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SNU
SNU
SNU - Sentula Mining - Revised Reviewed Results For The Year Ended 31 March 2008
- Dividend Declaration And Withdrawal Of Cautionary Announcement (Revised)
SENTULA MINING LIMITED
(previously Scharrig Mining Limited)
(Registration number 1992/001973/06)
(Incorporated in the Republic of South Africa)
Share code: SNU
ISIN code: ZAE000107223
("Sentula" or "the Group" or "the Company")
REVISED REVIEWED RESULTS FOR THE YEAR ENDED 31 MARCH 2008 - DIVIDEND DECLARATION
AND WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT (REVISED)
Group revenue increased to R2,66 billion
(Restated 2007: R1,38 billion)
Operating profit up to R376,3 million
(Restated 2007: R189,57 million)
Core EPS was 107,5 cents per share
(Restated 2007: 77,9 cents per share)
"It was a very challenging second half to the financial year, but we have dealt
with all the problematic issues outlined in our trading statement on 2 June
2008. The March 2007 results have been restated and our performance in 2008 has
shown relative growth. The extraordinary challenges we`ve been faced with over
the last year are now behind us and the fundamentals of the company are sound,
integration of acquisitions is complete and the operations are well poised for
sustained growth. We will continue to pursue our growth strategy and our
prospects are exceptionally good. We are facing an exciting future with renewed
determination and clarity of purpose." - Robin Berry, CEO, Sentula Mining
Condensed Provisional Consolidated Income Statement
for the year ended 31 March 2008
Reviewed Restated As
previously
results results reported
31 March 31 March 31 March
2008 2007 2007
R`000 R`000 R`000
Revenue 2 659 897 1 376 859 1 368 760
Operating profit 376 288 189 571 296 360
Excess of assets and
liabilities obtained over
purchase price 52 816 5 511 -
Finance costs (148 722) (69 391) (69 391)
Net profit before taxation 280 382 125 691 226 969
Income from investments in 18 286 - -
associates - net of tax
Taxation (63 889) (32 028) (69 728)
Net profit after taxation 234 799 93 663 157 241
Earnings attributable to - 8 389 8 389
outside shareholders
Earnings attributable to 234 779 85 274 148 852
ordinary shareholders
Supplementary information
Attributable earnings per 116,4 56,3 98,4
share (cents)
Core earnings per share 107,5 77,9 103,7
(cents)
Headline earnings per 93,9 71,2 98,4
share (cents)
Dividend per share (cents)
Interim (Declared) 11,00 7,00 7,00
Final (Proposed) 10,00 10,00 10,00
21,00 17,00 17,00
Shares in issue (000)
- at end of period 235 566 188 431 188 431
- weighted average for the 201 699 151 352 151 352
year
Condensed Provisional Consolidated Balance Sheet
as at 31 March 2008
Reviewed Restated As
previously
results results reported
31 March 31 March 31 March
2008 2007 2007
R`000 R`000 R`000
ASSETS
Non-current assets
Property, plant and 2 412 693 1 302 318 1 399 575
equipment
Investments in equity- 190 266 - -
accounted associates
Intangible assets - other 12 008 38 667 227 785
Investments in mineral 366 482 - -
rights
Goodwill 372 698 203 425 -
3 354 147 1 544 410 1 627 360
Current assets
Inventories 307 545 175 202 137 752
Trade and other 556 728 326 313 338 462
receivables
Bank balance and cash 285 397 164 511 164 511
1 149 670 666 026 640 725
4 503 817 2 210 436 2 268 085
EQUITY AND LIABILITIES
Share capital and premium 1 560 996 574 568 517 843
Reserves 488 522 272 249 363 650
Ordinary shareholders` 2 049 518 846 817 881 493
funds
Outside shareholders` 105 926 8 389 8 389
interests
Total shareholders` funds 2 155 444 855 206 889 882
Non-current liabilities
Long-term borrowings 1 290 272 348 667 322 855
Deferred taxation 252 184 139 470 182 008
1 542 456 488 137 504 863
Current liabilities
Trade and other payables 270 486 238 289 252 441
Other financial 5 851 284 586 284 586
liabilities
Current portion of long- 472 532 309 353 309 353
term borrowings
Taxation 57 048 34 866 26 960
805 917 867 093 873 340
4 503 817 2 210 436 2 268 085
Statement of Changes in Equity
for the year ended 31 March 2008
Employee
share
incentive
reserve/
Share Share capital
capital premium reserve
R`000 R`000 R`000
Balance at
1 April 2006 as previously 1 374 100 055 6 076
reported
Prior year adjustments 108 5 142 (5 469)
Restated balance as at 1 April 1 482 105 197 607
2006
Restated profit for the year - - -
Profit for the year
as previously reported - - -
Prior year adjustments - profit - - -
Prior year adjustments - equity - 21 600 -
Dividend paid
Share-base payments - 13 464 503
Shares issued 510 432 315 -
Restated balance as at 31 March 1 992 572 576 1 110
2007
Net profit for the year
Foreign currency
translation movement
Nkomati minority
Dividend Paid
Share-base payments (4 073) 20 244
Minority acquired
Shares issued 472 990 029 -
2 464 1 558 532 21 354
Statement of Changes in Equity (continued)
for the year ended 31 March 2008
Foreign
exchange
Treasury translation Retained
shares reserve earnings
R`000 R`000 R`000
Balance at
1 April 2006 as previously (8 397) - 217 397
reported
Prior year adjustments (5 297) - 13 414
Restated balance as at 1 April (13 694) - 230 810
2006
Restated profit for the year - - 85 274
Profit for the year
as previously reported - - 148 852
Prior year adjustments - profit - - (63 578)
Prior year adjustments - equity - (2 263) -
Dividend paid (20 923)
Share-base payments 10 443 -
Shares issued (32 375) - -
Restated balance as at 31 March (35 626) (2 263) 295 161
2007
Net profit for the year 234 779
Foreign currency
translation movement 2 544
Nkomati minority
Dividend Paid (42 851)
Share-base payments 4 847 - (3 291)
Minority acquired
Shares issued - - -
(30 779) 281 483 798
Statement of Changes in Equity (continued)
for the year ended 31 March 2008
Non-
distri-
butable Minority
reserve interest Total
R`000 R`000
Balance at
1 April 2006 as previously reported 13 866 - 330 371
Prior year adjustments - - 7 898
Restated balance as at 1 April 2006 13 866 - 338 268
Restated profit for the year - 8 389 93 663
Profit for the year
as previously reported - 8 389 157 241
Prior year adjustments - profit - - (63 578)
Prior year adjustments - equity - - 19 337
Dividend paid (20 923)
Share-base payments - 24 410
Shares issued - 400 450
Restated balance as at 31 March 13 866 8 389 855 205
2007
Net profit for the year 234 779
Foreign currency
translation movement 2 544
Nkomati minority 105 927 105 927
Dividend Paid (42 851)
Share-base payments - 17 727
Minority acquired (8 389) (8 389)
Shares issued - - 990 501
13 866 105 927 2 155 443
Prior period adjustments
Balance as
previously Share
reported based
on 31 March payment
2007 expenditure (1)
Balance sheet
Equity
Share capital 1 884 108
Share premium 532 370 18 606
Employee share incentive reserve / 7 209 (6 099)
Capital Reserve
Treasury Shares (16 411) (19 215)
Retained earnings 344 838 1 995
Net Effect on Equity 869 890 (4 605)
Assets
Property, Plant and equipment 1 399 575
Receiver of Revenue (26 960) (4 605)
Inventory 137 752
Long term liability (322 855)
Deferred taxation (182 008)
Trade receivables 338 462
Trade payables (252 441)
Goodwill 227 785
Net effect on assets 1 319 310 (4 605)
Income Statement
Net (profit) attributable to (148 852)
ordinary shareholders
Staff Cost 1 148
Impairment of Property Plant and
Equipment
Debt write off \ Restraint of trade 6 076
Foreign exchange adjustment
Depreciation
Profit on sale of assets
Taxation expenditure 4 605
Revenue
Cost of sales
Commission paid
Negative goodwill on business
acquisition
Net (profit) attributable to (148 852) 11 829
ordinary shareholders
Impact on Earnings per share 8
(cents)
Prior period adjustments (continued)
Benicon Benicon
Earthworks Sales
(Pty) Ltd (Pty) Ltd /
acquisition Enjee
adjustment (2) Trust (3)
Balance sheet
Equity
Share capital
Share premium 21 600
Employee share incentive reserve /
Capital Reserve
Treasury Shares
Retained earnings (23 827)
Net Effect on Equity (2 227) -
Assets
Property, Plant and equipment (11 235)
Receiver of Revenue (3 300)
Inventory 8 000
Long term liability (18 629)
Deferred taxation 12 308
Trade receivables
Trade payables 10 629
Goodwill
Net effect on assets (2 227) -
Income Statement
Net (profit) attributable to
ordinary shareholders
Staff Cost
Impairment of Property Plant and
Equipment
Debt write off \ Restraint of trade
Foreign exchange adjustment
Depreciation (1 198)
Profit on sale of assets (108)
Taxation expenditure (12 074)
Revenue
Cost of sales
Commission paid
Negative goodwill on business 37 287
acquisition
Net (profit) attributable to 23 906 -
ordinary shareholders
Impact on Earnings per share (cents) 16 -
Prior period adjustments (continued)
Scharrighuisen
Drilling and Shares
Blasting issued
(Pty) Ltd regarding
asset restraint
impairment (4) of trade (5)
Balance sheet
Equity
Share capital
Share premium
Employee share incentive reserve /
Capital Reserve
Treasury Shares
Retained earnings (24 567) (6 212)
Net Effect on Equity (24 567) (6 212)
Assets
Property, Plant and equipment (34 613)
Receiver of Revenue
Inventory
Long term liability
Deferred taxation 10 046 2 538
Trade receivables (8 750)
Trade payables
Goodwill
Net effect on assets (24 567) (6 212)
Income Statement
Net (profit) attributable to
ordinary shareholders
Staff Cost
Impairment of Property Plant and 34 613
Equipment
Debt write off \ Restraint of trade 8 750
Foreign exchange adjustment
Depreciation
Profit on sale of assets
Taxation expenditure (10 046) (2 538)
Revenue
Cost of sales
Commission paid
Negative goodwill on business
acquisition
Net (profit) attributable to 24 567 6 212
ordinary shareholders
Impact on Earnings per share 16 4
(cents)
Prior period adjustments (continued)
Benicon Sales
(Pty) Ltd /
Scharrighuisen
Opencast Mining Geosearch
(Pty) Ltd (6) (Pty) Ltd (7)
Balance sheet
Equity
Share capital
Share premium
Employee share incentive reserve
/ Capital Reserve
Treasury Shares
Retained earnings 6 985 (4 049)
Net Effect on Equity 6 985 (4 049)
Assets
Property, Plant and equipment (51 409)
Receiver of Revenue
Inventory 29 450
Long term liability 12 827 (20 010)
Deferred taxation 15 993 1 654
Trade receivables (3 399)
Trade payables 3 523
Goodwill 14 307
Net effect on assets 6 985 (4 049)
Income Statement
Net (profit) attributable to
ordinary shareholders
Staff Cost
Impairment of Property Plant and
Equipment
Debt write off \ Restraint of
trade
Foreign exchange adjustment 5 703
Depreciation
Profit on sale of assets
Taxation expenditure (15 993) (1 654)
Revenue (8 099)
Cost of sales 15 354
Commission paid 1 753
Negative goodwill on business
acquisition
Net (profit) attributable to (6 985) 4 049
ordinary shareholders
Impact on Earnings per share (5) 3
(cents)
Prior period adjustments (continued)
31 March
Total 2007
adjustments Restated
Balance sheet
Equity
Share capital 108 1 992
Share premium 40 206 572 576
Employee share incentive reserve / (6 099) 1 110
Capital Reserve
Treasury Shares (19 215) (35 626)
Retained earnings (49 675) 295 163
Net Effect on Equity (34 675) 835 215
Assets
Property, Plant and equipment (97 257) 1 302 318
Receiver of Revenue (7 905) (34 865)
Inventory 37 450 175 202
Long term liability (25 811) (348 666)
Deferred taxation 42 538 (139 471)
Trade receivables (12 149) 326 313
Trade payables 14 151 (238 290)
Goodwill 14 307 242 092
Net effect on assets (34 677) 1 284 634
Income Statement
Net (profit) attributable to ordinary (148 852)
shareholders
Staff Cost 1 148 1 148
Impairment of Property Plant and 34 613 34 613
Equipment
Debt write off \ Restraint of trade 14 826 14 826
Foreign exchange adjustment 5 703 5 703
Depreciation (1 198) (1 198)
Profit on sale of assets (108) (108)
Taxation expenditure (37 700) (37 700)
Revenue (8 099) (8 099)
Cost of sales 15 354 15 354
Commission paid 1 753 1 753
Negative goodwill on business 37 287 37 287
acquisition
Net (profit) attributable to ordinary 63 578 (85 274)
shareholders
Impact on Earnings per share (cents) 42
Notes to the prior year restatement:
Note 1 Recognition of accounting impact for share based payments incorrectly
accounted for in the prior year
Note 2 Correction of purchase price adjustment on acquisition of Benicon Earth
Works (Pty) Ltd acquisition and correction of fair value of fixed assets
Note 3 Correction of balances on vendor loan accounts pertaining to funding for
Benicon Sales (Pty) Ltd
Note 4 Impairment of 11 dril rigs acquired as part of the Fixedtrade CC
acquisition
Note 5 Expenses associated with restraint payments
Note 6 Adjustments resulting from the reconciliation of fixed asset register and
accounts associated with funding arrangements
Note 7 Purchase price adjustments pertaining to acquisition of Geosearch
Holdings (Pty) Ltd
Segmental analysis
for the year ended 31 March 2008
R`000
Net profit
before
finance
R`000 charges
Turnover and tax
Opencast mining services 1 362 307 226 284
Exploration drilling 774 179 162 314
Drilling and blasting 202 089 (3 205)
Equipment trading and spares 425 671 8 520
Coal Assets - -
Crane Hire 36 228 20 717
2 800 474 414 630
Corporate - (18 272)
Eliminations (140 577) (20 070)
2 659 897 376 288
for the year ended 31 March 2007 R`000
Net profit
before
finance
R`000 charges
Turnover and tax
Opencast mining services 919 654 277 729
Exploration drilling 293 254 72 220
Drilling and blasting 42 264 (112)
Equipment trading and spares 113 588 782
Crane Hire
1 368 760 350 619
Corporate - 19 605
Prior year restatements 8 099 (180 632)
1 376 859 189 592
Segmental analysis (continued)
for the year ended 31 March 2008
R`000
Trade and
other R`000
receivables Inventory
Opencast mining services 303 451 103 007
Exploration drilling 183 261 108 451
Drilling and blasting 33 113 1 553
Equipment trading and spares 35 884 80 616
Coal Assets 31 850 10 916
Crane Hire 10 831 1 209
598 390 305 752
Corporate 29 250 -
Eliminations (70 912) 1 793
556 728 307 545
for the year ended 31 March 2007
R`000
Trade and
other R`000
receivables Inventory
Opencast mining services 127 201 74 473
Exploration drilling 152 592 33 758
Drilling and blasting 6 081 -
Equipment trading and spares 21 666 58 971
Crane Hire
307 540 167 202
Corporate
Prior year restatements 18 773 8 000
326 313 175 202
Segmental analysis (continued)
for the year ended 31 March 2008
R`000
Trade R`000
and Property,
other plant and R`000
payables equipment Borrowings
Opencast mining services 141 558 1 911 313 1 754 414
Exploration drilling 102 488 203 003 406 334
Drilling and blasting 15 263 141 230 244 320
Equipment trading and spares 14 864 62 021 148 745
Coal Assets 50 073 43 074 96 829
Crane Hire 3 625 41 777 58 286
327 871 2 402 418 2 708 928
Corporate 14 901 1 653 1 705 322
Eliminations (72 286) 8 622 (2 645 595)
270 486 2 412 693 1 768 655
for the year ended 31 March
2007
R`000
Trade R`000
and Property,
other plant and R`000
payables equipment Borrowings
Opencast mining services 51 054 1 123 977 571 373
Exploration drilling 146 902 150 055 304 687
Drilling and blasting 11 314 24 878 47 917
Equipment trading and spares 6 183 1 728
Crane Hire
215 453 1 300 638 923 977
Corporate
Prior year restatements 22 836 1 680 18 629
238 289 1 302 318 942 606
Condensed Provisional Consolidated Cash Flow Statement
for the year ended 31 March 2008
Reviewed Restated As
previously
results results reported
31 March 31 March 31 March
2008 2007 2007
R`000 R`000 R`000
Net profit before 280 382 125 691 226 969
taxation
Non-cash flow items and (41 988) (27 662) (17 501)
changes in working
capital
Finance charges 155 387 71 013 71 013
Cash generated from 393 781 169 042 280 481
operations
Interest paid (122 153) (61 260) (59 638)
Dividends paid (42 851) (21 411) (21 411)
Taxation paid (74 273) (5 083) (5 083)
Cash flows from 154 504 81 288 194 349
operating activities
Cash flows from (1 378 040) (605 376) (710 371)
investing activities
Acquisition of (57 817) (74 113) (126 077)
businesses, net of cash
acquired
Acquisition of minority (13 880) - -
interest
Purchase of property, (1 241 499) (529 855) (581 264)
plant and equipment
Disposal of property, 100 468 19 110 19 110
plant and equipment
Movement in other - (22 140) (22 140)
financial liabilities
Interest received 6 669 1 622 -
Purchase of investments (171 981) - -
in associate
Cash flows from 1 344 412 664 959 659 157
financing activities
Proceeds of share issue 702 228 424 802 400 450
Proceeds/payments of 642 184 240 157 234 355
long-term borrowings
Net movement in - - 24 352
treasury shares
Net increase/(decrease) 120 876 140 871 143 135
in cash and cash
equivalents
Foreign currency - - (2 264)
translation reserves
Cash and cash 164 511 23 640 23 640
equivalents at the
beginning of the year
Cash and cash 285 387 164 511 164 511
equivalents at the end
of the year
Purchase of Investments
Richie Classic
Benicon Crane Challenge
Coal Hire Trading
(Pty) (Pty) (Pty)
Limited Limited Limited
R000`s R000`s R000`s
Property, plant and equipment 43 074 36 402 25 042
Amortised customer base
Goodwill 282
Investment 87 9 651
Inventories 10 916 761 199
Receivables 18 869 17 058
Cash and cash equivalents 3 303 9 123
Leases (19 165)
Long-term liabilities (86 312) (7 502) (614)
Payables (27 051) (9 105)
Provisions (25 708)
Tax payable (13 454)
Deferred tax liability
Book value (62 540) 29 660 18 734
Fair value adjustment
Property, plant and equipment 21 447
Receivables
Intangibles 364 305
Deferred tax (102 005) (6 005)
Goodwill (52 816) 17 746 35 139
Minority interest 105 926 - -
Fair value 252 870 47 406 69 315
Fair value net of cash acquired
Consideration paid
Cash 112 21 776 22 929
Loan acquired
Ordinary shares 40 906 25 630 46 386
Costs of acquisition 41 018 47 406 69 315
Cash consideration paid net of
cash acquired
Purchase of Investments (continued)
Acquisition
in minority -
Geosearch
Pioneer Holdings
Drilling & (Pty)
Blasting cc Total Limited
R000`s R000`s R000`s
Property, plant and 51 098 155 616 30 011
equipment
Amortised customer base 7 733
Goodwill 282 37 291
Investment 9 738
Inventories 1 091 12 967 6 752
Receivables 22 504 58 431 30 506
Cash and cash (6 226) 6 200 14 589
equivalents
Leases (37 038) (56 203)
Long-term liabilities (94 429) (82 394)
Payables (12 588) (48 744) (28 929)
Provisions (25 708)
Tax payable (13 454) (5 325)
Deferred tax liability (2 378)
Book value 18 841 4 695 7 856
Fair value adjustment
Property, plant and 37 947 59 395
equipment
Receivables 1 538 1 538
Intangibles 19 599 383 904
Deferred tax (16 113) (124 123)
Goodwill 19 687 19 756 96 702
Minority interest - 105 926 -
Fair value 81 499 451 091 104 558
Fair value net of cash 444 891
acquired
Consideration paid
Cash 19 200 64 017 13 880
Loan acquired (17 829)
Ordinary shares 62 299 175 221 108 507
Costs of acquisition 81 499 239 238 104 558
Cash consideration paid 57 817
net of cash acquired
Reconciliation of headline earnings
Reviewed Restated As
previously
results results reported
31 March 31 March 31 March
2008 2007 2007
R`000 R`000 R`000
Earnings attributed to 234 779 85 274 148 852
ordinary shareholders
Adjust for
Profit on sale of plant (12 172)
and equipment
Impairment 411 34 613
Fair value adjustment (52 245) (5 511)
(64 006) 29 102
Tax effect of adjustment 18 562 (10 046)
Attributed to shareholders (45 444) 19 056
Attributed to minority (2 015)
shareholders
Headline earnings 189 335 102 315 148 852
attributable to ordinary
shareholders
Reconciliation of core earnings
Reviewed Restated As
previously
results results reported
31 March 31 March 31 March
2008 2007 2007
R`000 R`000 R`000
Earnings attributed to 234 779 85 274 148 852
ordinary shareholders
Adjust for
Profit on sale of plant (12 172)
and equipment
Impairment 411 34 613
Fair value adjustment (52 245) (5 511)
Customer based 38 667 19 333 19 333
amortisation
Fair value adjustment on 14 030 14 030
vendor liabilities
Foreign exchange (19 173) (19 173)
adjustment on vendor
liabilities
Foreign exchange
adjustment on acquisition
(25 339) 43 292 14 190
Tax effect of adjustment 7 348 (14 153) (4 115)
Attributed to shareholders (17 991) 29 139 10 075
Attributed to outside 2 015 2 015
shareholders
Attributed to ordinary (17 991) 27 124 8 060
shareholders
Core earnings attributable 216 788 112 398 156,912
to ordinary shareholders
Financial Review
Revenue for the year to March 2008 increased to R2,66 billion from R1,38 billion
as restated in the prior year.
Opencast mining services contributed R1,36 billion (49%) of revenue while
exploration drilling contributed R774 million (28%) of group revenue and
drilling and blasting services contributed R202 million (7%). Crane hire and
equipment trading contributed R426 million (15%) and R36 million (1%) of
turnover, respectively.
Operating profit amounted to R376,3 million (2007: R189,6 million), resulting in
an operating margin of 14,15% (2007: 13,77%). This includes the lower margin
business of Benicon Sales. If the impact of this business is excluded, the
operating margin increases to 16,5%.
An amount of R52,2 million was recognised as negative goodwill in terms of IFRS
3 on the acquisition of the Nkomati mine following its consolidation at year-
end. The prior year negative goodwill of R5,5 million related to the excess fair
value of plant and equipment recognised on the Benicon Opencast Mining
transaction in terms of IFRS 3.
Finance charges increased from R69,4 million to R148,7 million as debt levels
increased to fund capital acquisitions and as a consequence of the impact of
recent interest rate increases.
Taxation increased to R63,9 million (2007: R32 million), resulting in an
effective tax rate of 22,8% (2006: 25,5%).
Income of R18,3 million from investments in associates represents Sentula`s
attributable earnings from the Koornfontein mine for the two months prior to the
financial year end. Negative goodwill on this acquisition was not recognised at
year-end due to delays being experienced in the fair value assessment of the
acquired assets for IFRS 3 purposes.
Attributable, headline and core earnings per share increased to 116,4 cents,
107,5 cents and 93,9 cents, respectively compared to the prior year restated
figures of 56,3 cents, 77,9 cents and 71,2 cents, respectively.
The net debt to equity ratio increased to 69% (2007: 58%) following the
increased borrowings to fund the group`s growth.
A final dividend of 10 cents per share is proposed consistent with the 10 cents
per share of last year for a total dividend of 21 cents per share (2007: 10
cents per share).
FINANCIAL RESTATEMENT 2007
Accounting and auditing procedure at year-end indentified a number of
fundamental accounting errors in the prior financial year, which necessitated a
restatement of the prior year results. The reasons for the restatement of R63,6
million on the prior year net profit after tax is disclosed in the notes to the
condensed provisional results. The Group`s cash position was not impacted.
BASIS OF PRESENTATION
The financial statements have been prepared in accordance with International
Financial Reporting Standards (IFRS) and IAS 34 - Interim Financial Reporting.
The accounting policies have been applied consistently to all periods presented
in the financial statements. These financial statements have been reviewed by
KPMG Inc. and their unqualified review opinion is available for inspection at
the company`s office.
STRATEGIC REVIEW AND OBJECTIVES
Safety track record
Sentula is pleased to have recorded a fatality free year. The CIFR was 2,38
which is below industry norms and Sentula will continue to place the health and
safety of its employees as its top priority.
Mining Services
The provision of mining services remains the core of Sentula`s business and the
five operating divisions, with their nine underlying subsidiaries, continue to
trade well, given the buoyant market conditions currently being experienced.
The Group`s vision of developing the mining services business to be the company
of choice across the African continent, on the back of sustainable growth in the
sector, remains at the heart of Sentula`s strategy. During the last period the
company has actively worked towards this vision through both organic and
acquisitive growth and restructuring in support of its non- South African
activities. Through this, the Sentula Group has grown to become the leading
opencast coal mining contractor in South Africa, an international mining
services provider with operations in 12 African countries and a leading
exploration drilling company across the continent. The company`s foothold in the
coal and energy sector, coupled with its diversified service offering, client
base, mineral exposure and geographical spread have created a solid platform for
ongoing sustainable growth.
Opencast Mining
The above average rainfall experienced during the second half, while impacting
negatively on the physical operating environment, had a greater impact in
reducing overall margins, through increased operating expenses and the necessity
to deploy additional resources to meet contracted obligations. Coupled with
abnormal input cost increases, both Scharrighuisen and Benicon opencast mining
services experienced margin erosion during the latter part of the year, but are
now enjoying the benefit of recently priced new work and the opportunity to
reprice existing contracts in a buoyant market. While Scharrighuisen`s
operations in coal are set to grow by some 20% during the coming year,
predominantly on the back of the start-up of BECSA`s DMO boxcut, Benicon has
doubled the number of its medium term steady state sites from three to six.
The consolidation of CCT opencast mining, with its expertise in non-coal mining
activities, for the second half, resulted in a reduction of the exposure of this
segment to coal mining by some 7% in F2008, on the strength of its contribution
and higher overall margins. This reduction is expected to double in the coming
year, with the award and start-up of the Smokey Hills open pit platinum project
to CCT in March 2008.
At approximately 45%, this segment is envisaged to continue to be a significant
contributor to the Group`s earnings in the F2009 year.
Strategically, under the Benicon entity, the Group has established an equipment
hire business in Moatise, Mozambique in preparation for the large scale coal
mining operations, planned to come on-stream from 2010 onwards.
Drilling and Blasting
As the company sought to expand its mining services offering in support of the
core opencast businesses, JEF Drill and Blast was acquired in the year under
review. The rationale for the transaction, consolidated from 1 June 2007, was an
opportunity to create critical mass with the Scharrighuisen Drilling and
Blasting unit, developed on the back of the previously acquired Fixed trade
business, early in 2006. It was also seen as an opportunity to acquire the
necessary expertise required to operate and manage a business of this nature.
Although the segment made no contribution to the group in the prior year, due
in large to write downs on impaired assets, and made a small operating loss in
the current year, it is set to grow its business by some 25% in the coming year,
through the diversification of its client base and improved contract pricing.
Equipment Trading, Spares and Engineering
The three subsidiaries, Benicon Sales, Caston and NWN Automotive, continue to
play a strategic role in supplying the Group`s requirements from an equipment
and spares perspective and the in-house retention of key maintenance facilities
and skills. The ongoing limited contribution of this segment is offset by its
strategic offering.
Exploration Drilling
Through the Geosearch acquisition in 2006, and the subsequent acquisition of the
remaining 20%, effective 1 April 2007, this segment has significantly
diversified the Group. On the back of its solid contribution in the F2008 year,
as a result of its growth, wide geographic spread and good overall margins,
Geosearch is expected to remain a significant contributor to the Group`s
earnings, on the back of moderate growth of 15% and solid margins, for the year
ahead. Growth in all segments of the exploration sector remains strong for the
foreseeable future.
Crane Hire
The acquisition of Ritchie Crane Hire, effective 1 April 2007 further
diversified Sentula`s service offering. This high margin, medium to large mobile
crane hire business is set to continue to benefit from the ongoing large
infrastructure projects, currently being undertaken in South Africa. This
segment is expected to maintain its contribution to the Group of approximately
5%, through growing the Ritchie business by some 25% during the coming year, on
the strength of the additional cranes purchased during 2007.
Capital Expenditure
In total R1 241 million of capital expenditure was spent as follows:
Scharrig open cast mining, R803 million was invested in new equipment for
expansion projects. Benicon open cast mining acquired plant for R185 million to
expand operations. R58 million was spent by Benicon Sales in the strategic
purchase of two drag lines for future capacity deployment. CCT invested in
capacity to the amount of R16 million to establish the Smokey Hills contract.
JEF Drill & Blast group invested R49 million for new drilling capacity and
support equipment. Geosearch invested R93 million during the year in additional
exploration drilling rigs. Ritchie Crane have invested R22 million in additional
and replacement mobile cranes. Some R15 million was spent at the Nkomati
Anthracite mine upgrading beneficiation plant.
Coal Mining Opportunities
Sentula`s objective is to become a junior coal mining company producing between
15 and 20 million tons within five years. The Group`s aim is to position the
company as a significant second tier producer behind the "big five".
Sentula is currently invested in six projects (four in South Africa, one in
Botswana and one in Zambia). The projects can be broadly described as follows:
Investments in Operating Coal Mines
The acquisition of a 60% stake in the Nkomati Anthracite mine through Sentula`s
purchase of Benicon Coal, currently produces a combination of domestic sized and
export products, from its open pit operations. These are blended with coking
coals in various ferrochrome and steel manufacturing processes. While production
costs are high, due to the scale of the operation and the nature of the
resource, the reserve base is large and the sales products enjoy a substantial
portion of the current pricing associated with scarce good quality coking coals.
The final condition precedent was fulfilled during March 2008 and the results
from this acquisition are to be consolidated from 1 April 2008. The mine is in
the process of developing a boxcut to access an underground reserve block, in
order to diversify its production sources and ramp the current operation up to
its optimal production capacity. Sales for current year F2009 are expected to be
300kt with an increase to 400kt in subsequent years.
The acquisition of a 49,99% stake in the Koornfontein mine, effective 1 February
2008, has given Sentula a good base to grow a junior coal portfolio in the heart
of Mpumalanga. It is a large underground operation with well capitalised
infrastructure, a well understood reserve base and 1,5 million tons per annum
entitlement through RBCT, which has provided the Group with a share in a good
operating asset. The operation continues to perform well, and while total
exposure to buoyant export coal pricing will only be realised once the coal
marketing agreements in the original BECSA sale agreements lapse in June 2009,
the mine is already taking advantage of such pricing on its excess production.
The mine is in the process of completing the feasibility study for the
development of its extensive four seam coal reserves. The contribution from
Koornfontein in the coming year, is expected to be similar to that reflected in
the current year on an annualised basis. Overall, the two operating assets are
expected to yield some 20% of Sentula`s earnings for the F2009 year.
Development Coal Investments
Of the five resource areas in the Merafe Coal JV, two of the prospects, namely
Schoongezicht and Bankfontein are currently being progressed to development,
after award of the prospecting rights in April this year, with first production
planned for Q1 and Q2 2009, respectively. Both projects are opencast and are
well positioned to supply export quality, domestic "A" grade and Eskom quality
coal into a variety of markets. The combined annual sales output of the two
projects is planned to be 2,85 million tons. Further exploration drilling is
being undertaken on the remaining Merafe Coal Prospects.
Exploration Coal Investments
Greenfield coal resource development is being undertaken, through the Jonah Coal
joint venture and Aquila Resources in Botswana known as Asenjo Energy, Jonah
Coal and Indonga Mining in Zambia and Mabapa mining in the northern Limpopo
province. Exploration drilling is currently underway on all three prospect
areas, with initial encouraging results.
WITHDRAWAL OF CAUTIONARY ANNOUNCEMENT
Shareholders are referred to the trading update and cautionary announcement
dated 2 June 2008 and are advised that, as the restated results for 31 March
2007 are hereby announced, caution no longer needs to be exercised when dealing
in the company`s securities.
DIRECTORATE
During the 12 months ended 31 March 2008 the following changes took place to the
board of directors.
Tony Scharrighuisen and Jason Holland resigned from the board and Mr Gideon
"Deon" Louw was appointed to the board as Chief Financial Officer. Mr Robin
Berry was promoted to the role of Chief Executive Officer and was already a
member of the board as the appointed COO. He replaced Mr Casper Scharrighuisen
who resigned as a director in November 2007. Jonathan Best was appointed as a
non-executive director to the board.
DIVIDEND
A final dividend of 10 cents (2007: 10 cents) per share has been declared by the
board in respect of the year ended 31 March 2008, payable on Monday, 6 October
2008 to those shareholders recorded in the register of the company at the close
of business on Friday, 3 October 2008.
The salient dates of the final dividend are as follows:
Declaration date Wednesday, 25 June 2008
Last date to trade "cum" dividend Friday, 26 September 2008
Shares trade "ex" dividend Monday, 29 September 2008
Record date Friday, 3 October 2008
Payment date Monday, 6 October 2008
No dematerialisation or rematerialisation of shares may take place between
Monday, 29 September 2008 and Friday, 3 October 2008, both dates inclusive.
On behalf of the board
Sir Sam Jonah Boksburg
Non-executive Chairman
Robin Berry
CEO, Managing Director
25 June 2008
Transfer secretaries: Link Market Services South Africa
(Pty) Limited,
5th Floor, 11 Diagonal Street, Johannesburg, 2001.
PO Box 4844, Johannesburg, 2000 Tel (011) 832-2652
Directors: Sir S E Jonah KBE* (Chairman),
D C M Gihwala* (Deputy Chairman),
R Berry, G Louw, Dr P Huysamer*, A Joffe*,
J G Best,* R K Jonah*, C Moorcroft, E H J Stoyell*
*Non-executive
Sponsor: Barnard Jacobs Mellet Corporate Finance (Pty) Limited
Auditor: KPMG Inc
Registered Address: 28 Patrick Road, Jet Park, Boksburg 1459.
PO Box 30194, Jet Park 1469 Tel (011) 397-3870
Date: 25/06/2008 17:30:02 Produced by the JSE SENS Department.
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JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
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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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