Wrap Text
Reviewed condensed consolidated financial results for the year ended 29 February 2016
Oakbay Resources and Energy Limited
(Incorporated in the Republic of South Africa)
(Registration number 2009/021537/06)
Share code: ORL ISIN: ZAE 000196085
("Oakbay Resources" or "the Group" or “the Company”)
Reviewed condensed consolidated financial results for the year ended
29 February 2016
Condensed consolidated statement of financial position as at
29 February 2016
Reviewed Reviewed Reviewed
year ended year ended year ended
29 February 28 February 28 February
2016 2015 2014
(Restated) (Restated)
R’000 R’000 R’000
Assets
Non-current assets 10 725 731 7 856 326 7 790 085
Property, plant and equipment 2 081 515 1 969 946 1 871 519
Mineral resources and reserves 5 205 629 5 205 629 5 205 629
Intangible asset 2 760 943 – –
Deferred tax assets 594 659 611 873 634 133
Investment property 1 029 – –
Environmental rehabilitation
obligation investments 68 903 57 536 54 598
Environmental rehabilitation
guarantee deposits 2 439 2 439 2 439
Deposits 10 614 8 903 21 767
Current assets 504 149 444 518 183 840
Trade and other receivables 51 278 16 981 10 647
Amounts owing by related parties 44 379 27 962 27 345
Inventories 183 515 208 513 142 754
Cash and cash equivalents 224 977 191 062 3 094
Total assets 11 229 880 8 300 844 7 973 925
Equity and liabilities
Stated capital 466 398 466 398 –
Share capital – – 1
Share premium – – 56 025
Retained earnings 5 308 798 4 502 577 4 556 615
Equity attributable to owners of
the company 5 775 196 4 968 975 4 612 641
Non-controlling interest 1 994 047 756 484 763 647
Total equity 7 769 243 5 725 459 5 376 288
Non-current liabilities 2 973 222 2 144 268 1 591 325
Loans and borrowings 82 349 110 367 –
Environmental rehabilitation
provision 277 159 209 811 133 749
Amount owing to holding company 383 074 366 514 –
Deferred tax liabilities 2 230 640 1 457 576 1 457 576
Current liabilities 487 415 431 117 1 006 312
Trade and other payables 87 679 77 676 108 036
Loans and borrowings 235 147 184 362 404 695
Amount owing to holding company – – 252 416
Amounts owing to related parties 164 589 169 079 241 165
Total liabilities 3 460 637 2 575 385 2 597 637
Total equity and liabilities 11 229 880 8 300 844 7 973 925
NAV per share attributable to
owners of the company (in cents) 721.90 621.12 461 264 100.00
Number of shares in issue 800 000 000 800 000 000 1 000
Condensed consolidated statement of profit or loss and other
comprehensive income
for the year ended 29 February 2016
Reviewed Reviewed
year ended year ended
29 February 28 February
2016 2015
(Restated)
R’000 R’000
Revenue 273 714 165 049
Cost of sales (227 757) (123 161)
Gross profit 45 957 41 888
Other operating income 20 287 32 426
Other operating expenses (67 301) (51 142)
Operating (loss)/profit (1 057) 23 172
Finance income 49 392 6 572
Finance costs (46 836) (68 684)
Net finance income/(costs) 2 556 (62 112)
Profit/(loss) before tax 1 499 (38 940)
Income tax (18 412) (22 261)
Loss for the year (16 913) (61 201)
Other comprehensive income – –
Total comprehensive loss for the year (16 913) (61 201)
Attributable to:
Equity holders of the company (5 092) (54 038)
Non-controlling interest (11 821) (7 163)
Total comprehensive loss for the year (16 913) (61 201)
Basic loss per share (in cents) (0.64) (27.02)
Diluted basic loss per share (in cents) (0.64) (27.02)
Headline loss per share (in cents) (0.68) (41.42)
Diluted headline loss per share (in cents) (0.68) (41.42)
Reconciliation between basic loss and
headline loss for the year ended
29 February 2016
Total comprehensive loss for the year (16 913) (61 201)
Loss attributable to owners of the company
Loss attributable to non-controlling interest (5 092) (54 038)
(11 821) (7 163)
Adjustments:
After tax (profit)/loss on disposal of plant
and equipment (484) 173
After tax reversal of impairment on property – (39 108)
Total headline loss for the year (17 397) (100 136)
Headline loss attributable to owners of
the company (5 450) (82 850)
Portion attributable to non-controlling
interest (11 947) (17 286)
Weighted average number of shares in issue 800 000 000 200 000 750
Diluted portion of shares - -
Weighted average number of shares for
purposes of dilution 800 000 000 200 000 750
Condensed consolidated statement of cash flows
for the year ended 29 February 2016
Reviewed Reviewed
year ended year ended to
29 February 28 February
2016 2015
R’000 R’000
Cash flows from operating activities 55 790 (7 397)
Cash generated/(utilised) by operations 49 725 (13 657)
Interest paid (14 398) (312)
Interest received 20 463 6 572
Cash flows from investing activities (72 246) (89 725)
Acquisitions resulting in expansion to
property, plant and equipment (73 281) (89 725)
Proceeds from disposal of property, plant
and equipment 2 064 –
Acquisition of investment property (1 029) –
Cash flows from financing activities 50 371 285 090
Proceeds on issue of ordinary share capital – 185 350
Proceeds from borrowings 46 907 144 960
Repayment of borrowings (37 500) (80 000)
Payment of finance lease liabilities (1 686) (3 789)
Decrease in amounts owing to related parties (4 761) (74 912)
Decrease/(increase) in amounts owing by 1 922 (617)
related parties
Increase in amount owing to holding company 45 489 114 098
Net decrease in cash and cash equivalents 33 915 187 968
Cash and cash equivalents at the beginning
of the year 191 062 3 094
Cash and cash equivalents at the end of
the year 224 977 191 062
Condensed statement of changes of equity
for the year ended 29 February 2016
Share Share
capital premium
R’000 R’000
Balance at 1 March 2013, as previously reported 1 56 025
Impact of prior period adjustment – –
Restated balance at 1 March 2013 1 56 025
Total comprehensive loss for the period
(restated)#
Balance at 28 February 2014 (Restated) 1 56 025
Conversion of shares to no par value (1) (56 025)
Issued ordinary shares – –
Total comprehensive loss for the period
(restated)# – –
Balance at 28 February 2015 (Restated) – –
Total comprehensive income for the period# – –
Increase in non-controlling interest due to issue
of shares in subsidiary – –
Transfer of equity – –
Balance at 29 February 2016 – –
Condensed statement of changes of equity
for the year ended 29 February 2016
Total
shareholder’s
equity
attributable
Stated Retained to the
capital earnings owners
R’000 R’000 R’000
Balance at 1 March 2013, as
previously reported – 4 279 693 4 335 719
Impact of prior period adjustment 435 228 435 228
Restated balance at 1 March 2013 – 4 714 921 4 770 947
Total comprehensive loss for the
period (restated)# – (158 306) (158 306)
Balance at 28 February 2014
(Restated) – 4 556 615 4 612 641
Conversion of shares to no par value 56 026 – –
Issued ordinary shares 410 372 – 410 372
Total comprehensive loss for the
period (restated)# – (54 038) (54 038)
Balance at 28 February 2015
(Restated) 466 398 4 502 577 4 968 975
Total comprehensive income for the
period# – (5 092) (5 092)
Increase in non-controlling interest
due to issue of shares in subsidiary – – –
Transfer of equity – 811 313 811 313
Balance at 29 February 2016 466 398 5 308 798 5 775 196
Condensed statement of changes of equity
for the year ended 29 February 2016
Non-
controlling
interest Total
R’000 R’000
Balance at 1 March 2013, as previously reported 642 461 4 978 180
Impact of prior period adjustment 152 919 588 147
Restated balance at 1 March 2013 795 380 5 566 327
Total comprehensive loss for the period
(restated)# (31 733) (190 039)
Balance at 28 February 2014 (Restated) 763 647 5 376 288
Conversion of shares to no par value – –
Issued ordinary shares – 410 372
Total comprehensive loss for the period
(restated)# (7 163) (61 201)
Balance at 28 February 2015 (Restated) 756 484 5 725 459
Total comprehensive income for the period# (11 821) (16 913)
Increase in non-controlling interest due to issue
of shares in subsidiary 2 060 697 2 060 697
Transfer of equity (811 313) –
Balance at 29 February 2016 1 994 047 7 769 243
#The total comprehensive income for the period is equal to the profit for
the year as no element of other comprehensive income exists.
Commentary
The directors are pleased to present the reviewed annual results for the
financial year ended 29 February 2016 (“the year”). Oakbay Resources reported
a 66% increase in turnover and a 104% improvement in profit before tax, primarily
due to the positive earnings effect of coal contract mining activities undertaken
during the year under review. Gold production for the year remained constant with
378kg of gold produced in the prior period, compared to 377kg gold produced
in the current period. The group supplemented its income during the year
under review by undertaking coal contract mining activities and successfully
mined approximately 1.1 mt of coal for the year ended 29 February 2016.
As a critical part of its strategy to position itself as a diversified miner
and supplier of energy related natural resources, the group completed its
acquisition of the Brakfontein coal project during the year under review.
As the transaction was completed in close proximity to the end of the
financial year, the earnings effect of this acquisition will only be
realised for the first time during the 2016/2017 financial year.
Basis of preparation
These condensed consolidated financial results for the period ended
29 February 2016 have been prepared in accordance with the framework
concepts and the measurement and recognition requirements of International
Financial Reporting Standards (“IFRS”), the SAICA Financial Reporting Guides
as issued by the Accounting Practices Committee and the Financial Reporting
Pronouncements as issued by the Financial Reporting Standards Council and
the information as required by IAS 34: Interim Financial Reporting, the
Listings Requirements of the JSE Limited, and the Companies Act of South
Africa (Act 71 of 2008), as amended.
The reviewed condensed consolidated financial statements do not include
all the disclosure required for a complete set of annual financial
statements prepared in accordance with IFRS as issued by the
International Accounting Standards Board.
The reviewed condensed consolidated financial statements appearing in this
announcement are the responsibility of the directors of the Group and the
board takes full responsibility for the preparation of these financial
statements.
The reviewed condensed consolidated financial statements for the year ended
29 February 2016 were prepared under the supervision of Mr. T. W. Scott
CA (SA) in his capacity as Financial Director. The reviewed condensed
consolidated financial statements comprise the condensed consolidated
statement of financial position at 29 February 2016 and the condensed
statements of profit or loss and other comprehensive income, changes in
equity and cash flows for the year then ended.
The reviewed condensed consolidated financial statements of the Group
are prepared as a going concern on a historical cost basis except for
certain financial instruments, which are stated at fair value as
applicable.
The principal accounting policies, which comply with IFRS, applied during
the preparation of the condensed financial statements are consistent in
all material aspects to the accounting policies adopted and applied in
the consolidated annual financial statements for the prior reporting
period ended 28 February 2015. All new interpretations and standards
were assessed and adopted with no material impact.
Unqualified review opinion
These provisional condensed consolidated financial statements have been
reviewed by SizweNtsalubaGobodo Inc. in terms of International Standards
on Review Engagements. A copy of this unmodified review report is
available for inspection at the Company’s registered office.
The review report does not necessarily report on all the information
contained in this announcement, specifically commentary that appears in
paragraphs of these provisional condensed consolidated financial statements
concerning the nature of the business, safety, financial performance and
position, operational review and prospects as well as production data
which has merely been read in order to identify significant inconsistencies
between this commentary and the condensed consolidated financial statements.
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 review report together with the accompanying
financial information from the Company’s registered office – available
during normal business hours.
Any reference to future financial performance included in this announcement
has not been reviewed or reported on by the Company’s auditor.
SizweNtsalubaGobodo Inc. were appointed as auditors, as announced on
21 April 2016 by the Company, and have reviewed but not audited the
comparative information presented for the financial years ending
28 February 2015 (restated) and 28 February 2014 (restated). The restated
comparative information was not audited by the Company’s previous auditors.
Nature of the business
Oakbay Resources’ business activity is the mining and exploration of
mineral resources, particularly uranium, gold and coal deposits, and
the beneficiation thereof. The group owns one of the most significant
uranium projects in Africa, Shiva Uranium, which boasts one of the largest
high quality uranium ore bodies in the world, as well as a world class
uranium processing plant that has been recently commissioned. At the
Shiva Uranium mine, located near Klerksdorp in the North-West Province
of South Africa, the group mines and produces gold while it focuses on
the development of its uranium project. Oakbay Resources also mines and
supplies thermal coal from its Brakfontein project, located near Delmas
in the Mpumalanga Province of South Africa.
Safety
During the year, the company maintained its excellent safety record with
zero fatalities or serious injuries being experienced during the period.
Safety remains the topmost priority and is embedded in every aspect of
the operating culture of the group. At 29 February 2016, Oakbay Resources
had achieved a total of 6 039 fatality free shifts, and had a total of
31 injuries at the mine compared to 37 injuries in the previous period.
The group’s safety performance is the result of ongoing efforts by mine
employees, unions and management toward maintaining safe working
conditions and practices.
Operational review
Key indicators
% increase/
2016 2015 (decrease)
Ore milled (tonnes) 657 606 791 540 (17%)
Gold sold (kg) 377.08 378.82 (0.31%)
Coal mined (tonnes) 1 100 000 0 100%
Gold operations
Gold production for the year under review remained substantially the same
year-on-year, albeit off a lower volume of milled ore. Gold production for
the year was constrained due to the lower plant and equipment availability
that was experienced, in conjunction with difficult low-grade mining
conditions. Management focused their efforts on improving production
efficiencies through plant and equipment availability in the open-cast
mining section, as well as the gold plant while aggressively controlling
costs.
The second half of the year saw the company experiencing significant
higher ZAR gold prices; which had a positive effect on gold revenue
compared to the prior year. The company also focused on identifying
alternative sources of higher grade gold bearing ore in order
to supplement existing gold operations at the Shiva Uranium mine.
Further exploration activities on areas of geological interest are
also currently underway.
Uranium operations and further exploration
With over 200 million pounds of high grade uranium ore*, as well as
existing processing capabilities, the Group’s Shiva Uranium project
represents a significant opportunity to take advantage of the expected
upswing in uranium demand in the medium term. The ongoing development
of the Shiva Uranium project remains a priority for management and the
board of directors as part of our strategy to unlock the significant
value in the sizeable uranium ore body.
The Company is well advanced with a detailed options analysis study
regarding the optimisation of the uranium mining and production project,
and is a pre-cursor to the completion of the updated bankable feasibility
study. The Company intends to continue advancing with both the updated
bankable feasibility study, as well as initiate its fundraising programme
with a view to accessing additional capital or debt in the near future.
While uranium prices have remained frustratingly low in US Dollar terms
over recent months, growth in the international nuclear industry remains
positive and is expected to result in a significant supply deficit in the
near to medium term. Given the size of the uranium ore body, together with
the associated gold content and existing plant and underground mine
infrastructure, Shiva Uranium remains well placed to take advantage
of forecasted market conditions, especially at the prevailing
exchange rate.
*As per the Group's Samrec compliant mineral resource statement published
in the 2015 Integrated Annual Report (available on the Company's website
www.oakbay.co.za). The aforementioned resource statement was signed off by
a Competent Person, the details of which appear in the 2015 Integrated
Annual Report.
Coal operations
From March 2015, the company commenced with coal contract mining operations
as part of its strategy to diversify its revenue streams while the
development of the Shiva Uranium project and other initiatives are
underway. During the year under review, the company successfully mined
approximately 1.1mt of coal at the Brakfontein Colliery which had a
positive effect on revenue and financial performance for the period.
In November 2015, the company announced its intention to acquire the
Brakfontein project as a step forward in achieving the group’s ambition of
positioning itself as a significant miner and supplier of energy related
natural resources. The acquisition of the Brakfontein project was completed
in late February 2016. Accordingly, the group is now mining the Brakfontein
asset for its own benefit, rather than in the capacity of a contract miner.
In addition to the Brakfontein activities, the group continues to search for
further open cast contract mining opportunities in the coal sector, as well
as the potential acquisition of well-priced, high quality coal assets.
Financial performance and position
The company’s overall financial performance for the year improved compared to
the prior year, with the company incurring a loss for the year of R16.9 million
compared with a loss of R61.2 million in the prior year. The primary reasons
for the year-on-year change in financial performance were the result of the
unwinding of deferred tax assets relating to the utilisation of accumulated
tax credits and available assessed losses, together with the effect of
relatively attractive margins realised from contract mining activities
and a higher ZAR gold price. The current year loss also included the
effect of the write-down of unrecoverable metals in process inventory and the
impairment of receivables. The company had a strong financial position at
29 February 2016 with total assets of R11.2 billion compared to total
liabilities of R3.5 billion.
Segmental analysis
Information about reportable segments
Gold
Year ended Year ended
R’ 000s 29-Feb-16 28-Feb-15
Revenue from external customers 185 012 165 049
Inter-segment revenue – –
185 012 165 049
Operating profit/(loss) before depreciation 758 52 267
Depreciation (19 069) (24 136)
Finance income – –
Finance cost – –
Profit/(loss) for the period before tax (18 311) 28 131
Segmental assets and liabilities
Gold
Year ended Year ended
R’ 000s 29-Feb-16 28-Feb-15
Segment assets 545 273 592 305
Segment liabilities 277 159 182 556
Contract Mining
Year ended Year ended
R’ 000s 29-Feb-16 28-Feb-15
Revenue from external customers 88 702 –
Inter-segment revenue – –
88 702 –
Operating profit/(loss) before depreciation 78 029 –
Depreciation – –
Finance income – –
Finance cost – –
Profit/(loss) for the period before tax 78 029 –
Segmental assets and liabilities
Coal/Contract Mining
Year ended Year ended
R’ 000s 29-Feb-16 28-Feb-15
Segment assets 2 782 521 –
Segment liabilities 773 064 –
Uranium Development
Year ended Year ended
R’ 000s 29-Feb-16 28-Feb-15
Revenue from external customers – –
Inter-segment revenue – –
Operating profit/(loss) before depreciation (4 382) (16 678)
Depreciation (1 739) (1 791)
Finance income – –
Finance cost – –
Profit/(loss) for the period before tax (6 121) (18 469)
Segmental assets and liabilities
Uranium Development
Year ended Year ended
29-Feb-16 28-Feb-15
R’ 000s (Restated)
Segment assets 6 635 166 6 769 123
Segment liabilities 1 457 576 1 457 576
Central Services
Year ended Year ended
R’ 000s 29-Feb-16 28-Feb-15
Revenue from external customers – –
Inter-segment revenue – –
– –
Operating profit/(loss) before depreciation (46 194) 16 398
Depreciation (8 460) (2 888)
Finance income 49 392 6 572
Finance cost (46 836) (68 684)
Profit/(loss) for the period before tax (52 098) (48 602)
Segmental assets and liabilities
Central Services
Year ended Year ended
29-Feb-16 28-Feb-15
R’ 000s (Restated)
Segment assets 1 266 919 939 416
Segment liabilities 952 838 935 253
Total
Year ended Year ended
R’ 000s 29-Feb-16 28-Feb-15
Revenue from external customers 273 714 165 049
Inter-segment revenue – –
273 714 165 049
Operating profit/(loss) before depreciation 28 211 51 987
Depreciation (29 268) (28 815)
Finance income 49 392 6 572
Finance cost (46 836) (68 684)
Profit/(loss) for the period before tax 1 499 38 940
Segmental assets and liabilities
Total
Year ended Year ended
29-Feb-16 28-Feb-15
R’ 000s (Restated)
Segment assets 11 229 880 8 300 844
Segment liabilities 3 460 637 2 575 385
Loans and borrowings
Industrial Development Corporation ("IDC") borrowings
Reviewed
Reviewed year
year ended ended
29 February 28-Feb
2016 2015
R’000 R’000
Balance at the beginning of the period - 1 March 146 186 450 676
Loan repayments for the period (37 500) (80 000)
Conversion of debt to equity – (225 022)
Application of effective-interest-rate-method to
apply amortised cost in terms of IAS39 due to
changes in timing of cash flows (3 235) 5 386
Application of effective–interest-rate-method to
apply amortised cost in terms of IAS39 due to
conversion of debt to equity – (60 265)
Interest accrued 18 281 55 411
Balance at the end of the period 123 732 146 186
The IDC loan is secured against the moveable and immovable property of
Shiva Uranium Proprietary Limited. The loan bears interest at a rate of
prime plus 2%, compounded daily. The loan has the following repayment
terms at 29 February 2016:
30 June 2016 – R37.5 million
31 March 2017 – R37.5 million
31 March 2018 – R37.5 million plus capitalised interest from
28 November 2014.
Bank of Baroda (“BoB”) facility
Reviewed
Reviewed year
year ended ended
29 February 28-Feb
2016 2015
R’000 R’000
Balance at the beginning of the period - 1 March 146 858 –
Draw down on loan facility 46 906 144 960
Unpaid interest – 1 898
Balance at the end of the period 193 764 146 858
Borrowings on the BoB facility are secured
against, and to the extent of, cash fixed deposits
invested by Oakbay Resources and Energy Limited
and held at the BoB. The loans have no fixed
terms of repayment and bear interest at
variable rates linked to investment rates on
fixed deposits. The facility was settled in full
subsequent to financial year end using cash fixed
deposits on hand at the BoB.
Other loans and borrowings – 1 658
Analysis of current and non-current portions of
loans and borrowings
Non-current portion of interest bearing loans and
borrowings 82 349 110 367
Current portion of interest bearing loans and
borrowings 235 147 184 362
Total loans and borrowings 317 496 294 729
Environmental rehabilitation provision
Reviewed
Reviewed year
year ended ended
29 February 28-Feb
2016 2015
R’000 R’000
Balance at the beginning of the period 209 811 133 749
Unwinding of interest 12 861 11 141
Capitalised to property, plant and equipment 43 604 40 644
Change in estimate in environmental rehabilitation
provision recognised in profit or loss 4 030 24 277
Acquired through business combination 6 853 –
Balance at the end of the period 277 159 209 811
During the current reporting period, requirements of the recently promulgated
financial provision regulations (GNR 1147, November 2015) published under the
National Environmental Management Act, Act 107 of 1998 (NEMA), became effective.
This, as well as ongoing mining activities, resulted in a change of estimate in
the current environmental rehabilitation provision; which was accounted for in
profit or loss and, where applicable, capitalised to property, plant and
equipment as an asset for future decommissioning costs in terms of IFRIC 1:
Changes in Existing Decommissioning, Restoration and Similar Liabilities and
IAS 37: Provisions, Contingent Liabilities and Contingent Assets.
Prior period error relating to the recognition of deferred tax assets
The Group has previously not recognised deferred tax assets relating to
unutilised tax losses and tax credits in Shiva Uranium Proprietary Limited,
which were predominantly acquired when the original acquisition of that
entity took place, and was accounted for as a business combination in
terms of IFRS 3 Business Combinations, during the financial year ended
28 February 2011. This previous accounting treatment for deferred tax assets
was adopted by the Group, based on advice received at that time, which
resulted in the view being held that the Group was not permitted in terms
of IFRS to account for unrecognised deferred tax assets acquired as part
of the business combination, as well as the deferred tax effect resulting
from the subsequent utilisation of tax losses and tax credits carried
forward in the years following the acquisition. The Group, based on
new advice, have taken the revised view that, in terms of IFRS 3
Business Combinations and IAS 12: Income Taxes, the previous accounting
treatment was incorrect and as a result, the Group has accordingly restated
its comparative information to correctly reflect the recognition of the
specific deferred tax asset and related movements, for the comparative
periods in the profit or loss for the Group.
The total value of unrecognised deferred tax assets at the time of the
business combination that should have been recognised amounted to
R1.045 billion. Deferred tax liabilities recognised at the time of the
business combination amounted to R1.47 billion.
The table below reflects the impact of the prior period error for deferred
tax on the Group’s condensed consolidated financial statements:
As
previously
reported Adjustments As restated
Effect on opening equity at
1 March 2013 R’000 R’000 R’000
Condensed consolidated statement
of financial position
Stated Capital as at 1 March 2013 56 026 – 56 026
Opening retained income as at
1 March 2013 4 279 693 435 228 4 714 921
Opening non-controlling interests as
at 1 March 2013 642 461 152 919 795 380
Total equity as at 1 March 2013 4 978 180 588 147 5 566 327
Reporting period ended
28 February 2014
Condensed consolidated statement of
financial position
Deferred tax assets – 634 133 634 133
Total assets – 634 133 634 133
Stated Capital 56 026 – 56 026
Retained income 4 087 357 469 258 4 556 615
Non-controlling interests 598 772 164 875 763 647
Total equity 4 742 155 634 133 5 376 288
Deferred tax liabilities 1 457 576 – 1 457 576
Total liabilities 1 457 576 – 1 457 576
NAV per share attributable to the
owners of the company (in cents) 414 338 300 46 925 800 461 264 100
Condensed consolidated statement of
profit or loss and other
comprehensive income
Income tax income – (45 986) (45 986)
Profit and total comprehensive
income – (45 986) (45 986)
Losses attributable to non-
controlling interests 43 689 (11 956) 31 733
Total losses attributable to non-
controlling interests 43 689 (11 956) (31 733)
Loss per share (in cents) (19 233 600) 3 402 964 (15 830 636)
Diluted loss per share (in cents) (19 233 600) 3 402 964 (15 830 636)
Headline loss per share (in cents) (19 233 600) 3 402 964 (15 830 636)
Diluted headline loss per share
(in cents) (19 233 600) 3 402 964 (15 830 636)
Reporting period ended
28 February 2015
Condensed consolidated statement
of financial position
Deferred tax assets – 611 873 611 873
Total assets – 611 873 611 873
Stated Capital 466 398 – 466 398
Retained income 4 049 792 452 785 4 502 577
Non-controlling interests 597 397 159 088 756 485
Total equity 5 113 586 611 873 5 725 459
Deferred tax liabilities 1 457 576 – 1 457 576
Total liabilities 1 457 576 – 1 457 576
NAV per share attributable to the
owners of the company (in cents) 564.52 56.60 621.12
Condensed consolidated statement of
profit or loss and other
comprehensive income
Income tax expense – 22 261 22 261
Profit and total comprehensive
income – 22 261 22 261
Losses attributable to non-
controlling interests 1 375 5 788 7 163
Total losses attributable to non-
controlling interests 1 375 5 788 7 163
Loss per share (in cents) (18.78) (8.24) (27.02)
Diluted loss per share (in cents) (18.78) (8.24) (27.02)
Headline loss per share (in cents) # (18.78) (22.64) (41.42)
Diluted headline loss per share (in
cents) # (18.78) (22.64) (41.42)
# The restatement impact on the Headline and Diluted headline loss per share
emanating from the restatement detailed in this note is 8.24 cents as is the
case with the Loss and Diluted loss per share. The remaining 14.40 cents
emanates from the incorrect treatment of two transactions for purposes of
Headline Earnings as per the rules depicted in Circular 02/2015. The
amendments are reflected in the reconciliation between basic loss and
headline loss for the year ended 28 February 2015 above, and relate to the
loss on disposal of plant and equipment (R0.173 million) and the reversal
of impairment on land (R39.108 million).
Deferred taxation
Reviewed
Reviewed year
Year ended ended
29 February 28-Feb
2016 2015
R’000 R’000
(Restated)
Deferred tax assets:
Balance at the beginning of the period 611 873 634 133
Acquired through business combination 1 198 –
Decrease in deductible temporary differences (18 412) (22 261)
Balance at the end of the period 594 659 611 873
Deferred tax assets at the end of the period
are comprised of:
Deductible temporary differences on uranium and
gold operations 593 461 611 873
Deductible temporary differences on coal operations 1 198 –
Balance at the end of the period 594 659 611 873
Reviewed
Reviewed year
Year ended ended
29 February 28-Feb
2016 2015
R’000 R’000
(Restated)
Deferred tax liabilities:
Balance at the beginning of the period 1 457 576 1 457 576
Acquired through business combination 773 064 –
Balance at the end of the period 2 230 640 1 457 576
Deferred tax liabilities at the end of the period
are comprised of:
Taxable temporary differences on mineral resource
assets – uranium and gold 1 457 576 1 457 576
Taxable temporary differences on mineral resource
assets – coal 773 064 –
Balance at the end of the period 2 230 640 1 457 576
Deferred tax has been measure at the rates that are expected to apply when
the company realises the carrying amount of its assets, or settles the
carrying amount of its liabilities.
A deferred tax asset is recognised for deductible temporary differences,
unused tax losses and unused tax credits to the extent that it is probable
that taxable profit will be available against which the deductible temporary
differences can be utilised and to the extent that sufficient taxable
temporary differences exist against which deductible temporary differences
can be utilised before they expire.
The deferred tax assets and deferred tax liabilities attributable to the
uranium and gold mining operations of Shiva Uranium, has been offset in
the statement of financial position as the entity has the legal right to
settle current tax amounts on a net basis and the deferred tax amounts
are levied by the same taxing authority on the same entity.
Related parties
Reviewed
Reviewed year
Year ended ended
29 February 28-Feb
2016 2015
R’000 R’000
(Restated)
Amounts owing by related parties
Tegeta Exploration and Resources Proprietary 38 335 –
Limited
Surya Crushers Proprietary Limited 5 522 3 368
Other 522 24 594
Balance at the end of the period 44 379 27 962
Amounts owing to related parties
Westdawn Investments Proprietary Limited 45 632 25 752
Unlimited Investments Proprietary Limited 4 511 4 514
JIC Engineering Services – 28 883
Action Investments 114 446 109 930
Balance at the end of the period 164 589 169 079
All loans owing by and to related parties are
denominated in ZAR and are unsecured, interest
free and there are no specified fixed terms of
repayment.
The loan granted by Action Investments was
denominated in US Dollars until 1 March 2015;
whereupon it was redenominated to ZAR. Interest
is accrued at LIBOR plus 3%. The foreign currency
denominated balance of the loan at 28 February
2015 was USD 9 582 879. Both the principle and
interest accrued on the loan shall become due
and payable upon written demand from the lender.
Amounts owing to holding company:
Oakbay Investments Proprietary Limited 383 074 366 514
Balance at the end of the period 383 074 366 514
The repayment terms are 367 days’ notice on demand
from the holding company. The loan is interest
free and unsecured.
Transactions with related parties
Services rendered to related parties:
Tegeta Exploration and Resources Proprietary
Limited – coal contract mining services 146 261 14 859
Services received from related parties:
Westdawn Investments Proprietary Limited -
underground mining development services 33 874 34 402
Outstanding related party balances do not attract interest, neither are
settlement policies strictly adhered to in terms of monthly transactional
accounts owed to or by related parties. This excludes the loan accounts
which terms and conditions are set out above.
Acquisition of a business by a subsidiary company from a related party
On 29 February 2016, the acquisition of the business of Tegeta Exploration
and Resources Proprietary Limited (“TER”) as a going concern (as announced
on SENS on 11 December 2015) by the Group became unconditional. The
transaction has been accounted for in terms of IFRS 3: Business
Combinations. At the time of the acquisition, the business of TER
solely consisted of the Brakfontein coal project. The associated assets
and liabilities of TER were acquired by the Group and settled through
an issue of 100 million shares in Shiva Uranium Proprietary Limited;
which is a subsidiary of Oakbay Resources. The Brakfontein coal
project is an existing miner and supplier of thermal coal and the
acquisition will result in the Group moving toward its strategy of
becoming a diversified miner and supplier of energy related
natural resources.
The fair value of the purchase consideration in terms of the shares
issued amounted to R2.06 billion. Acquisition costs of approximately
R6.1 million were incurred and were classified under the “operating
costs” category, in profit or loss for the year ended 29 February 2016.
As part of the acquisition, the Group acquired receivables with a fair
value of R39.66 million which are equal to their underlying gross
contractual amounts. At the reporting date, the Group did not expect
any of the contractual cash flows related to the acquired trade and
other receivables to be unrecoverable.
No contingent liabilities were assumed as part of the business
combination and the transaction did not result in the recognition
of goodwill or a gain on bargain purchase. Supply agreements were
acquired as part of the transaction which have been recognised as
“intangible assets” as indicated.
The following table summarises the recognised amounts for the assets
acquired and liabilities assumed at the date of acquisition:
R’000
Fair
values R’000
recognised Previous
on carrying
acquisition amounts
Plant and equipment 21 578 21 578
Mineral resources* 2 760 943 -
Deferred tax assets 1 198 1 198
Trade receivables 38 489 38 489
Inventory 2 288 2 288
Cash and equivalents# 14 931 14 931
Deposits 1 169 1 169
Environmental rehabilitation obligation
funds 7 415 7 415
Deferred tax liabilities* (773 064)
Trade and other payables (7 068) (7 068)
Environmental rehabilitation obligation (7 182) (7 182)
Net asset value 2 060 697 72 818
Consideration for business combination –
share issue 2 060 697
* The mineral resources are represented by the supply agreements classified
and recognised as an intangible asset due to the fact that the supply
agreements represent the supply of the majority of the mineral resources
over the estimated term of mining. The associated deferred taxation
liability was raised in terms of the business combination at an applicable
tax rate of 28% as there is currently no intention of selling the asset
acquired but rather the utilisation of the mineral resources by means
of the supply agreements.
# The cash balances acquired during the transaction were lent to TER on
the date of acquisition at the terms and conditions as set out above under
“related parties” and has been included under “amounts owing by related parties”.
Financial instruments information
The group has not disclosed the fair values of financial instruments measured
at amortised cost as their carrying amounts closely approximate their
fair values. There were no financial instruments measured at fair value
that were individually material at the end of the reporting period.
Write-down of inventories
During the reporting period, the Group wrote off metals-in-process inventory
with a cost of R25.94 million due to the assessment of the net realisable
value being R nil in terms of IAS 2: Inventories. The basis for this assessment
of net realisable value is due to the uncertainty surrounding the timing and
recoverability of metals-in-process inventories. The adjustment is recognised
in profit or loss for the reporting period and classified under “cost of sales”.
Trade receivables
Changes in recoverability assessment – City of Matlosana receivable
In terms of IAS39: Financial Instruments: Recognition and Measurement,
management identified evidence that the carrying amount of a receivable
from the City of Matlosana is higher than its estimated recoverable amount,
and accordingly, should be impaired at the end of the reporting period ended
29 February 2016. The total consideration receivable is R17.76 million. The
total assessment of future cash flows relating to the receivable is considered
to be R9.43 million at the end of the reporting period; which resulted in an
impairment charge of R8.45 million which is recognised in profit or loss for
the period for the reporting period and classified under “operating expenses”
by means of an allowance for impairments recognised in the statement of
financial position.
Capital commitments
The Group does not have any capital commitments for which specific board
approval has been obtained as at 29 February 2016.
Prospects
The Group experienced significantly difficult conditions in recent months as
a result of adverse and intense media interest surrounding the Company’s
majority shareholder. These adverse conditions have resulted in the Company
experiencing a loss of professional service providers, most notably the
Group’s external auditors, sponsors and bankers. In response, management
has focused its efforts in recent weeks on appointing new external auditors,
issuing reviewed year end results, stabilising the Company’s transactional
banking capabilities and searching for a new JSE approved sponsor. While
prevailing conditions remain challenging, management is continuing with
every effort to navigate the company through this difficult period;
while remaining focused on unlocking the value in the Shiva Uranium project.
The medium to long term fundamentals for uranium prices, together with
current prevailing ZAR gold prices, positions Shiva Uranium as a promising
uranium investment opportunity. Additionally, Oakbay Resources’ recent
expansion into coal mining and supply operations, as well as its ongoing
search for acquisition opportunities at attractive valuations, positions
the Group, and their broad range of stakeholders, well for the future.
Events after the reporting period
Subsequent to the end of the financial year on 29 February 2016, the
Group settled its facility with the BoB in full.
Furthermore, the Group’s external auditors (KPMG Inc.) resigned as
auditors of the Group in March 2016 and were replaced by SizweNtsalubaGobodo
Inc. in April 2016. The Group’s sponsors, Sasfin Bank Limited, terminated
their sponsor mandate in March 2016, and the Group’s local banker terminated
their banking services to Shiva Uranium on 6 June 2016.
Other than mentioned in this report and most notably under “Changes to
the board”, there were no other material subsequent events that require
disclosure.
Changes to the board
Both the company’s chairman, Mr. A. Gupta, and its CEO, Mr. V. Gupta
resigned on 8 April 2016. Mr. V. Gupta was replaced by Mr. J. Roux on
17 May 2016 as the incoming CEO. Mr. T.W. Rensen, formerly the acting
chairman of the board, has been appointed as independent non-executive
chairman in a permanent role on 9 June 2016. Mr. N. Howa joins the board
as a non-executive director on 9 June 2016.
Dividends
In line with group strategy, no dividend has been declared for the year.
For and on behalf of the board of directors
J Roux
CEO
10 June 2016
Directors: TW Rensen*~ (Chairman), J Roux (CEO), TW Scott (FD), MV Pamensky*,
DJ Nyamane*, N Howa#
*independent non-executive
~Irish
#non-executive
Registered Office:
Grayston Ridge Office Park, Block A, Lower Ground Floor,
144 Katherine Street, Sandown, Sandton, South Africa
Postal address
Postnet Suite 458
Private Bag X9
Benmore, 2010
Company secretary: iThemba Governance and Statutory Solutions (Pty) Limited,
Monument Office Park, Suite 5 – 102, 79 Steenbok Avenue, Monumentpark, 0181,
(PO Box 25160, Monumentpark, 0181)
Transfer Secretaries: Trifecta Capital Services Proprietary Limited,
Business Partners Tower Hive, 5th Floor, 3 Caxton Road, Industria, 2093,
(PO Box 61272, Marshalltown, 2107)
www.oakbay.co.za
Date: 10/06/2016 05:20:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.