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Audited Annual Consolidated Financial Statements for the Year Ended 30 June 2015
COAL OF AFRICA LIMITED
(Incorporated and registered in Australia)
Registration number ABN 008 905 388
ISIN AU000000CZA6
JSE/ASX/AIM share code: CZA
("CoaL or the "Company" or the "Group")
AUDITED ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2015
(Expressed in United States dollars unless otherwise stated)
COAL OF AFRICA LIMITED
DIRECTORS' REPORT
The directors of Coal of Africa Limited ("CoAL" or "the Company") submit herewith the annual report of the company and
the entities controlled by the Company (its subsidiaries), collectively referred to as "the Group" or the "Consolidated
Entity", for the financial year ended 30 June 2015. All balances are denominated in United States dollars unless otherwise
stated.
In order to comply with the provisions of the Corporations Act 2001, the directors report as follows:
Information about the directors and key management personnel
The names and particulars of the directors of the company during or since the end of the financial year are set out below.
Unless otherwise stated, the directors held office during the whole of the financial year:
Bernard Robert Pryor Independent Non-Executive Chairman Mr Pryor was previously the chief executive officer
of African Minerals Limited and Q Resources plc.
Between 2006 and 2010 he held senior executive
positions within Anglo American Plc as head of
business development, and CEO of Anglo Ferrous
Brazil Inc.
David Hugh Brown Executive Director and Chief Executive Mr Brown joined CoAL following a tenure of almost
Officer 14 years at Impala Platinum Holdings Limited
(Implats). He joined the Impala Group in 1999 and
served as chief financial officer and financial
director of Impala Platinum Holdings Ltd before
being appointed chief executive officer in 2006. He
is currently an independent non-executive director
of Vodacom Group Limited as well as non-executive
director of Edcon Holdings Limited. In the past he
has served as a non-executive director of Simmer &
Jack Limited and ASX listed Zimplats Holdings
Limited. Mr Brown is a Chartered Accountant and
completed his articles with Ernst & Young,
graduating from the University of Cape Town.
De Wet Olivier Schutte Executive Director and Chief Financial Mr Schutte is a Chartered Accountant and attended
Officer – appointed 22 June 2015 the Top Executive Programme at the University of
Virginia. He has over 16 years of experience in the
mining and natural resources industry serving as
managing director, natural resources at Macquarie
Bank and chief financial officer of listed platinum
producer, Atlatsa Resources Corporation. Mr
Schutte also served as new business and
exploration executive at Harmony Gold Mining (Pty)
Ltd and has a strong corporate finance background.
Peter George Cordin Independent non-executive Director Mr Cordin has a Bachelor of Engineering from the
University of Western Australia and is well
experienced in the evaluation, development and
operation of resource projects within Australia and
overseas. He was until recently the chairman of ASX
listed Dragon Mining Limited and is a non-executive
director of Vital Metals Limited and Aurora
Minerals Limited.
Khomotso Brian Mosehla Non-Executive Director After serving articles at KPMG, Mr Mosehla worked
for five years at African Merchant Bank Limited,
where he gained a broad range of experience,
including Management Buy-Out, Leveraged Buy-Out
and capital restructuring/raising transactions. In
2003, he established Mvelaphanda Corporate
Finance, for the development of Mvelaphanda's
mining and non-mining interests. Mr Mosehla
served as a director on the boards of several
companies, including Mvelaphanda Resources
Limited and Net 1 UEPS Technologies Limited, and
he is currently the chief executive officer of
Mosomo Investment Holdings Proprietary Limited.
Rudolph Henry Torlage Non-executive Director Mr Torlage is a Chartered Accountant and has over
twenty years' experience with ArcelorMittal South
Africa. He was previously executive director finance
and a board member of various unlisted
ArcelorMittal Group companies.
Andrew David Mifflin Independent non-executive Director – Mr Mifflin obtained his Bachelor of Science
appointed 12 December 2014 (Honours) in Mining Engineering from Staffordshire
University and has a Master's Degree in Business
Administration. He has over 30 years' experience
specifically in the coal mining arena, spanning
various organisations such as British Coal
Corporation, Xstrata and GVK resources. Mr Mifflin
has in depth knowledge of the development and
operations at thermal and hard coking collieries.
Thabo Felix Mosololi Independent non-executive Director – Mr Mosololi has over 20 years of experience within
appointed 12 December 2014 the South African corporate environment and
completed his articles with KPMG. He is a qualified
Chartered Accountant, served as finance director
and operations director of Tsogo Sun and has
considerable expertise as a director of various
companies.
David John Keir Murray Senior independent non-executive Mr Murray has held a number of senior positions in
Director – resigned 12 December 2014 the global coal industry, including managing
director of Ingwe Coal Corporation (formerly Trans-
Natal Coal Corporation Limited), chief executive of
BHP Billiton Mitsubishi Alliance and president of
energy coal sector Group at BHP Billiton Limited, a
position he held until December 2009. Mr Murray
holds a Bachelor of Science Degree (Civil
Engineering) from the University of KwaZulu-Natal
and a Post Graduate Diploma in Mining Engineering
from the University of Pretoria. He has also
completed the Advanced Executive Program from
the University of South Africa.
Michael George Meeser Executive Director and Chief Financial Mr Meeser is a qualified Chartered Accountant and
Officer – resigned 30 April 2015 has over 20 years' local and international project
finance experience. He spent six years working for
Edison Mission Energy Limited with interests in
more than 50 power projects and assets of more
than $4billion. In 1998, Mr Meeser joined Investec
Bank Limited's Project and Infrastructure Finance
business and served as head of the project &
infrastructure and commodity & resource finance
businesses for Africa and was a member of the
divisions' executive committee.
No further directors were appointed or resigned during the financial year end 30 June 2015.
Directorships of other listed companies
Directorships of other listed companies held by the directors in the 3 years immediately before the end of the financial
year are as follows:
Director Company Period of directorship
Bernard Robert Pryor African Minerals Limited 2011 – 2014
David Hugh Brown Impala Platinum Holdings Limited 1999 – 2012
Zimplats Holdings Limited 2001 – 2012
Vodacom Group Limited 2012 – Present
De Wet Olivier Schutte None
Peter George Cordin Dragon Mining Limited 2006 – 2014
Vital Metals Limited 2009 – Present
Kalgoorlie Mining Company Limited 2012 –2013
Aurora Minerals Limited 2014 – Present
Khomotso Brian Mosehla Net 1 UEPS Technologies, Incorporated 2012 – 2013
Rudolph Henry Torlage ArcelorMittal South Africa Limited 2010 – 2012
Andrew David Mifflin None
Thabo Felix Mosololi Evraz Highveld Steel & Vanadium Limited 2013 – Present
Pan African Resources PLC 2014 – Present
David John Keir Murray Coalspur Mines Limited 2011 – 2015
Meridien Resources Limited 2012 – 2012
Stonewall Resources Limited 2012 – 2015
Michael George Meeser None
Directors' shareholdings
The following table sets out each director's relevant interest in shares or options in shares or debentures of the Company
as at the date of this report.
Director(1) Ordinary shares Listed options Unlisted options
B Pryor (2) 150,000 - 1,000,000
D Brown (3) 825,000 - 13,075,000
D Schutte(4) - - -
P Cordin 1,371,059 - -
K Mosehla - - -
R Torlage - - -
A Mifflin - - -
T Mosololi(5) 10,000 - -
D Murray(6) - - 2,500,000
M Meeser 600,000 - 1,375,000
2,956,059 - 17,950,000
1. Mr Pryor was issued with 1,000,000 share options on 28 November 2012 with an exercise price of GBP0.25 expiring
three years from date of issue, vesting immediately and a further 1,000,000 share options with an exercise price
GBP0.375, and expiring three years from date of issue, issued on 6 August 2015.
2. Mr Brown was issued with 2,500,000 share options on 28 November 2012 with an exercise price of GBP0.25 expiring 3
years from date of issue, vesting immediately. On appointment as Chief Executive Officer and Executive Director on 1
February 2014, Mr Brown received 10,575,000 options in accordance with the Company's employee share option plan
exercisable in three equal tranches over a three-year period. The first tranche of 3,525,000 options are exercisable on 1
February 2015 at ZAR1.20 each, a further 3,525,000 options are exercisable on 1 February 2016 at an exercise price of
ZAR1.32 per option and the remaining 3,525,000 options are exercisable on 1 February 2017 at an exercise price of
ZAR1.45. All 10,575,000 options expire on 1 February 2019.
3. On appointment as Chief Financial Officer and Executive Director on 22 June 2015 Mr Schutte received 6,600,000
options in accordance with the Company's employee share option plan. The options vest in three equal tranches over a
three-year period and are subject to shareholder approval. The first tranche of 2,200,000 options are exercisable on 21
June 2016 at ZAR1.20 each, a further 2,200,000 options are exercisable on 21 June 2017 at ZAR1.32 per option and the
remaining 2,200,000 options are exercisable on 21 June 2018 at an exercise price of ZAR1.45 each.
4. 958,300 shares are held by the Cordin Pty Ltd (The Cordin Family Trust) and 458,300 shares held by Cordin Pty Ltd (The
Cordin Superannuation Fund). Mr Cordin is a beneficiary of both the trust and superannuation fund.
5. Mr Murray was issued a total of 2,500,000 options on 9 November 2010 (each option having an exercise price equal to
the volume weighted average price of the Company's Shares 10 trading days prior to the issue date and an expiry date
5 years from the issue date, 1,000,000 of which vested 12 months after the date of issue, 750,000 of which vested 24
months after the date of issue and the remaining 750,000 vested 36 months from the date of issue).
6. Mr Meeser was issued with 4,125,000 share options on 22 November 2013 with an exercise price of ZAR2.00 expiring 3
years from date of issue. Mr Meeser resigned on 30 April 2015 resulting in the cancellation of the 2,750,000 options
that had not vested. The vested options will expire on 30 November 2015.
Remuneration of directors and key management personnel
Information about the remuneration of directors and key management personnel is set out in the remuneration report of
this directors' report, on pages 12 to 23.
Share options granted to directors and senior management
During and since the end of the financial year, no share options were granted to directors or key management personnel of
the Company and of its controlled entities as part of their remuneration:
Company secretary
Mr Tony Bevan, a qualified Chartered Accountant with over 25 years' experience, is the Company Secretary and works with
Endeavour Corporate Pty Ltd, the company engaged to provide contract secretarial, accounting and administration services
to CoAL.
Principal activities
The Company is a limited company incorporated in Australia. Its common shares are listed on the Australian Securities
Exchange ("ASX"), the AIM Market of the London Stock Exchange ("AIM") and the Johannesburg Stock Exchange ("JSE") in
South Africa. The principal activities of the Company and its subsidiaries are the acquisition, exploration, development and
operation of metallurgical and thermal coal projects in South Africa.
The Group's principal assets and projects include:
- the Makhado hard coking and thermal coal project which was granted a New Order Mining Right ("NOMR") in May
2015;
- Vele colliery where operations have been placed on a care and maintenance basis pending the granting of the
extension of the mine's Integrated Water Use License ("IWUL") and completion of certain plant modifications;
- three exploration and development stage coking and thermal coal projects, namely Chapudi, Generaal and Mopane, in
the Soutpansberg Coalfield; and
- the Mooiplaats colliery currently on care and maintenance and subject to a formal sale process.
Review of operations
The Company undertook the following activities during the year:
Operational salient features
- No Fatalities (FY2014: none) and no lost time injuries recorded during the year (FY2014: one).
- The Department of Mineral Resources ("DMR") granted the Company a NOMR for the Makhado Project as well as
Section 11 approval transferring the project from CoAL to its subsidiary Baobab Mining.
- Continued engagements with the Department of Water Affairs ("DWA") to progress the application for the Makhado
Project IWUL, expected to be granted in the second half of 2015.
- Approval granted for the amended and updated Environmental Authorisation ("EA") for Vele to include the anticipated
plant modifications while the application for the amendment and extension of the IWUL for the colliery is pending,
following which the Company will make a decision on the timing of the start of the plant modifications.
- Historic Biodiversity Offset Agreement ("BOA") for the Vele Colliery signed in October 2014 with the Department of
Environmental Affairs ("DEA") and South African National Parks ("SANP").
- Completion in December 2014 of the Front End Engineering and Design ("FEED") process for the Vele Colliery plant by
Sedgman.
Disposal of Non-Core Assets
- Signature of a Share Purchase Agreement ("SPA") with Blackspear Capital Proprietary Limited ("Blackspear") for the
disposal of the Mooiplaats Colliery for $20.3 million (ZAR250 million). Blackpear was unable to agree terms with a
financial and operational partner to fund its acquisition resulting in the SPA lapsing on 30 June 2015. The Company is
continuing discussions with other potential purchasers including Blackspear.
- Receipt of $0.1 million (ZAR1.5 million) (FY2014: $0.4 million) of the $2 million (ZAR20.8 million) for the sale of the
Opgoedenhoop mining right and renegotiation of the balance of the $1.4 million (ZAR17.4 million) (including interest
and VAT). The amount is payable in monthly instalments of at least ($0.02 million (R0.25 million) with the balance due
by the end of June 2016.
- Receipt of a further $0.22 million (FY2014: $0.5 million) payment for a one year extension to acquire the Holfontein
project for $5.0 million (including the option fees) expected to be completed during calender year 2016.
Corporate salient features
- Completion of the $65 million (before charges and foreign currency movements) shareholder approved three stage
equity process with the issue of 695 million shares at GBP0.055 each.
- Restructuring of rehabilitation guarantees resulted in the release of $4.7 million of restricted cash.
- Conclusion of agreements in March 2015 with BBBEE partners to acquire up to 26 per cent of the Makhado Project. The
BBBEE partners have two years to raise sufficient capital to acquire their interests in the project with the final amount
payable subject to due diligence and will be negotiated with the Company.
- Agreement reached for the liability (FY2015: $19.8 million; FY2014: $29.8 million) owing to Rio Tinto with the balance
to be paid in monthly instalments of at least $100,000 plus interest and the obligation settled by June 2017. During the
year the Company paid capital of $10 million (FY2014: $0.2 million) and acccrued interest of $1.6 million (FY2014: nil).
- Payment of $10 million to Grindrod Corridor Management Proprietary Limited("Grindrod") and Terminal de Carvão da
Matola Limitada("TCM") in late 2014, settling all outstanding liabilities and take or pay obligations until 31 December
2016. Any further obligations would be dependent on any future capacity requirements still to be contracted.
- Settlement of the Investec Bank Limited working capital facility in November 2014 on the payment of $5.9 million.
- Appointment of De Wet Schutte as Chief Financial Officer and Executive Director.
Legal
- Settlement of the last outstanding significant legal matter in December 2014 following an arbitration award for claims
instituted by Envicoal (Pty) Ltd. The matter was adjudicated by arbitration and Envicoal were awarded $1.4 million and
a further $1 million in interest.
Other than the above, there was no significant change in the state of affairs of the Consolidated Entity during the financial
year.
Subsequent events
Post year end, the following significant operational events took place:
- Entering into a Subscription Agreement and a Loan Agreement with Singapore registered Yishun Brightrise Investment
PTE Limited ("Yishun") whereby Yishun will acquire up to 183,231,261 ordinary shares for 5.15 British pence each
raising approximately GBP9.4 million (approximately $14.7 million) conditional upon, CoAL shareholder approval at an
EGM to be held on 14 September 2015. The Company and Yishun have also entered into a Loan Agreement in terms of
which Yishun has agreed to lend CoAL $10 million conditional upon the Company's shareholders approving the issue
of the 183,231,261 shares. The loan will bear no interest and is only repayable in limited circumstances.
There have been no other events between 30 June 2015 and the date of this report which necessitate adjustment to the
statements of comprehensive income or statements of financial position at that date.
Financial review
- No revenue was generated during the year as result of all operation on care and maintenance(FY 2014 $3.3 million
generated by Mooiplaats)
- Non-cash charges of $7.5 million (FY2014: $54.3 million) including:
- No impairment at Mooiplaats incurred during the year (FY2014: $14.9million)
- Depreciation and amortisation of $1.4 million (FY2014: $2.2 million);
- Unrealised foreign exchange gain of $18.9 million (FY2014: $36.4 million loss) as a result of the South African rand
weakening against the United States dollar; and
- Share based payment expense of $3.064 million (FY2014: $0.7 million).
- Tota unrestricted cash balances at year-end, including cash held by operations available for sale of $17.8 million
(FY2014: $2.1 million).
Future developments
The NOMR for the Makhado Project was granted in May 2015 as well as section 11 approval for the transfer of the project
to CoAL's 74% owned subsidiary, Baobab Mining. The Company completed a Definitive Feasibility Study ("DFS") for
Makhado during FY2013 which indicates that the project has 344.8 million mineable tonnes in situ and a 16 year life of
mine. CoAL has regular interactions with the DWA and expects that the IWUL for the Makhado Project will be granted in
the second half of 2015 with the 26 month construction phase commencing in the second half of 2016. The opencast
project is expected to produce 12.6Mtpa of ROM coal yielding 2.3Mtpa of hard coking coal and 3.2Mtpa of thermal coal for
domestic and export markets.
The Company completed the FEED process for Vele and once constructed, the colliery will be able to produce multiple
products simultaneously. The amended EA for the colliery was granted during FY2015 and the Company anticipates that
the application for an amendment and extension of the Vele's IWUL will be granted in due course. The colliery's current
IWUL expires in March 2016 and following the granting, the Company will make a decision on the commencement of the
plant modifications taking cognisance of prevailing market conditions into account. This will be towards June 2016.
The exploration and development of the CoAL prospects in the Soutpansberg coalfield is the catalyst for the long-term
growth of the Company. The DMR has accepted the Company's NOMR applications for the Mopane, Generaal and Chapudi
projects, all forming part of the MbeuYashu project.
Environmental regulations
The Consolidated Entity's operations are not subject to any significant environmental regulations under either
Commonwealth or State legislation and there has consequently been no breach. The Group is subject to numerous
environmental regulations in South Africa, including the Atmospheric Pollution Prevention Act (No. 45 of 1965),
Environment Conservation Act (No. 73 of 1989), National Water Act (No. 45 of 1965), National Environmental Management
Act (No. 107 of 1998), the National Environmental Management Air Quality Act (No. 39 of 2004) and the environmental
provisions in the Mineral and Petroleum Resources Development Act (No 28 of 2002). There is uncertainty regarding the
interrelationship between these statutes in the mining context and as such complete compliance with all simultaneously is
often difficult. The Board believes that the Consolidated Entity has adequate systems in place for the management of its
environmental impacts but from time to time statutory non-compliances may occur. The Board takes these seriously and
undertook a thorough review of all its activities during FY2013 to bring them into compliance and continues to monitor
compliance thereof.
Dividends
No dividend has been paid or proposed for the financial year ended 30 June 2015 (FY2014: nil).
Shares under option or issued on exercise of options
Details of unissued shares under option as at the date of this report are:
Number of shares Class of shares Exercise price Expiry date
under option
ESOP Unlisted Options 1,441,061 Ordinary A$1.40 30 September 2015
Class C Unlisted Options 2,500,000 Ordinary A$1.20 9 November 2015
Class L Unlisted Options 3,500,000 Ordinary GBP0.25 30 November 2015
TMM options 40,000,000 Ordinary ZAR0.30 1 June 2016
ESOP Unlisted Options 2,670,000 Ordinary ZAR7.60 14 February 2017
ESOP Unlisted Options 3,932,928 Ordinary ZAR1.75 30 June 2017
ESOP Unlisted Options 1,325,000 Ordinary ZAR2.00 30 November 2015
Investec options 20,000,000 Ordinary ZAR2.00 21 October 2018
ESOP Unlisted Options 3,525,000 Ordinary ZAR1.20 1 February 2019
ESOP Unlisted Options 3,525,000 Ordinary ZAR1.32 1 February 2019
ESOP Unlisted Options 3,525,000 Ordinary ZAR1.45 1 February 2019
The holders of these options do not have the right, by virtue of the option, to participate in any share issue of the Company
or of any other body corporate or registered scheme.
No shares or interests were issued during or since the end of the financial year as a result of exercise of options.
Indemnification of officers and auditors
During the financial year, the Company paid a premium in respect of a contract insuring the directors of the Company, the
company secretary, and all executive officers of the Company and of any related body corporate against a liability incurred
by such a director, secretary or executive officer to the extent permitted by the Corporations Act 2001.
The Company has not otherwise, during or since the end of the financial year, except to the extent permitted by law,
indemnified or agreed to indemnify an officer or auditor of the Company or of any related body corporate against a liability
incurred by such an officer or auditor.
Directors' meetings
The following table sets out the number of directors' meetings (including meetings of committees of directors) held during
the financial year and the number of meetings attended by each director (while they were a director or committee
member). During the financial year, a total of five board meetings were held, four scheduled and one unscheduled, zero
placing and bid committee meetings, four nomination and remuneration committee meeting, five audit committee
meetings and four safety and health committee meeting were held.
Board Meetings Audit Committee Nomination and Safety, Health and
Meetings Remuneration Environment
Committee Meetings Committee Meetings
Director Held Attended Held Attended Held Attended Held Attended
B Pryor 5 5 5 5 4 4 - -
D Brown 5 5 - - 4 4 4 4
D Schutte(1) - - - - - - - -
P Cordin 5 5 3 3 - - 4 4
K Mosehla 5 5 5 5 - - - -
R Torlage 5 4 - - - - - -
A Mifflin(2) 3 3 - - - - 2 2
T Mosololi(2) 3 3 2 2 2 2 - -
D Murray(3) 2 2 - - 2 1 2 1
M Meeser(4) 3 3 - - - - - -
1. Mr Schutte was appointed Executive Director and Chief Financial Officer on 22 June 2015.
2. Appointed as Independent Non-Executive Directors on 12 December 2014.
3. Resigned as Senior Independent Non-Executive Director on 12 December 2014.
4. Mr Meeser resigned as Executive Director and Chief Financial Officer on 30 April 2015.
Proceedings on behalf of the Company
No persons applied for leave to bring or intervene in proceedings on behalf of the Company during or since the end of the
financial year.
Non-audit services
No non-audit services were provided during the current financial year. Details of amounts paid or payable to the auditor
for services provided during the year by the auditor are outlined in note 8 to the consolidated financial statements.
Auditor's independence declaration
The auditor's independence declaration is included on page 24 of these consolidated financial statements.
Remuneration report (Audited)
This remuneration report, which forms part of the directors' report, sets out information about the remuneration of Coal
of Africa Limited's directors and its senior management for the financial year ended 30 June 2015. The prescribed details
for each person covered by this report are detailed below under the following headings:
- director and senior management details;
- remuneration policy;
- relationship between the remuneration policy and company performance;
- remuneration of directors and senior management; and
- key terms of employment contracts.
The Board is responsible for establishing remuneration packages applicable to the Board members of the Company. The
policy adopted by the Board is to ensure that remuneration properly reflects an individual's duties and responsibilities and
that remuneration is competitive in attracting, retaining and motivating people of the highest calibre.
Directors' remuneration packages are also assessed in the light of the condition of markets within which the Company
operates, the Company's financial condition and the individual's contribution to the achievement of corporate objectives.
Executive Directors are remunerated by way of a salary or consultancy fees, commensurate with their required level of
service.
Total remuneration for all Non-Executive Directors, excluding share-based payments, as approved by shareholders at the
November 2010 General Meeting, is not to exceed A$1,000,000 per annum ($765,700).
The Board has nominated a Nomination and Remuneration Committee which was made up as follows: Mr Pryor
(Chairman), Mr Mosololi and Mr Brown. The Company does not have any scheme relating to retirement benefits for
Executive or Non-Executive Directors.
Director and key management personnel details
The following persons acted as directors of the Company during or since the end of the financial year:
- B Pryor Independent Chairman
- D Brown Chief Executive Officer and Executive Director
- D Schutte Appointed Chief Financial Officer and Executive Director on 22 June 2015
- P Cordin Independent Non-Executive Director
- K Mosehla Independent Non-Executive Director
- R Torlage Non-Executive Director
- A Mifflin Appointed Independent Non-Executive Director on 12 December 2014
- T Mosololi Appointed Independent Non-Executive Director on 12 December 2014
- D Murray Resigned as Senior Independent Non-Executive Director on 12 December 2014
- M Meeser Resigned as Chief Financial Officer and Executive Director on 30 April 2015
Key management personnel are those persons having authority and responsibility for planning, directing and controlling
the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity. The
term 'key management' is used in this remuneration report to refer to the following persons.
- C Bronn Chief Operating Officer
Except as noted, the named persons held their current position for the whole of the financial year and since the end of the
financial year.
Remuneration policy
The remuneration policy of CoAL has been designed to align key management personnel objectives with shareholder and
business objectives by providing a fixed remuneration component and offering specific long-term incentives based on key
performance areas affecting the consolidated group's financial results. The Board of CoAL believes the remuneration policy
to be appropriate and effective in its ability to attract and retain the best key management personnel to run and manage
the consolidated group, as well as create goal congruence between Directors, key management and shareholders.
The Board's policy for determining the nature and amount of remuneration for key management personnel of the
consolidated group is as follows:
- The remuneration structure is developed by the Nomination and Remuneration Committee and approved by the Board
after professional advice is periodically sought from independent external consultants.
- All key management personnel receive a base salary (based on factors such as length of service and experience),
options and performance incentives.
- Incentives paid in the form of cash and options are intended to align the interests of the Directors, key management
and company with those of the shareholders.
The Nomination and Remuneration Committee reviews key management personnel packages annually by reference to the
consolidated group's performance, executive performance and comparable information from industry sectors.
The performance of key management personnel is measured against criteria agreed annually with each executive and
bonuses and incentives are linked to predetermined performance criteria. The performance criteria vary and are
determined in line with each individual's performance contract. The Board may, however, exercise its discretion in relation
to approving incentives, bonuses and options, and can recommend changes to the Nomination and Remuneration
Committee's recommendations. Any changes must be justified by reference to measurable performance criteria. The policy
is designed to attract the highest calibre of executives and reward them for performance results leading to long-term
growth in shareholder wealth.
All remuneration paid to key management personnel is valued at the cost to the Company and expensed.
The Board's policy is to remunerate Non-Executive Directors at market rates for time, commitment and responsibilities.
The Nomination and Remuneration Committee determines payments to the Non-Executive Directors and reviews their
remuneration annually, based on market practice, duties and accountability. The maximum aggregate amount of fees,
excluding share-based payments that can be paid to Non-Executive Directors is A$1,000,000 ($765,700).
To assist directors with independent judgement, it is the Board's policy that if a director considers it necessary to obtain
independent professional advice to properly discharge the responsibility of their office as a director then, provided the
director first obtains approval from the Chairman for incurring such expense, the Company will pay the reasonable
expenses associated with obtaining such advice.
Options granted under the arrangement do not carry dividend or voting rights. Options are valued using a binomial option
pricing model and the Black-Scholes option pricing model was used to validate the price calculated.
Performance – based remuneration
The key performance indicators (KPIs') are set annually, which includes consultation with key management personnel to
ensure buy-in. The measures are specifically tailored to the area each individual is involved in and has a level of control
over. The KPIs target areas the Board believes hold greater potential for group expansion and profit, covering financial and
non-financial as well as short and long-term goals.
Performance in relation to the KPIs is assessed annually, with bonuses being awarded depending on the number and
deemed difficulty of the KPIs achieved.
Hedging of Management Remuneration
No member of key management entered into an arrangement during or since the end of the financial year to limit the risk
relating to any element of that person's remuneration.
Relationship between remuneration policy and Company performance
The tables below set out summary information about the Group's earnings and movements in shareholder wealth for the
five years to June 2015.
Year ended Year ended Year ended Year ended Year ended
30 June 30 June 30 June 30 June 30 June
2015 2014 2013 2012 2011
$'000 $'000 $'000 $'000 $'000
Revenue - 4,060 146,396 243,842 261,425
Net loss before tax 6,711 84.120 155,754 150,551 218,106
Net loss after tax 6,711 84,120 148,137 138,908 219,003
Year ended Year ended Year ended Year ended Year ended
30 June 30 June 30 June 30 June 30 June
2015 2014 2013 2012 2011
Share price at start of year A$0.07 A$0.19 A$0.56 A$1.08 A$1.75
Share price at end of year A$0.09 A$0.07 A$0.19 A$0.56 A$1.08
Basic and diluted loss per share ($ cents) 0.47 8.02 17.00 23.00 41.00
Remuneration of directors and key management personnel
Details of the nature and amount of each major element of the remuneration of each director and senior management
personnel for the year are:
Short term employee benefits Post- Termination Share- Total Share
employment benefits based based
benefits payments % of
Total
Salary and Bonus Non- Super- Options /
fees monetary annuation Shares
2015 benefits
$ $ $ $ $ $ $ %
Non-Executive Directors
B Pryor 62,940 - - - - - 62,940 -
P Cordin 37,226 - - 4,785 - - 42,011 -
K Mosehla 50,688 - - - - - 50,688 -
R Torlage(1) 50,688 - - - - - 50,688 -
A Mifflin(1) 19,582 - - 2,690 - - 22,272 -
T Mosololi(2) 26,791 - - - - - 26,791 -
D Murray 17,738 - - 2,077 - - 19,815 -
Executive Directors
D Brown(3) 481,250 - - - - 131,485 612,735 32
D Schutte(4) 8,497 - - - - - 8,497 -
M Meeser 249,139 - - - - - 249,139 -
1,004,539 - - 9,552 - 131,485 1,145,576 18
C Bronn 262,500 21,875 - - - - 284,375 -
1,267,039 21,875 - 9,552 - 131,485 1,429,951 15
1. Mr Mifflin and Mr Mosololi were appointed as Independent Non-Executive Directors on 12 December 2014.
2. Mr Murray resigned as Senior Independent Non-Executive Director on 12 December 2014.
3. Mr Schutte was appointed as Chief Financial Officer and Executive Director on 22 June 2015.
4. Mr Meeser resigned as Chief Financial Officer and Executive Director on 30 April 2015.
Short term employee benefits Post- Termination Share- Total Share
employment benefits based based
benefits payments % of
Total
Salary and Bonus Non - Super- Options /
fees monetary annuation Shares
2014 benefits
$ $ $ $ $ $ $ %
Non-Executive Directors
B Pryor 237,865 - - - - - 237,865 -
D Murray 86,587 - - 8,009 - - 94,596 -
P Cordin 84,353 - - 7,803 - - 92,156 -
K Mosehla 67,479 - - - - - 67,479 -
R Torlage 67,479 - - - - - 67,479 -
Executive Directors
D Brown 572,961 - - - - - 572,961 -
M Meeser 318,197 - - - - 225,145 543,342 41
1,434,921 - - 15,812 - 225,145 1,675,878 13
C Bronn 289,269 - - - - 8,854 298,123 3
W Hattingh 158,045 - - - - 19,054 177,099 11
Key management 447,314 - - - - 27,908 475,222 6
1,882,235 - - 15,812 - 253,053 2,151,100 12
No director or key management appointed during the period received a payment as part of his consideration for agreeing
to hold the position.
Share-based payments granted as compensation for the current financial year
During the financial year, the following share-based payment arrangements were in existence:
Exercise Grant date Vesting
Option series Number Grant date Expiry date price value date
Class J unlisted options 3,000,000 08/12/2009 30/11/2014 A$2.74 A$0.58 (1)
Class C unlisted options 2,500,000 09/11/2010 09/11/2015 A$1.20 A$0.59 (2)
ESOP unlisted options 1,441,061 04/02/2011 30/09/2015 A$1.40 A$0.91 (3)
ESOP unlisted options 2,670,000 16/09/2011 14/02/2017 ZAR7.60 ZAR3.46 (4)
Class L unlisted options 3,500,000 28/11/2012 30/11/2015 GBP0.25 GBP0.032 (5)
ESOP unlisted options 3,932,928 22/11/2013 30/06/2017 ZAR1.75 ZAR0.52 (6)
ESOP unlisted options 2,750,000 22/11/2013 30/04/2015 ZAR2.00 ZAR0.56 (7)
ESOP unlisted options 1,375,000 22/11/2013 30/11/2015 ZAR2.00 ZAR0.56 (7)
ESOP unlisted options 3,525,000 01/02/2014 01/02/2019 ZAR1.20 ZAR0.15 (8)
ESOP unlisted options 3,525,000 01/02/2014 01/02/2019 ZAR1.32 ZAR0.14 (8)
ESOP unlisted options 3,525,000 01/02/2014 01/02/2019 ZAR1.45 ZAR0.12 (8)
31,743,989
1. The 3,000,000 share options were granted to Mr Farrell, a former Managing Director of the Company on 8 December
2009. 2,000,000 of the options vested on 29 January 2011 and the remaining 1,000,000 options vest one year after the
granting of the Makhado Project New Order Mining Right. These options expired during the year.
2. Mr Murray was issued a total of 2,500,000 options with an expiry date 5 years from the issue date, 1,000,000 of which
will vest 12 months after the date of issue, 750,000 of which will vest 24 months after the date of issue and the
remaining 750,000 vesting 36 months from the date of issue.
3. These options were issued to employees and vest in three equal tranches on 30 September 2011, 30 September 2012
and the remaining third on 30 September 2013.
4. These options were issued to employees and one third vested on 1 July 2012, one third on 1 July 2013 and the
remaining third on 1 July 2014.
5. These options all vested on 28 November 2012.
6. These options were issued to employees and two thirds vested immediately on granting and one third vesting on 1 July
2014.
7. Mr Meeser was issued a total of 4,125,000 options vesting in three equal tranches on 1 June 2014, 1 June 2015 and 1
June 2016. 2,750,000 of these options had not vested and were cancelled on Mr Meeser resignation.
8. A total of 10,575,000 options were granted to Mr Brown on his appointment as Chief Executive Officer and vest in
three equal tranches on 1 February 2015, 1 February 2016 and 1 February 2017.
The following grants of share-based payment compensation to key management personnel relate to the current financial
year:
During the financial year
% of
compensation
% of % of for the year
Number Number grant grant consisting of
Name Option series granted vested vested forfeited options
D Brown ESOP unlisted options 10,575,000 3,525,000 33 n/a 32
During the year, none of the key management personnel exercised options that were granted to them as part of their
compensation.
Share-based payments granted as compensation for the current financial year (continued)
No options granted to key management personnel were exercised or lapsed during the year.
Key terms of employment contracts
The Company entered into formal contractual employment agreements with the Chief Executive Officer and the Chief
Financial Officer only and not with any other member of the Board. The employment conditions of the Chief Executive
Officer and Chief Financial Officer are:
Current
1. Mr Brown's appointment as Chief Executive Officer commenced on 1 February 2014 with an annual remuneration of
ZAR5.5 million and a three month notice period and received 10,575,000 options in accordance with the Company's
employee share option plan. The options are exercisable in three equal tranches over three years at ZAR1.20, ZAR1.32
and ZAR1.40 vesting on 1 February 2015, 1 February 2016 and 1 February 2017 respectively.
2. Mr Schutte serves as Financial Director with an annual remuneration of ZAR3.6 million and a three month notice
period. On appointment as Chief Financial Officer and Executive Director Mr Schutte received 6,600,000 options in
accordance with the Company's employee share option plan. The options vest in three equal tranches over a three-
year period and are subject to shareholder approval. The first tranche of 2,200,000 options are exercisable on 21 June
2016 at ZAR1.20 each, a further 2,200,000 options are exercisable on 21 June 2017 at ZAR1.32 per option and the
remaining 2,200,000 options are exercisable on 21 June 2018 at an exercise price of ZAR1.45 each.
The employment conditions of the following specified executives have been formalised in employment contracts:
1. Mr Bronn is employed by CoAL in the capacity of Chief Operations Officer, at an annual remuneration of ZAR3.0 million.
This permanent employment contract may be terminated by written notice of two months.
Key management personnel equity holdings
Option holdings
The movement during the reporting period in the number of options over ordinary shares exercisable at A$1.20 on or
before 9 November 2015 held directly, indirectly or beneficially by each director and key management personnel including
their personally-related entities, is as follows:
Held at Granted as Exercised Other Held at
1 July 2014 remuneration changes 30 June 2015
Non-Executive Directors
B Pryor(1) - - - - -
D Murray 2,500,000 - - - 2,500,000
P Cordin - - - - -
K Mosehla - - - - -
R Torlage - - - - -
A Mifflin - - - - -
T Mosololi - - - - -
Executive Directors
D Brown - - - - -
D Schutte - - - - -
M Meeser - - - - -
Key management - - - - -
(1) Resigned 12 December 2014
The movement during the reporting period in the number of options over ordinary shares exercisable at A$1.40 or ZAR9.50
on or before 14 February 2017 held directly, indirectly or beneficially by each director and key management personnel
including their personally-related entities, is as follows:
Held at Granted as Exercised Other Held at
1 July 2014 remuneration changes 30 June 2015
Non-Executive Directors
B Pryor - - - - -
D Murray - - - - -
P Cordin - - - - -
K Mosehla - - - - -
R Torlage - - - - -
A Mifflin - - - - -
T Mosololi - - - - -
Executive Directors
D Brown - - - - -
D Schutte - - - - -
M Meeser - - - - -
Key management
C Bronn 135,000 - - - 135,000
The movement during the reporting period in the number of options over ordinary shares exercisable at GBP0.25 on or
before 30 November 2015 held directly, indirectly or beneficially by each director and key management personnel
including their personally-related entities, is as follows:
Held at Granted as Exercised Other changes Held at
1 July 2014 remuneration 30 June 2015
Non-Executive Directors
B Pryor 1,000,000 - - - 1,000,000
D Murray - - - - -
P Cordin - - - - -
K Mosehla - - - - -
R Torlage - - - - -
A Mifflin - - - - -
T Mosololi - - - - -
Executive Directors
D Brown 2,500,000 - - - 2,500,000
D Schutte - - - - -
M Meeser - - - - -
Key management - - - - -
The movement during the reporting period in the number of options over ordinary shares exercisable at ZAR1.75 on or
before 30 June 2017 held directly, indirectly or beneficially by each director and key management personnel including their
personally-related entities, is as follows:
Held at Granted as Exercised Other changes Held at
1 July 2014 remuneration 30 June 2015
Non-Executive Directors
B Pryor - - - - -
D Murray - - - - -
P Cordin - - - - -
K Mosehla - - - - -
R Torlage - - - - -
A Mifflin - - - - -
T Mosololi - - - - -
Executive Directors
D Brown - - - - -
D Schutte - - - - -
M Meeser - - - - -
Key management
C Bronn 174,696 - - - 174,696
The movement during the reporting period in the number of options over ordinary shares exercisable at ZAR2.00 on or
before 1 June 2018 held directly, indirectly or beneficially by each director and key management personnel including their
personally-related entities, is as follows:
Held at Granted as Exercised Other changes Held at
1 July 2014 remuneration 30 June 2015
Non-Executive Directors
B Pryor - - - - -
D Murray - - - - -
P Cordin - - - - -
K Mosehla - - - - -
R Torlage - - - - -
A Mifflin - - - - -
T Mosololi - - - - -
Executive Directors
D Brown - - - - -
D Schutte(1) - - - - -
M Meeser 4,125,000 - - (2,750,000) ,375,000
Key management - - - - -
(1) Resigned 30 April 2015
The movement during the reporting period in the number of options over ordinary shares exercisable in three equal
tranches at ZAR1.20 on or before 1 February 2015, ZAR1.32 on or before 1 February 2016 and ZAR1.45 on or before 1
February 2017 held directly, indirectly or beneficially by each director and key management personnel including their
personally-related entities, is as follows:
Held at Granted as Exercised Other Held at
1 July 2014 remuneration changes 30 June 2015
Non-Executive Directors
B Pryor - - - - -
D Murray - - - - -
P Cordin - - - - -
K Mosehla - - - - -
R Torlage - - - - -
A Mifflin - - - - -
T Mosololi - - - - -
Executive Directors
D Brown - 10,575,000 - - 10,575,000
D Schutte - - - - -
M Meeser - - - - -
Key management - - - - -
Equity holdings and transactions of Directors and key management personnel
The movement during the reporting period in the number of ordinary shares held, directly, indirectly or beneficially by
each key management personnel including their personally-related entities, is as follows:
Held at Purchased Received on Other Held at
1 July 2014 exercise of changes 30 June 2015
options /
remuneration
Non-Executive Directors
B Pryor(1) - 150,000 - - 150,000
D Murray - - - - -
P Cordin 871,059 500,000 - - 1,371,059
K Mosehla - - - - -
R Torlage - - - - -
A Mifflin(2) - - - - -
T Mosololi - - - 10,000 10,000
Executive Directors
D Brown 250,000 575,000 - - 825,000
D Schutte(3) - - - - -
M Meeser 600,000 - - - 600,000
Key management - - - - -
(1) Resigned 12 December 2014
(2) Purchased prior to being appointed as a Non-Executive Director.
(3) Resigned 30 April 2015
This directors' report is signed in accordance with a resolution of directors made pursuant to s298(2) of the Corporations
Act 2001.
On behalf of the Directors
David Hugh Brown
Chief Executive Officer
10 September 2015
Bernard Robert Pryor
Chairman
10 September 2015
Deloitte Touche Tohmatsu
A.C.N. 74 490 121 060
Woodside Plaza
Level 14
240 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
DX 206
Tel: +61 (0) 8 9365 7000
Fax: +61 (0) 8 9365 7001
www.deloitte.com.au
The Board of Directors
Coal of Africa Limited Suite 8,
7 The Esplanade Mount Pleasant WA 6153
10 September 2015
Auditor’s Independence Declaration to Coal of Africa Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence
to the directors of Coal of Africa Limited.
As lead audit partner for the audit of the financial statements of Coal of Africa Limited for the financial year ended 30 June 2015,
I declare that to the best of my knowledge and belief, there have been no contraventions of:
(i) the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Deloitte Touche Tohmatsu
Partner
Chartered Accountants
CORPORATE GOVERNANCE STATEMENT
The Board of Directors of Coal of Africa Limited is responsible for the establishment of a corporate governance framework
that has regard to the best practice recommendations set by the ASX Corporate Governance Council.
This statement summarises the corporate governance practices that have been adopted by the Board. In addition to the
information contained in this statement, the Company's website at www.coalofafrica.com contains additional details of its
corporate governance procedures and practices.
The Company has followed the ASX Corporate Governance Council's Corporate Governance Principles and
Recommendations (Third Edition) ("ASX Principles") where the Board has considered the recommendation to be an
appropriate benchmark for its corporate governance principles. Where the Company considered it was not appropriate to
presently comply with a particular recommendation, the reasons are set out in the relevant section of this statement.
PRINCIPLE 1: LAY SOLID FOUNDATIONS FOR MANAGEMENT AND OVERSIGHT
A listed entity should establish and disclose the respective roles and responsibilities of its board and management and
how their performance is monitored and evaluated.
ASX Principles Recommendation 1.1: A listed entity should disclose:
a) the respective roles and responsibilities of its board and management; and
b) those matters expressly reserved to the board and those delegated to management.
The Board has established a Board Charter which sets out functions reserved to Board and those delegated to senior
executives. This Charter is available on the Company's website.
The role of the Board is to provide leadership for and supervision of the Company's senior management. The Board
provides the strategic direction of the Company and regularly measures the progression by senior management of that
strategic direction.
The key responsibilities of the Board include:
a) overseeing the Company, including its control and accountability systems;
b) appointing the Chief Executive Officer, or equivalent, for a period and on terms as the Directors see fit and, where
appropriate, removing the Chief Executive Officer, or equivalent;
c) ratifying the appointment and, where appropriate, the removal of senior executives, including the Chief Financial
Officer and the Company Secretary;
d) ensuring the Company's policy and procedure for selection and (re)appointment of directors is reviewed in
accordance with the Company's Nomination Committee Charter;
e) approving the Company's policies on risk oversight and management, internal compliance and control, Code of
Conduct, and legal compliance;
f) satisfying itself that senior management has developed and implemented a sound system of risk management and
internal control in relation to financial reporting risks and reviewed the effectiveness of the operation of that system;
g) assessing the effectiveness of senior management's implementation of systems for managing material business risk
including the making of additional enquiries and to request assurances regarding the management of material
business risk, as appropriate;
h) monitoring, reviewing and challenging senior management's performance and implementation of strategy;
i) ensuring appropriate resources are available to senior management;
j) approving and monitoring the progress of major capital expenditure, capital management, and acquisitions and
divestitures;
k) monitoring the financial performance of the Company;
l) ensuring the integrity of the Company's financial (with the assistance of the Audit and Risk Committee) and other
reporting through approval and monitoring;
m) providing overall corporate governance of the Company, including conducting regular reviews of the balance of
responsibilities within the Company to ensure division of functions remain appropriate to the needs of the Company;
n) appointing the external auditor (where applicable, based on recommendations of the Audit and Risk Committee) and
the appointment of a new external auditor when any vacancy arises, provided that any appointment made by the
Board must be ratified by shareholders at the next annual general meeting of the Company;
o) engagement with the Company's external auditors by the Audit and Risk Committee;
p) monitoring compliance with all of the Company's legal obligations, such as those obligations relating to the
environment, native title, cultural heritage and occupational health and safety; and
q) making regular assessment of whether each non-executive Director is independent in accordance with the Company's
policy on assessing the independence of directors.
The Board has delegated responsibilities and authorities to management to enable them to conduct the Company's day-to-
day activities. Matters which are not covered by these delegations, such as approvals which exceed certain limits, require
Board approval.
Details of meeting attendance of members of the Board for FY2015 is contained in the following table:
Number of Board meetings attended in FY2015 Number of Board meetings held in FY2015
while a member while a member
Bernard Pryor
5 5
(Chairman)
David Brown 5 5
De Wet Schutte - -
Peter Cordin 5 5
Khomotso Mosehla 5 5
Rudolph Torlage 4 5
Andrew Mifflin 3 3
Thabo Mosololi 3 3
David Murray 2 2
Michael Meeser 3 3
The Board has established three standing Committees to assist it to meet its responsibilities:
- Audit and Risk Committee
- Nomination and Remuneration Committee
- Safety, Health and Environment Committee
Each standing Committee has a formal Charter approved by the Board setting out the matters relevant to composition,
terms of reference, process and administration of that Committee. These Committees are described in further detail
elsewhere in this Corporate Governance Statement.
The Board Charter requires the Board to convene regular meetings with such frequency as is sufficient to appropriately
discharge its responsibilities.
Standing Committee meetings are held as required, generally the day prior to the scheduled Board meeting. The Chairman
sets the agenda for each meeting in conjunction with the Chief Executive Officer and Company Secretary. Any Director may
request additional matters on the agenda. Members of senior management attend meetings of the Board and its
Committees by invitation and are available for questioning by Directors.
ASX Principles Recommendation 1.2: A listed entity should:
a) undertake appropriate checks before appointing a person, or putting forward to security holders a candidate for
election, as a director; and
b) 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.
The Company performs checks on all potential Directors which include checks on a person's character, experience,
education, criminal record and bankruptcy history. Potential Director's are required to provide their consent for the
Company to conduct any background or other check and also acknowledge that they will have sufficient time available to
fulfil their responsibilities as Director of the Company.
Newly appointed Directors must stand for reappointment at the next Annual General Meeting ("AGM") of the Company.
The Notice of Meeting for the AGM provides shareholders with information about each Director standing for election or re-
election including details regarding their length of tenure, relevant skills and experience.
ASX Principles Recommendation 1.3: A listed entity should have a written agreement with each director and senior
executive setting out the terms of their appointment.
The Company has written agreements in place with each director in the form of an appointment letter. The letter among
other matters summarises the terms of appointment including remuneration, the requirement to comply with key
corporate policies including the Code of Conduct and Share Trading Policy and indemnity and insurance arrangements.
All senior executives including the Chief Executive Officer and the Chief Financial Officer have their position descriptions,
roles and responsibilities set out in writing in an employment contract.
ASX Principles Recommendation 1.4: The Company Secretary of a listed entity should be accountable directly to the
board, through the chair, on all matters to do with the proper functioning of the board.
The Company Secretary has an important role in supporting the effectiveness of the Board and its committees. The role of
the Company Secretary includes:
- dvising the Board and its committees on governance matters;
- onitoring that Board and committee policy and procedures are followed; and
- nsuring that the business at Board and committee meetings is accurately reflected in the minutes.
All Directors have direct access to the Company Secretary and vice versa.
The appointment and removal of the Company Secretary is a matter for decision by the Board as a whole.
ASX Principles Recommendation 1.5: A listed entity should
a) 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;
b) disclose the policy or a summary of it; and
c) 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 and either:
1. the respective proportions of men and women on the board, in senior executive positions and across
the whole organisation; or
2. if the entity is a "relevant employer" under the Workplace Gender Equality Act, the entity's most
recent "Gender Equality Indicators", as defined in and published under that Act.
The Company is committed to developing a diverse workforce and providing a work environment in which all employees
are treated fairly and with respect. To this end, the Company has in place an Employment Equity Policy which details its
commitment to being an equal opportunity employer and is in line with the South African Mining Charter and Employment
Equity legislation in South Africa. A copy of the Employment Equity Policy and the Diversity Policy are available on the
Company's website.
The Mining Charter requires that a company establish measurable objectives for achieving gender diversity and assess such
objectives and progress toward achieving them. The targets set for CoAL include 10% female representation in core mining
positions. Employment Equity targets as these relating to designated groups (one of which is women) are included as part
of the business key performance areas and are included in all management performance contracts.
As at end of the 2015 financial year, the proportion of women employees in the organisation is:
Employees 40%
Management 33%
Senior Executive 25%
Board 0%
The Company is not considered a relevant employer under the Australian Workplace Gender Equality Act as the number of
employees in Australia is below the threshold.
ASX Principles Recommendation 1.6: A listed entity should:
a) have and disclose a process for periodically evaluating the performance of its board, its committees and individual
directors; and
b) disclose in relation to each reporting period, whether a performance evaluation was undertaken in the reporting
period in accordance with that process.
The Board reviews its performance and the performance of individual Directors annually. The most recent review, which
was conducted during the year, involved the completion of a detailed questionnaire by each Director. The process was
managed by the Company Secretary and the Chairman and the results of the review were discussed at a subsequent board
meeting.
The Board considers its processes for reviewing the performance of the Board appropriate for the size and stage of
development of the Company.
ASX Principles Recommendation 1.7: A listed entity should:
a) have and disclose a process for periodically evaluating the performance of its senior executives; and
b) disclose in relation to each reporting period, whether a performance evaluation was undertaken in the reporting
period in accordance with that process.
The Chief Executive Officer is responsible for assessing the performance of the key executives within the Company. This is
performed at least annually through a formal process involving a formal meeting with each senior executive. A
performance evaluation of senior executives was completed in the financial year in accordance with this process.
PRINCIPLE 2: STRUCTURE THE BOARD TO ADD VALUE
A listed entity should have a board of an appropriate size, composition, skills and commitment to enable it to discharge
its duties effectively.
ASX Principles Recommendation 2.1: The board of a listed entity should:
a) have a nomination committee which:
1. has at least three members, a majority of whom are independent directors; and
2. is chaired by an independent director;
and disclose
3. the charter of the committee;
4. the members of the committee; and
5. at the end of the reporting period, the number of times the committee met throughout the period
and the individual attendances of the members at those meetings; or
b) if it does not have a nomination committee, disclose that fact and the processes it employs to address board
succession issues and to ensure that the board has the appropriate balance of skills, knowledge, experience,
independence and diversity to enable it to discharge its duties and responsibilities effectively.
The Company has established a Nomination and Remuneration Committee and adopted a Charter that set out the
committee's role and responsibilities, composition and membership requirements. That Charter has been published on the
Company's website.
The Committee's nomination responsibilities include ensuring that the Board has the appropriate blend of Directors with
the necessary expertise and relevant industry experience. As such the Charter requires the Committee to:
- regularly review the size and composition of the Board, and make recommendations to the Board on any appropriate
changes;
- identify and assess necessary and desirable director competences and provide advice on the competency levels of
directors with a view to enhancing the Board;
- make recommendations on the appointment and removal of directors;
- make recommendations on whether any directors whose term of office is due to expire should be nominated for re-
election; and
- regularly review the time required from non-executive Directors and whether non-executive Directors are meeting
that requirement.
The responsibilities of this Committee with respect to remuneration matters are set out elsewhere in this statement.
The Committee Charter states that the composition should include a minimum of three members, the majority of whom
must be independent, and a Chairman who is an independent Director. Membership is consistent with the composition
requirements of the Charter and the recommendations of the ASX Principles.
Details of meeting attendance of members of the Nomination Committee for FY2015 is contained in the following table:
Number of Committee meetings attended in Number of Committee meetings held in
FY2015 while a member FY2015 while a member
Bernard Pryor 4 4
(Chairman)
Thabo Mosololi 2 2
David Brown 4 4
David Murray 1 2
ASX Principles Recommendation 2.2: A listed entity should have and disclose a board skills matrix setting out the skills
and diversity that the board currently has or is looking to achieve in its membership.
The Company's website contains details on the procedures for the selection and appointment of new Directors and the re-
election of incumbent Directors, together with the Board's policy for the nomination and appointment of Directors.
The Board has developed a structured process for selection and appointment of new Directors to the Board. As part of this
procedure, the Board has committed to:
- the evaluation and identification of the diversity, skills, experience and expertise that will best complement Board
effectiveness;
- the development of a competencies review process for identifying and assessing Director competencies;
- the conduct of a competencies review of the Board before a candidate is recommended for appointment; and
- the periodic review of the Board's succession plan.
The following board skills matrix sets out the mix of skills, experience & expertise the board currently has across its
membership:
Competencies Rating
South African politics a
Strategic thinking a
Gender r
Technical a
Financial a
Commercial a
Mergers & Acquisitions a
Coal markets a
International affairs a
Shareholder relations a
Project development a
Equity markets a
Debt markets/ Banking experience r
Executive leadership a
Listed board experience a
SHE & Sustainability a
r - the CoAL board is currently working to increase these skills
ASX Principles Recommendation 2.3: A listed entity should disclose:
a) the names of the directors considered by the board to be independent directors;
b) if a director has an interest, position, association or relationship of the type that might cause doubts about the
independence of that director but the board is of the opinion that it does not compromise the independence of the
director; the nature of the interest, position, association or relationship in question and an explanation of why the
board is of that opinion; and
c) the length of service of each director.
ASX Principles Recommendation 2.4: A majority of the board of a listed entity should be independent Directors.
ASX Principles Recommendation 2.5: The chair of the board of a listed entity should be an independent Director and, in
particular, should not be the same person as the CEO of the entity.
The Board currently comprises two executive Directors and six non-executive Directors. Five of the non-executive directors
are considered to be independent. The Chairman, Mr B Pryor, is one of the independent Directors.
The Board agrees that all Directors should bring an independent judgement to bear in decision-making. The Board has
adopted a formal policy on access to independent professional advice which provides that Directors are entitled to seek
independent professional advice for the purposes of the proper performance of their duties. The advice is at the
Company's expense and advice so obtained is to be made available to all Directors.
A Director's obligations to avoid a conflict of interest are set out in the Code of Conduct, available on the Company's
website. Directors must also comply strictly with Corporations Act requirements for the avoidance of conflicts.
The Board considers an independent Director to be a non-executive Director who meets the criteria for independence set
out the ASX Principles. In determining a Director's independence, the Board considers the relationships that may affect
independence.
Criteria that the Board takes into account when determining Director independence include:
- substantial shareholdings in the Company;
- past or current employment in an executive capacity;
- whether or not the Director has been a principal of a material professional adviser or a material consultant to the
Company in the past three years;
- material supplier or customer relationships with the Company;
- material contractual relationships or payments for services other than as a Director; and
- family ties and cross-directorships.
Materiality for these purposes is based on quantitative and qualitative thresholds, set out in the Board Charter available
from the Company's website.
The Board has reviewed and considered the positions and associations of each of the Directors in office at the date of this
report and consider that a majority of the Directors are independent. Bernard Pryor, Peter Cordin, Khomotso Mosehla,
Andrew Mifflin and Thabo Mosololi are considered independent. Executive Directors David Brown and De Wet Schutte and
non-executive Director Rudolph Torlage are not considered independent. Non-executive Director Rudolph Torlage is an
officer/senior employee of ArcelorMittal South Africa Limited, a substantial shareholder in the Company and as such does
not meet the Board's criteria for independence.
The period of office held by each Director in office is as follows:
Director Date Appointed Period in office Due for Re-election or Retirement
Bernard Pryor 6 August 2012 3 years 2017 AGM
David Brown 6 August 2012 3 years 2015 AGM
De Wet Schutte 22 June 2015 1 year 2015 AGM
Peter Cordin 8 December 1997 17 years 2016 AGM
Khomotso Mosehla 18 November 2010 4 years 2016 AGM
Rudolph Torlage 18 November 2010 4 years 2016 AGM
Andrew Mifflin 12 December 2014 1 year 2015 AGM
Thabo Mosololi 12 December 2014 1 year 2015 AGM
Directors must retire at the third AGM following their election or most recent re-election. At least one third of Directors
must stand for election at each AGM. Any Director appointed to fill a casual vacancy since the date of the previous AGM
must submit themselves to shareholders for election at the next AGM. Re-appointment of Directors by rotation is not
automatic.
ASX Principles Recommendation 2.6: A listed entity 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.
As part of the induction process, meetings are arranged with other Board members and key executives prior to the
Director's appointment.
All Directors are expected to maintain the skills required to discharge their obligations to the Company. Directors are
encouraged to undertake continuing professional education and where this involves industry seminars and approved
education courses, this is paid for by the Company where appropriate.
The skills, experience and expertise relevant to the position of director held by each director in office at the date of this
integrated report is set out in the Directors' report.
PRINCIPLE 3: ACT ETHICALLY AND RESPONSIBLY
A listed entity should act ethically and responsibly.
ASX Principles Recommendation 3.1: A listed entity should:
a) have a code of conduct for its directors, senior executives and employees; and
b) disclose that code or a summary of it.
CODE OF CONDUCT
The Board encourages appropriate standards of conduct and behaviour from Directors, officers, employees and
contractors of the Company. The Board has adopted a Code of Conduct in relation to Directors and employees, available
from the Company's website. This Code of Conduct is regularly reviewed and updated as necessary to ensure that it
reflects the highest standards of behaviour and professionalism and the practices necessary to maintain confidence in the
Company's integrity.
A fundamental theme is that all business affairs are conducted legally, ethically and with strict observance of the highest
standards of integrity and propriety.
SECURITIES TRADING POLICY
The Board has adopted a Securities Trading Policy which regulates dealings by Directors, officers and employees in
securities issued by the Company. The policy is intended to assist in maintaining market confidence in the integrity of
dealings in the Company's securities.
Under the policy, which is available on the Company's website, Directors, officers and employees of the Company must
not, whether in their own capacity or as an agent for another, subscribe for, purchase or sell, or enter into an agreement to
subscribe for, purchase or sell, any securities (ie. shares or options) in the Company, or procure another person to do so:
a) if that Director, officer or employee possesses information that a reasonable person would expect to have a material
effect on the price or value of the securities if the information was generally available;
b) if the Director, officer or employee knows or ought reasonably to know, that:
- the information is not generally available; and
- if it were generally available, it might have a material effect on the price or value of the securities in the
Company; and
c) without the written acknowledgement of the Chair.
Further, Directors, officers and employees must not either directly or indirectly pass on this kind of information to another
person if they know, or ought reasonably to know, that this other person is likely to deal in the securities of the Company
or procure another person to do so.
The policy regulates trading by key management personnel within defined closed periods, as well as providing details of
trading not subject to the policy, exceptional circumstances in which key management personnel may be permitted to
trade during a prohibited period with prior written clearance and the procedure for obtaining written clearance.
Directors, officers and employees must not enter into transactions or arrangements which operate to limit the economic
risk of their security holding in the Company without first seeking and obtaining written acknowledgement from the Chair.
Executives are also prohibited from entering into transactions or arrangements which limit the economic risk of
participating in unvested entitlements.
PRIVACY
The Company has resolved to comply with the National Privacy Principles contained in the Privacy Act 1988, to the extent
required for a company the size and nature of CoAL.
PRINCIPLE 4: SAFEGUARD INTEGRITY IN CORPORATE REPORTING
A listed entity should have formal and rigorous processes that independently verify and safeguard the integrity of its
corporate reporting.
ASX Principles Recommendation 4.1: The board of a listed entity should:
a) have an audit committee which:
1. has at least three members, all of whom are non-executive directors and a majority of whom are
independent directors; and
2. is chaired by an independent director, who is not the chair of the board,
and disclose
3. the charter of the committee;
4. the relevant qualifications and experience of the members of the committee; and
5. in relation to each reporting period, the number of times the committee met throughout the period
and the individual attendances of the members at those meetings; or
b) if it does not have an audit committee, disclose that fact and the processes it employs that independently verify
and safeguard the integrity of its corporate reporting, including the processes for the appointment and removal of
the external auditor and the rotation of the audit engagement partner.
AUDIT COMMITTEE
The Company has established an Audit and Risk Committee which is comprised of a majority of independent non-executive
Directors.
The role of the Audit and Risk Committee is to:
- monitor and review the integrity of the financial reporting of the Company, reviewing significant financial reporting
judgments;
- review the Company's internal financial control system and, unless expressly addressed by a separate risk committee
or by the Board itself, risk management systems;
- monitor, review and oversee the external audit function including matters concerning appointment and
remuneration, independence and non-audit services;
- monitor and review compliance with the Company's Code of Conduct; and
- perform such other functions as assigned by law, the Company's Constitution, or the Board.
The Board has determined that the Audit Committee should comprise:
- at least three members;
- a majority of independent non-executive Directors; and
- an independent chair who is not the Chair of the Board.
In addition, the Audit Committee should include:
- members who are financially literate i.e. able to read and understand financial statements;
- at least one member with relevant qualifications and experience, i.e. a qualified accountant or other finance
professional with experience of financial and accounting matters; and
- at least one member with an understanding of the industry in which the entity operates.
As at 30 June 2015 membership was consistent with the composition requirements of the ASX Principles and Audit and Risk
Committee Charter with one exception. The Chair of the Committee, Mr B Pryor is also the Chair of the Board. The Board
accepted this departure from the Audit and Risk Committee Charter and the ASX Principles as a temporary one, resolved
subsequent to year end with the appointment of Mr T Mosololi as Chairman of the Audit Committee.
The Charter is published on the Company's website. The website also contains information on the procedures for the
selection and appointment of the external auditor and for the rotation of external audit partners.
Details of meeting attendance of members of the Audit and Risk Committee for FY2015 is contained in the following table:
Number of Committee meetings attended in Number of Committee meetings held in
FY2015 while a member FY2015 while a member
Bernard Pryor (Chairman) 5 5
(Chairman)
Thabo Mosololi 2 2
Khomotso Mosehla 5 5
Peter Cordin 3 3
ASX Principles Recommendation 4.2: The board of a listed entity should, before it approves the entity's financial
statements for a financial period, receive from the 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 position and performance of the entity and that the opinion has
been formed on the basis of a sound system of risk management and internal control which is operating effectively.
The Chief Executive Officer and Chief Financial Officer confirm in writing to the Board that:
a) the Company's annual financial reports present a true and fair view, in all material respects, of the Company's
financial condition and operational results are in accordance with relevant accounting standards;
b) the above confirmation is founded on a sound system of risk management and internal compliance and control which
implements the policies of the Board; and
c) the Company's risk management and internal compliance and control system is operating efficiently and effectively in
all material respects.
This declaration was obtained for the relevant reporting period.
ASX Principles Recommendation 4.3: A listed entity that has an AGM should ensure that its external auditor attends its
AGM and is available to answer questions from security holders relevant to the audit.
The auditor attends the AGM, usually by telephone as the meeting is held in the United Kingdom. Shareholders are able to
ask questions on the conduct of the audit and the preparation and content of the audit report, in accordance with the
requirements of the Corporations Act 2001.
PRINCIPLE 5: MAKE TIMELY AND BALANCED DISCLOSURE
A listed entity should make timely and balanced disclosure of all matters concerning it that a reasonable person would
expect to have a material effect on the price or value of its securities.
The Company is committed to ensuring that:
- all investors have equal and timely access to material information concerning the Company – including its financial
situation, performance, ownership and governance; and
- Company announcements are factual and presented in a clear and balanced way.
ASX Principles Recommendation 5.1: A listed entity should:
a) should have a written policy for complying with its continuous disclosure obligations under the Listing Rules; and
b) disclose that policy or a summary of it.
The Board has an established Shareholder Communication Policy which is available from the Company's website. The
Company has adopted certain procedures to ensure that it complies with its continuous disclosure obligations and has
appointed a Responsible Officer who is responsible for ensuring the procedures are complied with.
PRINCIPLE 6: RESPECT THE RIGHTS OF SECURITY HOLDERS
A listed entity should respect the rights of its security holders by providing them with appropriate information and
facilities to allow them to exercise those rights effectively.
ASX Principles Recommendation 6.1: A listed entity should provide information about itself and its governance to
investors via its website.
ASX Principles Recommendation 6.2: A listed entity should design and implement an investor relations program to
facilitate effective two-way communication with investors.
ASX Principles Recommendation 6.3: A listed entity should disclose the policies and processes it has in place to facilitate
and encourage participation at meetings of security holders.
ASX Principles Recommendation 6.4: A listed entity should give security holders the option to receive communications
from, and send communications to, the entity and its security register electronically.
The Board has established a communications strategy which is available from the Company's website.
The Board aims to ensure that the shareholders are informed of all major developments affecting the Company. All
shareholders receive the Company's annual report, and may also request copies of the Company's half-yearly and quarterly
reports.
The Company maintains a website at www.coalofafrica.com and makes comprehensive information available on a regular
and up-to date basis. The Company provides shareholder materials directly to shareholders through electronic means. A
shareholder may request a hard copy of the Company's annual report to be posted to them.
Shareholders are encouraged at annual general meetings to ask questions of Directors and senior management and also
the Company's external auditors, who attend the Company's annual general meetings.
PRINCIPLE 7: RECOGNISE AND MANAGE RISK
A listed entity should establish a sound risk management framework and periodically review the effectiveness of that
framework.
ASX Principles Recommendation 7.1: The board of a listed entity should:
a) have a committee or committees to oversee risk, each of which:
1. has at least three members, a majority of whom are independent directors; and
2. is chaired by an independent director;
and disclose
3. the charter of the committee;
4. the members of the committee; and
5. as at the end of each reporting period, the number of times the committee met throughout the period
and the individual attendances of the members at those meetings; or
b) if it does not have a risk committee or committee that satisfies (a) above, disclose that fact and the processes it
employs for overseeing the entity's risk management framework.
The Company has a policy for the oversight and management of material business risks, which is available on the
Company's website. The Board is responsible for approving the Company's policies on risk oversight and management and
satisfying itself that management has developed and implemented a sound system of risk management and internal
control.
Implementation of the risk management system and day-to-day management of risk is the responsibility of the Chief
Executive Officer, with the assistance of senior management, as required.
The Chief Executive Officer has responsibility for identifying, assessing, monitoring and managing risks. The Chief Executive
Officer is also responsible for identifying any material changes to the Company's risk profile and ensuring, with approval of
the Board, the risk profile of the Company is updated to reflect any material change.
The Chief Executive Officer is required to report on the progress of, and on all matters associated with, risk management
on a regular basis, and at least annually. During the reporting period, the Chief Executive Officer regularly reported to the
Board as to the effectiveness of the Company's management of its material business risks.
The Audit and Risk Committee also has responsibility for reviewing the Company's internal financial control system and risk
management systems and reporting to the Board. Details of the composition and Charter of the Audit and Risk Committee
has been disclosed earlier in this document (refer Principle 4).
Details of meeting attendance of members of the Audit and Risk Committee for FY2015 are contained in a table earlier in
this document (refer Principle 4).
In addition, the Board has also established a Safety, Health and Environment Committee to assist the Board in the effective
discharge of its responsibilities in relation to safety, health and environmental ("SHE") issues for CoAL, and the oversight of
risks relating to these issues. The Committee's responsibilities include to:
- Understand the risks of SHE issues involving CoAL's activities;
- Ensure that the systems and processes for identifying, assessing and managing SHE risks of CoAL are adequately
monitored;
- Regularly review and ensure compliance with the SHE strategies and policies of CoAL and the supporting management
systems and processes; and
- Monitor developments in relevant SHE-related legislation and regulations and monitor CoAL's compliance with
relevant legislation, including through audits.
ASX Principles Recommendation 7.2: The board or committee of the board should:
a) review the entity's risk management framework at least annually to satisfy itself that it continues to be sound; and
b) disclose, in relation to each reporting period, whether such a review has taken place.
The risk management framework was reviewed by the Committee during the reporting period.
ASX Principles Recommendation 7.3: A listed entity should disclose:
a) if it has an internal audit function, how the function is structured and what role it performs; or
b) if it does not have an internal audit function, that fact and the processes it employs for evaluating and continually
improving the effectiveness of its risk management and internal control processes.
Due to the size of the Company and its current level of activity and operations, the Company does not have a formal
internal audit function.
The Board believe that the Company's risk management and internal control systems establish a sufficient control
environment to manage business risks.
ASX Principles Recommendation 7.4: A listed entity should disclose whether it has any material exposure to economic,
environmental and socially sustainable risks and, if it does, how it manages or intends to manage those risks.
The Company is very aware of its impact on the economy, the environment and the community in which it operates, and
the risks associated with not dealing with aspects appropriately.
The Company annually reports on these aspects through its Sustainable Development Review in the Integrated (Annual)
Report. This report is available on the Company website.
PRINCIPLE 8: REMUNERATE FAIRLY AND RESPONSIBLY
A listed entity should pay director remuneration sufficient to attract and retain high quality directors and design its
executive remuneration to attract, retain and motivate high quality senior executives and to align their interests with
the creation of value for security holders.
ASX Principles Recommendation 8.1: The Board of a listed entity should:
a) have a remuneration committee which:
1. has at least three members, a majority of whom are independent directors; and
2. is chaired by an independent director;
and disclose
3. the charter of the committee;
4. the members of the committee; and
5. as at the end of each reporting period, the number of times the committee met throughout the period
and the individual attendances of the members at those meetings; or
b) if it does not have a remuneration committee, disclose that fact and the processes it employs for setting the level
and composition of remuneration for directors and senior executives and ensuring that such remuneration is
appropriate and not excessive.
The Board has established a Nomination and Remuneration Committee and adopted a Charter that sets out the
committee's roles and responsibilities, composition and membership requirements. The Charter is available on the
Company's website.
The Committee Charter states that the composition should include a minimum of three members, the majority of whom
must be independent, and a Chairman who is an independent Director. Membership is consistent with the composition
requirements of the Charter and the recommendations of the ASX Principles.
Details of meeting attendance of members of the Nomination and Remuneration Committee for FY2015 are contained in a
table earlier in this document (refer Principle 2).
ASX Principles: Recommendation 8.2: A listed entity should separately disclose its policies and practices regarding the
remuneration of non-executive directors and the remuneration of executive directors and other senior executives.
The Charter of the Remuneration Committee details the Company's approach to the structure of executive and non-
executive remuneration. Executive Directors and key executives are remunerated by way of a salary or consultancy fees,
commensurate with their required level of services. Non-executive Directors receive a fixed monthly fee for their services.
Total aggregated non-executive Directors' fees are currently capped at A$1,000,000 per annum.
The Company does not have any scheme relating to retirement benefits for non-executive Directors.
The remuneration report contained in the Directors' report contains details of remuneration paid to Directors and key
executives during the year.
Disclosure of the Company's remuneration policies is best served through a transparent and readily understandable
framework for executive remuneration that details the costs and benefits. The Company intends to meet its transparency
obligations in the following manner:
- publishing a detailed remuneration report in the annual report each year;
- continuous disclosure of employment agreements with key executives where those agreements, or obligations falling
due under those agreements, may trigger a continuous disclosure obligation under ASX Listing Rule 3.1;
- presentation of the remuneration report to shareholders for their consideration and nonbinding vote at the
Company's AGM;
- taking into account the outcome of the nonbinding shareholder vote when determining future remuneration policy;
and
- responding to shareholder questions on policy and practice in a frank and open manner.
ASX Principles: Recommendation 8.3: A listed entity which has an equity-based remuneration scheme should:
a) have a policy on whether participants are permitted to enter into transactions (whether through the use of
derivatives or otherwise) which limit the economic risk of participating in the scheme; and
b) disclose that policy or a summary of it.
Companies should clearly distinguish the structure of non-executive Directors' remuneration from that of executive
directors and senior executives.
The Company has an Employee Share Option Plan which was approved by Shareholders at the 2013 AGM. A summary of
the plan was included in the Company's 2013 Notice of General Meeting, a copy of which is available on the Company's
website.
The Company's Policy for Trading in Company Securities prohibits Directors, Officers and Employees from entering into
transactions or arrangements which operate to limit the economic risk of their security holding in the Company without
first seeking and obtaining written clearance from the Chairman.
A copy of the Company's Policy for Trading in Company Securities can be found on the Company's website.
The directors declare that:
a) in the directors' opinion, there are reasonable grounds to believe that the Company will be able to pay its debts
as and when they become due and payable;
b) in the directors' opinion, the attached financial statements are in compliance with International Financial
Reporting Standards, as stated in note 2.1 to the financial statements;
c) in the directors' opinion, the attached financial statements and notes thereto are in accordance with the
Corporations Act 2001, including compliance with accounting standards and giving a true and fair view of the
financial position and performance of the Consolidated Entity; and
d) the directors have been given the declarations required by s.295A of the Corporations Act 2001.
Signed in accordance with a resolution of the directors made pursuant to s.295(5) of the Corporations Act 2001.
On behalf of the Directors
Bernard Pryor David Brown
Chairman Chief Executive Officer
10 September 2015 10 September 2015
COAL OF AFRICA LIMITED
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
for the year ended 30 June 2015
Year ended Year ended
30 June 2015 30 June 2014
Note $'000 $'000
Continuing operations
Revenue 5 - 761
Investment income 6 828 1,699
Other income 7 324 5,564
Gain recognised on disposal of interest in former subsidiary 11 - 1,438
Other gains and (losses) 7 1,580 (617)
Depreciation and amortisation 7 (1,472) (2,176)
Foreign exchange gains/(losses) 7 14,504 (36,317)
Take or pay port obligation 15 - (10,556)
Employee benefits expense 7 (4,936) (8,042)
Finance costs 9 (1,286) (2,309)
Consulting expense (777) (2,617)
Other expenses (13,300) (10,373)
Loss before tax (4,535) (63,545)
Income tax expense 10 - -
Net loss for the year from continuing operations (4,535) (63,545)
Discontinued operations
Loss for the year from operations classified as held for sale 11 (2,176) (20,575)
LOSS FOR THE YEAR (6,711) (84,120)
Other comprehensive loss, net of income tax
Items that may be reclassified subsequently to profit or loss
Exchange differences on translating foreign operations (59,872) 21,255
Total comprehensive loss for the year (66,583) (62,865)
Loss for the year attributable to:
Owners of the Company (6,711) (84,120)
Non-controlling interests - -
(6,711) (84,120)
Total comprehensive loss attributable to:
Owners of the Company (66,583) (62,865)
Non-controlling interests - -
(66,583) (62,865)
Loss per share 12
From continuing operations and discontinued operations
Basic and diluted (cents per share) (0.47) (8.02)
From continuing operations
Basic and diluted (cents per share) (0.32) (6.06)
The accompanying notes are an integral part of these consolidated financial statements
COAL OF AFRICA LIMITED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 June 2015
Year ended Year ended
30 June 2015 30 June 2014
Note $'000 $'000
ASSETS
Non-current assets
Development, exploration and evaluation expenditure 13 232,813 271,711
Property, plant and equipment 14 16,259 17,413
Intangible assets 15 11,682 15,488
Other receivables 16 1,746 2,245
Other financial assets 17 3,411 1,607
Restricted cash 20 1,023 5,153
Deferred tax assets 25 2,320 2,694
Total non-current assets 269,254 316,311
Current assets
Inventories 18 236 528
Trade and other receivables 19 792 1,902
Other financial assets 17 468 610
Cash and cash equivalents 20 17,759 2,017
19,255 5,057
Assets classified as held for sale 21 18,118 23,030
Total current assets 37,373 28,087
Total assets 306,627 344,398
LIABILITIES
Non-current liabilities
Deferred consideration 22 15,422 -
Provisions 24 5,733 4,643
Total non-current liabilities 21,155 4,643
Current liabilities
Deferred consideration 22 3,265 29,800
Trade and other payables 26 2,719 15,083
Borrowings 23 - 6,372
Provisions 24 294 2,447
Current tax liabilities 1,285 1,583
7,563 55,285
Liabilities associated with assets held for sale 21 3,354 4,150
Total current liabilities 10,917 59,435
Total liabilities 32,072 64,078
NET ASSETS 274,555 280,320
EQUITY
Issued capital 27 992,374 935,891
Accumulated deficit 28 (718,081) (790,964)
Reserves 29 (313) 134,818
Equity attributable to owners of the Company 273,980 279,745
Non-controlling interests 31 575 575
TOTAL EQUITY 274,555 280,320
The accompanying notes are an integral part of these consolidated financial statements
COAL OF AFRICA LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2015
Issued capital Accumulated Share based Capital Foreign Attributable Non- Total equity
deficit payment profits currency to owners controlling
reserve reserve translation of the interests
reserve parent
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Balance at 1 July 2014 935,891 (790,964) 82,464 91 52,263 279,745 575 280,320
Total comprehensive loss for the year - (6,711) - - (59,872) (66,583) - (66,583)
Loss for the year - (6,711) - - - (6,711) - (6,711)
Other comprehensive loss, net of tax - - - - (59,872) (59,872) - (59,872)
935,891 (797,675) 82,464 91 (7,609) 213,162 575 213,737
Shares issued for capital raising(net of costs) 56,483 - - - - 56,483 - 56,483
Shares issued to employees - - 4,335 - - 4,335 - 4,335
Share options cancelled - 79,594 (79,594) - - - - -
Balance at 30 June 2015 992,374 (718,081) 7,205 91 (7,609) 273,980 575 274,555
Balance at 1 July 2013 935,891 (707,535) 82,438 91 31,008 341,893 575 342,468
Total comprehensive loss for the year - (84,120) - - 21,255 (62,865) - (62,865)
Loss for the year - (84,120) - - - (84,120) - (84,120)
Other comprehensive loss, net of tax - - - - 21,255 21,255 - 21,255
935,891 (791,655) 82,438 91 52,263 279,028 575 279,603
Shares issued to employees - - 717 - - 717 - 717
Share options cancelled - 691 (691) - - - - -
Share issued costs - - - - - - - -
Balance at 30 June 2014 935,891 (790,964) 82,464 91 52,263 279,745 575 280,320
The accompanying notes are an integral part of these consolidated financial statements
COAL OF AFRICA LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 30 June 2015
Year ended Year ended
30 June 2015 30 June 2014
Note $'000 $'000
Cash flows from operating activities
Receipts from customers 1,003 12,918
Payments to suppliers and employees (16,124) (34,386)
Cash used in operations 33 (15,121) (21,468)
Interest received 628 952
Interest paid (1,182) (811)
Net cash used in operating activities (15,675) (21,327)
Cash flows from investing activities
Purchase of property, plant and equipment (1,358) (148)
Proceeds from the sale of property, plant and equipment 1 609
Investment in development assets (991) (5,056)
Investment in exploration assets (86) (1,867)
Increase in other financial assets 134 1,404
Settlement of Envicoal matter (2,431)
Proceeds from the sale of Nucoal - 7,714
Decrease / (Increase) in restricted cash 4,761 (1,274)
Net cash generated from investing activities 30 1,382
Cash flows from financing activities
Settlement in export trade finance facility (10,367) (12,246)
Finance lease repayments - (52)
Repayment of Investec Facility (5,909) -
Repayment of deferred consideration (11,619) -
Proceeds from loans receivable 1,579 4,442
Proceeds from the issue of shares (net of share issuance costs) 57,926 -
Net cash generated / (used) by financing activities 31,610 (7,856)
Net increase/(decrease) in cash and cash equivalents 15,965 (27,801)
Net foreign exchange differences (182) (38)
Cash and cash equivalents at beginning of the year 2,099 29,938
Cash and cash equivalents at the end of the year 20 17,882 2,099
The accompanying notes are an integral part of these consolidated financial statements
COAL OF AFRICA LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 30 June 2015
1. General Information
Coal of Africa Limited (‘CoAL’ or the ‘Company’) is a limited company incorporated in Australia. Its common shares
are listed on the Australian Securities Exchange (‘ASX’), the Alternative Investment Market of the London Stock Exchange
(‘AIM’) and the Johannesburg Securities Exchange (‘JSE’) in South Africa. The addresses of its registered office and principal
places of business is Suite 8, 7 The Esplanade, Mt Pleasant, Perth, Western Australia 6000.
The principal activities of the Company and its subsidiaries (‘the Group’ or ‘the Consolidated Entity’) are the acquisition,
exploration, development and operation of metallurgical and thermal coal projects in South Africa.
The Group’s principal assets and projects include:
- the Makhado hard coking and thermal coal project which was granted of a NOMR in May 2015;
- the development phase Vele colliery where operations have been significantly reduced pending the granting of the extension of the mine’s IWUL;
- three exploration and development stage coking and thermal coal projects, namely Chapudi, Generaal and Mopane, in the Soutpansberg Coalfield; and
- the Mooiplaats colliery currently on care and maintenance and subject to a formal sale process.
Going Concern
These consolidated financial statements have been prepared on the going concern basis, which contemplates the continuity of normal
business activities and the realisation of assets and the settlement of liabilities in the normal course of business.
The Consolidated Entity has incurred a net loss after tax for the year ended 30 June 2015 of $6.7 million (30 June 2014: loss of $84.1 million),
including an unrealised foreign exchange gain of $14.5 million and depreciation and amortisation charges of $1.5 million. During the twelve month
period under review, net cash outflows from operating activities were $15.7 million (30 June 2014 net outflow: $21.3 million) and net cash inflow
from investing activities were $0.03 million (30 June 2014 net outflow: $1.4 million). As at 30 June 2014 the Consolidated Entity had a net current
asset position of $11.7 million (30 June 2014: net current liability of $50.2 million), excluding assets and liabilities associated with discontinued operations.
As part of the process to raise additional funding for the business and manage the entity’s cashflow requirements the Company entered into a
Subscription Agreement and a Loan Agreement with Singapore registered Yishun Brightrise Investment PTE Limited (“Yishun”) whereby Yishun will
acquire up to 183,231,261 ordinary shares for 5.15 British pence each raising approximately GBP9.4 million (approximately $14.7 million) conditional
upon CoAL shareholder approval on the 14th of September 2015. The Company and Yishun have also entered into a Loan Agreement in terms of which Yishun
has agreed to lend CoAL $10 million conditional upon the Company’s shareholders approving the issue of the 183,231,261 shares. The loan will bear no
interest and is only repayable in limited circumstances. An Extraordinary General meeting (“EGM”) has been arranged for the 14th of September 2015 in
order to obtain shareholder approval for the placement as well as the loan. The Company has obtained sufficient proof of proxies for votes that aggregate
to more than the required 50% approval needed at the EGM.
At the date of this report and including the cash flow received from the above mentioned arrangement, the Directors are confident that the Company and
Consolidated Entity will be able to continue as going concerns.
1. Basis of presentation
1.1. Statement of compliance
These consolidated financial statements are general purpose financial statements which have been prepared in
accordance with the Corporations Act 2001, Accounting Standards and Interpretations, and comply with other
requirements of the law. The financial statements comprise the consolidated financial statements of the Group. For
the purposes of preparing the consolidated financial statements, the Company is a for-profit entity. Accounting
Standards include Australian Accounting Standards. Compliance with Australian Accounting Standards ensures that
the consolidated financial statements and notes of the company and the Group comply with International Financial
Reporting Standards ('IFRS').
The consolidated financial statements were authorised for issue by the Directors on 10 September 2015.
1.2. Basis of Preparation
The consolidated financial statements have been prepared on the basis of historical cost, except for other financial
assets and financial instruments that are measured at revalued amounts or fair values, as explained in the accounting
policies below. Historical cost is generally based on the fair values of the consideration given in exchange for assets.
All amounts are presented in United States dollars, and rounded to nearest thousand unless otherwise noted.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date, regardless of whether that price is directly observable or
estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Group takes
into account the characteristics of the asset or liability if market participants would take those characteristics into
account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure
purposes in these consolidated financial statements is determined on such a basis, except for share-based payment
transactions that are within the scope of AASB 2, and measurements that have some similarities to fair value but are
not fair value, such as net realisable value in AASB 2 or value in use in AASB 136.
In addition, for financial reporting purposes, fair value measurements are categorised into Level 1, 2 or 3 based on
the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to
the fair value measurement in its entirety, which are described as follows:
- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the entity
can access at the measurement date;
- Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or
liability, either directly or indirectly; and
- Level 3 inputs are unobservable inputs for the asset or liability.
2. Accounting policies
2.1. Basis of Consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled
by the Company (its subsidiaries). Control is achieved when the Company:
- has power over the investee;
- is exposed, or has rights, to variable returns from its involvement with the investee; and
- has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control listed above. When the Company has less than a majority of
the voting rights of an investee, it has power over the investee when the voting rights are sufficient to give it the
practical ability to direct the relevant activities of the investee unilaterally. The Company considers all relevant facts
and circumstances in assessing whether or not the Company's voting rights in an investee are sufficient to give it
power, including:
- the size of the Company's holding of voting rights relative to the size and dispersion of holdings of the other vote
holders;
- potential voting rights held by the Company, other vote holders or other parties;
- rights arising from other contractual arrangements; and
any additional facts and circumstances that indicate that the Company has, or does not have, the current ability to
direct the relevant activities at the time that decisions need to be made, including voting patterns at previous
shareholders' meetings.
Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the
company loses control of the subsidiary. Specifically, income and expenses of a subsidiary acquired or disposed of
during the year are included in the consolidated statement of profit or loss and other comprehensive income from
the date the Company gains control until the date when the Company ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income are attributed to the owners of the Company and
to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the
Company and to the non-controlling interests even if this results in the non-controlling interests having a deficit
balance.
A list of controlled entities is contained in note 36 to the consolidated financial statements.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies
into line with those used by other members of the Group.
All inter-group transactions, balances, income and expenses are eliminated in full on consolidation.
Changes in the Group's ownership interests in subsidiaries that do not result in the Group losing control are
accounted for as equity transactions. The carrying amounts of the Group's interests and the non-controlling interests
are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount
by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is
recognised directly in equity and attributed to owners of the Company.
When the Group loses control of a subsidiary, a gain or loss is recognised in profit or loss and is calculated as the
difference between
(i) the aggregate of the fair value of the consideration received and the fair value of any retained interest and
(ii) the previous carrying amount of the assets (including goodwill), and liabilities of the subsidiary and any non-
controlling interests.
When assets of the subsidiary are carried at revalued amounts or fair values and the related cumulative gain or loss
has been recognised in other comprehensive income and accumulated in equity, the amounts previously recognised
in other comprehensive income and accumulated in equity are accounted for as if the Company had directly disposed
of the relevant assets (i.e. reclassified to profit or loss or transferred directly to any category of equity as specified by
applicable Standards). The fair value of any investment retained in the former subsidiary at the date when control is
lost is regarded as the fair value on initial recognition for subsequent accounting under Accounting Standard AASB
139 'Financial Instruments: Recognition and Measurement' or, when applicable, the cost on initial recognition of an
investment in an associate or joint venture.
2.2. Business combinations
Business combinations occur where an acquirer obtains control over one or more businesses and results in the
consolidation of its assets and liabilities.
Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a
business combination is measured at fair value which is calculated as the sum of the acquisition-date fair values of
assets transferred by the Group, liabilities incurred by the Group to the former owners of the acquiree and the equity
instruments issued by the Group in exchange for control of the acquiree. Acquisition-related costs are recognised in
profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at their fair value,
except that:
- dferred tax assets or liabilities are recognised and measured in accordance with AASB 112 'Income Taxes';
- asets or liabilities related to employee benefit arrangements are recognised and measured in accordance with
AASB 119 'Employee Benefits';
- labilities or equity instruments related to share-based payment arrangements of the acquiree or share-based
payment arrangements of the Group entered into to replace share-based payment arrangements of the
acquiree are measured in accordance with AASB 2 'Share-based Payment' at the acquisition date; and
- asets (or disposal groups) that are classified as held for sale in accordance with AASB 5 'Non-current Assets
Held for Sale and Discontinued Operations' are measured in accordance with that Standard.
Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling
interests in the acquiree, and the fair value of the acquirer's previously held equity interest in the acquiree (if any)
over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after
reassessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed
exceeds the sum of the consideration transferred, the amount of any non-controlling interests in the acquiree and
the fair value of the acquirer's previously held interest in the acquiree (if any), the excess is recognised immediately
in profit or loss as a bargain purchase gain.
Non-controlling interests that represent ownership interests and entitle their holders to a proportionate share of the
entity's net assets in the event of liquidation may be initially measured either at fair value or at the non-controlling
interests' proportionate share of the recognised amounts of the acquiree's identifiable net assets. Non-controlling
interests are measured at fair value or, when applicable, on the basis specified in another Standard.
Where the consideration transferred by the Group in a business combination includes assets or liabilities resulting
from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair
value. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are
adjusted retrospectively, with corresponding adjustments against goodwill. Measurement period adjustments are
adjustments that arise from additional information obtained during the 'measurement period' (which cannot exceed
one year from the acquisition date) about facts and circumstances that existed at the acquisition date.
The subsequent accounting for changes in the fair value of contingent consideration that do not qualify as
measurement period adjustments depends on how the contingent consideration is classified. Contingent
consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent
settlement is accounted for within equity. Contingent consideration that is classified as an asset or liability is
remeasured at subsequent reporting dates in accordance with AASB 139, or AASB 137 'Provisions, Contingent
Liabilities and Contingent Assets', as appropriate, with the corresponding gain or loss being recognised in profit or
loss.
Where a business combination is achieved in stages, the Group's previously held equity interest in the acquiree is
remeasured to fair value at the acquisition date (i.e. the date when the Group attains control) and the resulting gain
or loss, if any, is recognised in profit or loss. Amounts arising from interests in the acquiree prior to the acquisition
date that have previously been recognised in other comprehensive income are reclassified to profit or loss where
such treatment would be appropriate if that interest were disposed of.
If the initial accounting for a business combination is incomplete by the end of the reporting period in which the
combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete.
Those provisional amounts are adjusted during the measurement period (see above), or additional assets or liabilities
are recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition
date that, if known, would have affected the amounts recognised as of that date.
2.3. Functional and presentation currency
The individual financial statements of each group entity are presented in the currency of the primary economic
environment in which the entity operates (its functional currency). For the purpose of the consolidated financial
statements, the results and financial position of each group entity are expressed in United Sates dollars ('$'), which is
the presentation currency for the consolidated financial statements.
Transactions in foreign currencies are initially recorded in the functional currency at the rate of exchange ruling
at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated to the
spot rate of exchange ruling at the reporting date. All differences are taken to the consolidated statement of profit or
loss and other comprehensive income.
Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange
rates at the date of the initial transaction.
Exchange differences on monetary items are recognised in profit or loss in the period in which they arise except for:
- exchange differences on foreign currency borrowings relating to assets under construction for future productive
use, which are included in the cost of those assets when they are regarded as an adjustment to interest costs on
those foreign currency borrowings;
- exchange differences on transactions entered into in order to hedge certain foreign currency risks; and
- exchange differences on monetary items receivable from or payable to a foreign operation for which settlement
is neither planned nor likely to occur (therefore forming part of the net investment in the foreign operation),
which are recognised initially in other comprehensive income and reclassified from equity to profit or loss on
repayment of the monetary items.
For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group's foreign
operations are translated into United States dollars using the spot rate of exchange ruling at the reporting date.
Income and expense items are translated at the average exchange rates for the period, unless exchange rates
fluctuated significantly during that period, in which case the exchange rates at the dates of the transactions are used.
Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in equity
(attributed to non-controlling interests as appropriate).
On the disposal of a foreign operation (i.e. a disposal of the Group's entire interest in a foreign operation, or a
disposal involving loss of control over a subsidiary that includes a foreign operation, loss of joint control over a jointly
controlled entity that includes a foreign operation, or loss of significant influence over an associate that includes a
foreign operation), all of the accumulated exchange differences in respect of that operation attributable to the Group
are reclassified to profit or loss.
Goodwill and fair value adjustments on identifiable assets and liabilities arising on the acquisition of a foreign
operation are treated as assets and liabilities of the foreign operation and translated at the spot rate of exchange
ruling at the reporting date. Exchange differences arising are recognised in equity.
2.4. Non-current assets held for sale
Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered
principally through a sale transaction rather than through continuing use. This condition is regarded as met only
when the sale is highly probable and the non-current asset (or disposal group) is available for immediate sale in its
present condition. Management must be committed to the sale, which should be expected to qualify for recognition
as a completed sale within one year from the date of classification.
When the criteria above are met and the Group is committed to a sale plan involving loss of control of a subsidiary,
all of the assets and liabilities of that subsidiary are classified as assets held for sale and liabilities associated with
assets held for sale in the consolidated statement of financial position. The income and expenses from these
operations are not included in the various line items in the consolidated statement of profit or loss and other
comprehensive income but the net results from these operations classified as held for sale are disclosed as a
separate line within the statement of profit or loss.
Non-current assets (and disposal groups) classified as held for sale are measured at the lower of their previous
carrying amount and fair value less costs to sell.
2.5. Exploration and evaluation expenditure
(i) Pre-licence costs
Pre-licence costs relate to costs incurred before the Group has obtained legal rights to explore in a specific area. Such
costs may include the acquisition of exploration data and the associated costs of analysing that data. These costs are
expensed in the period in which they are incurred.
(ii) Exploration and evaluation expenditure
Exploration and evaluation activity involves the search for mineral resources, the determination of technical
feasibility and the assessment of commercial viability of an identified resource.
Exploration and evaluation activity includes:
i. Researching and analysing historical exploration data
ii. Gathering exploration data through geophysical studies
iii. Exploratory drilling and sampling
iv. Determining and examining the volume and grade of the resource
v. Surveying transportation and infrastructure requirements
vi. Conducting market and finance studies
Licence costs paid in connection with a right to explore in an existing exploration area are capitalised and
amortised over the term of the permit.
Once the legal right to explore has been acquired, exploration and evaluation expenditure is charged to profit or loss
as incurred, unless the Group conclude that a future economic benefit is more likely than not to be realised.
Capitalised expenditure includes costs directly related to exploration and evaluation activities in the relevant area of
interest, including materials and fuel used, surveying costs, drilling costs and payments made to contractors. General
and administrative costs are allocated to an exploration or evaluation area of interest and capitalised as an asset only
to the extent that those costs can be related directly to operational activities in the relevant area of interest.
Exploration and evaluation assets acquired in a business combination are initially recognised at fair value,
including resources and exploration potential that is value beyond proven and probable reserves. Similarly, the costs
associated with acquiring an exploration and evaluation asset (that does not represent a business) are also
capitalised. They are subsequently measured at cost less accumulated impairment.
All capitalised exploration and evaluation expenditure is written off where the above conditions are no longer
satisfied, and assessed for impairment if facts and circumstances indicate that an impairment may exist. See note 2.11.
Exploration and evaluation expenditure that has been capitalised is reclassified to property, plant and equipment –
development assets, when the technical feasibility and commercial viability of extracting a mineral resource are
demonstrable. Prior to such reclassification, exploration and evaluation expenditure capitalised is tested for
impairment.
2.6. Property, plant and equipment – Development assets
Development expenditure incurred by or on behalf of the Group is accumulated separately for each area of interest
in which economically recoverable resources have been identified. Such expenditure comprises costs directly
attributable to the construction of a mine and the related infrastructure.
No depreciation is recognised in respect of development assets.
Development assets are assessed for impairment if facts and circumstances indicate that an impairment may exist.
See note 2.11.
A development asset is reclassified as a 'mining property' at the end of the commissioning phase, when the mine is
capable of operating in the manner intended by management. Immediately prior to such reclassification,
development assets are tested for impairment.
2.7. Property, plant and equipment – Mining property
Mining property includes expenditure that has been incurred through the exploration and development phases, and,
in addition, further development expenditure that is incurred in respect of a mining property after the
commencement of production, provided that, in all instances, it is probable that additional future economic benefits
associated with the expenditure will flow to the Group. Otherwise such expenditure is classified as cost of sales.
Mining property includes plant and equipment associated with the mining property.
When a mine construction project moves into the production phase, the capitalisation of certain mine construction
costs ceases, and costs are either regarded as part of the cost of inventory or expensed, except for costs which
qualify for capitalisation relating to mining asset additions, improvements or new developments, underground mine
development or mineable reserve development
Depreciation on plant and equipment included within mining property is computed on a straight-line basis over five years.
Depreciation on other components of mining property, is charged using the units-of-production method, with
separate calculations being made for each area of interest. The units-of-production basis results in a depreciation
charge proportional to the depletion of proved and probable reserves.
Mining property is assessed for impairment if facts and circumstances indicate that an impairment may exist. See
note 2.11.
2.8. Deferred stripping costs
Stripping costs comprise the removal of overburden and other waste products from a mine. Stripping costs incurred
in the development of a mine before production commences are capitalised as part of the cost of constructing the
mine (initially within development assets) and are subsequently depreciated over the life of the operation.
Stripping costs incurred during the production stage of a mine are deferred when this is considered the most
appropriate basis for matching the costs against the related economic benefits. The amount deferred is based on the
waste-to-ore ratio ('stripping ratio'), which is calculated by dividing the tonnage of waste mined by the quantity of
ore mined. Stripping costs incurred in a period are deferred to the extent that the current period ratio exceeds the
expected life-of mine-ratio. Such deferred costs are then charged to the consolidated statement of profit or loss and
other comprehensive loss to the extent that, in subsequent periods, the current period ratio falls below the life-of
mine-ratio. The life-of-mine stripping ratio is calculated based on proved and probable reserves. Any changes to the
life-of-mine ratio are accounted for prospectively.
Where a mine operates more than one open pit that is regarded as a separate operation for the purpose of mine
planning, stripping costs are accounted for separately by reference to the ore from each separate pit. If, however, the
pits are highly integrated for the purpose of the mine planning, the second and subsequent pits are regarded as
extensions of the first pit in accounting for stripping costs. In such cases, the initial stripping (i.e. overburden and
other waste removal) of the second and subsequent pits is considered to be production phase stripping relating to
the combined operation.
Deferred stripping costs are included in the cost base of assets when determining a cash generating unit for
impairment assessment purposes.
2.9. Property, plant and equipment (excluding development assets and mining property)
Freehold land is stated at cost and is not depreciated.
Items of property, plant and equipment are stated at cost less accumulated depreciation and accumulated
impairment losses. Where items of property, plant and equipment contain components that have different useful
lives to the main item of plant and equipment, these are capitalised separately to the plant and equipment to which
the component can be logically assigned.
The initial cost of an asset comprises its purchase price or construction cost, any costs directly attributable to
bringing the asset into operation, the initial estimate of the rehabilitation obligation, and, for qualifying assets (where
relevant), borrowing costs. The purchase price or construction cost is the aggregate amount paid and the fair value of
any other consideration given to acquire the asset. The capitalised value of a finance lease is also included in
property, plant and equipment.
Depreciation is recognised so as to write off the cost of assets (other than freehold land) less their residual values
over their useful lives, using the straight-line method. The estimated useful lives, residual values and depreciation
method are reviewed at the end of each reporting period, with the effect of any changes in estimate accounted for
on a prospective basis.
Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets.
However, when there is no reasonable certainty that ownership will be obtained by the end of the lease term, assets
are depreciated over the shorter of the lease term and the useful lives.
An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are
expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an
item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying
amount of the asset and is recognised in profit or loss.
The depreciation rates applicable to each category of property, plant and equipment are as follows:
Furniture, fittings and office equipment 13% – 50%
Buildings 20%
Plant and equipment 20%
Motor vehicles 20% – 33%
Leasehold improvements 25%
Computer equipment 33%
Leased assets Lease period
2.10. Intangible assets, excluding goodwill
An intangible asset is recognised at cost if it is probable that future economic benefits will flow to the Group and the
cost can be reliably measured.The cost of intangible assets acquired in a business combination is their fair value at
the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated
amortisation (calculated on a straight-line basis over their useful lives) and accumulated impairment losses, if any.
Intangible assets are amortised on a straight-line basis over their estimated useful lives. The amortisation method
used and the estimated remaining useful lives are reviewed at least annually.
Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net
disposal proceeds and the carrying amount of the asset and are recognised in the consolidated statement of profit or
loss and other comprehensive income when the asset is derecognised.
Intangible assets are assessed for impairment if facts and circumstances indicate that an impairment may exist. See note 2.11.
2.11. Impairment of tangible and intangible assets other than goodwill
The carrying amounts of the Group's tangible and intangible assets are reviewed at each reporting date to determine
whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any).
Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the
recoverable amount of the cash-generating unit to which the asset belongs. Where a reasonable and consistent basis
of allocation can be identified, corporate assets are also allocated to individual cash-generating units, or otherwise
they are allocated to the smallest group of cash-generating units for which a reasonable and consistent allocation
basis can be identified.
Recoverable amount is the higher of fair value less costs to sell and value-in-use. In assessing value-in-use, the
estimated future cash flows are discounted to their present value using a post-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset for which the estimates of future
cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the
carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is
recognised immediately in profit or loss.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash generating unit) is
increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not
exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset
(or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss.
2.12. Leasing
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards
of ownership to the lessee. All other leases are classified as operating leases.
Assets held under finance leases are initially recognised as assets of the Group at their fair value at the inception of
the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is
included in the consolidated statement of financial position as a finance lease obligation.
Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a
constant rate of interest on the remaining balance of the liability. Finance expenses are recognised immediately in
profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalised in
accordance with the Group's general policy on borrowing costs (see 2.24 below). Contingent rentals are recognised
as expenses in the periods in which they are incurred.
Operating lease payments are recognised as an expense on the straight-line basis over the lease term, except where
another systematic basis is more representative of the time pattern in which economic benefits from the leased asset
are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which
they are incurred.
2.13. Inventories
Inventories are stated at the lower of cost and net realisable value. Costs of inventories include expenditure incurred
in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their
existing location and condition.
Cost is determined by using the weighted-average method and comprises direct purchase costs and an appropriate
portion of fixed and variable overhead costs, including depreciation and amortisation, incurred in converting
materials into finished goods, based on the normal production capacity.
Any provision for obsolescence is determined by reference to specific items of stock. A regular review is undertaken
to determine the extent of any provision for obsolescence.
Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and
costs necessary to make the sale.
2.14. Trade receivables
Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the
effective interest method, less provision for impairment.
A provision for impairment of trade receivables is established when there is objective evidence that the Group will
not be able to collect all amounts due according to the original terms of the receivables. Significant financial
difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganization, and default or
delinquency in payments are considered indicators that the trade receivable is impaired. The amount of the provision
is the difference between the asset's carrying amount and the present value of estimated future cash flows,
discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of an
allowance account, and the amount of the loss is recognised in the consolidated statement of income. When a trade
receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries
of amounts previously written off are credited in the consolidated statement of profit or loss and other
comprehensive loss.
2.15. Cash and cash equivalents
Cash and cash equivalents comprise cash balances and short-term deposits.
Restricted cash comprise cash balances which are encumbered and the Group does therefore not have access to
these funds.
2.16. Financial instruments
Recognition
Financial assets and financial liabilities are recognised when a Group entity becomes a party to the contractual
provisions of the instrument.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly
attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and
financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial
assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the
acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in
profit or loss.
Effective interest method
The effective interest method is a method of calculating the amortised cost of a financial asset or financial liability
and of allocating interest over the relevant period. The effective interest rate is the rate that exactly discounts
estimated future cash receipts (including all fees on points paid or received that form an integral part of the effective
interest rate, transaction costs and other premiums or discounts) through the expected life of the instrument, or,
where appropriate, a shorter period, to the net carrying amount on initial recognition.
Income is recognised on an effective interest basis for debt instruments other than those financial assets classified as
at fair value through profit or loss ('FVTPL').
Financial assets
Financial assets are classified into the following specified categories: FVTPL, 'held-to-maturity' investments,
'available-for-sale' ('AFS') financial assets and 'loans and receivables'. The classification depends on the nature and
purpose of the financial assets and is determined at the time of initial recognition. All regular way purchases or sales
of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are
purchases or sales of financial assets that require delivery of assets within the time frame established by regulation
or convention in the marketplace.
Financial assets at FVTPL
Financial assets are classified as at FVTPL when the financial asset is either held for trading or it is designated as at FVTPL.
A financial asset is classified as held for trading if:
- it has been acquired principally for the purpose of selling it in the near term; or
- on initial recognition it is part of a portfolio of identified financial instruments that the Group manages together
and has a recent actual pattern of short-term profit-taking; or
- it is a derivative that is not designated and effective as a hedging instrument.
A financial asset other than a financial asset held for trading may be designated as at FVTPL upon initial recognition if:
- such designation eliminates or significantly reduces a measurement or recognition inconsistency that would
otherwise arise; or
- the financial asset forms part of a group of financial assets or financial liabilities or both, which is managed and its
performance is evaluated on a fair value basis, in accordance with the Group's documented risk management or
investment strategy, and information about the grouping is provided internally on that basis; or
- it forms part of a contract containing one or more embedded derivatives, and AASB 139 'Financial Instruments:
Recognition and Measurement' permits the entire combined contract (asset or liability) to be designated as at
FVTPL.
Financial assets at FVTPL are stated at fair value, with any gains or losses arising on remeasurement recognised in
profit or loss. The net gain or loss recognised in profit or loss incorporates any dividend or interest earned on the
financial asset and is included in the 'other gains and losses' line item. Fair value is determined in the manner
described in note 32.
Held to maturity investments
Non-derivative financial assets with fixed or determinable payments and fixed maturity dates that management has
the intent and ability to hold to maturity are classified as held to maturity. These investments are included in non-
current assets, except for maturities within 12 months from the financial year-end date, which are classified as
current assets. Held to maturity investments are carried at amortised cost using the effective interest rate method
less any impairment.
Loans and receivables
Trade receivables, loans, and other receivables that have fixed or determinable payments that are not quoted in an
active market are classified as 'loans and receivables'. Loans and receivables are measured at amortised cost using
the effective interest method, less any impairment. Interest income is recognised by applying the effective interest
rate, except for short-term receivables when the effect of discounting is immaterial.
Available for sale investments
AFS financial assets are non-derivatives that are either designated as AFS or are not classified as (a) loans and
receivables, (b) held-to-maturity investments or (c) financial assets at FVTPL.
Changes in the carrying amount of AFS monetary financial assets relating to changes in foreign currency rates (see
below), interest income calculated using the effective interest method and dividends on AFS equity investments are
recognised in profit or loss. Other changes in the carrying amount of AFS financial assets are recognised in other
comprehensive loss. Where the investment is disposed of or is determined to be impaired, the cumulative gain or
loss previously accumulated in the equity is reclassified to profit or loss.
The fair value of AFS monetary financial assets denominated in a foreign currency is determined in that foreign
currency and translated at the spot rate prevailing at the end of the reporting period. The foreign exchange gains and
losses that are recognised in profit or loss are determined based on the amortised cost of the monetary asset. Other
foreign exchange gains and losses are recognised in other comprehensive loss.
Dividends on AFS equity instruments are recognised in profit or loss when the Group's right to receive the dividends
is established.
AFS equity investments that do not have a quoted market price in an active market and whose fair value cannot be
reliably measured and derivatives that are linked to and must be settled by delivery of such unquoted equity
investments are measured at cost less any identified impairment losses at the end of each reporting period.
Impairment of financial assets
Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting
period. Financial assets are considered to be impaired when there is objective evidence that, as a result of one or
more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the
investment have been affected.
For listed or unlisted equity investments classified as AFS, a significant or prolonged decline in the fair value of the
security below its cost is considered to be objective evidence of impairment.
For certain categories of financial asset, such as trade receivables, assets that are assessed not to be impaired
individually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a
portfolio of receivables could include the Group's past experience of collecting payments, an increase in the number
of delayed payments in the portfolio past the average credit period, as well as observable changes in national or local
economic conditions that correlate with default on receivables.
For financial assets carried at amortised cost, the amount of the impairment loss recognised is the difference
between the asset's carrying amount and the present value of estimated future cash flows, discounted at the
financial asset's original effective interest rate.
For financial assets carried at cost, the amount of the impairment loss is measured as the difference between the
asset's carrying amount and the present value of the estimated future cash flows discounted at the current market
rate of return for a similar financial asset. Such impairment loss will not be reversed in subsequent periods.
The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the
exception of trade receivables, where the carrying amount is reduced through the use of an allowance account.
When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent
recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying
amount of the allowance account are recognised in profit or loss.
When an AFS financial asset is considered to be impaired, cumulative gains or losses previously recognised in other
comprehensive income are reclassified to profit or loss in the period.
For financial assets measured at amortised cost, if, in a subsequent period, the amount of the impairment loss
decreases and the decrease can be related objectively to an event occurring after the impairment was recognised,
the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of
the investment at the date the impairment is reversed does not exceed what the amortised cost would have been
had the impairment not been recognised.
In respect of AFS equity securities, impairment losses previously recognised in profit or loss are not reversed through
profit or loss. Any increase in fair value subsequent to an impairment loss is recognised in other comprehensive
income and accumulated under the heading of investments revaluation reserve. In respect of AFS debt securities,
impairment losses are subsequently reversed through profit or loss if an increase in the fair value of the investment
can be objectively related to an event occurring after the recognition of the impairment loss.
Derecognition
The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or
when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another
entity. Any interest in financial assets transferred that is created or retained by the group is recognised as a separate
asset or liability.
The Group may enter into transactions whereby it transfers assets recognised on its consolidated statement of
financial position, but retains either all risks and rewards of the transferred assets or a portion of them. If all, or
substantially all, risks and rewards are retained, then the Group continues to recognise the financial asset and also
recognises a collateralised borrowing for the proceeds received.
On derecognition of a financial asset in its entirety, the difference between the asset's carrying amount and the sum
of the consideration received and receivable and the cumulative gain or loss that had been recognised in other
comprehensive income and accumulated in equity is recognised in profit or loss.
On derecognition of a financial asset other than in its entirety (e.g. when the Group retains an option to repurchase
part of a transferred asset or retains a residual interest that does not result in the retention of substantially all the
risks and rewards of ownership and the Group retains control), the Group allocates the previous carrying amount of
the financial asset between the part it continues to recognise under continuing involvement, and the part it no longer
recognises on the basis of the relative fair values of those parts on the date of the transfer. The difference between
the carrying amount allocated to the part that is no longer recognised and the sum of the consideration received for
the part no longer recognised and any cumulative gain or loss allocated to it that had been recognised in other
comprehensive income is recognised in profit or loss. A cumulative gain or loss that had been recognised in other
comprehensive income is allocated between the part that continues to be recognised and the part that is no longer
recognised on the basis of the relative fair values of those parts.
Financial liabilities
Financial liabilities are initially measured at fair value. Financial liabilities comprise short-term and long-term interest-
bearing borrowings and trade and other payables (excluding income received in advance).
The Group classifies financial liabilities as other financial liabilities. Subsequent to initial measurement, such liabilities
are carried at amortised cost using the effective interest method.
Borrowings
Borrowings comprise short-term and long-term interest-bearing borrowings. Premiums or discounts arising from the
difference between the fair value of borrowings raised and the amount repayable at maturity date are recognised in
the income statement as borrowing costs based on the effective interest rate method.
Derecognition
Financial liabilities are derecognised when the associated obligation has been discharged, cancelled or has expired.
Equity instruments
An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of
its liabilities, and includes ordinary share capital. Equity instruments issued by the group are recorded at the
proceeds received, net of direct issue costs.
2.17. Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of
business from suppliers. Trade payables are classified as current liabilities if payment is due within one year or less. If
not, they are presented as non-current liabilities.
Trade payables are recognised initially at fair value and subsequently measured at amortised cost using the effective
interest method.
2.18. Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of a past event, it
is probable that the Group will be required to settle the obligation, and the amount can be reliably estimated.
Provisions are not recognised for future operating losses.
The amount recognised as a provision is the best estimate of the consideration required to settle the present
obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the
obligation. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying
amount is the present value of those cash flows (where the effect of the time value of money is material). The
increase in provisions due to the passage of time is included in the finance cost line item in the consolidated
statement of profit or loss and comprehensive loss.
Rehabilitation provision
A provision for rehabilitation is recognised when there is a present obligation as a result of exploration, development
or production activities undertaken, it is probable that an outflow of economic benefits will be required to settle the
obligation, and the amount of the provision can be measured reliably.
The nature of these restoration activities includes: dismantling and removing structures; rehabilitating mines and
tailings dams; dismantling operating facilities; closing plant and waste sites; and restoring, reclaiming and
revegetating affected areas.
The provision for future rehabilitation costs is the best estimate of the present value of the expenditure required to
settle the rehabilitation obligation at the reporting date, based on current legal and other requirements and
technology. Future rehabilitation costs are reviewed annually and any changes in the estimate are reflected in the
present value of the rehabilitation provision at each reporting date.
The initial estimate of the rehabilitation provision relating to exploration, development and production facilities is
capitalised into the cost of the related asset and depreciated or amortised on the same basis as the related asset.
Changes in the estimate of the provision are treated in the same manner, except that the unwinding of the effect of
discounting on the provision is recognised as a finance cost rather than being capitalised into the cost of the related
asset.
2.19. Share-based payments transactions of the Company
Equity-settled
Equity-settled share-based payments to employees and others providing similar services are measured at the fair
value of the equity instruments at the grant date. Details regarding the determination of the fair value of equity-
settled share-based transactions are set out in note 30.
The fair value determined at the grant date of the equity-settled share-based payments is expensed on the straight-
line basis over the vesting period, based on the Group's estimate of equity instruments that will eventually vest, with
a corresponding increase in equity. At the end of each reporting period, the Group revises its estimate of the number
of equity instruments expected to vest. The impact of the revision of the original estimates, if any, is recognised in
profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to the
equity-settled employee benefits reserve.
Equity-settled share-based payment transactions with parties other than employees are measured at the fair value of
the goods or services received, except where that fair value cannot be estimated reliably, in which case they are
measured at the fair value of the equity instruments granted, measured at the date the entity obtains the goods or
the counterparty renders the service.
Accounting for BEE transactions
Where equity instruments are issued to a broad based black economic empowerment ('BEE') party at less than fair
value, these are accounted for as share-based payments. Any difference between the fair value of the equity
instrument issued and the consideration received is accounted for as an expense in the consolidated statement of
profit or loss and other comprehensive loss.
A restriction on the BEE party to transfer the equity instrument subsequent to its vesting is not treated as a vesting
condition, but is factored into the fair value determination of the instrument.
2.20. Taxation, including sales tax
The income tax expense or income for the period represents the sum of the tax currently payable or recoverable and
deferred tax.
Current taxation
The tax currently payable or recoverable is based on taxable profit or loss for the year. Taxable profit or loss differs
from profit or loss as reported in the consolidated statement of profit or loss and other comprehensive loss because
of items of income or expense that are taxable or deductible in other years and items that are never taxable or
deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively
enacted at the reporting date in countries where the Group operates and generates taxable income.
Deferred taxation
Deferred taxation is recognised on temporary differences between the carrying amounts of assets and liabilities in
the consolidated financial statements and the corresponding tax bases used in the computation of taxable profit or
loss. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are
generally recognised for all deductible temporary differences to the extent that it is probable that taxable profits will
be available against which those deductible temporary differences can be utilised. Such deferred tax assets and
liabilities are not recognised if a taxable temporary difference arises from the initial recognition of goodwill or any
temporary difference arises from the initial recognition (other than in a business combination) of other assets and
liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable
that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Deferred tax balances are calculated using the tax rates that are expected to apply to the reporting period or periods
when the temporary difference reverse, based on tax rates and tax laws enacted or substantively enacted at the end
of the reporting period.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets
against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the
Group intends to settle its current tax assets and liabilities on a net basis.
Deferred tax liabilities are recognised for temporary differences associated with investments in subsidiaries and
associates, and interests in joint ventures, except where the timing of the reversal of the temporary difference is
controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred tax assets arising from deductible temporary differences associated with such investments and interests are
only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the
benefits of the temporary differences and they are expected to reverse in the foreseeable future.
Current and deferred tax for the year
Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in
other comprehensive income or directly in equity, in which case the current and deferred tax are also recognised in
other comprehensive income or directly in equity, respectively.
Where current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is
included in the accounting for the business combination.
Sales tax
Revenues, expenses and assets are recognised net of the amount of the applicable sales tax, except:
- where the amount of sales tax incurred is not recoverable from the taxation authority, it is recognised as part
of the cost of acquisition of an asset or as part of an item of expense; or
- for receivables and payables which are recognised inclusive of sales tax.
The net amount of sales tax recoverable from, or payable to, the taxation authority is included as part of receivables
or payables.
Cash flows are included in the cash flow statement on a gross basis. The sales tax component of cash flows arising
from investing and financing activities which is recoverable from, or payable to, the taxation authority is classified
within operating cash flows.
2.21. Revenue recognition
Revenue is recognised at fair value of the consideration received net of the amount of applicable sales tax.
Sale of goods
Revenue from the sale of goods is recognised when all the following conditions are satisfied:
- the Group has transferred to the buyer the significant risks and rewards of ownership of the goods;
- the Group retains neither continuing managerial involvement to the degree usually associated with ownership
nor effective control over the goods sold;
- the amount of revenue can be measured reliably;
- it is probable that the economic benefits associated with the transaction will flow to the Group; and
- the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Specifically, revenue from the sale of goods is recognised when goods are delivered and legal title is passed.
Many of the Group's sales are subject to an adjustment based on inspection of the shipment by the customer. In such
cases, revenue is recognised based on the Group's best estimate of the grade at the time of shipment, and any
subsequent adjustments are recorded against revenue when advised. Historically, the differences between estimated
and actual grade have not been significant.
Interest income
Interest income is recognised when it is probable that the economic benefits will flow to the Group and the amount
of revenue can be measured reliably. Interest income is accrued on a time basis, by reference to the principal
outstanding and at the effective interest rate. Interest income is recognised in finance income on the consolidated
statement of profit or loss and other comprehensive loss.
2.22. Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which are
assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the
cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
All other borrowing costs are recognised in profit or loss in the period in which they are incurred.
2.23. Employee benefits
A liability is recognised for benefits accruing to employees in respect of wages and salaries, annual leave and sick
leave when it is probable that settlement will be required and they are capable of being measured reliably.
2.24. Segment information
Reportable segments are reported in a manner consistent with the internal reporting provided to the chief operating
decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing
performance of the operating segments, has been identified as the Company's executive committee.
Management has determined the reportable segments of the Group based on the reports reviewed by the
Company's executive committee that are used to make strategic decisions. The Group has three reportable
segments: Exploration, Development and Mining (see note 4).
2.25. Adoption of new and revised Accounting Standards and Interpretations
The key new and amended reporting requirements that must be applied for the first time this year include:
Offsetting criteria for financial assets and financial liabilities
- Aendments to AASB 132 Financial Instruments: Presentation clarifies the requirements relating to the offset of
financial assets and financial liabilities.
- Additional disclosures on recoverable amounts for non-financial assets:
- Aendments to AASB 136 Impairment of Assets remove the requirement to disclose the recoverable amount of a
cash-generating unit (CGU) under certain circumstances. Further, there are some additional disclosure
requirements applicable in instances where the recoverable amount of an asset or a CGU is measured at fair
value less costs of disposal.
- Consolidation exemption for investment entities:
- Aendments to AASB 10 Consolidated Financial Statements introduce an exemption from consolidation of
subsidiaries for entities which meet the definition of an investment entity.
- Annual Improvements 2010-2012 and 2011-2013 Cycles: AASB 2014-1 Amendments to Australian Accounting
Standards Part A – Annual Improvements 2010-2012 and 2011-2013 Cycles makes various amendments to
Australian Accounting Standards. Most notably, items that will impact disclosure requirements under AASB 8
Operating Segments, AASB 119 Employee Benefits, and AASB 124 Related Party Disclosure.
At the date of the authorisation of the financial report, a number of Standards and Interpretations were in issue but
not yet effective. The potential effect of the revised Standards / Interpretations on the Groups' financial statement
has not yet been determined.
Standard Effective for the annual Expected to be initially
reporting periods beginning applied in the financial
on or after year ending
- AASB 9 'Financial Instruments' and the relevant amending standards
1 January 2018 30 June 2019
- AASB 14 Regulatory Deferral Accounts 1 January 2016 30 June 2017
- AASB 15 Revenue from Contracts with Customers 1 January 2017 30 June 2018
- AASB 2014-1 'Amendments to Australian Accounting Standards' – 1 January 2016 30 June 2017
Part D: 'Consequential Amendments arising from AASB 14'
- AASB 2014-1 'Amendments to Australian Accounting Standards' – 1 January 2015 30 June 2016
Part E: 'Financial Instruments'
- Accounting for Acquisitions of Interests in Joint Operations
(Amendments to IFRS11) 1 January 2016 30 June 2017
- Clarification of Acceptable Methods of Depreciation and
Amortisation (Amendments to IAS16 and IAS38) 1 January 2016 30 June 2017
New and revised Standards and Interpretations affecting amounts reported and / or disclosure in the consolidated
financial statements
In the current year, the Group has applied a number of new and revised AASB's issued by the Australian Accounting
Standards Board that are mandatorily effective for an accounting period that begins on or after 1 January 2014.
AASB 2012-3 Amendments to Australian The Group has applied the amendments to AASB 7 'Disclosures –
Accounting Standards – Offsetting Financial Offsetting Financial Assets and Financial Liabilities' in the current
Assets and Financial Liabilities (Amendments to
AASB 132) year. The amendments to AASB 7 require entities to disclose
information about rights of offset and related arrangements
(such as collateral posting requirements) for
financial instruments under an enforceable master netting
agreement or similar arrangement.
As the Group does not have any offsetting arrangements in
place, the application of the amendments does not have any
material impact on the consolidated financial statements.
AASB 2013-3 Amendments to AASB 136 – This Standard amends the disclosure requirements in AASB 136.
Recoverable Amount Disclosures for Non- The amendments include the requirement to disclose additional
Financial Assets information about the fair value measurement when the
recoverable amount of impaired assets is based on fair value
less costs of disposal. In addition, a further requirement has
been included to disclose the discount rates that have been
used in the current and previous measurements if the
recoverable amount of impaired assets based on fair value less
costs of disposal was measured using a present value technique.
The intention of this amendment is to harmonise the disclosure
requirements for fair value less costs of disposal and value in use
when present value techniques are used to measure the
recoverable amount of impaired assets.
The Group has applied AASB 2013-3 for the first time in this
current year. The Group included detail disclosure regarding the
valuation of development and exploration projects, and
indicated the recoverability of the carrying value in note 13.
AASB 2013-6 Amendments to AASB 136 arising The objective of this Standard is to make amendments to AASB
from Reduced Disclosure Requirements 136 Impairment of Assets to establish reduced disclosure
requirements for entities preparing general purpose financial
statements under Australian Accounting Standards – Reduced
Disclosure Requirements arising from AASB 2013-3 Amendments
to AASB 136 – Recoverable Amount Disclosures for Non-Financial
Assets.
As a result the Australian Conceptual Framework now
supersedes the objective and the qualitative characteristics of
financial statements, as well as the guidance previously available
in Statement of Accounting Concepts SAC 2 'Objective of
General Purpose Financial Reporting'. The adoption of this
amending standard does not have any material impact on the
consolidated financial statements.
AASB 2013-9 Amendments to Australian Part B makes amendments to particular Australian Accounting
Accounting Standards – Conceptual Framework, Standards to delete references to AASB 1031 and minor editorial
Materiality and Financial Instruments amendments to various standards.
The Group does not currently provide disclosure relating to
AASB 1031 and therefore this amendment does not affect the
consolidated group financial statements.
AASB 2014-4 Amendments to Australian The objective of this amendment is to clarify the requirements
Accounting Standards – Clarification of Acceptable for the revaluation method in AASB 116 Property, Plant and
Methods of Depreciation and Amortisation Equipment and AASB 138 Intangible Assets to address concerns
about the calculation of the accumulated depreciation or
Amends AASB 116 Property, Plant and Equipment amortisation at the date of the revaluation. The Interpretations
and AASB 138 Intangible Assets to provide Committee reported to the IASB that practice differed in the
additional guidance on how the depreciation or calculation of accumulated depreciation for an item of property,
amortisation of property, plant and equipment and plant and equipment that is measured using the revaluation
intangible assets should be calculated. method in cases where the residual value, the useful life or the
depreciation method has been re-estimated before a
revaluation.
The amendment clarifies that the carrying amount of an asset is
adjusted to that value in one of the following ways:
i) The gross carrying amount is adjusted consistently with the
valuation
the carrying amount to that with accumulated depreciation
adjusted proportionately).
ii) The accumulated depreciation is eliminated against the gross
carrying amount of the asset.
This amendment is not expected to have any financial or
disclosure impact on the consolidated group financial
statements.
The basis for calculation of depreciation and amortisation should
be based on the expected pattern of consumption of the future
economic benefits of an asset.
This amendment is not expected to have any financial or
disclosure impact on the Group's results.
AASB 2014-1 Amendments to Australian Accounting Part A makes various amendments to Australian Accounting
Standards [Part A – Annual Improvements 2010-2012 Standards arising from the issuance by IASB of IFRSs Annual
and 2011- 2013 Cycles] Improvements to IFRS 2010- 2012 Cycle and Annual
Improvements to IFRSs 2011-2013 Cycle.
Key amendments include:
- AASB 2 – definition of vesting condition;
- AASB 3 – accounting for contingent consideration in
a business combination;
- AASB 8 – aggregation of operating segments and
reconciliation of the total of the reportable
segments' assets tothe entity's assets;
- AASB 13 – short-term receivables and payables;
- AASB 116 – revaluation method: proportionate
restatement of accumulated depreciation;
- AASB 124 – key management personnel;
- AASB 138 – revaluation method: proportionate
restatement of accumulated amortisation;
- AASB 1 – meaning of 'effective IFRSs';
- AASB 3 – scope exceptions for joint ventures;
- AASB 13 – scope of paragraph 52 (portfolio
exception);
- AASB 140 – clarifying the interrelationship between
AASB 3 and AASB 140 when classifying property as
investment property or owner occupied property.
AASB 2014-1 Amendments to Australian Accounting Narrow scope amendments to AASB 119 Employee Benefits
Standards [Part B – Defined Benefit Plans: Employee that apply to contributions from employees or third parties to
Contributions (Amendments to AASB 119)] defined benefit plans. The objective of the amendments is to
simplify the accounting for contributions that are independent
of the number of years of employee service, for example,
employee contributions that are calculated according to a fixed
percentage of salary.
This amendment is not expected to have any financial or
disclosure impact on the Group's results
AASB 2014-2 Amendments to AASB1053 Transition to Amends AASB 1053 Application of Tiers of Australian
and between Tiers, and related Tier 2 Disclosure Accounting Standards to clarify that AASB 1053 relates only to
Requirement general purpose financial statements.
Aims to make AASB 1053 consistent with AASB 108 Accounting
Policies, Changes in Accounting Estimates and Errors option in
AASB 1 First-time Adoption of Australian Accounting
Standards; and clarify certain circumstances in which an entity
applying Tier 2 reporting requirements can apply the AASB 108
option in AASB 1. Specifies certain disclosure requirements
when an entity resumes the application of Tier 2 reporting
requirements.
This amendment is not expected to have any financial or
disclosure impact on the Group's results
AASB 2014-9 Amendments to Australian Accounting Amends AASB 127 Separate Financial Statements, to allow an
Standards – Equity Method in Separate Financial entity to account for investments in subsidiaries, joint ventures
Statements and associates in its separate financial statements:
- at cost,
- in accordance with AASB 9 Financial Instruments, or
- using the equity method as described in AASB 128
- Investments in Associates and Joint Ventures.
The accounting policy option must be applied for each
category of investment.
This amendment is not expected to have any financial or
disclosure impact on the Group's results
3. Critical accounting estimates and key judgements
Estimates assume a reasonable expectation of future events and are based on current trends and economic data,
obtained both externally and within the Group. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are
recognised in the period in which the estimates are revised and in any future periods affected.
The primary areas in which estimates and judgements are applied are discussed below.
Asset carrying values and impairment charges
The Group assesses impairment at the end of each reporting period by evaluating conditions and events specific to
the Group that may be indicative of impairment triggers. Recoverable amounts of relevant assets are reassessed
using value-in-use calculations which incorporate various key assumptions. Key assumptions include future coal
prices, future operating costs, discount rates, foreign exchange rates and coal reserves. Refer to note 13.
Coal reserves
Economically recoverable coal reserves relate to the estimated quantity of coal in an area of interest that can be
expected to be profitably extracted, processed and sold.
The Group determines and reports coal reserves under the Australasian Code of Reporting of Mineral Resources and
Ore Reserves (the 'JORC Code'). This includes estimates and assumptions in relation to geological, technical and
economic factors, including: quantities, grades, production techniques, recovery rates, production costs, transport
costs, exchange rates and expected coal demand and prices.
Because the economic assumptions used to estimate reserves change from period to period, and because additional
geological data is generated during the course of operations, estimates of reserves may change from period to
period. Changes in reported reserves may affect the Group's financial results and financial position in a number of
ways, including the following:
- asset carrying values may be affected due to changes in estimated future cash flows; and
- depreciation and amortisation charges may change where such charges are determined by the units of
production basis, or where the useful economic lives of assets change.
Depreciation and amortisation charges in the Consolidated Statement of Comprehensive Income may change where
such charges are determined by the units of production basis, or where the useful economic lives of assets change
Exploration and evaluation assets
Determining the recoverability of exploration and evaluation expenditure capitalised requires estimates and
assumptions as to future events and circumstances, in particular, whether successful development and commercial
exploitation, or alternatively sale, of the respective areas of interest will be achieved. The Group applies the
principles of AASB 6 and recognises exploration and evaluation assets when the rights of tenure of the area of
interest are current, and the exploration and evaluation expenditures incurred are expected to be recouped through
successful development and exploitation of the area. If, after having capitalised the expenditure under the Group's
accounting policy, a judgment is made that recovery of the carrying amount is unlikely, an impairment loss is
recorded in profit or loss. Refer to note 13.
Development expenditure
Development activities commence after the commercial viability and technical feasibility of the project is established.
Judgment is applied by management in determining when a project is commercially viable and technically feasible.
Any judgments may change as new information becomes available. If, after having commenced the development
activity, a judgment is made that a development asset is impaired, the appropriate amount will be written off to the
consolidated statement of comprehensive income. Refer to note 13.
The company considers the following items as pre-requisites prior to concluding on commercial viability:
- All requisite regulatory approvals from government departments in South Africa have been received and are not
subject to realistic legal challenges
- The Company has the necessary funding to engage in the construction and development of the project as well as
general working capital until the project is cash generative
- AJORC compliant resource proving the quantity and quality of the project as well as a detailed Mine Plan
reflecting that the colliery can be developed and will deliver the required return hurdle rates
- The Company has secured off-take and/ or logistics agreements for a significant portion of the product produced
by the mine and the pricing has been agreed
- The Company has the appropriate skills and resources to develop and operate the project
Rehabilitation and restoration provisions
Certain estimates and assumptions are required to be made in determining the cost of rehabilitation and restoration
of the areas disturbed during mining activities and the cost of dismantling of mining infrastructure. The amount the
Group is expected to incur to settle its future obligations includes estimates regarding:
- the future expected costs of rehabilitation, restoration and dismantling.
- the expected timing of the cash flows and the expected life of mine (which is based on coal reserves noted above);
- the application of relevant environmental legislation; and
- the appropriate rate at which to discount the liability;
Changes in the estimates and assumptions used could have a material impact on the carrying value of the
rehabilitation provision and related asset. The provision is reviewed at each reporting date and updated based on the
best available estimates and assumptions at that time. The carrying amount of the rehabilitation provision is set out
in note 24.
Recoverability of non-current assets
As set out in note 13, certain assumptions are required to be made in order to assess the recoverability of non-
current assets where there is an impairment indicator. Key assumptions include future coal prices, future operating
costs, discount rate, foreign exchange rates and estimates of coal reserves. Estimates of coal reserves in themselves
are dependent on various assumptions (refer above). Changes in these assumptions could therefore affect estimates
of future cash flows used in the assessment of recoverable amounts, estimates of the life of mine and depreciation.
Refer to note 13.
Contingent liabilities – litigation
Certain claims have been made against the Group. Judgments about the validity of the claims have been made by
the Directors. Further details are included in note 34.
4. Segment information
The Group has three reportable segments: Exploration, Development and Mining.
The Exploration segment is involved in the search for resources suitable for commercial exploitation, and the
determination of the technical feasibility and commercial viability of resources. As of June 30, 2015, projects within
this reportable segment include three exploration stage coking and thermal coal complexes, namely the Chapudi
Complex (which comprises the Chapudi project, the Chapudi West project and the Wildebeesthoek project), the
Soutpansberg Complex (which comprises the Voorburg project, the Mt Stuart project and the Jutland project) and
the Makhado Complex (comprising the Makhado project, the Makhado Extension project and the Generaal project).
The Development segment is engaged in establishing access to and commissioning facilities to extract, treat and
transport production from the mineral reserve, and other preparations for commercial production. As of June 30,
2015 projects included within this reportable segment include project, namely the Vele Colliery, in the early
operational and development stage.
The Mining segment is involved in day to day activities of obtaining a saleable product from the mineral reserve on a
commercial scale and consists of the Mooiplaats Colliery (comparative figures for June 2014 still includes the
Woestalleen Colliery). As of June 30 2014 the Mooiplaats Colliery has been classified as operations held for sale.
The accounting policies of the reportable segments are the same as those described in Note 2, Accounting policies.
The Group evaluates performance on the basis of segment profitability, which represents net operating (loss) / profit
earned by each reportable segment.
Each reportable segment is managed separately because, amongst other things, each reportable segment has
substantially different risks.
The Group accounts for intersegment sales and transfers as if the sales or transfers were to third parties, ie at
current market prices.
The Group's reportable segments focus on the stage of project development and the product offerings of coal mines
in production.
In order to reconcile the segment results with the consolidated statement of profit or loss and other comprehensive
income the discontinuing operations should be deducted from the segment total and the corporate results (as per
the reconciliation later in the note should be included.
Discontinuing
Continuing operations operations
Exploration Development Mining Total
For the year ended 30 June 2015 $'000 $'000 $'000 $'000
Revenues from external customers - - - -
Inter-segment revenues - - - -
Revenue - - - -
Segment loss (4,387) (1,958) (2,176) (8,521)
Items included within the Group's
measure of segment profitability
- Depreciation and amortisation (84) (63) - (147)
- Impairment - - - -
- Finance income 22 47 97 166
- Finance cost (978) (80) (605) (1,663)
Segment assets 124,715 117,160 18,118 259,993
Items included within the Group's
measure of segment assets
- Additions to non-current assets 2,454 145 - 2,599
Segment liabilities 20,788 5,153 3,354 29,295
Discontinuing
Continuing operations operations
Exploration Development Mining Total
For the year ended 30 June 2014 $'000 $'000 $'000 $'000
Revenues from external customers - - 3,299 3,299
Inter-segment revenues - - - -
(1)
Revenue - - 3,299 3,299
Segment loss 3,829 1,845 20,575 26,249
Items included within the Group's
measure of segment profitability
- Depreciation and amortisation (79) (65) - (144)
- Impairment - - (14,933) (14,933)
Finance income 7 65 352 424
- Finance cost (1,586) (66) (97) (1,749)
(1) Revenues represent sale of product
Segment assets 145,995 135,991 23,029 305 015
Items included within the Group's
measure of segment assets
- Additions to non-current assets 3,637 7,057 - 10,694
Segment liabilities 30,820 4,974 3,644 39,438
Reconciliations of the total segment amounts to respective items included in the consolidated financial statements
are as follows:
Year ended Year ended
30 June 2015 30 June 2014
$'000 $'000
otal loss for reportable segments 8,521 26,249
econciling items:
nallocated corporate costs 15,681 21,115
epreciation and amortisation 1,325 2,032
oreign exchange (gain)/ loss (18,816) 34,724
oss before taxation 6,711 84,120
otal segment assets 259,993 305,015
econciling items:
nallocated property, plant and equipment 10,336 12,349
ntangible assets 11,682 15,488
ther financial assets 3,879 705
ther receivables 1,745 2,245
nallocated current assets 18,992 8,596
otal assets 306,627 344,398
otal segment liabilities
econciling items: 29,295 39,438
nallocated liabilities 2,777 24,640
otal liabilities 32,072 64,078
Year ended Year ended
30 June 2015 30 June 2014
$'000 $'000
The Group operates in two principal geographical areas – Australia
(country of domicile) and South Africa.
The Group's revenue from external customers by location of operations
and information about its non-current assets by location of assets are
detailed below.
Revenue by location of operations
South Africa - 4,061
Australia - -
Total revenue - 4,061
Non-current assets by location of operations
South Africa 269,254 316,311
Australia - -
Total non-current assets 269,254 316,311
Year ended Year ended
30 June 2015 30 June 2014
$'000 $'000
5. Revenue
The following is an analysis of the Group's revenue for the year from
continuing operations (excluding investment income – see note 6)
Revenue from the rendering of services - 761
- 761
6. Investment income
Continuing operations
Rental income 134 926
Interest income
Bank deposits 646 602
Interest on loans 48 171
Total interest income 694 773
Total investment income 828 1,699
7. Loss for the year from continuing operations
Loss for the year from continuing operations has been arrived at after
charging or (crediting):
Other income
Profit on sale of claims - 3,048
Insurance claim - 1,350
Non-refundable deposits received for sale of non-core assets 324 904
Other - 262
Total other income 324 5,564
Other gains/(losses)
Loss on disposal of property, plant and equipment - (41)
Fair value gain on renegotiated Rio Tinto deferred consideration 1,303 -
Revaluation of investments 277 (576)
Total other gains and (losses) 1,580 (617)
Depreciation and amortisation
Depreciation
Depreciation of property, plant and equipment (note 14) 497 1,107
Total depreciation 497 1,107
Amortisation
Amortisation of intangible asset (note 15) 975 1,069
Total amortisation 975 1,069
Total depreciation and amortisation 1,472 2,176
Foreign exchange profit/(loss)
Unrealised 18,991 (35,568)
Realised (4,487) (749)
14,504 (36,317)
Employee benefits expenses
Share-based payments 131 717
Super-annuation 10 14
Salaries and wages 4,795 7,311
Total employee benefits expense 4,936 8,042
8. Auditors’ remuneration
Amounts received by the auditors of the Company as at 30 June 2015
Deloitte – Australia
Audit and review of financial reports 102 119
102 119
Deloitte – Johannesburg
Audit and review of financial reports 229 325
229 325
9. Finance cost
Finance costs
Interest on loans 1,191 2,238
Interest on overdraft 9 -
Unwinding of interest 86 71
1,286 2,309
Year ended Year ended
30 June 2015 30 June 2014
$'000 $'000
10. Income tax and deferred tax
Income tax recognised in profit or loss from continuing operations
Current tax
Current tax expense in respect of the current year - -
- -
Deferred tax (note 25)
Origination and reversal of temporary differences - -
- -
Total income tax expense recognised - -
The Group's effective tax rate for the year from continuing operations
was 0% (2014: 0%). The tax rate used for the 2015 and 2014
reconciliations below is the corporate tax rate of 28% payable by South
African corporate entities on taxable profits under South African tax law.
The income tax expense for the year can be reconciled to the accounting
profit as follows:
Loss from continuing operations before income tax (4,535) (61,394)
Income tax benefit calculated at 28% (2014: 28%) (1,270) (17,190)
Tax effects of:
Expenses that are not deductible for tax purposes 753 617
Income that are not taxable (91) (1,509)
Other temporary differences not recognised 608 18,082
Income tax (credit) / charge - -
Income tax recognised on the loss from discontinuing operations
Current tax
Current tax expense in respect of the current year - -
- -
Deferred tax (note 25)
Origination and reversal of temporary differences - -
- -
Total income tax benefit recognised - -
The Group's effective tax rate for the year was 0% (2014: 0%). The tax
rate used for the 2015 and 2014 reconciliations below is the corporate tax
rate of 28% payable by South African corporate entities on taxable profits
under South African tax law. The income tax expense for the year can be
reconciled to the accounting profit as follows:
Loss before income tax (5,005) (20,575)
Income tax benefit calculated at 28% (2014: 28%) (1,401) (5,761)
Tax effects of:
Expenses that are not deductible for tax purposes 483 228
Other temporary differences not recognised 918 5,533
Income tax (credit) / charge - -
11. Discontinuing operations
11.1 Holfontein (Pty) Ltd ('Holfontein')
The Company is in the process of finalising agreements for the disposal of
the Holfontein thermal coal project near Secunda in Mpumalanga.
11.2 Plan to dispose of Langcarel (Pty) Ltd ('Mooiplaats')
The Company has announced a long-term strategy to dispose of its
thermal assets in order to focus on the development of the coking coal
assets. The Company is actively seeking a buyer for this business and
expects to complete a sale during the next financial year. The Group has
not recognised any impairment on the Mooiplaats colliery during the
current financial year. (2014: $14.9 million – note 21).
11.3 Analysis of loss for the year from discontinuing operations
The combined results of the operations held for sale included in the loss
for the year are set out below. The comparative losses and cash flows
from operations held for sale have been re-presented to include those
operations classified as held for sale in the current year.
Year ended Year ended
30 June 2015 30 June 2014
$'000 $'000
Loss for the year from operations held for sale
Revenue - 3,299
Other gains 427 78
427 3,377
Expenses (2,603) (23,952)
Loss before tax (2,176) (20,575)
Attributable income tax credit - -
Loss for the year from operations held for sale (attributable to owners of
the company) (2,176) (20,575)
Cash flows from operations held for sale
Net cash outflows from operating activities (1,400) (3,619)
Net cash inflows from investing activities 1,024 128
Net cash inflows/(outflows) from financing activities 729 (12,298)
Net cash inflows/(outflows) 353 (15,789)
These operations have been classified and accounted for at 30 June 2015
as a disposal group held for sale (see note 21).
Woestalleen
During 2014 the company received the Section 11 approval from the DMR
for the sale of all of the equity and loan accounts in NuCoal Mining
Proprietary Limited ('Woestalleen Complex') resulting in the sale
consideration of ZAR80 million ($7.6 million) paid to CoAL. This resulted in
a gain of $1.4 million being realised.
Year ended Year ended
30 June 2015 30 June 2014
Cents per share Cents per share
12. Loss per share attributable to owners of the Company
Basic loss per share
From continuing operations 0.32 6.06
From discontinuing operations 0.15 1.96
0.47 8.02
12.1 Basic loss per share
$'000 $'000
Loss for the year attributable to owners of the Company (6,711) (84,120)
Less: Loss for the year from operations held for sale (2,176) (20,575)
Loss used in the calculation of basic loss per share from continuing
operations (4,535) (63,545)
'000 shares '000 shares
Weighted number of ordinary shares
Weighted average number of ordinary shares for the purposes of basic
loss per share 1,414,768 1,048,369
12.2 Diluted loss per share
Diluted loss per share is calculated by dividing loss attributable to owners
of the Company by the weighted average number of ordinary shares
outstanding during the year plus the weighted average number of diluted
ordinary share that would be issued on conversion of all the dilutive
potential ordinary shares into ordinary shares.
As at 30 June 2015, 85,993,989 options (2014 – 21,168,990 options) were
excluded from the computation of the loss per share as their impact is
anti-dilutive. Furthermore at 30 June 2015 the Firefly option has expired
and is not included in the calculation..
12.3 Headline loss per share (in line with JSE requirements)
The calculation of headline loss per share at 30 June 2015 was based on
the headline loss attributable to ordinary equity holders of the Company
of $6.7 million (2014: $70.6 million) and a weighted average number of
ordinary shares outstanding during the period ended 30 June 2015 of
1,414,768,613 (2014: 1,048,368,613).
The adjustments made to arrive at the headline loss are as follows:
Loss for the period attributable to ordinary shareholders (6,711) (84,120)
Adjust for:
Impairment losses - 14,933
Gain recognised on disposal of interest in former subsidiary - (1,438)
Headline earnings (6,711) (70,625)
Headline loss per share (cents per share) 0.47 6.74
Year ended Year ended
30 June 2015 30 June 2014
$'000 $'000
13. Development, exploration and evaluation expenditure
Development, exploration and evaluation expenditure comprises:
Exploration and evaluation assets 118,498 139,991
Development expenditure 114,315 131,720
Balance at end of year 232,813 271,711
A reconciliation of development, exploration and evaluation expenditure is
presented below:
Exploration and evaluation assets
Balance at beginning of year 139,991 148,131
Additions 145 1,846
Foreign exchange differences (21,638) (9,986)
Balance at end of year 118,498 139,991
Development assets
Balance at beginning of year 131,720 130,947
Additions(1) 2,454 7,061
Foreign exchange differences (19,859) (6,288)
Balance at end of year 114,315 131,720
(1) Vele is not considered to be in commercial production and as a result,
revenue from the sale of coal is not recognised as revenue but off-set
against additions. No revenue was generated during the current
financial year. The total revenue off-set against additions for 2014 was
$9.2 million.
Impairment testing
Exploration and Evaluation Assets
As of 30 June 2015 the net book value of the following project assets were classified as Exploration and Evaluation assets:
- Greater Soutpansberg Project: $63.7 million
- Makhado Project: $54.7 million
In terms of AASB 6 - Exploration for and Evaluation of Mineral Resource management have performed an assessment of
whether facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its
recoverable amount. In performing its assessment, management have considered its exploration rights to the exploration
areas, its planned & budgeted exploration activities and the likelihood of the recoverability of the net book value from the
successful development of the areas of interest. Management have concluded that no indicators of impairment for its
Exploration and Evaluation assets exist as at 30 June 2015.
Non-current assets held for sale
As of 30 June 2015 the net book value of the following project assets were classified as non-current assets held for sale
- Holfontein Colliery: $ nil
- Mooiplaats Colliery: $15.9 million
The Company is in the process of finalising agreements for the disposal of the Holfontein Colliery, and has announced a
strategy to dispose of the Mooiplaats Colliery within the next 12 months. Consequently, these project assets have been
classified as non-current assets held for sale and have been written down to their fair value less costs to sell represented by
indicative offers received.
Development Assets
As of 30 June 2015 the net book value of the following project assets were included in Development assets:
- Vele Colliery: $111 million
In terms of AASB 136 – Impairment of Assets management have identified the coal commodity price as an indicator that the
Vele assets may be impaired and have performed a formal impairment assessment.
Management have adopted the fair value less costs of disposal approach to estimate the recoverable amount of the project,
before comparing this amount with the carrying value of the associated assets and liabilities in order to assess whether an
impairment of the carrying value is required under AASB 136. Management formed the view that impairment is not likely.
In calculating fair value less costs of disposal, management have forecast the cashflows associated with the project over its
expected life of 18 years until 2033. The cash flows are estimated for the assets of the colliery in its current condition
together with capital expenditure required for the colliery to resume operation and discounted to its present value using a
post-tax discount rate that reflects the current market assessments of the risks specific to the Vele Colliery. The identification
of impairment indicators and the estimation of future cash flows require management to make significant estimates and
judgments. Details of the key assumptions used in the fair value less costs of disposal calculation at 30 June 2015 are included
below.
Key assumptions
2015 2016 2017 2018 LT
Thermal coal price (USD, real)(1) 66 67 66 80 80
Hard coking coal price (USD, real)(2) 119 119 142 135 135
Exchange rate (USD / ZAR, nominal)(3) 12.2 12.6 12.9 13.3 Note 3
Discount rate(4) 15.8%
Inflation rates - USD 2.5%
- ZAR 6.0%
Production start date April 2017
(1) Management's assumptions reflect the Richards Bay export thermal coal (API4) price.
(2) Management's assumption of the hard coking coal price is made after considering relevant broker forecasts.
(3) Management has applied a flat exchange rate for the period to 2018. Thereafter the rate is derived with reference to
the 2018 assumption, and inflated by the compounding differential between USD and ZAR inflation rates.
(4) Management prepared a nominal ZAR-denominated, post-tax discount rate, which was calculated with reference to
the Capital Asset Pricing Model (CAPM).
Impairment Assessment
USD million
Carrying Value of Vele Cash Generating Unit 111
Value of Vele using the discounted cash flow method 113
Sensitivity Analysis
Changes in key assumptions in the table below would have the following approximate impact on the recoverable amount of
the Vele Colliery as calculated using the discounted cash flow method and excluding the effect of the value attributable to
resources outside the LOM.
Sensitivity Change in variable Effect on fair value less
costs of disposal
Long term coal prices +10.0% 37
-10.0% (41)
Long term exchange rate +10.0% 33
-10.0% (36)
Discount rate +0.8% (7)
-0.8% 7
Operating costs +10.0% (15)
-10.0% 15
Delays in production start date +12 months (19)
+24 months (33)
Excluded from the value of the Vele Colliery derived from the discounted cash flow model, is any value attributable to
resources remaining after the projections made in the life of mine model. In order to assess the potential value of resources
outside of the life of mine plan, a resource valuation was undertaken by management in September 2012 in consultation with
valuations experts. This valuation applied a weighted average multiple of ZAR 6.8/tonne of resources, or USD 0.56/tonne
which resulted in an indicative valuation of $140 million at that time. An alternative valuation of the resources outside of the
life of mine plan has been performed by extending the discounted cash flow model by ten years, which results in an indicative
valuation of $13 million. The value of the resources outside of the life of mine plan could therefore be in the range of $13
million to in excess of $100 million.
14. Property, plant and equipment
Mining Land and Leasehold Motor Other Total
property, buildings improvements vehicles
plant and
equipment
$'000 $'000 $'000 $'000 $'000 $'000
2015
Cost
At beginning of year 28 17,403 540 828 2,048 20,847
Additions 28 1,824 - 20 75 1,947
Disposals - - - - - -
Exchange differences (6) (2,526) (77) (116) (292) (3,017)
At end of year 50 16,701 463 732 1,831 19,777
Accumulated depreciation
At beginning of year 11 714 537 447 1,725 3,434
Depreciation charge - 230 1 130 136 497
Accumulated - - - - - -
depreciation on disposals
Exchange differences 25 (87) (76) (60) (215) (413)
At end of year 36 857 462 517 1,646 3,518
Net carrying value at
end of year 14 15,844 1 215 185 16,259
Mining Land and Leasehold Motor Other Total
property, buildings improvements vehicles
plant and
equipment
$'000 $'000 $'000 $'000 $'000 $'000
2014
Cost
At beginning of year 465 17,481 572 888 2,178 21,584
Additions - 1,120 2 - 27 1,149
Disposals (415) - - - (20) (435)
Exchange differences (22) (1,198) (34) (60) (137) (1,451)
At end of year 28 17,403 540 828 2,048 20,847
Accumulated depreciation
At beginning of year 166 406 517 269 1,380 2,738
Depreciation charge 342 52 200 455 1,049
Accumulated depreciation (146) - - - (17) (163)
on disposals
Exchange differences (9) (34) (32) (22) (93) (190)
At end of year 11 714 537 447 1,725 3,434
Net carrying value at end
of year 2014 17 16,689 3 381 323 17,413
Year ended Year ended
30 June 2015 30 June 2014
$'000 $'000
15. Intangible assets
Balance at beginning of year 15,488 16,078
Amortisation (975) (1,069)
Foreign exchange differences (2,831) 479
Balance at end of year 11,682 15,488
In August 2008 the Company entered into a throughput agreement with
TCM, a subsidiary of Grindrod, the operator of the Matola Terminal, and
CMR Engineers & Project Managers Proprietary Limited.
This agreement granted the Company one mtpa of port capacity through
the Matola terminal commencing 1 January 2009, for an initial term of
five years. This capacity was increased to approximately three mtpa in
March 2011 and the Company has the right to renew the agreement
(subject to certain conditions) at the end of the initial term, for further
periods of 3 successive periods of 5 years each for a total of 15 years.
During the year the Company reached an agreement with Grindrod to
settle the current liabilities to date as well as cover all future take or pay
obligation until 31 December 2016. The settlement of $10.3 million was
paid during the current financial year (included in accrued expenses 2014
– note 26). The Company will be able to export coal during the settlement
period with no take or pay obligations and has sufficient export capacity
to meet scheduled production from the Vele Colliery to the end of
CY2016 if required.
The terms of the Throughput Agreement will be renegotiated for a
further two five-year periods and one further two year period
commencing CY2017, ensuring the Company has sufficient capacity to
export coal produced by its Vele Colliery and Makhado Project.
16. Other receivables
Carrying amount of:
Nimag loan 1,503 1,931
Other loans 243 314
1,746 2,245
Balance at beginning of year 2,245 3,567
Other (312) (581)
Foreign exchange differences (187) (741)
Balance at end of year 1,746 2,245
Nimag loan
CoAL provided a loan as part of the NiMag disposal to settle the balance
of the purchase consideration. The loan bears interest at the South
African prime overdraft rate less 0.5%, payable quarterly in arrears. The
capital is repayable in 12 equal quarterly instalments following the 39th
month after the date of advance of the ABSA funding for the
management buyout or, the date the ABSA funding is fully repaid.
Year ended Year ended
30 June 2015 30 June 2014
$'000 $'000
17. Other financial assets
Carrying value of financial assets at fair value through profit or loss
Listed securities
- Equity securities 468 618
Unlisted securities
- Equity securities in private corporations* 3,145 966
3,613 1,584
Financial assets at fair value through profit or loss are presented within
'operating activities' as part of changes in working capital in the
statement of cash flows.
*Determined primarily by reference to the value of recent private
placements. Listed and Unlisted Investments are carried at the market
value as at the reporting date.
Deposits 266 633
3,879 2,217
Other financial assets have been analysed between current and non-
current as follows:
Current 468 610
Non-current 3,411 1,607
3,879 2,217
18. Inventories
Consumable stores 218 507
Finished goods 18 21
236 528
The cost of inventories recognised as an expense during the year in
respect of continuing operations was $ 0.5 million (2014: nil).
19. Trade and other receivables
Trade receivables 95 241
Other receivables 1,111 2,145
Allowance for doubtful debts (414) (484)
792 1,902
The carrying amount of trade and other receivables approximate their fair
value due to their short-term maturity.
Year ended Year ended
30 June 2015 30 June 2014
$'000 $'000
19. Trade and other receivables (continued)
The maximum exposure to credit risk at the reporting date is the carrying
value of each class of receivables as disclosed in note 19. The Group does
not hold any collateral as security.
Movements on the allowance for doubtful debts are as follows:
Balance at beginning of year 484 720
Allowance for bad debts 6 495
Receivable written off as uncollectable - (720)
Foreign exchange differences (76) (11)
Balance at end of year 414 484
Trade receivables are exposed to the credit risk of end-user customers
within the coal mining industry.
The Group has an established credit policy under which customers are
analysed for creditworthiness before the Group's payment and delivery
terms and conditions are offered. Customer balances are monitored on
an ongoing basis to ensure that they remain within the negotiated terms
and conditions offered.
Credit quality of trade receivables
Not past due 95 160
Past due 0 to 30 days - -
Past due 31 to 60 days - -
Past due 61 to 90 days - 81
95 241
Currency analysis of trade receivables
SA Rand 95 241
95 241
Year ended Year ended
30 June 2015 30 June 2014
$'000 $'000
20. Cash and cash equivalents
Bank balances 17,759 2,017
Bank balances included in a disposal group held for sale (refer note 21) 123 82
17,882 2,099
Restricted cash 1,023 5,153
Restricted cash included in a disposal group held for sale (refer note 21) 264 1,474
1,287 6,627
The restricted cash balance of $1.3million(2014 - $6.6million) is held on
behalf of subsidiary companies in respect of the rehabilitation guarantees
issued to the DMR in respect of environmental rehabilitation costs of
$10.1 million (2014: $17.6 million). This cash is not available for use other
than for those specific purposes.
Credit risk
Cash at bank earns interest at a floating rate based on daily bank deposit
rates. Cash is deposited at highly reputable financial institutions of a high
quality credit standing within Australia, the United Kingdom and the
Republic of South Africa.
The fair value of cash and cash equivalents equates to the values as
disclosed in this note.
21. Assets classified as held for sale
Carrying amounts of
Holfontein Investments Proprietary Limited ('Holfontein') - -
Langcarel Proprietary Limited ('Mooiplaats') 14,764 18,880
14,764 18,880
Assets classified as held for sale
Holfontein - -
Mooiplaats 18,118 23,030
18,118 23,030
Liabilities associated with assets held for sale
Holfontein - -
Mooiplaats 3,354 4,150
3,354 4,150
Holfontein
Net assets of Holfontein Investments Proprietary Limited - -
Impairment on assets held for sale - -
- -
Year ended Year ended
30 June 2015 30 June 2014
$'000 $'000
The DMR also approved the sale of the undeveloped Opgoedenhoop
mining right resulting in the deposit of R5 million ($0.5 million) being
received in May 2014. An additional R1.5 million ($0.31million) was
received in March 2015. The company has agreed on new settlement
terms and the R17.2 million ($1.5 million) balance of the purchase price
owed to The Company is payable within 12 months. The outstanding
balance will accrue interest at the South African prime rate.
Mooiplaats
As described in note 11, the Company is seeking to dispose of its thermal
assets which include the Mooiplaats colliery. The Company expects to
recover the remaining carrying value through the sales price.
The major classes of assets and liabilities of Mooiplaats at the end of the
reporting period are as follows:
Assets classified as held for sale
Property, plant and equipment 16,770 18,229
Other financial assets 710 2,266
Restricted cash 264 1,474
Inventories 13 929
Trade and other receivables 238 50
Cash and cash equivalents 123 82
18,118 23,030
Liabilities classified as held for sale
Provisions 2,855 2,932
Trade payables and accrued expenses 499 1,218
3,354 4,150
Net assets of Mooiplaats 14,764 18,880
22. Deferred consideration
Deferred consideration 18,687 29,800
18,687 29,800
Opening balance 29,800 30,000
Loan advanced 65
Repaid during the year (10,000) (200)
Interest accrued 33 -
Gain on valuation at amortised cost (1,303) -
Foreign Exchange 92 -
Balance at end of year 18,687 29,800
Current 3,265 29,800
Non-Current 15,422 -
18,687 29,800
Year ended Year ended
30 June 2015 30 June 2014
$'000 $'000
The Deferred Consideration relates to the second tranche (part of the
total acquisition price of $75 million for Chapudi and Kwezi) of $30
million payable to Rio Tinto. During the year the company renegotiated
the payment term of this loan. The company is required to pay a
minimum payment of $100,000 a months as well as additional
committed money on the sale of non-core assets. This arrangement
includes interest at 4%.
The current portion of the deferred consideration consist of the minimum
payment of $100,000 and a $2million payment on the expected sale of
Mooiplaats.
23. Borrowings
Secured – at amortised cost
Secured loans - 6,372
- 6,372
Total current borrowings - 6,372
Total borrowings - 6,372
The carrying value of the Group's interest bearing liabilities, which consist
of floating rate interest bearing liabilities, approximate fair value.
Investec bank facility
Loan advanced 6,372 10,997
Loan repaid (5,909) (3,752)
463 7,245
Foreign exchange differences (463) (873)
- 6,372
The Company, through its wholly owned subsidiary GVM Metals
Administration (South Africa) (Pty) Ltd has secured an 18-month, ZAR210
million (approximately US$20.0 million) working capital facility from
Investec. The facility was repaid in full during the current financial year.
In addition, CoAL had issued 20 million options to Investec which are
exercisable at ZAR1.32 before October 2018.
Year ended Year ended
30 June 2015 30 June 2014
$'000 $'000
24. Provisions
Employee provisions 221 296
Biodiversity offset provision 2,773 2,151
Rehabilitation provisions 3,033 4,643
6,027 7,090
Employee provisions
The provision for employees represents unused annual leave entitlements.
Biodiversity offset provision
The Biodiversity offset agreement("BOA") was signed by the Department of
Environmental Affairs ("DEA"), South African National Parks Board and the
company to the value of R55 million ($4.7 million) over a 25 year period.
The BOA commits The Company to pay R55million ($4.4million) to the
South African National Parks Board over a period of 25 years. The following
payment arrangement has been agreed:
Phase 1 – R2million paid in 2015
Phase 2 – R15million from year 2016 to 2021 (R2.5million annually)
Phase 3 – R13million from year 2022 to 2028 (R1.8million annually)
Phase 4 – R13million from 2029 to 2033 (R2.6million annually)
Phase 5 – R12million from 2034 to 2038 (R2.4million annually)
For the purpose of the present value calculation these payments have been
assume as equal annual payment and discounted at the current South
Africa inflation rate of 6%.
Rehabilitation provision
Balance at beginning of year 4,643 4,903
Unwinding of discount 86 72
Change in assumptions on rehabilitation provisions (1,051) -
Foreign exchange differences (645) (332)
Balance at end of year 3,033 4,643
The rehabilitation provision represents the current cost of environmental
liabilities as at the respective year end. An annual estimate of the quantum
of closure costs is necessary in order to fulfil the requirements of the DMR,
as well as meeting specific closure objectives outlined in the mine's
Environmental Management Programme ('EMP').
Although the ultimate amount of the obligation is uncertain, the fair value
of the obligation is based on information that is currently available. This
estimate includes costs for the removal of all current mine infrastructure
and the rehabilitation of all disturbed areas to a condition as described in
the EMP.
The period assumed in the calculation of the present value of the obligation
is the aggregate of the construction period of the mine and the total
estimated life of mine.
The current estimate available is inflated by the South African inflation rate
of 6% annually and the discount rate applied to establish the current
obligation is a South Africa government bond rate at 30 June 2015 of 8.32%
annually.
Due to the delay on the Vele Colliery start-up the estimated Life of mine has
been extended causing a decrease in the present value of the
environmental obligation.
The recent granting of the NOMR in May 2015 resulted in a potential
construction start date only in the second half of 2016. The Makhado
Project is still in Exploration phase and no formal decision to mine is
currently in place.
Year ended Year ended
30 June 2015 30 June 2014
$'000 $'000
Provisions have been analysed between current and non-current as follows:
Current 294 2,447
Non-current 5,733 4,643
6,027 7,090
Year ended Year ended
30 June 2015 30 June 2014
$'000 $'000
25. Deferred tax
Deferred tax asset 2,320 2,694
2320 2,694
The gross movement on the deferred tax account is as follows:
Balance at beginning of year 2,694 2,885
Exchange differences (374) (191)
Balance at end of year 2,320 2,694
The movement in deferred income tax assets and liabilities during the year, without taking into consideration the
offsetting of balances within the same tax jurisdiction, is as follows:
Deferred tax assets
(1)
Capital allowances
Balance at beginning of year 2,694 2,885
Foreign exchange differences (374) (191)
Balance at end of year 2,320 2,694
Deferred income tax assets are recognised for tax loss carry-forwards to
the extent that the realisation of the related tax benefit through future
taxable profits is probable. The group did not recognise deferred income
tax assets of $97 million (2014: $101.7 million) in respect of losses
amounting to $158 million (2014: $147.7 million) and unredeemed capital
expenditure of $176 million (2014: $215.6 million) that can be carried
forward against future taxable income.
1 – The deferred tax asset recognised on capital allowances relates to a
portion of the capital expenditure on the construction of the Vele
plant. The recognition of the asset is supported by the Life of Mine
model as future profits will be available to utilise the deferred tax
asset.
Year ended Year ended
30 June 2015 30 June 2014
$'000 $'000
26. Trade and other payables
Trade payables 1,237 3,019
Accrued expenses 1,134 12,064
Other 348 -
2,719 15,083
The average credit period is 30 days. Interest at the South African prime
overdraft rate is charged on overdue creditors.
27. Issued capital
Fully paid ordinary shares
1,743,568,613 (2014: 1,048,368,613) fully paid ordinary shares 992,374 935,891
Movements in fully paid ordinary shares Number $'000
At 30 June 2013 1,048,368,613 935,891
Issue of shares, net of issuance costs - -
At 30 June 2014 1,048,368,613 935,891
Issue of shares, net of issuance costs 695,200,000 56,483
At 30 Jun 2015 1,743,568,613 992,374
Holders of ordinary shares are entitled to receive dividends as declared
from time to time and are entitled to one vote per share at shareholders
meetings.
In the event of winding up of the Company ordinary shareholders rank
after all other shareholders and creditors and are fully entitled to any
proceeds of liquidation.
Changes to the then Corporations Law abolished the authorised capital
and par value concept in relation to share capital from 1 July 1998.
Therefore, the Company does not have a limited amount of authorised
capital and issued shares do not have a par value.
Share options granted
Share options granted under the Company's employee share option plan
carry no rights to dividends and no voting rights. Further details of the
employee share option plan are provided in note 30.
28. Accumulated deficit
Accumulated deficit at the beginning of the financial year (790,964) (707,535)
Net loss attributed to Owners of the Company (6,711) (84,120)
Transferred from share based payment reserve 79,594 691
Accumulated deficit at the end of the financial year (718,081) (790,964)
Year ended Year ended
30 June 2015 30 June 2014
$'000 $'000
29. Reserves
29.1 Reserves
Capital profits reserve 91 91
Share based payment reserve 7,205 82,464
Foreign currency translation reserve (7,609) 52,263
(313) 134,818
Movements for the year can be reconciled as follows:
Share-based payments reserve
Opening balance 82,464 82,438
Share options issued during the year 4,335 717
Transfer from share based payment reserve (79,594) (691)
Closing balance 7,205 82,464
Foreign currency translation reserve
Opening balance 52,263 31,008
Exchange differences on translating foreign operations (59,872) 21,255
Closing balance (7,609) 52,263
Nature and purpose of reserves:
Capital reserve
The capital profits reserve contains capital profits derived during previous
financial years.
Share-based payment reserve
Share based payments represent the value of unexercised share options
to Directors and employees.
Foreign currency translation reserve
The foreign currency translation reserve records the foreign currency
differences arising from the translation of foreign operations.
30. Share-based payments
Employee share option plan
The Group maintains certain Employee Share Option Plans ('ESOP's') for executives and senior employees of the Group as
per the rules approved by shareholders on 30 November 2009. In accordance with the terms of the schemes eligible
executives and senior employees may be granted options to purchase ordinary shares.
Share options granted to Directors and Officers
The Group also grants share options to directors, officers, lenders and equity funders of the Group outside the ESOP. In
accordance with the Group's policies, directors and officers may be granted options to purchase ordinary shares.
Share Option Terms, Vesting Requirements and Options Outstanding at 30 June 2015
Each option converts into one ordinary share of the Company on exercise. No amounts are paid or payable by the recipient
on receipt of the option. The options hold no voting or dividend rights, and are not transferable. Upon exercise of the
options the ordinary shares received rank equally with existing ordinary shares.
The following share-based payment arrangements existed during the financial period ended 30 June 2015:
- 3,000,000 share options over ordinary shares in CoAL were granted to Mr Farrell on 8 December 2009. The options
allowed Mr Farrell to take up ordinary shares at an exercise price of A$2.74 each. 2,000,000 of the options vested
one year after the granting of the NOMR for the Vele Colliery and the remaining 1,000,000 options vest one year
after the granting of the Makhado Project NOMR. The 3,000,000 options held no voting or dividend rights, were not
transferable and lapsed on 30 November 2014.
- 2,500,000 share options over ordinary shares in CoAL were granted to Mr Murray, previously Senior Independent
Non-Executive Director of CoAL, on 9 November 2010. The options allow Mr Murray to take up ordinary shares at an
exercise price of A$1.20 each. The options are exercisable in equal tranches on or before 9 November 2015. The
options hold no voting or dividend rights, and are not transferable. 1,000,000 options vested on 8 November 2011,
750,000 on 8 November 2012 and the remaining 750,000 vested on 8 November 2013 and on conversion of the
options to shares, the shares will rank equally with existing shares. At reporting date, none of the options had been
taken up or had lapsed.
- 1,540,561 options were granted on 4 February 2011 to eligible employees of CoAL as part of the ESOP. The options
issued are exercisable prior to 30 September 2015 and have an exercise price of A$1.40, or ZAR9.50. The options vest
in equal tranches on 30 September 2011, 30 September 2012 and 30 September 2013. Upon conversion the shares
will rank equally with existing shares, are not transferable and hold no voting or dividend rights. At reporting date,
none of the options had been taken up but 99,500 options have been cancelled.
- 2,670,000 options were issued on 16 September 2011 to eligible employees of CoAL as part of the ESOP. The options
issued are exercisable prior to 14 February 2017 and have an exercise price of A$1.40 or ZAR7.60. The options vest in
equal tranches on 1 July 2012, 1 July 2013 and 1 July 2014. Upon conversion the shares will rank equally with existing
shares, are not transferable and hold no voting or dividend rights. At reporting date, none of the options had been
taken up or had lapsed.
- 2,500,000 options over ordinary shares in CoAL were granted to Mr Brown on 28 November 2012 for his role as
Executive Chairman. The options allow the holder to take up ordinary shares at an exercise price of GBP0.25 each and
are exercisable on or before 30 November 2015. The options hold no voting or dividend rights and are not
transferable. Upon conversion of the options to shares, the shares would rank equally with existing shares. At
reporting date, none of the options had been taken up or had lapsed.
- 1,000,000 options over ordinary shares in CoAL were granted to Mr Pryor on 28 November 2012 for his role as Non-
Executive Director. The options allow the holder to take up ordinary shares at an exercise price of GBP0.25 each and
are exercisable on or before 30 November 2015. The options hold no voting or dividend rights and are not
transferable. Upon conversion of the options to shares, the shares would rank equally with existing shares. At
reporting date, none of the options had been taken up or had lapsed.
- 3,932,938 options were granted on 22 November 2013 to eligible employees of CoAL as part of the ESOP. The
options are exercisable prior to 30 June 2017 and have an exercise price of ZAR1.75. Two thirds of the options vested
immediately and the remaining third on 1 July 2014. Upon conversion the shares will rank equally with existing
shares, are not transferable and hold no voting or dividend rights. At reporting date, none of the options had been
taken up or had lapsed.
- 4,125,000 options were issued on 22 November 2013 as part of the ESOP to Mr Meeser, previously Chief Financial
Officer and Executive Director of CoAL. The options issued are exercisable prior to 1 June 2018 and have an exercise
price of ZAR2.00. 1,375,000 options vested on 30 June 2014 and the balance were due to vest in equal tranches on 1
June 2015 and 1 June 2016. Upon conversion the shares will rank equally with existing shares, are not transferable
and hold no voting or dividend rights. Mr Meeser resigned on 30 April 2015 and the 2,750,000 options that had not
vested were cancelled. At reporting date, none of the 1,375,000 vested options had been taken up or had lapsed.
- The Company finalised an 18-month, ZAR210 million working capital facility from Investec Bank Limited during
October 2013 and announced that it would issue 20,000,000 Options to Investec. The 20,000,000 shareholder
approved options were issued on 30 January 2015 and have an exercise price of ZAR1.32 and expire on 21 October
2018. Upon conversion the shares will rank equally with existing shares, are not transferable and hold no voting or
dividend rights. At reporting date, none of the options had been taken up or had lapsed.
- 10,575,000 options were awarded to Mr Brown on his appointment as Chief Executive Officer and Executive Director
of the Company. The options were approved by shareholders on 28 November 2014 and issued on 30 January 2015
under the ESOP vesting in three equal tranches of 3,525,000 options on 1 February 2015, 1 February 2016 and 1
February 2017 respectively. The Options will expire on 1 February 2019 and are otherwise subject to the terms of the
ESOP. Upon conversion the shares will rank equally with existing shares, are not transferable and hold no voting or
dividend rights. At reporting date, none of the options had been taken up or had lapsed.
- On 1 June 2015 the Company issued 40,000,000 options to TMM (Pty) Ltd as part of the three stage equity raise
process. The options have an exercise price of ZAR0.30 each and expire in 1 June 2016. Upon conversion the shares
will rank equally with existing shares, are not transferable and hold no voting or dividend rights. At reporting date,
none of the options had been taken up or had lapsed.
There has been no alteration of the terms and conditions of the above share based payment arrangements since the grant
date.
The following share-based payment arrangements were in existence at the end of the current year:
Weighted
Fair value average
Exercise at grant remaining
price date contractual
Option series Number Grant date Expiry date life
Class C unlisted options 2,500,000 09/11/2010 09/11/2015 A$1.20 A$0.59 0.00 years
ESOP unlisted options 1,441,061 04/02/2011 30/09/2015 A$1.40 A$0.91 0.00 years
Class L unlisted options 3,500,000 28/11/2012 30/09/2015 GBP0.25 A$0.05 0.02 years
ESOP unlisted options 2,670,000 16/09/2011 14/02/2017 A$1.40 ZAR3.46 0.05 years
ESOP unlisted options 3,932,928 22/11/2013 30/06/2017 ZAR1.75 ZAR0.52 0.09 years
ESOP unlisted options 1,375,000 22/11/2013 01/06/2018 ZAR2.00 ZAR0.56 0.05 years
Investec options 20,000,000 30/01/2015 21/10/2018 ZAR1.32 ZAR0.75 0.77 years
ESOP unlisted options 3,525,000 30/01/2015 01/02/2019 ZAR1.20 ZAR0.15 0.15 years
ESOP unlisted options 3,525,000 30/01/2015 01/02/2019 ZAR1.32 ZAR0.14 0.15 years
ESOP unlisted options 3,525,000 30/01/2015 01/02/2019 ZAR1.40 ZAR0.12 0.15 years
TMM options 40,000,000 01/06/2015 01/06/2016 ZAR0.30 ZAR0.77 0.43 years
v 85,993,989
Fair value of share options granted during the year
The weighted average fair value of share options granted during the financial year is A$0.07 (2014: A$0.06). Options were
priced using a binomial option pricing model and the Black-Scholes option pricing model was used to validate the price
calculated. Where relevant, the expected life used in the model has been adjusted based on management's best estimate
of the effects of non-transferability, exercise restrictions (including the probability of meeting market conditions attached
to the option), and behavioural considerations.
Expected volatility is calculated by Hoadley's volatility calculator for one, two and three year periods and a future
estimated volatility level of 55% was used in the pricing model.
Inputs into the binomial option pricing model for the current financial year were as follows (validated using the Black-
Scholes valuation model):
ESOP ESOP ESOP Investec TMM
grants(1) grants(1) grants(1) grant(2) grant(3)
Closing share price on issue ZAR0.53 ZAR0.53 ZAR0.53 ZAR1.35 ZAR1.04
Exercise price ZAR1.20 ZAR1.32 ZAR1.45 ZAR1.32 ZAR0.30
Expected volatility 55.0% 55.0% 55.0% 55.0% 80.0%
Option life remaining 4.2 years 4.2 years 4.2 years 5.0 years 1.0 years
Dividend yield 0% 0% 0% 0% 0%
Risk free interest rate 6.92% 6.92% 6.92% 6.64% 6.7%
1. Options granted to Mr D Brown under the ESOP in terms of his appointment as Chief Executive Officer.
2. Options granted to Investec in terms of the working capital facility.
3. Options granted to TMM in terms of the three stage equity raise process.
The total share based payment expense recognised in the current financial year is $3,063,987.
Inputs into the binomial option pricing model for the prior financial year were as follows (validated using the Black-
Scholes valuation model):
ESOP grants(1) ESOP grants(2)
Closing share price on issue date ZAR1.33 ZAR1.33
Exercise price ZAR1.75 ZAR2.00
Expected volatility 55.0% 55.0%
Option life remaining 3.0 years 3.9 years
Dividend yield 0% 0%
Risk free interest rate 6.85% 7.12%
(1) Options granted to staff in terms of the ESOP
(2) Options granted to Mr Meeser under the ESOP in terms of his appointment as Financial Director
Movement in share options
Year ended Year ended
30 June 2015 30 June 2014
Number Number
Options outstanding at beginning of year 21,168,990 13,929,562
Options expired (3,000,001) (818,500)
Options cancelled (2,750,000) -
Options granted 70,575,000 8,057,928
Options exercised - -
Options outstanding at end of year 85,993,989 21,168,990
Weighted average exercise price (A$) 0.17 0.82
Options exercisable 78,943,989 15,218,014
Share options exercised during the year
No share options were exercised during the period.
Share options outstanding at the end of the year
The share options outstanding at the end of the year had a weighted average exercise price of A$0.17 (2014: A$0.82) and a
weighted average contractual life of 1.86 years (2014: 2.19 years).
Year ended Year ended
30 June 2015 30 June 2014
$'000 $'000
31. Non-controlling interest
Non-controlling interests comprise the following:
Freewheel Trade and Invest 37 Proprietary Limited 575 575
575 575
32. Financial instruments
32.1 Capital management
The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while
maximising the return to stakeholders through the optimisation of the debt and equity balance. The Group's overall
strategy remains unchanged.
The capital structure of the Group consists of net debt (borrowings as detailed in note 23) and equity of the Group
(comprising issued capital, reserves, retained earnings and non-controlling interests as detailed in notes 27 to 29).
The Group is not subject to any externally imposed capital requirements.
The Group's risk management committee reviews the capital structure of the Group on a semi-annual basis. As part
of this review, the committee considers the cost of capital and the risks associated with each class of capital. The
Group has reached its target gearing ratio of 0% determined as the proportion of net debt to equity. During 2014 the
gearing ratio was higher than the target range due to the time delay in the sale of non-core assets.
Year ended Year ended
30 June 2015 30 June 2014
$'000 $'000
Debt(1) - 6,372
Net debt - 6,372
Equity(2) 273,980 282,471
Net debt to equity ratio - 2.3%
1. Debt is defined as long-term and short-term borrowings as described in note 23.
2. Equity includes all capital and reserves of the Group that are managed as capital.
32.2 Categories of financial instruments
The accounting policies for financial instruments have been applied to the line
items below:
Year ended Year ended
30 June 2015 30 June 2014
$'000 $'000
Financial assets
Other receivables 1,746 2,245
Trade and other receivables 792 1,902
Cash and cash equivalents 17,759 2,017
Restricted cash 1,023 5,153
Other Financial Assets 3,879 2,217
Total financial assets 25,199 13,534
Year ended Year ended
30 June 2015 30 June 2014
$'000 $'000
Financial liabilities
Deferred consideration 18,687 29,800
Borrowings - 6,372
Trade and other payables 2,719 15,083
Total financial liabilities 21,406 51,255
Fair value of financial assets and liabilities
The fair value of a financial asset or a financial liability is the amount at which the asset could be exchanged or liability
settled in a current transaction between willing parties in an arm's length transaction. The fair values of the Group's
financial assets and liabilities approximate their carrying values, as a result of their short maturity or because they
carry floating rates of interest.
All financial assets and liabilities recorded in the consolidated financial statements approximate their respective fair values.
The following table provides an analysis of financial instruments that are measured subsequent to initial recognition
at fair value, grouped into Level 1 to 3, based on the degree to which the fair value is observable.
Level 1 fair value measurements are those derived from quoted prices in active markets for identical assets or liabilities.
Level 1 financial assets comprise deposits and listed securities (note 17).
Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that
are observable for the asset or liability, either directly or indirectly.
Level 2 financial assets comprise investments with investment firms. These investments serve as collateral for
rehabilitation guarantees. The fair value has been determined by the investment firms' fund statement (note 17).
Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or
liability that are not based on observable market data.
There were no assets reclassified into / out of FVTPL during the year nor were any assets transferred between levels.
As at 30 June 2015 Level 1 Level 2 Level 3 Total
Financial assets at FVTPL 734 3,145 - 3,879
As at 30 June 2014 Level 1 Level 2 Level 3 Total
Financial assets at FVTPL 1,251 966 - 2,217
32.3 Financial risk management objectives
The Group's Corporate Treasury function provides services to the business, co-ordinates access to domestic and
international financial markets, monitors and manages the financial risks relating to the operations of the Group
through internal risk reports which analyse exposures by degree and magnitude of risks. These risks include market
risk (including currency risk, fair value interest rate risk and price risk), credit risk, liquidity risk and cash flow interest
rate risk.
The Corporate Treasury function reports quarterly to the Group's risk management committee, an independent body
that monitors risks and policies implemented to mitigate risk exposures.
32.4 Market risk
Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures,
primarily with respect to the Australian dollar and the US dollar. Foreign exchange risk arises from future
commitments, assets and liabilities that are denominated in a currency that is not the functional currency. Most of
the Company's purchases are denominated in SA rand. However, certain items during the exploration, development
and plant construction phase as well as long lead-capital items are denominated in US dollars, Euros or Australian
dollars. These have to be acquired by the South African operating company due to the South African Reserve Bank's
Foreign Exchange Control Rulings. This exposes the South African subsidiary companies to changes in the foreign
exchange rates.
The Group's cash deposits are largely denominated in US dollar and SA rand. A foreign exchange risk arises from the
funds deposited in US dollar which will have to be exchanged into the functional currency for working capital
purposes.
The Group generally does not enter into forward sales, derivatives or other hedging arrangements to manage this risk.
At financial period end, the financial instruments exposed to foreign currency risk movements are as follows:
Held in
Balances at 30 June 2015 Held in ZAR GBP Held in AUD Held in USD Total
$'000 $'000 $'000 $'000 $'000
Financial assets
Other receivables 1,746 - - - 1,746
Trade and other receivables 701 - 91 - 792
Cash(1) and cash equivalents 13,698 597 44 4,443 18,782
Total financial assets 16,145 597 135 4,443 21,320
(1). Cash includes restricted cash
Financial liabilities
Deferred consideration - - - 18,687 18,687
Borrowings - - - - -
Trade and other payables 1,462 1,257 - 2,719
Total financial liabilities 1,462 - 1,257 18,687 21,406
Held in ZAR Held in GBP Held in AUD Held in USD Total
$'000 $'000 $'000 $'000 $'000
Balances at 30 June 2014
Financial assets
Other receivables 2,245 - - - 2,245
Trade and other receivables 1,233 - 669 - 1,902
Cash(1) and cash equivalents 6,433 3 227 507 7,170
Total financial assets 9,911 3 896 507 11,317
(1). Cash includes restricted cash
Financial liabilities
Deferred consideration 29,800 29,800
Borrowings 6,372 - - - 6,372
Trade and other payables 3,620 161 138 11,164 15,083
Total financial liabilities 9,992 161 138 40,964 51,255
Balances classified as held for sale are not included in the above tables, or discussed in the subsequent narrative.
The following table details the Group's sensitivity to a 10% increase and decrease in the US dollar against the relevant
foreign currencies. 10% is the sensitivity rate used when reporting foreign currency risk internally to key
management personnel and represents management's assessment of the reasonably possible change in foreign
exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and
adjusts their translation at the year-end for a 10% change in foreign currency rates. The sensitivity analysis includes
external loans as well as loans to foreign operations within the Group where the denomination of the loan is in a
currency other than the functional currency of the lender or the borrower. A positive number below indicates an
increase in profit or equity where the US dollar strengthens 10% against the relevant currency. For a 10% weakening
of the US dollar against the relevant currency, there would be a comparable impact on the profit or equity, and the
balances below would be negative.
Year ended Year ended
30 June 2015 30 June 2014
Impact on profit / (loss) $'000 $'000
Judgements on reasonable possible movements
USD/ZAR increase by 10% (2,355) (3,136)
USD/ZAR decrease by 10% 2,355 3,136
32.5 Interest rate risk management
The Group's interest rate risk arises mainly from short-term borrowings, cash and bank balances and restricted cash.
The Group has variable interest rate borrowings. Variable rate borrowings expose the group to cash flow interest rate risk.
The Group has not entered into any agreements, such as hedging, to manage this risk.
The following table summarises the sensitivity of the financial instruments held at the reporting date, following a
movement in variable interest rates, with all other variables held constant. The sensitivities are based on reasonably
possible changes over a financial period, using the observed range of actual historical rates.
Year ended Year ended
30 June 2015 30 June 2014
Impact on profit / (loss) $'000 $'000
Judgements on reasonable possible movements
Increase of 0.2% in LIBOR 40 (1)
Decrease of 0.2% in LIBOR (40) 1
Increase of 1.0% in JIBAR 202 (60)
Decrease of 1.0% in JIBAR (202) 60
The impact is calculated on the net financial instruments exposed to variable interest rates as at reporting date and
does not take into account any repayments of short-term borrowings.
32.6 Credit risk
Credit risk is the risk that a contracting entity will not complete its obligation under a financial instrument that will
result in a financial loss to the Group. The carrying amount of financial assets represents the maximum credit
exposure. Receivable balances are monitored on an ongoing basis with the result that the Group's exposure to bad
debts is not significant.
At year end there is no significant concentration of credit risk represented in the cash and cash equivalents, restricted
cash and trade accounts receivables balance. The Group manages its credit risk by predominantly dealing with
counterparties with a positive credit rating.
The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks
with high credit-ratings assigned by international credit-rating agencies.
32.7 Liquidity risk
The liquidity position of the Group is managed to ensure sufficient liquid funds are available to meet financial
commitments in a timely and cost effective manner. The Group's Executive continually reviews the liquidity position
including cash flow forecasts to determine the forecast liquidity position and maintain appropriate liquidity levels.
The concentration of cash balances on hand in geographical areas was as follows:
United Kingdom Australia South Africa Total
Balances at 30 June 2015 $'000 $'000 $'000 $'000
Cash and cash equivalents 5,020 45 13,717 18,782
5,020 45 13,717 18,782
United Kingdom Australia South Africa Total
Balances at 30 June 2014 $'000 $'000 $'000 $'000
Cash and cash equivalents 514 200 6,456 7,170
514 200 6,456 7,170
The contractual maturities of the Group's financial liabilities at the reporting date were as follows:
Less than 6 Between 6 – 12 Greater than 12 Total
months months months
Balances at 30 June 2015 $'000 $'000 $'000 $'000
Deferred consideration 2,600 665 16,600 19,865
Borrowings(1) - - - -
Trade and other payables 2,719 - - 2,719
5,319 665 16,600 22,584
1. Interest bearing at rates between 4 % and 10 %
Less than 6 Between 6 – Greater than 12 Total
months 12 months months
Balances at 30 June 2015 $'000 $'000 $'000 $'000
Other receivables 1,746 - - 1,746
Trade and other receivables 792 - - 792
Cash and cash equivalents 17,759 - - 17,759
Restricted cash 1,023 - - 1,023
Other financial assets 468 - 3,411 3,879
21,788 - 3,411 25,199
Less than 6 Between 6 – Greater than 12 Total
months 12 months months
Balances at 30 June 2014 $'000 $'000 $'000 $'000
Deferred consideration 29,800 - - 29,800
Borrowings(1) 6,372 - - 6,372
Trade and other payables 15,083 - - 15,083
51,255 - - 51,255
1. Interest bearing at rates between 4 % and 10 %
Less than 6 Between 6 – 12 Greater than 12 Total
months months months
Balances at 30 June 2014 $'000 $'000 $'000 $'000
Other Receivables - 2,826 - 2,826
Trade and Other Receivables 1,902 - - 1,902
Cash and Cash Equivalent 2,017 - - 2,017
Restricted Cash 287 - - 287
Other financial assets 618 - - 618
4,824 2,826 - 7,650
33. Notes to the statement of cash flows
Year ended Year ended
30 June 2015 30 June 2014
Note $'000 $'000
Reconciliation of cash
For the purposes of the consolidated statement of cash flows, cash
and cash equivalents include cash on hand and in banks, net of
outstanding bank overdrafts. Cash and cash equivalents at the end of
the reporting period as shown in the consolidated statement of cash
flows can be reconciled to the related items in the consolidated
statement of financial position as follows:
Cash and bank balances 20 17,882 2,099
Reconciliation of loss before tax to net cash used in operations
Loss before tax (continuing operations and operations held for sale) (6,711) (84,120)
Add back:
Depreciation 497 1,106
Amortisation 975 1,069
Impairment losses - 14,933
Share-based payment 3,064 717
Re-valuation of investments 281 576
Re-valuation of inventory 847
Sundry income (non-cash) (487) (4,486)
Gain on revaluation of Deferred Consideration (1,303) -
Movement in provisions 368 555
Finance costs (net) 1,504 1,286
Loss on sale of assets - 42
Foreign exchange (gains) / losses on operating activities (14,504) 36,725
Changes in working capital
Decrease in inventories 4 568
Decrease in trade and other receivables 1,282 1,365
(Decrease) / increase in trade and other payables (935) 8,196
Cash used in operations (15,121) (21,468)
34. Contingencies and commitments
Contingent liabilities as outlined below:
Ferret Mining & Environmental Services Proprietary Limited
During the period, Ferret's 26% shareholding in Mooiplaats Mining Limited was re-instated. Although they are not
entitled to any assets or claims in the Mooiplaats group, they are entitled to receive ZAR15million (US$1.0 million)
upon the successful disposal of the Mooiplaats Colliery.
Issue of Share Options to De Wet Schutte
In terms of his appointment as Chief Financial officer, Mr Schutte is entitled to receive 6,600,000 options in three
equal tranches over a three year period (Year 1: 2,200,000 at ZAR 1, 20, Year 2: 2,200,000 at ZAR 1, 32, Year 3:
2,200,000 at ZAR 1, 45) These are granted in accordance with the Company's employee share option plan and are
subject to shareholder approval.
Makhado Water Commitment
CoAL has agreed to acquire water allocation for the Makhado Project from water users situated near the proposed
colliery and the Company has undertaken to increase supply assurance without impacting negatively on the water
available for agriculture. The parties have in principle agreed to avoid endangering local agriculture by creating new
water, primarily by reducing losses, improving distribution and countering leakages and evaporation. The creation of
new water will be financed either through CoAL's funds, outside funding or a Public-Private-Partnership with one or
more organs of State or other appropriate entities.
The overall objective is the co-existence of mining and agriculture and includes a feasibility study and the completion
of projects identified in the study which will facilitate the creation of new water. In terms of the agreement, the
Company will be required to pay a total of $7.9 million. The first payments of $1.8 million are due 90 and 180 days
after the granting of the IWUL, a further $0.6 million is payable eight months after the IWUL is granted and the
balance within five years of the granting.
Commitments
In addition to the commitments of the parent entity as disclosed under note 38, subsidiary companies have financial
commitments in terms of the NOMR granted by the South African DMR. The commitments are based on the revenue
generated by the colliery during the financial year, and/or quantities of coal sold by the colliery during the financial
year.
35. Related party disclosures
The aggregate compensation made to directors and other members of key management personnel of the company
and the Group is set out below:
Year ended Year ended
30 June 2015 30 June 2014
$ $
Short-term employee benefits 1,288,914 1,882,235
Post-employment benefits 9,552 15,812
Termination benefits - -
Share-based payments 131,485 253,053
1,429,951 2,151,100
The Group has not provided any of its key management personnel with loans.
Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have
been eliminated on consolidation and are not disclosed in this note.
36. Controlled entities
Particulars in relation to controlled entities
Year Year
ended 30 ended 30
Country of June 2015 June 2014
incorporation % %
Bakstaan Boerdery Proprietary Limited * South Africa 100 100
Baobab Mining & Exploration Proprietary Limited** South Africa 100 100
Chapudi Coal Proprietary Limited *** South Africa 74 74
Coal of Africa Plc**** Jersey - 100
Coal of Africa & ArcelorMittal Analytical Laboratories Proprietary Limited South Africa 50 50
Cove Mining NL Australia 100 100
Evoc Mining NL**** Australia - 100
Freewheel Trade and Invest 37 Proprietary Limited South Africa 100 100
Fumaria Property Holdings Proprietary Limited South Africa 100 100
Golden Valley Services Proprietary Limited Australia 100 100
Greenstone Gold Mines NL**** Australia - 100
GVM Metals Administration (South Africa) Proprietary Limited South Africa 100 100
Harrisia Investments Holdings Proprietary Limited South Africa 100 100
Holfontein Investments Proprietary Limited South Africa 74 74
Kwezi Mining Exploration Proprietary Limited *** South Africa 74 74
Langcarel Proprietary Limited ***** South Africa 74 74
Limpopo Coal Company Proprietary Limited South Africa 100 100
MbeuYahsu Proprietary Limited South Africa 74 74
Mooiplaats Mining Limited South Africa 74 74
Regulus Investment Holdings Proprietary Limited South Africa 100 100
Silkwood Trading 14 Proprietary Limited South Africa 100 100
Tshikunda Mining Proprietary Limited South Africa 60 60
Tshipise Energy Investments Proprietary Limited South Africa 50 50
* Subsidiary company of Fumaria Property Holdings Proprietary Limited
** 74% on completion of the Makhado Project BBBEE transactions
*** Subsidiary companies of MbeuYashu Proprietary Limited
**** Deregistered
***** Subsidiary company of Mooiplaats Mining Limited
37. Events after the reporting period
Post year end, the following significant events took place:
- Entering into a Subscription Agreement and a Loan Agreement with Singapore registered Yishun Brightrise Investment PTE
Limited (“Yishun”) whereby Yishun will acquire up to 183,231,261 ordinary shares for 5.15 British pence each raising
approximately GBP9.4 million (approximately $14.7 million) conditional upon, CoAL shareholder approval on the 14th of
September 2015. The Company and Yishun have also entered into a Loan Agreement in terms of which Yishun has agreed to
lend CoAL $10 million conditional upon the Company’s shareholders approving the issue of the 183,231,261 shares.
The loan will bear no interest and is only repayable in limited circumstances.
There have been no other events between 30 June 2015 and the date of this report which necessitate adjustment to the
consolidated statements of comprehensive income or consolidated statements of financial position at that date.
38. Parent entity financial information
Parent entity
Year ended Year ended
30 June 2015 30 June 2014
$’000 $’000
Summary financial information
Non-current assets 270,405 444,433
Current assets 6,806 3,205
Total assets 277,211 447,638
Current liabilities 5,389 18,758
Total liabilities 5,389 18,758
Net assets 271,822 428,880
Shareholders’ Equity
Issued capital 992,374 935,891
Accumulated deficit (887,836) (649,416)
Reserves 167,284 142,405
271,822 428,880
Loss for the year (238,420) (175,336)
Total comprehensive loss (238,420) (175,336)
Commitments
- Coal has subordinated all loans to subsidiary companies
Deloitte Touche Tohmatsu
A.C.N. 74 490 121 060
Woodside Plaza
Level 14
240 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
DX 206
Tel: +61 (0) 8 9365 7000
Fax: +61 (0) 8 9365 7001
www.deloitte.com.au
Independent Auditor’s Report to the members of Coal of Africa Limited
Report on the Financial Report
We have audited the accompanying financial report of Coal of Africa Limited, which comprises the statement of financial position
as at 30 June 2015, the statement of profit or loss and other comprehensive income, the statement of cash flows and the statement
of changes in equity for the year ended on that date, notes comprising a summary of significant accounting policies and other
explanatory information, and the directors’ declaration of the consolidated entity, comprising the company and the entities it
controlled at the year’s end or from time to time during the financial year as set out on pages 38 to 102.
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation of the financial report that gives a true and fair view in accordance
with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary
to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error. In Note 2, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements,
that the consolidated financial statements comply with International Financial Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with
Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit
engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material
misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report.
The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control, relevant to the company’s preparation of the financial report that gives a true and fair view, in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control.
An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by
the directors, as well as evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Auditor’s Independence Declaration
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of Coal of Africa Limited, would be in the same terms if given to the directors as at the time of this auditor’s report.
Opinion
In our opinion:
(a) the financial report of Coal of Africa Limited is in accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2015 and of its performance for the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
(b) the consolidated financial statements also comply with International Financial Reporting Standards as disclosed in Note 2.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 12 to 22 of the directors’ report for the year ended 30 June 2015. The directors of the company are responsible for the preparation and presentation of the Remuneration Report in accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
Opinion
In our opinion the Remuneration Report of Coal of Africa Limited for the year ended 30 June 2015, complies with section 300A of the Corporations Act 2001.
DELOITTE TOUCHE TOHMATSU
Ross Jerrard
Partner
Chartered Accountants
Perth, 10 September 2015
Date: 10/09/2015 01:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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