Shaping Our Future
Total Page：16
File Type：pdf, Size：1020Kb
Shaping our future Petra Diamonds Limited Annual Report and Accounts 2015 ‘The Cullinan Dream’ Front cover image: Our front cover star this year is an exceptional 122.52 carat blue diamond recovered at the Cullinan mine in South Africa in June 2014. The incredible rarity of a blue diamond of this magnitude sets it apart as a truly significant find. In September 2014, the rough stone was sold for a value equivalent to US$27.6 million, with Petra retaining a 15% share in the net proceeds of the polished yield. Image above: The rough stone was entrusted to a master cutter and, after lengthy analysis, the best yield was determined to be four polished diamonds, each of notable size. The largest of the stones is a dazzling 26 carat radiant cut diamond of intense fancy blue. This magnificent diamond has been named The Cullinan Dream, reflecting its ethereal beauty. The polished stones are, from left to right: an 11.3 carat pear, a 26 carat radiant, a 10.3 carat radiant and a 7.0 carat cushion. The Cullinan Dream and its related stones are yet to be sold, but the exceptional rarity of blue diamonds, along with their rich history and heritage, has today made them one of the world’s most highly valuable and collectable items. Strategic Corporate Financial Supplementary Overview Report Governance Statements Information Petra Diamonds is a leading independent diamond mining group and a growing supplier of rough diamonds to the international market. FY 2015 marked a further progression of our mission to develop a world-class diamond mining group. Why Invest Chief Executive’s Statement Our Strategy Page 2 Page 10 Page 20 Overview Corporate Governance Supplementary Information 02 Why Invest 48 Chairman’s Introduction 135 Five-year Summary 04 Chairman’s Statement to Governance of Consolidated Figures 06 At a Glance 50 Board of Directors 136 Petra’s Partners 52 Corporate Governance Statement 137 FY 2015 – Operations Results Tables 61 Report of the Audit Committee 140 2 015 Resource Statement Strategic Report 68 Risk Management 144 Shareholder and Corporate 74 Report of the Nomination Information 10 Chief Executive’s Statement Committee 147 Glossary 12 Q&A with the CEO 75 Report of the HSSE Committee 13 Our Market 76 Directors’ Remuneration Report 18 Our Business Model 20 Our Strategy 22 Key Performance Indicators Financial Statements 24 Financial Review 28 Operational Review 90 Directors’ Responsibilities 30 Finsch Statement 32 Cullinan 91 Independent Auditors’ Report 34 Koffiefontein 94 Consolidated Income Statement 35 Kimberley Underground 95 Consolidated Statement of Other Discover more about 36 Williamson Comprehensive Income 37 Exploration 96 Consolidated Statement Petra online 38 Risks Overview of Financial Position petradiamonds.com 40 Sustainability 97 Consolidated Statement of Cashflows See our Sustainability The Strategic Report should 98 Consolidated Statement Report online be read in conjunction with the of Changes in Equity petradiamonds.com/ Corporate Governance Statement. 99 Notes to the Annual sustainability Financial Statements Petra Diamonds Limited Annual Report and Accounts 2015 01 Overview Why Invest With a high growth profile, long-life operations, an industry-leading team and one of the world’s largest diamond resources of over 300 million carats, Petra offers a unique and high quality investment opportunity, providing direct exposure to diamonds. A strong operational track record Petra’s fast development has established the Company as London’s largest quoted diamond mining group. The Company has acquired five of the world’s most important diamond mines and has increased production from circa 0.1 Mcts in FY 2005 to circa 3.2 Mcts in FY 2015. PRODUCTION REVENUE ADJUSTED OPERATING GROUP LTIFR Lost time million carats US$ million CASHFLOW1 US$ million injury frequency rate 3.2 425.0 141.3 0.29 +2% -10% -22% -9% 1 2 3.11 3.2 471.8 181.2 0.67 425.0 2.71 392.52 141.3 132.8 0.32 0.29 13 14 15 13 14 15 13 14 15 13 14 15 1. Production volumes include 6,229 carats (FY 2014: 36,287 carats; FY 2013: 72,287 carats) relating to the Fissure Mines (Helam, Sedibeng and Star). 2. Revenues for FY 2014 and FY 2013 exclude revenue generated by the Sedibeng and Star operations, which has been reclassified to loss on disposal of discontinued operations. 3. All the above form part of Petra’s key performance indicators. Financial highlights FY 2015 highlights US$ million FY 2015 FY 2014 % change Š Production increased to 3.2 Mcts Revenue 425.0 471.8 -10% Š Gross diamond resources increased 2.5% to 308.6 Mcts Profit from mining activities 154.5 201.1 -23% Š US$300 million financing via Notes Issue Adjusted EBITDA 139.3 187.7 -26% Š Debt facilities increased to US$290.1 million Adjusted net profit after tax 62.8 93.7 -33% Net profit after tax 59.6 67.5 -12% Š Intention to construct a modern plant at Cullinan Basic continuing EPS (cents) 9.46 12.80 -26% Š Improvement of safety performance Adjusted basic continuing EPS (cents) 10.09 14.82 -32% Š Appointment of Ms Octavia Matloa Net debt 171.7 124.9 +37% as an independent Non-Executive Director Cash at bank 166.6 34.0 +390% Š Maiden dividend declared of 3.0 US cents per share Diamond debtors 57.6 55.4 +4% Š Capex of US$274.1 million Diamond inventories 33.5 27.0 +24% Š Re-financing of US$98 million Black Economic Bank loans and borrowings 35.0 158.9 -78% Empowerment Partner loans US$ Loan Notes and accrued interest 303.0 — n/a Refer to page 135 and the Financial Review for definition of non-GAAP measures. Financial Review Page 24 Chief Executive’s Statement Page 10 Petra Diamonds Limited 02 Annual Report and Accounts 2015 Strategic Corporate Financial Supplementary Overview Report Governance Statements Information From a diversified portfolio ...with a major resource base Petra’s portfolio provides flexibility in terms of meeting Petra has compiled one of the world’s largest targets and ensures that Petra is not reliant on the diamond resources with a focus on sustainable, performance of any one operation. long-life mining operations. At a Glance Page 6 Operational Review Page 28 PRODUCING MINES ORE PROCESSED IN FY 2015 PROFIT FROM MINING ACTIVITIES FY 2015 DIVIDEND number million tonnes US$ million US cents 5 17.1 154.5 3.0 Leading to an exceptional growth path with a low cost focus Petra has an organic growth path to circa 5 million carats per annum by FY 2019, which is supported by an effective low cost focus, well suited to maximising returns from its assets. FY 2016 PRODUCTION FY 2019 PRODUCTION TARGET million carats TARGET million carats 3.3–3.4 circa 5.0 Outlook Growth and margin expansion Š Petra is in a robust position with a strong balance sheet, efficient cost base and increasing operating margin profile FY 2019 FY 2015 production Carat production (million carats) Š Undiluted ore from the new mining areas at Finsch production target of ca. 5.0 Mcts; US$ million US$ FY 2012 of 3.2 Mcts; revenue of ca. US$1.0bn 6 and Cullinan are expected to contribute meaningfully production revenue of 1,000 of 2.2 Mcts; US$425m to the production profile from H2 FY 2016 onwards revenue of 5 US$317m Š Expansion plans remain on track to increase 4 production to circa 5 Mcts by FY 2019 3 500 Š Petra has made a solid start to FY 2016 in terms 2 of production, with the operations as a whole 1 performing according to expectations, including achieved grades at Finsch and Cullinan 0 0 Š For FY 2016, the Company’s financial results 2017F 2016F 2019F 2018F 2015A 2014A 2013A 2012A are expected to be favourably impacted should the ongoing weakness in the Rand continue X Capex X Production (RHS) X Revenue Note: All forecasts for Capex, revenue and production are management estimates. Capex is in nominal terms; diamond prices are calculated using a 4% real price increase. Our Strategy Page 20 Petra Diamonds Limited Annual Report and Accounts 2015 03 Overview Chairman’s Statement Shaping our future We believe we have the right team in place to unlock the value of our assets. Dear shareholder, to show positive growth, particularly in the major US market. It is my pleasure to introduce Petra’s 2015 Annual Report, which The medium to longer-term outlook for our market continues as always sets out a fair, balanced and understandable account to be positive, given the forecast constrained supply versus of the business, its performance over the last year and its sustained growth in demand. Read more on pages 13 to 17. future prospects. Financing A transitional year Petra significantly strengthened its balance sheet during the While the Group delivered further annual production growth Year through an inaugural Notes Issue which served to raise to 3.2 million carats in FY 2015, it was a challenging year for US$300 million, predominantly from UK and North American Petra, due to both internal and external factors, which meant investors. Approximately half of the funds raised are being used we had to revise market expectations with regards to revenue to construct a modern processing plant at Cullinan, which is and therefore earnings for the Year. expected to significantly enhance recoveries from this world-class mine. The remaining funds were used to settle the majority of our Operationally, it was expected to be a transitional period, while debt facilities, which remain available to the Group, and will be the majority of production continued to be sourced from mature employed to further the Group’s expansion projects.