31 March 2011
Basis of preparation
The condensed consolidated interim financial results for the six months ended 31 December 2010 (“interim reporting period”) have been prepared in accordance with IAS 34: Interim Financial Reporting, as well as the AC500 standards as issued by the Accounting Practices Board, on a historical cost basis and conform to International Financial Reporting Standards (“IFRS”).
The accounting policies adopted for the interim reporting period are consistent with those applied in the financial statements for the Group for the period ended 30 June 2010.
The interim reporting period announcement has been prepared in accordance with the disclosure requirements of the JSE Limited Listings Requirements and the Companies Act of South Africa.
The comparative interim reporting period figures for the six months ended 30 December 2009 have not been previously published due to the change in the Company’s financial year-end from 28 February to 30 June, as decided
at the shareholders’ meeting held on 29 January 2009.
The financial information on which these interim period results are based has not been reviewed or reported on by Sephaku Holdings’ auditors.
Statement on going concern
The financial statements for the interim reporting period have been prepared on the going-concern basis as the directors have every reason to believe that the Company has adequate resources in place to continue in operation
for the foreseeable future.
Overview and comments
The Company is an HDSA-controlled mineral exploration, development and investment company with two key projects in the cement and fluorspar sectors.
Restructuring
The Group was restructured during the interim reporting period in order to represent a more defined and focused investment opportunity to the market. Sephaku Holdings has disposed of all of the shares that it held in its subsidiaries to Incubex Minerals Limited (“Incubex”), save for its cement and fluorspar interests.
Subsequently, Sephaku Holdings distributed all of the issued shares in Incubex to its shareholders in the form of a dividend in specie of R13,6 million in the ratio of one Incubex share for every ten Sephaku Holdings shares held. The impact of the restructuring on the interim period results is the removal of the Incubex subsidiaries’ assets and liabilities from the Sephaku Holdings consolidation. The total loss for the Incubex subsidiaries for the interim period up to the unbundling on 31 October 2010, is included in the Statement of Comprehensive Income as a R2 million loss from discontinued operations.
Dilution of interest in Cement
Sephaku Cement (Pty) Limited (“Sephaku Cement”) issued shares for cash to Dangote Industries Limited (“Dangote Industries”) during the interim reporting period in order to settle a loan of R75,6 million. Dangote Industries also subscribed for shares in an amount of R703,4 million resulting in Dangote Industries increasing its interest in Sephaku Cement from 19,76% to 64% with Sephaku Holdings retaining a 35,994% interest. The finalisation of the Dangote Industries transaction places Sephaku Cement firmly on track to develop its Aganang and Delmas projects with sufficient equity funding and the necessary guarantees provided by Dangote Industries to secure the required debt financing.
Sephaku Cement’s assets and liabilities are no longer consolidated in Sephaku Holdings but are shown as an equity accounted investment in associate of R635 million. Profit on the dilution of interest in Sephaku Cement of R408 million is included in the Statement of Comprehensive Income as well as a loss of R16,7 million for the interim period to 15 October 2010, which is classified as loss from discontinued operations, as a result of the change in Sephaku Holdings’ interest in Sephaku Cement from a subsidiary to an associate.
Fluorspar
The Company’s key objectives relating to fluorspar include the funding of Sephaku Fluoride (Pty) Limited’s (“Sephaku Fluoride”) Nokeng Fluorspar Project in order to bring it into production, the development of other fluorspar exploration assets up the value curve and the introduction of new downstream beneficiation opportunities into the Group. Sephaku Fluoride’s principal project, the Nokeng Fluorspar Mine, is on track, with the first phase of the plant’s definitive feasibility study complete and production planned for 2013.
Limestone
Sephaku Cement purchased Sephaku Holdings’ 51% interest in Sephaku Limestone and Exploration (Pty) Limited (“Sephaku Limestone”) and also acquired a further 29% interest in Sephaku Limestone from Golden Pond Trading 483 (Pty) Limited (“Golden Pond”). Both transactions were settled through the issue of Sephaku Holdings shares. The transfer of shares from Sephaku Cement to Golden Pond is, however, subject the consent of the Minister of Mineral Resources for the transfer of prospecting rights in terms of section 11 of the Mineral and Petroleum Resources Development Act.
African Nickel Holdings
Sephaku Holdings’ investment in African Nickel Holdings (Pty) Limited is carried at fair value of R20 million and is disclosed as an asset held for sale, as management is committed to a plan to dispose of the nickel assets in the near future.
There have been no material changes to the Company’s mineral resource and mineral reserve statements as compared to those presented in the financial results for the sixteen months ended 30 June 2010.
Changes to the board
Mr Morrison Smit resigned as the financial director of the Company with effect from 28 February 2011 and Mr Steven Steyn was appointed as acting chief financial officer. There have been no further changes to the board of directors.
On behalf of the board
Download the full results announcement:
Print:Condensed consolidated interim financial results for the six months ended 31 December 2010 (PDF – 46KB)
SENS: Condensed consolidated interim financial results for the six months ended 31 December 2010 (PDF – 46KB)
Neil Crafford-Lazarus
CEO
Lelau Mohuba
Chairman
Pretoria
31 March 2011