Wrap Text
Unaudited condensed consolidated financial results for the six months ended 31 December 2017
UNICORN CAPITAL PARTNERS LIMITED
Previously known as Sentula Mining Limited
Incorporated in the Republic of South Africa
(Registration number 1992/001973/06)
Share code: UCP ISIN: ZAE000244745
("Unicorn" or "the Company")
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2017
OVERVIEW OF RESULTS
- Basic earnings per share improved to 1,08 cents (December 2016: loss per share of 7,40 cents)
- Headline loss per share improved to 0,11 cents (December 2016: headline loss per share of 4,01 cents)
- Basic earnings per share from continuing operations improved to 0,73 cents (December 2016: loss per share of 0,80 cents)
- Net asset value per share increased to 22 cents (June 2017: 21 cents)
- The net Group overdraft position reduced to R9 million (June 2017: R31 million)
INTRODUCTION
Unicorn Capital Partners Limited has been listed on the Main Board of the JSE Limited since 1993. Unicorn's current portfolio
of companies includes the provision of overburden drilling and blasting, mobile crane hire and exploration drilling services
to the mining sector as well as an operational anthracite mine. Unicorn is on course to convert from a diversified mining and
mining services group to an investment holding company. Unicorn's investment focus will not be sector specific but will
rather focus on businesses that have good investment characteristics and yield attractive returns on capital.
The interim results for the six months ended 31 December 2017 represent the culmination of the efforts that led to the
improvement of what was once a company that had been incurring consecutive losses to an enterprise that can once again
lift its head and focus on what is important: delivering sustainable returns to its shareholders. Although still very modest,
Unicorn was able to deliver an attributable profit of R12,5 million to its shareholders for the interim period ended
31 December 2017, yielding positive results for the first time since September 2012. Our efforts during the past two years
finally started paying off during the six month period, evident in every one of our mining services companies achieving a
profit. Annualised return from operations on assets exceeded 15% in all instances. In addition, the remaining contract mining
machinery and equipment was disposed of during the period, completing the Group's exit from direct contract mining
activities. The only remaining piece to complete the short term puzzle, is the Nkomati Anthracite mine. Our consolidated
profits suffered as a result of our decision to accelerate the development of the mine to ensure that we can realize some of
the potential of this quality anthracite resource. We remain on target to achieve steady state mining operations in April 2018.
The interim financial results reflect the execution of the Group's strategic objectives of returning to profitability, sustaining
cash flow momentum in JEF, Ritchie and Geosearch and completing the Nkomati expansion within time and budget.
Drilling and blasting
The acquisition by JEF of nineteen drill rigs during the previous financial year delivered the results envisaged. The rigs were
fully deployed, assisting JEF in delivering its best six months performance since September 2014. Drill rig availability averaged
83% while drill rig utilisation averaged 87%. JEF recorded an operating profit of R23 million (December 2016: R4 million),
which equates to an annualised EBIT-return-on-assets of 19% compared to 3% as at June 2017. External debt to total assets
reduced to 16% compared to 19% as at 30 June 2017. The lower debt levels and strong performance warrants further
investment in JEF during the second half of the financial year should the operating environment remain robust.
Heavy mobile crane lifting
The four additional mobile cranes acquired by Ritchie during the previous financial year were fully deployed from the date
of acquisition. Crane availability averaged 85% and crane utilisation 76%. The average hourly rate charged per crane,
however, increased by less than inflation when compared to the previous interim period. Ritchie recorded an operating profit
of R18 million (December 2016: R13 million), which equates to an annualised EBIT-return-on-assets of 19% compared to 17%
as at June 2017. External debt to total assets reduced to 14% compared to 17% as at 30 June 2017, which provides capacity
for further expansion. Ritchie's operating environment remains healthy and investment in additional mobile cranes will most
likely be made during the second half of the 2018 calendar year.
Exploration drilling
The operating environment for Geosearch, with exploration drilling operations in South Africa, Botswana and Mozambique
continued to improve, albeit at a slow pace. During the six months ended 31 December 2017, we were able to commence a
large project in Botswana, were awarded a promising new contract in South Africa and were able to deploy additional drill
rigs at Vale's coal mine in Tete, Mozambique. Total drill rigs deployed as a percentage of our total fleet increased from 30%
as at 30 June 2017 to 37% by 31 December 2017, which was slightly below our target. Geosearch recorded an operating profit
of R8 million (December 2016: R3 million), which equates to an annualised EBIT-return-on-assets of 18%, compared to a 0%
as at June 2017. The exploration drilling operations remain ungeared.
Anthracite mining
During the six months ended 31 December 2017, we invested R67 million in Nkomati. Of the R67 million, R31 million was
invested in the make-safe and recommissioning of the underground mine and R36 million invested in the construction of the
new wash plant. The R67 million investment was financed through the long term IDC loan secured during the 2017 financial
year. Work on the underground mine and plant not yet commissioned at 31 December 2017, was capitalised as work in
progress. During March 2018, we commissioned our new 90,000 run of mine tons wash plant, and reopened the underground
mine. The new wash plant complex, with total capacity of 130,000 run of mine tons per month, will be fully operational by
early April 2018. Our underground mine aims to achieve steady state production by the end of April 2018. There have been
no lost time injuries during the period at Nkomati. Nkomati's operating loss of R44 million (December 2016: R2 million) can
be directly attributed to the successful expansion of the open pit mine. The loss is a direct result of the increase in the size of
the open pit, which should enable more sustainable and predictable open pit production in future.
The mine supplies a product which is ideal for the ferrochrome market. All the projected steady state production can be sold
locally as we are one of only a handful of mines in the country with the quality preferred for the ferrochrome market.
Exploration to establish the extent of the resource is ongoing on the available 6000 ha minable area. At this stage the total
resource amounts to 8.7 million Mineable Tons In Situ.
Contract mining
Sentula Coal, the Group's last remaining operating entity involved in opencast mining and earthmoving, has two remaining
Anglo American Coal South Africa contracts: The main contract, Umlalazi, will expire on 31 March 2018 while the New Vaal
contract was recently extended to December 2020. Both contracts are executed through the use of subcontractors. Sentula
Coal takes no operational risk and only provides management and administrative services. The company's last remaining
machinery and equipment was disposed of during October 2017 for a profit of R16 million, delivering R28 million in positive
cash flow. For the six month period ended 31 December 2017, the opencast mining and earthmoving segment reported an
operating profit of R25 million (December 2016: loss of R85 million).
Overdraft facility
Following the disposal of the opencast mining machinery and equipment, the Group's gross overdraft facility was reduced to
R46 million (June 2017: R65 million). Net cash on hand amounted to a negative R9 million (June 2017: negative R31 million).
As at 31 December 2017 the Group's centralised overdraft facility is secured through various cross-sureties across all Group
companies. In order to execute the Group's strategy of ring-fencing operating entities and to facilitate Unicorns transition to
an investment holding company, during March 2018 the centralised overdraft facility has been re-distributed from Unicorn
level to the individual operating companies.
Resource statement
The most recent South African Mineral Resource Committee compliant Resource and Reserve Statements of Nkomati is
available on the Unicorn website (www.unicorncapital.co.za). The respective Reserve and Resource statements contain
details of all the competent persons, their professional memberships, qualifications and experience. There has been no
significant change to the resources as disclosed in the previous Reserve and Resource Statement.
Matters of litigation
Unicorn continues to be involved in various litigation matters. We remain cautiously optimistic that we will achieve some
success during the current financial year.
On behalf of the Board
Ralph Patmore Jacques Badenhorst
Independent non-executive Chairman Chief Executive Officer
Woodmead
28 March 2018
CONDENSED CONSOLIDATED STATEMENT OF PROFIT AND LOSS
For the six months ended 31 December 2017
Unaudited six Unaudited six
months - months - Audited year ended
R'000 31 December 2017 31 December 2016 30 June 2017
Revenue 587 076 615 432 1 069 269
Cost of sales (536 662) (556 665) (976 962)
Gross profit 50 414 58 767 92 307
Other income 2 032 1 659 2 930
Administrative expenses (53 252) (46 221) (110 862)
(Loss)/profit from operations (806) 14 205 (15 625)
Net profit on disposal of assets 12 757 285 4 224
Impairment of property, plant and equipment - (11 535) (11 535)
Operating profit/(loss) 11 951 2 955 (22 936)
Finance expense (10 585) (8 538) (19 893)
Finance income 600 396 1 360
Fair value adjustment - (1 026) (1 110)
Profit/(loss) before income tax 1 966 (6 213) (42 579)
Income tax expense (13 347) (4 076) (6 335)
Loss for the period from continuing operations (11 381) (10 289) (48 914)
Discontinued operations
Profit/(loss) for the period from discontinued operations
(attributable to the owners of the parent) 4 045 (76 739) (77 620)
Loss on disposal of discontinued operations - - (11 649)
Profit/(loss) for the period from discontinued operations 4 045 (76 739) (89 269)
Loss for the period (7 336) (87 028) (138 183)
Attributable to:
- Owners of the parent 12 521 (85 982) (120 197)
- continuing operations 8 476 (9 243) (30 928)
- discontinued operations 4 045 (76 739) (89 269)
- Non controlling interest (19 857) (1 046) (17 986)
- continuing operations (19 857) (1 046) (17 986)
- discontinued operations - - -
(7 336) (87 028) (138 183)
Weighted basic and diluted earnings/(loss) per share (cents)
- Continuing operations 0,73 (0,80) (2,66)
- Discontinued operations 0,35 (6,60) (7,68)
Basic and diluted earnings/(loss) per share 1,08 (7,40) (10,34)
Shares in issue at end of the period excluding treasury
shares ('000) 1 162 010 1 162 010 1 162 010
Weighted average shares in issue at the end of the period
excluding treasury shares ('000) 1 162 010 1 162 010 1 162 010
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the six months ended 31 December 2017
Unaudited six Unaudited six
months - months - Audited year ended
R'000 31 December 2017 31 December 2016 30 June 2017
Loss for the period (7 336) (87 028) (138 183)
Other comprehensive loss
Items that may be subsequently reclassified to profit or loss
Foreign currency translation differences for foreign
operations (2 088) (10 704) (5 274)
Other comprehensive loss for the period, net of income
tax (2 088) (10 704) (5 274)
Total comprehensive loss for the period (9 424) (97 732) (143 457)
Attributable to:
- Owners of the parent 10 433 (96 686) (125 471)
- continuing operations 6 388 (19 947) (36 202)
- discontinued operations 4 045 (76 739) (89 269)
- Non controlling interest (19 857) (1 046) (17 986)
- continuing operations (19 857) (1 046) (17 986)
- discontinued operations - - -
(9 424) (97 732) (143 457)
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 31 December 2017
Unaudited at Unaudited at Audited at
R'000 31 December 2017 31 December 2016 30 June 2017
Assets
Non-current assets 641 899 488 185 592 825
Property, plant and equipment 310 915 261 596 338 520
Mining assets 165 345 156 841 155 303
Work in progress 89 275 - 22 725
Goodwill 37 427 37 427 37 427
Restricted cash 7 230 4 560 6 461
Other financial assets 5 439 - 6 121
Deferred income tax assets 26 268 27 761 26 268
Current assets 255 725 299 485 257 904
Inventories 19 029 25 575 18 960
Trade and other receivables 200 207 242 312 202 809
Cash and cash equivalents 36 489 29 799 34 271
Current income tax assets - 1 799 1 864
Assets of disposal group classified as held-for-sale - 109 408 4 937
TOTAL ASSETS 897 624 897 078 855 666
Equity
Total equity attributable to owners of the parent 250 371 268 723 239 938
Share capital 2 097 075 2 097 075 2 097 075
Reserves 78 932 75 590 81 020
Accumulated loss (1 925 636) (1 903 942) (1 938 157)
Non-controlling interest (59 791) (22 994) (39 934)
TOTAL EQUITY 190 580 245 729 200 004
Liabilities
Non-current liabilities 271 563 144 547 200 273
Loans and borrowings 93 643 - 22 484
Finance lease obligations 38 129 10 902 49 934
Rehabilitation provision 81 917 71 172 72 240
Deferred income tax liabilities 57 874 62 473 55 615
Current liabilities 435 481 504 791 455 389
Trade and other payables 196 642 257 318 206 390
Megacube arbitration award 92 331 92 331 92 331
Loans and borrowings 10 350 18 827 -
Finance lease obligations 26 071 16 421 26 227
Deferred revenue - 5 331 12 000
Bank overdraft 45 526 68 678 65 305
Current income tax liabilities 64 561 45 885 53 136
Liabilities of disposal group classified as held-for-sale - 2 011 -
TOTAL LIABILITIES 707 044 651 349 655 662
TOTAL EQUITY AND LIABILITIES 897 624 897 078 855 666
Net asset value per share (excluding treasury shares) -
cents 22 23 21
Tangible net asset value per share (excluding goodwill),
(excluding treasury shares) - cents 18 20 17
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 31 December 2017
Unaudited six Unaudited six
months - months - Audited year ended
R'000 31 December 2017 31 December 2016 30 June 2017
Cash flows from operating activities
Cash generated from/(utilised in) operating activities 18 294 9 367 (10 779)
Working capital changes (18 919) (19 622) (16 411)
Income taxes received/(paid) 622 (1 442) (5 629)
Interest paid (7 316) (8 131) (17 668)
Net cash (outflow) from operating activities (7 319) (19 828) (50 487)
Cash flow from investing activities
Interest received 582 396 1 375
Purchase of property, plant and equipment (7 807) (12 237) (98 616)
Mine development work in progress (62 988) - (22 810)
Proceeds from disposal of property, plant and equipment 29 678 53 365 54 579
Proceeds from disposal of assets held-for-sale 5 633 2 731 97 462
Movement in other financial assets (125) - -
Increase in restricted cash (769) (1 710) (3 611)
Net cash (outflow)/inflow from investing activities (35 796) 42 545 28 379
Cash flows from financing activities
Proceeds from borrowings 77 288 - 22 484
Repayment of borrowings - (14 679) (33 500)
Finance lease advances 1 630 10 231 79 144
Finance lease payments (13 591) (7 049) (27 124)
Net cash inflow/(outflow) from financing activities 65 327 (11 497) 41 004
Net increase in cash and cash equivalents 22 212 11 220 18 896
Cash and cash equivalents at the beginning of the period (31 034) (49 120) (49 120)
Exchange losses on cash and cash equivalents (215) (946) (810)
Cash and cash equivalents at the end of the period (9 037) (38 846) (31 034)
Cash and cash equivalents classified as assets held-for
sale - 33 -
Cash and cash equivalents per statement of financial
position (9 037) (38 879) (31 034)
Cash and cash equivalents at the end of the period (9 037) (38 846) (31 034)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the six months ended 31 December 2017
Foreign
Share-based currency Non-
Share payment Treasury translation Accumulated controlling
R'000 capital reserve shares reserve loss Total interest Total Equity
Balance at 30 June 2016 2 122 973 31 632 (25 898) 54 662 (1 817 960) 365 409 (21 948) 343 461
Loss for the period - - - - (85 982) (85 982) (1 046) (87 028)
Other comprehensive loss - - - (10 704) - (10 704) - (10 704)
Balance at 31 December 2016 2 122 973 31 632 (25 898) 43 958 (1 903 942) 268 723 (22 994) 245 729
Loss for the period - - - - (34 215) (34 215) (16 940) (51 155)
Other comprehensive income - - - 5 430 - 5 430 - 5 430
Balance at 30 June 2017 2 122 973 31 632 (25 898) 49 388 (1 938 157) 239 938 (39 934) 200 004
Profit/(loss) for the period - - - - 12 521 12 521 (19 857) (7 336)
Other comprehensive loss - - - (2 088) - (2 088) - (2 088)
Balance at 31 December 2017 2 122 973 31 632 (25 898) 47 300 (1 925 636) 250 371 (59 791) 190 580
INFORMATION ABOUT REPORTABLE SEGMENTS
The Group is organised into five operating segments, namely overburden drilling and blasting ("JEF"), mobile crane hire ("Ritchie"),
exploration drilling ("Geosearch"), anthracite mining ("Nkomati") and opencast mining and earthmoving services, as described below.
The strategic business units offer different services within the mining industry and are managed separately due to different equipment,
technology and skills requirements.
Benicon and CCT have been disclosed as discontinued operations in the opencast and earthmoving segment due to the wind-down of
these operations. Benicon Sales was disposed of on 1 January 2017 and its results for the six months ended 31 December 2016 were
included as discontinued operations in this segment. Sentula Coal is included in opencast mining and earthmoving services continued operations.
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.
Opencast Overburden Corporate
mining and Exploration drilling and Mobile Anthracite and other
R'000 earthmoving drilling blasting crane hire mining Megacube services Total
Unaudited six months ended
31 December 2017
Total segment revenue 261 587 70 209 176 368 54 419 27 314 - 23 481 613 378
Inter-segment revenue - (1 225) - (1 384) - - (23 481) (26 090)
External revenue 261 587 68 984 176 368 53 035 27 314 - - 587 288
- Continuing operations 261 375 68 984 176 368 53 035 27 314 - - 587 076
- Discontinued operations 212 - - - - - - 212
Total segment results 7 463 8 288 22 347 18 218 (44 316) (1 577) (11 229) (806)
Net profit on sale of assets 12 441 (25) 341 - - - - 12 757
Results from operating
activities - Continuing
operations 19 904 8 263 22 688 18 218 (44 316) (1 577) (11 229) 11 951
Total segment results 732 - - - - - - 732
Net profit on sale of assets 3 996 - - - - - - 3 996
Net profit on sale of assets
held-for-sale 696 - - - - - - 696
Results from operating
activities - Discontinuing
operations 5 424 - - - - - - 5 424
Opencast Overburden Corporate
mining and Exploration drilling and Mobile Anthracite and other
R'000 earthmoving drilling blasting crane hire mining Megacube services Total
Unaudited six months ended
31 December 2017
Segment assets 57 735 81 393 233 127 188 446 298 308 2 244 10 103 871 356
Current and deferred tax
assets - 11 746 - - 14 522 - - 26 268
Total assets 57 735 93 139 233 127 188 446 312 830 2 244 10 103 897 624
Segment liabilities 62 398 9 620 71 132 33 857 242 016 95 078 70 508 584 609
Current and deferred tax
liabilities 41 152 7 135 19 752 32 709 - 17 928 3 759 122 435
Total liabilities 103 550 16 755 90 884 66 566 242 016 113 006 74 267 707 044
Opencast Overburden Corporate
mining and Exploration drilling and Mobile Anthracite and other
R'000 earthmoving drilling blasting crane hire mining Megacube services Total
Unaudited six months ended
31 December 2016
Total segment revenue 356 095 82 924 147 406 41 114 95 632 - 24 174 747 345
Inter-segment revenue (1 775) (1 606) (19 986) (127) - - (24 174) (47 668)
External revenue 354 320 81 318 127 420 40 987 95 632 - - 699 677
- Continuing operations 270 075 81 318 127 420 40 987 95 632 - - 615 432
- Discontinued operations 84 245 - - - - - - 84 245
Total segment results 4 506 3 162 3 994 13 215 (1 508) 1 218 (10 382) 14 205
Impairment of property, plant
and equipment (11 535) - - - - - - (11 535)
Net profit on sale of assets - 115 105 65 - - - 285
Results from operating
activities - Continuing
operations (7 029) 3 277 4 099 13 280 (1 508) 1 218 (10 382) 2 955
Total segment results (50 084) - - - - - - (50 084)
Impairment of property, plant
and equipment (27 106) - - - - - - (27 106)
Impairment of assets held-for-
sale (3 258) - - - - - - (3 258)
Net profit on sale of assets 2 193 - - - - - - 2 193
Results from operating
activities - Discontinuing
operations (78 255) - - - - - - (78 255)
Opencast Overburden Corporate
mining and Exploration drilling and Mobile Anthracite and other
R'000 earthmoving drilling blasting crane hire mining Megacube services Total
Unaudited six months ended
31 December 2016
Segment assets 120 441 85 186 188 450 156 755 194 833 7 268 5 177 758 110
Assets classified as held-for-
sale 98 454 - - - - - 10 954 109 408
Current and deferred tax
assets - 11 746 1 799 - 14 644 - 1 371 29 560
Total assets 218 895 96 932 190 249 156 755 209 477 7 268 17 502 897 078
Segment liabilities 204 407 15 461 22 658 13 023 82 074 95 661 107 696 540 980
Liabilities classified as held-
for-sale - - - - - - 2 011 2 011
Current and deferred tax
liabilities 35 218 9 848 15 735 26 887 - 16 802 3 868 108 358
Total liabilities 239 625 25 309 38 393 39 910 82 074 112 463 113 575 651 349
Opencast Overburden Corporate
mining and Exploration drilling and Mobile Anthracite and other
R'000 earthmoving drilling blasting crane hire mining Megacube services Total
Audited year ended 30 June
2017
Total segment revenue 634 304 144 677 286 532 91 131 157 259 - 61 159 1 375 062
Inter-segment revenue (153 461) (4 566) (34 786) (256) - - (61 159) (254 228)
External revenue 480 843 140 111 251 746 90 875 157 259 - - 1 120 834
- Continuing operations 429 278 140 111 251 746 90 875 157 259 - - 1 069 269
- Discontinued operations 51 565 - - - - - - 51 565
Total segment results pre-
impairment (39 318) (545) 4 465 30 430 (44 221) (4 575) (18 388) (72 152)
Impairment of property, plant,
equipment and motor
vehicles (38 641) - - - - - - (38 641)
Impairment of assets held-for-
sale (3 258) - - - - - - (3 258)
Net profit on sale of assets 2 617 98 1 748 (113) 303 1 405 1 6 059
Net profit on sale of assets
held-for-sale 9 264 - - - - - - 9 264
Results from operating
activities (69 336) (447) 6 213 30 317 (43 918) (3 170) (18 387) (98 728)
- Continuing operations 6 456 (447) 6 213 30 317 (43 918) (3 170) (18 387) (22 936)
- Discontinued operations (75 792) - - - - - - (75 792)
Opencast Overburden Corporate
mining and Exploration drilling and Mobile Anthracite and other
R'000 earthmoving drilling blasting crane hire mining Megacube services Total
Audited year ended 30 June
2017
Segment assets 85 913 77 851 230 686 189 090 226 679 373 12 005 822 597
Assets classified as held-for-
sale 4 937 - - - - - - 4 937
Current and deferred tax
assets - 11 746 1 864 - 14 522 - - 28 132
Total assets 90 850 89 597 232 550 189 090 241 201 373 12 005 855 666
Segment liabilities 93 195 12 270 81 879 40 708 138 800 95 107 84 952 546 911
Current and deferred tax
liabilities 37 162 8 129 14 003 27 979 - 17 688 3 790 108 751
Total liabilities 130 357 20 399 95 882 68 687 138 800 112 795 88 742 655 662
RECONCILIATION OF HEADLINE LOSS
Unaudited six months - Unaudited six months - Audited year ended -
31 December 2017 31 December 2016 30 June 2017
R'000 Continuing Discontinued Group Continuing Discontinued Group Continuing Discontinued Group
Profit/(loss) for the period
attributable to equity holders of the parent 8 476 4 045 12 521 (9 243) (76 739) (85 982) (30 928) (89 269) (120 197)
Adjusted for:
Net profit on disposal of plant and
equipment (12 757) (3 996) (16 753) (285) 4 656 4 371 (3 230) (1 834) (5 064)
Profit on disposal of assets held-
for-sale - (696) (696) - (6 849) (6 849) - (9 264) (9 264)
Scrapping of assets 60 - 60 - - - - - -
Impairment of plant and
equipment - - - 11 535 27 106 38 641 11 535 27 106 38 641
Impairment of assets held-for-
sale - - - - 3 258 3 258 - 3 258 3 258
Loss on disposal of subsidiary - - - - - - - 11 649 11 649
Tax effect on the above 3 579 - 3 579 - - - 217 - 217
Non-controlling interest portion
allocation - - - - - - - - -
Headline (loss)/profit attributable
to ordinary shareholders (642) (647) (1 289) 2 007 (48 568) (46 561) (22 406) (58 354) (80 760)
Weighted headline and diluted
(loss)/earnings per share (cents) (0,05) (0,06) (0,11) 0,17 (4,18) (4,01) (1,93) (5,02) (6,95)
NOTES TO THE FINANCIAL STATEMENTS
1. Basis of preparation
The unaudited condensed consolidated interim financial statements for the six months ended 31 December 2017 were prepared under
the supervision of Mr. JC Lemmer (CA) SA in accordance with International Financial Reporting Standards ("IFRS") IAS 34 – Interim
Financial Reporting, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial
Pronouncements as issued by the Financial Reporting Standards Council, and the requirements of the Companies Act of South Africa and
the Listings Requirements of the JSE Limited.
The unaudited condensed consolidated interim financial statements do not include all the information and disclosures required in the
annual financial statements, and should be read in conjunction with the Group's financial statements for the year ended 30 June 2017,
which were prepared in accordance with International Financial Reporting Standards as issued by the Internal Accounting Standards Board.
The accounting standards and amendments to issued accounting standards and interpretations, which are relevant to the Group, but not
yet effective on 31 December 2017 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.
These results have not been audited or reviewed by the Group's auditors.
2. 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 financial statements for the year ended 30 June 2017 and are presented in South African rand,
which is the functional and presentational currency of the Group.
There have been no material changes to the items measured at fair value as disclosed in the financial statements subsequent to 30 June
2017. The directors consider that the carrying amounts of financial assets and liabilities recorded at amortised cost approximate their
fair values.
3. Discontinued operations
Benicon Opencast and CCT were wound down in the previous financial year and the companies have been presented as discontinued
operations. Benicon Sales was disposed of on 1 January 2017 and its results for the six months ended 31 December 2016 have been
disclosed as a discontinued operation in the opencast mining segment.
Financial performance relating to these discontinued operations for the period is set out below:
Unaudited six Unaudited six
months - months - Audited year ended
R'000 31 December 2017 31 December 2016 30 June 2017
Revenue 212 84 245 51 565
Cost of sales 258 (125 808) (102 412)
Gross profit/(loss) 470 (41 563) (50 847)
Other income 84 411 1 160
Administration expenses 178 (8 932) (6 840)
Profit/(loss) from operations 732 (50 084) (56 527)
Profit on disposal of assets 3 996 - 1 835
Profit on disposal of assets held-for-sale 696 2 193 9 264
Impairment of property, plant and equipment - (27 106) (27 106)
Impairment of assets held-for-sale - (3 258) (3 258)
Operating profit/(loss) 5 424 (78 255) (75 792)
Net finance expense (1 377) (1 894) (5 238)
Profit/(loss) before taxation 4 047 (80 149) (81 030)
Taxation - 3 410 3 410
Profit/(loss) for the period from discontinued operations 4 047 (76 739) (77 620)
4. Contingent assets
Megacube
During the previous year judgment was granted in favour of the Golden Autumn Trust against Argent Industrial 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. The appeal hearing date has been set for 30 July 2018. Any funds recovered through the Golden Autumn Trust, net of costs,
will be paid over to Megacube.
Nkomati
Nkomati is claiming R25 million from the previous opencast mining contractor due to non-performance in terms of the contract. A dispute
has been lodged for arbitration commencing during March 2018.
Scharrighuisen
Megacube and the Trustees of the insolvent estate of Mr C Scharrighuisen, a former director, have instituted legal proceedings against
Mr Scharrighuisen and related parties in the Netherlands, the British Virgin Islands and Curacao in ongoing attempts to locate and secure
Mr Scharrighuisen's assets. Megacube currently has two judgements against Mr Scharrighuisen's in excess of R 383 million, both of which
remain unsatisfied. The quantum of funds that can be recovered through the legal proceedings have not been determined.
To the best of our knowledge and belief there are no other contingent assets not set out or referred to in this report which may materially
affect the financial position of the Group.
5. Contingent liabilities
Keaton sought, in one of its claims in the arbitration, compensation for the value of run of mine 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 tonnage substantially in excess of what it sought, namely for 657 583 tons run of mine coal
allegedly not extracted. The additional 270 991 tons of run of mine coal awarded under this claim, equates to an estimated value of
R45 million and was not provided for. The duplicated award is under dispute and as a result, no further provision has been made above
the compensation originally sought by Keaton.
Apart from the matter set out above, there are no other contingent liabilities not set out or referred to in this report which may materially
affect the financial position of the Group.
8. Events after the reporting period
The directors are not aware of any subsequent events that occurred between the reporting period and up to the date of this report, not
otherwise dealt within this report.
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. The Group's current liabilities exceed current assets by R180 million (June 2017: R197 million). Net current
liabilities relating to discontinued opencast mining operations and Megacube amounts to R158 million (June 2017: R 159 million). There
is no recourse to Unicorn or any of the other operating subsidiaries for these amounts outstanding. 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. Based on Unicorn subsidiaries' cash flow forecasts for the 2018 financial year, the Group is
expected to meet all its obligations during this period.
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
This report contains forward-looking statements which are not historical facts. Forward-looking statements involve inherent risks,
uncertainties and assumptions, including, without limitation, risks related to the timing or ultimate completion of any proposed
transactions; and the possibility that benefits may not materialise or such assumptions prove incorrect. Actual results could differ
materially from those expressed or implied by such forward-looking statements and assumptions. The forward-looking statements in this
report are made as of the date of this report and Unicorn expressly disclaims any obligations to update or correct the statements due to
events occurring after issuing this report.
Company Secretary: Arbor Capital Proprietary Limited
Transfer secretaries: Computershare Investor Services Proprietary Limited
2nd Floor, Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196.
PO Box 61051, Marshalltown 2107. Tel (011) 370-5000
Sponsor: Questco Corporate Advisory 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.unicorncapital.co.za
Abbreviations: ("Argent") Argent Industrial Limited; ("Benicon") Benicon Opencast Mining Proprietary Limited; ("CCT") Classic Challenge
Trading Proprietary Limited; ("Geosearch") Companies in the Group that performs exploration drilling services; ("IDC") Industrial
Development Corporation; ("JEF") JEF Drill and Blast Proprietary Limited; ("Keaton"): Keaton Mining Proprietary Limited ("Megacube")
Megacube Proprietary Limited; ("Nkomati") Nkomati Anthracite Proprietary Limited; ("Ritchie") Ritchie Crane Hire Proprietary Limited;
("Sentula Coal") Sentula Coal Proprietary Limited; ("the Group") Unicorn Capital Partners Limited, its subsidiaries associates and affiliates;
("Benicon Sales") Benicon Sales Proprietary Limited.
Date: 28/03/2018 05:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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