Evander trending higher

Pan African Resources 10 December 2015 Update

Pan African Resources

Evander trending higher

H116 preview

Metals & mining

10 December 2015

Price

7.4p

Market cap

£136m

US$1.5168/£

ZAR21.5487/£

ZAR14.2067/US$

Net debt (£m) at end June 2015

18

Shares in issue

1,831.5m

Free float

74%

Code

PAF

Primary exchange

AIM/JSE

Secondary exchange

N/A

Share price performance

%

1m

3m

12m

Abs

(7.8)

2.7

(36.3)

Rel (local)

(5.8)

4.1

(33.7)

52-week high/low

13.25p

6.3p

Business description

Pan African (PAF) has five major assets in South Africa: Barberton Mines (target output 95koz Au pa), the Barberton Tailings Retreatment Project (20koz), Evander Gold Mines (95koz), the Evander Tailings Retreatment Project (ETRP 10koz + expansion potential) and Phoenix Platinum (12koz).

Next events

LSE ex-dividend date

10 December

Record date

11 December

Dividend payment date

24 December

H116 results

Feb/Mar 2016

Analyst

Charles Gibson

+44 (0)20 3077 5724

Pan African Resources is a research client of Edison Investment Research Limited

As is now virtually a semi-annual event, Pan African (PAF) has released a trading statement under paragraph 3.4 (b) of the JSE listing requirements stating that its H116 results will differ by at least 20% from H115. In this case, PAF has indicated that headline EPS (HEPS) will be at least 65% higher than the 0.31p per share reported in H115 in sterling terms – ie at least 0.51p/share including an estimated 0.12p in exceptional hedging profits. The announcement broadly confirms our estimates for both the half and full years and suggests that the expected unit cost reductions and head grade increases at Evander in particular are indeed materialising.

Year end

Revenue (£m)

PBT*
(£m)

EPS*
(p)

DPS
(p)

P/E
(x)

Yield
(%)

06/14

154.2

34.0

1.46

0.82

5.1

11.1

06/15

140.4

16.0

0.64

0.54

11.6

7.3

06/16e

157.6

38.3

1.43

0.54

5.2

7.3

06/17e

202.1

91.0

3.56

0.82

2.1

11.1

Note: *PBT and EPS are normalised, excluding intangible amortisation and exceptional items.

Cash flows positive and net debt contained

In addition to its HEPS guidance, PAF has reported that its net debt position is ZAR70m at present – equivalent to £3.2m before payment of the group’s final dividend of £9.9m, suggesting ex-dividend net debt of £13.1m and thereby implying c £4.9m of cash inflows to date in FY16, or c £5.9-7.4m pro-rata for H116. In this respect, PAF’s H2 is anticipated to demonstrate a material improvement over H1, such that net debt will be well contained within the limits of its ZAR800m (expandable) revolving credit facility, even after payment of an FY16 dividend and ZAR200m consideration for Uitkomst (excluded from our forecasts).

Valuation: 25p at long-term gold or 12.5p at spot gold

Our H116 headline EPS forecast of 0.44p is consistent with the minimum of 0.51p implied by PAF’s trading statement if 0.12p/share of hedging profits are also excluded. This produces confidence in our FY16 HEPS forecast of 1.43p/share (cf a consensus of 1.55p, within a range of 0.36-2.00p. Over the life of operations, our absolute value of PAF is 25p, based on the present value of our estimated maximum potential stream of dividends payable to shareholders over the life of its mine operations (applying a 10% discount rate). The above valuation assumes that the grade profile at Evander continues to increase to in excess of 7.0g/t from FY17. It also assumes an average gold price of US$1,454/oz for FY17-39. If the gold price remains at US$1,070/oz in real terms, however, our absolute value of PAF halves from 25p to 12.5p (all other things being equal). Note that, in this case, our full-year HEPS estimate declines from 1.43p to 0.87p – in which case PAF will probably still have to release a paragraph 3.4(b) statement towards the end of the financial year. In the meantime, Pan African remains consistently cheaper than its South African peers (on both consensus and our forecasts) in terms of yield (100% of instances considered), P/E ratio (100% of instances considered) and EV/EBITDA (at least 87.5% of instances considered).

FY15 review and FY16 forecasts

Considered on a standalone basis, Pan African’s FY15 results were characterised by a large increase in tonnes milled and processed, primarily as a result of a maiden contribution from the ETRP, thereby firmly establishing it as a retreatment operator as well as an underground miner. In local currency terms, the gold price was higher in H215 cf H1, owing to the depreciation of the rand, although this was offset by a decline in gold sold, such that FY15 revenue was effectively flat
(-3.8%). Coupled with continuing cost increases on a gross basis, this resulted in a degree of margin compression and a consequent 25.5% year-on-year decline in adjusted EBTIDA.

For H215 specifically, precious metal sales were £7.4m less than our prior expectations, owing in part to an under-sale of material relative to production and the continuation of the low-grade mining cycle at Evander for longer than expected. However, this was partially offset by production costs also being £4.3m less than expected. Royalty costs and taxes were £1.1m and £1.6m better than our expectations, partially offset by a £1.5m negative variation in net finance costs. Overall, H215 net profits were £2.2m less than our expectations in H2. Nevertheless, this still represented an increase cf H1, as shown below.

Exhibit 1: Pan African underlying P&L statement by half-year (H113-H215) actual vs expected

£000s (unless otherwise indicated)

H113

H213

H114

H214

H115

H215e

H215

H215 vs H215e (%)

H215 vs H115

FY15e

FY15

Precious metal sales

49,529

84,006

84,637

69,914

68,126

80,349

72,951

(9.2)

7.1

148,475

141,077

Realisation costs

(89)

(138)

(191)

(159)

(295)

(347)

(396)

14.1

34.2

(642)

(691)

Realisation costs (%)

0.18

0.16

0.23

0.23

0.43

0.43

0.54

25.6

25.6

0.43

0.49

On-mine revenue

49,440

83,869

84,447

69,755

67,831

80,002

72,555

(9.3)

7.0

147,833

140,386

Gold cost of production

 

 

(52,519)

(52,727)

(58,449)

Platinum cost of production

 

 

(1,590)

(1,797)

(1,732)

Cost of production

(25,753)

(45,428)

(54,109)

(52,285)

(54,524)

(60,180)

(55,889)

(7.1)

2.5

(114,705)

(110,413)

Depreciation

(2,033)

(3,965)

(5,088)

(4,935)

(4,676)

(5,649)

(5,661)

0.2

21.1

(10,326)

(10,337)

Mining profit

21,653

34,476

25,249

12,535

8,631

14,172

11,005

(22.3)

27.5

22,803

19,636

Other income/(expenses)

(3,169)

(2,484)

(223)

(1,227)

523

0

(273)

N/A

(152.2)

523

250

Loss in associate

 

 

(89)

(84)

(128)

0

0

0.0

(100.0)

(128)

(127)

Loss on associate disposal

(140)

0.0

(100.0)

(140)

(140)

Impairment costs

0

7,232

0

(12)

(56)

(2)

N/A

(96.4)

(56)

(58)

Royalty costs

(1,298)

(1,901)

(1,747)

(272)

(795)

(1,938)

(852)

(56.0)

7.2

(2,733)

(1,647)

Net income before finance items

17,187

37,323

23,191

10,940

8,034

12,234

9,878

(19.3)

23.0

20,268

17,912

Finances income

548

907

381

306

321

28

N/A

(91.3)

Finance costs

(95)

(1,163)

(725)

(153)

(498)

(1,960)

N/A

293.6

Net finance income

453

(256)

(344)

153

(177)

(478)

(1,932)

304.2

991.5

(655)

(2,109)

Profit before taxation

17,640

37,067

22,847

11,093

7,857

11,756

7,946

(32.4)

1.1

19,613

15,803

Taxation

(5,288)

(6,845)

(5,537)

(1,618)

(2,310)

(3,456)

(1,823)

(47.3)

(21.1)

(5,765)

(4,133)

Marginal tax rate (%)

30

18

24

15

29

29

23

(20.7)

(20.7)

29

26

Deferred tax

 

 

 

 

 

 

Profit after taxation

12,351

30,223

17,310

9,475

5,548

8,300

6,122

(26.2)

10.3

13,848

11,670

 

 

EPS (p)

0.85

1.66

0.95

0.52

0.30

0.45

0.33

(26.7)

10.0

0.76

0.64

HEPS* (p)

0.85

1.26

0.95

0.52

0.31

0.45

0.33

(26.7)

6.5

0.77

0.65

Diluted EPS (p)

0.85

1.65

0.95

0.52

0.30

0.44

0.33

(25.0)

10.0

0.74

0.64

Diluted HEPS* (p)

0.85

1.26

0.95

0.52

0.31

0.44

0.33

(25.0)

6.5

0.75

0.65

Source: Pan African Resources, Edison Investment Research. Note: *HEPS = headline earnings per share.

In general, Pan African’s surface retreatment operations outperformed expectations, driven by higher than expected metallurgical recoveries. Underground operational performance was inevitably more affected by the inconsistent electrical power supply in South Africa and also the Section 54 stoppage notices imposed on both Barberton and Evander by the DMR during the year. Nevertheless, cash costs remained below US$1,000/oz and both reportable (RIFR) and lost time (LTIFR) injury frequency rates remained on a downward trajectory.

Pan African’s immediate focus is now to increase output to 225,000oz per year (vs 176koz in FY15) and to improve its cash cost profiles.

Evander Gold Mines (EGM)

At Evander, the six months from December 2014 to June 2015 was characterised by a slower than expected recovery from the lower-grade mining sequence. As a result, the (implied) underground head grade was 4.92g/t compared with a previous forecast of 5.25g/t. This coincided with a decrease in tonnes milled from underground sources, owing to challenges related to underground mining operations and infrastructure constraints (especially conveyor belt availability), allied with power interruptions and DMR Section 54 stoppage notices, which resulted in three days of lost production in H1 and six days in H2. As a result, there was an increase in unit costs, from ZAR1,230/t in H115 to ZAR1,795/t in H215. However, this largely reflected a sharp, 65.9% decrease in the number of tonnes treated from surface sources. Excluding this effect, the likely unit cost of mining from underground increased only 5.6%, from ZAR2,250/t to ZAR2,376/t (cf our target of ZAR2,159/t). As a result, gross total cash costs fell materially for the first time since H213, to ZAR451.9m.

Exhibit 2: EGM operational results, H114-H216e, actual and forecasts

H114

H214

H115

H215

FY15

H116e

H216e

FY16e

Tonnes milled underground (t)

200,272

194,855

197,879

184,107

381,986

200,500

200,500

401,000

Head grade underground (g/t)

6.20

4.17

4.30

4.92

4.60

5.68

6.75

6.22

Underground gold contained (oz)

39,921

26,138

27,357

29,137

56,494

36,615

43,512

80,127

Tonnes milled surface (t)

111,225

149,676

198,578

67,645

266,223

0

Head grade surface (g/t)

1.30

1.47

1.40

0.22

1.10

0.00

Surface gold contained (oz)

4,649

7,095

8,938

477

9,415

0

0

0

Tonnes milled (t)

311,497

344,531

396,457

251,752

648,209

200,500

200,500

401,000

Head grade (g/t)

4.45

3.00

2.85

3.66

3.2

5.68

6.75

6.2

Contained gold (oz)

44,570

33,233

36,295

29,614

65,909

36,615

43,512

80,127

Recovery (%)

97

102

93

100

96.4

98

98

97.7

Production underground (oz)

38,710

27,246

26,024

27,722

53,746

35,773

42,512

78,284

Production surface (oz)

3,955

6,645

7,831

1,982

9,813

0

Total production (oz)

42,665

33,891

33,855

29,704

63,559

35,773

42,512

78,284

Recovered grade (g/t)

4.26

3.06

2.66

3.67

3.05

5.55

6.59

6.07

Gold sold (oz)

43,164

33,392

33,733

29,825

63,558

35,773

42,512

78,284

Average spot price (US$/oz)

1,302

1,290

1,233

1,206

1,121

1,225

Average spot price (ZAR/kg)

421,273

443,171

435,376

461,891

447,474

484,259

559,531

525,134

Total cash cost (US$/oz)

985

1,358

1,317

1,277

1291.011

901

717

801

Total cash cost (ZAR/kg)

318,616

466,650

464,955

489,118

475,342

389,068

327,394

355,577

Total cash cost (US$/t)

134.93

134.43

112.03

149.51

126.5858

160.69

151.98

156.33

Total cash cost (ZAR/t)

1,373.00

1,427.75

1,230.00

1,794.96

1449.662

2,159.08

2,159.08

2,159.08

Implied revenue (US$000s)

56,200

42,940

41,593

35,694

77,287

40,101

52,077

92,178

Implied revenue (ZAR000s)

565,576

460,221

456,799

427,794

884,593

538,809

739,838

1,278,647

Implied revenue (£000s)

35,471

25,504

25,566

23,502

49,068

26,080

34,333

60,413

Implied cash costs (US$000s)

42,029

46,317

44,415

37,639

82,054

32,219

30,471

62,690

Implied cash costs (ZAR000s)

422,810

491,905

487,800

451,884

939,684

432,896

432,896

865,791

Implied cash costs (£000s)

26,527

27,662

27,297

24,917

52,214

20,977

20,089

41,066

Forex (ZAR/£)

15.9388

17.8279

17.87

18.1318

18.0009

20.6370

21.5487

21.0929

Forex (ZAR/US$)

10.06

10.6853

10.98

11.9173

11.4500

13.4362

14.2067

13.8215

Forex (US$/£)

1.5843738

1.668451

1.6269

1.5186

1.5727

1.5377

1.5168

1.5272

Source: Edison Investment Research, Pan African Resources. Note: Excludes inventory changes.

Evander has implemented remedial action regarding conveyor belt availability, including the replacement of 4.4km (out of c 5km) of belting and the introduction of a planned maintenance function (cf previous breakdown maintenance), which has resulted in an improvement in conveyor belt availability from 60% to 80%. The mine has also improved the monitoring and pump infrastructure of its 8 shaft dewatering pumps, including the introduction of a dam cleaning schedule, to reduce the risk of shaft flooding.

In rand terms, the major contributors to cost pressures on a year-on-year basis were:

sales and wages: +5.4% (cf +7.3% at the interim stage) was lower than the average Chamber of Mines increase, owing to the implementation of a voluntary separation programme to optimise employee numbers;

mining costs: +6.2% owing to additional vamping in No’s 2 & 3 declines and unit cost increases linked to inflation;

engineering and technical services: +1.6% (vs +10.7% at the interim stage owing to higher maintenance costs);

electricity & water: +7.1% (vs +8.8% for electricity alone at the interim stage), but +5.8% excluding the ETRP. This was lower than the 12.7% tariff increase imposed by Eskom as a result of lower consumption occasioned by load clipping and power optimisation projects, among other things;

security costs -11.8% (vs -1.7% at the interim stage) owing to renegotiated rates with contractors; and

administration and other costs: -13.1% (vs +23.0% at the interim stage) owing to a drive to minimise negotiable costs and after EGM migrated to a new accounting system in H115.

Evander is supplied by only one feeder cable from Eskom (vs four at BGMO). This increases the operational risk of being affected by power outages. However, Evander has also been designated as a ‘key industrial customer’, with the result that it is the last affected operation in its region and has never experienced an uncontrolled power cut. Unlike Barberton, however, it lacks the capacity to support itself on self-generated power, with the exception of the winders, emergency pumps and fans.

Level 25 at 8 shaft has now been established and raise lines installed, providing access to additional high-grade panels and creating flexibility in the mining operation, which will allow management to manage and blend the ore mined towards achieving a target of 110,000oz of annual gold mined at EGM. While operations are ramping-up at 25 Level, the 24 Level return airway has been converted to create a tramming loop, with the result that the majority of crews are now working in the high-grade area of the mine – this is expected to remain the case for at least the next two years.

As a result of the migration of productive activities from the 23 to 25 Level, management is forecasting an increase in both tonnes hoisted and head grade at 8 shaft to 5.68g/t in H116 and 6.75g/t in H216.

Exhibit 3: Evander 8 shaft grade profile, actual and forecast, January 2014-June 2016

Source: Pan African Resources, Edison Investment Research

Face-grade and head-grade forecasts are supplied by management, from which we have calculated the average head grade for the relevant half-year periods.

Both face grade and mined grade are part of a mine’s ore flow controls, controlled by Evander’s detailed Short Interval Control (SIC) system. Face grade, in particular, is the average grade of the tonnes mined on the reef horizon at stoping widths and includes all additional waste, eg winch cubbies, gulley and footwall waste. The mining grade is the face grade adjusted downwards with all the other waste produced by mining. In an ideal situation, a mine call factor (MCF – defined as the ratio of the total quantity of recovered and unrecovered mineral product after processing compared to the amount estimated to have been in the ore based on sampling), can be applied to the average mining grade (if all sources of ore are considered), to equate to a head grade. Thus, if the process of sampling, assaying and tonnage measurements in a mine and plant were to be perfect and there was no mineral loss at any stage during handling and processing, the MCF would be 100% and the mined grade would equal the head grade. Any attempt to infer a head grade from a mined grade at Evander 8 Shaft also therefore needs to consider waste, on-reef mining and the MCF – only one of which (the MCF) is readily available. In this case, the historic MCF at Evander is 63%. Recently, it is reported to have been over 70% and as high as 89%. We also regard it as significant that it has been on a broadly rising trend.

More simply, it can be observed that, over the period covered by the graph in Exhibit 3, the head grade has typically been between 55.8% and 36.4% of the face grade (with an average at 43.8%), which would imply a potential range of head grades of 7.75-5.06g/t in H116 and a 8.33-5.44g/t in H216.

Future operations at Evander will involve advancing from 25 to 26 Level in approximately 12 months’ time, increasing the number of conveyor belts from 11 (over 5km) currently to 12, and proportionately increasing the amount of associated maintenance required. However, it will also improve access to more high-grade panels and allow management to selectively reduce mining at the lower-grade extremities of the Kinross pay channel.

In the longer term, management believes that a grade of 7.2g/t is sustainable. Note that, had an underground head grade of 7.2g/t prevailed in H215 (and applying the group’s H215 marginal tax rate to the incremental profits), we estimate that it would have added c 0.52p to both Pan African’s EPS and headline EPS in H215 (ie 1.04p on an annualised basis).

Barberton Gold Mining Operations (BGMO)

While the performance at BGMO improved in H215, it continued to exhibit the after-effects of the contamination of the Biox plant with oil at Fairview. Although metallurgical recoveries from the Biox plant recovered to pre-contamination levels, overall throughput was c 91% of capacity. At the same time, the head grade was affected by face-grade availability at both Sheba and Consort mines. However, cash costs were also well controlled with the result that gross profits are likely to have increased during the second six-month period in H215 in both ZAR and USD terms.

Exhibit 4: Barberton operational results, H114-H216e

H114

H214

H115

H215

FY15

H116e

H216e

FY16e

Tonnes milled (t)

149,589

142,532

126,713

134,036

260,749

140,768

147,500

288,268

Head grade (g/t)

10.45

10.56

11.40

10.00

10.68

10.26

10.26

10.26

Contained gold (oz)

50,272

48,374

46,443

43,080

89,523

46,433

48,654

95,088

Recovery (%)

91

96

89

90

91

92.5

92.5

92.49

Production underground (oz)

41,849

46,130

42,666

38,649

81,315

42,946

45,000

87,946

Production calcine dumps/surface ops (oz)

390

369

76

102

178

0

Total production (oz)

42,239

46,499

42,742

38,751

81,493

42,946

45,000

87,946

Gold sold (oz)

45,405

43,333

41,232

40,261

81,493

42,946

45,000

87,946

Average spot price (US$/oz)

1,317

1,290

1,229

1,206

1,212

1,121

1,225

1,174

Average spot price (ZAR/kg)

426,101

443,171

433,966

461,891

446,246

484,259

559,531

522,773

Total cash cost (US$/oz)

787

770

885

825

840

782

740

760

Total cash cost (ZAR/kg)

254,506

263,029

312,502

318,061

309,289

337,869

337,869

16,018

Total cash cost (US$/t)

222.22

251.14

287.82

238.62

262.53

238.62

225.67

231.99

Total cash cost (ZAR/t)

2,403.00

2,668.95

3,161.00

2,860.08

3,006.54

3,206.09

3,206.09

3,206.09

Implied revenue (US$000s)

59,798

56,360

50,674

48,095

98,770

48,143

55,125

103,268

Implied revenue (ZAR000s)

601,758

600,142

556,300

574,798

1,131,098

646,858

783,147

1,430,004

Implied revenue (£000s)

37,743

33,700

31,148

31,559

62,707

31,309

36,343

67,652

Implied cash costs (US$000s)

33,242

35,796

36,471

31,983

68,454

33,589

33,287

66,876

Implied cash costs (ZAR000s)

334,362

380,411

400,600

383,353

783,953

451,315

472,898

924,213

Implied cash costs (£000s)

20,978

21,484

22,417

21,043

43,460

21,869

21,946

43,815

Forex (ZAR/£)

15.9388

17.8279

17.87

18.1318

18.00091

20.637

21.5487

21.09285

Forex (ZAR/US$)

10.06

10.6853

10.98

11.9173

11.45

13.43623

14.2067

13.8214625

Forex (US$/£)

1.584374

1.6687

1.6269

1.5186

1.572744

1.53765

1.5168

1.527225

Source: Edison Investment Research, Pan African Resources. Note: Excludes inventory adjustments.

Principal sources of cost inflation over the year (in rand terms, year-on-year) were:

salary and wages: +4.7% (vs +6.5% at the interim stage) as a result of a decrease in the number of employees on the mine and also lower incentivisation payments (which depend upon the mine’s productivity and profitability);

mining costs: +5.3% (vs +12.4% at the interim stage) due to an increase in vamping contractor’s costs. Note that excluding vamping contractor’s costs, mining costs were ostensibly unchanged, year-on-year;

engineering and technical services: +12.2% (vs +7.5% at the interim stage) owing to the need for secondary support at Fairview’s high-grade 11-block; and

electricity: +11.5% (vs +10.7% at the interim stage), reflecting Eskom’s additional one-off 4.69% tariff increase from 1 April 2015.

Note that processing costs fell 1.6% during the year. Capital expenditure similarly declined by 25.4% to ZAR112.6m – almost all of which is now classified as either ‘maintenance’ or ‘development’ after the conclusion of the BTRP’s construction.

Operational and maintenance systems have been implemented to mitigate the risk of future oil contamination of the Biox plant. At the same time:

a new bonus scheme has been introduced, based on safety, tonnes achieved, gold produced and costs;

ventilation holings have been completed at Sheba and Consort;

high-grade blocks on 38 Level at Consort have been equipped; and

ramp development at Fairview has been accelerated to access the next stoping platform.

Finally, exploration drilling confirmed the down-dip extension of the high-grade 11-block of the MRC orebody by a further 170m, thereby increasing the life of BGMO’s operations by 5.3%, from 19 to 20 years (company estimate).

Barberton Tailings Retreatment Project (BTRP)

Although it declined in H2 vs H1, the head grade at the BTRP was still higher than expected. Higher metallurgical recoveries (average 57% in FY16, but higher in H2, vs a planned 56%) also contributed to higher production, while simultaneously mitigating the decline in grade from a unit cost perspective. As a result, gross profits expanded in both ZAR and GBP terms in H2 (although they declined in USD terms, owing to the effects forex rates), while unit costs of production remained below US$500/oz. Capital expenditure declined to zero, as expected.

Exhibit 5: BTRP operational results, H114-H216e

H114

H214

H115

H215

FY15

H116e

H216e

FY16e

Tonnes processed tailings (t)

343,137

472,599

484,315

487,312

971,627

543,656

600,000

1,143,656

Head grade tailings (g/t)

1.70

1.58

1.50

1.30

1.40

1.15

1.15

1.15

Tailings gold contained (oz)

18,755

23,208

23,357

20,377

43,734

20,135

22,222

42,358

Recovery (%)

60

49

51

65

57

45

45

45.0

Production tailings (oz)

11,603

11,282

11,710

13,219

24,929

9,061

10,000

19,061

Production other (oz)

0

0

0

0

0

0

0

0

Total production (oz)

11,603

11,282

11,710

12,573

24,283

9,061

10,000

19,061

Recovered grade (g/t)

1.05

0.74

0.75

0.80

0.78

0.52

0.52

0.52

Gold sold (oz)

11,603

11,282

11,710

12,573

24,283

9,061

10,000

19,061

Average spot price (US$/oz)

1,317

1,290

1,229

1,206

1,215

1,121

1,225

1,176

Average spot price (ZAR/kg)

426,101

443,171

433,799

461,891

447,387

484,259

559,531

523,749

Total cash cost (US$/oz)

454

528

459

497

480

692

655

673

Total cash cost (ZAR/kg)

146,928

181,511

162,203

190,268

176,734

299,051

299,051

299,051

Total cash cost (US$/t)

15.36

12.72

11.11

12.88

12.00

11.54

10.91

11.21

Total cash cost (ZAR/t)

154.53

131.28

121.98

152.69

137.3815

155.02

155.02

155.0241

Implied revenue (US$000s)

15,281

14,584

14,392

15,112

29,504

10,157

12,250

22,407

Implied revenue (ZAR000s)

153,776

155,425

157,998

179,905

337,902

136,476

174,032

310,508

Implied revenue (£000s)

9,645

8,723

8,846

9,885

18,731

6,606

8,076

14,682

Implied cash costs (US$000s)

5,271

6,011

5,379

6,277

11,656

6,273

6,547

12,820

Implied cash costs (ZAR000s)

53,025

63,693

59,077

74,406

133,484

84,280

93,014

177,294

Implied cash costs (£000s)

3,327

3,590

3,306

4,111

7,417

4,084

4,316

8,400

Forex (ZAR/£)

15.9388

17.8279

17.87

18.1318

18.00

20.6370

21.5487

21.09

Forex (ZAR/US$)

10.06

10.6853

10.98

11.9173

11.45

13.4362

14.2067

13.82

Forex (US$/£)

1.5843738

1.668451

1.6269

1.5186

1.57

1.5377

1.5168

1.53

Capex (US$000s)

3,569

364

100

188

288

0

0

0

Capex (ZAR000s)

35,900

4,800

1,100

2,200

3,300

0

0

0

Capex (£000s)

2,252

159

62

122

183

0

0

0

Source: Edison Investment Research, Pan African Resources. Note: Excludes inventory changes.

Throughput is anticipated to increase towards design capacity throughout FY16. For the moment, we are anticipating a continued moderation in grade and metallurgical recoveries. However, management has recently been investigating the potential to reduce retention times, while maintaining metallurgical recoveries at relatively high levels. To the extent that it is successful, our forecasts may prove to be relatively conservative.

In the longer term, approximately two-thirds of the tailings being treated at the BTRP originated from the Fairview concentrator at a grade of c 1.6g/t. The remaining third are from the same origin, but are also supplemented with material from the Biox plant at a grade of 3-10g/t. As a result, a substantial portion of the resources being treated by BTRP exists at a grade in excess of 1.6g/t and there is ample opportunity for management to pursue high grades to increase financial returns.

ETRP

Notable in Pan African’s H215 results was a maiden contribution from the ETRP, which achieved commercial production in early H215 compared with expectations of H116, and therefore contributed around four months of output and revenues to group results.

Pro-rata, the ETRP achieved 89.9% throughput capacity utilisation. In addition, metallurgical recoveries were higher than expected at 54% cf 42% expected. In part, this could be attributed to the processing of additional sources of higher-grade surface feedstocks. Even excluding this, however, recoveries were reported to be 48%, with the result that unit costs of production for the period were below their ZAR280,000/kg target.

Exhibit 6: ETRP operational results, H115-H216e

H215

H116

H216

FY16e

Tonnes processed from surface feedstocks (t)

139,723

Head grade surface feedstocks (g/t)

1.10

Surface feedstocks gold contained (oz)

4,941

Tonnes processed tailings (t)

507,444

1,080,000

1,080,000

Head grade tailings (g/t)

0.30

0.32

0.32

Tailings gold contained (oz)

4,894

11,111

11,111

Total tonnes processed (t)

647,167

1,080,000

1,080,000

2,160,000

Head grade (g/t)

0.47

0.32

0.32

0.32

Contained gold (oz)

9,836

11,111

11,111

22,223

Recovery (%)

54

48

48

48

Production tailings (oz)

4,029

5,333

5,333

10,667

Production surface (oz)

2,494

0

Total production (oz)

6,523

5,333

5,333

10,667

Recovered grade (g/t)

0.31

0.15

0.15

0.15

Gold sold (oz)

6,523

5,333

5,333

10,667

Average spot price (US$/oz)

1,206

1,121

1,225

Average spot price (ZAR/kg)

466,647

484,259

559,531

Total cash cost (US$/oz)

688

567

536

551

Total cash cost (ZAR/kg)

266,453

245,000

245,000

245,000

Total cash cost (US$/t)

6.93

2.80

2.65

2.72

Total cash cost (ZAR/t)

83.53

37.63

37.63

37.632

Implied revenue (US$000s)

7,260

5,979

6,533

12,512

Implied revenue (ZAR000s)

87,403

80,333

92,819

173,152

Implied revenue (£000s)

4,609

3,888

4,307

8,196

Implied cash costs (US$000s)

4,488

3,025

2,861

5,886

Implied cash costs (ZAR000s)

54,060

40,643

40,643

81,285

Implied cash costs (£000s)

3,004

1,969

1,886

3,855

0.00

0.00

0.00

Forex (ZAR/£)

18.1318

20.6370

21.5487

21.0929

Forex (ZAR/US$)

12.0400

13.4362

14.2067

13.8215

Forex (US$/£)

1.5186

1.5377

1.5168

1.5272

Capex (US$000s)

7,899

0

0

0

Capex (ZAR000s)

95,100

0

0

0

Capex (£000s)

5,284

0

0

0

Source: Edison Investment Research, Pan African Resources. Note: Excludes inventory changes.

The grade of the dam being re-mined at the ETRP is 0.3g/t, which is low in absolute terms. However, the operation is commercially viable given its ability to fill unutilised capacity in the Kinross plant and the fact that it therefore attracts only incremental operating costs (largely for 14 additional employees). Re-mining is being conducted without breaching the dam wall and the tailings are being redeposited at Winkelhaak, thereby simplifying the environmental requirements (ie the Environmental Impact Assessment) with respect to re-filling the Kinross dam at a later date.

Effectively, the ETRP represents a substantial (10,000oz per year) pilot plant, designed to prove recovery and cost parameters, before a decision is taken on a much larger operation. Named Elikhulu, this would process 12Mtpa (cf the ETRP’s 2.16Mtpa), but would require material independent capital expenditure and would need to support an independent cost base (cf the ETRP, which effectively supports only an incremental cost base).

Phoenix Platinum

Phoenix’s performance during the year was transformed by IFM’s resumption of mining at its underground Lesedi Mine, which provided sulphide material for treatment in the CTRP (vs oxide material from Skychrome previously). This, in combination with an improved reagent suite and the processing of higher sulphide content tailings contained in number 4 dam, resulted in a materially improved plant recovery and financial performance. As a result, Phoenix’s adjusted EBITDA for the year was reported to have been ZAR27.7m, which was in line with (and a slight improvement on) management’s prior internal profit forecast of ZAR24m.

Exhibit 7: Phoenix Platinum operating and financial performance, H114-H215

H114

H214

H115

H215

Plant feed - total (t)

118,259

132,923

135,963

126,156

Head grade (g/t)

3.80

3.61

3.16

3.47

Contained PGE (oz)

14,448

15,432

13,813

14,081

Plant recovery (%)

24.0

27.3

34.0

53.8

Recovered PGE (oz)

3,468

4,217

4,697

7,577

Production and sales of PGE 6E (oz)

2,987

4,217

4,711

5,534

Basket price received (ZAR/oz)

9,380

10,016

9,815

9,423

Basket price received (US$/oz)

932

937

894

791

Implied revenue (ZAR000s)

28,018

43,934

46,238

52,144

Implied revenue (GBP000s)

1,758

2,464

2,587

2,876

Total cash costs (ZAR/oz)

8,484

9,868

6,817

6,453

Total cash costs (US$/oz)

843

924

621

542

Total cash costs (ZAR/t)

214

313

236

283

Implied total cash costs (ZAR000s)

25,307

41,615

32,087

35,713

Implied total cash costs (GBP000s)

1,588

2,334

1,796

1,970

Capex (ZAR000s)

200

200

100

500

Source: Edison Investment Research, Pan African Resources. Note: Excludes inventory changes.

Of note is the fact that, while gross costs and unit working costs rose, unit costs of production fell as a result of the operation recovering to its targeted grade profile.

Year-on-year contributors towards upward cost pressures in FY15 were:

Salary and wages: +10.7% (vs +11.9% at the interim stage), attributable to a 7.5% pay increase awarded to employees plus a new incentive scheme linked to productivity and profitability.

Realisation and refining costs: +30.9% (vs +173.1% at the interim stage) owing to increased concentrate tonnages delivered to Lonmin in combination with higher chrome charges due to a higher chrome content as a result of a higher mass pull.

Electricity +2.8% below Eskom’s 12.7% tariff increase, owing to the optimisation of the plant’s mill to reduce power consumption.

On 27 August, International Ferro Metals (IFM) announced that, as a result of deteriorating business conditions, its South African subsidiary had entered a Business Rescue programme – a statutory means of enabling a financially distressed company to continue business under the supervision of a Business Rescue Practitioner, protected from its creditors. Phoenix Platinum is on IFM’s property and a portion of the feedstock for its operation (currently c 20%) originates from tailings arising from IFM’s processing activities. It also sources electricity, water and certain other services from IFM. At this stage, management states that it "is not in a position to fully assess the impact of the Business Rescue proceedings" on Phoenix Platinum. In the interim, Phoenix is investigating the feasibility of sourcing material from its Elandskraal and Kroondal tailings dams to maintain production and to mitigate any shortfalls arising from IFM (note that on 29 June Phoenix signed a new agreement to secure the PGE rights to the Elandskraal surface resource).

Uitkomst

In June 2015, Pan African entered into agreements to acquire the Uitkomst colliery, near the town of Utrecht in KwaZulu-Natal, from Oakleaf Investments Holding 109 Proprietary and Shanduka Resources for a cash consideration of ZAR200m (£9.3m at current exchange rates).The colliery is already operational with 25.7Mt of resources (of which 86% is in the measured and indicated categories) selling c 0.4Mtpa of high-grade thermal, export-quality coal with metallurgical applications to both the domestic and the export markets.

The acquisition remains subject to DMR approval. However, it is anticipated to be immediately earnings- and cash-flow accretive. Until it closes, however, it remains excluded from our forecasts.

Labour relations

The 2015 wage round

Historically, Pan African has had good relations with the unions. Evander negotiates as part of the collectivised bargaining process, under the auspices of the South African Chamber of Mines, while Barberton negotiates separately. During the 2013 wage round (which covered FY14 and FY15), Pan African was the first entity to reach a settlement.

On 13 October 2015, the company further announced that it had again concluded multi-year wage agreements with both the NUM and the UASA to the effect that:

The average Barberton salary and wage bill for FY16 and FY17 will increase by c 9% per year (effective from 1 July 2015).

The average Evander salary and wage bill for FY16, FY17 and FY18 will increase by c 7.8% per year (effective from 1 July 2015).

Electricity

As has been well documented, South Africa is currently suffering from a shortage of effective generating capacity as older power stations on the historic Eastern Transvaal coalfields approach obsolescence.

In response, Eskom has commissioned two new power stations in South Africa’s Limpopo and Mpumalanga provinces. Known as Medupi and Kusile, respectively, each plant will have a generating gross capacity of c 4,800MW, with Medupi representing the largest investment in Eskom’s 84-year history and the first base-load project to be built in the country in 20 years. The combined output of the plants represents c 23% of the country’s current power generating capacity.

However, the completion of Medupi is taking longer than anticipated. Whereas Eskom estimated that the total duration of the project would be no longer than four years at the time of its commissioning, over seven years later only one unit of 794MW capacity has been built (out of six) and the project remains some way from completion. While the news of first electricity and its synchronisation into the grid in March is positive in the context of South Africa’s electricity tribulations, it represents only one-sixth of design capacity and only 1.9% of Eskom’s current capacity of c 42,000MW. Moreover, capital expenditure on the two new power stations has exceeded the budget, such that Eskom has needed to turn to the South African Treasury for additional funding. As a result, in addition to the three 8% per year increases agreed between Eskom and the regulator, NERSA, in 2013, there was one further increase of 4.69% from 1 April 2015. Nevertheless, at c ZAR0.85-0.90/kWh (c US$0.060/kWh), electricity remains cheap in South Africa relative to the rest of the world – not least as a result of the depreciation of the rand, which has resulted in the equivalent US dollar price falling from US$0.066/kWh in the past six months. In addition, all operations at the company are engaged in a process of load shedding and power clipping aimed at minimising electricity consumption wherever possible. Note that the cost of self-generating power at Pan African’s mines is typically 3-4x the cost of grid power.

At least until the two power stations are commissioned and synchronised into the grid, South Africa appears likely to continue to experience intermittent load shedding and power outages. However, this is almost invariably directed towards residential, rather than industrial consumers. By contrast, industrial consumers are typically required to reduce their consumption by 10% or, at worst, 25%. As a consequence of this situation, it is supposed that the South African government will look more favourably on independent power producer-generating solutions for South Africa’s future electricity needs. It will also focus on the previously largely unexploited resources of the Waterberg coalfield in the Limpopo province for its energy source (note, readers are directed to Sibanye’s recent private sector initiative in this region).

Forecasts

We have updated our forecasts for FY16 based on the estimates made for each of the precious metals’ operations and highlighted individually (note that forecasts continue to exclude the Uitkomst colliery, as stated above). On the basis of these assumptions, our detailed financial forecasts for PAF for H116, H216 and FY16 are as follows.

Exhibit 8: Pan African underlying P&L statement by half-year (H113-H216e) actual and expected

£000s (unless otherwise indicated)

H114

H214

FY14

H115

H215

FY15

H116e

H216e

FY16e

Precious metal sales

84,637

69,914

154,551

68,126

72,951

141,077

71,348

86,403

157,751

Realisation costs

(191)

(159)

(349)

(295)

(396)

(691)

(78)

(95)

(173)

Realisation costs (%)

0.23

0.23

0.23

0.43

0.54

0.49

0.11

0.11

0.11

On-mine revenue

84,447

69,755

154,202

67,831

72,555

140,386

71,270

86,308

157,577

Gold cost of production

(52,519)

(52,727)

(48,900)

(48,238)

Pt cost of production

(1,590)

(1,797)

(1,796)

(1,773)

Cost of production

(54,109)

(52,285)

(106,394)

(54,524)

(55,889)

(110,413)

(50,696)

(50,011)

(100,707)

Depreciation

(5,088)

(4,935)

(10,023)

(4,676)

(5,661)

(10,337)

(6,045)

(6,430)

(12,476)

Mining profit

25,249

12,535

37,784

8,631

11,005

19,636

14,528

29,867

44,395

Other income/(expenses)

(223)

(1,227)

(1,450)

523

(273)

250

Loss in associate

(89)

(84)

(173)

(128)

0

(128)

Loss on associate disposal

(140)

(140)

Impairment costs

0

(12)

(12)

(56)

(2)

(58)

Royalty costs

(1,747)

(272)

(2,019)

(795)

(852)

(1,647)

(2,019)

(2,446)

(4,465)

Net income before finance items

23,191

10,940

34,130

8,034

9,878

17,912

12,509

27,421

39,930

Finances income

381

306

687

321

28

349

Finance costs

(725)

(153)

(878)

(498)

(1,960)

(2,458)

Net finance income

(344)

153

(191)

(177)

(1,932)

(2,109)

(811)

(811)

(1,623)

Profit before taxation

22,847

11,093

33,939

7,857

7,946

15,803

11,697

26,610

38,307

Taxation

(5,537)

(1,618)

(7,155)

(2,310)

(1,823)

(4,133)

(3,705)

(8,429)

(12,134)

Marginal tax rate (%)

24

15

21

29

23

26

32

32

32

Deferred tax

 

 

Profit after taxation

17,310

9,475

26,785

5,548

6,122

11,670

7,992

18,181

26,173

EPS (p)

0.95

0.52

1.47

0.30

0.33

0.64

0.44

0.99

1.43

HEPS* (p)

0.95

0.52

1.47

0.31

0.33

0.65

0.44

0.99

1.43

Diluted EPS (p)

0.95

0.52

1.46

0.30

0.33

0.64

0.43

0.97

1.39

Diluted HEPS* (p)

0.95

0.52

1.46

0.31

0.33

0.65

0.43

0.97

1.39

Source: Pan African Resources, Edison Investment Research. Note: As reported basis; *HEPS = headline earnings per share (company adjusted basis).

Note that our FY16 headline EPS forecast of 1.43p per share compares with a mean consensus estimate of 1.56p, within the range 0.36-2.00p (source: Bloomberg, 10 December 2015).

Valuation

Additional key changes to our long-term forecasts compared with our last note (and in line with management guidance) are as follows:

an increase in the life of mine at BGMO of one year, from 19 to 20 years;

a decrease in the life of mine at Evander of one year, from 17 to 16 years; and

an increase in the life of operations at the BTRP of three years, from 12 to 15 years.

Updating our long-term forecasts to reflect these changes, our absolute value of PAF increases from 22p to 25p (in part as a result of advancing one year from 1 July 2014 to 1 July 2015), based on the present value of our estimated maximum potential stream of dividends payable to shareholders over the life of its mine operations (applying a 10% discount rate).

Exhibit 9: PAF estimated life of operations diluted EPS and (maximum potential) DPS

Source: Edison Investment Research, Pan African Resources

The above profile assumes that the grade profile at Evander will increase to in excess of 7.00g/t from FY17. We assume gold prices of US$1,372/oz in FY17 and US$1,378/oz in FY18.

Sensitivities

Short term

Three key sensitivities affect our short-term earnings forecasts, namely the Evander grade, Evander costs and the gold price:

If unit costs at Evander remain at estimated H215 levels (ie ZAR2,376/t), rather than declining to ZAR2,159/t as a result of continuing cost control, our estimate of Pan African’s headline EPS falls from 1.43p per share to 1.20p/share.

If Evander’s grade remains at H215 levels (ie 4.9g/t) for the full year (note, unlikely to the point of impossible in the light of PAF’s 26 November trading statement, so largely for illustrative purposes only), our estimate of PAF’s headline EPS falls from 1.43p to 0.52p/share. If the grade recovery stalls at its June-August average of 5.5g/t, our estimate of PAF’s headline EPS falls from 1.43p to 0.82p/share (also unlikely in the light of PAF’s 26 November trading statement).

If the gold price remains at current levels in H216, our estimate of PAF’s EPS declines from 1.43p to 0.87p.

Long term

In the longer term, the key sensitivity affecting our forecasts is the real gold price. Currently, our forecasts for FY17-39 are US$1,454/oz and for CY17-39 are US$1,466/oz.

If the gold price remains at US$1,070/oz in real terms, however, our absolute value of PAF halves from 25p to 12.5p (all other things being equal), as shown in the chart below:

Exhibit 10: PAF estimated lifetime diluted EPS and (maximum potential) DPS at US$1,070/oz

Source: Edison Investment Research, Pan African Resources

Note that average long-term EPS of 1.67p/share for FY18-28 is approximately consistent with FY15 EPS of 0.64p plus 1.04p (0.52p in H215 annualised) if Evander recorded an underground head grade of 7.2g/t.

Relative valuation

Of as much significance, PAF remains notably cheap (based on our updated estimates) when compared with its South African peers in Exhibit 11, below.

Exhibit 11: Comparative valuation of PAF with respect to South African peers

EV/EBITDA (x)

P/E (x)

Yield (%)

 

Yr 1

Yr 2

Yr 1

Yr 2

Yr 1

Yr 2

AngloGold Ashanti

4.8

4.4

35.8

11.6

0.0

0.0

Gold Fields

4.0

3.5

34.1

14.9

1.2

1.8

Sibanye

4.0

3.2

19.2

10.3

2.0

3.1

Harmony*

3.7

3.0

N/A 

149.8

0.0

0.2

Average (excluding PAF)

4.1

3.5

29.7

46.6

0.8

1.3

Pan African (Edison)

3.9

2.0

5.2

2.1

7.3

11.1

Pan African (consensus)

2.8

2.7

4.8

4.8

9.2

9.2

Source: Edison Investment Research, Bloomberg. Note: Priced at 10 December 2015.

Therefore, on both consensus and our forecasts, Pan African is consistently cheaper than its peers in terms of yield (100% of instances considered over the two years), P/E ratio (75% of instances considered) and EV/EBITDA (at least 62.5% of instances considered).

Financials

Pan African had £18.0m in net debt at 30 June 2015, which is an improvement on our prior forecast of £24.0m. Debt is financed via a ZAR800m revolving credit facility (£37m at current exchange rates), which can be expanded to ZAR1,100m (£51.0m). Net debt currently equates to a gearing (net debt/equity) ratio of 12.3% and a leverage (net debt/[net debt+equity]) ratio of 10.9%, but is forecast to improve to £3.9m under the effect of the improved cash flows engendered by the improved operational performance described above before consideration relating to the acquisition of Uitkomst (assuming DMR approval) of ZAR200m (£9.2m at current exchange rates).

Exhibit 12: Financial summary

£000s

2008

2009

2010

2011

2012

2013

2014

2015

2016e

2017e

Year-end 30 June

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

39,148

52,860

68,344

79,051

100,905

133,308

154,202

140,386

157,577

202,119

Cost of sales

(25,164)

(28,505)

(40,554)

(45,345)

(46,123)

(71,181)

(106,394)

(110,413)

(100,707)

(97,338)

Gross profit

13,985

24,355

27,790

33,705

54,783

62,127

47,808

29,973

56,871

104,781

EBITDA

 

 

13,711

22,890

25,023

28,540

45,018

53,276

44,165

28,448

52,406

100,301

Operating profit (before GW and except.)

11,745

20,529

21,897

25,655

41,759

47,278

34,142

18,110

39,930

91,306

Intangible amortisation

0

0

0

0

0

0

0

0

0

0

Exceptionals

0

(5,025)

(335)

0

(48)

7,232

(12)

(198)

0

0

Other

0

0

0

0

0

0

0

0

0

0

Operating profit

11,745

15,504

21,562

25,655

41,711

54,510

34,130

17,912

39,930

91,306

Net interest

200

807

594

762

516

197

(191)

(2,109)

(1,623)

(350)

Profit before tax (norm)

 

 

11,945

21,336

22,491

26,417

42,274

47,475

33,951

16,001

38,307

90,955

Profit before tax (FRS 3)

 

 

11,945

16,311

22,156

26,417

42,226

54,707

33,939

15,803

38,307

90,955

Tax

(4,367)

(8,219)

(7,656)

(9,248)

(12,985)

(12,133)

(7,155)

(4,133)

(12,134)

(25,781)

Profit after tax (norm)

7,579

13,117

14,835

17,169

29,290

35,342

26,796

11,868

26,173

65,175

Profit after tax (FRS 3)

7,579

8,091

14,500

17,169

29,242

42,574

26,785

11,670

26,173

65,175

Average number of shares outstanding (m)

1,043.8

1,104.4

1,366.3

1,432.7

1,445.2

1,619.8

1,827.2

1,830.4

1,832.1

1,832.1

EPS - normalised (p)

 

 

0.52

0.85

1.07

1.20

2.03

2.18

1.46

0.64

1.43

3.56

EPS - FRS 3 (p)

 

 

0.52

0.40

1.04

1.20

2.02

2.63

1.47

0.64

1.43

3.56

Dividend per share (p)

0.00

0.26

0.37

0.51

0.00

0.83

0.82

0.54

0.54

0.82

Gross margin (%)

35.7

46.1

40.7

42.6

54.3

46.6

31.0

21.4

36.1

51.8

EBITDA margin (%)

35.0

43.3

36.6

36.1

44.6

40.0

28.6

20.3

33.3

49.6

Operating margin (before GW and except.) (%)

30.0

38.8

32.0

32.5

41.4

35.5

22.1

12.9

25.3

45.2

BALANCE SHEET

Fixed assets

 

 

55,647

67,198

74,324

97,281

86,075

249,316

223,425

220,150

220,677

220,499

Intangible assets

35,577

35,397

36,829

38,229

23,664

38,628

37,040

37,713

39,449

41,186

Tangible assets

20,070

31,801

37,495

59,052

62,412

209,490

185,376

181,533

180,323

178,409

Investments

0

0

0

0

0

1,199

1,010

905

905

905

Current assets

 

 

8,770

4,949

17,677

15,835

41,614

26,962

23,510

17,218

33,533

84,768

Stocks

378

358

1,126

1,457

1,869

6,596

5,341

3,503

5,258

6,744

Debtors

2,973

2,201

3,795

4,254

6,828

15,384

12,551

10,386

10,805

13,858

Cash

5,419

2,389

12,756

10,124

19,782

4,769

5,618

3,329

17,470

64,166

Current liabilities

 

 

(6,611)

(6,101)

(7,084)

(8,960)

(11,062)

(24,066)

(24,012)

(22,350)

(22,107)

(21,553)

Creditors

(6,521)

(6,080)

(7,084)

(8,960)

(11,062)

(23,202)

(19,257)

(17,301)

(17,058)

(16,505)

Short-term borrowings

(89)

(21)

0

0

0

(864)

(4,755)

(5,049)

(5,049)

(5,049)

Long-term liabilities

 

 

(7,438)

(9,686)

(11,431)

(13,410)

(14,001)

(80,004)

(63,528)

(67,850)

(68,648)

(70,108)

Long-term borrowings

(17)

0

0

(181)

(869)

(11,133)

(8,141)

(16,313)

(16,313)

(16,313)

Other long-term liabilities

(7,421)

(9,686)

(11,431)

(13,228)

(13,132)

(68,871)

(55,387)

(51,537)

(52,335)

(53,795)

Net assets

 

 

50,369

56,360

73,487

90,746

102,626

172,208

159,396

147,167

163,454

213,605

CASH FLOW

Operating cash flow

 

 

12,762

25,420

25,207

31,968

49,092

61,618

45,996

25,959

46,414

95,207

Net Interest

200

807

594

762

516

314

(606)

(2,109)

(1,623)

(350)

Tax

(1,723)

(10,886)

(7,476)

(10,743)

(11,616)

(13,666)

(8,536)

(3,479)

(11,336)

(24,321)

Capex

(5,680)

(5,705)

(6,764)

(21,712)

(17,814)

(27,197)

(21,355)

(19,554)

(9,428)

(8,817)

Acquisitions/disposals

226

(4,205)

0

0

(1,549)

(96,006)

0

(760)

0

0

Financing

785

0

48

1,545

259

47,112

349

(235)

0

(0)

Dividends

0

(6,774)

0

(5,376)

(7,416)

0

(14,684)

(15,006)

(9,886)

(15,023)

Net cash flow

6,571

(1,343)

11,609

(3,557)

11,471

(27,826)

1,164

(15,184)

14,141

46,696

Opening net debt/(cash)

 

 

(136)

(5,313)

(2,369)

(12,756)

(9,943)

(18,913)

7,228

7,278

18,033

3,892

Exchange rate movements

(1,394)

(2,642)

(281)

925

(1,813)

594

(839)

(276)

0

0

Other

0

1,041

(940)

(181)

(688)

1,090

(375)

4,705

0

0

Closing net debt/(cash)

 

 

(5,313)

(2,369)

(12,756)

(9,943)

(18,913)

7,228

7,278

18,033

3,892

(42,804)

Source: Company sources, Edison Investment Research

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