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Audited consolidated financial statements for the year ended 30 June 2018
Resource Generation Limited
Registration number ACN 059 950 337
(Incorporated and registered in Australia)
ISIN: AU000000RES1
Share Code on the ASX: RES
Share Code on the JSE: RSG
("Resgen" or the “Company”)
ASX/JSE Release
Resource Generation Limited today released its audited consolidated
financial statements for the year ended 30 June 2018.
The financial statements were approved by the Board of Directors and
signed by Lulamile Xate (Chairman). The Directors take full
responsibility for the preparation of the annual report and that the
financial information has been correctly extracted from the underlying
annual financial statements. This summarised report is extracted from
audited information, but is not itself audited. The annual financial
statements were audited by Deloitte Touche Tohmatsu and their audit
opinion is available for inspection at the Company's registered office.
Auditors’ report includes the following emphasis of matter paragraph:
We draw attention to Note 1(a) in the financial report, which indicates
that the Group incurred a net loss of $10.3 million (2017: $2.0 million)
and used net cash in operating activities of $5.8 million (2017: $4.1
million) during the year ended 30 June 2018. As stated in Note 1(a),
these events or conditions, along with other matters as set forth in
Note 1(a), indicate that a material uncertainty exists that may cast
significant doubt on the Company’s and Group’s ability to continue as a
going concern. Our opinion is not modified in respect of this matter.
The full set of financial statements are available on Resource
Generations Limited’s website. www.resgen.com.au
Any forward looking statements have not been reviewed nor audited by the
Company’s external auditors.
Extracts from the financial statements for the year ended 30 June 2018
may be found below.
Contacts
Leapeetswe Molotsane, Interim CEO & MD on +27 11 010 6310 or
Michael Meintjes, Company Secretary on +61 413 706 143
Media enquiries
Russell and Associates on +27 11 880 3924
Johannesburg
17 September 2018
JSE Sponsor: Deloitte & Touche Sponsor Services (Pty) Limited
Resource Generation Limited (Resgen) is an emerging ASX and JSE-listed
energy company, currently developing the Boikarabelo Coal Mine in South
Africa’s Waterberg region. The Waterberg accounts for around 40% of the
country’s currently known coal resources. The Coal Resources and Coal
Reserves for the Boikarabelo Coal Mine, held through the operating
subsidiary Ledjadja Coal, were recently updated based upon a new mine
plan and execution strategy. The Boikarabelo Coal Resources total 995Mt
and the Coal Reserves total 267Mt applying the JORC Code 2012 (SENS
announcement dated 23 January 2017).
Consolidated statement of profit or loss and other
comprehensive income
For the year ended 30 June 2018
Consolidated
2018 2017
$'000 $'000
Revenue from continuing
operations
218 182
Other
333 577
551 759
Administration, rent and
corporate (3,211) (3,606)
Depreciation of property plant
and equipment
(380) (387)
Employees benefits expense
(2,467) (2,640)
Finance expenses (1,626) (3)
Share based compensation
(203) (355)
Foreign exchange movements
(3,006) 4,257
Loss before income tax
(10,342) (1,975)
Income tax expense - 1
Loss from continuing operations
(10,342) (1,974)
Loss for the year (10,342) (1,974)
Other comprehensive income, net
of income tax
Items that may be reclassified
subsequently to profit and loss
when specific conditions are met
Exchange differences on
translation of foreign
operations
(1,854) 13,648
Total comprehensive
(loss)/income
(12,196) 11,674
Loss is attributable to:
Owners of Resource Generation
Limited
(10,342) (1,974)
Total comprehensive
(loss)/income for the year is
attributable to:
Owners of Resource Generation
Limited (12,196) 11,674
Headline earnings (10,342) (1,974)
Earnings per share (EPS) (cents)
(1.8) (0.3)
Headline earnings per share
(HEPS)(cents)
(1.8) (0.3)
Consolidated statement of financial position
As at 30 June 2018
Consolidated
2018 2017
$'000 $'000
Current assets
Cash and cash
equivalents 1,729 4,682
Trade and other
receivables 82 170
Deposits and
prepayments 168 180
1,979 5,032
Non-current assets
Property, plant and
equipment 32,323 33,081
Mining tenements and
mining development 161,719 153,677
Deposits and loan
receivables 1,207 2,042
195,249 188,800
TOTAL ASSETS 197,228 193,832
Current liabilities
Trade and other
payables 6,302 8,185
Provisions 563 300
Borrowings 19,660 12,665
26,525 21,150
Non-current
liabilities
Provisions 2,150 2,175
Borrowings 44,420 34,115
Royalties payable 1,645 1,869
48,215 38,159
TOTAL LIABILITIES 74,740 59,309
NET ASSETS 122,488 134,523
Equity
Contributed equity 223,622 223,622
Reserves (38,603) (36,910)
Accumulated losses (62,531) (52,189)
TOTAL EQUITY 122,488 134,523
Consolidated statement of changes in equity
For the year ended 30 June 2018
Contri-
buted Retained Total
equity Reserves earnings equity
$'000 $'000 $'000 $'000
Balance at 30 June 2016 223,622 (50,955) (50,215) 122,452
Loss for the year - - (1,974) (1,974)
Other comprehensive income
for the year - exchange
differences on translation of
foreign operations - 13,648 - 13,648
Total comprehensive
income/(loss) for the year - 13,648 (1,974) 11,674
Transactions with owners in
their capacity as owners:
Transfer of option reserve to
earnings - 42 - 42
Employee share plan – value
of employees - 204 - 204
Employee share options -
value of employee services - 151 - 151
- 397 - 397
Balance at 30 June 2017 223,622 (36,910) (52,189) 134,523
Loss for the year - - (10,342) (10,342)
Other comprehensive loss
for the year – exchange differences
on translation of foreign
operations - (1,854) - (1,854)
Total comprehensive
loss for the year - (1,854) (10,342) (12,196)
Transactions with owners in their capacity as owners
Treasury shares to be issued
vesting 30 June 2018 - (42) - (42)
Employee share plan
value of employee services - 116 - 116
Employee share plan
Value of employee service - 87 - 87
- 161 - 161
Balance at 30 June 2018 223,622 (38,603) (62,531) 122,488
For the year ended 30 June 2018
Consolidated
2018 2017
$'000 $'000
Cash flows from operating
activities
Payments to suppliers and
employees (6,054) (4,277)
Interest received 218 182
Finance costs (5) (3)
Taxation payments - 1
Net cash outflow from
operating activities (5,841) (4,097)
Cash flows from investing
activities
Payments for land, property,
plant and equipment (6) (185)
Refunds of government charges
associated with land
acquisition - -
Payments for acquisition of
non-controlling interest - -
Net payments for mining
related licence deposits - -
Payments for mining tenements
and mining development (5,050) (6,673)
Net cash outflow from
investing activities (5,056) (6,858)
Cash flows from financing
activities
Proceeds from issue of shares - -
Equity raising costs - -
Repayment of borrowings (2,501) (2,798)
Forfeited share deposit - -
Drawdown from
loan 10,471 6,830
Net cash inflow from
financing activities 7,970 4,032
Net (decrease)/increase in
cash and cash equivalents (2,927) (6,923)
Cash and cash equivalents at
the beginning of the year 4,682 11,955
Effects of exchange rate
movements on cash and cash
equivalents (26) (350)
Cash and cash equivalents at
the end of the year 1,729 4,682
1. Basis of preparation
This general purpose financial report has been prepared in accordance
with Australian Accounting Standards, other authoritative pronouncements
of the Australian Accounting Standards Board including Interpretations
and the Corporations Act 2001. For the purposes of preparing the
consolidated financial statements, the Company is a for-profit entity.
The financial report of Resource Generation Limited also complies with
International Financial Reporting Standards ("IFRS") as issued by the
International Accounting Standards Board ("IASB").
3. Critical accounting estimates and judgements
The preparation of financial statements in conformity with Australian
Accounting Standards requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the
process of applying the Group's accounting policies. The areas
involving a higher degree of judgement or complexity, or areas where
assumptions and estimates are significant to the financial statements,
are disclosed below.
Estimates and judgements are continually evaluated and are based on
historical experience and other factors, including expectations of
future events that may have a financial impact on the entity and that
are believed to be reasonable under the circumstances. The estimates
and assumptions that have a significant risk of causing a material
adjustment to the carrying amounts of assets and liabilities within the
next financial year are discussed below.
The accounting policies and methods of computation adopted in the
preparation of the financial report are consistent with those adopted
and disclosed in the Company's financial report for the year ended 30
June 2017. These accounting policies are consistent with Australian
Accounting Standards and with International Financial Reporting
Standards.
Capitalisation of Mining Tenements and Mining Development expenditure
Development expenditure incurred by or on behalf of the consolidated
entity is accumulated separately for each mine in which economically
recoverable reserves have been identified to the satisfaction of the
Directors. Such expenditure comprises direct costs plus overhead
expenditure incurred which can be directly attributable to the
development process, in accordance with AASB 116 'Property, Plant &
Equipment'.
All expenditure incurred prior to the commencement of commercial levels
of production from each area of interest is carried forward to the
extent which recoupment out of revenue to be derived from the sale of
production from the area of interest, or by its sale, is reasonably
assured. Once commercial levels of production commence, the development
expenditure in respect of that area of interest will be depreciated on
a straight-line basis, based upon an estimate of the life of the mine.
Development expenditure on the Boikarabelo Coal Mine has been fully
capitalised as per note 11. The Group is confident of the full recovery
of the expenditure on the Boikarabelo Coal Mine on the basis of the
financial modelling of the mine incorporating forecast production,
sales levels and capital expenditure. This model is updated regularly
and used to assess whether an impairment provision is required. Based
on the current critical estimates and judgements, the Directors do not
believe that an impairment provision is required.
As at 30 June 2018 the carrying value of the capitalised Mining
Tenements and Mining Development Expenditure is $161.7m (2017: $153.7m)
as disclosed in note 11. In the current year $10.3m of development
expenditure has been capitalised.
Management has exercised judgment in determining whether development
expenditure incurred meets the criteria for capitalisation, including:
1. Assessing whether costs are directly attributable to bringing the
mine to the location and condition necessary for operating as
intended; and
2. Assessing whether it is probable that the expenditure will result
in future economic benefits, including an assessment of the
availability of adequate funding for development and exploitation
of the asset or alternatively, the ability to sell the asset.
Impairment of Property, Plant and Equipment and Mining Tenements and
Mining Development expenditure
As at 30 June 2018 the carrying value of Property, Plant and Equipment
and Mining Tenements and Mining Development Expenditure is $32.3m
(2017: $33.1m) and $161.7m (2017: $153.7m) respectively, as disclosed
in notes 10 and 11.
Management has exercised judgment in determining whether indicators of
impairment exist for Property, Plant and Equipment and Mining Tenements
and Mining Development Expenditure. Indicators were identified during
the current period and the model was updated, including:
1. Future cash flows for Cash Generating Units (‘CGU’), which include
estimates of future coal prices, operating and capital costs and
foreign exchange rates; and
2. Discount rates.
The financial model is sensitive to three principle assumptions being
the export coal price, the discount rate and the USD/ZAR fx rate. These
assumptions were varied in isolation to determine at what value would
these need to be changed to in order for the recoverable amount to
equal the carrying amount. These results are disclosed in note 11.
4. Segment information
4.1 Description of operating segments
Management has determined the segments based upon reports reviewed by
the Board that are used to make strategic decisions. The Board
considers the business from both a business and geographic
perspective, with the Board being the chief operating decision maker.
Business segments
The Group has coal interests in South Africa. The main priority is to
develop its Coal Resources in the Waterberg region of South Africa.
Management has determined that there is one operating segment, being
mining tenements and mining development. Unallocated corporate
administration reflects other corporate administration costs.
4.2 Segment revenue and results
Segment Revenue Segment Loss
Year Year Year Year
Ended Ended Ended Ended
30/6/18 30/6/17 30/6/18 30/6/17
$’000 $’000 $’000 $’000
Mining
Tenements
And mining
Development 447 623 (8,987) (848)
Corporate –
Unallocated 104 136 (1,355) (1,126)
Total for
Continued
Operations 551 759 (10,342) (1,974)
The accounting policies of the reportable segments are the same as the
Group's accounting policies described in note 1. The mining tenements
and mining development segment loss represents the loss incurred by that
segment without allocation of central administration costs and salaries,
gains and losses, finance costs and income tax expense, all of which are
included in the corporate segment. This is the measure reported to the
chief operating decision maker for the purposes of resource allocation
and assessment of segment performance.
4.3 Segment asset and liabilities
2018 2017
$’000 $’000
Segment assets
Mining tenements
and mining
development 197,004 193,082
Corporate –
unallocated 224 750
197,228 193,832
Segment liabilities
Mining tenements
and mining
development 74,416 58,975
Corporate –
unallocated 324 334
74,740 59,309
4.4 Other segment information
Depreciation and Additions to land,
amortisation property, plant and equipment
Year Year Year Year
ended ended ended ended
30/6/18 30/0/6/17 30/6/18 30/6/17
$’000 $’000 $’000 $’000
Mining tenements
and mining
development 365 367 6 185
Corporate –
unallocated 15 20 - -
Total 380 387 6 185
4.5 Other segment information – mining assets
Additions to mining assets
Year ended Year ended
30/6/18 30/6/17
Mining tenements and
Mining development 10,260 9,968
Corporate – unallocated - -
10,260 9,968
4.6 Geographical information
Revenue from external customers Non-current assets
Year Year Year Year
ended ended ended ended
30/6/18 30/6/17 30/6/18 30/6/17
$’000 $’000 $’000 $’000
Australia 104 136 - 18
South
Africa 447 623 195,249 188,782
551 759 195,249 188,800
5 Events occurring after the reporting period
The Company agreed a further extension of the Facility Agreement of 3
March 2014 (Facility), under which Noble Resources International Pte Ltd
will make available additional funds of up to $3.4m (US$2.5m) to the
Company's subsidiary, Ledjadja Coal (Pty) Ltd to fund operations whilst
project funding is secured. The total Facility made available to the
Company is now $50.3m (US$37.2m).
The additional funds are to be made available on the same terms as the
existing Facility and can be drawn in monthly tranches over the period
to 31 October 2018. The date of commencement of loan repayments was also
deferred from 1 August 2018 to 1 November 2018 with a termination date
of 31 March 2025.
The Group has received in principle support from Noble (subject to
satisfaction of conditions precedent) in respect of a request for a
further extension of the Facility amounting to US$4.7m along with a
deferral of loan repayments that are currently due to commence on 1
November 2018 to 1 April 2019.
The Company has executed three separate contracts with Sedgman (South
Africa) (Proprietary) Limited and Sedgman Pty Limited for the
Boikarabelo Coal Mine relating to (i) the engineering design,
construction and commissioning of the CHPP; (ii) the operations and
maintenance for the CHPP; and (iii) the construction of ancillary works
relating to the infrastructure of the mine.
There are no other events that have occurred subsequent to the end of
the financial year that have significantly affected or may significantly
affect:
(i) the Group’s operations in future financial years, or
(ii) the results of those operations in future financial years,
or
(iii) the Group’s state of affairs in future financial years.
6 Dividends
No dividends were paid or proposed to be paid to members during the
financial year (2017: nil).
Date: 17/09/2018 09:23:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
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