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Audited Annual Consolidated Financial Statements for the year ended 30 June 2014
Coal of Africa Limited
(Incorporated and registered in Australia)
Registration number ABN 008 905 388
ISIN AU000000CZA6
JSE/ASX/AIM share code: CZA
("CoAL or the "Company" or the "Group")
AUDITED ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2014
(Expressed in United States dollars unless otherwise stated)
DIRECTORS' REPORT
The directors of Coal of Africa Limited ('CoAL' or 'the Company') submit herewith the annual report of the company and
the entities controlled by the Company (its subsidiaries), collectively referred to as 'the Group' or 'the Consolidated Entity',
for the financial year ended 30 June 2014. All balances are denominated in United States dollars unless otherwise stated.
In order to comply with the provisions of the Corporations Act 2001, the directors report as follows:
Information about the directors and key management personnel
The names and particulars of the directors of the company during or since the end of the financial year are set out below.
Unless otherwise stated, the directors held office during the whole of the financial year:
Bernard Robert Pryor Independent Non-Executive Chairman Mr Pryor was previously the chief executive officer
(appointed 1 February 2014) of African Minerals Limited and Q Resources plc.
Independent Non-Executive Director Between 2006 and 2010 he held senior executive
(1 July 2013 to 31 January 2014) positions within Anglo American plc as head of
business development, and CEO of Anglo Ferrous
Brazil Inc.
David Hugh Brown Executive Director and Chief Executive Mr Brown joined CoAL following a tenure of almost
Officer (appointed 1 February 2014) 14 years at Impala Platinum Holdings Limited
Executive Chairman (1 July 2013 to 31 ('Implats'). He joined the Impala Group in 1999 and
January 2014) served as chief financial officer and financial
director of Impala Platinum Holdings Ltd before
being appointed chief executive officer in 2006. He
is currently an independent non-executive director
of Vodacom Group Limited as well as non-executive
director of EDCON Holdings Limited. In the past he
has served as a non-executive director of Simmer &
Jack Limited and ASX listed Zimplats Holdings
Limited. Mr Brown is a Chartered Accountant and
completed his articles with Ernst & Young,
graduating from the University of Cape Town.
Michael George Meeser Financial Director Mr Meeser is a qualified Chartered Accountant and
has over 20 years' local and international project
finance experience. He spent 6 years working for
Edison Mission Energy Limited with interests in
more than 50 power projects and assets of more
than $4billion. In 1998, Mr Meeser joined Investec
Bank Limited's Project and Infrastructure Finance
business and served as head of the project &
infrastructure and commodity & resource finance
businesses for Africa and was a member of the
divisions' executive committee.
David John Keir Murray Senior Independent Non-Executive Mr Murray has held a number of senior positions in
Director the global coal industry, including managing
director of Ingwe Coal Corporation (formerly Trans-
Natal Coal Corporation Limited), chief executive of
BHP Billiton Mitsubishi Alliance and president of
energy coal sector Group at BHP Billiton Limited, a
position he held until December 2009. Mr Murray
holds a Bachelor of Science Degree (Civil
Engineering) from the University of KwaZulu-Natal
and a Post Graduate Diploma in Mining Engineering
from the University of Pretoria. He has also
completed the Advanced Executive Program from
the University of South Africa.
Peter George Cordin Independent Non-Executive Director Mr Cordin has a Bachelor of Engineering from the
University of Western Australia and is well
experienced in the evaluation, development and
operation of resource projects within Australia and
overseas. He was until recently the chairman of ASX
listed Dragon Mining Limited and is a non-executive
director of Vital Metals Limited.
Khomotso Brian Mosehla Non-Executive Director After serving articles at KPMG, Mr Mosehla worked
for five years at African Merchant Bank Limited,
where he gained a broad range of experience,
including Management Buy-Out, Leveraged Buy-Out
and capital restructuring/raising transactions. In
2003, he established Mvelaphanda Corporate
Finance, for the development of Mvelaphanda's
mining and non-mining interests. Mr Mosehla
served as a director on the boards of several
companies, including Mvelaphanda Resources
Limited and Net 1, and he is currently the chief
executive officer of Mosomo Investment Holdings
Proprietary Limited.
Rudolph Henry Torlage Non-Executive Director Mr Torlage is a Chartered Accountant and has over
20 years' experience with ArcelorMittal South
Africa. He was previously executive director finance
and a board member of various unlisted
ArcelorMittal Group companies.
No directors were appointed or resigned during the financial year ending 30 June 2014.
Directorships of other listed companies
Directorships of other listed companies held by the directors in the 3 years immediately before the end of the financial
year are as follows:
Director Company Period of directorship
Bernard Robert Pryor African Minerals Limited 2011 – 2014
David Hugh Brown Impala Platinum Holdings Limited 1999 – 2012
Zimplats Holdings Limited 2001 – 2012
Simmer & Jack Limited 2010 – 2011
Vodacom Group Limited 2012 – Present
Michael George Meeser None
David John Keir Murray Coalspur Mines Limited 2011 – Present
Meridien Resources Limited 2012 – 2012
Stonewall Resources Limited 2012 – Present
Peter George Cordin Dragon Mining Limited 2006 – 2014
Vital Metals Limited 2009 – Present
Kalgoorlie Mining Company Limited 2012 – 2013
Aurora Minerals Limited 2014 - Present
Khomotso Brian Mosehla Net 1 UEPS Technologies, Incorporated 2012 – 2013
Rudolph Henry Torlage ArcelorMittal South Africa Limited 2010 – 2012
Directors' shareholdings
The following table sets out each director's relevant interest in shares or options in shares or debentures of the Company
as at the date of this report.
Director Ordinary shares Listed options Unlisted options
B Pryor(1) - - 1,000,000
D Brown(2) 325,000 - 2,500,000
M Meeser(3) 600,000 - 4,125,000
D Murray(4) - - 2,500,000
P Cordin(5) 871,059 - -
K Mosehla - - -
R Torlage - - -
1,796,059 - 10,125,000
1. Mr Pryor was issued with 1,000,000 share options on 28 November 2012 with an exercise price of GBP0.25 expiring 3
years from date of issue, vesting immediately and a further 1,000,000 share options with an exercise price GBP0.375,
and expiring three years from date of issue, to be issued on 6 August 2015.
2. Mr Brown was issued with 2,500,000 share options on 28 November 2012 with an exercise price of GBP0.25 expiring 3
years from date of issue, vesting immediately. On appointment as Chief Executive Officer and Executive Director on 1
February 2014, Mr Brown agreed to forfeit a further 2,500,000 unissued share options allocated to him in his contract
as Non-executive Chairman. Mr Brown will instead receive 10,575,000 options to be granted in 3 equal tranches over a
3 year period (Year 1: 3,525,000 at ZAR1.20; Year 2: 3,525,000 at ZAR1.32; Year 3: 3,525,000) at ZAR 1.45. These are
granted in accordance with the Company's employee share option plan and are subject to shareholder approval.
Should there be a change of control event, the options will vest immediately. The forfeiture of the unissued options
and granting of 10,575,000 shares was outstanding as at 30 June 2014.
3. Mr Meeser was issued with 4,125,000 share options on 22 November 2013 with an exercise price of ZAR2.00 expiring 3
years from date of issue. The options vest in 3 equal tranches on 1 June 2014, 1 June 2015 and 1 June 2016.
4. Mr Murray was issued a total of 2,500,000 options on 9 November 2010 (each option having an exercise price equal to
the volume weighted average price of the Company's Shares 10 trading days prior to the issue date and an expiry date
5 years from the issue date, 1,000,000 of which vested 12 months after the date of issue, 750,000 of which vested 24
months after the date of issue and the remaining 750,000 vested 36 months from the date of issue).
5. 412,759 shares are held by the Cordin Pty Ltd ATF The Cordin Trust and 458,300 shares held by Cordin Pty Ltd The
Cordin Superannuation Fund. Mr Cordin is a beneficiary of both the trust and superannuation fund.
Remuneration of directors and key management personnel
Information about the remuneration of directors and key management personnel is set out in the remuneration report of
this directors' report, on pages 12 to 20.
Share options granted to directors and senior management
During and since the end of the financial year, an aggregate 10,749,696 share options were granted to the following
directors and key management personnel of the Company and of its controlled entities as part of their remuneration:
Directors and senior Number of options Issuing entity Number of ordinary shares
management under option
B Pryor - Coal of Africa Limited -
D Brown(1) 10,575,000 Coal of Africa Limited 10,575,000
M Meeser - Coal of Africa Limited -
D Murray - Coal of Africa Limited -
P Cordin - Coal of Africa Limited -
K Mosehla - Coal of Africa Limited -
R Torlage - Coal of Africa Limited -
C Bronn(2) 174,696 Coal of Africa Limited 174,696
1. Mr Brown was issued with 2,500,000 share options with an exercise price of GBP0.25 expiring 3 years from date of
issue, vesting immediately. On appointment as Chief Executive Officer and Executive Director on 1 February 2014, Mr
Brown agreed to forfeit a further 2,500,000 unissued share options allocated to him in his contract as Non-executive
Chairman. Mr Brown will instead receive 10,575,000 options to be granted in 3 equal tranches over a 3 year period
(Year 1: 3,525,000 at ZAR1.20; Year 2: 3,525,000 at ZAR1.32; Year 3: 3,525,000 at ZAR1.45). These are granted in
accordance with the Company's employee share option plan and are subject to shareholder approval. Should there be
a change of control event, the options will vest immediately. The forfeiture of the unissued options and granting of
10,575,000 shares was outstanding as at 30 June 2014.
2. Mr Bronn was granted options under the Employee Share Ownership Programme.
Company secretary
Mr Tony Bevan, a qualified Chartered Accountant with over 25 years' experience, is the Company Secretary and works with
Endeavour Corporate Pty Ltd, the company engaged to provide contract secretarial, accounting and administration services
to CoAL.
Principal activities
The Company is a limited company incorporated in Australia. Its common shares are listed on the Australian Securities
Exchange ('ASX'), the AIM Market of the London Stock Exchange ('AIM') and the Johannesburg Stock Exchange ('JSE') in
South Africa. The principal activities of the Company and its subsidiaries ('the Group' or the 'Consolidated Entity') are the
acquisition, exploration, development and operation of metallurgical and thermal coal projects in South Africa.
The Group's principal assets and projects include:
- two coking and thermal coal projects, the development phase Vele colliery and the Makhado project which is awaiting
the granting of a New Order Mining Right ('NOMR');
- three exploration and development stage coking and thermal coal projects, namely Chapudi, Generaal and Mopane, in
the Soutpansberg Coalfield; and
- the Mooiplaats colliery currently on care and maintenance and subject to a formal sale process.
Review of operations
The Company undertook the following activities during the year:
Operational salient features
- No Fatalities (FY2013: one) and one lost time injury recorded during the year (FY2013: 14) given the reduced
activity at the Company's projects.
- Cost-cutting processes resulted in the placement of the Mooiplaats Colliery on care and maintenance and the
reduction of corporate staff head count while operations at the Vele Colliery were suspended in anticipation of the
plant modification and regulatory approvals, expected to commence in Q3 CY2015.
- The Makhado Project received Environmental Authorisation in terms of National Environmental Management Act
('NEMA') and Environmental Impact Assessment Regulations from LEDET.
- Appointment of Sedgman as engineer for the front-end engineering and design ('FEED') for the Vele Colliery plant
modification project.
- Independent consultants Snowden Group are appointed and commenced with a Technical Review of the Vele Colliery
plant modification.
Disposal of Non-Core Assets
- Section 11 approval granted by the Department of Mineral Resources ('DMR') and all other suspensive conditions
satisfied resulting in the sale of the Woestalleen Complex for ZAR80 million ($7.6 million).
- Approval by the DMR for the sale of the Opgoedenhoop mining right for ZAR20.8 million ($2 million) exclusive of value
added tax ('VAT') and receipt of the initial ZAR4.4 million ($0.4 million) (exclusive of VAT) with the balance of the
ZAR20.8 million ($2 million) due the earlier of receipt of an Integrated Water Use Licence ('IWUL') or 31 March 2015.
- The Company's formal process for the disposal of the Mooiplaats Colliery is at an advanced stage. Subsequent to year-
end the Company has signed a Sale and Purchase Agreement for the disposal of the Mooiplaats colliery (refer to
Subsequent events note below).
- Receipt of a ZAR5 million ($0.5 million) payment for a one-year option to acquire the Holfontein project for ZAR50
million ($5.2 million) (including the ZAR5 million option fee) expected to be completed during CY2014.
- Conversion of the Company's shareholding in ASX listed Lemur Resources Limited to AIM listed Bushveld Minerals
Limited shares and disposal of a portion of this investment, realising $1.8 million with the balance of the shares to be
sold market conditions dependent.
Corporate salient features
- Signature of a Memorandum of Agreement with seven communities located in the proximity of the Makhado Project,
ensuring a broad based Black Economic Empowerment ('BEE') structure is in place. The Company continued its
interaction with potential funders of this BEE structure which will facilitate the finalisation of their acquisition of a 20%
interest in the Makhado project.
- Repayment of the remaining $12.5 million of the Deutsche Bank facility as well as the Investec derivative facility during
the year and ZAR210 million (approximately $21.4 million) 18 month credit facility secured from Investec Bank Limited.
- Drawdown of the first ZAR107.5 million ($10.2 million) of the Investec facility of which ZAR40 million ($3.8 million) was
repaid in Q2 CY2014.
- Settlement of the business interruption insurance claim relating to the February 2013 train derailment on the Maputo
corridor and receipt of ZAR14.0 million ($1.3 million).
Legal
- Withdrawal of the legal action instituted by Motjoli Resources Proprietary Limited & Motjoli Resources Advisory
Services CC suing the Company for 4,750,000 fully paid up ordinary shares in CoAL or, ZAR95.5 million ($9.7 million)
with interest.
- Settlement of the action instituted by Coria (Pkf) Investments 14 Proprietary Limited who claimed damages of ZAR4.3
million ($0.4 million) from previously wholly owned NuCoal Mining (Pty) Ltd. In terms of the settlement, NuCoal paid
Coria ZAR0.9 million ($0.1 million).
- Settlement of the litigation instituted by Ferret Mining & Environmental Services (Pty) Ltd in relation to their historic
shareholding in Mooiplaats Mining Limited, the intermediate holding company of the Mooiplaats colliery. In terms of
the settlement, Ferret were reinstated as 26% shareholders in Mooiplaats Mining and will dispose of their interest
should the colliery be sold. Ferret will receive a maximum of ZAR10 million ($0.96 million) should Mooiplaats be sold
within the next 18 months or, a maximum of ZAR15.0 million ($1.4 million) if it is sold thereafter and ensures that the
Mooiplaats colliery complies with the BEE requirements stipulated in the Mineral and Petroleum Resources
Development Act ('MPRDA').
- Envicoal (Pty) Ltd had previously launched arbitration proceedings against NuCoal Mining (Pty) Ltd in which they
originally sought to claim damages to the value of ZAR188.1 million ($17.8 million), alternatively ZAR157.1 million
($143.8 million), further alternatively ZAR140.0 million ($13.2 million). This was subsequently reduced to ZAR78.0
million ($7.4 million), alternatively ZAR70.0 million ($6.6 million) excluding VAT, interest and costs thereon. A ruling on
this matter was received on 12 September 2014 with an award for Envicoal. The Company is reviewing the findings and
pending the finalisation of all related processes, has provided $2.2 million as at 30 June 2014 (detailed in note 24).
Other than the above, there was no significant change in the state of affairs of the Consolidated Entity during the financial
year.
Subsequent events
Post year end, the following significant operational events took place:
- On 27 August 2014 the Company reached an agreement with Grindrod Corridor Management Proprietary Limited and
Terminal de Carvão da Matola Limitada ('TCM'), both subsidiaries of Grindrod Limited ('Grindrod'), for the settlement
of both historic and future liabilities, up to the end of December 2016, remaining under the current terms of the
August 2008 Throughput Agreement ("Throughput Agreement"). The settlement with Grindrod will result in a $10
million payment settled in two tranches; US$6million at the end of October 2014 and US$4million by the earlier of 5
days after receipt of the Stage 2 Placement of the proposed equity raise announced on 26 August 2014, or the end of
December 2014. The payment of the $10 million in the two tranches as described above is subject to the successful
completion of the placement.
- On 19 September 2014 the Company signed a Sale and Purchase Agreement for the disposal of the Mooiplaats colliery
for a gross consideration of ZAR250 million (US$23.47 million) in cash. Upon fulfilment of all conditions precedent
including the receipt of regulatory approvals consistent with a transaction of this nature, the consideration will be
settled in two tranches, with the first tranche of ZAR150 million (US$14.084 million) expected to be received during the
first quarter of CY2015. The second tranche of ZAR100 million (US$9.39 million) is payable on the earlier of 12 months
from the payment of the first tranche or 30 November 2015.
- On 25 September 2014 the shareholders voted in favour of an equity placement. The 251,000,000 Shares will be issued
and paid for within three business days of the date on which CoAL notifies the Placees that each of the Stage 1
Conditions has been satisfied, raising GBP13.805 million.
The Placement is conditional upon the following conditions:
- the approval by the Company's shareholders for the issue of additional shares;
- Haohua Energy International (Hong Kong) Co. Limited ("HEI") and M&G Investment Management Limited ("M&G")
having received confirmation from the Treasurer of the Commonwealth of Australia under the Foreign Acquisitions
and Takeovers Act 1975 (Cth) that it has no objection to the acquisition by HEI and M&G of its/their respective
Placement Shares; and
- HEI having received all necessary regulatory approvals within the People's Republic of China ("PRC") for it to
acquire its Placement Shares.
The only outstanding condition at the date of this report is the PRC approval for HEI, which is expected in the near
future. All other approvals have been obtained.
There have been no other events between 30 June 2014 and the date of this report which necessitate adjustment to the
consolidated statement of profit or loss and other comprehensive income or the consolidated statement of financial
position at that date.
Financial review
- $3.3 million (FY2013: $145.4 million) in revenue generated by the Mooiplaats colliery. The operation was put on care
and maintenance in October 2013.
- Non-cash charges of $53.4 million (FY2013: $106.4 million) including:
- impairment of Mooiplaats of $14.9 million (FY2012: $48.5 million);
- depreciation and amortisation of $2.2 million (FY2013: $28.6 million);
- unrealised foreign exchange losses of $35.6 million (FY2013: $28.6 million) as a result of the South African rand
weakening against the United States dollar; and
- share based payment expense of $0.7 million (FY2013: $0.7 million).
- Total unrestricted cash balances at year-end, including cash held by operations available for sale of $2.1 million
(FY2013: $29.9 million).
Future developments
The Company has finalised additional core drilling and core testing in order to ascertain the coal quality at the Vele colliery.
This data has been utilised in a financial model which supports the investment case for a plant to produce semi-soft coking
coal as well as sized and un-sized thermal coal. The board approved the technical plan and has commenced on the FEED of
the plant modification required at Vele. The planned plant modification will be funded from the proceeds of the proposed
equity raise.
The Makhado project Definitive Feasibility Study ('DFS') completed during the previous financial year, indicates that the
project has 344.8 million mineable tonnes in situ and a 16 year life of mine. The opencast project is expected to produce
12.6 million tonnes per annum ('Mtpa') of ROM coal yielding 2.3 Mtpa of hard coking coal and 3.2 Mtpa of thermal coal for
the domestic or export markets. The estimated average on-mine operating costs are ZAR865 ($89) per tonne of hard
coking coal (after thermal by-product credit) and the project is expected to cost ZAR3.96 billion ($406 million) (including
contingency) to build. The project's Internal Rate of Return ('IRR') of 30.1% and Net Present Value ('NPV') of ZAR6.79 billion
($697 million) were calculated using independently forecast average hard coking coal prices over the life of the mine. There are
a number of milestones still to be met before the Makhado project achieves both technical and commercial feasibility.
The exploration and development of the CoAL prospects in the Soutpansberg coalfield is the catalyst for the long-term
growth of the Company. The Department of Mineral Resources has accepted the Company's New Order Mining Right
('NOMR') applications for the Mopane, Generaal and Chapudi projects.
Environmental regulations
The Consolidated Entity's operations are not subject to any significant environmental regulations under either
Commonwealth or State legislation and there has consequently been no breach. The Group is subject to numerous
environmental regulations in South Africa, including the Atmospheric Pollution Prevention Act (No. 45 of 1965),
Environment Conservation Act (No. 73 of 1989), National Water Act (No. 45 of 1965), National Environmental Management
Act (No. 107 of 1998), the National Environmental Management Air Quality Act (No. 39 of 2004) and the environmental
provisions in the MPRDA (No 28 of 2002). There is uncertainty regarding the interrelationship between these statutes in
the mining context and as such complete compliance with all simultaneously is often difficult. The Board believes that the
Consolidated Entity has adequate systems in place for the management of its environmental impacts but from time to time
statutory non-compliances may occur. The Board takes these seriously and undertook a thorough review of all its activities
during FY2013 to bring them into compliance and continues to monitor compliance thereof.
Dividends
No dividend has been paid or proposed for the financial year ended 30 June 2014 (2013: nil).
Shares under option or issued on exercise of options
Details of unissued shares under option as at the date of this report are:
Number of shares Class of shares Exercise price Expiry date
under option
1 Option(1) 50,000,000 Ordinary GBP0.60 1 November 2014
Class J Unlisted Options 3,000,000 Ordinary A$2.74 30 November 2014
ESOP Unlisted Options 1,441,061 Ordinary A$1.40 30 September 2015
Class C Unlisted Options 2,500,000 Ordinary A$1.20 9 November 2015
Class L Unlisted Options 3,500,000 Ordinary GBP0.25 30 November 2015
ESOP Unlisted Options 2,670,000 Ordinary ZAR7.60 14 February 2017
ESOP Unlisted Options 3,932,928 Ordinary ZAR1.75 30 June 2017
ESOP Unlisted Options 4,125,000 Ordinary ZAR2.00 30 June 2018
1. Option to subscribe for 50 million ordinary shares for GBP0.60 each between 1 November 2010 and 1 November 2014,
as approved by shareholders on 22 April 2010, and granted to Firefly Investments Proprietary Limited, a Broad Based
Black Economic Empowerment ('BBBEE') entity.
The holders of these options do not have the right, by virtue of the option, to participate in any share issue of the Company
or of any other body corporate or registered scheme.
No shares or interests were issued during or since the end of the financial year as a result of exercise of options.
Indemnification of officers and auditors
During the financial year, the Company paid a premium in respect of a contract insuring the directors of the Company as
named above, the company secretary, and all executive officers of the Company and of any related body corporate against
a liability incurred by such a director, secretary or executive officer to the extent permitted by the Corporations Act 2001.
The Company has not otherwise, during or since the end of the financial year, except to the extent permitted by law,
indemnified or agreed to indemnify an officer or auditor of the Company or of any related body corporate against a liability
incurred by such an officer or auditor.
Directors' meetings
The following table sets out the number of directors' meetings (including meetings of committees of directors) held during
the financial year and the number of meetings attended by each director (while they were a director or committee
member). During the financial year, a total of five board meetings were held, four scheduled and one unscheduled, zero
placing and bid committee meetings, four nomination and remuneration committee meeting, five audit committee
meetings and four safety and health committee meeting were held.
Board Meetings Audit Committee Nomination and Safety, Health and
Meetings Remuneration Environment
Committee Meetings Committee Meetings
Director Held Attended Held Attended Held Attended Held Attended
B Pryor(1) 5 4 5 4 4 4 - -
D Brown(2) 5 5 - - 4 4 4 4
M Meeser 5 5 - - - - - -
D Murray 5 5 - - 4 4 4 4
P Cordin 5 4 5 5 - - 4 4
K Mosehla 5 4 5 5 - - - -
R Torlage 5 3 - - - - - -
1. Mr Pryor was an Independent Non-Executive Director until 31 January 2014 and was appointed Independent Non-
Executive Chairman on 1 February 2014.
2. Mr Brown was Executive Chairman until 31 January 2014 and was appointed Executive Director and Chief Executive
Officer 1 February 2014.
Proceedings on behalf of the Company
No persons applied for leave to bring or intervene in proceedings on behalf of the Company during or since the end of the
financial year.
Non-audit services
Details of amounts paid or payable to the auditor for non-audit services provided during the year by the auditor are
outlined in note 8 to the consolidated financial statements.
The directors are satisfied that the provision of non-audit services, during the year, by the auditor (or by another person or
firm on the auditor's behalf) is compatible with the general standard of independence for auditors imposed by the
Corporations Act 2001.
The directors are of the opinion that the services as disclosed in note 8 to the consolidated financial statements do not
compromise the external auditor's independence, based on advice received from the Audit Committee, for the following
reasons:
- all non-audit services have been reviewed and approved to ensure that they do not impact the integrity and objectivity
of the auditor, and
- none of the services undermine the general principles relating to auditor independence as set out in Code of Conduct
APES 110 'Code of Ethics for Professional Accountants' issued by the Accounting Professional & Ethical Standards
Board, including reviewing or auditing the auditor's own work, acting in a management or decision-making capacity for
the Company, acting as advocate for the Company or jointly sharing economic risks and rewards.
Auditor's independence declaration
The auditor's independence declaration is included on page 22 of these consolidated financial statements.
Remuneration report (Audited)
This remuneration report, which forms part of the directors' report, sets out information about the remuneration of Coal
of Africa Limited's directors and its senior management for the financial year ended 30 June 2014. The prescribed details
for each person covered by this report are detailed below under the following headings:
- director and key management personnel details;
- remuneration policy;
- performance-based remuneration;
- hedging of management remuneration;
- relationship between the remuneration policy and company performance;
- remuneration of directors and key management personnel;
- share-based payments granted as compensation for the current financial year;
- key terms of employment contracts; and
- key management personnel equity holdings
The Board is responsible for establishing remuneration packages applicable to the Board members of the Company. The
policy adopted by the Board is to ensure that remuneration properly reflects an individual's duties and responsibilities and
that remuneration is competitive in attracting, retaining and motivating people of the highest calibre.
Directors' remuneration packages are also assessed in the light of the condition of markets within which the Company
operates, the Company's financial condition and the individual's contribution to the achievement of corporate objectives.
Executive Directors are remunerated by way of a salary or consultancy fees, commensurate with their required level of
service.
Total remuneration for all Non-Executive Directors, excluding share-based payments, as approved by shareholders at the
November 2010 General Meeting, is not to exceed A$1,000,000 per annum ($917,852).
The Board has nominated a Nomination and Remuneration Committee which was made up as follows: Mr Pryor
(Chairman), Mr Murray and Mr Brown. The Company does not have any scheme relating to retirement benefits for Non-
Executive Directors.
Director and key management personnel details
The following persons acted as directors of the Company during or since the end of the financial year:
- B Pryor Independent Non-Executive Director until 31 January 2014
Appointed Independent Chairman from 1 February 2014
- D Brown Executive Chairman until 31 January 2014
Appointed Chief Executive Officer and Director from 1 February 2014
- M Meeser Financial Director
- D Murray Senior Independent Non-Executive Director
- P Cordin Independent Non-Executive Director
- K Mosehla Non-Executive Director
- R Torlage Non-Executive Director
Key management personnel are those persons having authority and responsibility for planning, directing and controlling
the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity. The
term 'key management' is used in this remuneration report to refer to the following persons.
Except as noted, the named persons held their current position for the whole of the financial year and since the end of the
financial year:
- C Bronn Chief Operating Officer
- W Hattingh Commercial Director (resigned 28 February 2014)
Mr Tony Bevan, a qualified Chartered Accountant with over 25 years' experience, is the Company Secretary and works with
Endeavour Corporate Pty Ltd, the company engaged to provide contract secretarial, accounting and administration services
to CoAL.
Remuneration policy
The remuneration policy of CoAL has been designed to align key management personnel objectives with shareholder and
business objectives by providing a fixed remuneration component and offering specific long-term incentives based on key
performance areas affecting the consolidated group's financial results. The Board of CoAL believes the remuneration policy
to be appropriate and effective in its ability to attract and retain the best key management personnel to run and manage
the consolidated group, as well as create goal congruence between Directors, key management and shareholders.
The Board's policy for determining the nature and amount of remuneration for key management personnel of the
consolidated group is as follows:
- The remuneration structure is developed by the Nomination and Remuneration Committee and approved by the Board
after professional advice is periodically sought from independent external consultants.
- All key management personnel receive a base salary (based on factors such as length of service and experience),
options and performance incentives.
- Incentives paid in the form of cash and options are intended to align the interests of the Directors, key management
and company with those of the shareholders.
The Nomination and Remuneration Committee reviews key management personnel packages annually by reference to the
consolidated group's performance, executive performance and comparable information from industry sectors.
The performance of key management personnel is measured against criteria agreed annually with each executive and
bonuses and incentives are linked to predetermined performance criteria. The performance criteria vary and are
determined in line with each individual's performance contract. The Board may, however, exercise its discretion in relation
to approving incentives, bonuses and options, and can recommend changes to the Nomination and Remuneration
Committee's recommendations. Any changes must be justified by reference to measurable performance criteria. The policy
is designed to attract the highest calibre of executives and reward them for performance results leading to long-term
growth in shareholder wealth.
All remuneration paid to key management personnel is valued at the cost to the Company and expensed.
The Board's policy is to remunerate Non-Executive Directors at market rates for time, commitment and responsibilities.
The Nomination and Remuneration Committee determines payments to the Non-Executive Directors and reviews their
remuneration annually, based on market practice, duties and accountability. The maximum aggregate amount of fees,
excluding share-based payments, that can be paid to Non-Executive Directors is A$1,000,000 ($917,852).
To assist directors with independent judgement, it is the Board's policy that if a director considers it necessary to obtain
independent professional advice to properly discharge the responsibility of their office as a director then, provided the
director first obtains approval from the Chairman for incurring such expense, the Company will pay the reasonable
expenses associated with obtaining such advice.
Options granted under the arrangement do not carry dividend or voting rights. Options are valued using the Binomial
option pricing model.
Performance – based remuneration
The key performance indicators ('KPIs') are set annually, which includes consultation with key management personnel to
ensure buy-in. The measures are specifically tailored to the area each individual is involved in and has a level of control
over. The KPIs target areas the Board believes hold greater potential for group expansion and profit, covering financial and
non-financial as well as short and long-term goals.
Performance in relation to the KPIs is assessed annually, with bonuses being awarded depending on the number and
deemed difficulty of the KPIs achieved.
Hedging of Management Remuneration
No member of key management entered into an arrangement during or since the end of the financial year to limit the risk
relating to any element of that person's remuneration.
Relationship between remuneration policy and Company performance
The tables below set out summary information about the Group's earnings and movements in shareholder wealth for the
five years to June 2014.
Year ended Year ended Year ended Year ended Year ended
30 June 30 June 30 June 30 June 30 June
2014 2013 2012 2011 2010
$'000 $'000 $'000 $'000 $'000
Revenue 4,060 146,396 243,842 261,425 98,376
- Continuing operations 761 1,012 1,349 261,425 98,376
- Discontinued operations (note 11) 3,299 145,384 242,493 - -
Net loss before tax 84,120 155,754 150,551 218,106 178,656
- Continuing operations 63,545 65,070 75,398 218,106 178,656
- Discontinued operations (note 11) 20,575 90,684 75,153 - -
Net loss after tax 84,120 148,137 138,908 219,003 167,758
- Continuing operations 63,545 65,070 75,397 219,003 167,758
- Discontinued operations (note 11) 20,575 83,067 63,511 - -
Year ended Year ended Year ended Year ended Year ended
30 June 30 June 30 June 30 June 30 June
2014 2013 2012 2011 2010
Share price at start of year A$0.19 A$0.58 A$1.08 A$1.83 A$1.57
Share price at end of year A$0.07 A$0.19 A$0.58 A$1.08 A$1.83
Basic and diluted loss per share ($ cents) 0.08 0.17 0.23 0.41 0.37
Remuneration of directors and key management personnel
Details of the nature and amount of each major element of the remuneration of each director and senior management
personnel for the year are:
Short term employee benefits Post- Termination Share- Total Share
employm benefits based based
ent paymen % of
benefits ts Total
Salary and Bonus Non- Super- Options
fees monetary annuation /Shares
2014 benefits
$ $ $ $ $ $ $ %
Non-Executive Directors
B Pryor(1) 237,865 - - - - - 237,865 -
D Murray 86,587 - - 8,009 - - 94,596 -
P Cordin 84,353 - - 7,803 - - 92,156 -
K Mosehla 67,479 - - - - - 67,479 -
R Torlage 67,479 - - - - - 67,479 -
Executive Directors
D Brown(2) 572,961 - - - - - 572,961 -
M Meeser 318,197 - - - - 225,145 543,342 41
1,434,921 - - 15,812 - 225,145 1,675,878 13
C Bronn 289,269 - - - - 8,854 298,123 3
W Hattingh(3) 158,045 - - - - 19,054 177,099 11
Key management 447,314 - - - - 27,908 475,222 6
1,882,235 - - 15,812 - 253,053 2,151,100 12
1. Mr Pryor was an Independent Non-Executive Director until 31 January 2014 and was appointed Independent Non-
Executive Chairman on 1 February 2014.
2. Mr Brown was Executive Chairman until 31 January 2014 and was appointed Executive Director and Chief Executive
Officer 1 February 2014.
3. Mr Hattingh resigned effective 28 February 2014.
Subsequent to the resignations of Mr R van der Merwe and W Hattingh and the corporate restructure, the only key
management person is the Chief Operating Officer – C Bronn.
Short term employee benefits Post- Termina- Share- Total Share
employ- tion based based
ment benefits paymen % of
benefits ts Total
Salary and Bonus Non- Super- Options
fees monetary annuation /Shares
2013 benefits
$ $ $ $ $ $ $ %
Non-Executive Directors
-
B Pryor 214,249 - - - 50,317 264,566 19
D Brown 288,300 - - - - 125,791 414,091 30
D Murray 101,809 - - 6,109 - - 107,918 -
P Cordin 111,950 - - 6,713 - - 118,663 -
K Mosehla 55,532 - - - - - 55,532 -
R Torlage 55,532 - - - - - 55,532 -
R Linnell 19,483 - - - - - 19,483 -
S Bywater 19,857 - - - - - 19,857 -
M Xayiya 8,741 - - - - - 8,741 -
Executive Directors
D Brown 57,885 - - - - - 57,885 -
M Meeser 31,523 - - - - - 31,523 -
J Wallington 710,979 - - - - - 710,979 -
W Koonin 190,381 - - - 1,175,829 - 1,366,210 -
A Nevhutanda 125,336 - - - - - 125,336 -
1,991,557 - - 12,822 1,175,829 176,108 3,356,316 5
C Bronn 28,676 - - - - - 28,676 -
R van der Merwe 416,930 38,547 - - - - 455,477 -
W Hattingh 306,930 34,050 - - - - 340,980 -
Key management 752,536 72,597 - - - - 825,133 -
2,744,093 72,597 - 12,822 1,175,829 176,108 4,181,449 4
No director or key management appointed during the period received a payment as part of his consideration for agreeing
to hold the position.
The Group has not provided any of its key management personnel with loans and has not entered into any other
transactions (apart from the salary and fees and share options issued disclosed in this report) with its key management
personnel.
Share-based payments granted as compensation for the current financial year
During the financial year, the following share-based payment arrangements were in existence (also included in note 30):
Grant date
Option series Number Grant date Expiry date value Vesting date
Class K unlisted options 818,500 25/02/2010 30/06/2014 A$0.92 (1)
Class J unlisted options 3,000,000 08/12/2009 30/11/2014 A$0.58 30/11/2009(2)
Class C unlisted options 2,500,000 09/11/2010 09/11/2015 A$0.59 (3)
ESOP unlisted options 1,441,061 04/02/2011 30/09/2015 A$0.91 (4)
ESOP unlisted options 2,670,000 16/09/2011 14/02/2017 ZAR3.46 (5)
Class L unlisted options 3,500,000 28/11/2012 30/11/2015 GBP0.032 28/11/2012(6)
ESOP unlisted options 3,932,928 22/11/2013 30/06/2017 ZAR0.52 (7)
ESOP unlisted options 4,125,000 22/11/2013 30/06/2018 ZAR0.56 (8)
21,987,489
1. These options were issued to employees and one third vested immediately on granting, 25 February 2010, one third on
1 July 2010 and the remaining third on 1 July 2011.
2. The 3,000,000 share options were granted to Mr Farrell, a former Managing Director of the Company on 8 December
2009. 2,000,000 of the options vested on 29 January 2011 and the remaining 1,000,000 options vest 1 year after the
granting of the Makhado project NOMR.
3. Mr Murray was issued a total of 2,500,000 options with an expiry date 5 years from the issue date, 1,000,000 of which
will vest 12 months after the date of issue, 750,000 of which vested 24 months after the date of issue and the
remaining 750,000 vested 36 months from the date of issue.
4. These options were issued to employees and vested in 3 equal tranches on 30 September 2011, 30 September 2011
and the remaining third on 30 September 2012.
5. These options were issued to employees and one third vested on 1 July 2012, one third on 1 July 2013 and the
remaining third on 1 July 2014.
6. 2,500,000 of the options granted to Mr Brown and 1,000,000 to Mr Pryor 28 November 2012. The options vested
immediately, expire 3 years from date of issue and have an exercise price of GBP0.25.
7. These options were issued to employees and two thirds vested immediately on granting and one third vesting on 1 July
2014.
8. Mr Meeser was issued a total of 4,125,000 options vesting in three equal tranches on 1 June 2014, 1 June 2015 and 1
June 2016.
The following grants of share-based payment compensation to key management personnel relate to the current financial
year:
During the financial year
% of
compensation
% of % of for the year
Number Number grant grant consisting of
Name Option series granted vested vested forfeited options
M Meeser ESOP unlisted options 4,125,000 1,375,000 33 n/a 41
C Bronn ESOP unlisted options 174,696 116,464 67 n/a 3
W Hattingh(1) ESOP unlisted options 345,897 230,598 67 33 11
1. Mr Hattingh resigned effective 28 February 2014
During the year, none of the key management personnel exercised options that were granted to them as part of their
compensation.
The following table summarises the value of options to key management personnel granted, exercised or lapsed during the
year:
Value of Value of
options Value of options lapsed
granted at options at at the date of
Name grant date exercise date lapse
C Bronn 8,854 n/a n/a
W Hattingh (1) 19,054 n/a 6,351
1. Mr Hattingh resigned effective 28 February 2014
Key terms of employment contracts
The Company entered into formal contractual employment agreements with the Chief Executive Officer and the Financial
Director only and not with any other member of the Board. The employment conditions of the Chief Executive Officer and
Financial Director are:
1. Mr Brown's appointment as Chief Executive Officer commenced on 1 February 2014 with an annual remuneration of
ZAR5.5 million and a three month notice period and will receive 10,575,000 options at ZAR1.45 vesting in three equal
tranches over three years. These are to be granted in accordance with the Company's employee share option plan and
are subject to shareholder approval. Should there be a change of control event, the options will vest immediately.
2. Mr Meeser serves as Financial Director with an annual remuneration of ZAR3.3 million and a three month notice
period.
The employment conditions of the following specified executives have been formalised in employment contracts:
1. Mr Bronn is employed by CoAL in the capacity of Chief Operations Officer, at an annual remuneration of ZAR3.0 million.
This permanent employment contract may be terminated by written notice of two months.
2. Mr Hattingh was employed by CoAL in the capacity of Commercial Director and resigned effective 28 February 2014.
Key management personnel equity holdings
Option holdings
The movement during the reporting period in the number of options over ordinary shares exercisable at A$1.20 on or
before 9 November 2015 held directly, indirectly or beneficially by each director and key management personnel including
their personally-related entities, is as follows:
Held at Granted as Exercised Other Held at
1 July 2013 remuneration changes 30 June 2014
Non-Executive Directors
B Pryor - - - - -
D Murray 2,500,000 - - - 2,500,000
P Cordin - - - - -
K Mosehla - - - - -
R Torlage - - - - -
Executive Directors
D Brown - - - - -
M Meeser - - - - -
Key management - - - - -
The movement during the reporting period in the number of options over ordinary shares exercisable at A$1.40 on or
before 30 September 2015 held directly, indirectly or beneficially by each director and key management personnel
including their personally-related entities, is as follows:
Held at Granted as Exercised Other Held at
1 July 2013 remuneration changes 30 June 2014
Non-Executive Directors
B Pryor - - - - -
D Murray - - - - -
P Cordin - - - - -
K Mosehla - - - - -
R Torlage - - - - -
D Brown - - - - -
M Meeser - - - - -
W Hattingh 77,000 - - - 77,000
The movement during the reporting period in the number of options over ordinary shares exercisable at ZAR7.60 on or
before 14 February 2017 held directly, indirectly or beneficially by each director and key management personnel including
their personally-related entities, is as follows:
Held at Granted as Exercised Other Held at
1 July 2013 remuneration changes 30 June 2014
Non-Executive Directors
B Pryor - - - - -
D Murray - - - - -
P Cordin - - - - -
K Mosehla - - - - -
R Torlage - - - - -
D Brown - - - - -
M Meeser - - - - -
C Bronn 135,000 - - - 135,000
W Hattingh 286,000 - - - 286,000
The movement during the reporting period in the number of options over ordinary shares exercisable at GBP0.25 on or
before 30 November 2015 held directly, indirectly or beneficially by each director and key management personnel
including their personally-related entities, is as follows:
Held at Granted as Exercised Other changes Held at
1 July 2013 remuneration 30 June 2014
Non-Executive Directors
B Pryor 1,000,000 - - - 1,000,000
D Murray - - - - -
P Cordin - - - - -
K Mosehla - - - - -
R Torlage - - - - -
D Brown 2,500,000 - - - 2,500,000
M Meeser - - - - -
Key management - - - - -
The movement during the reporting period in the number of options over ordinary shares exercisable at ZAR1.75 on or
before 30 June 2017 held directly, indirectly or beneficially by each director and key management personnel including their
personally-related entities, is as follows:
Held at Granted as Exercised Other changes Held at
1 July 2013 remuneration 30 June 2014
Non-Executive Directors
B Pryor - - - - -
D Murray - - - - -
P Cordin - - - - -
K Mosehla - - - - -
R Torlage - - - - -
D Brown - - - - -
M Meeser - - - - -
C Bronn - 174,696 - - 174,696
W Hattingh - 345,897 - (115,299) 230,598
The movement during the reporting period in the number of options over ordinary shares exercisable at ZAR2.00 on or
before 1 June 2018 held directly, indirectly or beneficially by each director and key management personnel including their
personally-related entities, is as follows:
Held at Granted as Exercised Other changes Held at
1 July 2013 remuneration 30 June 2014
Non-Executive Directors
B Pryor - - - - -
D Murray - - - - -
P Cordin - - - - -
K Mosehla - - - - -
R Torlage - - - - -
D Brown - - - - -
M Meeser - 4,125,000 - - 4,125,000
Key management - - - - -
Equity holdings and transactions of Directors and key management personnel
The movement during the reporting period in the number of ordinary shares held, directly, indirectly or beneficially by
each key management personnel including their personally-related entities, is as follows:
Held at Purchased Received on Other Held at
1 July 2013 exercise of changes 30 June 2014
options /
remuneration
Non-Executive Directors
D Murray - - - - -
P Cordin 871,059 - - - 871,059
K Mosehla - - - - -
B Pryor - - - - -
R Torlage - - - - -
D Brown 30,000 295,000 - - 325,000
M Meeser - 600,000 - - 600,000
Key management - - - - -
This directors' report is signed in accordance with a resolution of directors made pursuant to s298(2) of the Corporations
Act 2001.
On behalf of the Directors
Bernard Robert Pryor David Hugh Brown
Chairman Chief Executive Officer
29 September 2014 29 September 2014
CORPORATE GOVERNANCE STATEMENT
The Board of Directors of Coal of Africa Limited is responsible for the establishment of a corporate governance framework
that has regard to the best practice recommendations set by the ASX Corporate Governance Council. CoAL's objective is to
achieve best practice in corporate governance and the Company's Board, senior executives and employees are committed
to achieving this objective.
This statement summarises the corporate governance practices that have been adopted by the Board. In addition to the
information contained in this statement, the Company's website at www.coalofafrica.com contains additional details of its
corporate governance procedures and practices.
The Company has followed the ASX Corporate Governance Council's Corporate Governance Principles and
Recommendations ('ASX Principles') where the Board has considered the recommendation to be an appropriate
benchmark for its corporate governance principles. Where the Company considered it was not appropriate to presently
comply with a particular recommendation, the reasons are set out in the relevant section of this statement.
1.1 PRINCIPLE 1: LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT
Companies should establish and disclose the respective roles and responsibilities of Board and management.
ASX Principles Recommendation 1.1: Companies should establish the functions reserved to the Board and those
delegated to senior executives and disclose those functions.
The Board has established a Board Charter which sets out functions reserved to Board and those delegated to senior
executives. This Charter is available on the Company's website.
Role and Responsibilities of the Board
The role of the Board is to provide leadership for and supervision of the Company's senior management. The Board
provides the strategic direction of the Company and regularly measures the progression by senior management of
that strategic direction.
The key responsibilities of the Board include:
(a) overseeing the Company, including its control and accountability systems;
(b) appointing the chief executive officer, or equivalent, for a period and on terms as the Directors see fit and, where
appropriate, removing the chief executive officer, or equivalent;
(c) ratifying the appointment and, where appropriate, the removal of senior executives, including the chief financial
officer and the company secretary;
(d) ensuring the Company's Policy and Procedure for Selection and (Re)Appointment of Directors is reviewed in
accordance with the Company's Nomination Committee Charter;
(e) approving the Company's policies on risk oversight and management, internal compliance and control, Code of
Conduct, and legal compliance;
(f) satisfying itself that senior management has developed and implemented a sound system of risk management
and internal control in relation to financial reporting risks and reviewed the effectiveness of the operation of that
system;
(g) assessing the effectiveness of senior management's implementation of systems for managing material business
risk including the making of additional enquiries and to request assurances regarding the management of
material business risk, as appropriate;
(h) monitoring, reviewing and challenging senior management's performance and implementation of strategy;
(i) ensuring appropriate resources are available to senior management;
(j) approving and monitoring the progress of major capital expenditure, capital management, and acquisitions and
divestitures;
(k) monitoring the financial performance of the Company;
(l) ensuring the integrity of the Company's financial (with the assistance of the Audit and Risk Committee) and other
reporting through approval and monitoring;
(m) providing overall corporate governance of the Company, including conducting regular reviews of the balance of
responsibilities within the Company to ensure division of functions remain appropriate to the needs of the
Company;
(n) appointing the external auditor (where applicable, based on recommendations of the Audit and Risk Committee)
and the appointment of a new external auditor when any vacancy arises, provided that any appointment made
by the Board must be ratified by shareholders at the next annual general meeting of the Company;
(o) engaging with the Company's external auditors and Audit and Risk Committee;
(p) monitoring compliance with all of the Company's legal obligations, such as those obligations relating to the
environment, native title, cultural heritage and occupational health and safety; and
(q) making regular assessment of whether each non-executive Director is independent in accordance with the
Company's Policy on Assessing the Independence of Directors.
The Board has delegated responsibilities and authorities to management to enable management to conduct the
Company's day to day activities. Matters which are not covered by these delegations, such as approvals which exceed
certain limits, require Board approval.
ASX Principles: Recommendation 1.2: Companies should disclose the process for evaluating the performance of senior
executives.
The Chief Executive Officer is responsible for assessing the performance of the key executives within the Company.
This is performed at least annually through a formal process involving a formal meeting with each senior executive.
A performance evaluation of senior executives was completed in the financial year in accordance with this process.
Induction procedures have been developed to allow new senior executives to participate fully and actively in
management decision-making at the earliest opportunity.
Committees
The Board has established three standing Committees to assist it to meet its responsibilities. The Committees are:
- Audit & Risk
- Nomination and Remuneration
- Safety, Health & Environment
These Committees are described in further detail under the relevant Principles below.
Commitment
All Directors understand the Company's expectations of them. The non-executive Directors have been provided with
formal letters of appointment that set out the key terms and conditions of their appointment.
Similarly, the Company has employment agreements with its Chief Executive Officer, Chief Financial Officer and other
key executives.
Prior to appointment or being submitted for re-election, each non-executive Director is required to specifically
acknowledge that they have and will continue to have the time available to discharge their responsibilities to the
Company.
Meetings
The Board Charter requires the Board to convene regular meetings with such frequency as is sufficient to
appropriately discharge its responsibilities. The Board held 4 scheduled and 1 unscheduled meetings during the
reporting year. There were also 6 Circular Resolutions during the year that dealt with specific matters.
Standing Committee meetings are held as required, generally the day prior to the scheduled Board meeting.
The Chairman sets the agenda for each meeting in conjunction with the Chief Executive Officer and Company
Secretary. Any Director may request additional matters on the agenda. Members of senior management attend
meetings of the Board and its Committees by invitation and were available for questioning by Directors.
The attendance of Directors at Board and Committee meetings during the year is detailed in the Directors' Report.
1.2 PRINCIPLE 2: STRUCTURE THE BOARD TO ADD VALUE
Companies should have a Board of an effective composition, size and commitment to adequately discharge its
responsibilities and duties.
Board composition
Details of the Directors in office at the date of this report, including their qualifications, experience, date of
appointment and their status as non-executive, independent or executive Directors are set out in the Directors
Report.
ASX Principles: Recommendation 2.1 recommends a majority of the Board should be independent Directors,
Recommendation 2.2 recommends the Chairman should be an independent Director and Recommendation 2.3
recommends that the roles of the Chair and Managing Director should not be exercised by the same individual.
The Board currently comprises two executive Directors and five non-executive Directors. Three of the non-executive
directors are considered to be independent.
The Chairman, Mr B Pryor, is one of the independent directors.
The Company's website contains details on the procedures for the selection and appointment of new Directors and
the re-election of incumbent Directors, together with the Board's policy for the nomination and appointment of
Directors.
Independent decision-making
The Board agrees that all Directors should bring an independent judgement to bear in decision-making.
The Board has adopted a formal policy on access to independent professional advice which provides that Directors
are entitled to seek independent professional advice for the purposes of the proper performance of their duties. The
advice is at the Company's expense and advice so obtained is to be made available to all Directors.
Director independence
The Board considers an independent Director to be a non-executive Director who meets the criteria for
independence set out in Principle 2 of the ASX Corporate Governance Principles and Recommendations. In
determining a Director's independence, the Board considers the relationships that may affect independence.
Criteria that the Board takes into account when determining Director independence include:
- substantial shareholdings in the Company
- past or current employment in an executive capacity
- whether or not the Director has been a principal of a material professional adviser or a material consultant to the
Company in the past 3 years
- material supplier or customer relationships with the Company
- material contractual relationships or payments for services other than as a Director
- family ties and cross-directorships.
Materiality for these purposes is based on quantitative and qualitative thresholds, set out in the Board Charter
available from the Company's website.
The Board has reviewed and considered the positions and associations of each of the Directors in office at the date of
this report and consider that a majority of the Directors are not independent. Messrs Bernard Pryor, Peter Cordin and
David Murray are considered independent. Executive Directors Messrs David Brown and Michael Meeser and non-
executive Directors Khomotso Mosehla and Rudolph Torlage are not considered independent.
Non-executive Director Rudolph Torlage is an officer/senior employee of ArcelorMittal South Africa Ltd, a substantial
shareholder in the Company and as such does not meet the Board's criteria for independence. Non-executive
Director Khomotso Mosehla is associated with Firefly Investments (Pty) Limited, a Broad Based Black Economic
Empowerment ('BEE') entity granted an option to subscribe for 50 million ordinary shares for 60 pence each expiring
on 1 November 2014 and as such does not meet the Board's criteria for independence.
Notwithstanding that the current composition of the Board does not meet the requirements of ASX Principle 2 as a
majority of the Directors are not independent, the Board considers that the composition of the Board is adequate for
the Company's current size and operations, and includes an appropriate mix of skills and expertise, relevant to the
Company's business. The Board has formed the view that the individuals on the Board can, and do make quality
judgments in the best interests of the Company on all relevant issues.
The period of office held by each director in office is as follows:
Director Date Appointed Period in office Due for Re-election or
Retirement
Bernard Pryor 6 August 2012 2 year 2014 AGM
David Brown 6 August 2012 2 year 2015 AGM
Michael Meeser 1 June 2013 1 year 2016 AGM
Peter Cordin 8 December 1997 16 years 2014 AGM
David Murray 8 September 2010 3 years 2015 AGM
Khomotso Mosehla 18 November 2010 3 years 2014 AGM
Rudolph Torlage 18 November 2010 3 years 2015 AGM
Conflicts of Interest
A Director's obligations to avoid a conflict of interest are set out in Code of Conduct, available on the Company's
website. Directors must also comply strictly with Corporations Act requirements for the avoidance of conflicts.
Nomination and remuneration committee
ASX Principles: Recommendation 2.4: The Board should establish a Nomination Committee
The Company has established a Nomination & Remuneration Committee and adopted a Charter that sets out the
committee's role and responsibilities, composition and membership requirements. That Charter has been published
on the Company's website.
Nomination responsibilities:
The Committee's Nomination Responsibilities includes ensuring that the Board has the appropriate blend of directors
with the necessary expertise and relevant industry experience. As such the Charter requires the Committee to:
- regularly review the size and composition of the Board, and make recommendations to the Board on any
appropriate changes;
- identify and assess necessary and desirable director competences and provide advice on the competency levels
of directors with a view to enhancing the Board;
- make recommendations on the appointment and removal of directors;
- make recommendations on whether any directors whose term of office is due to expire should be nominated for
re-election;
- regularly review the time required from non-executive directors and whether non-executive directors are
meeting that requirement.
The responsibilities of this Committee with respect to remuneration matters are set out under the discussion of
Principle 8 later in this Statement.
Composition of the Committee:
The Committee Charter states that the composition should include:
- a minimum of three members, the majority of whom must be independent, and
- a Chairman who is an independent Director.
Committee membership is disclosed in the Directors Report included as part of the Annual Report along with details
of meetings attended. Membership is consistent with the composition requirements of the Charter and the
recommendations of the ASX Principles.
Selection, appointment, induction and continuing development processes
Directors must retire at the third AGM following their election or most recent re-election. At least one third of
Directors must stand for election at each AGM. Any Director appointed to fill a casual vacancy since the date of the
previous AGM must submit themselves to shareholders for election at the next AGM. Re-appointment of Directors
by rotation is not automatic.
All Directors are subject to an annual performance evaluation process. All notices of meeting at which a Director is
standing for election or re-election are accompanied by information to enable shareholders to make an informed
decision.
The Board has developed a structured process for selection and appointment of new Directors to the Board. As part
of this procedure, the Board has committed to:
- the evaluation and identification of the diversity, skills, experience and expertise that will best complement Board
effectiveness
- the development of a competencies review process for identifying and assessing Director competencies
- the conduct of a competencies review of the Board before a candidate is recommended for appointment
- the periodic review of the Board's succession plan.
The Board has agreed that its membership should reflect a mix of:
- experience across relevant industries, including resources and infrastructure;
- involvement in relevant activities, for example, mining exploration, development and operation, and investment
activities
- a variety of technical skills and expertise, for example, mining exploration and operations, engineering, project
management, accounting, finance, legal, risk management, human resources and business development; and
- a diversity of backgrounds, previous work roles and educational qualifications.
As part of the induction process, meetings are arranged with other Board members and key executives prior to the
Director's appointment.
All Directors are expected to maintain the skills required to discharge their obligations to the Company. Directors are
encouraged to undertake continuing professional education and where this involves industry seminars and approved
education courses, this is paid for by the Company where appropriate.
The skills, experience and expertise relevant to the position of director held by each director in office at the date of
the Annual Report is set out in the Directors Report included in the Annual Report.
ASX Principles: Recommendation 2.5: Companies should disclose the process for evaluating the performance of the
Board, its committees and individual directors.
The Board will undertake an annual performance evaluation that reviews:
- performance of the Board against the requirements of the Board Charter;
- performance of Board Committees against the requirements of their respective Charters;
- individual performances of the Chair, Directors, and Chief Executive Officer and
- the Board Charter, the Committee Charters and the procedures of the Board with a view to continuous
improvement.
The Board usually commences the annual performance evaluation in May each year in accordance with this process.
The evaluation of Directors other than the Chief Executive Officer is usually concluded in August each year. The
annual performance evaluation for the Chief Executive Officer is usually concluded in September each year.
A review of the Board consistent with the above has occurred in 2014.
Company Secretary
The Company Secretary plays an important role in supporting the effectiveness of the Board by monitoring that
Board policy and procedures are followed, and co-ordinating the timely completion and dispatch of board agenda
and briefing material.
All Directors have access to the Company Secretary.
The appointment and removal of the Company Secretary is a matter for decision by the Board as a whole.
1.3 PRINCIPLE 3: PROMOTE ETHICAL AND RESPONSIBLE DECISION-MAKING
Companies should actively promote ethical and responsible decision-making.
ASX Principles: Recommendation 3.1: Companies should establish and disclose a Code of Conduct or a summary of
the Code as to certain specified matters.
Code of conduct
The Board encourages appropriate standards of conduct and behaviour from Directors, officers, employees and
contractors of the Company.
The Board has adopted a Code of Conduct in relation to Directors and employees, available from the Company's
website. This Code of Conduct is regularly reviewed and updated as necessary to ensure that it reflects the highest
standards of behaviour and professionalism and the practices necessary to maintain confidence in the Company's
integrity.
A fundamental theme is that all business affairs are conducted legally, ethically and with strict observance of the
highest standards of integrity and propriety.
Securities trading policy
The Board has adopted a Securities Trading Policy which regulates dealings by Directors, officers and employees in
securities issued by the Company. The policy is intended to assist in maintaining market confidence in the integrity of
dealings in the Company's securities.
Under the policy, which is available on the Company's website, Directors, officers and employees of the Company
must not, whether in their own capacity or as an agent for another, subscribe for, purchase or sell, or enter into an
agreement to subscribe for, purchase or sell, any securities (ie. shares or options) in the Company, or procure
another person to do so:
a) if that Director, officer or employee possesses information that a reasonable person would expect to have a
material effect on the price or value of the securities if the information was generally available;
b) if the Director, officer or employee knows or ought reasonably to know, that:
- the information is not generally available; and
- if it were generally available, it might have a material effect on the price or value of the securities in the
Company; and
c) without the written acknowledgement of the Chair.
Further, Directors, officers and employees must not either directly or indirectly pass on this kind of information to
another person if they know, or ought reasonably to know, that this other person is likely to deal in the securities of
the Company or procure another person to do so.
The policy regulates trading by key management personnel within defined closed periods, as well as providing details
of trading not subject to the policy, exceptional circumstances in which key management personnel may be
permitted to trade during a prohibited period with prior written clearance and the procedure for obtaining written
clearance.
Directors, officers and employees must not enter into transactions or arrangements which operate to limit the
economic risk of their security holding in the Company without first seeking and obtaining written acknowledgement
from the Chair.
Executives are also prohibited from entering into transactions or arrangements which limit the economic risk of
participating in unvested entitlements.
Privacy
The Company has resolved to comply with the National Privacy Principles contained in the Privacy Act 1988, to the
extent required for a company the size and nature of CoAL.
ASX Principles: Recommendation 3.2: Companies should establish a policy concerning diversity and disclose the policy
or a summary of that policy. The policy should include requirements for the board to establish measurable objectives
for achieving gender diversity and for the board to assess annually both the objectives and progress in achieving
them.
ASX Principles: Recommendation 3.3: Companies should disclose in each annual report the measurable objectives for
achieving gender diversity set by the board in accordance with the diversity policy and progress towards achieving
them.
ASX Principles: Recommendation 3.4: Companies should disclose in each annual report the proportion of women
employees in the whole organization, women in senior executive positions and women on the board.
Diversity
The Company is committed to developing a diverse workforce and providing a work environment in which all
employees are treated fairly and with respect. To this end, the Company has in place an Employment Equity Policy
which details its commitment to being an equal opportunity employer and is in line with the South African Mining
Charter and Employment Equity legislation in South Africa. A copy of the Employment Equity Policy is available on the
Company's website.
The Mining Charter requires that a company establish measurable objectives for achieving gender diversity and
assess such objectives and progress toward achieving them. The targets set for CoAL include 10% female
representation in core mining positions. Employment Equity targets as these relate to designated groups (one of
which is women) are included as part of the business key performance areas which are included in all management
performance contracts.
As at end of the financial year, the proportion of women employees in the organisation is:
Employees 34%
Management 58%
Senior Executive 31%
Board: 0%
1.4 PRINCIPLE 4: SAFEGUARD INTEGRITY IN FINANCIAL REPORTING
Companies should have a structure to independently verify and safeguard the integrity of the Company's financial
reporting.
This structure is required to be one of review and authorisation designed to ensure the truthful and factual
presentation of the Company's financial position.
It is expected to include:
- the review and consideration of the financial statements by the Audit Committee
- a process to ensure the independence and competence of the Company's external auditors.
Audit Committee
ASX Principles: Recommendation 4.1: The Board should establish an Audit Committee.
ASX Principles: Recommendation 4.2 recommends the appropriate Committee structure.
ASX Principles: Recommendation 4.3 states that the Committee should have a formal Charter
The Company has established an Audit and Risk Committee which is comprised of a majority of independent non-
executive Directors.
The role of the Audit and Risk Committee is to:
- monitor and review the integrity of the financial reporting of the Company, reviewing significant financial
reporting judgments;
- review the Company's internal financial control system and, unless expressly addressed by a separate risk
committee or by the Board itself, risk management systems;
- monitor, review and oversee the external audit function including matters concerning appointment and
remuneration, independence and non-audit services;
- monitor and review compliance with the Company's Code of Conduct; and
- perform such other functions as assigned by law, the Company's Constitution, or the Board.
Composition of the Committee
The Board has determined that the Audit Committee should comprise:
- at least three members
- a majority of independent non-executive directors
- an independent chair who is not the Chair of the Board.
In addition, the Audit Committee should include:
- members who are financially literate ie able to read and understand financial statements
- at least one member with relevant qualifications and experience, ie a qualified accountant or other finance
professional with experience of financial and accounting matters
- at least one member with an understanding of the industry in which the entity operates.
Committee membership is disclosed in the Directors Report included as part of the Annual Report along with details
of meetings attended. Membership is consistent with the composition requirements of the ASX Principles. The Chair
of the Committee, Mr B Pryor, during the year was appointed Chair of the Board. The Board have accepted this
departure from the Audit & Risk Committee Charter as a temporary one as they intend to appoint a new Chair of the
Committee.
The Charter is published on the Company's website. The website also contains information on the procedures for the
selection and appointment of the external auditor and for the rotation of external audit partners.
1.5 PRINCIPLE 5: MAKE TIMELY AND BALANCED DISCLOSURE
Companies should promote timely and balanced disclosure of all material matters concerning the Company.
The Company is committed to ensuring that:
- all investors have equal and timely access to material information concerning the Company – including its
financial situation, performance, ownership and governance
- company announcements are factual and presented in a clear and balanced way.
ASX Principles: Recommendation 5.1: Companies should establish written policies designed to ensure compliance with
ASX Listing Rule disclosure requirements and to ensure accountability at a senior executive level for that compliance
and disclose those policies or a summary thereof.
The Board has an established Continuous Disclosure Policy which is available from the Company's website.
The Company has adopted certain procedures to ensure that it complies with its continuous disclosure obligations
and has appointed a Responsible Officer who is responsible for ensuring the procedures are complied with.
1.6 PRINCIPLE 6: RESPECT THE RIGHTS OF SHAREHOLDERS
Companies should respect the rights of shareholders and facilitate the effective exercise of those rights.
ASX Principles: Recommendation 6.1: Companies should design a communications policy for promoting effective
communication with shareholders and encouraging their participation at general meetings and disclose their policy or
a summary thereof.
The Board has established a communications strategy which is available from the Company's website.
The Board aims to ensure that the shareholders are informed of all major developments affecting the Company. All
shareholders receive the Company's annual report, and may also request copies of the Company's half-yearly and
quarterly reports.
The Company maintains a website at www.coalofafrica.com and makes comprehensive information available on a
regular and up to date basis. The Company provides shareholder materials directly to shareholders through
electronic means. A shareholder may request a hard copy of the Company's annual report to be posted to them.
Shareholders are encouraged at annual general meetings to ask questions of Directors and senior management and
also the Company's external auditors, who are requested to attend the Company's annual general meetings.
1.7 PRINCIPLE 7: RECOGNISE AND MANAGE RISK
Companies should establish a sound system of risk oversight and management and internal control.
ASX Principles: Recommendation 7.1: Companies should establish policies for the oversight and management of
material business risks and disclose a summary of these policies.
ASX Principles: Recommendation 7.2: The Board should require management to design and implement the risk
management and internal control system to manage the Company's material business risks and report to it on
whether those risks are being managed effectively. The Board should disclose that management has reported to it as
to the effectiveness of the Company's management of its material business risks.
Risk Management
The Company has a policy for the oversight and management of material business risks, which is available on the
Company's website.
The Board is responsible for approving the Company's policies on risk oversight and management and satisfying itself
that management has developed and implemented a sound system of risk management and internal control.
Implementation of the risk management system and day-to-day management of risk is the responsibility of the Chief
Executive Officer, with the assistance of senior management, as required.
The Chief Executive Officer has responsibility for identifying, assessing, monitoring and managing risks. The Chief
Executive Officer is also responsible for identifying any material changes to the Company's risk profile and ensuring,
with approval of the Board, the risk profile of the Company is updated to reflect any material change.
The Chief Executive Officer is required to report on the progress of, and on all matters associated with, risk
management on a regular basis, and at least annually. During the reporting period, the Chief Executive Officer
regularly reported to the Board as to the effectiveness of the Company's management of its material business risks.
The Audit and Risk Committee also has responsibility for reviewing the Company's internal financial control system
and risk management systems and reporting to the Board.
In addition, the Board has also established a Safety, Health and Environment Committee is to assist the Board in the
effective discharge of its responsibilities in relation to health, safety and environmental ('HSE') issues for CoAL, and
the oversight of risks relating to these issues. The Committee's responsibilities include to:
- Understand the risks of HSE issues involving CoAL's activities;
- Ensure that the systems and processes for identifying, assessing and managing HSE risks of CoAL are adequately
monitored;
- Regularly review and ensure compliance with the HSE strategies and policies of CoAL's and the supporting
Management systems and processes;
- Monitor developments in relevant HSE related legislation and regulations and monitor CoAL's compliance with
relevant legislation, including through audits.
ASX Principles: Recommendation 7.3: The Board should disclose whether it has received assurance from the chief
executive officer (or equivalent) and the chief financial officer (or equivalent) that the declaration provided in
accordance with section 295A of the Corporations Act is founded on a sound system of risk management and internal
control and that the system is operating effectively in all material aspects in relation to financial reporting risks.
The Chief Executive Officer and Chief Financial Officer have confirmed in writing to the Board that:
a) the Company's financial reports present a true and fair view, in all material respects, of the Company's financial
condition and operational results are in accordance with relevant accounting standards;
b) the above confirmation is founded on a sound system of risk management and internal compliance and control
which implements the policies of the Board;
c) the Company's risk management and internal compliance and control system is operating efficiently and
effectively in all material respects.
1.8 PRINCIPLE 8: REMUNERATE FAIRLY AND RESPONSIBLY
Companies should ensure that the level and composition of remuneration is sufficient and reasonable and that its
relationship to performance is clear.
Nomination and Remuneration Committee
ASX Principles: Recommendation 8.1: The Board should establish a Remuneration Committee.
ASX Principles: Recommendation 8.2: The remuneration committee should be structured so that it consists of a
majority of independent directors; is chaired by an independent director and has at least three members.
The Board has established a Nomination and Remuneration Committee and adopted a Charter that sets out the
committee's role and responsibilities, composition and membership requirements. The Charter is available on the
Company's website.
The composition requirements for, and membership of this committee meet the above requirements.
Committee membership is disclosed in the Directors Report included as part of the Annual Report along with details
of meetings attended.
ASX Principles: Recommendation 8.3: Companies should clearly distinguish the structure of non-executive directors'
remuneration from that of executive directors and senior executives.
The Charter of the Nomination and Remuneration Committee details the Company's approach to the structure of
executive and non-executive remuneration.
Executive Directors and key executives are remunerated by way of a salary or consultancy fees, commensurate with
their required level of services. Non-executive Directors receive a fixed monthly fee for their services. Total
aggregated non-executive Directors' fees are currently capped at A$1,000,000 per annum.
The Company does not have any scheme relating to retirement benefits for non-executive Directors.
The Remuneration Report contained in the Directors Report contains details of remuneration paid to Directors and
key executives during the year.
Remuneration Policy Disclosures
Disclosure of the Company's remuneration policies is best served through a transparent and readily understandable
framework for executive remuneration that details the costs and benefits.
The Company intends to meet its transparency obligations in the following manner:
- publishing a detailed Remuneration Report in the Annual Report each year
- continuous disclosure of employment agreements with key executives where those agreements, or obligations
falling due under those agreements, may trigger a continuous disclosure obligation under ASX Listing Rule 3.1.
- presentation of the Remuneration Report to shareholders for their consideration and non-binding vote at the
Company's AGM
- taking into account the outcome of the non-binding shareholder vote when determining future remuneration
policy; and
- responding to shareholder questions on policy and practice in a frank and open manner.
ASX Listing Rule 4.10.3 requires companies to disclose the extent to which they have complied with the ASX Corporate
Governance Council's Corporate Governance Principles and Recommendations (2nd Edition as amended on 30 June 2010)
("ASX Principles"). Where recommendations have not been followed, the Company must identify the recommendations
which have not been followed and give reasons for not following them. The Company's corporate governance practices
for the year ended 30 June 2014 are outlined in the Corporate Governance Statement above. The following table lists
each of the ASX Principles and the Company's assessment of its compliance with the ASX Principles:
ASX Corporate Governance Council Recommendations Reference Comply 3rd Edition
ASX
Principles
Principle 1: Lay solid foundations for management and oversight
1.1 Companies should establish the functions As above Yes 1.1
reserved to the Board and those delegated to
Senior Executives and disclose those
functions.
1.2 Companies should disclose the process for As above Yes 1.7
evaluating the performance of Senior
Executives.
Principle 2: Structure the Board to add value
2.1 A majority of the Board should be As above No 2.4
independent Directors.
2.2 The Chair should be an independent Director. As above Yes 2.5
2.3 The roles of Chair and Chief Executive Officer As above Yes 2.5
should not be exercised by the same
individual.
2.4 The Board should establish a Nomination As above Yes 2.1
Committee.
2.5 Companies should disclose the process for As above Yes 1.6
evaluating the performance of the Board, its
Committees and individual Directors.
ASX Corporate Governance Council Recommendations Reference Comply 3rd Edition
ASX
Principles
Principle 3: Promote ethical and responsible decision-making
3.1 Companies should establish a code of As above Yes 3.1
conduct and disclose the code or a summary
of the code as to:
- the practices necessary to maintain
confidence in the Company's integrity
- the practices necessary to take into
account their legal obligations and
reasonable expectations of their
stakeholders; and
- the responsibility and accountability of
individuals for reporting and investigating
reports of unethical practices.
3.2 Companies should establish a policy As above Yes 1.5
concerning diversity and disclose the policy or
a summary of that policy. The policy should
include requirements for the Board to
establish measurable objectives for achieving
gender diversity for the Board to assess
annually both the objectives and progress in
achieving them.
3.3 Companies should disclose in each annual As above Yes 1.5
report the measurable objectives for
achieving gender diversity set by the Board in
accordance with the diversity policy and
progress towards achieving them.
3.4 Companies should disclose in each annual As above Yes 1.5
report the proportion of women employees
in the whole organisation, women in Senior
Executive positions and women on the Board.
ASX Corporate Governance Council Recommendations Reference Comply 3rd Edition
ASX
Principles
Principle 4: Safeguard integrity in financial reporting
4.1 The Board should establish an Audit As above Yes 4.1
Committee.
4.2 The Audit Committee should be structured so As above No 4.1
that it:
- consists only of Non-Executive
Directors;
- consists of a majority of
independent Directors;
- is chaired by an independent Chair,
who is not Chair of the Board; and
- has at least three members.
4.3 The Audit Committee should have a formal As above Yes 4.1
charter.
Principle 5: Make timely and balanced disclosure
5.1 Companies should establish written policies As above Yes 5.1
designed to ensure compliance with ASX
Listing Rule disclosure requirements and to
ensure accountability at a Senior Executive
level for that compliance and disclose those
policies or a summary of those policies.
Principle 6: Respect the rights of shareholders
6.1 Companies should design a communications As above Yes 6.1-6.4
policy for promoting effective communication
with shareholders and encouraging their
participation at general meetings and disclose
their policy or a summary of that policy.
ASX Corporate Governance Council Recommendations Reference Comply 3rd Edition
ASX
Principles
Principle 7: Recognise and manage risk
7.1 Companies should establish policies for the As above Yes 7.1
oversight and management of material
business risks and disclose a summary of
those policies.
7.2 The Board should require management to As above Yes 7.2
design and implement the risk management
and internal control system to manage the
Company's material business risks and report
to it on whether those risks are being
managed effectively. The Board should
disclose that management has reported to it
as to the effectiveness of the Company's
management of its material business risks.
7.3 The Board should disclose whether it has As above Yes 4.2
received assurance from the Chief Executive
Officer (or equivalent) and the Chief Financial
Officer (or equivalent) that the declaration
provided in accordance with s.295A of the
Corporations Act is founded on a sound
system of risk management and internal
control and that the system is operating
effectively in all material respects in relation
to financial reporting risks.
ASX Corporate Governance Council Recommendations Reference Comply 3rd Edition
ASX
Principles
Principle 8:
Remunerate
fairly and
responsibly
8.1 The Board should establish a Remuneration As above Yes 8.1
Committee.
8.2 The Remuneration Committee should be As above Yes 8.1
structured so that it:
- consists of a majority of independent
Directors
- is chaired by an independent Chair; and
has at least three members.
8.3 Companies should clearly distinguish the As above Yes 8.2
structure of Non-Executive Directors'
remuneration from that of Executive
Directors and Senior Executives.
The directors declare that:
a) in the directors' opinion, there are reasonable grounds to believe that the Company will be able to pay its debts
as and when they become due and payable;
b) in the directors' opinion, the attached financial statements are in compliance with International Financial
Reporting Standards, as stated in note 1.1 to the financial statements;
c) in the directors' opinion, the attached financial statements and notes thereto are in accordance with the
Corporations Act 2001, including compliance with accounting standards and giving a true and fair view of the
financial position and performance of the Consolidated Entity; and
d) the directors have been given the declarations required by s.295A of the Corporations Act 2001.
Signed in accordance with a resolution of the directors made pursuant to s.295(5) of the Corporations Act 2001.
On behalf of the Directors
Bernard Robert Pryor David Hugh Brown
Chairman Chief Executive Officer
29 September 2014 29 September 2014
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
for the year ended 30 June 2014
Year ended Year ended
30 June 2014 30 June 2013
Note $'000 $'000
Continuing operations
Revenue 5 761 1,012
Investment income 6 1,699 628
Other income 7 5,564 -
Gain recognised on disposal of interest in former subsidiary 11 1,438 -
Other (losses) and gains 7 (617) (7,468)
Depreciation and amortisation 7 (2,176) (1,841)
Foreign exchange losses 7 (36,317) (24,323)
Take or pay port obligation 15 (10,556) (2,424)
Employee benefits expense 7 (8,042) (14,005)
Finance costs 9 (2,309) (147)
Consulting expense (2,617) (5,310)
Other expenses 7 (10,373) (11,192)
Loss before tax (63,545) (65,070)
Income tax expense 10 - -
Net loss for the year from continuing operations (63,545) (65,070)
Discontinued operations
Loss for the year from discontinued operations 11 (20,575) (83,067)
LOSS FOR THE YEAR (84,120) (148,137)
Other comprehensive loss, net of income tax
Items that may be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations 21,255 (32,111)
Total comprehensive loss for the year (62,865) (180,248)
Loss for the year attributable to:
Owners of the Company (84,120) (148,137)
Non-controlling interests - -
(84,120) (148,137)
Total comprehensive loss attributable to:
Owners of the Company (62,865) (180,248)
Non-controlling interests - -
(62,865) (180,248)
Loss per share 12
From continuing operations and discontinued operations
Basic and diluted (cents per share) 8.02 16.54
From continuing operations
Basic and diluted (cents per share) 6.06 7.27
The accompanying notes are an integral part of these consolidated financial statements
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 June 2014
Year ended Year ended
30 June 2014 30 June 2013
Note $'000 $'000
ASSETS
Non-current assets
Development, exploration and evaluation expenditure 13 271,711 279,078
Property, plant and equipment 14 17,413 18,846
Intangible assets 15 15,488 16,078
Other receivables 16 2,245 3,567
Other financial assets 17 1,607 2,989
Restricted cash 20 5,153 4,187
Deferred tax assets 25 2,694 2,885
Total non-current assets 316,311 327,630
Current assets
Inventories 18 528 1,096
Trade and other receivables 19 1,902 3,267
Other financial assets 17 610 3,318
Cash and cash equivalents 20 2,017 20,995
5,057 28,676
Assets associated with discontinued operations 21 23,030 71,093
Total current assets 28,087 99,769
Total assets 344,398 427,399
LIABILITIES
Non-current liabilities
Deferred consideration 22 - 30,000
Provisions 24 4,643 4,903
Total non-current liabilities 4,643 34,903
Current liabilities
Deferred consideration 22 29,800 -
Trade and other payables 26 15,083 10,837
Borrowings 23 6,372 2,088
Provisions 24 2,447 398
Current tax liabilities 1,583 1,534
55,285 14,857
Liabilities associated with discontinued operations 21 4,150 35,171
Total current liabilities 59,435 50,028
Total liabilities 64,078 84,931
NET ASSETS 280,320 342,468
EQUITY
Issued capital 27 935,891 935,891
Accumulated deficit 28 (790,964) (707,535)
Reserves 29 134,818 113,537
Equity attributable to owners of the Company 279,745 341,893
Non-controlling interests 31 575 575
TOTAL EQUITY 280,320 342,468
The accompanying notes are an integral part of these consolidated financial statements
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2014
Issued capital Accumulated Share based Capital Foreign Attributable Non- Total equity
deficit payment profits currency to owners of controlling
reserve reserve translation the parent interests
reserve
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Balance at 1 July 2013 935,891 (707,535) 82,438 91 31,008 341,893 575 342,468
Total comprehensive loss for the year - (84,120) - - 21,255 (62,865) - (62,865)
Loss for the year - (84,120) - - - (84,120) - (84,120)
Other comprehensive loss, net of tax - - - - 21,255 21,255 - 21,255
935,891 (791,655) 82,438 91 52,263 279,028 575 279,603
Shares issued to employees - - 717 - - 717 - 717
Share options cancelled - 691 (691) - - - - -
Balance at 30 June 2014 935,891 (790,964) 82,464 91 52,263 279,745 575 280,320
Balance at 1 July 2012 791,102 (564,800) 87,180 91 63,119 376,692 575 377,267
Total comprehensive loss for the year - (148,137) - - (32,111) (180,248) - (180,248)
Loss for the year - (148,137) - - - (148,137) - (148,137)
Other comprehensive loss, net of tax - - - - (32,111) (32,111) - (32,111)
791,102 (712,937) 87,180 91 31,008 196,444 575 197,019
Shares issued for capital raising 154,250 - - - - 154,250 - 154,250
Shares issued to employees - - 660 - - 660 - 660
Share options cancelled - 5,402 (5,402) - - - - -
Share issued costs (9,461) - - - - (9,461) - (9,461)
Balance at 30 June 2013 935,891 (707,535) 82,438 91 31,008 341,893 575 342,468
The accompanying notes are an integral part of these consolidated financial statements
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 30 June 2014
Year ended Year ended
30 June 2014 30 June 2013
Note $'000 $'000
Cash flows from operating activities
Receipts from customers 12,918 156,019
Payments to suppliers and employees (34,386) (224,987)
Cash used in operations 33 (21,468) (68,968)
Interest received 952 702
Interest paid (811) (331)
Income taxes paid - -
Net cash used in operating activities (21,327) (68,597)
Purchase of property, plant and equipment (148) (4,843)
Proceeds from the sale of property, plant and equipment 609 -
Investment in development assets (5,056) (19,465)
Investment in exploration assets (1,867) (9,261)
Increase in other financial assets 1,404 (2,158)
Proceeds from early settlement of Grindrod loan - 4,622
Proceeds from the sale of Nucoal 7,714 -
(Increase) / decrease in restricted cash (1,274) 4,136
Net cash generated /(used) by investing activities 1,382 (26,969)
Decrease in export trade finance facility (12,246) (21,693)
Finance lease repayments (52) (1,266)
Proceeds from / (Repayment of) loans payable 4,442 (15,289)
Proceeds from the issue of shares (net of share issuance costs) - 142,348
Net cash (used) / generated by financing activities (7,856) 104,100
Net decrease in cash and cash equivalents (27,801) 8,534
Net foreign exchange differences (38) 1,881
Cash and cash equivalents at beginning of the year 29,938 19,523
Cash and cash equivalents at the end of the year 20 2,099 29,938
The accompanying notes are an integral part of these financial statements
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2014
1. General Information
Coal of Africa Limited ('CoAL' or the 'Company') is a limited company incorporated in Australia. Its common shares
are listed on the Australian Securities Exchange ('ASX'), the Alternative Investment Market of the London Stock
Exchange ('AIM') and the Johannesburg Securities Exchange ('JSE') in South Africa. The addresses of its registered
office and principal places of business is Suite 8, 7 The Esplanade, Mt Pleasant, Perth, Western Australia 6000.
The principal activities of the Company and its subsidiaries ('the Group' or 'the Consolidated Entity') are the
acquisition, exploration, development and operation of metallurgical and thermal coal projects in South Africa.
The Group's principal assets and projects include:
- two coking and thermal coal projects, the development phase Vele colliery and the Makhado project which is
awaiting the granting of a New Order Mining Right ('NOMR');
- three exploration and development stage coking and thermal coal projects, namely Chapudi, Makhado and
Mopane, in the Soutpansberg Coalfield; and
- the Mooiplaats colliery currently on care and maintenance and subject to a formal sale process.
Going Concern
These consolidated financial statements have been prepared on the going concern basis, which contemplates the
continuity of normal business activities and the realisation of assets and the settlement of liabilities in the normal
course of business.
The Consolidated Entity has incurred a net loss after tax for the year ended 30 June 2014 of $84.1 million (30 June
2013: loss of $148.1 million), including a non-cash impairment of $14.9 million on the Mooiplaats Colliery, unrealised
foreign exchange losses of $35.6 million and depreciation and amortisation charges of $2.2 million. During the twelve
month period under review, net cash outflows from operating activities were $21.3 million (30 June 2013 net
outflow: $68.6 million) and net cash outflows from investing activities were $1.4 million (30 June 2013 net outflow:
$26.9 million). As at 30 June 2014 the Consolidated Entity had a net current liability position of $50.2 million (30 June
2013: net current assets of $13.8 million), excluding assets and liabilities associated with discontinued operations.
These conditions indicate that there is a material uncertainty relating to the ability of the Company and Consolidated
Entity to continue as going concerns.
As part of the process to raise additional funding for the business and manage the entity's cashflow requirements
during the reporting and subsequent period, the Company has performed the following fundraising activities:
- In September 2013, the Company concluded a restructuring resulting in a reduction in overhead costs.
- In October 2013, the Consolidated Entity secured a working capital facility with Investec Bank Limited for ZAR210
million (US$20.0 million) of which ZAR67.5 million (US$6.4 million) was drawn down on 30 June 2014. A further
ZAR100 million (US$9.5 million) is available for draw down however it is subject to conditions. Refer to Note 23
for further details of the facility.
- On 31 January 2014, the Department of Mineral Resources ("DMR") granted Section 11 approval in terms of the
Mineral and Petroleum Resources Development Act ("MPRDA") for the disposal of the Woestalleen Complex. The
sale consideration of ZAR80 million (US$7.6million) was received on 6 March 2014.
- On 6 March 2014, Section 11 approval was granted by the DMR for the disposal of the Opgoedenhoop mineral
right for consideration of ZAR20.4 million ($US1.9m) of which a deposit of ZAR5.0 million ($US 0.5m) was
received.
- In February 2014, the Company successfully concluded a business interruption insurance claim relating to the
Transnet Freight Rail ('TFR') derailment in February 2013 resulting in a settlement of ZAR14.0 million (US$1.3
million).
- On 26 August 2014 the Company announced that it has entered into conditional agreements with certain existing
and new investors to raise up to approximately GBP38.225 million (or approximately US$64.9 million) through
the issue of up to 695,000,000 new shares at an issue price of GBP0.055 per share. On 25 September 2014
shareholders approved the placement at the EGM.
- On 27 August 2014 the Company concluded a settlement with Grindrod Corridor Management Proprietary
Limited and Terminal de Carvão da Matola Limitada ('TCM'), both subsidiaries of Grindrod Limited ('Grindrod'),
for the settlement of both historic and future take or pay liabilities, up to the end of December 2016.
The ability of the Company and the Consolidated Entity to continue as going concerns and to pay their debts as and
when they fall due is dependent on:
(i) The successful conclusion of the two stage private placement of 695 million shares at GBP0.055 per share
(approximately US$64.9 million) as approved by the shareholders at the EGM on 25 September 2015. Specifically:
- In respect of Stage 1 the receipt of all regulatory approvals and the successful completion of the Stage 1
Placement raising GBP13.805 million by no later than 31 October 2014 failing which the company would be required
to institute cash management procedures; and
- In respect of Stage 2, one of the investors having sufficient funds to participate and the successful completion
of the Stage 2 Placement raising GBP24.420 million by no later than 24 December 2014.
(ii) The effective conclusion of negotiations with Rio Tinto with respect to the rescheduling of the US$29.8
million liability and the deferral of the agreed Grindrod settlement (refer to note 37) in order to match the
Company's available cash resources.
(iii) The successful conclusion and receipt of funds from the sale of the Mooiplaats Colliery (as contemplated in Note
37).
(iv) The continual review by the Directors of the quantum and timing of all discretionary expenditures including
exploration and development costs, and wherever necessary, these costs will be minimised or deferred to suit
the Consolidated Entity's cash flow from operations.
At the date of this report and having considered the above factors, the Directors are confident that the Company and
Consolidated Entity will be able to continue as going concerns.
In the event that the Consolidated Entity does not achieve successful outcomes in relation to the matters set out
above, significant uncertainty would exist as to the ability of the Company and Consolidated Entity to continue as
going concerns and, therefore, the Company and Consolidated Entity may be unable to realise their assets and
discharge their liabilities in the normal course of business.
The financial report does not include adjustments relating to the recoverability and classification of recorded asset
amounts, or to the amounts and classification of liabilities that might be necessary should the Company and
Consolidated Entity not continue as going concerns.
1. Basis of presentation
1.1. Statement of compliance
These consolidated financial statements are general purpose financial statements which have been prepared in
accordance with the Corporations Act 2001, Accounting Standards and Interpretations, and comply with other
requirements of the law. The financial statements comprise the consolidated financial statements of the Group. For
the purposes of preparing the consolidated financial statements, the Company is a for-profit entity. Accounting
Standards include Australian Accounting Standards. Compliance with Australian Accounting Standards ensures that
the consolidated financial statements and notes of the company and the Group comply with International Financial
Reporting Standards ('IFRS').
The consolidated financial statements were authorised for issue by the Directors on 29 September 2014.
1.2. Basis of Preparation
The consolidated financial statements have been prepared on the basis of historical cost, except for certain non-
current assets and financial instruments that are measured at revalued amounts or fair values, as explained in the
accounting policies below. Historical cost is generally based on the fair values of the consideration given in exchange
for assets.
All amounts are presented in United States dollars, unless otherwise noted.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date, regardless of whether that price is directly observable or
estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes
into account the characteristics of the asset or liability if market participants would take those characteristics into
account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure
purposes in these consolidated financial statements is determined on such a basis, except for share-based payment
transactions that are within the scope of AASB 2, and measurements that have some similarities to fair value but are
not fair value, such as net realisable value in AASB 2 or value in use in AASB 136.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on
the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to
the fair value measurement in its entirety, which are described as follows:
- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity can
access at the measurement date;
- Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or
liability, either directly or indirectly; and
- Level 3 inputs are unobservable inputs for the asset or liability.
2. Accounting policies
2.1. Basis of Consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled
by the Company (its subsidiaries). Control is achieved when the Company:
- has power over the investee;
- is exposed, or has rights, to variable returns from its involvement with the investee; and
- has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control listed above. When the Company has less than a majority of
the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the
practical ability to direct the relevant activities of the investee unilaterally. The Company considers all relevant facts
and circumstances in assessing whether or not the Company's voting rights in an investee are sufficient to give it
power, including:
- the size of the Company's holding of voting rights relative to the size and dispersion of holdings of the other vote
holders;
- potential voting rights held by the Company, other vote holders or other parties;
- rights arising from other contractual arrangements; and
any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to
direct the relevant activities at the time that decisions need to be made, including voting patterns at previous
shareholders' meetings.
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the
company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of
during the year are included in the consolidated statement of profit or loss and other comprehensive income from
the date the Company gains control until the date when the Company ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and
to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the
Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit
balance.
A list of controlled entities is contained in note 36 to the consolidated financial statements.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies
into line with those used by other members of the Group.
All inter-group transactions, balances, income and expenses are eliminated in full on consolidation.
Changes in the Group's ownership interests in subsidiaries that do not result in the Group losing control are
accounted for as equity transactions. The carrying amounts of the Group's interests and the non-controlling interests
are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount
by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is
recognised directly in equity and attributed to owners of the Company.
When the Group loses control of a subsidiary, a gain or loss is recognised in profit or loss and is calculated as the
difference between
(i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and
(ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-
controlling interests.
When assets of the subsidiary are carried at revalued amounts or fair values and the related cumulative gain or loss
has been recognised in other comprehensive income and accumulated in equity, the amounts previously recognised
in other comprehensive income and accumulated in equity are accounted for as if the Company had directly disposed
of the relevant assets (i.e. reclassified to profit or loss or transferred directly to any category of equity as specified by
applicable Standards). The fair value of any investment retained in the former subsidiary at the date when control is
lost is regarded as the fair value on initial recognition for subsequent accounting under Accounting Standard AASB
139 'Financial Instruments: Recognition and Measurement' or, when applicable, the cost on initial recognition of an
investment in an associate or joint venture.
2.2. Business combinations
Business combinations occur where an acquirer obtains control over one or more businesses and results in the
consolidation of its assets and liabilities.
Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a
business combination is measured at fair value which is calculated as the sum of the acquisition-date fair values of
assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity
instruments issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognised in
profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value,
except that:
- deferred tax assets or liabilities are recognised and measured in accordance with AASB 112 'Income Taxes';
- assets or liabilities related to employee benefit arrangements are recognised and measured in accordance with
AASB 119 'Employee Benefits';
- liabilities or equity instruments related to share-based payment arrangements of the acquiree or share-based
payment arrangements of the Group entered into to replace share-based payment arrangements of the acquiree
are measured in accordance with AASB 2 'Share-based Payment' at the acquisition date; and
- assets (or disposal groups) that are classified as held for sale in accordance with AASB 5 'Non-current Assets Held
for Sale and Discontinued Operations' are measured in accordance with that Standard.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling
interests in the acquiree, and the fair value of the acquirer's previously held equity interest in the acquiree (if any)
over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after
reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed
exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and
the fair value of the acquirer's previously held interest in the acquiree (if any), the excess is recognised immediately
in profit or loss as a bargain purchase gain.
Non-controlling interests that represent ownership interests and entitle their holders to a proportionate share of the
entity's net assets in the event of liquidation may be initially measured either at fair value or at the non-controlling
interests' proportionate share of the recognised amounts of the acquiree's identifiable net assets. The choice of
measurement basis is made on a transaction-by-transaction basis. Other types of non-controlling interests are
measured at fair value or, when applicable, on the basis specified in another Standard.
Where the consideration transferred by the Group in a business combination includes assets or liabilities resulting
from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair
value. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are
adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are
adjustments that arise from additional information obtained during the 'measurement period' (which cannot exceed
one year from the acquisition date) about facts and circumstances that existed at the acquisition date.
The subsequent accounting for changes in the fair value of contingent consideration that do not qualify as
measurement period adjustments depends on how the contingent consideration is classified. Contingent
consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent
settlement is accounted for within equity. Contingent consideration that is classified as an asset or liability is
remeasured at subsequent reporting dates in accordance with AASB 139, or AASB 137 'Provisions, Contingent
Liabilities and Contingent Assets', as appropriate, with the corresponding gain or loss being recognised in profit or
loss.
Where a business combination is achieved in stages, the Group's previously held equity interest in the acquiree is
remeasured to fair value at the acquisition date (i.e. the date when the Group attains control) and the resulting gain
or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition
date that have previously been recognised in other comprehensive income are reclassified to profit or loss where
such treatment would be appropriate if that interest were disposed of.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the
combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete.
Those provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities
are recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition
date that, if known, would have affected the amounts recognised as of that date.
2.3. Functional and presentation currency
The individual financial statements of each group entity are presented in the currency of the primary economic
environment in which the entity operates (its functional currency). For the purpose of the consolidated financial
statements, the results and financial position of each group entity are expressed in United Sates dollars ('$'), which is
the presentation currency for the consolidated financial statements.
In preparing the financial statements of each individual group entity, transactions in currencies other than the
entity's functional currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the
transactions. At the end of each reporting period, monetary items denominated in foreign currencies are
retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in
foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-
monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.
Exchange differences on monetary items are recognised in profit or loss in the period in which they arise except for:
- exchange differences on foreign currency borrowings relating to assets under construction for future productive
use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on
those foreign currency borrowings;
- exchange differences on transactions entered into in order to hedge certain foreign currency risks; and
- exchange differences on monetary items receivable from or payable to a foreign operation for which settlement
is neither planned nor likely to occur (therefore forming part of the net investment in the foreign operation),
which are recognised initially in other comprehensive income and reclassified from equity to profit or loss on
repayment of the monetary items.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group's foreign
operations are translated into United States dollars using exchange rates prevailing at the end of the reporting
period. Income and expense items are translated at the average exchange rates for the period, unless exchange rates
fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used.
Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in equity
(attributed to non-controlling interests as appropriate).
On the disposal of a foreign operation (i.e. a disposal of the Group's entire interest in a foreign operation, or a
disposal involving loss of control over a subsidiary that includes a foreign operation, loss of joint control over a jointly
controlled entity that includes a foreign operation, or loss of significant influence over an associate that includes a
foreign operation), all of the accumulated exchange differences in respect of that operation attributable to the Group
are reclassified to profit or loss.
Goodwill and fair value adjustments on identifiable assets and liabilities arising on the acquisition of a foreign
operation are treated as assets and liabilities of the foreign operation and translated at the rate of exchange
prevailing at the end of each reporting period. Exchange differences arising are recognised in equity.
2.4. Non-current assets held for sale
Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered
principally through a sale transaction rather than through continuing use. This condition is regarded as met only
when the sale is highly probable and the non-current asset (or disposal group) is available for immediate sale in its
present condition. Management must be committed to the sale, which should be expected to qualify for recognition
as a completed sale within one year from the date of classification.
When the criteria above are met and the Group is committed to a sale plan involving loss of control of a subsidiary,
all of the assets and liabilities of that subsidiary are classified as assets held for sale and liabilities associated with
assets held for sale in the consolidated statement of financial position. The income and expenses from these
operations are not included in the various line items in the consolidated statement of profit or loss but the net results
from these operations classified as held for sale are disclosed as a separate line within the statement of profit or loss.
Non-current assets (and disposal groups) classified as held for sale are measured at the lower of their previous
carrying amount and fair value less costs to sell.
2.5. Exploration and evaluation expenditure
Exploration and evaluation expenditure related to an area of interest is written off as incurred except where the
rights of tenure of an area are current and it is considered probable that the costs will be recouped through
successful development and exploitation of the area of interest, or alternatively by its sale.
Capitalised expenditure includes costs directly related to exploration and evaluation activities in the relevant area of
interest, including materials and fuel used, surveying costs, drilling costs and payments made to contractors. General
and administrative costs are allocated to an exploration or evaluation area of interest and capitalised as an asset only
to the extent that those costs can be related directly to operational activities in the relevant area of interest.
Identifiable exploration assets acquired in a business combination are initially recognised as assets at their fair value.
Subsequent to acquisition they are accounted for in accordance with the policy outlined above.
All capitalised exploration and evaluation expenditure is written off where the above conditions are no longer
satisfied, and assessed for impairment if facts and circumstances indicate that an impairment may exist. See note
2.11.
Exploration and evaluation expenditure that has been capitalised is reclassified to property, plant and equipment –
development assets, when the technical feasibility and commercial viability of extracting a mineral resource are
demonstrable. Prior to such reclassification, exploration and evaluation expenditure capitalised is tested for
impairment.
2.6. Property, plant and equipment – Development assets
Development expenditure incurred by or on behalf of the Group is accumulated separately for each area of interest
in which economically recoverable resources have been identified. Such expenditure comprises costs directly
attributable to the construction of a mine and the related infrastructure.
No depreciation is recognised in respect of development assets.
Development assets are assessed for impairment if facts and circumstances indicate that an impairment may exist.
See note 2.11.
A development asset is reclassified as a 'mining property' at the end of the commissioning phase, when the mine is
capable of operating in the manner intended by management. Immediately prior to such reclassification,
development assets are tested for impairment.
2.7. Property, plant and equipment – Mining property
Mining property includes expenditure that has been incurred through the exploration and development phases, and,
in addition, further development expenditure that is incurred in respect of a mining property after the
commencement of production, provided that, in all instances, it is probable that additional future economic benefits
associated with the expenditure will flow to the Group. Otherwise such expenditure is classified as cost of sales.
Mining property includes plant and equipment associated with the mining property.
Depreciation on plant and equipment included within mining property is computed on a straight-line basis over five
years.
Depreciation on other components of mining property, is charged using the units-of-production method, with
separate calculations being made for each area of interest. The units-of-production basis results in a depreciation
charge proportional to the depletion of proved and probable reserves.
Mining property is assessed for impairment if facts and circumstances indicate that an impairment may exist. See
note 2.11.
2.8. Deferred stripping costs
Stripping costs comprise the removal of overburden and other waste products from a mine. Stripping costs incurred
in the development of a mine before production commences are capitalised as part of the cost of constructing the
mine (initially within development assets) and are subsequently depreciated over the life of the operation.
Stripping costs incurred during the production stage of a mine are deferred when this is considered the most
appropriate basis for matching the costs against the related economic benefits. The amount deferred is based on the
waste-to-ore ratio ('stripping ratio'), which is calculated by dividing the tonnage of waste mined by the quantity of
ore mined. Stripping costs incurred in a period are deferred to the extent that the current period ratio exceeds the
expected life-of mine-ratio. Such deferred costs are then charged to the consolidated statement of profit or loss and
other comprehensive loss to the extent that, in subsequent periods, the current period ratio falls below the life-of
mine-ratio. The life-of-mine stripping ratio is calculated based on proved and probable reserves. Any changes to the
life-of-mine ratio are accounted for prospectively.
Where a mine operates more than one open pit that is regarded as a separate operation for the purpose of mine
planning, stripping costs are accounted for separately by reference to the ore from each separate pit. If, however, the
pits are highly integrated for the purpose of the mine planning, the second and subsequent pits are regarded as
extensions of the first pit in accounting for stripping costs. In such cases, the initial stripping (i.e. overburden and
other waste removal) of the second and subsequent pits is considered to be production phase stripping relating to
the combined operation.
Deferred stripping costs are included in the cost base of assets when determining a cash generating unit for
impairment assessment purposes.
2.9. Property, plant and equipment (excluding development assets and mining property)
Freehold land is stated at cost and is not depreciated.
Items of property, plant and equipment are stated at cost less accumulated depreciation and accumulated
impairment losses. Where items of property, plant and equipment contain components that have different useful
lives to the main item of plant and equipment, these are capitalised separately to the plant and equipment to which
the component can be logically assigned.
Depreciation is recognised so as to write off the cost of assets (other than freehold land) less their residual values
over their useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation
method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for
on a prospective basis.
Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets.
However, when there is no reasonable certainty that ownership will be obtained by the end of the lease term, assets
are depreciated over the shorter of the lease term and the useful lives.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are
expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an
item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying
amount of the asset and is recognised in profit or loss.
The depreciation rates applicable to each category of property, plant and equipment are as follows:
Furniture, fittings and office equipment 13% – 50%
Buildings 20%
Plant and equipment 20%
Motor vehicles 20% – 33%
Leasehold improvements 25%
Computer equipment 33%
Leased assets Lease period
2.10. Intangible assets, excluding goodwill
An intangible asset is recognised at cost if it is probable that future economic benefits will flow to the Group and the
cost can be reliably measured.
Intangible assets are amortised on a straight-line basis over their estimated useful lives. The amortisation method
used and the estimated remaining useful lives are reviewed at least annually.
Intangible assets are assessed for impairment if facts and circumstances indicate that an impairment may exist. See
note 2.11.
2.11. Impairment of tangible and intangible assets other than goodwill
The carrying amounts of the Group's tangible and intangible assets are reviewed at each reporting date to determine
whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).
Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the
recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent basis
of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise
they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation
basis can be identified.
Intangible assets with indefinite useful lives and intangible assets not yet available for use are tested for impairment
at least annually, and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value-in-use. In assessing value-in-use, the
estimated future cash flows are discounted to their present value using a post-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset for which the estimates of future
cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is
recognised immediately in profit or loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash generating unit) is
increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not
exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset
(or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.
2.12. Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards
of ownership to the lessee. All other leases are classified as operating leases.
Assets held under finance leases are initially recognised as assets of the Group at their fair value at the inception of
the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is
included in the statement of financial position as a finance lease obligation.
Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a
constant rate of interest on the remaining balance of the liability. Finance expenses are recognised immediately in
profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalised in
accordance with the Group's general policy on borrowing costs (see 2.24 below). Contingent rentals are recognised
as expenses in the periods in which they are incurred.
Operating lease payments are recognised as an expense on the straight-line basis over the lease term, except where
another systematic basis is more representative of the time pattern in which economic benefits from the leased asset
are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which
they are incurred.
2.13. Inventories
Inventories are stated at the lower of cost and net realisable value. Costs of inventories include expenditure incurred
in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their
existing location and condition.
Costs of inventories are determined using the weighted average method.
Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and
costs necessary to make the sale.
2.14. Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest method, less provision for impairment.
A provision for impairment of trade receivables is established when there is objective evidence that the Group will
not be able to collect all amounts due according to the original terms of the receivables. Significant financial
difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganization, and default or
delinquency in payments are considered indicators that the trade receivable is impaired. The amount of the provision
is the difference between the asset's carrying amount and the present value of estimated future cash flows,
discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of an
allowance account, and the amount of the loss is recognised in the consolidated statement of income. When a trade
receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries
of amounts previously written off are credited in the consolidated statement of profit or loss and other
comprehensive loss.
2.15. Cash and cash equivalents
Cash and cash equivalents comprise cash balances and short-term deposits. Bank overdrafts that are repayable on
demand form an integral part of the Group's cash management system and are included as a component of cash and
cash equivalents for the purposes of the cash flow statement.
2.16. Restricted cash
Restricted cash comprise cash balances which are encumbered and the Group does therefore not have access to
these funds.
2.17. Financial instruments
Recognition
Financial assets and financial liabilities are recognised when a Group entity becomes a party to the contractual
provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly
attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and
financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial
assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the
acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in
profit or loss.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial asset or financial liability
and of allocating interest over the relevant period. The effective interest rate is the rate that exactly discounts
estimated future cash receipts (including all fees on points paid or received that form an integral part of the effective
interest rate, transaction costs and other premiums or discounts) through the expected life of the instrument, or,
where appropriate, a shorter period, to the net carrying amount on initial recognition.
Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as
at fair value through profit or loss ('FVTPL').
Financial assets
Financial assets are classified into the following specified categories: FVTPL, 'held-to-maturity' investments,
'available-for-sale' ('AFS') financial assets and 'loans and receivables'. The classification depends on the nature and
purpose of the financial assets and is determined at the time of initial recognition. All regular way purchases or sales
of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are
purchases or sales of financial assets that require delivery of assets within the time frame established by regulation
or convention in the marketplace.
Financial assets at FVTPL
Financial assets are classified as at FVTPL when the financial asset is either held for trading or it is designated as at
FVTPL.
A financial asset is classified as held for trading if:
- it has been acquired principally for the purpose of selling it in the near term; or
- on initial recognition it is part of a portfolio of identified financial instruments that the Group manages together
and has a recent actual pattern of short-term profit-taking; or
- it is a derivative that is not designated and effective as a hedging instrument.
A financial asset other than a financial asset held for trading may be designated as at FVTPL upon initial recognition if:
- such designation eliminates or significantly reduces a measurement or recognition inconsistency that would
otherwise arise; or
- the financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and its
performance is evaluated on a fair value basis, in accordance with the Group's documented risk management or
investment strategy, and information about the grouping is provided internally on that basis; or
- it forms part of a contract containing one or more embedded derivatives, and AASB 139 'Financial Instruments:
Recognition and Measurement' permits the entire combined contract (asset or liability) to be designated as at
FVTPL.
Financial assets at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in
profit or loss. The net gain or loss recognised in profit or loss incorporates any dividend or interest earned on the
financial asset and is included in the 'other gains and losses' line item. Fair value is determined in the manner
described in note 32.
Held to maturity investments
Non-derivative financial assets with fixed or determinable payments and fixed maturity dates that management has
the intent and ability to hold to maturity are classified as held to maturity. These investments are included in non-
current assets, except for maturities within 12 months from the financial year-end date, which are classified as
current assets. Held to maturity investments are carried at amortised cost using the effective interest rate method
less any impairment.
Loans and receivables
Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an
active market are classified as 'loans and receivables'. Loans and receivables are measured at amortised cost using
the effective interest method, less any impairment. Interest income is recognised by applying the effective interest
rate, except for short-term receivables when the effect of discounting is immaterial.
Available for sale investments
AFS financial assets are non-derivatives that are either designated as AFS or are not classified as (a) loans and
receivables, (b) held-to-maturity investments or (c) financial assets at FVTPL.
Changes in the carrying amount of AFS monetary financial assets relating to changes in foreign currency rates (see
below), interest income calculated using the effective interest method and dividends on AFS equity investments are
recognised in profit or loss. Other changes in the carrying amount of AFS financial assets are recognised in other
comprehensive loss. Where the investment is disposed of or is determined to be impaired, the cumulative gain or
loss previously accumulated in the equity is reclassified to profit or loss.
The fair value of AFS monetary financial assets denominated in a foreign currency is determined in that foreign
currency and translated at the spot rate prevailing at the end of the reporting period. The foreign exchange gains and
losses that are recognised in profit or loss are determined based on the amortised cost of the monetary asset. Other
foreign exchange gains and losses are recognised in other comprehensive loss.
Dividends on AFS equity instruments are recognised in profit or loss when the Group's right to receive the dividends
is established.
AFS equity investments that do not have a quoted market price in an active market and whose fair value cannot be
reliably measured and derivatives that are linked to and must be settled by delivery of such unquoted equity
investments are measured at cost less any identified impairment losses at the end of each reporting period.
Impairment of financial assets
Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting
period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or
more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the
investment have been affected.
For listed or unlisted equity investments classified as AFS, a significant or prolonged decline in the fair value of the
security below its cost is considered to be objective evidence of impairment.
For certain categories of financial asset, such as trade receivables, assets that are assessed not to be impaired
individually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a
portfolio of receivables could include the Group's past experience of collecting payments, an increase in the number
of delayed payments in the portfolio past the average credit period, as well as observable changes in national or local
economic conditions that correlate with default on receivables.
For financial assets carried at amortised cost, the amount of the impairment loss recognised is the difference
between the asset's carrying amount and the present value of estimated future cash flows, discounted at the
financial asset's original effective interest rate.
For financial assets carried at cost, the amount of the impairment loss is measured as the difference between the
asset's carrying amount and the present value of the estimated future cash flows discounted at the current market
rate of return for a similar financial asset. Such impairment loss will not be reversed in subsequent periods.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the
exception of trade receivables, where the carrying amount is reduced through the use of an allowance account.
When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent
recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying
amount of the allowance account are recognised in profit or loss.
When an AFS financial asset is considered to be impaired, cumulative gains or losses previously recognised in other
comprehensive income are reclassified to profit or loss in the period.
For financial assets measured at amortised cost, if, in a subsequent period, the amount of the impairment loss
decreases and the decrease can be related objectively to an event occurring after the impairment was recognised,
the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of
the investment at the date the impairment is reversed does not exceed what the amortised cost would have been
had the impairment not been recognised.
In respect of AFS equity securities, impairment losses previously recognised in profit or loss are not reversed through
profit or loss. Any increase in fair value subsequent to an impairment loss is recognised in other comprehensive
income and accumulated under the heading of investments revaluation reserve. In respect of AFS debt securities,
impairment losses are subsequently reversed through profit or loss if an increase in the fair value of the investment
can be objectively related to an event occurring after the recognition of the impairment loss.
Derecognition
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or
when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another
entity. Any interest in financial assets transferred that is created or retained by the group is recognised as a separate
asset or liability.
The Group may enter into transactions whereby it transfers assets recognised on its consolidated statement of
financial position, but retains either all risks and rewards of the transferred assets or a portion of them. If all, or
substantially all, risks and rewards are retained, then the Group continues to recognise the financial asset and also
recognises a collateralised borrowing for the proceeds received.
On derecognition of a financial asset in its entirety, the difference between the asset's carrying amount and the sum
of the consideration received and receivable and the cumulative gain or loss that had been recognised in other
comprehensive income and accumulated in equity is recognised in profit or loss.
On derecognition of a financial asset other than in its entirety (e.g. when the Group retains an option to repurchase
part of a transferred asset or retains a residual interest that does not result in the retention of substantially all the
risks and rewards of ownership and the Group retains control), the Group allocates the previous carrying amount of
the financial asset between the part it continues to recognise under continuing involvement, and the part it no longer
recognises on the basis of the relative fair values of those parts on the date of the transfer. The difference between
the carrying amount allocated to the part that is no longer recognised and the sum of the consideration received for
the part no longer recognised and any cumulative gain or loss allocated to it that had been recognised in other
comprehensive income is recognised in profit or loss. A cumulative gain or loss that had been recognised in other
comprehensive income is allocated between the part that continues to be recognised and the part that is no longer
recognised on the basis of the relative fair values of those parts.
Financial liabilities
Financial liabilities are initially measured at fair value. Financial liabilities comprise short-term and long-term interest-
bearing borrowings and trade and other payables (excluding income received in advance).
The Group classifies financial liabilities as other financial liabilities. Subsequent to initial measurement, such liabilities
are carried at amortised cost using the effective interest method.
Borrowings
Borrowings comprise short-term and long-term interest-bearing borrowings. Premiums or discounts arising from the
difference between the fair value of borrowings raised and the amount repayable at maturity date are recognised in
the income statement as borrowing costs based on the effective interest rate method.
Derecognition
Financial liabilities are derecognised when the associated obligation has been discharged, cancelled or has expired.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of
its liabilities, and includes ordinary share capital. Equity instruments issued by the group are recorded at the
proceeds received, net of direct issue costs.
2.18. Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of
business from suppliers. Trade payables are classified as current liabilities if payment is due within one year or less. If
not, they are presented as non-current liabilities.
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective
interest method.
2.19. Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of a past event, it
is probable that the Group will be required to settle the obligation, and the amount can be reliably estimated.
Provisions are not recognised for future operating losses.
The amount recognised as a provision is the best estimate of the consideration required to settle the present
obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the
obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying
amount is the present value of those cash flows (where the effect of the time value of money is material). The
increase in provisions due to the passage of time is included in the finance cost line item in the consolidated
statement of profit or loss and comprehensive loss.
Rehabilitation provision
A provision for rehabilitation is recognised when there is a present obligation as a result of exploration, development
or production activities undertaken, it is probable that an outflow of economic benefits will be required to settle the
obligation, and the amount of the provision can be measured reliably. The estimated future obligations include the
costs of removing facilities, abandoning sites and restoring the affected areas.
The provision for future rehabilitation costs is the best estimate of the present value of the expenditure required to
settle the rehabilitation obligation at the reporting date, based on current legal and other requirements and
technology. Future rehabilitation costs are reviewed annually and any changes in the estimate are reflected in the
present value of the rehabilitation provision at each reporting date.
The initial estimate of the rehabilitation provision relating to exploration, development and production facilities is
capitalised into the cost of the related asset and depreciated or amortised on the same basis as the related asset.
Changes in the estimate of the provision are treated in the same manner, except that the unwinding of the effect of
discounting on the provision is recognised as a finance cost rather than being capitalised into the cost of the related
asset.
2.20. Share-based payments transactions of the Company
Equity-settled
Equity-settled share-based payments to employees and others providing similar services are measured at the fair
value of the equity instruments at the grant date. Details regarding the determination of the fair value of equity-
settled share-based transactions are set out in note 30.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on the straight-
line basis over the vesting period, based on the Group's estimate of equity instruments that will eventually vest, with
a corresponding increase in equity. At the end of each reporting period, the Group revises its estimate of the number
of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in
profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the
equity-settled employee benefits reserve.
No amounts have been recognised in the consolidated financial statements in respect of other equity-settled share-
based payments.
Equity-settled share-based payment transactions with parties other than employees are measured at the fair value of
the goods or services received, except where that fair value cannot be estimated reliably, in which case they are
measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or
the counterparty renders the service.
Cash-settled
For cash-settled share-based payments, a liability is recognised for the goods or services acquired, measured initially
at the fair value of the liability. At the end of each reporting period until the liability is settled, and at the date of
settlement, the fair value of the liability is remeasured, with any changes in fair value recognised in profit or loss for
the year.
Accounting for BEE transactions
Where equity instruments are issued to a broad based black economic empowerment ('BEE') party at less than fair
value, these are accounted for as share-based payments. Any difference between the fair value of the equity
instrument issued and the consideration received is accounted for as an expense in the consolidated statement of
profit or loss and other comprehensive loss.
A restriction on the BEE party to transfer the equity instrument subsequent to its vesting is not treated as a vesting
condition, but is factored into the fair value determination of the instrument.
2.21. Taxation, including sales tax
The income tax expense or income for the period represents the sum of the tax currently payable or recoverable and
deferred tax.
Current taxation
The tax currently payable or recoverable is based on taxable profit or loss for the year. Taxable profit or loss differs
from profit or loss as reported in the consolidated statement of profit or loss and other comprehensive loss because
of items of income or expense that are taxable or deductible in other years and items that are never taxable or
deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively
enacted at the reporting date in countries where the Group operates and generates taxable income.
Deferred taxation
Deferred taxation is recognised on temporary differences between the carrying amounts of assets and liabilities in
the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit or
loss. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are
generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will
be available against which those deductible temporary differences can be utilised. Such deferred tax assets and
liabilities are not recognised if a taxable temporary difference arises from the initial recognition of goodwill or any
temporary difference arises from the initial recognition (other than in a business combination) of other assets and
liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable
that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax balances are calculated using the tax rates that are expected to apply to the reporting period or periods
when the temporary difference reverse, based on tax rates and tax laws enacted or substantively enacted at the end
of the reporting period.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets
against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the
Group intends to settle its current tax assets and liabilities on a net basis.
Deferred tax liabilities are recognised for temporary differences associated with investments in subsidiaries and
associates, and interests in joint ventures, except where the timing of the reversal of the temporary difference is
controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax assets arising from deductible temporary differences associated with such investments and interests are
only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the
benefits of the temporary differences and they are expected to reverse in the foreseeable future.
2.22. Taxation, including sales tax (continued)
Current and deferred tax for the year
Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in
other comprehensive income or directly in equity, in which case the current and deferred tax are also recognised in
other comprehensive income or directly in equity, respectively.
Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is
included in the accounting for the business combination.
Sales tax
Revenues, expenses and assets are recognised net of the amount of the applicable sales tax, except:
- where the amount of sales tax incurred is not recoverable from the taxation authority, it is recognised as part of
the cost of acquisition of an asset or as part of an item of expense; or
- for receivables and payables which are recognised inclusive of sales tax.
The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables
or payables.
Cash flows are included in the cash flow statement on a gross basis. The sales tax component of cash flows arising
from investing and financing activities which is recoverable from, or payable to, the taxation authority is classified
within operating cash flows.
2.23. Revenue recognition
Revenue is recognised at fair value of the consideration received net of the amount of applicable sales tax.
Sale of goods
Revenue from the sale of goods is recognised when all the following conditions are satisfied:
- the Group has transferred to the buyer the significant risks and rewards of ownership of the goods;
- the Group retains neither continuing managerial involvement to the degree usually associated with ownership
nor effective control over the goods sold;
- the amount of revenue can be measured reliably;
- it is probable that the economic benefits associated with the transaction will flow to the Group; and
- the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Specifically, revenue from the sale of goods is recognised when goods are delivered and legal title is passed.
Many of the Group's sales are subject to an adjustment based on inspection of the shipment by the customer. In such
cases, revenue is recognised based on the Group's best estimate of the grade at the time of shipment, and any
subsequent adjustments are recorded against revenue when advised. Historically, the differences between estimated
and actual grade have not been significant.
Interest income
Interest income is recognised when it is probable that the economic benefits will flow to the Group and the amount
of revenue can be measured reliably. Interest income is accrued on a time basis, by reference to the principal
outstanding and at the effective interest rate. Interest income is recognised in finance income on the consolidated
statement of profit or loss and other comprehensive loss.
2.24. Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are
assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the
cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
2.25. Employee benefits
A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave, long service
leave, and sick leave when it is probable that settlement will be required and they are capable of being measured
reliably. Liabilities recognised in respect of short-term employee benefits, are measured at their nominal values using
the remuneration rate expected to apply at the time of settlement. Liabilities recognised in respect of long term
employee benefits are measured as the present value of the estimated future cash outflows to be made by the
Group in respect of services provided by employees up to reporting date.
2.26. Segment information
Reportable segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the Company's executive committee.
Management has determined the reportable segments of the Group based on the reports reviewed by the
Company's executive committee that are used to make strategic decisions. The Group has three reportable
segments: Exploration, Development and Mining (see note 4).
2.27. Comparative amounts
When required by Accounting Standards, comparative figures have been adjusted to conform to changes in
presentation for the current financial period.
In particular, the cost of sales ($1.7 million) line item previously presented in 2013 is now reclassified in the other
expenses line item. The Company believes that subsequent to the reduced activity at operations and the corporate
re-structure, the change in presentation gives a true reflection of the Company's business as gross profit / loss is no
longer a significant key performance indicator.
2.28. Adoption of new and revised Accounting Standards and Interpretations
At the date of the authorisation of the financial report, a number of Standards and Interpretations were in issue but
not yet effective. The potential effect of the revised Standards / Interpretations on the Groups' financial statement
has not yet been determined.
Standard Effective for the Expected to be
annual reporting initially applied in
periods beginning on the financial year
or after ending
- AASB 9 'Financial Instruments' and the relevant amending 1 January 2018 30 June 2019
standards
- AASB 1031 'Materiality' (2013) 1 January 2014 30 June 2015
- AASB 2012-3 'Amendments to Australian Accounting Standards - 1 January 2014 30 June 2015
Offsetting Financial Assets and Financial Liabilities'
- AASB 2013-3 'Amendments to AASB 136 – Recoverable Amount 1 January 2014 30 June 2015
Disclosures for Non-Financial Assets'
- AASB 2013-4 'Amendments to Australian Accounting Standards – 1 January 2014 30 June 2015
Novation of Derivatives and Continuation of Hedge Accounting'
- AASB 2013-5 'Amendments to Australian Accounting Standards – 1 January 2014 30 June 2015
Investment Entities'
- AASB 2013-9 'Amendments to Australian Accounting Standards – 1 January 2014 30 June 2015
Conceptual Framework, Materiality and Financial Instruments'
- INT 21 'Levies' 1 January 2014 30 June 2015
- AASB 2014-1 'Amendments to Australian Accounting Standards' 1 July 2014 30 June 2015
- Part A: 'Annual Improvements 2010-2012 and 2011-2013
Cycles'
- Part B: 'Defined Benefit Plans: Employee Contributions
(Amendments to AASB 119)'
- Part C: 'Materiality'
- AASB 2014-1 'Amendments to Australian Accounting Standards' 1 January 2016 30 June 2017
– Part D: 'Consequential Amendments arising from AASB 14'
- AASB 2014-1 'Amendments to Australian Accounting Standards' 1 January 2015 30 June 2016
– Part E: 'Financial Instruments'
- AASB 14 'Regulatory Deferral Accounts' 1 January 2016 30 June 2017
- Accounting for Acquisitions of Interests in Joint Operations 1 January 2016 30 June 2017
(Amendments to IFRS11)
At the date of the authorisation of the financial report, the following IASB Standards and IFRIC Interpretations were
also in issue but not yet effective, although Australian equivalent Standards and Interpretations have not yet been
issued.
Standard Effective for the Expected to be
annual reporting initially applied in
periods beginning on the financial year
or after ending
· Clarification of Acceptable Methods of Depreciation and 1 January 2016 30 June 2017
Amortisation (Amendments to IAS16 and IAS38)
· IFRS 15 ' Revenue from Contracts with Customers' 1 January 2017 30 June 2018
New and revised Standards and Interpretations affecting amounts reported and / or disclosure in the financial
statements
In the current year, the Group has applied a number of new and revised AASB's issued by the Australian Accounting
Standards Board that are mandatorily effective for an accounting period that begins on or after 1 January 2013.
AASB 2011-4 'Amendments This standard removes the individual key management personnel disclosure
to Australian Accounting requirements in AASB 124 'Related Party Disclosures' As a result the Group only
Standards to Remove discloses the key management personnel compensation in total and for each of
Individual Key Management the categories required in AASB 124.
Personnel Disclosure
Requirements' In the current year the individual key management personnel disclosure
previously required by AASB 124 (Note 35 in the 30 June 2013 financial
statements) is now disclosed in the remuneration report due to an amendment to
Corporations Regulations 2001 issued in June 2013.
AASB 2012-2 'Amendments The Group has applied the amendments to AASB 7 'Disclosures – Offsetting
to Australian Accounting Financial Assets and Financial Liabilities' for the first time in the current year. The
Standards – Disclosures – amendments to AASB 7 require entities to disclose information about rights of
Offsetting Financial Assets offset and related arrangements (such as collateral posting requirements) for
and Financial Liabilities financial instruments under an enforceable master netting agreement or similar
arrangement.
As the Group does not have any offsetting arrangements in place, the application
of the amendments does not have any material impact on the consolidated
financial statements.
AASB 2012-5 'Amendments The Annual Improvements to AASBs 2009 - 2011 have made a number of
to Australian Accounting amendments to AASBs. The amendments that are relevant to the Group are the
Standards arising from amendments to AASB 101 regarding when a statement of financial position as at
Annual Improvements 2009- the beginning of the preceding period (third statement of financial position) and
2011 Cycle the related notes are required to be presented. The amendments specify that a
third statement of financial position is required when
a) an entity applies an accounting policy retrospectively, or makes a retrospective
restatement or reclassification of items in its financial statements, and
b) the retrospective application, restatement or reclassification has a material
effect on the information in the third statement of financial position. The
amendments specify that related notes are not required to accompany the
third statement of financial position.
AASB 2012-9 'Amendment to This standard makes amendment to AASB 1048 'Interpretation of Standards'
AASB 1048 arising from the following the withdrawal of Australian Interpretation 1039 'Substantive
Withdrawal of Australian Enactment of Major Tax Bills in Australia'. The adoption of this amending
Interpretation 1039' standard does not have any material impact on the consolidated financial
statements.
AASB CF 2013-1 This amendment has incorporated IASB's Chapters 1 and 3 Conceptual
'Amendments to the Framework for Financial Reporting as an Appendix to the Australian Framework
Australian Conceptual for the Preparation and Presentation of Financial Statements. The amendment
Framework' and AASB 2013-9 also included not-for-profit specific paragraphs to help clarify the concepts from
'Amendments to Australian the perspective of not-for-profit entities in the private and public sectors.
Accounting Standards – As a result the Australian Conceptual Framework now supersedes the objective
Conceptual Framework, and the qualitative characteristics of financial statements, as well as the guidance
Materiality and Financial previously available in Statement of Accounting Concepts SAC 2 'Objective of
Instruments' (Part A General Purpose Financial Reporting'. The adoption of this amending standard
Conceptual Framework) does not have any material impact on the consolidated financial statements.
AASB 12 'Disclosure of AASB 12 is a new disclosure standard and is applicable to entities that have
Interests in Other Entities' interests in subsidiaries, joint arrangements, associates and/or unconsolidated
and AASB 2011-7 structured entities. In general, the application of AASB 12 has resulted in more
'Amendments to Australian extensive disclosures in the consolidated financial statements.
Accounting Standards arising
from the consolidation and
Joint Arrangements
standards'
AASB 13 'Fair Value The Group has applied AASB 13 for the first time in the current year. AASB 13
Measurement' and AASB establishes a single source of guidance for fair value measurements and
2011-8 'Amendments to disclosures about fair value measurements. The scope of AASB 13 is broad; the
Australian Accounting fair value measurement requirements of AASB 13 apply to both financial
Standards arising from AASB instrument items and non-financial instrument items for which other AASBs
13' require or permit fair value measurements and disclosures about fair value
measurements, except for sharebased payment transactions that are within the
scope of AASB 2 'Share-based Payment', leasing transactions that are within the
scope of AASB 117 'Leases', and measurements that have some similarities to fair
value but are not fair value (e.g. net realisable value for the purposes of
measuring inventories or value in use for impairment assessment purposes).
AASB 13 defines fair value as the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction in the principal (or most
advantageous) market at the measurement date under current market
conditions. Fair value under AASB 13 is an exit price regardless of whether that
price is directly observable or estimated using another valuation technique. Also,
AASB 13 includes extensive disclosure requirements.
AASB 13 requires prospective application from 1 July 2013. In addition, specific
transitional provisions were given to entities such that they need not apply the
disclosure requirements set out in the Standard in comparative information
provided for periods before the initial application of the Standard. In accordance
with these transitional provisions, the Group has not made any new disclosures
required by AASB 13 for the 2013 comparative period (please see note 13 for the
2014 disclosures). Other than the additional disclosures, the application of AASB
13 does not have any material impact on the amounts recognised in the
consolidated financial statements.
AASB 10 'Consolidated AASB 10 replaces the parts of AASB 127 'Consolidated and Separate Financial
Financial Statements' and statements' that deal with consolidated financial statements and Interpretation
AASB 2011-7 'Amendments 112 'Consolidation – Special Purpose Entities'. AASB 10 changes the definition of
to Australian Accounting control such that an investor controls an investee when a) it has power over an
Standards arising from the investee, b) it is exposed, or has rights, to variable returns from its involvement
consolidation and Joint with the investee, and c) has the ability to use its power to affect its returns. All
Arrangements standards' three of these criteria must be met for an investor to have control over an
investee. Previously, control was defined as the power to govern the financial and
operating policies of an entity so as to obtain benefits from its activities.
Additional guidance has been included in AASB 10 to explain when an investor
has control over an investee. Some guidance included in AASB 10 that deals with
whether or not an investor that owns less than 50 per cent of the voting rights in
an investee has control over the investee is relevant to the Group.
Specifically the Group's 50 per cent ownership interest in Tshipise Energy
Investment Proprietary Limited ('Tshipise') gives the Group the same percentage
of the voting rights in Tshipise.
The directors of the Company made an assessment as the date of the initial
application of AASB 10 (i.e. 1 July 2013) as to whether or not the Group has
control over Tshipise in accordance with the new definition of control and the
related guidance set out in AASB 10. The directors concluded that it has had
control over Tshipise and as a result, the application of AASB 10 has had no
impact on the accounting treatment of Tshipsie in the consolidated financial
statements.
AASB 11 'Joint AASB 11 replaces AASB 131 'Interests in Joint Ventures', and the guidance
Arrangements' and AASB contained in a related interpretation, Interpretation 113 'Jointly Controlled
2011-7 'Amendments to Entities – Non-Monetary Contributions by Venturers', has been incorporated in
Australian Accounting AASB 128 (as revised in 2011). AASB 11 deals with how a joint arrangement of
Standards arising from the which two or more parties have joint control should be classified and accounted
consolidation and Joint for. Under AASB 11, there are only two types of joint arrangements – joint
Arrangements standards' operations and joint ventures. The classification of joint arrangements under
AASB 11 is determined based on the rights and obligations of parties to the joint
arrangements by considering the structure, the legal form of the arrangements,
the contractual terms agreed by the parties to the arrangement, and, when
relevant, other facts and circumstances. A joint operation is a joint arrangement
whereby the parties that have joint control of the arrangement (i.e. joint
operators) have rights to the assets, and obligations for the liabilities, relating to
the arrangement. A joint venture is a joint arrangement whereby the parties that
have joint control of the arrangement (i.e. joint venturers) have rights to the net
assets of the arrangement. Previously, AASB 131 contemplated three types of
joint arrangements – jointly controlled entities, jointly controlled operations and
jointly controlled assets. The classification of joint arrangements under AASB 131
was primarily determined based on the legal form of the arrangement (e.g. a joint
arrangement that was established through a separate entity was accounted for as
a jointly controlled entity).
AASB 11 'Joint The initial and subsequent accounting of joint ventures and joint operations is
Arrangements' and AASB different. Investments in joint ventures are accounted for using the equity
2011-7 'Amendments to method (proportionate consolidation is no longer allowed). Investments in joint
Australian Accounting operations are accounted for such that each joint operator recognises its assets
Standards arising from the (including its share of any assets jointly held), its liabilities (including its share of
consolidation and Joint any liabilities incurred jointly), its revenue (including its share of revenue from the
Arrangements standards' sale of the output by the joint operation) and its expenses (including its share of
(continued) any expenses incurred jointly). Each joint operator accounts for the assets and
liabilities, as well as revenues and expenses, relating to its interest in the
joint operation in accordance with the applicable Standards.
The directors of the Company reviewed and assessed the classification of the
Group's investments in joint arrangements in accordance with the requirements
of AASB 11. The directors concluded that the Group's investment in Coal of Africa
& ArcelorMittal Analytical Laboratories Proprietary Limited, which was classified
as a jointly controlled entity under AASB 131 and was accounted for using the
proportionate consolidation method, should be classified as a joint operation
under AASB 11. This has had no impact on the consolidated financial statements.
AASB 119 'Employee In the current year, the Group has applied AASB 119 (as revised in 2011)
Benefits' (2011) and AASB 'Employee Benefits' and the related consequential amendments for the first time.
2011-10 'Amendments to AASB 119 (as revised in 2011) changes the accounting for defined benefit plans
Australian Accounting and termination benefits. The most significant change relates to the accounting
Standards arising from AASB for changes in defined benefit obligations and plan assets. The amendments
119 (2011)' require the recognition of changes in defined benefit obligations and in the fair
value of plan assets when they occur, and hence eliminate the 'corridor approach'
permitted under the previous version of AASB 119 and accelerate the recognition
of past service costs. All actuarial gains and losses are recognised immediately
through other comprehensive income in order for the net pension asset or
liability recognised in the consolidated statement of financial position to reflect
the full value of the plan deficit or surplus.
Furthermore, the interest cost and expected return on plan assets used in the
previous version of AASB 119 are replaced with a 'net interest' amount under
AASB 119 (as revised in 2011), which is calculated by applying the discount rate to
the net defined benefit liability or asset. These changes have had no impact on
the current financial statements as the Group does not have and defined benefit
plans and no plan assets.
3. Critical accounting estimates and key judgements
Estimates assume a reasonable expectation of future events and are based on current trends and economic data,
obtained both externally and within the Group. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimates are revised and in any future periods affected.
The primary areas in which estimates and judgements are applied are discussed below.
Asset carrying values and impairment charges
The Group assesses impairment at the end of each reporting period by evaluating conditions and events specific to
the Group that may be indicative of impairment triggers. Recoverable amounts of relevant assets are reassessed
using value-in-use calculations which incorporate various key assumptions. Key assumptions include future coal
prices, future operating costs, discount rates, foreign exchange rates and coal reserves.
Coal reserves
Economically recoverable coal reserves relate to the estimated quantity of coal in an area of interest that can be
expected to be profitably extracted, processed and sold.
The Group determines and reports coal reserves under the Australasian Code of Reporting of Mineral Resources and
Ore Reserves (the 'JORC Code'). This includes estimates and assumptions in relation to geological, technical and
economic factors, including: quantities, grades, production techniques, recovery rates, production costs, transport
costs, exchange rates and expected coal demand and prices.
Because the economic assumptions used to estimate reserves change from period to period, and because additional
geological data is generated during the course of operations, estimates of reserves may change from period to
period. Changes in reported reserves may affect the Group's financial results and financial position in a number of
ways, including the following:
- asset carrying values may be affected due to changes in estimated future cash flows; and
- depreciation and amortisation charges may change where such charges are determined by the units of
production basis, or where the useful economic lives of assets change.
Depreciation and amortisation charges in the Consolidated Statement of Comprehensive Income may change where
such charges are determined by the units of production basis, or where the useful economic lives of assets change
Exploration and evaluation assets
Determining the recoverability of exploration and evaluation expenditure capitalised requires estimates and
assumptions as to future events and circumstances, in particular, whether successful development and commercial
exploitation, or alternatively sale, of the respective areas of interest will be achieved. The Group applies the
principles of AASB 6 and recognises exploration and evaluation assets when the rights of tenure of the area of
interest are current, and the exploration and evaluation expenditures incurred are expected to be recouped through
successful development and exploitation of the area. If, after having capitalised the expenditure under the Group's
accounting policy, a judgment is made that recovery of the carrying amount is unlikely, an impairment loss is
recorded in profit or loss. Refer to note 13.
Development expenditure
Development activities commence after the commercial viability and technical feasibility of the project is established.
Judgment is applied by management in determining when a project is commercially viable and technically feasible.
Any judgments may change as new information becomes available. If, after having commenced the development
activity, a judgment is made that a development asset is impaired, the appropriate amount will be written off to the
consolidated statement of comprehensive income. Refer to note 13.
Rehabilitation and restoration provisions
Certain estimates and assumptions are required to be made in determining the cost of rehabilitation and restoration
of the areas disturbed during mining activities and the cost of dismantling of mining infrastructure. The amount the
Group is expected to incur to settle its future obligations includes estimates regarding:
- the appropriate rate at which to discount the liability;
- the expected timing of the cash flows and the expected life of mine (which is based on coal reserves noted
above);
- the application of relevant environmental legislation; and
- the future expected costs of rehabilitation, restoration and dismantling.
Changes in the estimates and assumptions used could have a material impact on the carrying value of the
rehabilitation provision and related asset. The provision is reviewed at each reporting date and updated based on the
best available estimates and assumptions at that time. The carrying amount of the rehabilitation provision is set out
in note 24.
Recoverability of non-current assets
As set out in note 13, certain assumptions are required to be made in order to assess the recoverability of non-
current assets where there is an impairment indicator. Key assumptions include future coal prices, future operating
costs, discount rate, foreign exchange rates and estimates of coal reserves. Estimates of coal reserves in themselves
are dependent on various assumptions (refer above). Changes in these assumptions could therefore affect estimates
of future cash flows used in the assessment of recoverable amounts, estimates of the life of mine and depreciation.
Refer to note 13.
Contingent liabilities – litigation
Certain claims have been made against the Group. Judgments about the validity of the claims have been made by
the Directors. Further details are included in note 34.
4. Segment information
The Group has three reportable segments: Exploration, Development and Mining.
The Exploration segment is involved in the search for resources suitable for commercial exploitation, and the
determination of the technical feasibility and commercial viability of resources. As of June 30, 2014, projects within
this reportable segment include three exploration and development stage coking and thermal coal complexes,
namely the Chapudi Complex (which comprises the Chapudi project, the Chapudi West project and the
Wildebeesthoek project), the Mopane Complex (which comprises the Voorburg project, the Mt Stuart project
and the Jutland project) and the Makhado Complex (comprising the Makhado project, the Makhado Extension
project and the Generaal project).
The Development segment is engaged in establishing access to and commissioning facilities to extract, treat and
transport production from the mineral reserve, and other preparations for commercial production. As of June 30,
2014 projects included within this reportable segment include one coking coal project, namely the Vele Colliery, in
the early operational and development stage.
The Mining segment is involved in day to day activities of obtaining a saleable product from the mineral reserve on a
commercial scale and included the Mooiplaats Colliery and the Woestalleen Colliery. As of June 30, 2014 the
Mooiplaats Colliery and the Woestalleen Colliery has been classified as discontinued operations.
The accounting policies of the reportable segments are the same as those described in Note 2, Accounting policies.
The Group evaluates performance on the basis of segment profitability, which represents net operating (loss) / profit
earned by each reportable segment.
Each reportable segment is managed separately because, amongst other things, each reportable segment has
substantially different risks.
The Group accounts for intersegment sales and transfers as if the sales or transfers were to third parties, ie at
current market prices.
The Group's reportable segments focus on the stage of project development and the product offerings of coal mines
in production.
In order to reconcile the segment results with the Consolidated Statement of profit or loss and other comprehensive
income the discontinued operations should be deducted from the segment total and the corporate results (as per
the reconciliation later in the note should be included.
Discontinued
Continuing operations operations
Exploration Development Mining Total
For the year ended 30 June 2014 $'000 $'000 $'000 $'000
Revenues from external customers - - 3,299 3,299
Inter-segment revenues - - - -
Revenue(1) - - 3,299 3,299
Segment loss 3,829 1,845 20,575 26,249
Items included within the Group's
measure of segment profitability
- Depreciation and amortisation (79) (65) - (144)
- Impairment - - (14,933) (14,933)
- Finance income 7 65 352 424
- Finance cost (1,586) (66) (97) (1,749)
1. Revenues represent sale of product
Segment assets 145,995 135,991 23,029 305 015
Items included within the Group's
measure of segment assets
- Additions to non-current assets 3,637 7,057 - 10,694
Segment liabilities 30,820 4,974 3,644 39,438
Discontinued
Continuing operations operations
Exploration Development Mining Total
For the year ended 30 June 2013 $'000 $'000 $'000 $'000
Revenues from external customers - - 145,384 145,384
Inter-segment revenues - - 45,822 45,822
Revenue(1) - - 191,206 191,206
Segment loss 1,321 4,002 90,684 96,007
Items included within the Group's
measure of segment profitability
- Depreciation and amortisation (16) (72) (26,968) (27,056)
- Impairment - - (48,545) (48,545)
- Finance income - - 74 74
- Finance cost (8) (81) (802) (891)
1. Revenues represent sale of product
Segment assets 155,607 135,425 71,093 362,125
Items included within the Group's
measure of segment assets
- Additions to non-current assets 11,593 25,258 3,625 40,476
Segment liabilities 4,318 7,669 35,171 47,158
Reconciliations of the total segment amounts to respective items included in the consolidated financial statements
are as follows:
In addition to the reconciliations provided below, also refer to note 11 and note 21 in order to reconcile the segment
information to the consolidated financial statements as the mining segment is a discontinued operation and are
therefore only included in the consolidated statement of profit or loss and other comprehensive income after the
loss after tax. The assets and liabilities of the mining segment (discontinued operation) is also included as separate
line items on the consolidated statement of financial position.
Year ended Year ended
30 June 2014 30 June 2013
$'000 $'000
Total loss for reportable segments 26,249 96,007
Reconciling items:
Unallocated corporate costs 21,115 34,368
Depreciation and amortisation 2,032 1,753
Foreign exchange losses 34,724 23,626
Loss before taxation 84,120 155,754
Total segment assets 305,015 362,125
Reconciling items:
Unallocated property, plant and equipment 12,349 14,491
Intangible assets 15,488 16,078
Other financial assets 705 4,081
Other receivables 2,245 3,565
Unallocated current assets 8,596 27,059
Total assets 344,398 427,399
Total segment liabilities 39,438 47,158
Reconciling items:
Unallocated liabilities 24,640 37,773
Total liabilities 64,078 84,931
Year ended Year ended
30 June 2014 30 June 2013
$'000 $'000
The Group operates in two principal geographical areas – Australia
(country of domicile) and South Africa.
The Group's revenue from external customers by location of operations
and information about its non-current assets by location of assets are
detailed below.
Revenue by location of operations
South Africa 4,061 146,396
Australia - -
Total revenue 4,061 146,396
Non-current liabilities by location of operations
South Africa 4,643 34,903
Australia - -
Total non-current liabilities 4,643 34,903
Year ended Year ended
30 June 2014 30 June 2013
$'000 $'000
5. Revenue
The following is an analysis of the Group's revenue for the year from
continuing operations (excluding investment income – see note 6)
Revenue from the rendering of services 761 1,012
761 1,012
6. Investment income
Continuing operations
Rental income 926 -
Interest income
Bank deposits 602 628
Interest on loans 171 -
Total interest income 773 628
Total investment income 1,699 628
7. Loss for the year from continuing operations
Loss for the year from continuing operations has been arrived at after
charging or (crediting):
Other income
Profit on sale of claims 3,048 -
Insurance claim 1,350 -
Non-refundable deposits received for sale of non-core assets 904 -
Other 262 -
5,564 -
Other losses
Loss on disposal of property, plant and equipment 41 -
Mark to market valuation of Investec derivative facility - 4,244
Discount on early settlement of loan receivable - 3,050
Revaluation of investments 576 174
Total other losses 617 7,468
Depreciation and amortisation
Depreciation
Depreciation of property, plant and equipment 1,107 946
Total depreciation 1,107 946
Amortisation
Amortisation of intangible asset (note 15) 1,069 895
Total amortisation 1,069 895
Total depreciation and amortisation 2,176 1,841
Foreign exchange loss / (profit)
Unrealised 35,568 28,575
Realised 749 (4,252)
36,317 24,323
Year ended Year ended
30 June 2014 30 June 2013
$'000 $'000
Employee benefits expenses
Share-based payments 717 660
Super-annuation 14 34
Salaries and wages 7,311 13,311
Total employee benefits expense 8,042 14,005
Other expenses
The cost of sales ($1.7milion) line item previously presented in 2013 is now
reclassified in the other expenses line item.
8. Auditors' remuneration $ $
Amounts received by the auditors of the Company as at 30 June 2014
Deloitte – Australia
Audit and review of financial reports 119,296 177,674
Other services - 123,084
119,296 300,758
Deloitte – United Kingdom
Audit and review of financial reports - -
Other services – review of UK registration document - 440,193
- 440,193
Deloitte – Johannesburg
Audit and review of financial reports 324,529 437,767
Other services - 393
324,529 438,160
9. Finance cost $'000 $'000
Finance costs
Interest on loans 2,238 58
Unwinding of interest 71 89
2,309 147
Year ended Year ended
30 June 2014 30 June 2013
$'000 $'000
10. Income tax and deferred tax
Income tax recognised in profit or loss from continuing operations
Current tax
Current tax expense in respect of the current year - -
- -
Deferred tax (note 25)
Origination and reversal of temporary differences - -
- -
Total income tax expense recognised - -
The Group's effective tax rate for the year from continuing operations
was 0% (2013: 0%). The tax rate used for the 2014 and 2013
reconciliations below is the corporate tax rate of 28% payable by South
African corporate entities on taxable profits under South African tax law.
The income tax expense for the year can be reconciled to the accounting
profit as follows:
Loss from continuing operations before income tax (61,394) (65,070)
Income tax benefit calculated at 28% (2013: 28%) (17,190) (18,220)
Tax effects of:
Expenses that are not deductible for tax purposes 617 6,787
Income that are not taxable (1,509) -
Tax losses utilised - -
Other temporary differences not utilised 18,082 11,433
Income tax (credit) / charge - -
Income tax recognised on the loss from discontinued operations
Current tax
Current tax expense in respect of the current year - 190
- 190
Deferred tax (note 25)
Origination and reversal of temporary differences - (7,807)
- (7,807)
Total income tax benefit recognised - (7,617)
The Group's effective tax rate for the year was 0% (2013: 5%). The tax
rate used for the 2014 and 2013 reconciliations below is the corporate tax
rate of 28% payable by South African corporate entities on taxable profits
under South African tax law. The income tax expense for the year can be
reconciled to the accounting profit as follows:
Loss before income tax (20,575) (90,684)
Income tax benefit calculated at 28% (2013: 28%) (5,761) (25,392)
Tax effects of:
Expenses that are not deductible for tax purposes 228 16,089
Tax losses utilised - (1,260)
Other temporary differences utilised / (not utilised) 5,533 2,946
Income tax (credit) / charge - (7,617)
11. Discontinued operations
11.1 Holfontein (Pty) Ltd ('Holfontein')
The Company is in the process of finalising agreements for the disposal of
the Holfontein thermal coal project near Secunda in Mpumalanga.
11.2 Plan to dispose of Langcarel (Pty) Ltd ('Mooiplaats')
The Company has announced a long-term strategy to dispose of its
thermal assets in order to focus on the development of the coking coal
assets. The Company is actively seeking a buyer for this business and
expects to complete a sale during the next financial year. The Group has
recognised an impairment loss on the Mooiplaats colliery of $14.9 million
(refer note 21) in December 2013. No further impairment loss has been
recognised upon the reclassification of these operations to discontinued
operations.
11.3 Analysis of loss for the year from discontinued operations
The combined results of the discontinued operations in the loss for the
year are set out below.
Year ended Year ended
30 June 2014 30 June 2013
$'000 $'000
Loss for the year from discontinued operations
Revenue 3,299 145,384
Other gains 78 2,315
3,377 147,699
Expenses (23,952) (238,383)
Loss before tax (20,575) (90,684)
Attributable income tax credit - 7,617
Loss for the year from discontinued operations (attributable to owners of
the company) (20,575) (83,067)
Cash flows from discontinued operations
Net cash outflows from operating activities (3,619) (34,568)
Net cash outflows from investing activities 128 (7,530)
Net cash outflows from financing activities (12,298) (23,239)
Net cash outflows (15,789) (65,337)
These operations have been classified and accounted for at 30 June 2014
as discontinued operations (see note 21).
Woestalleen
The Company received Section 11 approval from the Department of
Mineral Resources ('DMR') for the sale of all of the equity and loan
accounts in NuCoal Mining Proprietary Limited ('Woestalleen Complex')
resulting in the sale consideration of ZAR80 million ($7.6 million) paid to
CoAL. This resulted in a gain of $1.4 million being realised.
Year ended Year ended
30 June 2014 30 June 2013
Cents per share Cents per share
12. Loss per share attributable to owners of the Company
Basic loss per share
From continuing operations 6.06 7.27
From discontinued operations 1.96 9.27
8.02 16.54
12.1 Basic loss per share
$'000 $'000
Loss for the year attributable to owners of the Company (84,120) (148,137)
Less: Loss for the year from operations held for sale (20,575) (83,067)
Loss used in the calculation of basic loss per share from continuing
operations (63,545) (65,070)
000 shares 000 shares
Weighted number of ordinary shares
Weighted average number of ordinary shares for the purposes of basic
loss per share 1,048,369 895,633
12.2 Diluted loss per share
Diluted loss per share is calculated by dividing loss attributable to owners
of the Company by the weighted average number of ordinary shares
outstanding during the year plus the weighted average number of diluted
ordinary share that would be issued on conversion of all the dilutive
potential ordinary shares into ordinary shares.
As at 30 June 2014, 21,168,990 options (2013 – 13,929,562 options) were
excluded from the computation of the loss per share as their impact is
anti-dilutive. Furthermore at 30 June 2014 and 2013 one option issued to
Firefly to acquire 50 million shares (see note 30) was also excluded from
the computation of the loss per share as the impact is anti-dilutive.
12.3 Headline loss per share (in line with JSE requirements)
The calculation of headline loss per share at 30 June 2014 was based on
the headline loss attributable to ordinary equity holders of the Company
of $67.0 million (2013: $99.6 million) and a weighted average number of
ordinary shares outstanding during the period ended 30 June 2014 of
1,048,368,613 (2013: 895,633,032).
The adjustments made to arrive at the headline loss are as follows:
Loss for the period attributable to ordinary shareholders (84,120) (148,137)
Adjust for:
Impairment losses 14,933 48,545
Gain recognised on disposal of interest in former subsidiary (1,438) -
Headline earnings (70,625) (99,592)
Headline loss per share (cents per share) 6.74 11.12
Year ended Year ended
30 June 2014 30 June 2013
$'000 $'000
13. Development, exploration and evaluation expenditure
Development, exploration and evaluation expenditure comprises:
Exploration and evaluation assets 139,991 148,131
Development expenditure 131,720 130,947
Balance at end of year 271,711 279,078
A reconciliation of development, exploration and evaluation expenditure is
presented below:
Exploration and evaluation assets
Balance at beginning of year 148,131 156,270
Additions 1,846 11,593
Foreign exchange differences (9,986) (19,732)
Balance at end of year 139,991 148,131
Development assets
Balance at beginning of year 130,947 127,216
Additions(1) 7,061 25,258
Foreign exchange differences (6,288) (21,527)
Balance at end of year 131,720 130,947
(1) Vele is not considered to be in commercial production and as a result,
revenue from the sale of coal is not recognised as revenue but off-set
against additions. The total revenue off-set against additions is $9.0
million (2013 - $8.2 million).
Development assets have been allocated for impairment testing purposes
to the Vele project.
The recoverable amount of this cash-generating unit is determined based
on a value in use calculation (including a resource multiple),
which uses cash flow projections based on financial budgets approved by
the Directors covering a three year period, and a discount rate of 11.96%
per annum (2013: 11.50% per annum).
Cash flow projections during the budget period are based on
management's best estimates of cash flows and known contractual
arrangements. The cash flows beyond that three year period have been
extrapolated using a 2.70% per annum growth rate. The Directors believe
that any reasonably possible change in the key assumptions on which
recoverable amount is based would not cause the aggregate carrying
amount to exceed the aggregate recoverable amount of the cash
generating unit.
14. Property, plant and equipment
Mining Land and Leasehold Motor Other Total
property, buildings improvements vehicles
plant and
equipment
$'000 $'000 $'000 $'000 $'000 $'000
2014
Cost
At beginning of year 465 17,481 572 888 2,178 21,584
Additions - 1,120 2 - 27 1,149
Disposals (415) - - - (20) (435)
Exchange differences (22) (1,198) (34) (60) (137) 1,451)
At end of year 28 17,403 540 828 2,048 20,847
Accumulated depreciation
At beginning of year 166 406 517 269 1,380 2,738
Depreciation charge - 342 52 200 455 1,049
Accumulated (146) - - - (17) (163)
depreciation on disposals
Exchange differences (9) (34) (32) (22) (93) (190)
At end of year 11 714 537 447 1,725 3,434
Net carrying value at
end of year 17 16,689 3 381 323 17,413
Mining Land and Leasehold Motor Other Total
property, buildings improvements vehicles
plant and
equipment
$'000 $'000 $'000 $'000 $'000 $'000
2013
Cost
At beginning of year 427,898 24,348 678 1,839 2,817 457,580
Additions 3,626 449 - 340 428 4,843
Transfers - (929) - - - (929)
Assets held for sale (376,955) (2,608) - (956) (573) (381,092)
Exchange differences (54,104) (3,779) (106) (335) (494) (58,818)
At end of year 465 17,481 572 888 2,178 21,584
Accumulated depreciation
At beginning of year 188,777 1,325 462 694 1,445 192,703
Amortisation 13,577 - - - - 13,577
Depreciation charge 11,968 1,135 142 244 666 14,155
Assets held for sale (176,290) (1,741) - (530) (432) (178,993)
Exchange differences (37,866) (313) (87) (139) (299) (38,704)
At end of year 166 406 517 269 1,380 2,738
Accumulated Impairment
At beginning of year 123,236 - - - - 123,236
Impairment charge 48,545 - - - - 48,545
Assets held for sale (166,399) - - - - (166,399)
Exchange differences (5,382) - - - - (5,382)
At end of year - - - - - -
Net carrying value at end
of year 299 17,075 55 619 798 18,846
Year ended Year ended
30 June 2014 30 June 2013
$'000 $'000
15. Intangible assets
Balance at beginning of year 16,078 18,757
Amortisation (1,069) (895)
Foreign exchange differences 479 (1,784)
Balance at end of year 15,488 16,078
In August 2008 the Company entered into a throughput agreement with
Terminal De Carvao Da Matola Limitada ('TCM'), a subsidiary of Grindrod
Trading & Shipping Limited ('Grindrod')), the operator of the Matola
Terminal) and CMR Engineers & Project Managers Proprietary Limited.
This agreement granted the Company one mtpa of port capacity through
the Matola terminal commencing 1 January 2009, for an initial term of
five years. This capacity was increased to three mtpa in March 2011.
Subsequent to year-end the Company reached an agreement with
Grindrod which will result in a $10 million payment (included in accrued
expenses – note 26). The payment will settle the current liabilities
recorded to date as well as cover all future take or pay obligations until
31 December 2016. The Company will be able to export coal during the
settlement period with no take or pay obligations and has sufficient
export capacity to meet scheduled production from the Vele Colliery to
the end of CY2016.
The terms of the Throughput Agreement will be renegotiated for a
further two five-year periods and one further two year period
commencing CY2017, ensuring the Company has sufficient capacity to
export coal produced by its Vele Colliery and Makhado Project.
16. Other receivables
Carrying amount of:
Nimag loan 1,931 2,188
Other loans 314 1,379
2,245 3,567
Balance at beginning of year 3,567 13,811
Loan sold – Terminal development loan - (11,200)
Other (581) -
Loan advanced - 1,609
Foreign exchange differences (741) (653)
Balance at end of year 2,245 3,567
Nimag loan
CoAL provided a loan as part of the NiMag disposal to settle the balance
of the purchase consideration. The loan bears interest at the South
African prime overdraft rate less 0.5%, payable quarterly in arrears. The
capital is repayable in 12 equal quarterly instalments following the 39th
month after the date of advance of the ABSA funding for the
management buyout (ABSA funding was advanced in December 2011) or,
the date the ABSA funding is fully repaid.
Year ended Year ended
30 June 2014 30 June 2013
$'000 $'000
17. Other financial assets
Carrying value of financial assets at fair value through profit or loss
Listed securities
- Equity securities 618 3,403
Unlisted securities
- Equity securities in private corporations* 966 559
1,584 3,962
Financial assets at fair value through profit or loss are presented within
'operating activities' as part of changes in working capital in the
statement of cash flows.
*Determined primarily by reference to the value of recent private
placements.
Deposits 633 2,345
2,217 6,307
Other financial assets have been analysed between current and non-
current as follows:
Current 610 3,318
Non-current 1,607 2,989
2,217 6,307
18. Inventories
Consumable stores 507 985
Finished goods 21 111
528 1,096
The cost of inventories recognised as an expense during the year in
respect of continuing operations was $0.5 million (2013: nil).
19. Trade and other receivables
Trade receivables 241 266
Other receivables 2,145 3,721
Allowance for doubtful debts (484) (720)
1,902 3,267
The carrying amount of trade and other receivables approximate their fair
value due to their short-term maturity.
Year ended Year ended
30 June 2014 30 June 2013
$'000 $'000
The maximum exposure to credit risk at the reporting date is the carrying
value of each class of receivables as disclosed in note 19. The Group does
not hold any collateral as security.
Movements on the allowance for doubtful debts are as follows:
Balance at beginning of year 720 2,025
Allowance for bad debts 495 1,641
Receivable written off as uncollectable (720) (334)
Transferred to assets classified as held for sale - (2,836)
Foreign exchange differences (11) 224
Balance at end of year 484 720
Trade receivables are exposed to the credit risk of end-user customers
within the coal mining industry.
The Group has an established credit policy under which customers are
analysed for creditworthiness before the Group's payment and delivery
terms and conditions are offered. Customer balances are monitored on
an ongoing basis to ensure that they remain within the negotiated terms
and conditions offered.
Credit quality of trade receivables
Not past due 160 32
Past due 0 to 30 days - 4
Past due 31 to 60 days - -
Past due 61 to 90 days 81 230
241 266
Currency analysis of trade receivables
SA Rand 241 266
US dollar - -
241 266
Year ended Year ended
30 June 2014 30 June 2013
$'000 $'000
20. Cash and cash equivalents
Bank balances 2,017 20,995
Bank balances associated with discontinued operations (refer note 21) 82 8,943
2,099 29,938
Restricted cash 5,153 4,187
Restricted cash associated with discontinued operations (refer note 21) 1,474 2,158
6,627 6,345
The restricted cash balance of $6,627,000 (2013 - $6,345,000) was held
on behalf of subsidiary companies in respect of the rehabilitation
guarantees issued to the Department of Mineral Resources in respect of
environmental rehabilitation costs of $17.6 million (2013: $17.6 million).
This cash was not available for use other than for those specific purposes.
Credit risk
Cash at bank earns interest at a floating rate based on daily bank deposit
rates. Cash is deposited at highly reputable financial institutions of a high
quality credit standing within Australia, the United Kingdom and the
Republic of South Africa.
The fair value of cash and cash equivalents equates to the values as
disclosed in this note.
21. Discontinued operations
Carrying amounts of
Holfontein Investments Proprietary Limited ('Holfontein') - -
Nucoal Mining Proprietary Limited ('Woestalleen') - 988
Langcarel Proprietary Limited ('Mooiplaats') 18,880 34,934
18,880 35,922
Assets associated with discontinued operations
Holfontein - -
Nucoal Mining Proprietary Limited - 15,097
Mooiplaats 23,030 55,996
23,030 71,093
Liabilities associated with discontinued operations
Holfontein - -
Nucoal Mining Proprietary Limited 14,109
Mooiplaats 4,150 21,062
4,150 35,171
Holfontein
Net assets of Holfontein Investments Proprietary Limited - -
Impairment on assets held for sale - -
- -
Year ended Year ended
30 June 2014 30 June 2013
$'000 $'000
Mooiplaats
As described in note 11, the Company is seeking to dispose of its thermal
assets which include the Mooiplaats colliery. During the year under
review, an impairment loss of $14.9 million was recognised as the
carrying value of the asset exceeded the realisable value. The Company
expects to recover the remaining carrying value through the sales price of
ZAR250 million ($23.5 million).
The major classes of assets and liabilities of Mooiplaats at the end of the
reporting period are as follows:
Assets classified as held for sale
Property, plant and equipment 18,229 35,100
Other financial assets 2,266 2,043
Restricted cash 1,474 1,580
Inventories 929 2,021
Trade and other receivables 50 9,267
Cash and cash equivalents 82 5,985
23,030 55,996
Liabilities classified as held for sale
Interest bearing liabilities - 12,769
Provisions 2,932 3,414
Trade payables and accrued expenses 1,218 4,879
4,150 21,062
Net assets of Mooiplaats 18,880 34,934
22. Deferred consideration
The second tranche of the deferred consideration (part of the total
acquisition price of $75 million for Chapudi and Kwezi) of $29.8 million is
due and payable. The Company is currently in negotiations with Rio Tinto
to defer the payment.
Year ended Year ended
30 June 2014 30 June 2013
$'000 $'000
23. Borrowings
Current
Unsecured – at amortised cost
Unsecured loans - 1,869
Other - 219
- 2,088
Secured – at amortised cost
Secured loans 6,372 -
6,372 -
Total current borrowings 6,372 2,088
Total borrowings 6,372 2,088
The carrying value of the Group's interest bearing liabilities, which consist
of floating rate interest bearing liabilities, approximate fair value.
Export trade finance facility
Balance at beginning of year - 32,469
Loan advanced - 4,770
Loan repaid - (26,463)
Interest accrued - 1,938
- 12,714
Re-classified to Liabilities associated with assets held for sale - (12,714)
- -
The Company, through its wholly owned subsidiary Langcarel (Pty) Ltd
had a revolving thermal coal export finance facility ('the facility') for up to
$50.0 million with Deutsche Bank AG, Amsterdam. The amount
outstanding on this facility as at 30 June 2013 was repaid in full on 3
September 2013.
Investec bank facility
Loan advanced 10,997 -
Loan repaid (3,752) -
7,245 -
Foreign exchange differences (873) -
6,372 -
The Company, through its wholly owned subsidiary GVM Metals
Administration (South Africa) (Pty) Ltd has secured an 18-month, ZAR210
million (approximately US$20.0 million) working capital facility from
Investec.
The principal terms of the loan include interest at the Johannesburg
Interbank Agreed Rate plus 500 base points inclusive of statutory costs
currently 0.20%, and is repayable at the earlier of:
· the date on which the Mooiplaats Sales Proceeds are received or;
· a period of 18 months.
In addition, CoAL will issue 20 million options to Investec (subject to
shareholder approval) which are exercisable at ZAR1.32 before October
2018 (note 34).
Year ended Year ended
30 June 2014 30 June 2013
$'000 $'000
24. Provisions
Employee provisions 296 389
Other 2,151 9
Rehabilitation provisions 4,643 4,903
7,090 5,301
Employee provisions
The provision for employees represents unused annual leave entitlements.
Upon re-classifying the thermal assets as assets held for sale, $0.4 million
has been transferred to liabilities associated with assets held for sale.
Other
The amount provided for FY2014 relates to the provision raised in relation
to Envicoal.
Rehabilitation provision
Balance at beginning of year 4,903 16,916
Unwinding of discount 72 164
Utilisation of provision - (1,045)
Additional provisions recognised - 1,308
Re-classified to Liabilities associated with assets held for sale - (9,649)
Foreign exchange differences (332) (2,791)
Balance at end of year 4,643 4,903
The rehabilitation provision represents the current cost of environmental
liabilities as at the respective year end. An annual estimate of the quantum
of closure costs is necessary in order to fulfil the requirements of the DMR,
as well as meeting specific closure objectives outlined in the mine's
Environmental Management Programme ('EMP').
Although the ultimate amount of the obligation is uncertain, the fair value
of the obligation is based on information that is currently available. This
estimate includes costs for the removal of all current mine infrastructure
and the rehabilitation of all disturbed areas to a condition as described in
the EMP.
Provisions have been analysed between current and non-current as follows:
Current 2,447 398
Non-current 4,643 4,903
7,090 5,301
Year ended Year ended
30 June 2014 30 June 2013
$'000 $'000
25. Deferred tax
Deferred tax asset
- Deferred tax asset to be recovered after more than 12 months 2,694 2,885
- Deferred tax asset to be recovered within 12 months - -
2,694 2,885
Net deferred tax asset / (liability) 2,694 2,885
The gross movement on the deferred tax account is as follows:
Balance at beginning of year 2,885 (3,010)
Exchange differences (191) (1,912)
Statement of comprehensive income charge – included as part of
Operations held for sale - 7,807
Balance at end of year 2,694 2,885
The movement in deferred income tax assets and liabilities during the year,
without taking into consideration the offsetting of balances within the same
tax jurisdiction, is as follows:
Deferred tax assets
Capital allowances(1)
Balance at beginning of year 2,885 3,444
Foreign exchange differences (191) (559)
Balance at end of year 2,694 2,885
Deferred tax liabilities
Other
Balance at beginning of year - (6,454)
Amortisation - 7,807
Foreign exchange differences - (1,353)
Balance at end of year - -
Total
Balance at beginning of year - 6,454
Statement of comprehensive income charge / (credit) - (7,807)
Foreign exchange differences - 1,353
Balance at end of year - -
Deferred income tax assets are recognised for tax loss carry-forwards to
the extent that the realisation of the related tax benefit through future
taxable profits is probable. The group did not recognise deferred income
tax assets of $98.5 million (2013: $96.4 million) in respect of losses
amounting to $147.7 million (2013: $84.7 million) and unredeemed
capital expenditure of $204.1 million (2013: $259.5 million) that can be
carried forward against future taxable income.
1 – The deferred tax asset recognised on capital allowances relates to a
portion of the capital expenditure on the construction of the Vele
plant. The recognition of the asset is supported by the Life of Mine
model as future revenues will be available to utilise the deferred tax
asset.
Year ended Year ended
30 June 2014 30 June 2013
$'000 $'000
26. Trade and other payables
Trade payables 3,019 6,627
Accrued expenses 12,064 4,147
Other - 63
15,083 10,837
The average credit period is 30 days. Interest at the South African prime
overdraft rate is charged on overdue creditors.
27. Issued capital
Fully paid ordinary shares
1,048,368,613 (2012: 666,323,828) fully paid ordinary shares 935,891 935,891
Movements in fully paid ordinary shares Number $'000
At 30 June 2012 666,323,828 791,102
Issue of shares, net of issuance costs 382,044,785 144,789
At 30 June 2013 1,048,368,613 935,891
At 30 Jun 2014 1,048,368,613 935,891
Holders of ordinary shares are entitled to receive dividends as declared
from time to time and are entitled to one vote per share at shareholders
meetings.
In the event of winding up of the Company ordinary shareholders rank
after all other shareholders and creditors and are fully entitled to any
proceeds of liquidation.
Changes to the then Corporations Law abolished the authorised capital
and par value concept in relation to share capital from 1 July 1998.
Therefore, the Company does not have a limited amount of authorised
capital and issued shares do not have a par value.
Share options granted
Share options granted under the Company's employee share option plan
carry no rights to dividends and no voting rights. Further details of the
employee share option plan are provided in note 30.
28. Accumulated deficit
Accumulated deficit at the beginning of the financial year (707,535) (564,800)
Net loss attributed to Owners of the Company (84,120) (148,137)
Transferred from share based payment reserve 691 5,402
Accumulated deficit at the end of the financial year (790,964) (707,535)
Year ended Year ended
30 June 2014 30 June 2013
$'000 $'000
29. Reserves
29.1 Reserves
Capital profits reserve 91 91
Share based payment reserve 82,464 82,438
Foreign currency translation reserve 52,263 31,008
134,818 113,537
Movements for the year can be reconciled as follows:
Share-based payments reserve
Opening balance 82,438 87,180
Share options issued during the year 717 660
Transfer from share based payment reserve (691) (5,402)
Closing balance 82,464 82,438
Foreign currency translation reserve
Opening balance 31,008 63,119
Exchange differences on translating foreign operations 21,255 (32,111)
Closing balance 52,263 31,008
Nature and purpose of reserves:
Capital reserve
The capital profits reserve contains capital profits derived during previous
financial years.
Share-based payment reserve
Share based payments represent the value of unexercised share options
to Directors and employees, as well as the BBBEE option.
Foreign currency translation reserve
The foreign currency translation reserve records the foreign currency
differences arising from the translation of foreign operations.
30. Share-based payments
Share options
Employee share option plan
The Group maintains certain Employee Share Option Plans ('ESOP's') for executives and senior employees of the
Group as per the rules approved by shareholders on 30 November 2009. In accordance with the terms of the
schemes eligible executives and senior employees may be granted options to purchase ordinary shares.
Share options granted to Directors and Officers
The Group also grants share options to directors and officers of the Group outside the ESOP's. In accordance with the
Group's policies, directors and officers may be granted options to purchase ordinary shares.
Share Option Terms, Vesting Requirements and Options Outstanding at 30 June 2014
Each option converts into one ordinary share of the Company on exercise. No amounts are paid or payable by the
recipient on receipt of the option. The options hold no voting or dividend rights, and are not transferable. Upon
exercise of the options the ordinary shares received rank equally with existing ordinary shares.
The following share-based payment arrangements existed during the financial period ended 30 June 2014:
- 3,000,000 share options over ordinary shares in CoAL were granted to Mr Farrell on 8 December 2009. The
options allow Mr Farrell to take up ordinary shares at an exercise price of A$2.74 each. 2,000,000 of the options
vested one year after the granting of the NOMR for the Vele Colliery and the remaining 1,000,000 options vest
one year after the granting of the Makhado Project NOMR. The 3,000,000 options are exercisable on or before 30
November 2014 and hold no voting or dividend rights and are not transferable. Upon conversion of the options
to shares, the shares will rank equally with existing shares. At reporting date, none of the options had been taken
up or had lapsed.
- 912,500 options were issued to eligible employees of CoAL as part of the ESOP on 25 February 2010. The options
issued under this series were exercisable prior to 30 June 2014, have an exercise price of A$1.90, are not
transferable and hold no voting or dividend rights and vested in equal tranches on 1 July 2009, 1 July 2010 and 1
July 2011. Upon conversion, the shares would have ranked equally with existing shares. At reporting date, 94,000
options had been cancelled and the balance expired on 30 June 2014.
- 2,500,000 share options over ordinary shares in CoAL were granted to Mr Murray, Senior Independent Non-
Executive Director of CoAL, on 9 November 2010. The options allow Mr Murray to take up ordinary shares at an
exercise price of A$1.20 each. The options are exercisable in equal tranches on or before 9 November 2015. The
options hold no voting or dividend rights, and are not transferable. 1,000,000 options vested on 8 November
2011, 750,000 on 8 November 2012 and the remaining 750,000 vested on 8 November 2013 and on conversion
of the options to shares, the shares will rank equally with existing shares. At reporting date, none of the options
had been taken up or had lapsed.
- 1,540,561 options were issued on 4 February 2011 to eligible employees of CoAL as part of the ESOP. The options
issued are exercisable prior to 30 September 2015, have an exercise price of A$1.40, or ZAR9.50. The options vest
in equal tranches on 30 September 2011, 30 September 2012 and 30 September 2013. Upon conversion the
shares will rank equally with existing shares, are not transferable and hold no voting or dividend rights. At
reporting date, none of the options had been taken up but 99,500 options have been cancelled.
- 2,670,000 options were issued on 16 September 2011 to eligible employees of CoAL as part of the ESOP. The
options issued are exercisable prior to 14 February 2017, have an exercise price of A$1.40 or ZAR7.60. The
options vest in equal tranches on 1 July 2012, 1 July 2013 and 1 July 2014. Upon conversion the shares will rank
equally with existing shares, are not transferable and hold no voting or dividend rights. At reporting date, none of
the options had been taken up or had lapsed.
- 2,500,000 options over ordinary shares in CoAL were granted to Mr Brown on 28 November 2012 for his role as
Executive Chairman. The options allow the holder to take up ordinary shares at an exercise price of GBP0.25 each
and are exercisable on or before 30 November 2015. The options hold no voting or dividend rights and are not
transferable. Upon conversion of the options to shares, the shares would rank equally with existing shares. At
reporting date, none of the options had been taken up or had lapsed.
- 1,000,000 options over ordinary shares in CoAL were granted to Mr Pryor on 28 November 2012 for his role as
Non-Executive Director. The options allow the holder to take up ordinary shares at an exercise price of GBP0.25
each and are exercisable on or before 30 November 2015. The options hold no voting or dividend rights and are
not transferable. Upon conversion of the options to shares, the shares would rank equally with existing shares. At
reporting date, none of the options had been taken up or had lapsed.
- 3,932,938 options were issued on 22 November 2013 to eligible employees of CoAL as part of the ESOP. The
options issued are exercisable prior to 30 June 2017 and have an exercise price of ZAR1.75. Two thirds of the
options vested immediately and the remaining third on 1 July 2014. Upon conversion the shares will rank equally
with existing shares, are not transferable and hold no voting or dividend rights. At reporting date, none of the
options had been taken up or had lapsed.
- 4,125,000 options were issued on 22 November 2013 as part of the ESOP to Mr Meeser, Financial Director of
CoAL. The options issued are exercisable prior to 1 June 2018 and have an exercise price of ZAR2.00. 1,375,000
options vested on 1 June 2014 and the balance vest in equal tranches on 1 June 2015 and 1 June 2016. Upon
conversion the shares will rank equally with existing shares, are not transferable and hold no voting or dividend
rights. At reporting date, none of the options had been taken up or had lapsed.
There has been no alteration of the terms and conditions of the above share based payment arrangements since the
grant date.
The following share-based payment arrangements were in existence at the end of the current year:
Weighted
Fair value average
Exercise at grant remaining
price date contractual
Option series Number Grant date Expiry date life
Option (1) 1 22/04/2010 01/11/2014 GBP0.60 A$1.78 0.00 years
Class J unlisted options 3,000,000 08/12/2009 30/11/2014 A$2.74 A$0.58 0.06 years
Class C unlisted options 2,500,000 09/11/2010 09/11/2015 A$1.20 A$0.59 0.16 years
ESOP unlisted options 1,441,061 04/02/2011 30/09/2015 A$1.40 A$0.91 0.09 years
Class L unlisted options 3,500,000 28/11/2012 30/09/2015 GBP0.25 A$0.05 0.23 years
ESOP unlisted options 2,670,000 16/09/2011 14/02/2017 A$1.40 ZAR3.46 0.33 years
ESOP unlisted options 3,932,928 22/11/2013 30/06/2017 ZAR1.75 ZAR0.52 0.56 years
ESOP unlisted options 4,125,000 22/11/2013 01/06/2018 ZAR2.00 ZAR0.56 0.23 years
21,168,990
1. Option to subscribe for 50 million ordinary shares for 60 pence each between 1 November 2010 and 1 November
2014, as approved by shareholders on 22 April 2010.
Fair value of share options granted during the year
The weighted average fair value of share options granted during the financial year is A$0.06 (2013: A$0.38). Options
were priced using a binomial option pricing model and the Black-Scholes option pricing model was used to validate
the price calculated. Where relevant, the expected life used in the model has been adjusted based on management's
best estimate of the effects of non-transferability, exercise restrictions (including the probability of meeting market
conditions attached to the option), and behavioural considerations.
Expected volatility is calculated by Hoadley's volatility calculator for one, two and three year periods and a future
estimated volatility level of 55% was used in the pricing model.
Inputs into the binomial option pricing model for the current financial year were as follows and were validated using
the Black-Scholes valuation model:
ESOP grants(1) ESOP grants(2)
Closing share price on issue date ZAR1.33 ZAR1.33
Exercise price ZAR1.75 ZAR2.00
Expected volatility 55.0% 55.0%
Option life remaining 3.0 years 3.9 years
Dividend yield 0% 0%
Risk free interest rate 6.85% 7.12%
1. Options granted to staff in terms of the ESOP
2. Options granted to Mr Meeser under the ESOP in terms of his appointment as Financial Director
The total share based payment expense recognised in the current financial year is $717,354 (2013: $660,015).
Inputs into the Black-Scholes model for the prior financial year were as follows:
ESOP
grants
Closing share price on issue date GBP0.14
Exercise price GBP0.25
Expected volatility 60.0%
Option life remaining 3 years
Dividend yield 0%
Risk free interest rate 0.333%
Movement in share options
Year ended Year ended
30 June 2014 30 June 2013
Number Number
Options outstanding at beginning of year 13,929,562 22,079,562
Options expired (818,500) (9,650,000)
Options cancelled - (2,000,000)
Options granted 8,057,928 3,500,000
Options exercised - -
Options outstanding at end of year 21,168,990 13,929,562
Weighted average exercise price (A$) 0.82 2.13
Options exercisable 15,218,014 10,399,562
Weighted average exercise price (A$) 0.94 1.28
Share options exercised during the year
No share options were exercised during the period (2013 – nil).
Share options outstanding at the end of the year
The share options outstanding at the end of the year had a weighted
average exercise price of A$0.94 (2013: A$1.28) and a weighted average
contractual life of 2.19 years (2013: 2.32 years).
Year ended Year ended
30 June 2014 30 June 2013
$'000 $'000
31. Non-controlling interest
Non-controlling interests comprise the following:
Freewheel Trade and Invest 37 Proprietary Limited 575 575
575 575
32. Financial instruments
32.1 Capital management
The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while
maximising the return to stakeholders through the optimisation of the debt and equity balance. The Group's overall
strategy remains unchanged.
The capital structure of the Group consists of net debt (borrowings as detailed in note 23) and equity of the Group
(comprising issued capital, reserves, retained earnings and non-controlling interests as detailed in notes 27 to 29).
The Group is not subject to any externally imposed capital requirements.
The Group's risk management committee reviews the capital structure of the Group on a semiannual basis. As part of
this review, the committee considers the cost of capital and the risks associated with each class of capital. The
gearing ratio at 30 June 2014 of 2.27% (see below) was higher than the previous year due to the time delay in the
sale of non-core assets.
Year ended Year ended
30 June 2014 30 June 2013
$'000 $'000
Debt(1) 6,372 2,088
Net debt 6,372 2,088
Equity(2) 280,320 342,468
Net debt to equity ratio 2.27% 0.61%
1. Debt is defined as long-term and short-term borrowings as described in note 23.
2. Equity includes all capital and reserves of the Group that are managed as capital.
32.2 Categories of financial instruments
The accounting policies for financial instruments have been applied to the line
items below:
Year ended Year ended
30 June 2014 30 June 2013
$'000 $'000
Financial assets
Other receivables 2,245 3,567
Trade and other receivables 1,902 3,267
Cash and cash equivalents 2,017 20,995
Restricted cash 5,153 4,187
Fair value through profit or loss 2,217 6,307
Total financial assets 13,534 38,323
Year ended Year ended
30 June 2014 30 June 2013
$'000 $'000
Financial liabilities
Deferred consideration 29,800 30,000
Borrowings 6,372 2,088
Trade and other payables 15,083 10,837
Total financial liabilities 51,255 42,925
Fair value of financial assets and liabilities
The fair value of a financial asset or a financial liability is the amount at which the asset could be exchanged or liability
settled in a current transaction between willing parties in an arm's length transaction. The fair values of the Group's
financial assets and liabilities approximate their carrying values, as a result of their short maturity or because they
carry floating rates of interest.
All financial assets and liabilities recorded in the financial statements approximate their respective fair values.
The following table provides an analysis of financial instruments that are measured subsequent to initial recognition
at fair value, grouped into Level 1 to 3, based on the degree to which the fair value is observable.
Level 1 fair value measurements are those derived from quoted prices in active markets for identical assets or
liabilities.
Level 1 financial assets comprise deposits and listed securities (note 17).
Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that
are observable for the asset or liability, either directly or indirectly.
Level 2 financial assets comprise investments with investment firms. These investments serve as collateral for
rehabilitation guarantees. The fair value has been determined by the investment firms' fund statement (note 17).
Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or
liability that are not based on observable market data.
There were no assets reclassified into / out of FVTPL during the year nor were any assets transferred between levels.
As at 30 June 2014 Level 1 Level 2 Level 3 Total
Financial assets at FVTPL 1,251 966 - 2,217
As at 30 June 2013 Level 1 Level 2 Level 3 Total
Financial assets at FVTPL 5,748 559 - 6,307
32.3 Financial risk management objectives
The Group's Corporate Treasury function provides services to the business, co-ordinates access to domestic and
international financial markets, monitors and manages the financial risks relating to the operations of the Group
through internal risk reports which analyse exposures by degree and magnitude of risks. These risks include market
risk (including currency risk, fair value interest rate risk and price risk), credit risk, liquidity risk and cash flow interest
rate risk.
The Corporate Treasury function reports quarterly to the Group's risk management committee, an independent body
that monitors risks and policies implemented to mitigate risk exposures.
32.4 Market risk
Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures,
primarily with respect to the Australian dollar and the US dollar. Foreign exchange risk arises from future
commitments, assets and liabilities that are denominated in a currency that is not the functional currency. Most of
the Company's purchases are denominated in SA rand. However, certain items during the exploration, development
and plant construction phase as well as long lead-capital items are denominated in US dollars, Euros or Australian
dollars. These have to be acquired by the South African operating company due to the South African Reserve Bank's
Foreign Exchange Control Rulings. This exposes the South African subsidiary companies to changes in the foreign
exchange rates.
The Group's cash deposits are largely denominated in US dollar and SA rand. A foreign exchange risk arises from the
funds deposited in US dollar which will have to be exchanged into the functional currency for working capital
purposes.
The Group generally does not enter into forward sales, derivatives or other hedging arrangements to manage this
risk.
At financial period end, the financial instruments exposed to foreign currency risk movements are as follows:
Held in ZAR Held in GBP Held in AUD Held in USD Total
Balances at 30 June 2014 $'000 $'000 $'000 $'000 $'000
Financial assets
Other receivables 2,245 - - - 2,245
Trade and other receivables 1,233 - 669 - 1,902
Cash(1) and cash equivalents 6,433 3 227 507 7,170
Total financial assets 9,911 3 896 507 11,317
(1).Cash includes restricted cash
Financial liabilities
Deferred consideration - - - 29,800 29,800
Borrowings 6,372 - - - 6,372
Trade and other payables 3,620 161 138 11,164 15,083
Total financial liabilities 9,992 161 138 40,964 51,255
Held in ZAR Held in GBP Held in AUD Held in USD Total
$'000 $'000 $'000 $'000 $'000
Balances at 30 June 2013
Financial assets
Other receivables 3,567 - - - 3,567
Trade and other receivables 2,837 - 430 - 3,267
Cash(1) and cash equivalents 10,499 16 259 14,408 25,182
Total financial assets 16,903 16 689 14,408 32,016
(1).Cash includes restricted cash
Financial liabilities
Deferred consideration 30,000 30,000
Borrowings 219 1,869 - - 2,088
Trade and other payables 8,430 - 2,407 - 10,837
Total financial liabilities 8,649 1,869 2,407 30,000 42,925
Balances classified as held for sale are not included in the above tables, or discussed in the subsequent narrative.
The following table details the Group's sensitivity to a 10% increase and decrease in the US dollar against the relevant
foreign currencies. 10% is the sensitivity rate used when reporting foreign currency risk internally to key
management personnel and represents management's assessment of the reasonably possible change in foreign
exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and
adjusts their translation at the year-end for a 10% change in foreign currency rates. The sensitivity analysis includes
external loans as well as loans to foreign operations within the Group where the denomination of the loan is in a
currency other than the functional currency of the lender or the borrower. A positive number below indicates an
increase in profit or equity where the US dollar strengthens 10% against the relevant currency. For a 10% weakening
of the US dollar against the relevant currency, there would be a comparable impact on the profit or equity, and the
balances below would be negative.
Year ended Year ended
30 June 2014 30 June 2013
Impact on profit / (loss) $'000 $'000
Judgements on reasonable possible movements
USD/ZAR increase by 10% (3,136) (10,396)
USD/ZAR decrease by 10% 3,136 10,396
32.5 Interest rate risk management
The Group's interest rate risk arises mainly from short-term borrowings, cash and bank balances and restricted cash.
The Group has variable interest rate borrowings. Variable rate borrowings expose the group to cash flow interest rate
risk.
The Group has not entered into any agreements, such as hedging, to manage this risk.
The following table summarises the sensitivity of the financial instruments held at the reporting date, following a
movement in variable interest rates, with all other variables held constant. The sensitivities are based on reasonably
possible changes over a financial period, using the observed range of actual historical rates.
Year ended Year ended
30 June 2014 30 June 2013
Impact on profit / (loss) $'000 $'000
Judgements on reasonable possible movements
Increase of 0.2% in LIBOR (1) (36)
Decrease of 0.2% in LIBOR 1 36
Increase of 1.0% in JIBAR (60) -
Decrease of 1.0% in JIBAR 60 -
The impact is calculated on the net financial instruments exposed to variable interest rates as at reporting date and
does not take into account any repayments of short-term borrowings.
32.6 Credit risk
Credit risk is the risk that a contracting entity will not complete its obligation under a financial instrument that will
result in a financial loss to the Group. The carrying amount of financial assets represents the maximum credit
exposure. Receivable balances are monitored on an ongoing basis with the result that the Group's exposure to bad
debts is not significant.
At year end there is no significant concentration of credit risk represented in the cash and cash equivalents, restricted
cash and trade accounts receivables balance. The Group manages its credit risk by predominantly dealing with
counterparties with a positive credit rating.
The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks
with high credit-ratings assigned by international credit-rating agencies.
32.7 Liquidity risk
The liquidity position of the Group is managed to ensure sufficient liquid funds are available to meet financial
commitments in a timely and cost effective manner. The Group's Executive continually reviews the liquidity position
including cash flow forecasts to determine the forecast liquidity position and maintain appropriate liquidity levels.
The concentration of cash balances on hand in geographical areas was as follows:
United Kingdom Australia South Africa Total
Balances at 30 June 2014 $'000 $'000 $'000 $'000
Cash and cash equivalents 514 200 6,456 7,170
514 200 6,456 7,170
United Kingdom Australia South Africa Total
Balances at 30 June 2013 $'000 $'000 $'000 $'000
Cash and cash equivalents 19,796 259 5,127 25,182
19,796 259 5,127 25,182
The contractual maturities of the Group's financial liabilities at the reporting date were as follows:
Less than 6 Between 6 – 12 Greater than 12 Total
months months months
Balances at 30 June 2014 $'000 $'000 $'000 $'000
Deferred consideration 29,800 - - 29,800
Borrowings(1) 6,372 - - 6,372
Trade and other payables 15,083 - - 15,083
51,255 - - 51,255
1. Interest bearing at rates between 7.45 % and 11.50 %
The contractual maturities of the Group's financial assets at the reporting date were as follows:
Less than 6 Between 6 – 12 Greater than Total
months months 12 months
Balances at 30 June 2014 $'000 $'000 $'000 $'000
Other receivables - 2,826 - 2,826
Trade and other receivables 1,902 - - 1,902
Cash and cash equivalents 2,017 - - 2,017
Restricted cash 287 - 4,866 5,153
Fair value through profit or loss 618 - 1,599 2,217
4,824 2,826 6,465 14,115
33. Notes to the statement of cash flows
Year ended Year ended
30 June 2014 30 June 2013
Note $'000 $'000
Reconciliation of cash
For the purposes of the consolidated statement of cash flows, cash
and cash equivalents include cash on hand and in banks, net of
outstanding bank overdrafts. Cash and cash equivalents at the end of
the reporting period as shown in the consolidated statement of cash
flows can be reconciled to the related items in the consolidated
statement of financial position as follows:
Cash and bank balances 20 2,099 29,938
Reconciliation of loss before tax to net cash used in operations
Loss before tax (continuing operations and operations held for sale) (84,120) (155,754)
Add back:
Depreciation 1,106 22,129
Amortisation 1,069 6,680
Impairment losses 14,933 48,545
Share-based payment 717 660
Re-valuation of investments 576 -
Sundry income (non-cash) (4,486) -
Discount on early settlement of loan - 3,050
Movement in provisions 555 (342)
Finance costs (net) 1,286 247
Loss on sale of assets 42 -
Foreign exchange (gains) / losses on operating activities 36,725 30,292
Changes in working capital
Decrease / (increase) in inventories 568 11,541
Decrease / (increase) in trade and other receivables 1,365 (8,109)
Increase / (decrease) in trade and other payables 8,196 (27,907)
Cash used in operations (21,468) (68,968)
34. Contingencies and commitments
Contingent liabilities
The Group is currently involved in litigation as outlined below ($ amounts presented within have been computed
using the exchange rate as of 30 June 2014 unless otherwise stated):
Ferret Mining & Environmental Services Proprietary Limited
During the period, Ferret's 26% shareholding in Mooiplaats Mining Limited was re-instated. Although they are not
entitled to any assets or claims in the Mooiplaats group, they are entitled to receive ZAR10.1 million (US$1.0 million)
upon the successful disposal of the Mooiplaats Colliery should a disposal be completed prior to April 2016,
alternatively R15 million ($1.4 million) should a sale transaction be completed after this date.
Issue of Share Options to Investec Bank Limited
In terms of the ZAR210.0 million ($19.8 million) short term bridging facility granted by Investec Bank Limited in
October 2013, the Company is required to issue 20 million options to the bank. The options have an exercise price of
ZAR1.32 and expire on 21 October 2018 and the issue thereof is subject to shareholder approval.
Issue of Share Options to David Brown
In terms of his appointment as Chief Executive Officer Mr Brown is entitled to receive 10,575,000 options to be
granted in three equal tranches over a three-year period (Year 1: 3,525,000 at ZAR1.20; Year 2: 3,525,000 at ZAR1.32;
Year 3: 3,525,000) at ZAR 1.45. These are granted in accordance with the Company's employee share option plan and
are subject to shareholder approval.
Issue of Share Options to Bernard Pryor
In terms of his appointment as Non-Executive Director Mr Pryor is entitled to receive 1,000,000 share options with an
exercise price of GBP0.375 expiring three years from date of issue. The options are due to be issued on 6 August
2015, subject to shareholder approval.
Commitments
In addition to the commitments of the parent entity as disclosed under note 38, subsidiary companies have financial
commitments in terms of New Order Mining Rights granted by the South African Department of Mineral Resources.
The commitments are based on the revenue generated by the colliery during the financial year, and/or quantities of
coal sold by the colliery during the financial year.
35. Related party disclosures
The aggregate compensation made to directors and other members of key management personnel of the company
and the Group is set out below:
Year ended Year ended
30 June 2014 30 June 2013
$ $
Short-term employee benefits 1,882,235 2,816,690
Post-employment benefits 15,812 12,822
Termination benefits - 1,175,829
Share-based payments 253,053 176,108
2,151,100 4,181,449
The Group has not provided any of its key management personnel with loans.
Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have
been eliminated on consolidation and are not disclosed in this note.
36. Controlled entities
Particulars in relation to controlled entities
Year Year
ended 30 ended 30
Country of June 2014 June 2013
incorporation % %
Bakstaan Boerdery Proprietary Limited * South Africa 100 100
Baobab Mining & Exploration Proprietary Limited South Africa 100 100
Chapudi Coal Proprietary Limited ** South Africa 74 74
Coal of Africa Plc Jersey 100 100
Coal of Africa & ArcelorMittal Analytical Laboratories Proprietary Limited South Africa 50 50
Cove Mining NL Australia 100 100
Evoc Mining NL Australia 100 100
Freewheel Trade and Invest 37 Proprietary Limited South Africa 74 74
Fumaria Property Holdings Proprietary Limited South Africa 100 100
Golden Valley Services Proprietary Limited Australia 100 100
Greenstone Gold Mines NL Australia 100 100
GVM Metals Administration (South Africa) Proprietary Limited South Africa 100 100
Harrisia Investments Holdings Proprietary Limited South Africa 100 100
Holfontein Investments Proprietary Limited South Africa 74 100
Kwezi Mining Exploration Proprietary Limited ** South Africa 74 74
Langcarel Proprietary Limited *** South Africa 74 74
Limpopo Coal Company Proprietary Limited South Africa 100 100
MbeuYahsu Proprietary Limited South Africa 74 74
Mooiplaats Mining Limited South Africa 74 100
Nu-Coal Proprietary Limited **** South Africa - 100
NuCoal Investments Proprietary Limited **** South Africa - 100
NuCoal Mining Proprietary Limited South Africa - 100
Regulus Investment Holdings Proprietary Limited South Africa 100 100
Silkwood Trading 14 Proprietary Limited South Africa 100 100
Tshikunda Mining Proprietary Limited South Africa 60 60
Tshipise Energy Investments Proprietary Limited South Africa 50 50
Woestalleen Colliery Proprietary Limited **** South Africa - 100
* Subsidiary company of Fumaria Property Holdings Proprietary Limited
** Subsidiary companies of MbeuYashu Proprietary Limited (formerly Keynote Trading and Investments 108
Proprietary Limited)
*** Subsidiary company of Mooiplaats Mining Limited (previously Coal of Africa Limited)
**** Subsidiary companies of NuCoal Mining Proprietary Limited – sold effective 28 February 2014
37. Events after the reporting period
Post year end, the following significant events took place:
- On 27 August 2014 the Company reached an agreement with Grindrod Corridor Management Proprietary Limited
and Terminal de Carvão da Matola Limitada ('TCM'), both subsidiaries of Grindrod Limited ('Grindrod'), for the
settlement of both historic and future liabilities, up to the end of December 2016, remaining under the current
terms of the August 2008 Throughput Agreement ("Throughput Agreement"). The settlement with Grindrod will
result in a $10 million payment settled in two tranches; US$6million at the end of October 2014 and US$4million
by the earlier of 5 days after receipt of the Stage 2 Placement of the proposed equity raise announced on 26
August 2014, or the end of December 2014.
- On 19 September 2014 the Company signed a Sale and Purchase Agreement for the disposal of the Mooiplaats
colliery for a gross consideration of ZAR250 million (US$23.47 million) in cash. Upon fulfilment of all conditions
precedent including the receipt of regulatory approvals consistent with a transaction of this nature, the
consideration will be settled in two tranches, with the first tranche of ZAR150 million (US$14.084 million)
expected to be received during the first quarter of CY2015. The second tranche of ZAR100 million (US$9.39
million) is payable on the earlier of 12 months from the payment of the first tranche or 30 November 2015.
- On 25 September 2014 the shareholders voted in favour of an equity placement. The 251,000,000 Shares will be
issued and paid for within three business days of the date on which CoAL notifies the Placees that each of the
Stage 1 Conditions has been satisfied, raising GBP13.805 million. The Placement is conditional upon the following
conditions:
- the approval by the Company's shareholders for the issue of additional shares;
- Haohua Energy International (Hong Kong) Co. Limited ("HEI") and M&G Investment Management Limited
("M&G") having received confirmation from the Treasurer of the Commonwealth of Australia under the Foreign
Acquisitions and Takeovers Act 1975 (Cth) that it has no objection to the acquisition by HEI and M&G of
its/their respective Placement Shares; and
- HEI having received all necessary regulatory approvals within the People's Republic of China ("PRC") for it to
acquire its Placement Shares.
The only outstanding condition at the date of this report is the PRC approval for HEI, which is expected in the
near future. All other approvals have been obtained.
There have been no other events between 30 June 2014 and the date of this report which necessitate adjustment to
the statements of comprehensive income or statements of financial position at that date.
38. Parent entity financial information
Parent entity
Year ended Year ended
30 June 2014 30 June 2013
$'000 $'000
Summary financial information
Non-current assets 444,433 572,451
Current assets 3,205 27,231
Total assets 447,638 599,682
Current liabilities 18,758 7,559
Total liabilities 18,758 7,559
Net assets 428,880 592,123
Shareholders' Equity
Issued capital 935,891 935,891
Accumulated deficit (649,416) (474,080)
Reserves 142,405 130,312
428,880 592,123
Loss for the year (175,336) (44,079)
Total comprehensive loss (175,336) (44,079)
Commitments
- Coal has a commitment under the Matola Terminal Agreement to 'take or pay' for allocated port capacity.
Subsequent to year-end the Company reached an agreement to settle the current liabilities as well as cover all
future take or pay obligations until 31 December 2016 for an amount of $10 million (refer to note 15);
- Coal has subordinated all loans to subsidiary companies.
Contingent liabilities
- During the period, Ferret's 26% shareholding in Mooiplaats Mining Limited was re-instated. Although they are
not entitled to any assets or claims in the Mooiplaats group, they are entitled to received ZAR10.1 million ($1.0
million) upon the successful disposal of the Mooiplaats Colliery (refer note 34);
- Share options need to be issued to Investec Bank Limited and certain directors of the company. The issue of the
share options are subject to shareholder approval (refer note 34).
Sponsor: Investec Bank Limited
Date: 30/09/2014 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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