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Consolidated financial statements for the year ended 30 June 2016
Resource Generation Limited
Registration number ACN 059 950 337
(Incorporated and registered in Australia)
ISIN: AU000000RES1
Share Code on the ASX: RES
Share Code on the JSE: RSG
("Resgen" or the “Company”)
ASX/JSE Release
Resource Generation Limited today released its consolidated financial
statements for the year ended 30 June 2016.
The financial statements were approved by the Board of Directors and
signed by Lulamile Xate (Deputy Chairman). The directors take full
responsibility for the preparation of the annual report and that the
financial information has been correctly extracted from the underlying
annual financial statements. This summarised report is extracted from
audited information, but is not itself audited. The annual financial
statements were audited by Deloitte Touche Tohmatsu and their audit
opinion is available for inspection at the Company's registered office.
Auditors’ report includes the following emphasis of matter paragraph:
Without modifying our opinion, we draw attention to Note 1(a) in the
financial report which indicates that the consolidated entity incurred a
loss of $7.7 million (2015: $4.9 million) and used net cash in operating
activities of $5.2 million (2015: $1.9 million) during the year ended 30
June 2016. These conditions, along with other matters as set out in Note
1(a), indicate the existence of a material uncertainty that may cast
significant doubt about the ability of the company and the consolidated
entity to continue as going concerns and therefore, the company and the
consolidated entity may be unable to realise their assets and discharge
their liabilities in the normal course of business.
The full set of financial statements are available on Resource
Generations Limited’s website. www.resgen.com.au
Extracts from the financial statements for the year ended 30 June 2016
may be found below.
Contacts
Rob Lowe, CEO on +27 12 345 1057 or
Michael Meintjes, Company Secretary on +61 413 706 143
Media enquiries
Russell and Associates on +27 11 880 3924
Johannesburg
31 August 2016
JSE Sponsor: Deloitte & Touche Sponsor Services (Pty) Limited
Resource Generation is developing its Boikarabelo Coal Mine in the
Waterberg region of South Africa, which has one of the country’s largest
remaining coal deposits. The Boikarabelo mine has probable reserves of
744.8 million tonnes* of coal on 35% of the tenements under the
company’s control (refer SENS announcement dated 16 December 2010).
Stage 1 of the mine development targets saleable coal production of 6
million tonnes per annum.
*This information was prepared and first disclosed under the
JORC Code 2012 on the basis that the information has not
materially changed since it was last reported.
Consolidated statement of profit or loss and other
comprehensive income
For the year ended 30 June 2016
Consolidated
2016 2015
$'000 $'000
*Restated
Revenue from continuing
operations
210 677
Other 69 -
279 677
Administration, rent and
corporate (1,638) (1,155)
Depreciation of property plant
and equipment
(334) (404)
Employees benefits expense
(3,682) (1,606)
Finance expenses (22) (2,729)
Share based compensation
1,906 (797)
Foreign exchange movements
(4,165) 1,070
Loss before income tax
(7,656) (4,944)
Income tax expense (1) (5)
Loss from continuing operations
(7,657) (4,949)
Loss for the year (7,657) (4,949)
Other comprehensive income, net
of income tax
Items that may be reclassified
subsequently to profit and loss
when specific conditions are met
Exchange differences on
translation of foreign
operations
(19,550) 8,397
Total comprehensive income
(27,207) 3,448
Loss is attributable to:
Owners of Resource Generation
Limited
(7,657) (4,949)
Total comprehensive income for
the year is attributable to:
Owners of Resource Generation
Limited (27,207) 3,448
Headline earnings (7,657) (4,949)
Earnings per share (EPS) (cents)
(1.3) (0.9)
Headline earnings per share
(HEPS)(cents)
(1.3) (0.9)
Consolidated statement of financial position
As at 30 June 2016
Consolidated
2016 2015 01-Jul-14
*Restated *Restated
$'000 $'000 $'000
Current
assets
Cash and cash
equivalents 11,995 28,551 54,337
Trade and
other
receivables 146 200 414
Deposits and
prepayments 174 207 140
12,275 28,958 54,891
Non-current
assets
Property,
plant and
equipment 30,365 35,464 33,367
Mining
tenements and
mining
development 128,644 129,314 89,742
Deposits and
loan
receivables 1,859 2,938 2,307
160,868 167,716 125,416
TOTAL ASSETS 173,143 196,674 180,307
Current
liabilities
Trade and
other
payables 6,967 7,320 8,377
Provisions 180 987 788
Borrowings 3,887 2,661 -
11,034 10,968 9,165
Non-current
liabilities
Provisions 1,983 204 38
Borrowings 35,728 31,221 21,231
Royalties
payable 1,946 2,716 2,553
39,657 34,141 23,822
TOTAL
LIABILITIES 50,691 45,109 32,987
NET ASSETS 122,452 151,565 147,320
Equity
Contributed
equity 223,622 223,622 223,622
Reserves (50,955) (11,817) (21,011)
Accumulated
losses (50,215) (60,240) (55,291)
TOTAL EQUITY 122,452 151,565 147,320
Consolidated statement of changes in equity
For the year ended 30 June 2016
Contri-
buted Retained Total
equity Reserves earnings equity
$'000 $'000 $'000 $'000
Balance at 1 July
2014 (as
previously
reported) 223,622 (10,090) (37,808) 175,724
Adjustments (see
note 3) - (10,921) (17,483) (28,404)
Balance at 1 July
2014 (restated) 223,622 (21,011) (55,291) 147,320
Loss for the year - - (4,949) (4,949)
Other
comprehensive
income for the
year - exchange
differences on
translation of
foreign operations - 8,397 - 8,397
Total
comprehensive
income for the
year - 8,397 (4,949) 3,448
Transactions with
owners in their
capacity as
owners:
Employee share
options - value of
employee services - 797 - 797
Balance at 30 June
2015 223,622 (11,817) (60,240) 151,565
Loss for the year - - (7,657) (7,657)
Other
comprehensive
income for the
year - exchange
differences on
translation of
foreign operations - (19,550) - (19,550)
Total
comprehensive
income for the
year - (19,550) (7,657) (27,207)
Transactions with
owners in their
capacity as
owners:
Transfer of option
premium reserve to
earnings - (17,682) 17,682 -
Employee share
options - value of
employee services - (1,906) - (1,906)
- (19,588) 17,682 (1,906)
Balance at 30 June
2016 223,622 (50,955) (50,215) 122,452
Consolidated statement of cash flows
For the year ended 30 June 2016
Consolidated
2016 2015
$'000 $'000
Cash flows from
operating
activities
Payments to
suppliers and
employees (5,369) (2,610)
Interest received 210 677
Finance costs (22) (8)
Taxation payments (1) (4)
Net cash outflow
from operating
activities (5,182) (1,945)
Cash flows from
investing
activities
Payments for land,
property, plant and
equipment (537) (376)
Refunds of
government charges
associated with
land acquisition - -
Payments for
acquisition of non-
controlling
interest - -
Net payments for
mining related
licence deposits - (285)
Payments for mining
tenements and
mining development (8,836) (28,588)
Net cash outflow (9,373) (29,249)
from investing
activities
Cash flows from
financing
activities
Proceeds from issue
of shares - -
Equity raising
costs - -
Repayment of
borrowings (1,935) -
Forfeited share
deposit - -
Proceeds from
borrowings - -
Net cash inflow
from financing
activities (1,935) -
Net
(decrease)/increase
in cash and cash
equivalents (16,490) (31,194)
Cash and cash
equivalents at the
beginning of the
year 28,551 54,337
Effects of exchange
rate movements on
cash and cash
equivalents (106) 5,408
Cash and cash
equivalents at the
end of the year 11,955 28,551
1. Basis of preparation
This general purpose financial report has been prepared in accordance
with Australian Accounting Standards, other authoritative pronouncements
of the Australian Accounting Standards Board including Interpretations
and the Corporations Act 2001. For the purposes of preparing the
consolidated financial statements, the Company is a for-profit entity.
The financial report of Resource Generation Limited also complies with
International Financial Reporting Standards ("IFRS") as issued by the
International Accounting Standards Board ("IASB").
3. Critical accounting estimates and judgements
The preparation of financial statements in conformity with
Australian Accounting Standards requires the use of certain
critical accounting estimates. It also requires management to
exercise its judgement in the process of applying the Group's
accounting policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimates
are significant to the financial statements, are disclosed below.
Estimates and judgements are continually evaluated and are based
on historical experience and other factors, including
expectations of future events that may have a financial impact on
the entity and that are believed to be reasonable under the
circumstances. The estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year
are discussed below.
The accounting policies and methods of computation adopted in the
preparation of the financial report are consistent with those
adopted and disclosed in the Company's financial report for the
year ended 30 June 2015. These accounting policies are consistent
with Australian Accounting Standards and with International
Financial Reporting Standards.
Development expenditure
Development expenditure incurred by or on behalf of the
consolidated entity is accumulated separately for each mine in
which economically recoverable reserves have been identified to
the satisfaction of the Directors. Such expenditure comprises
direct costs plus overhead expenditure incurred which can be
directly attributable to the development process, in accordance
with AASB 116 'Property, Plant & Equipment'.
All expenditure incurred prior to the commencement of commercial
levels of production from each area of interest is carried
forward to the extent which recoupment out of revenue to be
derived from the sale of production from the area of interest, or
by its sale, is reasonably assured. Once commercial levels of
production commence, the development expenditure in respect of
that area of interest will be depreciated on a straight-line
basis, based upon an estimate of the life of the mine.
Expenditure on the Boikarabelo Coal Mine has been fully
capitalised as per Note 11. The Group is confident of the full
recovery of the expenditure on the Boikarabelo Coal Mine on the
basis of the financial modelling of the mine incorporating
forecast production, sales levels and capital expenditure. This
model is updated regularly and used to assess whether an
impairment provision is required. Based on the current critical
estimates and judgements, the Directors do not believe that an
impairment provision is required.
Restatement of accounts
The accounts have been restated in respect of the accounting for
loans to the Group's BEE partner and also accounting for foreign
exchange on acquisition adjustments.
(i) Loan to BEE partner
In 2011, the Group loaned its Black Economic Empowerment (BEE)
partner, Fairy Wing Trading 136 (Pty) Limited (Fairy Wing), R80
million ($7.3 million) to facilitate its 26% acquisition of
Ledjadja Coal (Pty) Limited (Ledjadja). In 2013, an additional
R39 million ($3.5 million) was loaned to Fairy Wing, to fund its
26% acquisition of Waterberg One Coal (Pty) Limited (Waterberg
One). The loans are secured over Fairy Wing’s shares in Ledjadja
and Waterberg One and are repayable out of future dividends.
Interest on the loans was deferred from 1 January 2014 until
commencement of coal production at the Boikarabelo Coal Mine at
which time interest will be payable at the prime rate quoted by
Standard Bank of South Africa plus 3%.
Guidance from the South African Institute of Chartered
Accountants in respect of accounting for BEE transactions, which
is consistent with AASB 2 Share-based Payment, indicates that
loans to BEE partners made on non-commercial terms should be
treated as share-based payments. In light of this guidance and
having regard to the terms of the Fairy Wing loans, including the
fact that they are secured over Fairy Wing’s shares in the
respective subsidiaries and are in substance only repayable out
of future dividends from coal production, the directors have
concluded that instead of recognising loan receivables at
inception, the financial statements should have reflected a
charge to profit and loss.
The restatement in relation to this reverses the previously
recorded loan carrying values, including accrued interest,
against retained earnings. It also includes the related impact on
the foreign currency translation reserve.
(ii) Foreign exchange on acquisition adjustments
The Group previously acquired interests in South African
subsidiaries that held exploration licences for the Boikarabelo
Coal Mine project. The difference between the net assets of the
subsidiaries acquired and the purchase consideration was recorded
as an exploration asset, subsequently reclassified to mining
tenements and mining development assets. Such differences should
be treated as assets of the foreign operation and therefore
foreign exchange differences arising on translation of these
assets for consolidation purposes shall be recorded in the
foreign currency translation reserve.
The restatement reflects this accounting. The reduction of the
mining tenement and mining development asset balance reflects the
weakening of the South African Rand against the Australian
dollar.
30-Jun-15
30-Jun-15
As As restated
previously
stated
$'000 $'000 $'000
Consolidated statement
of financial position
Deposits and loan
receivables 18,484 (15,546) 2,938
Mining tenements and
mining development 140,539 (11,225) 129,314
Total non-current
assets 194,487 (26,771) 167,716
TOTAL ASSETS 223,445 (26,771) 196,674
Equity 223,622 - 223,622
Reserves (2,529) (9,288) (11,817)
Accumulated
losses (42,757) (17,483) (60,240)
TOTAL EQUITY 178,336 (26,771) 151,565
30-Jun-14 30-Jun-14
As As restated
previously
stated
$'000 $'000 $'000
Consolidated statement
of financial position
Deposits and loan
receivables 16,923 (14,616) 2,307
Mining tenements and
mining development 103,530 (13,788) 89,742
Total non-current
assets 153,820 (28,404) 125,416
TOTAL ASSETS 208,711 (28,404) 180,307
Equity 223,622 - 223,622
Reserves (10,090) (10,921) (21,011)
Reserves (37,808) (17,483) (55,291)
TOTAL EQUITY 175,724 (28,404) 147,320
4. Segment information
4.1
Management has determined the segments based upon reports
reviewed by the Board that are used to make strategic decisions.
The Board considers the business from both a business and
geographic perspective, with the Board being the chief operating
decision maker.
Business segments
The Group has coal interests in South Africa. The main priority
is to develop its coal resources in the Waterberg region of South
Africa. Management has determined that there is one operating
segment, being mining tenements and mining development.
Unallocated corporate administration reflects other corporate
costs and includes equity raisings and administration costs.
4.2 Segment revenues and results
Segment Revenue Segment Profit
Year Year Year ended Year
ended ended 30/6/16 ended
30/6/16 30/6/15 30/6/15
$'000 $'000 $'000 $'000
Mining
tenements
and mining
development 243 454 (629) (6,791)
Corporate -
unallocated 36 223 (7,028) 1,842
Total for
continuing
operations 279 677 (7,657) (4,949)
The accounting policies of the reportable segments are
the same as the Group's accounting policies described in
Note 1. The mining tenements and mining development
segment loss represents the loss earned by that segment
without allocation of central administration costs and
salaries, share of profits of associates, gains and
losses, finance costs and income tax expense, all of
which are included in the corporate segment. This is the
measure reported to the chief operating decision maker
for the purposes of resource allocation and assessment
of segment performance.
4.3 Segment asset and liabilities
2016 2015
$'000 $'000
Segment
assets
Mining
tenements
and mining
development 162,114 172,607
Corporate -
unallocated 11,029 24,067
173,143 196,674
Segment
liabilities
Mining
tenements
and mining
development 50,390 43,896
Corporate -
unallocated 301 1,213
50,691 45,109
4.4 Other segment information
Depreciation and Additions to land,
amortisation property, plant and
equipment
Year Year Year ended Year
ended ended 30/6/16 ended
30/6/16 30/6/15 30/6/15
$'000 $'000 $'000 $'000
Mining
tenements
and mining
development 309 357 504 331
Corporate -
unallocated 25 47 33 45
Total 344 404 537 376
4.5 Other segment information - mining assets
Additions
to mining
assets
Year ended Year
30/6/16 ended
30/6/15
$'000 $'000
Mining tenements and mining
development 20,025 32,392
Corporate - unallocated - -
20,025 32,392
4.6 Geographical information
Revenue from external Non-current assets
customers
Year Year Year ended Year
ended ended 30/6/16 ended
30/6/16 30/6/15 30/6/15
$'000 $'000 $'000 $'000
Australia 36 223 39 52
South
Africa 243 454 160,829 167,664
279 677 160,868 167,716
26 Events occurring after the reporting period
On 8 August 2016, the Company announced that it had agreed the
commercial terms on which a Financing Syndicate will seek their
requisite approvals in order to secure funding of R5.52 billion (A$515
million) to complete the construction of the Boikarabelo Coal Mine.
Dividends
No dividends were paid or proposed to be paid to members during the
financial year (2015: nil).
Date: 31/08/2016 04:56:00 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.
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