Wrap Text
Reviewed Condensed Consolidated Interim Results for the six months ended 30 September 2015
Sentula Mining
(“Sentula” or “the Company” or “the Group”)
Incorporated in the Republic of South Africa
(Registration number 1992/001973/06)
Share code: SNU
ISIN: ZAE000107223
Reviewed condensed consolidated interim results
for the six months ended 30 September 2015
Condensed consolidated statement of financial position
Reviewed Reviewed Audited
at September at September March
R’000 2015 2014 2015
Assets
Total non-current assets 962 528 850 175 801 617
Property, plant and equipment 896 511 798 937 749 942
Restricted investments 285 - -
Intangible assets - 1 346 672
Goodwill 37 427 37 427 37 427
Deferred income tax asset 28 305 12 465 13 576
Total current assets 366 582 494 632 403 328
Inventories 66 190 114 460 70 492
Trade and other receivables 276 268 348 053 312 947
Cash and cash equivalents 24 117 28 163 19 245
Current tax receivable 7 3 956 644
Assets of disposal group classified as held-for-sale 2 946 328 873 219 490
Total assets 1 332 056 1 673 680 1 424 435
Equity and liabilities
Total equity attributable to equity holders of the parent 700 137 950 927 732 012
Share capital and premium 1 994 406 1 994 406 1 994 406
Reserves 111 667 114 397 110 689
Accumulated loss (1 405 936) (1 157 876) (1 373 083)
Non-controlling interest - 1 855 -
Total equity 700 137 952 782 732 012
Liabilities
Total non-current liabilities 163 689 103 628 114 856
Loans and borrowings 1 143 12 907 3 699
Rehabilitation provision 67 981 - -
Finance lease obligations 27 129 5 068 44 356
Deferred income tax liabilities 67 436 85 653 66 801
Total current liabilities 468 230 549 960 509 534
Trade and other payables 218 847 208 501 208 865
Loans and borrowings 94 809 257 822 133 134
Finance lease obligations 20 988 5 967 26 260
Bank overdraft 80 179 35 710 81 214
Current income tax liabilities 53 407 41 960 60 061
Liabilities of disposal group classified as held-for-sale - 67 310 68 033
Total liabilities 631 919 720 898 692 423
TOTAL EQUITY AND LIABILITIES 1 332 056 1 673 680 1 424 435
Net asset value per share (excluding treasury shares) 121 cents 164 cents 126 cents
Tangible net asset value per share (excluding goodwill) -
(excluding treasury shares) 114 cents 157 cents 119 cents
Condensed consolidated income statement
Reviewed
Reviewed for the Audited
for the six months for the year
six months ended ended
ended September March
September 2014 2015
R’000 2015 Re-presented Re-presented
Revenue 649 885 723 622 1 374 753
Loss from operations (12 143) (28 528) (153 880)
Net profit/(loss) on disposal of assets 542 (14 807) (52 099)
Impairment of plant and equipment - (132) (14 795)
Impairment of assets held-for-sale - (11 803) (815)
Operating loss (11 601) (55 270) (221 589)
Finance charges (19 059) (26 647) (52 918)
Fair value adjustment on interest rate cap - (159) (159)
Loss before taxation (30 660) (82 076) (274 666)
Taxation (2 193) 5 374 (16 244)
Loss for the period from continuing operations (32 853) (76 702) (290 910)
Discontinued operations
Loss for the period from discontinued operations (attributable to
the owners of the parent) - (147) (275)
Loss on disposal of discontinued operations - - (3 727)
Total loss for the period (32 853) (76 849) (294 912)
Loss attributable to:
- Owners of the parent (32 853) (77 237) (293 445)
- continuing operations (32 853) (77 090) (289 443)
- discontinued operations - (147) (4 002)
- Non-controlling interest - 388 (1 467)
- continuing operations - 388 (1 467)
- discontinued operations - - -
Basic and diluted loss per share (cents) (5,65) (13,29) (50,51)
- continuing operations (cents) (5,65) (13,27) (49,82)
- discontinued operations (cents) - (0,02) (0,69)
Condensed consolidated cash flow statement
Reviewed Reviewed
for the for the Audited
six months six months for the year
ended ended ended
September September March
R’000 2015 2014 2015
Cash flows from operating activities 75 253 11 918 47 138
Cash generated from operating activities 101 226 50 660 119 808
Income taxes paid (8 720) (14 340) (20 622)
Interest paid (17 253) (24 402) (52 048)
Cash flows from investing activities (19 692) 11 267 (3 534)
Interest received 583 182 769
Purchase of property, plant and equipment (25 792) (22 188) (103 959)
Proceeds from disposal of property, plant and equipment 3 505 20 513 42 021
Capitalised exploration expenditure - - (1 187)
Additions to assets held-for-sale - (7 526) (830)
Proceeds from disposal of assets held-for-sale 2 297 20 286 27 279
Proceeds from disposal of subsidiary - - 23 680
Movement in restricted investments (285) - 8 693
Cash flows from financing activities (51 902) (64 575) (139 033)
Increase in borrowings - 971 77 476
Decrease in borrowings (51 902) (65 546) (216 509)
Net increase/(decrease) in cash and cash equivalents 3 659 (41 390) (95 429)
Cash and cash equivalents at the beginning of the period (60 569) 33 744 33 744
Exchange gain on cash and cash equivalents 848 1 012 1 116
Cash and cash equivalents at the end of the period (56 062) (6 634) (60 569)
Cash and cash equivalents classified as discontinued operations - (7 547) (61 969)
Cash and cash equivalents per statement of financial position (56 062) 913 1 400
Cash and cash equivalents at the end of the period (56 062) (6 634) (60 569)
Condensed consolidated statement of comprehensive income
Reviewed
Reviewed for the Audited
for the six months for the year
six months ended ended
ended September March
September 2014 2015
R’000 2015 Re-presented Re-presented
Loss for the period (32 853) (76 849) (294 912)
Other comprehensive income
Items that may be subsequently reclassified to profit or loss
Foreign currency translation differences for foreign operations 978 3 547 2 339
Other comprehensive income for the period, net of income tax 978 3 547 2 339
Total comprehensive loss for the period (31 875) (73 302) (292 573)
Loss attributable to:
- Owners of the parent (31 875) (73 690) (291 106)
- continuing operations (31 875) (73 543) (287 104)
- discontinued operations - (147) (4 002)
- Non-controlling interest - 388 (1 467)
- continuing operations - 388 (1 467)
- discontinued operations - - -
Reconciliation of headline loss
Reviewed Reviewed re-presented September 2014 Audited re-presented March 2015
September
2015 Continuing Discontinued Continuing Discontinued
R’000 Group operations operations Group operations operations Group
Loss for the period attributable to equity holders
of the parent (32 853) (77 090) (147) (77 237) (289 443) (4 002) (293 445)
Adjusted for:
Profit on disposal of plant and equipment (60) (2 750) - (2 750) (2 762) - (2 762)
Loss on disposal of subsidiary - - - - - 3 727 3 727
Loss on disposal of plant and equipment 383 17 557 - 17 557 54 861 - 54 861
Scrapping of assets - 1 357 - 1 357 1 357 - 1 357
Profit on disposal of held-for-sale assets (865) (213) - (213) - - -
Impairment of property, plant and equipment - 132 - 132 14 795 - 14 795
Impairment of assets held-for-sale - 11 803 - 11 803 815 - 815
Tax effect of above adjustments 16 - - - (19 338) - (19 338)
Headline loss attributed to ordinary shareholders (33 379) (49 204) (147) (49 351) (239 715) (275) (239 990)
Headline and diluted loss per share (cents) (5,75) (8,47) (0,02) (8,49) (41,26) (0,05) (41,31)
Shares and weighted shares in issue at the end of
the period excluding treasury shares (‘000) 581 005 581 005 581 005
Condensed consolidated statement of changes in equity
Foreign
Share-based currency
Share Share payment Treasury translation
R’000 capital premium reserve shares reserve
Restated balance as at 31 March 2014 5 866 2 014 438 36 684 (25 898) 74 166
Loss for the period - - - - -
Other comprehensive income - - - - 3 547
Balance as at 30 September 2014 5 866 2 014 438 36 684 (25 898) 77 713
Loss for the period - - - - -
Other comprehensive income - - - - (1 208)
Transactions with owners, recorded directly in equity
Disposal of subsidiary - - (2 500) - -
Balance as at 31 March 2015 5 866 2 014 438 34 184 (25 898) 76 505
Loss for the period - - - - -
Other comprehensive income - - - - 978
Balance as at 30 September 2015 5 866 2 014 438 34 184 (25 898) 77 483
Condensed consolidated statement of changes in equity
Total
Non- ordinary
Accumulated controlling shareholders’
R’000 loss Total interest funds
Restated balance as at 31 March 2014 (1 080 639) 1 024 617 1 467 1 026 084
Loss for the period (77 237) (77 237) 388 (76 849)
Other comprehensive income - 3 547 - 3 547
Balance as at 30 September 2014 (1 157 876) 950 927 1 855 952 782
Loss for the period (216 208) (216 208) (1 855) (218 063)
Other comprehensive income - (1 208) - (1 208)
Transactions with owners, recorded directly in equity
Disposal of subsidiary 1 001 (1 499) - (1 499)
Balance as at 31 March 2015 (1 373 083) 732 012 - 732 012
Loss for the period (32 853) (32 853) - (32 853)
Other comprehensive income - 978 - 978
Balance as at 30 September 2015 (1 405 936) 700 137 - 700 137
Information about reportable segments
The Group is organised in five operating segments, namely opencast mining services, exploration drilling, overburden drilling and
blasting, mobile crane hire and coal mining. Megacube has been moved to corporate and other services as it is in the process of
being wound down and this led to the restatement in the prior year. Benicon, CCT, Benicon Sales and Caston are included in the
opencast mining services. Benicon Coal, Nkomati, Sentula Coal and Mauritius are included in the coal mining operations, Benicon
Coal and Nkomati have been represented in the prior year as they are no longer classified as held-for-sale. Segment performance
is measured based on the segment profit before interest and income tax. Inter-segment revenue is priced on an arm’s-length basis.
Opencast Overburden Corporate
mining Exploration drilling and Mobile and other
R’000 services drilling blasting Crane hire Coal mining services Total
Reviewed six months ended 30 September 2015
Total segment revenue 376 883 111 538 170 042 37 777 91 951 550 788 741
Inter-segment revenue 66 614 1 289 59 722 579 10 102 550 138 856
External revenue 310 269 110 249 110 320 37 198 81 849 - 649 885
Total segment results pre-impairment (21 810) (3 362) 22 001 11 685 (1 539) (19 118) (12 143)
Net gain on disposal of assets (379) 865 58 - (4) 2 542
Segment results (22 188) (2 497) 22 059 11 685 (1 543) (19 116) (11 601)
Reviewed restated six months ended 30 September 2014
Total segment revenue 453 653 134 794 182 484 49 877 547 10 292 831 647
Inter-segment revenue 44 423 1 329 51 325 656 - 10 292 108 025
External revenue 409 230 133 465 131 159 49 221 547 - 723 622
Continuing operations
Total segment results pre-impairment (37 437) (22 438) 27 466 20 437 678 (17 733) (29 028)
Net loss on disposal of assets (17 193) 1 258 1 493 (365) - - (14 807)
Impairment of assets transferred to held-for-sale (11 803) (132) - - - - (11 935)
Recovery of unaccounted funds - - - - - 500 500
Total segment results from continuing operations (66 433) (21 312) 28 958 20 072 678 (17 233) (55 270)
Total segment results from discontinued operations - - - - (147) - (147)
Segment results (66 433) (21 312) 28 958 20 072 531 (17 233) (55 417)
Notes to the condensed interim financial information
1 Basis of preparation
The condensed consolidated interim financial statements for the six months ended 30 September 2015 have been
prepared under the supervision of Mr JC Lemmer (CA)SA in accordance with International Financial Reporting
Standards IAS 34 - Interim Financial Reporting, the SAICA Financial Reporting Guides, as issued by the
Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards
Council, and the requirements of the Companies Act of South Africa and the Listings Requirements of the JSE
Limited.
The condensed consolidated interim financial statements do not include all the information and disclosures
required in the annual financial statements, and should be read in conjunction with the Group’s annual
financial statements as at 31 March 2015, which have been prepared in accordance with International Financial
Reporting Standards as issued by the International Accounting Standards Board (IASB).
The accounting standards and amendments to issued accounting standards and interpretations, which are relevant
to the Group, but not yet effective on 30 September 2015 have not been early adopted.
2 Accounting policies
The significant accounting policies, judgments, estimates and methods of computation are in terms of IFRS and
are consistent in all material respects with those applied in the annual financial statements for the year
ended 31 March 2015 and are presented in South African rand, which is the functional and presentational currency.
There have been no material changes to the items measured at fair value as disclosed in the financial
statements subsequent to 31 March 2015. The directors consider that the carrying amounts of financial assets
and liabilities recorded at amortised cost approximate their fair values.
3 Review conclusion
These condensed consolidated interim financial statements for the six months to 30 September 2015 have been
reviewed by PricewaterhouseCoopers Inc. who expressed an unmodified review conclusion. A copy of the auditor’s
review conclusion is available for inspection at the company’s registered office together with the interim
financial statements identified in the auditor’s report.
The auditor’s report does not necessarily report on all of the information contained in this announcement/
financial results. Shareholders are therefore advised that in order to obtain a full understanding of the
nature of the auditor’s engagement they should obtain a copy of the auditor’s report together with the
accompanying financial information from the issuer’s registered office.
4 Assets and liabilities classified as held-for-sale
Benicon Coal Proprietary Limited (“Benicon Coal”) and its subsidiary, Nkomati Anthracite Proprietary Limited
(“Nkomati”), can no longer be classified as held-for-sale as the requirements of IFRS 5 are no longer met.
However, the Board remains committed to disposing of this asset.
The prior year numbers on the Income statement, Statement of Comprehensive Income, basic and headline loss
per share have been represented to include Benicon Coal and Nkomati in Continuing operations. In terms of
IFRS 5, the Statement of Financial position for September 2015 includes these operations on a line by line
basis.
The remaining assets classified as held-for-sale mainly relate to equipment that will be disposed of within
the next 12 months.
Transferred
Reviewed (from)/to Audited Reviewed
September held- March September
R’000 2015 Disposal for-sale 2015 2014
Assets held-for-sale
Property, plant and equipment 2 946 (2 598) (184 202) 189 746 232 520
Mineral right - - - - 45 330
Intangible assets - - - - 7 402
Restricted investment - - - - 11 888
Deferred tax asset - - (14 729) 14 729 14 729
Inventories - - (10 384) 10 384 14 149
Trade and other receivables - - (3 231) 3 231 1 942
Cash and cash equivalents - - (1 400) 1 400 913
2 946 (2 598) (213 946) 219 490 328 873
Liabilities held-for-sale
Rehabilitation provision - - (66 899) 66 899 66 899
Trade and other payables - - (1 134) 1 134 411
- - (68 033) 68 033 67 310
5 Contingent liabilities
Keaton
During the 2013 financial year, Megacube Mining Proprietary Limited (“Megacube”) instituted legal
proceedings against Keaton Mining Proprietary Limited (“Keaton”) for the recovery of R41,5 million owing
to Megacube for mining services rendered on its Vanggatfontein operation.
Subsequent to the above action, Keaton instituted a counter claim of R119,9 million against Megacube in
respect of an alleged breach of contract and substandard mining practices. A hearing with the Arbitrator
was held on 4 April 2014 in order to obtain a ruling aimed at splitting the claims. Despite an
acknowledgement that Megacube’s claim is not in dispute, the Arbitrator ruled that the merits of the
claims could not be split and that the outcome would be subject to a ruling on both claims. The legal
arbitration process is scheduled to be heard in the week commencing 29 February 2016 to 11 March 2016.
6 Contingent assets
During the year judgment was granted in favour of the Golden Autumn Trust against Argent Industrial
Limited (“Argent”) for payment of the sum of R 8,8 million with interest on this sum a tempore morea, as
well as costs of the suit. Argent was granted leave to appeal this matter on 8 May 2015. Any funds
recovered through the Golden Autumn Trust, net of costs, are paid over to Megacube.
Argent’s claim against Sentula and Megacube were dismissed with costs.
7 Events after the reporting period
The directors are not aware of any subsequent events that occurred between the reporting period up to the
date of this report, not otherwise dealt within this report.
8 Going concern
The financial statements have been prepared on the going concern basis as the directors have every reason
to believe that the Company has adequate resources in place to continue in operation for the foreseeable
future. The basis presumes that funds will be available to finance future operations and that the
realisation of assets and settlement of liabilities, contingent obligations and commitments will occur in
the ordinary course of business.
FINANCIAL OVERVIEW
- Revenue decreased by 10% to R650 million (2014: R724 million)
- Basic loss per share from operations improved to 5,7 cents (2014: 13,3 cents)
- Headline loss per share improved to 5,8 cents (2014: 8,5 cents)
- Net asset value per share: 121 cents (2014: 164 cents)
- Tangible net asset value per share: 114 cents (2014: 157 cents)
- Debt reduced by R64 million during the period (2014: R64 million)
The Group’s earnings for the six-month period were impacted by the following:
- A lower plant and equipment base combined with a decrease in salary cost resulted in an increase in the gross
profit percentage.
- Overhead costs, which include doubtful debt provisions amounting to R3,5 million and retrenchment costs incurred
amounting to R6,2 million, reduced during the period.
- No impairments or significant losses on disposal of equipment were incurred.
- A reduction in senior debt resulted in a 28% decrease in finance charges.
- Capital expenditure in the Opencast Mining operations was limited to refurbishing existing plant. Repairs and
maintenance cost remained consistent compared to the comparative period.
- Benicon Coal and Nkomati, previously classified as held-for-sale, were reclassified to continued operations due to
International Financial Reporting Standard - (“IFRS 5”). The Board, however, remains committed to the disposal of the
mine.
OPERATIONAL REVIEW
The Group operates mainly in five operating segments broadly defined as Opencast Mining Services, Overburden Drilling
and Blasting, Mobile Crane Hire, Exploration Drilling and Coal Mining.
Opencast Mining services
The bulk earth moving businesses of Benicon Opencast Mining (“Benicon”) and Classic Challenge Trading (“CCT”) have
continued to experience difficult trading conditions. Margins remain under pressure across the opencast mining contracting
sector. Benicon remains fully contracted for the next 30 months. Historically, revenue generated from Opencast Mining
operations were affected through seasonal rainfall patterns especially in the second half of the financial year.
Overburden Drilling and Blasting
JEF Drill and Blast (“JEF”) provides overburden drilling and blasting services to Group companies and external
customers. The loss of certain blasting contracts, combined with a reduction in the coal mining volumes, have affected
performance.
Mobile Crane Hire
Ritchie continued to grow its client base, which should partly offset the decline in work experienced over the past
six months as a result of a key client entering into business rescue proceedings.
Exploration Drilling
The current depressed commodity cycle continues to significantly impact Geosearch’s ability to contract additional
work. Current contracts in South Africa, Botswana and Mozambique utilise less than half of business capacity.
Coal Mining
Following Nkomati securing an offtake agreement with Glencore Alloys, production at the mine was recommenced. Cash
flows generated have been reinvested in order to increase output and the attractiveness of the mine for potential
acquirers. The Board continues to pursue opportunities to dispose of the mine.
STRATEGIC REVIEW
The Group’s strategy in the current challenging macro-economic environment is that of growth and value preservation
through:
- investment in growth opportunities in its Drilling and Blasting and Mobile Crane Hire operations;
- taking advantage from secured work for its bulk earthmoving businesses through continued restructuring and limited
capital expenditure to realise current equipment values;
- rightsizing the exploration business, by limiting capital expenditure and only entering into contracts where targeted
returns are achievable;
- continuing to pursue opportunities to dispose of the Group’s stake in Nkomati whilst re-establishing profitable mining
operations without significant additional investment; and
- increasing the emphasis on overhead reduction across the Group.
SUSTAINABILITY
Safety track record
No serious injuries were recorded during the period under review. Working closely with all its stakeholders, Sentula
strives towards the goal of zero harm.
Transformation
As at September 2015, Sentula’s South African contracting entities remained independently verified “level 4”
contributors, in terms of the dti codes which measures broad-based black economic empowerment (“BBBEE”). The Group
continues to strive for improvements in all components of the BBBEE scorecard.
Environment
During the period under review, the Group companies have continued to meet their objectives and thus maintain their
International Standards Organisation accreditations, with respect to their safety, environmental and training systems.
GROUP CAPITAL STRUCTURE
The Group has commenced discussions with its existing lenders with a view to concluding a debt restructuring agreement.
DIVIDENDS
The Board has decided not to declare a dividend for the period under review.
DIRECTORATE
The following resignations occurred during the period under review to date of this report:
- RC Berry resigned as Chief Executive Officer and executive director on 7 October 2015.
The following appointments occurred during the period under review to date of this report:
- JC Badenhorst was appointed as a non-executive director on 8 May 2015 and appointed as acting Chief Executive Officer
on 7 October 2015.
On behalf of the Board
Ralph Patmore Jacques Badenhorst
Non-executive Chairman Acting Chief Executive Officer
Woodmead
25 November 2015
Directors: RB Patmore* (Chairman), JC Badenhorst (Acting Chief Executive Officer), JC Lemmer (Financial Director),
DR Zihlangu*, SP Naude*, ME Gama*
* Independent, non-executive
Company Secretary: GC Cross
Transfer Secretaries: Computershare Investor Services Proprietary Limited, Ground Floor,
70 Marshall Street, Johannesburg, 2001. PO Box 61051 Marshalltown. Tel (011) 370-5000
Public relations/communications: Jerelene Maharaj, Sentula
Sponsor: Merchantec Capital
Auditor: PricewaterhouseCoopers Inc.
Registered address: Ground Floor, Building 14, Woodlands Office Park, Woodmead, 2080
PO Box 76, Woodmead, 2080 • Tel (011) 656-1303
www.sentula.co.za
Date: 25/11/2015 05:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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