
1 July 2023- 1 July 2022-31 December 2022(1) Year ended
31 December 30 June
2023 2023
Loss for the Period (11.3) (17.6) (102.4)
Other comprehensive profit that will not be reclassified to the Consolidated
Income Statement in subsequent periods:
Exchange differences on translation of the share-based payment reserve - - 0.2
Other comprehensive profit/(loss) that will be reclassified to the
Consolidated Income Statement in subsequent periods:
Exchange differences on translation of foreign operations(2) 6.4 (18.1) (50.4)
Exchange differences on non-controlling interest(1) 0.2 (0.5) (1.9)
Total comprehensive loss for the Period, net of tax (4.7) (36.2) (154.5)
Total comprehensive loss attributable to:
Equity holders of the parent company (2.7) (41.8) (155.5)
- continuing operations (3.1) (35.6) (115.0)
- discontinued operations 0.4 (6.2) (40.5)
Non-controlling interest (2.0) 5.6 1.0
(4.7) (36.2) (154.5)
((1)) The comparative period for the six months ended 31 December 2022 has
been re-presented in accordance with IFRS 5, refer to note 11.
((2)) Exchange differences arising on translation of foreign operations and
non-controlling interest will be reclassified to profit and loss if specific
future conditions are met.
PETRA DIAMONDS LIMITED
CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2023
US$ million Notes (Unaudited) (Unaudited) (Audited)
31 December 2023 31 December 2022 30 June
2023
ASSETS
Non-current assets
Property, plant and equipment 5 623.6 620.2 598.1
Right-of-use assets 24.2 20.0 26.6
BEE loans and receivables 41.3 38.2 37.3
Other receivables 6.7 5.1 6.6
Total non-current assets 695.8 683.5 668.6
Current assets
Trade and other receivables 43.5 24.7 42.0
Inventories 80.0 81.7 88.4
Cash restricted for use 18.7 16.2 17.7
Cash and cash equivalents 56.6 130.4 44.1
Total current assets 198.8 253.0 192.2
Total assets 894.6 936.5 860.8
EQUITY AND LIABILITIES
Equity
Share capital 145.7 145.7 145.7
Share premium account 609.5 609.5 609.5
Foreign currency translation reserve (492.9) (467.0) (499.3)
Share-based payment reserve 4.7 2.8 3.9
Other reserves (0.8) (0.8) (0.8)
Accumulated reserves 52.6 142.7 61.7
Attributable to equity holders of the parent company 318.8 432.9 320.7
Non-controlling interest (8.4) 0.5 (3.9)
Total equity 310.4 433.4 316.8
Liabilities
Non-current liabilities
Loans and borrowings 6 270.6 221.1 222.4
Provisions 104.3 97.3 99.1
Lease liabilities 21.6 17.8 25.8
Deferred tax liabilities 80.1 82.4 82.0
Total non-current liabilities 476.6 418.6 429.3
Current liabilities
Loans and borrowings 6 25.2 20.6 25.1
Lease liabilities 4.2 3.0 3.0
Trade and other payables 69.2 56.5 69.0
Provisions 9.0 4.4 17.6
Total current liabilities 107.6 84.5 114.7
Total liabilities 584.2 503.1 544.0
Total equity and liabilities 894.6 936.5 860.8
PETRA DIAMONDS LIMITED
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASHFLOWS
FOR THE 6 MONTH PERIOD ENDED 31 DECEMBER 2023
US$ million Notes (Unaudited) (Restated Unaudited) (Restated Audited)
1 July 2022-31 December 2022(4) Year ended
1 July 2023-31 December 2023 30 June
2023(3)
Loss before taxation for the Period from continuing and discontinued (15.5) (3.4) (79.3)
operations
Depreciation of property plant and equipment 40.4 40.3 82.5
Amortisation of right-of-use asset 2.5 1.9 3.2
Net impairment reversal - non financial assets - - (20.0)
Impairment charge - other receivables - 3.5 4.9
Gain on extinguishment on Notes - - (0.6)
Non-cash items relating to discontinued operations - (1.2) 21.5
Movement in provisions (7.0) 4.3 7.0
Dividend received from BEE partner(1) (0.4) (0.5) (0.5)
Financial income (8.7) (23.4) (11.1)
Financial expense 19.3 52.9 70.8
(Profit)/loss on sale of property, plant and equipment (0.5) - 1.4
Share-based payment expense 0.7 0.9 2.3
Operating profit before working capital changes 30.8 75.3 82.1
(Increase)/decrease in trade and other receivables (1.4) 15.7 0.4
Decrease in trade and other payables (4.5) (18.2) (9.9)
Decrease/(increase) in inventories 10.3 (12.6) (26.1)
Cash generated from operations 35.2 60.2 46.5
Net realised gains on foreign exchange contracts 2.6 7.1 1.9
Finance expenses paid (14.8) (0.4) (8.4)
Income tax received - 0.3 0.6
Net cash generated from operating activities 23.0 67.2 40.6
Cash flows from investing activities
Additions to property, plant and equipment (56.3) (47.7) (113.0)
Proceeds from sale of property, plant and equipment 0.9 - 1.0
Loan advances to BEE partners(1) (0.1) - -
Repayment from KEM JV(2) 0.1 0.3 0.5
Interest received 2.8 1.7 3.9
Net cash utilised in investing activities (52.6) (45.7) (107.6)
Cash flows from financing activities
Lease instalments paid (3.2) (2.4) (4.6)
Repayment of borrowings 6 - (146.1) (146.1)
Drawdown on revolving credit facility 6 45.5 - -
Net dividend paid to BEE partners(1) (2.1) (2.2) (3.3)
Net cash generated from/(utilised in) financing activities 40.2 (150.7) (154.0)
Net increase/(decrease) in cash and cash equivalents 10.6 (129.2) (221.0)
Cash and cash equivalents at beginning of the Period 44.1 271.9 271.9
Effect of exchange rate fluctuations on cash held 1.9 (12.3) (6.8)
Cash and cash equivalents at end of the Period 56.6 130.4 44.1
( )
( )
((1))BEE Partners are the Group's black economic empowerment partners, who
hold minority interests in the Group's South African Operations.
((2))KEM JV is a former joint venture; Petra disposed of its interest in KEM
JV during FY 2019.
((3))The comparative period for 30 June 2023 has been restated to reclassify
the US$3.3 million net dividend paid to BEE Partners from net cash utilised in
investing activities (30 June 2023: US$110.9 million as previously stated), to
net cash utilised in financing activities (30 June 2023: US$150.7 million as
previously stated).
( )
((4))The comparative period for the six months ended 31 December 2022 has been
re-presented and restated for the following items:
(· ) Re-presentation in accordance with IFRS 5, refer to
note 11 (A)
(· ) Reclassification of a realised foreign exchange loss on
settlement of loans (B)
(· ) Exclusion of working capital movements from additions
to property, plant and equipment (C)
(· ) Reclassification of dividends paid from investing
activities to financing activities (D)
The effect of the re-presentation and restatements had the following impact on
the statement of cashflows for the period 1 July 2022 to 31 December 2022:
US$ million As previously stated Re-presentations / Restatements
As restated
A B C D
Depreciation of property, plant and equipment 40.5 (0.2) - - - 40.3
Impairment charge - non financial assets 0.3 (0.3) - - - -
Non-cash items relating to discontinued operations - (1.2) - - - (1.2)
Financial income (25.8) 2.4 - - - (23.4)
Financial expense 52.8 0.1 - - - 52.9
Operating profit before working capital changes 74.5 0.8 - - - 75.3
Decrease in trade and other payables (15.0) - - (3.2) - (18.2)
Cash generated from operations 62.6 0.8 - (3.2) - 60.2
Net realised gains on foreign exchange contracts 4.1 (0.8) 3.8 - - 7.1
Net cash generated from operating activities 66.6 - 3.8 (3.2) - 67.2
Additions to property, plant and equipment (50.9) - - 3.2 - (47.7)
Dividends paid to BEE partners (2.7) - - - 2.7 -
Dividend received from BEE partners 0.5 - - - (0.5) -
Net cash utilised in investing activities (51.1) - - 3.2 2.2 (45.7)
Net dividend paid to BEE partners - - - - (2.2) (2.2)
Net realised foreign exchange loss on settlement of loans (11.8) - 11.8 - - -
Net cash utilised in financing activities (160.3) - 11.8 - (2.2) (150.7)
Net decrease in cash and cash equivalents (144.8) - 15.6 - - (129.2)
Effect of exchange rate fluctuations on cash held 3.3 - (15.6) - - (12.3)
Cash and cash equivalents at end of the Period 130.4 - - - - 130.4
PETRA DIAMONDS LIMITED
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY
FOR THE 6 MONTH PERIOD ENDED 31 DECEMBER 2023
(Unaudited) Share Share Foreign Share-based Other Accumulated reserves / (losses) Attributable Non-controlling Total
capital premium currency payment reserves to the interest equity
account translation reserve parent
US$ million reserve
Six month Period ended 31 December 2023:
At 1 July 2023 145.7 609.5 (499.3) 3.9 (0.8) 61.7 320.7 (3.9) 316.8
Loss for the Period - - - - - (9.1) (9.1) (2.2) (11.3)
Other comprehensive income - - 6.4 - - - 6.4 0.2 6.6
Dividend paid to Non-controlling interest shareholders - - - - - - - (2.5) (2.5)
Equity settled share based payments - - - 0.8 - - 0.8 - 0.8
At 31 December 2023 145.7 609.5 (492.9) 4.7 (0.8) 52.6 318.8 (8.4) 310.4
(Unaudited) Share Share Foreign Share-based Other Accumulated reserves / (losses) Attributable Non-controlling Total
capital premium currency payment reserves to the interest equity
account translation reserve parent
US$ million reserve
Six month Period ended 31 December 2022:
At 1 July 2022 145.7 959.5 (448.9) 1.9 (0.8) (183.6) 473.8 4.7 478.5
Loss for the Period - - - - - (23.7) (23.7) 6.1 (17.6)
Other comprehensive expense - - (18.1) - - - (18.1) (0.5) (18.6)
Conversion of share premium - (350.0) - - - 350.0 - - -
Dividend paid to Non-controlling interest shareholders - - - - - - - (9.8) (9.8)
Equity settled share based payments - - - 0.9 - - 0.9 - 0.9
At 31 December 2022 145.7 609.5 (467.0) 2.8 (0.8) 142.7 432.9 0.5 433.4
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE 6 MONTH PERIOD ENDED 31 DECEMBER 2023
1. GENERAL INFORMATION
Petra Diamonds Limited (the "Company"), a limited liability company listed on
the Main Market of the London Stock Exchange ("LSE"), is registered in Bermuda
and domiciled in the United Kingdom. The condensed consolidated interim
financial statements of the Company for the six-month period ended 31 December
2023 comprise the Company and its subsidiaries (together referred to as the
"Group").
2. BASIS OF PREPARATION
The condensed consolidated interim financial statements in this report have
been prepared in accordance with the historic cost convention except for
certain financial instruments which are stated at fair value. The Group
prepares condensed consolidated interim financial statements for the six
months ended 31 December (the "Period"), and annual financial statements for
the year ended 30 June. The Group's accounting policies used in the
preparation of these condensed consolidated interim financial statements are
consistent with those used in the annual financial statements for the year
ended 30 June 2023.
The condensed consolidated interim financial statements of the Company have
been prepared in compliance with the framework concepts and the measurement
and recognition requirements of the International Financial Reporting
Standards adopted by the European Union ("IFRSs"), IAS 34 Interim Financial
Reporting as issued by the International Accounting Standards Board ("IASB"),
the Disclosure and Transparency Rules of the Financial Conduct Authority in
the United Kingdom as applicable to interim financial reporting and in the
manner required by the Bermudan Companies Act, 1981 for the preparation of
financial information of the group for the six months ended 31 December 2023.
These condensed consolidated interim financial statements should be read in
conjunction with the Company's audited consolidated financial statements and
the notes as at and for the year ended 30 June 2023.
Going concern
In the annual financial statements for the year ended 30 June 2023, the
Company indicated that material uncertainties exist that may cast doubt on the
Group's ability to continue as a going concern. The uncertainties related to
volatility in diamond prices given low levels of demand for rough diamonds. In
an attempt to mitigate this price volatility on the back of reduced demand,
major diamond producers curtailed supply and the Gem and Jewellery Export
Promotion Council of India (GJEPC) effected a 2-month Indian diamond import
moratorium from mid-October to mid-December 2023.
Since 30 June 2023, the Company has been taking steps to provide financial
flexibility should prevailing market conditions continue if diamond prices
remained weaker-for-longer. As a result, portions of the Group's capital
programmes were amended and currently stand deferred, with the Company also
pursuing cost reductions across the Group.
To provide further financial flexibility, the Company negotiated an increase
in commitments under the Absa Bank revolving credit facility of ZAR750 million
(effective 15 February 2024), bringing the total commitments under the
facility to ZAR1.75 billion (c. US$93 million).
In the last tender of the Period (which coincided with the lifting of the
Indian moratorium), the diamond market showed encouraging indications of price
recovery from the lows witnessed in the late-September 2023 tender. The
Company remains cautious in its approach to the market in the near-term with
the current price volatility being experienced but is of the view that the
longer-term fundamentals of the diamond business remain sound.
Operational Update
Steady production was delivered by the Cullinan and Finsch Mines during H1
FY2024, with a successful faster than anticipated ramp-up at Williamson, which
is now close to its annual steady-state production run-rate. The deferral of
portions of the capital projects at the Cullinan and Finsch Mines currently
stand deferred. Post Period end, unforeseen underground mechanical issues
emerged at Finsch, relating to the protracted replacement of a winder rope and
accelerated wear on the chute feeding the material sizer on 78 level. This is
likely to result in a marginal drop of carats forecasted for the second half
of FY24 at Finsch.
Koffiefontein continued with its Care & Maintenance activities and
progressed its Closure planning. In December 2023, Petra signed a non-binding
term sheet with an interested party for the potential sale of the
Koffiefontein mine. The interested party is currently carrying out its due
diligence, and should a sale materialise, Petra will not submit the mine's
Closure application. As part of this Going Concern assessment, all the costs
associated with the Care & maintenance activities as well as transitioning
to Closure are included, in line with the provisions raised at FY23 year-end
for these activities.
Diamond prices and market outlook
The market experienced severe volatility in H1 FY 2024, continuing the
softening of prices from 4Q FY 2023. The Indian moratorium was lifted in
December 2023, with early indications suggesting that the intended outcome of
reducing excess inventory in the midstream is being achieved. Early
indications of a diamond pricing rebound were evident (as expected) at the
Company's December 2023 tender results, which coincided with the lifting of
the Indian moratorium.
Indications are that interest rates have now peaked and will start to decline
towards the second half of CY 2024, providing support to diamond demand in the
medium term, with the continuing structural supply deficit also anticipated to
provide pricing support in the medium to long term. In addition, the G7's
announcement of further sanctions to restrict the trade of diamonds of Russian
origin should also provide support to diamond prices.
The Company continues to adopt a cautious approach to the market in the
near-term, with prices likely to remain volatile and ongoing discipline by
major producers being key to providing some price stability for CY 2024.
However, the Board is of the view that despite the current market volatility
being experienced, the supply / demand fundamentals of the diamond market
remain intact.
Williamson Updates
Williamson restarted operations in Q1 FY 2024 and has been ramping up faster
than anticipated, with current production close to its annual steady-state run
rate. As stated in the FY 2023 year-end reporting, both the Framework
Agreement with the GoT and the Share Sale Agreement with Pink Diamonds are
expected to become effective during the second half of FY 2024, pending
satisfaction of certain suspensive conditions and regulatory approvals.
It should be noted that the Group's going concern assessment is performed
excluding Williamson's trading results, as Williamson is considered a
ring-fenced operation for these purposes, as per the definitions and
requirements set forth in the Group's financing agreements. Williamson
successfully upsized its overdraft facility from US$7 million to US$10 million
in September 2023. Williamson, however, continues to encounter short-term
liquidity challenges as its production reaches steady-state, and its
short-term liquidity is receiving focused attention on an on-going basis. In
order to aid Williamson in navigating this start-up period during the
challenging market conditions experienced in H1 FY 2024, a priority
shareholder loan of US$6 million was provided by the Group.
Forecast liquidity and covenants
The Board has reviewed the Group's forecasts with various sensitivities
applied, for the 18-month period to June 2025, 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 recognise cash distributions payable to Petra upon
forecasted receipt, or Petra's funding obligations towards Williamson upon
payment.
The Board has given careful consideration to potential risks identified in
meeting the forecasts under the review Period. The following sensitivities (in
addition to the Base Case) have been performed in assessing the Group's
ability to operate as a going concern as at the date of these results:
• A 10% decrease in forecast rough diamond prices from January
2024 to June 2026
• A 5% strengthening in the forecast South African Rand (ZAR)
exchange rate against the US Dollar from January 2024 to June 2026
• A 5% increase in operating costs from January 2024 to June
2026
• Combined sensitivity: prices down 5% and ZAR stronger by 5%
January 2025 to June 2026 (effectively resulting in opex and total capex up
by 5% in USD terms)
Except for the liquidity covenant measured at June 2025, the forecast covenant
measurements for the base case and each of the sensitised cases do not project
any breaches for any of the covenants during the 18-month review period to
June 2025. The liquidity covenant for the base and each of the sensitised
cases projects a breach in June 2025 because of the liquidity covenant being a
12 month forward looking covenant. Consequently, the liquidity covenant review
period extends to June 2026. The projected liquidity covenant breach in June
2025 is due to both the RCF and the 2L debt currently maturing and assumed to
be settled in January and March 2026 respectively, thereby indicating a
liquidity breach during Q1 CY 2026. As previously stated, the Group may have
to refinance the full outstanding 2L debt of c. US$250 million, which is
likely to be pursued prior to the debt becoming a current liability in March
2025. The Group remains confident in its ability to refinance its debt on the
back of the underlying operational cashflow generation, as well as strong net
cashflow generation projection post the deferred peak extension project
capital period of FY 2025 to FY 2027. The outcome of a refinance, however,
remains outside of the Group's control and therefore constitutes a material
uncertainty. If the Group is unable to successfully refinance the existing
debt on account of the willingness of existing Noteholders and/or the terms
and conditions of such a refinance or new debt instrument, the Group may have
to resort to an equity raise or asset sales to settle its obligations. The
Group is of the view that a successful equity raise would be supported by the
long-term resource potential at both Cullinan Mine and Finsch, extending their
current mine plans to mid-2030s and beyond.
The Board is of the view that despite the current market volatility being
experienced, the supply / demand fundamentals of the diamond market remain
intact.
Based on its assessment of the forecasts, principal risks and uncertainties
and mitigation actions considered available to the Group, including steps
already undertaken or planned to be undertaken by management to improve
resilience in the business, in the event of downside sensitivities, the Board
confirms that it is satisfied that the Group will be able to continue to
operate and meet its liabilities as they fall due over the next 18-month
period.
However, the Board recognises the risks associated with persisting market
volatility which may lead to lower diamond prices for longer, as well as the
risk to refinancing the Group's 2L debt, given this remains outside of the
Group's control. These factors indicate the existence of material
uncertainties which may cast significant doubt on the Group's ability to
continue as a going concern and therefore it may be unable to realise its
assets and discharge its liabilities in the normal course of business. The
Financial Statements do not include the adjustments that would result if the
Group were unable to continue as a going concern.
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 have been disclosed in the
Group's annual financial statements for the year ended 30 June 2023. Except as
disclosed under property, plant and equipment, there have been no material
changes to the significant assumptions and judgements in the 6-month period
ended 31 December 2023.
3. DIVIDENDS
No dividends have been declared in respect of the current Period under review
(30 June 2023: US$nil and 31 December 2022: US$nil).
4. SEGMENTAL INFORMATION
Segment information is presented in respect of the Group's operating and
geographical segments:
· Mining - the extraction and sale of rough diamonds from mining
operations in South Africa and Tanzania.
· Corporate - administrative activities in the United Kingdom.
· Beneficiation - beneficiation activities in South Africa.
Segments are based on the Group's management and internal reporting structure.
Management reviews the Group's performance by reviewing the results of the
mining activities in South Africa, Tanzania and reviewing the results of the
corporate administration expenses in the United Kingdom. Each segment derives,
or aims to derive, its revenue from diamond mining and diamond sales, except
for the corporate and administration cost centre.
Segment results, assets and liabilities include items directly attributable to
a segment, as well as those that can be allocated on a reasonable basis.
Segment results are calculated after charging direct mining costs,
depreciation and other income and expenses. Unallocated items comprise mainly
interest-earning assets and revenue, interest-bearing borrowings and expenses
and corporate assets and expenses. Segment capital expenditure is the total
cost incurred during the Period to acquire segment assets that are expected to
be used for more than one period. Eliminations comprise transactions between
Group companies that are cancelled on consolidation. The results are not
materially affected by seasonal variations. Revenues are generated from
tenders held in South Africa and Antwerp for external customers from various
countries.
4. SEGMENTAL INFORMATION (continued)
Operating segments South Africa - Mining activities Tanzania -Mining activities United Kingdom South Africa
Cullinan Mine Finsch Koffiefontein(5) Williamson Corporate and treasury Beneficiation(3) Inter-segment Consolidated
US$ million
(6 month period ended 31 December 2023) 1 July 2023 - 1 July 2023 - 1 July 2023 - 1 July 2023 - 1 July 2023 - 1 July 2023 - 1 July 2023 - 1 July 2023 -
31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December
2023 2023 2023 2023 2023 2023 2023 2023
Revenue 96.5 67.0 - 24.3 - - - 187.8
Segment result¹ 12.1 (6.4) - (4.3) (7.9) - (0.1) (6.6)
Impairment charge - operations - - - - - - - -
Impairment reversal - other receivables - - - 0.2 (0.2) - - -
Other direct income 0.7 - - 0.2 0.4 - - 1.3
Operating profit / (loss)² 12.8 (6.4) - (3.9) (7.7) - (0.1) (5.3)
Financial income 8.7
Financial expense (19.3)
Income tax charge 4.2
Profit on discontinued operation including associated impairment charges (net 0.4
of tax)(5)
Non-controlling interest 2.2
Profit attributable to equity holders of the parent company (9.1)
Segment assets 426.5 245.8 1.2 83.5 3,140.1 5.8 (3,008.3) 894.6
Segment liabilities 351.3 147.7 52.4 83.4 2,047.2 6.4 (2,104.2) 584.2
Capital expenditure 27.3 15.9 - 6.6 0.7 - - 50.5
((1))The Group's revenue of US$187.8 million comprises the sale of rough
diamonds and polished stones.
((2))Total depreciation of US$40.4 million included in the segmental result
comprises depreciation incurred at the Cullinan Mine US$22.5 million, Finsch
US$15.5 million, Koffiefontein US$nil, Williamson US$2.0 million and Corporate
and treasury US$0.4 million.
((3))Operating loss is equivalent to revenue of US$187.8 million less total
costs of US$193.1 million as disclosed in the Consolidated Income Statement.
((4))The beneficiation segment represents Tarorite, a cutting and polishing
business in South Africa, which can on occasion cut and polish select rough
diamonds.
((5))The operating results in respect of Koffiefontein have been reflected
within profit on discontinued operation (refer to note 11).
4. SEGMENTAL INFORMATION (continued)
Operating segments South Africa - Mining activities Tanzania -Mining activities United Kingdom South Africa
Cullinan Mine Finsch Koffiefontein(4) Williamson Corporate and treasury Beneficiation(3) Inter-segment Consolidated
US$ million
(6 month period ended 31 December 2022) 1 July 2022 - 1 July 2022 - 1 July 2022 - 1 July 2022 - 1 July 2022 - 1 July 2022 - 1 July 2022 - 1 July 2022 -
31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December
2022 2022 2022 2022 2022 2022 2022 2022
Revenue 104.1 55.3 - 49.1 - 0.5 (0.5) 208.5
Segment result¹ 42.8 10.1 - (9.4) (7.6) 0.5 (1.7) 34.7
Impairment charge - other receivables - - - (3.5) - - - (3.5)
Other direct income - 0.5 - 0.1 0.5 - - 1.1
Operating profit / (loss)² 42.8 10.6 - (12.8) (7.1) 0.5 (1.7) 32.3
Financial income 23.4
Financial expense (52.9)
Income tax charge (14.2)
Loss on discontinued operation including associated impairment charges (net of (6.2)
tax)(5)
Non-controlling interest (6.1)
Profit attributable to equity holders of the parent company (23.7)
Segment assets 446.7 203.2 4.7 124.5 3,189.5 5.7 (3,037.8) 936.5
Segment liabilities 343.3 117.4 22.6 64.4 2,097.5 6.5 (2,148.6) 503.1
Capital expenditure 23.6 23.1 0.3 3.2 2.0 - - 52.2
((1))Total depreciation of US$40.5 million included in the segmental result
comprises depreciation incurred at the Cullinan Mine US$23.0 million, Finsch
US$9.1 million, Koffiefontein US$0.1 million, Williamson US$8.0 million and
Corporate and treasury US$0.3 million.
((2))Operating profit is equivalent to revenue of US$208.5 million less total
costs of US$176.2 million as disclosed in the condensed Consolidated Income
Statement.
((3))The beneficiation segment represents Tarorite, a cutting and polishing
business in South Africa, which can on occasion cut and polish select rough
diamonds.
((4))The operating results in respect of Koffiefontein have been reflected
within loss on discontinued operation (refer to note 11).
4. SEGMENTAL INFORMATION (continued)
Operating segments South Africa - Mining activities Tanzania -Mining activities United Kingdom South Africa
Cullinan Mine Finsch Koffiefontein(5) Williamson Corporate and treasury Beneficiation(4) Inter-segment Consolidated
US$ million
(12 month period ended 30 June 2023) 2023 2023 2023 2023 2023 2023 2023 2023
Revenue(1) 182.9 93.3 - 49.1 - 0.2 (0.2) 325.3
Segment result(2) 49.1 10.1 - (29.2) (23.2) (0.1) (1.9) 4.8
Impairment reversal / (charge) - operations (1.5) 52.7 - (31.2) - - - 20.0
Impairment charge - other receivables - - - (3.9) (1.0) - - (4.9)
Other direct income - - - (0.6) 1.0 - - 0.4
Operating profit / (loss)(3) 47.6 62.8 - (64.9) (23.2) (0.1) (1.9) 20.3
Financial income 11.1
Financial expense (70.8)
Gain on extinguishment of Notes net of unamortised costs 0.6
Income tax charge (23.1)
Loss on discontinued operation including associated impairment charges (net of (40.5)
tax)(5)
Non-controlling interest (2.9)
Profit attributable to equity holders of the parent company (105.3)
Segment assets 418.6 248.9 0.3 85.0 3,018.6 5.5 (2,916.1) 860.8
Segment liabilities 335.6 143.1 50.1 84.1 1,946.3 6.2 (2,021.4) 544.0
Capital expenditure 52.8 43.2 0.3 19.3 1.8 - - 117.4
((1))The Group's revenue of US$325.3 million comprises the sale of rough
diamonds and polished stones. The sale of rough diamonds contributed US$323.7
million, with polished stones contributing US$0.2 million and US$1.4 million
from profit share agreements. The sale of rough diamonds for Koffiefontein of
US$4.4 million is included under loss on discontinued operation.
((2))Total depreciation of US$82.5 million included in the segmental result
comprises depreciation incurred at the Cullinan Mine US$53.5 million, Finsch
US$20.2 million, Williamson US$8.2 million and Corporate and treasury US$0.6
million.
((3))Operating profit is equivalent to revenue of US$325.3 million less total
costs of US$305.0 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.
((5))The operating results in respect of Koffiefontein have been reflected
within loss on discontinued operation (refer to note 11).
5. PROPERTY, PLANT AND EQUIPMENT
The net movement in property, plant and equipment for the Period is an
increase of US$25.5 million (30 June 2023: US$35.1 million decrease and 31
December 2022 US$13.0 million decrease). This is primarily as a result of:
1 July 2023 - 1 July 2022 - 1 July 2022 -
US$ million 31 December 2023 31 December 2022 30 June
2023
As at 1 July 598.1 633.2 633.2
Foreign exchange movement 15.4 (24.8) (82.4)
Additions 50.5 51.9 117.4
Change in rehabilitation assets - 0.7 (5.0)
Depreciation (40.4) (40.5) (82.5)
Impairments - (0.3) 19.2
Disposals - - (1.8)
As at Period end 623.6 620.2 598.1
Group impairment assumptions for 31 December 2023 and 30 June 2023
At 30 June 2023 the Group reviewed the carrying value of its operational
assets for indicators of impairment, and accounted for specific impairment
provisions and reversals. The assumptions in exercising its judgement related
to future exchange rates, rough diamond prices, contribution from Exceptional
Diamonds, volumes of production, ore reserves and resources included in the
current mine plans, feasibility studies, future development and production
costs and macroeconomic factors such as inflation and discount rates. Refer to
the annual financial statements for the year ended 30 June 2023 for details of
the key inputs and sensitivities. For the six months ended 31 December 2023
the assumptions remained materially unchanged, except for the following items
which did not have an impact on previously recognised impairments:
Key assumptions Explanation
Current mine plan and recoverable value of reserves and resources Economically recoverable reserves and resources are based on Management's
expectations based on the availability of reserves and resources at mine sites
and technical studies undertaken in house and by third party specialists. The
reserves, which informed the current Board-approved mine plans for the
operations, are unchanged other than factoring in depletion through mining
activities during H1 FY 2024.
Following the deferrals of certain capital project announced during November
2023, certain replanning work is currently ongoing to finalise the revised and
optimised mine plans for future Board approval. In the absence of Board
approval for the revised and optimised mine plans, Management prepared
best-estimate mine plans, based on their expectations, current information and
projections, to inform revised production, capital and operating expenditure
profiles for mine plans for these interim results. It is expected that the FY
2024 year-end reviews will be based on Board-approved plans, following the
finalisation of the replanning work during H2 FY 2024.
Diamond prices The short-medium term diamond prices used in the impairment test have been set
with reference to recently achieved pricing, on-mine product mix and market
trends, while long-term diamond price escalators are informed by industry
views of long-term market supply/demand fundamentals. For Finsch and WDL,
short-term pricing is aligned to recent prices achieved, with medium term
price increases assumed as both the market & product mixes normalise to
pre-moratorium levels. No short-medium price increases have been assumed for
Cullinan Mine, given its consistent product mix, and remains aligned to
pricing assumptions at FY23 year-end. 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, continue to
represent a critical judgement.
The 31 December 2023 impairment testing models' starting price assumptions
have been adjusted to reflect the pricing achieved during the six months ended
31 December 2023. The long-term models incorporate normalised diamond price
escalation of 1.9% (30 June 2023: 1.9%) above a long-term US inflation rate of
2.0% (30 June 2023: 2.0%) per annum from FY 2025 onwards. The Group continues
to exclude any contribution from Exceptional Stones as part of business
planning or price assumptions.
6. LOANS AND BORROWINGS
US$ million 31 December 31 December 30 June
2023 2022 2023
Non-current liabilities
Senior secured second lien notes 224.1 221.1 222.4
Senior secured lender debt facilities(1) 46.5 - -
270.6 221.1 222.4
Current liabilities
Senior secured second lien notes 25.2 20.6 25.1
Total loans and borrowings 295.8 241.7 247.5
(1.)In July and August 2023, the Group drew down, in total, an amount of
ZAR850 million (US$46.5 million) from the ZAR1.0 billion Revolving Credit
Facility ("RCF").
In December 2023, the Company announced that Absa Bank approved the increase
of the First Lien Revolving Credit Facility by ZAR750 million, bringing the
total commitments under the facility to ZAR1.75 billion (c. US$93 million).
This increase to the facility is now fully available following execution and
completion of the associated amendment agreement, effective 15 February 2024.
The amended facility's existing covenants, margin, fees, and maturity date
remain unchanged. A total of ZAR850 million (US$46.5 million) is currently
drawn leaving a further balance of ZAR900 million (US$49.2 million) expected
to be available for drawdown under the upsized facility.
The Group's debt and hedging facilities are detailed in the table below:
Senior Lender Debt Facilities 31 December 31 December 30 June
2023 2022 2023
Facility amount Facility amount Facility amount
ZAR Debt Facilities:
ZAR Lenders RCF ZAR1.0 billion ZAR1.0 billion ZAR1.0 billion
ZAR Lenders Term loan ZAR nil ZAR nil ZAR nil
Absa/RMB - FX Hedging facilities ZAR300 million ZAR300 million ZAR300 million
Covenant ratios
As part of the RCF entered into with Absa Bank, the Company is required:
· to maintain a Net Debt : Adjusted 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; and
· to maintain minimum 12 month forward looking liquidity requirement that
consolidated cash and cash equivalents shall not fall below US$20.0 million.
7. COMMITMENTS
As at 31 December 2023, the Company had committed to future capital
expenditure totalling US$42.9 million (30 June 2023: US$102.5 million and 31
December 2022: US$55.1 million).
8. RELATED PARTY TRANSACTIONS
The Group's related party BEE partners, Kago Diamonds (Pty) Ltd ("Kago
Diamonds") and its gross interests in the mining operations of the Group are
disclosed in the table below.
Mine Partner and respective interest Partner and respective interest Partner and respective interest
as at 31 December 2023 (%) as at 31 December 2022 (%) as at 30 June 2023 (%)
Cullinan Kago Diamonds (14%) Kago Diamonds (14%) Kago Diamonds (14%)
Finsch Kago Diamonds (14%) Kago Diamonds (14%) Kago Diamonds (14%)
Koffiefontein Kago Diamonds (14%) Kago Diamonds (14%) Kago Diamonds (14%)
The Itumeleng Petra Diamonds Employee Trust ("IPDET") holds a 12% interest in
each of the Group's South African operations, with Petra's commercial BEE
Partners holding the remaining 14% interest through their respective
shareholdings in Kago Diamonds, in which Petra has a 31.46% interest. The
effective interest percentages attributable to the remaining operations for
the Group's shareholders is 78.4%.
The non-current loans receivable, non-current loans payable, finance income
and finance expense, due from and due to the related party BEE partners and
other related parties, including dividends paid are disclosed in the table
below:
US$ million 31 December 2023 31 December 2022 30 June 2023
Non-current receivable
Kago Diamonds(1) 23.2 21.8 21.1
Current trade and other receivables
KEM JV(2) 2.7 3.3 2.7
Impairment provision(2) (2.7) (2.0) (2.6)
- 1.3 0.1
1 July 2023 - 1 July 2022 - 1 July 2022 -
31 December 2023 31 December 2022 30 June 2023
Finance income
Kago Diamonds 1.3 1.0 2.4
Dividend paid
Kago Diamonds(3) 0.9 1.2 1.1
((1)) The movement in the Kago Diamonds receivable of US$2.1 million (30 June
2023: US$4.5 million and 31 December 2022: US$4.8 million) is attributable to
amounts advanced to Kago Diamonds during the Period totalling US$0.1 million
(30 June 2023: US$3.5 million repayments and 31 December 2022: US$3.5 million
repayments received from Kago Diamonds), a foreign exchange increase of US$0.6
million (30 June 2023: US$3.0 million decrease and 31 December 2022: US$1.2
million decrease) and accrued interest of US$1.3 million (30 June 2023: US$2.4
million and 31 December 2022: US$1.2 million).
((2)) Included in current trade and other receivables are amounts outstanding
from KEM JV in respect of a working capital facility and equipment finance
facility of US$nil (30 June 2023: US$1.0 million and 31 December 2022: US$1.3
million). During the 6 months ended 31 December 2023 the Group received
payments of US$0.1 million (30 June 2023: US$0.5 million and 31 December 2022:
US$0.3 million) from the KEM JV as settlement of the outstanding purchase
consideration. 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$2.7 million (30 June 2023: US$2.6
million and 31 December 2022: US$2.0 million).
((3)) Cullinan declared and paid a dividend out of profits generated in the
financial year ended 30 June 2023 to its shareholders. The BEE partners
received a gross dividend of US$2.5 million (30 June 2023: US$9.6 million and
31 December 2022: US$9.8 million). An amount of US$0.3 million (30 June 2023:
US$6.1 million and 31 December 2022: US$6.3 million) was used by BEE partners
to repay a portion of their loans owing to the Group and a net cash payment of
US$1.8 million (30 June 2023: US$2.0 million and 31 December 2022: US$2.2
million) was received by the BEE partners, comprising Kago US$0.9 million (30
June 2023: US$1.1 million and 31 December 2022: US$1.2 million) and IPDET
US$0.9 million (30 June 2023: US$0.9 million and 31 December 2022: US$1.0
million).
9. EARNINGS PER SHARE
Continuing operations Discontinued operation Total Continuing operations Discontinued operation Total Continuing operations Discontinued operation
1 July 2023 - 31 December 2023 1 July 2023 - 31 December 2023 1 July 2023 - 31 December 2023 1 July 2022 - 31 December 2022 1 July 2022 - 31 December 2022 1 July 2023 - 31 December 2023 1 July 2022 - 30 June 2023 1 July 2022 - 30 June 2023 Total
1 July 2022 - 30 June 2023
Numerator US$ million US$ million US$ million US$ million US$ million US$ million US$ million US$ million US$ million
Loss profit for the Period (9.5) 0.4 (9.1) (19.1) (4.6) (23.7) (74.0) (31.3) (105.3)
Denominator Shares Shares Shares Shares Shares Shares Shares Shares Shares
Weighted average number of ordinary shares used in basic EPS
Brought forward 194,201,785 194,201,785 194,201,785 194,201,785 194,201,785 194,201,785 194,201,785 194,201,785 194,201,785
Carried forward 194,201,785 194,201,785 194,201,785 194,201,785 194,201,785 194,201,785 194,201,785 194,201,785 194,201,785
Shares Shares Shares Shares Shares Shares Shares Shares Shares
Dilutive effect of potential ordinary shares - - - - - - - - -
Weighted average number of ordinary shares in issue used in diluted EPS 194,201,785 194,201,785 194,201,785 194,201,785 194,201,785 194,201,785 194,201,785 194,201,785
194,201,785
US cents US cents US cents US cents US cents US cents US cents US cents US cents
Basic (loss) / profit per share - US cents (4.87) 0.18 (4.69) (9.86) (2.37) (12.23) (38.10) (16.11) (54.21)
Diluted (loss) / profit per share - US cents (4.87) 0.18 (4.69) (9.86) (2.37) (12.23) (38.10) (16.11) (54.21)
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 2023: nil and 31 December 2022: nil).
10. 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.
Continuing operations Discontinued operation Total Continuing operations Discontinued operation Total Continuing operations Discontinued operation
1 July 2023 - 31 December 2023 1 July 2023 - 31 December 2023 1 July 2023 - 31 December 2023 1 July 2022 - 31 December 2022 1 July 2022 - 31 December 2022 1 July 2023 - 31 December 2023 1 July 2022 - 30 June 2023 1 July 2022 - 30 June 2023 Total
1 July 2022 - 30 June 2023
Numerator US$ million US$ million US$ million US$ million US$ million US$ million US$ million US$ million US$ million
(Loss) / profit for the Year (9.5) 0.4 (9.1) (19.1) (4.6) (23.7) (74.0) (31.3) (105.3)
Net unrealised foreign exchange loss* (0.5) - (0.5) 14.0 - 14.0 29.3 - 29.3
Taxation credit on unrealised foreign exchange loss* 0.2 - 0.2 (0.1) - (0.1) (0.9) - (0.9)
Present value discount - Williamson VAT receivable (0.2) - (0.2) 3.5 - 3.5 3.9 - 3.9
Impairment (reversal) / charge - operations* - - - 0.2 0.2 (8.9) 0.6 (8.3)
Impairment (reversal) / charge - other receivables 0.2 - 0.2 - - - 1.0 - 1.0
Taxation charge on impairment reversal* - - - - - - 10.8 - 10.8
Transaction costs and acceleration of unamortised costs on Notes and - - - 9.0 - 9.0 9.0 9.0
restructured bank facilities
-
Gain on extinguishment of Notes net of unamortised costs - - - - - - (0.6) - (0.6)
10. ADJUSTED EARNINGS PER SHARE (non-GAAP measure) (continued)
Continuing operations Discontinued operation Total Continuing operations Discontinued operation Total Continuing operations Discontinued operation
1 July 2023 - 31 December 2023 1 July 2023 - 31 December 2023 1 July 2023 - 31 December 2023 1 July 2022 - 31 December 2022 1 July 2022 - 31 December 2022 1 July 2023 - 31 December 2023 1 July 2022 - 30 June 2023 1 July 2022 - 30 June 2023 Total
1 July 2022 - 30 June 2023
Numerator US$ million US$ million US$ million US$ million US$ million US$ million US$ million US$ million US$ million
Williamson tailings facility - remediation costs - - - 5.9 - 5.9 10.7 - 10.7
Williamson tailings facility - accelerated depreciation - - - 5.2 - 5.2 5.2 - 5.2
Human rights IGM claims provision and transaction costs / (reversal) of 0.6 - 0.6 - - - 8.5
settlement agreement
8.5 -
Inventory Impairment (WDL blocked parcel 1 Inventory and related receivable - - - - - - (0.1) - (0.1)
adjustment)
Movement in provision for unsettled and disputed tax claims - - - - - - 0.3 - 0.3
Adjusted loss for the Period attributable to parent (9.2) 0.4 (8.8) 18.4 (4.4) 14.0 (5.8) (30.7) (36.5)
*Portion attributable to equity shareholders of the Company
10. ADJUSTED EARNINGS PER SHARE (non-GAAP measure) (continued)
Continuing operations Discontinued operation Total Continuing operations Discontinued operation Total Continuing operations Discontinued operation
1 July 2023 - 31 December 2023 1 July 2023 - 31 December 2023 1 July 2023 - 31 December 2023 1 July 2022 - 31 December 2022 1 July 2022 - 31 December 2022 1 July 2023 - 31 December 2023 1 July 2022 - 30 June 2023 1 July 2022 - 30 June 2023 Total
1 July 2022 - 30 June 2023
Denominator Shares Shares Shares Shares Shares Shares Shares Shares Shares
Weighted average number of ordinary shares used in basic EPS
As at 1 July 194,201,785 194,201,785 194,201,785 194,201,785 194,201,785 194,201,785 194,201,785 194,201,785 194,201,785
Effect of shares issued during the Period - - - - - - - - -
Dilutive effect of potential ordinary shares - - - - - - - - -
Weighted average number of ordinary shares in issue used in diluted EPS 194,201,785 194,201,785 194,201,785 194,201,785 194,201,785 194,201,785 194,201,785 194,201,785 194,201,785
US cents US cents US cents US cents US cents US cents US cents US cents US cents
Adjusted basic profit / (loss) per share - US cents (4.72) 0.18 (4.54) 9.46 (2.27) 7.19 (2.96) (15.78) (18.74)
Adjusted diluted profit / (loss) per share - US cents (4.72) 0.18 (4.54) 9.46 (2.27) 7.19 (2.96) (15.78) (18.74)
11. DISCONTINUED OPERATIONS
Management took the decision during the prior year to put the Koffiefontein
mine on care and maintenance. By the end of the prior year, the Company had
started the process of winding-up the operation and, after completing a
significant restructuring of the staff complement at the operation, was in the
process of finalising workstreams to meet its rehabilitation obligations and
is in discussions with the DMRE to formalise the ultimate closure of the
operation.
A discontinued operation is a component of the entity that has been disposed
of and is classified as held for sale or abandoned (as the Koffiefontein
assets are currently not undergoing a formal sales process, it met the
criteria of IFRS 5 and was classified as a discontinued operation) and that
represents a separate major line of business or geographical area of
operation, is part of a single co-ordinated plan to dispose of such a line of
business or area of operations, or is a subsidiary acquired exclusively with a
view to resale. The results of discontinued operations are presented
separately in the statement of profit or loss.
As the potential sale of the Koffiefontein operations have not sufficiently
advanced at the reporting date, the assets and liabilities did not yet meet
the requirements to be classified as held-for-sale.
Results of Koffiefontein:
1 July 2023- 1 July 2022- 1 July 2022-
US$ million 31 December 31 December 2022 30 June
2023
2023
Revenue - 3.6 4.4
Cost of sales 0.3 (12.0) (24.5)
Gross loss 0.3 (8.4) (20.1)
Impairment charge - property, plant and equipment - (0.3) (0.8)
Provisions for closure - - (22.0)
Financial income 0.1 2.5 2.4
Loss before tax 0.4 (6.2) (40.5)
Income tax charge - - -
Net loss for the Year 0.4 (6.2) (40.5)
Attributable to:
Equity holders of the parent 0.4 (4.6) (31.3)
Non-controlling interest - (1.6) (9.2)
0.4 (6.2) (40.5)
12. ANNOUNCEMENTS AND SUBSEQUENT EVENTS
Directorate change - On 15 September 2023, the Company announced that Johannes
Bhatt would retire from the Board as Non-Executive Director at the conclusion
of the Company's Annual General Meeting on 14 November 2023.
Improved resilience through capital deferrals - On 1 November 2023, the
Company announced steps taken to improve financial flexibility under the
prevailing diamond market conditions. Certain amendments and deferrals to
capital programmes were approved and were expected to reduce the Group's
extension capital expenditure for the financial year ending 30 June 2024 by up
to US$65 million. Further to the capital deferrals, the Company identified
operating and group cost savings of US$7 - 10 million against the FY 2024
guidance.
Directorate change - On 13 November 2023, the Company announced that the
Chair, Peter Hill CBE, would not offer himself for re-election at the
Company's forthcoming Annual General Meeting and consequently retired from the
Board at the conclusion of the Company's Annual General Meeting held on 14
November 2023. The Board appointed Varda Shine, Senior Independent Director,
as Chair of the Company with effect from the conclusion of the Annual General
Meeting.
Approval of increase in Revolving Credit Facility - On 8 December 2023, the
Company announced that Absa Bank had approved to increase its commitments
under the ZAR1 billion (c. US$53 million) First Lien Revolving Credit Facility
by up to ZAR750 million (c. US$40 million). The increase was subject to
completion of an amendment to the existing facility agreement (which has since
been executed and completed), with the existing covenants, margin, fees, and
maturity date remaining unchanged
Potential sale of Koffiefontein - On 13 December 2023, the Company announced
that it has entered into a non-binding term sheet on an exclusive basis with
an interested party for the potential sale of the Koffiefontein Diamond Mine
in South Africa. Any sale would be subject to obtaining the consent of the
Department of Minerals and Energy in accordance with section 11 of South
Africa's Mineral and Petroleum Resources Development Act.
Board changes - On 20 December 2023, the Company announced a series of changes
to the Board.
1. Jon Dudas stepped down from the Board in his role as independent
NED (and therefore as a member of the Company's Audit & Risk,
Remuneration, Nomination and Investment Committees) with effect from 17
February 2024 and assumed the role of Board advisor for 6 months until 17
August 2024.
2. Alex Watson stepped down from the Board in her role as a
non-independent NED (and therefore as a member of the Company's Sustainability
and Investment Committees) also with effect from 17 February 2024, and assumed
the role of Board Observer with effect from this date.
3. José Manuel Vargas was appointed as a non-independent NED of the
Company, effective 1 January 2024. He is a significant shareholder of the
Company.
4. New Safety, Health and Sustainability Committee: with effect from
1 January 2024, the Company's Sustainability and Health & Safety
Committees were merged to form a single Safety, Health & Sustainability
Committee that is Chaired by Lerato Molebatsi, the previous Sustainability
Committee Chair. Members of this Committee are Lerato Molebatsi (Committee
Chair), Varda Shine (Board Chair), Richard Duffy (CEO) and Bernie Pryor (SID
and previous Health & Safety Committee Chair).
5. Remuneration Committee Chair: following the Board changes that
took effect immediately after the Company's Annual General Meeting on 14
November 2023, which saw Varda Shine appointed as Chair and Bernie Pryor as
Senior Independent Director, Bernie Pryor became Chair of the Remuneration
Committee, with Varda resigning from this role, effective 1 January 2024.
6. Chair and NED fees: the Chair's fee and the NED fees (including
the SID fee, Committee Chair fees and basic Non-Executive Director fees) were
all reduced by 5%, with effect from 1 January 2024, apart from the
Sustainability, Health & Safety Committee Chair fee which was slightly
increased to match the Audit & Risk and Remuneration Committee Chair fees
and reflect the increased responsibilities of the Safety, Health &
Sustainability Committee.
RESPONSIBILITY STATEMENT
We confirm that to the best of our knowledge:
a) the Condensed Financial Statements have been prepared in accordance
with European Union-adopted IAS 34 Interim Financial Reporting, and give a
true and fair view of the assets, liabilities, financial position and profit
of the Group; and
b) the Interim Management Report includes a fair review of the
information required by the FCA's Disclosure and Transparency Rules (DTR 4.2.7
R and 4.2.8 R).
By order of the Board
Richard Duffy
Chief Executive
Officer
19 February 2024
INDEPENDENT REVIEW REPORT TO PETRA DIAMONDS LIMITED
Conclusion
Based on our review, nothing has come to our attention that causes us to
believe that the condensed set of financial statements in the half-yearly
financial report for the six months ended 31 December 2023 is not prepared, in
all material respects, in accordance with International Accounting Standard
34, as adopted by the European Union, and the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct Authority.
We have been engaged by the company to review the condensed set of financial
statements in the half-yearly financial report for the six months ended 31
December 2023 which comprises Condensed Consolidated Income Statement,
Condensed Consolidated Statement of Comprehensive Income, Condensed
Consolidated Statement of Financial Position, Condensed Consolidated Statement
of Cash Flows, Condensed Consolidated Statement of Changes in Equity and Notes
to the Condensed Consolidated Interim Financial Statements.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" ("ISRE (UK) 2410"). A review of interim
financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would become aware
of all significant matters that might be identified in an audit. Accordingly,
we do not express an audit opinion.
As disclosed in Note 2, the annual financial statements of the group are
prepared in accordance with International Financial Reporting Standards
(IFRSs) as adopted by the European Union. The condensed set of financial
statements included in this half-yearly financial report has been prepared in
accordance with International Accounting Standard 34, "Interim Financial
Reporting", as adopted by the European Union.
Material Uncertainty related to going concern
We draw attention to Note 2, which indicates that persisting market volatility
may lead to lower diamond prices for longer, as well as the refinancing of the
Group's 2L debt which is outside of the Group's control.
As stated in Note 2, these events or conditions indicate that material
uncertainties exist that may cast significant doubt on the Group's ability to
continue as a going concern. Our conclusion is not modified in respect of this
matter.
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the directors have
inappropriately adopted the going concern basis of accounting or that the
directors have identified material uncertainties relating to going concern
that are not appropriately disclosed.
This conclusion is based on the review procedures performed in accordance with
ISRE (UK) 2410, however future events or conditions may cause the group to
cease to continue as a going concern.
Responsibilities of directors
The directors are responsible for preparing the half-yearly financial report
in accordance with the Disclosure Guidance and Transparency Rules of the
United Kingdom's Financial Conduct Authority.
In preparing the half-yearly financial report, the directors are responsible
for assessing the company's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the directors either intend to
liquidate the company or to cease operations, or have no realistic alternative
but to do so.
Auditor's responsibilities for the review of the financial information
In reviewing the half-yearly report, we are responsible for expressing to the
Company a conclusion on the condensed set of financial statement in the
half-yearly financial report. Our conclusion, including our Conclusions
Relating to Going Concern, are based on procedures that are less extensive
than audit procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
Our report has been prepared in accordance with the terms of our engagement to
assist the Company in meeting the requirements of the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct Authority and for
no other purpose. No person is entitled to rely on this report unless such a
person is a person entitled to rely upon this report by virtue of and for the
purpose of our terms of engagement or has been expressly authorised to do so
by our prior written consent. Save as above, we do not accept responsibility
for this report to any other person or for any other purpose and we hereby
expressly disclaim any and all such liability.
BDO LLP
Chartered Accountants
London, UK
19 February 2024
BDO LLP is a limited liability partnership registered in England and Wales
(with registered number OC305127).
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