Wrap Text
Interim Financial Report for the half year ended 31 December 2017
RESOURCE GENERATION LIMITED ABN 91 059 950 337
Resource Generation Limited
Registered in Australia under the Corporations Act, 2001 (Cth) with
registration number ACN: 059 950 337
ISIN: AU000000RES1
Share Code on the ASX: RES
Share Code on the JSE: RSG
(“Resource Generation” or the “Company”)
Interim Financial Report for the half year ended 31 December 2017
Contents Page
Directors' report 2
Auditor's independence declaration 4
Interim financial report
Condensed consolidated statement of profit or loss and other comprehensive income 5
Condensed consolidated statement of financialposition 6
Condensed consolidated statement of changesin equity 7
Condensed consolidated statement of cash flows 8
Notes to the condensed consolidatedfinancial statements 9
Directors' declaration 14
Independent auditor's review report 15
Supplementary information - presentation of financial information in South African Rand 17
This interim financial report does not include all of the notes of the type normally included in an annual financial report. Accordingly, this report is to
be read in conjunction with the annual report for the year ended 30 June 2017 and any public announcements made by Resource Generation
Limited during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001 and the ASX
Listing Rules.
RESOURCE GENERATION LIMITED
Directors' report
The Board of Directors present their report on the consolidated entity (referred to hereafter as the Group) consisting of Resource Generation Limited (Resgen or the Company)
and the entities it controlled for the half year ended 31 December 2017 (HY18). In order to comply with the provision of the Corporations Act 2001, the Directors report as
follows:
1. Directors
The following persons were Directors of Resource Generation Limited during or since the end of the half year:
Name Position Length of service
Mr L Xate Chairman and Non-executive Director 2.25 years (As Chair effective 22 November 2017)
Mr R Croll Independent Non-executive Director 2.25 years
Mr M Dahiya Non-executive Director 0.58 years
Mr C Gilligan Independent Non-executive Director 2.25 years
Mr L Molotsane * Independent Executive Director 2.25 years
Dr K Sebati Independent Non-executive Director 2.25 years
Mr P Watson Independent Non-executive Director 0.08 years (Appointed 23 November 2017)
Mr D Gately Chairman and Independent Non-executive Director 2.24 years (Resigned 22 November 2017)
* Mr Molotsane was appointed Interim Managing Director and CEO effective 8 March 2018.
Mr M Meintjes has been Company Secretary since 26 November 2015.
2. Principal activities
During the half year the principal continuing activities of the Group consisted of the financing and development of the Boikarabelo Coal Mine in the Waterberg region of South
Africa.
3. Review of operations
During the HY18 the Group recorded a net loss of $1.2 million (HY17: $1.2 million loss). The HY18 net loss of $1.2 million includes administrative and corporate expenses of
$1.3 million, employee expenses of $1.2 million and an unrealised foreign exchange gain of $1.5 million.
Management continued with its efforts to render the development of the Boikarabelo Coal Mine bankable. In particular, demonstrable progress has been made to finalise the
material contracts including those relating to an economically viable logistics solution and the EPC contracts.
During the period, the primary source of Project Funding being pursued by the Company since 2016 was determined to be no longer viable because the financing parties
required a greater degree of certainty around the terms of coal supply to Eskom before proceeding to secure credit approval. Management had in parallel been exploring
another funding proposal to place before the Board. This proposal is not subject to a committed domestic coal supply with Eskom. By 31 December 2017, the lenders had
completed their due diligence investigations and prepared their credit committee submissions.
The Company has received legal advice that the funding proposal currently being progressed will require approval of Shareholders under ASX Listing Rule requirements. An
independent expert based in Australia has been identified and has been briefed on the funding proposal currently under negotiation and will be instructed to prepare a report
for Shareholders. Any such report will contain a detailed synopsis of the proposed funding and financial implications. An extraordinary general meeting of Shareholders would
then be called for the purpose of considering and approving the funding proposal.
The proposed facility under negotiation is intended to provide the total funds required to complete the construction of the mine to the point of commissioning, but does not
include the costs of constructing the rail link. In parallel the Company is continuing to progress negotiations with respect to the funding of the rail link with a number of interested
parties. The cost of the rail link is estimated to be approximately R650 million (approximately $68.4 million). Ramp-up costs for the mine are estimated to be approximately
R300 million (approximately $31.5 million). Management believes these funds can be raised when required from commercial banks, as the Project will have been substantially
de-risked at that point in time.
The Company, through its subsidiary, Ledjadja Coal (Pty) Ltd (LCL), executed an agreement with Noble Resources International Pte Ltd (Noble) for the supply of additional
uncontracted coal to be produced from the mine. The grant to Noble of this first right of refusal to purchase any additional uncontracted coal to be produced from the mine
arose during negotiations of an extension to the Facility Agreement. Performance of the Offtake Agreement is subject to receipt of relevant regulatory/shareholder approvals.
LCL has agreed to offer to sell and deliver to Noble a committed quantity of 800,000 tonnes of coal per annum, plus up to 300,000 tonnes of coal per annum as advised by
LCL to Noble on a quarterly basis for years 1 to 3; and from year 4 onwards, up to 200,000 tonnes of coal per annum as advised by LCL to Noble on a quarterly basis.
Directors' report (continued)
3. Review of operations (continued)
The Company executed a further extension of the Facility Agreement of 3 March 2014 under which Noble agreed to make available additional funds of up to US$3.8 million to
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RESOURCE GENERATION LIMITED
LCL to fund the operations and development of the mine whilst project funding is secured. The total facility made available to the Company is now US$32.2 million. The
additional funds are to be made available on the same terms as the existing facility and can be drawn in monthly tranches over the period to 31 March 2018. In addition, the
Group agreed with Noble to extend the commencement of repayment of the amounts borrowed from September 2017 to April 2018.
4. Dividends
No dividends were paid or proposed to be paid to members during the financial half year (2016: nil).
5. Events occurring after the balance sheet date
There are no matters of significance up to the date of this report that have not been included in the interim financial report.
6. Auditor's independence declaration
The auditors' independence declaration is included on page 4 of the interim financial report.
7. Rounding of amounts
The Company is a company of the kind referred to in ASIC Corporations (Rounding in Financials/Directors' Reports) Instrument 2016/191, dated 24 March 2016, and in
accordance with that Instrument amounts in the Directors' report and the interim financial report have been rounded off to the nearest thousand dollars, unless otherwise
indicated.
This report is made in accordance with a resolution of the Directors, pursuant to Section 306(3) of the Corporations Act 2001.
On behalf of the Directors
L Xate Chairman
Johannesburg
16 March 2018
JSE Sponsor: Deloitte & Touche Sponsor Services (Pty) Ltd
Page 3
Deloitte,
Deloitte Touche Tohmatsu
ABN 74 490 121 060 Level
23, Riverside Centre 123
Eagle Street Brisbane,
QLD, 4000 Australia
Phone: +61 7 3308 7000
www.deloitte.com.au
The Board of Directors Resource Generation
Limited Level 1, 17 Station Road
Indooroopilly QLD 4068
16 March 2018
Dear Board Members Resource
Generation Limited
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following declaration of independence to the
directors of Resource Generation Limited.
As lead audit partner for the review of the financial statements of Resource Generation Limited for the half-year ended 31 December 2017, I
declare that to the best of my knowledge and belief, there have been no contraventions of:
(i) the auditor independence requirements of the Corporations Act 2001 in relation to the review; and
(ii) any applicable code of professional conduct in relation to the review.
Matthew Donaldson Partner
Chartered Accountants
Yours sincerely
DELOITTE TOUCHE TOHMATSU
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited.
4
RESOURCE GENERATION LIMITED
Condensed consolidated statement of profit or loss and other comprehensive income For the half
year ended 31 December 2017 _____________________________________________________
Half year ended
31-Dec-17 31-Dec-16
Notes $'000 $'000
Revenue from continuing operations ____________ 179 ____________ 315
(2,049)
(1,272) (183)
Administrative, rent and corporate Depreciation of property, plant and (187) (1,379)
equipment Employee benefits expense Finance expenses (1,231) (3)
(3)
Share-based compensation expense Unrealised foreign exchange 3 (130) (138)
movements 3 1,456 2,208
Loss before income tax (1,188) (1,229)
Income tax benefit - 1
Loss for the half year (1,188) (1,228)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss: Exchange
7 5,222 15,504
gain on translation of foreign operations
Total comprehensive income for the half year 4,034 14,276
Loss is attributable to:
Owners of Resource Generation Limited (1,188) (1,228)
Total comprehensive income for the half year is attributable to: Owners
of Resource Generation Limited 4,034 14,276
Headline loss (1,188) (1,228)
Loss per share
Cents Cents
(0.21) (0.21)
Loss per share for loss from continuing operations Basic loss per share (0.21) (0.21)
Diluted loss per share Headline loss per share (0.21) (0.21)
The above condensed consolidated statement of profit or loss and other comprehensive income should be read in conjunction with
the accompanying notes.
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RESOURCE GENERATION LIMITED
Condensed consolidated statement of financial position As at 31 December 2017
31-Dec-17 30-Jun-17
Notes $'000 $'000
Current assets
Cash and cash equivalents 1,830 4,682
Trade and other receivables 192 170
Deposits and prepayments 284
180
2,306 5,032
Non-current assets
Property, plant and equipment 34,191 33,081
Mining tenements and mining development 165,658 153,677
Deposits 1,269 2,042
201,118 188,800
TOTAL ASSETS 203,424 193,832
Current liabilities
Trade and other payables 6,479 8,185
Provisions 455 300
Borrowings 4 14,619 12,665
21,553 21,150
Non-current liabilities
Provisions 2,261 2,175
Borrowings 4 39,028 34,115
Royalties payable 1,869
1,868
38,159
43,157
TOTAL LIABILITIES 64,710 59,309
NET ASSETS 138,714 134,523
Equity
Contributed equity 5 223,622 223,622
Reserves 7 (31,531) (36,910)
Accumulated losses (53,377) (52,189)
TOTAL EQUITY 138,714 134,523
The above condensed consolidated statement of financial position should be read in conjunction with the accompanying notes.
Condensed consolidated statement of changes in equity For the half year ended 31 December 2017
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RESOURCE GENERATION LIMITED
Attributable to owners of Resource Generation Limited
Contributed Retained
equity Reserves earnings Total equity
Notes $'000 $'000 $'000 $'000
Balance at 1 July 2016 223,622 (50,955) (50,215) 122,452
Loss for the period (1,228) (1,228)
Other comprehensive income for the period (foreign currency translation) - 15,504 - 15,504
Total comprehensive (loss)/income for the period - 15,504 (1,228) 14,276
Employee share plan - value of employee services 265 265
- 265 - 265
Balance at 31 December 2016 223,622 (35,186) (51,443) 136,993
Balance at 1 July 2017 223,622 (36,910) (52,189) 134,523
Loss for the period (1,188) (1,188)
Other comprehensive income for the period (foreign currency translation) - 5,222 - 5,222
Total comprehensive (loss)/income for the period - 5,222 (1,188) 4,034
Employee share plan - value of employee services 7 130 130
Treasury shares to be issued - vesting 30 June 2018 7 - 27 - 27
- 157 - 157
Balance at 31 December 2017 223,622 (31,531) (53,377) 138,714
The above condensed consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
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RESOURCE GENERATION LIMITED
Condensed consolidated statement of cash flows For the half year ended 31 December 2017
Half year ended
31-Dec-17 31-Dec-16
$'000 $'000
Cash flows from operating activities
Payments to suppliers and employees (3,254) (3,364)
Interest received 112 70
Interest/finance costs paid (3) (3)
Taxation refund - 1
Net cash outflow from operating activities (3,145) (3,296)
Cash flows from investing activities
Payments for property, plant and equipment (1) (118)
Payments for mining tenements and mining development (3,377) (3,116)
Net cash outflow from investing activities (3,378) (3,234)
Cash flows from financing activities
Repayment of borrowings (1,256) (1,403)
Drawdown of borrowings 4,776 -
Net cash inflow/(outflow) from financing activities 3,520 (1,403)
Net decrease in cash and cash equivalents (3,003) (7,933)
Cash and cash equivalents at the beginning of the half year 4,682 11,955
Effects of exchange rate movements on cash and cash equivalents 151 495
Cash and cash equivalents at the end of the half year 1,830 4,517
The above condensed consolidated statement of cash flows should be read in conjunction with the accompanying notes.
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RESOURCE GENERATION LIMITED
Notes to the condensed consolidated financial statements For
the half year ended 31 December 2017
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of preparation of half year financial report
This general purpose financial report for the interim half year reporting period ended 31 December 2017 (HY18) has been prepared in accordance
with AASB 134 Interim Financial Reporting and the Corporations Act 2001. Compliance with AASB 134 ensures compliance with International
Financial Reporting Standard IAS 34 'Interim Financial Reporting'.
This interim financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to
be read in conjunction with the Annual Report for the year ended 30 June 2017 and any public announcements made by Resource Generation
Limited during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001 and the ASX
Listing Rules.
The interim financial report been prepared on the basis of historical cost, except for financial instruments which are measures at fair value. Cost
is based on the fair values of the consideration given in exchange for assets. All amounts are presented in Australian dollars, unless otherwise
noted.
The Company is a Company of the kind referred to in ASIC Corporations (Rounding in Financial/Directors'Report) Instruments, dated 24
March 2016, and in accordance with that Corporations Instrument amounts in the financial report are rounded off to the nearest thousand
dollars, unless otherwise stated.
Disclosure surrounding adoption of new or revised Standards
The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting Standards Board (AASB)
that are relevant to their operations and effective for the current half year.
*AASB 2016-1 Recognition of Deferred Tax Assets for Unrealised Losses [AASB 112]
*AASB 2016-2 Disclosure Initiative: Amendments to AASB
107 *AASB 2017-2 Further Annual Improvements 2014-2016
Cycle
The Company has reviewed the above Accounting Standards and determined that they have no material impact on the interim financial report for
the half year ended 31 December 2017.
The following new accounting standards are not yet effective but may have an impact on the Group in the financial years commencing 1 July 2017
or later:
*AASB 9 Financial Instruments
*AASB 15 Revenue from Contracts with Customers
*AASB 2014-5 Amendments to Australian Accounting Standards arising from AASB 15
*AASB 2015-8 Amendments to Australian Accounting Standards - Effective date of AASB
15 *AASB 2016-3 Amendments to Australian Accounting Standards - Clarification to AASB
15
*AASB 2016-5 Amendments to Australian Accounting Standards - Classification and Measurement of Share-based Payment Transactions
*AASB 16 Leases
*AASB Interpretation 22 Foreign Currency Transactions and Advanced Consideration
*AASB 2017-3 Amendments to Australian Accounting Standards - Clarifications to AASB 4
*AASB 2017-4 Amendments to Australian Accounting Standards - Uncertainty over Income Tax Treatments
The Company is in the process of determining the potential impact of adopting the above standards and they have not been applied in the
preparation of the interim financial report for the half year ended 31 December 2017.
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RESOURCE GENERATION LIMITED
Notes to the condensed consolidated financial statements For the half year
ended 31 December 2017
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
(b) Significant accounting policies
The accounting policies and methods of computation adopted in the preparation of the interim financial report are consistent with those adopted
and disclosed in the Company's annual financial report for the year ended 30 June 2017. These accounting policies are consistent with Australian
Accounting Standards and with International Financial Reporting Standards.
The interim financial report comprises the financial statements of Resource Generation Limited and its subsidiaries as at 31 December 2017 ("the
Consolidated Entity").
Going concern
The interim financial report has been prepared on the going concern basis which presumes the realisation of assets and the discharge of liabilities
in the normal course of business for the foreseeable future.
As at 31 December 2017, the Group had net current liabilities of $19.2 million (30 June 2017: net current liabilities of $16.1 million), made a loss
for the half year of $1.2 million (2017: $2.0 million loss for the year) and recorded a net cash outflow from operations of $3.1 million (2017: $4.1
million for the year). The Group had a cash balance at 31 December 2017 of $1.8 million (30 June 2017: $4.7 million).
In concluding that the going concern basis is appropriate, a cash flow forecast has been prepared for the fifteen months to 31 March 2019. The
forecast includes the following key assumptions:
(a) the drawdown of the remaining US$3.3 million from the US$3.8 million extended Working Capital Facility agreed with Noble in
November 2017, which is an extension of the existing fully drawn US$28.4 million Working Capital Facility;
(b) the deferral of the loan repayments on the Noble Working Capital Facility which are due to commence in April 2018;
(c) securing additional funds (the “bridging funding”) of approximately $2.8 million (US$2.2 million) before May 2018 to bridge the
gap to accessing the first drawdown under a proposed project funding facility; and
(d) the receipt of project funding from a Financing Syndicate to complete the construction of the Boikarabelo Coal Mine (the “project
funding”) on or around July 2018.
The Directors note the following in respect of the key assumptions:
(a) since 31 December 2017, the Group has drawn down US$1.75 million of funds under the extended Working Capital Facility
agreement. Recent market announcements have been made by Noble in respect of a proposal to significantly restructure its
debt. The proposal is subject to creditor, regulatory and shareholder approval. The Directors have been monitoring the
announcements closely and have held direct discussions with Noble management. At the date of signing the interim financial
report, the Directors remain confident that Noble will continue to honour the existing financing arrangements with the Group and
will provide further support as outlined in (b), (c) and (d) below;
(b) the Group has held preliminary discussions with Noble in respect of the deferral of loan repayments that are due to
commence in April 2018:
(c) the Group has held preliminary discussions with Noble in respect of a proposal to provide the bridging funding; and although
(d)
the proposed lenders in the Financing Syndicate have completed their due diligence investigations and credit submissions,
the Company is unable to forecast with certainty the outcome of the credit approval process and when signed terms sheets
will be received. However, based on regular communication with the Financing Syndicate, it is expected that approval will be
achieved in April 2018.
Based on the proposed time line, first drawdown of the project funding would then take place in July 2018 and this would permit construction of
the mine to commence with scheduled completion in October 2020. First saleable coal production would then occur in the last quarter of 2020.
Notwithstanding this, should the Group not secure bridging funding and not receive the proceeds anticipated under the project funding referred to
above, there are material uncertainties as to whether the Group will be able to continue as a going concern and, therefore, whether it will realise
its assets and extinguish its liabilities in the normal course of business and at the amounts stated in the financial report.
The financial report does not include adjustments relating to the recoverability and classification of recorded asset amounts nor to the amounts
and classification of liabilities that might be necessary should the Group not continue as a going concern.
(c) Income Tax
The Directors have not recognised any deferred tax assets in relation to carry forward unused tax losses. Given the history of operating losses,
the Directors have determined that the most appropriate time to recognise deferred tax assets from carry forward unused tax losses is when the
mine commences production.
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RESOURCE GENERATION LIMITED
Notes to the condensed consolidated financial statements For
the half year ended 31 December 2017
2. SEGMENT INFORMATION
(a) 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.
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.
(b) Primary reporting format
Information regarding these segments is presented below. The accounting of the reportable segments is the same as the Group's accounting
policies.
HY18 Mining Corporate
tenements
Africa Australia Total
$'000 $'000 $'000
Total segment and consolidated revenue 111 68 179
Loss before income tax (366) (822) (1,188)
Loss for the half year (366) (822) (1,188)
HY17 Mining Corporate
tenements
Africa Australia Total
$'000 $'000 $'000
Total segment and consolidated revenue 248 67 315
Loss before income tax (589) (640) (1,229)
Income tax benefit 1 - 1
Loss for the half year (588) (640) (1,228)
3. LOSS FOR THE HALF YEAR Half year ended
31-Dec-17 31-Dec-16
$'000 $'000
Loss for the half year includes the following items that are unusual because of their nature, size or
incidence:
Expenses
Share-based compensation expense 130 138
Unrealised foreign exchange movements (1,456) (2,208)
4. BORROWINGS
31-Dec-17 30-Jun-17
$'000 $'000
Current liabilities - Borrowings (unsecured) 14,619 12,665
14,619 12,665
Non-current liabilities - Borrowings (unsecured) 39,028 34,115
39,028 34,115
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RESOURCE GENERATION LIMITED
Notes to the condensed consolidated financial statements For
the half year ended 31 December 2017
4. BORROWINGS (continued)
Noble loan
US$20 million was drawn down as an unsecured loan from Noble Resources International Pte Ltd (Noble) in March 2014. The Company signed
a further extension of the Facility Agreement on 7 December 2017, under which Noble agreed to make available additional funds up to US$3.8
million to the Company's subsidiary, Ledjadja Coal (Pty) Ltd (LCL), to fund the operations and development of the Boikarabelo Coal Mine project
being undertaken in South Africa, while project funding is secured. The total Facility made available to the Company is now $41.3 million (US$32.2
million). $37.0 million (US$28.9 million) has been drawn down as at 31 December 2017. $12.8 million of interest has been capitalised on the loan
as at 31 December 2017. It is repayable in quarterly instalments of capital and interest over 78 months commencing April 2018 and has an annual
interest of 10.75%.
EHL loan
EHL Energy (Pty) Ltd completed the electricity sub-station at the Boikarabelo Coal Mine which connects the mine to the grid. The construction is
subject to a deferred payment plan, with interest payable at the ABSA Bank prime lending rate plus 3%. The loan amounted to $8.6 million (R82.5
million), is unsecured and repayable in 16 quarterly instalments from November 2015. There were 7 quarterly instalments remaining to be paid as
at 31 December 2017, amounting to $3.8 million (R36.7 million).
LCL is the borrower under both of the above loan facilities. The Company has provided a guarantee to the respective lenders.
5. CONTRIBUTED EQUITY
31-Dec-17 30-Jun-17 31-Dec-17 30-Jun-17
Shares Shares $'000 $'000
Opening balance 581,380,338 581,380,338 223,622 223,622
Issues of ordinary shares - - - -
Closing balance 581,380,338 581,380,338 223,622 223,622
6. DEVELOPMENT PARTNERS
31-Dec-17 30-Jun-17
Interest Interest
% %
Waterberg One Coal (Pty) Ltd 74 74
Ledjadja Coal (Pty) Ltd 74 74
The minority interest in Ledjadja Coal (Pty) Ltd and Waterberg One Coal (Pty) Ltd is held by Fairy Wing Trading 136 (Pty) Ltd (Fairy Wing), the
Group's black economic empowerment (BEE) partner. Pursuant to the terms of a loan from the Group to facilitate the acquisition of the shares,
Fairy Wing only nominally holds the minority interest and is not currently entitled to a share in the residual interest of the subsidiaries. For this
reason, a non-controlling interest is not presented in the interim financial report.
7. RESERVES
31-Dec-17 30-Jun-17
$'000 $'000
Reserves
Other contributed equity 1,085 1,085
Share-based payment reserve 1,040 910
Treasury shares (2,097) (2,124)
Foreign currency translation reserve (31,559) (36,781)
(31,531) (36,910)
Movements in reserves
Share-based payment reserve
Opening balance 910 706
Employee share plan expense 130 204
Closing balance 1,040 910
Notes to the condensed consolidated financial statements For the half year ended 31 December 2017
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RESOURCE GENERATION LIMITED
7. RESERVES (continued)
31-Dec-17 30-Jun-17
$'000 $'000
Treasury shares
Opening balance (2,124) (2,124)
Treasury shares to be issued - vesting 30 June 2018 27 -
Closing balance (2,097) (2,124)
Foreign currency translation reserve
Opening balance (36,781) (50,429)
Movement 5,222 13,648
Closing balance (31,559) (36,781)
Foreign currency translation reserve movement for the current half year relates to a 4% appreciation of the Rand against the Australian Dollar
during the half year ended 31 December 2017 (30 June 2017: 9% appreciation).
8. COMMITMENTS
Capital commitments
The Group has $0.1 million (30 June 2017: $0.1 million) in commitments in respect of the development of the Boikarabelo Coal Mine.
There are potential property acquisitions of $11.9 million (30 June 2017: $14.7 million) contingent to events subsequent to the commencement of
mine production.
9. EVENTS OCCURRING AFTER THE BALANCE SHEET DATE
There are no matters of significance up to the date of this report that have arisen since 31 December 2017 that has significantly affected, or may
significantly affect, the Group's operations in future years, the results of those operations or the state of affairs in future years.
10. CONTINGENT
LIABILITIES Environmental
rehabilitation
Legislation stipulates that all mining operations within South Africa are required to make provision for environmental rehabilitation during the life
of the mine and at closure. In line with this requirement, the Company entered into policies with a reputable insurance broker to set aside funds
for aforementioned purposes. On the back of these policies the insurance broker provides the required mining rehabilitation guarantees which are
accepted by the Department of Mineral Resources. The Company makes annual premium payments towards structured products that will allow
the matching of the environmental rehabilitation liability against Company assets over a period of time.
31-Dec-17 30-Jun-17
$'000 $'000
Guarantees for rehabilitation 2,331 2,175
Less: Funds available on Guardrisk Policy (1,138) (883)
Contingent liability 1,193 1,292
11. EXECUTIVE KMP REMUNERATION
Remuneration arrangements of key management personnel are disclosed in the 2017 annual financial report.
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RESOURCE GENERATION LIMITED
Directors' declaration
In the Directors' opinion:
(a) there are reasonable grounds to believe that Resource Generation Limited will be able to pay its debts as and when they become due and payable;
and
(b) the financial statements and notes set out on pages 5 to 13 are in accordance with the Corporations Act 2001, including compliance with accounting
standards and giving a true and fair view of the financial position as at 31 December 2017 and of the performance of the consolidated entity for the half
year ended on that date.
This declaration is made in accordance with a resolution of the Directors, pursuant to Section 303(5) of the Corporations Act 2001.
L Xate Chairman
Johannesburg 16 March 2018
Page 14
Deloilte.
Deloitte Touche
Tohmatsu ABN 74 490
121 060 Level 23,
Riverside Centre 123
Eagle Street Brisbane,
QLD, 4000 Australia
Phone: +61 7 3308 7000
www.deloitte.com.au
Independent Auditor's Review Report to the
members of Resource Generation Limited
Report on the Half-Year Financial Report
We have reviewed the accompanying half-year financial report of Resource Generation Limited, which comprises the condensed statement of
financial position as at 31 December 2017, and the condensed statement of profit or loss and other comprehensive income, the condensed
statement of cash flows and the condensed statement of changes in equity for the half-year ended on that date, notes comprising a summary
of significant accounting policies and other explanatory information, and the directors' declaration of the consolidated entity comprising the
company and the entities it controlled at the end of the half-year or from time to time during the half-year as set out on pages 5 to 14.
Directors' Responsibility for the Half-Year Financial Report
The directors of the company are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance
with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to
enable the preparation of the half-year financial report that gives a true and fair view and is free from material misstatement, whether due to
fraud or error.
Auditor's Responsibility
Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance
with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the
Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that
the half-year financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated
entity's financial position as at 31 December 2017 and its performance for the half-year ended on that date; and complying with Accounting
Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of Resource Generation Limited,
ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.
A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and
applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian
Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might
be identified in an audit. Accordingly, we do not express an audit opinion
Liability limited by a scheme approved under Professional Standards Legislation.
Member of Deloitte Touche Tohmatsu Limited
15
Deloitte
Auditor's Independence Declaration
In conducting our review, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the
independence declaration required by the Corporations Act 2001, which has been given to the directors of Resource Generation Limited,
would be in the same terms if given to the directors as at the time of this auditor's review report.
Conclusion
Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report
of Resource Generation Limited is not in accordance with the Corporations Act 2001, including:
(a) giving a true and fair view of the consolidated entity's financial position as at 31 December 2017 and of its performance for the half-
year ended on that date; and
(b) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.
Material Uncertainty Related to Going Concern
We draw attention to Note 1(b) in the half-year financial report, which indicates that the Group incurred a net loss of $1.2 million (30 June 2017:
$2.0 million) and used net cash in operating activities of $3.1 million (30 June 2017: $4.1 million) during the half-year ended 31 December
2017. As stated in Note 1(b), these events or conditions, along with other matters as set forth in Note 1(b), indicate that a material uncertainty
exists that may cast significant doubt on the Group's ability to continue as a going concern. Our conclusion is not modified in respect of this
matter.
DELOITTE TOUCHE TOHMATSU
Matthew Donaldson
Partner
Chartered Accountants Brisbane,
16 March 2018
16
RESOURCE GENERATION LIMITED
Supplementary Information - presentation of financial information in South African Rand
The presentation currency used in the preparation of the financial statements is the Australian dollar (A$). The Group has translated the financial
statements to the South African Rand (ZAR) because the Boikarabelo Coal Mine, which represents the Group's most significant activity, is located in this
region. This supplementary information has restated the financial statements in Rand. Assets and liabilities were translated to Rand using the relevant
closing rate of exchange and income and expense items were translated using the relevant cumulative average rate of exchange. The applicable rates
used in the restatement of information are as follows:
Dec-17 Jun-17 Dec-16
Average rate of exchange $A/Rand 10.4310 10.2461 10.5407
Closing rate of exchange $A/Rand 9.6430 10.0255 9.8603
Consolidated statements of comprehensive income - ZAR Convenience Translation (Supplementary Information)
For the half year ended 31 December 2017
Half year ended
31-Dec-17 31-Dec-16
R'000 R'000
Revenue from continuing operations 1,867 3,320
Administration, rent and corporate (13,269) (21,598)
Depreciation of property, plant and equipment (1,951) (1,929)
Employee benefits expense (12,841) (14,536)
Finance expenses (31) (32)
Share-based compensation expense (1,356) (1,455)
Unrealised foreign exchange movements 15,188 23,274
Loss before income tax (12,393) (12,956)
Income tax benefit - 11
Loss for the half year (12,393) (12,945)
Other comprehensive income
Items that may be reclassified subsequently to profit or loss:
Exchange gain on translation of foreign operations 54,471 163,423
Total comprehensive income for the half year 42,078 150,478
Loss is attributable to:
Owners of Resource Generation Limited (12,393) (12,945)
Total comprehensive income for the half year is attributable to:
Owners of Resource Generation Limited 42,078 150,478
Loss per share Rand Rand
Loss per share for loss from continuing operations
Basic loss per share (2.1) (2.2)
Diluted loss per share (2.1) (2.2)
Headline loss per share (2.1) (2.2)
Page 17
RESOURCE GENERATION LIMITED
Consolidated statements of financial position As at - ZAR Convenience Translation (Supplementary Information)
31 December 2017
31-Dec-17 30-Jun-17
R'000 R'000
Current assets
Cash and cash equivalents 17,647 46,935
Trade and other receivables 1,851 1,704
Deposits and prepayments 2,739 1,805
22,237 50,444
Non-current assets
Property, plant and equipment 329,704 331,653
Mining tenements and mining development 1,597,440 1,540,685
Deposits 12,237 20,472
1,939,381 1,892,810
TOTAL ASSETS 1,961,618 1,943,254
Current liabilities
Trade and other payables 62,478 82,054
Provisions 4,388 3,008
Borrowings 140,971 126,973
207,837 212,035
Non-current liabilities
Provisions 21,803 21,805
Borrowings 376,347 342,019
Royalties payable 18,013 18,738
416,163 382,562
TOTAL LIABILITIES 624,000 594,597
NET ASSETS 1,337,618 1,348,657
Equity
Contributed equity 2,156,387 2,229,377
Reserves (304,054) (357,501)
Accumulated losses (514,714) (523,219)
TOTAL EQUITY 1,337,618 1,348,657
Page 18
RESOURCE GENERATION LIMITED
Consolidated statement of cash flows - ZAR Convenience Translation (Supplementary Information) For the
half year ended 31 December 2017
Half year ended
31-Dec-17 31-Dec-16
R'000 R'000
Cash flows from operating activities
Payments to suppliers and employees (33,942) (35,459)
Interest received 1,168 738
Interest paid (31) (32)
Taxation refund - 11
Net cash outflow from operating activities (32,805) (34,742)
Cash flows from investing activities
Payments for property, plant and equipment (11) (1,244)
Payments for mining tenements and mining development (35,225) (32,845)
Net cash outflow from investing activities (35,236) (34,089)
Cash flows from financing activities
Repayment of borrowings (13,101) (14,789)
Drawdown of borrowings 49,818 -
Net cash inflow/(outflow) from financing activities 36,717 (14,789)
Net decrease in cash and cash equivalents (31,324) (83,620)
Cash and cash equivalents at the beginning of the half year 46,935 267,609
Effects of exchange rate movements on cash and cash equivalents 2,036 (139,450)
Cash and cash equivalents at the end of the half year 17,647 44,539
Page 19
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