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Resource Generation Limited - Consolidated Financial Statements For The Year Ended 30 June 2016

Release Date: 31/08/2016 16:56:00      Code(s): RSG     
Resource Generation Limited
Registration number ACN 059 950 337
(Incorporated and registered in Australia)
ISIN: AU000000RES1
Share Code on the ASX: RES
Share Code on the JSE: RSG
("Resgen" or the ?Company?)

ASX/JSE Release
Resource Generation Limited today released its consolidated financial
statements for the year ended 30 June 2016.

The financial statements were approved by the Board of Directors and
signed by Lulamile Xate (Deputy Chairman). The directors take full
responsibility for the preparation of the annual report and that the
financial information has been correctly extracted from the underlying
annual financial statements. This summarised report is extracted from
audited information, but is not itself audited. The annual financial
statements were audited by Deloitte Touche Tohmatsu and their audit
opinion is available for inspection at the Company's registered office.

Auditors? report includes the following emphasis of matter paragraph:

Without modifying our opinion, we draw attention to Note 1(a) in the
financial report which indicates that the consolidated entity incurred a
loss of $7.7 million (2015: $4.9 million) and used net cash in operating
activities of $5.2 million (2015: $1.9 million) during the year ended 30
June 2016. These conditions, along with other matters as set out in Note
1(a), indicate the existence of a material uncertainty that may cast
significant doubt about the ability of the company and the consolidated
entity to continue as going concerns and therefore, the company and the
consolidated entity may be unable to realise their assets and discharge
their liabilities in the normal course of business.

The full set of financial statements are available on Resource
Generations Limited?s website. www.resgen.com.au

Extracts from the financial statements for the year ended 30 June 2016
may be found below.

Contacts
Rob Lowe, CEO on +27 12 345 1057 or
Michael Meintjes, Company Secretary on +61 413 706 143

Media enquiries
Russell and Associates on +27 11 880 3924

Johannesburg
31 August 2016
JSE Sponsor: Deloitte & Touche Sponsor Services (Pty) Limited

Resource Generation is developing its Boikarabelo Coal Mine in the
Waterberg region of South Africa, which has one of the country?s largest
remaining coal deposits. The Boikarabelo mine has probable reserves of
744.8 million tonnes* of coal on 35% of the tenements under the
company?s control (refer SENS announcement dated 16 December 2010).
Stage 1 of the mine development targets saleable coal production of 6
million tonnes per annum.



*This information was prepared and first disclosed under the
JORC Code 2012 on the basis that the information has not
materially changed since it was last reported.
        Consolidated statement of profit or loss and other
                       comprehensive income
                 For the year ended 30 June 2016


                                              Consolidated
                                               2016            2015
                                              $'000           $'000
                                                         *Restated

Revenue from continuing
operations
                                                   210          677
Other                                               69               -

                                                   279          677


Administration, rent and
corporate                                   (1,638)          (1,155)

Depreciation of property plant
and equipment
                                              (334)           (404)

Employees benefits expense
                                            (3,682)          (1,606)
Finance expenses                               (22)          (2,729)

Share based compensation
                                              1,906           (797)
Foreign exchange movements
                                            (4,165)           1,070


Loss before income tax
                                            (7,656)          (4,944)


Income tax expense                                 (1)          (5)




Loss from continuing operations
                                            (7,657)          (4,949)

Loss for the year                           (7,657)          (4,949)
Other comprehensive income, net
of income tax




Items that may be reclassified
subsequently to profit and loss
when specific conditions are met




Exchange differences on
translation of foreign
operations
                                   (19,550)    8,397

Total comprehensive income
                                   (27,207)    3,448




Loss is attributable to:


Owners of Resource Generation
Limited
                                   (7,657)    (4,949)




Total comprehensive income for
the year is attributable to:


Owners of Resource Generation
Limited                            (27,207)    3,448




Headline earnings                  (7,657)    (4,949)

Earnings per share (EPS) (cents)
                                      (1.3)    (0.9)
Headline earnings per share
(HEPS)(cents)
                                      (1.3)    (0.9)
Consolidated statement of financial position
As at 30 June 2016
                        Consolidated
                         2016               2015     01-Jul-14
                                       *Restated     *Restated
                        $'000              $'000         $'000

Current
assets

Cash and cash
equivalents            11,995       28,551           54,337

Trade and
other
receivables               146            200           414

Deposits and
prepayments               174            207           140
                       12,275       28,958           54,891
Non-current
assets

Property,
plant and
equipment              30,365            35,464         33,367

Mining
tenements and
mining
development           128,644           129,314         89,742


Deposits and
loan
receivables             1,859              2,938         2,307
                      160,868           167,716        125,416
TOTAL ASSETS          173,143           196,674        180,307


Current
liabilities

Trade and
other
payables                6,967              7,320         8,377
Provisions                180                  987            788
Borrowings              3,887              2,661               -
                       11,034            10,968          9,165
Non-current
liabilities
Provisions        1,983        204         38
Borrowings       35,728    31,221     21,231

Royalties
payable           1,946      2,716     2,553
                 39,657    34,141     23,822

TOTAL
LIABILITIES      50,691    45,109     32,987


NET ASSETS      122,452   151,565    147,320


Equity

Contributed
equity          223,622   223,622    223,622
Reserves       (50,955)   (11,817)   (21,011)
Accumulated
losses         (50,215)   (60,240)   (55,291)


TOTAL EQUITY    122,452   151,565    147,320
Consolidated statement of changes in equity

For the year ended 30 June 2016


                     Contri-
                      buted                     Retained     Total
                     equity        Reserves     earnings     equity
                     $'000          $'000        $'000       $'000

Balance at 1 July
2014 (as
previously
reported)             223,622 (10,090)          (37,808)      175,724


Adjustments (see
note 3)                        - (10,921)       (17,483)     (28,404)


Balance at 1 July
2014 (restated)       223,622 (21,011)          (55,291)      147,320


Loss for the year              -            -    (4,949)      (4,949)



Other
comprehensive
income for the
year - exchange
differences on
translation of
foreign operations             -     8,397               -      8,397


Total
comprehensive
income for the
year                           -     8,397       (4,949)        3,448

Transactions with
owners in their
capacity as
owners:

Employee share
options - value of
employee services              -       797               -        797

Balance at 30 June
2015                  223,622 (11,817)          (60,240)      151,565
Loss for the year         -         -   (7,657)    (7,657)




Other
comprehensive
income for the
year - exchange
differences on
translation of
foreign operations        - (19,550)           -   (19,550)

Total
comprehensive
income for the
year                      - (19,550)    (7,657)    (27,207)

Transactions with
owners in their
capacity as
owners:


Transfer of option
premium reserve to
earnings                  - (17,682)      17,682          -


Employee share
options - value of
employee services         -   (1,906)          -   (1,906)

                          - (19,588)      17,682   (1,906)


Balance at 30 June
2016                 223,622 (50,955)   (50,215)   122,452
Consolidated statement of cash flows
For the year ended 30 June 2016
                                  Consolidated
                                 2016               2015
                                $'000              $'000
Cash flows from
operating
activities

Payments to
suppliers and
employees                     (5,369)            (2,610)
Interest received                 210                677
Finance costs                    (22)                (8)



Taxation payments                 (1)                (4)
Net cash outflow
from operating
activities                    (5,182)            (1,945)


Cash flows from
investing
activities


Payments for land,
property, plant and
equipment                       (537)              (376)



Refunds of
government charges
associated with
land acquisition                    -                  -

Payments for
acquisition of non-
controlling
interest                            -                  -
Net payments for
mining related
licence deposits                    -              (285)


Payments for mining
tenements and
mining development            (8,836)            (28,588)


Net cash outflow              (9,373)            (29,249)
from investing
activities


Cash flows from
financing
activities
Proceeds from issue
of shares                   -          -
Equity raising
costs                       -          -
Repayment of
borrowings            (1,935)          -
Forfeited share
deposit                     -          -
Proceeds from
borrowings                  -          -
Net cash inflow
from financing
activities            (1,935)          -


Net
(decrease)/increase
in cash and cash
equivalents           (16,490)   (31,194)


Cash and cash
equivalents at the
beginning of the
year                   28,551     54,337


Effects of exchange
rate movements on
cash and cash
equivalents             (106)      5,408



Cash and cash
equivalents at the
end of the year        11,955     28,551
  1.   Basis of preparation

This general purpose financial report has been prepared in accordance
with Australian Accounting Standards, other authoritative pronouncements
of the Australian Accounting Standards Board including Interpretations
and the Corporations Act 2001. For the purposes of preparing the
consolidated financial statements, the Company is a for-profit entity.

The financial report of Resource Generation Limited also complies with
International Financial Reporting Standards ("IFRS") as issued by the
International Accounting Standards Board ("IASB").



3. Critical accounting estimates and judgements

The preparation of financial statements in conformity with
Australian Accounting Standards requires the use of certain
critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the Group's
accounting policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimates
are significant to the financial statements, are disclosed below.




Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including
expectations of future events that may have a financial impact on
the entity and that are believed to be reasonable under the
circumstances. The estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year
are discussed below.




The accounting policies and methods of computation adopted in the
preparation of the financial report are consistent with those
adopted and disclosed in the Company's financial report for the
year ended 30 June 2015. These accounting policies are consistent
with Australian Accounting Standards and with International
Financial Reporting Standards.




Development expenditure
Development expenditure incurred by or on behalf of the
consolidated entity is accumulated separately for each mine in
which economically recoverable reserves have been identified to
the satisfaction of the Directors. Such expenditure comprises
direct costs plus overhead expenditure incurred which can be
directly attributable to the development process, in accordance
with AASB 116 'Property, Plant & Equipment'.




All expenditure incurred prior to the commencement of commercial
levels of production from each area of interest is carried
forward to the extent which recoupment out of revenue to be
derived from the sale of production from the area of interest, or
by its sale, is reasonably assured. Once commercial levels of
production commence, the development expenditure in respect of
that area of interest will be depreciated on a straight-line
basis, based upon an estimate of the life of the mine.




Expenditure on the Boikarabelo Coal Mine has been fully
capitalised as per Note 11. The Group is confident of the full
recovery of the expenditure on the Boikarabelo Coal Mine on the
basis of the financial modelling of the mine incorporating
forecast production, sales levels and capital expenditure. This
model is updated regularly and used to assess whether an
impairment provision is required. Based on the current critical
estimates and judgements, the Directors do not believe that an
impairment provision is required.


Restatement of accounts

The accounts have been restated in respect of the accounting for
loans to the Group's BEE partner and also accounting for foreign
exchange on acquisition adjustments.

(i) Loan to BEE partner
In 2011, the Group loaned its Black Economic Empowerment (BEE)
partner, Fairy Wing Trading 136 (Pty) Limited (Fairy Wing), R80
million ($7.3 million) to facilitate its 26% acquisition of
Ledjadja Coal (Pty) Limited (Ledjadja). In 2013, an additional
R39 million ($3.5 million) was loaned to Fairy Wing, to fund its
26% acquisition of Waterberg One Coal (Pty) Limited (Waterberg
One). The loans are secured over Fairy Wing?s shares in Ledjadja
and Waterberg One and are repayable out of future dividends.
Interest on the loans was deferred from 1 January 2014 until
commencement of coal production at the Boikarabelo Coal Mine at
which time interest will be payable at the prime rate quoted by
Standard Bank of South Africa plus 3%.



Guidance from the South African Institute of Chartered
Accountants in respect of accounting for BEE transactions, which
is consistent with AASB 2 Share-based Payment, indicates that
loans to BEE partners made on non-commercial terms should be
treated as share-based payments. In light of this guidance and
having regard to the terms of the Fairy Wing loans, including the
fact that they are secured over Fairy Wing?s shares in the
respective subsidiaries and are in substance only repayable out
of future dividends from coal production, the directors have
concluded that instead of recognising loan receivables at
inception, the financial statements should have reflected a
charge to profit and loss.




The restatement in relation to this reverses the previously
recorded loan carrying values, including accrued interest,
against retained earnings. It also includes the related impact on
the foreign currency translation reserve.




(ii) Foreign exchange on acquisition adjustments
The Group previously acquired interests in South African
subsidiaries that held exploration licences for the Boikarabelo
Coal Mine project. The difference between the net assets of the
subsidiaries acquired and the purchase consideration was recorded
as an exploration asset, subsequently reclassified to mining
tenements and mining development assets. Such differences should
be treated as assets of the foreign operation and therefore
foreign exchange differences arising on translation of these
assets for consolidation purposes shall be recorded in the
foreign currency translation reserve.

The restatement reflects this accounting. The reduction of the
mining tenement and mining development asset balance reflects the
weakening of the South African Rand against the Australian
dollar.




                                                     30-Jun-15


                         30-Jun-15
                             As                     As restated
                         previously
                           stated


                            $'000        $'000         $'000




Consolidated statement
of financial position


Deposits and loan
receivables                   18,484    (15,546)               2,938


Mining tenements and
mining development           140,539    (11,225)          129,314

Total non-current
assets                       194,487    (26,771)          167,716


TOTAL ASSETS                 223,445    (26,771)          196,674
Equity                       223,622           -        223,622
Reserves                     (2,529)   (9,288)         (11,817)
Accumulated
losses                      (42,757)   (17,483)        (60,240)


TOTAL EQUITY                 178,336   (26,771)         151,565


                         30-Jun-14                 30-Jun-14
                             As                    As restated
                         previously
                           stated
                            $'000      $'000         $'000



Consolidated statement
of financial position

Deposits and loan
receivables                   16,923   (14,616)           2,307

Mining tenements and
mining development           103,530   (13,788)          89,742



Total non-current
assets                       153,820   (28,404)         125,416


TOTAL ASSETS                 208,711   (28,404)         180,307


Equity                       223,622           -        223,622
Reserves                    (10,090)   (10,921)        (21,011)
Reserves                    (37,808)   (17,483)        (55,291)


TOTAL EQUITY                 175,724   (28,404)         147,320
4. Segment information


  4.1


Management has determined the segments based upon reports
reviewed by the Board that are used to make strategic decisions.
The Board considers the business from both a business and
geographic perspective, with the Board being the chief operating
decision maker.




Business segments
The Group has coal interests in South Africa. The main priority
is to develop its coal resources in the Waterberg region of South
Africa. Management has determined that there is one operating
segment, being mining tenements and mining development.
Unallocated corporate administration reflects other corporate
costs and includes equity raisings and administration costs.



 4.2    Segment revenues and results
                 Segment Revenue           Segment Profit
                Year          Year      Year ended    Year
                ended         ended      30/6/16      ended
               30/6/16       30/6/15                 30/6/15

                $'000        $'000        $'000      $'000




Mining
tenements
and mining
development         243           454        (629)    (6,791)



Corporate -
unallocated             36        223      (7,028)      1,842


Total for
continuing
operations          279           677      (7,657)    (4,949)
The accounting policies of the reportable segments are
the same as the Group's accounting policies described in
Note 1. The mining tenements and mining development
segment loss represents the loss earned by that segment
without allocation of central administration costs and
salaries, share of profits of associates, gains and
losses, finance costs and income tax expense, all of
which are included in the corporate segment. This is the
measure reported to the chief operating decision maker
for the purposes of resource allocation and assessment
of segment performance.


 4.3   Segment asset and liabilities
                              2016        2015
                             $'000      $'000

Segment
assets
Mining
tenements
and mining
development                162,114     172,607



Corporate -
unallocated                 11,029     24,067


                           173,143     196,674



Segment
liabilities

Mining
tenements
and mining
development                 50,390     43,896



Corporate -
unallocated                    301      1,213


                            50,691     45,109
 4.4    Other segment information
                Depreciation and           Additions to land,
                  amortisation             property, plant and
                                                equipment
                Year          Year        Year ended    Year
                ended         ended         30/6/16     ended
               30/6/16       30/6/15                   30/6/15

                $'000        $'000          $'000         $'000




Mining
tenements
and mining
development         309           357            504          331




Corporate -
unallocated             25           47             33            45


Total               344           404            537          376



 4.5    Other segment information - mining assets
                                          Additions
                                          to mining
                                          assets
                                          Year ended      Year
                                            30/6/16       ended
                                                         30/6/15

                                            $'000         $'000


Mining tenements and mining
development                                   20,025       32,392


Corporate - unallocated                             -              -


                                              20,025       32,392


 4.6    Geographical information
              Revenue from external        Non-current assets
                    customers
               Year          Year      Year ended      Year
               ended         ended      30/6/16        ended
              30/6/16       30/6/15                   30/6/15

               $'000        $'000        $'000         $'000


Australia              36        223             39            52



South
Africa             243           454      160,829      167,664


                   279           677      160,868      167,716


26    Events occurring after the reporting period

On 8 August 2016, the Company announced that it had agreed the
commercial terms on which a Financing Syndicate will seek their
requisite approvals in order to secure funding of R5.52 billion (A$515
million) to complete the construction of the Boikarabelo Coal Mine.



Dividends
No dividends were paid or proposed to be paid to members during the
financial year (2015: nil).

Date: 31/08/2016 04:56:00 Supplied by www.sharenet.co.za                     
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