Wrap Text
Unaudited Interim Consolidated Financial Statements
For The Period Ended 31 August 2017
Rockwell Diamonds Inc.
(A company incorporated in accordance with the laws of British Columbia, Canada)
(Incorporation number BC0354545)
(South African registration number: 2007/031582/10)
Primary listing: TSX Secondary listing: JSE
Share code on the JSE Limited: RDI ISIN: CA77434W2022
Share code on the TSX: RDI CUSIP Number: 77434W103
("Rockwell" or "the Group")
16 October 2017
Unaudited interim consolidated financial statements for the period ended
31 August 2017
Consolidated statements of financial position
As at As at
31 August 28 February
Amounts in Canadian Dollars ('000) 2017 2017
Assets
Non-current assets
Mineral property interests - 15 143
Investment in associates - 623
Property, plant and equipment - 24 254
Rehabilitation deposits - 1 884
Investment and deposits - 136
Total non-current assets - 42 040
Current assets
Inventories - 1 381
Trade and other receivables 85 1 569
Cash and cash equivalents 56 1 730
Total current assets 141 4 680
Non-current assets held for sale - 10 970
Total assets 141 57 690
Equity and liabilities
Equity
Share capital 147 472 147 472
Reserves - (14 391)
Retained loss (163 729) (144 825)
Total equity (16 257) (11 744)
Liabilities
Non-current liabilities
Rehabilitation obligation - 2 508
Non-current portion of trade and other payables - 961
Total non-current liabilities - 3 469
Current liabilities
Loans and borrowings 15 486 38 852
Finance lease obligation - 511
Trade and other payables 912 17 007
Bank overdraft - 1 207
Total current liabilities 16 398 57 577
Non-current liabilities held for sale - 8 388
Total liabilities 16 398 69 434
Total equity and liabilities 141 57 690
The accompanying notes are an integral part of these unaudited interim
consolidated financial statements
Consolidated statements of financial performance
3 months 6 months 3 months 6 months
ended ended ended ended
31 August 31 August 31 August 31 August
Amounts in Canadian 2017 2017 2016 2016
Dollars ('000)
Sale of diamonds - - 10 576 22 673
Beneficiation income - - 2 839 3 208
Cost of sales before
amortization
and depreciation - - (11 717) (20 890)
Gross profit before
amortization
and depreciation - - 1 698 4 991
Amortization of mineral
property interests - - (659) (932)
Depreciation of property,
plant and equipment - - (1 152) (2 295)
Rehabilitation obligation
recognized - - (514) (556)
Gross (loss) profit - - (627) 1 208
Other income - - 216 270
General, administration
and business development
expenses (133) (260) (995) (1 708)
Loss before net finance
costs (133) (260) (1 406) (230)
Finance income - - 1 19
Foreign exchange profit
on US$ loans - - 1 567 1 632
Finance costs (178) (343) (791) (1 508)
Loss after net finance
costs (311) (603) (629) (87)
Share of profit from
equity accounted investment - - 33 69
Loss before taxation (311) (603) (596) (18)
Taxation - - 8 -
Loss profit for the period (311) (603) (588) (18)
Loss attributable to:
Owners of the parent (311) (603) (588) (619)
Non-controlling interest - - - 601
(311) (603) (588) (18)
Loss per share
Basic and diluted loss
per share (cents) (0.57) (1.10) (1.07) (0.03)
Consolidated statements of comprehensive income
3 months 6 months 3 months 6 months
ended ended ended ended
31 August 31 August 31 August 31 August
Amounts in Canadian 2017 2017 2016 2016
Dollars ('000)
Loss for the period (311) (603) (588) (18)
Other comprehensive
income net of taxation
Items that are or may be
reclassified to profit
or loss
Exchange differences on
translating foreign
operations 23 855 23 490 302 (151)
Other comprehensive
income for the period net
of taxation 23 855 23 490 302 (151)
Total comprehensive income
(loss) for the period 23 544 22 887 (286) (169)
Total comprehensive income
attributable to:
Owners of the Group 23 490 22 887 (286) (169)
Consolidated statements of changes in equity
Foreign
currency Share-
trans- based
Amounts in Canadian Share lation payment
Dollars ('000) capital reserve* reserve**
Balance at
01 March 2016 147 472 (22 706) 9 099
Total comprehensive
income for the period
Loss for the period - - -
Other comprehensive income - (151) -
Total comprehensive income
for the period - (151) -
Share-based payment expense - - 16
Total changes - (151) 16
Balance as at
31 August 2016 147 472 (22 857) 9 115
Balance at
01 March 2017 147 472 (23 490) 9 099
Total comprehensive income
for the period
Loss for the period - - -
Other comprehensive income - 23 490 -
Total comprehensive income
for the period - 23 490 -
Loss of control of
subsidiaries - effect
of deconsolidation - - -
Reversal of share-based payment
reserve - - (9 099)
Total changes - 23 490 (9 099)
Balance at
31 August 2017 147 472 - -
Total Re-
net tained Total
Amounts in Canadian reserves loss equity
Dollars ('000)
Balance at
01 March 2016 (13 607) (130 358) 3 507
Total comprehensive
income for the period
Loss for the period - (18) (18)
Other comprehensive income (151) - (151)
Total comprehensive income
for the period (151) (18) (169)
Share-based payment expense 16 - 16
Total changes (135) (18) (153)
Balance as at
31 August 2016 (13 742) - 3 354
Balance at
01 March 2017 (14 391) (144 825) (11 744)
Total comprehensive income
for the perio
Loss for the period - (603) (603)
Other comprehensive income 23 490 - 23 490
Total comprehensive income
for the period 23 490 (603) 22 887
Loss of control of
subsidiaries - effect
of deconsolidation - (18 301) (18 301)
Reversal of share-based payment
reserve (9 099) - (9 099)
Total changes 14 391 (18 904) (4 513)
Balance at
31 August 2017 - (163 729) (16 257)
* 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.
The accompanying notes are an integral part of these unaudited interim
consolidated financial statements.
Loss per share
Basic and diluted loss per share
3 months 6 months 3 months 6 months
ended ended ended ended
Amounts in Canadian 31 August 31 August 31 August 31 August
Dollars ('000) 2017 2017 2016 2016
Basic loss per share
Cents per share (0.57) (1.10) (1.07) (0.03)
Basic loss per share was calculated based on a weighted average number of
ordinary common shares of 54 983 244 for the 6 months ended 31 August 2017
(3 months ended 31 August 2017: 54 983 244) and 54 983 244 for the 3 months
ended 31 August 2016 (3 months ended 31 August 2016: 54 983 244).
Reconciliation of loss for the period to basic loss
3 months 6 months 3 months 6 months
ended ended ended ended
Amounts in Canadian 31 August 31 August 31 August 31 August
Dollars ('000) 2017 2017 2016 2016
Loss for period (311) (603) (588) (18)
Cents per share
Adjusted for:
Loss attributable to non-
controlling interests - - - -
Basic loss attributable
to owners of the Group (311) (603) (588) (18)
Diluted loss per share is equal to loss per share because there are no dilutive
potential ordinary shares in issue.
At 31 August 2017 and 31 August 2016 the impact of share-based options were
excluded from the weighted average number of shares as the effect would have
been anti-dilutive.
Basic and diluted headline loss per share
3 months 6 months 3 months 6 months
ended ended ended ended
Amounts in Canadian 31 August 31 August 31 August 31 August
Dollars ('000) 2017 2017 2016 2016
Headline loss per
share (cents) (0.57) (1.10) (1.08) (0.40)
Reconciliation between basic loss and headline loss
3 months 6 months 3 months 6 months
ended ended ended ended
Amounts in Canadian 31 August 31 August 31 August 31 August
Dollars ('000) 2017 2017 2016 2016
Basic loss attributable
to owners of the Group (311) (603) (588) (18)
Adjusted for:
Profit on disposal of assets - - (4) (204)
Realised foreign exchange - - - -
Non-controlling interest
portion of the above
adjustments - - - -
Headline loss attributable to
owners of the Group (311) (603) (592) (222)
The basic and diluted headline loss per share disclosed is provided based on
the listing requirements of the Johannesburg Stock Exchange (Group’s secondary
listing). The disclosure of basic and diluted loss per share is provided in
accordance with Circular 2/2013 as issued by the South African Institute of
Chartered Accountants. Headline loss represents the basic loss attributable to
the owners of the Group excluding certain re-measurements.
At 31 August 2017 and 31 August 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 per share calculation, as the effect would have
been anti-dilutive.
Continuance of operations
Although the Group experienced a total comprehensive income of $23.5 million for
the period ended 31 August 2017 (31 August 2016: incurred a loss of
$0.2 million) due to the exchange differences on translating foreign exchange
operations being written back due to the deconsolidation of the Company's
subsidiaries, as of this date its currentliabilities exceed its current assets
by $16.3 million (31 August 2016: $11.8 million).
Basis of preparation
Statement of compliance
The accompanying unaudited interim consolidated financial statements have been
prepared in accordance with IAS 34: Interim Financial Reporting. The accounting
policies applied in the unaudited interim consolidated financial statements are
consistent with those applied in the consolidated financial statements for the
year ended 28 February 2017, which have been prepared in accordance with
International Financial Reporting Standards ("IFRS") as issued by the
International Accounting Standards Board ("IASB").
Accounting treatment of operating subsidiaries
IFRS 10 requires that a Company consolidate investee entities where:
- an investor controls an investee, and when it is exposed, or has rights, to
variable returns from its involvement with the investee; and
- has the ability to affect those returns through its power over the investee.
Business rescue
In November 2016, an interim liquidation application was brought by C-Rock
Mining Limited (’CML') against three subsidiaries of the Company, which
resulted in a provisional winding-up order being issued by the High Court of
South Africa, Northern Cape division on 23 March 2017. This order made in
respect of the Company's subsidiaries, Rockwell Resources RSA (Pty) Ltd
(Rockwell RSA), HC van Wyk Diamonds Ltd (HC van Wyk) and Saxendrift Mine
(Pty) Ltd (Saxendrift), but not the Company.
The Company's subsidiaries attended again before the High Court in South Africa,
Northern Cape division on 18 May 2017 in respect of creditors' applications to
place the three subsidiaries into ‘business rescue'. In order to grant the
applications, the court needed to be satisfied that the prospects for success
were sufficiently reasonable that the provisional liquidation order should
be permanently suspended, and all other legal matters be stayed, to allow
the subsidiaries the ability to return to commercial health. In accepting the
applications, the court accepted the Company's contention that there is a
reasonable prospect of rescuing the subsidiaries and that it has a sound
business plan to restore them to long-term profitability.
The Company itself was not in business rescue and is not involved in any
insolvency arrangement in Canada either.
The business rescue practitioners were Metis Strategy Advisors, who were
appointed by the Court on an interim basis. Their appointment was ratified
by creditors on 10 June 2017 and they managed the Wouterspan mine since then.
Business rescue (BR) is similar to Canadian work out arrangements, although
a major distinction in South Africa is that final commercial decisions are
made by the practitioners in consultation with the existing management of the
entity, and not by the Court which is the practice in Canada. The board of
directors of the subsidiaries remained in place and continued to direct the
affairs of the three subsidiaries, subject to final concurrence of the business
rescue practitioners. The Company's three subsidiaries needed a court order
to exit business rescue, and to do so, the business rescue practitioners
needed to have been satisfied that the business is sound enough to meet
obligations as they fall due for the subsequent six months after exit. The
effect of the BR order was that the joint business rescue practitioners
oversaw the affairs of the subsidiaries, by working alongside the directors
and management to right the businesses of the subsidiaries, and implement
the business rescue plan to restore future commercial success. The immediate
effect at such time was all claims against the three subsidiaries were
stayed, and the liquidation process was suspended, such that the commissioning
and ramp up could continue on a protected basis. The Company's subsidiaries
would also continue to pursue all of its current criminal and civil claims
against a former employee as well as CML and certain individuals involved
in the business of CML during such period.
Subsequent events relevant to basis of preparation
On 7 September 2017 the business rescue practitioners concluded that the three
subsidiaries under business rescue did not represent a sustainable business
operation, placed the Wouterspan mine on care and maintenance and made a motion
to the High Court in Kimberley to place the three subsidiaries back in
provisional liquidation. This resulted in the termination of the business
rescue practitioners and theire counsel's mandate.
The High Court sanctioned the provisional liquidation order on 22 September 2017
and provisional liquidators were appointed on 27 September 2017, taking the
control of the three subsidiaries away from the Company as its parent.
In terms of IFRS 10, the Company has concluded that the above circumstances
represent a loss of shareholder control by virtue of the provisional liquidation
orders against the subsidiaries, and the assets and liabilities in such
subsidiaries were de-recognised at the reporting date.
Business rescue
In November 2016, an interim liquidation application was brought by C-Rock
Mining Limited ('CML') against three subsidiaries of the Company, which
resulted in a provisional winding-up order being issued by the High Court
of South Africa, Northern Cape division on 23 March 2017. This order made
in respect of the Company’s subsidiaries, Rockwell Resources RSA (Pty) Ltd
(Rockwell RSA), HC van Wyk Diamonds Ltd (HC van Wyk) and Saxendrift Mine
(Pty) Ltd (Saxendrift), but not the Company.
The Company's subsidiaries attended again before the High Court in South Africa,
Northern Cape division on 18 May 2017 in respect of creditors’ applications to
place the three subsidiaries into ‘business rescue’. In order to grant the
applications, the court needed to be satisfied that the prospects for success
were sufficiently reasonable that the provisional liquidation order should be
permanently suspended, and all other legal matters be stayed, to allow the
subsidiaries the ability to return to commercial health. In accepting the
applications, the court accepted the Company’s contention that there is a
reasonable prospect of rescuing the subsidiaries and that it has a sound
business plan to restore them to long-term profitability.
The Company itself was not in business rescue and is not involved in any
insolvency arrangement in Canada either.
The business rescue practitioners were Metis Strategy Advisors, who were
appointed by the Court on an interim basis. Their appointment was ratified
by creditors on 10 June 2017 and they managed the Wouterspan mine since then.
Business rescue (BR) is similar to Canadian work out arrangements, although a
major distinction in South Africa is that final commercial decisions are made
by the practitioners in consultation with the existing management of the
entity, and not by the Court which is the practice in Canada. The board of
directors of the subsidiaries remained in place and continued to direct the
affairs of the three subsidiaries, subject to final concurrence of the business
rescue practitioners. The Company's three subsidiaries needed a court order to
exit business rescue, and to do so, the business rescue practitioners needed to
have been satisfied that the business is sound enough to meet obligations as
they fall due for the subsequent six months after exit. The effect of the BR
order was that the joint business rescue practitioners oversaw the affairs of
the subsidiaries, by working alongside the directors and management to right
the businesses of the subsidiaries, and implement the business rescue plan to
restore future commercial success. The immediate effect at such time was all
claims against the three subsidiaries were stayed, and the liquidation process
was suspended, such that the commissioning and ramp up could continue on a
protected basis. The Company's subsidiaries would also continue to pursue all
of its current criminal and civil claims against a former employee as well as
CML and certain individuals involved in the business of CML during such period.
Subsequent events
On 7 September 2017 the business rescue practitioners concluded that the three
subsidiaries under business rescue did not represent a sustainable business
operation, placed the Wouterspan mine on care and maintenance and made a motion
to the High Court in Kimberley to place the three subsidiaries back in
provisional liquidation. This resulted in the termination of the business
rescue practitioners and their Counsel.
The High Court sanctioned the provisional liquidation order on 22 September 2017
and provisional liquidators were appointed on 27 September 2017 with a return
date of 3 November 2017 for final determination.
In terms of IFRS 10, the Company has concluded that the above circumstances
represent a loss of shareholder control by virtue of the provisional liquidation
orders against the subsidiaries, and the assets and liabilities in such
subsidiaries were de-recognised at the reporting date.
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)
Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196
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: 17/10/2017 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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