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Unaudited Interim Consolidated Financial Statements For The Period Ended 31 May 2016
Rockwell Diamonds Inc.
(A company incorporated in accordance with the laws of British
Columbia, Canada) (Incorporation number BCO354545)
(South African registration number: 2007/031582/10)
Share code on the JSE Limited: RDI
ISIN: CA77434W2022
Share code on the TSX: RDI CUSIP Number: 77434W103
(“Rockwell” or “the Group”)
Unaudited interim consolidated financial statements
for the period ended 31 May 2016
13 July 2016
Consolidated statements of financial position
As at As at
31 May 29 February
Amounts in Canadian Dollars (’000) 2016 2016
Assets
Non-current assets
Mineral property interests 23 207 23 871
Investment in associates 475 452
Property, plant and equipment 24 920 25 506
Investments and deposits 1 414 1 344
Rehabilitation deposits 1 089 1 103
Total non-current assets 51 105 52 276
Current assets
Inventories 2 858 2 100
Trade and other receivables 2 870 4 083
Cash and cash equivalents 478 58
Total current assets 6 206 6 241
Total assets 57 311 58 517
Equity and liabilities
Equity
Share capital 147 472 147 472
Reserves (14 051) (13 607)
Retained loss (129 788) (130 358)
Total equity 3 633 3 507
Liabilities
Non-current liabilities
Loans and borrowings 26 472 26 573
Finance lease obligation - 430
Deferred tax 4 727 4 867
Rehabilitation obligation 7 572 7 753
Total non-current liabilities 38 771 39 623
Current liabilities
Loans from related parties 1 217 1 218
Finance lease obligation 855 594
Trade and other payables 12 269 12 185
Bank overdraft 566 1 390
Total current liabilities 14 907 15 387
Total liabilities 53 678 55 010
Total equity and liabilities 57 311 58 517
Consolidated statements of financial performance
3 months 3 months
ended ended
31 May 31 May
Amounts in Canadian Dollars (’000) 2016 2015
Sale of diamonds 12 097 8 269
Beneficiation income 369 970
Cost of sales before amortisation and
depreciation (9 173) (12 349)
Gross profit (loss) before amortization
and depreciation 3 293 (3 110)
Amortization of mineral property
interests (273) (109)
Depreciation of property, plant and
equipment (1 143) (1 300)
Rehabilitation obligation recognized (42) (33)
Gross profit (loss) 1 835 (4 552)
Other income 54 372
General, administration and business
development expenses (713) (1 604)
Loss on sale of subsidiary - (1 774)
Realized foreign exchange with sale of
subsidiary - 1 276
Profit (loss) before net finance costs 1 176 (6 282)
Finance income 18 39
Foreign exchange loss on US$ loans 65 -
Finance costs (717) (304)
Profit (loss) after net finance costs 542 (6 547)
Share of profit from equity accounted
investments 36 33
Profit (loss) before income tax
(charge) recovery 578 (6 514)
Income tax (charge) recovery (8) 1 334
Profit (loss) for the period 570 (5 180)
Earnings (loss) per share
Basic and diluted earnings (loss) per
share (cents) 1.04 (9.43)
Consolidated statements of comprehensive income
3 months 3 months
ended ended
31 May 31 May
Amounts in Canadian Dollars (’000) 2016 2015
Profit (loss) for the period 570 (5 180)
Other comprehensive income net of taxation
Items that are or may be reclassified to
profit or loss
Exchange differences on translating
foreign operations (453) (1 489)
Realized foreign exchange with sale of
subsidiary - (1 276)
Other comprehensive income for the
period net of taxation (453) (2 765)
Total comprehensive income (loss) 117 (7 945)
Total comprehensive income attributable to:
Owners of the Group 117 (7 975)
Non-controlling interest - 30
Total comprehensive income for the period 117 (7 945)
Consolidated statements of changes in equity
Foreign Share-
currency based
Amounts in Canadia Share translation payment Total
Dollars (‘000) capital reserve* reserve** reserves
Balance at 1 March 147 435 (17 605) 9 030 (8 575)
Total comprehensive
income for the period
Loss for the period – – – –
Other comprehensive
income – (2 829) – (2 829)
Total comprehensive
income for the period – (2 829) – (2 829)
Share-based payment
expense – – 32 32
Sale of subsidiary
(note 13) – – – –
Total changes – (2 829) 32 (2 797)
Balance at
31 May 2015 147 435 (20 434) 9 062 (11 372)
Balance at
1 March 2016 147 472 (22 706) 9 099 (13 607)
Total comprehensive
income for the period
Income for the period – – – –
Other comprehensive
income – (453) – (453)
Total comprehensive
income for the period – (453) – (453)
Share-based payment
expense – – 9 9
Total changes – (453) 9 (444)
Balance at
31 May 2016 147 472 (23 159) 9 108 (14 051)
Note(s) 7 8
Total
attribu-
table to Non-
equity control-
Amounts in Canadia Retained holders of ling Total
Dollars (‘000) loss the Group interest equity
Balance at 1 March (102 076) 36 784 (2 369) 34 415
Total comprehensive
income for the period
Loss for the period (5 146) (5 146) (34) (5 180)
Other comprehensive
income – (2 829) 64 (2 765)
Total comprehensive
income for the period (5 146) (7 975) 30 (7 945)
Share-based payment
expense – 32 – 32
Sale of subsidiary
(note 13) – – 1 678 1 678
Total changes (5 146) (7 943) 1 708 (6 235)
Balance at
31 May 2015 (107 222) 28 841 (661) 28 180
Balance at
01 March 2016 (130 358) 3 507 – 3 507
Total comprehensive
income for the period
Income for the
period 570 570 – 570
Other comprehensive
income – (453) – (453)
Total comprehensive
income for the period 570 117 – 117
Share-based payment
expense – 9 – 9
Total changes 570 126 – 126
Balance at
31 May 2016 (129 788) 3 633 – 3 633
* Currency translation differences arising on the conversion of the
results and financial position of foreign operations from
their functional currency to the Group’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 3 months
ended ended
31 May 31 May
Amounts in Canadian Dollars (’000) 2016 2015
Cash receipts from customers 11 838 8 862
Cash paid to suppliers and employees (9 779) (13 882)
Cash generated from (used in) operations 2 059 (5 020)
Finance income 18 39
Finance costs (692) (111)
Net cash inflow (outflow) from operating
activities 1 385 (5 092)
Cash flows from investing activities
Purchase of property, plant and equipment (1 737) (260)
Proceeds from sale of property, plant and
equipment 215 –
Sale of mineral property interests - 515
Acquisition of subsidiary - (1 708)
Proceeds from sale of subsidiary - 2 266
Advances from related party loans 35 20
Increase in investments and deposits (112) (71)
Increase in rehabilitation deposits (18) (34)
Repayment of loan from buyers of
subsidiary 1 712 -
Net cash inflow from investing activities 95 728
Cash flows from financing activities
Advances from loans and borrowings 1 296 1 921
Repayment of loans and borrowings (1 362) –
Repayment of finance lease obligations (170) (208)
Net cash (outflow) inflow from financing
activities (236) 1 713
Net movement in cash and cash equivalents
for the period 1 244 (2 651)
Cash and cash equivalents at the
beginning of the period (1 332) 576
Cash and cash equivalents included in
assets held for sale - 776
Total cash and cash equivalents at end of
the period (88) (1 299)
Sale and acquisition of subsidiaries
Sale of subsidiary
An acquisition consortium assumed control of Tirisano on March 28,
2015, and therefore the Group accounted for the sale as of that date.
The cash consideration was to be settled by way of two initial
payments totaling ZAR20 million ($1.8 million), followed by 20 equal
monthly instalments of ZAR2 million ($0.17 million), of which 12 have
been received to date. Therefore as at 29 February 2016, ZAR22 million
($1.8 million) was outstanding on the sale price. This was received
after year-end. Agreement has been concluded after 29 February 2016
for early settlement of the remaining balance in the amount of
ZAR20 million after a ZAR2 million settlement discount.
3 months
ended
31 May
Amounts in Canadian Dollars (’000) 2015
Property, plant and equipment 1 417
Mineral property interests 8 000
Rehabilitation obligation (2 072)
Rehabilitation deposits 1 739
Trade and other receivables 1 142
Trade and other payables (238)
Loans and borrowings (3 720)
Loan to related party 8
Outside shareholders 1 678
Total net assets sold 7 954
Net assets sold 7 954
Loss on sale of subsidiary 1 774
6 180
Consideration
Cash received 2 098
Deferred consideration – outstanding at year end 2 770
Deferred consideration – received since acquisition 1 312
6 180
Business combination
On May 25, 2015, Rockwell announced the closing of the Bondeo
140 cc acquisition (“Steyn Transaction”), and assumed control on
May 28, 2015. All required approvals and long term acquisition credit
facilities were secured.
The acquisition was accounted for as an acquired business in terms of
IFRS 3: Business Combinations. It included the purchase of 100% of
the issued share capital in Pioneer Minerals Proprietary Limited
which owns the Remhoogte property, from Bondeo 140 cc, the
Holsloot and Bo-Karoo properties and certain earthmoving equipment
and plant.
The movable assets acquired have been included in a first security
charge securing the two long term acquisition credit facilities from
Diacore and Emerald as disclosed in note 9.
The following summarises the fair value of assets and liabilities
acquired
3 months
ended
31 May
Amounts in Canadian Dollars (’000) 2015
Mineral property interests 13 130
Property, plant and equipment 13 385
Deferred tax (3 368)
Rehabilitation obligation (994)
Other liabilities (99)
Total identifiable net assets 22 054
The deferred tax arises under IFRS as the difference between the fair
value and the tax base of the asset acquired, times the tax rate. In
future years, depreciation and amortization will be greater than the
tax cover on the asset, at which time the deferred tax balance will
be drawn down. It does not represent a tax liability owing at
present.
3 months
ended
31 May
Amounts in Canadian Dollars (’000) 2015
The Group financed the purchase consideration through
Cash (513)
Bridging loan – Diacore (paid directly by
vendor to seller) (20 346)
Bridging loan – Emerald (1 195)
(22 054)
Net cash outflow from Company, on acquisition
Cash consideration paid (1 708)
Earnings (loss) per share
3 months 3 months
ended ended
31 May 31 May
Amounts in Canadian Dollars (’000) 2016 2015
Basic and diluted earnings (loss) per share
Cents per share 1.04 (9.43)
Basic (loss) earnings per share was
calculated based on a weighted average
number of common shares of 54 983 244
for the 3 months ended 31 May 2016
(3 months ended 31 May 2015: 54 558 244).
Reconciliation of profit (loss) for the
period to basic profit (loss)
Profit (loss) for the period 570 (5 180)
Adjusted for:
Loss attributable to non-controlling interest - 34
Basic earnings (loss) attributable to
owners of the Group 570 (5 146)
At 31 May 2016 the impact of share-based
payment options were excluded from the
weighted average number of shares, for the
purpose of the diluted earnings (loss) per
share calculation, as the effect would have
been anti-dilutive.
Basic and diluted headline earnings (loss)
per share
Cents per share 0.67 (8.82)
Reconciliation between basic profit
(loss) and headline earnings (loss)
Basic profit (loss) attributable to
owners of the Group 570 (5 146)
Adjusted for:
Profit on disposal of property, plant
and equipment and mineral properties (200) (165)
Loss on sale of subsidiary - 1 774
Realized foreign exchange with sale of
subsidiary - (1 276)
Non-controlling interest portion of
above adjustments - -
Headline profit (loss) attributable to
owners of the Group 370 (4 813)
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 re-measurements.
At 31 May 2016 the impact of share-based payment options were
excluded from the weighted average number of shares, for the purpose
of the diluted headline (loss) earnings per share calculation, as the
effect would have been anti-dilutive.
Segmental information
The Group has three reportable operating segments, as described
below, which are the Group’s operating divisions. These divisions
offer different diamond product characteristics, qualities, geological
characteristics, processes and services, and are managed separately
because they require different technology and profit or cost strategies.
For each of the divisions the Group executive committee (chief operating
decision making body) reviews internally managed reports on at least a
monthly basis. The following describes the operations in each of the
Group’s reportable segments:
• Northern Cape operation is associated with the mining of palaeo
channels and rooikoppie gravels and the recovery of high value and
larger carat size diamonds;
• North West operation is associated with the mining of potholes and
the recovery of lower value and smaller carat size diamonds; and
• Corporate represents the corporate management and administrative
function of the Group.
The reconciliation column represents the inter group transactions
eliminated on consolidation. All reportable segments are located in
the same geographical jurisdiction. Information regarding the results
of each of the reportable segments is included below.
For the year ended 31 May 2016
Amounts in
Canadian Northern North Corpo- Recon-
Dollars (‘000) Cape West rate ciling Total
Total assets 48 643 - 8 668 - 57 311
Total
liabilities (30 110) - (23 568) - (53 678)
External revenue 12 466 - 411 (411) 12 466
Profit for the
period 570 - - - 570
For the year ended 29 February 2016
Amounts in
Canadian Northern North Corpo- Recon-
Dollars (‘000) Cape West rate ciling Total
Total assets 56 394 - 4 504 (2 081) 58 817
Total
liabilities (25 523) - (27 406) (2 081) (55 010)
External revenue (46 274) (1 065) - - (47 339)
Inter-segment
revenue - - - - -
Loss for the year (18 350) (4 027) (5 304) - (27 681)
For the 3 months ended 31 May 2015
Amounts in
Canadian Northern North Corpo- Recon-
Dollars (‘000) Cape West rate ciling Total
Total assets 70 311 - 71 086 (57 819) 83 578
Total
liabilities 83 976 - 29 241 (57 819) 55 398
External revenue 8 174 1 065 - - 9 239
Inter-segment
revenue (1 054) (55) 1 109 - -
Loss for the
period (4 355) (16) (809) - (5 180)
Corporate information
Registered office – South Africa: Level 1, Wilds View, Isle of
Houghton Corner Carse O’Gowrie and Boundary Roads Houghton Estate,
Johannesburg 2198
PO Box 3011, Houghton 2041, South Africa
Telephone: +27 11 484 0830
Facsimile: +27 86 262 2838
Corporate address – Canada:
2900–550 Burrard Street, Vancouver
British Columbia, Canada V6C 0A3
Telephone: +1 604 631 3131
Facsimile: +1 604 631 3232
Toll Free: 1 866 635 3131
JSE sponsor: PSG Capital
First Floor, Building 8 Inanda Greens Business Park,
54 Wierda Road West, Wierda Valley, Sandton 2196
International broker: Northland Capital Partners Limited
60 Gresham Street, London, EC2V 7BB United Kingdom
Auditors: KPMG Inc Chartered Accountants
KPMG Crescent, 85 Empire Road, Parktown 2193, South Africa
Transfer agents - South Africa:
Computershare Investor Services Proprietary Limited
(Registration number 2004/0036471/07)
Ground Floor, 70 Marshall Street Johannesburg 2001, South Africa
Transfer agents - Canada: Computershare Investor Services Inc.
3rd Floor, 510 Burrard Street, Vancouver, British Columbia
Canada V6C 3B9
Lawyers - South Africa:
Brink Falcon Hume Inc Attorneys
Second Floor, 8 Melville Road, Illovo, Sandton 2196, South Africa
Lawyers - Canada:
Fasken Martineau DuMoulin LLP
333 Bay Street, Suite 2400, Bay Adelaide Centre, Toronto, Ontario,
Canada, M5H 2T6
Date: 13/07/2016 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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