annual report and financial statements for the year ended...
TRANSCRIPT
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Annual Report and Financial Statements for the year ended 31 March 2015
Public Enterprises Portfolio Committee
20 April 2016
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Contents
1. Predetermined Objectives
2. PSJV Operations
3. Achievements In Terms of Deed of Settlement
4. Community Upliftment Initiatives and Bursaries
5. Control Environment
6. Annual Financial Statements
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Predetermined Objectives
Alexkor had 11 approved targets during the year, with three key performance indicators (KPI) being waived and approved by the Minister that related to the coal strategy. All 8 remaining KPIs were achieved resulting in a success rate of 100% (2014: 94%).
KPI’s waived were:
The acquisition of funding for the coal (and lime) strategy.
The financial Debt to Equity ratio of > 30% (no project).
Socio Economic Indicator: the creation of 10 additional positions.
Highlights of the KPIs achieved during the year:
Rehabilitation implementation plan – Appointment of a Service Provider during Q1
Carat production – Actual 74 387 carats vs target of 70 000 carats
Bursaries issued to four Mining Engineering students
HDI as % of appointments – Achieved 94.7% vs target of 80%
Fatalities – Zero fatalities vs target of zero
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PSJV Operations Highlights
Diamond revenue increased by 49% to R414.2m (2014: R277.0m)
Production increased to 74 387 carats (2014: 46 680 carats)
Sea days increased to 24 during the year (2014: 20 sea days)
A net profit of R17.6m was achieved for the year (2014: restated profit of R25.2m)
Capital expenditure of R79.7m was incurred during the year, with the majority going towards the Muisvlak plant. 32% of the capital expenditure was procured from local suppliers.
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Achievements In Terms of Deed of Settlement
Alexkor received funding from Government for the execution of the land claim settlement agreement and the achievement thereof in the current year is as follows:
Township establishment costs of R1,6 million
The Township upgrade for phase 4 has been completed
PSJV re-capitalisation for R61,9 million
Company establishment for communities business entities for RVC
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PSJV Operations Comparative annual diamond production
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33 503
25 620 25 059
33 363
37 794 37 016 35 358
46 681
74 387
-
10 000
20 000
30 000
40 000
50 000
60 000
70 000
80 000
2007 2008 2009 2010 2011 2012 2013 2014 2015
CA
RA
TS
YEARS
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PSJV Operations Carat production per mining area
7
9 698
21 632
5 515
9 836
46 681
12 652
21 291
7 377
33 066
74 387
-
10 000
20 000
30 000
40 000
50 000
60 000
70 000
80 000
Land Mining Marine Beach Muisvlak TOTAL
CA
RA
TS
2014
2015
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PSJV Operations Sea days over the last decade
* Definition of “Sea Day”. When more than 50% of the sea vessels leave the harbour in a day to
dive for diamonds in the marine concessions.
8
79
61
44
34
23
18
10 13 13
8
22 20
24
0
10
20
30
40
50
60
70
80
90
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
SE
A D
AY
S *
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Community Upliftment Initiatives
In line with our Social and Labour commitments we have enrolled community members
as well as employees on our ABET program to assist in alleviating illiteracy in the
Richtersveld community.
For the year under review we also offered employees and members of the community
various skills development opportunities including learner-ships and internships.
Through our Local Economic Development programs which are aligned with the
Richtersveld Municipality IDP program we have continued to contribute towards poverty
alleviation, capacity building, improvement in the quality of life in the Richtersveld
community and surrounding towns as well as job creation and providing much needed
portable training skills.
To address the challenge of scarce skills, during the year under review we supported
the High school in the Richtersveld who offer Maths and Science to their learners. We
believe this initiative will encourage more learners to study Mathematics and Science at
tertiary level.
During the previous financial year (2013/14), we launched the Alexkor RMC JV
Wellness Campaign in partnership with the Department of Health. Through this initiative
more than 500 employees, school learners and members of the community received
free HIV counselling and testing and dental screening.
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Figures include Alexkor head office employees only
Name Surname Qualification Year of Study Gender Province
Khomotso Mashala Mining Engineering
2nd year Female Limpopo
Ndivhuwo Tshilande Mining Engineering
3rd year Female Limpopo
Thandazile Kubhela Mining Engineering
2nd year Female KwaZulu Natal
Ayavuya Maqotha Mining Engineering
2nd year Male Eastern Cape
Mpho Moruwane Mechanical Engineering
Final year Female North West
Baratang Mothobi Environmental Management
2nd year Female Northern Cape
Zandre Allison Environmental Management
3rd year Male Northern Cape
Bursary Students
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Control Environment
Internal controls are designed to provide reasonable but not absolute assurance as to the reliability of the financial statements, safeguarding of assets and to prevent and detect erroneous statements and losses.
Alexkor’s internal audit function is outsourced and provides an independent appraisal to examine and evaluate the company’s activities.
Alexkor has a fraud hotline facility and its effectiveness is reviewed throughout the year. This facility enables all stakeholders or any other parties to report fraudulent, corrupt and unethical practices in the work place. The hotline is implemented at both Alexkor and the PSJV.
There is evidence of ongoing improvement both at the PSJV as well as Alexkor on the control environment.
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Annual Financial Statements Approval and Audit Opinion
The AFS were approved and signed off by the Board on the 29th of July 2015.
The Audit and Risk Committee’s report is included in the Integrated Report.
The external auditor’s opinion remained unchanged. An emphasis on the Matters paragraph was included regarding:
− Restatement of corresponding figures due to a change in accounting policy re. exploration costs
− Alexkor being exempted by National Treasury (NT) from requirements of PFMA and has prepared its AFS in accordance with IFRS
− Material impairment of non-current assets held for sale
Findings, however, were raised regarding inter alia:
− Title deeds on properties recognised in the AFS
− Inadequate financial provision for the environmental rehabilitation liability
− Unallocated receipt relating to litigation that has been dormant for more than three years
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Annual Financial Statements Statement of Financial Position
Material movements during FY2015
Property, plant and equipment R86.1m (2014: R72.1m)
Cash in the rehabilitation trust R118.6m (2014: R115.0m)
Loan to joint venture R68.4m (2014: R38.1m)
Cash and cash equivalents R383.9m (2014: R475.1m)
Environmental liability R233.1m (2014: R284.7m)
Trade and other payables R98.9m (2014: R170.1m)
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Annual Financial Statements Statement of Comprehensive Income Highlights
Revenue R211.2m (2014: R141.3m)
Other expenses of R174.5m inclusive of impairment loss of R162m on non-current assets held for sale (2014: R20.4m)
Movement in rehabilitation liability R51.6m (2014: R15.9m)
Operating loss of R95.8m (2014: restated profit of R23.2m)
Net finance income R23.8m (2014: R30.4m)
Loss for the year R82.2m (2014: restated profit of R50.3m)
Had it not been for impairment, operating profit would have been R66,6m and profit for the year of R80.2m
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Annual Financial Statements Cash and Cash Equivalents
Cash Category Balance at 31
March 2015
Balance at 31
March 2014
Rm Rm
Operational cash 83.9 113.5
Recapitalisation funds (MTEF) 214.5 211.4
Cash held in legal trust 11.1 10.7
Cash held in government funded reserves 74.4 139.5
TOTAL 383.9 475.1
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Annual Financial Statements Government Funded Obligations
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Opening balance
at beginning
of the year
Transfers
received
Utilised during
the year
Interest earned
on investment
of funds
Closing balance
at the end
of the year
Township establishment 8 385 985 - (1 601 572) 425 127 7 209 540
Costs related to Deed of
Settlement 7 868 006 - (3 569 957) 437 756 4 735 806
PSJV recapitalisation 122 260 000 - (61 946 963) 2 183 155 62 496 193
Total government funded
obligations 138 513 992 - (67 118 491) 3 046 038 74 441 539
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Annual Financial Statements
Contingent Liabilities at 31 March 2015
Nabera mining
No provision was made for the above case after consultation with legal representation.
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Thank You