gold flake

Everything falling into place

Pan African Resources 28 October 2021 Outlook
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Pan African Resources

Everything falling into place

FY21 results

Metals & mining

28 October 2021

Price

17.50p

Market cap

£391m

ZAR20.5700/£, ZAR14.9732/US$, US$1.3736/£

Net debt (US$m) at end June 2021

39.0

Shares in issue, effective 1,928.3m post-consolidation

2,234.7m

Free float

86%

Code

PAF

Primary exchange

AIM/JSE

Secondary exchange

OTCQX Best Market

Share price performance

%

1m

3m

12m

Abs

(7.3)

(21.9)

(33.8)

Rel (local)

(10.4)

(22.3)

(45.9)

52-week high/low

25.7p

13.7p

Business description

Pan African Resources has four major producing precious metals assets in South Africa: Barberton (target output 95koz Au pa), the Barberton Tailings Retreatment Project, or BTRP (20koz), Elikhulu (55koz) and Evander underground, incorporating Egoli (currently 36koz, rising to >100koz).

Next events

AGM

25 November 2021

LSE ex-dividend date

2 December 2021

FY21 dividend payment date

14December 2021

Mintails/Mogale due diligence

Until January 2022

Analyst

Charles Gibson

+44 (0)20 3077 5724

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

Pan African’s FY21 results were closely in line with our expectations. Mining profit for the full 12-month period was US$128.0m (cf our estimate of US$132.7m – see Exhibit 2), profit after tax US$74.7m (cf our estimate of US$75.1m) and EPS 3.87c per share (cf our estimate of 3.90c). Most striking, however, was the 28.5% increase in the proposed final dividend to ZAR402.2m, or 1.26671cps at the prevailing forex rate. This was above the company’s dividend policy guidelines, but reflected management’s increasing confidence in the outlook for its operations. Pan African has also announced a share buyback programme to add to investors’ returns.

Year end

Revenue (US$m)

PBT*
(US$m)

EPS*
(c)

DPS
(c)

P/E
(x)

Yield
(%)

06/20

274.1

80.8

3.78

0.84

6.4

3.5

06/21

368.9

117.7

4.54

1.27

5.3

5.3

06/22e

337.2

131.2

4.99

1.44

4.8

6.0

06/23e

357.1

142.3

5.12

2.42

4.7

10.1

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles and exceptional items.

Evander makes like a phoenix; Elikhulu recovers

In addition to its financial results, management confirmed its production guidance of 195koz for FY22 and c 210koz in FY23 and FY24. In the short term, we expect this to be at higher margins as Elikhulu transitions away from the lower benches of the Kinross tailings storage facility (TSF) to the upper benches of dam no. 3 and eventually to the Leslie and Bracken TSFs, which will allow for improved throughput and higher recoveries than in H221. In the medium term, however, with the development of the 24 Level project then Egoli at Evander, we expect output at Pan African to rise to c 263.8koz in FY27, with the main increase from Egoli financed internally from cash flows and without the need for recourse to third-party debt funding.

High yield sustainable and growing

At 5.3%, we estimate that Pan African has the 12th highest dividend yield among 64 dividend-paying listed precious metals miners, globally.

Valuation: 30p per share in prospect

Pan African is cheap relative to both its historical trading record and its peers. Our core valuation of the company is 41.79c/share (30.42p/share) cum-div. However, this stands to rise by an additional 13.5%, to 47.43c/share (34.53p/share), in the event of the successful development of Mintails/Mogale in particular. To this must then be added the value of c 19.2m underground Witwatersrand ounces, which we estimate could lie anywhere in the range of 0.22–5.24c to take the total to 47.65–52.67c/share (34.69–38.34p/share). Alternatively, if Pan African’s historical average price to normalised EPS ratio of 8.9x in the period FY10–21 is applied to our FY22 and FY23 forecasts, it implies a share price of 32.15p in FY22, followed by 32.99p in FY23.

Investment summary

Company description: African gold miner

Pan African is a South Africa-based gold mining group, which has dual primary JSE and AIM listings and operates four major assets in South Africa: Barberton (target output 95koz Au pa), the Barberton Tailings Retreatment Project (20koz pa), Elikhulu incorporating the Evander Tailings Retreatment Project (55koz + 10koz pa) and Evander underground incorporating the Egoli project (currently 36koz rising to >100koz pa). Within these, it has a plethora of short- to medium-term organic growth projects and an abundance of ESG initiatives (see results presentation for details).

Valuation: Everything points to 30p per share

Pan African is cheap relative to both its historical trading record and its peers. Our core valuation of the company is 41.79c/share (30.42p/share) cum-div. Stated alternatively, we calculate that investors buying Pan African’s shares, cum-div, at a price of 17.50p per share, will enjoy an internal rate of return on their investment of 21.8% per year over the next 18 years, until FY39, in US dollar terms. In addition, our core valuation rises by an additional 13.5%, to 47.43c/share (34.53p/share) once next level growth projects – and in particular, the Mintails/Mogale assets – are taken into account. To this must then be added the value of c 19.2m underground Witwatersrand ounces, which we estimate could lie anywhere in the range of 0.22–5.24c to take the total to 47.65–52.67c/share (34.69–38.34p/share). Alternatively, if PAF’s historical average price to normalised EPS ratio of 8.9x in the period FY10–21 is applied to our FY22 and FY23 forecasts, it implies a share price of 32.15p in FY22 followed by 32.99p in FY23. In the meantime, PAF remains cheaper than its South Africa- and London-listed gold mining peers on 86.1% of comparable common valuation measures (31 out of 36 individual measures) if our forecasts are applied over the next two years or 80.6% if consensus forecasts are applied (see Exhibit 13 on page 12). Thus, applying PAF’s peers’ average year 1 P/E ratio of 9.2x to our forecast normalised HEPS forecast of 4.99c/share for FY22 implies a share price for the company of 33.3p at prevailing forex rates, while applying its peers’ average year 2 P/E ratio of 8.6x to our forecast normalised headline earnings per share (HEPS) forecast of 5.12c/share implies a share price of 32.0p in FY23.

Financials: Net-debt free within a year

Pan African reported total net debt of US$39.0m at end-FY21, which equates to a gearing ratio (net debt/equity) of 13.8% and a leverage ratio (net debt/[net debt+equity]) of 12.1%. Of this, net debt to financial institutions amounted to only US$23.6m, which compares to two and a half years ago, when it was completing capex on Elikhulu and net debt amounted to £102.7m (31 December 2018) and gearing and leverage to 82.2% and 45.1%, respectively. Despite capex commitments, we are continuing to forecast the company will be free of net debt to financial institutions by the end of FY22. In the meantime, the group remains comfortably within its debt covenants to the point at which they are now, to all intents and purposes, irrelevant.

Sensitivities and risks: Fewer than usual South African profile

Our valuation of Pan African (above) has been conducted at a real gold price declining from US$1,819/oz to US$1,524/oz over the next six years to CY28 and then flattening off. Apart from gold price risk, other risks include the sovereign risk relating to South Africa and normal geological and engineering risks (albeit more than a third of production in the immediate future is expected to be derived from tailings retreatment operations). Otherwise, normal commercial risks include exchange rate movements (in particular the rand/dollar exchange rate), regulatory risks and workforce risks.

FY21 production results

Pan African announced its FY21 financial results within the context of known production results, which were released to the market on 13 July and only very slightly adjusted in the final results announcement on 15 September (see Exhibit 1). Overall, production in FY21 was 6,777oz (3.5%) higher than PAF’s own guidance of 195,000oz from as recently as May 2021 and as a result, the group’s production profile grew, rather than declined, in H221 cf H121.

Exhibit 1: PAF production, FY18–21 (oz)

Original PAF estimate

Final

Operation

H118

H218

H119

H219

H120

H220

H121

H221

FY21

H221

FY21

Change*

(oz)

Barberton UG

32,159

40,966

38,550

36,806

36,737

31,392

42,350

42,469

84,819

42,476

84,826

+7

BTRP

8,452

9,052

12,006

12,001

10,619

9,516

10,004

8,231

18,235

8,235

18,239

+4

Barberton

40,611

50,018

50,556

48,807

47,356

40,908

52,354

50,700

103,054

50,711

103,065

+11

Evander UG

32,734

15,831

8,821

8,058

11,553

9,117

12,607

23,352

35,959

23,409

36,016

+57

ETRP

11,937

9,313

6,345

3,654

4,731

6,176

6,560

4,561

11,121

4,677

11,237

+116

Evander

44,671

25,144

15,166

11,712

16,284

15,293

19,169

27,913

47,080

28,086

47,253

+173

Elikhulu

0

0

15,292

30,909

29,301

30,315

26,863

24,610

51,473

24,596

51,459

-14

Total

85,282

75,139

81,014

91,428

92,941

86,516

98,386

103,223

201,608

103,391

201,777

+169

Source: Edison Investment Research, Pan African Resources. Note: *Final cf original. Totals may not add up owing to rounding. UG, underground.

In general, all of the outperformance could be attributed to operations at Evander underground. Output at Evander underground was restrained by a ventilation shaft lining fracture in H121 as well as technical difficulties relating to the pseudo packs used for ground support (now overcome) and lower than usual metallurgical recoveries (although this was, to some extent, counterbalanced by an elevated head grade, which, we estimated at 8.51g/t). In the event, however, Evander’s performance in H221 not only returned output levels to those expected for the six-month period, but more than made up for the shortfall in the first half, such that production for the full year was 36,016oz cf an original Edison forecast of 35,667oz (see our note, The sun rises over Egoli’s city of gold, published on 14 October 2020). Over the same period, production at Barberton underground benefited from increased mining footprints on the 256, 257, 258 and 358 platforms, thereby engendering greater mining flexibility. Throughput at Elikhulu was restricted on account of remedial work on its tailing storage facility’s lower compartment. In addition, unexpected concentrations of carbonaceous material in the lower benches of the Kinross dam negatively affected gold recoveries, which we estimate must have been in the order of 42.6% in H221 – in line with our prior expectation and also H121 and H220, but notably lower than H219 and H120 (both >50%).

FY21 financial results

The table overleaf presents Pan African’s H221 and FY21 results relative to both historic results and our prior expectations. In general, both earnings and headline earnings were within 1% of our forecasts for the full year (post-tax). Within that, the main variances were a negative US$3.3m variance in the depreciation charge, which increased more than capex (+31.2% H221 cf H121) and production (+5.1% H221 cf H121) and a negative US$6.1m variance in ‘other’ expenses, which included US$7.3m in costs incurred on the increased value of employee incentive schemes’ liabilities, consistent with the increase in the group’s share price. These were almost exactly balanced by a US$10.4m positive variance in the tax charge, of which the majority (US$7.2m) could be attributed to deferred taxes.

While normalised earnings and profit after tax were within 1% of our prior expectations, however, Pan African outperformed our underlying expectations (as measured by normalised HEPS, which excludes other income and expenses, in particular), by 6.9%, as shown below.

Exhibit 2: PAF P&L statement by half-year (H119–H221e)

US$000s
(unless otherwise indicated)

H119
(restated)

H219

FY19

H120

H220

FY20

H121

H221e

H221a

FY21e

FY21a

Revenue

97,531

121,287

218,818

132,849

141,258

274,107

183,751

185,269

185,164

369,020

368,915

Cost of production

(70,847)

(82,133)

(152,980)

(86,501)

(71,956)

(158,457)

(98,245)

(109,312)

(110,570)

(207,557)

(208,815)

Depreciation

(6,840)

(9,388)

(16,228)

(10,526)

(10,977)

(21,503)

(12,741)

(16,020)

(19,333)

(28,761)

(32,074)

Mining profit

19,844

29,767

49,611

35,821

58,325

94,146

72,766

59,937

55,260

132,703

128,026

Other income/(expenses)

(2,077)

(5,181)

(7,258)

(962)

(27,720)

(28,682)

(6,704)

0

(6,115)

(6,704)

(12,819)

Loss in associate etc

0

0

0

0

0

0

0

0

0

0

Loss on disposals

0

0

0

0

0

0

0

0

0

0

Impairments

0

17,854

17,854

109

(20)

89

0

0

0

0

Royalty costs

(474)

120

(354)

(208)

(266)

(474)

(2,404)

(1,778)

(1,050)

(4,183)

(3,454)

Net income before finance

17,293

42,559

59,852

34,761

30,319

65,079

63,657

58,159

48,096

121,816

111,753

Finances income

443

407

850

207

258

465

300

456

756

Finance costs

(5,699)

(7,343)

(13,042)

(7,760)

(5,587)

(13,346)

(3,946)

(3,729)

(7,675)

Net finance income

(5,256)

(6,936)

(12,192)

(7,553)

(5,329)

(12,881)

(3,646)

(2,507)

(3,273)

(6,153)

(6,919)

Profit before taxation

12,037

35,623

47,660

27,208

24,990

52,198

60,011

55,651

44,823

115,662

104,834

Taxation

(2,325)

(5,850)

(8,174)

(5,303)

(2,602)

(7,905)

(19,239)

(21,275)

(10,903)

(40,513)

(30,141)

Effective tax rate (%)

19.3

16.4

17.2

19.5

10.4

15.1

32.1

38.2

24.3

35.0

28.8

PAT (continuing ops)

9,712

29,774

39,486

21,906

22,388

44,293

40,773

34,376

33,920

75,149

74,692

Loss from discontinued ops

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

N/A

Profit after tax

9,712

29,774

39,486

21,906

22,388

44,293

40,773

34,376

33,920

75,149

74,692

Headline earnings

9,712

14,586

24,298

21,742

22,416

44,158

40,772

34,376

33,919

75,148

74,691

Est. normalised headline earnings

11,789

19,766

31,556

22,704

50,136

72,840

47,476

34,376

40,034

81,852

87,510

EPS (c)

0.50

1.54

2.05

1.14

1.16

2.30

2.11

1.78

1.76

3.90

3.87

HEPS* (c)

0.50

0.76

1.26

1.13

1.16

2.29

2.11

1.78

1.76

3.90

3.87

Normalised HEPS (c)

0.61

1.03

1.64

1.18

2.60

3.78

2.46

1.78

2.08

4.24

4.54

EPS from continuing ops (c)

0.50

1.54

2.05

1.14

1.16

2.30

2.11

1.78

1.76

3.90

3.87

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

In the event, deferred taxes accounted for the majority (52.6%) of the total tax charge, with cash taxes amounting to only the balance of 47.4%.

While modestly outperforming our expectations for the full year, normalised HEPS of 4.54c/share was nevertheless almost exactly in the middle of the range of analysts’ expectations of 3.01–3.72p/share, or 4.16–5.14c/share (source: Refinitiv, 21 July 2021).

H221 and FY21 operational analysis

Barberton underground (42% of production; 41% of adjusted EBITDA)

Barberton reaped the rewards to increased mining flexibility in H221, owing to the establishment of four platforms from which to cycle high-grade production on the MRC orebody (cf three in FY20), with tonnes milled remaining at high levels and the underground grade remaining close to its average for the last 10 years. As a result, production recorded its highest level since H116, while unit costs increased by only 3.1% (H221 cf H121) in rand terms, which was a creditable performance given that year-on-year CPI inflation in South Africa was 4.9% in June after recording a 30-month high of 5.2% in May and that the number of tonnes milled from surface sources decreased by 5.9 percentage points, from 24.3% of the total in H121 to 18.4% in H221. As a result, Barberton recorded its second highest level of adjusted EBITDA in recent history in H221 (after H121) and otherwise the highest since at least H115 and easily covered capex of ZAR230.4m (see Exhibit 3).

Full details of Barberton’s operating performance in FY21 are provided in Pan African’s results announcement. In summary, the worst depredations of the coronavirus were mitigated by: increased reserve delineation drilling on the 256 platform of the high-grade MRC orebody at Fairview to increase confidence in, and predictability of, management’s geological models; Barberton’s ability to mill ore from surface sources (requiring a lower complement of workers); and its ability to focus on higher-grade areas of the orebody after the establishment of the 257 and 258 platforms, thereby allowing four platforms to cycle (flexible) production on the MRC. The improved flexibility, resulting from accelerated underground development programmes, has now increased the face length available for mining to over 200m (cf 130m at end-FY20). At the 257 platform alone, geological mapping and reserve delineation drilling have identified mineralised widths in excess of 15m (cf the usual 7m ordinarily encountered on the upper platforms).

Exhibit 3: Barberton underground operational statistics and estimates, H118–H221

H118

H218

H119

H219

H120

H220

H121

H221e

H221

H221 vs H221e (%)

FY21

Tonnes milled underground (t)

124,969

112,862

127,858

119,777

117,545

116,035

122,199

129,501

133,473

+3.1

255,672

Head grade underground (g/t)

8.70

12.07

9.60

9.88

*9.70

*8.79

11.25

10.38

*10.42

+0.4

10.82

Underground gold contained (oz)

34,956

43,803

39,463

38,052

36,648

32,791

44,195

43,215

44,724

+3.5

88,918

Tonnes milled surface (t)

0

0

12,471

33,158

47,231

56,593

39,267

38,879

30,078

-22.6

69,345

Head grade surface (g/t)

0.00

0.00

2.30

1.62

*2.16

*0.73

1.06

2.16

*0.98

-54.6

1.03

Surface gold contained (oz)

0

0

922

1,729

3,283

1,331

1,343

2,703

949

-64.9

2,292

Tons milled (t)

124,969

112,862

140,329

152,935

164,776

172,628

161,466

168,380

163,551

-2.9

325,017

Head grade (g/t)

8.70

12.07

8.95

8.09

7.54

6.15

8.77

8.48

8.69

+2.5

8.73

Contained gold (oz)

34,956

43,803

40,386

39,780

39,932

34,122

45,538

45,918

45,673

-0.5

91,211

Recovery (%)

93.0

93.5

94.0

92.5

92.0

92.0

93.0

92.5

93.0

+0.5

93.00

Production underground (oz)

32,159

40,966

37,735

35,129

36,737

31,392

42,350

42,469

42,476

0.0

84,826

Production calcine dumps/surface ops (oz)

0

0

815

1,677

0

0

0

0

N/A

0

Total production (oz)

32,159

40,966

38,550

36,806

36,737

31,392

42,350

42,469

42,476

0.0

84,826

Recovered grade (g/t)

8.00

11.29

8.54

7.49

6.93

5.66

8.16

7.84

8.08

+3.0

8.12

Gold sold (oz)

32,159

40,966

37,829

37,527

36,737

31,392

42,350

42,469

42,476

0.0

84,826

Average spot price (US$/oz)

1,288

1,317

1,220

1,306

1,477

1,647

1,877

1,819

1,805

-0.8

1,836

Average spot price (ZAR/kg)

554,361

521,029

556,770

596,180

698,031

882,504

981,381

850,373

843,828

-0.8

909,122

Total cash cost (US$/oz)

1,145

981

996

1,097

1,159

1,053

997

1,235

1,150

-6.7

1,074

Total cash cost (ZAR/kg)

492,826

390,220

454,164

500,214

547,594

572,432

521,351

577,560

542,629

-6.0

531,999

Total cash cost (US$/t)

294.62

356.03

268.42

269.10

258.39

191.44

261.64

311.60

298.72

-4.1

280.30

Total cash cost (ZAR/t)

3,945.00

4,405.46

3,860.00

3,817.67

3,797.00

3,237.70

4,253.00

4,530.90

4,383.29

-3.3

4,318.56

Implied revenue (US$000)

41,421

53,057

46,151

49,325

54,261

53,724

79,491

77,251

76,250

-1.3

155,741

Implied revenue (ZAR000)

554,499

660,698

655,098

699,398

797,598

893,997

1,292,694

1,123,280

1,105,899

-1.5

2,398,592

Implied revenue (£000)

31,422

38,722

35,652

38,120

43,061

42,614

60,824

55,637

54,762

-1.6

115,586

Implied cash costs (US$000)

36,819

40,182

37,667

41,155

42,576

33,047

42,246

52,468

48,857

-6.9

91,103

Implied cash costs (ZAR000)

493,003

497,209

534,400

583,855

625,654

558,918

686,715

762,914

716,891

-6.0

1,403,606

Implied cash costs (£000)

27,900

29,269

29,102

31,803

33,796

26,203

32,349

37,790

35,265

-6.7

67,614

Reported adjusted EBITDA (ZAR000)

72,300

174,700

137,200

140,700

205,100

262,200

543,900

421,700

N/A

965,600

Source: Pan African Resources, Edison Investment Research. Note: *Estimated.

Since the year end, Pan African announced a three-year wage agreement with the National Union of Mineworkers (NUM) and a five-year wage agreement with the United Association of South Africa union (UASA). While there are a number of conditions to the agreements, the substantive points are that the NUM deal provides for an average annual wage increase of c 5.6% for three years ending 30 June 2024, while the UASA deal provides for 5.0% increases for the five years to end June 2026, but with the potential to be higher or lower depending on the rate of South African consumer price inflation. The blended average annual increase is expected to be 5.4% compound annually for the initial three-year period of the agreements. While price increases in South Africa (as measured by the CPI) were 3.0–3.3% between July 2020 and March 2021, they recently accelerated to 5.2% in May and 4.9% in June. Over the past six years, they have been 3.1–6.3% (simple average 4.7%). With little apparent political will to rein prices in, however, in the face of the country’s unemployment situation, inflation is expected to remain at elevated levels at or around 4.5% into the foreseeable and, as such, Pan African’s agreements represent a real-term increase of less than 1%, while at the same time conferring upon Barberton the security of operating in an environment free from the prospect of old fashioned industrial action.

Elikhulu (26% of production; 33% of adjusted EBITDA)

Elikhulu’s performance in H221 was broadly similar to both that in H121 and Edison’s prior expectations, with the exception of the fact that unit cash costs (as measured in ZAR/t) did not decline relative to H121 as we had expected. Remedial and optimisation work on the Elikhulu tailings storage facility’s lower compartment restricted tonnage throughputs, in mitigation of which the group was required to install elevated drains on the south-western edge of the compartment in order to facilitate the removal of excess water from the facility (TSF) and to ensure sustainable operations. At the same time, the lower benches of the Kinross TSF were found to contain higher than expected concentrations of historically processed fine carbon, which adversely affected metallurgical recoveries, compounded by the mining of the coarser but high-grade outer wall of the Kinross TSF, which also acted to reduce recoveries.

As a result, whereas we calculated that Elikhulu accounted for 47% of group-wide H120 adjusted EBITDA, 91% of H220 adjusted EBITDA and 68% of FY20 adjusted EBITDA, in FY21 we estimate it accounted for 39% of H121 adjusted EBITDA, 27% of H221 adjusted EBITDA and 33% of FY21 adjusted EBITDA. Nevertheless, while adjusted EBITDA at Elikhulu was comparable to that of Barberton in FY21 (ZAR786.0m cf ZAR965.6m), its capex was still an order of magnitude lower (ZAR64.2m cf ZAR418.3m).

Exhibit 4: Elikhulu operational statistics and estimates, H119–H221

H119

H219

H120

H220

H121

H221e

H221

H221 cf H121

FY21

Tonnes processed tailings (t)

3,534,278

7,313,931

6,211,028

6,882,546

6,278,191

6,671,500

6,776,576

7.9

13,054,767

Head grade tailings (g/t)

0.30

0.26

*0.28

0.32

0.31

0.27

0.29

-6.5

0.30

Tailings gold contained (oz)

34,089

60,199

56,348

70,494

62,472

57,740

63,038

0.9

125,510

Recovery (%)

44.0

51.3

52.0

43.0

43.0

42.6

42.6

-0.9

41.0

Production tailings (oz)

15,292

30,909

29,301

30,315

26,863

24,610

24,596

-8.4

51,459

Total production (oz)

15,292

30,909

29,301

30,315

26,863

24,610

24,596

-8.4

51,459

Recovered grade (g/t)

0.13

0.13

0.15

0.14

0.13

0.11

0.11

-15.2

0.12

Gold sold (oz)

15,292

30,173

29,301

30,315

26,863

24,610

24,596

-8.4

51,459

Average spot price (US$/oz)

1,216

1,306

1,451

1,647

1,852

1,805

1,805

-2.5

1,811

Average spot price (ZAR/kg)

563,250

596,180

685,680

882,504

968,130

843,828

843,828

-12.8

896,689

Total cash cost (US$/oz)

517

575

621

495

656

711

849

29.3

744

Total cash cost (ZAR/kg)

239,639

262,650

293,608

265,166

342,917

332,333

396,698

15.7

368,613

Total cash cost (US$/t)

2.24

2.43

2.93

2.15

2.81

2.62

3.05

8.6

2.93

Total cash cost (ZAR/t)

32.00

33.70

43.00

36.33

45.63

38.13

44.78

-1.9

45.19

Implied revenue (US$000)

18,595

39,009

42,516

50,783

49,750

44,421

43,442

-12.7

93,192

Implied revenue (ZAR000)

267,899

554,999

624,898

837,196

808,898

645,909

626,289

-22.6

1,435,187

Implied revenue (£000)

14,365

30,145

33,740

40,283

38,067

31,992

31,097

-18.3

69,165

Implied cash costs (US$000)

7,912

17,742

18,209

14,818

17,626

17,495

20,657

17.2

38,283

Implied cash costs (ZAR000)

114,000

246,492

267,600

250,023

286,500

254,384

303,480

5.9

589,980

Implied cash costs (£000)

6,208

13,421

14,455

11,784

13,496

12,601

14,986

11.0

28,482

Adjusted EBITDA (ZAR000)

145,100

296,300

333,100

564,000

484,800

301,200

N/A

786,000

Source: Pan African Resources, Edison Investment Research. Note: *Estimate.

Capex at Elikhulu will continue to increase in FY22 as it transitions from Phase 1 of its operations (the re-mining of Kinross tailings) to Phase 2 (the re-mining of Leslie and Bracken tailings), necessitating the installation of approximately 6km of piping and a pump station between the plant and the areas to be mined. Thereafter, it is expected to produce approximately 60,000oz gold pa until FY26 as re-mining progresses from the Kinross to the Leslie and Bracken TSFs. For the final seven years of operation, while processing the Winkelhaak TSF, it is expected to produce c 50,000oz gold pa (excluding c 102,000oz inferred mineral resources delineated in the soil material beneath the existing TSFs).

In the meantime, however, Elikhulu is expected to produce 55,000oz gold in FY22, with improved throughput and higher recoveries from the planned re-mining of areas on the upper benches of the number three Kinross TSF dam (in line with its mine plan from the start of production).

Evander underground (18% of production; 16% of adjusted EBITDA)

Relative to prior periods, underground operations at Evander in H221 recorded a vastly improved performance, with both tonnes processed and grades increasing materially at the same time that unit costs (measured in ZAR/t) decreased materially, to result in a near seven-fold increase in adjusted EBITDA (cf H121) to a level that is almost certainly a record for underground operations at Evander since they came under PAF ownership and management in H213.

Exhibit 5: Evander operational statistics and estimates, H119–H221

H119

H219

H120

H220

H121

H221e

H221

**Change
(%)

***Variance
(%)

FY21

Tonnes milled (t)

37,347

26,624

30,044

21,392

50,634

76,093

69,812

37.9

-8.3

120,446

Head grade (g/t)

7.82

10.01

*12.59

5.16

8.51

9.74

10.56

24.1

+8.4

9.70

Contained gold (oz)

9,384

8,572

12,161

3,549

13,854

23,829

23,709

71.1

-0.5

37,563

Recovery (%)

94

94

95

94

91

98

99

8.5

+1.0

96

Underground production (oz)

8,821

8,058

11,553

9,117

12,607

23,352

23,409

85.7

+0.2

36,016

Production from surface sources (oz)

0

0

0

0

N/A

N/A

0

Total production (oz)

8,821

8,058

11,553

9,117

12,607

23,352

23,409

85.7

+0.2

36,016

Recovered grade (g/t)

7.35

9.41

11.96

13.26

7.74

9.55

10.43

34.7

+9.2

9.30

Gold sold (oz)

8,821

8,058

9,214

5,863

12,607

23,352

23,409

85.7

+0.2

36,016

Average spot price (US$/oz)

1,214

1,306

1,451

1,647

1,852

1,805

1,805

-2.5

0.0

1,811

Average spot price (ZAR/kg)

565,367

596,180

685,658

882,504

968,072

843,828

843,828

-12.8

0.0

896,612

Total cash cost (US$/oz)

1,711

1,814

1,420

1,241

1,604

1,012

1,030

-35.8

+1.8

1,225

Total cash cost (ZAR/kg)

780,357

828,170

671,299

665,209

838,665

473,272

481,582

-42.6

+1.8

606,656

Total cash cost (US$/t)

404.07

549.62

546.00

169.14

399.31

310.68

342.36

-14.3

+10.2

366.30

Total cash cost (ZAR/t)

5,733

7,796

6,404

5,671

6,496

4,517

5,023

-22.7

+11.2

5,642

Implied revenue (US$000)

10,709

10,525

13,370

9,879

23,348

42,150

41,877

79.4

-0.6

65,225

Implied revenue (ZAR000)

155,115

146,084

196,499

167,699

379,599

612,892

624,798

64.6

+1.9

1,004,397

Implied revenue (£000)

8,272

8,134

10,610

7,836

17,865

30,357

30,543

71.0

+0.6

48,408

Implied cash costs (US$000)

15,091

14,633

16,404

3,618

20,218

23,641

23,901

18.2

+1.1

44,120

Implied cash costs (ZAR000)

214,100

207,564

192,402

121,306

328,918

343,748

350,638

6.6

+2.0

679,556

Implied cash costs (£000)

11,659

11,301

10,393

5,509

15,495

17,027

17,312

11.7

+1.7

32,806

Adjusted EBITDA (ZAR000)

(58,985)

26,085

64,900

(345,600)

49,000

331,000

575.5

380,000

Source: Pan African Resources, Edison Investment Research. Note: *Estimate. **H221 cf H121. ***H221 cf H221e.

After a difficult H121, in which output was below expectations, among other things, as a result of a ventilation shaft lining fracture, successful remedial work on the shaft barrel allowed production in H221 to more than make up for the shortfalls in H121, with average production of c 5,134oz per month for each of the last three months of FY21 (ie an annualised production rate of 61,608oz pa).

The 8 Shaft pillar now has a remaining life in excess of two years and is expected to produce approximately 79,160oz of gold during this period, at approximately 39,000oz pa, after which production at Evander underground will be redirected towards Phase 1 of the 8 Shaft decline, 24 Level project and potentially Phase 2 thereafter (extending mining down to 25 and 26 Levels).

Growth projects

Pan African has recently added two major new projects to its existing portfolio of growth projects (already including Royal Sheba, the Fairview sub-vertical shaft, Rolspruit, Poplar, Evander South etc) in the form of the Mintails/Mogale project and the 8 Shaft decline 24 Level project.

Mintails/Mogale

One of the assets with the most immediate optionality in the company’s portfolio is Mintails/Mogale, which could yet prove very similar in nature to Elikhulu, and into which PAF is conducting due diligence with a view to acquiring it.

On 6 November 2020, PAF announced it had entered into a conditional agreement with the liquidator of Mintails’ assets for the purchase of the total share capital and associated loans of Mogale Gold and Mintails SA Soweto Cluster. Due diligence has been extended until January 2022. In the meantime, Pan African has successfully concluded both a fatal flaw analysis and a high-level financial evaluation of the project (which would be similar in nature to Pan African’s flagship Elikhulu project). In July, it subsequently completed a pre-feasibility study (PFS) on the Mogale Gold assets. Key outcomes of the PFS (cf the financial evaluation) are as follows:

An optimal throughput feed of c 0.8Mtpm (unchanged; cf Elikhulu’s 1.2Mtpm).

An all-in sustaining cost of US$1,087/oz (cf US$800/oz).

An NPV10.71 of ZAR849m, or US$56.6m, at a gold price of US$1,690/oz and a forex rate of ZAR15.00/US$ (cf ZAR1,469m, or US$101.3m, at a gold price of US$1,770/oz and a forex rate of ZAR14.50/US$); this equates to ZAR0.44/share (cf ZAR0.76/share), US$0.029/share (cf US$0.053/share) or £0.021 (cf £0.038/share).

Initial project capital of ZAR1,991m, or US$132.7m at ZAR15.00/US$, and life of mine capital of ZAR3,022m, or US$201.5m (cf ZAR1,000m, or US$68.9m at ZAR14.50/US$, and life of mine capital of ZAR1,700m, or US$117.2m).

Average annual production of 40-50koz pa (cf 44.4koz pa).

An 11-year life of mine (cf 12 years).

A real pre-tax internal rate of return of 22% (cf a post-tax internal rate of return of 42.8%).

While not explicitly reported in the results of the PFS, metallurgical recoveries were estimated to be c 53% in the initial financial evaluation (cf Elikhulu’s 48%). In the meantime, by way of comparison, investors should note that Mintails’ and Mogale’s aggregate resource of 2.36Moz compares favourably to Elikhulu’s original resource of 1.7Moz and its initial reserve of 1.5Moz, but at a fractionally higher grade of 0.30g/t (cf Elikhulu’s 0.29g/t). PAF announced the results of an independent definitive feasibility study (DFS) on Elikhulu on 5 December 2016, which demonstrated an NPV9 of US$75.9m (or, then, 5.0c/share, or US$40.95 per resource ounce) at a gold price of US$1,180/oz and a forex rate of ZAR14.50/US$. At the time, we estimated Elikhulu to be worth US$69.9m (or 4.6c/share) at a 10% discount rate and to be capable of adding 1.33p to EPS in the first eight years of its operation (albeit there are now 28.0% more shares in issue). Now, however, with capex having been expended (albeit with not all associated debt having quite been repaid), we estimate a valuation for Elikhulu of c US$140.98 per initial resource ounce or US$185.19 per remaining resource ounce. As such, and albeit with suitable caveats such as the Mintails/Mogale assets developing in a similar fashion to Elikhulu, PAF could acquire for US$1.31/oz an asset that should be worth US$9.88/oz as an in-situ resource (see Gold stars and black holes, published in January 2019), could be worth US$23.98/oz (pre-development) and may be worth up to US$208.49 per remaining ounce (or US$126.23 per initial ounce), post-initial capex and debt repayment.

8 Shaft no. 2 decline 24 Level project

Pan African has continued to maintain the integrity of the underground infrastructure at Evander even after the end of high-volume, deep-level underground mining in May 2018. While limited vamping operations have continued since then, PAF has now concluded an internal technical and economic study into the merits of mining the number 2 decline on 24 Level at 8 Shaft (Phase 1 of the project) with an option to extend mining to levels 25 and 26 at a later date (Phase 2).

An integral component of the Phase 1 study was the identification of pre-May 2018 problems at Evander underground and appropriate mitigation of the major challenges encountered during the mining of the Kinross orebody. These included:

Exhibit 6: Evander underground challenges and mitigations

Risk

Mitigation

Low efficiencies owing to high temperatures as a result of inadequate refrigeration capacity

Installation of a new refrigeration plant for a capital investment of c ZAR170m (US$22.1m at ZAR14.50/US$)

Ore and waste separation

Underground waste handling and storage facilities to be installed at a capital cost of c ZAR60m (US$4.1m)

Limited face time owing to long underground travelling times and distances

Installation of a man carriage on 24 Level

Labour intensive ore handling infrastructure based on a continually rotating three-shift pattern

Reduced tonnage profile requiring only one shift to be manned in order to meet production targets

Risk

Low efficiencies owing to high temperatures as a result of inadequate refrigeration capacity

Ore and waste separation

Limited face time owing to long underground travelling times and distances

Labour intensive ore handling infrastructure based on a continually rotating three-shift pattern

Mitigation

Installation of a new refrigeration plant for a capital investment of c ZAR170m (US$22.1m at ZAR14.50/US$)

Underground waste handling and storage facilities to be installed at a capital cost of c ZAR60m (US$4.1m)

Installation of a man carriage on 24 Level

Reduced tonnage profile requiring only one shift to be manned in order to meet production targets

Source: Pan African Resources, Edison Investment Research

To date, the study has yielded the following results for the project:

An NPV10.71 of ZAR126.1m, or US$8.7m at a gold price of US$1,770/oz and a forex rate of ZAR14.50/US$, or ZAR0.063/share, US$0.005/share or £0.003/share.

Project capital of ZAR320m (US$22.1m at ZAR14.50/US$) to be funded internally and from existing facilities.

A real, post-tax internal rate of return of 26.6% (based on Phase 1 cash-flows only).

While not large by the standards of some of Pan African’s other recent projects, the 8 Shaft no. 2 decline 24 Level project will extend the 8 Shaft Pillar project’s 2.5-year life by a minimum of another 2.5 years at approximately the same level of production of c 35,000oz per year and has now been officially brought into PAF’s life of mine plan for 8 Shaft (and therefore our estimates for the purposes of our valuation of Pan African, below).

Asset development and assumptions

As a consequence of the positive concept study on Mintails/Mogale and the group’s assessment of the opportunity provided by the 24 Level project at Evander, Pan African has now reprioritised its capital expenditure programmes as follows:

It has started preparatory work for the mining of the 24 Level project. For the purposes of our estimates and valuation, we have assumed the following performance parameters over the life of the operation:

Exhibit 7: 24 Level project cost and production assumptions

FY22

FY23

FY24

FY25

FY26

Gold produced (oz)

0

10,450

35,520

39,700

12,550

Opex (ZAR/t)*

N/A

5,000

5,000

5,000

5,000

Capex (ZARm)*

220.8

90.6

6.4

-

-

Source: Pan African Resources, Edison Investment Research. Note: *Real.

It will implement a phased approach to the development of the Egoli project. We had previously assumed that capex for Egoil would be expended in FY21–23 with production also beginning in FY23; we are now assuming that PAF will develop and mine the 24 Level project in FY22–26 and will phase in Egoli capex in FY24–26, with first production in FY25. For the moment, we have left our capex assumptions for Egoli unchanged in real terms (at ZAR1.9bn over the life of the operation), albeit their later timing will allow them to be funded from 24 Level project cash-flows, rather than requiring third party debt finance. In addition, we have increased assumed life of mine production from Egoli from 571koz to 730koz to reflect upside from both ‘white areas’ and inferred resources that will be accessed during the dovetailing of the 24 Level and Egoli projects. In the event that the 25 and 26 Level project is developed however, there will be scope to significantly reduce the upfront capital expenditure uniquely associated with Egoli.

It will complete a definitive feasibility study (DFS) on the Mintails’ assets in Q1 of CY22. The results of the Mintails’ PFS are shown on page 8, above. One intermediate risk that has evolved with respect to Mintails is that, whereas Pan African has the sole right to acquire Mintails’ assets, subject to due diligence (extended to January 2022), it is understood that an application has been brought by the major creditor of Mintails SA to set aside the liquidation process and revert to a business rescue process. As a consequence, we have not yet incorporated PAF’s PFS results for Mintails/Mogale into our group forecasts, but continue to value this asset at purchase price only plus potential upside in the event that the project is developed according to the parameters set out in the project’s PFS.

As a result of the above changes to our assumptions (particularly the deferral of the development of Egoli), whereas we had forecast that group production at PAF would reach 274.5koz in FY25 previously, we now forecast that it will reach 263.8koz in FY27 – approximately two years later than originally forecast, but with intermediate production augmented by the 24 Level project (and potentially the Phase 2 25 and 26 Level projects) and without the need for third-party debt funding for Egoli.

Exhibit 8: Estimated Pan African group gold production, FY18–FY27e

Source: Edison Investment Research.

Updated (absolute) valuation

In the light of Pan African’s operational update for FY21 and fractionally revised external factors such as the gold price and forex rates, our absolute value of the company (based on its existing four producing assets plus Egoli) has increased by 14.4% to 41.79c/share (cf 36.52c previously), on the basis of the present value of our estimated maximum potential stream of dividends payable to shareholders over the life of its mining operations (applying a 10% discount rate):

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

Source: Pan African Resources, Edison Investment Research. Note: *From FY24. Excludes discretionary exploration investment.

A summary of the major components of the change in our valuation is provided in the ‘bridge’ chart below:

Exhibit 10: October 2021 valuation cf July 2021 valuation bridge chart (US cents per share)

Source: Edison Investment Research

Including its other potential growth projects and assets (namely the residual Evander underground resource and its shareholding in MC Mining), our updated total valuation of PAF is as follows:

Exhibit 11: PAF absolute valuation summary (US cents per share)

Project

Current valuation
(cents/share)

Previous valuation
(cents/share)

Existing producing assets (plus Egoli)

41.79

36.52

FY21 dividend

1.20

N/A

Fairview Sub-Vertical Shaft project

0.76

1.13

Royal Sheba (resource-based valuation)

0.69

0.43

Mintails/Mogale purchase consideration*

0.17

0.17

8 Shaft no. 2 decline 24 Level project

**N/A

0.45

MC Mining shares

0.06

0.06

Sub-total

44.66

38.76

EGM underground resource

0.22-5.24

0.22–5.24

Sub-total

44.88-49.90

38.98–44.00

Mintails/Mogale project execution upside

2.77

5.08

Total

47.65-52.67

44.06–49.08

Source: Edison Investment Research. Note: Numbers may not add up owing to rounding.* Acquisition of Mintails/Mogale is agreed, subject to due diligence; **now included in ‘Existing producing assets (plus Egoli)’.

Stated alternatively, excluding its other assets (ie the Fairview Sub-Vertical Shaft, Royal Sheba, Mintails/Mogale, MC Mining shares and EGM underground resource), we estimate that investors buying Pan African’s shares, cum-div, at a price of 17.50p per share, will earn an internal rate of return on their investment of 21.8% per year (over the next 18 years, until FY39, in US dollar terms.

Historical relative and current peer group valuation

Historical relative valuation

Exhibit 12, below, depicts PAF’s average share price in each of its financial years from FY10 to FY21 and compares this with normalised HEPS in the same year. For FY22 and FY23, the current share price (17.50p) is compared with our forecast normalised HEPS for FY22 to FY23. As is apparent from the graph, Pan African’s price to normalised HEPS ratio of 4.8x and 4.7x for FY22 and FY23, respectively (based on our forecasts, see Exhibit 18) is close to the bottom of its recent historical range of 4.1–14.8x for the period FY10–21:

Exhibit 12: PAF historical price to normalised HEPS** ratio, FY10–FY23e

Source: Edison Investment Research. Note: *Completed historical years calculated with respect to average share price within the year shown and normalised HEPS; zero normalisation assumed before 2016. **HEPS shown in pence prior to 2018 and US cents thereafter.

Stated alternatively, if PAF’s average Year 1 price to normalised EPS ratio of 8.9x for FY10–21 is applied to our normalised earnings forecasts, then it implies a share price for PAF of c 32.15p in FY22 followed by 32.99p in FY23.

Relative peer group valuation

Over the next two years, Pan African remains cheaper than its South Africa- and London-listed gold mining peers on 86.1% of comparable common valuation measures (31 out of 36 individual measures in the table below) if our forecasts are applied or 80.6% if consensus forecasts are applied.

Exhibit 13: Comparative valuation of PAF with South African and London peers

 

EV/EBITDA (x)

P/E (x)

Yield (%)

Year 1

Year 2

Year 1

Year 2

Year 1

Year 2

AngloGold Ashanti

5.3

4.3

10.1

7.8

1.4

1.6

Gold Fields

4.5

4.5

9.7

9.3

3.0

3.1

Sibanye

2.1

2.4

3.9

4.7

9.0

7.8

Harmony

3.8

3.6

8.5

8.1

1.9

3.5

Centamin

3.5

3.3

11.7

11.5

6.5

4.8

Endeavour Mining (consensus)

4.9

4.7

11.2

10.3

2.1

2.4

Average (excluding PAF)

4.0

3.8

9.2

8.6

4.0

3.9

PAF (Edison)

2.9

2.7

4.8

4.7

6.0

10.1

PAF (consensus)

3.0

3.1

4.8

4.9

4.6

6.1

Source: Edison Investment Research, Refinitiv. Note: Consensus and peers priced at 28 October 2021.

Alternatively, applying PAF’s peers’ average year 1 P/E ratio of 9.2x to our forecast normalised HEPS forecast of 4.99c/share for FY22 implies a share price for the company of 33.3p at prevailing forex rates. Applying its peers’ average year 2 P/E ratio of 8.6x to our forecast normalised HEPS forecast of 5.12c/share implies a share price of 32.0p.

Financials

Pan African reported net debt to financial institutions of only US$23.6m at end-June 2021 (see Exhibit 16), which equates to a gearing ratio (net debt/equity) of only 8.3% (cf 24.5% at the interim stage) and a leverage ratio (net debt/[net debt+equity]) of 7.7% (cf 19.7% at the interim stage). Despite capex commitments, we are continuing to forecast the company will be free of net debt to financial institutions by the end of FY22.

Exhibit 14: PAF current estimated net debt* profile forecast, FY17 to FY22e (US$000)

Exhibit 15: PAF previous net debt* profile forecast, FY17 to FY22e (US$000)

Source: Edison Investment Research, Pan African Resources. Note: *To financial institutions.

Source: Edison Investment Research, Pan African Resources. Note: *To financial institutions.

Exhibit 14: PAF current estimated net debt* profile forecast, FY17 to FY22e (US$000)

Source: Edison Investment Research, Pan African Resources. Note: *To financial institutions.

Exhibit 15: PAF previous net debt* profile forecast, FY17 to FY22e (US$000)

Source: Edison Investment Research, Pan African Resources. Note: *To financial institutions.

Including all other components, total net debt amounted to US$39.0m, made up of the following components:

Exhibit 16: Pan African components of total net debt

Item

Amount
(US$m)

Long-term debt to financial institutions

28.0

Short-term debt to financial institutions

30.7

Total debt to financial institutions

58.7

Cash

35.1

Net debt to financial institutions

23.6

Redink Rentals (RF) Limited loan facility

9.9

Other

0.2

Net senior debt

33.7

Lease liabilities

5.3

Total net debt

39.0

Item

Long-term debt to financial institutions

Short-term debt to financial institutions

Total debt to financial institutions

Cash

Net debt to financial institutions

Redink Rentals (RF) Limited loan facility

Other

Net senior debt

Lease liabilities

Total net debt

Amount
(US$m)

28.0

30.7

58.7

35.1

23.6

9.9

0.2

33.7

5.3

39.0

Source: Pan African Resources.

This US$39.0m level of net debt equates to a gearing ratio (net debt/equity) of 13.8% and a leverage ratio (net debt/[net debt+equity]) of 12.1%.

Relative to H121, lease liabilities remain almost unchanged, at US$5.3m (cf US$5.0m). In addition, during FY21, PAF entered into a loan with Redink Rentals (RF) to fund the solar photovoltaic renewable energy plant located at Evander Mines. For the purposes of our financial modelling, debts to non-financial institutions, such as lease liabilities, are included in ‘Other long-term liabilities’ in Exhibit 18, below.

In the meantime, the group remains very comfortably within its revolving credit facility debt covenants to the point at which they are now, to all intents and purposes, irrelevant:

Exhibit 17: PAF group debt covenants

Measurement

Constraint

FY21

H121

FY20

H120

FY19

H119

FY18*

H118

FY17
(restated)

Net debt:equity

Must be less than 1:1

0.1

0.3

0.4

0.6

0.71

0.85

0.78

0.19

0.02

Net debt:EBITDA

Must be less than 2.0:1 falling to 1.5:1 by June 2022

0.3

0.5

0.7

1.6

2.2

3.24

3.73

2.25

0.08

Interest cover ratio

Must be greater than 4.5 times rising to 5.1 times by June 2022

23.0

17.7

10.1

5.8

4.1

3.64

4.61

4.62

19.32

Debt service cover ratio

Must be greater than 1.3:1

3.0

3.3

3.4

3.0

1.4

2.85

3.84

1.85

9.11

Source: Pan African Resources. Note: *Subsequently restated.

Exhibit 18: Financial summary

US$'000s

2018

2019

2020

2021

2022e

2023e

Year end 30 June

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

145,829

218,818

274,107

368,915

337,194

357,087

Cost of sales

(107,140)

(152,980)

(158,457)

(208,815)

(163,316)

(175,213)

Gross profit

38,689

65,838

115,650

160,100

173,877

181,874

EBITDA

 

 

38,131

65,484

115,176

156,646

169,787

178,329

Operating profit (before GW and except.)

 

31,506

49,256

93,673

124,572

133,287

142,104

Intangible amortisation

0

0

0

0

0

0

Exceptionals

(16,521)

10,596

(28,593)

(12,819)

(1,720)

(1,719)

Other

0

0

0

0

0

0

Operating profit

14,985

59,852

65,079

111,753

131,566

140,384

Net interest

(2,222)

(12,192)

(12,881)

(6,919)

(2,120)

233

Profit before tax (norm)

 

 

29,284

37,064

80,791

117,653

131,167

142,336

Profit before tax (FRS 3)

 

 

12,763

47,660

52,198

104,834

129,447

140,617

Tax

2,826

(8,174)

(7,905)

(30,141)

(34,942)

(43,604)

Profit after tax (norm)

32,110

28,890

72,887

87,511

96,225

98,732

Profit after tax (FRS 3)

15,589

39,486

44,293

74,692

94,505

97,013

Average number of shares outstanding (m)

1,809.7

1,928.3

1,928.3

1,928.3

1,928.3

1,928.3

EPS - normalised (c)

 

 

1.31

1.64

3.78

4.54

4.99

5.12

EPS - FRS 3 (c)

 

 

0.87

2.05

2.30

3.87

4.90

5.03

Dividend per share (c)

0.00

0.15

0.84

1.27

1.44

2.42

Gross margin (%)

26.5

30.1

42.2

43.4

51.6

50.9

EBITDA margin (%)

26.1

29.9

42.0

42.5

50.4

49.9

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

21.6

22.5

34.2

33.8

39.5

39.8

BALANCE SHEET

Fixed assets

 

 

315,279

361,529

314,968

398,533

444,085

454,913

Intangible assets

56,899

49,372

43,466

50,548

52,934

55,319

Tangible assets

254,247

305,355

270,286

346,922

390,087

398,530

Investments

4,134

6,802

1,216

1,064

1,064

1,064

Current assets

 

 

29,009

31,601

53,648

84,558

110,347

190,325

Stocks

4,310

6,323

7,626

11,356

11,249

11,912

Debtors

22,577

18,048

11,245

37,211

24,040

25,456

Cash

922

5,341

33,530

35,133

74,201

152,099

Current liabilities

 

 

(44,395)

(63,855)

(78,722)

(105,978)

(109,676)

(149,452)

Creditors

(37,968)

(39,707)

(62,806)

(75,303)

(79,001)

(129,877)

Short-term borrowings

(6,426)

(24,148)

(15,916)

(30,675)

(30,675)

(19,575)

Long-term liabilities

 

 

(152,906)

(145,693)

(106,276)

(93,482)

(94,386)

(95,109)

Long-term borrowings

(112,827)

(109,618)

(73,333)

(28,011)

(28,011)

(28,011)

Other long-term liabilities

(40,078)

(36,076)

(32,943)

(65,471)

(66,375)

(67,097)

Net assets

 

 

146,988

183,582

183,620

283,632

350,370

400,677

CASH FLOW

Operating cash flow

 

 

5,345

59,822

73,399

124,549

164,445

172,243

Net Interest

(6,076)

(14,685)

(10,834)

(5,623)

(2,120)

233

Tax

(1,634)

(4,497)

(5,804)

(18,902)

(12,906)

(8,658)

Capex

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