Petra Diamonds Limited
Annual Report and Accounts 2013
32
Performance Review
Financial Review
SUMMARY
$
Revenue rose 27% to US$402.7 million due
to higher production levels in FY 2013.
$
Profit from mining activity rose 34%
to US$138.6 million, reflecting an overall
margin of ca. 34%.
$
Adjusted EBITDA rose 36% to
US$122.4 million in line with the increased
production and sales, combined with
a stable diamond market.
$
Adjusted operating cashflow rose 57%
to US$132.8 million, demonstrating
management’s focus on this area.
$
A net profit after tax of US$27.9 million
was recorded for the year, reflecting
the impact of the Group’s solid trading
in FY 2013.
Revenue
Gross mine revenue increased 27% to US$402.7 million
(FY 2012: US$316.9 million), primarily due to increased volumes
coupled with the sale of the exceptional 25.5 carat blue diamond
from Cullinan for US$16.9 million in May 2013.
Mining and processing costs
The mining and processing costs for the Year are, as in past periods,
comprised of on-mine cash costs as well as other operational
expenses. A breakdown of the total mining and processing costs
for the Year is set out to the right.
On-mine cash costs increased by 12%, due to:
$
inclusion of Finsch for 12 months (FY 2012: nine months)
(8% of the increase);
$
inflationary increases, including the impact of electricity
and labour costs (9% of the increase);
$
treatment of higher tonnages across the operations
versus FY 2012 (9% of the increase); and
$
offset by a depreciating Rand against the US Dollar (less 14%).
Certain cost categories in South Africa have increased in excess
of South African inflation (South African CPI stood at 5.5% at
30 June 2013). Petra’s cost focus, coupled with higher tonnage
throughput, enabled the Group to partially mitigate the direct
effect of inflationary pressures. Two key areas where costs
escalated at a higher level than South African CPI are
electricity and labour.
Electricity prices rose by 16% during the Year and a further
increase of ca. 9% has been approved by the South African
National Energy Regulator for FY 2014. Petra’s electricity
usage accounted for approximately 14% of South African cash
on-mine costs. Petra endeavours to manage its electricity
consumption as the Group’s production profile increases
and the Company has achieved good success in this area.
In South Africa, labour accounted for approximately 41% of
on-mine cash costs at the pipe mines and 68% of on-mine cash
costs at the Fissure Mines. As in the past, the Company anticipates
that future labour cost increases will continue to be slightly
above inflation.
As the bulk of Petra’s operating costs are incurred in ZAR, the 14%
weakening of the average ZAR exchange rate against the US Dollar
(FY 2013: R8.839/US$1 versus FY 2012: R7.768/US$1) negated
some of the increased costs in Rand terms as mentioned above.
Unit costs on a mine by mine basis are covered in the
Operational Review from pages 36 to 42.
Petra’s management is focused on generating cashflows from its operations,
which are currently used to help fund the Company’s capital expansion programmes,
assisted by the Group’s debt facilities.
An impressive year of growth
David Abery
Finance Director
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