TIDMCZA
RNS Number : 6925Y
Coal of Africa Limited
10 September 2015
COAL OF AFRICA LIMITED
AUDITED ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 30 June 2015
(Expressed in United States dollars unless otherwise stated)
COAL OF AFRICA LIMITED
DIRECTORS' REPORT
The directors of Coal of Africa Limited ("CoAL" or "the
Company") submit herewith the annual report of the company and the
entities controlled by the Company (its subsidiaries), collectively
referred to as "the Group" or the "Consolidated Entity", for the
financial year ended 30 June 2015. All balances are denominated in
United States dollars unless otherwise stated.
In order to comply with the provisions of the Corporations Act
2001, the directors report as follows:
Information about the directors and key management personnel
The names and particulars of the directors of the company during
or since the end of the financial year are set out below. Unless
otherwise stated, the directors held office during the whole of the
financial year:
Bernard Robert Independent Non-Executive Mr Pryor was previously
Pryor Chairman the chief executive
officer of African
Minerals Limited and
Q Resources plc. Between
2006 and 2010 he held
senior executive positions
within Anglo American
Plc as head of business
development, and CEO
of Anglo Ferrous Brazil
Inc.
David Hugh Executive Director Mr Brown joined CoAL
Brown and Chief Executive following a tenure
Officer of almost 14 years
at Impala Platinum
Holdings Limited (Implats).
He joined the Impala
Group in 1999 and served
as chief financial
officer and financial
director of Impala
Platinum Holdings Ltd
before being appointed
chief executive officer
in 2006. He is currently
an independent non-executive
director of Vodacom
Group Limited as well
as non-executive director
of Edcon Holdings Limited.
In the past he has
served as a non-executive
director of Simmer
& Jack Limited and
ASX listed Zimplats
Holdings Limited. Mr
Brown is a Chartered
Accountant and completed
his articles with Ernst
& Young, graduating
from the University
of Cape Town.
De Wet Olivier Executive Director Mr Schutte is a Chartered
Schutte and Chief Financial Accountant and attended
Officer - appointed the Top Executive Programme
22 June 2015 at the University of
Virginia. He has over
16 years of experience
in the mining and natural
resources industry
serving as managing
director, natural resources
at Macquarie Bank and
chief financial officer
of listed platinum
producer, Atlatsa Resources
Corporation. Mr Schutte
also served as new
business and exploration
executive at Harmony
Gold Mining (Pty) Ltd
and has a strong corporate
finance background.
Peter George Independent non-executive Mr Cordin has a Bachelor
Cordin Director of Engineering from
the University of Western
Australia and is well
experienced in the
evaluation, development
and operation of resource
projects within Australia
and overseas. He was
until recently the
chairman of ASX listed
Dragon Mining Limited
and is a non-executive
director of Vital Metals
Limited and Aurora
Minerals Limited.
Khomotso Non-Executive After serving articles
Brian Mosehla Director at KPMG, Mr Mosehla
worked for five years
at African Merchant
Bank Limited, where
he gained a broad range
of experience, including
Management Buy-Out,
Leveraged Buy-Out and
capital restructuring/raising
transactions. In 2003,
he established Mvelaphanda
Corporate Finance,
for the development
of Mvelaphanda's mining
and non-mining interests.
Mr Mosehla served as
a director on the boards
of several companies,
including Mvelaphanda
Resources Limited and
Net 1 UEPS Technologies
Limited, and he is
currently the chief
executive officer of
Mosomo Investment Holdings
Proprietary Limited.
Rudolph Henry Non-executive Mr Torlage is a Chartered
Torlage Director Accountant and has
over twenty years'
experience with ArcelorMittal
South Africa. He was
previously executive
director finance and
a board member of various
unlisted ArcelorMittal
Group companies.
Andrew David Independent non-executive Mr Mifflin obtained
Mifflin Director - appointed his Bachelor of Science
12 December 2014 (Honours) in Mining
Engineering from Staffordshire
University and has
a Master's Degree in
Business Administration.
He has over 30 years'
experience specifically
in the coal mining
arena, spanning various
organisations such
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as British Coal Corporation,
Xstrata and GVK resources.
Mr Mifflin has in depth
knowledge of the development
and operations at thermal
and hard coking collieries.
Thabo Felix Independent non-executive Mr Mosololi has over
Mosololi Director - appointed 20 years of experience
12 December 2014 within the South African
corporate environment
and completed his articles
with KPMG. He is a
qualified Chartered
Accountant, served
as finance director
and operations director
of Tsogo Sun and has
considerable expertise
as a director of various
companies.
David John Senior independent Mr Murray has held
Keir Murray non-executive a number of senior
Director - resigned positions in the global
12 December 2014 coal industry, including
managing director of
Ingwe Coal Corporation
(formerly Trans-Natal
Coal Corporation Limited),
chief executive of
BHP Billiton Mitsubishi
Alliance and president
of energy coal sector
Group at BHP Billiton
Limited, a position
he held until December
2009. Mr Murray holds
a Bachelor of Science
Degree (Civil Engineering)
from the University
of KwaZulu-Natal and
a Post Graduate Diploma
in Mining Engineering
from the University
of Pretoria. He has
also completed the
Advanced Executive
Program from the University
of South Africa.
Michael George Executive Director Mr Meeser is a qualified
Meeser and Chief Financial Chartered Accountant
Officer - resigned and has over 20 years'
30 April 2015 local and international
project finance experience.
He spent six years
working for Edison
Mission Energy Limited
with interests in more
than 50 power projects
and assets of more
than $4billion. In
1998, Mr Meeser joined
Investec Bank Limited's
Project and Infrastructure
Finance business and
served as head of the
project & infrastructure
and commodity & resource
finance businesses
for Africa and was
a member of the divisions'
executive committee.
No further directors were appointed or resigned
during the financial year end 30 June 2015.
Directorships of other listed companies
Directorships of other listed companies held by the directors in
the 3 years immediately before the end of the financial year are as
follows:
Director Company Period of
directorship
--------------- ----------------------------- ----------------
Bernard Robert African Minerals Limited 2011 - 2014
Pryor
David Hugh Impala Platinum Holdings 1999 - 2012
Brown Limited
Zimplats Holdings Limited 2001 - 2012
Vodacom Group Limited 2012 - Present
De Wet Olivier None
Schutte
Peter George Dragon Mining Limited 2006 - 2014
Cordin Vital Metals Limited 2009 - Present
Kalgoorlie Mining Company 2012 -2013
Limited 2014 - Present
Aurora Minerals Limited
Khomotso Brian Net 1 UEPS Technologies, 2012 - 2013
Mosehla Incorporated
Rudolph Henry ArcelorMittal South Africa 2010 - 2012
Torlage Limited
Andrew David None
Mifflin
Thabo Felix Evraz Highveld Steel & 2013 - Present
Mosololi Vanadium Limited 2014 - Present
Pan African Resources PLC
David John Coalspur Mines Limited 2011 - 2015
Keir Murray
Meridien Resources Limited 2012 - 2012
Stonewall Resources Limited 2012 - 2015
Michael George None
Meeser
Directors' shareholdings
The following table sets out each director's relevant interest
in shares or options in shares or debentures of the Company as at
the date of this report.
Director Ordinary shares Listed options Unlisted options
-------------- ---------------- --------------- -----------------
B Pryor(1) 150,000 - 1,000,000
D Brown(2) 825,000 - 13,075,000
D Schutte(3) - - -
P Cordin(4) 1,371,059 - -
K Mosehla - - -
R Torlage - - -
A Mifflin - - -
T Mosololi 10,000 - -
D Murray(5) - - 2,500,000
M Meeser(6) 600,000 - 1,375,000
-------------- ---------------- --------------- -----------------
2,956,059 - 17,950,000
-------------- ---------------- --------------- -----------------
1. Mr Pryor was issued with 1,000,000 share options on 28
November 2012 with an exercise price of GBP0.25 expiring three
years from date of issue, vesting immediately and a further
1,000,000 share options with an exercise price GBP0.375, and
expiring three years from date of issue, issued on 6 August
2015.
2. Mr Brown was issued with 2,500,000 share options on 28
November 2012 with an exercise price of GBP0.25 expiring 3 years
from date of issue, vesting immediately. On appointment as Chief
Executive Officer and Executive Director on 1 February 2014, Mr
Brown received 10,575,000 options in accordance with the Company's
employee share option plan exercisable in three equal tranches over
a three-year period. The first tranche of 3,525,000 options are
exercisable on 1 February 2015 at ZAR1.20 each, a further 3,525,000
options are exercisable on 1 February 2016 at an exercise price of
ZAR1.32 per option and the remaining 3,525,000 options are
exercisable on 1 February 2017 at an exercise price of ZAR1.45. All
10,575,000 options expire on 1 February 2019.
3. On appointment as Chief Financial Officer and Executive
Director on 22 June 2015 Mr Schutte received 6,600,000 options in
accordance with the Company's employee share option plan. The
options vest in three equal tranches over a three-year period and
are subject to shareholder approval. The first tranche of 2,200,000
options are exercisable on 21 June 2016 at ZAR1.20 each, a further
2,200,000 options are exercisable on 21 June 2017 at ZAR1.32 per
option and the remaining 2,200,000 options are exercisable on 21
June 2018 at an exercise price of ZAR1.45 each.
4. 958,300 shares are held by the Cordin Pty Ltd (The Cordin
Family Trust) and 458,300 shares held by Cordin Pty Ltd (The Cordin
Superannuation Fund). Mr Cordin is a beneficiary of both the trust
and superannuation fund.
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5. Mr Murray was issued a total of 2,500,000 options on 9
November 2010 (each option having an exercise price equal to the
volume weighted average price of the Company's Shares 10 trading
days prior to the issue date and an expiry date 5 years from the
issue date, 1,000,000 of which vested 12 months after the date of
issue, 750,000 of which vested 24 months after the date of issue
and the remaining 750,000 vested 36 months from the date of
issue).
6. Mr Meeser was issued with 4,125,000 share options on 22
November 2013 with an exercise price of ZAR2.00 expiring 3 years
from date of issue. Mr Meeser resigned on 30 April 2015 resulting
in the cancellation of the 2,750,000 options that had not vested.
The vested options will expire on 30 November 2015.
Remuneration of directors and key management personnel
Information about the remuneration of directors and key
management personnel is set out in the remuneration report of this
directors' report, on pages 12 to 23.
Share options granted to directors and senior management
During and since the end of the financial year, no share options
were granted to directors or key management personnel of the
Company and of its controlled entities as part of their
remuneration:
Company secretary
Mr Tony Bevan, a qualified Chartered Accountant with over 25
years' experience, is the Company Secretary and works with
Endeavour Corporate Pty Ltd, the company engaged to provide
contract secretarial, accounting and administration services to
CoAL.
Principal activities
The Company is a limited company incorporated in Australia. Its
common shares are listed on the Australian Securities Exchange
("ASX"), the AIM Market of the London Stock Exchange ("AIM") and
the Johannesburg Stock Exchange ("JSE") in South Africa. The
principal activities of the Company and its subsidiaries are the
acquisition, exploration, development and operation of
metallurgical and thermal coal projects in South Africa.
The Group's principal assets and projects include:
-- the Makhado hard coking and thermal coal project which was
granted a New Order Mining Right ("NOMR") in May 2015;
-- Vele colliery where operations have been placed on a care and
maintenance basis pending the granting of the extension of the
mine's Integrated Water Use License ("IWUL") and completion of
certain plant modifications;
-- three exploration and development stage coking and thermal
coal projects, namely Chapudi, Generaal and Mopane, in the
Soutpansberg Coalfield; and
-- the Mooiplaats colliery currently on care and maintenance and
subject to a formal sale process.
Review of operations
The Company undertook the following activities during the
year:
Operational salient features
-- No Fatalities (FY2014: none) and no lost time injuries
recorded during the year (FY2014: one).
-- The Department of Mineral Resources ("DMR") granted the
Company a NOMR for the Makhado Project as well as Section 11
approval transferring the project from CoAL to its subsidiary
Baobab Mining.
-- Continued engagements with the Department of Water Affairs
("DWA") to progress the application for the Makhado Project IWUL,
expected to be granted in the second half of 2015.
-- Approval granted for the amended and updated Environmental
Authorisation ("EA") for Vele to include the anticipated plant
modifications while the application for the amendment and extension
of the IWUL for the colliery is pending, following which the
Company will make a decision on the timing of the start of the
plant modifications.
-- Historic Biodiversity Offset Agreement ("BOA") for the Vele
Colliery signed in October 2014 with the Department of
Environmental Affairs ("DEA") and South African National Parks
("SANP").
-- Completion in December 2014 of the Front End Engineering and
Design ("FEED") process for the Vele Colliery plant by Sedgman.
Disposal of Non-Core Assets
-- Signature of a Share Purchase Agreement ("SPA") with Blackspear Capital Proprietary Limited ("Blackspear") for the disposal of the Mooiplaats Colliery for $20.3 million (ZAR250 million). Blackpear was unable to agree terms with a financial and operational partner to fund its acquisition resulting in the SPA lapsing on 30 June 2015. The Company is continuing discussions with other potential purchasers including Blackspear.
-- Receipt of $0.1 million (ZAR1.5 million) (FY2014: $0.4
million) of the $2 million (ZAR20.8 million) for the sale of the
Opgoedenhoop mining right and renegotiation of the balance of the
$1.4 million (ZAR17.4 million) (including interest and VAT). The
amount is payable in monthly instalments of at least ($0.02 million
(R0.25 million) with the balance due by the end of June 2016.
-- Receipt of a further $0.22 million (FY2014: $0.5 million)
payment for a one year extension to acquire the Holfontein project
for $5.0 million (including the option fees) expected to be
completed during calender year 2016.
Corporate salient features
-- Completion of the $65 million (before charges and foreign
currency movements) shareholder approved three stage equity process
with the issue of 695 million shares at GBP0.055 each.
-- Restructuring of rehabilitation guarantees resulted in the
release of $4.7 million of restricted cash.
-- Conclusion of agreements in March 2015 with BBBEE partners to
acquire up to 26 per cent of the Makhado Project. The BBBEE
partners have two years to raise sufficient capital to acquire
their interests in the project with the final amount payable
subject to due diligence and will be negotiated with the
Company.
-- Agreement reached for the liability (FY2015: $19.8 million;
FY2014: $29.8 million) owing to Rio Tinto with the balance to be
paid in monthly instalments of at least $100,000 plus interest and
the obligation settled by June 2017. During the year the Company
paid capital of $10 million (FY2014: $0.2 million) and acccrued
interest of $1.6 million (FY2014: nil).
-- Payment of $10 million to Grindrod Corridor Management
Proprietary Limited("Grindrod") and Terminal de Carvão da Matola
Limitada("TCM") in late 2014, settling all outstanding liabilities
and take or pay obligations until 31 December 2016. Any further
obligations would be dependent on any future capacity requirements
still to be contracted.
-- Settlement of the Investec Bank Limited working capital
facility in November 2014 on the payment of $5.9 million.
-- Appointment of De Wet Schutte as Chief Financial Officer and Executive Director.
Legal
-- Settlement of the last outstanding significant legal matter
in December 2014 following an arbitration award for claims
instituted by Envicoal (Pty) Ltd. The matter was adjudicated by
arbitration and Envicoal were awarded $1.4 million and a further $1
million in interest.
Other than the above, there was no significant change in the
state of affairs of the Consolidated Entity during the financial
year.
Subsequent events
Post year end, the following significant operational events took
place:
-- Entering into a Subscription Agreement and a Loan Agreement
with Singapore registered Yishun Brightrise Investment PTE Limited
("Yishun") whereby Yishun will acquire up to 183,231,261 ordinary
shares for 5.15 British pence each raising approximately GBP9.4
million (approximately $14.7 million) conditional upon, CoAL
shareholder approval at an EGM to be held on 14 September 2015. The
Company and Yishun have also entered into a Loan Agreement in terms
of which Yishun has agreed to lend CoAL $10 million conditional
upon the Company's shareholders approving the issue of the
183,231,261 shares. The loan will bear no interest and is only
repayable in limited circumstances.
There have been no other events between 30 June 2015 and the
date of this report which necessitate adjustment to the statements
of comprehensive income or statements of financial position at that
date.
Financial review
-- No revenue was generated during the year as result of all
operation on care and maintenance(FY 2014 $3.3 million generated by
Mooiplaats)
-- Non-cash charges of $7.5 million (FY2014: $54.3 million) including:
-- No impairment at Mooiplaats incurred during the year (FY2014:
$14.9million)
-- Depreciation and amortisation of $1.4 million (FY2014: $2.2
million);
-- Unrealised foreign exchange gain of $18.9 million (FY2014:
$36.4 million loss) as a result of the South African rand weakening
against the United States dollar; and
-- Share based payment expense of $3.064 million (FY2014: $0.7
million).
-- Total unrestricted cash balances at year-end, including cash
held by operations available for sale of $17.8 million (FY2014:
$2.1 million).
Future developments
The NOMR for the Makhado Project was granted in May 2015 as well
as section 11 approval for the transfer of the project to CoAL's
74% owned subsidiary, Baobab Mining. The Company completed a
Definitive Feasibility Study ("DFS") for Makhado during FY2013
which indicates that the project has 344.8 million mineable tonnes
in situ and a 16 year life of mine. CoAL has regular interactions
with the DWA and expects that the IWUL for the Makhado Project will
be granted in the second half of 2015 with the 26 month
construction phase commencing in the second half of 2016. The
opencast project is expected to produce 12.6Mtpa of ROM coal
yielding 2.3Mtpa of hard coking coal and 3.2Mtpa of thermal coal
for domestic and export markets.
The Company completed the FEED process for Vele and once
constructed, the colliery will be able to produce multiple products
simultaneously. The amended EA for the colliery was granted during
FY2015 and the Company anticipates that the application for an
amendment and extension of the Vele's IWUL will be granted in due
course. The colliery's current IWUL expires in March 2016 and
following the granting, the Company will make a decision on the
commencement of the plant modifications taking cognisance of
prevailing market conditions into account. This will be towards
June 2016.
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The exploration and development of the CoAL prospects in the
Soutpansberg coalfield is the catalyst for the long-term growth of
the Company. The DMR has accepted the Company's NOMR applications
for the Mopane, Generaal and Chapudi projects, all forming part of
the MbeuYashu project.
Environmental regulations
The Consolidated Entity's operations are not subject to any
significant environmental regulations under either Commonwealth or
State legislation and there has consequently been no breach. The
Group is subject to numerous environmental regulations in South
Africa, including the Atmospheric Pollution Prevention Act (No. 45
of 1965), Environment Conservation Act (No. 73 of 1989), National
Water Act (No. 45 of 1965), National Environmental Management Act
(No. 107 of 1998), the National Environmental Management Air
Quality Act (No. 39 of 2004) and the environmental provisions in
the Mineral and Petroleum Resources Development Act (No 28 of
2002). There is uncertainty regarding the interrelationship between
these statutes in the mining context and as such complete
compliance with all simultaneously is often difficult. The Board
believes that the Consolidated Entity has adequate systems in place
for the management of its environmental impacts but from time to
time statutory non-compliances may occur. The Board takes these
seriously and undertook a thorough review of all its activities
during FY2013 to bring them into compliance and continues to
monitor compliance thereof.
Dividends
No dividend has been paid or proposed for the financial year
ended 30 June 2015 (FY2014: nil).
Shares under option or issued on exercise of options
Details of unissued shares under option as at the date of this
report are:
Number Class of Exercise Expiry date
of shares shares price
under option
----------------- -------------- --------- --------- -------------
ESOP Unlisted 1,441,061 Ordinary A$1.40 30 September
Options 2015
Class C Unlisted 2,500,000 Ordinary A$1.20 9 November
Options 2015
Class L Unlisted 3,500,000 Ordinary GBP0.25 30 November
Options 2015
TMM options 40,000,000 Ordinary ZAR0.30 1 June 2016
ESOP Unlisted 2,670,000 Ordinary ZAR7.60 14 February
Options 2017
ESOP Unlisted 3,932,928 Ordinary ZAR1.75 30 June
Options 2017
ESOP Unlisted 1,325,000 Ordinary ZAR2.00 30 November
Options 2015
Investec options 20,000,000 Ordinary ZAR2.00 21 October
2018
ESOP Unlisted 3,525,000 Ordinary ZAR1.20 1 February
Options 2019
ESOP Unlisted 3,525,000 Ordinary ZAR1.32 1 February
Options 2019
ESOP Unlisted 3,525,000 Ordinary ZAR1.45 1 February
Options 2019
The holders of these options do not have the right, by virtue of
the option, to participate in any share issue of the Company or of
any other body corporate or registered scheme.
No shares or interests were issued during or since the end of
the financial year as a result of exercise of options.
Indemnification of officers and auditors
During the financial year, the Company paid a premium in respect
of a contract insuring the directors of the Company, the company
secretary, and all executive officers of the Company and of any
related body corporate against a liability incurred by such a
director, secretary or executive officer to the extent permitted by
the Corporations Act 2001.
The Company has not otherwise, during or since the end of the
financial year, except to the extent permitted by law, indemnified
or agreed to indemnify an officer or auditor of the Company or of
any related body corporate against a liability incurred by such an
officer or auditor.
Directors' meetings
The following table sets out the number of directors' meetings
(including meetings of committees of directors) held during the
financial year and the number of meetings attended by each director
(while they were a director or committee member). During the
financial year, a total of five board meetings were held, four
scheduled and one unscheduled, zero placing and bid committee
meetings, four nomination and remuneration committee meeting, five
audit committee meetings and four safety and health committee
meeting were held.
Board Meetings Audit Committee Nomination Safety,
Meetings and Remuneration Health and
Committee Environment
Meetings Committee
Meetings
Director Held Attended Held Attended Held Attended Held Attended
--------------- ------ --------- ------ ---------- ------- ----------- ----- ---------
B Pryor 5 5 5 5 4 4 - -
D Brown 5 5 - - 4 4 4 4
D Schutte(1) - - - - - - - -
P Cordin 5 5 3 3 - - 4 4
K Mosehla 5 5 5 5 - - - -
R Torlage 5 4 - - - - - -
A Mifflin(2) 3 3 - - - - 2 2
T Mosololi(2) 3 3 2 2 2 2 - -
D Murray(3) 2 2 - - 2 1 2 1
M Meeser(4) 3 3 - - - - - -
1. Mr Schutte was appointed Executive Director and Chief Financial Officer on 22 June 2015.
2. Appointed as Independent Non-Executive Directors on 12 December 2014.
3. Resigned as Senior Independent Non-Executive Director on 12 December 2014.
4. Mr Meeser resigned as Executive Director and Chief Financial Officer on 30 April 2015.
Proceedings on behalf of the Company
No persons applied for leave to bring or intervene in
proceedings on behalf of the Company during or since the end of the
financial year.
Non-audit services
No non-audit services were provided during the current financial
year. Details of amounts paid or payable to the auditor for
services provided during the year by the auditor are outlined in
note 8 to the consolidated financial statements.
Auditor's independence declaration
The auditor's independence declaration is included on page 24 of
these consolidated financial statements.
Remuneration report (Audited)
This remuneration report, which forms part of the directors'
report, sets out information about the remuneration of Coal of
Africa Limited's directors and its senior management for the
financial year ended 30 June 2015. The prescribed details for each
person covered by this report are detailed below under the
following headings:
-- director and senior management details;
-- remuneration policy;
-- relationship between the remuneration policy and company performance;
-- remuneration of directors and senior management; and
-- key terms of employment contracts.
The Board is responsible for establishing remuneration packages
applicable to the Board members of the Company. The policy adopted
by the Board is to ensure that remuneration properly reflects an
individual's duties and responsibilities and that remuneration is
competitive in attracting, retaining and motivating people of the
highest calibre.
Directors' remuneration packages are also assessed in the light
of the condition of markets within which the Company operates, the
Company's financial condition and the individual's contribution to
the achievement of corporate objectives. Executive Directors are
remunerated by way of a salary or consultancy fees, commensurate
with their required level of service.
Total remuneration for all Non-Executive Directors, excluding
share-based payments, as approved by shareholders at the November
2010 General Meeting, is not to exceed A$1,000,000 per annum
($765,700).
The Board has nominated a Nomination and Remuneration Committee
which was made up as follows: Mr Pryor (Chairman), Mr Mosololi and
Mr Brown. The Company does not have any scheme relating to
retirement benefits for Executive or Non-Executive Directors.
Director and key management personnel details
The following persons acted as directors of the Company during
or since the end of the financial year:
-- B Pryor Independent Chairman
-- D Brown Chief Executive Officer and Executive Director
-- D Schutte Appointed Chief Financial Officer and Executive
Director on 22 June 2015
-- P Cordin Independent Non-Executive Director
-- K Mosehla Independent Non-Executive Director
-- R Torlage Non-Executive Director
-- A Mifflin Appointed Independent Non-Executive Director on 12
December 2014
-- T Mosololi Appointed Independent Non-Executive Director on 12
December 2014
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-- D Murray Resigned as Senior Independent Non-Executive
Director on 12 December 2014
-- M Meeser Resigned as Chief Financial Officer and Executive
Director on 30 April 2015
Key management personnel are those persons having authority and
responsibility for planning, directing and controlling the
activities of the entity, directly or indirectly, including any
director (whether executive or otherwise) of that entity. The term
'key management' is used in this remuneration report to refer to
the following persons.
-- C Bronn Chief Operating Officer
Except as noted, the named persons held their current position
for the whole of the financial year and since the end of the
financial year.
Remuneration policy
The remuneration policy of CoAL has been designed to align key
management personnel objectives with shareholder and business
objectives by providing a fixed remuneration component and offering
specific long-term incentives based on key performance areas
affecting the consolidated group's financial results. The Board of
CoAL believes the remuneration policy to be appropriate and
effective in its ability to attract and retain the best key
management personnel to run and manage the consolidated group, as
well as create goal congruence between Directors, key management
and shareholders.
The Board's policy for determining the nature and amount of
remuneration for key management personnel of the consolidated group
is as follows:
-- The remuneration structure is developed by the Nomination and
Remuneration Committee and approved by the Board after professional
advice is periodically sought from independent external
consultants.
-- All key management personnel receive a base salary (based on
factors such as length of service and experience), options and
performance incentives.
-- Incentives paid in the form of cash and options are intended
to align the interests of the Directors, key management and company
with those of the shareholders.
The Nomination and Remuneration Committee reviews key management
personnel packages annually by reference to the consolidated
group's performance, executive performance and comparable
information from industry sectors.
The performance of key management personnel is measured against
criteria agreed annually with each executive and bonuses and
incentives are linked to predetermined performance criteria. The
performance criteria vary and are determined in line with each
individual's performance contract. The Board may, however, exercise
its discretion in relation to approving incentives, bonuses and
options, and can recommend changes to the Nomination and
Remuneration Committee's recommendations. Any changes must be
justified by reference to measurable performance criteria. The
policy is designed to attract the highest calibre of executives and
reward them for performance results leading to long-term growth in
shareholder wealth.
All remuneration paid to key management personnel is valued at
the cost to the Company and expensed.
The Board's policy is to remunerate Non-Executive Directors at
market rates for time, commitment and responsibilities. The
Nomination and Remuneration Committee determines payments to the
Non-Executive Directors and reviews their remuneration annually,
based on market practice, duties and accountability. The maximum
aggregate amount of fees, excluding share-based payments that can
be paid to Non-Executive Directors is A$1,000,000 ($765,700).
To assist directors with independent judgement, it is the
Board's policy that if a director considers it necessary to obtain
independent professional advice to properly discharge the
responsibility of their office as a director then, provided the
director first obtains approval from the Chairman for incurring
such expense, the Company will pay the reasonable expenses
associated with obtaining such advice.
Options granted under the arrangement do not carry dividend or
voting rights. Options are valued using a binomial option pricing
model and the Black-Scholes option pricing model was used to
validate the price calculated.
Performance - based remuneration
The key performance indicators (KPIs") are set annually, which
includes consultation with key management personnel to ensure
buy-in. The measures are specifically tailored to the area each
individual is involved in and has a level of control over. The KPIs
target areas the Board believes hold greater potential for group
expansion and profit, covering financial and non-financial as well
as short and long-term goals.
Performance in relation to the KPIs is assessed annually, with
bonuses being awarded depending on the number and deemed difficulty
of the KPIs achieved.
Hedging of Management Remuneration
No member of key management entered into an arrangement during
or since the end of the financial year to limit the risk relating
to any element of that person's remuneration.
Relationship between remuneration policy and Company
performance
The tables below set out summary information about the Group's
earnings and movements in shareholder wealth for the five years to
June 2015.
Year Year Year Year Year
ended ended ended ended ended
30 June 30 June 30 June 30 June 30 June
2015 2014 2013 2012 2011
$'000 $'000 $'000 $'000 $'000
--------- --------- --------- --------- ---------
Revenue - 4,060 146,396 243,842 261,425
Net loss before
tax 6,711 84.120 155,754 150,551 218,106
Net loss after tax 6,711 84,120 148,137 138,908 219,003
---------------------- --------- --------- --------- --------- ---------
Year Year Year Year Year
ended ended ended ended ended
30 June 30 June 30 June 30 June 30 June
2015 2014 2013 2012 2011
--------- --------- --------- --------- ---------
Share price at start A$0.07 A$0.19 A$0.56 A$1.08 A$1.75
of year
Share price at end A$0.09 A$0.07 A$0.19 A$0.56 A$1.08
of year
Basic and diluted
loss per share ($
cents) 0.47 8.02 17.00 23.00 41.00
---------------------- --------- --------- --------- --------- ---------
Remuneration of directors and key management personnel
Details of the nature and amount of each major element of the
remuneration of each director and senior management personnel for
the year are:
Short term employee Post-employment Termination Share- Total Share
benefits benefits benefits based based
payments %
of
Total
-------------------------------- ---------------- ------------ ---------- ---------- -------
Salary Bonus Non Super-annuation Options
and -monetary / Shares
2015 fees benefits $
$ $ $ $ $ %
$
---------- ------- ----------- ---------------- ------------ ---------- ---------- -------
Non-Executive
Directors
B Pryor 62,940 - - - - - 62,940 -
P Cordin 37,226 - - 4,785 - - 42,011 -
K Mosehla 50,688 - - - - - 50,688 -
R Torlage 50,688 - - - - - 50,688 -
A Mifflin(1) 19,582 - - 2,690 - - 22,272 -
T Mosololi(1) 26,791 - - - - - 26,791 -
D Murray(2) 17,738 - - 2,077 - - 19,815 -
Executive Directors
D Brown 481,250 - - - - 131,485 612,735 32
D Schutte(3) 8,497 - - - - - 8,497 -
M Meeser(4) 249,139 - - - - - 249,139 -
1,004,539 - - 9,552 - 131,485 1,145,576 18
---------- ------- ----------- ---------------- ------------ ---------- ---------- -------
C Bronn 262,500 21,875 - - - - 284,375 -
---------- ------- ----------- ---------------- ------------ ---------- ---------- -------
1,267,039 21,875 - 9,552 - 131,485 1,429,951 15
---------- ------- ----------- ---------------- ------------ ---------- ---------- -------
(MORE TO FOLLOW) Dow Jones Newswires
September 10, 2015 07:00 ET (11:00 GMT)
1. Mr Mifflin and Mr Mosololi were appointed as Independent
Non-Executive Directors on 12 December 2014.
2. Mr Murray resigned as Senior Independent Non-Executive Director on 12 December 2014.
3. Mr Schutte was appointed as Chief Financial Officer and Executive Director on 22 June 2015.
4. Mr Meeser resigned as Chief Financial Officer and Executive Director on 30 April 2015.
Remuneration of directors and key management personnel
(continued)
Short term employee Post-employment Termination Share- Total Share
benefits benefits benefits based based
payments %
of
Total
------------------------------- ---------------- ------------ ---------- ---------- -------
Salary Bonus Non Super-annuation Options
and -monetary / Shares
2014 fees benefits $
$ $ $ $ $ %
$
---------- ------ ----------- ---------------- ------------ ---------- ---------- -------
Non-Executive
Directors
B Pryor 237,865 - - - - - 237,865 -
D Murray 86,587 - - 8,009 - - 94,596 -
P Cordin 84,353 - - 7,803 - - 92,156 -
K Mosehla 67,479 - - - - - 67,479 -
R Torlage 67,479 - - - - - 67,479 -
Executive Directors
D Brown 572,961 - - - - - 572,961 -
M Meeser 318,197 - - - - 225,145 543,342 41
1,434,921 - - 15,812 - 225,145 1,675,878 13
---------- ------ ----------- ---------------- ------------ ---------- ---------- -------
C Bronn 289,269 - - - - 8,854 298,123 3
W Hattingh 158,045 - - - - 19,054 177,099 11
Key management 447,314 - - - - 27,908 475,222 6
---------- ------ ----------- ---------------- ------------ ---------- ---------- -------
1,882,235 - - 15,812 - 253,053 2,151,100 12
---------- ------ ----------- ---------------- ------------ ---------- ---------- -------
No director or key management appointed during the period
received a payment as part of his consideration for agreeing to
hold the position.
Share-based payments granted as compensation for the current
financial year
During the financial year, the following share-based payment
arrangements were in existence:
Exercise Grant
Grant Expiry price date Vesting
Option series Number date date value date
------------------ ----------- ----------- ----------- --------- --------- --------
Class J unlisted
options 3,000,000 08/12/2009 30/11/2014 A$2.74 A$0.58 (1)
Class C unlisted
options 2,500,000 09/11/2010 09/11/2015 A$1.20 A$0.59 (2)
ESOP unlisted
options 1,441,061 04/02/2011 30/09/2015 A$1.40 A$0.91 (3)
ESOP unlisted
options 2,670,000 16/09/2011 14/02/2017 ZAR7.60 ZAR3.46 (4)
Class L unlisted
options 3,500,000 28/11/2012 30/11/2015 GBP0.25 GBP0.032 (5)
ESOP unlisted
options 3,932,928 22/11/2013 30/06/2017 ZAR1.75 ZAR0.52 (6)
ESOP unlisted
options 2,750,000 22/11/2013 30/04/2015 ZAR2.00 ZAR0.56 (7)
ESOP unlisted
options 1,375,000 22/11/2013 30/11/2015 ZAR2.00 ZAR0.56 (7)
ESOP unlisted
options 3,525,000 01/02/2014 01/02/2019 ZAR1.20 ZAR0.15 (8)
ESOP unlisted
options 3,525,000 01/02/2014 01/02/2019 ZAR1.32 ZAR0.14 (8)
ESOP unlisted
options 3,525,000 01/02/2014 01/02/2019 ZAR1.45 ZAR0.12 (8)
31,743,989
-----------
1. The 3,000,000 share options were granted to Mr Farrell, a
former Managing Director of the Company on 8 December 2009.
2,000,000 of the options vested on 29 January 2011 and the
remaining 1,000,000 options vest one year after the granting of the
Makhado Project New Order Mining Right. These options expired
during the year.
2. Mr Murray was issued a total of 2,500,000 options with an
expiry date 5 years from the issue date, 1,000,000 of which will
vest 12 months after the date of issue, 750,000 of which will vest
24 months after the date of issue and the remaining 750,000 vesting
36 months from the date of issue.
3. These options were issued to employees and vest in three
equal tranches on 30 September 2011, 30 September 2012 and the
remaining third on 30 September 2013.
4. These options were issued to employees and one third vested
on 1 July 2012, one third on 1 July 2013 and the remaining third on
1 July 2014.
5. These options all vested on 28 November 2012.
6. These options were issued to employees and two thirds vested
immediately on granting and one third vesting on 1 July 2014.
7. Mr Meeser was issued a total of 4,125,000 options vesting in
three equal tranches on 1 June 2014, 1 June 2015 and 1 June 2016.
2,750,000 of these options had not vested and were cancelled on Mr
Meeser resignation.
8. A total of 10,575,000 options were granted to Mr Brown on his
appointment as Chief Executive Officer and vest in three equal
tranches on 1 February 2015, 1 February 2016 and 1 February
2017.
The following grants of share-based payment compensation to key
management personnel relate to the current financial year:
During the financial year
---------------------------------------------------------------------
% of
compensation
for the year
% of grant % of grant consisting of
Name Option series Number granted Number vested vested forfeited options
--------- ------------------ --------------- -------------- ----------------- ----------------- ----------------
ESOP unlisted
D Brown options 10,575,000 3,525,000 33 n/a 32
During the year, none of the key management personnel exercised
options that were granted to them as part of their
compensation.
Share-based payments granted as compensation for the current
financial year (continued)
No options granted to key management personnel were exercised or
lapsed during the year.
Key terms of employment contracts
The Company entered into formal contractual employment
agreements with the Chief Executive Officer and the Chief Financial
Officer only and not with any other member of the Board. The
employment conditions of the Chief Executive Officer and Chief
Financial Officer are:
Current
1. Mr Brown's appointment as Chief Executive Officer commenced
on 1 February 2014 with an annual remuneration of ZAR5.5 million
and a three month notice period and received 10,575,000 options in
accordance with the Company's employee share option plan. The
options are exercisable in three equal tranches over three years at
ZAR1.20, ZAR1.32 and ZAR1.40 vesting on 1 February 2015, 1 February
2016 and 1 February 2017 respectively.
2. Mr Schutte serves as Financial Director with an annual
remuneration of ZAR3.6 million and a three month notice period. On
appointment as Chief Financial Officer and Executive Director Mr
Schutte received 6,600,000 options in accordance with the Company's
employee share option plan. The options vest in three equal
tranches over a three-year period and are subject to shareholder
approval. The first tranche of 2,200,000 options are exercisable on
21 June 2016 at ZAR1.20 each, a further 2,200,000 options are
exercisable on 21 June 2017 at ZAR1.32 per option and the remaining
2,200,000 options are exercisable on 21 June 2018 at an exercise
price of ZAR1.45 each.
The employment conditions of the following specified executives
have been formalised in employment contracts:
(MORE TO FOLLOW) Dow Jones Newswires
September 10, 2015 07:00 ET (11:00 GMT)
1. Mr Bronn is employed by CoAL in the capacity of Chief
Operations Officer, at an annual remuneration of ZAR3.0 million.
This permanent employment contract may be terminated by written
notice of two months.
Key management personnel equity holdings
Option holdings
The movement during the reporting period in the number of
options over ordinary shares exercisable at A$1.20 on or before 9
November 2015 held directly, indirectly or beneficially by each
director and key management personnel including their
personally-related entities, is as follows:
Held Granted Exercised Other Held
at as remuneration changes at
1 July 30 June
2014 2015
---------------- ---------- ----------------- ---------- --------- ----------
Non-Executive
Directors
B Pryor - - - - -
D Murray(1) 2,500,000 - - - 2,500,000
P Cordin - - - - -
K Mosehla - - - - -
R Torlage - - - - -
A Mifflin - - - - -
T Mosololi - - - - -
Executive
Directors
D Brown - - - - -
D Schutte - - - - -
M Meeser - - - - -
Key management - - - - -
---------------- ---------- ----------------- ---------- --------- ----------
(1) Resigned 12 December 2014
Key management personnel equity holdings (continued)
The movement during the reporting period in the number of
options over ordinary shares exercisable at A$1.40 or ZAR9.50 on or
before 14 February 2017 held directly, indirectly or beneficially
by each director and key management personnel including their
personally-related entities, is as follows:
Held Granted Exercised Other Held
at as remuneration changes at
1 July 30 June
2014 2015
---------------- -------- ----------------- ---------- --------- ---------
Non-Executive
Directors
B Pryor - - - - -
D Murray - - - - -
P Cordin - - - - -
K Mosehla - - - - -
R Torlage - - - - -
A Mifflin - - - - -
T Mosololi - - - - -
Executive
Directors
D Brown - - - - -
D Schutte - - - - -
M Meeser - - - - -
Key management
C Bronn 135,000 - - - 135,000
---------------- -------- ----------------- ---------- --------- ---------
The movement during the reporting period in the number of
options over ordinary shares exercisable at GBP0.25 on or before 30
November 2015 held directly, indirectly or beneficially by each
director and key management personnel including their
personally-related entities, is as follows:
Held Granted Exercised Other Held
at as remuneration changes at
1 July 30 June
2014 2015
---------------- ---------- ----------------- ---------- --------- ----------
Non-Executive
Directors
B Pryor 1,000,000 - - - 1,000,000
D Murray - - - - -
P Cordin - - - - -
K Mosehla - - - - -
R Torlage - - - - -
A Mifflin - - - - -
T Mosololi - - - - -
Executive
Directors
D Brown 2,500,000 - - - 2,500,000
D Schutte - - - - -
M Meeser - - - - -
Key management - - - - -
---------------- ---------- ----------------- ---------- --------- ----------
Key management personnel equity holdings (continued)
The movement during the reporting period in the number of
options over ordinary shares exercisable at ZAR1.75 on or before 30
June 2017 held directly, indirectly or beneficially by each
director and key management personnel including their
personally-related entities, is as follows:
Held Granted Exercised Other Held
at as remuneration changes at
1 July 30 June
2014 2015
---------------- -------- ----------------- ---------- --------- ---------
Non-Executive
Directors
B Pryor - - - - -
D Murray - - - - -
P Cordin - - - - -
K Mosehla - - - - -
R Torlage - - - - -
A Mifflin - - - - -
T Mosololi - - - - -
Executive
Directors
D Brown - - - - -
D Schutte - - - - -
M Meeser - - - - -
Key management
C Bronn 174,696 - - - 174,696
---------------- -------- ----------------- ---------- --------- ---------
The movement during the reporting period in the number of
options over ordinary shares exercisable at ZAR2.00 on or before 1
June 2018 held directly, indirectly or beneficially by each
director and key management personnel including their
personally-related entities, is as follows:
Held Granted Exercised Other Held
at as remuneration changes at
1 July 30 June
2014 2015
---------------- ---------- ----------------- ---------- ------------ ----------
Non-Executive
Directors
B Pryor - - - - -
D Murray - - - - -
P Cordin - - - - -
K Mosehla - - - - -
R Torlage - - - - -
A Mifflin - - - - -
T Mosololi - - - - -
Executive
Directors
D Brown - - - - -
D Schutte - - - - -
M Meeser(1) 4,125,000 - - (2,750,000) 1,375,000
Key management - - - - -
---------------- ---------- ----------------- ---------- ------------ ----------
(1) Resigned 30 April 2015
Key management personnel equity holdings (continued)
(MORE TO FOLLOW) Dow Jones Newswires
September 10, 2015 07:00 ET (11:00 GMT)
The movement during the reporting period in the number of
options over ordinary shares exercisable in three equal tranches at
ZAR1.20 on or before 1 February 2015, ZAR1.32 on or before 1
February 2016 and ZAR1.45 on or before 1 February 2017 held
directly, indirectly or beneficially by each director and key
management personnel including their personally-related entities,
is as follows:
Held Granted Exercised Other Held
at as remuneration changes at
1 July 30 June
2014 2015
---------------- --------- ----------------- ---------- --------- -----------
Non-Executive
Directors
B Pryor - - - - -
D Murray - - - - -
P Cordin - - - - -
K Mosehla - - - - -
R Torlage - - - - -
A Mifflin - - - - -
T Mosololi - - - - -
Executive
Directors
D Brown - 10,575,000 - - 10,575,000
D Schutte - - - - -
M Meeser - - - - -
Key management - - - - -
---------------- --------- ----------------- ---------- --------- -----------
Equity holdings and transactions of Directors and key management
personnel
The movement during the reporting period in the number of
ordinary shares held, directly, indirectly or beneficially by each
key management personnel including their personally-related
entities, is as follows:
Held at Purchased Received Other Held
1 July on exercise changes at
2014 of options 30 June
/ remuneration 2015
---------------- -------- ---------- ---------------- --------- ----------
Non-Executive
Directors
B Pryor - 150,000 - - 150,000
D Murray(1) - - - - -
P Cordin 871,059 500,000 - - 1,371,059
K Mosehla - - - - -
R Torlage - - - - -
A Mifflin - - - - -
T Mosololi(2) - - - 10,000 10,000
Executive
Directors
D Brown 250,000 575,000 - - 825,000
D Schutte - - - - -
M Meeser(3) 600,000 - - - 600,000
Key management - - - - -
---------------- -------- ---------- ---------------- --------- ----------
(1) Resigned 12 December 2014
(2) Purchased prior to being appointed as a Non-Executive Director.
(3) Resigned 30 April 2015
This directors' report is signed in accordance with a resolution
of directors made pursuant to s298(2) of the Corporations Act
2001.
On behalf of the Directors
David Hugh Brown
Chief Executive Officer
10 September 2015
Bernard Robert Pryor
Chairman
10 September 2015
COAL OF AFRICA LIMITED
AUDIT INDEPENDENCE
Deloitte Touche Tohmatsu
A.C.N. 74 490 121 060
Woodside Plaza
Level 14
240 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
DX 206
Tel: +61 (0) 8 9365 7000
Fax: +61 (0) 8 9365 7001
www.deloitte.com.au
The Board of Directors
Coal of Africa Limited Suite 8,
7 The Esplanade Mount Pleasant WA 6153
10 September 2015
Auditor's Independence Declaration to Coal of Africa 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 Coal of Africa Limited.
As lead audit partner for the audit of the financial statements
of Coal of Africa Limited for the financial year ended 30 June
2015, 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 audit; and
(ii) any applicable code of professional conduct in relation to the audit.
Partner
Chartered Accountants
COAL OF AFRICA LIMITED
CORPORATE GOVERNANCE
CORPORATE GOVERNANCE STATEMENT
The Board of Directors of Coal of Africa Limited is responsible
for the establishment of a corporate governance framework that has
regard to the best practice recommendations set by the ASX
Corporate Governance Council.
This statement summarises the corporate governance practices
that have been adopted by the Board. In addition to the information
contained in this statement, the Company's website at
www.coalofafrica.com contains additional details of its corporate
governance procedures and practices.
The Company has followed the ASX Corporate Governance Council's
Corporate Governance Principles and Recommendations (Third Edition)
("ASX Principles") where the Board has considered the
recommendation to be an appropriate benchmark for its corporate
governance principles. Where the Company considered it was not
appropriate to presently comply with a particular recommendation,
the reasons are set out in the relevant section of this
statement.
PRINCIPLE 1: LAY SOLID FOUNDATIONS FOR MANAGEMENT AND
OVERSIGHT
A listed entity should establish and disclose the respective
roles and responsibilities of its board and management and how
their performance is monitored and evaluated.
ASX Principles Recommendation 1.1: A listed entity should
disclose:
a) the respective roles and responsibilities of its board and management; and
b) those matters expressly reserved to the board and those delegated to management.
The Board has established a Board Charter which sets out
functions reserved to Board and those delegated to senior
executives. This Charter is available on the Company's website.
The role of the Board is to provide leadership for and
supervision of the Company's senior management. The Board provides
the strategic direction of the Company and regularly measures the
progression by senior management of that strategic direction.
The key responsibilities of the Board include:
a) overseeing the Company, including its control and accountability systems;
b) appointing the Chief Executive Officer, or equivalent, for a
period and on terms as the Directors see fit and, where
appropriate, removing the Chief Executive Officer, or
equivalent;
c) ratifying the appointment and, where appropriate, the removal
of senior executives, including the Chief Financial Officer and the
Company Secretary;
d) ensuring the Company's policy and procedure for selection and
(re)appointment of directors is reviewed in accordance with the
Company's Nomination Committee Charter;
e) approving the Company's policies on risk oversight and
management, internal compliance and control, Code of Conduct, and
legal compliance;
f) satisfying itself that senior management has developed and
implemented a sound system of risk management and internal control
in relation to financial reporting risks and reviewed the
effectiveness of the operation of that system;
g) assessing the effectiveness of senior management's
implementation of systems for managing material business risk
including the making of additional enquiries and to request
assurances regarding the management of material business risk, as
appropriate;
h) monitoring, reviewing and challenging senior management's
performance and implementation of strategy;
i) ensuring appropriate resources are available to senior management;
j) approving and monitoring the progress of major capital
expenditure, capital management, and acquisitions and
divestitures;
k) monitoring the financial performance of the Company;
l) ensuring the integrity of the Company's financial (with the
assistance of the Audit and Risk Committee) and other reporting
through approval and monitoring;
m) providing overall corporate governance of the Company,
including conducting regular reviews of the balance of
responsibilities within the Company to ensure division of functions
remain appropriate to the needs of the Company;
n) appointing the external auditor (where applicable, based on
recommendations of the Audit and Risk Committee) and the
appointment of a new external auditor when any vacancy arises,
provided that any appointment made by the Board must be ratified by
shareholders at the next annual general meeting of the Company;
o) engagement with the Company's external auditors by the Audit and Risk Committee;
p) monitoring compliance with all of the Company's legal
obligations, such as those obligations relating to the environment,
native title, cultural heritage and occupational health and safety;
and
q) making regular assessment of whether each non-executive
Director is independent in accordance with the Company's policy on
assessing the independence of directors.
(MORE TO FOLLOW) Dow Jones Newswires
September 10, 2015 07:00 ET (11:00 GMT)
The Board has delegated responsibilities and authorities to
management to enable them to conduct the Company's day-to-day
activities. Matters which are not covered by these delegations,
such as approvals which exceed certain limits, require Board
approval.
Details of meeting attendance of members of the Board for FY2015
is contained in the following table:
Number of Board meetings attended in FY2015 Number of Board meetings held in FY2015
while a member while a member
-------------------------- -------------------------------------------- --------------------------------------------
Bernard Pryor (Chairman) 5 5
-------------------------- -------------------------------------------- --------------------------------------------
David Brown 5 5
-------------------------- -------------------------------------------- --------------------------------------------
De Wet Schutte - -
-------------------------- -------------------------------------------- --------------------------------------------
Peter Cordin 5 5
-------------------------- -------------------------------------------- --------------------------------------------
Khomotso Mosehla 5 5
-------------------------- -------------------------------------------- --------------------------------------------
Rudolph Torlage 4 5
-------------------------- -------------------------------------------- --------------------------------------------
Andrew Mifflin 3 3
-------------------------- -------------------------------------------- --------------------------------------------
Thabo Mosololi 3 3
-------------------------- -------------------------------------------- --------------------------------------------
David Murray 2 2
-------------------------- -------------------------------------------- --------------------------------------------
Michael Meeser 3 3
-------------------------- -------------------------------------------- --------------------------------------------
The Board has established three standing Committees to assist it
to meet its responsibilities:
-- Audit and Risk Committee
-- Nomination and Remuneration Committee
-- Safety, Health and Environment Committee
Each standing Committee has a formal Charter approved by the
Board setting out the matters relevant to composition, terms of
reference, process and administration of that Committee. These
Committees are described in further detail elsewhere in this
Corporate Governance Statement.
The Board Charter requires the Board to convene regular meetings
with such frequency as is sufficient to appropriately discharge its
responsibilities.
Standing Committee meetings are held as required, generally the
day prior to the scheduled Board meeting. The Chairman sets the
agenda for each meeting in conjunction with the Chief Executive
Officer and Company Secretary. Any Director may request additional
matters on the agenda. Members of senior management attend meetings
of the Board and its Committees by invitation and are available for
questioning by Directors.
ASX Principles Recommendation 1.2: A listed entity should:
a) undertake appropriate checks before appointing a person, or
putting forward to security holders a candidate for election, as a
director; and
b) provide security holders with all material information in its
possession relevant to a decision on whether or not to elect or
re-elect a director.
The Company performs checks on all potential Directors which
include checks on a person's character, experience, education,
criminal record and bankruptcy history. Potential Director's are
required to provide their consent for the Company to conduct any
background or other check and also acknowledge that they will have
sufficient time available to fulfil their responsibilities as
Director of the Company.
Newly appointed Directors must stand for reappointment at the
next Annual General Meeting ("AGM") of the Company. The Notice of
Meeting for the AGM provides shareholders with information about
each Director standing for election or re-election including
details regarding their length of tenure, relevant skills and
experience.
ASX Principles Recommendation 1.3: A listed entity should have a
written agreement with each director and senior executive setting
out the terms of their appointment.
The Company has written agreements in place with each director
in the form of an appointment letter. The letter among other
matters summarises the terms of appointment including remuneration,
the requirement to comply with key corporate policies including the
Code of Conduct and Share Trading Policy and indemnity and
insurance arrangements.
All senior executives including the Chief Executive Officer and
the Chief Financial Officer have their position descriptions, roles
and responsibilities set out in writing in an employment
contract.
ASX Principles Recommendation 1.4: The Company Secretary of a
listed entity should be accountable directly to the board, through
the chair, on all matters to do with the proper functioning of the
board.
The Company Secretary has an important role in supporting the
effectiveness of the Board and its committees. The role of the
Company Secretary includes:
-- advising the Board and its committees on governance matters;
-- monitoring that Board and committee policy and procedures are followed; and
-- ensuring that the business at Board and committee meetings is
accurately reflected in the minutes.
All Directors have direct access to the Company Secretary and
vice versa.
The appointment and removal of the Company Secretary is a matter
for decision by the Board as a whole.
ASX Principles Recommendation 1.5: A listed entity should
a) have a diversity policy which includes requirements for the
board or a relevant committee of the board to set measurable
objectives for achieving gender diversity and to assess annually
both the objectives and the entity's progress in achieving
them;
b) disclose the policy or a summary of it; and
c) disclose at the end of each reporting period the measurable
objectives for achieving gender diversity set by the board or a
relevant committee of the board in accordance with the entity's
diversity policy and its progress towards achieving them and
either:
1. the respective proportions of men and women on the board, in
senior executive positions and across the whole organisation;
or
2. if the entity is a "relevant employer" under the Workplace
Gender Equality Act, the entity's most recent "Gender Equality
Indicators", as defined in and published under that Act.
The Company is committed to developing a diverse workforce and
providing a work environment in which all employees are treated
fairly and with respect. To this end, the Company has in place an
Employment Equity Policy which details its commitment to being an
equal opportunity employer and is in line with the South African
Mining Charter and Employment Equity legislation in South Africa. A
copy of the Employment Equity Policy and the Diversity Policy are
available on the Company's website.
The Mining Charter requires that a company establish measurable
objectives for achieving gender diversity and assess such
objectives and progress toward achieving them. The targets set for
CoAL include 10% female representation in core mining positions.
Employment Equity targets as these relating to designated groups
(one of which is women) are included as part of the business key
performance areas and are included in all management performance
contracts.
As at end of the 2015 financial year, the proportion of women
employees in the organisation is:
Employees 40%
Management 33%
Senior Executive 25%
Board 0%
The Company is not considered a relevant employer under the
Australian Workplace Gender Equality Act as the number of employees
in Australia is below the threshold.
ASX Principles Recommendation 1.6: A listed entity should:
a) have and disclose a process for periodically evaluating the
performance of its board, its committees and individual directors;
and
b) disclose in relation to each reporting period, whether a
performance evaluation was undertaken in the reporting period in
accordance with that process.
The Board reviews its performance and the performance of
individual Directors annually. The most recent review, which was
conducted during the year, involved the completion of a detailed
questionnaire by each Director. The process was managed by the
Company Secretary and the Chairman and the results of the review
were discussed at a subsequent board meeting.
The Board considers its processes for reviewing the performance
of the Board appropriate for the size and stage of development of
the Company.
ASX Principles Recommendation 1.7: A listed entity should:
a) have and disclose a process for periodically evaluating the
performance of its senior executives; and
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b) disclose in relation to each reporting period, whether a
performance evaluation was undertaken in the reporting period in
accordance with that process.
The Chief Executive Officer is responsible for assessing the
performance of the key executives within the Company. This is
performed at least annually through a formal process involving a
formal meeting with each senior executive. A performance evaluation
of senior executives was completed in the financial year in
accordance with this process.
PRINCIPLE 2: STRUCTURE THE BOARD TO ADD VALUE
A listed entity should have a board of an appropriate size,
composition, skills and commitment to enable it to discharge its
duties effectively.
ASX Principles Recommendation 2.1: The board of a listed entity
should:
a) have a nomination committee which:
1. has at least three members, a majority of whom are independent directors; and
2. is chaired by an independent director;
and disclose
3. the charter of the committee;
4. the members of the committee; and
5. at the end of the reporting period, the number of times the
committee met throughout the period and the individual attendances
of the members at those meetings; or
b) if it does not have a nomination committee, disclose that
fact and the processes it employs to address board succession
issues and to ensure that the board has the appropriate balance of
skills, knowledge, experience, independence and diversity to enable
it to discharge its duties and responsibilities effectively.
The Company has established a Nomination and Remuneration
Committee and adopted a Charter that set out the committee's role
and responsibilities, composition and membership requirements. That
Charter has been published on the Company's website.
The Committee's nomination responsibilities include ensuring
that the Board has the appropriate blend of Directors with the
necessary expertise and relevant industry experience. As such the
Charter requires the Committee to:
-- regularly review the size and composition of the Board, and
make recommendations to the Board on any appropriate changes;
-- identify and assess necessary and desirable director
competences and provide advice on the competency levels of
directors with a view to enhancing the Board;
-- make recommendations on the appointment and removal of directors;
-- make recommendations on whether any directors whose term of
office is due to expire should be nominated for re-election;
and
-- regularly review the time required from non-executive
Directors and whether non-executive Directors are meeting that
requirement.
The responsibilities of this Committee with respect to
remuneration matters are set out elsewhere in this statement.
The Committee Charter states that the composition should include
a minimum of three members, the majority of whom must be
independent, and a Chairman who is an independent Director.
Membership is consistent with the composition requirements of the
Charter and the recommendations of the ASX Principles.
Details of meeting attendance of members of the Nomination
Committee for FY2015 is contained in the following table:
Number of Committee meetings attended in Number of Committee meetings held in FY2015
FY2015 while a member while a member
-------------------------- -------------------------------------------- --------------------------------------------
Bernard Pryor (Chairman) 4 4
-------------------------- -------------------------------------------- --------------------------------------------
Thabo Mosololi 2 2
-------------------------- -------------------------------------------- --------------------------------------------
David Brown 4 4
-------------------------- -------------------------------------------- --------------------------------------------
David Murray 1 2
-------------------------- -------------------------------------------- --------------------------------------------
ASX Principles Recommendation 2.2: A listed entity should have
and disclose a board skills matrix setting out the skills and
diversity that the board currently has or is looking to achieve in
its membership.
The Company's website contains details on the procedures for the
selection and appointment of new Directors and the re-election of
incumbent Directors, together with the Board's policy for the
nomination and appointment of Directors.
The Board has developed a structured process for selection and
appointment of new Directors to the Board. As part of this
procedure, the Board has committed to:
-- the evaluation and identification of the diversity, skills,
experience and expertise that will best complement Board
effectiveness;
-- the development of a competencies review process for
identifying and assessing Director competencies;
-- the conduct of a competencies review of the Board before a
candidate is recommended for appointment; and
-- the periodic review of the Board's succession plan.
The following board skills matrix sets out the mix of skills,
experience & expertise the board currently has across its
membership:
Competencies Rating
--------------------------------- -------
South African politics a
--------------------------------- -------
Strategic thinking a
--------------------------------- -------
Gender r
--------------------------------- -------
Technical a
--------------------------------- -------
Financial a
--------------------------------- -------
Commercial a
--------------------------------- -------
Mergers & Acquisitions a
--------------------------------- -------
Coal markets a
--------------------------------- -------
International affairs a
--------------------------------- -------
Shareholder relations a
--------------------------------- -------
Project development a
--------------------------------- -------
Equity markets a
--------------------------------- -------
Debt markets/ Banking experience r
--------------------------------- -------
Executive leadership a
--------------------------------- -------
Listed board experience a
--------------------------------- -------
SHE & Sustainability a
--------------------------------- -------
r - the CoAL board is currently working to increase these
skills
ASX Principles Recommendation 2.3: A listed entity should
disclose:
a) the names of the directors considered by the board to be independent directors;
b) if a director has an interest, position, association or
relationship of the type that might cause doubts about the
independence of that director but the board is of the opinion that
it does not compromise the independence of the director; the nature
of the interest, position, association or relationship in question
and an explanation of why the board is of that opinion; and
c) the length of service of each director.
ASX Principles Recommendation 2.4: A majority of the board of a
listed entity should be independent Directors.
ASX Principles Recommendation 2.5: The chair of the board of a
listed entity should be an independent Director and, in particular,
should not be the same person as the CEO of the entity.
The Board currently comprises two executive Directors and six
non-executive Directors. Five of the non-executive directors are
considered to be independent. The Chairman, Mr B Pryor, is one of
the independent Directors.
The Board agrees that all Directors should bring an independent
judgement to bear in decision-making. The Board has adopted a
formal policy on access to independent professional advice which
provides that Directors are entitled to seek independent
professional advice for the purposes of the proper performance of
their duties. The advice is at the Company's expense and advice so
obtained is to be made available to all Directors.
A Director's obligations to avoid a conflict of interest are set
out in the Code of Conduct, available on the Company's website.
Directors must also comply strictly with Corporations Act
requirements for the avoidance of conflicts.
The Board considers an independent Director to be a
non-executive Director who meets the criteria for independence set
out the ASX Principles. In determining a Director's independence,
the Board considers the relationships that may affect
independence.
Criteria that the Board takes into account when determining
Director independence include:
-- substantial shareholdings in the Company;
-- past or current employment in an executive capacity;
-- whether or not the Director has been a principal of a
material professional adviser or a material consultant to the
Company in the past three years;
-- material supplier or customer relationships with the Company;
-- material contractual relationships or payments for services other than as a Director; and
-- family ties and cross-directorships.
Materiality for these purposes is based on quantitative and
qualitative thresholds, set out in the Board Charter available from
the Company's website.
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The Board has reviewed and considered the positions and
associations of each of the Directors in office at the date of this
report and consider that a majority of the Directors are
independent. Bernard Pryor, Peter Cordin, Khomotso Mosehla, Andrew
Mifflin and Thabo Mosololi are considered independent. Executive
Directors David Brown and De Wet Schutte and non-executive Director
Rudolph Torlage are not considered independent. Non-executive
Director Rudolph Torlage is an officer/senior employee of
ArcelorMittal South Africa Limited, a substantial shareholder in
the Company and as such does not meet the Board's criteria for
independence.
The period of office held by each Director in office is as
follows:
Director Date Appointed Period in office Due for Re-election or Retirement
----------------- ----------------- ----------------- ----------------------------------
Bernard Pryor 6 August 2012 3 years 2017 AGM
----------------- ----------------- ----------------- ----------------------------------
David Brown 6 August 2012 3 years 2015 AGM
----------------- ----------------- ----------------- ----------------------------------
De Wet Schutte 22 June 2015 1 year 2015 AGM
----------------- ----------------- ----------------- ----------------------------------
Peter Cordin 8 December 1997 17 years 2016 AGM
----------------- ----------------- ----------------- ----------------------------------
Khomotso Mosehla 18 November 2010 4 years 2016 AGM
----------------- ----------------- ----------------- ----------------------------------
Rudolph Torlage 18 November 2010 4 years 2016 AGM
----------------- ----------------- ----------------- ----------------------------------
Andrew Mifflin 12 December 2014 1 year 2015 AGM
----------------- ----------------- ----------------- ----------------------------------
Thabo Mosololi 12 December 2014 1 year 2015 AGM
----------------- ----------------- ----------------- ----------------------------------
Directors must retire at the third AGM following their election
or most recent re-election. At least one third of Directors must
stand for election at each AGM. Any Director appointed to fill a
casual vacancy since the date of the previous AGM must submit
themselves to shareholders for election at the next AGM.
Re-appointment of Directors by rotation is not automatic.
ASX Principles Recommendation 2.6: A listed entity should have a
program for inducting new directors and provide appropriate
professional development opportunities for directors to develop and
maintain the skills and knowledge needed to perform their role as
directors effectively.
As part of the induction process, meetings are arranged with
other Board members and key executives prior to the Director's
appointment.
All Directors are expected to maintain the skills required to
discharge their obligations to the Company. Directors are
encouraged to undertake continuing professional education and where
this involves industry seminars and approved education courses,
this is paid for by the Company where appropriate.
The skills, experience and expertise relevant to the position of
director held by each director in office at the date of this
integrated report is set out in the Directors' report.
PRINCIPLE 3: ACT ETHICALLY AND RESPONSIBLY
A listed entity should act ethically and responsibly.
ASX Principles Recommendation 3.1: A listed entity should:
a) have a code of conduct for its directors, senior executives and employees; and
b) disclose that code or a summary of it.
CODE OF CONDUCT
The Board encourages appropriate standards of conduct and
behaviour from Directors, officers, employees and contractors of
the Company. The Board has adopted a Code of Conduct in relation to
Directors and employees, available from the Company's website. This
Code of Conduct is regularly reviewed and updated as necessary to
ensure that it reflects the highest standards of behaviour and
professionalism and the practices necessary to maintain confidence
in the Company's integrity.
A fundamental theme is that all business affairs are conducted
legally, ethically and with strict observance of the highest
standards of integrity and propriety.
SECURITIES TRADING POLICY
The Board has adopted a Securities Trading Policy which
regulates dealings by Directors, officers and employees in
securities issued by the Company. The policy is intended to assist
in maintaining market confidence in the integrity of dealings in
the Company's securities.
Under the policy, which is available on the Company's website,
Directors, officers and employees of the Company must not, whether
in their own capacity or as an agent for another, subscribe for,
purchase or sell, or enter into an agreement to subscribe for,
purchase or sell, any securities (ie. shares or options) in the
Company, or procure another person to do so:
a) if that Director, officer or employee possesses information
that a reasonable person would expect to have a material effect on
the price or value of the securities if the information was
generally available;
b) if the Director, officer or employee knows or ought reasonably to know, that:
-- the information is not generally available; and
-- if it were generally available, it might have a material
effect on the price or value of the securities in the Company;
and
c) without the written acknowledgement of the Chair.
Further, Directors, officers and employees must not either
directly or indirectly pass on this kind of information to another
person if they know, or ought reasonably to know, that this other
person is likely to deal in the securities of the Company or
procure another person to do so.
The policy regulates trading by key management personnel within
defined closed periods, as well as providing details of trading not
subject to the policy, exceptional circumstances in which key
management personnel may be permitted to trade during a prohibited
period with prior written clearance and the procedure for obtaining
written clearance.
Directors, officers and employees must not enter into
transactions or arrangements which operate to limit the economic
risk of their security holding in the Company without first seeking
and obtaining written acknowledgement from the Chair.
Executives are also prohibited from entering into transactions
or arrangements which limit the economic risk of participating in
unvested entitlements.
PRIVACY
The Company has resolved to comply with the National Privacy
Principles contained in the Privacy Act 1988, to the extent
required for a company the size and nature of CoAL.
PRINCIPLE 4: SAFEGUARD INTEGRITY IN CORPORATE REPORTING
A listed entity should have formal and rigorous processes that
independently verify and safeguard the integrity of its corporate
reporting.
ASX Principles Recommendation 4.1: The board of a listed entity
should:
a) have an audit committee which:
1. has at least three members, all of whom are non-executive
directors and a majority of whom are independent directors; and
2. is chaired by an independent director, who is not the chair of the board,
and disclose
3. the charter of the committee;
4. the relevant qualifications and experience of the members of the committee; and
5. in relation to each reporting period, the number of times the
committee met throughout the period and the individual attendances
of the members at those meetings; or
b) if it does not have an audit committee, disclose that fact
and the processes it employs that independently verify and
safeguard the integrity of its corporate reporting, including the
processes for the appointment and removal of the external auditor
and the rotation of the audit engagement partner.
AUDIT COMMITTEE
The Company has established an Audit and Risk Committee which is
comprised of a majority of independent non-executive Directors.
The role of the Audit and Risk Committee is to:
-- monitor and review the integrity of the financial reporting
of the Company, reviewing significant financial reporting
judgments;
-- review the Company's internal financial control system and,
unless expressly addressed by a separate risk committee or by the
Board itself, risk management systems;
-- monitor, review and oversee the external audit function
including matters concerning appointment and remuneration,
independence and non-audit services;
-- monitor and review compliance with the Company's Code of Conduct; and
-- perform such other functions as assigned by law, the Company's Constitution, or the Board.
The Board has determined that the Audit Committee should
comprise:
-- at least three members;
-- a majority of independent non-executive Directors; and
-- an independent chair who is not the Chair of the Board.
In addition, the Audit Committee should include:
-- members who are financially literate i.e. able to read and understand financial statements;
-- at least one member with relevant qualifications and
experience, i.e. a qualified accountant or other finance
professional with experience of financial and accounting matters;
and
-- at least one member with an understanding of the industry in which the entity operates.
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As at 30 June 2015 membership was consistent with the
composition requirements of the ASX Principles and Audit and Risk
Committee Charter with one exception. The Chair of the Committee,
Mr B Pryor is also the Chair of the Board. The Board accepted this
departure from the Audit and Risk Committee Charter and the ASX
Principles as a temporary one, resolved subsequent to year end with
the appointment of Mr T Mosololi as Chairman of the Audit
Committee.
The Charter is published on the Company's website. The website
also contains information on the procedures for the selection and
appointment of the external auditor and for the rotation of
external audit partners.
Details of meeting attendance of members of the Audit and Risk
Committee for FY2015 is contained in the following table:
Number of Committee meetings attended Number of Committee meetings held in
in FY2015 while a member FY2015 while a member
------------------------------------- -------------------------------------- ---------------------------------------
Bernard Pryor (Chairman) (Chairman) 5 5
------------------------------------- -------------------------------------- ---------------------------------------
Thabo Mosololi 2 2
------------------------------------- -------------------------------------- ---------------------------------------
Khomotso Mosehla 5 5
------------------------------------- -------------------------------------- ---------------------------------------
Peter Cordin 3 3
------------------------------------- -------------------------------------- ---------------------------------------
ASX Principles Recommendation 4.2: The board of a listed entity
should, before it approves the entity's financial statements for a
financial period, receive from the CEO and CFO a declaration that,
in their opinion, the financial records of the entity have been
properly maintained and that the financial statements comply with
the appropriate accounting standards and give a true and fair view
of the financial position and performance of the entity and that
the opinion has been formed on the basis of a sound system of risk
management and internal control which is operating effectively.
The Chief Executive Officer and Chief Financial Officer confirm
in writing to the Board that:
a) the Company's annual financial reports present a true and
fair view, in all material respects, of the Company's financial
condition and operational results are in accordance with relevant
accounting standards;
b) the above confirmation is founded on a sound system of risk
management and internal compliance and control which implements the
policies of the Board; and
c) the Company's risk management and internal compliance and
control system is operating efficiently and effectively in all
material respects.
This declaration was obtained for the relevant reporting
period.
ASX Principles Recommendation 4.3: A listed entity that has an
AGM should ensure that its external auditor attends its AGM and is
available to answer questions from security holders relevant to the
audit.
The auditor attends the AGM, usually by telephone as the meeting
is held in the United Kingdom. Shareholders are able to ask
questions on the conduct of the audit and the preparation and
content of the audit report, in accordance with the requirements of
the Corporations Act 2001.
PRINCIPLE 5: MAKE TIMELY AND BALANCED DISCLOSURE
A listed entity should make timely and balanced disclosure of
all matters concerning it that a reasonable person would expect to
have a material effect on the price or value of its securities.
The Company is committed to ensuring that:
-- all investors have equal and timely access to material
information concerning the Company - including its financial
situation, performance, ownership and governance; and
-- Company announcements are factual and presented in a clear and balanced way.
ASX Principles Recommendation 5.1: A listed entity should:
a) should have a written policy for complying with its
continuous disclosure obligations under the Listing Rules; and
b) disclose that policy or a summary of it.
The Board has an established Shareholder Communication Policy
which is available from the Company's website. The Company has
adopted certain procedures to ensure that it complies with its
continuous disclosure obligations and has appointed a Responsible
Officer who is responsible for ensuring the procedures are complied
with.
PRINCIPLE 6: RESPECT THE RIGHTS OF SECURITY HOLDERS
A listed entity should respect the rights of its security
holders by providing them with appropriate information and
facilities to allow them to exercise those rights effectively.
ASX Principles Recommendation 6.1: A listed entity should
provide information about itself and its governance to investors
via its website.
ASX Principles Recommendation 6.2: A listed entity should design
and implement an investor relations program to facilitate effective
two-way communication with investors.
ASX Principles Recommendation 6.3: A listed entity should
disclose the policies and processes it has in place to facilitate
and encourage participation at meetings of security holders.
ASX Principles Recommendation 6.4: A listed entity should give
security holders the option to receive communications from, and
send communications to, the entity and its security register
electronically.
The Board has established a communications strategy which is
available from the Company's website.
The Board aims to ensure that the shareholders are informed of
all major developments affecting the Company. All shareholders
receive the Company's annual report, and may also request copies of
the Company's half-yearly and quarterly reports.
The Company maintains a website at www.coalofafrica.com and
makes comprehensive information available on a regular and up-to
date basis. The Company provides shareholder materials directly to
shareholders through electronic means. A shareholder may request a
hard copy of the Company's annual report to be posted to them.
Shareholders are encouraged at annual general meetings to ask
questions of Directors and senior management and also the Company's
external auditors, who attend the Company's annual general
meetings.
PRINCIPLE 7: RECOGNISE AND MANAGE RISK
A listed entity should establish a sound risk management
framework and periodically review the effectiveness of that
framework.
ASX Principles Recommendation 7.1: The board of a listed entity
should:
a) have a committee or committees to oversee risk, each of which:
1. has at least three members, a majority of whom are independent directors; and
2. is chaired by an independent director;
and disclose
3. the charter of the committee;
4. the members of the committee; and
5. as at the end of each reporting period, the number of times
the committee met throughout the period and the individual
attendances of the members at those meetings; or
b) if it does not have a risk committee or committee that
satisfies (a) above, disclose that fact and the processes it
employs for overseeing the entity's risk management framework.
The Company has a policy for the oversight and management of
material business risks, which is available on the Company's
website. The Board is responsible for approving the Company's
policies on risk oversight and management and satisfying itself
that management has developed and implemented a sound system of
risk management and internal control.
Implementation of the risk management system and day-to-day
management of risk is the responsibility of the Chief Executive
Officer, with the assistance of senior management, as required.
The Chief Executive Officer has responsibility for identifying,
assessing, monitoring and managing risks. The Chief Executive
Officer is also responsible for identifying any material changes to
the Company's risk profile and ensuring, with approval of the
Board, the risk profile of the Company is updated to reflect any
material change.
The Chief Executive Officer is required to report on the
progress of, and on all matters associated with, risk management on
a regular basis, and at least annually. During the reporting
period, the Chief Executive Officer regularly reported to the Board
as to the effectiveness of the Company's management of its material
business risks.
The Audit and Risk Committee also has responsibility for
reviewing the Company's internal financial control system and risk
management systems and reporting to the Board. Details of the
composition and Charter of the Audit and Risk Committee has been
disclosed earlier in this document (refer Principle 4).
Details of meeting attendance of members of the Audit and Risk
Committee for FY2015 are contained in a table earlier in this
document (refer Principle 4).
In addition, the Board has also established a Safety, Health and
Environment Committee to assist the Board in the effective
discharge of its responsibilities in relation to safety, health and
environmental ("SHE") issues for CoAL, and the oversight of risks
relating to these issues. The Committee's responsibilities include
to:
-- Understand the risks of SHE issues involving CoAL's activities;
-- Ensure that the systems and processes for identifying,
assessing and managing SHE risks of CoAL are adequately
monitored;
-- Regularly review and ensure compliance with the SHE
strategies and policies of CoAL and the supporting management
systems and processes; and
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-- Monitor developments in relevant SHE-related legislation and
regulations and monitor CoAL's compliance with relevant
legislation, including through audits.
ASX Principles Recommendation 7.2: The board or committee of the
board should:
a) review the entity's risk management framework at least
annually to satisfy itself that it continues to be sound; and
b) disclose, in relation to each reporting period, whether such a review has taken place.
The risk management framework was reviewed by the Committee
during the reporting period.
ASX Principles Recommendation 7.3: A listed entity should
disclose:
a) if it has an internal audit function, how the function is
structured and what role it performs; or
b) if it does not have an internal audit function, that fact and
the processes it employs for evaluating and continually improving
the effectiveness of its risk management and internal control
processes.
Due to the size of the Company and its current level of activity
and operations, the Company does not have a formal internal audit
function.
The Board believe that the Company's risk management and
internal control systems establish a sufficient control environment
to manage business risks.
ASX Principles Recommendation 7.4: A listed entity should
disclose whether it has any material exposure to economic,
environmental and socially sustainable risks and, if it does, how
it manages or intends to manage those risks.
The Company is very aware of its impact on the economy, the
environment and the community in which it operates, and the risks
associated with not dealing with aspects appropriately.
The Company annually reports on these aspects through its
Sustainable Development Review in the Integrated (Annual) Report.
This report is available on the Company website.
PRINCIPLE 8: REMUNERATE FAIRLY AND RESPONSIBLY
A listed entity should pay director remuneration sufficient to
attract and retain high quality directors and design its executive
remuneration to attract, retain and motivate high quality senior
executives and to align their interests with the creation of value
for security holders.
ASX Principles Recommendation 8.1: The Board of a listed entity
should:
a) have a remuneration committee which:
1. has at least three members, a majority of whom are independent directors; and
2. is chaired by an independent director;
and disclose
3. the charter of the committee;
4. the members of the committee; and
5. as at the end of each reporting period, the number of times
the committee met throughout the period and the individual
attendances of the members at those meetings; or
b) if it does not have a remuneration committee, disclose that
fact and the processes it employs for setting the level and
composition of remuneration for directors and senior executives and
ensuring that such remuneration is appropriate and not
excessive.
The Board has established a Nomination and Remuneration
Committee and adopted a Charter that sets out the committee's roles
and responsibilities, composition and membership requirements. The
Charter is available on the Company's website.
The Committee Charter states that the composition should include
a minimum of three members, the majority of whom must be
independent, and a Chairman who is an independent Director.
Membership is consistent with the composition requirements of the
Charter and the recommendations of the ASX Principles.
Details of meeting attendance of members of the Nomination and
Remuneration Committee for FY2015 are contained in a table earlier
in this document (refer Principle 2).
ASX Principles: Recommendation 8.2: A listed entity should
separately disclose its policies and practices regarding the
remuneration of non-executive directors and the remuneration of
executive directors and other senior executives.
The Charter of the Remuneration Committee details the Company's
approach to the structure of executive and non-executive
remuneration. Executive Directors and key executives are
remunerated by way of a salary or consultancy fees, commensurate
with their required level of services. Non-executive Directors
receive a fixed monthly fee for their services. Total aggregated
non-executive Directors' fees are currently capped at A$1,000,000
per annum.
The Company does not have any scheme relating to retirement
benefits for non-executive Directors.
The remuneration report contained in the Directors' report
contains details of remuneration paid to Directors and key
executives during the year.
Disclosure of the Company's remuneration policies is best served
through a transparent and readily understandable framework for
executive remuneration that details the costs and benefits. The
Company intends to meet its transparency obligations in the
following manner:
-- publishing a detailed remuneration report in the annual report each year;
-- continuous disclosure of employment agreements with key
executives where those agreements, or obligations falling due under
those agreements, may trigger a continuous disclosure obligation
under ASX Listing Rule 3.1;
-- presentation of the remuneration report to shareholders for
their consideration and nonbinding vote at the Company's AGM;
-- taking into account the outcome of the nonbinding shareholder
vote when determining future remuneration policy; and
-- responding to shareholder questions on policy and practice in a frank and open manner.
ASX Principles: Recommendation 8.3: A listed entity which has an
equity-based remuneration scheme should:
a) have a policy on whether participants are permitted to enter
into transactions (whether through the use of derivatives or
otherwise) which limit the economic risk of participating in the
scheme; and
b) disclose that policy or a summary of it.
Companies should clearly distinguish the structure of
non-executive Directors' remuneration from that of executive
directors and senior executives.
The Company has an Employee Share Option Plan which was approved
by Shareholders at the 2013 AGM. A summary of the plan was included
in the Company's 2013 Notice of General Meeting, a copy of which is
available on the Company's website.
The Company's Policy for Trading in Company Securities prohibits
Directors, Officers and Employees from entering into transactions
or arrangements which operate to limit the economic risk of their
security holding in the Company without first seeking and obtaining
written clearance from the Chairman.
A copy of the Company's Policy for Trading in Company Securities
can be found on the Company's website.
COAL OF AFRICA LIMITED
DIRECTORS DECLARATION
The directors declare that:
a) in the directors' opinion, there are reasonable grounds to
believe that the Company will be able to pay its debts as and when
they become due and payable;
b) in the directors' opinion, the attached financial statements
are in compliance with International Financial Reporting Standards,
as stated in note 2.1 to the financial statements;
c) in the directors' opinion, the attached financial statements
and notes thereto are in accordance with the Corporations Act 2001,
including compliance with accounting standards and giving a true
and fair view of the financial position and performance of the
Consolidated Entity; and
d) the directors have been given the declarations required by
s.295A of the Corporations Act 2001.
Signed in accordance with a resolution of the directors made
pursuant to s.295(5) of the Corporations Act 2001.
On behalf of the Directors
Bernard Pryor David Brown
Chairman Chief Executive Officer
10 September 2015 10 September 2015
COAL OF AFRICA LIMITED
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE
INCOME
for the year ended 30 June 2015
Year ended Year ended
30 June 30 June
2015 2014
Note $'000 $'000
------------------------------------- ----- ----------- -----------
Continuing operations
Revenue 5 - 761
Investment income 6 828 1,699
Other income 7 324 5,564
Gain recognised on disposal
of interest in former subsidiary 11 - 1,438
Other gains and (losses) 7 1,580 (617)
Depreciation and amortisation 7 (1,472) (2,176)
Foreign exchange gains/(losses) 7 14,504 (36,317)
Take or pay port obligation 15 - (10,556)
Employee benefits expense 7 (4,936) (8,042)
Finance costs 9 (1,286) (2,309)
Consulting expense (777) (2,617)
Other expenses (13,300) (10,373)
----------- -----------
Loss before tax (4,535) (63,545)
Income tax expense 10 - -
----------- -----------
Net loss for the year from
continuing operations (4,535) (63,545)
Discontinued operations
Loss for the year from operations
classified as held for sale 11 (2,176) (20,575)
LOSS FOR THE YEAR (6,711) (84,120)
----------- -----------
Other comprehensive loss,
net of income tax
Items that may be reclassified
subsequently to profit or
loss
Exchange differences on translating
foreign operations (59,872) 21,255
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----------- -----------
Total comprehensive loss
for the year (66,583) (62,865)
----------- -----------
Loss for the year attributable
to:
Owners of the Company (6,711) (84,120)
Non-controlling interests - -
----------- -----------
(6,711) (84,120)
----------- -----------
Total comprehensive loss
attributable to:
Owners of the Company (66,583) (62,865)
Non-controlling interests - -
----------- -----------
(66,583) (62,865)
----------- -----------
Loss per share 12
From continuing operations
and discontinued operations
Basic and diluted (cents
per share) (0.47) (8.02)
From continuing operations
Basic and diluted (cents
per share) (0.32) (6.06)
The accompanying notes are an integral
part of these consolidated financial
statements
COAL OF AFRICA LIMITED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 30 June 2015
Year ended Year ended
30 June 30 June
2015 2014
Note $'000 $'000
------------------------------------ ----- ----------- -----------
ASSETS
Non-current assets
Development, exploration
and evaluation expenditure 13 232,813 271,711
Property, plant and equipment 14 16,259 17,413
Intangible assets 15 11,682 15,488
Other receivables 16 1,746 2,245
Other financial assets 17 3,411 1,607
Restricted cash 20 1,023 5,153
Deferred tax assets 25 2,320 2,694
----------- -----------
Total non-current assets 269,254 316,311
----------- -----------
Current assets
Inventories 18 236 528
Trade and other receivables 19 792 1,902
Other financial assets 17 468 610
Cash and cash equivalents 20 17,759 2,017
----------- -----------
19,255 5,057
Assets classified as held
for sale 21 18,118 23,030
Total current assets 37,373 28,087
----------- -----------
Total assets 306,627 344,398
----------- -----------
LIABILITIES
Non-current liabilities
Deferred consideration 22 15,422 -
Provisions 24 5,733 4,643
Total non-current liabilities 21,155 4,643
----------- -----------
Current liabilities
Deferred consideration 22 3,265 29,800
Trade and other payables 26 2,719 15,083
Borrowings 23 - 6,372
Provisions 24 294 2,447
Current tax liabilities 1,285 1,583
----------- -----------
7,563 55,285
Liabilities associated with
assets held for sale 21 3,354 4,150
----------- -----------
Total current liabilities 10,917 59,435
----------- -----------
Total liabilities 32,072 64,078
----------- -----------
NET ASSETS 274,555 280,320
----------- -----------
EQUITY
Issued capital 27 992,374 935,891
Accumulated deficit 28 (718,081) (790,964)
Reserves 29 (313) 134,818
----------- -----------
Equity attributable to owners
of the Company 273,980 279,745
Non-controlling interests 31 575 575
----------- -----------
TOTAL EQUITY 274,555 280,320
----------- -----------
The accompanying notes are an integral part of
these consolidated financial statements
COAL OF AFRICA LIMITED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 30 June 2015
Issued Accumulated Share Capital Foreign Attributable Non-controlling Total
capital deficit based profits currency to owners interests equity
payment reserve translation of the
reserve reserve parent
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
---------------- -------- ------------ --------- -------- ------------ ------------- ---------------- ---------
Balance at 1
July 2014 935,891 (790,964) 82,464 91 52,263 279,745 575 280,320
Total
comprehensive
loss for the
year - (6,711) - - (59,872) (66,583) - (66,583)
-------- ------------ --------- -------- ------------ ------------- ---------------- ---------
Loss for the
year - (6,711) - - - (6,711) - (6,711)
Other
comprehensive
loss, net of
tax - - - - (59,872) (59,872) - (59,872)
-------- ------------ --------- -------- ------------ ------------- ---------------- ---------
935,891 (797,675) 82,464 91 (7,609) 213,162 575 213,737
-------- ------------ --------- -------- ------------ ------------- ---------------- ---------
Shares issued
for capital
raising(net of
costs) 56,483 - - - - 56,483 - 56,483
Shares issued
to employees - - 4,335 - - 4,335 - 4,335
Share options
cancelled - 79,594 (79,594) - - - - -
-------- ------------ --------- -------- ------------ ------------- ---------------- ---------
Balance at 30
June 2015 992,374 (718,081) 7,205 91 (7,609) 273,980 575 274,555
-------- ------------ --------- -------- ------------ ------------- ---------------- ---------
Balance at 1
July 2013 935,891 (707,535) 82,438 91 31,008 341,893 575 342,468
Total
comprehensive
loss for the
year - (84,120) - - 21,255 (62,865) - (62,865)
-------- ------------ --------- -------- ------------ ------------- ---------------- ---------
Loss for the
year - (84,120) - - - (84,120) - (84,120)
Other
comprehensive
loss, net of
tax - - - - 21,255 21,255 - 21,255
-------- ------------ --------- -------- ------------ ------------- ---------------- ---------
935,891 (791,655) 82,438 91 52,263 279,028 575 279,603
Shares issued
to employees - - 717 - - 717 - 717
Share options
cancelled - 691 (691) - - - - -
Share issued - - - - - - - -
costs
-------- ------------ --------- -------- ------------ ------------- ---------------- ---------
Balance at 30
June 2014 935,891 (790,964) 82,464 91 52,263 279,745 575 280,320
-------- ------------ --------- -------- ------------ ------------- ---------------- ---------
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The accompanying notes are an integral part
of these consolidated financial statements
COAL OF AFRICA LIMITED
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 30 June 2015
Year ended Year ended
30 June 30 June
2015 2014
Note $'000 $'000
-------------------------------------- ----- ----------- -----------
Cash flows from operating
activities
Receipts from customers 1,003 12,918
Payments to suppliers and
employees (16,124) (34,386)
----------- -----------
Cash used in operations 33 (15,121) (21,468)
Interest received 628 952
Interest paid (1,182) (811)
Net cash used in operating
activities (15,675) (21,327)
----------- -----------
Cash flows from investing
activities
Purchase of property, plant
and equipment (1,358) (148)
Proceeds from the sale
of property, plant and
equipment 1 609
Investment in development
assets (991) (5,056)
Investment in exploration
assets (86) (1,867)
Increase in other financial
assets 134 1,404
Settlement of Envicoal
matter (2,431)
Proceeds from the sale
of Nucoal - 7,714
Decrease / (Increase) in
restricted cash 4,761 (1,274)
Net cash generated from
investing activities 30 1,382
----------- -----------
Cash flows from financing
activities
Settlement in export trade
finance facility (10,367) (12,246)
Finance lease repayments - (52)
Repayment of Investec Facility (5,909) -
Repayment of deferred consideration (11,619) -
Proceeds from loans receivable 1,579 4,442
Proceeds from the issue 57,926 -
of shares (net of share
issuance costs)
Net cash generated / (used)
by financing activities 31,610 (7,856)
----------- -----------
Net increase/(decrease)
in cash and cash equivalents 15,965 (27,801)
Net foreign exchange differences (182) (38)
Cash and cash equivalents
at beginning of the year 2,099 29,938
----------- -----------
Cash and cash equivalents
at the end of the year 20 17,882 2,099
----------- -----------
The accompanying notes are an
integral part of these consolidated
financial statements
COAL OF AFRICA LIMITED
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 30 June 2015
1. General Information
Coal of Africa Limited ('CoAL' or the 'Company') is a limited
company incorporated in Australia. Its common shares are listed on
the Australian Securities Exchange ('ASX'), the Alternative
Investment Market of the London Stock Exchange ('AIM') and the
Johannesburg Securities Exchange ('JSE') in South Africa. The
addresses of its registered office and principal places of business
is Suite 8, 7 The Esplanade, Mt Pleasant, Perth, Western Australia
6000.
The principal activities of the Company and its subsidiaries
('the Group' or 'the Consolidated Entity') are the acquisition,
exploration, development and operation of metallurgical and thermal
coal projects in South Africa.
The Group's principal assets and projects include:
-- the Makhado hard coking and thermal coal project which was granted of a NOMR in May 2015;
-- the development phase Vele colliery where operations have
been significantly reduced pending the granting of the extension of
the mine's IWUL;
-- three exploration and development stage coking and thermal
coal projects, namely Chapudi, Generaal and Mopane, in the
Soutpansberg Coalfield; and
-- the Mooiplaats colliery currently on care and maintenance and
subject to a formal sale process.
Going Concern
These consolidated financial statements have been prepared on
the going concern basis, which contemplates the continuity of
normal business activities and the realisation of assets and the
settlement of liabilities in the normal course of business.
The Consolidated Entity has incurred a net loss after tax for
the year ended 30 June 2015 of $6.7 million (30 June 2014: loss of
$84.1 million), including an unrealised foreign exchange gain of
$14.5 million and depreciation and amortisation charges of $1.5
million. During the twelve month period under review, net cash
outflows from operating activities were $15.7 million (30 June 2014
net outflow: $21.3 million) and net cash inflow from investing
activities were $0.03 million (30 June 2014 net outflow: $1.4
million). As at 30 June 2015 the Consolidated Entity had a net
current asset position of $11.7 million (30 June 2014: net current
liability of $50.2 million), excluding assets and liabilities
associated with discontinued operations.
As part of the process to raise additional funding for the
business and manage the entity's cashflow requirements the Company
entered into a Subscription Agreement and a Loan Agreement with
Singapore registered Yishun Brightrise Investment PTE Limited
("Yishun") whereby Yishun will acquire up to 183,231,261 ordinary
shares for 5.15 British pence each raising approximately GBP9.4
million (approximately $14.7 million) conditional upon CoAL
shareholder approval on the 14(th) of September 2015. The Company
and Yishun have also entered into a Loan Agreement in terms of
which Yishun has agreed to lend CoAL $10 million conditional upon
the Company's shareholders approving the issue of the 183,231,261
shares. The loan will bear no interest and is only repayable in
limited circumstances. An Extraordinary General meeting ("EGM") has
been arranged for the 14(th) of September 2015 in order to obtain
shareholder approval for the placement as well as the loan. The
Company has obtained sufficient proof of proxies for votes that
aggregate to more than the required 50% approval needed at the
EGM.
At the date of this report and including the cash flow received
from the above mentioned arrangement, the Directors are confident
that the Company and Consolidated Entity will be able to continue
as going concerns.
1. Basis of presentation
1.1. Statement of compliance
These consolidated financial statements are general purpose
financial statements which have been prepared in accordance with
the Corporations Act 2001, Accounting Standards and
Interpretations, and comply with other requirements of the law. The
financial statements comprise the consolidated financial statements
of the Group. For the purposes of preparing the consolidated
financial statements, the Company is a for-profit entity.
Accounting Standards include Australian Accounting Standards.
Compliance with Australian Accounting Standards ensures that the
consolidated financial statements and notes of the company and the
Group comply with International Financial Reporting Standards
('IFRS').
The consolidated financial statements were authorised for issue
by the Directors on 10 September 2015.
1.2. Basis of Preparation
The consolidated financial statements have been prepared on the
basis of historical cost, except for other financial assets and
financial instruments that are measured at revalued amounts or fair
values, as explained in the accounting policies below. Historical
cost is generally based on the fair values of the consideration
given in exchange for assets.
All amounts are presented in United States dollars, and rounded
to nearest thousand unless otherwise noted.
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date, regardless of whether
that price is directly observable or estimated using another
valuation technique. In estimating the fair value of an asset or a
liability, the Group takes into account the characteristics of the
asset or liability if market participants would take those
characteristics into account when pricing the asset or liability at
the measurement date. Fair value for measurement and/or disclosure
purposes in these consolidated financial statements is determined
on such a basis, except for share-based payment transactions that
are within the scope of AASB 2, and measurements that have some
similarities to fair value but are not fair value, such as net
realisable value in AASB 2 or value in use in AASB 136.
In addition, for financial reporting purposes, fair value
measurements are categorised into Level 1, 2 or 3 based on the
degree to which the inputs to the fair value measurements are
observable and the significance of the inputs to the fair value
measurement in its entirety, which are described as follows:
-- Level 1 inputs are quoted prices (unadjusted) in active
markets for identical assets or liabilities that the entity can
access at the measurement date;
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-- Level 2 inputs are inputs, other than quoted prices included
within Level 1, that are observable for the asset or liability,
either directly or indirectly; and
-- Level 3 inputs are unobservable inputs for the asset or liability.
2. Accounting policies
2.1. Basis of Consolidation
The consolidated financial statements incorporate the financial
statements of the Company and entities controlled by the Company
(its subsidiaries). Control is achieved when the Company:
-- has power over the investee;
-- is exposed, or has rights, to variable returns from its involvement with the investee; and
-- has the ability to use its power to affect its returns.
The Company reassesses whether or not it controls an investee if
facts and circumstances indicate that there are changes to one or
more of the three elements of control listed above. When the
Company has less than a majority of the voting rights of an
investee, it has power over the investee when the voting rights are
sufficient to give it the practical ability to direct the relevant
activities of the investee unilaterally. The Company considers all
relevant facts and circumstances in assessing whether or not the
Company's voting rights in an investee are sufficient to give it
power, including:
-- the size of the Company's holding of voting rights relative
to the size and dispersion of holdings of the other vote
holders;
-- potential voting rights held by the Company, other vote holders or other parties;
-- rights arising from other contractual arrangements; and
any additional facts and circumstances that indicate that the
Company has, or does not have, the current ability to direct the
relevant activities at the time that decisions need to be made,
including voting patterns at previous shareholders' meetings.
Consolidation of a subsidiary begins when the Company obtains
control over the subsidiary and ceases when the company loses
control of the subsidiary. Specifically, income and expenses of a
subsidiary acquired or disposed of during the year are included in
the consolidated statement of profit or loss and other
comprehensive income from the date the Company gains control until
the date when the Company ceases to control the subsidiary.
Profit or loss and each component of other comprehensive income
are attributed to the owners of the Company and to the
non-controlling interests. Total comprehensive income of
subsidiaries is attributed to the owners of the Company and to the
non-controlling interests even if this results in the
non-controlling interests having a deficit balance.
A list of controlled entities is contained in note 36 to the
consolidated financial statements.
Where necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting policies into
line with those used by other members of the Group.
All inter-group transactions, balances, income and expenses are
eliminated in full on consolidation.
Changes in the Group's ownership interests in subsidiaries that
do not result in the Group losing control are accounted for as
equity transactions. The carrying amounts of the Group's interests
and the non-controlling interests are adjusted to reflect the
changes in their relative interests in the subsidiaries. Any
difference between the amount by which the non-controlling
interests are adjusted and the fair value of the consideration paid
or received is recognised directly in equity and attributed to
owners of the Company.
When the Group loses control of a subsidiary, a gain or loss is
recognised in profit or loss and is calculated as the difference
between
(i) the aggregate of the fair value of the consideration
received and the fair value of any retained interest and
(ii) the previous carrying amount of the assets (including
goodwill), and liabilities of the subsidiary and any non-
controlling interests.
When assets of the subsidiary are carried at revalued amounts or
fair values and the related cumulative gain or loss has been
recognised in other comprehensive income and accumulated in equity,
the amounts previously recognised in other comprehensive income and
accumulated in equity are accounted for as if the Company had
directly disposed of the relevant assets (i.e. reclassified to
profit or loss or transferred directly to any category of equity as
specified by applicable Standards). The fair value of any
investment retained in the former subsidiary at the date when
control is lost is regarded as the fair value on initial
recognition for subsequent accounting under Accounting Standard
AASB 139 'Financial Instruments: Recognition and Measurement' or,
when applicable, the cost on initial recognition of an investment
in an associate or joint venture.
2.2. Business combinations
Business combinations occur where an acquirer obtains control
over one or more businesses and results in the consolidation of its
assets and liabilities.
Acquisitions of businesses are accounted for using the
acquisition method. The consideration transferred in a business
combination is measured at fair value which is calculated as the
sum of the acquisition-date fair values of assets transferred by
the Group, liabilities incurred by the Group to the former owners
of the acquiree and the equity instruments issued by the Group in
exchange for control of the acquiree. Acquisition-related costs are
recognised in profit or loss as incurred.
At the acquisition date, the identifiable assets acquired and
the liabilities assumed are recognised at their fair value, except
that:
-- deferred tax assets or liabilities are recognised and
measured in accordance with AASB 112 'Income Taxes';
-- assets or liabilities related to employee benefit
arrangements are recognised and measured in accordance with AASB
119 'Employee Benefits';
-- liabilities or equity instruments related to share-based
payment arrangements of the acquiree or share-based payment
arrangements of the Group entered into to replace share-based
payment arrangements of the acquiree are measured in accordance
with AASB 2 'Share-based Payment' at the acquisition date; and
-- assets (or disposal groups) that are classified as held for
sale in accordance with AASB 5 'Non-current Assets Held for Sale
and Discontinued Operations' are measured in accordance with that
Standard.
Goodwill is measured as the excess of the sum of the
consideration transferred, the amount of any non-controlling
interests in the acquiree, and the fair value of the acquirer's
previously held equity interest in the acquiree (if any) over the
net of the acquisition-date amounts of the identifiable assets
acquired and the liabilities assumed. If, after reassessment, the
net of the acquisition-date amounts of the identifiable assets
acquired and liabilities assumed exceeds the sum of the
consideration transferred, the amount of any non-controlling
interests in the acquiree and the fair value of the acquirer's
previously held interest in the acquiree (if any), the excess is
recognised immediately in profit or loss as a bargain purchase
gain.
Non-controlling interests that represent ownership interests and
entitle their holders to a proportionate share of the entity's net
assets in the event of liquidation may be initially measured either
at fair value or at the non-controlling interests' proportionate
share of the recognised amounts of the acquiree's identifiable net
assets. Non-controlling interests are measured at fair value or,
when applicable, on the basis specified in another Standard.
Where the consideration transferred by the Group in a business
combination includes assets or liabilities resulting from a
contingent consideration arrangement, the contingent consideration
is measured at its acquisition-date fair value. Changes in the fair
value of the contingent consideration that qualify as measurement
period adjustments are adjusted retrospectively, with corresponding
adjustments against goodwill. Measurement period adjustments are
adjustments that arise from additional information obtained during
the 'measurement period' (which cannot exceed one year from the
acquisition date) about facts and circumstances that existed at the
acquisition date.
The subsequent accounting for changes in the fair value of
contingent consideration that do not qualify as measurement period
adjustments depends on how the contingent consideration is
classified. Contingent consideration that is classified as equity
is not remeasured at subsequent reporting dates and its subsequent
settlement is accounted for within equity. Contingent consideration
that is classified as an asset or liability is remeasured at
subsequent reporting dates in accordance with AASB 139, or AASB 137
'Provisions, Contingent Liabilities and Contingent Assets', as
appropriate, with the corresponding gain or loss being recognised
in profit or loss.
Where a business combination is achieved in stages, the Group's
previously held equity interest in the acquiree is remeasured to
fair value at the acquisition date (i.e. the date when the Group
attains control) and the resulting gain or loss, if any, is
recognised in profit or loss. Amounts arising from interests in the
acquiree prior to the acquisition date that have previously been
recognised in other comprehensive income are reclassified to profit
or loss where such treatment would be appropriate if that interest
were disposed of.
If the initial accounting for a business combination is
incomplete by the end of the reporting period in which the
combination occurs, the Group reports provisional amounts for the
items for which the accounting is incomplete. Those provisional
amounts are adjusted during the measurement period (see above), or
additional assets or liabilities are recognised, to reflect new
information obtained about facts and circumstances that existed as
of the acquisition date that, if known, would have affected the
amounts recognised as of that date.
2.3. Functional and presentation currency
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The individual financial statements of each group entity are
presented in the currency of the primary economic environment in
which the entity operates (its functional currency). For the
purpose of the consolidated financial statements, the results and
financial position of each group entity are expressed in United
Sates dollars ('$'), which is the presentation currency for the
consolidated financial statements.
Transactions in foreign currencies are initially recorded in the
functional currency at the rate of exchange ruling
at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies are translated to the spot rate
of exchange ruling at the reporting date. All differences are taken
to the consolidated statement of profit or loss and other
comprehensive income.
Non-monetary items that are measured at historical cost in a
foreign currency are translated using the exchange
rates at the date of the initial transaction.
Exchange differences on monetary items are recognised in profit
or loss in the period in which they arise except for:
-- exchange differences on foreign currency borrowings relating
to assets under construction for future productive use, which are
included in the cost of those assets when they are regarded as an
adjustment to interest costs on those foreign currency
borrowings;
-- exchange differences on transactions entered into in order to
hedge certain foreign currency risks; and
-- exchange differences on monetary items receivable from or
payable to a foreign operation for which settlement is neither
planned nor likely to occur (therefore forming part of the net
investment in the foreign operation), which are recognised
initially in other comprehensive income and reclassified from
equity to profit or loss on repayment of the monetary items.
For the purpose of presenting consolidated financial statements,
the assets and liabilities of the Group's foreign operations are
translated into United States dollars using the spot rate of
exchange ruling at the reporting date. Income and expense items are
translated at the average exchange rates for the period, unless
exchange rates fluctuated significantly during that period, in
which case the exchange rates at the dates of the transactions are
used. Exchange differences arising, if any, are recognised in other
comprehensive income and accumulated in equity (attributed to
non-controlling interests as appropriate).
On the disposal of a foreign operation (i.e. a disposal of the
Group's entire interest in a foreign operation, or a disposal
involving loss of control over a subsidiary that includes a foreign
operation, loss of joint control over a jointly controlled entity
that includes a foreign operation, or loss of significant influence
over an associate that includes a foreign operation), all of the
accumulated exchange differences in respect of that operation
attributable to the Group are reclassified to profit or loss.
Goodwill and fair value adjustments on identifiable assets and
liabilities arising on the acquisition of a foreign operation are
treated as assets and liabilities of the foreign operation and
translated at the spot rate of exchange ruling at the reporting
date. Exchange differences arising are recognised in equity.
2.4. Non-current assets held for sale
Non-current assets and disposal groups are classified as held
for sale if their carrying amount will be recovered principally
through a sale transaction rather than through continuing use. This
condition is regarded as met only when the sale is highly probable
and the non-current asset (or disposal group) is available for
immediate sale in its present condition. Management must be
committed to the sale, which should be expected to qualify for
recognition as a completed sale within one year from the date of
classification.
When the criteria above are met and the Group is committed to a
sale plan involving loss of control of a subsidiary, all of the
assets and liabilities of that subsidiary are classified as assets
held for sale and liabilities associated with assets held for sale
in the consolidated statement of financial position. The income and
expenses from these operations are not included in the various line
items in the consolidated statement of profit or loss and other
comprehensive income but the net results from these operations
classified as held for sale are disclosed as a separate line within
the statement of profit or loss.
Non-current assets (and disposal groups) classified as held for
sale are measured at the lower of their previous carrying amount
and fair value less costs to sell.
2.5. Exploration and evaluation expenditure
(i) Pre-licence costs
Pre-licence costs relate to costs incurred before the Group has
obtained legal rights to explore in a specific area. Such costs may
include the acquisition of exploration data and the associated
costs of analysing that data. These costs are expensed in the
period in which they are incurred.
(ii) Exploration and evaluation expenditure
Exploration and evaluation activity involves the search for
mineral resources, the determination of technical feasibility and
the assessment of commercial viability of an identified
resource.
Exploration and evaluation activity includes:
i. Researching and analysing historical exploration data
ii. Gathering exploration data through geophysical studies
iii. Exploratory drilling and sampling
iv. Determining and examining the volume and grade of the resource
v. Surveying transportation and infrastructure requirements
vi. Conducting market and finance studies
Licence costs paid in connection with a right to explore in an
existing exploration area are capitalised and
amortised over the term of the permit.
Once the legal right to explore has been acquired, exploration
and evaluation expenditure is charged to profit or loss as
incurred, unless the Group conclude that a future economic benefit
is more likely than not to be realised.
Capitalised expenditure includes costs directly related to
exploration and evaluation activities in the relevant area of
interest, including materials and fuel used, surveying costs,
drilling costs and payments made to contractors. General and
administrative costs are allocated to an exploration or evaluation
area of interest and capitalised as an asset only to the extent
that those costs can be related directly to operational activities
in the relevant area of interest.
Exploration and evaluation assets acquired in a business
combination are initially recognised at fair value,
including resources and exploration potential that is value
beyond proven and probable reserves. Similarly, the costs
associated with acquiring an exploration and evaluation asset (that
does not represent a business) are also capitalised. They are
subsequently measured at cost less accumulated impairment.
All capitalised exploration and evaluation expenditure is
written off where the above conditions are no longer satisfied, and
assessed for impairment if facts and circumstances indicate that an
impairment may exist. See note 2.11.
Exploration and evaluation expenditure that has been capitalised
is reclassified to property, plant and equipment - development
assets, when the technical feasibility and commercial viability of
extracting a mineral resource are demonstrable. Prior to such
reclassification, exploration and evaluation expenditure
capitalised is tested for impairment.
2.6. Property, plant and equipment - Development assets
Development expenditure incurred by or on behalf of the Group is
accumulated separately for each area of interest in which
economically recoverable resources have been identified. Such
expenditure comprises costs directly attributable to the
construction of a mine and the related infrastructure.
No depreciation is recognised in respect of development
assets.
Development assets are assessed for impairment if facts and
circumstances indicate that an impairment may exist. See note
2.11.
A development asset is reclassified as a 'mining property' at
the end of the commissioning phase, when the mine is capable of
operating in the manner intended by management. Immediately prior
to such reclassification, development assets are tested for
impairment.
2.7. Property, plant and equipment - Mining property
Mining property includes expenditure that has been incurred
through the exploration and development phases, and, in addition,
further development expenditure that is incurred in respect of a
mining property after the commencement of production, provided
that, in all instances, it is probable that additional future
economic benefits associated with the expenditure will flow to the
Group. Otherwise such expenditure is classified as cost of
sales.
Mining property includes plant and equipment associated with the
mining property.
When a mine construction project moves into the production
phase, the capitalisation of certain mine construction costs
ceases, and costs are either regarded as part of the cost of
inventory or expensed, except for costs which qualify for
capitalisation relating to mining asset additions, improvements or
new developments, underground mine development or mineable reserve
development
Depreciation on plant and equipment included within mining
property is computed on a straight-line basis over five years.
Depreciation on other components of mining property, is charged
using the units-of-production method, with separate calculations
being made for each area of interest. The units-of-production basis
results in a depreciation charge proportional to the depletion of
proved and probable reserves.
Mining property is assessed for impairment if facts and
circumstances indicate that an impairment may exist. See note
2.11.
2.8. Deferred stripping costs
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Stripping costs comprise the removal of overburden and other
waste products from a mine. Stripping costs incurred in the
development of a mine before production commences are capitalised
as part of the cost of constructing the mine (initially within
development assets) and are subsequently depreciated over the life
of the operation.
Stripping costs incurred during the production stage of a mine
are deferred when this is considered the most appropriate basis for
matching the costs against the related economic benefits. The
amount deferred is based on the waste-to-ore ratio ('stripping
ratio'), which is calculated by dividing the tonnage of waste mined
by the quantity of ore mined. Stripping costs incurred in a period
are deferred to the extent that the current period ratio exceeds
the expected life-of mine-ratio. Such deferred costs are then
charged to the consolidated statement of profit or loss and other
comprehensive loss to the extent that, in subsequent periods, the
current period ratio falls below the life-of mine-ratio. The
life-of-mine stripping ratio is calculated based on proved and
probable reserves. Any changes to the life-of-mine ratio are
accounted for prospectively.
Where a mine operates more than one open pit that is regarded as
a separate operation for the purpose of mine planning, stripping
costs are accounted for separately by reference to the ore from
each separate pit. If, however, the pits are highly integrated for
the purpose of the mine planning, the second and subsequent pits
are regarded as extensions of the first pit in accounting for
stripping costs. In such cases, the initial stripping (i.e.
overburden and other waste removal) of the second and subsequent
pits is considered to be production phase stripping relating to the
combined operation.
Deferred stripping costs are included in the cost base of assets
when determining a cash generating unit for impairment assessment
purposes.
2.9. Property, plant and equipment (excluding development assets and mining property)
Freehold land is stated at cost and is not depreciated.
Items of property, plant and equipment are stated at cost less
accumulated depreciation and accumulated impairment losses. Where
items of property, plant and equipment contain components that have
different useful lives to the main item of plant and equipment,
these are capitalised separately to the plant and equipment to
which the component can be logically assigned.
The initial cost of an asset comprises its purchase price or
construction cost, any costs directly attributable to bringing the
asset into operation, the initial estimate of the rehabilitation
obligation, and, for qualifying assets (where relevant), borrowing
costs. The purchase price or construction cost is the aggregate
amount paid and the fair value of any other consideration given to
acquire the asset. The capitalised value of a finance lease is also
included in property, plant and equipment.
Depreciation is recognised so as to write off the cost of assets
(other than freehold land) less their residual values over their
useful lives, using the straight-line method. The estimated useful
lives, residual values and depreciation method are reviewed at the
end of each reporting period, with the effect of any changes in
estimate accounted for on a prospective basis.
Assets held under finance leases are depreciated over their
expected useful lives on the same basis as owned assets. However,
when there is no reasonable certainty that ownership will be
obtained by the end of the lease term, assets are depreciated over
the shorter of the lease term and the useful lives.
An item of property, plant and equipment is derecognised upon
disposal or when no future economic benefits are expected to arise
from the continued use of the asset. Any gain or loss arising on
the disposal or retirement of an item of property, plant and
equipment is determined as the difference between the sales
proceeds and the carrying amount of the asset and is recognised in
profit or loss.
The depreciation rates applicable to each category of property,
plant and equipment are as follows:
Furniture, fittings and office equipment 13% - 50%
Buildings 20%
Plant and equipment 20%
Motor vehicles 20% - 33%
Leasehold improvements 25%
Computer equipment 33%
Leased assets Lease period
2.10. Intangible assets, excluding goodwill
An intangible asset is recognised at cost if it is probable that
future economic benefits will flow to the Group and the cost can be
reliably measured.The cost of intangible assets acquired in a
business combination is their fair value at the date of
acquisition. Following initial recognition, intangible assets are
carried at cost less any accumulated amortisation (calculated on a
straight-line basis over their useful lives) and accumulated
impairment losses, if any.
Intangible assets are amortised on a straight-line basis over
their estimated useful lives. The amortisation method used and the
estimated remaining useful lives are reviewed at least
annually.
Gains or losses arising from derecognition of an intangible
asset are measured as the difference between the net disposal
proceeds and the carrying amount of the asset and are recognised in
the consolidated statement of profit or loss and other
comprehensive income when the asset is derecognised.
Intangible assets are assessed for impairment if facts and
circumstances indicate that an impairment may exist. See note
2.11.
2.11. Impairment of tangible and intangible assets other than
goodwill
The carrying amounts of the Group's tangible and intangible
assets are reviewed at each reporting date to determine whether
there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the extent
of the impairment loss (if any).
Where it is not possible to estimate the recoverable amount of
an individual asset, the Group estimates the recoverable amount of
the cash-generating unit to which the asset belongs. Where a
reasonable and consistent basis of allocation can be identified,
corporate assets are also allocated to individual cash-generating
units, or otherwise they are allocated to the smallest group of
cash-generating units for which a reasonable and consistent
allocation basis can be identified.
Recoverable amount is the higher of fair value less costs to
sell and value-in-use. In assessing value-in-use, the estimated
future cash flows are discounted to their present value using a
post-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been
adjusted.
If the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (or cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised immediately in
profit or loss.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (or cash generating unit) is increased to the
revised estimate of its recoverable amount, but so that the
increased carrying amount does not exceed the carrying amount that
would have been determined had no impairment loss been recognised
for the asset (or cash-generating unit) in prior years. A reversal
of an impairment loss is recognised immediately in profit or
loss.
2.12. Leasing
Leases are classified as finance leases whenever the terms of
the lease transfer substantially all the risks and rewards of
ownership to the lessee. All other leases are classified as
operating leases.
Assets held under finance leases are initially recognised as
assets of the Group at their fair value at the inception of the
lease or, if lower, at the present value of the minimum lease
payments. The corresponding liability to the lessor is included in
the consolidated statement of financial position as a finance lease
obligation.
Lease payments are apportioned between finance expenses and
reduction of the lease obligation so as to achieve a constant rate
of interest on the remaining balance of the liability. Finance
expenses are recognised immediately in profit or loss, unless they
are directly attributable to qualifying assets, in which case they
are capitalised in accordance with the Group's general policy on
borrowing costs (see 2.24 below). Contingent rentals are recognised
as expenses in the periods in which they are incurred.
Operating lease payments are recognised as an expense on the
straight-line basis over the lease term, except where another
systematic basis is more representative of the time pattern in
which economic benefits from the leased asset are consumed.
Contingent rentals arising under operating leases are recognised as
an expense in the period in which they are incurred.
2.13. Inventories
Inventories are stated at the lower of cost and net realisable
value. Costs of inventories include expenditure incurred in
acquiring the inventories, production or conversion costs and other
costs incurred in bringing them to their existing location and
condition.
Cost is determined by using the weighted-average method and
comprises direct purchase costs and an appropriate portion of fixed
and variable overhead costs, including depreciation and
amortisation, incurred in converting materials into finished goods,
based on the normal production capacity
Any provision for obsolescence is determined by reference to
specific items of stock. A regular review is undertaken to
determine the extent of any provision for obsolescence.
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Net realisable value represents the estimated selling price for
inventories less all estimated costs of completion and costs
necessary to make the sale.)
2.14. Trade receivables
Trade receivables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method, less provision for impairment.
A provision for impairment of trade receivables is established
when there is objective evidence that the Group will not be able to
collect all amounts due according to the original terms of the
receivables. Significant financial difficulties of the debtor,
probability that the debtor will enter bankruptcy or financial
reorganization, and default or delinquency in payments are
considered indicators that the trade receivable is impaired. The
amount of the provision is the difference between the asset's
carrying amount and the present value of estimated future cash
flows, discounted at the original effective interest rate. The
carrying amount of the asset is reduced through the use of an
allowance account, and the amount of the loss is recognised in the
consolidated statement of income. When a trade receivable is
uncollectible, it is written off against the allowance account for
trade receivables. Subsequent recoveries of amounts previously
written off are credited in the consolidated statement of profit or
loss and other comprehensive loss.
2.15. Cash and cash equivalents
Cash and cash equivalents comprise cash balances and short-term
deposits.
Restricted cash comprise cash balances which are encumbered and
the Group does therefore not have access to these funds.
2.16. Financial instruments
Recognition
Financial assets and financial liabilities are recognised when a
Group entity becomes a party to the contractual provisions of the
instrument.
Financial assets and financial liabilities are initially
measured at fair value. Transaction costs that are directly
attributable to the acquisition or issue of financial assets and
financial liabilities (other than financial assets and financial
liabilities at fair value through profit or loss) are added to or
deducted from the fair value of the financial assets or financial
liabilities, as appropriate, on initial recognition. Transaction
costs directly attributable to the acquisition of financial assets
or financial liabilities at fair value through profit or loss are
recognised immediately in profit or loss.
Effective interest method
The effective interest method is a method of calculating the
amortised cost of a financial asset or financial liability and of
allocating interest over the relevant period. The effective
interest rate is the rate that exactly discounts estimated future
cash receipts (including all fees on points paid or received that
form an integral part of the effective interest rate, transaction
costs and other premiums or discounts) through the expected life of
the instrument, or, where appropriate, a shorter period, to the net
carrying amount on initial recognition.
Income is recognised on an effective interest basis for debt
instruments other than those financial assets classified as at fair
value through profit or loss ('FVTPL').
Financial assets
Financial assets are classified into the following specified
categories: FVTPL, 'held-to-maturity' investments,
'available-for-sale' ('AFS') financial assets and 'loans and
receivables'. The classification depends on the nature and purpose
of the financial assets and is determined at the time of initial
recognition. All regular way purchases or sales of financial assets
are recognised and derecognised on a trade date basis. Regular way
purchases or sales are purchases or sales of financial assets that
require delivery of assets within the time frame established by
regulation or convention in the marketplace.
Financial assets at FVTPL
Financial assets are classified as at FVTPL when the financial
asset is either held for trading or it is designated as at
FVTPL.
A financial asset is classified as held for trading if:
-- it has been acquired principally for the purpose of selling it in the near term; or
-- on initial recognition it is part of a portfolio of
identified financial instruments that the Group manages together
and has a recent actual pattern of short-term profit-taking; or
-- it is a derivative that is not designated and effective as a hedging instrument.
A financial asset other than a financial asset held for trading
may be designated as at FVTPL upon initial recognition if:
-- such designation eliminates or significantly reduces a
measurement or recognition inconsistency that would otherwise
arise; or
-- the financial asset forms part of a group of financial assets
or financial liabilities or both, which is managed and its
performance is evaluated on a fair value basis, in accordance with
the Group's documented risk management or investment strategy, and
information about the grouping is provided internally on that
basis; or
-- it forms part of a contract containing one or more embedded
derivatives, and AASB 139 'Financial Instruments: Recognition and
Measurement' permits the entire combined contract (asset or
liability) to be designated as at FVTPL.
Financial assets at FVTPL are stated at fair value, with any
gains or losses arising on remeasurement recognised in profit or
loss. The net gain or loss recognised in profit or loss
incorporates any dividend or interest earned on the financial asset
and is included in the 'other gains and losses' line item. Fair
value is determined in the manner described in note 32.
Held to maturity investments
Non-derivative financial assets with fixed or determinable
payments and fixed maturity dates that management has the intent
and ability to hold to maturity are classified as held to maturity.
These investments are included in non-current assets, except for
maturities within 12 months from the financial year-end date, which
are classified as current assets. Held to maturity investments are
carried at amortised cost using the effective interest rate method
less any impairment.
Loans and receivables
Trade receivables, loans, and other receivables that have fixed
or determinable payments that are not quoted in an active market
are classified as 'loans and receivables'. Loans and receivables
are measured at amortised cost using the effective interest method,
less any impairment. Interest income is recognised by applying the
effective interest rate, except for short-term receivables when the
effect of discounting is immaterial.
Available for sale investments
AFS financial assets are non-derivatives that are either
designated as AFS or are not classified as (a) loans and
receivables, (b) held-to-maturity investments or (c) financial
assets at FVTPL.
Changes in the carrying amount of AFS monetary financial assets
relating to changes in foreign currency rates (see below), interest
income calculated using the effective interest method and dividends
on AFS equity investments are recognised in profit or loss. Other
changes in the carrying amount of AFS financial assets are
recognised in other comprehensive loss. Where the investment is
disposed of or is determined to be impaired, the cumulative gain or
loss previously accumulated in the equity is reclassified to profit
or loss.
The fair value of AFS monetary financial assets denominated in a
foreign currency is determined in that foreign currency and
translated at the spot rate prevailing at the end of the reporting
period. The foreign exchange gains and losses that are recognised
in profit or loss are determined based on the amortised cost of the
monetary asset. Other foreign exchange gains and losses are
recognised in other comprehensive loss.
Dividends on AFS equity instruments are recognised in profit or
loss when the Group's right to receive the dividends is
established.
AFS equity investments that do not have a quoted market price in
an active market and whose fair value cannot be reliably measured
and derivatives that are linked to and must be settled by delivery
of such unquoted equity investments are measured at cost less any
identified impairment losses at the end of each reporting
period.
Impairment of financial assets
Financial assets, other than those at FVTPL, are assessed for
indicators of impairment at the end of each reporting period.
Financial assets are considered to be impaired when there is
objective evidence that, as a result of one or more events that
occurred after the initial recognition of the financial asset, the
estimated future cash flows of the investment have been
affected.
For listed or unlisted equity investments classified as AFS, a
significant or prolonged decline in the fair value of the security
below its cost is considered to be objective evidence of
impairment.
For certain categories of financial asset, such as trade
receivables, assets that are assessed not to be impaired
individually are, in addition, assessed for impairment on a
collective basis. Objective evidence of impairment for a portfolio
of receivables could include the Group's past experience of
collecting payments, an increase in the number of delayed payments
in the portfolio past the average credit period, as well as
observable changes in national or local economic conditions that
correlate with default on receivables.
For financial assets carried at amortised cost, the amount of
the impairment loss recognised is the difference between the
asset's carrying amount and the present value of estimated future
cash flows, discounted at the financial asset's original effective
interest rate.
For financial assets carried at cost, the amount of the
impairment loss is measured as the difference between the asset's
carrying amount and the present value of the estimated future cash
flows discounted at the current market rate of return for a similar
financial asset. Such impairment loss will not be reversed in
subsequent periods.
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The carrying amount of the financial asset is reduced by the
impairment loss directly for all financial assets with the
exception of trade receivables, where the carrying amount is
reduced through the use of an allowance account. When a trade
receivable is considered uncollectible, it is written off against
the allowance account. Subsequent recoveries of amounts previously
written off are credited against the allowance account. Changes in
the carrying amount of the allowance account are recognised in
profit or loss.
When an AFS financial asset is considered to be impaired,
cumulative gains or losses previously recognised in other
comprehensive income are reclassified to profit or loss in the
period.
For financial assets measured at amortised cost, if, in a
subsequent period, the amount of the impairment loss decreases and
the decrease can be related objectively to an event occurring after
the impairment was recognised, the previously recognised impairment
loss is reversed through profit or loss to the extent that the
carrying amount of the investment at the date the impairment is
reversed does not exceed what the amortised cost would have been
had the impairment not been recognised.
In respect of AFS equity securities, impairment losses
previously recognised in profit or loss are not reversed through
profit or loss. Any increase in fair value subsequent to an
impairment loss is recognised in other comprehensive income and
accumulated under the heading of investments revaluation reserve.
In respect of AFS debt securities, impairment losses are
subsequently reversed through profit or loss if an increase in the
fair value of the investment can be objectively related to an event
occurring after the recognition of the impairment loss.
Derecognition
The Group derecognises a financial asset when the contractual
rights to the cash flows from the asset expire, or when it
transfers the financial asset and substantially all the risks and
rewards of ownership of the asset to another entity. Any interest
in financial assets transferred that is created or retained by the
group is recognised as a separate asset or liability.
The Group may enter into transactions whereby it transfers
assets recognised on its consolidated statement of financial
position, but retains either all risks and rewards of the
transferred assets or a portion of them. If all, or substantially
all, risks and rewards are retained, then the Group continues to
recognise the financial asset and also recognises a collateralised
borrowing for the proceeds received.
On derecognition of a financial asset in its entirety, the
difference between the asset's carrying amount and the sum of the
consideration received and receivable and the cumulative gain or
loss that had been recognised in other comprehensive income and
accumulated in equity is recognised in profit or loss.
On derecognition of a financial asset other than in its entirety
(e.g. when the Group retains an option to repurchase part of a
transferred asset or retains a residual interest that does not
result in the retention of substantially all the risks and rewards
of ownership and the Group retains control), the Group allocates
the previous carrying amount of the financial asset between the
part it continues to recognise under continuing involvement, and
the part it no longer recognises on the basis of the relative fair
values of those parts on the date of the transfer. The difference
between the carrying amount allocated to the part that is no longer
recognised and the sum of the consideration received for the part
no longer recognised and any cumulative gain or loss allocated to
it that had been recognised in other comprehensive income is
recognised in profit or loss. A cumulative gain or loss that had
been recognised in other comprehensive income is allocated between
the part that continues to be recognised and the part that is no
longer recognised on the basis of the relative fair values of those
parts.
Financial liabilities
Financial liabilities are initially measured at fair value.
Financial liabilities comprise short-term and long-term
interest-bearing borrowings and trade and other payables (excluding
income received in advance).
The Group classifies financial liabilities as other financial
liabilities. Subsequent to initial measurement, such liabilities
are carried at amortised cost using the effective interest
method.
Borrowings
Borrowings comprise short-term and long-term interest-bearing
borrowings. Premiums or discounts arising from the difference
between the fair value of borrowings raised and the amount
repayable at maturity date are recognised in the income statement
as borrowing costs based on the effective interest rate method.
Derecognition
Financial liabilities are derecognised when the associated
obligation has been discharged, cancelled or has expired.
Equity instruments
An equity instrument is any contract that evidences a residual
interest in the assets of the group after deducting all of its
liabilities, and includes ordinary share capital. Equity
instruments issued by the group are recorded at the proceeds
received, net of direct issue costs.
2.17. Trade payables
Trade payables are obligations to pay for goods or services that
have been acquired in the ordinary course of business from
suppliers. Trade payables are classified as current liabilities if
payment is due within one year or less. If not, they are presented
as non-current liabilities.
Trade payables are recognised initially at fair value and
subsequently measured at amortised cost using the effective
interest method.
2.18. Provisions
Provisions are recognised when the Group has a present legal or
constructive obligation as a result of a past event, it is probable
that the Group will be required to settle the obligation, and the
amount can be reliably estimated. Provisions are not recognised for
future operating losses.
The amount recognised as a provision is the best estimate of the
consideration required to settle the present obligation at the end
of the reporting period, taking into account the risks and
uncertainties surrounding the obligation. When a provision is
measured using the cash flows estimated to settle the present
obligation, its carrying amount is the present value of those cash
flows (where the effect of the time value of money is material).
The increase in provisions due to the passage of time is included
in the finance cost line item in the consolidated statement of
profit or loss and comprehensive loss.
Rehabilitation provision
A provision for rehabilitation is recognised when there is a
present obligation as a result of exploration, development or
production activities undertaken, it is probable that an outflow of
economic benefits will be required to settle the obligation, and
the amount of the provision can be measured reliably.
The nature of these restoration activities includes: dismantling
and removing structures; rehabilitating mines and tailings dams;
dismantling operating facilities; closing plant and waste sites;
and restoring, reclaiming and revegetating affected areas.
The provision for future rehabilitation costs is the best
estimate of the present value of the expenditure required to settle
the rehabilitation obligation at the reporting date, based on
current legal and other requirements and technology. Future
rehabilitation costs are reviewed annually and any changes in the
estimate are reflected in the present value of the rehabilitation
provision at each reporting date.
The initial estimate of the rehabilitation provision relating to
exploration, development and production facilities is capitalised
into the cost of the related asset and depreciated or amortised on
the same basis as the related asset. Changes in the estimate of the
provision are treated in the same manner, except that the unwinding
of the effect of discounting on the provision is recognised as a
finance cost rather than being capitalised into the cost of the
related asset.
2.19. Share-based payments transactions of the Company
Equity-settled
Equity-settled share-based payments to employees and others
providing similar services are measured at the fair value of the
equity instruments at the grant date. Details regarding the
determination of the fair value of equity-settled share-based
transactions are set out in note 30.
The fair value determined at the grant date of the
equity-settled share-based payments is expensed on the
straight-line basis over the vesting period, based on the Group's
estimate of equity instruments that will eventually vest, with a
corresponding increase in equity. At the end of each reporting
period, the Group revises its estimate of the number of equity
instruments expected to vest. The impact of the revision of the
original estimates, if any, is recognised in profit or loss such
that the cumulative expense reflects the revised estimate, with a
corresponding adjustment to the equity-settled employee benefits
reserve.
Equity-settled share-based payment transactions with parties
other than employees are measured at the fair value of the goods or
services received, except where that fair value cannot be estimated
reliably, in which case they are measured at the fair value of the
equity instruments granted, measured at the date the entity obtains
the goods or the counterparty renders the service.
2.20. Share-based payments transactions of the Company
(continued)
Accounting for BEE transactions
Where equity instruments are issued to a broad based black
economic empowerment ('BEE') party at less than fair value, these
are accounted for as share-based payments. Any difference between
the fair value of the equity instrument issued and the
consideration received is accounted for as an expense in the
consolidated statement of profit or loss and other comprehensive
loss.
A restriction on the BEE party to transfer the equity instrument
subsequent to its vesting is not treated as a vesting condition,
but is factored into the fair value determination of the
instrument.
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2.21. Taxation, including sales tax
The income tax expense or income for the period represents the
sum of the tax currently payable or recoverable and deferred
tax.
Current taxation
The tax currently payable or recoverable is based on taxable
profit or loss for the year. Taxable profit or loss differs from
profit or loss as reported in the consolidated statement of profit
or loss and other comprehensive loss because of items of income or
expense that are taxable or deductible in other years and items
that are never taxable or deductible. The Group's liability for
current tax is calculated using tax rates that have been enacted or
substantively enacted at the reporting date in countries where the
Group operates and generates taxable income.
Deferred taxation
Deferred taxation is recognised on temporary differences between
the carrying amounts of assets and liabilities in the consolidated
financial statements and the corresponding tax bases used in the
computation of taxable profit or loss. Deferred tax liabilities are
generally recognised for all taxable temporary differences.
Deferred tax assets are generally recognised for all deductible
temporary differences to the extent that it is probable that
taxable profits will be available against which those deductible
temporary differences can be utilised. Such deferred tax assets and
liabilities are not recognised if a taxable temporary difference
arises from the initial recognition of goodwill or any temporary
difference arises from the initial recognition (other than in a
business combination) of other assets and liabilities in a
transaction that affects neither the taxable profit nor the
accounting profit.
Deferred tax assets are reviewed at each reporting date and are
reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset
to be recovered.
Deferred tax balances are calculated using the tax rates that
are expected to apply to the reporting period or periods when the
temporary difference reverse, based on tax rates and tax laws
enacted or substantively enacted at the end of the reporting
period.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied
by the same taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis.
Deferred tax liabilities are recognised for temporary
differences associated with investments in subsidiaries and
associates, and interests in joint ventures, except where the
timing of the reversal of the temporary difference is controlled by
the Group and it is probable that the temporary difference will not
reverse in the foreseeable future. Deferred tax assets arising from
deductible temporary differences associated with such investments
and interests are only recognised to the extent that it is probable
that there will be sufficient taxable profits against which to
utilise the benefits of the temporary differences and they are
expected to reverse in the foreseeable future.
2.22. Taxation, including sales tax (continued)
Current and deferred tax for the year
Current and deferred tax are recognised in profit or loss,
except when they relate to items that are recognised in other
comprehensive income or directly in equity, in which case the
current and deferred tax are also recognised in other comprehensive
income or directly in equity, respectively.
Where current tax or deferred tax arises from the initial
accounting for a business combination, the tax effect is included
in the accounting for the business combination.
Sales tax
Revenues, expenses and assets are recognised net of the amount
of the applicable sales tax, except:
-- where the amount of sales tax incurred is not recoverable
from the taxation authority, it is recognised as part of the cost
of acquisition of an asset or as part of an item of expense; or
-- for receivables and payables which are recognised inclusive of sales tax.
The net amount of sales tax recoverable from, or payable to, the
taxation authority is included as part of receivables or
payables.
Cash flows are included in the cash flow statement on a gross
basis. The sales tax component of cash flows arising from investing
and financing activities which is recoverable from, or payable to,
the taxation authority is classified within operating cash
flows.
2.23. Revenue recognition
Revenue is recognised at fair value of the consideration
received net of the amount of applicable sales tax.
Sale of goods
Revenue from the sale of goods is recognised when all the
following conditions are satisfied:
-- the Group has transferred to the buyer the significant risks
and rewards of ownership of the goods;
-- the Group retains neither continuing managerial involvement
to the degree usually associated with ownership nor effective
control over the goods sold;
-- the amount of revenue can be measured reliably;
-- it is probable that the economic benefits associated with the
transaction will flow to the Group; and
-- the costs incurred or to be incurred in respect of the
transaction can be measured reliably.
Specifically, revenue from the sale of goods is recognised when
goods are delivered and legal title is passed.
Many of the Group's sales are subject to an adjustment based on
inspection of the shipment by the customer. In such cases, revenue
is recognised based on the Group's best estimate of the grade at
the time of shipment, and any subsequent adjustments are recorded
against revenue when advised. Historically, the differences between
estimated and actual grade have not been significant.
Interest income
Interest income is recognised when it is probable that the
economic benefits will flow to the Group and the amount of revenue
can be measured reliably. Interest income is accrued on a time
basis, by reference to the principal outstanding and at the
effective interest rate. Interest income is recognised in finance
income on the consolidated statement of profit or loss and other
comprehensive loss.
2.24. Borrowing costs
Borrowing costs directly attributable to the acquisition,
construction or production of qualifying assets, which are assets
that necessarily take a substantial period of time to get ready for
their intended use or sale, are added to the cost of those assets,
until such time as the assets are substantially ready for their
intended use or sale.
All other borrowing costs are recognised in profit or loss in
the period in which they are incurred.
2.25. Employee benefits
A liability is recognised for benefits accruing to employees in
respect of wages and salaries, annual leave and sick leave when it
is probable that settlement will be required and they are capable
of being measured reliably.
2. Accounting policies (continued)
2.26. Segment information
Reportable segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision-maker.
The chief operating decision-maker, who is responsible for
allocating resources and assessing performance of the operating
segments, has been identified as the Company's executive
committee.
Management has determined the reportable segments of the Group
based on the reports reviewed by the Company's executive committee
that are used to make strategic decisions. The Group has three
reportable segments: Exploration, Development and Mining (see note
4).
2.27. Adoption of new and revised Accounting Standards and
Interpretations
The key new and amended reporting requirements that must be
applied for the first time this year include:
o Offsetting criteria for financial assets and financial
liabilities
-- Amendments to AASB 132 Financial Instruments: Presentation
clarifies the requirements relating to the offset of financial
assets and financial liabilities.
-- Additional disclosures on recoverable amounts for
non-financial assets:
-- Amendments to AASB 136 Impairment of Assets remove the
requirement to disclose the recoverable amount of a cash-generating
unit (CGU) under certain circumstances. Further, there are some
additional disclosure requirements applicable in instances where
the recoverable amount of an asset or a CGU is measured at fair
value less costs of disposal.
-- Consolidation exemption for investment entities:
-- Amendments to AASB 10 Consolidated Financial Statements
introduce an exemption from consolidation of subsidiaries for
entities which meet the definition of an investment entity.
-- Annual Improvements 2010-2012 and 2011-2013 Cycles: AASB
2014-1 Amendments to Australian Accounting Standards Part A -
Annual Improvements 2010-2012 and 2011-2013 Cycles makes various
amendments to Australian Accounting Standards. Most notably, items
that will impact disclosure requirements under AASB 8 Operating
Segments, AASB 119 Employee Benefits, and AASB 124 Related Party
Disclosure.
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At the date of the authorisation of the financial report, a
number of Standards and Interpretations were in issue but not yet
effective. The potential effect of the revised Standards /
Interpretations on the Groups' financial statement has not yet been
determined.
Standard Effective Expected
for the annual to be initially
reporting applied in
periods beginning the financial
on or after year ending
-------------------------------------------------------------- -------------------- ------------------
1 January 30 June
* AASB 9 'Financial Instruments' and the relevant 2018 2019
amending standards
1 January 30 June
* AASB 14 Regulatory Deferral Accounts 2016 2017
1 January 30 June
* AASB 15 Revenue from Contracts with Customers 2017 2018
1 January 30 June
* AASB 2014-1 'Amendments to Australian Accounting 2016 2017
Standards' - Part D: 'Consequential Amendments
arising from AASB 14'
1 January 30 June
* AASB 2014-1 'Amendments to Australian Accounting 2015 2016
Standards' - Part E: 'Financial Instruments'
1 January 30 June
* Accounting for Acquisitions of Interests in Joint 2016 2017
Operations (Amendments to IFRS11)
1 January 30 June
* Clarification of Acceptable Methods of Depreciation 2016 2017
and Amortisation (Amendments to IAS16 and IAS38)
---------------------------------------------------------------- ------------------ ----------------
New and revised Standards and Interpretations affecting amounts
reported and / or disclosure in the consolidated financial
statements
In the current year, the Group has applied a number of new and
revised AASB's issued by the Australian Accounting Standards Board
that are mandatorily effective for an accounting period that begins
on or after 1 January 2014.
AASB 2012-3 Amendments The Group has applied the
to Australian Accounting amendments to AASB 7 'Disclosures
Standards - Offsetting - Offsetting Financial
Financial Assets and Assets and Financial Liabilities'
Financial Liabilities in the current year. The
(Amendments to AASB amendments to AASB 7 require
132) entities to disclose information
about rights of offset
and related arrangements
(such as collateral posting
requirements) for
financial instruments under
an enforceable master netting
agreement or similar arrangement.
As the Group does not have
any offsetting arrangements
in place, the application
of the amendments does
not have any material impact
on the consolidated financial
statements.
AASB 2013-3 Amendments This Standard amends the
to AASB 136 - Recoverable disclosure requirements
Amount Disclosures in AASB 136. The amendments
for Non-Financial Assets include the requirement
to disclose additional
information about the fair
value measurement when
the recoverable amount
of impaired assets is based
on fair value less costs
of disposal. In addition,
a further requirement has
been included to disclose
the discount rates that
have been used in the current
and previous measurements
if the recoverable amount
of impaired assets based
on fair value less costs
of disposal was measured
using a present value technique.
The intention of this amendment
is to harmonise the disclosure
requirements for fair value
less costs of disposal
and value in use when present
value techniques are used
to measure the recoverable
amount of impaired assets.
The Group has applied AASB
2013-3 for the first time
in this current year. The
Group included detail disclosure
regarding the valuation
of development and exploration
projects, and indicated
the recoverability of the
carrying value in note
13.
AASB 2013-6 Amendments The objective of this Standard
to AASB 136 arising is to make amendments to
from Reduced Disclosure AASB 136 Impairment of
Requirements Assets to establish reduced
disclosure requirements
for entities preparing
general purpose financial
statements under Australian
Accounting Standards -
Reduced Disclosure Requirements
arising from AASB 2013-3
Amendments to AASB 136
- Recoverable Amount Disclosures
for Non-Financial Assets.
As a result the Australian
Conceptual Framework now
supersedes the objective
and the qualitative characteristics
of financial statements,
as well as the guidance
previously available in
Statement of Accounting
Concepts SAC 2 'Objective
of General Purpose Financial
Reporting'. The adoption
of this amending standard
does not have any material
impact on the consolidated
financial statements.
AASB 2013-9 Amendments Part B makes amendments
to Australian Accounting to particular Australian
Standards - Conceptual Accounting
Framework, Materiality Standards to delete references
and Financial Instruments to AASB 1031 and minor
editorial
amendments to various standards.
The Group does not currently
provide disclosure relating
to AASB 1031 and therefore
this amendment does not
affect the consolidated
group financial statements.
AASB 2014-4 Amendments The objective of this amendment
to Australian Accounting is to clarify the requirements
Standards - Clarification for the revaluation method
of Acceptable Methods in AASB 116 Property, Plant
of Depreciation and and Equipment and AASB
Amortisation 138 Intangible Assets to
Amends AASB 116 Property, address concerns about
Plant and Equipment the calculation of the
and AASB 138 Intangible accumulated depreciation
Assets to provide additional or amortisation at the
guidance on how the date of the revaluation.
depreciation or amortisation The Interpretations Committee
of property, plant reported to the IASB that
and equipment and intangible practice differed in the
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assets should be calculated. calculation of accumulated
depreciation for an item
of property, plant and
equipment that is measured
using the revaluation method
in cases where the residual
value, the useful life
or the depreciation method
has been re-estimated before
a revaluation.
The amendment clarifies
that the carrying amount
of an asset is adjusted
to that value in one of
the following ways:
i) The gross carrying amount
is adjusted consistently
with the valuation
the carrying amount to
that with accumulated depreciation
adjusted proportionately).
ii) The accumulated depreciation
is eliminated against the
gross carrying amount of
the asset.
This amendment is not expected
to have any financial or
disclosure impact on the
consolidated group financial
statements.
The basis for calculation
of depreciation and amortisation
should be based on the
expected pattern of consumption
of the future economic
benefits of an asset.
This amendment is not expected
to have any financial or
disclosure impact on the
Group's results.
AASB 2014-1 Amendments Part A makes various amendments
to Australian Accounting to Australian Accounting
Standards [Part A - Standards arising from
Annual Improvements the issuance by IASB of
2010-2012 and 2011- IFRSs Annual Improvements
2013 Cycles] to IFRS 2010- 2012 Cycle
and Annual Improvements
to IFRSs 2011-2013 Cycle.
Key amendments include:
* AASB 2 - definition of vesting condition;
* AASB 3 - accounting for contingent consideration in a
business combination;
* AASB 8 - aggregation of operating segments and
reconciliation of the total of the reportable
segments' assets tothe entity's assets;
* AASB 13 - short-term receivables and payables;
* AASB 116 - revaluation method: proportionate
restatement of accumulated depreciation;
* AASB 124 - key management personnel;
* AASB 138 - revaluation method: proportionate
restatement of accumulated amortisation;
* AASB 1 - meaning of 'effective IFRSs';
* AASB 3 - scope exceptions for joint ventures;
* AASB 13 - scope of paragraph 52 (portfolio
exception);
* AASB 140 - clarifying the interrelationship between
AASB 3 and AASB 140 when classifying property as
investment property or owner occupied property.
AASB 2014-1 Amendments Narrow scope amendments
to Australian Accounting to AASB 119 Employee Benefits
Standards [Part B - that apply to contributions
Defined Benefit Plans: from employees or third
Employee parties to defined benefit
Contributions (Amendments plans. The objective of
to AASB 119)] the amendments is to simplify
the accounting for contributions
that are independent of
the number of years of
employee service, for example,
employee contributions
that are calculated according
to a fixed percentage of
salary.
This amendment is not expected
to have any financial or
disclosure impact on the
Group's results
AASB 2014-2 Amendments Amends AASB 1053 Application
to AASB1053 Transition of Tiers of Australian
to and between Tiers, Accounting Standards to
and related Tier 2 Disclosure clarify that AASB 1053
Requirement relates only to general
purpose financial statements.
Aims to make AASB 1053
consistent with AASB 108
Accounting Policies, Changes
in Accounting Estimates
and Errors option in AASB
1 First-time Adoption of
Australian Accounting Standards;
and clarify certain circumstances
in which an entity applying
Tier 2 reporting requirements
can apply the AASB 108
option in AASB 1. Specifies
certain disclosure requirements
when an entity resumes
the application of Tier
2 reporting requirements.
This amendment is not expected
to have any financial or
disclosure impact on the
Group's results
AASB 2014-9 Amendments Amends AASB 127 Separate
to Australian Accounting Financial Statements, to
Standards - Equity Method allow an entity to account
in Separate Financial for investments in subsidiaries,
Statements joint ventures and associates
in its separate financial
statements:
* at cost,
* in accordance with AASB 9 Financial Instruments, or
* using the equity method as described in AASB 128
* Investments in Associates and Joint Ventures.
The accounting policy option
must be applied for each
category of investment.
This amendment is not expected
to have any financial or
disclosure impact on the
Group's results
3. Critical accounting estimates and key judgements
Estimates assume a reasonable expectation of future events and
are based on current trends and economic data, obtained both
externally and within the Group. Actual results may differ from
these estimates.
Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the
period in which the estimates are revised and in any future periods
affected.
The primary areas in which estimates and judgements are applied
are discussed below.
Asset carrying values and impairment charges
The Group assesses impairment at the end of each reporting
period by evaluating conditions and events specific to the Group
that may be indicative of impairment triggers. Recoverable amounts
of relevant assets are reassessed using value-in-use calculations
which incorporate various key assumptions. Key assumptions include
future coal prices, future operating costs, discount rates, foreign
exchange rates and coal reserves. Refer to note 13.
Coal reserves
Economically recoverable coal reserves relate to the estimated
quantity of coal in an area of interest that can be expected to be
profitably extracted, processed and sold.
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The Group determines and reports coal reserves under the
Australasian Code of Reporting of Mineral Resources and Ore
Reserves (the 'JORC Code'). This includes estimates and assumptions
in relation to geological, technical and economic factors,
including: quantities, grades, production techniques, recovery
rates, production costs, transport costs, exchange rates and
expected coal demand and prices.
Because the economic assumptions used to estimate reserves
change from period to period, and because additional geological
data is generated during the course of operations, estimates of
reserves may change from period to period. Changes in reported
reserves may affect the Group's financial results and financial
position in a number of ways, including the following:
-- asset carrying values may be affected due to changes in estimated future cash flows; and
-- depreciation and amortisation charges may change where such
charges are determined by the units of production basis, or where
the useful economic lives of assets change.
Depreciation and amortisation charges in the Consolidated
Statement of Comprehensive Income may change where such charges are
determined by the units of production basis, or where the useful
economic lives of assets change
Exploration and evaluation assets
Determining the recoverability of exploration and evaluation
expenditure capitalised requires estimates and assumptions as to
future events and circumstances, in particular, whether successful
development and commercial exploitation, or alternatively sale, of
the respective areas of interest will be achieved. The Group
applies the principles of AASB 6 and recognises exploration and
evaluation assets when the rights of tenure of the area of interest
are current, and the exploration and evaluation expenditures
incurred are expected to be recouped through successful development
and exploitation of the area. If, after having capitalised the
expenditure under the Group's accounting policy, a judgment is made
that recovery of the carrying amount is unlikely, an impairment
loss is recorded in profit or loss. Refer to note 13.
3. Critical accounting estimates and key judgements (continued)
Development expenditure
Development activities commence after the commercial viability
and technical feasibility of the project is established. Judgment
is applied by management in determining when a project is
commercially viable and technically feasible. Any judgments may
change as new information becomes available. If, after having
commenced the development activity, a judgment is made that a
development asset is impaired, the appropriate amount will be
written off to the consolidated statement of comprehensive income.
Refer to note 13.
The company considers the following items as pre-requisites
prior to concluding on commercial viability:
-- All requisite regulatory approvals from government
departments in South Africa have been received and are not subject
to realistic legal challenges
-- The Company has the necessary funding to engage in the
construction and development of the project as well as general
working capital until the project is cash generative
-- A JORC compliant resource proving the quantity and quality of
the project as well as a detailed Mine Plan reflecting that the
colliery can be developed and will deliver the required return
hurdle rates
-- The Company has secured off-take and/ or logistics agreements
for a significant portion of the product produced by the mine and
the pricing has been agreed
-- The Company has the appropriate skills and resources to develop and operate the project
Rehabilitation and restoration provisions
Certain estimates and assumptions are required to be made in
determining the cost of rehabilitation and restoration of the areas
disturbed during mining activities and the cost of dismantling of
mining infrastructure. The amount the Group is expected to incur to
settle its future obligations includes estimates regarding:
-- the future expected costs of rehabilitation, restoration and dismantling.
-- the expected timing of the cash flows and the expected life
of mine (which is based on coal reserves noted above);
-- the application of relevant environmental legislation; and
-- the appropriate rate at which to discount the liability;
Changes in the estimates and assumptions used could have a
material impact on the carrying value of the rehabilitation
provision and related asset. The provision is reviewed at each
reporting date and updated based on the best available estimates
and assumptions at that time. The carrying amount of the
rehabilitation provision is set out in note 24.
Recoverability of non-current assets
As set out in note 13, certain assumptions are required to be
made in order to assess the recoverability of non-current assets
where there is an impairment indicator. Key assumptions include
future coal prices, future operating costs, discount rate, foreign
exchange rates and estimates of coal reserves. Estimates of coal
reserves in themselves are dependent on various assumptions (refer
above). Changes in these assumptions could therefore affect
estimates of future cash flows used in the assessment of
recoverable amounts, estimates of the life of mine and
depreciation. Refer to note 13.
Contingent liabilities - litigation
Certain claims have been made against the Group. Judgments about
the validity of the claims have been made by the Directors. Further
details are included in note 34.
4. Segment information
The Group has three reportable segments: Exploration,
Development and Mining.
The Exploration segment is involved in the search
for resources suitable for commercial exploitation,
and the determination of the technical feasibility
and commercial viability of resources. As of
June 30, 2015, projects within this reportable
segment include three exploration stage coking
and thermal coal complexes, namely the Chapudi
Complex (which comprises the Chapudi project,
the Chapudi West project and the Wildebeesthoek
project), the Soutpansberg Complex (which comprises
the Voorburg project, the Mt Stuart project
and the Jutland project) and the Makhado Complex
(comprising the Makhado project, the Makhado
Extension project and the Generaal project).
The Development segment is engaged in establishing
access to and commissioning facilities to extract,
treat and transport production from the mineral
reserve, and other preparations for commercial
production. As of June 30, 2015 projects included
within this reportable segment include project,
namely the Vele Colliery, in the early operational
and development stage.
The Mining segment is involved in day to day
activities of obtaining a saleable product from
the mineral reserve on a commercial scale and
consists of the Mooiplaats Colliery (comparative
figures for June 2014 still includes the Woestalleen
Colliery). As of June 30 2014 the Mooiplaats
Colliery has been classified as operations held
for sale.
The accounting policies of the reportable segments
are the same as those described in Note 2, Accounting
policies.
The Group evaluates performance on the basis
of segment profitability, which represents net
operating (loss) / profit earned by each reportable
segment.
Each reportable segment is managed separately
because, amongst other things, each reportable
segment has substantially different risks.
The Group accounts for intersegment sales and
transfers as if the sales or transfers were
to third parties, ie at current market prices.
The Group's reportable segments focus on the
stage of project development and the product
offerings of coal mines in production.
In order to reconcile the segment results with
the consolidated statement of profit or loss
and other comprehensive income the discontinuing
operations should be deducted from the segment
total and the corporate results (as per the
reconciliation later in the note should be included.
Discontinuing
Continuing operations operations
-------------------------- --------------
Exploration Development Mining Total
For the year ended $'000 $'000 $'000 $'000
30 June 2015
----------------------- ------------ ------------ -------------- --------
Revenues from - - - -
external customers
Inter-segment - - - -
revenues
------------ ------------ -------------- --------
Revenue - - - -
------------ ------------ -------------- --------
Segment loss (4,387) (1,958) (2,176) (8,521)
Items included
within the Group's
measure of segment
profitability
- Depreciation
and amortisation (84) (63) - (147)
- Impairment - - - -
* Finance income 22 47 97 166
- Finance cost (978) (80) (605) (1,663)
------------ ------------ -------------- --------
Segment assets 124,715 117,160 18,118 259,993
------------ ------------ -------------- --------
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Items included
within the Group's
measure of segment
assets
- Additions to
non-current assets 2,454 145 - 2,599
------------ ------------ -------------- --------
Segment liabilities 20,788 5,153 3,354 29,295
------------ ------------ -------------- --------
Discontinuing
Continuing operations operations
-------------------------- --------------
Exploration Development Mining Total
For the year $'000 $'000 $'000 $'000
ended 30 June
2014
--------------------- ------------ ------------ -------------- ---------
Revenues from
external customers - - 3,299 3,299
Inter-segment - - - -
revenues
------------ ------------ -------------- ---------
Revenue (1) - - 3,299 3,299
------------ ------------ -------------- ---------
Segment loss 3,829 1,845 20,575 26,249
Items included
within the Group's
measure of segment
profitability
- Depreciation
and amortisation (79) (65) - (144)
- Impairment - - (14,933) (14,933)
Finance income 7 65 352 424
- Finance cost (1,586) (66) (97) (1,749)
------------ ------------ -------------- ---------
(1) Revenues represent
sale of product
Segment assets 145,995 135,991 23,029 305 015
------------ ------------ -------------- ---------
Items included
within the Group's
measure of segment
assets
- Additions to
non-current assets 3,637 7,057 - 10,694
------------ ------------ -------------- ---------
Segment liabilities 30,820 4,974 3,644 39,438
------------ ------------ -------------- ---------
Reconciliations of the total segment amounts to respective items
included in the consolidated financial statements are as
follows:
Year ended Year ended
30 June 30 June
2015 2014
$'000 $'000
----------- -----------
Total loss for reportable
segments 8,521 26,249
Reconciling items:
Unallocated corporate costs 15,681 21,115
Depreciation and amortisation 1,325 2,032
Foreign exchange (gain)/ loss (18,816) 34,724
Loss before taxation 6,711 84,120
----------- -----------
Total segment assets 259,993 305,015
Reconciling items:
Unallocated property, plant
and equipment 10,336 12,349
Intangible assets 11,682 15,488
Other financial assets 3,879 705
Other receivables 1,745 2,245
Unallocated current assets 18,992 8,596
----------- -----------
Total assets 306,627 344,398
----------- -----------
Total segment liabilities
Reconciling items: 29,295 39,438
Unallocated liabilities 2,777 24,640
----------- -----------
Total liabilities 32,072 64,078
----------- -----------
Year ended Year ended
30 June 30 June
2015 2014
$'000 $'000
----------- -----------
The Group operates in two principal
geographical areas - Australia
(country of domicile) and South
Africa.
The Group's revenue from external
customers by location of operations
and information about its non-current
assets by location of assets
are detailed below.
Revenue by location of operations
South Africa - 4,061
Australia - -
----------- -----------
Total revenue - 4,061
----------- -----------
Non-current assets by location
of operations
South Africa 269,254 316,311
Australia - -
----------- -----------
Total non-current assets 269,254 316,311
----------- -----------
Year ended Year
ended
30 June 30 June
2015 2014
$'000 $'000
5. Revenue
The following is an analysis
of the Group's revenue for the
year from continuing operations
(excluding investment income
- see note 6)
Revenue from the rendering of
services - 761
----------- ---------
- 761
----------- ---------
6. Investment income
Continuing operations
Rental income 134 926
----------- ---------
Interest income
Bank deposits 646 602
Interest on loans 48 171
----------- ---------
Total interest income 694 773
----------- ---------
Total investment income 828 1,699
----------- ---------
7. Loss for the year from continuing
operations
Loss for the year from continuing
operations has been arrived at
after charging or (crediting):
Other income
Profit on sale of claims - 3,048
Insurance claim - 1,350
Non-refundable deposits received
for sale of non-core assets 324 904
Other - 262
----------- ---------
Total other income 324 5,564
----------- ---------
Other gains/(losses)
Loss on disposal of property,
plant and equipment - (41)
Fair value gain on renegotiated 1,303 -
Rio Tinto deferred consideration
Revaluation of investments 277 (576)
----------- ---------
Total other gains and (losses) 1,580 (617)
----------- ---------
Depreciation and amortisation
Depreciation
Depreciation of property, plant
and equipment (note 14) 497 1,107
----------- ---------
Total depreciation 497 1,107
----------- ---------
Amortisation
Amortisation of intangible asset
(note 15) 975 1,069
----------- ---------
Total amortisation 975 1,069
----------- ---------
Total depreciation and amortisation 1,472 2,176
----------- ---------
Foreign exchange profit/(loss)
Unrealised 18,991 (35,568)
Realised (4,487) (749)
----------- ---------
14,504 (36,317)
----------- ---------
Year ended Year
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30 June ended
2015 30 June
2014
$'000 $'000
-------------------------------------- ----------- ---------
7. Loss for the year from continuing
operations (continued)
Employee benefits expenses
Share-based payments 131 717
Super-annuation 10 14
Salaries and wages 4,795 7,311
----------- ---------
Total employee benefits expense 4,936 8,042
----------- ---------
8. Auditors' remuneration
Amounts received by the auditors
of the Company as at 30 June
2015
Deloitte - Australia
Audit and review of financial
reports 102 119
102 119
----------- ---------
Deloitte - Johannesburg
Audit and review of financial
reports 229 325
229 325
----------- ---------
9. Finance cost
Finance costs
Interest on loans 1,191 2,238
Interest on overdraft 9 -
Unwinding of interest 86 71
----------- ---------
1,286 2,309
----------- ---------
Year ended Year
30 June ended
2015 30 June
2014
$'000 $'000
--------------------------------------------- ----------- ---------
10. Income tax and deferred tax
Income tax recognised in profit
or loss from continuing operations
Current tax
Current tax expense in respect - -
of the current year
----------- ---------
- -
----------- ---------
Deferred tax (note 25)
Origination and reversal of temporary - -
differences
----------- ---------
- -
----------- ---------
Total income tax expense recognised - -
----------- ---------
The Group's effective tax rate
for the year from continuing
operations was 0% (2014: 0%).
The tax rate used for the 2015
and 2014 reconciliations below
is the corporate tax rate of
28% payable by South African
corporate entities on taxable
profits under South African tax
law. The income tax expense for
the year can be reconciled to
the accounting profit as follows:
Loss from continuing operations
before income tax (4,535) (61,394)
Income tax benefit calculated
at 28% (2014: 28%) (1,270) (17,190)
Tax effects of:
Expenses that are not deductible
for tax purposes 753 617
Income that are not taxable (91) (1,509)
Other temporary differences not
recognised 608 18,082
----------- ---------
Income tax (credit) / charge - -
----------- ---------
Income tax recognised on the
loss from discontinuing operations
Current tax
Current tax expense in respect - -
of the current year
- -
----------- ---------
Deferred tax (note 25)
Origination and reversal of temporary - -
differences
- -
----------- ---------
Total income tax benefit recognised - -
----------- ---------
The Group's effective tax rate
for the year was 0% (2014: 0%).
The tax rate used for the 2015
and 2014 reconciliations below
is the corporate tax rate of
28% payable by South African
corporate entities on taxable
profits under South African tax
law. The income tax expense for
the year can be reconciled to
the accounting profit as follows:
Loss before income tax (5,005) (20,575)
Income tax benefit calculated
at 28% (2014: 28%) (1,401) (5,761)
Tax effects of:
Expenses that are not deductible
for tax purposes 483 228
Other temporary differences
not recognised 918 5,533
Income tax (credit) / charge - -
----------- ---------
11. Discontinuing operations
11.1 Holfontein (Pty) Ltd ('Holfontein')
The Company is in the process
of finalising agreements for
the disposal of the Holfontein
thermal coal project near Secunda
in Mpumalanga.
11.2 Plan to dispose of Langcarel
(Pty) Ltd ('Mooiplaats')
The Company has announced a long-term
strategy to dispose of its thermal
assets in order to focus on the
development of the coking coal
assets. The Company is actively
seeking a buyer for this business
and expects to complete a sale
during the next financial year.
The Group has not recognised
any impairment on the Mooiplaats
colliery during the current financial
year. (2014: $14.9 million -
note 21).
11.3 Analysis of loss for the
year from discontinuing operations
The combined results of the operations
held for sale included in the
loss for the year are set out
below. The comparative losses
and cash flows from operations
held for sale have been re-presented
to include those operations classified
as held for sale in the current
year.
Year ended Year
30 June ended
2015 30 June
2014
$'000 $'000
----------- ------------
Loss for the year from operations
held for sale
Revenue - 3,299
Other gains 427 78
----------- ------------
427 3,377
Expenses (2,603) (23,952)
----------- ------------
Loss before tax (2,176) (20,575)
Attributable income tax credit - -
----------- ------------
Loss for the year from operations
held for sale (attributable to
owners of the company) (2,176) (20,575)
----------- ------------
Cash flows from operations held
for sale
Net cash outflows from operating
activities (1,400) (3,619)
Net cash inflows from investing
activities 1,024 128
Net cash inflows/(outflows) from
financing activities 729 (12,298)
----------- ------------
Net cash inflows/(outflows) 353 (15,789)
----------- ------------
These operations have been classified
and accounted for at 30 June
2015 as a disposal group held
for sale (see note 21).
Woestalleen
During 2014 the company received
the Section 11 approval from
the DMR for the sale of all
of the equity and loan accounts
in NuCoal Mining Proprietary
Limited ('Woestalleen Complex')
resulting in the sale consideration
of ZAR80 million ($7.6 million)
paid to CoAL. This resulted
in a gain of $1.4 million being
realised.
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Year ended Year ended
30 June 30 June
2015 2014
------------ ------------
Cents Cents
per share per share
12. Loss per share attributable
to owners of the Company
Basic loss per share
From continuing operations 0.32 6.06
From discontinuing operations 0.15 1.96
------------ ------------
0.47 8.02
------------ ------------
12.1 Basic loss per share
$'000 $'000
------------ ------------
Loss for the year attributable
to owners of the Company (6,711) (84,120)
Less: Loss for the year from
operations held for sale (2,176) (20,575)
------------ ------------
Loss used in the calculation
of basic loss per share from
continuing operations (4,535) (63,545)
------------ ------------
'000 shares '000 shares
------------ ------------
Weighted number of ordinary shares
Weighted average number of ordinary
shares for the purposes of basic
loss per share 1,414,768 1,048,369
------------ ------------
12.2 Diluted loss per share
Diluted loss per share is calculated
by dividing loss attributable
to owners of the Company by the
weighted average number of ordinary
shares outstanding during the
year plus the weighted average
number of diluted ordinary share
that would be issued on conversion
of all the dilutive potential
ordinary shares into ordinary
shares.
As at 30 June 2015, 85,993,989
options (2014 - 21,168,990 options)
were excluded from the computation
of the loss per share as their
impact is anti-dilutive. Furthermore
at 30 June 2015 the Firefly option
has expired and is not included
in the calculation..
12.3 Headline loss per share
(in line with JSE requirements)
The calculation of headline loss
per share at 30 June 2015 was
based on the headline loss attributable
to ordinary equity holders of
the Company of $6.7 million (2014:
$70.6 million) and a weighted
average number of ordinary shares
outstanding during the period
ended 30 June 2015 of 1,414,768,613
(2014: 1,048,368,613).
The adjustments made to arrive
at the headline loss are as follows:
Loss for the period attributable
to ordinary shareholders (6,711) (84,120)
Adjust for:
Impairment losses - 14,933
Gain recognised on disposal of
interest in former subsidiary - (1,438)
------------ ------------
Headline earnings (6,711) (70,625)
------------ ------------
Headline loss per share (cents
per share) 0.47 6.74
Year ended Year ended
30 June 30 June
2015 2014
$'000 $'000
------------------------------------------------------------------------ --------------------------- --------------------------
13. Development, exploration
and evaluation expenditure
Development, exploration and
evaluation expenditure comprises:
Exploration and evaluation assets 118,498 139,991
Development expenditure 114,315 131,720
--------------------------- --------------------------
Balance at end of year 232,813 271,711
--------------------------- --------------------------
A reconciliation of development,
exploration and evaluation expenditure
is presented below:
Exploration and evaluation assets
Balance at beginning of year 139,991 148,131
Additions 145 1,846
Foreign exchange differences (21,638) (9,986)
--------------------------- --------------------------
Balance at end of year 118,498 139,991
--------------------------- --------------------------
Development assets
Balance at beginning of year 131,720 130,947
Additions (1) 2,454 7,061
Foreign exchange differences (19,859) (6,288)
--------------------------- --------------------------
Balance at end of year 114,315 131,720
--------------------------- --------------------------
(1) Vele is not considered to
be in commercial production and
as a result, revenue from the
sale of coal is not recognised
as revenue but off-set against
additions. No revenue was generated
during the current financial
year. The total revenue off-set
against additions for 2014 was
$9.2 million.
Impairment testing
Exploration and Evaluation Assets
As of 30 June 2015 the net book value of the following
project assets were classified as Exploration
and Evaluation assets:
* Greater Soutpansberg Project: $63.7 million
* Makhado Project: $54.7 million
In terms of AASB 6 - Exploration for and Evaluation
of Mineral Resource management have performed
an assessment of whether facts and circumstances
suggest that the carrying amount of an exploration
and evaluation asset may exceed its recoverable
amount. In performing its assessment, management
have considered its exploration rights to the
exploration areas, its planned & budgeted exploration
activities and the likelihood of the recoverability
of the net book value from the successful development
of the areas of interest. Management have concluded
that no indicators of impairment for its Exploration
and Evaluation assets exist as at 30 June 2015.
Non-current assets held for sale
As of 30 June 2015 the net book value of the following
project assets were classified as non-current
assets held for sale
* Holfontein Colliery: $ nil
* Mooiplaats Colliery: $15.9 million
The Company is in the process of finalising agreements
for the disposal of the Holfontein Colliery, and
has announced a strategy to dispose of the Mooiplaats
Colliery within the next 12 months. Consequently,
these project assets have been classified as non-current
assets held for sale and have been written down
to their fair value less costs to sell represented
by indicative offers received.
Development Assets
As of 30 June 2015 the net book value of the following
project assets were included in Development assets:
* Vele Colliery: $111 million
In terms of AASB 136 - Impairment of Assets management
have identified the coal commodity price as an
indicator that the Vele assets may be impaired
and have performed a formal impairment assessment.
Management have adopted the fair value less costs
of disposal approach to estimate the recoverable
amount of the project, before comparing this amount
with the carrying value of the associated assets
and liabilities in order to assess whether an
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September 10, 2015 07:00 ET (11:00 GMT)
impairment of the carrying value is required under
AASB 136. Management formed the view that impairment
is not likely.
In calculating fair value less costs of disposal,
management have forecast the cashflows associated
with the project over its expected life of 18
years until 2033. The cash flows are estimated
for the assets of the colliery in its current
condition together with capital expenditure required
for the colliery to resume operation and discounted
to its present value using a post-tax discount
rate that reflects the current market assessments
of the risks specific to the Vele Colliery. The
identification of impairment indicators and the
estimation of future cash flows require management
to make significant estimates and judgments. Details
of the key assumptions used in the fair value
less costs of disposal calculation at 30 June
2015 are included below.
Key assumptions 2015 2016 2017 2018 LT
------------------------------------- ----- ----- ----- ----- -------
Thermal coal price (USD, real)[1] 66 67 66 80 80
------------------------------------- ----- ----- ----- ----- -------
Hard coking coal price (USD, real)2 119 119 142 135 135
------------------------------------- ----- ----- ----- ----- -------
Exchange rate (USD / ZAR, nominal)3 12.2 12.6 12.9 13.3 Note 3
------------------------------------- ----- ----- ----- ----- -------
Discount rate4 15.8%
------------------------------------- -----------------------------------
Inflation rates - USD 2.5%
* ZAR 6.0%
------------------------------------- -----------------------------------
Production start date April 2017
------------------------------------- -----------------------------------
(1) Management's assumptions reflect the Richards
Bay export thermal coal (API4) price.
(2) Management's assumption of the hard coking
coal price is made after considering relevant
broker forecasts.
(3) Management has applied a flat exchange rate
for the period to 2018. Thereafter the rate is
derived with reference to the 2018 assumption,
and inflated by the compounding differential between
USD and ZAR inflation rates.
(4) Management prepared a nominal ZAR-denominated,
post-tax discount rate, which was calculated with
reference to the Capital Asset Pricing Model (CAPM).
Impairment Assessment USD million
----------------------------------------------------- ------------
Carrying Value of Vele Cash Generating Unit 111
----------------------------------------------------- ------------
Value of Vele using the discounted cash flow method 113
----------------------------------------------------- ------------
Sensitivity Analysis
Changes in key assumptions in the table below
would have the following approximate impact on
the recoverable amount of the Vele Colliery as
calculated using the discounted cash flow method
and excluding the effect of the value attributable
to resources outside the
LOM. Sensitivity Change in variable Effect on fair value less costs
of disposal
--------------------------------- ------------------- --------------------------------
Long term coal prices +10.0% 37
-10.0% (41)
--------------------------------- ------------------- --------------------------------
Long term exchange rate +10.0% 33
-10.0% (36)
--------------------------------- ------------------- --------------------------------
Discount rate +0.8% (7)
-0.8% 7
--------------------------------- ------------------- --------------------------------
Operating costs +10.0% (15)
-10.0% 15
--------------------------------- ------------------- --------------------------------
Delays in production start date +12 months (19)
+24 months (33)
--------------------------------- ------------------- --------------------------------
Excluded from the value of the Vele Colliery derived
from the discounted cash flow model, is any value
attributable to resources remaining after the
projections made in the life of mine model. In
order to assess the potential value of resources
outside of the life of mine plan, a resource valuation
was undertaken by management in September 2012
in consultation with valuations experts. This
valuation applied a weighted average multiple
of ZAR 6.8/tonne of resources, or USD 0.56/tonne
which resulted in an indicative valuation of $140
million at that time. An alternative valuation
of the resources outside of the life of mine plan
has been performed by extending the discounted
cash flow model by ten years, which results in
an indicative valuation of $13 million. The value
of the resources outside of the life of mine plan
could therefore be in the range of $13 million
to in excess of $100 million.
14. Property, plant and equipment
Mining Land Leasehold Motor Other Total
property, and buildings improvements vehicles
plant
and
equipment
$'000 $'000 $'000 $'000 $'000 $'000
--------------- ----------- --------------- -------------- ---------- ------ --------
2015
Cost
At beginning
of year 28 17,403 540 828 2,048 20,847
Additions 28 1,824 - 20 75 1,947
Disposals - - - - - -
Exchange
differences (6) (2,526) (77) (116) (292) (3,017)
----------- --------------- -------------- ---------- ------ --------
At end of
year 50 16,701 463 732 1,831 19,777
----------- --------------- -------------- ---------- ------ --------
Accumulated depreciation
At beginning
of year 11 714 537 447 1,725 3,434
Depreciation
charge - 230 1 130 136 497
Accumulated - - - - - -
depreciation
on disposals
Exchange
differences 25 (87) (76) (60) (215) (413)
----------- --------------- -------------- ---------- ------ --------
At end of
year 36 857 462 517 1,646 3,518
----------- --------------- -------------- ---------- ------ --------
Net carrying
value at
end of year 14 15,844 1 215 185 16,259
----------- --------------- -------------- ---------- ------ --------
14. Property, plant and equipment
Mining Land Leasehold Motor Other Total
property, and improvements vehicles
plant buildings
and equipment
$'000 $'000 $'000 $'000 $'000 $'000
---------------------- --------------- ----------- -------------- ---------- ------ --------
2014
Cost
At beginning
of year 465 17,481 572 888 2,178 21,584
Additions - 1,120 2 - 27 1,149
Disposals (415) - - - (20) (435)
Exchange differences (22) (1,198) (34) (60) (137) (1,451)
---------------------- --------------- ----------- -------------- ---------- ------ --------
At end of
year 28 17,403 540 828 2,048 20,847
---------------------- --------------- ----------- -------------- ---------- ------ --------
Accumulated
depreciation
At beginning
of year 166 406 517 269 1,380 2,738
Depreciation charge 342 52 200 455 1,049
Accumulated
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September 10, 2015 07:00 ET (11:00 GMT)
depreciation
on disposals (146) - - - (17) (163)
Exchange differences (9) (34) (32) (22) (93) (190)
---------------------- --------------- ----------- -------------- ---------- ------ --------
At end of
year 11 714 537 447 1,725 3,434
---------------------- --------------- ----------- -------------- ---------- ------ --------
Net carrying
value at end
of year 2014 17 16,689 3 381 323 17,413
---------------------- --------------- ----------- -------------- ---------- ------ --------
Year ended Year ended
30 June 30 June
2015 2014
$'000 $'000
--------------------------------------------------- ----------- -------------
15. Intangible assets
Balance at beginning of year 15,488 16,078
Amortisation (975) (1,069)
Foreign exchange differences (2,831) 479
----------- -----------
Balance at end of year 11,682 15,488
----------- -----------
In August 2008 the Company entered
into a throughput agreement with
TCM, a subsidiary of Grindrod,
the operator of the Matola Terminal,
and CMR Engineers & Project Managers
Proprietary Limited.
This agreement granted the Company
one mtpa of port capacity through
the Matola terminal commencing
1 January 2009, for an initial
term of five years. This capacity
was increased to approximately
three mtpa in March 2011 and
the Company has the right to
renew the agreement (subject
to certain conditions) at the
end of the initial term, for
further periods of 3 successive
periods of 5 years each for a
total of 15 years.
During the year the Company reached
an agreement with Grindrod to
settle the current liabilities
to date as well as cover all
future take or pay obligation
until 31 December 2016. The settlement
of $10.3 million was paid during
the current financial year (included
in accrued expenses 2014 - note
26). The Company will be able
to export coal during the settlement
period with no take or pay obligations
and has sufficient export capacity
to meet scheduled production
from the Vele Colliery to the
end of CY2016 if required.
The terms of the Throughput Agreement
will be renegotiated for a further
two five-year periods and one
further two year period commencing
CY2017, ensuring the Company
has sufficient capacity to export
coal produced by its Vele Colliery
and Makhado Project.
16. Other receivables
Carrying amount of:
Nimag loan 1,503 1,931
Other loans 243 314
----------- -------------
1,746 2,245
----------- -------------
Balance at beginning of year 2,245 3,567
Other (312) (581)
Foreign exchange differences (187) (741)
----------- -------------
Balance at end of year 1,746 2,245
----------- -------------
Nimag loan
CoAL provided a loan as part
of the NiMag disposal to settle
the balance of the purchase consideration.
The loan bears interest at the
South African prime overdraft
rate less 0.5%, payable quarterly
in arrears. The capital is repayable
in 12 equal quarterly instalments
following the 39(th) month after
the date of advance of the ABSA
funding for the management buyout
or, the date the ABSA funding
is fully repaid.
-
Year ended Year ended
30 June 30 June
2015 2014
$'000 $'000
--------------------------------------------------------- ----------- -----------
17. Other financial assets
Carrying value of financial assets
at fair value through profit
or loss
Listed securities
* Equity securities 468 618
Unlisted securities
* Equity securities in private corporations* 3,145 966
----------- -----------
3,613 1,584
----------- -----------
Financial assets at fair value
through profit or loss are presented
within 'operating activities'
as part of changes in working
capital in the statement of cash
flows.
*Determined primarily by reference
to the value of recent private
placements. Listed and Unlisted
Investments are carried at the
market value as at the reporting
date.
Deposits 266 633
----------- -----------
3,879 2,217
----------- -----------
Other financial assets have been
analysed between current and
non-current as follows:
Current 468 610
Non-current 3,411 1,607
----------- -----------
3,879 2,217
----------- -----------
18. Inventories
Consumable stores 218 507
Finished goods 18 21
236 528
----------- -----------
The cost of inventories recognised
as an expense during the year
in respect of continuing operations
was $ 0.5 million (2014: nil).
19. Trade and other receivables
Trade receivables 95 241
Other receivables 1,111 2,145
Allowance for doubtful debts (414) (484)
----------- -----------
792 1,902
----------- -----------
The carrying amount of trade
and other receivables approximate
their fair value due to their
short-term maturity.
Year ended Year ended
30 June 30 June
2015 2014
$'000 $'000
19. Trade and other receivables
(continued)
The maximum exposure to credit
risk at the reporting date is
the carrying value of each class
of receivables as disclosed in
note 19. The Group does not hold
any collateral as security.
Movements on the allowance for
doubtful debts are as follows:
Balance at beginning of year 484 720
Allowance for bad debts 6 495
Receivable written off as uncollectable - (720)
Foreign exchange differences (76) (11)
----------- -----------
Balance at end of year 414 484
----------- -----------
Trade receivables are exposed
to the credit risk of end-user
customers within the coal mining
industry.
The Group has an established
credit policy under which customers
are analysed for creditworthiness
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before the Group's payment and
delivery terms and conditions
are offered. Customer balances
are monitored on an ongoing basis
to ensure that they remain within
the negotiated terms and conditions
offered.
Credit quality of trade receivables
Not past due 95 160
Past due 0 to 30 days - -
Past due 31 to 60 days - -
Past due 61 to 90 days - 81
----------- -----------
95 241
----------- -----------
Currency analysis of trade receivables
SA Rand 95 241
95 241
----------- -----------
Year ended Year ended
30 June 30 June
2015 2014
$'000 $'000
20. Cash and cash equivalents
Bank balances 17,759 2,017
Bank balances included in a disposal
group held for sale (refer note
21) 123 82
----------- -----------
17,882 2,099
----------- -----------
Restricted cash 1,023 5,153
Restricted cash included in a
disposal group held for sale
(refer note 21) 264 1,474
----------- -----------
1,287 6,627
----------- -----------
The restricted cash balance of
$1.3million(2014 - $6.6million)
is held on behalf of subsidiary
companies in respect of the rehabilitation
guarantees issued to the DMR
in respect of environmental rehabilitation
costs of $10.1 million (2014:
$17.6 million). This cash is
not available for use other than
for those specific purposes.
Credit risk
Cash at bank earns interest at
a floating rate based on daily
bank deposit rates. Cash is deposited
at highly reputable financial
institutions of a high quality
credit standing within Australia,
the United Kingdom and the Republic
of South Africa.
The fair value of cash and cash
equivalents equates to the values
as disclosed in this note.
21. Assets classified as held
for sale
Carrying amounts of
Holfontein Investments Proprietary - -
Limited ('Holfontein')
Langcarel Proprietary Limited
('Mooiplaats') 14,764 18,880
14,764 18,880
----------- -----------
Assets classified as held for
sale
Holfontein - -
Mooiplaats 18,118 23,030
18,118 23,030
----------- -----------
Liabilities associated with assets
held for sale
Holfontein - -
Mooiplaats 3,354 4,150
3,354 4,150
----------- -----------
Holfontein
Net assets of Holfontein Investments - -
Proprietary Limited
Impairment on assets held for - -
sale
----------- -----------
- -
----------- -----------
Year ended Year ended
30 June 30 June
2015 2014
$'000 $'000
21. Assets classified as held
for sale (continued)
The DMR also approved the sale
of the undeveloped Opgoedenhoop
mining right resulting in the
deposit of R5 million ($0.5 million)
being received in May 2014. An
additional R1.5 million ($0.31million)
was received in March 2015. The
company has agreed on new settlement
terms and the R17.2 million ($1.5
million) balance of the purchase
price owed to The Company is
payable within 12 months. The
outstanding balance will accrue
interest at the South African
prime rate.
Mooiplaats
As described in note 11, the
Company is seeking to dispose
of its thermal assets which include
the Mooiplaats colliery. The
Company expects to recover the
remaining carrying value through
the sales price.
The major classes of assets and
liabilities of Mooiplaats at
the end of the reporting period
are as follows:
Assets classified as held for
sale
Property, plant and equipment 16,770 18,229
Other financial assets 710 2,266
Restricted cash 264 1,474
Inventories 13 929
Trade and other receivables 238 50
Cash and cash equivalents 123 82
18,118 23,030
------------- -----------
Liabilities classified as held
for sale
Provisions 2,855 2,932
Trade payables and accrued expenses 499 1,218
3,354 4,150
------------- -----------
Net assets of Mooiplaats 14,764 18,880
------------- -----------
22. Deferred consideration
Deferred consideration 18,687 29,800
------------- ------------
18,687 29,800
------------- ------------
Opening balance 29,800 30,000
Loan advanced 65
Repaid during the year (10,000) (200)
Interest accrued 33 -
Gain on valuation at amortised (1,303) -
cost
Foreign Exchange 92 -
------------- ------------
Balance at end of year 18,687 29,800
------------- ------------
Current 3,265 29,800
Non-Current 15,422 -
18,687 29,800
------- -------
Year ended Year ended
30 June 30 June
2015 2014
$'000 $'000
The Deferred Consideration relates
to the second tranche (part of
the total acquisition price of
$75 million for Chapudi and Kwezi)
of $30 million payable to Rio
Tinto. During the year the company
renegotiated the payment term
of this loan. The company is
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required to pay a minimum payment
of $100,000 a months as well
as additional committed money
on the sale of non-core assets.
This arrangement includes interest
at 4%.
The current portion of the deferred
consideration consist of the
minimum payment of $100,000 and
a $2million payment on the expected
sale of Mooiplaats.
23. Borrowings
Secured - at amortised cost
Secured loans - 6,372
- 6,372
----------- -----------
Total current borrowings - 6,372
----------- -----------
Total borrowings - 6,372
----------- -----------
The carrying value of the Group's
interest bearing liabilities,
which consist of floating rate
interest bearing liabilities,
approximate fair value.
Investec bank facility
Loan advanced 6,372 10,997
Loan repaid (5,909) (3,752)
----------- -----------
463 7,245
Foreign exchange differences (463) (873)
----------- -----------
- 6,372
----------- -----------
The Company, through its wholly
owned subsidiary GVM Metals Administration
(South Africa) (Pty) Ltd has
secured an 18-month, ZAR210 million
(approximately US$20.0 million)
working capital facility from
Investec. The facility was repaid
in full during the current financial
year.
In addition, CoAL had issued
20 million options to Investec
which are exercisable at ZAR1.32
before October 2018.
Year ended Year ended
30 June 30 June
2015 2014
$'000 $'000
24. Provisions
Employee provisions 221 296
Biodiversity offset provision 2,773 2,151
Rehabilitation provisions 3,033 4,643
6,027 7,090
----------- -----------
Employee provisions
The provision for employees represents
unused annual leave entitlements.
Biodiversity offset provision
The Biodiversity offset agreement("BOA")
was signed by the Department
of Environmental Affairs ("DEA"),
South African National Parks
Board and the company to the
value of R55 million ($4.7 million)
over a 25 year period. The BOA
commits The Company to pay R55million
($4.4million) to the South African
National Parks Board over a period
of 25 years. The following payment
arrangement has been agreed:
Phase 1 - R2million paid in 2015
Phase 2 - R15million from year
2016 to 2021 (R2.5million annually)
Phase 3 - R13million from year
2022 to 2028 (R1.8million annually)
Phase 4 - R13million from 2029
to 2033 (R2.6million annually)
Phase 5 - R12million from 2034
to 2038 (R2.4million annually)
For the purpose of the present
value calculation these payments
have been assume as equal annual
payment and discounted at the
current South Africa inflation
rate of 6%.
Rehabilitation provision
Balance at beginning of year 4,643 4,903
Unwinding of discount 86 72
Change in assumptions on rehabilitation (1,051) -
provisions
Foreign exchange differences (645) (332)
----------- ---------------
Balance at end of year 3,033 4,643
----------- ---------------
The rehabilitation provision
represents the current cost of
environmental liabilities as
at the respective year end. An
annual estimate of the quantum
of closure costs is necessary
in order to fulfil the requirements
of the DMR, as well as meeting
specific closure objectives outlined
in the mine's Environmental Management
Programme ('EMP').
Although the ultimate amount
of the obligation is uncertain,
the fair value of the obligation
is based on information that
is currently available. This
estimate includes costs for the
removal of all current mine infrastructure
and the rehabilitation of all
disturbed areas to a condition
as described in the EMP.
The period assumed in the calculation
of the present value of the obligation
is the aggregate of the construction
period of the mine and the total
estimated life of mine.
The current estimate available
is inflated by the South African
inflation rate of 6% annually
and the discount rate applied
to establish the current obligation
is a South Africa government
bond rate at 30 June 2015 of
8.32% annually.
Due to the delay on the Vele
Colliery start-up the estimated
Life of mine has been extended
causing a decrease in the present
value of the environmental obligation.
The recent granting of the NOMR
in May 2015 resulted in a potential
construction start date only
in the second half of 2016. The
Makhado Project is still in Exploration
phase and no formal decision
to mine is currently in place.
Year ended Year ended
30 June 30 June
2015 2014
$'000 $'000
----------- -----------
Provisions have been analysed
between current and non-current
as follows:
Current 294 2,447
Non-current 5,733 4,643
----------- -----------
6,027 7,090
----------- -----------
Year ended Year ended
30 June 30 June
2015 2014
$'000 $'000
------------------------------------------------ ----------- -----------
25. Deferred tax
Deferred tax asset 2,320 2,694
2320 2,694
----------- -----------
The gross movement on the deferred
tax account is as follows:
Balance at beginning of year 2,694 2,885
Exchange differences (374) (191)
Balance at end of year 2,320 2,694
----------- -----------
The movement in deferred income tax assets and
liabilities during the year, without taking into
consideration the offsetting of balances within
the same tax jurisdiction, is as follows:
Deferred tax assets
Capital allowances (1)
Balance at beginning of year 2,694 2,885
Foreign exchange differences (374) (191)
----------- -----------
Balance at end of year 2,320 2,694
----------- -----------
Deferred income tax assets are
recognised for tax loss carry-forwards
to the extent that the realisation
of the related tax benefit through
future taxable profits is probable.
The group did not recognise deferred
income tax assets of $97 million
(2014: $101.7 million) in respect
of losses amounting to $158 million
(2014: $147.7 million) and unredeemed
capital expenditure of $176 million
(2014: $215.6 million) that can
be carried forward against future
taxable income.
1 - The deferred tax asset recognised
on capital allowances relates
to a portion of the capital expenditure
on the construction of the Vele
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plant. The recognition of the
asset is supported by the Life
of Mine model as future profits
will be available to utilise
the deferred tax asset.
Year ended Year ended
30 June 30 June
2015 2014
$'000 $'000
26. Trade and other payables
Trade payables 1,237 3,019
Accrued expenses 1,134 12,064
Other 348 -
-------------- -----------
2,719 15,083
-------------- -----------
The average credit period is
30 days. Interest at the South
African prime overdraft rate
is charged on overdue creditors.
27. Issued capital
Fully paid ordinary shares
1,743,568,613 (2014: 1,048,368,613)
fully paid ordinary shares 992,374 935,891
-------------- -----------
Movements in fully paid ordinary Number $'000
shares
-------------- -----------
At 30 June 2013 1,048,368,613 935,891
Issue of shares, net of issuance - -
costs
-------------- -----------
At 30 June 2014 1,048,368,613 935,891
-------------- -----------
Issue of shares, net of issuance
costs 695,200,000 56,483
-------------- -----------
At 30 Jun 2015 1,743,568,613 992,374
-------------- -----------
Holders of ordinary shares are
entitled to receive dividends
as declared from time to time
and are entitled to one vote
per share at shareholders meetings.
In the event of winding up of
the Company ordinary shareholders
rank after all other shareholders
and creditors and are fully entitled
to any proceeds of liquidation.
Changes to the then Corporations
Law abolished the authorised
capital and par value concept
in relation to share capital
from 1 July 1998. Therefore,
the Company does not have a limited
amount of authorised capital
and issued shares do not have
a par value.
Share options granted
Share options granted under the
Company's employee share option
plan carry no rights to dividends
and no voting rights. Further
details of the employee share
option plan are provided in note
30.
28. Accumulated deficit
Accumulated deficit at the beginning
of the financial year (790,964) (707,535)
Net loss attributed to Owners
of the Company (6,711) (84,120)
Transferred from share based
payment reserve 79,594 691
-------------- -----------
Accumulated deficit at the end
of the financial year (718,081) (790,964)
-------------- -----------
Year ended Year ended
30 June 30 June
2015 2014
$'000 $'000
29. Reserves
29.1 Reserves
Capital profits reserve 91 91
Share based payment reserve 7,205 82,464
Foreign currency translation
reserve (7,609) 52,263
----------- --------
(313) 134,818
----------- --------
Movements for the year can be
reconciled as follows:
Share-based payments reserve
Opening balance 82,464 82,438
Share options issued during the
year 4,335 717
Transfer from share based payment
reserve (79,594) (691)
----------- --------
Closing balance 7,205 82,464
----------- --------
Foreign currency translation
reserve
Opening balance 52,263 31,008
Exchange differences on translating
foreign operations (59,872) 21,255
----------- --------
Closing balance (7,609) 52,263
----------- -------- -----------
Nature and purpose of reserves:
Capital reserve
The capital profits reserve contains
capital profits derived during
previous financial years.
Share-based payment reserve
Share based payments represent
the value of unexercised share
options to Directors and employees.
Foreign currency translation
reserve
The foreign currency translation
reserve records the foreign currency
differences arising from the
translation of foreign operations.
30. Share-based payments
Employee share option plan
The Group maintains certain Employee Share Option Plans
('ESOP's') for executives and senior employees of the Group as per
the rules approved by shareholders on 30 November 2009. In
accordance with the terms of the schemes eligible executives and
senior employees may be granted options to purchase ordinary
shares.
Share options granted to Directors and Officers
The Group also grants share options to directors, officers,
lenders and equity funders of the Group outside the ESOP. In
accordance with the Group's policies, directors and officers may be
granted options to purchase ordinary shares.
Share Option Terms, Vesting Requirements and Options Outstanding
at 30 June 2015
Each option converts into one ordinary share of the Company on
exercise. No amounts are paid or payable by the recipient on
receipt of the option. The options hold no voting or dividend
rights, and are not transferable. Upon exercise of the options the
ordinary shares received rank equally with existing ordinary
shares.
The following share-based payment arrangements existed during
the financial period ended 30 June 2015:
-- 3,000,000 share options over ordinary shares in CoAL were
granted to Mr Farrell on 8 December 2009. The options allowed Mr
Farrell to take up ordinary shares at an exercise price of A$2.74
each. 2,000,000 of the options vested one year after the granting
of the NOMR for the Vele Colliery and the remaining 1,000,000
options vest one year after the granting of the Makhado Project
NOMR. The 3,000,000 options held no voting or dividend rights, were
not transferable and lapsed on 30 November 2014.
-- 2,500,000 share options over ordinary shares in CoAL were
granted to Mr Murray, previously Senior Independent Non-Executive
Director of CoAL, on 9 November 2010. The options allow Mr Murray
to take up ordinary shares at an exercise price of A$1.20 each. The
options are exercisable in equal tranches on or before 9 November
2015. The options hold no voting or dividend rights, and are not
transferable. 1,000,000 options vested on 8 November 2011, 750,000
on 8 November 2012 and the remaining 750,000 vested on 8 November
2013 and on conversion of the options to shares, the shares will
rank equally with existing shares. At reporting date, none of the
options had been taken up or had lapsed.
-- 1,540,561 options were granted on 4 February 2011 to eligible
employees of CoAL as part of the ESOP. The options issued are
exercisable prior to 30 September 2015 and have an exercise price
of A$1.40, or ZAR9.50. The options vest in equal tranches on 30
September 2011, 30 September 2012 and 30 September 2013. Upon
conversion the shares will rank equally with existing shares, are
not transferable and hold no voting or dividend rights. At
reporting date, none of the options had been taken up but 99,500
options have been cancelled.
-- 2,670,000 options were issued on 16 September 2011 to
eligible employees of CoAL as part of the ESOP. The options issued
are exercisable prior to 14 February 2017 and have an exercise
price of A$1.40 or ZAR7.60. The options vest in equal tranches on 1
July 2012, 1 July 2013 and 1 July 2014. Upon conversion the shares
will rank equally with existing shares, are not transferable and
hold no voting or dividend rights. At reporting date, none of the
options had been taken up or had lapsed.
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-- 2,500,000 options over ordinary shares in CoAL were granted
to Mr Brown on 28 November 2012 for his role as Executive Chairman.
The options allow the holder to take up ordinary shares at an
exercise price of GBP0.25 each and are exercisable on or before 30
November 2015. The options hold no voting or dividend rights and
are not transferable. Upon conversion of the options to shares, the
shares would rank equally with existing shares. At reporting date,
none of the options had been taken up or had lapsed.
-- 1,000,000 options over ordinary shares in CoAL were granted
to Mr Pryor on 28 November 2012 for his role as Non-Executive
Director. The options allow the holder to take up ordinary shares
at an exercise price of GBP0.25 each and are exercisable on or
before 30 November 2015. The options hold no voting or dividend
rights and are not transferable. Upon conversion of the options to
shares, the shares would rank equally with existing shares. At
reporting date, none of the options had been taken up or had
lapsed.
-- 3,932,938 options were granted on 22 November 2013 to
eligible employees of CoAL as part of the ESOP. The options are
exercisable prior to 30 June 2017 and have an exercise price of
ZAR1.75. Two thirds of the options vested immediately and the
remaining third on 1 July 2014. Upon conversion the shares will
rank equally with existing shares, are not transferable and hold no
voting or dividend rights. At reporting date, none of the options
had been taken up or had lapsed.
-- 4,125,000 options were issued on 22 November 2013 as part of
the ESOP to Mr Meeser, previously Chief Financial Officer and
Executive Director of CoAL. The options issued are exercisable
prior to 1 June 2018 and have an exercise price of ZAR2.00.
1,375,000 options vested on 30 June 2014 and the balance were due
to vest in equal tranches on 1 June 2015 and 1 June 2016. Upon
conversion the shares will rank equally with existing shares, are
not transferable and hold no voting or dividend rights. Mr Meeser
resigned on 30 April 2015 and the 2,750,000 options that had not
vested were cancelled. At reporting date, none of the 1,375,000
vested options had been taken up or had lapsed.
-- The Company finalised an 18-month, ZAR210 million working
capital facility from Investec Bank Limited during October 2013 and
announced that it would issue 20,000,000 Options to Investec. The
20,000,000 shareholder approved options were issued on 30 January
2015 and have an exercise price of ZAR1.32 and expire on 21 October
2018. Upon conversion the shares will rank equally with existing
shares, are not transferable and hold no voting or dividend rights.
At reporting date, none of the options had been taken up or had
lapsed.
-- 10,575,000 options were awarded to Mr Brown on his
appointment as Chief Executive Officer and Executive Director of
the Company. The options were approved by shareholders on 28
November 2014 and issued on 30 January 2015 under the ESOP vesting
in three equal tranches of 3,525,000 options on 1 February 2015, 1
February 2016 and 1 February 2017 respectively. The Options will
expire on 1 February 2019 and are otherwise subject to the terms of
the ESOP. Upon conversion the shares will rank equally with
existing shares, are not transferable and hold no voting or
dividend rights. At reporting date, none of the options had been
taken up or had lapsed.
-- On 1 June 2015 the Company issued 40,000,000 options to TMM
(Pty) Ltd as part of the three stage equity raise process. The
options have an exercise price of ZAR0.30 each and expire in 1 June
2016. Upon conversion the shares will rank equally with existing
shares, are not transferable and hold no voting or dividend rights.
At reporting date, none of the options had been taken up or had
lapsed.
There has been no alteration of the terms and conditions of the
above share based payment arrangements since the grant date.
The following share-based payment arrangements were in existence
at the end of the current year:
Fair Weighted
value average
at remaining
Grant Expiry Exercise grant contractual
Option series Number date date price date life
--------------- ----------- ----------- ----------- ----------- -------- -------------
Class C
unlisted 0.00
options 2,500,000 09/11/2010 09/11/2015 A$1.20 A$0.59 years
ESOP unlisted 0.00
options 1,441,061 04/02/2011 30/09/2015 A$1.40 A$0.91 years
Class L
unlisted 0.02
options 3,500,000 28/11/2012 30/09/2015 GBP0.25 A$0.05 years
ESOP unlisted 0.05
options 2,670,000 16/09/2011 14/02/2017 A$1.40 ZAR3.46 years
ESOP unlisted 0.09
options 3,932,928 22/11/2013 30/06/2017 ZAR1.75 ZAR0.52 years
ESOP unlisted 0.05
options 1,375,000 22/11/2013 01/06/2018 ZAR2.00 ZAR0.56 years
Investec 0.77
options 20,000,000 30/01/2015 21/10/2018 ZAR1.32 ZAR0.75 years
ESOP unlisted 30/01/2015 0.15
options 3,525,000 01/02/2019 ZAR1.20 ZAR0.15 years
ESOP unlisted 3,525,000 30/01/2015 01/02/2019 0.15
options ZAR1.32 ZAR0.14 years
ESOP unlisted 3,525,000 30/01/2015 01/02/2019 0.15
options ZAR1.40 ZAR0.12 years
TMM options 01/06/2015 01/06/2016 ZAR0.30 ZAR0.77 0.43
40,000,000 years
85,993,989
-----------
Fair value of share options granted during the year
The weighted average fair value of share options granted during
the financial year is A$0.07 (2014: A$0.06). Options were priced
using a binomial option pricing model and the Black-Scholes option
pricing model was used to validate the price calculated. Where
relevant, the expected life used in the model has been adjusted
based on management's best estimate of the effects of
non-transferability, exercise restrictions (including the
probability of meeting market conditions attached to the option),
and behavioural considerations.
Expected volatility is calculated by Hoadley's volatility
calculator for one, two and three year periods and a future
estimated volatility level of 55% was used in the pricing
model.
Inputs into the binomial option pricing model for the current
financial year were as follows (validated using the Black-Scholes
valuation model):
ESOP grants(1) ESOP grants(1) ESOP grants(1) Investec grant(2) TMM grant(3)
----------------------------- --------------- --------------- --------------- ------------------ -------------
Closing share price on issue ZAR0.53 ZAR0.53 ZAR0.53 ZAR1.35 ZAR1.04
date
Exercise price ZAR1.20 ZAR1.32 ZAR1.45 ZAR1.32 ZAR0.30
Expected volatility 55.0% 55.0% 55.0% 55.0% 80.0%
Option life remaining 4.2 years 4.2 years 4.2 years 5.0 years 1.0 years
Dividend yield 0% 0% 0% 0% 0%
Risk free interest rate 6.92% 6.92% 6.92% 6.64% 6.7%
1. Options granted to Mr D Brown under the ESOP in terms of his
appointment as Chief Executive Officer.
2. Options granted to Investec in terms of the working capital facility.
3. Options granted to TMM in terms of the three stage equity raise process.
The total share based payment expense recognised in the current
financial year is $3,063,987.
Inputs into the binomial option pricing model for the prior
financial year were as follows (validated using the Black-Scholes
valuation model):
ESOP grants(1) ESOP grants(2)
----------------------------------- --------------- ---------------
Closing share price on issue date ZAR1.33 ZAR1.33
Exercise price ZAR1.75 ZAR2.00
Expected volatility 55.0% 55.0%
Option life remaining 3.0 years 3.9 years
Dividend yield 0% 0%
Risk free interest rate 6.85% 7.12%
(1) Options granted to staff in terms of the ESOP
(2) Options granted to Mr Meeser under the ESOP in terms of his appointment as Financial Director
Movement in share options
Year ended Year ended
30 June 30 June
2015 2014
Number Number
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------------ -----------
Options outstanding at beginning
of year 21,168,990 13,929,562
Options expired (3,000,001) (818,500)
Options cancelled (2,750,000) -
Options granted 70,575,000 8,057,928
Options exercised - -
------------ -----------
Options outstanding at end of
year 85,993,989 21,168,990
------------ -----------
Weighted average exercise price
(A$) 0.17 0.82
Options exercisable 78,943,989 15,218,014
Share options exercised during the year
No share options were exercised during the period.
Share options outstanding at the end of the year
The share options outstanding at the end of the year had a
weighted average exercise price of A$0.17 (2014: A$0.82) and a
weighted average contractual life of 1.86 years (2014: 2.19
years).
Year ended Year ended
30 June 30 June
2015 2014
$'000 $'000
----------- -----------
31. Non-controlling interest
Non-controlling interests comprise
the following:
Freewheel Trade and Invest 37
Proprietary Limited 575 575
575 575
----------- -----------
32. Financial instruments
32.1 Capital management
The Group manages its capital to ensure that entities in the
Group will be able to continue as going concerns while maximising
the return to stakeholders through the optimisation of the debt and
equity balance. The Group's overall strategy remains unchanged.
The capital structure of the Group consists of net debt
(borrowings as detailed in note 23) and equity of the Group
(comprising issued capital, reserves, retained earnings and
non-controlling interests as detailed in notes 27 to 29).
The Group is not subject to any externally imposed capital
requirements.
The Group's risk management committee reviews the capital
structure of the Group on a semi-annual basis. As part of this
review, the committee considers the cost of capital and the risks
associated with each class of capital. The Group has reached its
target gearing ratio of 0% determined as the proportion of net debt
to equity. During 2014 the gearing ratio was higher than the target
range due to the time delay in the sale of non-core assets.
Year Year
ended ended
30 June 30 June
2015 2014
$'000 $'000
--------- ---------
Debt (1) - 6,372
Net debt - 6,372
--------- ---------
Equity (2) 273,980 282,471
--------- ---------
Net debt to equity ratio - 2.3%
--------- ---------
1. Debt is defined as long-term and short-term borrowings as described in note 23.
2. Equity includes all capital and reserves of the Group that are managed as capital.
32.2 Categories of financial instruments
The accounting policies for financial
instruments have been applied
to the line items below:
Year Year
ended ended
30 June 30 June
2015 2014
$'000 $'000
--------- ---------
Financial assets
Other receivables 1,746 2,245
Trade and other receivables 792 1,902
Cash and cash equivalents 17,759 2,017
Restricted cash 1,023 5,153
Other Financial Assets 3,879 2,217
Total financial assets 25,199 13,534
--------- ---------
Year Year
ended ended
30 June 30 June
2015 2014
$'000 $'000
---------------------------------- ---------- ---------
Financial liabilities
Deferred consideration 18,687 29,800
Borrowings - 6,372
Trade and other payables 2,719 15,083
Total financial liabilities 21,406 51,255
---------- ---------
Fair value of financial assets
and liabilities
The fair value of a financial asset or a financial
liability is the amount at which the asset
could be exchanged or liability settled in
a current transaction between willing parties
in an arm's length transaction. The fair values
of the Group's financial assets and liabilities
approximate their carrying values, as a result
of their short maturity or because they carry
floating rates of interest.
All financial assets and liabilities recorded
in the consolidated financial statements approximate
their respective fair values.
The following table provides an analysis of
financial instruments that are measured subsequent
to initial recognition at fair value, grouped
into Level 1 to 3, based on the degree to which
the fair value is observable.
Level 1 fair value measurements are those derived
from quoted prices in active markets for identical
assets or liabilities.
Level 1 financial assets comprise deposits
and listed securities (note 17).
Level 2 fair value measurements are those derived
from inputs other than quoted prices included
within Level 1 that are observable for the
asset or liability, either directly or indirectly.
Level 2 financial assets comprise investments
with investment firms. These investments serve
as collateral for rehabilitation guarantees.
The fair value has been determined by the investment
firms' fund statement (note 17).
Level 3 fair value measurements are those derived
from valuation techniques that include inputs
for the asset or liability that are not based
on observable market data.
There were no assets reclassified into / out
of FVTPL during the year nor were any assets
transferred between levels.
Financial instruments (continued)
As at 30 Level 1 Level Level Total
June 2015 2 3
------------ ----------- ------ ------ ------
Financial
assets at
FVTPL 734 3,145 - 3,879
As at 30 Level 1 Level Level Total
June 2014 2 3
------------ ----------- ------ ------ ------
Financial
assets at
FVTPL 1,251 966 - 2,217
32.3 Financial risk management objectives
The Group's Corporate Treasury function provides services to the
business, co-ordinates access to domestic and international
financial markets, monitors and manages the financial risks
relating to the operations of the Group through internal risk
reports which analyse exposures by degree and magnitude of risks.
These risks include market risk (including currency risk, fair
value interest rate risk and price risk), credit risk, liquidity
risk and cash flow interest rate risk.
The Corporate Treasury function reports quarterly to the Group's
risk management committee, an independent body that monitors risks
and policies implemented to mitigate risk exposures.
32.4 Market risk
Foreign exchange risk
The Group operates internationally and is exposed to foreign
exchange risk arising from various currency exposures, primarily
with respect to the Australian dollar and the US dollar. Foreign
exchange risk arises from future commitments, assets and
liabilities that are denominated in a currency that is not the
functional currency. Most of the Company's purchases are
denominated in SA rand. However, certain items during the
exploration, development and plant construction phase as well as
long lead-capital items are denominated in US dollars, Euros or
Australian dollars. These have to be acquired by the South African
operating company due to the South African Reserve Bank's Foreign
Exchange Control Rulings. This exposes the South African subsidiary
companies to changes in the foreign exchange rates.
The Group's cash deposits are largely denominated in US dollar
and SA rand. A foreign exchange risk arises from the funds
deposited in US dollar which will have to be exchanged into the
functional currency for working capital purposes.
The Group generally does not enter into forward sales,
derivatives or other hedging arrangements to manage this risk.
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At financial period end, the financial instruments exposed to
foreign currency risk movements are as follows:
Held Held Held Held Total
Balances at in ZAR in GBP in AUD in USD $'000
30 June 2015 $'000 $'000 $'000 $'000
-------------------------- -------- -------- -------- -------- ---------
Financial assets
Other receivables 1,746 - - - 1,746
Trade and
other receivables 701 - 91 - 792
Cash(1) and
cash equivalents 13,698 597 44 4,443 18,782
-------- -------- -------- -------- -------
Total financial
assets 16,145 597 135 4,443 21,320
-------- -------- -------- -------- -------
(1) . Cash
includes restricted
cash
Financial liabilities
Deferred consideration - - - 18,687 18,687
Borrowings - - - - -
Trade and
other payables 1,462 1,257 - 2,719
Total financial
liabilities 1,462 - 1,257 18,687 21,406
-------- -------- -------- -------- ---------
Held Held Held Held Total
in ZAR in GBP in AUD in USD $'000
Balances at $'000 $'000 $'000 $'000
30 June 2014
-------------------------- -------- -------- -------- -------- -------
Financial assets
Other receivables 2,245 - - - 2,245
Trade and
other receivables 1,233 - 669 - 1,902
Cash(1) and
cash equivalents 6,433 3 227 507 7,170
-------- -------- -------- -------- -------
Total financial
assets 9,911 3 896 507 11,317
-------- -------- -------- -------- -------
(1) . Cash
includes restricted
cash
Financial liabilities
Deferred consideration 29,800 29,800
Borrowings 6,372 - - - 6,372
Trade and
other payables 3,620 161 138 11,164 15,083
Total financial
liabilities 9,992 161 138 40,964 51,255
-------- -------- -------- -------- -------
Balances classified as held for sale are not included in the
above tables, or discussed in the subsequent narrative.
The following table details the Group's sensitivity to a 10%
increase and decrease in the US dollar against the relevant foreign
currencies. 10% is the sensitivity rate used when reporting foreign
currency risk internally to key management personnel and represents
management's assessment of the reasonably possible change in
foreign exchange rates. The sensitivity analysis includes only
outstanding foreign currency denominated monetary items and adjusts
their translation at the year-end for a 10% change in foreign
currency rates. The sensitivity analysis includes external loans as
well as loans to foreign operations within the Group where the
denomination of the loan is in a currency other than the functional
currency of the lender or the borrower. A positive number below
indicates an increase in profit or equity where the US dollar
strengthens 10% against the relevant currency. For a 10% weakening
of the US dollar against the relevant currency, there would be a
comparable impact on the profit or equity, and the balances below
would be negative.
Year ended Year ended
30 June 30 June
2015 2014
Impact on profit / (loss) $'000 $'000
----------------------------------- ----------- -------- -----------
Judgements on reasonable possible
movements
USD/ZAR increase by 10% (2,355) (3,136)
USD/ZAR decrease by 10% 2,355 3,136
----------------------------------- ----------- --------
32.5 Interest rate risk management
The Group's interest rate risk arises mainly from short-term
borrowings, cash and bank balances and restricted cash. The Group
has variable interest rate borrowings. Variable rate borrowings
expose the group to cash flow interest rate risk.
The Group has not entered into any agreements, such as hedging,
to manage this risk.
The following table summarises the sensitivity of the financial
instruments held at the reporting date, following a movement in
variable interest rates, with all other variables held constant.
The sensitivities are based on reasonably possible changes over a
financial period, using the observed range of actual historical
rates.
Year ended Year ended
30 June 30 June
2015 2014
Impact on profit / (loss) $'000 $'000
----------------------------------- ----------- ----- -----------
Judgements on reasonable possible
movements
Increase of 0.2% in LIBOR 40 (1)
Decrease of 0.2% in LIBOR (40) 1
Increase of 1.0% in JIBAR 202 (60)
Decrease of 1.0% in JIBAR (202) 60
----------------------------------- ----------- -----
The impact is calculated on the net financial instruments
exposed to variable interest rates as at reporting date and does
not take into account any repayments of short-term borrowings.
32.6 Credit risk
Credit risk is the risk that a contracting entity will not
complete its obligation under a financial instrument that will
result in a financial loss to the Group. The carrying amount of
financial assets represents the maximum credit exposure. Receivable
balances are monitored on an ongoing basis with the result that the
Group's exposure to bad debts is not significant.
At year end there is no significant concentration of credit risk
represented in the cash and cash equivalents, restricted cash and
trade accounts receivables balance. The Group manages its credit
risk by predominantly dealing with counterparties with a positive
credit rating.
The credit risk on liquid funds and derivative financial
instruments is limited because the counterparties are banks with
high credit-ratings assigned by international credit-rating
agencies.
32.7 Liquidity risk
The liquidity position of the Group is managed to ensure
sufficient liquid funds are available to meet financial commitments
in a timely and cost effective manner. The Group's Executive
continually reviews the liquidity position including cash flow
forecasts to determine the forecast liquidity position and maintain
appropriate liquidity levels.
The concentration of cash balances on hand in geographical areas
was as follows:
United Australia South Total
Balances at Kingdom $'000 Africa $'000
30 June 2015 $'000 $'000
----------------- --------- ---------- -------- -------
Cash and cash
equivalents 5,020 45 13,717 18,782
--------- ---------- -------- -------
5,020 45 13,717 18,782
--------- ---------- -------- -------
United Australia South Total
Balances at Kingdom $'000 Africa $'000
30 June 2014 $'000 $'000
----------------- --------- ---------- -------- -------
Cash and cash
equivalents 514 200 6,456 7,170
--------- ---------- -------- -------
514 200 6,456 7,170
--------- ---------- -------- -------
The contractual maturities of the Group's financial liabilities
at the reporting date were as follows:
Less than Between Greater Total
6 months 6 - 12 than 12
Balances at $'000 months months $'000
30 June 2015 $'000 $'000
------------------------ ---------- -------- --------- -------
Deferred consideration 2,600 665 16,600 19,865
Borrowings(1) - - - -
Trade and other
payables 2,719 - - 2,719
5,319 665 16,600 22,584
---------- -------- --------- -------
1. Interest bearing at rates between 4 % and 10 %
Less Between Greater Total
than 6 - 12 than 12
Balances at 30 6 months months months $'000
June 2015 $'000 $'000 $'000
--------------------------- ---------- -------- --------- -------
Other receivables 1,746 - - 1,746
Trade and other
receivables 792 - - 792
Cash and cash equivalents 17,759 - - 17,759
Restricted cash 1,023 - - 1,023
Other financial
assets 468 - 3,411 3,879
21,788 - 3,411 25,199
-------------------------------------- -------- --------- -------
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September 10, 2015 07:00 ET (11:00 GMT)
Less than Between Greater Total
6 months 6 - 12 than 12
Balances at $'000 months months $'000
30 June 2014 $'000 $'000
------------------------ ---------- -------- --------- -------
Deferred consideration 29,800 - - 29,800
Borrowings(1) 6,372 - - 6,372
Trade and other
payables 15,083 - - 15,083
51,255 - - 51,255
---------- -------- --------- -------
1. Interest bearing at rates between 4 % and 10 %
Less than Between Greater Total
6 months 6 - 12 than 12
Balances at $'000 months months $'000
30 June 2014 $'000 $'000
------------------------ ---------- -------- --------- ---------
Other Receivables - 2,826 - 2,826
Trade and Other
Receivables 1,902 - - 1,902
Cash and Cash
Equivalent 2,017 - - 2,017
Restricted
Cash 287 - - 287
Other financial
assets 618 - - 618
4,824 2,826 - 7,650
---------- -------- --------- ---------
33. Notes to the
statement of cash
flows
Year Year
ended ended
30 June 30 June
2015 2014
Note $'000 $'000
-------------------------------------- ----- --------- ---------
Reconciliation of cash
For the purposes of the consolidated
statement of cash flows,
cash and cash equivalents
include cash on hand and
in banks, net of outstanding
bank overdrafts. Cash and
cash equivalents at the end
of the reporting period as
shown in the consolidated
statement of cash flows can
be reconciled to the related
items in the consolidated
statement of financial position
as follows:
Cash and bank balances 20 17,882 2,099
Reconciliation of loss before
tax to net cash used in operations
Loss before tax (continuing
operations and operations
held for sale) (6,711) (84,120)
Add back:
Depreciation 497 1,106
Amortisation 975 1,069
Impairment losses - 14,933
Share-based payment 3,064 717
Re-valuation of investments 281 576
Re-valuation of inventory 847
Sundry income (non-cash) (487) (4,486)
Gain on revaluation of Deferred (1,303) -
Consideration
Movement in provisions 368 555
Finance costs (net) 1,504 1,286
Loss on sale of assets - 42
Foreign exchange (gains)
/ losses on operating activities (14,504) 36,725
Changes in working capital
Decrease in inventories 4 568
Decrease in trade and other
receivables 1,282 1,365
(Decrease) / increase in
trade and other payables (935) 8,196
--------- ---------
Cash used in operations (15,121) (21,468)
--------- ---------
34. Contingencies and commitments
Contingent liabilities as outlined below:
Ferret Mining & Environmental Services Proprietary
Limited
During the period, Ferret's 26% shareholding in Mooiplaats
Mining Limited was re-instated. Although they are not entitled to
any assets or claims in the Mooiplaats group, they are entitled to
receive ZAR15million (US$1.0 million) upon the successful disposal
of the Mooiplaats Colliery.
Issue of Share Options to De Wet Schutte
In terms of his appointment as Chief Financial officer, Mr
Schutte is entitled to receive 6,600,000 options in three equal
tranches over a three year period (Year 1: 2,200,000 at ZAR 1, 20,
Year 2: 2,200,000 at ZAR 1, 32, Year 3: 2,200,000 at ZAR 1, 45)
These are granted in accordance with the Company's employee share
option plan and are subject to shareholder approval.
Makhado Water Commitment
CoAL has agreed to acquire water allocation for the Makhado
Project from water users situated near the proposed colliery and
the Company has undertaken to increase supply assurance without
impacting negatively on the water available for agriculture. The
parties have in principle agreed to avoid endangering local
agriculture by creating new water, primarily by reducing losses,
improving distribution and countering leakages and evaporation. The
creation of new water will be financed either through CoAL's funds,
outside funding or a Public-Private-Partnership with one or more
organs of State or other appropriate entities.
The overall objective is the co-existence of mining and
agriculture and includes a feasibility study and the completion of
projects identified in the study which will facilitate the creation
of new water. In terms of the agreement, the Company will be
required to pay a total of $7.9 million. The first payments of $1.8
million are due 90 and 180 days after the granting of the IWUL, a
further $0.6 million is payable eight months after the IWUL is
granted and the balance within five years of the granting.
Commitments
In addition to the commitments of the parent entity as disclosed
under note 38, subsidiary companies have financial commitments in
terms of the NOMR granted by the South African DMR. The commitments
are based on the revenue generated by the colliery during the
financial year, and/or quantities of coal sold by the colliery
during the financial year.
35. Related party disclosures
The aggregate compensation made to directors and other members
of key management personnel of the company and the Group is set out
below:
Year ended Year ended
30 June 30 June
2015 2014
$ $
------------------------------ ----------- -----------
Short-term employee benefits 1,288,914 1,882,235
Post-employment benefits 9,552 15,812
Termination benefits - -
Share-based payments 131,485 253,053
----------- -----------
1,429,951 2,151,100
----------- -----------
The Group has not provided any of its key management personnel
with loans.
Balances and transactions between the Company and its
subsidiaries, which are related parties of the Company, have been
eliminated on consolidation and are not disclosed in this note.
36. Controlled entities
Particulars in relation to controlled
entities
Year Year
ended ended
30 30
June June
2015 2014
Country
of incorporation % %
Bakstaan Boerdery Proprietary South
Limited * Africa 100 100
Baobab Mining & Exploration South
Proprietary Limited** Africa
Chapudi Coal Proprietary Limited South
*** Africa
Coal of Africa Plc**** Jersey
Coal of Africa & ArcelorMittal South
Analytical Laboratories Proprietary Africa
Limited Australia
Cove Mining NL Australia
Evoc Mining NL**** South
Freewheel Trade and Invest 37 Africa
Proprietary Limited South
Fumaria Property Holdings Proprietary Africa
Limited Australia
Golden Valley Services Proprietary Australia
Limited South
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Greenstone Gold Mines NL**** Africa
GVM Metals Administration (South South 100 100
Africa) Proprietary Limited Africa 74 74
Harrisia Investments Holdings South - 100
Proprietary Limited Africa 50 50
Holfontein Investments Proprietary South 100 100
Limited Africa - 100
Kwezi Mining Exploration Proprietary South 100 100
Limited *** Africa 100 100
Langcarel Proprietary Limited South 100 100
***** Africa - 100
Limpopo Coal Company Proprietary South 100 100
Limited Africa 100 100
MbeuYahsu Proprietary Limited South 74 74
Mooiplaats Mining Limited Africa 74 74
Regulus Investment Holdings South 74 74
Proprietary Limited Africa 100 100
Silkwood Trading 14 Proprietary South 74 74
Limited Africa 74 74
Tshikunda Mining Proprietary South 100 100
Limited Africa 100 100
Tshipise Energy Investments South 60 60
Proprietary Limited Africa 50 50
------------------------------------------------------------ --------------------- ------- -------
* Subsidiary company of Fumaria Property
Holdings Proprietary Limited
** 74% on completion of the Makhado Project
BBBEE transactions
*** Subsidiary companies of MbeuYashu Proprietary
Limited
**** Deregistered
***** Subsidiary company of Mooiplaats Mining
Limited
37. Events after the reporting period
Post year end, the following significant events took place:
-- Entering into a Subscription Agreement and a Loan Agreement
with Singapore registered Yishun Brightrise Investment PTE Limited
("Yishun") whereby Yishun will acquire up to 183,231,261 ordinary
shares for 5.15 British pence each raising approximately GBP9.4
million (approximately $14.7 million) conditional upon, CoAL
shareholder approval on the 14(th) of September 2015. The Company
and Yishun have also entered into a Loan Agreement in terms of
which Yishun has agreed to lend CoAL $10 million conditional upon
the Company's shareholders approving the issue of the 183,231,261
shares. The loan will bear no interest and is only repayable in
limited circumstances.
There have been no other events between 30 June
2015 and the date of this report which necessitate
adjustment to the consolidated statements of
comprehensive income or consolidated statements
of financial position at that date.
38. Parent entity financial information
Parent entity
Year ended Year ended
30 June 30 June
2015 2014
$'000 $'000
Summary financial information
Non-current assets 270,405 444,433
Current assets 6,806 3,205
----------- -----------
Total assets 277,211 447,638
----------- -----------
Current liabilities 5,389 18,758
----------- -----------
Total liabilities 5,389 18,758
----------- -----------
Net assets 271,822 428,880
----------- -----------
Shareholders' Equity
Issued capital 992,374 935,891
Accumulated deficit (887,836) (649,416)
Reserves 167,284 142,405
----------- -----------
271,822 428,880
----------- -----------
Loss for the year (238,420) (175,336)
----------- -----------
Total comprehensive loss (238,420) (175,336)
----------- -----------
Commitments
-- Coal has subordinated all loans to subsidiary companies
COAL OF AFRICA LIMITED
AUDIT OPINION
Deloitte Touche Tohmatsu
A.C.N. 74 490 121 060
Woodside Plaza
Level 14
240 St Georges Terrace
Perth WA 6000
GPO Box A46
Perth WA 6837 Australia
DX 206
Tel: +61 (0) 8 9365 7000
Fax: +61 (0) 8 9365 7001
www.deloitte.com.au
Independent Auditor's Report to the members of Coal of Africa
Limited
Report on the Financial Report
We have audited the accompanying financial report of Coal of
Africa Limited, which comprises the statement of financial position
as at 30 June 2015, the statement of profit or loss and other
comprehensive income, the statement of cash flows and the statement
of changes in equity for the 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 year's end or from time to time during the
financial year as set out on pages 38 to 102.
Directors' Responsibility for the Financial Report
The directors of the company are responsible for the preparation
of the 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
financial report that gives a true and fair view and is free from
material misstatement, whether due to fraud or error. In Note 2,
the directors also state, in accordance with Accounting Standard
AASB 101 Presentation of Financial Statements, that the
consolidated financial statements comply with International
Financial Reporting Standards.
Auditor's Responsibility
Our responsibility is to express an opinion on the financial
report based on our audit. We conducted our audit in accordance
with Australian Auditing Standards. Those standards require that we
comply with relevant ethical requirements relating to audit
engagements and plan and perform the audit to obtain reasonable
assurance whether the financial report is free from material
misstatement.
An audit involves performing procedures to obtain audit evidence
about the amounts and disclosures in the financial report. The
procedures selected depend on the auditor's judgement, including
the assessment of the risks of material misstatement of the
financial report, whether due to fraud or error. In making those
risk assessments, the auditor considers internal control, relevant
to the company's preparation of the financial report that gives a
true and fair view, in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the company's
internal control. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness
of accounting estimates made by the directors, as well as
evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our audit
opinion.
Auditor's Independence Declaration
In conducting our audit, 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 Coal of Africa Limited,
would be in the same terms if given to the directors as at the time
of this auditor's report.
Opinion
In our opinion:
(a) the financial report of Coal of Africa Limited is in
accordance with the Corporations Act 2001, including:
(i) giving a true and fair view of the consolidated entity's
financial position as at 30 June 2015 and of its performance for
the year ended on that date; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
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