| Tue 31 May 2011, 15:14 | | SNU - Sentula Mining Limited - Trading statement |
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SNU
SNU
SNU - Sentula Mining Limited - Trading statement
Sentula Mining Limited
Incorporated in the Republic of South Africa
(Registration number 1992/001973/06)
Share code: SNU ISIN: ZAE000107223
("Sentula" or "the Company" or "the Group")
TRADING STATEMENT
In terms of the Listings Requirements of JSE Limited, companies are required to
publish a trading statement as soon as they become reasonably certain that the
financial results for the period to be reported on next will differ by more than
20% from the previous corresponding period.
A review of the financial results for the year ended 31 March 2011 by the
Company, has indicated that earnings per share ("EPS") is expected to be at
least 6 cents, and headline earnings per share ("HEPS") is expected to be at
least 16 cents. EPS and HEPS for the 2010 financial year were 55.8 cents and 0.6
cents, respectively.
The substantial increase in Group HEPS for the 2011 financial year resulted from
Megacube Mining returning to operational profitability in the second half of the
financial year and most of the Group`s subsidiaries experiencing real growth in
business volumes.
The reduction in EPS, relative to the prior year, is primarily as a result of:
1 Inclusion of the profits realised on the sale of the Company`s interest in
the Koornfontein mine in the 2010 comparative figures; and
2 A pre-tax impairment charge of R71 million, included in the 2011 results.
Results for the financial year ended 31 March 2011 were also adversely impacted
by the following:
1 With the Group`s new debt facility becoming effective in February 2011,
unamortised pre-tax fees of R29 million had to be expensed in the year
under review. These fees were incurred in September 2009 when the Group`s
senior debt facility of R1.5 billion was rescheduled;
2 The persistently strong exchange rate impacted Geosearch`s foreign
operations, and pre-tax foreign currency losses of R17 million were
recognised, of which R14 million remained unrealised at year end;
3 Political unrest in the Ivory Coast, which resulted in Geosearch suspending
mobilisation on a substantial drilling contract;
4 Operating losses still being incurred by Megacube Mining during the first
half of the financial year as this business terminated loss making
contracts;
5 The suspension of opencast mining operations at Nkomati Anthracite due to
regulatory and environmental issues; and
6 Forensic and legal fees of R7 million, pre-tax, associated with the civil
and criminal actions instituted against members of previous management.
Operations
The year was characterised by tough trading conditions as the opencast mining
businesses experienced margin pressures. Megacube Mining however returned to
operational profitability in the second half of the financial year as the
business terminated loss making contracts and improved operational efficiencies.
Margins are expected to improve in the 2012 financial year as contracts are
renegotiated based on an improving demand for mining services.
The persistently strong exchange rate impacted adversely on Geosearch`s revenue
and margins, and political unrest in the Ivory Coast resulted in the suspension
of operations in that jurisdiction. With stability returning to the Ivory Coast,
drilling operations will recommence in the second quarter of the 2012 financial
year.
Despite a new order mining right being granted to Nkomati Anthracite during the
past year and the mine commencing opencast operations in September 2010, these
operations were suspended in March 2011 as a result of further regulatory and
environmental issues. While these issues are being resolved, the underground
operations have been placed on care and maintenance with effect from the end of
May 2011.
Impairment charge:
The Group`s fleet of plant and equipment is independently valued on an annual
basis and the fleet of CAT 785 dump trucks were impaired by R62 million, pre-
tax, as a consequence of the large variance between the carrying value of these
items of plant and their market value. These items of plant and equipment were
acquired in 2007 at the peak of the commodity cycle and at a time when the
exchange rate was materially weaker than the prevailing rates in the period
under review. The intention is to refurbish this fleet over the next twelve to
eighteen months in support of the Group`s generic growth aspirations. The
remainder of the impairment charge of R9 million related to the impairment of
certain items of non-core plant and equipment.
Progress on legal matters:
Following the announcement on 26 November 2010 of the civil judgment of R88
million against Casper Scharrighuisen, a second judgment for R171 million and
interest thereon of R124 million was obtained in a civil action against
Scharrighuisen on 6 May 2011, bringing the total civil judgments against him to
R383 million. An order for the provisional sequestration of Scharrighuisen`s
estate was granted on 20 May 2011 in the Western Cape High Court. The Company
continues to support the National Prosecuting Authority in the criminal actions
against Scharrighuisen and Jason Holland as a consequence of the
misappropriation of funds from Megacube Mining in the 2008 financial year.
With the granting of the provisional sequestration order against Scharrighuisen,
the Company`s legal and forensic fees should reduce materially in the 2012
financial year. During the financial year under review, interim distributions of
R10 million were received from Mr Holland`s sequestrated estate.
The financial information, on which this trading statement is based, has not
been reviewed or reported on by Sentula`s auditors. Sentula`s financial results
are expected to be released on or about 15 June 2011.
Johannesburg
31 May 2011
Sponsor
Merchantec Capital
Financial Communications
College Hill
Date: 31/05/2011 15:14:02 Produced by the JSE SENS Department.
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