Wrap Text
Unaudited Interim Consolidated Financial Statements
for the period ended 31 August 2015
Rockwell Diamonds Inc.
(A company incorporated in accordance with the laws
of British Columbia, Canada)
(Incorporation number BC0354545)
(South African registration number: 2007/031582/10)
Share code on the
JSE Limited: RDI
ISIN: CA77434W2022
Share code on the TSX: RDI CUSIP Number: 77434W103
(“Rockwell” or “the Group”)
15 October 2015
Unaudited Interim Consolidated Financial Statements for the period
ended 31 August 2015
Consolidated Statements of Financial Position
As at As at
Amounts in Canadian 31 August 28 February
Dollars (‘000) 2015 2015
Assets
Non-current assets
Mineral property interests 26 110 16 518
Investment in associates 458 396
Property, plant and equipment 36 157 27 001
Investments and deposits 1 461 1 502
Rehabilitation deposits 3 564 3 376
Total non-current assets 67 750 48 793
Current assets
Inventories 3 595 2 177
Loans to related parties - 8
Current tax receivable 34 37
Trade and other receivables 11 629 4 889
Assets held for sale - 13 525
Cash and cash equivalents 214 576
Total current assets 15 472 21 212
Total assets 83 222 70 005
Equity and liabilities
Equity
Share capital 147 435 147 435
Reserves (12 312) (8 575)
Retained loss (106 027) (102 076)
Total equity attributable to the
equity holdersof the Group 29 096 36 784
Non-controlling interest (691) (2 369)
Total equity 28 405 34 415
Liabilities
Non-current liabilities
Loans and borrowings 1 081 3 844
Finance lease obligation 852 1 276
Deferred tax 4 960 2 995
Rehabilitation obligation 6 614 5 987
Total non-current liabilities 13 507 14 102
Current liabilities
Loans from related parties 172 162
Loans and borrowings 25 493 2 296
Finance lease obligation 674 708
Trade and other payables 12 376 10 902
Liabilities held for sale - 7 420
Bank overdraft 2 595 -
Total current liabilities 41 310 21 488
Total liabilities 54 817 35 590
Total equity and liabilities 83 222 70 005
Consolidated Statements of Financial Performance
3 months 6 months 3 months 6 months
ended ended ended ended
Amounts in Canadian 31 August 31August 31 August 31 August
Dollars (‘000) 2015 2015 2014 2014
Sale of diamonds 12 277 20 546 14 222 23 931
Beneficiation income 8 689 9 659 2 660 8 088
Cost of sales before
amortization and
depreciation (11 791) (24 140) (15 689) (26 563)
Gross profit before
amortization and
depreciation 9 175 6 065 1 193 5 456
Amortization of
mineral property interests (747) (856) (169) (406)
Depreciation of property,
plant and equipment (1 559) (2 859) (1 558) (2 977)
Rehabilitation
obligation recognized (32) (65) (121) (241)
Gross profit (loss) 6 837 2 285 (655) 1 832
Other income 143 515 193 125
General, administration
and business development
expenses (1 658) (3 262) (1 347) (2 844)
Loss on sale of subsidiary - (1 774) - -
Realized foreign exchange
with saleof subsidiary - 1 276 - -
Profit (loss) before net
finance costs 5 322 (960) (1 809) (887)
Finance income 10 49 137 266
Foreign exchange loss
on US$ loans (2 823) (2 823) - -
Finance costs (1 037) (1 341) (200) (387)
Profit (loss) after net
finance costs 1 472 (5 075) (1 872) (1 008)
Share of profit from equity
accounted investment 58 91 51 85
Profit (loss) before
taxation 1 530 (4 984) (1 821) (923)
Taxation (384) 950 339 (214)
Profit (loss) for the period 1 146 (4 034) (1 482) (1 137)
Profit (loss) attributable
to:
Owners of the parent 1 195 (3 951) (1 391) (986)
Non-controlling interest (49) (83) (91) (151)
1 146 (4 034) (1 482) (1 137)
Earnings (loss) per
share
Basic and diluted earnings
(loss)per share (cents) 2.19 (7.24) (2.60) (1.84)
Consolidated Statements of Comprehensive Income
3 months 6 months 3 months 6 months
ended ended ended ended
Amounts in Canadian 31 August 31August 31 August 31 August
Dollars (‘000) 2015 2015 2014 2014
Profit (loss) for the
period 1 146 (4 034) (1 482) (1 137)
Other comprehensive income
net of taxation
Items that are or may be
reclassified to profit or
loss
Exchange differences on
translating foreign
operations (971) (1 185) (277) (530)
Realized foreign exchange
differences with sale of
subsidiary - (1 276) - -
Other comprehensive income
for the period net of
taxation (971) (2 461) (277) (530)
Total comprehensive income
for the period 175 (6 495) (1 759) (1 667)
Total comprehensive income
attributable to:
Owners of the Group 205 (6 495) (1 680) (1 539)
Non-controlling interest (30) - (79) (128)
Total comprehensive income
for the period 175 (6 495) (1 759) (1 667)
Consolidated Statements of Changes in Equity
Foreign Share-
currency based Total
Amounts in Canadian Share translation payment net
Dollars (‘000) capital reserve* reserve* reserve*
Balance at 01 March 2014 147 073 (18 799) 8 790 (10 009)
Total comprehensive income
for the period
Loss for the period - - - -
Other comprehensive income - (553) - (553)
Total comprehensive income
for the period - (553) - (553)
Share-based payment expense - - 171 171
Total changes - (553) 171 (382)
Balance as at
31 August 2014 147 073 (19 352) 8 961 (10 391)
Balance at 01 March 2015 147 435 (17 605) 9 030 (8 575)
Total comprehensive income
for the period
Loss for the period - - - -
Other comprehensive income - (2 511) - (2 511)
Total comprehensive income
for the period - (2 511) - (2 511)
Share-based payment expense - - 50 50
Sale of subsidiary - (1 276) - (1 276)
Total changes - (3 787) 50 (3 737)
Balance at 31 August 2015 147 435 (21 392) 9 080 (12 312)
Total equity
attributable Non-
to equity control-
Amounts in Canadian Retained holders of ling Total
Dollars (‘000) capital the Group interest equity
Balance at 01 March 2014 (88 096) 48 968 (1 737) 47 231
Total comprehensive income
for the period
Loss for the period (986) (986) (151) (1 137)
Other comprehensive income - (553) 23 (530)
Total comprehensive income
for the period (986) (1 539) (128) (1 667)
Share-based payment expense - 171 - 171
Total changes (986) (1 368) (128) (1 496)
Balance as at
31 August 2014 (89 082) 47 600 (1 865) 45 735
Balance at 01 March 2015 (102 076) 36 784 (2 369) 34 415
Total comprehensive income
for the period
Loss for the period (3 951) (3 951) (83) (4 034)
Other comprehensive income - (2 511) 83 (2 428)
Total comprehensive income
for the period (3 951) (6 462) - (6 462)
Share-based payment
expense - 50 - 50
Sale of subsidiary - (1 276) 1 678 402
Total changes (3 951) (7 688) 1 678 (6 010)
Balance at 31 August 2015 (106 027) 29 096 (691) 28 405
* Currency translation differences arising on the conversion of the
net investment in foreign operations from the functional currency to
the Company's presentation currency are accumulated in the foreign
currency translation reserve.
** Equity settled share-based payment transactions are accumulated in
the share-based payment reserve.
Consolidated Statements of Cash Flows
3 months 6 months 3 months 6 months
ended ended ended ended
Amounts in Canadian 31 August 31August 31 August 31 August
Dollars (‘000) 2015 2015 2014 2014
Cash flows from operating
activities
Cash receipts from
customers 17 478 26 340 18 017 35 195
Cash paid to suppliers
and employees (13 756) (27 638) (16 344) (32 400)
Cash generated from
(utilized by)
operations 3 722 (1 298) 1 673 2 795
Finance income 53 92 295 266
Finance costs (112) (223) - -
Net cash inflow (outflow)
from operating activities 3 663 (1 429) 1 968 3 061
Cash flows from investing
activities
Purchase of property,
plant and equipment (647) (907) (1 064) (1 553)
Proceeds from sale of
property, plant and
equipment 89 89 (18) 338
Purchase of mineral
property interests - - (300) (583)
Proceeds from sale of
mineral property
interests - 515 - -
Proceeds from sale of
subsidiary 601 2 867 - -
Investment in joint
venture - - - (103)
Acquisition of subsidiary
and business combination - (1 708) - -
Decrease (increase) in
related party loans 8 28 (281) (206)
Increase in other
financial assets (13) (84) (176) (500)
Decrease in rehabilitation
deposits 316 282 424 487
Net cash inflow (outflow)
from investing activities 354 1 082 (1 415) (2 120)
Cash flows from financing
activities
Repayment of proceeds
from loans and borrowings (4 898) (2 977) (2) (5)
Repayment of finance lease
obligations (201) (409) (61) (139)
Net cash outflow from
financing activities (5 099) (3 386) (63) (144)
Net movement in cash and
cash equivalents for the
period (1 082) (3 733) 490 797
Cash and cash equivalents
at the beginning of the
period (1 299) 576 (1 453) (1 760)
Cash and cash equivalents
released from assets held
for sale - 776 - -
Total net cash and cash
equivalents at end of the
period (2 381) (2 381) (963) (963)
3 months 6 months 3 months 6 months
ended ended ended ended
Amounts in Canadian 31 August 31August 31 August 31 August
Dollars (‘000) 2015 2015 2014 2014
Earnings (loss) per share
Basic and diluted earnings
(loss) per share
Basic earnings (loss) per
share
Cents per share 2.19 (7.24) (2.60) (1.84)
Basic earnings (loss) per share was calculated based on a weighted
average number of ordinary shares of 54 558 244 for the 3 months
ended 31 August 2015 (3 months ended 31 August 2014: 53 523 244) and
54 558 244 for the 6 months ended 31 August 2015 (6 months ended
31 August 2014: 48 974 752).
3 months 6 months 3 months 6 months
ended ended ended ended
Amounts in Canadian 31 August 31August 31 August 31 August
Dollars (‘000) 2015 2015 2014 2014
Reconciliation of earnings
(loss) for the period to
basic earnings (loss)
Profit (loss) for the
period 1 146 (4 034) (1 482) (1 137)
Adjusted for:
Loss attributable to non
controlling interest 49 83 91 151
Basic earnings (loss)
attributable to 1 195 (3 951) (1 391) (986)
owners of the Group
Diluted earnings (loss) per share is equal to earnings (loss) per
share because there are no dilutive potential ordinary shares in
issue.
At 31 August 2015 and 31 August 2014 the impact of share-based payment
options were excluded from the weighted average number of shares as the
effect would have been anti- dilutive.
3 months 6 months 3 months 6 months
ended ended ended ended
Amounts in Canadian 31 August 31August 31 August 31 August
Dollars (‘000) 2015 2015 2014 2014
Basic and diluted
headline earnings (loss)
per share
Headline earnings (loss)
per share (cents) 2.17 (6.65) (2.64) (1.53)
Reconciliation between
basic earnings(loss) and
headline earnings (loss)
Basic earnings (loss)
attributable to owners of
the Group 1 195 (3 951) (1 391) (986)
Adjusted for:
Profit on disposal of
assets (11) (11) - -
Profit on disposal of
mineral property - (165) - -
Realized foreign exchange
with sale of subsidiary - (1 276) - -
Loss on sale of property,
plant and equipment - - 27 254
Share of profit from
equity accounted
investment - - (51) (85)
Loss on sale of subsidiary - 1 774 - -
Headline earnings (loss)
attributable to owners of
the Group 1 184 (3 629) (1 415) (817)
The basic and diluted headline earnings (loss) per share disclosure
is provided based on the listing requirements of the Johannesburg
Stock Exchange (Group's secondary listing). The disclosure of basic
and diluted headline earnings (loss) per share is provided in
accordance with Circular 2/2013 as issued by the South African
Institute of Chartered Accountants. Headline earnings (loss)
represents the basic earnings (loss) attributable to the owners of
the Group excluding certain remeasurements.
At 31 August 2015 and 31 August 2014 the impact of share-based
payment options were excluded from the weighted average number of
shares, for the purpose of the diluted headline earnings (loss) per
share calculation, as the effect would have been anti-dilutive.
Subsequent events
As previously announced, on October 6, 2014, Rockwell RSA entered
into a Black Economic Empowerment transaction in terms of the
South African Mining Charter of 2004 with Siyancuma Capital (Pty) Ltd.
("Siyancuma") agreeing to sell 30% of the shares of certain of its
subsidiaries holding various mining rights, namely
Saxendrift Mine (Pty) Ltd. and HC Van Wyk Diamonds Ltd. to Siyancuma
(the "BEE Transaction").
Mr. Richard Mhlontlo (currently Group HR/Industrial Relations Manager
for Rockwell RSA) and Mr. Oupa Sekhukhune are currently the ultimate
shareholders in Siyancuma, each holding 50% of the shares of Siyancuma.
In due course, a trust established for the benefit of Rockwell RSA
employees will acquire 30% of the shares in Siyancuma from Messrs.
Mhlontlo and Sekhukhune. Pursuant to the BEE Agreement, the aggregate
consideration payable by Siyancuma to Rockwell RSA is a minimum of
ZAR72,680,770 (approximately $7,222,288 and US$6,463,226 based on the
Bank of Canada noon exchange rates on October 6, 2014, the date of the
BEE Agreement), payable over 10 years.
At the Company's Annual General and Special Meeting held on
September 23, 2015, disinterested shareholders approved the
BEE Agreement, which approval was required because Siyancuma is a
related party to the Company and the value of the assets being sold
to Siyancuma pursuant to the BEE Transaction is in excess of 10% of
the Company's market capitalization. The Company anticipates closure
in the next quarter.
Additional details are disclosed in the Management Information Circular
dated August 24, 2015 which is filed on SEDAR.
At the meeting held on September 23, 2015, disinterested shareholders
approved a motion to amend certain terms regarding the repayment of
amounts owing by the Company and Rockwell RSA to Daboll and Ascot.
These comprise the Promissory Note ($2,764,000); Demand Debentures
($236,000); and the bridging loan that was used to settle the
acquisition consideration (US$15 million and ZAR 16 million), of
which an amount of US$1.8 million has been repaid. The Company also
owes the equivalent of US$1.5 million to Emerald Holdings, a company
in which Mark Bristow, Rockwell’s chairman has a financial interest
(“Emerald Debt”).
The amounts outstanding on the loans from Daboll, Ascot and Emerald
constituted a new loan commencing on October 1, 2015 with the
following terms:
• A term of at least 24 months;
• Interest payable at the US 6-month LIBOR rate plus a margin of
1,000 basis points, payable every six months;
• The Daboll loan and Emerald Debt are to be repaid pro rata
through a sweep mechanism linked to sales revenues (currently 7.5%)
to be confirmed on a monthly basis by Ascot and the Company; and
Shareholders approved the issue of a 24,260,671 three year warrants
to Ascot and 3,024,756 to Emerald Holdings on the basis disclosed in
the Management Information Circular dated August 24,2015 as filed
on SEDAR.
As the shareholder approval for the above was obtained subsequent to the
end of Q2, the effect of these items has not been accounted for in the
Q2 financial statements.
Apart from the above management is not aware of any matter or circumstance
arising since the end of the financial year period, requiring amendment to
the amounts and disclosures in these financial statements.
Segmental information
The Group has three reportable operating segments, as described below, which
are the Group's operating divisions. These divisions offer different diamond
product characteristics, qualities, geological characteristics, processes and
services, and are managed separately because they require different technology
and profit or cost strategies. For each of the divisions the Group executive
committee (chief operating decision making body) reviews internally managed
reports on at least a monthly basis.
The following describes the operations in each of the Group's reportable
segments:
• Northern Cape operation is associated with the mining of Paleo Channels
and Rooikoppie gravels and the recovery of high value and larger carat
size diamonds;
• North West operation is associated with the mining of potholes and
the recovery of lower value and smaller carat size diamonds; and
• Corporate represents the corporate management and administrative function
of the Group. The reconciliation column represents the inter group transactions
eliminated on consolidation. All reportable segments are located in the same
geographical jurisdiction. Information regarding the results of each of the
reportable segments is included below.
For the 6 months ended 31 August 2015
Amounts in Canadian Northern North Corporate Recon-
Dollars (‘000) Cape West ciling Total
Total assets 70 739 - 64 253 (51 770) 83 222
Total liabilities 78 911 - 27 676 (51 770) 54 817
External revenue 29 140 1 065 - - 30 205
Loss for the period 1 751 (15) (4 427) - (2 691)
For the 6 months ended 31 August 2014
Amounts in Canadian Northern North Corporate Recon-
Dollars (‘000) Cape West ciling Total
Total assets 54 646 18 779 71 751 (64 612) 80 564
Total liabilities 71 275 25 688 2 478 (64 612) 34 829
External revenue 24 702 7 317 - - 32 019
Loss for the period (44) (639) (454) - (1 137)
Date: 16/10/2015 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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