| Thu 4 Dec 2008, 10:59 | | SNU - Sentula Mining Limited - Chairman`s statement at annual general meeting |
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SNU
SNU - Sentula Mining Limited - Chairman`s statement at annual general meeting
Sentula Mining Limited
(Formerly Scharrig Mining Limited)
Incorporated in the Republic of South Africa
(Registration number 1992/001973/06)
Share code: SNU ISIN: ZAE000107223
("Sentula" or "the company" or "group")
CHAIRMAN`S STATEMENT AT ANNUAL GENERAL MEETING
Shareholders are advised that the Chairman of the Sentula Board, Sir Sam Jonah,
at today`s annual general meeting held at 10:00 at the Sandton Sun, corner Fifth
and Alice Streets, Sandton, Oleander Room, read out the following statement.
"Good morning ladies and gentlemen,
In August 2006, I was invited to join Sentula`s Board as Chairman. Soon after
that, the company announced its ambitious growth plans in the contract mining
space and to develop its own coal mining assets.
Mindful of the challenges which would come with such rapid growth, the Board
decided on a series of measures to better prepare Sentula for the implementation
of its strategy.
Governance
The key objective was to transform Sentula from a traditionally family owned and
run company, which happened to be publically listed, to that of a serious public
company, with a diversified shareholding base and which bears all the traits
expected of a `reputable` public company.
The first objective was to significantly strengthen corporate governance.
Firstly, we appointed Robin Berry first as Chief Operating Officer and then as
Chief Executive Officer. The next major appointment was that of Jonathan Best, a
seasoned financial director, as an independent non-executive member of the Board
and the Chairman of the Audit Committee. This was followed by the appointment of
Deon Louw as Chief Financial Officer.
Subsequent to these appointments the board appointed KPMG Inc. as our new
auditors. Further internal controls and divisional appointments and processes
were implemented to strengthen the systems of good corporate governance.
We also established an audit, risk and governance committee which appointed
ORCA, a division of PKF Incorporated, as internal auditors for the group. They
have finalised their initial assessment of internal controls across the group
and management is currently in the process of implementing their
recommendations.
Other committees, including a joint remuneration and nominations committee
(which committees have since been split) and an investment committee were formed
to further bolster best practice and good corporate governance.
These measures have and will continue to assist us to ensure independent and
effective internal controls and processes. All former executive management of
the company have been replaced.
Additionally we have reinforced the independence of our Board through several
appointments as follows:
* Jeffrey van Rooyen, (Deputy Chairman, Independent Non-Executive);
* Patrick Modisane, (Executive Director & Head of Transformation/HR);
* Pulane Kingston, (Independent Non-Executive);
* Dawn Marole, (Independent Non-Executive); and
* Andy Kawa, (Independent Non-Executive).
The Board is satisfied that the systems and controls we have in place are
designed to provide reasonable assurance as to the integrity and reliability of
the company`s financial statements and to safeguard and maintain the group`s
assets.
Sentula now bears no resemblance to the company I joined as Chairman in August
2006. We have new executive management, new internationally recognised auditors,
robust controls and separation of functions and an independent and newly
composed Board.
Forensic Investigation:
Sentula grew rapidly, both organically and acquisitively, over a relatively
short period. This was coupled with many challenges of a traditional nature such
as the consolidation and reconciliation of accounts across different companies.
However, certain accounting and transactional `irregularities` were also
revealed and the extent of these are now well defined.
KPMG, an independent sub-committee Chaired by Jonathan Best, the head of the
Audit Committee and management have worked closely together in a major house
cleaning exercise. Indeed, it is largely as a result of this exercise, that
Sentula has been so topical for arguably the wrong reasons.
I would like to update shareholders on the recovery process and on a number of
actions in this regard which have been taken:
* Regulatory authorities have been notified of our intentions and possible
legal actions including the laying of charges against certain individuals;
* A sequestration order has been granted to gain access to a large sum of
money;
* We have recovered an asset plus interest and costs. Follow up legal
processes have been initiated in this regard; and
* Two employees have been suspended pending the outcome of a disciplinary
procedure.
I want to assure shareholders that we are aggressively going after all the
misappropriated company assets and we have made good progress in this regard. We
will continue to do everything in our power to recover as much as possible.
As painful as it is, the `house cleaning` exercise is a critical and necessary
process and the Board and management firmly believe that Sentula will come out
of it stronger and better-off in the long term.
FSB Trading Investigation:
You are all aware of the ongoing JSE/FSB investigation into the circumstances
around the trading update and trading activities earlier this year. In this
regard, management and the Board of Sentula have fully co-operated with the
authorities and have supplied all the requested information. We remain fully
committed to working with the JSE and the FSB to bring their investigation to a
swift conclusion. This sentiment and our actions indeed have been communicated
with the JSE and the FSB.
JSE Trading/Relisting:
In light of unquantifiable irregularities, trading activity was suspended on the
JSE in September. The irregularities were fully provided for in our 2008 audited
results. Since then, the forensic process has provided more certainty to the
nature and magnitude of those irregularities. Furthermore, the forensic process
has reduced the risk of further irregularities, beyond that already provide for,
to a negligible level. In this regard we are communicating and cooperating with
the JSE to provide them with the requisite information and documentation and on
the progress of the investigation. We will keep shareholders informed of our
progress.
Our operations are sound and we have good executive leadership and a totally
committed and newly composed Board to support and steer the company through
turbulent times. Nevertheless, we all recognise that there is much work still to
be done. We will endeavour to communicate the outcomes of the aspects I have
outlined above in a timely manner.
Conclusion:
Ladies and gentlemen, these are very challenging times for the mining industry.
Times have changed dramatically and suddenly. Commodities are not as strong as
they were only a few months ago, which has impacted on exploration activity.
Credit availability for the development of mining operations in general will
also impact on Sentula. However, Sentula continues to enjoy diversified earnings
across geographies and commodities and now operates in around a dozen African
countries with a solid client base and substantial dollar-based currency
exposure.
Cash management is controlled by our treasury function and is actively monitored
by management as a high priority in the current economic climate. The group`s
asset portfolio is well capitalised and the group is not dependent upon further
capital injections for its ongoing operations in the 2010 financial year.
Given the present circumstances, I believe that Sentula is well on its way to
full recovery. We have to a large extent implemented the foundation of our
growth strategy and we have good prospects for value creation in the future.
I believe strongly that Sentula is very well positioned to stand its ground and
the company will overcome the numerous challenges it faces. We have renewed our
energy and focus to rebuild and reinforce the reputation of our company and this
will be reflected in our performance going forward.
Now we can attend to the business on the agenda for today.
Thank you."
Johannesburg
4 December 2008
Sponsor:
Merchantec (Proprietary) Limited
Enquiries:
Sentula Mining 011 397 3870
Robin Berry
College Hill 011 447 3030
Jacques de Bie
Date: 04/12/2008 10:59:10 Produced by the JSE SENS Department.
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