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ROCKWELL DIAMONDS INCORPORATED - Audited condensed consolidated financial statements

Release Date: 29/05/2015 07:05
Code(s): RDI     PDF:  
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Audited condensed consolidated financial statements

Rockwell Diamonds Inc.
(A company incorporated in accordance with 
the laws of British Columbia, Canada) 
(Incorporation number BCO354545)
(South African registration number: 2007/031582/10) 
Share code on the JSE Limited: RDI
ISIN: CA77434W2022   Share code on the TSX: RDI 
CUSIP Number: 77434W103
("Rockwell" or "the Group")

28 May 2015

Audited condensed consolidated financial statements 
for the years 28 February 2015 and 28 February 2014

Consolidated Statements of Financial Position

Amounts in Canadian Dollars ('000)
                                           As at           As at
                                          28 Feb          28 Feb
                                            2015            2014
Assets
Non-current assets
Mineral property interests                16 518          26 642
Investment in associates                     396             233
Property, plant and equipment             27 001          30 719
Investments and deposits                   1 502           5 386
Rehabilitation deposits                    3 376           1 701
Total non-current assets                  48 793          64 681

Current assets
Inventories                                2 177           4 608
Loans to related parties                       8             186
Current tax receivable                        37              36
Trade and other receivables                4 889           8 501
Cash and cash equivalents                    576           1 325
Assets held for sale                      13 525               -
Total current assets                      21 212          14 656
Total assets                              70 005          79 337

Equity and liabilities
Equity
Share capital                            147 435         147 073
Reserves                                  (8 575)        (10 009) 
Retained loss                           (102 076)        (88 096)
Total equity attributable 
to the equity holders 
of the Group                              36 784          48 968
Non-controlling interest                  (2 369)         (1 737)
Total equity                              34 415          47 231

Liabilities
Non-current liabilities
Loans and borrowings                       3 844           3 241
Finance lease obligation                   1 276             110
Deferred tax                               2 995           5 926
Rehabilitation obligation                  5 987           6 459
Total non-current liabilities             14 102          15 736
Current liabilities
Loans from related parties                   162               4
Loans and borrowings                       2 296           1 954
Finance lease obligation                     708             165
Trade and other payables                  10 902          11 162
Bank overdraft                                 -           3 085
Liabilities held for sale                  7 420               -
Total current liabilities                 21 488          16 370
Total liabilities                         35 590          32 106
Total equity and liabilities              70 005          79 337


Consolidated Statements of Financial Performance                   

Amounts in Canadian Dollars ('000) 
                                    For the year    For the year
                                           ended           ended
                                          28 Feb          28 Feb
                                            2015            2014
Sale of diamonds                          56 948          41 107
Beneficiation income                      11 050           4 063
Cost of sales before 
amortisation and depreciation            (68 827)        (39 200)
Gross (loss) profit before 
amortization and depreciation               (829)          5 970
Amortization of mineral 
property interests                          (793)           (928) 
Depreciation of property, 
plant and equipment                       (6 273)         (5 009) 
Rehabilitation obligation recognized        (993)           (743)
Gross loss                                (8 888)           (710)
Other income                               1 619           1 703
General, administration and 
business development expenses             (5 895)         (4 440) 
Realized foreign exchange with 
sale of subsidiary                             -          (6 609) 
Impairments                               (3 643)            (55)
Loss before net finance costs            (16 807)        (10 111)
Finance income                               449             699
Finance costs                             (1 308)         (1 137)
Loss after net finance costs             (17 666)        (10 549)
Share of profit from equity 
accounted investments                        149              59
Loss before taxation                     (17 517)        (10 490)
Taxation                                   2 991              63
Loss for the year                        (14 526)        (10 427)
(Loss) profit attributable to :
Owners of the parent                     (13 980)        (10 618) 
Non-controlling interest                    (546)            191
                                         (14 526)        (10 427)
Loss per share
Basic and diluted loss 
per share (cents)                         (25.89)         (21.30)


Consolidated Statements of Comprehensive Income

Amounts in Canadian Dollars ('000)
                                    For the year    For the year
                                           ended           ended
                                          28 Feb          28 Feb
                                            2015            2014
Loss for the year                        (14 526)        (10 427)
Other comprehensive income net 
of taxation 

Items that are or may be 
reclassified to profit or loss
Exchange differences on 
translating foreign operations             1 108          (5 160)
Reversal of realized foreign 
exchange with sale of subsidiary               -           6 609
Other comprehensive income for the 
year net of taxation                       1 108           1 449
Total comprehensive loss                 (13 418)         (8 978)
Total comprehensive income 
attributable to:
Owners of the Group                      (12 786)         (9 378) 
Non-controlling interest                    (632)            400
Total comprehensive income 
for the year                             (13 418)         (8 978)


Consolidated Statements of Changes in Equity

Amounts in Canadian Dollars ('000)
 
                            Share    Foreign      Share-       Total
                          capital   currency       based         net
                                      trans-     payment    reserves
                                      lation     reserve**    
                                     reserve*        
Balance at 
01 March 2013             146 862    (20 039)      8 164     (11 875)
Total comprehensive 
income for the year
(Loss) profit for the year      -          -           -           -
Other comprehensive income      -      1 240           -       1 240
Total comprehensive income 
for the year                    -      1 240           -       1 240
Share-based payment expense     -          -         626         626
Shares issued to employees    205          -           -           -
Shares issued to consultants   29          -           -           -
Share issue costs             (23)         -           -           -
Total changes                 211      1 240         626       1 866

Balance at 
28 February 2014          147 073    (18 799)      8 790     (10 009)
Total comprehensive income
for the year
Loss for the year               -          -           -           -
Other comprehensive income      -      1 194           -       1 194
Total comprehensive income
for the year                    -      1 194           -       1 194
Share-based payment expense     -          -         240         240
Share options excercised       16          -           -           -
Shares issued to employees    347          -           -           -
Share issue costs              (1)         -           -           -
Total changes                 362      1 194         240       1 434
Balance at 
28 February 2015          147 435    (17 605)      9 030      (8 575)







Amounts in Canadian Dollars (000’s)
                         Retained        Total         Non-         Total
                             loss       equity     control-        equity
                                         attri-       ling
                                       butable    interest
                                     to equity
                                    holders of
                                     the Group
Balance at 
01 March 2013             (77 478)      57 509      (2 137)        55 372
Total comprehensive 
income for the year
(Loss) profit for 
the year                  (10 618)     (10 618)        191        (10 427)
Other comprehensive 
income                          -        1 240         209          1 449
Total comprehensive 
income for the year       (10 618)      (9 378)        400         (8 978) 
Share-based payment expense     -          626           -            626
Shares issued to employees      -          205           -            205
Shares issued to consultants    -           29           -             29
Share issue costs               -          (23)          -            (23)
Total changes             (10 618)      (8 541)        400         (8 141)

Balance at 
28 February 2014          (88 096)      48 968      (1 737)        47 231
Total comprehensive 
income for the year 
Loss for the year         (13 980)     (13 980)       (546)       (14 526)
Other comprehensive income      -        1 194         (86)         1 108
Total comprehensive income 
for the year              (13 980)     (12 786)       (632)       (13 418) 
Share-based payment expense     -          240           -            240
Share options excercised        -           16           -             16
Shares issued to employees      -          347           -            347
Share issue costs               -           (1)          -             (1)
Total changes             (13 980)     (12 184)       (632)       (12 816)
Balance at 
28 February 2015         (102 076)      36 784      (2 369)        34 415

* Currency translation differences arising on the conversion of the 
results and financial position of foreign operations from their 
functional currency to the Company's presentation currency are 
accumulated in the foreign currency translation reserve.

** Equity settled share-based payment transactions are accumulated in 
the share-based payment reserve.

Consolidated Statements of Cash Flows
Amounts in Canadian Dollars ('000) 
                                    For the year    For the year
                                           ended           ended
                                          28 Feb          28 Feb
                                            2015            2014
Cash flows from operating activities
Cash receipts from customers              68 301          41 999
Cash paid to suppliers and employees     (67 644)        (39 328)
Cash generated from operations               657           2 670
Finance income                               263             373
Finance costs                               (469)           (484)
Net cash inflow from operating 
activities                                   451           2 559

Cash flows from investing activities
Purchase of property, plant 
and equipment                             (4 070)         (8 707) 
Proceeds from sale of property, 
plant and equipment                          367             975
Purchase of mineral property interests      (663)           (199)
Sale of mineral property interests             -           2 098
Proceeds from sale of subsidiary               -           1 679
Movement in related party loans              328            (143) 
Movement in investments and 
deposits                                   2 575          (2 383) 
Increase in rehabilitation deposits       (1 623)            (65)
Net cash outflow from investing 
activities                                (3 086)         (6 745)
Cash flows from financing activities
Proceeds on share issue                       16               - 
Share issue costs                             (1)            (23) 
Proceeds from (repayment of) loans 
and borrowings                             4 126             (10) 
Proceeds from (repayment of) 
finance lease obligations                  1 606            (272)
Net cash inflow (outflow) from 
financing activities                       5 747            (305)
Net movement in cash and cash 
equivalents for the year                   3 112          (4 491)
Cash and cash equivalents at the 
beginning of the year                     (1 760)          2 731
Cash and cash equivalents included 
in assets held for sale                     (776)              -
Total cash and cash equivalents at 
end of the year                              576          (1 760)


Assets and liabilities held for sale

On March 30, 2015, the Company announced that it had reached an 
agreement to sell its non-core Tirisano Project ("Tirisano") in the 
North West Province of South Africa for a cash consideration of 
ZAR60 million ($6.4 million). The property had previously been 
identified as a non-core asset and a sale process was initiated. After 
evaluating a number of proposals as part of the sale process, the 
Company reached an agreement with a consortium made up of the royalty 
miners ("the Consortium"), who have operated at Tirisano for the past 
two years. The Consortium will acquire the entire issued share 
capital, together with claims on loan account in Rockwell's 100% 
owned subsidiary, Etruscan Diamonds Proprietary Limited including the 
Tirisano mining right and its associated infrastructure. Accordingly 
these assets and liabilities are presented as a disposal group held 
for sale.

The sale  is  expected to  close  within 12  months,  after  the  
successful  completion  of  conditions  precedent, including required 
regulatory approvals.  The cash consideration will be settled by way 
of two initial payments totaling ZAR20 million ($2.1 million),
already received in Q1 2016, followed by 20 equal monthly instalments
of ZAR2 million ($0.21 million).

As at 28 February 2015 the disposal group was stated at the impaired 
carrying amount being the lower of carrying amount or fair value less 
costs to sell (Level 1 of the fair value hierarchy) and was included 
within the North West for operating segment reporting purposes. An 
impairment of $2.6 million was calculated on the mineral property 
value based on the difference between the selling price of 
ZAR60 million ($6.4 Million) and the net carrying value.

The disposal of the Tirisano Project is not considered to be a 
discontinued operation. Although regarded as a seperate segment it is 
not considered to represent a seperate line of business or 
geographical area.

Amounts in Canadian Dollars ('000)
                                           As at 
                                          28 Feb 
                                            2015 
Assets and liabilities
Assets held for sale
Mineral property interests                 8 000 
Property, plant and equipment              1 448 
Investments and deposits                   1 664 
Rehabilitation deposits                       84 
Inventory                                    457 
Trade and other receivables                1 096 
Cash and cash equivalents                    776 
                                          13 525 

Liabilities held for sale
Loans and borrowings                       3 697 
Rehabilitation obligation                  2 117 
Trade and other payables                   1 606 
                                           7 420 

Acquisition of subsidiary

Gumrock Proprietary Limited ("Gumrock") is an unlisted entity in 
which the Group has a 50% interest.

Gumrock is structured as a separate vehicle in which the Group has
a residual interest. Rockwell has certain voting rights which 
effectively give it the ability to control the relevant activities, 
and management has concluded that Gumrock should be consolidated 
from incorporation.

Gumrock was incorporated in March 2014, and Rockwell paid  
ZAR1million for its 50% interest. A prospecting and contract mining 
agreement was concluded between Gumrock and the Group's subsidiary, 
Saxendrift Mining Proprietary Limited, in order to mine on the 
Group's Kwartelspan prospecting right.

A loss of $0.6 million was allocated to non-controlling interest 
during the year ended 28 February 2015, representing 50% of
Gumrock's total loss for the year.

Loss per share

Amounts in Canadian Dollars ('000) 
                                    For the year    For the year
                                           ended           ended
                                          28 Feb          28 Feb
                                            2015            2014
Basic and diluted loss per share
Cents per share                           (25.89)         (21.30)


Basic  loss  per share  was calculated  
based  on  a weighted  average  number  
of  common shares of 54 001 354  
(2014:49 839 859).

Reconciliation of loss for the year 
to basic loss
Loss for the year                        (14 526)        (10 427)
Adjusted for:
Loss attributable to non-controlling 
interest                                     546            (191)
Basic loss attributable to owners 
of the Group                             (13 980)        (10 618)

At 28 February 2015 and 28 February 2014 the impact of share-based 
payment options were excluded from the weighted average number of 
shares, for the purpose of the diluted loss per share calculation, 
as the effect would have been anti- dilutive.

Basic and diluted headline loss per share
Cents per share *                         (19.81)          (8.68)


Reconciliation between basic loss and 
headline loss
Basic loss attributable to owners 
of the Group                             (13 980)        (10 618)
Adjusted for:
Profit on disposal of mineral 
properties                                     -            (482) 
Loss (profit) on disposal of 
property, plant and equipment                266             (72) 
Impairment of mineral property interests   2 576               - 
Impairment of property, plant and 
equipment                                    438              36
Share of profit from equity accounted 
investment                                     -             (59) 
Loss on sale of subsidiary                     -             259
Realized foreign exchange with 
sale of subsidiary                             -           6 609
Non-controlling interest portion of 
above adjustments                              -               -
Headline loss attributable to owners 
of the Group                             (10 700)         (4 327)

The basic and diluted headline loss per share disclosure is provided 
based on the listing requirements of the Johannesburg Stock Exchange 
(Group's secondary listing).  The  disclosure  of  basic  and diluted 
headline  loss  per  share  is  provided  in accordance with 
Circular 2/2013 as issued by the South African Institute of Chartered 
Accountants. Headline loss represents the basic loss attributable to 
the owners of the Group excluding certain re-measurements.

At 28 February 2015 and 28 February 2014 the impact of share-based 
payment options were excluded from the weighted average number of 
shares, for the purpose of the diluted headline loss per share 
calculation, as the effect would have been anti-dilutive.





Segmental information

The Group has  three  reportable  operating segments, as described 
below, which are the Group's operating divisions. These divisions 
offer different diamond product characteristics, qualities, 
geological characteristics, processes and services, and are managed 
separately because they require different technology and profit or 
cost strategies. For each of the divisions the Group executive 
committee (chief operating decision making body) reviews internally 
managed reports on at least a monthly basis. The following describes 
the operations in each of the Group's reportable segments:

- Northern Cape operation is associated with the mining of Paleo 
  Channels and Rooikoppie gravels and the recovery of high value and 
  larger carat size diamonds;
- North West operation is associated with the mining of potholes and 
  the recovery of lower value and smaller carat size diamonds; and
- Corporate represents the corporate management and administrative 
  function of the Group.

The reconciliation column represents the inter group transactions 
eliminated on consolidation. All reportable segments are located in 
the same geographical jurisdiction. 

Information regarding the results of each of the reportable segments 
is included below.

For the year ended 28 February 2015

                        Northern    North   Corporate Reconciling    Total 
                            Cape     West 
Property, plant and 
equipment                 26 999        -           2          -    27 001
Mineral property 
interests                 16 518        -           -          -    16 518
Total assets              47 415   13 525      65 672    (56 607)   70 005
Total liabilities         63 578   22 007       6 612    (56 607)   35 590
External revenue         (51 504) (16 494)          -          -   (67 998)
Other material non-cash 
items
- Depreciation on 
  property, plant 
  and equipment            6 021      248           4          -     6 273 
- Amortization on mineral 
  property interests         568      225           -          -       793 
- Rehabilitation 
  obligation recognised    1 406     (413)          -          -       993 
- Impairment of mineral 
  property interests           -    2 576           -          -     2 576 
- Impairment of property, 
  plant and equipment        438        -           -          -       438 
- Write down mine supplies    48        -           -          -        48
- Impairment of sundry 
  receivables                578        3           -          -       581
- Share of profit from 
  equity accounted 
  investment                   -        -        (149)         -      (149)
Finance income              (347)     (93)         (9)         -      (449) 
Finance costs                809      374         125          -     1 308
Taxation                  (2 991)       -           -          -    (2 991) 
Loss for the year         10 892    2 362       1 272          -    14 526


For the year ended 28 February 2014
                        Northern    North   Corporate Reconciling    Total 
                            Cape     West 

Property, plant and 
equipment                 29 079    1 627          13          -    30 719
Mineral property 
interests                 16 265   10 376           -          -    26 642
Total assets              57 739   13 988      71 698    (64 088)   79 337
Total liabilities         72 156   21 589       2 449    (64 088)   32 106
External revenue         (36 445)  (8 725)          -          -   (45 170)
Other material non-cash 
items
- Depreciation on 
  property, plant and  
  equipment                4 764      241           3          -     5 009 
- Amortization on 
  mineral property 
  interests                  785      143           -          -       928 
- Rehabilitation 
  obligation (revised)
  recognised               1 167     (424)          -          -       743 
- Impairment of property,  
  plant and equipment         36        -           -          -        36 
- Write down of mine 
  supplies                    19        -           -          -        19
- Share of profit from 
  equity accounted 
  investment                   -        -         (59)         -       (59)
Finance income              (514)     (93)        (92)         -      (699) 
Finance cost                 533      505          99          -     1 137
Taxation                     (63)       -           -          -       (63) 
Loss for the year          2 294     (688)      8 821          -    10 427


Subsequent events

- On 5 January 2015 the Company signed an agreement to acquire certain 
assets of Bondeo 140 cc (Steyn transaction) for $29.0 million 
(ZAR284 million) (subsequently amended on 12 May 2015 to $21.9 million
(ZAR214.95 million)). This transaction was subject to a number of 
conditions precedent including regulatory approvals. At the date of 
signature of the financial statements, the required approvals and 
bridging finance had been secured to the end of August 2015; it is 
envisaged that the Group will take control of this operation on 
1 June 2015. Refinancing of the acquisition debt and the Daboll loan 
will need to take place during Q2 of fiscal 2016.

- On 30 March 2015, the Group announced that it had reached an 
agreement to sell its non-core Tirisano property on the North West 
Province of South Africa for a cash consideration of $6.4 million 
(ZAR60 million). This transaction is subject to a number of conditions 
precedent, including regulatory approvals which have been applied for 
but not yet satisfied at the date of signing the financial statements. 
The consideration will be settled by way of two initial payments totaling 
$2.1 million (ZAR20 million), already received in Q1 2016, followed by 
20 equal monthly instalments of $0.21 million (ZAR2 million).

- The Group’s overdraft expires at the end of May 2015. Negotiations were 
under way to renew this facility at the date of signing these financial 
statements.

- On the date of signature of these financial statements the Group and 
Gump Mining CC concluded an agreement to liquidate Gumrock Mining 
Proprietary Limited. This has no impact on the amount disclosed in the 
financial statements.

Apart from the above, management is not aware of any matter or circumstance 
arising since the end of the financial year requiring amendment to the 
amounts and disclosures included in these financial statements.


Consolidated statements of financial performance

Amounts in Canadian Dollars ('000)                                    
                                    For the year    For the year
                                           ended           ended
                                          28 Feb          28 Feb
                                            2015            2014
For the year ended 28 February 2015, 
rehabilitation obligation expense 
has been reclassified to be included 
in gross loss.  In the year ended 
28 February 2014, rehabilitation 
obligation expense was classified 
below the gross loss total.

Gross profit as previously stated              -              33
Rehabilitation obligation recognized           -            (743)
Gross loss as currently stated                 -            (710)


Non-controlling interest

The following table summarises the information relating to each of 
the Group's subsidiaries that has material non-controlling interest 
("NCI"), before any intra-group eliminations.

28 February 2015                                                      
                                 Blue Gum    Gumrock  Intra-group   Total
                                 Diamonds Mining Pty eliminations
                              Pty Limited    Limited
NCI percentage                        26%        50%
Non-current assets                      -        29
Current assets                      3 670        91
Non-current liabilities                 -    (1 251) 
Current liabilities               (24 484)      (83)
Net assets                        (20 814)   (1 214)
Carrying amount of NCI             (5 412)     (607)        3 650  (2 369) 
Revenue                            16 494       472
Profit (loss)                         340    (1 268) 
Other comprehensive income            464       (23)
Total comprehensive income            804    (1 291)
Profit (loss) allocated to NCI         88      (634)            -    (546) 
Other comprehensive income 
allocated to NCI                      (60)      (26)            -     (86)







28 February 2014
                                 Blue Gum    Gumrock  Intra-group   Total
                                 Diamonds Mining Pty eliminations
                              Pty Limited    Limited


NCI percentage                        26%        50%
Non-current assets                 1 709           - 
Current assets                     1 627           - 
Non-current liabilities          (18 836)          - 
Current liabilities               (4 681)          -
Net assets                       (20 181)          -
Carrying amount of NCI            (5 247)          -        3 510  (1 737) 
Revenue                            8 725           -
Profit                               734           -
Other comprehensive income        (1 621)          -
Total comprehensive income          (887)          -
Profit allocated to NCI              191           -            -     191
Other comprehensive income 
allocated to NCI                     209           -            -     209

Corporate information

Registered office – South Africa: 
Level 1, Wilds View, Isle of Houghton, Corner Carse O’Gowrie and 
Boundary Roads, Houghton Estate, Johannesburg 2198
PO Box 3011, Houghton 2041, South Africa
Telephone: +27 11 484 0830    Facsimile: +27 86 262 2838
Corporate  address – Canada: 
2900–550 Burrard Street, Vancouver, British Columbia, 
Canada V6C 0A3
Telephone: +1 604 631 3131  Facsimile: +1 604 631 3232  
Toll Free: 1 866 635 3131

Corporate advisor: Allan Hochreiter Proprietary Limited
4 Fricker Road, Illovo, Sandton 2196, South Africa

JSE sponsor: PSG Capital
First Floor, Building 8 Inanda Greens Business Park, 
54 Wierda Road West, Wierda Valley, Sandton 2196 

International broker: Northland Capital Partners Limited
60 Gresham Street, London, EC2V 7BB United Kingdom

Auditors: KPMG Inc Chartered Accountants
KPMG Crescent, 85 Empire Road, Parktown 2193, South Africa

Transfer agents - South Africa: 
Computershare Investor Services Proprietary Limited
(Registration number 2004/0036471/07) 
Ground Floor, 70 Marshall Street Johannesburg 2001, South Africa

Transfer agents - Canada: Computershare  Investor Services Inc.
3rd Floor, 510 Burrard Street, Vancouver, British Columbia, 
Canada V6C 3B9

Lawyers - South Africa: Brink Falcon Hume Inc Attorneys
Second Floor, 8 Melville Road, Illovo, Sandton 2196, South Africa

Lawyers - Canada: Fasken Martineau DuMoulin LLP
333 Bay Street, Suite 2400, Bay Adelaide Centre, Toronto, Ontario, 
Canada, M5H 2T6
Date: 29/05/2015 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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