Wrap Text
Financial Statements for the year ended 30 June 2014
The Waterberg Coal Company Limited
(formerly Range River Gold Limited)
(Incorporated in Australia)
(Registration number ABN 64 065 480 453)
ASX: WCC | JSE: WCC | ISIN: AU000000WCC9
(“WCC” or “the Company”)
Financial statements
for the year ended
30 June 2014
CORPORATE DIRECTORY
Directors Auditors
Dr. Mathews Phosa (Chairman) BDO Audit (WA) Pty Ltd
Mr. Stephen Miller (Executive Director) 38 Station Street
Mr. Lee Boyd (Non Executive Director) Subiaco WA 6008
Stock Exchange Listing
Company Secretary The Waterberg Coal Company Limited shares
Mr Lee Boyd are listed on the Australian Securities
Exchange and the Johannesburg Stock
Registered Office and Principal Place of Exchange, the home branch being Melbourne
Business ASX and JSE code: WCC
Level 2
1 Walker Avenue
West Perth WA Australia 6005
Australia
Telephone: + 618 9485 0888
Facsimile: + 618 9485 0077
Share Registry
Australia
Automic Registry Services
Level 1, 7 Ventnor Avenue
West Perth WA Australia 6005
Telephone: (08) 9324 2099
South Africa
Trifecta Capital Services
Nr 31 Beacon Road
Florida-North
1709 South Africa
CONTENTS
Page No
Directors’ Report 1
Auditor’s Independence Declaration 12
Corporate Governance Statement 13
Consolidated Statement of Profit or Loss and Other Comprehensive Income 23
Consolidated Statement of Financial Position 25
Consolidated Statement of Changes in Equity 26
Consolidated Statement of Cash Flows 27
Notes to the Consolidated Financial Statements 28
Directors’ Declaration 66
Independent Auditor’s Report 67
Exploration Licences 69
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Directors’ Report
DIRECTORS’ REPORT
The directors of The Waterberg Coal Company (the ‘Company’) and its controlled entities (the ‘Group’ or
‘Waterberg Coal’) present their report of the Group for the year ended 30 June 2014. In order to comply with
the provisions of the Corporations Act 2001, the directors report as follows:
Directors
The names and details of the Group’s directors in office during the financial year and until the date of this
report are as follows. Directors were in office for this entire period unless otherwise stated.
Dr Mathews Phosa – Non Executive Chairman (appointed 28 October 2013)
Dr Phosa is a Lawyer by profession and was elected as the first Premier of Mpumalanga Province in 1994 and
went on to serve as the Treasurer General within the Executive Committee of the ANC from 2007 to 2012. He
was a member of the National Executive Committee of the ANC for many years until 2012. Dr Phosa has
served as a business consultant for various local and international businesses since 1999.
Dr Phosa currently holds chairman, vice-chairman or board member positions on a number of prominent
South African institutions and companies.
Dr Phosa has not held any other listed directorships in the past three years.
Mr. Stephen Miller – Executive Director
Mr Miller has 25 years’ experience investing and executing corporate finance, mergers and acquisitions
opportunities in the resources sector.
Mr Miller established Resource Venture Capital Partners (RVCP) which is dedicated to investment
opportunities in the natural resources sector. RVCP is involved in corporate reorganizations and
restructurings, direct investments plus substantial debt and equity capital raisings for project start?ups,
developments, and corporate takeovers.
Mr Miller has also been a director, founder and chief executive officer of a number of successful resource
companies listed in the Australian and North American exchanges including East Africa Gold Corporation,
Western Metals Limited and Defiance Mining Corporation.
Mr. Miller is currently a director (appointed 14 June 2013) and Chief Executive Officer (appointed 4 July 2013)
of Firestone Energy Limited. He has not held any other listed directorships in the past three years.
Mr Edwin Leith Boyd – Non Executive Director and Company Secretary (appointed 18 March 2014)
Mr Boyd is a CPA and a Fellow of the Australian Institute of Company Directors and has extensive and broad
ranging directorial, corporate consulting, financial and senior executive experience across a range of
industries including the manufacturing, industrial engineering and, since 1993, the resources sector.
He is currently a director of ASX listed Anatolia Energy Ltd and three of its internationally registered
subsidiaries. He has not held any other listed directorships in the past three years.
Mr. Brian McMaster – Executive Chairman (retired 17 March 2014)
Mr. Jonathan Hart – Executive Director and Company Secretary (resigned 20 May 2014)
Mr. Scott Funston – Finance Director (resigned 17 March 2014)
Mr. Daniel Crennan – Non-Executive Director (resigned 7 May 2014)
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Directors’ Report
Interests in the shares and options of the Group
At the date of this report, the interests of the directors in the shares and options of The Waterberg Coal
Company Limited were:
Directors Fully Paid Shares Unlisted Options
S Miller 27,203,125 15,000,000
M Phosa - 20,000,000
L Boyd - -
Nature of operations and principal activities
The principal activities of the Group are coal and mineral exploration in South Africa and mineral exploration in
South Australia.
Operating results for the year
The loss for the year was $49,212,321 (2013: profit of $6,888,940).
Dividends
No dividend is recommended nor has one been declared or paid since the end of the financial year.
Review of financial condition
The cash flow statement highlights an increase in cash and cash equivalents in the year ended 30 June 2014
of $922,010 (2013: increase of $7,554,807). Operating cash outflows totalled $5,687,901 (2013: $4,358,566).
The Group has a net asset position of $4,895,925 (2013: $17,552,781).
Corporate structure
The Waterberg Coal Company is a company limited by shares that is incorporated and domiciled in Australia.
Share options
As at the date of this report, there were 135,180,323 unissued ordinary shares under options. The details of
the options at the date of this report are as follows:
Grant date Expiry Date Exercise Price Share options
30 June 2014
9 April 2013 31 December 2014 $0.20 5,187,500
11 April 2013 31 December 2014 $0.20 18,000,000
26 April 2013 31 December 2016 $0.20 25,000,000
13 September 2013 31 December 2014 $0.20 3,751,250
18 December 2013 31 December 2014 $0.20 7,441,573
28 November 2013 31 December 2016 $0.30 63,000,000
11 December 2013 31 December 2016 $0.30 12,000,000
18 February 2014 31 December 2014 $0.20 800,000
135,180,323
No option holder has any right under the options to participate in any other share issue of the Group or any
other entity.
Review of Operations
The Waterberg Coal Company Limited is the lead and managing partner in the Waterberg Coal Project joint
venture, situated in the Limpopo Province, South Africa. The Project currently has confirmed coal resources of
3.883 billion tonnes of coal contained within the granted mining and prospecting rights.
The Definitive Feasibility Study for the Waterberg Coal Project
In May 2012, SRK Consulting of Johannesburg, South Africa were commissioned by the Waterberg Joint
Venture Partners to undertake a Definitive Feasibility Study on a proposed development of an opencast
mining operation to produce 10 Million tonnes of coal (product) per annum to Eskom for an initial term of 30
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Directors’ Report
years pursuant to the Memorandum of Understanding that the Joint Venture entered into with Eskom (the
South African parastatal power utility) in March 2012 (as amended).
The Definitive Feasibility Study was completed by SRK in November 2013, and delivered to Eskom. The study
confirmed that the Project can produce sufficient tonnes for 30 years at the required Eskom specification to
satisfy the terms of the MOU.
Eskom; Coal Supply Agreement negotiations
Negotiations with Eskom on the Coal Supply Agreement are ongoing. During the period under review, the
WJV BFS team proposed, and Eskom have agreed, that the basis for price negotiation will be a base price
and escalator, with five-yearly price re-openers. A first draft CSA was presented to Eskom by the Project
technical team, and a pro-forma CSA template subsequently received by the team from Eskom.
With the completion of the SRK Definitive Feasibility Study, Eskom now have demonstrable evidence that the
quantum and qualities of the specified coal can be delivered by the WCP Joint Venture.
Subsequent to receiving the updated economic model, Eskom requested that the proposed off-take term be
increased from a 30 year period, to a 40 year period, and have made several concessions on coal quality in
order to increase the yield and reduce the operating costs. The WCP technical team have adjusted the
economic model accordingly.
Interaction with Lenders
In November 2013 the completed Definitive Feasibility Study and accompanying economic model was made
available to The Standard Bank of South Africa Limited. Standard Bank subsequently appointed Hatch Goba
as their Independent Technical Consultant to review all technical matters for the Waterberg Coal Project.
Eskom will make use of the Hatch review for their external technical review purposes. The Waterberg project
team worked closely with Hatch during the review process, sourcing data from SRK and the specialist
consultants where required.
Project Optimisation Study
Following the release of the SRK Definitive Feasibility Study, the Project technical team commenced with
Value Engineering and detailed Pit optimisation, focussing on production scheduling, savings on mining
contractor costs, plant operating costs and capital savings associated with the materials handling and CHPP.
The Project team was assisted by Ardbel who have identified significant capital savings associated with the
materials handling and coal washing plant when compared to the SRK FS study. Project optimisation also
focussed on the phasing of project capital, thereby boosting early project cash flow, and on removing non-
capital costs such as pre-strip mining costs from the balance sheet.
As part of the project optimisation, the Project team engaged with Exxaro on the possible sharing of logistics
infrastructure and the construction of access roads across the Exxaro/Sekoko Coal properties. The JSE listed
Exxaro is the operator of the immediately adjacent Grootegeluk Mine which currently produces approximately
18 mtpa of coal product and is also looking at expanding its operations through the development of the
Thabametsi coal project which shares a common boundary with the Waterberg Coal Project.
During the year, the Project team started assessing the potential de-risking of the Coal Project by
commencing operations with a smaller processing plant located in the south of the Sekoko Coal properties.
1, 2
Updated Resource Statement
An updated Independent Competent Persons Resource Statement was released during October 2013 to
reflect the increased borehole database following the completion of the 2013 drilling programme on the four
farms covered by the Mining Right (Smitspan, Massenberg, Hooikraal and Minnasvlakte), and the two farms
held under Prospecting Rights (Vetleegte and Swanepoelpan) and associated sample analysis on the
Waterberg Coal Project Properties.
The updated resource statement for the Waterberg Coal Project is for a coal resource of 3.88 Billion tonnes,
which represents a substantial increase in the coal resource of the Waterberg Coal Project Properties.
Previously SRK Consulting (Pty) Limited (December 2012) declared a Coal Resource of 1.183 billion tonnes
on the two farms Smitspan and Massenberg.
The resource statement was prepared on behalf of the Waterberg Coal Project Joint Venture Partners by
Gemecs (Pty) Limited in their capacity as Independent Competent Persons.
Note: 1 Please note that this information was prepared and first disclosed under the JORC Code 2004. It has not been updated since to comply with the
JORC Code 2013 on the basis that the information has not materially changed since it was last reported.
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Directors’ Report
Note 2: Competent Person Statement
Gemecs (Pty) Limited was commissioned by the Waterberg Coal Project Joint Venture Partners, to undertake an Updated Independent Persons Geological
Report for the Sekoko Waterberg Coal Project.
The Coal Resources were estimated in accordance with the South African code for the Reporting of Exploration Results, Mineral Resources and Mineral
Reserves (“SAMREC Code”), Australasian Code for Reporting of Exploration Results. Mineral Resources and Ore Reserves (“the JORC Code”) and South
African National Standard (SANS 10320:2004) guidelines.
The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Mr Coenraad D
van Niekerk, Pr.Sci.Nat (Reg. No 400066/98), M.Sc Hons (Geology), MDP, an employee of Gemecs (Pty) Limited, who is a Fellow of the Geological Society
of South Africa. Mr Niekerk is a mining geologist with 38 years’ experience in the mining industry, sufficient experience relevant to the style of mineralisation
and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the
Joint Ore Reserves Committee (JORC) “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr Niekerk consents
to the inclusion in the report of the matters based on his information in the form and context in which it appears.
Table 1 – Coal Resource on all six Waterberg Coal Project Properties
under both Prospecting Permit and Mining Right
Coal
Ash Vol CV TS
Resource IM %
Resource Classification 1 % % (Mj/kg) %
(ad)
(ad) (ad) (ad) (ad)
(Mt)
Measured 2,070.3 57.9 2.2 17.6 10.51 0.96
Indicated 8,56.3 59.4 2.3 17.2 9.96 1.00
Inferred 956.7 58.9 2.2 17.5 10.26 1.03
Total Resources 3,883.3 58.5 2.2 17.5 10.33 0.99
1
Coal Resource based on minimum thickness cut-off of 0.5m
Feasibility Study
On 6 February 2014, Waterberg Coal announced that the WCJVP completed a Feasibility Study (‘Study’) into
the development of an opencast mining operation to produce 10 million tonnes of coal (‘Product’) per annum
for Eskom for an initial term of 30 years. WCJVP confirmed that all material assumptions underpinning the
production target as stated in the competent person statement announcement continue to apply and have not
materially changed. However, Waterberg Coal in satisfaction of ASX Listing Rules 5.16 and 5.17 included
other assumptions relating to the relevant production target in this announcement.
Investec
As announced on 18 February 2014, Investec Emerging Companies Fund (Investec) were issued 6,200,000
ordinary shares and 7,440,000 free attaching unlisted options in Waterberg Coal (with an exercise price of
ZAR 1.78 per share and an expiry date of 31 December 2014) for an investment of ZAR 24,279,200
(approximately AUD $2,489,000).
South Australian Tenements
The Company continues to hold 3 exploration tenements in the Gawler Craton of South Australia which are
highly prospective for gold and copper-gold mineralisation. The Gawler Craton is host to large copper-gold
deposits such as Olympic Dam and Prominent Hill to the east, and gold deposits such as Challenger,
Tarcoola and Tunkillia in the west.
During the period the Company compiled and validated exploration data relating to the tenements and is
assessing the prospectivity of targets within the license holdings. The Company has designed work
programmes to test these targets however these work programmes have not been carried out to date. The
Company is considering its strategy with regards to these tenements.
Corporate Activities
On 4 September 2013, Waterberg Coal advised the market that it had entered into a loan agreement with FSE
whereby WCC would advance up to A$3 million to be used for FSE’s project finance obligations in relation to
The Waterberg Coal Project. The loan is unsecured and non-interest bearing.
On 23 September 2013, WCC completed its secondary listing on the Alternate Exchange (AltX) division of
JSE Limited (“JSE”). On 3 December 2013, Waterberg Coal transferred from the AltX of the JSE to the main
board, under the coal sector.
On 10 October 2013; the Group informed the market that its off-market takeover bid for all the ordinary shares
in FSE had closed. At the conclusion of the offer, WCC’s shareholding in FSE is 45.88%.
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Directors’ Report
On 28 October 2013, Dr Mathews Phosa joined the WCC Board as a Non-Executive Director.
On 28 November 2013, the Company held its annual general meeting and all resolutions, the subject of the
notice were passed.
On 4 December 2013, The Standard Bank of South Africa Limited was appointed as JSE Sponsor.
On 18 December 2013, the Company using its placement capacity raised A$2 million for working capital
purposes.
On 6 February 2014, Waterberg Coal announced that it had entered into a Letter of Intent with Ardbel, a joint
venture between ELB engineering services and the DRA group, which collectively are the pre-eminent
materials handling and engineering services provider to the mining sector in South Africa as its preferred
Engineering, Procurement and Construction contractor for the proposed development of the Waterberg Coal
Project.
On 17 March 2014, the Company announced it had entered into a Share Exchange Agreement with Global
Resources Investment Trust (GRIT) a company listed on the London Stock Exchange.
On the same date Mr B McMaster resigned and Dr Phosa was appointed as Chairman to the Board. Mr S
Funston resigned on the same date
On 20 May 2014 Mr J Hart resigned as Director.
On 20 May 2014 the Company Secretary Jonathan Hart resigned and Edwin Leith Boyd was appointed as a
Director and Company Secretary.
Dividends
No dividend is recommended nor has one been declared or paid since the end of the financial period.
Environmental regulation and performance
The consolidated entity has done everything to the best of its knowledge to comply with all applicable
legislation and has no reason to believe that they did not comply with any of the legislative requirements
during the year ended 30 June 2014 and subsequent to year end.
Significant changes in the state of affairs
There have been no significant changes in the state of affairs within the Group.
Events after the balance sheet date
Loan Facility
Subsequent to the year end, the Company entered into a new loan facility agreement with Firestone Energy
Limited whereupon it extended a further loan of $3 million to enable Firestone Energy Limited to meet its
commitments on the Waterberg Coal Project.
There were no other known significant events from the end of the financial year to the date of this report.
Likely developments
The Board of the Waterberg Coal Company Limited is currently considering the options for the development of
a stand along export project which is expected to be able to be brought into production and cash flow sooner
than the major total project. To this end, discussions are in progress with various parties with a view to
structuring a finance package to advance this.
Indemnification and insurance of directors, officers and auditors
The Group has agreed to indemnify and keep indemnified the current directors against all liabilities incurred by
the directors as a director of the Group and all legal expenses incurred by the directors as a director of the
Group.
The indemnity only applies to the extent and in the amount that the directors are not indemnified under any
other indemnity, including an indemnity contained in any insurance policy taken out by the Group, under the
general law or otherwise. The indemnity does not extend to any liability:
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Directors’ Report
? to the Group; or
? arising out of conduct of the directors involving a lack of good faith.
The total amount of insurance premiums paid has not been disclosed due to confidentiality reasons.
The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may
be brought against the directors and officers in their capacity as directors and officers of the Group, and any
other payments arising from liabilities incurred by the directors and officers in connection with such
proceedings, other than where such liabilities arise out of conduct involving a wilful breach of duty by the
directors and officers or the improper use by the directors and officers of their position or of information to gain
advantage for themselves or someone else or to cause detriment to the Group. It is not possible to apportion
the premium between amounts relating to the insurance against legal costs and those relating to other
liabilities. The insurance policy outlined above does not allocate the premium paid to each individual director
and officer of the Group.
Directors’ meetings
The number of Directors’ meetings each Director was eligible to attend and the number actually attended
during the year to 30 June 2014 are as follows:
Number of Directors Number of Directors
meetings eligible meetings
to attend attended
Mathews Phosa 1 1
Stephen Miller 3 3
Edwin Leith Boyd 0 0
Brian Mc Master 3 3
Scott Funston 3 3
Daniel Crennan 3 3
Jonathan Hart 3 3
Corporate Governance
In recognising the need for the highest standards of corporate behaviour and accountability, the Directors of
The Waterberg Coal Company Limited support and have adhered to the principles of sound corporate
governance, where possible. The Board recognises the recommendations of the Australian Securities
Exchange Corporate Governance Council, and considers that Waterberg Coal is in compliance with those
guidelines to the extent possible, which are of importance to the commercial operation of a junior listed
resources company. During the financial year, shareholders continued to receive the benefit of an efficient and
cost effective corporate governance policy for the Group. The Group’s Corporate Governance Statement and
disclosures are contained elsewhere in the annual report.
Auditor’s Independence and Non-Audit Services
The Directors received the auditors’ independence declaration as required under section 307c of the
Corporations Act 2001, a copy of which is included within this report.
Non-audit services provided by the auditors of the consolidated entity during the year are detailed in note 26
of the financial report. The Directors are satisfied that the provision of the non-audit services during the year
by the auditor did not compromise the general principles relating to auditor independence in accordance with
APES110, Code of Ethics for professional accountants set by the Accounting Professional and Ethics
Standards Board.
Proceedings on behalf of the Group
No person has applied to the Court under section 237 of the Corporations Act 2001 for leave to bring
proceedings on behalf of the Group for all or part of those proceedings. No proceedings have been brought or
intervened in on behalf of the Group with leave of the Court under section 237 of the Corporation Act 2001.
REMUNERATION REPORT (AUDITED)
This Remuneration Report outlines remuneration arrangements of directors and key management of the
Group in accordance with the requirements of the Corporations Act 2001 and its Regulations.
Information contained in the remuneration report has been audited.
Remuneration committee
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Directors’ Report
The full Board acts as the Remuneration Committee (not formally established) and is responsible for
determining and reviewing remuneration arrangements for the Board and executives.
The Remuneration Committee assesses the nature and amount of remuneration of executives on a periodic
basis by reference to relevant employment market conditions with the overall objective of maximising
stakeholders’ benefit from the retention of a high quality, high performing Board and executive team.
The Group’s Remuneration Committee has not engaged the services of remuneration consultants.
Remuneration philosophy
The performance of the Group depends upon the quality of its directors and executives. To prosper, the Group
must therefore attract, motivate and retain highly skilled directors and executives.
To this end, the Group embodies the following principles in its remuneration framework:
? provide competitive rewards to attract high calibre executives;
? reasonableness, fairness and consideration of market guidance;
? link executive rewards to shareholders’ value;
? have a proportion of total executive’s remuneration ‘at risk’;
? transparency and shareholder approval of compensation arrangements; and
? determine performance hurdles for variable executive remuneration.
Remuneration structure
In accordance with best practice corporate governance, non-executive director and executive remuneration
are structured differently and managed separately.
Director remuneration
Objective
The Board seeks to set aggregate remuneration at a level that provides the Group with the ability to attract
and retain directors of the highest calibre, whilst incurring a cost that is acceptable to shareholders.
Structure
The Group’s Constitution and the ASX Listing Rules specify that the aggregate remuneration of non-executive
directors shall be determined from time to time by a general meeting.
The amount of aggregate remuneration sought to be approved by shareholders and the fee structure is
reviewed annually. The Board considers fees paid to non-executive directors of comparable companies when
undertaking the annual review process.
Remuneration consists of the following key elements:
? fixed remuneration (consulting fees); and
? variable remuneration:
- short term incentive (STI); and
- long term incentive (LTI).
Fixed remuneration
Objective
Fixed remuneration is reviewed annually by the Remuneration Committee. The process consists of a review of
the Group’s and individual performance, relevant comparative remuneration in the market and where
necessary, seeking external advice on policies and practices. As noted above, the Remuneration Committee
may have access to external advice independent of management; however this has not occurred during the
current year.
Structure
Directors are given the opportunity to receive some of their fixed (primary) remuneration in a variety of forms
including cash and non-cash benefits. It is intended that the manner of payment chosen will be optimal for the
recipient without creating additional cost for the Group. The fixed remuneration component of the KMP is
detailed in Tables 1 and 2.
Variable remuneration – short term incentive (STI)
Objective
The objective of the STI program is to link the achievement of the Group’s operational targets with the
remuneration received by the executives charged with meeting those targets. The total potential STI available
is set at a level so as to provide sufficient incentive to the executive to achieve the operational targets and
such that the cost to the Group is reasonable in the circumstances.
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Directors’ Report
Structure
Actual STI payments granted to each executive depend on the extent to which specific targets set at the
beginning of the financial year are met. The targets consist of a number of Key Performance Indicators (KPI)
covering financial, non-financial, corporate and individual measures of performance. On an annual basis,
after consideration of performance against KPI, the Remuneration Committee in line with its responsibilities
determines the amount if any of the short term incentive to be paid to each executive. Given the nature of the
company at present, there are no formal KPIs in place. This will be reviewed going forward. No STI payments
were paid during the current financial year (2013: nil).
Variable remuneration – long term incentive (LTI)
Objective
The objective of the Executive Share Option Plan is to reward executives in a manner that aligns their
remuneration with the creation of shareholder wealth. As such, LTI grants are made to executives who are
able to influence the generation of shareholder wealth and thus have an impact on the Group’s performance
against long term goals.
Structure
Options are granted under the Executive Share Option Plan that has been approved by shareholders. Options
are granted under the scheme for no consideration, usually for terms of up to five years. Options granted
under the scheme carry no right to dividends or voting. When exercised, each option is convertible into one
ordinary share. Shares issued as a result of options being exercised, rank pari passu in all respects with
previously issued fully paid ordinary shares. Option holders cannot participate in new issues of capital that
may be offered to shareholders during the currency of the options prior to the exercise of the option. Prior to
any new pro rata issue of shares to shareholders, option holders are notified by the Group and are allowed ten
business days before the record date to exercise their options. The exercise price of options is determined by
the Board.
Performance of shareholders wealth
In considering the Group’s performance and benefits for shareholder wealth, the Board has regard to the
following indices in respect of the current financial year and the previous three financial years:
As at 30 June 2014 2013 2012 2011 2010
Profit / (loss) per share (cents) (19.00) 1.00 (8.75) (2.14) (0.49)
Share price (cents) 6.8 * ** ** 1.6
* suspended but last traded at 2 cents
** suspended
Service Agreements
There were no formal service agreements with Non-Executive Directors. On appointment to the Board, all
Non-Executive directors enter into a service agreement with Waterberg, in the form of a letter of appointment.
The letter summaries the Board policies and terms which mirror those set out within the Corporations Act
2001, including compensation, relevant to the office of Director. Non-Executive Directors’ fees are determined
within an aggregate directors’ fee pool limit. The maximum currently stands at $500,000 per annum and was
approved by the Company’s shareholders at the 2010 annual general meeting.
Stephen Miller’s services as Executive Director are governed by a service agreement between Millcorp
Securities Pty Ltd (a company of which Mr Miller is sole director) with the Company effective from 1 October
2013 with an expiry date of 31 December 2015 unless otherwise extended. In terms of this service agreement
three months termination notice is required on the part of either party. Mr Miller receives remuneration of
$35,000 per month. Prior to 1 October 2013, Mr Miller received fees of $5,000 per month.
In the previous financial year, the Group entered into a service agreement for certain administrative services
and office space for a term of two years and for the provision of corporate advisory services for a term of two
years with Garrison Capital Pty ltd, a company of which Mr McMaster and Mr Funston are Directors. The
Group was required to give three months written notice to terminate the agreement which concluded in May
2014.
No other formal service agreements are in place.
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Directors’ Report
Remuneration of key management personnel
Details of the nature and amount of each element of the emolument of each Director and Executive of the
Group for the financial year are as follows:
Short term Post %
Share-
employee employment Termination Option
based
Directors benefits benefits 10 payments Total based
payments
Salary/Fees Super
Executive Directors
S Miller 2014 330,000 - 1,469,695 - 1,799,695 86%
2013 15,000 - - - 15,000 -
1
B McMaster 2014 270,000 - 1,959,593 - 2,229,593 88%
2013 82,500 - - - 82,500 -
Non-Executive
Directors
2 89%
S Funston 2014 25,500 - 195,960 - 221,460
2013 9,000 - - - 9,000 -
3 91%
D Crennan 2014 30,462 - 293,939 - 324,401
2013 43,500 - - - 43,500 -
4 66%
J Hart 2014 150,000 - 293,939 - 443,939
2013 83,500 - - - 83,500 -
5 -
L Boyd 2014 19,328 - - - 19,328
2013 - - - - - -
6 -
M Phosa 2014 125,000 - 1,791,347 - 1,916,347
2013 - - - - - -
7, 9 -
T Tebeila 2014 6,179 - - - 6,179
2013 - - - - - -
8, 9 -
P Kasolo 2014 9,183 - - - 9,183
2013 - - - - - -
8, 9 -
D Knox 2014 - - - - -
2013 - - - - - -
8, 9 -
B Mphahlele 2014 9,183 - - - 9,183
2013 - - - - - -
Total Key Management 2014 974,835 - 6,004,473 - 6,979,308 83%
Personnel 2013 233,500 - - - 233,500 -
1. Retired 17 March 2014.
2. Resigned 17 March 2014
3. Resigned 7 May 2014.
4. Resigned 20 May 2014.
5. Appointed 18 March 2014
6. Appointed 28 October 2013
7. Resigned from Firestone Energy Limited 1 November 2013
8. Removed from Firestone Energy Limited 29 November 2013
9. Note these directors are included in their capacity as directors of Firestone Energy Limited, a controlled company.
10. Valued in accordance with AASB 2 Share Based Payment
No short-term benefits paid in the 2014 or 2013 financial year relate to performance related remuneration.
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Directors’ Report
Option holdings – Unlisted
The numbers of options over ordinary shares in the Company held during the financial year by each key management
personnel of The Waterberg Coal Company Limited, including their personally related parties, are set out below:
Vested and
Balance at 1 Granted as Options Net change Balance at 30 exercisable at
July 2014 remuneration exercised other June 2014 30 June 2014
Directors
S Miller - 15,000,000 - - 15,000,000 15,000,000
1
L Boyd - - - - - -
1
M Phosa - 20,000,000 - - 20,000,000 20,000,000
2
B McMaster 8,750,000 20,000,000 - (28,750,000) - -
2
S Funston 3,750,000 2,000,000 - (5,750,000) - -
2
D Crennan - 3,000,000 - (3,000,000) - -
2
J Hart 300,000 3,000,000 - (3,300,000) - -
12,800,000 63,000,000 - (40,800,000) 35,000,000 35,000,000
Note 1 - appointed during the financial year
Note 2 – resigned during the financial year
No options granted to Directors and other key management personnel as remuneration have been exercised
during the year.
Shareholdings
The numbers of ordinary shares in the Company held during the financial year by each key management personnel of The
Waterberg Coal Company Limited, including their personally related parties, are set out below:
Balance at 1 Granted as On exercise Net change Balance at 30
July 2014 remuneration of options other June 2014
Directors
S Miller 27,203,125 - - - 27,203,125
1
L Boyd - - - - -
1
M Phosa - - - - -
2
B McMaster 2,350,774 - - (2,350,774) -
2
S Funston 200,000 - - (200,000) -
2
D Crennan 100,000 - - (100,000) -
2
J Hart 250,000 - - (250,000) -
30,103,899 - (2,900,774) 27,203,125
Note 1 - appointed during the financial year
Note 2 – resigned during the financial year
Details of share based compensation
The terms and conditions of each grant of options affecting remuneration in the current or a future reporting
period are as follows:
Grant date Number Vesting date Expiry Date Exercise Value per option %
Price $ at grant date Vested
28 Nov 2013 63,000,000 28 Nov 2013 31 Dec 2016 0.30 $0.098 100%
Options granted carry no dividend or voting rights.
The options value at grant date has been disclosed in the remuneration table on page 9 as all options vested
immediately. Refer to note 23 for model inputs for options granted during the year.
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Directors’ Report
Transactions with key management personnel
Resource Venture Capital Partners, a company of which Stephen Miller is a related party, has lent the group
$174,973. The loan is non-interest bearing and is repayable by 30 September 2014.
$135,000 was paid to Millcorp Securities Pty Ltd, a company of which Stephen Miller is a related party, for the
provision of fully serviced office accommodation.
There were no other loans or transactions with key management personnel.
End of the Remuneration Report (Audited)
Signed in accordance with a resolution of the Board of Directors
Stephen Miller
Executive Director
30 September 2014
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Directors’ Report
AUDITOR’S INDEPENDENCE DECLARATION
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Corporate Governance Statement for the year ended 30 June 2014
The Waterberg Coal Company Limited (“Waterberg”) has made it a priority to adopt systems of control and
accountability as the basis for the administration of corporate governance. Some of these policies and
procedures are summarised in this statement. To the extent that they are applicable, and given its
circumstances, Waterberg adopts the Eight Essential Corporate Governance Principles and Best Practice
Recommendations ('Recommendations') published by the Corporate Governance Council of the ASX.
Where Waterberg's corporate governance practices follow a recommendation, the Board has made
appropriate statements reporting on the adoption of the recommendation. Where, after due consideration,
Waterberg's corporate governance practices depart from a recommendation, the Board has offered full
disclosure and reasoning for the adoption of its own practice, in compliance with the "if not, why not" regime.
As Waterberg's activities develop in size, nature and scope, the size of the Board and the implementation of
additional corporate governance structures will be given further consideration.
DISCLOSURE OF CORPORATE GOVERNANCE PRACTICES
Compliance with the ASX Principles and Recommendations
(a) Principle 1 – Lay solid foundations for management and oversight
Recommendation 1.1: Companies should disclose the respective roles and responsibilities of the board and
management; and those matters expressly reserved to the board and those delegated to management.
Notification of departure from Recommendation
Waterberg has not formally disclosed the functions reserved to the Board and those delegated to senior
executives.
Explanation for departure from Recommendation
The Board recognises the importance of distinguishing between the respective roles and responsibilities of the
Board and management. The Board has established an informal framework for Waterberg's management and
the roles and responsibilities of the Board and management. Due to the small size of the Board and of
Waterberg, the Board do not think that it is necessary to formally document the roles of Board and
management as it believes that these roles are being carried out in practice and are clearly understood by all
members of the Board and management.
The appointments of Non-Executive Directors are formalised in accordance with the regulatory requirements
and Waterberg’s constitution.
Recommendation 1.2: Companies should undertake appropriate checks before appointing a person, or
putting forward to security holders a candidate for election, as a director and provide security holders with all
material information in its possession relevant to a decision on whether or not to elect or re-elect a director.
Notification of departure from Recommendation
Waterberg has not established formal processes for such but in practice the board and management do follow
accepted practices in establishing suitability of directors.
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Corporate Governance Statement for the year ended 30 June 2014
Explanation for departure from Recommendation
The Board is responsible for the strategic direction of Waterberg, monitoring the overall corporate governance
of Waterberg and ensuring that shareholder value is increased. Due to the size of Waterberg and the stage of
the company’s development, the Board does not consider it is necessary to establish formal processes for
new appointments.
Recommendations of candidates for new Directors are made by the Directors for consideration by the Board
as a whole. If it is necessary to appoint a new Director to fill a vacancy on the Board or to complement the
existing Board, a wide potential base of possible candidates is considered. If a candidate is recommended by
a director, the Board assesses that proposed new director against a range of criteria including background,
experience, professional skills, personal qualities, the potential for the candidate’s skills to augment the
existing Board and the candidate’s availability to commit to the Board’s activities. If these criteria are met and
the Board appoints the candidate as a director, that director must retire at the next following General Meeting
of Shareholders and will be eligible for election by shareholders at that General Meeting.
Recommendation 1.3: Companies should have written agreements with each director and senior executives
setting out the terms of their appointment.
Notification of departure from Recommendation
Waterberg does not have formal written agreements with directors but does for senior executives.
Explanation for departure from Recommendation
Due to the size of Waterberg’s board and the stage of the company’s development, the Board does not
consider it is necessary to have formal documentation for each director.
Recommendation 1.4: The company secretary of the company should be accountable directly to the board
through the chair on all matters to do with the proper functioning of the board.
Due to the small size of Waterberg’s board the company secretary reports to the board regularly.
Recommendation 1.5: The Company should have a diversity policy which includes requirements for the
board or a relevant committee of the board to set measurable objectives for achieving gender diversity and to
assess annually both the objectives and the entity’s progress in achieving them. The company should disclose
that policy or a summary of it and disclose at the end of each reporting period the measurable objectives for
achieving gender diversity set by the board or a relevant committee of the board in accordance with the
entity’s diversity policy and its progress towards achieving them.
The Company and all its related bodies corporate have established a Diversity Policy.
The Company recognises the benefits arising from employee and board diversity, including a broader pool of
high quality employees, improving employee retention, accessing different perspectives and ideas and
benefiting from all available talent.
Diversity includes, but is not limited to, gender, age, ethnicity, cultural background and the persons skill set.
The Diversity Policy does not form part of an employee's contract of employment with The Company, nor
gives rise to contractual obligations. However, to the extent that the Diversity Policy requires an employee to
do or refrain from doing something and at all times subject to legal obligations, the Diversity Policy forms a
direction of the Company with which an employee is expected to comply.
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Corporate Governance Statement for the year ended 30 June 2014
OBJECTIVES
The Diversity Policy provides a framework for the Company to achieve:
? a diverse and skilled workforce, leading to continuous improvement in service delivery and achievement
of corporate goals;
? a workplace culture characterised by inclusive practices and behaviours for the benefit of all staff;
? improved employment and career development opportunities for women;
? a work environment that values and utilises the contributions of employees with diverse backgrounds,
experiences and perspectives through improved awareness of the benefits of workforce diversity and
successful management of diversity; and
? awareness in all staff of their rights and responsibilities with regards to fairness, equity and respect for all
aspects of diversity.
The Diversity Policy does not impose on the Company, its directors, officers, agents or employee any
obligation to engage in, or justification for engaging in, any conduct which is illegal or contrary to any anti-
discrimination or equal employment opportunity legislation or laws in any State or Territory of Australia or of
any foreign jurisdiction.
RESPONSIBILITIES
The Board's commitment
The Board is committed to workplace diversity, with a particular focus on supporting the representation of
women at the senior level of the Company and on the Board.
The Board is responsible for developing measurable objectives and strategies to meet the Objectives of the
Diversity Policy (Measurable Objectives) and monitoring the progress of the Measurable Objectives through
the monitoring, evaluation and reporting mechanisms listed below.
The Board may also set Measurable Objectives for achieving gender diversity and monitor their achievement.
The Board will conduct all Board appointment processes in a manner that promotes gender diversity, including
establishing a structured approach for identifying a pool of candidates, using external experts where
necessary.
Strategies
The Company's diversity strategies include:
? recruiting from a diverse pool of candidates for all positions, including senior management and the
Board;
? reviewing succession plans to ensure an appropriate focus on diversity;
? identifying specific factors to take account of in recruitment and selection processes to encourage
diversity;
? developing programs to develop a broader pool of skilled and experienced senior management and
Board candidates, including, workplace development programs, mentoring programs and targeted
training and development;
? developing a culture which takes account of domestic responsibilities of employees; and
? any other strategies the Board develops from time to time.
MONITORING AND EVALUATION
The Chairman will monitor the scope and currency of this policy.
The Company is responsible for implementing, monitoring and reporting on the Measurable Objectives once
they are set.
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Corporate Governance Statement for the year ended 30 June 2014
Measurable Objectives if set by the board will be included in the annual key performance indicators for the
Chief Executive Officer / Managing Director and senior executives.
In addition, the board will review progress against the Objectives (if set) as a key performance indicator in its
annual performance assessment.
REPORTING
The board may include in the Annual Report each year:
? the Measurable Objectives, if any, set by the Board;
? progress against the Objectives; and
? the proportion of women employees in the whole organisation, at senior management level and at
Board level.
Explanation for departure from Recommendations
While the Company has adopted a diversity policy as mentioned above, the Board do not consider it
appropriate to set measurable objectives at this stage of the Company’s development. The Board will continue
to review the development of Waterberg and will adopt measurable objectives at a more appropriate time.
Recommendation 1.6 & 1.7: Companies should have and disclose a process for periodically evaluating the
performance of the board, its committees and individual directors and senior executives; and disclose, in
relation to each reporting period, whether a performance evaluation was undertaken in the reporting period in
accordance with that process.
Notification of departure from Recommendation
Waterberg does not have formal processes for evaluating performance reviews but does so informally within
the confines of the size of its board.
Explanation for departure from Recommendation
Due to the size of Waterberg’s board and the stage of the company’s development, the Board does not
consider it is necessary to have formal performance reviews for each director or senior executive.
(b) Principle 2 – Structure of the Board to add value
Recommendation 2.1, 2.3 & 2.4: The board of the company should have a nomination committee with at
least three members, a majority of whom are independent directors, chaired by an independent director and
should disclose the charter of the committee.
Notification of departure from Recommendations
The Waterberg Board does not currently have a majority of independent directors and the Chairman is not
considered independent.
Explanation for departure from Recommendations
The Board’s composition changed during the year. Consistent with the size of Waterberg and its activities, the
Board currently comprises three (3) Directors. The Board considers that Mr Magashula meets the criteria set
in Principle 2.1 by the Corporate Governance Council to be considered an independent Director.
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Corporate Governance Statement for the year ended 30 June 2014
Mr Magashula has no material business or contractual relationship with Waterberg, other than as a Director,
and no conflicts of interest which could interfere with the exercise of independent judgement. Accordingly, he
is considered to be independent.
The Board’s policy is that the majority of Directors shall be independent, Non-Executive Directors. Due to the
size of Waterberg and the stage of Waterberg’s development, the Board does not consider it can justify the
appointment of more independent Non-Executive Directors, and therefore, the composition of the Board does
not currently conform to the best practice recommendations of the ASX Corporate Governance Council.
Recommendation 2.2: The company should have and disclose a board skills matrix setting out the mix of
skills and diversity that the board currently has or is looking to achieve in its membership.
Notification of departure from Recommendation
Waterberg does not have a board skills matrix setting out the mix of skills and diversity that the board has or
looks for, due to the size of the board.
Explanation for departure from Recommendation
Due to the size of Waterberg’s board and the stage of the company’s development, the board does not
consider it is necessary to have a formal skills matrix but does endeavour to follow these recommendations in
practice.
Recommendation 2.5: The chair of the board of the company should be an independent director and, in
particular, should not be the same person as the CEO of the entity.
The Company complies with this recommendation.
Recommendation 2.6: The company should have a program for inducting new directors and provide
appropriate professional development opportunities for directors to develop and maintain the skills and
knowledge needed to perform their role as directors effectively.
Notification of departure from Recommendations
The company does not have a formal induction process.
Explanation for departure from Recommendation
Due to the size of Waterberg’s board and the stage of the company’s development, the board does not
consider it is necessary to have a formal induction process but endeavours to ensure that directors are fully
supported and provided with opportunities for further learning.
Board access to independent professional advice
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 for incurring such expense from the Chair,
Waterberg will pay the reasonable expenses associated with obtaining such advice.
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Corporate Governance Statement for the year ended 30 June 2014
(c) Principle 3 – Promote ethical and responsible decision making
Recommendation 3.1: Companies should establish a code of 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 the reasonable expectations of
their stakeholders
? the responsibility and accountability of individuals for reporting and investigating reports of unethical
practices.
Notification of departure from Recommendation
Waterberg has not established a formal code of conduct.
Explanation for departure from Recommendation
The Board considers that its business practices, as determined by the Board and key executives, are the
equivalent of a code of conduct.
(d) Principle 4 – Safeguard integrity in corporate reporting
Recommendation 4.1: The board should establish an audit committee.
? 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
? has at least three members.
Notification of departure from Recommendation
Waterberg has not established an audit committee.
Explanation for departure from Recommendation
The Board considers that Waterberg is not currently of a size, or its affairs of such complexity, that the
formation of separate or special committees is justified at this time. The board as a whole is able to address
the governance aspects of the full scope of Waterberg's activities and ensure that it adheres to appropriate
ethical standards.
The board as a whole considers those matters that would usually be the responsibility of an audit committee
and a nomination committee. The Board considers that, at this stage, no efficiencies or other benefits would
be gained by establishing a separate audit committee or a separate nomination committee.
Recommendation 4.2: The board of the company should, before it approves the entity’s financial statements
for a financial period, receive from its CEO and CFO a declaration that, in their opinion, the financial records of
the entity have been properly maintained and that the financial statements comply with the appropriate
accounting standards and give a true and fair view of the financial performance of the entity. The audit
committee should have a formal charter.
The company complies with this recommendation.
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Corporate Governance Statement for the year ended 30 June 2014
Recommendation 4.3: Companies that have an AGM should ensure that the external auditor attends the
AGM and is available to answer questions from security holders relevant to the audit.
The company complies with this recommendation.
(e) Principle 5 – Make timely and balanced disclosure
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 of those policies.
Notification of departure from Recommendations
Waterberg has not established written policies and procedures designed to ensure compliance with ASX
Listing Rule disclosure requirements and accountability for compliance.
Explanation for departure from Recommendations
The Directors have a long history of involvement with public listed companies and through the support of
professional staff, are kept familiar with the disclosure requirements of the ASX listing rules.
Waterberg has in place informal procedures that it believes are sufficient for ensuring compliance with ASX
Listing Rule disclosure requirements and accountability for compliance. The Board has nominated the Chief
Executive Officer and the Company Secretary as being responsible for all matters relating to disclosure.
(f) Principle 6 – Respect the rights of security holders
Recommendation 6.1: Companies should provide information about themselves and their governance to
investors via their website.
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 of that policy.
The company has a website which is maintained via an external service provider with an automatic update in
terms of its latest announcement to the regulator.
Recommendation 6.2 Companies should design and implement an investor relations program to facilitate
effective two way communication with investors.
Notification of departure from Recommendations
Waterberg has not established a formal investor relations program.
Explanation for departure from Recommendations
While Waterberg has not established a formal investor relations strategy, it actively communicates with
investors in order to identify their expectations and actively promotes investor involvement in Waterberg.
Investors with internet access are encouraged to provide their email addresses in order to receive electronic
copies of information distributed by Waterberg. Alternatively, hard copies of information distributed by
Waterberg are available on request.
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Corporate Governance Statement for the year ended 30 June 2014
Recommendation 6.3 Companies should disclose the policies and processes they have in place to facilitate
and encourage participation at meetings of security holders.
Notification of departure from Recommendations
Waterberg has not established a formal policy to encourage participation at meetings of security holders.
Explanation for departure from Recommendations
The board will consider additional strategies to ensure that security holder participation is encouraged.
Recommendation 6.4 Companies should give security holders the option to receive communications from,
and send communications to, the company and its security register electronically
The company complies with this recommendation.
(g) Principle 7 – Recognise and manage risk
Recommendation 7.1: Companies should have a committee to oversee risk and disclose the charter,
members and the number of times the committee met through the period. If no committee exists the company
should disclose the processes employed for overseeing the company’s risk management framework.
Recommendation 7.2: The board or committee of the board should review the company’s risk management
framework at least annually to satisfy itself that it continues to be sound and disclose in relation to each
reporting period whether such a review has taken place.
Recommendation 7.3: The company should disclose if it has an internal audit function. If not, disclosure of
the processes the company employs for evaluating and continually improving the effectiveness of its risk
management and internal control processes.
Recommendation 7.4: The company should disclose whether it has any material exposure to economic,
environmental and social sustainability risks and, if it does, how it manages or intends to manage those risks.
Notification of departure from Recommendations
Waterberg has an informal risk oversight and management policy and internal compliance and control system.
Explanation for departure from Recommendations
The Board does not currently have formal procedures in place but is aware of the various risks that affect
Waterberg and its particular business. As Waterberg develops, the Board will develop appropriate procedures
to deal with risk oversight and management and internal compliance, taking into account the size of
Waterberg and the stage of development of its projects.
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Corporate Governance Statement for the year ended 30 June 2014
(h) Principle 7 - Recognise and manage risk
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 respects in relation to financial reporting
risks.
The CEO and the Chief Financial Officer equivalent, have provided a declaration to the Board in accordance
with section 295A of the Corporations Act and have assured the Board that such declaration 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.
(i) Principle 8 – Remunerate fairly and responsibly
Recommendation 8.1: The board should establish a remuneration committee.
? consists of a majority of independent directors
? is chaired by an independent chair
? has at least three members
Recommendation 8.2: The company should separately disclose its policies and practices regarding the
remuneration of non-executive directors and the remuneration of executive directors and other senior
executives.
Recommendation 8.3: Where the company has an equity based remuneration scheme the entity should
disclose the policy or a summary of it.
Notification of departure from Recommendations
Waterberg does not have a formal remuneration committee nor remuneration policy.
Explanation for departure from Recommendations
The current remuneration of the Directors is disclosed in the Directors’ Report. Non-executive Directors
receive a fixed fee for their services.
Subject to shareholder approval, the issue of options or shares to non-executive Directors may be an
appropriate method of providing sufficient incentive and reward while maintaining cash reserves.
Due to Waterberg's early stage of development and small size, it does not consider that a separate
remuneration committee would add any efficiency to the process of determining the levels of remuneration for
the Directors and key executives. The Board believes it is more appropriate to set aside time at specified
Board meetings each year to specifically address matters that would ordinarily fall to a remuneration
committee. In addition, all matters of remuneration will continue to be in accordance with regulatory
requirements, especially in respect of related party transactions, and none of the Directors will participate in
any deliberations regarding their own remuneration or related issues.
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Corporate Governance Statement for the year ended 30 June 2014
(j) Securities trading policy
Waterberg adopted a Share Trading policy in December 2010. The policy summarises the law relating to
insider trading and sets out Waterberg's policy on Directors, officers, employees and consultants of the Group
dealing in securities of Waterberg.
The policy is provided to all Directors and employees of the Group and compliance with it is reviewed on an
ongoing basis in accordance with Waterberg’s risk management systems.
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Consolidated Statement of Profit or Loss and Other Comprehensive Income for the
year ended 30 June 2014
cvc Consolidated Consolidated
Note 2014 2013
$ $
Continuing operations
Interest revenue 333,814 130,471
Other income 186,661 -
Employee benefits expenses 6(a) (974,835) (3,655)
Consultants and legal expenses (3,221,000) (3,190,929)
Foreign exchange gain 183,786 451,457
Impairment of available for sale financial assets 13 (1,894,162) (1,920,000)
Share of loss of associate 15 (214,473) -
Share based payment expense 23 (7,045,631) (2,977,245)
Finance costs 6(b) (35,212,087) (6,854,596)
Other expenses 6(c) (1,354,347) (1,189,074)
Loss before income tax (49,212,321) (15,553,571)
Income tax expense 7 - -
Net profit / (loss) from continuing operations (49,212,321) (15,553,571)
Discontinued operations
Profit from discontinued operations after tax 31 - 22,442,511
Net profit / (loss) for the year (49,212,321) 6,888,940
Other comprehensive income:
Items that may be reclassified subsequently to profit or
loss
Exchange differences on translation of foreign
operations (3,976,873) -
Total comprehensive income / (expenses) for the
6,888,940
year (53,189,194)
Net profit / (loss) attributable to:
Members of the parent entity (47,278,548) -
Non-controlling interest 30 (1,933,773) -
(49,212,321) 6,888,940
Total comprehensive income attributable to:
Members of the parent entity (49,185,505) -
Non-controlling interest 30 (4,003,689) -
(53,189,194) 6,888,940
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Consolidated Statement of Profit or Loss and Other Comprehensive Income for the
year ended 30 June 2014
Earnings / (loss) per share Consolidated Consolidated
2014 2013
From continued and discontinued operations: $ $
Basic earnings / (loss) per share (cents per share) 8 (19.0) 1.0
Diluted earnings / (loss) per share (cents per share) 8 N/A 1.0
From continued operations:
Basic loss per share (cents per share) 8 (19.0) (2.3)
Diluted loss per share (cents per share) 8 N/A (2.3)
From discontinued operations:
Basic earnings per share (cents per share) 8 N/A 3.3
Diluted earnings per share (cents per share) 8 N/A 3.3
The accompanying notes form part of these consolidated financial statements
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Consolidated Statement of Financial Position as at 30 June 2014
cvc Consolidated Consolidated
2014 2013
Note $ $
Current assets
Cash and cash equivalents 9 8,704,374 8,439,558
Trade and other receivables 10 485,268 279,504
Total current assets 9,189,642 8,719,062
Non-current assets
Exploration and evaluation expenditure 11 76,762,076 25,291,518
Property, plant and equipment 12 4,103,027 -
Other receivables 10 3,413,417 500,000
Available for sale financial assets 13 2,430,319 -
Other financial assets 14 - 7,880,000
Investment in associate 15 21,735,527 21,950,000
Total non-current assets 108,444,366 55,621,518
Total assets 117,634,008 64,340,580
Current liabilities
Trade and other payables 16 14,404,987 1,793,161
Financial liabilities 17 69,139,092 40,730,245
Borrowings 18 10,047,528 1,500,000
Total current liabilities 93,591,607 44,023,406
Non-current liabilities
Financial liabilities 17 19,146,476 -
Borrowings 18 - 2,764,393
Total non-current liabilities 19,146,476 2,764,393
Total liabilities 112,738,083 46,787,799
Net assets 4,895,925 17,552,781
Equity
Contributed equity 19 54,099,744 32,139,838
Reserves 20 9,379,919 4,241,245
Accumulated losses (66,106,850) (18,828,302)
Capital and reserves attributable to the owners (2,627,187) 17,552,781
of The Waterberg Coal Company Limited
Non-controlling interest 30 7,523,112 -
Total Equity 4,895,925 17,552,781
The accompanying notes form part of these consolidated financial statements
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Consolidated Statement of Changes in Equity for the year ended 30 June 2014
Share Foreign
based currency
Contributed Accumulated payment translation Total Non controlling
Consolidated equity losses reserve reserve Interest Total equity
$ $ $ $ $ $ $
Balance at 1 July 2012 82,523,237 (108,240,479) 1,264,000 - (24,453,242) - (24,453,242)
Total comprehensive loss for the period - 6,888,940 - - 6,888,940 - 6,888,940
Total comprehensive loss for the period - 6,888,940 - - 6,888,940 - 6,888,940
Transactions with owners in their capacity as owners
Capital reduction (82,523,237) 82,523,237 - - - - -
Shares issued, net of transaction costs 32,139,838 - - - 32,139,838 - 32,139,838
Share based payment - - 2,977,245 - 2,977,245 - 2,977,245
Balance at 30 June 2013 32,139,838 (18,828,302) 4,241,245 - 17,552,781 - 17,552,781
Loss for the period - (47,278,548) - - (47,278,548) (1,933,773) (49,212,321)
Other comprehensive loss
Foreign currency translation - - - (1,906,957) (1,906,957) (2,069,916) (3,976,873)
Total comprehensive loss for the period - (47,278,548) - (1,906,957) (49,185,505) (4,003,689) (53,189,194)
Transactions with owners in their capacity as owners
Shares issued, net of transaction costs 10,933,032 - - - 10,933,032 - 10,933,032
Shares issued on acquisition 11,026,874 - - - 11,026,874 - 11,026,874
Share based payment - - 7,045,631 - 7,045,631 - 7,045,631
Non-controlling interest on acquisition of subsidiary - - - - - 11,526,801 11,526,801
Balance at 30 June 2014 54,099,744 (66,106,850) 11,286,876 (1,906,957) (2,627,187) 7,523,112 4,895,925
The accompanying notes form part of these consolidated financial statements
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Consolidated Statement of Cash Flows for the year ended 30 June 2014
Consolidated Consolidated
2014 2013
Note $ $
Cash flow from operating activities
Receipts from customers (inc GST) - -
Payments to suppliers (inc GST) and employees (6,021,715) (4,385,812)
Interest paid - -
Interest received 333,814 27,246
Net cash outflows from operating activities 21 (5,687,901) (4,358,566)
Cash flow from investing activities
Payment for exploration and development (584,701) (18,735)
Acquisition in plant and equipment (61,219) -
Cash acquired on acquisition of subsidiary 75,789 -
Payments for investment in associates - (24,018,026)
Loans to associates - (2,350,000)
Settlement of DOCA - (2,277,577)
Net cash outflows from investing activities (570,131) (28,664,338)
Cash flow from financing activities
Proceeds from share issues, net of transaction costs 6,608,551 7,139,838
Proceeds from borrowings 8,750,000 33,437,873
Repayment of borrowings (2,500,000) -
Loans repaid to other entities (2,835,594) -
Loans to other entities (1,492,915) -
Payment of transaction costs (1,350,000) -
Net cash inflows from financing activities 7,180,042 40,577,711
Net increase / (decrease) in cash and cash equivalents held 922,010 7,554,807
Cash and cash equivalents at the beginning of the year 8,439,558 433,294
Net foreign exchange differences (657,194) 451,457
Cash and cash equivalents at the end of the year 9 8,704,374 8,439,558
The accompanying notes form part of these consolidated financial statements
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Notes to the consolidated financial statements for the year ended 30 June 2014
1. Corporate information
The Waterberg Coal Company Limited (the ‘Company’) is a Company limited by shares, domiciled and
incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange and the
Johannesburg Stock Exchange.
The nature of operations and principal activities of The Waterberg Coal Company Limited and its controlled
entities (the ‘Group’) are coal and mineral exploration.
The financial report of the Group for the year ended 30 June 2014 was authorised for issue in accordance
with a resolution of Directors on 30 September 2014.
2. Summary of significant accounting policies
a) Basis of preparation
The financial report is a general purpose financial report, which has been prepared in accordance with the
requirements of the Corporations Act 2001, Accounting Standards and Interpretations and complies with
other requirements of the law.
The Group is a for – profit entity for financial reporting purposes under Australian Accounting Standards.
The financial report has also been prepared on a historical cost basis. The presentation currency is
Australian dollars.
The accounting policies disclosed below have been consistently applied to all of the years presented
unless otherwise stated.
Going Concern
This report has been prepared on the going concern basis, which contemplates the continuity of normal
business activity and the realisation of assets and settlement of liabilities in the normal course of business.
The Group incurred a net loss after tax for the year ended 30 June 2014 of $49,212,321 and experienced
net cash outflows from operating activities of $5,687,901. At 30 June 2014, the Group had a net working
capital deficiency of $84,401,965. The cash and cash equivalents balance at the date of issuing this report
is $8,704,374, which includes a restricted cash balance of $6,601,062.
Waterberg Coal Company Limited has requested the Lenders under the Convertible Debt Facility, which is
currently scheduled to mature on 9 October 2014, to extend the facility for a six month period. The amount
due in respect of this facility in cash is $35 million plus accrued interest of $6,964,978. The Group has not
received approval for the requested extension. The lenders may also agree to the release of the restricted
cash secured to the Lenders on an ad hoc basis as required for general corporate expenses although no
formal arrangements have been concluded in this regard.
In addition to this facility, the Group also has various other borrowings and trade creditors due prior to 30
November 2014 totalling $22,349,695 including accrued interest. These amounts will also be required to
be repaid, refinanced and maturities extended.
Notwithstanding the ability of the Group to refinance its short term borrowings, in order for the Group to
continue as a going concern, and to progress the Waterberg Coal Project into production, the Group has to
receive regulatory approval, and raise adequate project financing.
The Directors believe that it is reasonably foreseeable that the Group will continue as a going concern and
that it is appropriate to adopt the going concern basis in the preparation of the financial report after
consideration of the following factors:
? The ability (as supported by the Group’s past trade record) to issue additional shares under the
Corporation Act 2001 to raise further working capital;
? The ongoing discussions with its financiers in respect to extending or refinancing its borrowings;
? The ongoing discussions with financiers and investors to fund the development of the Waterberg
Coal Project; and
? Receipt of full regulatory approval for the development.
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Notes to the consolidated financial statements for the year ended 30 June 2014
Should the Group not be able to obtain funds and refinance its borrowings, there is significant uncertainty
whether the Group will continue as a going concern and therefore whether it will realise its assets and
extinguish its liabilities in the normal course of business and at the amounts stated in this financial report.
The financial report does not contain any adjustments relating to the recoverability and classification of
recorded assets or to the amounts or classification of recorded assets or liabilities that might be necessary
should the Group not be able to continue as a going concern.
b) Statement of compliance
The financial report complies with Australian Accounting Standards. Compliance with Australian
Accounting Standards ensures that the financial report, comprising the financial statements and notes
thereto, complies with International Financial Reporting Standards (IFRS).
c) New accounting standards and interpretations issued but not yet effective
The following applicable accounting standards and interpretations have been issued or amended but are
not yet effective. These standards have not been adopted by the Group for the year ended 30 June 2014
and no change to the Group’s accounting policy is required.
Reference Title Summary Impact on Group’s Application
financial report date for
Group
AASB 9 (issued Financial Amends the requirements for The entity has financial 1 July 2018
December Instruments classification and measurement of assets classified as
2009 and financial assets. The available-for- available-for-sale. When
amended sale and held-to-maturity categories AASB 9 is first adopted,
December of financial assets in AASB 139 have the entity will reclassify
2010 and June been eliminated. Under AASB 9, these into the fair value
2014) there are three categories of financial through profit or loss
assets: category. On 1 July
? Amortised cost 2018, the cumulative fair
? Fair value through profit or loss value changes in the
? Fair value through other available-for-sale
comprehensive income. reserve will be
reclassified into retained
earnings and
The following requirements have subsequent fair value
generally been carried forward changes will be
unchanged from AASB 139 Financial recognised in profit or
Instruments: Recognition and loss. These changes
Measurement into AASB 9: apply prospectively so
? Classification and measurement comparatives do not
of financial liabilities; and need to be restated.
? Derecognition requirements for
financial assets and liabilities. The entity has financial
However, AASB 9 requires that liabilities measured at
gains or losses on financial liabilities fair value through profit
measured at fair value are or loss. The
recognised in profit or loss, except amendments require
that the effects of changes in the that any changes in fair
liability’s credit risk are recognised in value attributable to the
other comprehensive income. liability’s credit risk be
recognised in other
comprehensive income
instead of profit or loss.
There will be no impact
on the financial
statements when these
amendments are first
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Notes to the consolidated financial statements for the year ended 30 June 2014
Reference Title Summary Impact on Group’s Application
financial report date for
Group
adopted because they
apply prospectively from
1 July 2018.
AASB 2013-9 Amendments Makes two amendments to AASB 9: The application date of 1 July 2018
(issued to Australian ? Adding the new hedge AASB 9 has been
December Accounting accounting requirements into deferred to 1 January
2013) Standards – AASB 9, and 2018. The entity has not
Conceptual ? Making available for early yet made an
Framework, adoption the presentation of assessment of the
Materiality and changes in ‘own credit’ in other impact of these
Financial comprehensive income (OCI) for amendments.
Instruments financial liabilities under the fair
value option without early
applying the other AASB 9
requirements.
Under the new hedge accounting
requirements:
? The 80-125% highly effective
threshold has been removed
? Risk components of non-financial
items can qualify for hedge
accounting provided that the risk
component is separately
identifiable and reliably
measurable
? An aggregated position (i.e.
combination of a derivative and a
non-derivative) can qualify for
hedge accounting provided that it
is managed as one risk exposure
? When entities designate the
intrinsic value of options, the
initial time value is deferred in
OCI and subsequent changes in
time value are recognised in OCI
? When entities designate only the
spot element of a forward
contract, the forward points can
be deferred in OCI and
subsequent changes in forward
points are recognised in OCI.
Initial foreign currency basis
spread can also be deferred in
OCI with subsequent changes be
recognised in OCI
? Net foreign exchange cash flow
positions can qualify for hedge
accounting.
IFRS 15 Revenue from An entity will recognise revenue to Due to the recent 1 July 2017
(issued June Contracts with depict the transfer of promised goods release of this standard,
2014) Customers or services to customers in an the entity has not yet
amount that reflects the made a detailed
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Notes to the consolidated financial statements for the year ended 30 June 2014
Reference Title Summary Impact on Group’s Application
financial report date for
Group
consideration to which the entity assessment of the
expects to be entitled in exchange for impact of this standard.
those goods or services. This means
that revenue will be recognised when
control of goods or services is
transferred, rather than on transfer of
risks and rewards as is currently the
case under IAS 18 Revenue.
AASB 2014-3 Amendments When an entity acquires an interest There will be no impact 1 July 2016
(issued August to Australian in a joint operation whose activities on the financial
2014) Accounting meet the definition of a ‘business’ in statements when these
Standards - AASB 3 Business Combinations, to amendments are first
Accounting for the extent of its share of assets, adopted because they
Acquisitions of liabilities, revenues and expenses as apply prospectively to
Interests in specified in the contractual acquisitions of interests
Joint arrangement, the entity must apply in joint operations.
Operations all of the principles for business
combination accounting in AASB 3,
and other IFRSs, to the extent that
they do not conflict with AASB 11
Joint Arrangements.
This means that it will expense all
acquisition-related costs and
recognise its share, according to the
contractual arrangements, of:
? Fair value of identifiable assets and
liabilities, unless fair value
exceptions included in AASB 3 or
other IFRSs, and
? Deferred tax assets and liabilities
that arise from the initial
recognition of an asset or liability
as required by AASB 3 and AASB
112 Income Taxes.
Goodwill will then be recognised as
the excess consideration over the fair
value of net identifiable assets
acquired.
AASB 2012-6 Amendments Defers the effective date of AASB 9 As comparatives are no 1 July 2015
(issued to Australian to 1 January 2015. Entities are no longer required to be
September Accounting longer required to restate restated, there will be no
2012) Standards - comparatives on first time adoption. impact on amounts
Mandatory Instead, additional disclosures on the recognised in the
Effective Date effects of transition are required. financial statements.
of AASB 9 and However, additional
Transition disclosures will be
Disclosures required on transition,
including the
quantitative effects of
reclassifying financial
assets on transition.
AASB 2014-1 Annual IFRS 2 Share-based Payment There will be no impact 1 July 2014
Amendments Improvements The amendment clarifies the on the financial
to Australian to 2010-2012 definition of vesting conditions and statements when these
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Notes to the consolidated financial statements for the year ended 30 June 2014
Reference Title Summary Impact on Group’s Application
financial report date for
Group
Accounting and 2011- market conditions by separately amendments are first
Standards 2013 Cycles defining a performance condition adopted because they
(issued June and a service condition, both of apply prospectively to
2014) which were previously incorporated share-based payment
within the definition of a vesting transactions for which
condition without themselves being the grant date is on or
specifically defined. after 1 July 2014.
AASB 2014-1 Annual AASB 8 Operating Segments There will be no impact 1 July 2014
Amendments Improvements When operating segments have been on the financial
to Australian to 2010-2012 aggregated in determining reportable statements when these
Accounting and 2011- segments, additional disclosures are amendments are first
Standards 2013 Cycles required regarding judgments made adopted because this is
(issued June by management in applying the a disclosure standard
2014) aggregation criteria used to assess only. Further, because
that the aggregated segments have the group does not
similar economic characteristics, currently aggregate
including: operating segments in
determining reportable
? A description of the operating segments, it is unlikely
segments that have been that any additional
aggregated disclosures will be
The economic indicators required when this
considered in determining that the amendment is adopted
aggregated operating segments for the first time for the
share similar economic year ended 30 June
characteristics. 2015.
AASB 2014-1 Annual AASB 24 Related Party Disclosures There will be no impact 1 July 2014
Amendments Improvements The amendment clarifies that an on the financial
to Australian to 2010-2012 entity that provides key management statements when these
Accounting and 2011- personnel services (‘management amendments are first
Standards 2013 Cycles entity’) to a reporting entity (or to the adopted because this is
(issued June parent of the reporting entity), is a a disclosure standard
2014) related party of the reporting entity. only. As the group does
not currently engage the
The amendment also requires
services of a
separate disclosure of amounts
management entity, it is
recognised as an expense for key
also unlikely that any
management personnel services
additional disclosures
provided by a separate management
will be required when
entity (but not in the categories set
this amendment is
out in AASB 124.17).
adopted for the first time
for the year ended 30
June 2015.
There are no other standards that are not yet effective and that are expected to have a material impact on the
Group in the current of future reporting periods and on foreseeable future transactions.
d) Basis of consolidation
The consolidated financial statements comprise the financial statements of The Waterberg Coal Company
Limited (‘the Company’) and its controlled entities as at 30 June 2014 (‘the Group’).
Subsidiaries are all those entities (including special purpose entities) over which the Group has control. The
Group controls an entity when the Group is exposed to, or has rights to, variable returns from its involvement
with the entity and has the ability to affect those returns through its power to direct the activities of the entity.
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Notes to the consolidated financial statements for the year ended 30 June 2014
Subsidiaries are fully consolidated from the date on which control is transferred to the group. They are
deconsolidated from the date that control ceases.
The financial statements of the controlled entities are prepared for the same reporting period as the parent
Company, using consistent accounting policies.
In preparing the consolidated financial statements, all intercompany balances and transactions, income and
expenses and profit and losses resulting from intra-company transactions have been eliminated in full.
e) Business combinations
The acquisition of controlled entities is accounted for using the acquisition method of accounting. The
acquisition method of accounting involves recognising at acquisition date, separately from goodwill, the
identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquiree. The
identifiable assets acquired and the liabilities assumed are measured at their acquisition date fair values.
The difference between the above items and the fair value of the consideration (including the fair value of any
pre-existing investment in the acquiree) is goodwill or a discount on acquisition.
A change in the ownership interest of a controlled entity that does not result in a loss of control, is accounted
for as an equity transaction.
f) Asset acquisitions
When an asset acquisition does not constitute a business combination, the assets and liabilities are assigned
a carrying amount based on their relative fair values in an asset purchase transaction and no deferred tax will
arise in relation to the acquired assets and assumed liabilities, as the initial recognition exemption for deferred
tax under AASB 112 Income Taxes applies. No goodwill will arise on the acquisition.
g) Cash and cash equivalents
Cash and cash equivalents in the consolidated statement of financial position comprise cash at bank and in
hand and short term deposits with an original maturity of three months or less that are readily convertible to
known amounts of cash and which are subject to an insignificant risk of changes in value.
For the purposes of the consolidated statement of cash flows, cash and cash equivalents consist of cash and
cash equivalents as defined above excluding any outstanding bank overdrafts. Bank overdrafts are included
within interest-bearing loans and borrowings in current liabilities on the consolidated statement of financial
position.
h) Trade and other receivables
Trade receivables, which generally have 30 – 90 day terms, are recognised and carried at original invoice
amount less an allowance for any uncollectible amounts.
Impairment of trade receivables is continually reviewed and those that are considered to be uncollectible are
written off by reducing the carrying amount directly. An allowance account is used when there is objective
evidence that the Group will not be able to collect all amounts due according to the original contractual terms.
Factors considered by the Group in making this determination include known significant financial difficulties of
the debtor, review of financial information and significant delinquency in making contractual payments to the
Group. The impairment allowance is equal to the difference between the carrying amount of the receivable
and the present value of estimated future cash flows, discounted at the original effective interest rate. Where
receivables are short-term, discounting is not applied in determining the allowance.
The amount of the impairment loss is recognised in the consolidated statement of comprehensive income
within other expenses. When a trade receivable for which an impairment allowance had been recognised
becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent
recoveries of amounts previously written off are credited against other expenses in the consolidated statement
of comprehensive income.
i) Leases
Leases of fixed assets where substantially all the risks and benefits incidental to the ownership of the asset,
but not the legal ownership is transferred to the Group, are classified as finance leases.
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Notes to the consolidated financial statements for the year ended 30 June 2014
Finance leases are capitalised by recognising an asset and a liability at the lower of the amounts equal to the
fair value of the leased property or the present value of the minimum lease payments, including any
guaranteed residual values. Lease payments are allocated between the reduction of the lease liability and the
lease interest expense for the period.
Leased assets are depreciated on a straight-line basis over the shorter of their estimated useful lives or the
lease term.
Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are
recognised as expenses in the periods in which they are incurred.
j) Non-current assets (or disposal groups) held for sale and discontinued operations
Non-current assets (or 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 and a sale is considered
highly probable. They are measured at the lower of their carrying amount and fair value less costs to sell,
except for assets such as deferred tax assets and assets arising from employee benefits that are carried at
fair value and contractual rights under insurance contracts, which are specifically exempt from this
requirement.
An impairment loss is recognised for any initial or subsequent write-down of the asset (or disposal group) to
fair value less costs to sell. A gain is recognised for any subsequent increases in fair value less costs to sell of
an asset (or disposal group), but not in excess of any cumulative impairment loss previously recognised. A
gain or loss not previously recognised by the date of the sale of the non-current asset (or disposal group) is
recognised at the date of derecognition.
Non-current assets (including those that are part of a disposal group) are not depreciated or amortised while
they are classified as held for sale. Non-current assets classified as held for sale and the assets of a disposal
group classified as held for sale are presented separately from the other assets in the consolidated statement
of financial position. The liabilities of a disposal group classified as held for sale are presented separately from
other liabilities in the statement of financial position.
A discontinued operation is a component of the Group that has been disposed of or is classified as held for
sale and that represents a separate major line of business or geographical area of operations, is part of a
single co-ordinated plan to dispose of such a line of business or area of operations, or is a subsidiary acquired
exclusively with a view to resale.
k) Impairment of non-financial assets
At the end of the reporting period, the Group assesses whether there is any impairment indicator. The
assessment includes consideration of external and internal sources of information. If such indicators exist, an
impairment test is performed. Impairment testing is performed by comparing the recoverable amount of the
asset with the higher of value in use and fair value less costs to sell the asset. Any excess is expensed to the
profit/loss.
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are
separately identifiable cash inflows that are largely independent of the cash inflows from other assets or
groups of assets (cash-generating units). Non-financial assets other than goodwill that suffered impairment
are tested for possible reversal of the impairment whenever events or changes in circumstances indicate the
impairment may have reversed.
l) Intangible assets
Intangible assets are initially measured at cost. Following initial recognition, they are carried at cost less
accumulated amortisation and impairment. Intangibles with a finite life are amortised over their useful lives
and assessed for impairment annually where there is an indicator of impairment.
m) Exploration and evaluation expenditure
Exploration and evaluation expenditure costs related to each identifiable area of interest are carried forward to
the extent that:
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Notes to the consolidated financial statements for the year ended 30 June 2014
i. The rights to tenure of the areas of interest are current and the Group controls the area of interest in
which the expenditure has been incurred; and
ii. Such costs are expected to be recouped through successful development and exploitation of the area
of interest, or alternatively by its sale; or
iii. Exploration and evaluation activities in the area of interest have not at the reporting date reached a
stage that permits a reasonable assessment of the existence or otherwise of economically recoverable
reserves, and active and significant operations in, or in relation to the area of interest are continuing.
Exploration and evaluation expenditure are generally capitalised where a JORC (Joint Ore Reserves
Committee) resource has been identified and probable future economic benefits are demonstrated.
When the technical feasibility and commercial viability of extracting a mineral resource have been
demonstrated then any capitalised exploration and evaluation expenditure is reclassified as capitalised mine
development. Prior to reclassification, capitalised exploration and evaluation expenditure is assessed for
impairment.
In the event that an area of interest is abandoned or if the directors consider the expenditure to be of no value,
accumulated costs carried forward are written off in the year in which that assessment is made. A regular
review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward
costs in relation to that area of interest.
Impairment
Exploration and evaluation assets are assessed annually for indicators of impairment and where impairment
indicators exist, recoverable amounts of these assets will be estimated based on discounted cash flows from
their associated cash generating units. The consolidated statement of comprehensive income will recognise
expenses arising from the excess of the carrying values of exploration and evaluation assets over the
recoverable amounts of these assets.
n) Property, plant and equipment
Plant and equipment are measured on the cost basis less depreciation and impairment losses.
The carrying amount of plant and equipment is reviewed annually by Directors to ensure it is not in excess of
the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected
net cash flows that will be received from the assets employment and subsequent disposal. The expected net
cash flows have been discounted to their present values in determining recoverable amounts.
The cost of fixed assets constructed within the Group will include the cost of materials, direct labour,
borrowing costs and an appropriate proportion of fixed and variable overheads.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as
appropriate, only when it is probable that future economic benefits associated with the item will flow to the
Group and the cost of the item can be measured reliably. All other repairs and maintenance are charged to
profit or loss during the financial period in which they are incurred.
Surface rights refer to ownership of the land that the entity intends to mine, and is separate from a license to
tenure over the land. These assets will be classified as property and carried at cost. The property will be
amortised over a life of mine basis, with amortisation commencing upon production of saleable coal.
Depreciation
The depreciation amount of all fixed assets including building and capitalised lease assets is depreciated on a
straight line basis over their useful lives to the Group commencing from the time the asset is held ready for
use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or
the estimated useful lives of the improvements.
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Notes to the consolidated financial statements for the year ended 30 June 2014
The depreciation rates used for each class of depreciable assets are:
Class of Fixed Asset Depreciation Rate
Office furniture & equipment 4 years
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each reporting date.
An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying
amount is greater than its estimated recoverable amount.
Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains
and losses are included in profit or loss.
o) Trade and other payables
Liabilities for trade and other payables are carried at amortised cost and represent liabilities for goods and
services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group
becomes obliged to make future payments in respect of the purchase of these goods and services.
p) Interest-bearing liabilities (borrowings)
Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are
subsequently measured at amortised cost. Any difference between the proceeds of borrowings (net of
transaction costs) and the redemption amount is recognised in the statement of comprehensive income over
the period of the borrowings using the effective interest method. Gains and losses are recognised in profit or
loss when the liabilities are derecognised.
Borrowing costs
Borrowing costs are recognised as expenses in the period in which they are incurred, except for those relating
to qualifying assets. Borrowing costs include interest on borrowings.
q) Provisions
Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past
event, it is probable that an outflow of resources embodying economic benefits will be required to settle the
obligation and a reliable estimate can be made of the obligation.
Provisions are measured at the present value of management’s best estimate of the expenditure required to
settle the present obligation at balance date. If the effect of the time value of money is material, provisions are
discounted using a current pre-tax rate that reflects the time value of money and the risks specific to the
liability. When discounting is used, the increase in the provision due to the passage of time is recognised in
finance costs.
Employee leave benefits
Wages, salaries and annual leave
The provisions for employee benefits for wages, salaries (including non-monetary benefits) and annual leave
resulting from employees' services provided up to the balance date, that are expected to be settled within one
year of the reporting date have been measured at the undiscounted amounts expected to be paid when the
liability is settled based on current wage and salary rates including related on-costs. Expected future
payments beyond one year are discounted using market yields at the reporting date on national government
bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash
outflows. Liabilities for non-accumulating sick leave are recognised when the leave is taken and measured at
the rates paid or payable.
Employee benefit on-costs
Employee benefit on-costs, such as payroll tax and superannuation, are recognised and included in employee
benefit liabilities and costs when the employee benefits to which they relate are recognised.
Equity settled transactions
The Group provides benefits to employees (including key management personnel) of the Group in the form of
share-based payments, whereby employees render services in exchange for shares or rights over shares
(“equity settled transactions”), under the Waterberg Coal Executive Option Plan.
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Notes to the consolidated financial statements for the year ended 30 June 2014
The fair value of options granted under the Group’s Executive Share Option Plan is recognised as an
employee benefit expense with a corresponding increase in equity. The fair value is measured at grant date
and recognised over the vesting period.
The fair value at grant date is determined using an appropriate option pricing model that takes into account
exercise price, term of the option, vesting and performance criteria, dilution impact, the non-tradeable nature
of the option, share price at grant date and expected price volatility of the underlying share, expected dividend
yield and risk free interest rate for the term of the option, further details of which are given in note 23.
The fair value of the options granted excludes the impact of any non-market vesting conditions (for example
(profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the
number of options that are expected to become exercisable. At each balance date, the entity revises its
estimate of the number of options that are expected to become exercisable. The employee benefit expense
recognised each period takes into account the most recent estimate.
r) Contributed equity
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are
shown in equity as a deduction, net of tax, from the proceeds.
s) Revenue recognition
Revenue is recognised and measured at the fair value of the consideration received or receivable to the
extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably
measured. The following specific recognition criteria must also be met before revenue is recognised.
Sales are recognised as revenue only when there has been a passing of title and risk to the customer, and:
(a) the product is in a form suitable for delivery and no further processing is required by, or on behalf of
the entity;
(b) quantity and quality (grade) of the product can be determined with reasonable accuracy;
(c) the product has been dispatched to the customer and is no longer under the physical control of the
Group (or property in the product has earlier passed to the customer);
(d) the selling price can be measured reliably;
(e) it is probable that the economic benefits associated with the transaction will flow to the Group; and
(f) the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Interest income is recognised on a time proportion basis using the effective interest rate method.
t) Income tax and other taxes
The income tax expense or revenue for the period is the tax payable on the current period’s taxable income /
(loss) based on the notional income tax rate for each jurisdiction adjusted by changes in deferred tax assets
and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their
carrying amounts in the financial statements, and to unused tax losses.
Deferred tax assets and liabilities are recognised for all temporary differences at the tax rates expected to
apply when the assets are realised or liabilities are settled, based on those tax rates (and tax laws) that are
enacted or substantively enacted for each jurisdiction at the balance date. The relevant tax rates are applied
to the cumulative amounts of deductible and taxable temporary differences arising from the initial recognition
of an asset or a liability. No deferred tax asset or liability is recognised in relation to these temporary
differences if they arose in a transaction, other than a business combination, that at the time of the transaction
did not affect either accounting profit or taxable profit or loss.
Deferred tax assets are recognised for all deductible temporary differences and carry-forward of unused tax
credits and unused tax losses only if it is probable that future taxable profits will be available to utilise those
deductible temporary differences and carry-forward of unused tax credits and unused tax losses. Deferred
tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax
bases of investments in controlled entities where the parent entity is able to control the timing of the reversal
of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.
Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised
directly in equity and not in profit or loss.
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Notes to the consolidated financial statements for the year ended 30 June 2014
The carrying amount of deferred income tax assets is reviewed at each balance date and reduced to the
extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the
deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at each
balance date and are recognised to the extent that it has become probable that future taxable profit will allow
the deferred tax asset to be recovered. Deferred tax assets and deferred tax liabilities are offset only if a
legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax
assets and liabilities relate to the same taxable entity and the same taxation authority.
Other taxes
Revenues, expenses and assets are recognised net of the amount of GST except:
? where the GST incurred on a purchase of goods and services is not recoverable from the taxation
authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of
the expense item as applicable; and
? receivables and payables are stated with the amount of GST included.
The net amount of GST recoverable from, or payable to, the taxation authority is included as part of
receivables or payables in the consolidated statement of financial position.
Cash flows are included in the consolidated statement of cash flows on a gross basis and the GST component
of cash flows arising from investing and financing activities, that is recoverable from, or payable to, the
taxation authority, are classified as operating cash flows.
Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the
taxation authority.
u) Earnings per share
i. Basic earnings per share
Basic earnings per share is calculated by dividing the net profit (loss) attributable to members of the parent, by
the weighted average number of ordinary shares, adjusted for any bonus element and the requirements
outlined in paragraph 64 of AASB 133.
ii Diluted earnings per Share
Diluted earnings per share adjusts the figures used in the determination of basic earnings per share to take
into account the after income tax effect of the weighted average number of shares assumed to have been
issued for no consideration in relation to dilutive potential ordinary shares currently held as options.
v) Investments in controlled entities
All investments are initially recognised at cost, being the fair value of the consideration given. Subsequent to
the initial measurement, investments in controlled entities are carried at cost less accumulated impairment
losses.
w) Investments in associates
Associates are companies in which the Group has significant influence through holding, directly or indirectly,
20% or more of the voting power of the Group. Investments in associates are accounted for in the financial
statements by applying the equity method of accounting, whereby the investment is initially recognised at cost
and adjusted thereafter for the post-acquisition change in the Group’s share of net assets of the associate
company. In addition, the Group’s share of the profit or loss of the associate company is included in the
Group’s profit or loss.
The carrying amount of the investment includes goodwill relating to the associate. Any discount on acquisition
whereby the Group’s share of the net fair value of the associate exceeds the cost of investment is recognised
in profit or loss in the period in which the investment is acquired.
Profits and losses resulting from transactions between the Group and the associate are eliminated to the
extent of the Group’s interest in the associate.
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Notes to the consolidated financial statements for the year ended 30 June 2014
When the Group’s share of losses in an associate equals or exceeds its interest in the associate, the Group
discontinues recognising its share of further losses unless it has incurred legal or constructive obligations or
made payments on behalf of the associate. When the associate subsequently makes profits, the Group will
resume recognising its share of those profits once its share of the profits equals the share of the losses not
recognised. Details of the Group’s investments in associates are provided in note 15.
x) Interests in joint operations
Under AASB 11 Joint Arrangements, investments in joint arrangements are classified as either joint operations or joint
ventures. The classification depends on the contractual rights and obligations of each investor, rather than the legal
structure of the joint arrangement.
The Group recognises its direct right to the assets, liabilities, revenues and expenses of joint operations and its share of
any jointly held or incurred assets, liabilities, revenues and expenses. These have been incorporated in the financial
statements under the appropriate headings.
y) Financial Instruments
Recognition
Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual
provisions to the instrument. For financial assets, this is equivalent to the date the company commits itself to
either the purchase or sale of the asset (i.e. trading date accounting is adopted).
Financial instruments are initially measured at fair value plus transaction costs, except where the instrument is
classified "at fair value through profit or loss", in which the transaction costs are expensed to profit or loss
immediately.
Classification and subsequent measurement
Financial instruments are subsequently measured at air value, amortised cost using the effective interest
method, or cost.
Amortised cost is calculated as the amount at which the financial asset or financial liability is measured at
initial recognition less principle repayment and any reduction for impairment, and adjusted for any cumulative
amortisation of the difference between that initial amount and the maturity amount calculated using the
effective interest method.
Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are
applied to determine the fair value for all unlisted securities, including recent arm's length transaction,
reference to similar instruments and option pricing models.
The effective interest method is used to allocate interest income or interest expense over the relevant period
and is equivalent to the rate that discounts estimated future cash payments or receipts (including fees,
transaction costs and other premiums or discounts) over the expected life (or when this cannot be reliably
predicted, the contractual terms) of the financial instrument to the net carrying amount of the financial asset or
financial liability.
i) Financial assets at fair value through profit and loss
Financial assets are classified as "fair value through profit or loss" when they are held for trading for the
purpose of short term profit trading, derivatives not held for hedging purposes or when they are designated as
such to avoid an accounting mismatch or to enable performance evaluation where a group of financial assets
is managed by key management personnel on a fair value basis in accordance with a documented risk
management or investment strategy. Such assets are subsequently measured at fair value with changes in
carrying amount being included in profit or loss.
ii) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not
quoted in an active market and are stated at amortised cost using the effective interest rate method.
iii) Available for sale financial assets
If there is objective evidence of impairment for available for sale financial assets, the cumulative loss –
measured as the difference between the acquisition cost and the current fair value, less any impairment loss
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Notes to the consolidated financial statements for the year ended 30 June 2014
on that financial asset previously recognised in profit or loss – is removed from equity and recognised profit or
loss. Refer to note 13.
Impairment losses on equity instruments that were recognised in profit or loss are not reversed through profit
or loss in a subsequent period.
iv) Held-to-maturity investments
These investments have fixed maturities, and it is the Group’s intention to hold these investments to maturity.
Any held-to-maturity investments held by the Group are stated at amortised cost using the effective interest
rate method.
z) Financial Liabilities
Non-derivative financial liabilities are initially recognized at fair value net of directly attributable transaction
costs. On subsequent measurement, non-derivative financial liabilities are measured at amortised cost using
the effective interest method.
Compound financial instruments
Compound financial instruments issued by the Group comprise convertible notes that can be converted to
ordinary shares at the option of the holder, when the number of shares to be issued is fixed. The liability
component of a compound financial instrument is recognised initially at the fair value of a similar liability that
does not have an equity conversion option. The equity component is recognised initially at the difference
between the fair value of the compound financial instrument as a whole and the fair value of the liability
component. Any directly attributable transaction costs are allocated to the liability and equity components in
proportion to their initial carrying amounts.
Subsequent to initial recognition, the liability component of a compound financial instrument is measured at
amortised cost using the effective interest method. The equity component of a compound financial instrument
is not remeasured subsequent to initial recognition. Interest related to the financial liability is recognised in
profit or loss. On conversion the financial liability is reclassified to equity and no gain or loss is recognised.
Convertible notes that can be converted to share capital at the option of the holder and where the number of
shares is variable, contains an embedded derivative liability. The embedded derivative liability is calculated (at
fair value) first and the residual value is assigned to the debt host contract. The embedded derivative is
subsequently measured at fair values and movements are reflected in the profit and loss.
Certain convertible notes issued by the Group which include embedded derivatives (option to convert to
variable number of shares in the Group is recognised as financial liabilities at fair value through profit or
loss. On initial recognition, the fair value of the convertible note will equate to the proceeds received and
subsequently the liability is measured at fair value at each reporting period until settlement. The fair value
movements are recognised on the profit and loss as finance costs.
aa) Comparative information
Where required by Australian Accounting Standards, or allocations changes are relevant to the current years
reporting, comparatives have been adjusted to conform to changes in presentation for the current financial
period.
bb) Foreign Currency Transactions and Balances
Functional and presentation currency
The functional currency of each of the Group’s entities is measured using the currency of the primary
economic environment in which that entity operates. The consolidated financial statements are presented in
Australian dollars, which is the parent entity’s functional currency.
Transactions and balances
Foreign currency transactions are translated into functional currency using the exchange rates prevailing at
the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate.
Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the
transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when
fair values were determined.
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Notes to the consolidated financial statements for the year ended 30 June 2014
Exchange differences arising on the translation of monetary items are recognised in profit or loss, except
where deferred in equity as a qualifying cash flow or net investment hedge.
Exchange differences arising on the translation of non-monetary items are recognised directly in other
comprehensive income to the extent that the underlying gain or loss is recognised in other comprehensive
income; otherwise the exchange difference is recognised in profit or loss.
Group companies
The financial results and position of foreign operations, whose functional currency is different from the Group’s
presentation currency, are translated as follows:
- assets and liabilities are translated at exchange rates prevailing at the end of the reporting period;
- income and expenses are translated at average exchange rates for the period; and
- retained earnings are translated at the exchange rates prevailing at the date of the transaction.
Exchange differences arising on translation of foreign operations with functional currencies other than
Australian dollars are recognised in other comprehensive income and included in the foreign currency
translation reserve in the statement of financial position. The cumulative amount of these differences is
reclassified into profit or loss in the period in which the operation is disposed of.
3. Financial risk management objectives and policies
The Group’s principal financial instruments comprise bank loans, convertible notes, other financial assets,
finance leases and cash and short-term deposits.
The main purpose of these financial instruments is to raise finance for the Group’s operations. The Group has
various other financial assets and liabilities such as trade receivables and trade payables that arise directly
from its operations. The main risks arising from the Group’s financial instruments are price risk, credit risk and
liquidity risk. The Board reviews and agrees policies for managing each of these risks as summarised below.
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the
basis of measurement and the basis on which income and expenses are recognised, in respect of each class
of financial asset, financial liability and equity instrument are disclosed in note 2 to the financial statements.
Refer to note 24 for further details.
4. Significant accounting judgements, estimates and assumptions
The preparation of financial statements requires estimates and assumptions concerning the application of
accounting policies to be made by the Group. These assumptions, judgements and estimates are continually
evaluated and are believed to be reasonable based on the most current information available to management.
The resultant accounting outcomes however will inevitably rarely equate to the actual outcome. Revisions to
accounting estimates are recognised in the period in which the estimate is revised and in any future periods
affected. Significant judgements, estimates and assumptions made by management in the preparation of
these financial statements are outlined below:
Key estimates
(i) Share based payment transactions
The Group measures the cost of equity settled transactions with employees by reference to the fair value of
the equity instruments at the date at which they are granted. The fair value is determined by using the Black
Scholes formula taking into account the terms and conditions upon which the instruments were granted, as
discussed in note 23.
(ii) Impairment – general
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.
No impairment has been recognised during this financial year (2013: nil).
(iii) Fair value of convertible notes
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Notes to the consolidated financial statements for the year ended 30 June 2014
Convertible notes that can be converted to share capital at the option of the holder and where the number of
shares is variable, contains an embedded derivative liability. The embedded derivative liability is calculated (at
fair value) first and the residual value is assigned to the debt host contract. The embedded derivative is
subsequently measured at fair value and movements are reflected in the profit or loss.
Certain convertible notes issued by the Group which include embedded derivatives (option to convert to
variable number of shares in the Group) are recognised as financial liabilities at fair value through profit or
loss. On initial recognition, the fair value of the convertible note will equate to the proceeds received and
subsequently the liability is measured at fair value at each reporting period until settlement. The fair value
movements are recognised in the profit or loss as finance costs. The subjectivity of the method of fair valuing
these convertible notes lies in the method on the calibration adjustment is released to the profit or loss
statement over the life of the note. See note 25 for further details.
(iv) Accounting for exploration and evaluation expenditure
The Group capitalises expenditure relating to exploration and evaluation where it is considered likely to be
recoverable or where the activities have not reached a stage that permits a reasonable assessment of the
existence of reserves. While there are certain areas of interest from which no reserves have been extracted,
the directors are of the continued belief that such expenditure should not be written off since feasibility studies
in such areas have not yet concluded.
Key judgements
In the process of applying the entity’s accounting policies, management makes various judgements, apart
from those involving estimations, that can significantly affect the amounts recognised in the financial
statements. Specifically, management made judgements in determining the fair value classification of its suite
of convertible notes and investments.
Controlled entities with ownership interests of less than 50% of the voting rights
The Directors have concluded that the group controls Firestone Energy Limited, even though it holds only
45.88% on the basis that the group has power over the relevant activities of Firestone Energy Limed through
its:
- Voting rights at the investee’s board meetings
- Provision of key management personnel to the investee
- Provision of financing
This transaction has been accounted for as an asset acquisition as Firestone Energy Limited did not constitute
a business under AASB 3 Business Combinations (see further details in note 33).
5. Segment information
Management has determined the operating segments based on the reports reviewed by the board of directors
that are used to make strategic decisions. The entity does not have any operating segments with discrete
financial information.
The Board of Directors review internal management reports on a monthly basis that is consistent with the
information provided in the statement of comprehensive income, statement of financial position and statement
of cash flows. As a result no reconciliation is required because the information as presented is what is used by
the Board to make strategic decisions.
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Notes to the consolidated financial statements for the year ended 30 June 2014
6. Expenses
Consolidated Consolidated
2014 2013
(a) Employee benefits expense $ $
Wages, salaries and superannuation 974,835 3,655
974,835 3,655
(b) Finance costs
Facility fees on convertible notes at fair value 1,887,535 1,124,351
Interest expense 10,533,331 -
Amortisation of convertible note transaction costs 285,974 -
Net expense on financial assets and liabilities at fair value
through profit and loss 22,505,247 5,730,245
35,212,087 6,854,596
(c) Other expenses
Corporate costs 419,421 345,186
Accounting and audit fees 92,161 86,417
Travel and accommodation expenses 478,964 334,700
Other expenses 363,801 422,771
1,354,347 1,189,074
7. Income tax expense / (benefits)
(a) Income tax expense / (benefit)
Current tax - -
Deferred tax - -
- -
Deferred income tax / (benefit) expense included in income tax
expense comprises:
Decrease / (increase) in deferred tax assets - -
(Decrease) / increase in deferred tax liabilities - -
- -
(b) Reconciliation between aggregate tax benefit recognised
in the income statement and tax calculated per the
statutory income tax rate
Profit / (loss) from ordinary activities before income tax (49,212,321) 6,888,940
Income tax (loss) / benefit at the statutory rate of 30% (2013: (14,763,696) 2,066,682
30%)
Tax effect of amounts that are not deductible in calculating
taxable income:
Share-based payments 2,113,689 893,171
Impairment losses - 576,000
Other – fair value movement in liabilities 11,954,557 -
Other timing differences not recognised 474,410 -
Unrecognised tax losses 221,040 -
- 3,535,853
Benefit of tax losses not brought to account - (3,535,853)
Income tax expense - -
(c) Tax losses
Unused tax losses for which no deferred tax asset has been
97,401,259 49,001,960
recognised
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Notes to the consolidated financial statements for the year ended 30 June 2014
All unused tax losses were incurred by Australian entities.
The Group has a large amount of carried forward tax losses of which the unrecognised deferred tax assets
are materially greater than the level of deferred tax liabilities. The Group has not recognised income tax
expense, tax assets and tax liabilities as it is not probable that future taxable amounts will be available to
utilise those temporary differences.
Unrecognised deferred tax balances in overseas entities will only be available following a full review in the
relevant jurisdiction.
8. Earnings / (Losses) per share
The following reflects the net profit / (loss) and share data used in the basic and diluted earnings per share
computations:
Consolidated Consolidated
2014 2013
$ $
Profit / (loss) from continuing and discontinuing operations (used
(49,212,321) 6,888,940
in calculating basic and diluted EPS)
Profit / (loss) from continuing operations (used in calculating basic
(49,212,321) (15,553,571)
and diluted EPS)
Profit / (loss) from discontinued operations (used in calculating
- 22,442,511
basic EPS)
Weighted average number of ordinary shares for basic loss per 252,961,693 680,761,692
share
Weighted average number of ordinary shares adjusted for the N/A 680,761,692
effect of dilution
There are no instruments (e.g. share options) excluded from the calculation of diluted earnings per share
that could potentially dilute basic earnings per share in the future because they are anti-dilutive for either of
the periods presented.
The issued shares in the Group were consolidated on a 1 for 60 basis on 17 July 2012 and on a 1 for 10
basis on 9 April 2013. The post consolidation shares have been used for the purpose of calculating the
basic and diluted earnings per share as required by paragraph 64 of AASB 133.
9. Cash and cash equivalents
Cvc Consolidated Consolidated
2014 2013
$ $
Cash at bank and in hand 2,103,312 1,475,043
1
Restricted cash 6,601,062 6,964,515
8,704,374 8,439,558
Short term deposits earn interest at floating rates based on prevailing bank deposit rates.
1
Included in the cash balance is $6,601,062 (2013: 6,964,515) held as a security deposit on the AUD 35
million convertible note facility (note 17). The deposit is subject to a put/call option of AUD 6.5 million and will
be released to the Group on conversion or repayment of the facility after 18 months from the date of the draw
down. The Group is not entitled to interest revenue until 18 months from the date of the draw down.
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Notes to the consolidated financial statements for the year ended 30 June 2014
10. Trade and other receivables
Consolidated Consolidated
Current 2014 2013
$ $
GST receivable 133,552 112,837
Prepayments 350,336 -
Other receivables 1,380 -
Interest receivable - 166,667
485,268 279,504
Receivables are non-interest bearing and are generally on 30 day terms and therefore due to their short term
nature, their carrying values approximate their fair values. A provision is recognised when there is objective
evidence that the individual trade receivable is impaired. The receivables credit risk has been reviewed and
assessed as immaterial as the counterparties are recognised and reputable companies. None of the current
receivables are impaired nor past due.
Consolidated Consolidated
Non current 2014 2013
$ $
Environmental rehabilitation bond 1,420,502 -
Advances to Sekoko Coal (Pty) Ltd 1,992,624 500,000
Advances to Sekoko Resources (Pty) Ltd 291 -
3,413,417 500,000
The Group agreed to provide Sekoko Coal (Pty) Ltd with an unsecured loan of $1,992,624 for expenditure on
the Waterberg Coal Project. The loan is non-interest bearing and will be repayable once the project generates
revenue. As these loans are repayable at call, their fair value approximates their carrying value at reporting
date.
Information about the Group’s exposure to foreign exchange risk and interest rate risk is provided in note 24.
11. Exploration and evaluation expenditure
Consolidated Consolidated
2014 2013
$ $
Opening balance at beginning of the year 25,291,518 -
Interest in joint venture acquired on acquisition of Firestone Energy
1 56,152,478 -
Limited (Exploration and Evaluation Expenditure)
1
Additional exploration expenditure 584,701 18,135
2
Acquisition of exploration interests - 25,273,383
Foreign currency movements (5,266,621) -
Carrying amount at the end of the year 76,762,076 25,291,518
1
On 23 September 2013, the off-market takeover bid for all the ordinary shares in Firestone Energy Limited
(‘Firestone’) closed (note 33). At the conclusion of the offer, the Company’s shareholding in Firestone is
45.88%. The Group is a participant with Sekoko Coal (Pty) Ltd in a coal project in the Waterberg locality in
South Africa.
Firestone is a participant with Sekoko Coal (Pty) Ltd in a coal project in the Waterberg locality in South Africa.
The Company holds a 60% earn-in interest and Sekoko Coal (Pty) Ltd a 40% interest, and the project is
funded in the same ratio. The joint venture is carried out through the Company’s 100%-owned subsidiaries,
Lexshell 126 General Trading (Pty) Ltd and Checkered Flag Investments 2 (Pty) Ltd.
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Notes to the consolidated financial statements for the year ended 30 June 2014
The joint venture agreements in relation to the Waterberg joint venture require unanimous consent from all
parties for all relevant activities. The joint venture is unincorporated. This entity is therefore classified as a joint
operation and the Group recognises its direct right to the jointly held assets, liabilities, revenues and expenses
as described in Note 2(x).
The principal place of business of the joint operation is in South Africa.
2
Acquisition of exploration tenements includes the fair value of the shares issued to vendors of Ariona
Company SA (note 32). The ultimate recoupment of costs carried forward for exploration expenditure is
dependent on the successful development and commercial exploitation or sale of the respective mining areas.
Recoverability of the carrying amounts of exploration and evaluation expenditure assets is dependent on
successful development and commercial exploitation or alternatively, sale of the respective area of interest.
12. Property, plant and equipment
Consolidated Consolidated
2014 2013
$ $
Office furniture and equipment:
Cost 207,616 -
Accumulated depreciation (139,526) -
68,090 -
Property – surface rights:
Cost 4,034,937 -
Total property, plant and equipment 4,103,027 -
Movements in the carrying amounts of each class of property, plant & equipment are set out
below:
Consolidated Consolidated
2014 2013
Office furniture and equipment $ $
Balance at the beginning of year - -
1
Additions 101,171 -
Depreciation expense (32,599) -
Foreign exchange adjustment (482) -
Carrying amount at the end of the year 68,090 -
Property – surface rights
Balance at the beginning of year - -
1
Additions 4,305,283 -
Foreign exchange adjustment (270,346) -
Carrying amount at the end of the year 4,034,937 -
1
On 23 September 2013, the off-market takeover bid for all the ordinary shares in Firestone Energy Limited
(‘Firestone’) closed (note 33). At the conclusion of the offer, the Company’s shareholding in Firestone is
45.88%. Office furniture and equipment additions include a net amount of $39,952 acquired. Property –
surface rights additions include an amount of $4,305,283 acquired.
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Notes to the consolidated financial statements for the year ended 30 June 2014
13. Available for sale financial assets
Consolidated Consolidated
2014 2013
$ $
1
Investment in Global Resource Investment Trust Plc 4,324,481 -
2
Impairment charged to profit or loss (1,894,162) -
2,430,319 -
1
On 7 March 2014, WCC entered into a Share Exchange Agreement with Global Resources Investment Trust
Plc (‘GRIT’), a company listed on the London Stock Exchange. WCC has exchanged 20,000,000 new
Ordinary shares in the Company at a price of approximately £0.1168 per share and WCC has received
2,335,220 ordinary shares in the capital of GRIT at the issue price of approx. AUD $4.32 million. As at 30
June 2014, Waterberg held a 6% share in GRIT. Refer to note 23 for further details.
2
Due to the significant and sustained decline in value of GRIT shares, an impairment charge of $1,894,162
has been charged to the profit or loss.
14. Other financial assets
Consolidated Consolidated
2014 2013
$ $
1
Convertible notes at fair value through profit and loss - 5,000,000
1
Investment in Firestone Energy Ltd - 4,800,000
1
Fair value adjustment on investment - (1,920,000)
- 7,880,000
1
On 23 September 2013, the off-market takeover bid for all the ordinary shares in Firestone Energy Limited
(‘Firestone’) closed (note 33). At the conclusion of the offer, the Company’s shareholding in Firestone is
45.88%. Prior to the acquisition, the group help $5,000,000 worth of fully secured Firestone convertible notes.
Prior to the takeover bid, Firestone was accounted for by the Group as an investment as disclosed above.
However, Firestone is now a controlled entity and therefore these balances are eliminated on consolidation.
15. Investment in associate
Consolidated Consolidated
2014 2013
$ $
Investment in Sekoko Coal (Pty) Ltd 21,950,000 21,950,000
1
Share of loss of associate (214,473) -
21,735,527 21,950,000
1
In June 2013 the Group acquired a 25% interest in Sekoko Coal (Pty) Ltd, resulting in a 10% indirect interest
in the Waterberg Coal Project.
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Notes to the consolidated financial statements for the year ended 30 June 2014
a) Principal activity and general information
Ownership interest in Sekoko Coal Pty Ltd at the end of that associate Company’s reporting period was 25%
of ordinary shares.
Principal Country of
Name Activity Incorporation Share Ownership Interest
2014 2013
% %
Unlisted:
Sekoko Coal (Pty) Ltd Exploration and South Africa Ord
coal mining 25% 25%
b) Summarised presentation of aggregate assets, liabilities and performance of associate at 25%
30 June 2014
$
Current assets 55,784
Non-current assets 1,664,061
Total assets 1,719,845
Current Liabilities (1,785,831)
Non- current Liabilities (363,248)
Total liabilities (2,149,079)
Equity (429,234)
Add fair value on acquisition 22,164,761
Carrying amount at 30 June 2014 21,735,527
Revenue 6,280
Loss (214,473)
Sekoko Coal (Pty) Ltd has no commitments or contingent liabilities.
16. Trade and other payables
Consolidated Consolidated
2014 2013
Unsecured $ $
Trade creditors 3,092,115 1,307,646
Other creditors and accruals 1,041,442 485,515
Interest payable 10,271,430 -
14,404,987 1,793,161
Trade payables are non-interest bearing and are normally settled on 30 day terms. Information about the
Group’s exposure to foreign exchange risk is provided in note 24. Refer to notes 17 and 18 for terms and
details of interest payable on convertible notes and other borrowings.
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Notes to the consolidated financial statements for the year ended 30 June 2014
17. Financial liabilities
Consolidated Consolidated
2014 2013
Current $ $
1
Convertible note facility at fair value 69,139,092 40,730,245
69,139,092 40,730,245
Non Current
2
Convertible note facility at amortised cost 19,146,476 -
19,146,476 -
1
The Group has entered into various convertible facility agreements. The facilities are due to mature in
October and November 2014 or the lenders can elect to convert the loan to shares in the Group at any time.
The notes incur interest at 12% + LIBOR or 12% + 1 month Australian Bank Bill rate. Interest is accrued
monthly in arrears. Accrued interest is included in the interest payable balance in note 16. The total face value
of the notes is ZAR 10,000,000 (AUD 1,003,600) and AUD 39,900,000.
If the lenders elect to convert the facility into shares the formula is 2.1 times the facility amount at a discount
equivalent to 20% of the 30 day VWAP before the election to convert.
2
The total face value of the notes is $22.145 million and the maturity date 31 January 2017. They bear
interest at a fixed rate of 8% per annum. The notes can be converted at any time before the maturity date at a
conversion price of $0.025. They are secured over the assets of Firestone Energy Limited and its subsidiaries.
The initial fair value of the liability portion of the convertible note was determined using a market interest rate
for an equivalent non-convertible bond at the issue date. The liability is subsequently recognised on an
amortised cost basis until extinguished on conversion or maturity of the notes. The remainder of the proceeds
is allocated to the conversion option and recognised in shareholders’ equity, net of income tax, and not
subsequently remeasured.
The fair value as at 30 June 2014 of the convertible note liability recognised at amortised cost is $20.38
million.
18. Borrowings
Current Consolidated Consolidated
2014 2013
Unsecured loans carried at amortised cost $ $
1
Loan payable – Sekoko Resources (Pty) Ltd 6,783,302 -
2
Loan payable – Richmond Capital LLP 2,089,420 -
2
Loan payable – Resource Venture Capital Partners 174,973 -
2
Loan payable – Haworth Finance Limited 500,000 -
3
Loan payable – Celtic Capital Pty Ltd 416,500 1,500,000
4
Loan payable – Jason and Lisa Peterson 83,333 -
10,047,528 1,500,000
Non-current Consolidated Consolidated
2014 2013
Unsecured loans carried at amortised cost $ $
2
Loan payable – Richmond Capital LLP - 2,089,420
2
Loan payable – Resource Venture Capital Partners - 174,973
2
Loan payable – Haworth Finance Limited - 500,000
- 2,764,393
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Notes to the consolidated financial statements for the year ended 30 June 2014
1
Interest is charged at the South African prime rate of 9.0% (2013: 8.5%). The loan is unsecured.
2
The loans are non-interest bearing and are repayable within six months from 30 June 2014. Resources
Venture Capital Partners is a company of which Stephen Miller is a related party.
3
In the prior year, the Group borrowed $1,500,000 from Celtic Capital Pty Ltd. The loan was refinanced on 18
October 2013 and is repayable within 12 months from 31 December 2013. Interest is charged at a fixed rate of
45%.
4
The loan is repayable within 12 month from 31 December 2013 and interest is charged at a fixed rate of
50%.
19. Contributed equity Consolidated Consolidated
2014 2014
a) Ordinary shares $ $
313,265,213 issued and fully paid ordinary shares (2013:
54,099,744 32,139,838
177,005,123)
Fully paid ordinary shares carry one vote per share and carry the right to dividends. The shares have no par
value. In the event of winding up of the Group, ordinary shareholders rank after creditors and are only entitled
to any surplus proceeds of liquidation. At Shareholders’ meetings, each ordinary share is entitled to one vote
when a poll is called, otherwise, each shareholder as one vote on a show of hands.
Issue
Number of
Price $
Shares
(cents)
Movement in ordinary shares on issue
At 30 June 2012 2,178,187,039 82,523,237
Consolidated of capital at 1 for 60 and capital
reduction - (2,141,885,817) (82,523,237)
Shares issued via private placement 0.5 140,000,000 700,000
Shares issued via public offerings 2 150,000,000 3,000,000
Shares issued on acquisition (refer to note 23) 2 1,250,000,000 25,000,000
Placement – 27 March 2013 2 81,575,305 1,631,506
Consolidation of capital at 1 for 10 - (1,492,088,874) -
Placement – 9 April 2013 20 10,375,000 2,075,000
Placement – 11 April 2013 20 842,470 168,494
Costs of issue - - (435,162)
At 30 June 2013 177,005,123 32,139,838
Shares issued via private placement 19 8,192,978 1,540,500
Shares issued via public offerings 20 7,502,500 1,500,500
Shares issued on acquisition of subsidiary (refer to
notes 23 and 33) 15 71,792,189 11,026,874
Private Placement – 18 February 2014 20 800,000 160,000
Private Placement – 18 February 2014 17 6,200,000 1,053,923
Conversion of options – 17 March 2014 17 7,440,000 1,264,708
Subscription agreement with Global Resource
Investment Trust Plc (refer to note 23) 22 20,000,000 4,324,481
Placement – 4 April 2014 17 1,000,000 169,987
Placement – 27 June 2014 6.8 13,332,423 1,000,000
Costs of issue - - (81,067)
At 30 June 2014 313,265,213 54,099,744
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Notes to the consolidated financial statements for the year ended 30 June 2014
Consolidated Consolidated
2014 2013
b) Options over ordinary shares
No. No.
Options over ordinary shares 123,187,500 48,256,212
123,187,500 48,256,212
Consolidated
Number of
Movement in options
Options
At 30 June 2012 43,728,125
Consolidated of capital at 1 for 60 (42,999,340)
Expiry of options (41,666)
Consolidated of capital at 1 for 10 (618,407)
Issue of options to supplier 25,000,000
Issue of options to investors 23,187,500
At 30 June 2013 48,256,212
Issue of listed options 11,192,823
Issue of listed options 800,000
Issue of options to Directors 63,000,000
Issue of options to consultants 12,000,000
Issue of free attaching options 7,440,000
Exercise of options (7,440,000)
Expiry of options (68,712)
At 30 June 2014 135,180,323
On 26 April 2013, 25,000,000 unlisted options exercisable at 20c before 31 December 2016 were issued to
Garrison Capital Pty Limited as consideration for corporate advisory services.
In April 2013, 23,187,500 unlisted options exercisable at 20c before 31 December 2014 were issued to
investors (two free attaching options for every placement share acquired).
On 28 November 2013, 63,000,000 unlisted performance linked options exercisable at 30c before 31
December 2016 were issued to Directors.
On 11 December 2013, 12,000,000 unlisted options exercisable at 30c before 31 December 2016 were issued
to consultants for services provided.
In September and December, 11,192,823 listed options were issued for nil consideration under the
Placement. The options have an exercise price of $0.20 and expire 31 December 2014.
On 18 February 2014, 7,440,000 free attaching options with an exercise price of ZAR 1.78 and an expiry date
of 31 December 2014 were issued as part of the private placement. These options were exercised on 17
March 2014.
On 18 February 2014, 800,000 free attaching listed options were issued as part of the private placement. The
options have an exercise price of ZAR 1.78 and expire 31 December 2014.
No other options were issued during the 2014 financial year.
No option holder has any right under the options to participate in any other share issue of the Group or any
other entity. No other options were exercised during the financial year.
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Notes to the consolidated financial statements for the year ended 30 June 2014
c) Capital risk management
The Group’s capital comprises share capital and reserves less accumulated losses. As at 30 June 2014, the
Group has net assets of $4,895,925 (2013: $17,552,781). The Group manages its capital to ensure its ability
to continue as a going concern and to optimise returns to its shareholders (refer note 2). In addition, refer to
note 24 for further information on the Group’s financial risk management policies. There have been no
significant changes in the strategy adopted by management to control the capital of the Group since July
2012.
20. Reserves
Consolidated Consolidated
Share based payment reserve 2014 2013
$ $
Balance at beginning of the year 4,241,245 1,264,000
Issued during the year 7,045,631 2,977,245
Balance at the end of the year 11,286,876 4,241,245
Nature and purpose of reserve
The share based payment reserve is used to record the value of equity benefits provided to directors and
executives as part of their remuneration and non-employees for their services. Refer to note 23 for further
details of this plan.
Consolidated Consolidated
Foreign currency translation reserve 2014 2013
$ $
Balance at beginning of the year - -
Exchange differences arising on translation of foreign operations (1,906,957) -
Balance at the end of the year (1,906,957) -
Nature and purpose of reserve
The foreign currency translation reserve is used to record exchange differences arsing from the translation of
foreign subsidiary balances.
Consolidated Consolidated
Total reserves 2014 2013
$ $
Share based payment reserve 11,286,876 4,241,245
Foreign currency translation reserves (1,906,957) -
9,379,919 4,241,245
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Notes to the consolidated financial statements for the year ended 30 June 2014
21. Statement of cash flows reconciliation
Consolidated Consolidated
2014 2013
$ $
Reconciliation of net cash flows from operations with net
profit / (loss) after income tax
Net profit / (loss) after income tax (49,212,321) 6,888,940
Adjustments for:
Depreciation 32,599 -
Foreign exchange (gains) / losses (1,736,930) (451,457)
Share based payments 7,045,631 2,977,245
Settlement of DOCA debts - (22,442,511)
Share of loss of associate 214,473 -
Fair value movements on convertible notes 22,505,247 -
Fair value adjustment of non-current assets - 1,920,000
Impairment of available for sale financial assets 1,894,162 -
Amortisation of convertible note transaction costs 285,974 -
Accretion of convertible notes 582,646 -
Finance expense - 5,730,245
Other - 600
Changes in assets and liabilities:
(Increase) / decrease in receivables 288,325 (216,065)
(Increase) / decrease in prepayments (350,336) -
Increase / (decrease) in trade and other payables 1,409,389 1,234,437
Increase / (decrease) in accruals 11,353,240 -
Net cash outflows from operating activities (5,687,901) (4,358,566)
Non-cash financing and investing activities
Shares issued for asset acquisitions (refer to note 23)
22. Related party transactions
a) Key management personnel remuneration
Consolidated Consolidated
2014 2013
$ $
Short-term benefits 974,835 233,500
Post -employment benefits - -
Share-based payment 6,004,473 -
Termination benefits (paid / payable) - -
6,979,308 233,500
b) Other related parties
Sekoko Coal Pty Ltd is an associate of the Group, a loan totalling $1,992,624 of which $1,492,624 was
advanced during the year (note 10).
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Notes to the consolidated financial statements for the year ended 30 June 2014
Resource Venture Capital Partners, a company of which Stephen Miller is a related party, has lent the group
$174,973. The loan is non-interest bearing and is repayable by 30 September 2014.
23. Share based payments
Waterberg Coal Employee Share Option Plan
The Group has established an employee share option plan (ESOP). The objective of the ESOP is to assist in
the recruitment, reward, retention and motivation of executives of the Group. Under the ESOP, the Directors
may invite individuals acting in a manner similar to employees to participate in the ESOP and receive shares
or options. An individual may receive the options, or shares, or nominate a relative or associate to receive the
options or shares. The plan is open to executive officers, nominated consultants and employees of the Group.
The fair value at grant date of options granted during the financial year was determined using the Black
Scholes option pricing model that takes into account the exercise price, the term of the option, the share price
at grant date and expected price volatility of the underlying share and the risk free interest rate for the term of
the option.
Set out below are summaries of options granted during the current and previous financial year:
2014 2014 2013 2013
Average exercise Number of Average exercise Number of
price per option options price per option options
As at 1 July - - - -
Granted during the year under
the ESOP $0.30 63,000,000 - -
Granted during the year to
1
consultants $0.30 12,000,000 $0.20 25,000,000
Exercised during the year - - - -
Forfeited during the year - - - -
As at 30 June $0.30 75,000,000 $0.20 25,000,000
Vested and exercisable $0.30 75,000,000 $0.20 25,000,000
1
The group has rebutted the presumption that the fair value of the services is determinable and therefore
have used the market value of the options as the fair value of the services received.
The assessed fair value at grant date of options granted during the year ended 30 June 2014 was $0.098 and
$0.087 per option (2013: nil). The fair value at grant date is independently determined using a Black-Scholes
option pricing model that takes into account the exercise price, the term of the option, the impact of dilution,
the share price at grant date and expected price volatility of the underlying share, the expected dividend yield
and the risk free interest rate for the term of the option.
The model inputs for options granted during the year ended 30 June 2014 included:
(a) options are granted for no consideration and vest immediately;
(b) exercise price: $0.30 (2013: $0.20)
(c) grant date: 28 November 2013 and 11 December 2013 (2013: 26 April 2013)
(d) expiry date: 31 December 2016 (2013: 31 December 2013)
(e) share price at grant date: $0.19 (2013: $0.18)
(f) expected price volatility of the company’s shares: 100% (2013: 100%)
(g) expected dividend yield: nil (2013: nil)
(h) risk free interest rate: 2.66% (2013: 2.66%)
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Notes to the consolidated financial statements for the year ended 30 June 2014
Share based payments made under the ESOP and to consultants during the 2014 and 2013 financial years
have the following expiry date and exercise prices:
Grant date Expiry Date Exercise Price Share options 30 June Share options 30
2014 June 2013
26 April 2013 31 December 2016 $0.20 25,000,000 25,000,000
28 November 2013 31 December 2016 $0.30 63,000,000 -
11 December 2013 31 December 2016 $0.30 12,000,000 -
100,000,000 25,000,000
Weighted average remaining contractual life of options
outstanding at end of period 2.50 years 3.50 years
Consolidated Consolidated
Expenses arising from share based payment transactions 2014 2013
$ $
Options issued under the employee share option plan 6,004,473 -
Options issued to consultants for services provided 1,041,158 2,977,245
7,045,631 2,977,245
Consolidated Consolidated
Asset acquisitions 2014 2013
$ $
Consideration for Ariona Company SA (1,250,000,000 shares) - 25,000,000
Consideration for Firestone Energy Limited (71,792,189 shares) 11,026,874 -
Consideration for Global Resource Investment Trust Plc 4,324,481 -
(20,000,000 shares)
15,351,355 25,000,000
24. Financial Risk Management
(a) Significant accounting policies
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the
basis of measurement and the basis on which income and expenses are recognised, in respect of each class
of financial asset, financial liability and equity instrument are disclosed in note 2 to the financial statements.
(b) Overview
The Group has exposure to the following risks from their use of financial instruments:
? credit risk;
? liquidity risk;
? interest rate risk and
? price risk
? foreign exchange risk
This note presents information about the Group’s exposure to the above risks, their objectives, policies and
processes for measuring and managing risk, and the management of capital. Further quantitative disclosures
are also provided in this note.
The Board has overall responsibility for the establishment and oversight of the risk management framework
including the development and monitoring of risk management policies.
Established risk management policies seek to identify and analyse the risks faced by the Group, set
appropriate risk limits and controls, and to monitor risks and adherence to limits. Adopted risk management
policies and systems are reviewed regularly to reflect changes in market conditions and the Group’s activities.
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Notes to the consolidated financial statements for the year ended 30 June 2014
(c) Credit risk
Credit risk refers to the risk of default by counterparties on their contractual obligations resulting in financial
loss to the Group. The Group has adopted a policy of only dealing with creditworthy counterparties and
obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from
defaults. Management assesses the credit quality of the customer and/or counterparties by taking into account
its financial positions, past experience, and other factors.
In the prior year, the Group had significant credit risk exposure to a single counterparty or a group of
counterparties having similar characteristics via the convertible notes. In the current year, these notes have
been eliminated as part of the Firestone acquisition. This risk is managed as the counterparties have been
assessed as being of sound credit worthiness and the Group holds a first ranking security against the
underlying assets of the Borrower. The credit risk on liquid funds is limited because the counterparties are
banks with high credit-ratings assigned by international credit-rating agencies.
The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses,
represents the Group’s maximum exposure to credit risk without taking account of the value of any collateral
obtained.
(d) Liquidity risk management
Liquidity risk is the risk that the Group will encounter difficulty in meeting obligations associated with financial
liabilities.
The Group manages liquidity risk by maintaining sufficient cash facilities to meet the operating requirements of
the business and investing excess funds in highly liquid short term investments. The responsibility for liquidity
risk management rests with the Board of Directors. Refer to note 2a for further details on liquidity risk
management.
Alternatives for sourcing our future capital needs include our cash position and the issue of equity instruments.
These alternatives are evaluated to determine the optimal mix of capital resources for our capital needs. We
expect that, absent a material adverse change in a combination of our sources of liquidity, present levels of
liquidity along with future capital raising will be adequate to meet our expected capital needs.
Maturities of financial liabilities
The tables below analyse the group’s financial liabilities into relevant maturity groupings based on their
contractual maturities for:
(a) all non-derivative financial liabilities, and
(b) net and gross settled derivative financial instruments for which the contractual maturities are essential for
an understanding of the timing of the cash flows
The table below reflects all contractually fixed pay-offs and receivables for settlement, repayments and
interest resulting from recognised financial assets and liabilities. Cash flows for financial assets and liabilities
without fixed amount or timing are based on the conditions existing at 30 June 2014 and 2013.
Consolidated Consolidated
2014 2013
Contractual maturities of financial liabilities $ $
1
6 months or less 64,314,673 1,307,646
6-12 months or less - -
1-5 years 22,145,000 39,264,393
Over 5 years - -
Total contractual cash flows 86,459,673 40,572,039
Carrying amount financial liabilities 111,696,641 46,302,284
Trade and other payables 13,363,545 1,307,646
Convertible notes 88,285,568 40,730,245
Borrowings 10,047,528 4,264,393
Carrying amount financial liabilities 111,696,641 46,302,284
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Notes to the consolidated financial statements for the year ended 30 June 2014
1
Trade and other payables and convertible note facilities at fair value (refer to notes 16 and 17) are due in the
next six months.
(e) Interest rate risk
This risk arises on financial assets and liabilities, recognised at year end, where interest rate fluctuations
impact on cash flows or the fair value of fixed rate financial instruments. The Group’s policy is to manage its
interest cost and its ability to service the cost, using a combination of sensitivity analysis against the
underlying cash flows of the revenue generating assets purchased, matching loan terms against the life of the
cash generating assets, the available mix of funding options allowing for floating rate facilities to average
interest rates and the availability of entering into interest rate swaps and similar products if required.
The Group has not entered into any interest rate swaps.
Interest rate risk profile
The Group’s exposure to market risk for changes to interest rate risk relates primarily to its interest bearing
borrowings, earnings on cash and other financial assets.
Weighted Consolidated Consolidated
Average Interest 2014 2013
Rate % $ $
1
Cash and cash equivalents 4.37% 8,704,374 8,439,558
Other financial assets - - 5,000,000
Borrowings 8.80% (10,047,528) (1,500,000)
Convertible note facilities 14.32% (88,285,508) (40,730,245)
1
Included as part of cash and cash equivalents is a put/call option of $6.5m (security deposit) that will be
released to the Group on conversion or repayment of the SBSA convertible note facility after 18 months from
the date of the draw down. The Group is entitled to the accrued interest revenue on completion of the 18
months or on conversion.
(f) Price risk
The Group is also exposed to securities price risk, which is the risk that a change in equity price will affect the
Group’s financial performance, on investments held in Firestone Energy Limited.
Consolidated Consolidated
2014 2013
$ $
Available for sale financial assets 2,430,319 2,880,000
Sensitivity Analysis
The following tables illustrate the Group’s sensitivities to interest rate and price risk changes. The table
indicates the impact on how profit and equity values reported at balance date would have been affected by
changes in the relevant risk variable that management considers to be reasonably possible. These
sensitivities assume that the movement in a particular variable is independent of other variables.
Interest rate risk Consolidated
Profit Equity
Year ended 30 June 2013 $ $
+/-1% in interest rates 659,589/(672,047) 659,589/(672,047)
Year ended 30 June 2014
+/-1% in interest rates 108,173/(108,173) 108,173/(108,173)
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Notes to the consolidated financial statements for the year ended 30 June 2014
Price risk Consolidated
Profit Equity
Year ended 30 June 2013 $ $
+/-1% in listed investments 28,800/(28,800) 28,800/(28,800)
Year ended 30 June 2014
+/-1% in listed investments 24,303/(24,303) -/(-)
25. Fair Value
The fair values of financial assets and financial liabilities are presented in the following table and can be
compared to their carrying amounts in the consolidated statement of financial position.
Fair values are those amounts at which an asset could be exchanged, or a liability settled, between
knowledgeable, willing parties in an arm’s length transaction.
Fair values derived may be based on information that is estimated or subject to judgment, where changes in
assumptions may have a material impact on the amounts estimated. Areas of judgment and the assumptions
have been detailed below. Where possible, valuation information used to calculate fair value is extracted from
the market, with more reliable information available from markets that are actively traded.
The fair values of the Group’s financial assets and liabilities have been determined based on the following
methodologies:
(i) Cash and cash equivalents, trade and other receivables and trade and other payables and other
borrowings are short-term instruments in nature whose carrying value is equivalent to fair value. Trade and
other payables exclude amounts provided for annual leave, which is not considered a financial instrument.
(ii) Discounted cash flow models are used to determine the fair values of convertible notes at amortised cost.
Discount rates used on the calculations are based on market interest rates existing at the end of the reporting
period for similar types of notes. The discount rate used at 30 June 2014 is 12% and the instrument is
classified as level 3 under the fair value hierarchy.
The aggregate fair values and carrying amounts of financial assets and financial liabilities not carried at fair
value are disclosed in the consolidated statement of financial position and in the notes to the financial
statements as follows:
Carrying amount Fair value
2014 2013 2014 2013
Consolidated 2014
Financial Assets
Cash and cash equivalents 8,704,374 8,439,558 8,704,374 8,439,558
Trade and other receivables 1,380 166,667 1,380 166,667
Loan receivable 1,992,915 500,000 1,992,915 500,000
Available for sale financial assets 2,430,319 - 2,430,319 -
Other financial assets - 7,880,000 - 7,880,000
Financial Liabilities
Trade and other payables 13,363,545 1,307,646 13,363,545 1,307,646
Convertible notes at amortised cost 19,146,476 - 20,378,964 -
Other borrowings 10,047,528 4,264,393 10,047,528 4,264,393
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Notes to the consolidated financial statements for the year ended 30 June 2014
* Private company – no quoted price available
Financial Instruments Measured at Fair Value
The financial instruments recognised at fair value in the consolidated statement of financial position have been
analysed and classified using a fair value hierarchy reflecting the significance of the inputs used in making the
measurements.
The fair value hierarchy consists of the following levels:
? quoted prices in active markets for identical assets or liabilities (Level 1);
? inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly (as prices) or indirectly (derived from prices) (Level 2); and
? inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3).
Level 1 Level 2 Level 3 Total
Consolidated $000 $000 $000 $000
2014
Financial assets/liabilities
Financial assets and liabilities at fair
value through profit and loss:
Convertible note facility - - (69,139,092) (69,139,092)
Other financial asset (listed investment) 2,430,319 - - 2,430,319
2,430,319 - (69,139,092) (66,708,773)
Level 1 Level 2 Level 3 Total
Consolidated $000 $000 $000 $000
2013
Financial assets/liabilities
Financial assets and liabilities at fair
value through profit and loss:
Convertible note facility - - (40,730,245) (40,730,245)
Other financial asset (Convertible note) - - 5,000,000 5,000,000
Available for sale financial assets 2,880,000 - - 2,880,000
2,880,000 - (35,730,245) (32,850,245)
Included within Level 1 of the hierarchy are listed investments. The fair values of these financial assets have
been based on the closing quoted bid prices at the end of the reporting period, excluding transaction costs.
In determining the fair values of unlisted investments included in Level 2 of the hierarchy, valuation techniques
such as those using comparisons to similar investments for which market observable prices are available
have been adopted.
Derivative instruments are included in Level 2 of the hierarchy with the fair values being determined using
valuation techniques incorporating observable market data relevant to the hedged position.
Valuation techniques used to derive level 3 fair values:
The fair value of convertible notes not traded in an active market is determined using an internally prepared
discounted cash flow valuation technique using observable inputs (such as share price and the terms and
conditions of the convertible notes as disclosed per note 17) and release of the initial calibration adjustment to
the profit or loss.
No transfers between the levels of the fair value hierarchy occurred during the current or previous reporting
periods.
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Notes to the consolidated financial statements for the year ended 30 June 2014
The following table presents the changes in level 3 instruments for the year ended 30 June 2014:
Financial liabilities:
Convertible
notes adjusted
at fair value
2014
Consolidated $
Opening balance 1 July 2013 40,730,245
Issues/additions (net) 5,903,600
Fair value losses recognised in finance expense (refer note 6(b)) 22,505,247
Closing balance 30 June 2014 69,139,092
26. Auditor’s remuneration
Consolidated Consolidated
2014 2013
$ $
Amounts paid or payable to BDO Audit (WA) Pty Ltd:
1
Audit or review of the financial reports of the Group 122,834 -
Other services by BDO Corporate Tax (WA) Pty Ltd and BDO
1 24,831 -
Corporate Finance (WA) Pty Ltd
1
Audit and other services provided by BDO South Africa 26,909 -
Amounts paid or payable to HLB Mann Judd
Audit or review of the financial reports of the Group - 57,632
Other assurance services in relation to the Group - 28,785
174,574 86,417
1
Includes Firestone Energy Limited and it’s wholly owned subsidiaries.
27. Commitments and contingencies
(a) Operating lease commitments
Future minimum rentals payable under non-cancellable operating leases are as follows:
Consolidated Consolidated
2014 2013
$ $
Outstanding operating lease commitments are payable as follows:
Within one year 180,000 180,000
Later than one year but not more than five years 90,000 15,000
270,000 195,000
On 1 August 2012 the Group entered into a service agreement with Garrison Capital Pty Ltd for certain
administrative services and office space for a term of 2 years commencing in August 2012. The Group was
required to give 3 months’ written notice to terminate the agreement which concluded in May 2014.
On 1 October 2013, the Group entered into a service agreement with Millcorp Securities, a company of which
Stephen Miller is a related party, for the provision of fully serviced office accommodation. The agreement term
is to 31 December 2015. 3 months written notice to terminate the agreement is required by either party.
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Notes to the consolidated financial statements for the year ended 30 June 2014
(b) Other commitments
? A production royalty, equivalent to ZAR0.50 (A$0.05) per tonne of coal sold, is payable to Sekoko Coal (Pty) Ltd
during the term of the mining operations to a maximum aggregated amount of ZAR45 million (A$4.52 million).
? The Group’s wholly-owned subsidiary Utafutaji Trading 75 (Pty) Ltd was due to make further payments to
purchase the mining tenement properties Swanepoelpan and Massenberg as follows:
Swanepoelpan ? 2,000,000 rand (A$200,721) by 20 June 2014
? 3,000,000 rand (A$301,081) by 20 July 2014
? 17,679,479 rand (A$1,774,318) by 30 November 2014
Massenberg ? 8,500,000 rand (A$853,062) by 22 June 2014
? 9,000,000 rand (A$903,243) by 22 July 2014
? 17,500,000 rand (A$1,756,305) by 30 November 2014
The above payments are currently being re-negotiated and will be made when project financing is completed.
In the interim, a monthly access fee of ZAR100,000 is being paid per property.
28. Contingent liabilities
There are no known contingent liabilities.
29. Parent entity information
The following information relates to the parent entity, The Waterberg Coal Company Limited, at 30 June
2014. The information presented has been prepared using consistent accounting policies as presented in
note 2.
Parent Parent
2014 2013
$ $
Current assets 2,475,320 19,111,605
Non-current assets 77,703,538 62,010,424
Total assets 80,178,858 81,122,029
Current liabilities 80,078,261 63,569,248
Non-current liabilities - -
Total liabilities 80,078,261 63,569,248
Contributed equity 54,099,744 32,139,838
Share based payment reserve 11,286,876 4,241,245
Accumulates losses (65,286,023) (18,828,302)
Total equity (100,597) 17,552,781
Profit / (loss) for the year (46,457,721) (15,553,571)
Other comprehensive income - 22,442,511
Total comprehensive profit / (loss) for the year (46,457,721) 6,888,940
30. Interests in other entities
(a) Investments in controlled entities
The consolidated financial statements incorporate the assets, liabilities and results of The Waterberg Coal
Company Limited and the following controlled entities:
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Notes to the consolidated financial statements for the year ended 30 June 2014
Country of Ownership interest Ownership interest
Name of entity incorporation held by the group held by non-
controlling interests
2014 2013 2014 2013
Main Street 1116 Pty Ltd South Africa 100% 100% - -
Ariona Company SA Seychelles 100% 100% - -
Firestone Energy Limited Australia 45.88% 13.50% 54.12% N/A
1
Checkered Flag Investments 2 (Pty) Ltd South Africa 45.88% 13.50% 54.12% N/A
1
Lexshell 126 General Trading (Pty) Ltd South Africa 45.88% 13.50% 54.12% N/A
1
Utafutaji Trading 75 (Pty) Ltd South Africa 45.88% 13.50% 54.12% N/A
1
These companies are all wholly owned subsidiaries of Firestone Energy Limited.
Refer to note 32 for details on the acquisition of Ariona Company SA.
(b) Non-controlling interests
The following table sets out the summarised financial information for each subsidiary that has non-controlling
interests that are material to the group. Amounts disclosed are before intercompany eliminations.
Summarised balance sheet Firestone Energy
Limited
2014
$
Current assets 610,536
Non-current assets 77,007,095
Total assets 77,617,631
Current liabilities 15,217,004
Non-current liabilities 24,146,476
Total liabilities 39,363,480
Net assets 38,254,151
Accumulated NCI 7,523,112
Summarised statement of comprehensive income Firestone Energy
Limited
2014
$
Revenue 981
Profit / (loss) for the period (4,802,197)
Other comprehensive income (6,475,226)
Total comprehensive income (11,277,423)
Profit / (loss) allocated to NCI (1,933,773)
Comprehensive income allocated to NCI (4,003,689)
Summarised cash flows Firestone Energy
Limited
2014
$
Cash flows from operating activities (935,737)
Cash flows from investing activities (525,175)
Cash flows from financing activities 1,091,550
Net increase / (decrease) in cash and cash equivalents (369,362)
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Notes to the consolidated financial statements for the year ended 30 June 2014
31. Discontinued operations
On the 21 April 2011, the entity was placed into voluntary administration by the Directors with PPB Advisory
being appointed Administrators. Efforts to recapitalise the Company prior and subsequent to voluntary
administration were unsuccessful and the administrator subsequently suspended the operations and all were
placed into care and maintenance mode.
On 8 December 2011, creditors approved a resolution for the Company to enter into a Deed of Company
Arrangement (DOCA). The DOCA was executed by the Administrators on 23 December 2011 and sought to
restore the Company to a solvent state by reorganising the Company’s share capital and effecting an equity
raising to enable the Company to be reinstated on the ASX. On 24 July 2012, the recapitalisation of the
Company and the effectuation of the DOCA were completed and control of the Company passed to the
Directors effective 24 July 2012, the Company was no longer subject to any other form of external
administration, receivership or liquidation.
The consolidated entity/Company was considered a discontinued operation from 11 April 2011 until the DOCA
was effectuated on 24 July 2012. The financial performance to the date of 24 July 2012, which is included in
the discontinued operation per the statement of comprehensive income, is as follows:
Consolidated Consolidated
(a) Total profit / (loss) after tax attributable to discontinued 2014 2013
operation $ $
Revenue (interest income) - -
Expenses - -
Profit / (loss) before income tax - -
Income tax expense - -
Profit attributable to parent entity - -
Profit on sale before income tax - 22,442,511
Income tax expense - -
Profit on sale after income tax - -
Total profit / (loss) after tax attributable to discontinued
- 22,442,511
operation
On 24 July 2012, the recapitalization of the Company and the effectuation of the DOCA were completed and
control of the Company passed to the Directors. The Company’s secured creditors released and discharged
any security granted to them by the Company and all conditions precedent under the DOCA were satisfied or
waived; resulting in a profit on settlement of DOCA debts of $22,442,511 as follows:
Consolidated Consolidated
2014 2013
$ $
Liabilities as at 24 July 2012 - 22,715,088
Assets as at 24 July 2012 - 272,577
Net liabilities disposed - 22,442,511
Consolidated Consolidated
(b) Profit / (loss) on disposal 2014 2013
$ $
Consideration - -
Value of assets / liabilities disposed - -
- -
Profit / (loss) on disposed - -
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Notes to the consolidated financial statements for the year ended 30 June 2014
(c) The net cash flows of the discontinued operation, which
have been incorporated into the statement of cash flows, are 2014 2013
as follows; $ $
Net cash inflow / (outflow) from operating activities - -
Net cash inflow from investing activities - -
Net cash inflow / (outflow) from financing activities - -
Net cash increase / (decrease) in cash generated by the
discontinued - -
Net cash increase / (decrease) in cash generated by the
Discontinued operation - -
32. Acquisition of Subsidiary – Ariona Company SA
During the previous financial year, the Group acquired 100% of the voting shares of Ariona Company SA (a
company incorporated in the Seychelles) on 28 March 2013.
The total cost of the acquisition was $25,000,000 and comprised an issue of equity instruments. The Group
issued securities as described in note 20(a) with an issue price of $0.02.
The acquisition does not constitute a reverse acquisition as noted in note 4 and the cost of the acquisition has
been allocated to exploration and evaluation assets as disclosed in note 11.
The fair value of the identifiable assets and liabilities of Ariona Company SA as at the date of acquisition are:
Recognised on
acquisition
$
Trade and other receivables 63,440
Tenement interests 25,273,383
Loans receivable 8,373,195
Trade and other payables (392,279)
Borrowings (8,317,739)
Fair value of identifiable net assets 25,000,000
Cost of the acquisition:
Securities issued, at fair value 25,000,000
Total cost of the acquisition 25,000,000
Had the results of Ariona Company SA been consolidated from 1 July 2012 revenue for the Group would
have been $494,196 and the consolidated result would have been $4,839,134.
All acquisition related costs of $226,000 have been expensed and included in as part of consultants and
legal expenses in the financial year ended 30 June 2013.
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Notes to the consolidated financial statements for the year ended 30 June 2014
33. Acquisition of Subsidiary – Firestone Energy Limited
On 23 September 2013, the off-market takeover bid for all the ordinary shares in Firestone Energy Limited, a
company listed on the ASX, closed. At the conclusion of the offer, WCC’s shareholding in Firestone is
45.88%. The acquisition was essentially to acquire Firestone Energy Limited’s share of the coal project in the
Waterberg locality in South Africa, with no infrastructure or personnel, and therefore, the acquisition has been
treated as an asset acquisition as Firestone does not meet the definition of a business in accordance with the
Accounting Standards.
The consideration payable 1.25 Waterberg shares for every two shares held in Firestone Energy Limited.
Details of the fair value of the assets and liabilities acquired as at 23 September 2013 are as follows:
Purchase consideration comprises: $
Existing shares held 2,880,000
Ordinary shares acquired via takeover (1,148,632,708 shares) 11,026,874
Total consideration 13,906,874
Net assets acquired: $
Cash and cash equivalents 75,789
Trade and other receivables 1,564,255
Property, plant and equipment 4,345,235
Interest in joint operation 56,152,478
Trade and other payables (3,624,251)
Borrowings (33,388,530)
Non-controlling Interest at fair value (11,218,102)
Total 13,906,874
34. Events after the balance sheet date
Loan Facility
Subsequent to the year end, the Company entered into a new loan facility agreement with Firestone Energy
Limited whereupon it extended a further loan of $3 million to enable Firestone Energy Limited to meet its
commitments on the Waterberg Coal Project.
There were no other known significant events from the end of the financial year to the date of this report.
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Directors’ Declaration
DIRECTORS’ DECLARATION
In accordance with a resolution of the directors of The Waterberg Coal Company Limited, I state that:
1. In the opinion of the directors:
(a) the financial statements, notes and the additional disclosures included in the directors’ report
designated as audited, are in accordance with the Corporations Act 2001, including:
(i) complying with Australian Accounting Standards and Corporations Regulations 2001;
and
(ii) giving a true and fair view of the Group’s financial position as at 30 June 2014 and of
its performance for the year ended on that date;
(b) In the directors’ opinion, there are reasonable grounds to believe that the Group will be able
to pay its debts as and when they become due and payable, based on the factors outlined in
note 2 (a).
(c) The financial statements comply with International Financial Reporting Standards as issued
by the International Accounting Standards Board.
2. This declaration has been made after receiving declarations as required to be made to the directors in
accordance with section 295A of the Corporations Act 2001 for the financial year ended 30 June
2014.
On behalf of the Board
Stephen Miller
Executive Director
30 September 2014
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Exploration Licences
INDEPENDENT AUDITOR’S REPORT
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Exploration Licences
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Exploration Licences
The Waterberg Coal Company Ltd and Controlled Entities ABN 64 065 480 453
Exploration Licences
Exploration licences
The Group has an interest at the date of this report in the following Exploration and Mining Licences.
Licences are located in South Australia:
Property Name Tenement Interest
Lyons EL 5221 100%
Glenloth EL 5397 (previously 4197) 100%
Claypan Dam EL 4445 100%
The Group’s interest in the Waterberg Coal Project, located in South Africa:
Properties Right under Relevant Holder Interest Issue Date Expiry Date
which the Joint
properties Venture
are held
Vetleegte Vetleegte First Joint Uzalile 37.39% Granted New Order Renewal lodged 19
Prospecting Venture Joint Prospecting Right No. September 2011 and prior to
Right Venture 651/2006, on the expiry date.
(Sekoko 19/10/06
Resources Section 18(5) of the MPRDA
(Pty) Ltd provides that prospecting
and right in respect of which an
Uzalile application for renewal has
Property been lodged will remain in
Services force until such time as the
(Pty) Ltd) renewal application has been
granted or refused.
Olieboomsfontein Duikerfontein First Joint Sekoko 37.39% Granted New Order 2 July 2016
Prospecting Venture Coal (Pty) Prospecting Right No.
Right Ltd 681/2007, on
13/10/05
Renewal on 3 July
2013
Duikerfontein Duikerfontein First Joint Sekoko 37.39% Granted New Order 2 July 2016
Prospecting Venture Coal (Pty) Prospecting Right No.
Right Ltd 681/2007, on
13/10/05
Renewal on 3 July
2013
Swanepoelpan Duikerfontein First Joint Sekoko 37.39% Granted New Order 2 July 2016
Prospecting Venture Coal (Pty) Prospecting Right No.
Right Ltd 681/2007, on
13/10/05
Smitspan Mining Right Second Joint Sekoko 37.39% Granted New Order 16 August 2041
Venture Coal (Pty) Mining Right No.
Ltd 22/2011, on 17/09/11
Massenberg Mining Right Second Joint Sekoko 37.39% Granted New Order 16 August 2041
Venture Coal (Pty) Mining Right No.
Ltd 22/2011, on 17/09/11
Minnasvlakte Mining Right Second Joint Sekoko 37.39% Granted New Order 16 August 2041
Venture Coal (Pty) Mining Right No.
Ltd 22/2011, on 17/09/11
Hooikraal Mining Right Second Joint Sekoko 37.39% Granted New Order 16 August 2041
Venture Coal (Pty) Mining Right No.
Ltd 22/2011, on 17/09/11
1 October 2014
Sponsor:
The Standard Bank of South Africa Limited
Date: 01/10/2014 07:55:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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