Wrap Text
Interim results
Oakbay Resources and Energy Limited
(Incorporated in the Republic of South Africa)
(Registration number 2009/021537/06)
Share code: ORL ISIN: ZAE 000196085
("Oakbay" or "the group" or "the company")
REVIEWED INTERIM CONDENSED CONSOLIDATED FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2014
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Reviewed Audited
six months twelve months
ended ended
31 August 28 February
2014 2014
R'000 R'000
Assets
Non-current assets 7 177 867 7 155 952
Property, plant and equipment 1 892 025 1 871 519
Intangible assets 5 205 629 5 205 629
Other investments 55 968 54 598
Cash and cash equivalents 2 439 2 439
Deposits 21 806 21 767
Current assets 204 606 183 840
Trade and other receivables 10 996 10 647
Amount owing by related parties 37 657 27 345
Inventories 154 432 142 754
Cash and cash equivalents 1 521 3 094
Total assets 7 382 473 7 339 792
Equity and liabilities
Capital and reserves
Ordinary share capital 1 1
Share premium 56 025 56 025
Accumulated profit 3 970 273 4 087 357
Total equity attributable to equity
holders of the company 4 026 299 4 143 383
Non-controlling interest 562 214 598 772
Total equity 4 588 513 4 742 155
Non-current liabilities 1 917 014 1 591 325
Loans and borrowings 290 386 –
Provisions 169 052 133 749
Deferred taxation 1 457 576 1 457 576
Current liabilities 876 946 1 006 312
Trade and other payables 119 977 108 036
Loans and borrowings 188 789 404 695
Amounts owing to related parties 257 437 241 165
Amount owing to holding company 310 743 252 416
Total liabilities 2 793 960 2 597 637
Total equity and liabilities 7 382 473 7 339 792
Net asset value per share 4 589 4 742
(in R'000)
Net tangible asset value per (617) (463)
share (in R'000)
Closing number of shares 1 000 1 000
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Reviewed six Unaudited six
months ended months ended
31 August 2014 31 August 2013
R'000 R'000
Revenue 76 244 84 936
Cost of sales (76 943) (105 901)
Gross loss (699) (20 965)
Other operating income 37 205 26 165
Other operating expenses (59 379) (52 051)
Operating loss (22 873) (46 851)
Finance income 724 55
Finance expense (131 493) (17 404)
Loss before income tax for
the period (153 642) (64 200)
Taxation – –
Loss for the period (153 647) (64 200)
Other comprehensive income – –
Loss and total comprehensive
income for the period (153 642) (64 200)
Loss and total comprehensive
income attributable to:
Equity holders of the company (117 084) (49 528)
Non-controlling interest (36 558) (14 672)
(153 642) (64 200)
Reconciliation between earnings and headline earnings
per share
Basic loss per share (117 084) (49 528)
Diluted loss
per share (117 084) (49 528)
Headline (loss) / earnings per share for the six months ended 31 August 2014
Total comprehensive loss
for the six month period (117 084) (49 528)
Adjustments: - -
Headline loss attributable
to ordinary shareholders (117 084) (49 528)
Basic headline loss per share (117 084) (49 528)
Diluted headline loss
per share (in R'000) (117 084) (49 528)
Weighted average number of
shares 1 000 1 000
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW
Reviewed Audited
six months twelve months
ended ended
31 August 28 February
2014 2014
R'000 R'000
Cash flows from operating activities (29 955) 20 807
Cash utilised by operations (15 451) 38 156
Interest paid (15 228) (17 404)
Interest received 724 55
Cash flows from investing activities (41 712) (113 204)
Additions to property, plant and
equipment (30 031) (36 470)
Additions to investments (1 370) (1 253)
Increase in amounts owing by related
parties (10 311) (75 481)
Cash flows from financing activities 70 094 87 771
Increase in deposits (39) –
(Decrease)/increase in loans and
borrowings (4 466) 20 596
Increase in amount owing to related
parties 16 272 31 233
Increase in amount owing to holding
company 58 327 35 942
Net decrease in cash and cash
equivalents (1 573) (4 626)
Cash and cash equivalents at the
beginning of the year 3 094 5 982
Cash and cash equivalents at the end of
the period 1 521 1 356
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to equity holders of the Company
Non-
Share Share Accumulate controlling
capital premium d profit Total interest Total
R'000 R'000 R'000 R'000 R'000 R'000
Balance at 1 March
2011 1 56 025 3 623 822 3 679 848 559 877 4 239 725
Total comprehensive
income for the year – – 641 427 641 427 147 134 788 561
Balance at 29
February 2012 1 56 025 4 265 249 4 321 275 707 011 5 028 286
Total comprehensive
income for the year – – 14 444 14 444 (64 550) (50 106)
Balance at 28
February 2013 1 56 025 4 279 693 4 335 719 642 461 4 978 180
Total comprehensive
income for the period – – (49 528) (49 528) (14 672) (64 200)
Balance at 31 August
2013 1 56 025 4 230 165 4 286 191 627 789 4 913 980
Total comprehensive
income for the period – – (142 808) (142 808) (29 017) (171 825)
Balanced at 28
February 2014 1 56 025 4 087 357 4 143 383 598 772 4 742 155
Total comprehensive
income for the period – – (117 084) (117 084) (36 558) (153 642)
Balance at 31 August
2014 1 56 025 3 970 273 4 026 299 562 214 4 588 513
COMMENTARY – Financial and operational overview.
1. The directors present the reviewed condensed consolidated interim financial results for
the six months ended 31 August 2014.
2.1 Basis of preparation
These interim condensed consolidated financial results for the six months ended 31 August
2014 have been prepared in accordance with the framework concepts and the recognition and
measurement criteria of International Financial Reporting Standards ("IFRS"), and the SAICA
Financial Reporting Guides as issued by the Accounting Practices Committee, as well as the
presentation and disclosure requirements of IAS 34 – Interim Financial Reporting, the JSE
Limited Listings Requirements and the Companies Act of South Africa. The group accounting
policies and methods of measurement and recognition comply in material respects with IFRS
and are consistent with those applied in the previous financial period.
These interim condensed consolidated financial results have been prepared under the
supervision of Trevor Scott (BCom (Hons), BAcc, CA(SA))in his capacity as Financial
Director.
2.2 Reviewed results – auditor's conclusion
KPMG Inc, Oakbay's independent auditors, have reviewed the interim condensed consolidated
financial results of Oakbay. The review was conducted in accordance with International
Standards on Review Engagements 2410: Review of Interim Financial Information performed by
the Independent Auditor of the Entity. They have expressed an unmodified review conclusion
on the results. The auditors have not reviewed or audited comparative financial information
for the six months ended 31 August 2013, and accordingly do not express any opinion
thereon. The condensed consolidated interim financial results comprise the condensed
consolidated statement of financial position at 31 August 2014, condensed consolidated
statement of comprehensive income, condensed consolidated statement of changes in equity
and condensed consolidated statement of cashflows for the six months then ended and
selected explanatory notes. The review report is available for inspection at Oakbay's
registered office.
Any forecast information included in this announcement has neither been reviewed nor
reported on by the company's auditors.
3. Nature of the business
Oakbay Resources and Energy Limited is incorporated in the Republic of South Africa. These
condensed consolidated interim financial statements comprise the Company and its
subsidiaries (together referred to as the "Group" and individually as "Group entities").
Its principal business activity is the mining and exploration of mineral resources,
particularly uranium and gold deposits, and the possible beneficiation thereof. The Group
currently owns and operates a uranium and gold mine in the North West province of the
Republic of South Africa. The Group is currently engaged in open cast gold mining while
simultaneously focusing on the completion of a bankable feasibility study on its uranium
prospects.
Six
months Year
ended ended
31 28
August February
2014 2014
R'000 R'000
4. Provisions
Environmental rehabilitation and
restoration provision
Balance at the beginning of the year 133 749 91 087
Unwind of interest 11 143 13 212
Change in estimate 24 160 29 450
Balance at the end of the year 169 052 133 749
5. Loans and borrowings
Industrial Development Corporation ("IDC")
In April 2010, the IDC advanced the company R250 million.
Subsequent to the year ended 28 February 2014, the company
commenced with the process of renegotiating and restructuring
this loan with the IDC. This process was finalised on 24 June
2014 and the effective date of the restructured loan
agreement was backdated to 1 May 2013. Based on the new terms
of the restructured agreement, interest is incurred at a rate
of prime plus 2%, compounded on a daily basis. There are
fixed repayment terms for principal and interest repayments.
The remaining loan and accrued interest will be due and
payable on 31 March 2018.
As part of the new restructured agreement, the accrued
interest of R202 million from the initial IDC loan agreement
will accrue interest at prime plus 2%, compounded on a daily
basis. Upon the listing of the company, any outstanding
accrued interest and the interest thereon would be settled by
the IDC subscribing for shares in Oakbay Resources and
Energy. The shares shall be issued to the IDC at a 10%
discount of the listing price.
Due to the renegotiated terms of the IDC loan, a fair value
adjustment of R19.1 million was passed through profit and
loss and total interest of R59.8 million was recognised. For
purposes of determining the fair value of the loan,
management used a discounted cash flow model on the
assumption that the prime interest rate would remain as 9.25%
going forward and there will be no changes to the repayment
terms as stated in the agreement with the IDC. Should any
changes to the repayment terms or the interest rate occur
this will have an impact on the profit and loss going
forward.
Six
months Year
ended ended
31 28
August February
2014 2014
IDC Borrowings R'000 R'000
Balance at the beginning of the period 398 909 367 843
Repayment of loan – (20 000)
Finance expense reversal (22 937) –
Modification fair value adjustment 45 140 –
Fair value adjustment (25 982) –
Interest accrued 82 723 51 066
Balance at the end of the period 477 853 398 909
Terms and conditions
As at 28 February 2014, the loan was unsecured and interest
bearing. Interest was accrued at an effective rate of JIBAR
plus 8% per annum, compounded on a daily basis.
As at 31 August 2014, the loan is unsecured and interest
bearing. Interest is accrued at prime plus 2% on a daily
basis. Interest is due quarterly with effect from 30 June
2014. Approximately R256 million of IDC borrowings will be
converted to equity upon listing at a 10% discount to the
listing price.
Six
months Year
ended ended
31 28
August February
2014 2013
R'000 R'000
Total lease obligations
Finance lease obligations 1 322 5 786
Total loans and borrowings 479 175 404 695
Non-current 188 789 –
Current 290 386 404 695
479 175 404 695
6. Subsequent events
Subsequent to the period under review, the company issued 752 935 353 shares to existing
shareholders in terms of a pro rata issue of shares for no consideration. Additionally,
the company issued 35 000 shares to employees in terms of a broad based BEE initiative,
as well as issuing 18 500 000 shares for a total consideration of R185 million by way of
a private placement. The company is expected to have its securities listed on the Main
Board of the Johannesburg Stock Exchange on 28 November 2014. Upon listing date and
pursuant to a loan agreement between the IDC and the Group, the Group will convert a
portion of its IDC borrowings (amounting to approximately R256 million) into 28 528 647
ordinary shares.
7. General review of operations.
During the six months under review, the company focused its attention on the following
important issues:-
Safety
During the above mentioned period, the company's safety results were outstanding with
zero fatalities. To date the mine is at 4581 fatality free production shifts, which
took 4 years 2 months and 6 days (1527 production days) to achieve. This is proof of
the continuous commitment of the mine employees towards safe working practices. The
drive in order to keep the focus on safety is through the established Health and
Safety Committee and proper communication between the committee and workplace health
and safety representatives. On the job training and supervision is of high priority
and the assistance of the Safety, Health and Environmental and Training Departments
contribute towards this goal of zero fatalities. Senior management of the mine have
also bought into the safety awareness program and chair a weekly safety meeting with
the relevant supervisors in order to discuss safety achievements and pro-active
action to prevent any accidents and injuries. Safety remains the highest priority for
management and the company is constantly re-evaluating its safety procedures in line
with its philosophy of zero tolerance to unsafe acts and reducing safety risk to its
lowest possible level.
Gold production
During the period under review, the company produced approximately 386 485 milled
tons and realised gold sales of 6 721 ounces. Mining operations for the past six
months have been challenging due to operational upgrades in the company's milling
section. The company's recent investment in additional milling equipment and related
infrastructure is expected to increase production capacity at the mine. Consistently
achievable grades remain challenging due to the planned development ramp up and the
company's focus has been on identifying highest possible grade mining opportunities
rather than solely focusing on increasing the volume of milled ore. The company is
also focused on further expansion of miscellaneous value adding operations at the
mine that can contribute toward cost reduction and additional income for the company
such as a newly installed foundry to create grinding media as well as a crusher plant
making road aggregate from the waste product to decrease our environmental liability
and create extra revenue
Uranium operations and further exploration
Uranium operations are still in the development stage. The company intends to proceed
with a commissioning a bankable feasibility study on its mineral deposits with a view
to raising additional capital in the foreseeable future. The company is of the view
that at least R800 million will be required to bring optimum uranium production on-
line. The company intends to raise capital from both local and foreign investors in
the twelve months following the listing, and will be well placed to take advantage of
the expected upswing in uranium prices when they materialise as the price has gained
more than 65% in the last quarter
8. Prospects
The Group currently has gold and uranium operations in the North West province of the
Republic of South Africa and is focusing on value added strategies on both its gold and
uranium assets. The company is in the process of commissioning a definitive feasibility
study on its uranium project which is expected to be completed in late 2015.
9. Changes to the board
There have been no changes to the composition and structure of the board of directors
during the period under review. In preparation of the listing, the following changes
have however subsequently been implemented with effect from 25 September 2014:
- Ms Ronica Ragavan and Mr Ashu Chawla resigned as directors.
- The following individuals were appointed as non-executive directors:
- Mr Atul Gupta (Non-executive chairman)
- Mr Terry Rensen (Independent)
- Mr Mark Pamensky (Independent and Lead Independent Director ("LID"))
- Ms Dudu Nyamane (Independent)
- The following individuals were appointed as executive directors:
Mr George van der Merwe (Chief Executive Officer)
Mr Varun Gupta (Operations)
Mr Trevor Scott (Chief Financial Officer)
10. Dividends
No dividend has been declared for the interim period.
For and on behalf of the board of directors
G van Der Merwe
Chief Executive Officer
27 November 2014
Directors: A Gupta (Chairman), G van Der Merwe (CEO), M Pamensky (Independent Non-executive
and LID), D Nyamane (Independent Non-executive), T Rensen (Independent Non-executive),
V Gupta (Executive), T Scott (FD).
Sponsor: Sasfin Capital, a division of Sasfin Bank Limited.
Company Secretary: iThemba Governance and Statutory Solutions Proprietary Limited
Registered Office:
89 Gazelle Avenue,
Corporate Park South,
Midrand, 1685,
Postal address
Postnet Suite 458
Private Bag X9
Benmore, 2010
www.oakbay.co.za
27 November 2014
Sponsor:
Sasfin Capital (a division of Sasfin Bank Limited)
Date: 27/11/2014 05:32:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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