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Audited summarised consolidated financial results for the 15 months ended 30 June 2016 and notice of AGM
Sentula Mining Limited
Incorporated in the Republic of South Africa (Registration number 1992/001973/06)
Share code: SNU ISIN: ZAE000107223 ("Sentula" or "the Company" or "the Group")
Audited summarised consolidated financial results
for the 15 months ended 30 June 2016 and notice of the annual general meeting
INTRODUCTION
The 2016 financial period continued to be a very challenging one for Sentula. Since 2010, Sentula has been battling
to keep head above water as the debt load, fraud, declining commodity prices, declining margins, rising labour costs,
legal disputes and mining regulatory uncertainty continued to weigh on its performance. For Sentula it all culminated
in the tipping point being reached during the past financial period. The new starting point was to install an executive
team that was capable of focusing the business, identifying the issues and opportunities, and then to move forward despite
the negative past.
Sentula is on track to complete an aggressive restructuring exercise, which included closing, merging and recapitalising
affected businesses in its portfolio. Sentula’s key qualities which are long-term contracts with blue-chip customers,
a diversified revenue base, well established track records, good safety records and top quality and loyal staff with the
technical expertise to deliver results, have kept Sentula alive against all odds.
These qualities, combined with a fresh approach from the new executive management, assisted in repositioning each business
as a standalone and sustainable unit. There are more hurdles to cross but we are confident that Sentula is on track to turn
the corner. The environment remains very challenging but the emphasis will be on focusing on those things that we can control
rather than those that we cannot. In future the focus will be on businesses that have good investment characteristics and yield
attractive returns on capital.
FINANCIAL OVERVIEW
The loss incurred during the financial period was mainly as a result of the following non-recurring events:
- The Megacube Mining Proprietary Limited ("Megacube")/Keaton Mining Proprietary Limited ("Keaton") arbitration award of
R129 million;
- Impairment of property, plant and equipment amounting to R139 million in the opencast mining operations;
- Operating losses incurred by Benicon amounting to R157 million, including wind-down costs; and
- Nkomati production ramp up costs amounting to R25 million.
During the second half of the financial period, the operational management of Benicon was taken over by a new executive team.
The rapidly escalating losses in Benicon Opencast Mining Proprietary Limited ("Benicon") dictated that drastic action be taken,
which culminated in the winding down of Benicon as well as the proposed merger between Sentula Coal Proprietary Limited
("Sentula Coal") and Close-Up Mining Proprietary Limited ("Close-Up"). Shareholders are referred to the SENS announcement on
27 June 2016 in which the transaction was announced.
The Megacube/Keaton arbitration dispute has been provided for during the period, negatively impacting the Group’s equity by
R109 million. The arbitration award will not impact the rest of the Group’s operations as there is no known recourse between
Megacube and any other group company.
OPERATIONAL REVIEW
Mining services
Although Sentula currently provides a suite of diversified mining services to mainly blue-chip customers, it will in future
focus on investment in good companies with good management, delivering attractive returns on capital to shareholders. The
five businesses, constituting the current Sentula Group, operate in one of the four contracted mining-related service provision
areas, broadly defined as opencast mining, overburden drilling and blasting, mobile crane hire and exploration drilling. In
addition, Sentula is the majority shareholder in Nkomati Anthracite, which is an active anthracite mine.
Opencast mining services
Benicon, Sentula's largest bulk earthmoving business, suffered substantial losses during the fifteen month period as a
result of old and expensive to maintain equipment as well as an inefficient and expensive operating structure. As a
result, Benicon is in the process of winding down and the best elements are in the process of being merged with Close-Up.
As part of the proposed transaction, Sentula will acquire a 40% equity stake in Close-Up, which continues to provide
contract mining services to Anglo American Coal. Classic Challenge Trading Proprietary Limited ("CCT"), which provides
contract mining services to Samancor, suffered losses due to a historically mispriced contract. Subsequent to the period end
the contract price has been adjusted, which should enable CCT to operate profitably in future.
Overburden drilling and blasting
JEF Drill and Blast Proprietary Limited ("JEF") provides drilling and blasting services to Group companies as well as
external clients. JEF's performance during the 15 months was negatively affected by the loss of key blasting contracts.
Subsequent to the period-end JEF was able to obtain new drilling contracts, which should enable it to return to historical
levels of profitability. The Group will continue to invest in JEF to grow the business on a sustainable basis.
Mobile crane hire
Ritchie Crane Hire Proprietary Limited ("Ritchie") suffered a slowdown in revenue growth during the early part of the
financial period, mainly as a result of key customers postponing work due to tough market conditions. Since then,
confidence appears to have returned, evident in a consistent and gradual increase in Ritchie's crane utilisation ratio.
Ritchie's impeccable safety record combined with excellent customer service has enabled it to keep on winning new contracts
against very tough competition. The Group will continue to invest in Ritchie to grow the business on a sustainable basis.
Exploration drilling
The ongoing reduction in exploration expenditure in the market necessitated further restructuring of Geosearch operations
in South Africa, Mozambique and Botswana. The South African operation's key contract is with Anglo Platinum at their
Mogolakwena mine while Botswana was recently awarded a drilling contract at Debswana's Orapa mine. Mozambique continues
to be affected by challenging weather conditions and a very slow recovery in coal mining activities. Operations in all
three jurisdictions have been rightsized to be able to operate profitably in the current challenging environment. The
businesses are well-positioned to take advantage of new opportunities as the exploration drilling market recovers.
Nkomati Anthracite
The Nkomati Anthracite Mine, which was previously classified as a "held-for-sale" asset, has been brought back into
operation and is well on track to achieve record production and profitability. During the past fifteen months the emphasis
was on ensuring that the open pit mine achieves steady state production and that we complete the planning for the reopening
of the underground mine. Open pit steady state production was achieved subsequent to the end of the financial period and
underground make-safe operations are scheduled to start during 2017. Longstanding shareholder disputes have been resolved,
paving the way for raising the necessary capital to resume underground mining operations.
STRATEGIC UPDATE
The support of our shareholders during the past financial period facilitated the restructuring of operations and
reduction in debt. Our strategic objectives are:
- settlement of outstanding senior Group debt;
- reduction in the Group's exposure to opencast mining services;
- investment in performing businesses;
- unlocking value in Nkomati Anthracite Mine; and
- returning to profitability.
OUTLOOK
During the period under review, the bulk of the hard work has been done and we are satisfied that the future of Sentula will
look very different than its past. We do not pay too much attention to macro-economic factors or predictions about the
commodity cycle but rather prefer to focus on the things that we can control. We focus on each business's individual
requirements, drivers and dynamics to determine what is required in each to remain competitive and be profitable. Our sole
aim is to deliver attractive returns on capital to our shareholders over time and by doing so outperform the market.
NOTICE OF THE ANNUAL GENERAL MEETING
Notice is hereby given in terms of section 62(1) of the Companies Act 71 of 2008, as amended ("Companies Act"), that
an annual general meeting ("annual general meeting") of the shareholders of the Company will be held at Ground Floor,
Building 14, The Woodlands Office Park, Woodlands Drive, Woodmead, at 10:00 on Wednesday, 16 November 2016, to consider
and, if deemed fit, to approve the resolutions set out in the notice of the annual general meeting, which is contained in
the annual report.
The Board of Sentula has determined that, in terms of section 62(3)(a), as read with section 59 of the Companies Act,
the record date for the purposes of determining which shareholders of the Company are entitled to participate in and
vote at the annual general meeting is Friday, 11 November 2016. Accordingly the last day to trade Sentula shares in order
to be recorded in the register be entitled to vote will be Tuesday, 8 November 2016.
On behalf of the Board
Ralph Patmore Jacques Badenhorst
Non-executive Chairman Chief Executive Officer
Woodmead
30 September 2016
SUMMARY CONSOLIDATED INCOME STATEMENT
for the 15 months ended 30 June 2016
Audited Audited
June 2016 March 2015
R'000 15 months Restated
Revenue 1 535 689 1 374 753
Loss from operations (179 619) (153 880)
Net profit/(loss) on disposal of assets 9 662 (52 099)
Megacube arbitration award (129 051) -
Impairment of plant and equipment (138 846) (14 795)
Impairment of other receivable (3 568) -
Impairment of assets held-for-sale - (815)
Operating loss (441 422) (221 589)
Finance charges (45 467) (52 918)
Fair value adjustment on interest rate cap - (159)
Loss before taxation (486 889) (274 666)
Taxation 17 512 (16 244)
Loss for the period from continuing operations (469 377) (290 910)
Discontinued operations
Loss for the period from discontinued operations
(attributable to the owners of the parent) - (275)
Loss on disposal of discontinued operations - (3 727)
Total loss for the period (469 377) (294 912)
Loss attributable to:
- Owners of the parent (447 429) (293 445)
- continuing operations (447 429) (289 443)
- discontinued operations - (4 002)
- Non-controlling interest (21 948) (1 467)
- continuing operations (21 948) (1 467)
- discontinued operations - -
Weighted basic and diluted loss per share (cents) (61,27) (49,18)
- continuing operations (cents) (61,27) (48,51)
- discontinued operations (cents) - (0,67)
Shares in issue at the end of the period ('000) 1 167 564 586 559
Shares in issue at the end of the period excluding treasury shares ('000) 1 162 010 581 005
Weighted average shares in issue at the end of the period
excluding treasury shares ('000) (2015 restated for the rights issue) 730 200 596 708
SUMMARY CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the 15 months ended 30 June 2016
Audited Audited
June 2016 March 2015
R'000 15 months Restated
Loss for the period (469 377) (294 912)
Other comprehensive (loss)/income
Items that may be subsequently reclassified to profit or loss
Foreign currency translation differences for foreign operations (21 843) 2 339
Other comprehensive (loss)/income for the period, net of income tax (21 843) 2 339
Total comprehensive loss for the period (491 220) (292 573)
Loss attributable to:
- Owners of the parent (469 272) (291 106)
- continuing operations (469 272) (287 104)
- discontinued operations - (4 002)
- Non-controlling interest (21 948) (1 467)
- continuing operations (21 948) (1 467)
- discontinued operations - -
SUMMARY CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 30 June 2016
Audited Audited
June March
R'000 2016 2015
Assets
Total non-current assets 654 052 801 617
Property, plant and equipment 586 014 749 942
Restricted cash 2 850 -
Intangible assets - 672
Goodwill 37 427 37 427
Deferred income tax asset 27 761 13 576
Total current assets 283 737 403 328
Inventories 33 402 70 492
Trade and other receivables 213 792 312 947
Cash and cash equivalents 32 822 19 245
Current tax receivable 3 721 644
Assets of disposal group classified as held-for-sale 105 174 219 490
Total assets 1 042 963 1 424 435
Equity and liabilities
Total equity attributable to equity holders of the parent 365 409 732 012
Share capital 2 122 973 2 020 304
Treasury shares (25 898) (25 898)
Reserves 86 294 110 689
Accumulated loss (1 817 960) (1 373 083)
Non-controlling interest (21 948) -
Total equity 343 461 732 012
Liabilities
Total non-current liabilities 147 284 114 856
Loans and borrowings - 2 354
Rehabilitation provision 69 889 -
Finance lease obligations 14 301 45 701
Deferred income tax liabilities 63 094 66 801
Total current liabilities 525 048 509 534
Trade and other payables 230 179 208 474
Megacube arbitration award 92 331 -
Deferred revenue 25 331 391
Loans and borrowings 33 500 132 752
Finance lease obligations 9 840 26 642
Bank overdraft 86 841 81 214
Current income tax liabilities 47 026 60 061
Liabilities of disposal group classified as held-for-sale 27 170 68 033
Total liabilities 699 502 692 423
Total equity and liabilities 1 042 963 1 424 435
Net asset value per share (excluding treasury shares) (cents)
(2015 restated for the rights issue) 31 123
Tangible net asset value per share (excluding goodwill) - excluding
treasury shares (cents) (2015 restated for the rights issue) 28 116
SUMMARY CONSOLIDATED CASH FLOW STATEMENT
for the 15 months ended 30 June 2016
Audited
June 2016 Audited
R'000 15 months March 2015
Cash flows from operating activities 53 475 47 138
Cash generated from operating activities 100 729 119 808
Income taxes paid (9 719) (20 622)
Interest paid (37 535) (52 048)
Cash flows from investing activities 6 485 (3 534)
Interest received 1 699 769
Purchase of property, plant and equipment (56 888) (103 959)
Proceeds from disposal of property, plant and equipment 61 733 42 021
Capitalised exploration expenditure - (1 187)
Additions to assets held-for-sale - (830)
Proceeds from disposal of assets held-for-sale 2 791 27 279
Proceeds from disposal of subsidiary - 23 680
Movement in restricted cash (2 850) 8 693
Cash flows from financing activities (47 220) (139 033)
Increase in borrowings - 3 289
Decrease in borrowings (101 606) (199 827)
Finance lease advances 1 371 74 187
Finance lease payments (49 654) (16 682)
Proceeds from the rights issue 104 581 -
Payment of transaction costs related to rights issue (1 912) -
Net increase/(decrease) in cash and cash equivalents 12 740 (95 429)
Cash and cash equivalents at the beginning of the period (60 569) 33 744
Exchange (losses)/gain on cash and cash equivalents (1 291) 1 116
Cash and cash equivalents at the end of the period (49 120) (60 569)
Cash and cash equivalents per statement of financial position (54 019) (61 969)
Cash and cash equivalents classified as held-for-sale 4 899 -
Cash and cash equivalents classified as discontinued operations - 1 400
Cash and cash equivalents at the end of the period (49 120) (60 569)
SUMMARY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the 15 months ended 30 June 2016
Foreign
Share-based currency
Share payment Treasury translation
R'000 capital reserve shares reserve
Restated balance as at 31 March 2014 2 020 304 36 684 (25 898) 74 166
Loss for the year - - - -
Other comprehensive income - - - 2 339
Transactions with owners, recorded directly in equity
Disposal of subsidiary - (2 500) - -
Balance as at 31 March 2015 2 020 304 34 184 (25 898) 76 505
Loss for the 15 months - - - -
Other comprehensive loss - - - (21 843)
Transactions with owners, recorded directly in equity
Shares issued for cash 104 581 - - -
Rights issue transaction costs (1 912) - - -
Share options forfeited - (2 552) - -
Total contributions by and distributions to owners 102 669 (2 552) - (21 843)
Balance as at 30 June 2016 2 122 973 31 632 (25 898) 54 662
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 year (293 445) (293 445) (1 467) (294 912)
Other comprehensive income - 2 339 - 2 339
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 15 months (447 429) (447 429) (21 948) (469 377)
Other comprehensive loss - (21 843) - (21 843)
Transactions with owners, recorded directly in equity
Shares issued for cash - 104 581 - 104 581
Rights issue transaction costs - (1 912) - (1 912)
Share options forfeited 2 552 - - -
Total contributions by and distributions to owners (444 877) (366 603) (21 948) (388 551)
Balance as at 30 June 2016 (1 817 960) 365 409 (21 948) 343 461
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. Benicon, CCT, Sentula Coal, and Benicon Sales Proprietary Limited
("Benicon Sales") are included in the opencast mining services. Sentula Coal and Benicon Sales are now included in opencast
mining services due to a change in the structure of the organisation, previously Sentula Coal was included in the coal mining
segment and Benicon Sales was included in corporate and other services. Benicon Coal Proprietary Limited ("Benicon Coal") and
Nkomati Anthracite Proprietary Limited ("Nkomati") are included in the coal mining operations, Benicon Coal and Nkomati
Anthracite have been restated in the prior year as they are no longer classified as held-for-sale. Even though Megacube is
no longer operational, it has been disclosed separately due to its materiality. 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.
Audited 15 months ended 30 June 2016 Opencast Exploration Overburden
mining drilling drilling and Crane
R'000 services blasting hire
Total segment revenue 983 738 223 269 385 414 89 852
Inter-segment revenue 118 964 8 118 154 649 3 511
External revenue 864 774 215 151 230 765 86 341
Total segment results pre-impairment (167 271) (14 046) 28 061 28 281
Impairment of plant and motor vehicles (138 846) - - -
Megacube arbitration award - - - -
Impairment of other receivable - - - -
Net gain on disposal of assets 7 834 1 648 192 (3)
Segment results (298 283) (12 398) 28 253 28 278
Segment assets 234 941 120 450 194 325 155 864
Assets classified as held-for-sale 105 174 - - -
Current and deferred tax assets - 13 515 1 371 581
Total assets 340 115 133 965 195 696 156 445
Segment liabilities 148 244 16 713 59 649 11 152
Liabilities classified as held-for-sale 27 170 - - -
Current and deferred tax liabilities 37 615 36 368 15 405 -
Total liabilities 213 029 53 081 75 054 11 152
Audited restated 12 months ended 31 March 2015
Total segment revenue 815 212 269 170 358 549 100 620
Inter-segment revenue 69 956 2 659 101 092 1 202
External revenue 745 256 266 511 257 457 99 418
Continuing operations
Total segment results pre-impairment (134 508) (58 927) 41 782 47 433
Net loss on disposal of assets (50 225) 1 192 1 600 (321)
Impairment of property, plant and equipment (11 803) (2 992) - -
Impairment of assets transferred to held-for-sale - (815) - -
Total segment results from continuing operations (196 536) (61 542) 43 382 47 112
Segment assets 579 881 173 379 208 922 165 010
Assets classified as held-for-sale 2 553 2 790 - -
Current and deferred tax assets - 11 746 - 233
Total assets 582 434 187 915 208 922 165 243
Segment liabilities 137 466 47 177 55 240 15 521
Liabilities classified as held-for-sale - - - -
Current and deferred tax liabilities 40 857 24 510 16 311 -
Total liabilities 178 323 71 687 71 551 15 521
Audited 15 months ended 30 June 2016 Corporate
Coal and other
R'000 mining Megacube services Total
Total segment revenue 169 017 - 550 1 851 840
Inter-segment revenue 30 359 - 550 316 151
External revenue 138 658 - - 1 535 689
Total segment results pre-impairment (24 930) (3 806) (25 908) (179 619)
Impairment of plant and motor vehicles - - - (138 846)
Megacube arbitration award - (129 051) - (129 051)
Impairment of other receivable - - (3 568) (3 568)
Net gain on disposal of assets (15) - 6 9 662
Segment results (24 945) (132 857) (29 470) (441 422)
Segment assets 194 354 5 761 611 906 306
Assets classified as held-for-sale - - - 105 174
Current and deferred tax assets 14 644 - 1 372 31 483
Total assets 208 998 5 761 1 983 1 042 963
Segment liabilities 90 209 98 422 137 823 562 212
Liabilities classified as held-for-sale - - - 27 170
Current and deferred tax liabilities - 16 802 3 930 110 120
Total liabilities 90 209 115 224 141 753 699 502
Audited restated 12 months ended 31 March 2015
Total segment revenue 6 111 - 950 1 550 612
Inter-segment revenue - - 950 175 859
External revenue 6 111 - - 1 374 753
Continuing operations
Total segment results pre-impairment (14 648) 2 076 (37 088) (153 880)
Net loss on disposal of assets - - (4 345) (52 099)
Impairment of property, plant and equipment - - - (14 795)
Impairment of assets transferred to held-for-sale - - - (815)
Total segment results from continuing operations (14 648) 2 076 (41 433) (221 589)
Segment assets 69 42 207 21 257 1 190 725
Assets classified as held-for-sale 213 947 200 - 219 490
Current and deferred tax assets - - 2 241 14 220
Total assets 214 016 42 407 23 498 1 424 435
Segment liabilities 1 034 1 484 239 606 497 528
Liabilities classified as held-for-sale 68 033 - - 68 033
Current and deferred tax liabilities - 41 424 3 760 126 862
Total liabilities 69 067 42 908 243 366 692 423
RECONCILIATION OF HEADLINE LOSS
Audited
June 2016 Audited March 2015 - Restated
15 months 12 months
R'000 Continuing Discontinued
Group operations operations Group
Loss for the period attributable to equity holders of the parent (447 429) (289 443) (4 002) (293 445)
Adjusted for:
Profit on disposal of plant and equipment (10 438) (2 762) - (2 762)
Loss on disposal of subsidiary - - 3 727 3 727
Loss on disposal of plant and equipment 776 54 861 - 54 861
Scrapping of assets 511 1 357 - 1 357
Impairment of property, plant and equipment 138 846 14 795 - 14 795
Impairment of assets held-for-sale - 815 - 815
Tax effect of above adjustments 53 (19 338) - (19 338)
Headline loss attributed to ordinary shareholders (317 681) (239 715) (275) (239 990)
Weighted headline loss per share (cents) (2015 restated
for rights issue) (43,51) (40,17) (0,05) (40,22)
NOTES TO THE AUDITED FINANCIAL STATEMENTS
1 Basis of preparation
The summarised consolidated financial statements were prepared in accordance with the JSE Listings Requirements for provisional reports
and the requirements of the Companies Act applicable to summary financial statements. The JSE Listings Requirements require provisional
reports to be prepared in accordance with the framework concepts, the measurement and recognition requirements to International Financial
Reporting Standards (IFRS), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial
Pronouncements as issued by the Financial Reporting Standards Council and must also, as a minimum contain the information required
by IAS 34, Interim Financial Reporting.
The accounting standards and amendments to issued accounting standards and interpretations, which are relevant to the Group, but not yet
effective on 30 June 2016 have not been early adopted. It is expected that, where applicable, these standards and amendments will be
adopted on each respective effective date, except where specifically identified.
The audited summarised consolidated financial results for the 15 months ended 30 June 2016 have been prepared under the supervision
of the Financial Director, JC Lemmer CA(SA).
2 Change in year-end
As announced by the Company on SENS on 22 March 2016, Sentula has, with effect from 30 June 2016, amended its financial year-end
from 31 March to 30 June.
3 Accounting policies
The significant accounting policies, judgements, 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.
4 Assets and liabilities classified as held-for-sale
Sentula Coal transaction
During the current period, Sentula Coal was classified as held-for-sale as a result of a merger agreement entered into between
Sentula, Sentula Coal and Close-Up, as announced on SENS on 27 June 2016.
The result of the transaction is that Sentula will hold 40% of the shares in Close-Up, which will in addition to its existing
operations, hold 50,5% of the shares in Sentula Coal, with Sentula Coal owning certain plant and equipment previously owned
by Benicon.
Sentula Coal does not meet the criteria to be classified as a discontinued operation since it does not represent a separate
major line of business, does not represent a major geographical area of operation and is reported as part of the opencast
mining and earthmoving segment.
Benicon Coal transaction
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.
The prior year numbers on the income statement, statement of comprehensive income, and basic and headline loss per
share have been restated to include Benicon Coal and Nkomati in continuing operations. In terms of IFRS 5, the statement
of financial position for June 2016 includes these operations on a line-by-line basis. It is not a requirement that the
prior periods be restated in the statement of financial position and these operations are therefore classified as
held-for-sale at 31 March 2015.
R'000 Audited Transferred Audited
June (from)/to March
2016 Disposals held-for-sale 2015
Assets held-for-sale
Property, plant and equipment 59 003 (2 791) (127 952) 189 746
Deferred tax asset - - (14 729) 14 729
Inventories - - (10 384) 10 384
Trade and other receivables 41 272 - 38 041 3 231
Cash and cash equivalents 4 899 - 3 499 1 400
105 174 (2 791) (111 525) 219 490
Liabilities held-for-sale
Rehabilitation provision - - (66 899) 66 899
Trade and other payables 27 170 - 26 036 1 134
27 170 - (40 863) 68 033
5 Rights issue
During the first quarter of 2016, Sentula embarked on a partially underwritten renounceable rights offer in terms of
which 100 rights offer shares were issued for every 100 shares held at a subscription price of 18 cents per rights
offer share. The Company raised R104,58 million. Following the issue of the rights offer shares, the number of
Sentula shares in issue is 1 167 564 491.
6 Contingent assets
During the year, judgement was granted in favour of the Golden Autumn Trust against Argent Industrial Limited
("Argent") for payment of the sum of R8,8 million with interest on this sum a tempore more, 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 Mining.
Argent's claim against Sentula and Megacube was dismissed with costs.
7 Contingent liabilities
Keaton sought, in one of its claims in the arbitration, compensation for the value of ROM coal allegedly not
extracted amounting to R39,5 million based on 386 592 tons. As an alternative to this claim Keaton claimed an
amount of R48,6 million in respect of the cost to remove the overburden above the coal allegedly not extracted.
The higher amount of R48,6 million was provided for.
However, the arbitrator awarded Keaton tonnages substantially in excess of what it sought, namely for
657 583 tons ROM coal allegedly not extracted.
The additional 270 991 tons of ROM coal awarded under this claim, estimated value of R45 million, is challenged
in the mentioned high court application. As a result, no further provision has been made above the compensation
originally sought by Keaton.
8 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.
On 30 September 2016, Sentula issued a circular to shareholders where shareholders were advised that Sentula,
Sentula Coal a 50,5% held subsidiary of Sentula, and Close-Up Mining have entered into a merger agreement in
terms of which Sentula will dispose of its entire 50,5% shareholding in Sentula Coal to Close-Up at a value of
R50 as well as Sentula's claims against Sentula Coal in the amount of R50 million to Close-Up. In consideration
thereof, Close-Up will allot and issue 40% of Close-Up shares to Sentula.
In addition, Benicon will dispose of certain selected plant and equipment to Sentula valued at open market value for
R50 million which plant and equipment shall thereafter be disposed of by Sentula, to Sentula Coal for the same price.
Subsequent to period-end, Sentula Coal employed a substantial number of staff previously employed by Benicon. From 1 July 2016,
Sentula Coal will be responsible for all Anglo Coal contracts historically executed by Benicon. As a result, Benicon was
left with idle plant and equipment, certain debtors and some inventory. Benicon's idle plant and equipment are being disposed
of in an orderly fashion to raise the necessary cash to settle liabilities.
9 Going concern
The financial statements have been prepared on the going-concern basis. 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.
Although the current liabilities of the group exceed its current assets, due to the nature of these liabilities the
directors have every reason to believe 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.
The Company restructured its debt in March 2016 and based on Sentula subsidiaries’ cash flow forecasts for the 2017 financial
year, is expected to meet all its obligations during this period.
10 Audit opinion
These summary consolidated financial statements for the 15 months ended 30 June 2016 have been audited by
PricewaterhouseCoopers Inc., who expressed an unmodified opinion thereon. The auditor also expressed an unmodified
opinion on the financial statements from which these summary consolidated financial statements were derived.
A copy of the auditor's report on the summary consolidated financial statements and of the auditor's report on the financial
statements are available for inspection at the Company's registered office, together with the financial statements identified
in the respective auditor's reports.
Directors: RB Patmore* (Chairman), JC Badenhorst (Chief Executive Officer),
JC Lemmer (Financial Director), DR Zihlangu#, SP Naudé*, ME Gama*, T de Bruyn#
*Independent non-executive #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
Sponsor: Questco Proprietary Limited
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
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