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Consolidated financial statements for the year ended 30 June 2017
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 2017.
The financial statements were approved by the Board of Directors and
signed by Denis Gately (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 material uncertainty paragraph:
We draw attention to Note 1(a) in the financial report, which indicates
that the Group incurred a net loss of $2.0 million (2016: $7.7 million)
and used net cash in operating activities of $4.1 million (2016: $5.2
million) during the year ended 30 June 2017. As stated in Note 1(a),
these events or conditions, along with other matters as set forth in
Note 1(a), indicate that a material uncertainty exists that may cast
significant doubt on the Company’s and Group’s ability to continue as a
going concern. Our opinion is not modified in respect of this matter.
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 2017
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
30 August 2017
JSE Sponsor: Deloitte & Touche Sponsor Services (Pty) Limited
Resource Generation Limited (Resgen) is an emerging ASX and JSE-listed
energy company, currently developing the Boikarabelo Coal Mine in South
Africa’s Waterberg region. The Waterberg accounts for around 40% of the
country’s currently known coal resources. The Coal Resources and
Reserves for the Boikarabelo Coal Mine, held through the operating
subsidiary Ledjadja Coal, were recently updated based upon a new mine
plan and execution strategy. The Boikarabelo Coal Resources total 995Mt
and the Coal Reserves total 267Mt applying the JORC Code 2012 (SENS
announcement dated 23 January 2017)
Consolidated statement of profit or loss and other
comprehensive income
For the year ended 30 June 2017
Consolidated
2017 2016
$'000 $'000
Revenue from continuing
operations
182 210
Other
577 69
759 279
Administration, rent and
corporate (3,606) (1,638)
Depreciation of property plant
and equipment
(387) (334)
Employees benefits expense
(2,640) (3,682)
Finance expenses (3) (22)
Share based compensation
(355) 1,906
Foreign exchange movements
4,257 (4,165)
Loss before income tax
(1,975) (7,656)
Income tax expense 1 (1)
Loss from continuing operations
(1,974) (7,657)
Loss for the year (1,974) (7,657)
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
13,648 (19,550)
Total comprehensive income
11,674 (27,207)
Loss is attributable to:
Owners of Resource Generation
Limited
(1,974) (7,657)
Total comprehensive income for
the year is attributable to:
Owners of Resource Generation
Limited 11,674 (27,207)
Headline earnings (1,974) (7,657)
Earnings per share (EPS) (cents)
(0.3) (1.3)
Headline earnings per share
(HEPS)(cents)
(0.3) (1.3)
Consolidated statement of financial position
As at 30 June 2017
Consolidated
2017 2016
$'000 $'000
Current assets
Cash and cash
equivalents 4,682 11,955
Trade and other
receivables 170 146
Deposits and
prepayments 180 174
5,032 12,275
Non-current assets
Property, plant and
equipment 33,081 30,365
Mining tenements and
mining development 153,677 128,644
Deposits and loan
receivables 2,042 1,859
188,800 160,868
TOTAL ASSETS 193,832 173,143
Current liabilities
Trade and other
payables 8,185 6,967
Provisions 300 180
Borrowings 12,665 3,887
21,150 11,034
Non-current
liabilities
Provisions 2,175 1,983
Borrowings 34,115 35,728
Royalties payable 1,869 1,946
38,159 39,657
TOTAL LIABILITIES 59,309 50,691
NET ASSETS 134,523 122,452
Equity
Contributed equity 223,622 223,622
Reserves (36,910) (50,955)
Accumulated losses (52,189) (50,215)
TOTAL EQUITY 134,523 122,452
Consolidated statement of changes in equity
For the year ended 30 June 2017
Contri-
buted Retained Total
equity Reserves earnings equity
$'000 $'000 $'000 $'000
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
Loss for the year - - (1,974) (1,974)
Other comprehensive income
for the year – exchange differences
on translation of foreign
operations - 13,648 - 13,648
Total comprehensive income
/(loss) for the year - 13,648 (1,974) 11,674
Transactions with owners in their capacity as owners
Treasury shares to be issued
vesting 30 June 2018 - 42 - 42
Employee share plan
value of employee services - 204 - 204
Employee share plan
Value of employee service - 151 - 151
- 397 - 397
Balance at 30 June 2017 223,622 (36,910) (52,189) 134,523
For the year ended 30 June 2017
Consolidated
2017 2016
$'000 $'000
Cash flows from operating
activities
Payments to suppliers and
employees (4,277) (5,369)
Interest received 182 210
Finance costs (3) (22)
Taxation payments 1 (1)
Net cash outflow from
operating activities (4,097) (5,182)
Cash flows from investing
activities
Payments for land, property,
plant and equipment (185) (537)
Payments for mining tenements
and mining development (6,673) (8,836)
Net cash outflow from
investing activities (6,858) (9,373)
Cash flows from financing
activities
Repayment of borrowings (2,798) (1,935)
Forfeited share deposit - -
Drawdown from
loan 6,830 -
Net cash inflow from
financing activities 4,032 (1,935)
Net (decrease)/increase in
cash and cash equivalents (6,923) (16,490)
Cash and cash equivalents at
the beginning of the year 11,955 28,551
Effects of exchange rate
movements on cash and cash
equivalents (350) (106)
Cash and cash equivalents at
the end of the year 4,682 11,955
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 2016. These accounting policies are consistent with Australian
Accounting Standards and with International Financial Reporting
Standards.
Capitalisation of Mining Tenements and Mining 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.
Development 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.
As at 30 June 2017 the carrying value of the capitalised Mining
Tenements and Mining Development Expenditure is $153.7m (2016: $128.6m)
as disclosed in note 11. In the current year $10.0m of development
expenditure has been capitalised.
Management has exercised judgment in determining whether development
expenditure incurred meets the criteria for capitalisation, including:
1. Assessing whether costs are directly attributable to bringing the
mine to the location and condition necessary for operating as
intended; and
2. Assessing whether it is probable that the expenditure will result
in future economic benefits, including an assessment of the
availability of adequate funding for development and exploitation
of the assets or alternatively, the ability to sell the asset.
Impairment of Property, Plant and Equipment and Mining Tenements and
Mining Development expenditure
As at 30 June 2017 the carrying value of Property, Plant and Equipment
and Mining Tenements and Mining Development Expenditure is $33.1m
(2016: $30.4m) and $153.7m (2016: $128.6) respectively, as disclosed in
notes 10 and 11.
Management has exercised judgment in determining whether indicators of
impairment exist for Property, Plant and Equipment and Mining Tenements
and Mining Development Expenditure. When such indicators are
identified, management is required to exercised significant judgment in
making and estimate of recoverable amount of these assets, including:
1. Future cash flows for Cash Generating Units (‘CGU’), which include
estimates of future coal prices, operating and capital costs and
foreign exchange rates; and
2. Discount rates.
4. Segment information
4.1 Description of operating segments
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 administration costs.
4.2 Segment revenue and results
Segment Revenue Segment Loss
Year Year Year Year
Ended Ended Ended Ended
30/6/17 30/6/16 30/6/17 30/6/16
$’000 $’000 $’000 $’000
Mining
Tenements
And mining
Development 623 243 (848) (629)
Corporate –
Unallocated 136 36 (1,126) (7,028)
Total for
Continued
Operations 759 279 (1,974) (7,657)
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 incurred by that
segment without allocation of central administration costs and salaries,
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
2017 2016
$’000 $’000
Segment assets
Mining tenements
and mining
development 193,082 162,114
Corporate –
unallocated 750 11,029
193,832 173,143
Segment liabilities
Mining tenements
and mining
development 58,975 50,390
Corporate –
unallocated 334 301
59,309 50,691
4.4 Other segment information
Depreciation and Additions to land,
amortisation property, plant and equipment
Year Year Year Year
ended ended ended ended
30/6/17 30/6/16 30/6/17 30/6/16
$’000 $’000 $’000 $’000
Mining tenements
and mining
development 367 309 185 504
Corporate –
unallocated 20 25 - 33
Total 387 334 185 537
4.5 Other segment information – mining assets
Additions
to mining
assets
Year ended Year ended
30/6/17 30/6/16
Mining tenements and
Mining development 9,968 20,025
Corporate – unallocated - -
9,968 20,025
4.6 Geographical information
Revenue from external customers Non-current assets
Year Year Year Year
ended ended ended ended
30/6/17 30/6/16 30/6/17 30/6/16
$’000 $’000 $’000 $’000
Australia 136 36 18 39
South
Africa 623 243 188,782 160,829
759 279 188,800 160,868
5 Events occurring after the reporting period
Subsequent to the end of the financial year, the Board believed it would
be reasonable to ask the Debt Club members to undertake their credit
approval process to a conclusion notwithstanding the lack of an Eskom
memorandum of understanding, but on the basis that any draw down of
senior debt be subject to a concluded domestic coal supply agreement
being in place.
However, on 23 August 2017 some Debt Club members formally declined to
proceed on that basis. Instead they required a greater degree of
certainty around the terms of supply to Eskom before proceeding to
secure credit approval for funding of the project. In the circumstances,
the Board now believes that seeking project finance from the Debt Club
is no longer viable.
Mindful of the present difficulties in securing terms of supply with
Eskom, management has in parallel been exploring an alternative funding
proposal to place before the Board (the Alternative Funding). This
proposal is not subject to a committed domestic coal supply agreement.
The credit approval processes of these lenders, who are familiar with
the project, have commenced and are expected to be concluded by October
2017. Provided those processes are successful, a signed term sheet could
be expected before the end of October 2017. At that time the Board will
consider a recommendation from management and make a decision on the
Alternative Funding proposal.
Subsequent to the end of the financial year, Noble agreed to defer the
date on which loan repayments were to commence from September 2017 to
April 2018.
There are no other events that have occurred subsequent to the end of
the financial year that have significantly affected or may significantly
affect:
(i) the Group’s operations in future financial years, or
(ii) the results of those operations in future financial years,
or
(iii) the Group’s state of affairs in future financial years.
6 Dividends
No dividends were paid or proposed to be paid to members during the
financial year (2016: nil).
Date: 30/08/2017 10:12:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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