INTEGRATED ANNUAL REPORT 2016...2018/03/30 · BCom (Wits), CA(SA), MBA (Chicago Booth) Independent non-executive director Appointed: 27 May 2014 Board committee membership Chairman

INTEGRATED ANNUAL REPORT 2016

Sentula Integrated

Annual R

epo

rt 2016

Overview 2

Five-year review 3

Group operational structure 4

Directorate 6

Chairman’s and Chief Executive Officer’s report 8

Financial Director’s report 12

Governance reports

Corporate governance report 16

Risk management report 26

Information technology report 29

Remuneration report 30

Sustainability report 32

Consolidated financial statements 41

Shareholders’ information 111

JSE performance 112

Shareholders’ diary 112

Notice of annual general meeting 113

Form of proxy 121

Abbreviations 123

Subsidiaries 124

Administration IBC

Opencast mining

37% 2015: 55%

Exploration drilling

24% 2015: 16%

Crane hire

42% 2015: 20%

Coal mining

35% 2015: 20%

Drilling and blasting

35% 2015: 19%

Equity

For more detailed information about Sentula and its financial statements please refer to our website:

www.sentula.co.za

CONTENTS

ABOUT SENTULA

Integrated reportingThis Integrated Annual Report covers the 2016 annual financial period and has been compiled and presented

in accordance with the requirements and principles of the following:® the King Report on Governance for South Africa, and the King Code of Governance Principles

(“King III”);® the International Integrated Reporting Committee’s prototype of the

international Integrated Reporting (“IR”) framework;® the Companies Act 2008 (Act 71 of 2008), as amended (“Companies Act”);® the Listings Requirements of the JSE; ® International Financial Reporting Standards (“IFRS”); and® the Global Reporting Initiative’s GR3.1 guidelines on reporting of

non-financial information (“GRI G3.1”).

We recognise, in line with the principles of King III, that companies should not only report on financial

performance, but also on their sustainability, by disclosing social, environmental and economic issues. This

report provides stakeholders with relevant financial and non-financial information to enable them to obtain a

more balanced view of the Group’s business.

Forward-looking statementsThis report contains forward-looking statements which are not historical facts. Forward-looking statements

involve inherent risks, uncertainties and assumptions, including, without limitation, risks related to the timing or

ultimate completion of any proposed transactions; and the possibility that benefits may not materialise or such

assumptions prove incorrect, actual results could differ materially from those expressed or implied by such

forward-looking statements and assumptions. The forward-looking statements in this report are made as of the

date of this report and Sentula expressly disclaims any obligations to update or correct the statements due to

events occurring after issuing this report.

Definitions“The Company” refers to Sentula Mining Limited the holding company. “The Group” refers to Sentula Mining

Limited and all its subsidiaries. Also, “last year”, “previous year” and “previous corresponding period” refers

to the prior financial year ended 31 March 2015, “the current year”, “the current period”, “the year”, “the

period”, “this year”, “this period” refers to the fifteen months ended 30 June 2016 and “next year” refers

to the financial year ending 30 June 2017. For a full list of abbreviations used refer to page 123.

Sentula Mining Limited has been listed on the Main Board of the JSE Limited (“JSE”) since

1993. The Group is actively involved in the provision of contracted opencast mining,

overburden drilling and blasting, mobile crane hire and exploration drilling services to the

mining sector. Sentula is one of the major suppliers of outsourced mining services in the South

African coal mining industry and also owns and mines an anthracite mine. The Group’s portfolio

of blue chip customers, coupled with its diversified service offering, has contributed to its

ability to weather the prevailing challenging economic environment.

Sentula Mining Limited Integrated Annual Report 2016 1

OVERVIEW

Classi�ed injury frequency rateFive-year history (per million man hours worked)

0 0,5 1,00 1,50 2,00

2014

2013

2012

2016*

2015**

RevenueFive-year history (R’million)

0 500 1 000 1 500 2 000 2 500 3 000

2016*

2015**

2014

Restated 2013

2012

Headline (loss)/earnings per shareFive-year history (cents)

-50 -40 -30 -20 -10 0 10 20 30

2016*

2015**

2014

Restated 2013

2012

Basic loss per shareFive-year history (cents)

0 -20 -40 -60 -80 -100 -120 -140 -160

2016*

2015**

2014

Restated 2013

2012

* For the 15 months ended 30 June 2016 ** 2015 restated for Benicon Coal and Nkomati no longer classified as

held-for-sale *** 2014 EBITDA adjusted to exclude impairment of Nkomati mining right **** Adjusted for impairment of intangible asset, share-based payments, loss

on sale of assets and net realisable inventory adjustments

Operating lossFive-year history (R’million)

0 -200 -400 -600 -800 -1 000

2016*

2015**

2014

Restated 2013

2012

Cash generated from operating activitiesFive-year history (R’million)

0 50 100 150 200 250 300 350

2016*

2015**

2014

Restated 2013

2012

Net debt to equity gearingFive-year history (%)

0 10 20 30 40 50 60

2016*

2015**

2014

Restated 2013

2012

EBITDA****Five-year history (R’million)

-100 0 100 200 300 400 500

2016*

2015**

2014***

Restated 2013

2012

adjusted for exclusion of mineral right

Net asset value per shareFive-year history (cents)

0 100 200 300 400 500

2016*

2015**

2014

Restated 2013

2012

2 Sentula Mining Limited Integrated Annual Report 2016

FIVE-YEAR REVIEW

Fifteen months ended

June 2016*

Restated March

2015**March 2014

RestatedMarch 2013*** 2012

Revenue (R‘000) 1 535 689 1 374 752 1 591 482 2 084 118 2 512 415

Operating loss (R‘000) (441 422) (221 589) (176 445) (843 559) (420 071)

Earnings before Interest, tax, depreciation and amortisation (EBITDA) (R‘000)***** (16 247) 48 696 181 530 254 949 382 879

Cash generated from operations (R‘000) 100 729 119 808 288 782 206 525 319 156

Attributable loss (R‘000) (447 429) (293 445) (533 565) (862 687) (516 703)

Loss per share (cents) (61,3) (49,2) (47,7) (149,0) (88,9)

Headline (loss)/earnings per share (cents) (43,5) (40,2) (43,7) (25,4) 21,7

Tax rate (%) 3,6 (5,8) 7,7 3,4 (8,5)

Dividend per share (cents) – – – – –

Dividend cover (times) – – – – –

Net asset value per share (cents)***** 31 123 176 265 408

Total assets employed (R‘000) 1 042 963 1 424 435 1 785 186 2 788 885 3 855 635

Return on shareholders‘ equity (%) (81,5) (33,4) (41,7) (44,1) (19,8)

Gearing (%) 52 37 31 32 22

Liquidity

– Current ratio**** 0,70 1,08 1,28 0,92 2,48

– Current ratio**** excluding current portion of long-term borrowings 0,75 1,40 2,55 2,23 4,03

– Asset test ratio**** 0,64 0,96 1,08 0,72 1,84

Safety

– Classified injury frequency rate 1,22 0,69 0,78 0,29 1,65

* 2016 represents 15 months ending June 2016 ** Income statement restated due to Benicon Coal and Nkomati Anthracite no longer classified as held-for-sale assets. *** Restated due to IFRS 11 change in accounting policy **** Current assets include assets held-for-sale***** March 2014 EBITDA adjusted to exclude impairment of Nkomati mining right


GROUP OPERATIONAL STRUCTURE

Sentula CoalProprietary Limited

Sentula Mining ServicesProprietary Limited

Sentula Mining Mauritius Limited

Benicon SalesProprietary Limited

Benicon CoalProprietary Limited

Nkomati AnthraciteProprietary Limited

Sentula Employee Trust

Buenti DrillingProprietary Limited

Sentula Mining Services Mauritius Limited

Mpumalanga Economic Growth Agency

Myna Projects Geosearch Botswana

AguaTerra Mozambique

Geosearch International Operating Entities

Shanike Investments No 171 Proprietary Limited

Sentula ContractingProprietary Limited

JEF Drill and BlastProprietary Limited

Ritchie Crane HireProprietary Limited

Thebe Mining Resources

Sentula Empowerment Trust

Anglo American Khula Mining Fund

Sentula Employee Trust

Benicon Opencast MiningProprietary Limited

Classic Challenge Trading Proprietary Limited

83%

100%

50%

40%

100%

100%

100%

100%

50,5%

20%

100%

100%

20%

100%

100%

100%

20%

17%

60%

49,5%

51%

49%

100%

40%

50%



DIRECTORATE

INDEPENDENT NON- EXECUTIVE DIRECTORSEXECUTIVE DIRECTORS

Jacques (JC) Badenhorst (46)CA(SA)Executive director: Chief Executive OfficerAppointed Acting CEO on 7 October 2015 and Permanent CEO on 1 March 2016

Board committee membershipMember of the Social and Ethics Committee and attends various Board committee meetings ex officio.

Skills, expertise and experience Jacques joined the Company as non-executive director on 8 May 2015 and was appointed acting Chief Executive Officer on 7 October 2015 and appointed as permanent CEO on 1 March 2016. Jacques was formerly a financial analyst at JP Morgan and subsequently Group Executive for Strategy and Planning at Absa Group Limited and thereafter a director of various entities where he provided advice to key clients on corporate finance, mergers and acquisitions, financial advisory and debt capital markets. Jacques also served as an independent non-executive director of Dorbyl Limited.

Johann (JC) Lemmer (38)CA(SA)Executive director: Financial DirectorAppointed: 27 May 2014

Board committee membershipAttends various Board committee meetings ex officio and is a member of the Social and Ethics Committee.

Skills, expertise and experienceJohann is a chartered accountant with more than 10 years’ experience. He was appointed as the Financial Director of Sentula in May 2014. Prior to his appointment in 2012 as Chief Financial Officer of the Geosearch group of companies (“Geosearch”), a wholly owned subsidiary of Sentula, he was an audit partner at BDO.

Ralph (RB) Patmore (64)BCom (Wits), MBL (SBL) (UNISA), Stanford Executive Programme (Stanford University, USA), Accredited Associate of the Institute for Independent Business International Independent non-executive director (Chairman)Appointed: 25 January 2012

Board committee membershipChairman of the Board, Chairman of the Nomination Committee, Chairman of the Investment Committee and member of the Remuneration Committee.

Skills, expertise and experienceRalph obtained his BCom and MBL from the University of the Witwatersrand and Unisa Graduate School of Business Leadership respectively, and was the co-founder of Iliad Africa Limited, a listed company focused on building materials, where he served as Chief Executive Officer for 10 years. He has also served as Managing Director to various companies and held the position of director on the board of Group Five Limited, a listed company operating in the integrated construction services and materials sector.

Currently Ralph is also the non-executive of various other listed entities.


INDEPENDENT NON- EXECUTIVE DIRECTORS

NON-EXECUTIVE DIRECTORS

Dalikhaya (Rain) Zihlangu (49)BSc (Mining) Engineering, MBANon-executive directorAppointed: 1 July 2010

Board committee membershipMember of the Audit and Risk Committee, member of the Investment Committee, member of the Remuneration Committee and member of the Nomination Committee.

Skills, expertise and experienceRain obtained his first degree in Mining Engineering through the University of the Witwatersrand in 1989 to become the second black mining engineer in South Africa. He joined the Anglo American Corporation graduate training programme at Vaal Reefs Exploration and Mining Company and obtained his mine manager’s government certificate of competence.

His professional membership includes South African Institute of Mining and Metallurgy, Engineering Council of South Africa and Association of Mine Managers of South Africa.

Theunis de Bruyn (48)CA(SA)Non-executive directorAppointed: 15 June 2016

Board committee membershipMember of the Board.

Skills, expertise and experienceTheunis is a chartered accountant with more than 20 years’ experience in the financial services sector and founded Calibre Capital and RECM asset management in 2001.

Stephen (Steve) Naudé (65)BCom (Wits), CA(SA), MBA (Chicago Booth)Independent non-executive directorAppointed: 27 May 2014

Board committee membershipChairman of the Audit and Risk Committee and Chairman of the Remuneration Committee and member of the Nomination Committee.

Skills, expertise and experienceSteve is a chartered accountant and obtained his MBA from the University of Chicago Graduate School of Business. Steve has more than 30 years’ experience in corporate finance and investment banking in both the domestic and cross-border markets. Currently Steve is a non-executive director and Audit Committee Chairperson of a private technology company. He is also a member of the Institute of Directors South Africa.

Mdu Gama (47)BCom (Accounting) (University of Lesotho), MBA (University of Durban – Westville), PhD (University of Johannesburg) Independent non-executive directorAppointed: 1 February 2015

Board committee membershipMember of the Audit and Risk Committee and Chairman of the Social and Ethics Committee.

Skills, expertise and experienceMdu is the first recipient of a PhD (Finance) degree awarded by the University of Johannesburg (UJ) and its predecessor Rand Afrikaans Universiteit (RAU). He is also an alumni of Cornell University (USA) and Henley University (UK). He has been a founder and director of various companies for more than 20 years. He is a lead independent director at Mustek Limited, serves on its Audit and Risk Committee and also chairs the Mustek Employment Equity Committee. He is also a non-executive director of Calgro M3 Limited. Mdu is the co-founder and CEO of Resultant Finance Proprietary Limited, an asset rental company operating in the public and private sectors. He is also a trustee of the UJ Trust.


CHAIRMAN’S AND CHIEF EXECUTIVE OFFICER’S REPORT

We recognise that the roles of Chairman and Chief Executive are

separate and, accordingly, they operate under separate

Board-approved mandates. Our presentation of a combined

Chairman’s and Chief Executive’s review is based on a practical

decision to avoid duplication and provide the reader with a

succinct account of how the Sentula Group is integrating

sustainable development into everything it does.

OverviewThe 2016 financial period continued to be a very challenging

period for Sentula. Since 2010 Sentula has been battling to keep

head above water as the debt load, fraud, declining commodity

prices, declining margins, rising labour costs, legal disputes and

mining regulatory uncertainty continued to weigh on its

performance. All these factors resulted in excess of R2 billion of

shareholders capital being destroyed over the years and

substantially more lost in market value. In addition, as the

commodity binge came to an end and as lenders started to

suffer losses, they simply started applying more pressure on

mining services companies like Sentula to accelerate repayment

of outstanding debt. For Sentula it all culminated in the tipping

point being reached during the past financial period. The new

starting point was to install an executive team that was capable

of focusing the business, identifying the issues and

opportunities, and then to move forward despite the negative

past.

Sentula was in desperate need of a capital injection to stabilise

operations, keep the lenders at bay for another year to allow the

newly appointed executive time to restructure key businesses.

The capital injection came in the form of a R105 million rights

issue, which was partially used to reduce the senior debt burden,

provide capital to restructure key businesses as well as some

working capital.

Sentula is on track to complete an aggressive restructuring

exercise, which included closing, merging and recapitalising

affected businesses in its portfolio. The priorities on a long list of

action items were: u to plug the cash flow drain in the contract mining businesses,

which have been losing money for a long time. The end result

was the proposed merger between two contract miners to

create a profitable and very competitive contract mining

company in which Sentula will take up a minority interest, if

approved by shareholders; u to develop the Nkomati Anthracite Mine which today, after the

restructuring, is a profitable and well managed mine; u to substantially reduce fixed overhead expenses across the

Group, which was achieved; u to consolidate the exploration drilling expertise across the

Group and pursue new growth opportunities, which was done.

The key qualities which are long-term contracts with blue chip

customers, a diversified revenue base, well established track

records, good safety records and top quality and loyal staff with

the technical expertise to deliver results, have kept Sentula alive

against all odds and enabled management to restructure the

individual businesses. These qualities, combined with a fresh

approach from the new executive management, assisted in

repositioning each business as a standalone and sustainable unit.

There are more hurdles to cross but we are confident that

Sentula is on track to turn the corner. The environment remains

very challenging but the emphasis will be on focusing on those

things that we can control rather than those that we cannot. In

future the focus will be on businesses that have good investment

characteristics and yield attractive returns on capital.

Safety managementThe Group boasts a proud track record of more than 5,7 million

fatality free operating hours. Safety is a core value of the Sentula

Strategic updateThe support of our shareholders during the past financial year facilitated the completion of the restructuring of operations and reduction in debt. Our strategic objectives are:

u Settlement of outstanding senior Group debt; u Reduction in the Group’s exposure to opencast mining services;

u Investment in performing businesses; u Unlocking value in Nkomati Anthracite mine; and u Returning to profitability.


Group and integral to ensuring sustainable business. It is

demonstrated by commitment to high standards and assignment

of specific responsibilities for safety. The Group places an

absolute priority on the safety of employees and sub-contractors.

For the period under review the Group achieved a CIFR of

1,22 per million man hours worked.

The safety policy and framework of the Group provides direction

and sets standards for operations to develop and manage its

proactive safety programmes and strategies with the objective of

continuously improving in terms of safety performance.

PeopleThe quality of our people is critical to the Group’s competitive

advantage. We recognise that in order to achieve the sustained

high performance that is necessary for Sentula to meet the

demands of its business environment, it needs to attract, retain

and continuously develop its employees at all levels.

SustainabilityThe Board and executive leadership team remain committed to

building a sustainable business that takes into account the

economic, social and environmental needs of communities in

which the Group operates. This commitment to sustainable

development is driven at a Group level, endorsed and measured

by the Board, and implemented across the operations. The

Chairman and directors, through their involvement on various

Board committees, are able to contribute to and support the

attainment of the Group’s objectives.

Sentula is committed to conducting its operational activities in

an environmentally responsible and sustainable manner within its

scope of control.

TransformationIt is our vision to market Sentula as a home for all South Africans,

where there are no divisions or boundaries and where no one

feels excluded. Sentula is rated as a level 5 BBBEE entity, with

an effective shareholding of 20,77% in terms of dti codes. Its

South African mining services businesses as a group, are rated a

level 4 contributor with an effective shareholding of 33,99%.

The Board and corporate governanceSentula has a tainted history of governance breaches and

non-compliance with standard governance requirements. The

current Board has every intention to ensure that Sentula in future

maintains the highest standards in terms of corporate

governance and ethics. The Board operates under the terms

stipulated by the Board Charter, which regulates the roles and

responsibilities of the directors.

“Significant restructuring and repricing of our contract mining operations enabled us to plug the cash flow drain...”


CHAIRMAN’S AND CHIEF EXECUTIVE OFFICER’S REPORT CONTINUED

The Board continues to ensure compliance with best practice

and the governance guidelines outlined in King III. We will

ensure that the Company remains transparent and adheres to

high levels of disclosure.

Changes in the composition of the Board and its various

committees during the period under review have been fully

detailed on pages 16 to 23 of this report.

Strategic reviewDuring the past fifteen months it became clear that for Sentula

to survive and flourish, aggressive restructuring of its balance

sheet as well as certain key operations were required. The

strategic objectives that were set in October 2015 had very

specific envisaged outcomes. In this regard, we are satisfied that

adequate progress was made.

The strategic objectives that were set are: u strengthen the balance sheet; u reduce and restructure debt; u cut overhead expenses; u restructure all contract mining operations; u develop the Group’s anthracite mine; u invest in performing businesses; and u return the Group to profitability.

Significant restructuring and repricing of our contract mining

operations enabled us to plug the cash flow drain and re-

establish profitable and sustainable contract mining operations.

Although we actively continue to pursue new contracts and

opportunities in all areas of operations, we will only take on new

contracts that deliver an acceptable return on capital. We are

more than happy to either divest from unprofitable businesses or

to put unprofitable assets under care and maintenance until we

witness adequate traction in the global economic recovery.

We will not engage in new contracts for the sake of simply

keeping assets and people busy. We will only deploy assets

when we are satisfied that our investment criteria is being met.

In addition to organic growth opportunities, ongoing strategic

industry consolidation opportunities continue to be assessed.

During the last three months to June we have closed down our

main contract mining subsidiary but are in the process of

simultaneously establishing a new and profitable contract miner

in which we will ultimately hold a 40% shareholding.

We are of the view that the blue chip mining houses will

continue to outsource mining activities due to the capital and

labour intensive nature of mining, currency sensitivity of

equipment and revenue as well as the pricing power that

outsourcing provides. We believe that the opportunities are

there; we just have to make sure that we pursue them in a

profitable and sustainable manner.

Operational reviewMining servicesAlthough Sentula currently provides a suite of diversified

mining services to mainly blue chip customers, it will in future

focus on investment in good companies with good management,

delivering attractive returns on capital to shareholders. The five

businesses, constituting the current Sentula Group, operate

in one of the four contracted mining-related service provision

areas, broadly defined as opencast mining, mobile crane

hire and exploration drilling. In addition, Sentula is the majority

shareholder in Nkomati Anthracite, which is an active

anthracite mine.

Opencast mining servicesSentula’s largest bulk earthmoving business, Benicon Opencast Mining (“Benicon”), suffered substantial losses during the fifteen months as a result of old and expensive to maintain equipment as well as an inefficient and expensive operating structure. As a result, Benicon is in the process of winding down and the best elements are in the process of being merged with Close-Up Mining (“Close-Up”). As part of the proposed transaction, Sentula will take up a 40% equity stake in Close-Up, which continues to provide contract mining services to Anglo American Coal. Classic Challenge Trading (“CCT”), which provides contract mining services to Samancor, suffered losses due to a historically mispriced contract. Subsequent to the period end the contract price has been adjusted, which should enable CCT to operate profitably in future.

Overburden drilling and blasting JEF Drill and Blast (“JEF”) provides drilling and blasting services to both companies as well as external clients. JEF’s performance during the fifteen months was negatively affected by the loss of key blasting contracts. Subsequent to period end JEF was able to obtain new drilling contracts, which should enable it to return to historical levels of profitability.

Mobile crane hireRitchie Crane Hire (“Ritchie”) suffered a slowdown in revenue growth during the early part of the financial year, mainly as a result of key customers postponing work due to tough market conditions. Since then, confidence appears to have returned, evident in a consistent and gradual increase in Ritchie’s crane utilisation ratio. Ritchie’s impeccable safety record combined with excellent customer service has enabled it to keep on winning new contracts against very tough competition. The Group will continue to invest in Ritchie to grow the business on a sustainable basis.


Exploration drillingThe ongoing reduction in exploration expenditure in the market necessitated further restructuring of Geosearch operations in South Africa, Mozambique and Botswana. The South African operation’s key contract is with Anglo Platinum at their Mogolakwena mine while Botswana was recently awarded a drilling contract at Debswana’s Orapa mine. Mozambique continues to be affected by challenging weather conditions and a very slow recovery in coal mining activities. Operations in all three jurisdictions have been rightsized to be able to operate profitably in the current challenging environment. The businesses are well positioned to take advantage of new opportunities as the exploration drilling market recovers.

Nkomati AnthraciteThe Nkomati anthracite mine, which was previously classified as a “held-for-sale” asset, has been brought back into operation and is well on track to achieve record production and profitability. During the past fifteen months the emphasis was on ensuring that the open pit mine achieves steady state production and that we complete the planning for the reopening of the underground mine. Open pit steady state production was achieved subsequent to the end of the financial period and underground make-safe operations are scheduled to start during 2017. Longstanding shareholder disputes have been resolved, paving the way for raising the necessary capital to resume underground mining operations.

OutlookDuring the past period under review, the bulk of the hard work has been done and we are satisfied that the future of Sentula will look very different than its past. We do not pay too much attention to macro-economic factors or predictions about the commodity cycle but rather prefer to focus on the things that we can control. We focus on each business’ individual requirements, drivers and dynamics to determine what is required in each to remain competitive and be profitable. Our sole aim is to deliver attractive returns on capital to our shareholders over time and by doing so outperform the market.

AppreciationWe would like to extend our thanks to the Board, executive management and their teams for the hard work, dedication and support demonstrated during the fifteen months, resulting in the maintenance of the Group’s operational base during challenging times.

Our appreciation is also extended to our clients and suppliers for their continued and invaluable support and service respectively.

Ralph Patmore Jacques BadenhorstNon-executive Chairman Chief Executive Officer

30 September 2016


FINANCIAL DIRECTOR’S REPORT

OverviewSentula continued its focus on the overall strategy of

streamlining and restructuring operations and reducing

corporate costs and debt during the period.

During the past fifteen months, the Group was faced with a

significant decline in its Emalahleni based operations. Ritchie

Crane Hire (“Ritchie”) was impacted by the closure of Highveld

Steel as well as a significant decline in Glencore’s mining

activities in the area. JEF Drill & Blast (“JEF”) was affected by

clients electing to perform blasting contracts in-house while the

pressure on Benicon Opencast’s (“Benicon”) mining margins, as

a result of a long decline in the coal price as well as high

maintenance and labour costs, reached its tipping point.

However, during this period the groundwork was also laid in

order to return the Group to profitability: u Ritchie secured new contracts; u JEF stabilised operations, identified growth opportunities and

secured new contracts; u Nkomati Anthracite’s (“Nkomati”) mining production was

targeted to increase from 10 000 to 40 000 ROM tonnes per

month; u Geosearch’s restructuring was finalised and new contracts

secured; and u A new strategy for opencast mining operations was formalised.

With foundations being laid, the Group required additional

capital to restructure the debt maturity profile and invest in

working capital.

Through the March 2016 rights offer, the Company managed to

raise an additional R104,6 million in equity capital. The proceeds

were utilised to reduce the senior debt facility by R45 million,

R8 million was utilised to restructure and wind-down Benicon

and a working capital investment of R22 million was made in JEF.

Review of resultsThe loss incurred during the fifteen months ended 30 June 2016

was mainly as a result of the following non-recurring events: u The Megacube/Keaton arbitration award of R129 million; u Impairment of property, plant and equipment of R139 million in

the opencast mining operations subsequent to the decision to

wind-down Benicon; u Operating losses incurred by Benicon amounting to

R157 million, including wind-down costs; u Nkomati production ramp up costs amounting to R25 million.

Ongoing overhead cost cutting initiatives have resulted in

administration expenses decreasing by 24% on a comparable

basis to R179 million for the 15-month period.

Segmental analysisOpencast mining and earthmovingCompanies presented as part of the opencast mining and

earthmoving segment include Benicon, Sentula Coal, CCT and

Benicon Sales. Sentula currently holds 50,5% of the shares in

Sentula Coal with the remaining shares being held by the

Sentula Employee Trust. Sentula Coal is currently 62,91% black

owned. Sentula Coal’s opencast mining activities commenced

during April 2015 when Sentula Coal secured its first opencast

mining contract with Anglo Coal due to its strong empowerment

credentials. The intention was for Sentula Coal to utilise

subcontractors to perform its mining operations until such time

as adequate cash reserves have accumulated to acquire its own

equipment.

Anglo contracts, historically performed by Benicon, came up for

renewal during early 2016. As a result of Anglo’s revised

procurement requirements the contracts were awarded to

Sentula Coal, which subsequently appointed Close-Up Mining

(“Close-Up”) and Benicon as subcontractors to perform the

mining activities.


Sentula Coal’s subcontractor agreements are structured in a

manner that guarantees a positive profit margin to Sentula Coal.

Benicon’s ageing fleet negatively impacted the ability of Sentula

Coal to deliver into the Anglo Coal contracts. As an alternative

to the significant investment required for upgrading and

replacing equipment, the proposed Close-Up transaction was

entered into.

Benicon incurred an operating loss of R104 million for the

12 months ending March 2016, which escalated to R157 million

for the 15 months ending June 2016. At the end of June 2016

the decision was made to wind-down Benicon. As part of the

restructuring, Sentula Coal employed certain staff from Benicon

and is currently in the process of acquiring selected equipment

from Benicon.

The R53 million operating loss incurred by Benicon between

April and June 2016 also included wind-down and retrenchment

costs. The cash flow impact was limited through the disposal of

certain plant and equipment. Some equipment, including plant

and equipment to be disposed of to Sentula Coal, is still in the

process of being sold. The plant and equipment is classified as

held-for-sale.

Benicon Sales is an equipment trading company, which realises

all surplus components and inventory in the Group at relatively

low margins. Benicon Sales’ largest client during the period was

Benicon.

CCT which provides chrome mining services to Samancor in

Steelpoort, incurred an operating loss of R10 million. The loss

can be attributable to the volatile labour and community

environment in the Steelpoort area as well as an incorrectly

priced contract. Subsequent to the reporting period, CCT

secured a new three-year contract with Samancor at a

significantly improved rate.

Exploration drillingThe Geosearch group of companies incurred a loss of R14 million

for the period. Exploration drilling is significantly exposed to

cyclical changes in the mining industry. The loss was mainly

attributable to heavy rains in Mozambique during the period

April to June 2016. The companies forming part of the group

have been rightsized on the back of long-term secured contracts.

Geosearch requires uplift in mining exploration to return to

previous levels of profitability.

Overburden drilling and blastingDuring the period JEF generated 40% of its revenue from Group

companies namely Sentula Coal, Benicon, CCT and Nkomati

while external clients contributed 60%. JEF’s revenue is therefore

partially dependent on the Group’s successes in its opencast

mining operations. JEF’s profitability during the period was

negatively impacted by external clients electing to perform

blasting contracts in-house. However, during early 2016 JEF was

able to secure additional drilling contracts in order to partially

compensate for the loss of blasting revenue.

Crane hireFollowing the closure of Highveld steel and reduced spending

by Glencore, Ritchie was unable to repeat the 2015 record

revenue of R100 million. Since Ritchie’s cost structure is primarily

fixed, a decrease in revenue directly impacts the profitability of

the Company. Ritchie managed to secure additional preferred

supplier contracts towards the latter part of the financial year.

These contracts were secured at slightly lower margins but allows

for Ritchie to return to previous revenue levels.

Coal miningIn February 2016 a new monthly production target of

40 000 ROM tonnes was set for Nkomati on the back of a

secured Glencore off-take agreement. In order to achieve the

increased volumes, the direction of the opencast pit had to be

changed and additional employees employed. The additional

expenditure resulted in an operating loss for the segment

amounting to R25 million. Nkomati’s future profitability is

dependent on the production target being sustained.

MegacubeThe Megacube/Keaton arbitration dispute has been fully

provided for during the period, negatively impacting the Group’s

equity by R109 million. The arbitration award will not impact the

rest of the Group’s operations as there is no known recourse

between Megacube and any other Group company.


FINANCIAL DIRECTOR’S REPORT CONTINUED

Income tax liabilitiesThe Group is in the process of finalising the current disputed

2007 and 2008 mining capital allowances with SARS amounting

to R50,8 million. The liabilities and interest have been fully

provided for in the results based on SARS’s assessment as

disclosed in note 10 of the financial statements. Due to the

nature of the dispute and the financial position of Megacube,

CCT and Benicon, management is of the opinion that a

reasonable settlement could be reached with SARS on all

outstanding matters.

Capital structureThe Group’s total shareholder funds, excluding Megacube,

amounts to R453 million. The Group’s short-term debt, including

net overdraft, decreased by R155 million to R112 million.

Adjusting for Megacube, the Group’s debt to equity ratio

decreased from 36% to 25%.

The support of our shareholders during the past financial year

facilitated the completion of the restructuring of operations and

reduction in debt.

Nkomati Anthracite Reserve The Nkomati Anthracite mine is located approximately 50 km

south of Komatipoort, Mpumalanga province, within the

Kangwane Coal Field. The run of mine anthracite reserves

amount to a total of 4,24 Mt after taking into account 0,28 Mt

mined during the period. The latest independent Competent

Persons Report (CPR), conducted by SRK Consulting in 2011, is

available on Sentula’s website.

Johann Lemmer

Financial Director

30 September 2016

Corporate and other service costsCorporate and other service costs decreased by R1 million per

month from the prior year as a result of continued downscaling

and streamlining of the Group’s corporate structure.

Cash flow and net cash positionCash flow management was critical during the period in order to

ensure that the Group achieved scheduled debt repayments.

Cash flow from operating activities before changes in working

capital was a negative R17 million compared to a positive

R40 million in the prior year. The decline is mainly as a result of

the R157 million operating loss incurred by Benicon, which is in

the process of being wound down at the end of the financial

period. The negative operational cash flow has been offset by

the unwinding of working capital amounting to R93 million.

Purchase of equipment during the period amounted to

R57 million. Equipment purchases were mainly funded through

the disposal of plant and equipment amounting to R61 million.

Debt of R151 million was repaid compared to R217 million in the

prior year.

The cash and cash equivalents at the end of the period

amounted to a negative R54 million, compared to a negative

R62 million in the prior financial year. The Group bridges any

working capital deficits by utilising its general banking facility

from Standard Bank with a limit of R95 million.

As a result of the rights offer, Sentula was able to restructure the

senior debt repayment terms during February 2016 and reduce

the interest rate from 15,15% to an effective rate of 11,55%

(JIBAR + 425 basis points). As at 30 June 2016, the remaining

senior debt of R35,5 million is repayable in quarterly instalments

of R3,75 million per quarter and a bullet payment of R26 million

on or before 31 March 2017. It is not Sentula’s intention to

refinance the debt.


CORPORATE GOVERNANCE REPORT


GOVERNANCE REPORTS

The governance report section includes the following:

Corporate governance report – page 16

Risk management report – page 26

Information Technology report – page 29

Remuneration report – page 30

Corporate governance reportIntroduction

The Board of Directors (“the Board”) of Sentula and senior

management are committed to the highest standards of

corporate governance and take pride in their high moral and

ethical business standards, accompanied by sound and

transparent business practices.

As corporate governance is constantly evolving, Sentula

continually focuses on seeking ways to improve on its corporate

governance standards and in doing so, the Board continuously

strives to achieve corporate governance best practice.

The Board, assisted by the Audit and Risk Committee, and the

Social and Ethics Committee, is responsible for overall corporate

governance and monitors compliance with all applicable laws,

rules, codes, standards and the Listings Requirements, and

ensures ongoing improvement in the Group’s adherence to

these laws, guidelines and principles. The Company Secretary is

responsible for assisting the Board in monitoring compliance and

the day-to-day management of corporate governance.

Sentula applies all the principles of King III, save for disclosure in

the sustainability report which is not independently reviewed.

The Audit and Risk Committee reviews the need for external

assurance annually. The International Accounting and Auditing

Standard on Assurance Engagements (ISAE 3000) and

Accountability’s Assurance Standard (AA 1000 AS) are taken into

account in deciding when to use external assurance providers.

The King III checklist is available on the Sentula website

(www.sentula.co.za) and on request.

Board of DirectorsStructure and role of the Board

The Board has a unitary structure which comprised seven

members during the financial period under review, and still

comprises seven members, three of whom are independent

non-executive directors. Determination of independence is

guided by King III, the Companies Act, the Listings Requirements

and corporate best practice. The profiles of the members of the

Board are set out on pages 6 to 7 of this Integrated Annual

Report.

The roles of the non-executive Chairman and the Chief Executive

Officer are separated in accordance with the Board’s policy of

division of responsibilities. This ensures a balance of authority

and precludes any one director from exercising unfettered

powers of decision-making. In addition, the Board complies with

the requirements of King III insofar as the composition of its

sub-committees is concerned.

A Board Charter, which is reviewed annually, has been adopted

to guide the Board in governance issues and sets a framework

within which the Board functions. The Board Charter sets out the

Board’s duties and obligations, which include, inter alia, to:

u act as the focal point for, and custodian of, corporate

governance by arranging its relationship with management,

shareholders and other stakeholders of the Company along

sound corporate governance principles;

u appreciate that strategy, risk, performance and sustainability

are inseparable and to give effect to this by:

– contributing to and approving the strategy;

– satisfying itself that the strategy and business plans do not

give rise to risks that have not been thoroughly assessed by

management;

– identifying key performance and risk areas;

– ensuring that the strategy will result in sustainable

outcomes; and

– considering sustainability as a business opportunity that

guides strategy formulation;

u provide effective leadership on an ethical foundation;

u ensure that the Company is and is seen to be a responsible

corporate citizen by having regard not only to the financial

aspects of the business of the Company but also to the impact

that business operations have on the environment and the

society within which it operates;

u ensure that the Company’s ethics are managed effectively;

u ensure that the Company has an effective and independent

Audit and Risk Committee;

u be responsible for the governance of risk;

u be responsible for information technology (“IT”) governance;

u ensure that the Company complies with applicable laws and

considers adherence to non-binding rules and standards;

u ensure that there is an effective risk-based internal audit;

u appreciate that stakeholders’ perceptions affect the Company’s

reputation;

u ensure the integrity of the Company’s Integrated Annual

Report;

u act in the best interests of the Company at all times by

ensuring that individual directors:


– exercise their fiduciary duties with the necessary care, skill

and diligence;

– adhere to legal standards of conduct;

– practice objective judgement with regard to the affairs of

the Company independently from management, but with

sufficient information to enable a proper and objective

assessment;

– are permitted to take independent advice in connection

with their duties following an agreed procedure;

– immediately disclose real or perceived conflicts to the Board

and deal with them accordingly; and

– deal in securities only in accordance with the policy adopted

by the Board;

u commence business rescue proceedings as soon as the

Company is financially distressed;

u elect a Chairman of the Board that is a non-executive director;

and

u appoint and evaluate the performance of the Chief Executive

Officer.

The Board Charter requires that non-executive directors have

unfettered access to management at any time, and all directors

are entitled, at the Company’s expense, to seek independent

professional advice on any matters pertaining to the Group

where they deem this to be necessary, and are obliged to seek

such advice in matters where they lack sufficient expertise to

make an informed decision. When seeking independent advice,

the directors must inform the Company Secretary and if it is

relevant to Sentula or its operations, the Company Secretary will

disclose the information to the Chief Executive Officer and the

Board.

Executive directors are appointed by the Board to oversee the

day-to-day running of the Company. Executive directors are held

accountable through regular reporting to the Board, and their

performance is measured against predetermined criteria.

Non-executive directors provide the Board with advice and

experience that is independent of management and the

executive. The presence of independent non-executive directors

on the Board, and the critical role they play as Board

representatives on key committees, ensures that the Company’s

interests are served by impartial views that are separate from

those of management and shareholders.

Self-evaluations by the Board and by the Audit and Risk

Committee were performed in August 2015. The results have

been addressed by the Board during the year.

An evaluation of individual director performance by the

Chairman and an evaluation of the Chairman by the rest of the

Board are performed annually in the fourth quarter of the

calendar year.

For the financial period ended 30 June 2016 and subsequent

thereto, the Board composition and resignation of directors were

as follows:

Director Appointed Resignation

Robin Berry (Chief Executive Officer) 02/01/2007 07/10/2015

Ralph Patmore (independent non-executive Chairman) 25/01/2012 n/a

Rain Zihlangu (non-executive) 01/07/2010 n/a

Stephen Naudé (independent non-executive) 27/05/2014 n/a

Mdu Gama (independent non-executive) 01/02/2015 n/a

Theunis de Bruyn (non-executive) 15/06/2016 n/a

Jacques Badenhorst (non-executive) 08/05/2015 n/a

(Chief Executive Officer) 07/10/2015 (acting) n/a

01/03/2016 (permanent) n/a

Johann Lemmer (Financial Director) 27/05/2014 n/a

Executive directors have contracts of employment with the

Company. No contracts between the executive directors and the

Company, or any of its subsidiaries, are terminable at periods of

notice exceeding six months or require payment of

compensation on termination.

Non-executive directors have service contracts with the

Company, and retire annually by rotation in accordance with the

Company’s MoI.

Details on the remuneration of executive and non-executive

directors are provided on page 106 of the Integrated Annual

Report.


Changes to the BoardResignations

Robin Berry resigned as Chief Executive Officer and

Chairman of the Social and Ethics Committee with effect from

7 October 2015.

Appointments

Jacques Badenhorst was appointed as non-executive director

effective 8 May 2015 until his appointment as acting CEO on

7 October 2015 and his permanent appointment as CEO on

1 March 2016.

Theunis de Bruyn was appointed as non-executive director with

effect from 15 June 2016.

Ralph Patmore was appointed as acting Chairman of the Social

and Ethics Committee effective 7 October 2016 and Mdu Gama

was appointed as member on 23 June 2015 and as Chairman on

3 March 2016 when Ralph Patmore stepped down as acting

Chairman.

Director appointment and retirement policiesThe non-executive directors and Chairman are subject to

retirement by rotation and re-election in accordance with the

Company’s MoI. At each annual general meeting, one-third of

the non-executive directors, or if their number is not a multiple

of three, then the number nearest to, but not less than, one-third

shall retire from office.

New appointments to the Board are made through a formal and

transparent process and the Nomination Committee assists with

the process of identifying suitable candidates to be proposed to

the Board and to shareholders.

Board appointments are made with a view to ensuring an

appropriate blend of skills and experience is maintained. All

Board appointments are ratified by Sentula shareholders.

Board meetingsThe Board meets at least four times a year with additional

meetings held when necessary.

The attendance at Board meetings held during this period is set

out below:

Number of Board meetings held during the period – seven:

Director Attendance

Robin Berry (resigned 07/10/2015) 2Ralph Patmore (Chairman) 7Rain Zihlangu 6Stephen Naudé 7Theunis de Bruyn (appointed 15/06/2016) 1Jacques Badenhorst (appointed 08/05/2015) 5Johann Lemmer 7

Board sub-committeesTo enable the Board to properly discharge its duties and

responsibilities, the Board is assisted by an Audit and Risk

Committee, a Remuneration Committee, an Investment

Committee, a Nomination Committee and a Social and Ethics

Committee.

Directors play a critical role as Board representatives on the

various Board committees and ensure that the Company’s

interests are served by impartial, objective and independent

views that are separate from those of management and

shareholders.

Each committee has a charter/terms of reference to guide the

members in performing their duties and the members of the

committees have access to management, Group records and

external professional advice if and when required. The

Chairperson of each committee attends the annual general

meeting.

Audit and Risk CommitteeThe Audit and Risk Committee is constituted as a statutory

committee of Sentula and the Group in respect of its statutory

duties in terms of section 94(7) of the Companies Act, and a

committee of the Board in respect of all other duties assigned to

it by the Board. The duties and responsibilities of the committee

members are in addition to those duties and responsibilities that

they have as members of the Board.

GOVERNANCE REPORTS continued


The committee has an independent role with accountability to

both the Board and shareholders. It does not, however, assume

the functions of management, which remain the responsibility of

the executive directors, prescribed officers and other members

of senior management.

The duties and responsibilities of the members of the Audit and

Risk Committee are governed by a charter which is reviewed

annually. The charter sets out the committee’s duties, which

include, inter alia:

Overseeing integrated reporting

The committee oversees integrated reporting, including the

integrity and content of the integrated reporting process, and in

particular the committee must:

(i) have regard to all factors and risks that may impact the

integrity of the Integrated Annual Report, including factors

that may predispose management to present a misleading

picture, significant judgements and reporting decisions

made, monitoring or enforcement actions by a regulatory

body, any evidence that brings into question previously

published information, forward-looking statements or other

information;

(ii) review the annual financial statements, interim reports,

preliminary or provisional results announcements,

summarised integrated information, any other intended

release of price-sensitive information and prospectuses,

trading statements and similar documents;

(iii) comment in the annual financial statements on the

accounting practices and the effectiveness of the internal

financial controls;

(iv) review the disclosure of sustainability issues in the

Integrated Annual Report to ensure that it is reliable and

does not conflict with the financial information;

(v) recommend to the Board whether or not to engage an

external assurance provider on material sustainability issues;

(vi) recommend the Integrated Annual Report for approval by

the Board;

(vii) consider the frequency for issuing interim results;

(viii) consider whether the external auditor should perform

assurance procedures on the interim results;

(ix) review the content of the summarised information as to

whether it provides a balanced view; and

(x) engage the external auditors to provide assurance on the

summarised financial information.

Combined assurance model

The committee must ensure that a combined assurance model is

applied to provide a coordinated approach to all assurance

activities, and in particular the committee should:

(i) ensure that the combined assurance received is appropriate

to address all the significant risks facing the Company; and

(ii) monitor the relationship between the external assurance

providers and the Company and take the appropriate action

where necessary.

Finance function and Financial Director

The committee reviews the expertise, resources and experience

of the Company’s finance function and discloses the results of

the review in the Integrated Annual Report. The committee also

considers and satisfies itself of the suitability of the expertise and

experience of the Financial Director on an annual basis.

Internal audit processes

The committee is responsible for overseeing the internal audit,

and in particular the committee must:

(i) be responsible for the appointment, performance

assessment and/or dismissal of the outsourced internal

audit service provider;

(ii) approve the internal audit plan and monitor performance

against this plan; and

(iii) ensure that the internal audit function is subject to an

independent quality review, as and when the committee

determines it appropriate.

Risk management

The committee is an integral component of the risk management

process and specifically the committee must:

(i) oversee the development and annual review of a policy and

plan for risk management to recommend for approval to the

Board;

(ii) monitor implementation of the policy and plan for risk

management taking place by means of risk management

systems and processes;

(iii) monitor effectiveness of the Company’s internal controls

and internal audit function;

(iv) make recommendations to the Board concerning the levels

of risk tolerance and monitoring that risks are managed

within the levels of tolerance as approved by the Board;

(v) ensure that the risk management plan is widely

disseminated throughout the Company and integrated in

the day-to-day activities of the Company;


(vi) oversee the integrity and efficiency of the risk management

process through assurance of the system controls and

policies in place;

(vii) ensure that risk management assessments are performed on

a continuous basis;

(viii) ensure that frameworks and methodologies are

implemented to increase the possibility of anticipating

unpredictable risks;

(ix) ensure that management considers and implements

appropriate risk responses;

(x) ensure that continuous risk monitoring by management

takes place;

(xi) express the committee’s formal opinion to the Board on the

effectiveness of the system and process of risk

management;

(xii) review reporting concerning risk management that is to be

included in the Integrated Annual Report for it being timely,

comprehensive and relevant; and

(xiii) focus on financial risks such as financial reporting risks,

internal financial controls, fraud risks as it relates to financial

reporting and IT risks as it relates to financial reporting.

External audit processes

The committee is responsible for recommending the

appointment of the external auditor and to oversee the external

audit process and in this regard the committee must:

(i) nominate the external auditor for appointment by the

shareholders;

(ii) approve the scope and terms of engagement, including

also the remuneration for the external audit engagement;

(iii) monitor and report on the independence of the external

auditor in the annual financial statements;

(iv) define a policy for non-audit services provided by the

external auditor;

(v) pre-approve the contracts for non-audit services to be

rendered by the external auditor;

(vi) ensure that there is a process for the committee to be

informed of any reportable irregularities (as identified in the

Auditing Profession Act, 2005) identified and reported by

the external auditor;

(vii) review the quality and effectiveness of the external audit

process;

(viii) evaluate the performance of the external auditor;

(ix) have oversight of the qualification and independence of the

external auditor; and

(x) perform any other oversight function determined by the

Board.

Compliance

The responsibility to facilitate compliance throughout the

Company has been delegated by the Board to the Audit and

Risk Committee, and in this regard the committee must:

(i) ensure that the Company complies with applicable laws and

consider adherence to non-binding rules, codes and

standards;

(ii) ensure that the Company establishes and maintains a

compliance framework and process that is appropriate

taking into account the laws, rules, codes and standards that

are applicable in light of the compliance risk profile of the

Company;

(iii) ensure that the Company establishes and implements a

legal compliance policy;

(iv) ensure that the Company establishes and implements a

compliance manual;

(v) identify, assess, advise on, monitor and report on the

regulatory compliance risk of the Company, which will form

part of the overall risk management framework of the

Company;

(vi) ensure that compliance monitoring and reporting be

undertaken in a manner that is appropriate for the

Company’s circumstances; and

(vii) ensure that a compliance culture is encouraged through

leadership, establishing the appropriate structures,

education and training, communication and measurement

of key performance indicators relevant to compliance.

The responsibility for IT governance throughout the Company

has been delegated by the Board through the Audit and Risk

Committee, to an IT Steering Committee established for this

purpose. The Audit and Risk Committee has oversight over

the duties of the IT Steering Committee as more fully detailed

in the approved Sentula IT Steering Committee Charter. The

IT Steering Committee will, through its Chairman, who assumes

the role as Chief Information Officer, submit minutes of all

IT Steering Committee meetings to the Audit and Risk

Committee. The Chief Information Officer of the IT Steering

Committee will report on any matters of importance to the

Audit and Risk Committee, who in turn will report on IT

governance to the Board.

In terms of the charter, the Audit and Risk Committee

comprises a minimum of three independent non-executive

directors, and the Chairman of the committee may not be the

Chairman of the Board.



The constitution of the Audit and Risk Committee is in

compliance with the requirements of King III.

The composition of this committee is as follows:

The committee was chaired by an independent non-executive

director, Stephen Naudé, with members Rain Zihlangu and

Mdu Gama.

The Chairman of the Board, Chief Executive Officer, Chief

Financial Director, other executives and the external and internal

auditors attend Audit and Risk Committee meetings by

invitation. The committee annually considers and recommends

the annual financial statements of the Company and the Group

for approval by the Board. Additionally, the committee approves

the audit fees and all fees for non-audit services provided by the

Group’s external auditors.

The Audit and Risk Committee confirms that it is satisfied with

the independence of the external auditor and the

appropriateness of the skills and expertise of Johann Lemmer,

Financial Director of Sentula.

Audit and Risk Committee meetings held during the period – six.

Director Attendance

Stephen Naudé (Chairman) 6Rain Zihlangu 5

Mdu Gama 6

Remuneration CommitteeThe Remuneration Committee has adopted a charter which is

reviewed annually, setting out its duties and obligations. The

committee is responsible for ensuring that the directors and

executive management are appropriately remunerated. The

committee is also responsible for the formulation of proposals

of the fees paid to the non-executive directors for the Board’s

consideration and shareholder approval.

During the year under review, the committee was chaired by

independent non-executive director, Stephen Naudé, and

comprised two additional independent non-executive directors,

Ralph Patmore and Rain Zihlangu.

The Chief Executive Officer and Financial Director attend

meetings by invitation, and are obliged to recuse themselves

from discussions with regard to their own remuneration.

Remuneration Committee meetings held during the period – six.

Director Attendance

Stephen Naudé (Chairman) 6Ralph Patmore 6

Rain Zihlangu 6

Nomination CommitteeThe Nomination Committee has adopted a charter which is

reviewed annually, setting out its duties and obligations. The

committee ensures a formal and transparent procedure for

appointments to the Board.

Although the appointment of directors is a matter to be

deliberated upon by the Board as a whole, the committee assists

the Board by identifying and recommending suitable candidates

for appointment as well as establishing a succession plan for

Board members.

During the year under review, the committee was chaired by an

independent non-executive Chairman, Ralph Patmore, and other

members are Rain Zihlangu and Stephen Naudé.

An attendance table for Nomination Committee meetings is set

out below:

Nomination Committee meetings held during the period – two.

Director Attendance

Ralph Patmore (Chairman) 2Rain Zihlangu 2

Stephen Naudé 2

Investment CommitteeThe purpose of the Investment Committee is to consider and

oversee Sentula’s strategic investment processes and to evaluate

investment projects relating to the acquisition or disposal of

Group assets.


There were no meetings during the year under review as

strategic investment/disposals were discussed by the Board as a

whole.

Social and Ethics CommitteeThe committee has adopted a charter which is reviewed annually,

setting out its duties and obligations.

The purpose of this committee is to recognise the responsibility

for the Company’s actions and the encouragement of a positive

impact through its activities on the environment, consumers,

employees, communities, stakeholders and all other members of

the public. The ultimate objective of managing organisational

integrity is to build an ethical corporate culture.

The committee’s members are appointed by the Board and it

consists of not less than three members, at least one of whom

must be an independent non-executive director. Members could

also comprise senior management or persons with the relevant

experience. The Board appoints the Chairman from the

members of the committee and determines the period for which

he/she shall hold office. The Board, from time-to-time, reviews

and revises the composition of the committee, taking into

account the need for an adequate combination of skills and

knowledge.

Board members may attend committee meetings by invitation.

Suitably qualified persons may be co-opted onto the committee

when necessary to render such specialist services, as may be

necessary, to assist the committee in its deliberations on any

particular matter, but shall have no voting rights.

The committee has the following functions:

(i) to provide guidance for the building and sustaining of an

ethical corporate culture in the Company;

(ii) to monitor the Company’s activities, having regard to any

relevant legislation, other legal requirements or prevailing

codes of best practice, with regard to Board Charter matters

relating to social and economic development, including the

Company’s standing in terms of goals and purposes of the

10 principles set out in the United Nations Global Compact

Principles, the OECD (Organisation for Economic

Cooperation and Development) recommendations

regarding corruption, the Employment Equity Act, the

Broad-Based Black Economic Empowerment Act and the

Company’s legal compliance framework as applicable from

time-to-time;

(iii) to promote good corporate citizenship, including the

Company’s promotion of equality, prevention of unfair

discrimination and reduction of corruption, contribution to

development of the communities in which its activities are

predominantly conducted or within which its products or

services are predominantly marketed and record of

sponsorship, donations and charitable giving;

(iv) to care for the environment, health and public safety,

including the impact of the Company’s activities and of its

products or services;

(v) to promote consumer relationships, including the

Company’s advertising, public relations and compliance with

consumer protection laws;

(vi) to monitor labour and employment, including the

Company’s standing in terms of the International Labour

Organisation Protocol on decent work and working

conditions and the Company’s employment relationship and

its contribution towards the educational development of its

employees;

(vii) to review any statements on ethical standards or

requirements for the Company and the procedures or

review system implemented to promote and enforce

compliance;

(viii) to review significant cases of employee conflicts of interest,

misconduct or fraud, or any other unethical activity by

employees or the Company;

(ix) where requested, to make recommendations on any

material potential conflict of interest or questionable

situations;

(x) to ensure that the Code of Conduct and ethics-related

policies are drafted and implemented;

(xi) to report on and disclose the Company’s ethics

performance;

(xii) to draw matters within its mandate to the attention of the

Board as the occasion requires;

(xiii) to report, through one of its members, to the shareholders

at the Company’s annual general meeting on the matters

within its mandate; and

(xiv) to approve the sustainability report.

The committee was chaired by Robin Berry until his resignation

on 7 October 2015 when Ralph Patmore was appointed acting

Chairman who stepped down as acting Chairman and member

on 3 March 2016 when Mdu Gama was appointed as Chairman.

The appointed members are Jacques Badenhorst and Johann

Lemmer, both effective 3 March 2016, when Khumo Mphake

stepped down as member. Ms Khumo Mphake is the Group

Manager: Transformation and Human Resources and reports

directly through a standing invitation to the committee.



Senior members of Sentula management attend meetings by

invitation.

Social and Ethics Committee meetings held during the period

– two.

Director Attendance

Robin Berry (Chairman) (resigned 07/10/2015) 1Ralph Patmore (acting Chairman from

07/10/2015) (stepped down as member and

acting Chairman on 03/03/2016) 0Mdu Gama (Chairman from 03/03/2016) 2Khumo Mphake (stepped down as member on

03/03/2016) 2Jacques Badenhorst 1

Johann Lemmer 1

Chief Executive OfficerThe Board has delegated specific authorities to the CEO to

ensure the effective day-to-day management of the Group. The

CEO monitors Group operations based on weekly reportable

operational measures from Group companies and through a

reporting monthly monitoring process. Decision-making in the

Group is governed through documented levels of authority.

Subsidiary reporting and monitoring

The Group has comprehensive monthly financial accounting,

cash flow reporting and safety and compliance reporting routines

for its subsidiaries. The Group manages cash, funding and

banking relationships through a centralised treasury function.

The Board approves the Group’s capital expenditure during the

annual budget process.

Monthly meetings are held with the executives of each of the

subsidiaries to review performance, health and safety,

commercial and strategic issues. These are in addition to the

monthly meetings held between the Group and the subsidiaries’

CEOs and respective business management teams.

The Board and its sub-committees oversee the management and

governance of the subsidiaries.

Sentula’s major subsidiaries are listed on page 124 of this

Integrated Annual Report.

Code of Business Conduct (”the Code“)

Sentula is committed to a policy of fair dealing and integrity in

the conduct of its business. This commitment, which is actively

endorsed by the Board, is based on a fundamental belief that

business should be conducted honestly, fairly and legally. The

Company expects all employees to share its commitment to high

moral, ethical and legal standards.

The CEO and executive management are responsible to the

Board for the development and maintenance of the ethical

culture within the Group. Supervisors and managers have a

responsibility to support the CEO and executive management in

upholding a high standard of business conduct, and must take

all reasonable steps to ensure that the people for whom they are

responsible are aware of and uphold the behaviours outlined in

the Code.

This includes:

• consistently demonstrating exemplary behaviour;

• undertaking activities to foster a culture in which employees

understand their responsibilities, feel comfortable raising

concerns without fear of victimisation, are encouraged to work

according to acceptable standards and are rewarded for such

behaviour;

• making certain that mandatory Company policies, standards

and procedures are accessible and understood;

• embedding the requirements of the Code into existing

systems, for example performance management processes,

employment and supplier contracts, induction as well as

industrial agreements;

• responding promptly and seriously to employees’ legitimate

concerns and questions about business conduct issues and

seeking further assistance if required;

• establishing internal processes that address risk areas in

relation to business conduct and ensuring that actual or

potential breaches are appropriately investigated and

handled;

• ensuring all business conduct breaches are reported to the

relevant human resources representative for recording in the

breaches database; and

• taking or recommending appropriate actions to address

business conduct issues.


Litigation statementOther than the disclosed counterclaim of Keaton Mining

Proprietary Limited against Megacube and the dispute with the

South African Revenue Service detailed in notes 10, 27, 32 of the

financial statements , the directors of the Company, whose

names appear on pages 6 to 7 of this Integrated Annual Report,

are not aware of any pending or threatened legal or arbitration

proceedings against the Group, which may have or have had a

material effect on the Group’s financial position in the fifteen

months preceding the date of this report.

Furthermore, as disclosed in note 33 of the financial statements

as part of the winding up process in the insolvent estate of the

Golden Autumn Trust (“Jason Hollard’s Family Trust”), the

trustees (“plaintiffs”) instituted action against Argent Industrial

(“defendant”) for R8,8 million plus interest. Thereafter, Argent

delivered a third party notice claiming R8,8 million and interest

against Sentula, alternatively Megacube.

On 4 March 2015, judgment was granted in favour of the plaintiff

for payment of R8.8 million with interest, as well as costs, which

costs included the cost of two counsels.

The defendant‘s claim against Sentula and/or Megacube was

dismissed with costs, which costs included the cost of two

counsels. Argent applied for leave to appeal which was granted

on 8 May 2015. Notice of appeal was delivered and the parties

are currently awaiting the court to allocate a date for hearing of

the appeal. Megacube is currently not operational and has a

negative net asset value of R109 million. There is no known

recourse to Sentula or any other Sentula subsidiary in respect of

Keaton’s claims.

The Group is currently disputing income tax administration

penalties and interest raised by the SARS amounting to

R50,8 million.

SARS is of the opinion that the companies did not perform

mining activities and subsequently did not qualify for mining

capital allowances claimed during the period 2008 to 2011. The

Group is currently disputing these liabilities and has engaged

with SARS in order to reach a settlement.

SARS has commenced legal action against CCT. SARS claims a

total of R26 million including interest, of which R13 million

relates to tax on disallowed mining allowances during 2011.

The matter was referred to the Tax Court and will be heard on

20 February 2017.

In addition to CCT, Megacube is currently disputing revised

assessments including interest and penalties amounting to

R16,8 million and Benicon is disputing a similar revised

assessment amounting to R8 million. A court date has not yet

been set for the Megacube and Benicon cases. The liabilities

and interest have been fully provided for in the annual financial

statements based on SARS’s assessment as per note 10 to the

annual financial statements.

Stakeholder engagementGood corporate governance principles promote interactive

communication processes to address the legitimate interests and

expectations of stakeholders. As such, Sentula remains

committed to providing all stakeholders with relevant,

transparent and timely communication through the most

appropriate medium and in the most appropriate manner. Due

to the nature of the Group, interaction with employees, unions,

suppliers and clients is primarily with management.

The executive directors interact regularly with key shareholders

on the performance and strategy of the Group. From time-to-

time shareholders contact non-executive directors on specific

issues. Communication channels include SENS, the press

(local and national newspapers), corporate reports and

publications, formal meetings and forums, informal

information sharing, marketing channels and the internet.

The website (www.sentula.co.za) provides relevant news and

information about the Group. The Group’s formal business

language is English but, where applicable, communication may

be provided in other languages.

Company SecretaryAll directors have unrestricted access to the advice and services

of the Company Secretary and to Company records, information,

documents and premises. The Company Secretary minutes all

Board and sub-committee meetings and maintains the registers

required by statute. The Company Secretary is also responsible

for keeping directors abreast of regulatory or legislative changes

which may affect the Company.



During the period under review, and in compliance with

paragraphs 3.84(i) and (j) of the Listings Requirements, the Board

evaluated Ms Ina Cross, Company Secretary, and is satisfied that

she is competent, suitably qualified and experienced. The Board

evaluated the Company Secretary’s performance having regard

to her: u proficiency relating to the administration of the Board’s affairs;

u compliance and adherence to the Companies Act and MoI;

u guidance and advice to the Board regarding relevant law as

regards their duties and responsibilities.

Furthermore, since she is not a director, nor is she related or

connected to any of the directors, thereby negating a potential

conflict of interest, it was agreed that she maintains an arm’s

length relationship with the Board.

Share dealing and conflicts of interestDirectors and management with access to financial results and/or

price-sensitive information are prohibited from dealing in Sentula

shares during closed or prohibited periods. Clearance and

approval procedures and processes are in place throughout the

Group. At the Company level, directors are required to obtain

prior approval from the Chairman and Chief Executive Officer

and to report any share dealing (including transactions in terms

of the Sentula Share Incentive Trust) to the Company Secretary

who, together with the Chief Executive Officer and Sponsor,

ensures the publication of the information on SENS. At subsidiary

level, dealings are cleared by the Chief Executive Officer.

Directors are required to separate their personal transactions

from the Company’s transactions, and they are prohibited from

accepting or soliciting gifts or benefits of any kind by virtue of

their position on the Board. Annually, and thereafter at each

Board meeting, directors are required to disclose to the

Chairman any potential conflict of interest and any other

directorships held by them. Directors who disclose a potential

conflict of interest recuse themselves from discussion of the

matter which may give rise to the conflict of interest.

SponsorIn compliance with the Listings Requirements, Questco

Proprietary Limited acts as Sponsor to Sentula.


Risk management reportRisk management framework

A corporate culture of risk awareness and mitigation is

entrenched at all levels across Sentula. Proactive decision-

making to mitigate and manage risk is expected and rewarded

on a daily basis from all our employees. The Board is ultimately

responsible and accountable for ensuring that adequate

procedures and processes are in place to identify, assess,

manage and monitor key business risks. A formal risk

management framework assists the Board to manage risk in an

effective manner. Sentula acknowledges that risk is an inherent

and unavoidable aspect and therefore requires risk awareness of

all its employees.


Enterprise risk management

The enterprise risk management process can be illustrated as follows:

• Established vision and mission

• Identification of strategic and operational objectives

• Objectives are aligned with Sentula’s vision and mission

• Risk categories • Operational,

financial, business, external, sustainability

• Identification of inherent risks

• Identify contributing factors

• Evaluating residual risks

• Identified risks are analysed in a risk matrix format

• The impact of the risk

• The likelihood that this particular risk will occur

• Identification of mitigating controls

• Avoid • Accept • Mitigate • Share/Insure

• Formulation and review of policies and procedures in place to review and mitigate risk

• Internal and external information that will assist the Group to identify, assess and respond to risks, is reviewed on an ongoing basis

Communication of risk • Communication • Clear roles and responsibilities of

personnel that are responsible for the above-mentioned risk management are established (risk owners)

Monitoring • Ongoing monitoring of

risks and controls

Objective setting

Event identification

Risk assessment

Decide on risk response

Control activities

Evaluation of information

Identification of risk

All material risks that impact the Group’s businesses are

evaluated by the Audit and Risk Committee and the Board using

a formal risk rating matrix. The Audit and Risk Committee and

the Board conduct regular reviews of the Group’s risks to ensure

that major risks are identified, rated and documented in the

Group’s risk register.

Although the Board, assisted by the Audit and Risk Committee,

assesses Group risk and ensures that a culture of risk awareness

is instilled throughout the Group, day-to-day responsibility for

risk identification, evaluation and management resides with the

subsidiary management and the CEO and CFO of the Group.

Additional risks are formally identified through monthly meetings

with subsidiary management. Subsidiary specific risks are

consolidated into the Group’s risk management framework

where overall Group risks are identified through this process.

Sentula’s focus is on identifying uncertain future events that may

impact the overall objectives of the Group in creating sustainable

stakeholder value. During the process we focus on

understanding the causes of the risks, the probability of the risk

materialising and the impact that the risk will have on achieving

the Group’s objectives. These assist us in evaluating and

establishing key risk mitigating controls.

Based on the aforementioned, risks are then plotted on the risk

matrix to prioritise and assess the risk on an ongoing basis.

The process is conducted with inputs from both the Group’s

internal and external auditors and other independent service

providers.


Managing and monitoring of risk and mitigating controls

Risks are reviewed on a monthly basis to ensure that the

requisite responsibility is allocated and the appropriate

mitigating mechanisms are implemented to reduce the identified

risk to an acceptable level.

The Group’s internal audit plan and assurance framework is

developed based on the risk assessment. The internal audit plan

is reviewed on an annual basis by the Audit and Risk Committee

and directed to ensure that the identified risk factors are being

managed in a manner consistent with the guidelines determined

by the Board.

Managing risk and risk factorsA summary of the major risks, in no order of priority, to which the Group is exposed, their impact and the mitigating strategies thereto,

is presented hereunder:

Root cause Impact Mitigation

Business risks

The Group is exposed to a

concentrated number of large

mining clients.

Significant dependence on a core group

of customers may result in adverse

business conditions.

Sentula’s biggest client is Anglo Coal. Through the

proposed Close-Up transaction we believe that

Sentula will be able to provide an even better

service through new equipment and improved

contract management.

Sentula maintains a close relationship with key

clients and engage on a regular basis.

Through the start-up of the Nkomati mine the

Group has decreased it’s exposure to contract

mining.

Investing in new non-mining-related companies in

the future.

External risksDemand for the Group’s services

is influenced by world economic

growth, particularly in respect of

coal and chrome demand in

Asian and the western European

sub-continents.

A reduction in economic growth could

have a negative impact on commodity

prices and a concomitant impact on the

Group’s revenues, profitability, cash

flows and asset values.

Should commodity prices deteriorate,

certain of the operations on which the

Group renders mining services may

become uneconomical resulting in a

cessation or curtailment of operations.

Major economic upheaval in Asia or

Europe may also exacerbate the

financial crisis, resulting in capital

equipment finance becoming more

expensive and/or curtailed.

The Group manages this risk through constant

monitoring of the markets in which it operates.

The following strategies have also been introduced

to further mitigate this risk:

u diversification of the Group’s earnings streams

through the start-up of Nkomati Anthracite mine

and possible future acquisitions of companies not

dependent on the mining industry;

u reducing the Group’s exposure to contract mining

through the wind-down of Benicon Opencast; and

u maintaining future debt levels which are stress

tested to different levels of cash flow volatility.



External risks continued

Community service delivery and

other protests.

Community protests might impact the

Group’s ability to deliver services to our

clients and might result in damage to

assets.

Management monitors any possible community

action closely through constant communication.

Communities are engaged on a regular basis to

understand concerns and implement solutions and

projects.

Damage to Company assets in the event of

community action is prevented through measures in

place to relocate assets to a protected area when

required.

Financial risksThe Group’s growth and

sustainability is dependent on

the support of a number of

financial institutions and

suppliers.

During the year the Group’s

cash flow was negatively

impacted by repayment of debt,

historical and operating losses.

A continuous reduction in available

credit lines and continued operating

losses might severely impact the

Group’s ability to invest in future

positive growth.

The Group is in the process of identifying buyers for

certain property held by the Group. Proceeds from

the disposal will be utilised to settle the senior debt

facility.

Restructuring plans implemented during the past

financial year should result in subsidiaries returning

to profitability.

Future financing will be secured on a decentralised

basis ring fenced to each individual subsidiary.

Operational risksMining is a hazardous activity and

the Group operates in a sector

that is subject to numerous safety

and health regulations.

Given the large fleets of plant

and equipment being operated

by the Group, exposure to mining

accidents is the single most

significant health and safety risk

facing the Group.

Failure to maintain high levels of safety

can result in harm to employees or

communities near the Group’s

operations.

Failure to meet safety objectives may

breach the Group’s values, impact its

reputation and affect the morale of

employees, the achievement of

production targets and the Group’s

licence to operate.

Severe safety incidences can result in

the Group’s reputation being damaged

with adverse consequences for its

stakeholders.

The Group places a very high priority on safety and

invests considerable resources in maintaining and

improving safety standards at its operations. In this

context the following initiatives have been

implemented:

u programmes to monitor compliance with ISO and

OSHAS standards;

u behaviour-based training and rigorous

enforcement of standards;

u incentives linked to the meeting of objectives;

u monitor conditions from a safety and operational

perspective, with regard to hazards identified and

solutions implemented; and

u risk elimination programmes and the mitigation of

assessed risk.




Operational risks continued

The Group’s operations are

conducted in an open

environment which is exposed

to the natural elements.

Adverse weather conditions such as

excessive rain, heat, fog and dust

adversely impact the Group’s ability to

meet its operational and financial

targets.

Initiatives to limit the impact of adverse weather

conditions include: u the design and maintenance of effective drainage and

pumping systems on operations; u ensuring that haul roads and related infrastructure are

constructed to ensure good drainage and durability; u contracted flexibility in operational activities in

conjunction with the scheduling of operational

activities and flexible production targets; and u maintaining high service delivery quality standards.

Information technology reportThe Board has, through delegated authority to the Audit and

Risk Committee, identified the functions within the business that

are dependent upon IT solutions. The business risk associated

with these functions has been assessed by the Audit and Risk

Committee and, taking cognisance of the nature of the Group’s

current business offering and strategy, an IT governance

framework has been established and policies have been

formulated under the direction of the Group IT Steering

Committee.

The IT Steering Committee has been mandated to guide the

Group’s IT strategy in line with business imperatives.

The IT Steering Committee continuously reviews and monitors

the appropriateness of the Group’s IT function and related

matters.

Given the nature of the Group’s current business mix, the

physical safeguarding of IT assets, data security, disaster

management and recovery, is the core of Sentula’s IT

management emphasis.

Back-up and recovery function for the Group are provided by an

offsite service provider, utilising secure offsite repositories. The

integration of the Group’s IT functions is also continuing with

centralised IT nodes rendering services to a number of

subsidiaries.



Remuneration reportRemuneration CommitteeThe role of the Remuneration Committee and its terms of reference are detailed below. In particular, the Remuneration Committee is responsible for:

u the determination and periodic review of the remuneration packages for executive directors and other members of the Executive Committee of the Company including, but not limited to, basic salary, performance-based short and long-term incentives, pensions and other benefits;

u the design, operation and administration of the Company’s performance-based incentives and awards made under the incentive schemes;

u the development of a succession plan that identifies suitably experienced individuals, within the organisation, who can step into key roles should the need arise; and

u assisting the Board with the determination of the remuneration to be paid to the non-executive directors.

Membership of the committee u Stephen Naudé (Chairman) u Rain Zihlangu u Ralph Patmore

Remuneration policy in respect of executive directors and senior executive remunerationThe Company’s objective is to focus and invest in businesses that have good investment characteristics and yield attractive returns on capital and by doing so, outperform the market. In order to achieve this, the Company must be in a position to attract the right talent available in the industry and its remuneration package must therefore be comparable to those of its competitors, in the various sectors in which it operates. The remuneration policy is aimed at attracting and retaining high-calibre executives and to motivate them to develop and implement the Company’s business strategy and the optimisation of long-term shareholder value.

The following principles are applied to give effect to the remuneration policy and to determine executive remuneration:

u executive remuneration is benchmarked against a comparator group of South African small and mid-cap JSE-listed entities, mining services and junior mining companies. The most recent benchmarking exercise conducted by the Company utilised the May 2016 PE Corporate Services Survey as a base, and indicated that the total remuneration of the executive directors was in line with the peer group median (fifty percentile);

u to ensure the appropriate balance between short, medium and long-term incentives, with salary comprising about 35% to 45% of annual remuneration, if the bonus and share-based incentive targets are achieved in any given year; and

u to align the behaviour and performance of executives with the Company’s strategic goals, all incentive plans align performance targets with shareholder interests.

The quantum of the short-term incentive and related bonus is determined with respect to performance in a given financial year, while the vesting of the share-based incentive awards is determined with respect to conditions related to Company performance over the three years following the date of grant. At the annual general meeting of shareholders to be held on 16 November 2016, shareholders will be asked to approve the policy as outlined in this report and that the Board be authorised to carry out the necessary action to implement the remuneration policy for the 2017 financial year as summarised herein.

Elements of executive director and senior executive remuneration Remuneration mixEach executive’s total remuneration consists of a basic salary and benefits, defined as the employment cost to the Company, an annual performance-linked incentive together with participation in a long-term incentive plan. The Company has approved the following share-based incentives, all of which are currently dormant:

u deferred bonus scheme; u share appreciation rights scheme; and u the Schamin share incentive trust.

An appropriate balance is maintained between fixed and performance-related remuneration and elements linked to short-term performance and those related to longer-term growth in shareholder value. The potential performance-based incentive achievable in a given year, expressed as a percentage of basic salary, is shown in the table below, if the budgeted annual financial target is met and the individuals deliver their personal objectives:

Chief Executive Officer 51%Financial Director 51%

The executive directors’ remuneration is disclosed in note 38 of the Group’s financial statements. Incentives are offered from time-to-time to specific personnel when unique circumstances arise.

Basic salary The basic salary is the total guaranteed annual employment cost to the Company associated with the employment of an executive. It is structured, at the individual’s election, but in accordance with applicable legislation, to include a basic salary, a travelling allowance, a medical aid contribution and a pension fund contribution. A cost of living increase in the basic salary is considered by the Remuneration Committee, and recommended to the Board, on an annual basis, and implemented from 1 July in the applicable year. For the following year, increases ranged from 0% to 6%, with a maximum increase in an individual’s executive salary cost of 6%.


Annual performance incentive This is a short-term incentive plan under which award levels are determined with reference to the achievement of a matrix based scorecard, comprising a Company financial metric and individual performance objectives. If no result is achieved with respect to the meeting of the financial metric, then no incentive is payable. For the financial year ended 30 June 2016, 100% of the incentive would have been payable if 100% of the Group’s targeted earnings before interest and tax and the personal objectives were delivered. Given the financial performance of the Group, no annual performance incentives are to be paid to the executive directors for the 2016 financial period. Taking into account the financial performance of the Group, the Remuneration Committee has decided that for the 2017 financial year management focus must be placed on returning the Group to profitability and the short-term incentive pool for the executive directors has therefore been set at a percentage of the Group profit before tax. Any accounting entries unrelated to the operations will not be taken into account when determining the profit before tax. This is intended to be a once-off arrangement and the short-term incentive in future years will revert to a matrix scorecard which will include the management of cash resources. This recommendation has been ratified by the Board.

The criteria and scorecard weighting for the financial year ending 30 June 2017 for subsidiary executive members, as approved by the Remuneration Committee and ratified by the Board, is as follows:

u Each operating subsidiary has its own targets and returns required to achieve the financial metric and they are based on realistic stretch targets taking into account the environment in which they are operating.

u 20% of the bonus amount payable will be subject to discretion by the Group Chief Executive Officer. The bonus pool amount will be limited to between 10% and 20% of the individual subsidiary’s EBIT, after taking into account the bonus.

u While the attainment of the financial metric will attract 100% of the available segment score, a result between 50% and 100% of the targeted metric will attract a pro rata score, from 0% to 100%.

u Should there be no result with respect to the achievement of the targeted financial metric, no performance incentive will be payable in terms of this scheme.

Share-based incentivesDeferred bonus scheme (dormant)There are currently no awards outstanding and it is not envisaged that any awards will be made in the near future. Share appreciation right scheme (dormant)There are currently no options awarded that are still outstanding and it is not envisaged that any new awards will be made in the near future.

Schamin share incentive trust (dormant)There are currently no participants in the trust and it is not envisaged that any new awards will be made in the near future.

Long-term incentive planSelected executives and employees of Sentula and its subsidiaries have, in the past, received a conditional right to receive a cash award (the “LTIP”) equal to the market value of a number of notional Sentula issued ordinary shares on the date the award becomes unconditional. This is a cash-settled scheme. The Remuneration Committee has proposed that this plan be phased out for executives other than executive directors of Sentula and replaced by similar plans within their operating subsidiaries.

At the end of the 2016 financial year, 37 430 000 LTIP awards were outstanding and would vest, subject to the criteria being met, up to the 2020 financial year.

The conditionality for the tranche of the LTIP awards, which were to vest in 2016 was not met and no awards vested. In order for the 2017 tranche to vest the Group needs to show a positive economic value added (“EVA”) with a return on equity (“ROE”) of 15%.

The criteria for allocation and vesting have been changed for the executive directors of Sentula with effect from the 2017 financial year. The following were recommended by the Remuneration Committee and approved by the Board:

u An allocation of four times the executive’s cost to company is made as a long-term incentive.

u The performance measure is a comparison between Sentula’s total shareholder return (“TSR”) as compared to the All Share Index (“Alsi”) over a three-year period from the date of the allocation.

u In order for the full amount of the allocation to vest the TSR must exceed the Alsi by a compound factor of 20% pa;

u If the movement in the TSR equals the movement in the Alsi then 25% of the allocation will vest;

u Where the TSR exceeds the Alsi by 10% pa, 50% will vest with a linear increase from 25% to 50% and then to 100% between equalling the Alsi and achieving an excess of 10% and 20% pa.

u Should the Alsi be lower at the end of the three-year period than at commencement then, subject to all the other criteria being achieved, the maximum amount that can vest is 25% of the allocation.

u The date of allocation to be 31 March in each year with the Sentula share price calculated at the 30-day volume weighted average price and the Alsi at that date.

u If the TSR movement is positive compared to a negative Alsi, then full vesting can take place in accordance with the other parameters.

u The amount vesting is to be paid in cash over a three-year period at years three, four and five, subject to the executive being employed by the Group at each payment date.

u The executives will be encouraged to use the amount paid to purchase shares in Sentula and in so doing, to become meaningful shareholders in the Company.


SUSTAINABILITY

Overview Sentula’s sustainable development framework is premised on

certain performance indicators which are key to ensuring the

future of the Company. These indicators can be broadly

categorised into the following three fields: safety, health and

environment; transformation; and stakeholder engagement. This

review will illustrate the progress made by Sentula since the first

report was issued in 2010 and also set targets for the next

financial year.

The majority of Sentula’s operations are South African-based,

therefore the review will focus mainly on those operations.

Limited coverage of the Group’s operations taking place outside

South Africa will also be included in this report and highlighted

as such.

Nkomati Anthracite was on care and maintenance from May 2011

and operations resumed in January 2015. Following a full

financial year of operations, Nkomati’s activities and performance

against the set key performance indicators have been included

in this review.

Monthly monitoring of the key performance indicators (“KPIs”) as

detailed on page 33, takes place at subsidiary and executive

committee levels, enabling the Group to consistently compare

its performance across the business as a whole and over the

previous years.

“Sustainable development is the pathway to the future we want for all. It offers a framework to generate economic growth, achieve social justice, exercise environmental stewardship and strengthen governance.”Ban Ki-moon

Operating contextIn response to the macro-economic challenges facing the mining

sector and the mining services sector in particular, Sentula’s focus

has continued to be on extreme cost control measures;

increased productivity and efficiency; developing sustainable and

competitive pricing models; building long-term strategic

partnerships with clients; and continuous engagement with

employee representatives and communities.

These initiatives are aimed at ensuring the sustainability of the

Group in the midst of these challenges, as well as positioning

the Company for the upturn in the mining sector.

Focus areasThis review focuses broadly on the following areas which have

been identified as the most critical for achieving sustainability in

the Group: u safety, health and environment; u transformation; and u stakeholder engagement.


Sentula’s performanceKey performance indicatorsKPIs are used to monitor progress and measure the achievement of annual performance in the field of sustainable development. The

table below reflects Sentula’s performance against each of these targets:

Key performance indicator

Obtained 2014

Obtained 2015

Target 2016

Obtained 2016

Quickmeasure

Target 2017

Safety Classified injury frequency rate* (“CIFR”)

0,78 1,05*** 0,60 1,22 x 1,00

Total injury frequency rate* (“TIFR”)

3,65 2,64*** 2,00 2,96 x 2,50

Fatalities 0 0 0 0 √ 0

Health New cases of occupational disease

0 0 0 1 x 0

Number of employees undergoing HCT

22% 3%** 50% 3% x 50%

International certification

Obtaining or retention of ISO 9001 certification

Retention at Benicon, Geosearch

and JEF

Retention at Benicon, Geosearch,

JEF and Ritchie


JEF and Ritchie

Certification at CCT


JEF and Ritchie

√ Retention at Geosearch,

JEF and Ritchie.



and JEF


and JEF


and JEF. Certification

at CCT and Ritchie


and JEF

√ Retention at Geosearch

and JEF



and JEF


and JEF


and JEF. Certification

at CCT and Ritchie


and JEF

√ Retention at Geosearch

and JEF

Environment Number of monetary fines or sanctions related to non-compliance with environmental legislation

2 0 0 0 √ 0

Number of environmental incidents (level 2 and 3)

0 0 0 0 √ 0

Black economic empowerment

Percentage procurement spend with dti compliant suppliers

65% 65% 70% 83% √ 85%

Employment equity

Number of HDSAs in management

58% 56% 60% 57% x 60%

Female participation in management

15% 14% 16% 15% x 16%

Percentage female employees in the Group

9% 8% 10% 9% x 10%

Training Number of training hours 82 259 79 638 80 000 91 533 √ 70 000

Stakeholder complaints

Number of issues raised by stakeholders

1 2 0 2 x 0

* Per million man-hours worked ** Employees participate in the HIV Counselling and Testing (“HCT”) campaigns of our clients and Sentula is working hard to get the statistics

applicable to the participation of our employees in these campaigns *** Re-calculated following the standardisation of the formula across all subsidiaries


Safety, health and environment Sentula aims to be a zero harm company and this requires

actively working to reduce complacency and workplace risk

through continuous adherence to ISO and OHSAS standards

and training.

SafetyThe safety of Sentula’s people is fundamental to its business and

remains the Group’s licence to operate. Safety is non-negotiable

and the Group has implemented a range of systems and

standards to drive progress in this central aspect of the business.

For the period under review, Sentula achieved a CIFR of 1,22, a

TIFR of 2,96 and zero fatalities. During the previous year,

Sentula achieved a CIFR of 1,05 and a TIFR of 2,64 (per million

man-hours worked) and had no fatalities. Although this

represents a decline in the safety performance frequency rates,

it must be borne in mind that the safety statistics for Nkomati

Anthracite have been included in this review for the first time

since operations resumed in January 2015.

Nonetheless, Sentula remains committed to the goal of zero

harm and ensures that all incidents are analysed, the causes

understood and the learnings shared across the Group.

Operational experience, input from clients as well as industry

norms, inform the Group’s set of best practices, which are

supported by the maintenance of a strict reporting discipline

where all incidents and near misses are recorded.

Safety standardsPart of Sentula’s risk management strategy is to obtain and retain

OHSAS 18001 certification – an Occupational Health and Safety

(“OHS”) management system. This system safeguards employee

safety by ensuring that policies and procedures are in place and

are adhered to, and it is also an important consideration for

tenders and for the retention of clients.

During the period under review, Benicon, Geosearch and JEF

retained their OHSAS 18001 certifications.

Approach to safety Safety incidents can have a significant impact on revenue, profits

and the future sustainability of both the contractor and the client

and that is why safety at Sentula is approached as a joint effort,

with Sentula ensuring that the client’s safety requirements are

fully understood.

Safety at Sentula is the responsibility of all employees.

Participation in daily safety talks, monthly safety meetings as well

as random safety audits is encouraged and has resulted in

employees being fully committed and adhering to safety

standards and procedures. A safety-conscious culture has been

created by encouraging employees to make recommendations

on how to improve safety in the workplace, to report incidents

and near misses and learn from them, in an effort to avoid

accidents.

Some of the initiatives implemented at subsidiary level include

risk assessments, improved hazard identification, fatigue

management as well as alcohol and drug screening.

Motor vehicle damageIn order to better equip drivers and to assess their appetite for

risky behaviour on the road, a number of the subsidiaries

implemented advanced and defensive driving courses, accident

avoidance systems as well as personality analysis. Sentula

continues to monitor the impact of these initiatives in order to

ensure a reduction in motor vehicle incidents.

Health and wellnessIt is Sentula’s responsibility to provide a safe and healthy working

environment for employees. Operational employees undergo

pre-employment and exit medicals and an annual medical

examination, which ensure that employees are fit for work. These

assessments also assist with the early detection and treatment of

chronic illnesses and occupational diseases.

Due to the nature of Sentula’s operations – with employees

located on host mines – arranging wellness days remains a

challenge for the Group. However, employees are afforded an

opportunity to participate in the wellness days arranged by the

SUSTAINABILITY continued


host mines. It is at these wellness days that employees can test

for diabetes, hypertension, tuberculosis, hearing loss, as well as

HIV. Sentula is still in discussions with the host mines to get

access to the wellness statistics particularly for the Group’s

employees.

The Group strictly adheres to the provisions of the Occupational

Health and Safety Act, the Mine Health and Safety Act and the

Compensation for Occupational Injuries and Diseases Act. The

primary health risks identified within the Group include exposure

to dust and noise which is mitigated by providing personal

protective equipment, dust suppression measures and

continuous monitoring.

For the period under review, one new incident of hearing loss

was diagnosed and reported for workmen’s compensation.

Sentula continues to assist the employee where necessary.

Working in remote areasGeosearch operates in remote areas, where exposure of

employees to adverse working conditions is greater. In response

to this, the Group has developed policies and procedures which

serve as guidelines on the provision of suitable living conditions

and sufficient support staff to manage them, the sourcing and

testing of drinking water as part of the camp establishment, as

well as pre- and post-medical assessments. In addition,

inspections and audits are conducted regularly to ensure that

camps and operating sites comply with these policies.

Employees located in malaria risk areas receive training on the

prevention of malaria and the early identification of symptoms.

Campsites are routinely fogged and employees are provided

with mosquito repellents, medication and medical treatment

where required. Vaccinations for yellow fever and typhoid fever

are also provided to employees working in risk areas.

EnvironmentThe environmental impact of mining and the sustainability of

resources are key focus areas and as a result, the spotlight is on

mining companies and contractors to ensure that the impact of

their operations are quantified and mitigated as far as possible.

As a responsible corporate citizen and in preparation for the

changes in environmental legislation, Sentula is focused on

monitoring the impact its operations have on the environment.

Sentula’s commitment to sound environmental practice requires

a continuous review of all environmental procedures and as a

result, the Group not only adheres to its own environmental

framework but also to the environmental policies, procedures

and standards which are in place at its host mines.

Environmental management standardsAs part of Sentula’s Risk Management Strategy, the ISO 14001

standard – a voluntary measure of environmental compliance

and maintenance of industry standards – has been selected as a

target standard to be achieved.

During the period under review, Benicon, Geosearch and JEF

retained their ISO 14001 certifications.

Environmental initiativesIn an effort to mitigate the Group’s impact on the environment,

subsidiaries are disposing of hazardous waste through accredited

waste disposal contractors. During the period under review,

Sentula safely disposed of 240 280 kg of hazardous waste,

compared to 190 660 kg in the previous year.

Treating minor oil and hydrocarbon spillages, using

biodegradable cleaning material and putting up more waste

bins, spill kits and drips are other ways in which the Group

minimises its environmental impact.

Resource conservation Sentula has committed itself to identifying initiatives to optimise

its resource conservation and as a result, responsible

management of resources is mandatory across the subsidiaries.

Recycling is encouraged in the Group and during the period

under review, 1 323 kg of paper was recycled. 176 kℓ of oil and

lubricants were recycled, representing 23% of all oils and

lubricants used within the Group.

Office waste recycling initiatives are also in place at some of the

subsidiaries.


Geosearch operates in remote areas far from rehabilitation sites

and therefore makes use of biodegradable lubricants as well as

chemicals which assist in the biodegradation of hydrocarbon

waste, thereby assisting in soil rehabilitation.

Sentula continues to monitor its municipal water use, as well as

those boreholes on which flow meters have been installed.

During the period under review, the Group’s total water usage

was 38 642 kℓ, an increase from the previous year due to the

resumption of operations at Nkomati.

Carbon footprintSentula understands that a more efficient business uses fewer

resources, produces less waste and emissions and reduces costs.

Therefore, the Group’s primary strategy with regard to the

reduction of emissions is to increase operational efficiencies in all

areas where emissions are generated.

Sentula measures its carbon emissions from two primary sources

namely diesel consumption and municipal electricity usage, with

diesel consumption being the largest contributor to emissions

within the Group. The nature of Sentula’s business makes these

emissions unavoidable, however, ways of improving efficiencies

are being investigated.

During the period under review, Sentula emitted a total of

90 292 tonnes of carbon dioxide, compared to 114 817 tonnes in

the previous year, indicating an increase in operational

efficiencies.

A challenge across the Group remains theft of diesel from

vehicles and storage tanks. Such theft not only affects the

reliability of the reported carbon emissions, but also the bottom

line of the business. Internal controls and monitoring systems

have been implemented in certain subsidiaries in an attempt to

curb the problem.

Maintenance of vehicles is also a vital component of reducing

carbon emissions. All subsidiaries have maintenance

programmes in place to increase the efficiency of mobile

equipment and also maximise their availability.

Environmental incidentsSentula is pleased to report that in the period under review, no

reportable environmental incidents took place. Sentula continues

with its efforts to comply with all applicable environmental laws

and makes use of specialists to advise on and mitigate the risks

of non-compliance.

TransformationSentula recognises the importance of broad-based black

economic empowerment (“BBBEE”), not only for the

development of sustainable growth in all of the Group’s

subsidiaries, but also for the growth of the broader South African

economy. Sentula aims to empower its people and maintain a

competitive advantage by assisting its clients in achieving their

BBBEE procurement goals.

For the period under review, Sentula used the dti scorecard to

measure its progress against the seven elements. Sentula is an

overall level 5 BBBEE contributor and the South African

contracting entities as a group, are rated a Level 4 contributor,

with an effective black ownership of 33,99%.

Management control and employment equityAs at 30 June 2016, 29% of the Board members (including

executive directors), were black. Sentula is an equal opportunity

employer which does not tolerate any form of discrimination and

is committed to increasing the number of historically

disadvantaged South Africans (“HDSAs”) in management

positions.

The Group’s efforts of increasing HDSAs in management

positions were hampered by retrenchments at Benicon as well as

contracts coming to an end at Buenti Drilling. The winding down

of Benicon resulted in 242 retrenchments as at 30 June 2016,

and 454 employees were re-employed in Sentula Coal.



As at 30 June 2016, Sentula’s management structure comprised

57% HDSAs, 15% of whom were women.

Our people

Employee statistics* 2016 2015 2014

Total employees 1 384 1 538 1 782Male employees 1 259 1 411 1 630Female employees 125 127 151Non-HDSAs in management 103 132 149HDSAs in management 138 168 204

Females in management 35 42 52

* SA operations only and excludes the 51 Geosearch International employees

As at 30 June 2016, the South African workforce comprised

1 384 employees, with the majority based at the Group’s

subsidiaries in the Mpumalanga and Limpopo provinces, from

1 538 in the previous financial year.

Staff retentionStaff retention in technical positions such as crane operators,

artisans and drill assistants remains a challenge and in an effort

to retain staff, Sentula offers market-related remuneration

packages as well as production bonuses, where applicable.

Learnerships and training programmes also focus on scarce skill

areas so as to upskill employees for these positions.

Women in miningDue to the nature of the business, the recruitment of women into

technical positions remains a challenge, primarily due to a lack of

suitable facilities and a shortage of women with those scarce

skills. By actively engaging with women in the recruitment

process and setting targets for its subsidiaries, the Group

continues to strive towards improving the representation of

women across all levels within the organisation.

As at 30 June 2016, Sentula’s workforce comprised 9% female

employees and 15% of management positions were occupied by

females, representing a very slight increase compared to the

previous financial year.

Employee relationsSouth African employees have the right to freedom of

association, a right conferred on them by the Constitution of the

Republic of South Africa and the Labour Relations Act, No 66 of

1995, as amended.

The recognised trade unions within the Group are the National

Union of Mineworkers (“NUM”), the Association of Mineworkers

and Construction Union (“AMCU”) and the National Union of

Metalworkers of South Africa (“NUMSA”). During the period

under review, all subsidiaries successfully concluded wage

agreements with the majority, recognised unions.

Learning and developmentLearning and development provides Sentula with an opportunity

to plan for future skills, while contributing to the overall

transformation of the Group and the broader economy by

improving the skills of employees.

Sentula focuses on developing staff internally and external

recruitment is only done if the necessary skills and expertise are

not available within the Group. Employees are also encouraged

to develop themselves and Sentula subsidises their attendance

at courses, as well as offering study assistance for tertiary studies.

A total of 91 533 hours of training took place across the Group

during the year under review. This represents an increase in the

total number of training hours compared to the previous

financial year mainly due to the inclusion of Nkomati in the

sustainability statistics.

ProcurementSentula’s approach is to source goods and services, where

possible, from small, medium and micro-enterprises (“SMMEs”)

which are dti compliant.

During the period under review, Sentula had a discretionary

procurement spend of R540 million, of which 83% was spent on

dti compliant suppliers, 7% was spent on small and medium

suppliers, 10% was spent on 50% black-owned suppliers and

2% was spent on suppliers that are 30% owned by black females.


At all operations, both within and outside South Africa, the

Group makes every effort to uplift local communities by

procuring from surrounding businesses and hiring from the

community where possible.

Enterprise and socio-economic developmentThe Sentula Transformation Trust (“the Trust”) was established

with the purpose of regulating and coordinating Sentula’s

approach to socio-economic and enterprise development, as

well as to streamline the allocation of funds for approved

projects.

Benicon continued to support the projects it initiated in recent

years including the Siyathuthuka Car Wash, the Siyathuthuka

Canteen and the delivery parts van project. CCT also continues

to support the CCT canteen.

During the period under review, the Group donated money,

crane hire as well as grader services to the value of R296 000 to

hospices, early learning centres, schools, sports clubs, child

welfare and outreach programmes.

Stakeholder engagementSentula believes that open and transparent engagement should

form the basis of its interaction with various stakeholders. As a

result, stakeholder engagement takes place at a functional and a

strategic level. Sentula’s primary stakeholders include

shareholders, employees, trade unions and representatives of

organised labour, local communities, clients and government

authorities.

Sentula acknowledges that constructive input from the Group’s

stakeholders is essential, not only for minimising the Group’s

reputational risk but also for ensuring that the business runs

smoothly. Therefore, Sentula engages with the various

stakeholder groups through, among others, meetings,

newsletters, the media and via the Group’s website

(www.sentula.co.za).

Government and regulatory bodiesForging and maintaining a good relationship with government

and regulatory bodies is vital to the ongoing sustainability of any

business. In line with this, Sentula strives to do so with the

Department of Mineral Resources, the Department of Water

Affairs and Sanitation, the Department of Labour and the South

African Revenue Services. Some of the key topics raised by these

stakeholders include safety, community engagement, the impact

of operations on the environment as well as the achievement of

employment equity targets. Each subsidiary is responsible for

communicating with the applicable regulatory authorities and

addressing any concerns which are raised.

Labour representatives and employeesLabour relations in South Africa is becoming increasingly

important and a business’ ability to resolve labour disputes

timeously and cost effectively remains a business imperative

which impacts on the sustainability of the business. It is in this

context that Sentula believes in continuous engagement with

employees directly and through their elected representatives.

Such engagement takes place daily in the normal course of

doing business through monthly union and management

meetings, contact with the human resources office, workers’

forums and in employment equity and skills development

committee meetings.

CommunitiesEngaging with the community, either through the local chiefs

or elected community representatives, is an important

consideration as Sentula’s operations are predominantly

based within communities. Failure to engage the community

may negatively affect the operations and ultimately the

sustainability of the Group. During the period under review,

a number of service delivery protests resulted in loss of

productivity. Meetings between the client and community

leaders were held, in an effort to resolve matters and find ways

to enable employees to get to work.

Sentula’s representatives meet regularly with community

representatives to discuss, among others, local recruitment,

social responsibility, environmental impact and possible training

opportunities for community members.

During the period under review, two stakeholder complaints

were received by Nkomati – a community leader was not

consulted prior to operations resuming and a blasting incident

which resulted in a number of houses being damaged.

Management held meetings with the complainants and the

matters were resolved amicably.

Sentula confirms that no grave or community relocations took

place during the period under review.





CONSOLIDATED ANNUAL FINANCIAL STATEMENTSfor the period ended 30 June 2016

CONTENTSDirectors’ responsibilities and approval 42

Certificate of the Company Secretary 42

Audit and Risk Committee report 43

Directors’ report 46

Independent auditors’ report 49

Statement of financial position 50

Income statement 51

Statement of comprehensive income 52

Statement of cash flows 53

Group statement of changes in equity 54

Company statement of changes in equity 55

Operational segment report 56

Notes to the financial statements 59


CERTIFICATE OF THE COMPANY SECRETARY

The directors are responsible for the maintenance of proper accounting records and the preparation, integrity and fair presentation of the Group financial statements and financial statements of Sentula Mining Limited. These financial statements comprise the statement of financial position at 30 June 2016, the income statement, the statement of comprehensive income, changes in equity and the cash flow for the fifteen months ended 30 June 2016, and the notes to the financial statements, which include a summary of significant accounting policies and other explanatory notes and the directors’ report, in accordance with International Financial Reporting Standards and in the manner required by the Companies Act of South Africa. These financial statements include amounts based on judgements and estimates made by management.

The directors are also responsible for the Group’s system of internal control. This responsibility includes designing, implementing and maintaining internal controls as the directors determine is necessary to enable the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Sentula Mining Limited and its subsidiaries operate in a well-established control environment, which is well documented and regularly reviewed. This incorporates risk management and internal control procedures, which are designed to provide reasonable, but not absolute, assurance that assets are safeguarded and the risks facing the business are being controlled.

The Group’s outsourced internal audit function, which operates unimpeded and independently from operational management, and has unrestricted access to the Group Audit and Risk Committee, assesses and where necessary, recommends improvements in the system of internal controls and accounting practice based on audit plans that take cognisance of the relative degrees of risk of each function or aspect of the business.

The directors have reviewed the Company and Group financial budgets along with the underlying business plans for the period to 30 June 2017. In light of the current Company and Group financial position and existing borrowing facility, they consider it appropriate that the Company and the Group annual financial statements be prepared on the going-concern basis.

The annual financial statements of the Group and Company have been audited by the independent accounting firm, PricewaterhouseCoopers Inc. The external auditors were given unrestricted access to all financial records and related data, including minutes of all meetings of shareholders, the Board of Directors and committees of the Board. The directors believe that all representations made to the independent auditors during the audit are valid and appropriate. PricewaterhouseCoopers Inc.’s unmodified audit report is presented on page 49.

The financial statements were prepared under the supervision of the Group Financial Director, JC Lemmer CA(SA) and approved by the Board of Directors on 30 September 2016.

RB Patmore JC Badenhorst

Chairman Chief Executive Officer

30 September 2016

I certify that the Company has lodged with the Companies and Intellectual Property Commission, all returns required of a public company in terms of the Companies Act, 71 of 2008, in respect of the fifteen months ended 30 June 2016 and that all such returns are true, correct and up to date.

GC Cross

Company Secretary 30 September 2016


DIRECTORS’ RESPONSIBILITY AND APPROVAL

AUDIT AND RISK COMMITTEE REPORT

The Audit and Risk Committee (“the committee”) is pleased to present this report as required by the Companies Act 2008 (Act 71 of 2008) (“the Companies Act”).

The committee is constituted as a statutory committee of Sentula Mining Limited (“the Company”) and its subsidiaries (“the Group”) in respect of its statutory duties in terms of section 94(7) of the Companies Act, and a formal committee of the Board in respect of all other duties assigned to it by the Board.

Role of the committeeThe committee has an independent role with accountability to both the Board and to shareholders. The committee’s responsibilities include the statutory duties prescribed by the Companies Act, activities recommended by King III and the responsibilities assigned by the Board.

The committee’s main responsibilities are as follows:

Integrated and financial reporting u review the annual financial statements, interim report, preliminary results announcement and summarised integrated financial information and ensure compliance with International Financial Reporting Standards and the Companies Act;

u review and approve the appropriateness of accounting policies, disclosure policies and the effectiveness of internal financial controls; u perform a review of the Group’s integrated reporting function and progress and consider factors and risks that could impact the integrity of the Integrated Annual Report;

u review the sustainability disclosure in the Integrated Annual Report and ensure that it is consistent with financial information reported; and

u recommend the Integrated Annual Report to the Board for approval.

Combined assurance modelEnsures that a combined assurance model is applied to provide a coordinated approach to all assurance activities, and in particular the committee:

u ensures that the combined assurance received is appropriate to address all the significant risks facing the Company; and u monitors the relationship between the external assurance providers and the Company, and takes the appropriate action where necessary.

Finance function and Financial DirectorReview the expertise, resources and experience of the Company’s finance function, and discloses the results of the review in the Integrated Annual Report. The committee also considers and satisfies itself of the suitability of the expertise and experience of the Financial Director on an annual basis.

Internal audit u review and approve the internal audit charter and audit plans; u evaluate the independence, effectiveness and performance of the internal audit function and compliance with its charter; u review the Group’s systems of internal control, including financial controls, ensuring that management is adhering to and continually improving these controls;

u review significant issues raised by the internal audit process; and u review policies and procedures for preventing and detecting fraud.

External audit u act as a liaison between the external auditors and the Board; u nominate the external auditor for appointment by shareholders; u determine annually the scope of audit and non-audit services which the external auditors may provide to the Group; u approve the remuneration of the external auditors and assess their performance; and u assess annually the independence of the external auditors.


Risk management u ensure that management’s processes and procedures are adequate to identify, assess, manage and monitor enterprise-wide risks; and u review tax and technology risks, in particular how they are managed.

Compliance u the responsibility to facilitate compliance throughout the Company and the Group has been delegated by the Board to the committee; and

u the committee ensures that the Company and the Group comply with applicable laws and consider adherence to non-binding rules, codes and standards, and establish and maintain a compliance framework and process, legal compliance policy and compliance manual that is appropriate taking into account the compliance risk profile of the Company.

General u receive and deal appropriately with any complaint relating to the accounting practices and internal audit of the Group or to the content or auditing of its financial statements, or to any related matter; and

u perform other functions as determined by the Board.

Composition of the committeeThe committee comprises three members, two of whom are independent non-executive directors, including the Chairman. In accordance with the requirements of the Companies Act, members of the committee are appointed annually by the Board for the ensuing financial year and in compliance with King III are appointed by shareholders at the annual general meeting.

The executive directors attend all the committee meetings by invitation. The external and internal auditors are also invited to attend all committee meetings.

The committee functions within an approved charter which is reviewed annually, and complies with all relevant legislation, regulation and governance codes.

The composition of the committee and meeting attendance of the six meetings held are as follows:

Director Attendance

Steve Naudé (Chairman) 6Rain Zihlangu 5Mdu Gama 6


AUDIT AND RISK COMMITTEE REPORT continued

The committee discharges its responsibilities by: u meeting at least four times a year to review the Group’s financial results, to receive and review reports from both the internal and external auditors, and to meet with management to review their progress on identifying and addressing key risk areas within the business;

u reporting to the Board at the next meeting, which is always held within a week of the respective committee meeting; and u meeting separately with the internal and external auditors to confirm they are receiving the full cooperation of management.

In conclusion, the committee confirms the following:

Independence of external auditorsThe Audit and Risk Committee is satisfied as to the independence of the Group’s external auditors, PricewaterhouseCoopers Inc., and its designated audit partner, Mrs C Marais Roux. The committee nominates PricewaterhouseCoopers Inc. as external auditor for the reappointment by shareholders at the annual general meeting.

Financial Director and the finance functionThe committee is satisfied that Mr Johann Lemmer has the appropriate expertise and experience for his position of Financial Director of the Company and the Group. In addition, the committee is also satisfied that the composition, experience and skills of the finance function meet the Group’s requirements.

Financial statementsThe committee has evaluated the financial statements for the fifteen months ended 30 June 2016 and considers that they comply in all material respects with the requirements of the Companies Act and International Financial Reporting Standards. The committee has therefore recommended the financial statements for approval to the Board. The Board has subsequently approved the financial statements, which will be open for discussion at the forthcoming annual general meeting.

Approval of the Audit Committee reportThe committee confirms that it has functioned in accordance with its charter for the 2016 financial year and that its report to shareholders has been approved by the Board.

Stephen Naudé

Chairman: Audit and Risk Committee

30 September 2016



The directors have pleasure in submitting their report for the fifteen months ended 30 June 2016.

IntroductionThis Annual Report is presented by the directors on the affairs of Sentula Mining Limited and its subsidiaries, together with the financial statements and auditors’ report, for the 15-month period ended 30 June 2016.

The Group derives its income from services to the mining and construction industry and through its own anthracite mining operation. Services to the mining industry include the provision of opencast contract mining, rehabilitation, earthworks, drilling and blasting and exploration drilling. Crane hire services are provided to a wide range of clients including Eskom, construction companies and mining companies. The Group holds a majority interest in an active anthracite mine.

The CEO’s report details the nature of each major subsidiary. Sentula Mining Limited is the Group holding company.

Financial resultsThe Group’s operating loss incurred from operations was mainly due to a loss of R298 million incurred in the Group’s opencast mining and earthmoving operations. The total cost to wind-down operations at Benicon Opencast Mining (“Benicon”) is included in the loss. As part of the Benicon wind-down an assessment was made to determine the realisable sales value of equipment remaining in Benicon resulting in an impairment of plant and equipment amounting to R139 million during the period.

The results were further impacted by the arbitrator’s dismissal of Megacube’s claim against Keaton, despite Keaton not disputing its liability and found Megacube to be liable in respect of three of Keaton claims, including legal costs. Even though the quantum is yet to be determined a provision of R129 million was accounted for during the period.

The Group continues to dispose of property and idle equipment mainly in the opencast mining operations. These disposals realised a positive cash flow of R62 million which resulted in a net profit of R10 million.

Total debt of R151 million was repaid during the year, reducing the total outstanding debt balance including net overdraft, to R112 million. The Group’s debt to equity ratio increased from 37% to 52% as a result of the lower capital base.

Investment in equipment amounted to R57 million compared to the R104 million invested in the prior year. Proceeds from the disposal of equipment amounted to R62 million compared to R42 million received in the prior year.

Weighted basic loss per share increased to 61,3 cents relative to the loss of 49,2 cents per share for the prior year.

For a more detailed analysis of the results refer to the Financial Director’s report on page 12.

Going concernThe Group financial statements have been prepared on the going concern basis. The basis presumes that funds will be available to finance future operations and that the realisation of assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business.

Although the current liabilities of the Group exceed its current assets, due to the nature of these liabilities the directors have every reason to believe that funds will be available to finance future operations and that the realisation of assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business.

The Company restructured its debt in March 2016 and based on Sentula subsidiaries’ cash flow forecasts for the 2017 financial year, is expected to meet all its obligations during this period.

Share capitalDuring the first quarter of 2016, Sentula shareholders approved an increase in authorised share capital from one billion shares to two billion shares. The increase in authorised shares was required for Sentula to embark on a partially underwritten renounceable rights offer in terms of which 100 rights offer shares were issued for every 100 shares held at a subscription price of 18 cents per rights offer share. As a results the issued number of shares increased from 586 559 181 ordinary shares to 1 167 567 491. Total proceeds from the rights offer amounted to R105 million.

Dividends to shareholdersIn light of the Company’s cash requirements for debt redemption and operating losses, the directors have considered it prudent not to declare any dividends for the 2016 financial year.


DIRECTORS’ REPORT for the fifteen months ended 30 June 2016


DirectorateThe following changes to the Board of Directors took place during the fifteen months under review:

Resignations: u Mr Robin Berry resigned as executive director and CEO on 7 October 2015.

Appointments: u Mr Jacques Badenhorst was appointed as a non-executive director on 8 May 2015, until his appointment as acting CEO on 1 October 2015 and his permanent appointment as CEO on 1 March 2016.

u Mr Theunis de Bruyn was appointed as a non-executive director with effect from 15 June 2016.

There were no changes to the Board of Directors subsequent to the year under review.

The directors of the Company and abridged curriculum vitae for each director are set out on pages 6 to 7 of this report.

Directors’ remuneration and shareholdingDetails of the directors’ remuneration are set out in note 38 to the financial statements and details of directors’ shareholdings are set out under “shareholder’s information” in the annual financial statements.

Director’s interests in contractsThe rights issue was underwritten by JB Private Equity Investors Partnership and the Dalikhaya Rain Zihlangu Family Trust.

Mr R Zihlangu, a director of Sentula, is a beneficiary and trustee of the Dalikhaya Rain Zihlangu Family Trust. The Dalikhaya Rain Zihlangu Family Trust underwrote R10 million of the rights offer and received an underwriting fee of R300 000.

Mr JC Badenhorst has a beneficial interest in JB Private Equity Investors Partnership. The JB Private Equity Investors Partnership underwrote R25,7 million of the rights offer shares and received an underwriting fee of R670 643. In addition, the partnership was paid a commission equal to 1,5% of the rand value of the rights offer shares for which they committed to subscribe to amounting to R310 283.

Other than the above and the transactions detailed in note 35 to the financial statements, no material contracts, in which directors have an interest, were entered into during the period.

Company Secretary and registered officeMs GC Cross is the Company Secretary.

The Company’s registered address is: The Company’s postal address is: Ground Floor – Block 14 PO Box 76The Woodlands Office Park Woodmead, 2080, South AfricaWoodmead, Gauteng South Africa

Acquisitions There were no business acquisitions during the 2016 financial year.

Employee share incentivesDetails of the Group’s share incentive schemes are detailed hereunder and in note 7 to the annual financial statements.

The Group operates an employee share incentive scheme. The following changes took place during the period under review:

Directors Staff Total

Awards/options at the beginning of the year 15 170 000 46 380 000 61 550 000 LTIPS granted during the period 5 075 000 27 950 000 33 025 000 Lapsed options and resignations (16 280 000) (40 865 000) (57 145 000)Options exercised and delivered – – –

Awards/options balance at the end of the period 3 965 000 33 465 000 37 430 000



Historical information regarding directors’ unexercised options at 30 June 2016 is as follows:

Share options at 1 April 2015Share options lapsed

during the periodShare options exercised

and taken delivery of

Share options at

30 June 2016

Director NumberStrike price

(R) Number Strike price

(R) Number Strike price

(R) Number

RC Berry 1 600 000 10,00 (1 600 000) 10,00 – – – 3 200 000 2,23 (3 200 000) 2,23 – – – 1 400 000 2,77 (1 400 000) 2,77 – – –

6 200 000 (6 200 000) – – –

Historical information regarding directors’ unexercised LTIPS at 30 June 2016 is as follows:

Director

LTIPS at 1 April 2015

Number

LTIPS granted during

the yearNumber

LTIPS exercised

NumberLTIPS lapsed

Number

LTIPS at 30 June 2016

Number

RC Berry 6 070 000 3 325 000 – (9 395 000) –JC Lemmer 2 900 000 1 750 000 – (685 000) 3 965 000

8 970 000 5 075 000 – (10 080 000) 3 965 000

Borrowing powersIn terms of clause 29 of the Memorandum of Incorporation, the Company has unlimited borrowing powers. The Group currently has no access to surplus facilities.

Subsequent eventsOn 30 September 2016, Sentula issued a circular to shareholders to advise shareholders that Sentula, Sentula Coal a 50,5% held subsidiary of Sentula, and Close-Up Mining have entered into a merger agreement in terms of which Sentula will dispose of its entire 50,5% shareholding in Sentula Coal to Close-Up at a value of R50 as well as Sentula’s claims against Sentula Coal in the amount of R50 million to Close-Up. In consideration thereof, Close-Up will allot and issue 40% of Close-Up shares to Sentula.

In addition, Benicon will dispose of certain selected plant and equipment to Sentula valued at open market value for R50 million which plant and equipment shall thereafter be disposed of by Sentula, to Sentula Coal for the same price.

Subsequent to year-end, Sentula Coal employed a substantial number of staff previously employed by Benicon. From 1 July 2016 Sentula Coal will be responsible for all Anglo Coal contracts historically executed by Benicon. As a result, Benicon was left with idle plant and equipment, certain debtors and some inventory. Benicon’s idle plant and equipment are being disposed of in an orderly fashion to raise the necessary cash to settle liabilities.

As a result of the above, the following assets were classified as held-for-sale in terms of IFRS 5: u Sentula’s investment in Sentula Coal that will be disposed of; u Benicon’s assets being disposed of to Sentula Coal; and u Benicon’s assets being disposed of as part of the process to wind down the Company.

Other than the above, there were no events that occurred subsequent to year-end.

Jacques Badenhorst Johann Lemmer

Chief Executive Officer Financial Director

30 September 2016


DIRECTORS’ REPORT continued

for the fifteen months ended 30 June 2016


INDEPENDENT AUDITORS’ REPORTfor the fifteen months ended 30 June 2016

To the shareholders of Sentula Mining Limited

Report on the financial statementsWe have audited the consolidated and separate financial statements of Sentula Mining Limited set out on pages 50 to 111, which comprise the statements of financial position as at 30 June 2016, and the income statements, statements of comprehensive income, statements of changes in equity and statements of cash flows for the fifteen months then ended, and the notes, comprising a summary of significant accounting policies and other explanatory information.

Directors’ responsibility for the financial statementsThe Company’s directors are responsible for the preparation and fair presentation of these consolidated and separate financial statements in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa, and for such internal control as the directors determine is necessary to enable the preparation of consolidated and separate financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibilityOur responsibility is to express an opinion on these consolidated and separate financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated and separate financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the consolidated and separate financial statements present fairly, in all material respects, the consolidated and separate financial position of Sentula Mining Limited as at 30 June 2016, and its consolidated and separate financial performance and its consolidated and separate cash flows for the fifteen months then ended in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa.

Other reports required by the Companies ActAs part of our audit of the consolidated and separate financial statements for the fifteen months then ended 30 June 2016, we have read the Directors’ report, the Audit Committee’s report and the Certificate by the Group Company Secretary for the purpose of identifying whether there are material inconsistencies between these reports and the audited consolidated and separate financial statements. These reports are the responsibility of the respective preparers. Based on reading these reports we have not identified material inconsistencies between these reports and the audited consolidated and separate financial statements. However, we have not audited these reports and accordingly do not express an opinion on these reports.

Report on other legal and regulatory requirementsIn terms of the IRBA Rule published in Government Gazette Number 39475 dated 4 December 2015, we report that PricewaterhouseCoopers Inc. has been the auditor of Sentula Mining Limited for five years.

.

PricewaterhouseCoopers Inc.

Director: C Marais RouxRegistered Auditor Sunninghill

30 September 2016


STATEMENT OF FINANCIAL POSITIONat 30 June 2016

Group Company

NoteJune 2016

R’000March 2015

R’000June 2016

R’000March 2015

R’000

AssetsNon-current assets 654 052 801 617 559 793 929 801 Property, plant and equipment 16 586 014 749 942 145 284 Loans to subsidiaries 39 – – 153 882 250 129 Intangible assets 17 – 672 – – Investment in subsidiaries 39 – – 59 837 104 558 Investment in preference shares 39 – – 344 557 573 000 Goodwill 17 37 427 37 427 – – Restricted cash 18 2 850 – – – Deferred income tax assets 10 27 761 13 576 1 372 1 830

Current assets 283 737 403 328 168 964 258 898

Inventories 19 33 402 70 492 – – Trade and other receivables 20 213 792 312 947 2 820 26 112Loans to subsidiaries 39 – –- 165 783 232 240 Cash and cash equivalents 21 32 822 19 245 361 135 Current income tax assets 10 3 721 644 – 411

Assets of disposal group classified as held-for-sale 22 105 174 219 490 – –

TOTAL ASSETS 1 042 963 1 424 435 728 757 1 188 699

EquityTotal equity attributable to owners of the parent 365 409 732 012 577 210 948 426

Share capital 23 2 122 973 2 020 304 2 122 973 2 020 304Treasury shares 23 (25 898) (25 898) – – Reserves 86 294 110 689 – 2 552 Accumulated loss (1 817 960) (1 373 083) (1 545 763) (1 074 430)

Non-controlling interest (21 948) – – –

TOTAL EQUITY 343 461 732 012 577 210 948 426

LiabilitiesNon-current liabilities 147 284 114 856 13 596 2 354 Loans and borrowings 24 – 2 354 – 2 354 Finance lease obligations 25 14 301 45 701 – – Loans from subsidiaries 39 – – 13 596 –

Rehabilitation provision 28 69 889 – – –

Deferred income tax liabilities 10 63 094 66 801 – –

Current liabilities 525 048 509 534 137 951 237 919

Trade and other payables 26 230 179 208 474 17 610 23 955 Megacube arbitration provision 27 92 331 – – –Loans and borrowings 24 33 500 132 752 33 500 132 752 Finance lease obligations 25 9 840 26 642 – – Deferred revenue 29 25 331 391 – – Bank overdraft 21 86 841 81 214 86 841 81 212 Current income tax liabilities 10 47 026 60 061 – –

Liabilities of disposal group classified as held-for-sale 22 27 170 68 033 – –

TOTAL LIABILITIES 699 502 692 423 151 547 240 273

TOTAL EQUITY AND LIABILITIES 1 042 963 1 424 435 728 757 1 188 699

The notes set out on pages 59 to 110 are an integral part of these consolidated financial statements.


INCOME STATEMENTfor the fifteen months ended 30 June 2016

Group Company

Note

Fifteen months –June 2016

R’000

Twelve months –March 2015

Restated*R’000

Fifteen months –June 2016

R’000


R’000

Revenue 5 1 535 689 1 374 753 – –Cost of sales (1 550 638) (1 344 276) – –Gross (loss)/profit (14 949) 30 477 – – Other income 14 711 4 760 85 298 79 808 Administrative expenses (179 381) (189 116) (32 360) (22 283)(Loss)/profit from operations 6 (179 619) (153 879) 52 938 57 525 Net profit/(loss) on disposal of assets 6 9 662 (52 099) – –Megacube arbitration award 27 (129 051) – – – Impairment of property, plant and equipment 16 (138 846) (14 795) – – Impairment of assets held-for-sale 22 – (815) – –Impairment of other receivable (3 568) – (3 568) –Impairment of intergroup investments, loans and receivables 35 – – (509 230) (557 104)Operating loss 6 (441 422) (221 588) (459 860) (499 579)Finance expense 8 (47 166) (54 199) (27 107) (49 273)Finance income 8 1 699 1 280 13 609 21 713 Fair value adjustment on interest rate cap – (159) – (159)Loss before income tax (486 889) (274 666) (473 358) (527 298)Income tax expense 10 17 512 (16 244) (527) 3 905 Loss for the period (469 377) (290 910) (473 885) (523 393)

Discontinued operationsLoss for the year from discontinued operations (attributable to the owners of the parent) 11 – (275) – –Loss on disposal of discontinued operations 12 – (3 727) – –Net loss for the period (469 377) (294 912) (473 885) (523 393)

Attributable to: – Owners of the parent (447 429) (293 445)

– continuing operations (447 429) (289 443) – discontinued operations – (4 002)

– Non-controlling interest (21 948) (1 467) – continuing operations (21 948) (1 467) – discontinued operations – –

(469 377) (294 912)

Weighted basic and diluted loss per share (cents)Continuing operations (61,27) (48,51)Discontinued operations – (0,67)Basic and diluted loss per share (61,27) (49,18)

* Restated for IFRS 5 as Benicon Coal and its subsidiary Nkomati are no longer classified as held-for-sale.



Group Company

Fifteen months – June 2016

R’000


Restated*R’000

Fifteen months – June 2016

R’000

Twelve months – March 2015

R’000

Loss for the period (469 377) (294 912) (473 885) (523 393)Other comprehensive (loss)/income Items that may be subsequently reclassified to profit or loss

Foreign currency translation differences for foreign operations** (21 843) 2 339 – –

Other comprehensive (loss)/income for the period, net of income tax (21 843) 2 339 – –

Total comprehensive loss for the period (491 220) (292 573) (473 885) (523 393)

Attributable to:– Owners of the parent (469 272) (291 106)

– continuing operations (469 272) (287 104)– discontinued operations – (4 002)

– Non-controlling interest (21 948) (1 467)– continuing operations (21 948) (1 467)– discontinued operations – –


** There is no tax effect on the foreign currency translation reserves as they are unrealised.


STATEMENT OF COMPREHENSIVE INCOMEfor the fifteen months ended 30 June 2016


STATEMENT OF CASH FLOWSfor the fifteen months ended 30 June 2016

Group Company

NoteFifteen months

– June 2016

Twelve months– March 2015

Restated*Fifteen months

– June 2016Twelve months

– March 2015

Cash flows from operating activitiesCash generated from operating activities 30.1 100 729 119 808 17 618 (5 139)Income taxes (paid)/received 30.2 (9 719) (20 622) 342 1 017 Interest paid 8 (37 535) (52 048) (26 112) (47 122)Net cash from/(utilised in) operating activities 53 475 47 138 (8 152) (51 244)

Cash flow from (utilised in)/investing activitiesInterest received 8 1 699 769 1 340 21 202 Purchase of property, plant and equipment 16 (56 888) (103 959) – (43)Proceeds from disposal of property, plant and equipment 61 733 42 021 6 – Capitalised exploration expenditure – (1 187) – – Additions to assets held-for-sale 22 – (830) – – Proceeds from disposal of assets held-for-sale 22 2 791 27 279 – – Proceeds from disposal of subsidiary 12 – 23 680 – 23 680 Repayment from subsidiaries – – 340 153 179 (Increase)/decrease in restricted cash (2 850) 8 693 – – Net cash from/(utilised in) investing activities 6 485 (3 534) 1 686 198 018

Cash flow from financing activitiesProceeds from borrowings – 3 289 – – Repayment of borrowings (101 606) (199 827) (101 606) (199 827)Finance lease advances 1 371 74 187 – – Finance lease payments (49 654) (16 682) – – Proceeds from the rights issue 104 581 – 104 581 – Payment of transaction costs related to rights issue (1 912) – (1 912) – Net cash from financing activities (47 220) (139 033) 1 063 (199 827)

Net increase/(decrease) in cash and cash equivalents 12 740 (95 429) (5 403) (53 053)Cash and cash equivalents at the beginning of the year (60 569) 33 744 (81 077) (28 024)Exchange (losses)/gains on cash and cash equivalents (1 291) 1 116 – – Cash and cash equivalents at the end of the period (49 120) (60 569) (86 480) (81 077)

Cash and cash equivalents classified as discontinued operations 11 – 1 400 – –

Cash and cash equivalents classified as assets held-for-sale 22 4 899 – – –Cash and cash equivalents per statement of financial position 21 (54 019) (61 969) (86 480) (81 077)Cash and cash equivalents at the end of the period (49 120) (60 569) (86 480) (81 077)


Refer to note 11 for cash flows from discontinued operations.



GROUP STATEMENT OF CHANGES IN EQUITYfor the fifteen months ended 30 June 2016

GroupR’000

Share capital

Share-based

payment reserve

Treasury shares

Foreign currency

translation reserve

Accumulated loss Total

Non-controlling

interestTotal

equity

Balance at 31 March 2014 2 020 304 36 684 (25 898) 74 166 (1 080 639) 1 024 617 1 467 1 026 084

Loss for the year – – – – (293 445) (293 445) (1 467) (294 912)Other comprehensive incomeForeign currency translation differences for foreign operations – – – 2 339 – 2 339 – 2 339

Total comprehensive (loss)/income for the year – – – 2 339 (293 445) (291 106) (1 467) (292 573)

Transactions with owners, recorded directly in equityContributions by and distributions to ownersDisposal of subsidiary – (2 500) – – 1 001 (1 499) – (1 499)

Total transactions with owners – (2 500) – – 1 001 (1 499) – (1 499)

Balance at 31 March 2015 2 020 304 34 184 (25 898) 76 505 (1 373 083) 732 012 – 732 012

Loss for the fifteen months – – – – (447 429) (447 429) (21 948) (469 377)Other comprehensive lossForeign currency translation differences for foreign operations – – – (21 843) – (21 843)) – (21 843)

Total comprehensive loss for the period – – – (21 843) (447 429) (469 272) (21 948) (491 220)

Transactions with owners, recorded

directly in equity

Contributions by and distributions to owners

Shares issued for cash 104 581 – – – – 104 581 – 104 581

Rights issue transaction costs (1 912) – – – – (1 912) – (1 912)

Share options forfeited – (2 552) – – 2 552 – – –

Total transactions with owners 102 669 (2 552) – – 2 552 102 669 – 102 669

Balance at 30 June 2016 2 122 973 31 632 (25 898) 54 662 (1 817 960) 365 409 (21 948) 343 461

Note 23 23The notes set out on pages 59 to 110 are an integral part of these consolidated financial statements.


COMPANY STATEMENT OF CHANGES IN EQUITYfor the fifteen months ended 30 June 2016

Figures in RandShare

capital

Share-based payment

reserveAccumulated

lossTotal

equity

Balance at 31 March 2014 2 020 304 2 552 (551 037) 1 471 819

Loss for the year – – (523 393) (523 393)Other comprehensive income – – – –

Total other comprehensive income – – – –

Total comprehensive loss for the year – – (523 393) (523 393)

Balance at 31 March 2015 2 020 304 2 552 (1 074 430) 948 426 Loss for the fifteen months – – (473 885) (473 885)Other comprehensive income – – – – Total other comprehensive income – – – –

Total comprehensive loss for the period – – (473 885) (473 885)

Transactions with owners, recorded directly in equityContributions by and distributions to ownersShares issued for cash 104 581 – – 104 581 Rights issue transaction costs (1 912) – – (1 912)Share options forfeited – (2 552) 2 552 –

Total transactions with owners 102 669 (2 552) 2 552 102 669

Balance at 30 June 2016 2 122 973 – (1 545 763) 577 210

Note 23The notes on pages 59 to 110 form an integral part of these financial statements.


Operating segmentsThe Group is organised into five operating segments, namely opencast mining services, exploration drilling, overburden drilling and blasting, mobile crane hire and coal mining as described below. The strategic business units offer different services within the mining industry and are managed separately due to different equipment, technology and skills requirements. The following summary describes the operations in each of the Group’s reportable segments:

Opencast mining and earthmovingIncludes the movement and management of all aspects of overburden removal and coal extraction and chrome mining to specified production budgets. Benicon Opencast Mining, Sentula Coal, CCT and Benicon Sales are included in this segment. Sentula Coal and Benicon Sales are now included in opencast mining and earthmoving due to a change in the structure of the organisation. Previously Sentula Coal was included in the coal mining segment and Benicon Sales was included in corporate and other services. The prior year numbers have been restated to reflect the change.

Exploration drillingIncludes the exploration drilling services operations across the African continent.

Overburden drilling and blastingIncludes drilling and blasting operation which uses specialised drilling rigs in the opencast mining sector, primarily in the coal industry.

Crane hireIncludes the hiring out of medium to heavy duty mobile cranes with capacities that range from 25 to 220 tonnes.

Coal miningIncludes the mining operations within the Group of which the largest contributor is in the anthracite industry. Benicon Coal and Nkomati Anthracite are included in the coal mining operations, Benicon Coal and its subsidiary, Nkomati Anthracite have been re-presented in the prior year as they are no longer classified as held-for-sale.

MegacubeEven though Megacube is no longer operational, it has been disclosed separately due to its materiality.

Corporate and other servicesThis is largely the head office operations.

Revenues of R503 million (2015: R461 million) are derived from a single external client in the opencast mining segment. The other segments are diversified and not exposed to concentration risk.

Accounting policyAn operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’s other components. All operating segments’ operating profit/(loss) is reviewed regularly by the Group’s CEO and CFO, who are the Chief Operating Decision-Makers to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available. Inter-segment pricing is determined on an arm’s length basis.

Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise current and deferred tax assets and liabilities. Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment and other intangible assets other than goodwill.

OPERATIONAL SEGMENT REPORT for the fifteen months ended 30 June 2016


Fifteen months – June 2016 (R’000)

Opencast mining and

earth-moving

Explorationdrilling

Overburden drilling and

blastingCrane

hire Coal

mining Megacube

Corporate and other

services Total

Total segment revenue 983 738 223 269 385 414 89 852 169 017 – 550 1 851 840Inter-segment revenue (118 964) (8 118) (154 649) (3 511) (30 359) – (550) (316 151)External revenue 864 774 215 151 230 765 86 341 138 658 – – 1 535 689

Total segment results pre-impairment (167 271) (14 046) 28 061 28 281 (24 930) (3 806) (25 908) (179 619)Impairment of plant, equipment and motor vehicles (138 846) – – – – – – (138 846)Megacube arbitration award – – – – – (129 051) – (129 051)Impairment of other receivable – – – – – – (3 568) (3 568)Net profit on sale of assets 7 834 1 648 192 (3) (15) – 6 9 662 Results from operating activities (298 283) (12 398) 28 253 28 278 (24 945) (132 857) (29 470) (441 422)

Total segment finance income 3 247 83 68 6 67 14 483 14 957 Inter-segment finance income – – (82) (33) – – (13 143) (13 258)

External finance income 3 247 1 35 6 67 1 340 1 699

Total segment finance expense (11 248) (9 873) (5 084) (3 211) (3 414) – (27 594) (60 424)Inter-segment finance expense 1 448 5 220 3 688 1 438 – – 1 464 13 258External finance expense (9 800) (4 653) (1 396) (1 773) (3 414) – (26 130) (47 166)

Net finance expense (9 797) (4 406) (1 395) (1 738) (3 408) 67 (24 790) (45 467)

Segment assets 234 941 120 450 194 325 155 864 194 354 5 761 612 906 307Assets classified as held-for-sale 105 174 – – – – – – 105 174Current and deferred tax assets – 13 515 1 371 581 14 644 – 1 371 31 482Total assets 340 115 133 965 195 696 156 445 208 998 5 761 1 983 1 042 963

Segment liabilities 148 244 16 713 59 649 11 152 90 209 98 422 137 823 562 212Liabilities classified as held-for-sale 27 170 – – – – – – 27 170 Current and deferred tax liabilities 37 615 36 368 15 405 – – 16 802 3 930 110 120Total liabilities 213 029 53 081 75 054 11 152 90 209 115 224 141 753 699 502

Capital expenditure 16 743 22 684 9 231 2 031 6 199 – – 56 888

Depreciation 75 448 29 500 25 203 7 340 7 474 – 139 145 104

Amortisation – 672 – – – – – 672


OPERATIONAL SEGMENT REPORT continued


Twelve months – March 2015 Restated (R’000)

Opencast mining and

earth-moving

Explorationdrilling


blastingCrane

hire Coal

mining Megacube

Corporate and other

services Total

Total segment revenue 815 212 269 170 358 549 100 620 6 111 – 950 1 550 612 Inter-segment revenue (69 956) (2 659) (101 092) (1 202) – – (950) (175 859)External revenue 745 256 266 511 257 457 99 418 6 111 – – 1 374 753

Total segment results pre-impairment (134 508) (58 927) 41 782 47 433 (14 648) 2 076 (37 087) (153 879)Impairment of plant, equipment and motor vehicles (11 803) (2 992) – – – – – (14 795)Impairment of assets held-for-sale – (815) – – – – – (815)Net loss on disposal of assets (50 225) 1 192 1 600 (321) – – (4 345) (52 099)Results from operating activities (196 536) (61 542) 43 382 47 112 (14 648) 2 076 (41 432) (221 588)

Total segment finance income 15 249 701 3 469 429 – 22 305 27 168Inter-segment finance income – – (701) (3 448) – – (21 739) (25 888)External finance income 15 249 – 21 429 – 566 1 280

Total segment finance expense (17 219) (2 799) (6 570) (3 787) (36) (395) (49 281) (80 087)Inter-segment finance expense 9 554 2 468 5 944 3 178 – – 4 744 25 888External finance expense (7 665) (331) (626) (609) (36) (395) (44 537) (54 199)

Net finance expense (7 650) (82) (626) (588) 393 (395) (43 971) (52 919)

Segment assets 579 881 173 379 208 922 165 010 69 42 207 21 257 1 190 725 Assets classified as held-for-sale 2 553 2 790 – – 213 947 200 – 219 490 Current and deferred tax assets – 11 746 – 233 – – 2 241 14 220 Total assets 582 434 187 915 208 922 165 243 214 016 42 407 23 498 1 424 435

Segment liabilities 137 466 47 177 55 240 15 521 1 034 1 484 239 606 497 528 Liabilities classified as held-for-sale – – – – 68 033 – – 68 033 Current and deferred tax liabilities 40 857 24 510 16 311 – – 41 424 3 760 126 862 Total liabilities 178 323 71 687 71 551 15 521 69 067 42 908 243 366 692 423

Capital expenditure 72 965 911 5 585 24 455 – – 43 103 959

Depreciation 119 346 20 511 21 441 5 463 534 – 1 369 168 664

Amortisation – 1 347 – – – – – 1 347

Geographical segmentsIn presenting information on the basis of geographical segments, segment revenue is based on the geographical location of the customers. Segment assets are based on the geographical location of the assets.

Fifteen months – June 2016 Twelve months – March 2015R’000 South Africa Rest of Africa Consolidated South Africa Rest of Africa Consolidated

Revenue from external customers 1 365 914 169 775 1 535 689 1 184 546 190 207 1 374 753

Non-current assets 619 497 34 555 654 052 733 920 54 122 788 042

Current assets 206 299 77 438 283 737 316 894 85 788 402 682

Total segment assets* 825 796 111 993 937 789 1 050 814 139 910 1 190 724

Capital expenditure 39 637 17 251 56 888 99 643 4 316 103 959 * Excludes assets held-for-sale.


1 General information Sentula Mining Limited (“the Company”) is a company domiciled in the Republic of South Africa. The address of the Company’s

registered office is Ground Floor, Building 14, Woodlands Office Park, Woodmead. The consolidated financial statements of the Company as at and for the fifteen months ended 30 June 2016 comprise the Company and its subsidiaries (together referred to as the “Group” and individually as “Group entities”) and the Group’s interest in jointly controlled entities.

The format of the financial statements has been changed to improve the quality of information provided in the financial statements and to follow best practice in the market. The change mainly relates to the inclusion of the accounting policies in the respective notes.

2 Change in year-end As announced by the Company on SENS on 22 March 2016, Sentula has, with effect from 30 June 2016, amended its financial

year-end from 31 March to 30 June.

3 Accounting policies Basis of preparation The principal accounting policies applied in the preparation of the consolidated and Company financial statements have been consistently applied in all years presented, unless otherwise stated. (i) Statement of compliance The financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”)

and interpretations issued by the IFRS Interpretations Committee (“IFRS IC”) and in a manner required by the Companies Act of South Africa, the JSE Listings Requirements and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council.

The Group and Company annual financial statements were authorised for issue by the Board of Directors on 30 September 2016.

(ii) Basis of measurement The Group’s financial statements are prepared on the historical cost basis except for the revaluation of certain financial

instruments which are measured at fair value, as appropriate.

(iii) Functional and presentation currency Transactions included in the financial statements of each of the Group’s entities are measured using the currency of the

primary economic environment in which they operate (the functional currency). The consolidated financial statements are presented in South African rand, which is the presentation currency and functional currency of the majority of the operations within the Group.

All amounts in the financial statements are stated to the nearest thousand (R’000) except where otherwise indicated.

(iv) Use of estimates and judgements The preparation of financial statements in conformity with IFRS required management to make judgements, estimates

and assumptions that affect the application of accounting policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The use of estimates and judgements are disclosed in note 4.

(v) Income statement presentation The Group has disclosed a mixed nature of presentation for its income statement, as it opted to specifically present the

impairments and loss on disposal of assets on the face of the income statement.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSfor the fifteen months ended 30 June 2016


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued


Recent accounting developmentsNew standards, amendments to standards and interpretations to existing standards that are not effective and have not

been early adopted by the Group

The following standards, amendments and interpretations have been published but are not effective and the Group has

not early adopted them: u Amendment to IAS 27: Separate financial statements – The amendment allows entities to use the equity method to account for investments in subsidiaries, joint ventures and associates in their separate financial statements. The standard becomes effective for year-ends commencing after 1 January 2016.

u IAS 1: Presentation of financial statements – This amendment is designed to encourage entities to apply professional judgement in determining what information to disclose in the financial statements. Furthermore, the amendments clarify that entities should also use professional judgement in determining where and in what order information is presented in the financial statements. The standard becomes effective for year-ends commencing after 1 January 2016.

u IAS 7: Statement of cash flows – This amendment requires entities to disclose additional information about changes in their financial liabilities. The standard becomes effective for year-ends commencing after 1 January 2017.

u IAS 12: Income taxes – This amendment clarifies the requirements on recognition of deferred tax assets for unrealised losses. The amendments clarify the accounting for deferred tax where an asset is measured at fair value and that fair value is below the asset’s tax base. They also clarify certain other aspects of accounting for deferred tax assets. The standard becomes effective for year-ends commencing after 1 January 2017.

u IFRS 15: Revenue from contracts with customers – This is a converged standard on revenue recognition. It replaces IAS 11: Construction Contracts, IAS 18: Revenue recognition and related interpretations. The core principle of IFRS 15 is that an entity recognises revenue to depict the transfer of promised goods and services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. IFRS 15 also includes a cohesive set of disclosure requirements that will provide the users of financial statements with comprehensive information about the nature, amount timing and uncertainty of revenue and cash flows arising from the entity’s contracts with customers. The standard becomes effective for year-ends commencing after 1 January 2018.

u IFRS 9: Financial Instruments (2009 & 2010) – This amendment addresses classification and measurement of financial assets and replaces the multiple classification and measurement models in IAS 39, with a single model that has only two classification categories: amortised cost and fair value. The standard becomes effective for year-ends commencing after 1 January 2018.

u IFRS 16: Leases – A new standard that replaces IAS 17: Leases. This standard introduces a single lessee accounting model and requires a lessee to recognise assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. IFRS 16 also contains expanded disclosure requirements for the lessee and lessor. The standard becomes effective for year-ends commencing after 1 January 2019.

The directors anticipate that all of the above standards or amendments to the extent relevant, will be adopted in the Group’s consolidated financial statements for the year in which they become effective. Management is currently assessing the impact of IFRS 15 on the various mining contracts as well as the impact that the other new standards and amendments will have on the Group’s financial statements. The Group will make a more detailed assessment of the impact over the next 12 months.

Group accounting policiesAccounting policies are included in the relevant notes to the consolidated financial statements. The accounting policies below are applied throughout the financial statements.



3.1 Basis of consolidation

3.1.1 Subsidiaries Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls

an entity when the Group is exposed to, or has a right to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. The consolidated financial statements present the results of the Company and its subsidiaries (“the Group”) as if they formed a single entity. The results and cash flows of subsidiaries are included from the date that control commences until the date that control ceases. Intergroup transactions and balances between Group companies are eliminated in full. The accounting policies of the subsidiaries are in line with the policies adopted by the Group.

Where the Group ceases to have control, any retained interest in the entity is premeasured to its fair value at the date when control is lost, with the change in the carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as a joint arrangement or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets and liabilities. This may mean that the amount previously recognised in other comprehensive income is reclassified to profit or loss.

With the acquisition of a non-controlling interest, the transactions are accounted for with the owners in their capacity and therefore no goodwill is recognised as a result of such transactions. The adjustments to non-controlling interest are based on a proportionate amount of the net assets of the subsidiary.

Transactions with non-controlling interest that do not result in loss of control are accounted for as equity transactions, that is, as transactions with the owners in their capacity as owners. The difference between fair value of any consideration paid and the relevant share acquired of the carrying value of net asset of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.

Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interests even if doing so causes the non-controlling interests to have a deficit balance.

In the financial statements of the Company, investments in subsidiaries are measured at cost less accumulated impairment losses.

3.1.2 Structured entities A structured entity is consolidated, if based on an evaluation of the substance of its relationship with the Group

and the entity’s risks and rewards, the Group concludes that it controls the structured entity. Structured entities controlled by the Group are established under terms that impose strict limitations on the decision-making powers of the structured entity’s management and that result in the Group receiving the majority of the benefits relating to the structured entity’s operations and net assets, are exposed to risk incidents to the structured entity’s activities, and retain the majority of the residual or ownership risks relating to the structured entity or its assets.

The trusts listed below are structured entities and included in the consolidated results but not consolidated in

the Company financial statements: u Sentula Employee Trust u Sentula Empowerment Trust u Schamin Share Incentive Trust

3.1.3 Joint arrangements Interest in joint ventures are initially recognised at cost and adjusted thereafter to recognise the Group’s share of

the post-acquisition profits or losses and movements in other comprehensive income through equity accounting.

The Group does not recognise any losses when the Group’s share of the losses in the joint venture equals or exceeds its investment, unless it has incurred obligations or made payments on behalf of the joint venture.


3.1.4 Business combinations Business combinations are accounted for using the acquisition method as at the acquisition date, which is the

date on which control is transferred to the Group. In assessing control, the Group takes substantive potential voting rights that are currently exercisable into consideration.

The Group measures goodwill at the acquisition date as: u the fair value of the consideration transferred; plus u the recognised amount of any non-controlling interests in the acquiree; plus u if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree; less

u the net recognised amount of the identifiable assets acquired and liabilities assumed.

When the excess is negative, a bargain purchase gain is recognised immediately in the income statement. The consideration transferred does not include amounts related to the settlement of pre-existing relationships. Such amounts are generally recognised in the income statement.

Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that the Group incurs in connection with a business combination are expensed as incurred.

Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingent consideration is classified as equity, it is not subsequently remeasured and settlement is accounted for within equity.

Otherwise, subsequent changes to the fair value of the contingent consideration are recognised in the income statement.

3.2 Foreign currency

3.2.1 Foreign currency transactions Foreign currency transactions are translated into the functional currency of the respective entity using the

exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date. Foreign currency differences resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss.

Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date that the fair value was determined. Non-monetary items in the foreign currency that are measured in terms of historical costs are translated using the exchange rate at the transaction date.

3.2.2 Foreign operations The results and the financial position of all the Group entities that have a functional currency different from the

presentation currency are translated into the presentation currency as follows: u assets and liabilities for each statement of financial position are translated at the closing rate at the reporting date;

u income and expenses for each income statement account are translated at exchange rates at the dates of the transactions; and

u all resulting exchange differences are recognised in other comprehensive income and presented as a separate component of equity (in the foreign currency translation reserve).

Foreign exchange gains and losses arising from a monetary item receivable from or payable to a foreign operation, the settlement of which is neither planned nor likely in the foreseeable future, are considered to form part of the net investment in a foreign operation and are recognised in other comprehensive income and presented in the foreign currency translation reserve.




3.3 Impairment of non-financial assets The carrying amount of the Group’s assets, other than inventories and deferred tax assets are reviewed at each reporting date to determine whether there is an indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Assets with an indefinite useful life – for example, goodwill or intangible assets not ready for use – are not subject to amortisation and are tested annually for impairment.

The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less the cost to sell. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

Other non-financial assets are subject to impairment tests whenever events or changes in circumstances indicate that their carrying amount may not be recoverable. When the carrying value of an asset exceeds its recoverable amount, the asset is written down accordingly. Where it is not possible to estimate the recoverable amount of an individual asset, the impairment test is carried out on the asset’s cash-generating unit.

Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit, and then to reduce the carrying amounts of the other assets in the cash-generating unit on a pro rata basis.

An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment had been recognised.

Impairment charges are disclosed separately on the income statement.

4 Critical accounting estimates and judgements The Group makes certain estimates and assumptions regarding the future. Estimates and judgements are continually evaluated

based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. In the future, actual experience may differ from these estimates and assumptions.

The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are disclosed in the notes as follows:

u Useful lives of property, plant and equipment – note 16 u Assessment of property, plant and equipment for impairment – note 16 u Useful lives of intangible assets – note 17 u Estimated impairment of goodwill – note 17 u Rehabilitation provision – note 28 u Inventories – note 19 u Income taxes – note 10 u Share based payments – note 7


5 Revenue

Group

R’000Fifteen months –

June 2016


Restated

Opencast mining and earthmoving 864 774 745 256 Exploration drilling 215 151 266 511 Overburden drilling and blasting 230 765 257 457 Crane hire 86 341 99 418

Coal mining 138 658 6 111

1 535 689 1 374 753

Revenue is derived from opencast contract mining, rehabilitation, earthworks, mining services, exploration drilling, overburden

drilling and blasting, crane hire, sale of equipment and spares and selling of anthracite.

Benicon, CCT, Sentula Coal, and Benicon Sales are included in the opencast mining and earthmoving segment. Sentula Coal and Benicon Sales are now included in opencast mining services due to a change in the structure of the organisation. Previously Sentula Coal was included in the coal mining segment and Benicon Sales in the equipment trading and spares segment. Benicon Coal and Nkomati Anthracite are included in the coal mining operations, Benicon Coal and Nkomati Anthracite have been restated in the prior year as they are no longer classified as held-for-sale. The prior year numbers have been restated in the same categories.

Accounting policyRevenue is measured at the fair value of the consideration received or receivable. The Group recognises revenue when the amount of revenue can be reliably measured; when it is probable that future economic benefits will flow to the Group and when specific criteria have been met for each of the Group activities. The invoiced values of goods sold and services rendered excludes value added tax, discounts and other non-operating income.

Opencast contract mining revenue is based on the bulk volume extracted or moved.Exploration drilling revenue is based on metres drilled.Drilling and blasting revenue is based on volume of material blasted.Crane hire revenue is derived from providing craneage services on an hourly basis.Coal mining revenue is based on tonnages anthracite sold.

The Group bases its estimates of return on historical results, taking into consideration the type of customer, the type of transaction and the specifics of each arrangement.




6 Results from operating activities

Group Company

R’000 NoteFifteen months –

June 2016


RestatedFifteen months –

June 2016Twelve months

– March 2015

Includes the following items:IncomeProfit on disposal of property, plant and equipment 10 438 2 762 6 – Preference dividend accrued – – 48 830 39 000

Profit on disposal of subsidiary – – – 9 873

Management fees received – – 36 438 30 876

Expenses

Loss on disposal of subsidiary – 3 727 – –

Bad debts written off 1 755 2 928 – –

Auditors’ remuneration 5 404 6 126 2 080 2 162

– Audit fees – current year 5 387 5 672 2 063 1 709

– Other assurance services 17 454 17 453

Unrealised foreign exchange gains (18 378) (4 719) – (15 370)

Realised foreign exchange losses 17 369 – – – Contribution to socio-economic and enterprise development 2 194 742 – 750 Loss on disposal of property, plant and equipment 776 54 861 – –

Amortisation of intangible assets 17 672 1 347 – – Write-down of inventory to net realisable value 19 5 210 21 802 – –

Inventory write off 19 7 747 – – –

Fair value adjustments on other payables 4 128 5 680 4 128 5 680

Depreciation 16 145 104 168 664 139 140

Scrapping of assets 16 511 1 357 – –

Impairment of plant and equipment 16 138 846 14 795 – –

Impairment of assets held-for-sale 22 – 815 – – Impairment of intergroup investments and loans 35 – – 509 230 444 164

Impairment loss on intergroup receivable 35 – – – 112 940

Impairment of other receivable 20 3 568 – 3 568 –

Personnel expenses

– Salaries and wages* 539 581 499 227 12 883 11 458

– Provident fund 16 249 12 938 – – – Cash-settled share-based payment expense (1 053) (1 178) (665) (476)

– Long-term incentive plan – 2 016 – 496 * Retrenchment costs of R28,2 million (Twelve months – March 2015: R20,9 million) is included in salaries and wages.

Accounting policy(i) Defined contribution plansProvision is made for retirement benefits for eligible employees by way of a provident fund. The fund is a defined contribution plan under which amounts to be paid as retirement benefits are determined by contributions to the fund together with investment earnings thereon. Contributions are charged against income as incurred.

Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future payments are available.

(ii) Short-term employee benefitsThe cost of all short-term employee benefits is recognised during the year in which the employee renders the related service. The accruals for employee entitlements to remuneration and annual leave represent the amount which the Group has a present obligation to pay as a result of the employee’s services provided to the reporting date. The accruals have been calculated at undiscounted amounts based on current remuneration rates.


7 Share-based payments

Group Number of grants

Company Number of grants

’000Fifteen months –

June 2016Twelve months –

March 2015Fifteen months –


March 2015

Cash-settled share appreciation rights scheme – 9 250 – 6 100

Long-term incentive plan 37 430 50 700 13 180 15 650

Schamin Share Incentive Trust equity-settled options – 1 600 – 1 600

37 430 61 550 13 180 23 350

Cash-settled share appreciation rights scheme The share appreciation rights scheme is a scheme whereby senior and middle management (the “employees”) of Sentula (the “Company”) are incentivised by means of the award of options, of which the offer price is determined as the 30-day VWAP of Sentula’s share price on the date of presentation of Sentula’s annual results (the “offer date”) and the employees can exercise the said options in five equal tranches annually from the first to the sixth anniversary of the offer date, subject to employment. The award and allocation of options under the scheme are governed by Sentula’s Board. There were no rights awarded or exercised as the scheme lapsed during the fifteen months ended 30 June 2016 (2015: Nil). This is a cash-settled scheme.

Group

Number of grantsCompany

Number of grants





March 2015

Outstanding at the beginning of the year 9 250 11 396 6 100 6 100 Forfeited options (6 500) (2 146) (5 600) – Lapsed options (2 750) – (500) –

Outstanding at the end of the period – 9 250 – 6 100

Exercisable at the end of the period – 7 400 – 4 880

Weighted average exercise price of outstanding options (cents) – 231 – 235 Weighted average exercise price of forfeited options (cents) 231 328 235 – Weighted average exercise price of exercisable options (cents) – 231 – 235

Fair value of options granted (R’000) – 1 393 – 919

Average remaining life (months) – 16 – 17

The fair value of such share programme was determined by using the binomial option valuation method on date of grant. The following inputs were used:

u Issued price ranging from 223 cents to 1 679 cents; u Expected volatility of 50%; u A staff turnover of 5,45% per annum; u A forecast dividend growth rate of 4%; u A risk-free interest rate of 8,97%.

Expected volatility was based on a filtered history of volatility of the Sentula Group from a period dating back to 2005; and has been adjusted to give recent history a higher weighting in determining the average expected volatility.




7 Share-based payments continued Long-term incentive plan Selected executives and employees of Sentula and its subsidiaries will receive a conditional right to receive a cash award (“LTIP award”) equal to the market value of a number of notional Sentula issued ordinary shares on the date that the award becomes unconditional. This LTIP award is settled in cash.







March 2015

Outstanding at the beginning of the year 50 700 31 032 15 650 11 162 Awards granted 33 025 32 600 10 050 10 300 Awards lapsed (11 120) – (3 435) –

Forfeited awards (35 175) (5 628) (9 085) –

Allocation to subsidiaries – – – (4 014)

Number of awards exercised – (7 304) – (1 798)

Outstanding at the end of the period 37 430 50 700 13 180 15 650

Value of awards exercised (R’000) – 2 016 – 496

Exercisable at the end of the period – – – –

Average remaining life 60 months 60 months 60 months 60 months

Awards made during the 2016 financial year relate to new staff members qualifying for the scheme and new awards to existing participants, which awards vest over the next five-year period. LTIPs are settled at the vesting date based on the market value of the Company’s share price determined by reference to 30-day VWAP. Conditions for vesting are established by the Board. In order for the July 2015 tranche to vest a 10% improvement in year-on-year economic value add (“EVA”) on the Group’s productive capital base (“capital base”), utilising the 31 March 2014 base, needed to be achieved. This was not met. The July 2014 tranche vested, as the vesting condition of achieving a 10% compound improvement year-on-year EVA on the March 2011 capital base, was met. In order for the 2017 tranche to vest the Group needs to show a positive economic value added (“EVA”) with a return on equity (“ROE”) of 15%. Vesting conditions also require that the participant remains in the Company’s employment at the maturity of the respective tranche.

Schamin Share Incentive Trust The following changes took place during the period under review:







March 2015

Outstanding at the beginning of the year 1 600 1 600 1 600 1 600 Forfeited options (1 600) – (1 600) –

Outstanding at the end of the period – 1 600 – 1 600

Exercisable at the end of the period Nil 1 600 Nil 1 600

Weighted average strike price of outstanding options (cents) n/a 1 000 n/a 1 000 Weighted average strike price of exercisable options (cents) n/a 1 000 n/a 1 000

Fair value of options at the date of grant (R’000) Nil 2 552 Nil 2 552

Average remaining life (months) n/a 21 n/a 21

Total number of shares held by the trust 2 118 061 2 118 061

The maximum number of shares that may be issued in terms of the scheme may not in aggregate exceed 23 556 594 shares in

Sentula’s issued capital. Shares vest in the option holder on the date the option was granted. Thereafter the option holder may exercise the options in individual tranches of 20% on each subsequent anniversary. The Schamin Share Incentive Trust scheme is no longer in use and the only remaining beneficiary left the employment of Sentula during the period. This is an equity-settled scheme. The trust is consolidated in the Group.


7 Share-based payments continued

Schamin Share Incentive Trust continued

Accounting policyCash-settled share-based payments are measured at fair value. The liability is remeasured at each balance sheet date until the date of settlement.

The fair value of the amount payable to employees in respect of the long-term incentive plan which is settled in cash, is recognised as an expense with an increase in liabilities, over the period that the employees become unconditionally entitled to payment. The liability is remeasured at each reporting date and at settlement date. Any changes in the fair value of the liability are recognised in profit or loss.

Critical accounting estimates and judgementsThe fair value of share options and share appreciation rights is measured by using the binomial valuation models, on the date of grant based on certain assumptions. Measurement inputs include the share price on the measurement date, the exercise price of the instrument, expected volatility, expected term of the instruments, expected dividends, and the risk-free interest rate. Service and non-market performance conditions attached to the transactions are not taken into account in determining fair value.

8 Finance income/expense

Group Company





March 2015

Finance income – received 1 699 1 280 13 609 21 713 – Financial institutions 750 735 430 54 – Intercompany loans – – 12 269 21 148

– South African Revenue Services 25 – 15 –

– Benicon Mining disposal 480 511 480 511

– Other 444 34 415 –

Finance expense – paid 44 176 52 048 27 107 47 122

– Non current borrowings 23 002 37 351 15 711 37 351

– Bank overdraft 10 045 5 049 10 040 5 030

– Intercompany advances – – 995 4 740

– Finance leases 2 296 6 575 – –

– Finance institutions – 111 – –

– Interest on outstanding tax 6 157 2 826 – –

– Other 2 676 136 361 1

Finance expense – non-cash 2 990 2 151 – 2 151

– Facility fees recognised – 2 151 – 2 151 – Unwinding charges of rehabilitation provision 2 990 – – –

Total finance expense 47 166 54 199 27 107 49 273

Net finance expense 45 467 52 919 13 498 27 560

No borrowing costs were capitalised during the current financial period or the previous year.

Accounting policyFinance income comprises interest income received on funds invested that are recognised in profit or loss. Interest income is recognised as it accrues in profit or loss, using the effective interest method.

Finance expenses comprise interest expense on borrowings that are recognised in profit or loss. Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are recognised in profit or loss using the effective interest method.




9 Investment in joint venture The Group entered into a joint venture agreement during 2008 with Jonah Capital BVI which led to the establishment of a joint

venture company, incorporated in Mauritius and known as Jonah Coal Botswana Limited. Sentula owns 50% of the share capital of Jonah Coal Botswana Limited. Jonah Coal Botswana Limited’s principle business activity is investing in coal exploration companies.

The interest in the joint venture was written off previously and Sentula only shares in the losses of the joint venture until the losses of the joint venture equal or exceed its interest in the joint venture.

The carrying value of the joint venture is RNil (March 2015: RNil)

10 Taxation

Group Company





March 2015

Normal taxation (14 418) 44 613 – – – Current year (15) 20 142 – – – Prior year adjustments (15 716) 19 098 – –

– Foreign 1 313 5 373 – –

Capital gains tax – (3 277) – (3 277)

Securities transfer tax 69 – 69 –

Deferred taxation (3 163) (25 092) 458 (628)

– Current year (3 796) (25 092) 458 (628)

– Prior year 633 – – –

Taxation (17 512) 16 244 527 (3 905)

Reconciliation of effective tax rate

Loss for the period (486 889) (278 668) (473 358) (527 298)

– Continuing operations (486 889) (274 666) (473 358) (527 298)

– Discontinued operations – (4 002) – –

Taxation 17 512 (16 244) (527) 3 905

Loss for the period after tax (469 377) (294 912) (473 885) (523 393)

Income tax expense at statutory rate

of 28% (136 328) (78 027) (132 540) (147 643)

– Non-deductible expenses 7 737 (13 677) 1 462 1 183

– Assessed loss utilised (7 992) (437) – –

– Additional assessment raised – 14 558 – –

– Tax effect of non-taxable income (244) (10 780) (13 672) (10 920)

– Securities transfer tax 69 – 69 –

– Capital gains tax (24) (3 333) – (3 277)

– Capital gain/loss not recognised – 3 140 143 592 154 105

– Prior year adjustment (15 083) 892 – –

– Foreign tax 1 313 5 393 – –

– Foreign currency translation – 403 – –

– Foreign deferred tax asset/liability not recognised 14 422 14 138 – –

– Foreign tax rate difference (5 762) 34 873 – – – Current year losses and temporary differences for which no deferred tax asset was recognised 125 115 49 193 1 616 6 951

– Other (735) (92) – (4 304)

Income tax expense recognised in profit (17 512) 16 244 527 (3 905)

Effective tax rate (%) 3,6% (5,8%) (0,1%) 0,7%

The tax rate used for the 2016 reconciliation above is the corporate tax rate of 28% (2015: 28%) payable by corporate entities in South Africa on taxable profits under tax law in that jurisdiction.


10 Taxation continued Deferred taxation

Group Company R’000 June 2016 March 2015 June 2016 March 2015

Balance at the beginning of the year 53 225 91 009 (1 830) (1 202) Movement for the period (3 163) (25 092) 458 (628)Originating temporary differences (3 796) (25 092) 458 (628) Prior year tax adjustments 633 – – – Transfer from held-for-sale assets (14 729) – – –

Disposal of subsidiary – (12 692) – –

Balance at the end of the period 35 333 53 225 (1 372) (1 830)

The balance comprises: Accelerated wear and tear for tax purposes on property, plant and equipment 64 004 99 795 – – Fair value adjustments on business combinations 10 786 10 755 – –

Provisions (5 138) (16 995) (1 372) (1 787)

Lease liability 1 350 305 – –

Unrealised foreign exchange movement (8 978) (7 200) – –

Assessed losses (22 180) (30 675) – –

Prepayments – 142 – (142)

Income received in advance (1 213) – – –

Other (3 298) (2 902) – 99

Net deferred tax liabilities 35 333 53 225 (1 372) (1 830)

Deferred tax asset 27 761 13 576 1 372 1 830 – Deferred tax asset to be recovered after more than 12 months 26 266 11 746 – – – Deferred tax asset to be recovered within 12 months 1 495 1 830 1 372 1 830

Deferred tax liability 63 094 66 801 – –– Deferred tax liability to be recovered after more than 12 months 44 730 35 943 – –– Deferred tax liability to be recovered within 12 months 18 364 30 858 – –




10 Taxation continued Deferred taxation continued

Group Company

Movement in temporary differences during the fifteen monthsR’000

Opening balance

1 April 2015

Transferred from

discontinued operations

Recognised in income

statement

Closing balance

30 June 2016

Opening balance

1 April 2015


statement

Closing balance

30 June 2016

Accelerated wear and tear 99 795 69 (35 860) 64 004 – – – Fair value adjustments on business combinations 10 755 – 31 10 786 – – – Assessed losses (30 675) (14 798) 23 293 (22 180) – – – Provisions (16 995) – 11 857 (5 138) (1 787) 415 (1 372)Lease liability 305 – 1 045 1 350 – – – Prepayments 142 – (142) – (142) 142 – Income received in advance – – (1 213) (1 213) – – – Unrealised foreign exchange movement (7 200) – (1 778) (8 978) – – – Other (2 902) – (396) (3 298) 99 (99) –

53 225 (14 729) (3 163) 35 333 (1 830) 458 (1 372)

Group Company

Movement in temporary differences during the previous year

Opening balance

1 April 2014


statementDisposal of

subsidiary

Closing balance

31 March 2015

Opening balance

1 April 2014


statement

Closing balance

31 March 2015

Accelerated wear and tear 292 079 (192 284) – 99 795 – – – Fair value adjustments on business combinations 22 177 1 270 (12 692) 10 755 – – – Assessed losses (37 968) 7 293 – (30 675) – – – Provisions (13 330) (3 665) – (16 995) (264) (1 523) (1 787)Lease liability – 305 – 305 – – – Prepayments 4 138 – 142 (4) (138) (142)Unredeemed capital expenditure (166 731) 166 731 – – – – – Unrealised foreign exchange movement (2 138) (5 062) – (7 200) – – – Other (3 084) 182 – (2 902) (934) 1 033 99

91 009 (25 092) (12 692) 53 225 (1 202) (628) (1 830)

Deferred income tax assets are recognised for tax loss carry forwards to the extent that the realisation of the related tax benefit through future taxable profits is probable. Deferred tax assets are expected to realise through profits.

Due to historical losses in operating subsidiaries the Group is not significantly exposed to uncertain tax positions. Additional deferred tax assets are only raised if certainty exists that these assets will realise within the next year. Historical deferred tax assets in Nkomati and Sentula Mining Services amounting to R14,5 million (2015: R14,5 million) and R11,7 million (2015: R11,7 million) respectively, are expected to realise through taxable income in the foreseeable future. Deferred tax assets have not been fully raised on assessed losses in these subsidiaries. The unrecognised portion of assessed losses in these companies is first reduced with taxable income generated. Current income tax calculations are performed on a conservative basis due to the current losses.


10 Taxation continued Unrecognised deferred taxDeferred tax assets have not been recognised in respect of tax losses amounting to R504 million (March 2015: R391 million) as it is not probable that future taxable profit will be available against which the Group can utilise the benefits therefrom in the foreseeable future.

Taxation assets and liabilities


Current tax receivable 3 721 644 – 411 Current tax liabilities (47 026) (60 061) – –

(43 305) (59 417) – 411

Current tax receivable 3 721 644 – 411 Current tax payable (47 026) (60 061) – –

– Relating to current year (393) (4 178) – – – Relating to prior year under objection (46 633) (55 883) – –

The Group is currently disputing income tax administration penalties and interest raised by SARS amounting to R51 million. (2015: R56 million). The amount reduced after a settlement was reached with SARS on a portion of the liability in Megacube, during the year.

SARS is of the opinion that the companies did not perform mining activities and subsequently did not qualify for mining capital allowances claimed during the 2008 to 2011 period. The Group is currently disputing these liabilities and has engaged with SARS in order to reach a settlement.

SARS has commenced legal action against CCT. SARS claimed a total of R26 million including interest, of which R13 million relates to tax on disallowed mining allowances during 2011. The matter has been referred to the Tax Court and will be heard on 20 February 2017.

Accounting policy Income tax comprises current and deferred tax. Current tax and deferred tax is recognised in profit or loss except to the extent that it relates to a business combination or items recognised directly in equity or other comprehensive income.

Current taxation is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.

The following temporary differences are not provided for: u the initial recognition of goodwill; u the initial recognition of assets and liabilities that affect neither accounting nor taxable profit; and u differences relating to investments in subsidiaries to the extent that it is probable that they will not reverse in the foreseeable future.

A deferred tax asset is recognised only to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Deferred tax assets are reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the temporary differences when they reverse based on the laws that have been enacted or substantively been enacted by the reporting date.

Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority on either:

u the same taxable entity; or u different Group entities which intend either to settle current tax assets and liabilities on a net basis; or u to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax assets or liabilities are expected to be settled or recovered.

The Group provides for disputes with revenue authorities based on assessments issued by the authorities including interest and penalties once the disputes arise.




10 Taxation continued Unrecognised deferred tax continued

Critical accounting estimates and judgementsThe Group is subject to income tax in several jurisdictions and significant judgement is required in determining the provision for income taxes. During the ordinary course of business, there are transactions and calculations for which the ultimate tax determination is uncertain. As a result, the Group recognises tax liabilities based on estimates of whether additional taxes and interest will be due. The Group believes that its accruals for tax liabilities are adequate for all open audit years based on its assessment of many factors including past experience and interpretations of tax law. This assessment relies on estimates and assumptions and may involve a series of complex judgements about future events. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will impact the income tax expense in the period in which such determination is made.

11 Discontinued operations There are no discontinued operations for the current period.

During the previous year, the Board took the decision to dispose of all the coal assets within the Group. As announced on SENS on 28 February 2014, Sentula concluded the following transactions:

u The Benicon Coal disposal transaction document; and u The Benicon Mining sale agreement

Benicon Coal disposal The Benicon Coal sale agreement and the Benicon Coal guarantee, pledge and cession agreement lapsed on 1 August

2014 due to the non-fulfilment of certain of the Benicon Coal conditions precedent within the agreed timeframe and was therefore not implemented.

Benicon Coal and its subsidiary, Nkomati, can no longer be classified as held-for-sale as the requirements of IFRS 5 are no longer met.

The prior year numbers on the income statement, statement of comprehensive income, basic and headline loss per share have been re-presented to include Benicon Coal and Nkomati in continuing operations. In terms of IFRS 5, the statement of financial position for June 2016 includes these operations on a line-by-line basis. It is not a requirement that the prior periods be restated in the statement of financial position and these operations are therefore classified as held-for-sale at 31 March 2015.

Benicon Mining disposal The Benicon Mining sale agreement was concluded on 28 February 2015, in terms of which Sentula disposed of its stake in Benicon Mining equity and claims.

The disposal of Benicon Mining is disclosed in note 12.


11 Discontinued operations continuedFinancial performance and cash flow information relating to the discontinued operations for the previous year is set out below.


Revenue – 6 111 – – Cost of sales – (21 984) – – Gross loss – (15 873) – – Other income – 831 – – Administration expenses – (1 480) – – Results from operating activities – (16 522) – – Finance expense – (36) – – Finance income – 429 – – Loss before taxation – (16 129) – – Taxation – – – – Loss for the year from discontinued operations – (16 129) – –

Loss attributable to: – (16 129) – – – Equity holders of the Company – (16 129) – – – Non-controlling interest – – – –

Cash flow attributable to operating activities – (22 074) – – Cash flow attributable to investing activities – (1 332) – – Cash flow attributable to financing activities – 23 286 – –

Cash flows attributable to discontinued operations – (120) – – Cash and cash equivalents at the beginning of the year – 1 520 – –

Cash and cash equivalents at the end of the period – 1 400 – –




12 Disposal of subsidiariesDuring the financial year ended 31 March 2015, the Group disposed of 100% of the share capital of Benicon Mining Proprietary Limited. The company held the Bankfontein mining right and property.

Benicon Mining was included in the coal mining segment.


Details of the net assets disposed of are as follows:

– Cash received – 23 680 – 23 680 – Amount owing recorded in other receivables – 16 320 – 16 320

Net disposal consideration – 40 000 – 40 000 Carrying value of net assets disposed – (11 089) – – Derecognition of mineral right – (45 330) – – Derecognition of deferred tax on mineral right – 12 692 – – Increase in acquisition liability – – – (500)Settlement of investment in Benicon Mining – – – (20 262)Settlement of loan in Benicon Mining – (9 365)

(Loss)/profit on disposal of subsidiary – (3 727) – 9 873

The assets and liabilities as of February 2015 disposed of are:

Fair valueR’000

Disposee's carrying amount

R’000

Property, plant and equipment 305 305 Intangible assets 7 589 7 589 Restricted investment 3 195 3 195

Net assets 11 089 11 089 Purchase consideration received in cash 23 680 Cash and cash equivalents in subsidiary disposed of –

Cash inflow on disposal 23 680


13 Earnings per share

Group June 2016 March 2015

Basic and diluted loss per share (cents) (61,27) (49,18)– continuing operations (cents) (61,27) (48,51)– discontinued operations (cents) – (0,67)

Headline and diluted loss per share (cents) (43,51) (40,22)– continuing operations (cents) (43,51) (40,17)– discontinued operations (cents) – (0,05)

’000 ’000

Shares in issue at the end of the period 1 167 564 586 559 Shares held by subsidiary (5 554) (5 554)

Shares in issue at the end of the period 1 162 010 581 005

Weighted average shares in issue at the end of the period excluding treasury shares (‘000) (2015 restated for the rights issue) 730 200 596 708

Headline earnings per share has been calculated in accordance with the SAICA Circular 2/2015 entitled ‘Headline Earnings’ which forms part of the Listings Requirements of the JSE Limited.

The adjustments made to arrive at headline loss are as follows:

June 2016 March 2015

R’000 Group Continuing Discontinued Group

Net loss for the period attributable to equity holders of the parent (447 429) (289 443) (4 002) (293 445)Adjusted for:Profit on disposal of plant and equipment (10 438) (2 762) – (2 762)Tax effect on profit on disposal of plant and equipment 53 773 – 773Loss on disposal of subsidiary – – 3 727 3 727 Loss on disposal of plant and equipment 776 54 861 – 54 861 Tax effect on loss on disposal of plant and equipment – (15 361) – (15 361)Scrapping of assets 511 1 357 – 1 357 Tax effect on scrapping of assets – (380) – (380)Impairment of plant and equipment 138 846 14 795 – 14 795 Tax effect on impairment of plant and equipment – (4 142) – (4 142) Impairment of assets held-for-sale – 815 – 815 Tax effect of impairment of assets held-for-sale – (228) – (228)

Headline loss attributable to ordinary shareholders (317 681) (239 715) (275) (239 990)




14 Net asset value per share

Group Company June 2016 March 2015 June 2016 March 2015

Net asset value per share (cents)* 31,45 122,68 49,67 163,24Tangible net asset value per share (cents)** 28,23 116,29 49,67 163,24

* The calculation of net asset value and tangible net asset value per share excludes the treasury shares.

** Tangible net asset value excludes goodwill and intangible assets.

15 Dividend The Board of Directors has not declared an interim or final dividend for the period ended 30 June 2016 or 31 March 2015.

Accounting policyDividends to equity holders are only recognised as a liability when declared and are included in the statement of changes in equity.

16 Property, plant and equipment Group

June 2016 (R’000) Land and buildings Mining assets

Plant and equipment

Motorvehicles

Furniture,fittings and equipment Total

Gross carrying amountAt 31 March 2015 74 309 – 1 534 339 128 302 23 170 1 760 120 Additions 13 400 5 108 33 260 3 583 1 537 56 888 Disposals (3 288) – (164 646) (31 952) (113) (199 999)Scrapping of assets – – (8 223) (3 585) (647) (12 455)Foreign currency translation (3 105) – (10 406) (3 854) 97 (17 268)Transfer (to)/from held-for-sale assets (282) 182 212 (343 968) (37 978) (13 980) (213 996)

At 30 June 2016 81 034 187 320 1 040 356 54 516 10 064 1 373 290

Accumulated depreciation and

impairment lossesAt 31 March 2015 8 694 – 899 710 81 814 19 960 1 010 178 Depreciation 2 373 4 190 122 744 13 708 2 089 145 104 Transfer (to)/from held-for-sale assets (943) 23 107 (320 651) (29 850) (13 611) (341 948)Disposals (3 174) – (114 897) (30 296) 436 (147 931)Impairment of assets – – 130 742 8 104 – 138 846Foreign currency translation 320 – (2 185) (3 251) 87 (5 029)

Scrapping of assets – – (8 012) (3 342) (590) (11 944)

At 30 June 2016 7 270 27 297 707 451 36 887 8 371 787 276

Net book value at 30 June 2016 73 764 160 023 332 905 17 629 1 693 586 014





16 Property, plant and equipment continued Group continued

March 2015 (R’000) Land and buildings Mining assets

Plant and equipment

Motor vehicles

Furniture, fittings and equipment Total

Gross carrying amountAt 31 March 2014 75 856 – 1 816 683 158 718 23 566 2 074 823 Additions – – 98 321 4 555 1 083 103 959 Transfer to inventory – – 3 415 – – 3 415 Disposals – – (298 126) (24 275) (1 494) (323 895)Scrapping of assets – – (4 268) (237) – (4 505)Foreign currency translation 135 – 6 720 414 15 7 284 Transfer to held-for-sale assets (1 682) – (88 406) (10 873) – (100 961)

At 31 March 2015 74 309 – 1 534 339 128 302 23 170 1 760 120

Accumulated depreciation and impairment lossesAt 31 March 2014 5 955 – 1 018 956 98 959 18 640 1 142 510 Depreciation 2 570 – 154 556 8 776 2 228 168 130 Transfer to held-for-sale assets (67) – (79 791) (8 539) – (88 397)Disposals – – (211 511) (17 341) (923) (229 775)Impairment of assets – – 14 766 29 – 14 795 Foreign currency translation 236 – 5 737 75 15 6 063 Scrapping of assets – – (3 003) (145) – (3 148)

At 31 March 2015 8 694 – 899 710 81 814 19 960 1 010 178

Net book value at 31 March 2015 65 615 – 634 629 46 488 3 210 749 942

Company

Furniture, fittings and equipment R’000 June 2016 March 2015

Gross carrying amountCarrying value at the beginning of the year 3 777 3 734 Additions – 43 Disposals (41) –

Carrying value at the end of the period 3 736 3 777

Accumulated depreciation and impairment lossesCarrying value at the beginning of the year 3 493 3 353 Depreciation 139 140 Disposals (41) –

Carrying value at the end of the period 3 591 3 493

Net book value at the end of the period 145 284

Assets pledged as security Refer to note 24 and note 25 for information on non-current assets pledged as security by the Group.


16 Property, plant and equipment continued Impairment loss Opencast mining segment During the current period, plant with a carrying value of R172,1 million (2015: R22,1 million) was impaired by R108,2 million

(2015: R11,8 million) in Benicon Opencast Mining Proprietary Limited. This impairment was raised due to certain machines being operationally uneconomical and technologically obsolete for redeployment.

Furthermore, assets with a carrying value of R59 million were classified as held-for-sale. These assets were impaired by R19 million to their current market value before being classified as held-for-sale. These assets were identified to be disposed of at June 2016 as they were no longer utilised. These assets will be sold from July 2016 to October 2016 through auctions and direct buyers.

During the period, leased plant and equipment with a carrying value of R15,0 million was impaired by R3 million and owned plant and equipment and motor vehicles with a carrying value of R18,3 million was impaired by R8,6 million in Classic Challenge Trading Proprietary Limited. During the financial period, the open market value of these assets declined significantly more than would be expected as a result of the passage of time, or normal use due to the weak economic situation in the bulk earth moving sector.

The recoverable amounts of the above assets, were determined by using the fair value less costs to sell for each asset within Level 3 of the fair value hierarchy. This was based on recent market-related prices and in some instances on the scrap value of the equipment.

Exploration drilling segment During the previous year, drilling rigs with a carrying value of R2,9 million were impaired to RNil in the exploration drilling

segment. These machines were written down to RNil as these rigs are in transit locations and access to obtain possession of these rigs is uncertain.

A register containing the information required by regulation 25(3) of the Companies Act is available for inspection at the registered office of the Company.

Accounting policy(i) Recognition and measurement Property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of self constructed assets includes the cost of materials and direct labour, and any costs directly attributable to bringing the asset to a working condition for its intended use, and the costs of dismantling and removing the items and restoring the site on which they are located.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment and depreciated separately.

Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of property, plant and equipment and are recognised net within “other income” in profit or loss.

(ii) Subsequent costs The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that future economic benefits within the part will flow to the Group and its cost can be measured reliably. The carrying amount of the replaced part is derecognised. The costs of day-to-day servicing of the property, plant and equipment are recognised in profit or loss as incurred.

(iii) Depreciation Depreciation is recognised in profit or loss on a systematic basis over the estimated useful lives of each part of an item of property, plant and equipment (except for mining assets and assets depreciated using the units of production method), since this most clearly reflects the expected pattern of consumption of the future economic benefits embodied in the asset. Leased assets are depreciated over the shorter of the lease term and their useful lives. If it is reasonably certain that the Group will obtain ownership by the end of the lease term, the assets are depreciated over their useful life. Land is not depreciated.

Residual value is the amount that the entity could recover for the asset at the reporting date if the asset was already of the age and in the condition that it will be in when the entity expects to dispose of it. The estimated residual value is based on similar assets that have reached the end of their useful lives at the date that the estimate has been made. If the residual value of an asset increases to an amount equal to or in excess of the asset’s carry value, then the asset’s depreciation charge will be zero. Depreciation will resume when the asset’s residual value falls below the asset’s carrying value.




16 Property, plant and equipment continuedAccounting policy continued Where the unit-of-production methodology is used, the estimate of future production is reviewed and revised, if necessary, at each reporting date in accordance with the requirement to review the asset’s expected useful life. Units of production are determined by the metres drilled or hours utilised for the specific item of plant and equipment. The annual revision did not require a change in estimate in the current and prior year.

A change in the useful life, in the unit of production method or in the residual value of an asset will result in a change in estimate and will only be applied prospectively.

The estimated useful lives for the current and comparative periods are as follows: u buildings 50 years u mining assets units of production u plant and equipment

Articulated dumpers 10 000 – 18 000 hoursRigid dump trucks 20 000 hoursExcavators 12 000 – 18 000 hoursLoaders 15 000 – 20 000 hoursDozers 15 000 – 20 000 hoursGraders 20 000 hoursScrapers 20 000 hoursCrushers 12 000 – 25 000 hoursDrilling and blasting rigs 5 – 7 yearsExploration drill rigs 5 – 9 yearsMobile cranes 8 – 10 yearsOther assets 3 – 5 years

u motor vehicles 5 years u furniture, fittings and equipment 3 – 10 years

Depreciation methods, useful lives and residual values are reviewed annually and adjusted if appropriate.

All mining assets are depreciated using the units-of-production method where the mine operating plan calls for production from well defined mineral reserves over proved and probable reserves. The calculation of the units-of-production rate of depreciation could be impacted to the extent that actual production in the future is different from current forecast production based on proved and probable mineral reserves. This would generally arise when there are significant changes in any of the assumptions used in estimating the mineral reserves.

These factors could include changes in proved and probable mineral reserves and differences between actual commodity prices and commodity price assumptions.

Critical accounting estimates and judgements As described above, the estimated useful lives of property, plant and equipment are reassessed at the end of each annual reporting period. The Group depreciates/amortises its assets over their estimated useful lives, as disclosed in the above accounting policy. The actual lives of these assets can vary depending on a variety of factors, including technological innovation and maintenance programmes. Changes in estimates can result in variations in the carrying value and amounts charged to profit or loss in specific periods.

Property, plant and equipment is considered for impairment if there are impairment indicators indicating that an impairment may be necessary. In reaching such a decision the economic viability of the asset itself or where it is a component of a larger economic unit, the viability of that unit itself and other indicators are considered.

If an indication of a possible impairment exists for an economic unit of assets, the future cash flows expected to be generated by the assets are projected, taking into account the expected return of these assets over the expected useful lives. The present value of these cash flows is determined using an appropriate discount rate. If the present value compared to the current net asset value is lower, the assets are impaired to the present value. If the present value of assets’ return is lower than the estimated proceeds from a disposal less cost to sell, the assets are impaired to the market value less cost to dispose.

If an indication of a possible impairment exists for an individual asset due to its condition or technological innovation, the individual asset is assessed for impairment based on the future use of the asset. Individual assets are impaired to a carrying value with reference to a similar asset being disposed of in the open market.

A number of estimates are used in determining the expected proceeds from the disposal of these assets as well as the cost required to sell these assets, the most significant of these is the expected market value that can be achieved through the disposal of the assets. The expected proceeds from the disposal of these assets are determined annually by a third party assessor.

During the period under review individual assets were impaired based on similar assets being disposed of in the market.


17 Intangible assets and goodwill Intangible assets Intangible assets comprise software.

June 2016 (R’000)

Intangible assets –

Software Goodwill

Total intangible assets and

goodwill

CostAt 31 March 2015 4 040 372 692 376 732

At 30 June 2016 4 040 372 692 376 732

Accumulated amortisation and impairment lossesAt 31 March 2015 3 368 335 265 338 633 Amortisation of intangible asset 672 – 672

At 30 June 2016 4 040 335 265 339 305

Net book value at 30 June 2016 – 37 427 37 427

March 2015

CostAt 31 March 2014 4 040 372 692 376 732

At 30 June 2015 4 040 372 692 376 732

Accumulated amortisation and impairment lossesAt 31 March 2015 2 021 335 265 337 286 Amortisation 1 347 – 1 347

At 31 March 2015 3 368 335 265 338 633

Net book value at 31 March 2015 672 37 427 38 099

Goodwill


Carrying value at the beginning of the year 37 427 37 427 – – – JEF 19 687 19 687 – – – Ritchie 17 740 17 740 – –

Carrying value at the end of the period 37 427 37 427 – – – JEF 19 687 19 687 – – – Ritchie 17 740 17 740 – –

Goodwill arose from the business acquisitions during the 2007 and 2008 financial years.

The recoverable amounts of the cash-generating units (CGUs) are determined from value-in-use calculations. The key assumptions for the value-in-use calculations are those regarding the discount rates, growth rates and expected revenue and cost projections during the period. These calculations are based on financial budgets approved by management covering a five-year period. Cash flows beyond the five-year period are estimated based on the operations remaining stable in the future without applying a growth rate for future periods. Management estimates discount rates that reflect current market assessments of the time value of money and the risks specific to the CGUs. Changes in revenue and cost projections are based on long-term inflation expectations.




17 Intangible assets and goodwill continued Intangible assets and goodwill continued

JEF Drill and Blast included in the overburden and drilling segment and Ritchie Crane Hire included in the crane hire segmentBudgeted future cash flow projections were discounted at the pre-tax rate of 15,76% (March 2015: 14,01%). The growth rate used in the calculation was 0%. Any reasonable possible change in key assumptions on which the recoverable amount is based would not cause the carrying amount of the operations exceeding the recoverable amount.

Accounting policy(i) GoodwillThe measurement of the initial recognition of goodwill has been disclosed in note 3.1.4, under Business combinations.

Subsequent measurementGoodwill is measured at cost less accumulated impairment losses.

For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of the cash-generating unit’s, or groups of cash-generating unit’s that is expected to benefit from the synergies of the combination. Each unit or group of units to which the goodwill is allocated represents the lowest level within the entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at the operating segment level. Goodwill impairment reviews are undertaken annually or more frequently if events or changes in circumstances indicate a potential impairment. The carrying value of goodwill is compared to the recoverable amount, which is the higher of value-in-use and fair value less costs of disposal. Any impairment is recognised immediately as an expense and is not subsequently reversed.

(ii) SoftwareDirect computer software development costs recognised as intangible assets are amortised on the straight-line basis at rates appropriate to the expected useful lives of the assets (three years) from the date that the assets are available for use, and are carried at cost less accumulated amortisation and accumulated impairment losses. The carrying value of capitalised computer software is reviewed annually and is written down when impaired.

Amortisation methods, useful lives and residual values are reviewed at financial year-end and adjusted, if necessary. There have been no changes in the estimated useful lives from those applied previous financial year.

Critical accounting estimates and judgementsAs described above, the estimated useful lives of intangible are reassessed at the end of each annual reporting period.

The Group annually tests whether goodwill has suffered any impairment, in accordance with the accounting policy. The recoverable amounts of cash-generating units have been determined based on value-in-use calculations. These calculations require an estimation of the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate present value.

18 Restricted cash


Carrying value at the beginning of the year – – – – Increase in restricted cash 2 850 – – – Carrying value at the end of the period 2 850 – – –

The amount relates to funds set aside to serve as collateral against guarantees made to the Department of Mineral Resources (“DMR”) in South Africa for environmental and rehabilitation obligations. Refer to note 28.

These funds are held in a money market account and held by Guardrisk who have issued the guarantee.


19 Inventories


Finished goods 821 – – – Work-in-progress – 3 868 – – Consumables and spares 32 581 66 624 – –

33 402 70 492 – –

Inventories expensed during the period 141 804 213 642 – –

Inventory write-off 7 747 – – –

Write-down of inventory to net realisable value 5 210 18 037 – –

During the 2016 financial period, Benicon Opencast Proprietary Limited wrote off obsolete parts exchange units by R1,5 million to scrap value. In addition, spare parts used in the repair and maintenance of earthmoving equipment have been written down by R5,2 million to its net realisable value. These parts were predominantly used in assets disposed of during the year.

During the period, the inventory write-down amounting to R6,3 million (2015: R4,2 million) within the exploration drilling sector relates to inventory items not expected to be utilised in the forthcoming financial year. These items were written down to net realisable value.

During the 2015 financial year, other spare parts and components used in the maintenance and repair of earthmoving and mining equipment held in Benicon Sales Proprietary Limited were written-down by R13,9 million to its expected net realisable value. These items were predominately used in the repair of kits and components of assets disposed of during the previous year.

Accounting policy Inventories are consumables and spares held in the ordinary course of business consumed in the production process or in the rendering of services in the mining operations. Finished goods are products available for sale in the coal operations. Inventories are measured at the lower of cost and net realisable value using the first-in first-out method. Cost includes all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated cost of completion and costs necessary to make the sale.

Critical accounting estimates and judgementsThe Group reviews the net realisable value of, and demand for, its inventory on a quarterly basis to provide assurance that recorded inventory is stated at the lower of cost or net realisable value. Factors that could impact estimated demand and selling prices include the timing and success of future technological innovations, competitor actions, supplier prices and economic trends.




20 Trade and other receivables


Trade receivables 176 761 241 061 – –Intercompany trade receivables – – 2 818 5 321 Other receivables 30 447 70 070 2 20 791Orezone Drilling – disposal of DRC assets 13 522 17 985 – – Prepayment on property – 10 877 – – Roan Coal – Benicon Mining disposal – 16 830 – 16 830 Deposits – 179 – 179 Other 16 925 24 199 2 3 782

207 208 311 131 2 820 26 112

Value added taxation 6 584 1 816 – –

213 792 312 947 2 820 26 112

Impairment loss included in the above 45 356 1 680 3 568 –

A cession is held over the trade receivables of Sentula in favour of the general short-term banking facility held at Standard Bank as disclosed in note 21.

The Group’s exposure to credit and currency risks and impairment losses related to trade and other receivables are disclosed in note 34.

21 Cash and cash equivalents


Bank balances 31 953 18 654 25 50 Call deposits 336 84 336 85 Cash on hand 533 507 – –

Cash and cash equivalents 32 822 19 245 361 135

Bank overdraft (86 841) (81 214) (86 841) (81 212)

Net cash and cash equivalents (54 019) (61 969) (86 480) (81 077)

The Group’s exposure to interest rate risk and sensitivity analysis for financial assets and liabilities are disclosed in note 34.


Accounting policy relating to notes 18, 19, 20 and 21Financial assets are recognised in the statement of financial position when the Group has become a party to the contractual provisions of the instruments.

Financial assets and financial liabilities are set off and the net amount presented in the statement of financial position, when the Group has a legal right to set off the amounts and intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.

Financial assetsThe Group classifies its financial assets into one of the categories discussed below, depending on the purpose for which the asset was acquired. The Group has not classified any of its financial assets as held to maturity or designated any instruments at fair value through profit or loss.

The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows on the financial assets in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferred financial assets that is created or retained by the Group is recognised as a separate asset or liability.

The Group has not classified any of its assets as available-for-sale.

Loans and receivablesThese assets are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise principally through the provision of goods and services to customers (eg trade receivables), but also incorporate other types of contractual monetary assets. They are initially recognised at fair value plus transaction costs that are directly attributable to the acquisition or issue of the instruments, and are subsequently carried at amortised cost using the effective interest method, less impairment losses.

Impairment losses are recognised when there is objective evidence that the Group will be unable to collect all of the amounts due under the terms receivable, the amount of such a loss being the difference between the net carrying amount and the present value of the future expected cash flows associated with the impaired receivable discounted at the original effective interest rate. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For trade receivables, which are reported net, such losses are recorded in a separate account with the loss being recognised within administrative expenses in the income statement. On confirmation that the trade receivable will not be collectible, the gross carrying value of the asset is written off against the allowance account. From time to time, the Group elects to renegotiate the terms of trade receivables due from customers with which it has previously had a good trading history. Such renegotiations will lead to changes in the timing of payments rather than changes to the amounts owed and, in consequence, the new expected cash flows are discounted at the original effective interest rate and the adjustment recognised in profit and loss.

Cash and cash equivalents form part of loans and receivables and include cash on hand, deposits held on call with banks, other short-term highly liquid investments with original maturities immediately available, and bank overdrafts. Bank overdrafts held at the same financial institution are set off against favourable bank balances reflected in current assets. It is the Group’s policy not to allow overdraft facilities at subsidiary companies. Such facilities are provided to the subsidiaries by the central treasury.

Restricted cash is not included in cash and cash equivalents.

These balances are initially recognised at fair value plus transaction costs and subsequently measured at amortised cost.

All short-term cash investments are invested with a major financial institution in order to manage credit risk.




22 Assets classified as held-for-sale

R’000 Note June 2016 Disposals

Transferred (from)/to

held-for-sale March 2015

Assets of disposal group classified as held-for-saleProperty, plant and equipment 22.1 59 003 (2 791) (127 952) 189 746Deferred income tax assets – – (14 729) 14 729Inventories – – (10 384) 10 384Trade and other receivables 41 272 – 38 041 3 231Cash and cash equivalents 4 899 – 3 499 1 400

105 174 (2 791) (111 525) 219 490

Liabilities of disposal group classified as held-for- saleRehabilitation provision 22.4 – – (66 899) 66 899 Trade and other payables 27 170 – 26 036 1 134

27 170 – (40 863) 68 033

22.1 Property, plant and equipment Movement in property, plant and equipment held-for-sale for the current year is detailed below:

R’000Opencast

mining servicesExploration

drillingDiscontinued

operations Total

Carrying value at 31 March 2015 2 753 2 791 184 202 189 746Transferred from/(to) property, plant and equipment 56 250 – (184 202) (127 952)Disposals – (2 791) – (2 791)

Carrying value at 30 June 2016 59 003 – – 59 003

Opencast mining and earthmoving segment Plant and equipment – Benicon Opencast Mining Assets with a carrying value of R78 million were classified as held-for-sale during the period. These assets were impaired

by R19 million to their current market value of R59 million before being classified as held-for-sale. These assets were identified to be disposed of at June 2016 as they were no longer utilised. These assets will be sold from July 2016 to October 2016 through auctions and direct buyers.

Exploration drilling segment The assets held-for-sale at the beginning of the year comprise Portion 1 of Erf 379, Steelpoort Ext 7. This vacant portion

of land was not in use and had no impact on our operations in Steelpoort. The market price of the property was less than the carrying value and it was impaired by R815 000 during the previous year. This asset was disposed of during the current period.

Movement in property, plant and equipment held-for-sale in the previous year is detailed below:

R’000Opencast

mining servicesExploration

drillingDiscontinued

operations Total

Carrying value at 31 March 2014 1 633 19 185 184 467 205 285 Additions – – 830 830 Depreciation – – (534) (534)Impairment of assets held-for-sale – (815) – (815)Transferred from property, plant and equipment 8 958 2 557 – 11 515 Foreign currency translation reserve – 1 049 – 1 049 Disposals (7 838) (19 185) (256) (27 279)Disposal of subsidiary – – (305) (305)

Carrying value at 31 March 2015 2 753 2 791 184 202 189 746

Exploration drilling property During the previous year, Sentula Mining Services Proprietary Limited entered into a sale of the property agreement

dated 9 May 2014 to dispose of Erf 581, Registration Division IR, Ekurhuleni Metropolitan Municipality, Province of Gauteng, in extent 9 962 square metres, held by the seller under title deed T 45066/2010, together with all improvements thereon, including all appurtenances, fixtures and fittings, specifically including the overhead cranes. The carrying value of the Jet Park property amounted to R19,2 million.


22 Assets classified as held-for-sale continued 22.1 Property, plant and equipment

Opencast mining and earthmoving segment Plant and equipment – Benicon Opencast Mining During the 2015 financial year, assets with a carrying value of R22,1 million were classified as held-for-sale. Theses assets

were identified to be disposed of at October 2014 as they were no longer being utilised. These assets were impaired by R11,8 million to their expected current market value before being classified as held-for-sale. The majority of these assets were sold in February 2015.

22.2 Merger of Sentula Coal Proprietary Limited and Close-Up Mining Proprietary Limited Sentula, Sentula Coal Proprietary Limited (“Sentula Coal”) and Close-Up Mining Proprietary Limited (“Close-Up”) have

entered into a merger agreement as announced on SENS on 27 June 2016. The result of the transaction is that Sentula will hold 40% of the shares in Close-Up, which will in addition to its existing operations, hold 50,5% of the shares in Sentula Coal, with Sentula Coal owning certain plant and equipment previously owned by Benicon Opencast.

Sentula Coal does not meet the criteria to be classified as a discontinued operation since it does not represent a separate major line of business, nor does it represent a major geographical area of operation and is reported as part of the opencast mining and earthmoving segment.

22.3 Discontinued operations Benicon Coal and its subsidiary Nkomati Anthracite are no longer classified as held-for-sale as the requirements of

IFRS 5 are no longer met.

The prior year numbers on the income statement, statement of comprehensive income and basic and headline loss per share have been restated to include Benicon Coal and Nkomati in continuing operations. In terms of IFRS 5, the statement of financial position for June 2016 includes these operations on a line by line basis.

The assets and liabilities relating to Benicon Coal and Benicon Mining Proprietary Limited (part of the coal mining segment) were presented in the previous financial year as held-for-sale following the Board’s decision to monetise the coal assets as disclosed in note 11.

Benicon Mining, previously included in discontinued operations was disposed of during the previous year as disclosed in note 12.

22.4 Rehabilitation provision

Group

R’000 Note June 2016 March 2015

Carrying value at the beginning of the year 66 899 66 899 Transferred from held-for-sale assets 28 (66 899) – Carrying value at the end of the period – 66 899

Accounting policyNon-current assets that are expected to be recovered primarily through sale or distribution rather than through continuing use, are assets classified as held-for-sale or distribution. Immediately before classification as held-for-sale or distribution, the assets, are remeasured in accordance with the Group’s accounting policies. Thereafter generally the assets are measured at the lower of their carrying amount and fair value less costs to sell. Impairment losses on initial classification as held-for-sale or distribution and subsequent gains and losses on remeasurement are recognised in profit or loss. Gains are not recognised in excess of any cumulative impairment loss.

Intangible assets and property, plant and equipment classified as held-for-sale are not amortised or depreciated.




23 Share capital


Authorised share capital2 000 000 000 (March 2015: 1 000 000 000) ordinary sharesIssued share capital1 167 567 491 (March 2015: 586 559 181) ordinary sharesBalance at the beginning of the year 2 020 304 2 020 304 2 020 304 2 020 304Shares issued for cash during the period 104 581 – 104 581 – Rights issue transaction costs (1 912) – (1 912) –

Balance at the end of the period 2 122 973 2 020 304 2 122 973 2 020 304

Treasury sharesBalance at the end of the period (25 898) (25 898) – –

Reconciliation of authorised shares not issued (millions)Number of authorised unissued ordinary shares at the beginning of the year 413 413 413 413 Increase of unissued authorised shares during the period 1 000 – 1 000 – Number of shares issued during the period (581) – (581) – Number of unissued authorised shares at the end of the period 832 413 832 413

At the general meeting held on 10 February 2016, the shareholders gave the approval to increase the authorised share capital from 1 000 000 000 to 2 000 000 000.

During the first quarter of 2016, Sentula embarked on a partially underwritten renounceable rights offer in terms of which 100 rights offer shares were issued for every 100 shares held at a subscription price of 18 cents per rights offer share. The company raised R104,58 million. The rights offer funds were mainly utilised to reduce the senior debt facility by R45 million. R8 million was utilised to restructure Benicon Opencast as part of the winding down process and a working capital investment of R22 million was made into JEF Drill and Blast. Following the issue of the rights offer shares, the number of Sentula shares in issue is 1 167 564 491.

The directors have not been granted the approval to issue ordinary shares, or sell treasury shares for cash, without the consent of the shareholders.

At the general meeting held on 25 June 2014 the directors were given the approval to sell the treasury shares. These shares have not been disposed of during the current period. All shares issued by the Company are fully paid.

Treasury shares are held by Megacube, a wholly owned subsidiary of Sentula.

Accounting policyThe Group’s ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a deduction from equity, net of tax effects. The cost of treasury shares is eliminated against the share capital balance.

When share capital recognised as equity is repurchased, the amount of the consideration paid, which includes directly attributable costs, net of tax effects, is recognised as a deduction from total equity as a treasury share reserve. When treasury shares are sold or reissued subsequently, the amount received is recognised as an increase in equity, the resulting surplus or deficit on the transaction is transferred to/from retained earnings.


24 Loans and borrowings


Interest-bearing borrowingsSecured at amortised costStandard Bank senior facility 33 500 110 000 33 500 110 000 WesBank instalment sale facility – 25 106 –- 25 106

33 500 135 106 33 500 135 106

Balance at the end of the period 33 500 135 106 33 500 135 106 Current portion of loans and borrowings (33 500) (132 752) (33 500) (132 752)

Non-current portion of loans and borrowings –- 2 354 – 2 354

The Standard Bank Consortium (“SBC”) facility was restructured on the following terms during the 2016 financial period: u quarterly principal repayments of R3 750 000 at the end of June, September and December; u quarterly interest payments at a rate of JIBAR plus 425 basis points; and u a final repayment due on or before 31 March 2017 amounting to R26 million.

All covenants were met at 30 June 2016.


Standard Bank senior debt facility 33 500 110 000 33 500 110 000

The effective average interest rate applicable to these liabilities is 15,1% (March 2015: 15,2%) and is based on a margin of 900 basis points above the three-month JIBAR rate for Tranche A and Tranche B and 1 100 basis points above the three-month JIBAR rate for Tranche C and is reset quarterly.

The repayment terms of these loans are as follows:


R’000 Principal Interest Total Principal Interest Total

Year ended:– 31 March 2016 – – – 110 000 12 353 122 353 – 30 June 2017 33 500 2 595 36 095 – – –

33 500 2 595 36 095 110 000 12 353 122 353

Total facility 700 000 700 000

Undrawn facility* 666 500 590 000

* The undrawn facility is currently not accessible due to the debt restructure

The Group’s obligations under the merged term facility are secured by registered notarial bonds over plant and equipment and motor vehicles, which have a carrying amount of R215,4 million (March 2015: R427,9 million). Sentula provided a cession and pledge of all the shares it holds in the Group subsidiaries, for the due and punctual fulfilment of all obligations by the Company. The subsidiaries have subordinated all claims which they may respectively have against one another to the claims which the lenders may have against Sentula and such other subsidiaries of Sentula.




24 Loans and borrowings continued


WesBank instalment sale agreement – 25 106 – 25 106 Total facility – 100 000 – 100 000

Undrawn facility – 74 894 – 74 894

The WesBank instalment sale agreement was fully repaid at 1 June 2016 and the Group has no further obligations under this facility.

The Group’s obligations under the WesBank instalment sale liabilities were secured by the lessors’ title of the financial assets, which had a carrying amount of R58,1 million at 31 March 2015.

The effective average interest rate applicable to these liabilities was 6,3% (March 2015: 7,0%) and is a prime linked facility.

The repayment terms of these loans, at 31 March 2015 were as follows:


R’000 Total Principal Interest Total

Year ended:– 31 March 2016 – 22 752 898 23 650 – 31 March 2017 – 2 354 7 2 361

– 25 106 905 26 011

The Company’s borrowing powers are unlimited in terms of the Memorandum of Incorporation.

The Group’s exposure to interest rate risk and sensitivity analysis for loans and borrowings are disclosed in note 34.

25 Finance lease obligations


Minimum lease payments due– within one year 12 477 34 068 – – – in second to fifth year inclusive 15 888 52 974 – –

28 365 87 042 – –

Less: future finance charges (4 224) (14 698) – – Present value of minimum lease payments 24 141 72 344 – –

– Barloworld 13 221 54 508 – – – Other 10 920 17 836 – –

Present value of minimum lease payments due – – – within one year 9 840 26 642 – – – in second to fifth year inclusive 14 301 45 701 – –

24 141 72 343 – – Non-current liabilities 14 301 45 701 – – Current liabilities 9 840 26 642 – –

24 141 72 343 – –

Interest rates are linked to a fixed rate at the contract date. All leases have fixed repayment terms.


25 Finance lease obligations continuedThe Group’s obligations under the Barloworld Equipment, a division of Barloworld South Africa Proprietary Limited, agreements are secured by the lessors’ title to the financial assets, which have a carrying amount of R18,0 million (March 2015: R55,2 million). The lease term is three to four years at a rate of prime plus 2%.

The assets Benicon Opencast financed through Barloworld Equipment, were returned during the period as they were no longer required. The remaining lease term was terminated and there are no further obligations.

The Group’s obligation under the finance lease in favour of Pinpoint Finance Proprietary Limited is secured by the lessor’s title to certain plant and equipment, which has a carrying amount of R14,2 million (March 2015: R14,5 million). The lease term is four years and the effective borrowing rate is a fixed rate of 16,8% (2015: 16,2%).

The Group’s obligation under the finance lease in favour of EDC Blasting Proprietary Limited is secured by the lessor’s title to certain plant and equipment, which has a carrying amount of R5,4 million (March 2015: R6,4 million). The lease term is four years and the effective borrowing rate is fixed at 8,5%.

The Group’s obligation under the finance lease in favour of Atlas Copco Customer Finance AB was settled during the period. This lease was secured by the Company’s title to certain plant and equipment with a carrying value of R4,1 million at 31 March 2015. The lease term was for three years and the effective borrowing rate was a fixed USD rate of 7,5%.

The Group’s obligations under the Standard Bank vehicle asset finance are secured by the lessors’ title of the financial assets, which have a carrying amount of R1,7 million (March 2015: R2,2 million). The effective average interest rate applicable to these liabilities is 9,53% (March 2015: 8,756%) and is a prime linked facility.

The Group entered into a finance lease in favour of Toyota Financial Services during the period. This lease is secured by the lessor’s title of the financial asset, which has a carrying amount of R1,6 million. The lease term is four years and the effective borrowing rate is 10,5%. The first repayment due is on 1 July 2016.

Accounting policyWhere substantially all of the risks and rewards incidental to ownership of a leased asset have been transferred to the Group (a “finance lease”), the asset is treated as if it had been purchased outright. The amount initially recognised as an asset is the lower of the fair value of the leased asset and the present value of the minimum lease payments payable over the term of the lease. The corresponding lease commitment is shown as a liability. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset. Lease payments are analysed between capital and interest.




26 Trade and other payables

Group Company

R’000 June 2016 March 2015 June 2016 March 2015

Trade payables 139 555 123 946 1 910 4 946 Intercompany trade payables – – 129 1 496 Other payables 46 970 44 510 12 714 13 813

186 525 168 456 14 753 20 255 Accrual for leave pay and employee incentives 31 182 29 998 – 866 Value added taxation 12 472 10 020 2 857 2 834

230 179 208 474 17 610 23 955

The Group’s exposure to interest rate and sensitivity analysis for financial liabilities are disclosed in note 34.

Accounting policy relating to notes 24, 25 and 26Financial liabilities are recognised in the statement of financial position when the Group has become a party to the contractual provisions of the instruments.

Financial liabilities are classified according to the substance of the contractual arrangement entered into and the purpose for which the asset was acquired and include the following:

Bank borrowings are initially recognised at fair value net of any transaction costs directly attributable to the issue of the instrument. Such interest-bearing liabilities are subsequently measured at amortised cost using the effective interest method, which ensures that any interest expense over the period to repayment is at a constant rate on the balance of the liability carried in the statement of financial position. Interest expense in this context includes initial transaction costs and premiums payable on redemption, as well as any interest while the liability is outstanding.

Trade payables and other short-term monetary financial liabilities are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method.

The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expired.

27 Megacube arbitration award

Group Company


Provision for Megacube arbitration award 92 331 – – –

During the 2013 financial year, Megacube Mining Proprietary Limited (“Megacube”) instituted arbitral proceedings against Keaton Mining Proprietary Limited (“Keaton”) for the recovery of R41,5 million owing to Megacube. In response Keaton raised five counter claims based on alleged breaches of contract by Megacube, which allegedly resulted in losses totalling R80 million. Shortly before the arbitration commenced, Keaton abandoned one of its claims of R33,6 million.

During April 2016 the arbitrator dismissed Megacube’s claim despite Keaton not disputing its liability and found Megacube to be liable to Keaton in respect of three of the Keaton claims, including legal costs. The quantum of the liability is to be determined separately in later arbitral proceedings before the arbitrator.

Even though the quantum of the liability is yet to be determined, based on the award made, Megacube has estimated a possible loss in favour of Keaton’s three counterclaims of R92 million as well as the R42 million in respect of Megacube’s receivable. Both amounts have been provided for in the accounts.

Megacube has launched a high court application to set aside the award on the basis of gross irregularities as well as the arbitrator exceeding his powers. This includes dismissal of Megacube’s claim that was never disputed by Keaton.


28 Rehabilitation provision

Group Company

R’000 Note June 2016 March 2015 June 2016 March 2015

Carrying value at the beginning of the year – – – – Transferred from assets held-for-sale 22 66 899 – – – Unwinding charge for the period 2 990 –

Carrying value at the end of the period 69 889 – – –

The Group is exposed to environmental liabilities pertaining to its mining operations at Nkomati Anthracite. Estimates of the cost of environmental and other remedial work, such as reclamation costs, close down and restoration and pollution control are made on an annual basis, by an independent environmental consultancy, based on the estimated useful life of the mine.

The following assumptions were used in calculating the present value of the rehabilitation provision:

Group Company

June 2016 March 2015 June 2016 March 2015

Inflation rate PPI 4,62% 4,36% n/a n/aDiscount rate 8,61% 8,46% n/a n/aLife of mine (years) 21 21 n/a n/a

The mine was under care and maintenance for most of the previous year and became operational in January 2015 and therefore no unwinding charge was recognised in the previous year. There has been no significant change in the estimates relating to the provision.

The gross value of the environmental rehabilitation obligation of the Company is R104 million (March 2015: R127 million).

Critical accounting estimates and judgementsLong-term environmental obligations are based on the Group’s environmental plans, in compliance with current environmental and regulatory requirements. Full provision is made based on the net present value of the estimated cost of restoring the environmental disturbance that has occurred up to the reporting date. Increases due to additional environmental disturbances are capitalised and amortised over the remaining lives of the mines. Annual increases in the provisions relating to the change in the net present value of the provision and inflationary increases are included in administration expenses in the income statement.

The estimated cost of rehabilitation is reviewed annually and adjusted as appropriate for changes in legislation or technology. Cost estimates are not reduced by the potential proceeds from the sale of assets or from plant clean-up at closure, in view of the uncertainty of estimating the potential future proceeds.

Accounting policy relating to note 27 and 28Provisions are recognised when the Group has a present obligation, whether legal or constructive for liabilities of uncertain timing or amount that have arisen as a result of past events and are discounted at a pre-tax rate reflecting current market assessments of the time value of money and the risks specific to the liability. In accordance with the applicable legal requirements, a provision for rehabilitation of land and the related expense is recognised when the damage occurs, it is probable that a restoration expense will be incurred and a reasonable estimate of the costs can be made. The increase in the provision due to passage of time is recognised as an interest expense.

29 Deferred revenue


Income received in advance 25 331 391 – –

Non-current liabilities – – – – Current liabilities 25 331 391 –

25 331 391 – –

Income received in advance classified as current liabilities relates to an advance payment from Anglo Coal Proprietary Limited for the Umlalazi North box cut and Zibulo, recognised in five equal monthly instalments commencing from August 2016. The final recognition date is December 2016.




30 Cash flow information 30.1 Cash generated from operations

Group Company


Cash flows from operating activitiesLoss for the period (469 377) (294 912) (473 885) (523 393)

Adjustments for:Depreciation 6 145 104 168 664 139 140 Amortisation of intangible assets 6 672 1 347 – – Megacube arbitration award 27 129 051 – – – Impairment of property, plant and equipment 6 138 846 14 795 – – Impairment of assets held-for-sale 6 – 815 – – Impairment of intergroup investments, loans and receivables 6 – – 509 230 557 104 Impairment of other receivables 6 3 568 – 3 568 – Loss/(profit) on disposal of subsidiary 12 – 3 727 – (9 873)Preference dividend accrual from subsidiary 6 – – (48 830) (39 000)Scrapping of assets 6 511 1 357 – – Unrealised foreign exchange gain 6 (1 143) (4 719) – (15 370)Fair value on interest rate cap – – – 159 Finance income 8 (1 699) (1 280) (13 609) (21 713)Finance expense 8 47 166 54 199 27 107 49 273 – Paid 44 176 52 048 27 107 47 122 – Unwinding/accrued 2 990 2 151 – 2 151 Cash-settled share-based payment expense – – – (476)Write-down of inventory to net realisable value 6 12 957 21 802 – – Fair value adjustment of other payables 6 4 128 5 680 4 128 5 680 Loss on disposal of property, plant and equipment 6 776 54 861 – – Profit on disposal of property, plant and equipment 6 (10 438) (2 762) (6) – Income tax expense 10 (17 512) 16 244 527 (3 905)

Cash flows (utilised in)/from operating activities before changes in working capital and provisions (17 390) 39 818 8 369 (1 374)

Change in inventories 31 528 25 914 – – Reallocation from inventory to property, plant and equipment 16 – (3 415) – – Change in trade and other receivables 82 791 66 512 19 722 (193)Change in trade and other payables (21 140) (7 061) (10 473) (3 572)Change in deferred revenue 24 940 (1 960) – –

Cash generated from operating activities 100 729 119 808 17 618 (5 139)


30 Cash flow information continued 30.2 Taxation paid


Balance at the beginning of the year 59 417 38 932 (411) 1 849 Amounts recognised in profit or loss (14 418) 44 613 – – Capital gains tax – (3 277) – (3 277)SARS interest and penalties 6 643 – – – Securities transfer tax 69 – 69 – Effect of movement in exchange rates 1 313 (229) – – Balance at the end of the period (43 305) (59 417) – 411

Taxation paid/(received) 9 719 20 622 (342) (1 017)

31 Capital commitments


Capital expenditure contracted for in respect of property, plant and equipment – – – – Capital expenditure authorised by the directors not contracted for in respect of property, plant and equipment

– New replacement equipment 21 954 74 942 – – – Refurbishments – – – –

The capital expenditure will be financed through vehicle asset finance, vendor finance and working capital.

32 Contingent liabilitiesAs disclosed in note 27, the arbitrator ruled against Megacube in the Keaton matter.

Keaton sought, in one of its claims in the arbitration, compensation for the value of ROM coal allegedly not extracted amounting to R39,5 million based on 386 592 tons. As an alternative to this claim, Keaton claimed an amount of R48,6 million in respect of the cost to remove the overburden above the coal allegedly not extracted. The higher amount of R48,6 million was provided for.

However, the arbitrator awarded Keaton tonnages substantially in excess of what it sought, namely for 657 583 tons ROM coal allegedly not extracted.

The additional 270 991 tons of ROM coal awarded under this claim, estimated value of R45 million, is challenged in the mentioned high court application (refer note 27). As a result no further provision has been made above the compensation originally sought by Keaton.

To the best of our knowledge and belief there are no other contingent liabilities to third parties not set out or referred to in this report which may materially affect the financial position of the Group

Accounting policyA contingent liability is a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group, or a present obligation that arises from past events but is not recognised because it is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation or the amount of the obligation cannot be measured with sufficient reliability. Contingent liabilities are not recognised as liabilities.




33 Contingent assets During the year judgment was granted in favour of the Golden Autumn Trust against Argent Industrial for payment of the sum of R8,8 million with interest on this sum a tempore more, as well as costs of the suit. Argent was granted leave to appeal this matter on 8 May 2015. Any funds recovered through the Golden Autumn Trust, net of costs, are paid over to Megacube Mining Proprietary Limited.

Argent’s claim against Sentula and Megacube was dismissed with costs.

To the best of our knowledge and belief there are no other contingent assets not set out or referred to in this report which may materially affect the financial position of the Group.

Accounting policyA contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group. Contingent assets are not recognised as assets.

34 Financial instruments 34.1 Risk management activities In the normal course of its operations, the Group is exposed to currency, interest rate, liquidity and credit risk. This note describes the Group’s objectives, policies and processes for managing those risks and methods used to measure them. In order to manage these risks, the Group has developed a comprehensive risk management process to facilitate control and monitoring. The Board has overall responsibility for the determination of the Group’s risk management objectives and polices and, while retaining ultimate responsibility for them, it has delegated the authority for designing and operating processes that ensure the effective implementation of the objectives and policies to the Group’s finance function. The Group’s treasury function provides services to the subsidiaries, coordinates access to domestic financial markets and monitors and manages the financial risks relating to the operations of the Group. These risks include market risk (including currency risk, fair value interest rate risk and price risk), credit risk, liquidity risk and cash flow interest rate risk. Operational and business risks are reviewed and addressed on a monthly basis.

The Group does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes. 34.2 Credit risk Credit risk is the risk of financial loss to the Group if a customer or a counterparty fails to meet its contractual obligations. The Group is mainly exposed to credit risk from credit sales and this risk is mitigated by dealing with creditworthy counterparties and a few major clients. It is Group policy to assess the credit risk of new customers before entering into a contract and this is monitored on an ongoing basis.

The Group mainly deposits cash at Standard Bank. Standard Bank is deemed to be a credible financial institution, with a Fitch credit rating of F1+(ZAF) for short-term debt. Their financial stability does not pose a threat to the Group.

The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:

Group Company

Carrying amount Carrying amount


Trade receivables 20 176 761 241 061 – – Intercompany trade receivables 20 – – 2 818 5 321 Other receivables 20 30 447 70 070 2 20 791Trade and other receivables 207 208 311 131 2 820 26 112Cash and cash equivalents 21 32 822 19 245 361 135 Loans to subsidiaries 39 – – 319 665 482 369 Restricted cash 18 2 850 – – –

242 880 330 376 322 846 508 616


34 Financial instruments continued 34.2 Credit risk continued The maximum exposure to credit risk for trade and other receivables at the reporting date by type of geographic region was:

Group Company



South Africa 181 277 260 498 2 820 26 112Botswana 1 640 23 887 – – Mozambique 10 709 13 076 – – Other African countries 13 582 13 670 – –

207 208 311 131 2 820 26 112

The maximum exposure to credit risk for trade and other receivables at the reporting date by type of counterparty was:

Group Company



Mining houses 128 089 199 752 – – Exploration companies 6 016 40 503 – – Mining subcontractors 44 687 48 802 – – Intercompany trade receivables – – 2 818 5 321 Proceeds from disposal of Benicon Mining – 16 830 – 16 830 Other 28 416 4 773 2 3 570 Auction proceeds – 471 – 391

207 208 311 131 2 820 26 112

The ageing of trade receivables at the reporting date per operating segment was: Group

June 2016 Carrying amount (R’000)

Opencast mining and

earthmoving Exploration

drilling


blasting Crane hire Coal mining* Total

Not past due 67 630 10 347 7 746 8 478 2 347 96 548Past due 0 – 30 days 17 356 5 484 21 283 3 997 36 48 156Past due 31 – 120 days 46 2 743 10 718 4 549 93 18 149Past due 121 – 180 days 998 (32) 4 619 328 1 237 7 150Past due 181 days and over 1 951 4 079 – 578 150 6 758 Trade receivables not impaired 87 981 22 621 44 366 17 930 3 863 176 761

March 2015 Carrying amount (R’000)

Opencast mining and

earthmoving Exploration

drilling


blasting Crane hire Megacube** Total

Not past due 51 658 22 464 22 379 8 490 – 104 991 Past due 0 – 30 days 20 881 13 365 18 178 7 260 – 59 684 Past due 31 – 120 days 23 510 1 797 2 285 5 337 – 32 929 Past due 121 – 180 days – – – 1 377 – 1 377 Past due 181 days and over – – – 289 41 791 42 080 Trade receivables not impaired 96 048 37 626 42 843 22 753 41 791 241 061

* Coal mining was reflected as held-for-sale in 2015.

** Megacube's outstanding trade receivable was fully provided for in the 2016 financial year.




34 Financial instruments continued 34.2 Credit risk continued Company

Carrying amount R’000 June 2016 March 2015

Not past due 2 818 5 321 Trade receivables not impaired 2 818 5 321

Normal credit terms for trade receivables are negotiated for each customer and do not extend beyond 60 days. Interest is charged on overdue accounts through agreement with the customer. Management follows a robust process of dealing with overdue accounts and a detailed review did not indicate any further impairment of trade and other receivables.

Intercompany trade receivables are settled 30 days and no interest is charged on these balances. The movement in the allowance for impairment in respect of trade receivables during the year was as follows:

Group Carrying amount

Company Carrying amount


Balance at 1 April 1 680 1 219 – – Increase in impairment provision 43 676 461 3 568 – Balance at the end of the period 45 356 1 680 3 568 –

At 30 June 2016 an impairment provision of R8,6 million (March 2015: R1,7 million) relates to customers that have indicated they are unable to meet their outstanding balances, mainly due to prevailing economic conditions. The Group believes that the unimpaired amounts that are past due by more than 30 days are still collectible, based on historic payment behaviour and extensive analyses of the underlying customers’ credit ratings.

An impairment provision was raised of R36,7 million as a result of the Megacube arbitration award (refer to note 27).

Based on historic default rates, the Group believes that, apart from the above, no impairment allowance is necessary in respect of the trade receivables not past due or past due by up to 30 days.

Credit risk is managed through constant review of exposure to specific customers. In considering the exposure limit set, the financial viability of the mining projects undertaken by customers are considered as well as credit rating and/or financial position of counterparties.

34.3 Foreign exchange risk The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US dollar. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities and new investments in foreign operations.

Foreign exchange risk also arises when individual Group entities enter into transactions denominated in a currency other than the functional currency.

The Group is exposed to currency risk on purchases made on plant and equipment globally. Purchases from these suppliers are made on a central basis and the risk is hedged using forward exchange contracts. The forward exchange contracts entered into from time to time are economic hedges and therefore the Group does not apply hedge accounting.

The Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk. Currency exposure arising from the net assets of the Group’s foreign operations is managed primarily through these operations holding cash denominated in the relevant foreign currency.


34 Financial instruments continued 34.3 Foreign exchange continued

The Group’s exposure to foreign currency risk was as follows:

Group Company

ZARequivalent

of USD exposure1

ZAR equivalent

of BWP exposure2

ZAR equivalent

of USD exposure1

ZAR equivalent

of BWP exposure2

ZAR equivalent

of USD exposure1

ZAR equivalent

of BWP exposure2

ZAR equivalent

of USD exposure1

ZAR equivalent

of BWP exposure2


Trade receivables 11 360 1 640 20 410 14 260 – – – – Cash and cash equivalents 6 252 1 918 13 928 419 – – – – Trade payables 876 984 8 682 6 158 – – – –

Gross balance sheet recognised 18 488 4 542 43 020 20 837 – – – – 1 This column discloses the USD exposure of foreign operations translated to ZAR. 2 This column discloses the BWP exposure of foreign operations translated to ZAR.

The following significant exchange rates applied during the period:

Average rate Reporting

date spot rate Average rate Reporting

date spot rate ZAR June 2016 March 2015

1 USD 14,02 14,78 11,06 12,09

1 BWP 1,32 1,38 1,21 1,22

A 10 percent strengthening of the rand against the following currencies at 30 June 2016 would have increased/(decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant.

The analysis is performed on the same basis for 2015.

Group Company

Equity Profit or loss Equity Profit or loss

June 2016

March 2015

June 2016

March 2015

June 2016

March 2015

June 2016

March 2015

USD (29 497) (6 641) (260) 864 – – – – BWP 133 281 5 632 13 328 1 342 – – – –

A 10 percent weakening of the rand against the above currencies at 30 June 2016 would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant.




34 Financial instruments continued 34.4 Interest rate risk

At the reporting date the interest rate profile of the Group’s interest-bearing financial instruments was:

Variable rate instruments


Financial assets 35 139 18 738 361 135 Funds held at financial institutions 32 289 18 738 361 135 Restricted cash 2 850 – – –

Financial liabilities (144 482) (288 663) (120 341) (216 318) Non-current liabilities

Loans and borrowings – (2 354) – (2 354) Finance lease obligations (14 301) (45 701) – –

Current liabilities Loans and borrowings (33 500) (132 752) (33 500) (132 752) Finance lease obligations (9 840) (26 642) – –

Bank overdraft (86 841) (81 214) (86 841) (81 212)

Net financial liabilities (109 343) (269 925) (119 980) (216 183)

The Group is exposed to interest rate risk from borrowings at variable rates. Fluctuations in interest rates impact on the value of the short-term investments and financing activities giving rise to interest rate risk. In the ordinary course of business the entities within the Group receive cash proceeds from its operations and are required to fund working capital and capital expenditure requirements. All entities within the Group are not permitted to borrow long term from external sources. The cash is managed to ensure that all surplus funds held within the Group are invested with the centralised treasury. The surplus funds are invested to maximise returns while ensuring that the capital is safeguarded for the maximum extent possible by only investing with top financial institutions.

Contractual arrangement for committed borrowing facilities are maintained with two banking counterparts to meet the Company’s funding requirements.

Cash flow sensitivity analysis for variable rate instruments A sensitivity analysis is performed by assuming that the amount of the assets and liabilities outstanding at the reporting date was outstanding for the whole year. A 200 basis point increase or decrease is used when reporting interest rate risk internally to key management personnel and represents management’s assessment of a reasonable and possible change in interest rates.

If interest rates had been 200 basis points higher/lower and all the other variables were held constant, the Group’s profit after tax for the year ended 30 June 2016 would decrease/increase by R5,4 million (March 2015: R6,6 million). This is attributable to the Group’s exposure to interest rates on its variable borrowings. The analysis is performed on the same basis for 2015.

If interest rates had been 200 basis points higher/lower and all the other variables were held constant, the Company’s profit after tax for the year ended 30 June 2016 would decrease/increase by R5,5 million (March 2015: R1,1 million). This is attributable to the Company’s exposure to interest rates on its variable borrowings. The analysis is performed on the same basis for 2015.

34.5 Liquidity risk Liquidity risk arises from the Group’s management of working capital and the finance charges and principal repayments on its debt instruments. It is the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. The Group’s policy is to ensure that it will always have sufficient cash to allow it to meet its liabilities when they become due. The Group manages liquidity risk via a centralised treasury, by maintaining adequate reserves, banking facilities and reserve borrowings facilities by continuously monitoring forecast and actual cash flows.

The following tables detail the Group’s remaining contractual maturity for its non-derivative financial liabilities. These tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay.


34 Financial instruments continued 34.5 Liquidity risk continued Group

June 2016

Weighted average

effective interest rate

Less than one month

R’000

One to three months

R’000

Three months to

one yearR’000

One to five years

R’000 Total R’000

Secured bank loans – Standard Bank senior debt facility 15,07% – 4 730 31 365 – 36 095 Bank overdraft 9,97% 86 841 – – – 86 841 Financial leases – ZAR 10,61% 1 098 3 302 6 772 14 884 26 056 Trade and other payables 0,00% 95 469 63 258 27 798 – 186 525

March 2015 Secured bank loans – Standard Bank senior debt facility 15,15% – 25 613 96 740 – 122 353 – WesBank instalment sale facility 7,00% 2 143 6 430 15 077 2 361 26 011 Bank overdraft 10,52% 81 214 – – – 81 214 Financial leases – USD 7,5% 242 718 705 – 1 665 Financial leases – ZAR 10,61% 3 043 6 614 22 745 52 974 85 376 Trade and other payables 0,00% 92 825 59 350 16 281 – 168 456

Company

June 2016

Weighted average

effective interest rate

Less than one month

R’000

One to three months

R’000

Three months to

one yearR’000

One to five years

R’000 Total R’000

Secured bank loans – Standard Bank senior debt facility 15,07% – 4 730 31 365 – 36 095 Bank overdraft 9,97% 86 841 – – – 86 841 Trade and other payables 0,00% 2 313 – 12 440 – 14 753 Loans from subsidiaries 5,28% – – – 13 596 13 596

March 2015 Secured bank loans – Standard Bank senior debt facility 15,15% – 25 613 96 740 – 122 353 – WesBank instalment sale facility 7,00% 2 143 6 430 15 077 2 361 26 011 Bank overdraft 10,52% 81 212 – – – 81 212 Trade and other payables 0,00% 3 846 11 809 4 600 – 20 255

It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at significantly different amounts.




34 Financial instruments continued 34.6 Fair value of financial instruments

The fair value of financial assets and liabilities, together with the carrying amounts shown in the statement of financial position, are as follows:

Group Company

June 2016 March 2015 June 2016 March 2015

R’000 Carrying

value Fair value Carrying



value Fair value

Assets measured at amortised cost Loans to subsidiaries – non-current – – – – 140 286 131 101 249 666 216 602 Restricted cash – non-current 2 850 2 850 – – – – – – Trade and other receivables 207 208 207 208 311 131 311 131 2 820 2 820 26 112 26 112Cash and cash equivalents 32 822 32 822 19 245 19 245 361 361 135 135 Loans to subsidiaries – current – – – – 165 783 109 317 232 240 178 040 Investment in preference shares – – – – 344 557 344 557 573 000 573 000

Assets held-for-sale carried at fair value 46 171 46 171 4 631 4 631 – – – – Liabilities measured at amortised cost Loans and borrowings – non-current – – (3 699) (3 699) – – (2 354) (2 354)Finance lease obligations – non-current (14 301) (14 301) (44 356) (44 356) – – – – Trade and other payables (204 993) (204 993) (185 334) (185 334) (2 039) (2 039) (8 001) (8 001)Short-term portion of loans and borrowings (33 500) (33 500) (133 134) (133 134) (33 500) (33 500) (132 752) (132 752)Finance lease obligations – current (9 840) (9 840) (26 260) (26 260) – – – – Bank overdraft (86 841) (86 841) (81 214) (81 214) (86 841) (86 841) (81 212) (81 212)

Liabilities carried at fair value Other payables (12 714) (12 714) (13 120) (13 120) (12 714) (12 714) (13 120) (13 120)

Liabilities held-for-sale carried at fair value (27 170) (27 170) (1 134) (1 134) – – – –

Fair value hierarchyAll financial instruments measured at fair value by valuation method are measured at a level 3.

The different levels have been defined as follows: u Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities u Level 2: inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly or indirectly (ie derived from prices)

u Level 3: inputs for the assets or liabilities that are not based on observable market data.


34 Financial instruments continued 34.6 Fair value hierarchy continued

The other financial instruments measured at fair value by valuation method is included under other payables and measured in terms of the accounting policy set out in note 3.1.4.

The fair value of the other payables is determined by discounting the future liability, which is calculated by multiplying the compensation rate by the run-of-mine tonnes estimated to be produced over the anticipated life of the mine.

The fair value of the loans to subsidiaries is calculated using prevailing market-related interest rates over the expected repayment terms.

Although the Group believes that its estimate of fair value is appropriate, the use of the different methodologies or assumptions could lead to different measures of fair value.

The directors consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the financial statements approximate their fair values as market-related rates are charged on financial assets and financial liabilities.

34.7 Capital management


Gearing ratio 52% 37% – –

The Group manages its capital structure to ensure that it will be able to continue as a going concern while maximising the return to shareholders through the optimisation of the debt and the equity capital.

The capital structure of the Group consists of debt, which includes loans to subsidiaries, cash and cash equivalents, liabilities and equity, comprising issued share capital, reserve and retained earnings as disclosed.

There are no external capital requirements imposed on the Group.

There were no changes to the manner in which the Group manages its capital.




35 Related party transactions and balances 35.1 Non-subsidiary related party transactions and balances

Sentula has a joint venture with Jonah Coal Botswana Limited and Mabapa Mining Limited. These are considered related parties. The Group did not enter into any transactions with these parties during the current or previous year.

35.2 Subsidiary related party transactions and balances All other related party transactions are with subsidiaries. Intercompany receivables are disclosed in note 20. All loans to and from subsidiaries are disclosed in note 39.


Management fees – – 36 438 30 876 Finance income – – 12 269 21 148 Finance expenses – – (995) (4 740)Impairment of intergroup investments and loans – – 509 230 331 224 Impairment of intergroup receivable – – – 112 940

All transactions with subsidiaries are priced on an arm’s length basis and are to be settled in cash within 12 months of the reporting date. As the Group operates a centralised treasury function, loans are provided from the holding company if funding is required.

35.3 Related party transactions with directorsThe rights issue was underwritten by JB Private Equity Investors Partnership and the Dalikhaya Rain Zihlangu Family Trust.

Mr R Zihlangu, a non-executive director of Sentula, is a beneficiary and trustee of the Dalikhaya Rain Zihlangu Family Trust. The Dalikhaya Rain Zihlangu Family Trust underwrote R10 million of the rights offer shares and received an underwriting fee of R300 000.

Mr JC Badenhorst, the CEO of Sentula, has a beneficial interest in JB Private Equity Investors Partnership. The JB Private Equity Partnership underwrote R25,7 million of the rights offer shares and received an underwriting fee of R670 643. In addition, the partnership was paid a commission equal to 1,5% of the rand value of the rights offer shares for which they committed to subscribe to amounting to R310 283.


35 Related party transactions and balances continued 35.4 Trust related party transactions and balances

The Company has a loan with the Schamin Trust. This loan relates to the funding of the Trust’s expenses by the Company.

An impairment test is performed annually and the loan is impaired down to the current market value of the shares held in the Trust (refer to note 39).

35.5 Key management personnel compensation Key management personnel compensation comprised:

Group R’000 June 2016 March 2015

Short-term employee benefits 27 913 22 261Share-based payments (1 110) 838

26 803 23 099

The directors remuneration is disclosed in note 38.

36 Going concern The financial statements have been prepared on the going concern basis. The basis presumes that funds will be available to

finance future operations and that the realisation of assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business. Although the current liabilities of the Group exceed its current assets, due to the nature of these liabilities the directors have every reason to believe that funds will be available to finance future operations and that the realisation of assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary course of business. The Company restructured its debt in March 2016 and based on Sentula subsidiaries’ cash flow forecasts for the 2017 financial year, is expected to meet all its obligations during this period.

37 Subsequent events The directors are not aware of any subsequent events other than those disclosed below that occurred between the date of authorisation of the annual financial statements and the year-end that require any adjustments or additional disclosure to the annual financial statements.

On 30 September 2016, Sentula issued a circular to shareholders where shareholders were advised that Sentula, Sentula Coal a 50,5% held subsidiary of Sentula, and Close-Up Mining have entered into a merger agreement in terms of which Sentula will dispose of its entire 50,5% shareholding in Sentula Coal to Close-Up at a value of R50 as well as Sentula’s claims against Sentula Coal in the amount of R50 million to Close-Up. In consideration thereof, Close-Up will allot and issue 40% of Close-Up shares to Sentula.

In addition, Benicon Opencast Mining (“Benicon”) will dispose of certain selected plant and equipment to Sentula valued at open market value for R50 million which plant and equipment shall thereafter be disposed of by Sentula, to Sentula Coal for the same price.

Subsequent to year-end, Sentula Coal employed a substantial number of staff previously employed by Benicon. From 1 July 2016 Sentula Coal will be responsible for all Anglo Coal contracts historically executed by Benicon. As a result, Benicon was left with idle plant and equipment, certain debtors and some inventory. Benicon’s idle plant and equipment is being disposed of in an orderly fashion to raise the necessary cash to settle liabilities.




38 Directors and prescribed officers’ remuneration

June 2016 (R’000) Basic

Motor vehicle

allowanceCC –

Pension fund SettlementConsulting

fees Total

Executive directorsJC Badenhorst* 267 11 – – 1 789 2 067 JC Lemmer 2 953 60 159 – – 3 172 RC Berry (resigned 7 October 2015) 2 166 194 – 4 500 – 6 860

5 386 265 159 4 500 1 789 12 099

June 2016 (R’000) Directors’

fees Audit and

Risk

Governance, Remuneration

and Nomination

Other services Total

Non-executive directorsRB Patmore 313 64 127 – 504 DR Zihlangu 188 160 – – 348 SP Naudé 209 200 159 – 568 ME Gama 209 160 – – 369 JC Badenhorst* 68 – 50 – 118

987 584 336 – 1 907

* JC Badenhorst was appointed to the Board as a non-executive director on 8 May 2015. He was appointed as Acting CEO on 7 October 2015 and was appointed CEO on 1 March 2016.

On 31 March 2016, an award amounting to four times Sentula Mining Limited’s (“Sentula”) executives’ cost to company was made as part of a long-term incentive performance award. If the vesting conditions are met on 31 March 2019, the award will be paid annually in cash over a three-year period commencing 31 March 2019, subject to the executive being employed by the Group at each payment date.

The vesting condition is a function of the percentage outperformance of Sentula’s total shareholder return (“TSR”) relative to the JSE All Share Index (“Alsi”) over a three-year period from the date of the award.

In order for the full award to vest, Sentula’s one-month volume-weighted average share price should outperform the Alsi by a compounded 20% per annum or more from the date of the award up to 31 March 2019. Sentula’s share price at the date of the award was 17 cents.

If Sentula’s TSR equals the performance of the Alsi over the measurement period, then only 25% of the award will vest. If Sentula’s TSR outperforms the Alsi by between 0% and 10% per annum, then 50% will vest with a linear increase from 25% to 50%. If Sentula’s TSR outperforms the Alsi by between 10% and 20% per annum, then 50% will vest with a linear increase from 50% to 100%.

In the event that the Alsi is lower at the end of the three-year period than at the time of the award, and TSR movement is also negative, the maximum amount that can vest is 25% of the award with the other parameters being as noted before, ie the movement in TSR needs to have exceeded the movement in the Alsi by at least 20% per annum for the full amount (25% of the award) to vest. If the TSR movement is positive, then full vesting can take place in accordance with the other parameters.

As at 30 June 2016, the liability was valued using available market information, future projections based on current trading conditions, including an annual growth of 9,5% in the Alsi. As a result, a liability was not raised. If it is assumed that all the conditions will be met, the liability recognised would be R0,7 million at the end of the financial period.


38 Directors and prescribed officers’ remuneration continued

March 2015 (R’000) Basic

Motor vehicle

allowanceLTIPs

vested* Incentive Total

Executive directors

RC Berry 4 327 384 283 – 4 994 JC Lemmer (appointed 27 May 2014) 2 028 39 104 570 2 741

6 355 423 387 570 7 735

* LTIPs paid in 2015 relate to 2014 financial year-end.

March 2015 (R’000) Directors’

fees Audit and

Risk

Governance, Remuneration

and Nomination

Other services Total

Non-executive directors JG Best (Resigned 8 August 2014) 105 4 78 – 187 RB Patmore 238 156 55 – 449 DR Zihlangu 161 122 97 – 380 SP Naudé (appointed 27 May 2014) 131 128 32 – 291 NV Qangule (Appointed 27 May 2014; Resigned 2 October 2014) 65 58 – – 123 ME Gama (appointed 1 February 2015) 32 27 – – 59

732 495 262 – 1 489

The remuneration of directors is determined by the Remuneration Committee having regard to the performance of individuals and market trends. Executive directors do not receive directors’ fees and the directors have service contracts with the Company. Executive directors are subject to the Company’s standard conditions of employment.




39 Information on subsidiary companies

Country of incorporation

Nature of business

Issued share capital Percentage held by Sentula Investment at cost Preference shares

Non-interest-bearing loans to subsidiaries

Interest-bearing loans to/(from) subsidiaries

June 2016%

March 2015%

June 2016%

March 2015%

June 2016%

March 2015%

June 2016%

March 2015%

June 2016%

March 2015%

Megacube Mining Proprietary Limited South Africa A 100 100 100 – – – – 93 – – – Sentula Contracting Proprietary Limited South Africa 4 000 83 83 – – 344 557 573 000 – – (13 596) (13 075)– Benicon Opencast Mining Proprietary Limited South Africa A 120 83 83 – – – – 50 000 8 000 – 179 280 – Classic Challenge Trading Proprietary Limited South Africa A 120 83 83 – – – – – – – 52 310 – JEF Drill and Blast Proprietary Limited South Africa C 100 83 83 – – – – – – 49 871 29 222 – Ritchie Crane Hire Proprietary Limited South Africa D 100 83 83 – – – – – – 6 171 20 715 Sentula Mining Services Proprietary Limited South Africa A 100 100 100 – – – – – – 43 715 34 194 – Geosearch a division of Sentula Mining Services South Africa B – 0 0 59 837 104 558 – – – – – – Benicon Sales Proprietary Limited South Africa E 100 000 100 100 – – – – – – 14 275 21 187 Benicon Coal Proprietary Limited South Africa F 100 100 100 – – – – (875) – – – Nkomati Anthracite Proprietary Limited South Africa F 100 60 60 – – – – 156 366 150 000 – –Sentula Coal Proprietary Limited South Africa A 100 50,5 50,5 – – – – 601 34 – – Caston Plant Sales Proprietary Limited South Africa E 100 100 100 – – – – – – – – Sentula Mining Mauritius Limited Mauritius G 100 100 100 – – – – – – – – Shanike Investments No 171 Proprietary Limited South Africa 100 100 100 – – – – (913) – – 37

Schamin Share Incentive Trust South Africa – – – – – – – 360 465 – –

Total investment at cost 59 837 104 558 344 557 573 000 205 632 158 499 100 436 323 870

Reflected as non-current assets 59 837 104 558 344 557 573 000 49 267 8 499 104 615 241 630 Reflected as current assets – – – – 156 366 150 000 9 417 82 240

Reflected as non-current liabilities – – – – – – (13 596) –

All subsidiary undertakings are included in the consolidation. The proportion of the voting rights in the subsidiary undertakings held directly by the parent do not differ from the proportion of ordinary shares held.

The investment in preference shares is carried at amortised cost. An impairment test is performed annually and any difference is recognised as an impairment in profit and loss.

During the 2013 financial year, Sentula Mining Limited (“Sentula”) entered into a broad-based black economic empowerment transaction whereby 100% of Benicon Opencast Mining Proprietary Limited, Classis Challenge Trading Proprietary Limited, JEF Drill and Blast Proprietary Limited and Ritchie Crane Hire Proprietary Limited were sold to Sentula Contracting Proprietary Limited. The purchase price was settled through the issue of R600 million preference shares at the dividend rate of 6,5% per annum.

Subsequently Sentula Contracting Proprietary Limited sold 16,675% to Shanike Investments No 171 (RF) Proprietary Limited (“Shanike”) for a consideration of R14 million. Shanike is owned by the Anglo American Khula Mining Fund Proprietary Limited, The Sentula Mining Employee Trust, The Sentula Mining Empowerment Trust and Thebe Mining Resources Proprietary Limited.

In terms of the agreement, Sentula granted an irrevocable option to the shareholders of Shanike whereby Sentula shall be obliged to purchase the shares in Shanike at fair market value which shall be settled by Sentula by way of the issue of Sentula shares. The option exercise period commences on 28 February 2017 and ends six months thereafter. The option may only be exercised in total. Such exercise shall be subject to the parties obtaining all regulatory approvals, including the Companies Act and the JSE Listings requirements.

In the previous year Benicon Coal was classified as held-for-sale as disclosed in note 22.

Restrictions There are no significant restrictions on the subsidiaries to transfer funds to Sentula in the form of cash dividends, or to repay loans and advances made by Sentula.

The Company has subordinated its claims against the following subsidiaries in favour of all other creditors on the following: Sentula Coal Proprietary Limited; Benicon Sales Proprietary Limited; Benicon Coal Proprietary Limited; Caston Plant Sales Proprietary Limited and Sentula Mining Mauritius Limited.

The directors valuation of the above subsidiaries approximates the cost as disclosed in this note.The loans to subsidiaries bear variable interest rates and the terms of the loans range from demand to 48 months.

Main businessA – Opencast mining and mining servicesB – Exploration drillingC – Drilling and blastingD – Crane hireE – Equipment trading and sparesF – MiningG – Foreign operations


39 Information on subsidiary companies

Country of incorporation

Nature of business

Issued share capital Percentage held by Sentula Investment at cost Preference shares

Non-interest-bearing loans to subsidiaries

Interest-bearing loans to/(from) subsidiaries

June 2016%

March 2015%

June 2016%

March 2015%

June 2016%

March 2015%

June 2016%

March 2015%

June 2016%

March 2015%

Megacube Mining Proprietary Limited South Africa A 100 100 100 – – – – 93 – – – Sentula Contracting Proprietary Limited South Africa 4 000 83 83 – – 344 557 573 000 – – (13 596) (13 075)– Benicon Opencast Mining Proprietary Limited South Africa A 120 83 83 – – – – 50 000 8 000 – 179 280 – Classic Challenge Trading Proprietary Limited South Africa A 120 83 83 – – – – – – – 52 310 – JEF Drill and Blast Proprietary Limited South Africa C 100 83 83 – – – – – – 49 871 29 222 – Ritchie Crane Hire Proprietary Limited South Africa D 100 83 83 – – – – – – 6 171 20 715 Sentula Mining Services Proprietary Limited South Africa A 100 100 100 – – – – – – 43 715 34 194 – Geosearch a division of Sentula Mining Services South Africa B – 0 0 59 837 104 558 – – – – – – Benicon Sales Proprietary Limited South Africa E 100 000 100 100 – – – – – – 14 275 21 187 Benicon Coal Proprietary Limited South Africa F 100 100 100 – – – – (875) – – – Nkomati Anthracite Proprietary Limited South Africa F 100 60 60 – – – – 156 366 150 000 – –Sentula Coal Proprietary Limited South Africa A 100 50,5 50,5 – – – – 601 34 – – Caston Plant Sales Proprietary Limited South Africa E 100 100 100 – – – – – – – – Sentula Mining Mauritius Limited Mauritius G 100 100 100 – – – – – – – – Shanike Investments No 171 Proprietary Limited South Africa 100 100 100 – – – – (913) – – 37

Schamin Share Incentive Trust South Africa – – – – – – – 360 465 – –

Total investment at cost 59 837 104 558 344 557 573 000 205 632 158 499 100 436 323 870

Reflected as non-current assets 59 837 104 558 344 557 573 000 49 267 8 499 104 615 241 630 Reflected as current assets – – – – 156 366 150 000 9 417 82 240

Reflected as non-current liabilities – – – – – – (13 596) –

All subsidiary undertakings are included in the consolidation. The proportion of the voting rights in the subsidiary undertakings held directly by the parent do not differ from the proportion of ordinary shares held.

The investment in preference shares is carried at amortised cost. An impairment test is performed annually and any difference is recognised as an impairment in profit and loss.

During the 2013 financial year, Sentula Mining Limited (“Sentula”) entered into a broad-based black economic empowerment transaction whereby 100% of Benicon Opencast Mining Proprietary Limited, Classis Challenge Trading Proprietary Limited, JEF Drill and Blast Proprietary Limited and Ritchie Crane Hire Proprietary Limited were sold to Sentula Contracting Proprietary Limited. The purchase price was settled through the issue of R600 million preference shares at the dividend rate of 6,5% per annum.

Subsequently Sentula Contracting Proprietary Limited sold 16,675% to Shanike Investments No 171 (RF) Proprietary Limited (“Shanike”) for a consideration of R14 million. Shanike is owned by the Anglo American Khula Mining Fund Proprietary Limited, The Sentula Mining Employee Trust, The Sentula Mining Empowerment Trust and Thebe Mining Resources Proprietary Limited.

In terms of the agreement, Sentula granted an irrevocable option to the shareholders of Shanike whereby Sentula shall be obliged to purchase the shares in Shanike at fair market value which shall be settled by Sentula by way of the issue of Sentula shares. The option exercise period commences on 28 February 2017 and ends six months thereafter. The option may only be exercised in total. Such exercise shall be subject to the parties obtaining all regulatory approvals, including the Companies Act and the JSE Listings requirements.

In the previous year Benicon Coal was classified as held-for-sale as disclosed in note 22.

Restrictions There are no significant restrictions on the subsidiaries to transfer funds to Sentula in the form of cash dividends, or to repay loans and advances made by Sentula.

The Company has subordinated its claims against the following subsidiaries in favour of all other creditors on the following: Sentula Coal Proprietary Limited; Benicon Sales Proprietary Limited; Benicon Coal Proprietary Limited; Caston Plant Sales Proprietary Limited and Sentula Mining Mauritius Limited.

The directors valuation of the above subsidiaries approximates the cost as disclosed in this note.The loans to subsidiaries bear variable interest rates and the terms of the loans range from demand to 48 months.

Main businessA – Opencast mining and mining servicesB – Exploration drillingC – Drilling and blastingD – Crane hireE – Equipment trading and sparesF – MiningG – Foreign operations




40 Information on subsidiaries with material non-controlling interest The total non-controlling interest for the period is R22 million (March 2015: RNil) and relates to Nkomati. Nkomati is no longer in the process of being disposed of and has been consolidated in the 2016 financial statements. Summarised balance sheet

Nkomati June 2016 March 2015

Current assets 6 660 14 634 Current liabilities (321 717) (298 877)Total current net liabilities (315 057) (284 243)Non-current assets 189 973 188 206 Non-current liabilities (69 891) (66 899)Total non-current net assets 120 082 121 307 Net liabilities (194 975) (162 936)

Summarised income statement

Nkomati R’000 June 2016 March 2015

Revenue 136 172 5 123

Loss before income tax (32 038) (26 499)Income tax expense – – Loss after tax for the period (32 038) (26 499)

Total comprehensive income allocated to non-controlling interest 21 948 1 467

Summarised cash flowsCash flows from operating activitiesCash generated from/(utilised in) operations 3 501 (23 334)Interest paid (424) (34)Net cash generated from/(utilised in) operating activities 3 077 (23 368)Net cash (utilised in)/generated from investing activities (8 998) 336

Net cash generated from financing activities 6 366 22 754 Net increase/(decrease) in cash and cash equivalents 445 (278)Cash and cash equivalents at the beginning of the year 1 136 1 414 Cash and cash equivalents at the end of the period 1 581 1 136

The information above is disclosed before intercompany eliminations.

Sentula Mining Limited

Integrated Annual Report 2016 111

SHAREHOLDERS’ INFORMATIONfor the period ended 30 June 2016

Number of shareholders

% of shareholders

Number of shares

% of shareholders

Analysis of shareholdersRange1 – 1 000 504 25,85 204 605 0,021 001 – 5 000 479 24,56 1 330 806 0,115 001 – 10 000 199 10,21 1 507 011 0,1310 001 – 50 000 345 17,69 8 709 580 0,7550 001 – 100 000 97 4,97 7 806 149 0,67

100 001 – and more 326 16,72 1 148 006 340 98,32

Total 1 950 100,00 1 167 564 491 100,00

Major shareholders (directly owning 5% or more of shares in issue)JB Private Equity Investors Partner 422 667 564 36,20%

422 667 564 36,20%

Shareholder spreadPublic 1 944 99,69 1 150 812 559 98,57Non-public 6 0,31 16 751 932 1,43Share scheme 1 0,05 2 118 061 0,18Associates 1 0,05 5 553 871 0,48Directors 4 0,21 9 080 000 0,78

Total 1 950 100,00 1 167 564 491 100,00

Directors’ shareholdings Shares held % of totalDirector Direct Indirect Total shareholding

June 2016

JC Badenhorst – 1 279 056 1 279 056 0,11JC Lemmer 3 080 000 – 3 080 000 0,26DR Zihlangu 6 000 000 55 555 555 61 555 555 5,27T de Bruyn – 2 876 236 2 876 236 0,25JC Badenhorst and T de Bruyn – 422 667 564 422 667 564 36,20

RC Berry (resigned 7 October 2015) – – – –

9 080 000 482 378 411 491 458 411 42,09

March 2015

RC Berry 3 054 907 – 3 054 907 0,52JC Lemmer 1 000 000 – 1 000 000 0,17DR Zihlangu 1 000 000 – 1 000 000 0,17

5 054 907 – 5 054 907 0,86

There has been no changes in the directors’ interest between 30 June 2016 and the date of this report.


112 Integrated Annual Report 2016

SHAREHOLDERS’ DIARY

Financial year-end 30 June 2016

Audited results announced 30 September 2016

Reports and profit statement

Integrated Annual Report published 30 September 2016

Annual general meeting 16 November 2016

Half-year interim review 28 February 2017

JSE PERFORMANCEfor the period ended 30 June 2016

2016 2015 2014 2013 2012

Number of shares traded (‘000) 521 480 307 861 124 926 160 088 137 778 % of total issued shares 44,66 52,49 21,30 27,29 23,49Value of shares traded (R’000) 97 447 69 398 200 542 288 726 322 220

Prices quoted (cents per share)– highest 28 35 165 235 300– lowest 12 16 19 151 151– closing 17 17 21 165 220

Market capitalisation at the end of the period (R’000) 198 486 99 715 123 177 967 823 1 290 430

Number of shares traded(’000)

0 200 000 400 000 600 000

June 2016

March 2015

March 2014

March 2013

March 2012

Market capitalisation at period end(R’000)

June 2016

March 2015

March 2014

March 2013

March 2012

0 300 000 600 000 900 000 1 200 000 1 500 000



NOTICE OF ANNUAL GENERAL MEETING

Sentula Mining LimitedIncorporated in the Republic of South Africa(Registration number 1992/001973/06) Share code: SNU ISIN: ZAE000107223 (“Sentula” or “the Company” or “the Group”)

If you are in any doubt as to what action you should take in respect of the following resolutions, please consult your Central Securities Depository Participant (“CSDP”), broker, banker, attorney, accountant or other professional adviser immediately.

Notice is hereby given in terms of section 62(1) of the Companies Act 71 of 2008, as amended (“Companies Act”), that an annual general meeting (“annual general meeting”) of shareholders of the Company will be held at Ground Floor, Building 14, The Woodlands Office Park, Woodlands Drive, Woodmead, at 10:00 on Wednesday, 16 November 2016, to consider and, if deemed fit, to approve the resolutions referred to below, with or without modification.

The Board of Directors of the Company (“the Board”) has determined that, in terms of section 62(3)(a), as read with section 59 of the Companies Act, the record date for the purposes of determining which shareholders of the Company are entitled to participate in and vote at the annual general meeting is Friday, 11 November 2016. Accordingly, the last day to trade Sentula shares in order to be recorded in the register to be entitled to vote will be Tuesday, 8 November 2016.

Report from Social and Ethics CommitteeIn accordance with Regulation 43(5)(c) of the Companies Act, the chairman of the Social and Ethics Committee, or in his absence, any member of that Committee, will present the Committee’s report to shareholders at the annual general meeting

Electronic participation in the general meetingThe Company will make provision for shareholders, or their proxies, to participate in the general meeting by way of electronic communication. Should you wish to participate in the general meeting by way of electronic communication, you will need to contact the Company at 011 656 1303 (contact person: Ina Cross) by Wednesday, 2 November 2016, so that the Company can provide for a teleconference dial-in facility. Please ensure that if you are participating in the general meeting via a teleconference facility that the voting proxies are sent through to the Company Secretary, Ms Ina Cross, so as to be received by no later than 10:00 on Wednesday, 9 November 2016.

The costs of accessing any means of electronic participation provided by the Company will be borne by the shareholder.

GeneralShareholders are reminded that:

u a shareholder entitled to attend and vote at the annual general meeting is entitled to appoint a proxy (or more than one proxy) to attend, participate in and vote at the annual general meeting in the place of the shareholder, and shareholders are referred to the form of proxy attached to this notice in this regard;

u a proxy need not also be a shareholder of the Company; and u in terms of section 63(1) of the Companies Act, any person attending or participating in an annual general meeting of shareholders must present reasonably satisfactory identification and the person presiding at the annual general meeting must be reasonably satisfied that the right of any person to participate in and vote (whether as shareholder or as proxy for a shareholder) has been reasonably verified. A green bar-coded identification document issued by the South African Department of Home Affairs, a driver’s licence or a valid passport will be accepted as sufficient identification.

1. Ordinary resolution number 1 Approval of annual financial statements “Resolved as an ordinary resolution, that the consolidated audited annual financial statements of the Company and the Group

for the fifteen months ended 30 June 2016, including the directors’ report, the report of the auditors and the report of the Company’s Audit and Risk Committee, be and are hereby received and adopted.”

A copy of the annual financial statements appears on pages 41 to 111 of the Integrated Annual Report.



NOTICE OF ANNUAL GENERAL MEETING continued

2. Ordinary resolution number 2 Reappointment of auditors “Resolved as an ordinary resolution, that PricewaterhouseCoopers Inc. be and is hereby reappointed as independent auditors

of the Company and the Group, with Ms C Marais Roux being the individual registered auditor who has undertaken the audit of the Company and Group for the ensuing financial year until conclusion of the next annual general meeting, as nominated by the Company’s Audit and Risk Committee, and the Board is hereby being authorised to determine the auditors’ remuneration.”

3. Ordinary resolution number 3 Re-election of director retiring by rotation “Resolved as an ordinary resolution, that Ralph Patmore who retires by rotation at this annual general meeting in accordance

with the Company’s MoI, and, being eligible, offers himself for re-election as an independent non-executive director of the Company, be and is hereby elected as an independent non-executive director of the Company.”

An abbreviated curriculum vitae in respect of Ralph Patmore appears on page 6 of the Integrated Annual Report to which this notice is attached.

4. Ordinary resolution number 4 Re-election of director retiring by rotation “Resolved as an ordinary resolution, that Mdu Gama retires by rotation at this annual general meeting in accordance with the

Company’s MoI, and, being eligible, offers himself for re-election as an independent non-executive director of the Company, be and is hereby elected as an independent non-executive director of the Company.”

An abbreviated curriculum vitae in respect of Mdu Gama appears on page 7 of the Integrated Annual Report to which this notice is attached.

5. Ordinary resolution number 5 Ratification of appointment of non-executive director “Resolved as an ordinary resolution, that the appointment of Theunis de Bruyn as a non-executive director of the Company,

effective 15 June 2016, be and is hereby ratified.”

An abbreviated curriculum vitae in respect of Theunis de Bruyn appears on page 7 of the Integrated Annual Report to which this notice is attached.

6. Ordinary resolution number 6 Re-election of Audit and Risk Committee member for the year ending 30 June 2017 “Resolved as an ordinary resolution, that Stephen Naudé be and is hereby re-elected as a member of the Audit and Risk

Committee of the Group for the year ending 30 June 2017.”

An abbreviated curriculum vitae in respect of Stephen Naudé appears on page 7 of the Integrated Annual Report to which this notice is attached.



7. Ordinary resolution number 7 Re-election of Audit and Risk Committee member for the year ending 30 June 2017 “Resolved as an ordinary resolution, that Dalikhaya (Rain) Zihlangu be and is hereby re-elected as a member of the Audit and

Risk Committee of the Group for the year ending 30 June 2017, with effect from the end of this annual general meeting in terms of section 94(2) of the Companies Act.”

An abbreviated curriculum vitae in respect of Rain Zihlangu appears on page 7 of the Integrated Annual Report to which this notice is attached.

8. Ordinary resolution number 8 Re-election of Audit and Risk Committee member for the year ending 30 June 2017 “Resolved as an ordinary resolution, that Mdu Gama be and is hereby re-elected as member of the Audit and Risk Committee of

the Group for the year ending 30 June 2017 be and is hereby approved with effect from the end of this annual general meeting in terms of section 94(2) of the Companies Act.”

An abbreviated curriculum vitae in respect of Mdu Gama appears on page 7 of the Integrated Annual Report to which this notice is attached.

9. Ordinary resolution number 9 Endorsement of the Company’s remuneration policy “Resolved as an ordinary resolution, that the remuneration policy as tabled by the Board, as more fully detailed on page 30 of

the Integrated Annual Report to which this notice is attached, be and is hereby approved by way of a non-binding advisory vote of shareholders of the Company, in terms of the King III Report on Corporate Governance.”

The minimum percentage of voting rights that is required for all ordinary resolutions to be adopted at the annual general meeting, is more than 50% (fifty percent) of the voting rights exercised on the resolution by shareholders present or represented by proxy at the annual general meeting.




10. Special resolution number 1 Non-executive directors’ remuneration for the year ending 30 June 2017 “Resolved as a special resolution that, in terms of section 66(9) of the Companies Act , the Company be and is hereby authorised

to pay remuneration to non-executive directors for the financial year ending 30 June 2017 in respect of their positions as Board and committee members as follows:

FY2016 FY2017

Retainer fees Annual Annual

Board Chairman 156 280 162 531Board member 69 458 72 236Audit and Risk Committee Chairman 65 290 67 902Audit and Risk Committee member 52 208 54 296

Meeting fees Per meeting Per meeting

Board fee – Chairman 31 256 32 506Board fee – member 20 837 21 670Board fee 5+ – Chairman 62 511 65 011Board fee 5+ – member 34 729 36 118Audit and Risk Committee fee – Chairman 24 483 25 462Audit and Risk Committee fee – member 19 593 20 377Audit and Risk Committee fee 4+ – Chairman 40 807 42 439Audit and Risk Committee fee 4+ – member 32 646 33 952Remuneration Committee fee – Chairman 32 646 33 952Remuneration Committee fee – member 26 084 27 127Nominations Committee fee – Chairman 32 646 33 952Nominations Committee fee – member 26 084 27 127Investment Committee fee – Chairman 32 646 33 952Investment Committee fee – member 26 084 27 127Other fees – member 26 084 27 127

In terms of section 66(9) of the Companies Act, a company is required to pre-approve the payment of remuneration to directors for their services as directors by means of a special resolution passed by the shareholders of the Company within the previous two years.”



11. Special resolution number 2 Financial assistance in terms of section 44 of the Companies Act 2008 “Resolved as a special resolution that, in terms of section 44 of the Companies Act, the shareholders of the Company hereby

approve of the Company providing, at any time and from time to time during the period of 2 (two) years commencing on the date of this special resolution, any direct or indirect financial assistance as contemplated in section 44 of the Companies Act to any person for the purpose of, or in connection with, the subscription for any option, or any securities, issued or to be issued by the Company or a related or inter-related company, or for the purchase of any option or securities of the Company or a related or inter-related company, provided that:

(i) the recipient or recipients of such financial assistance; (ii) the form, nature and extent of such financial assistance; (iii) the terms and conditions under which such financial assistance is provided, are determined by the Board from time-to-

time; and (iv) The Board may not authorise the Company to provide any financial assistance pursuant to this special resolution unless

the Board meets all those requirements of section 44 of the Companies Act which it is required to meet in order to authorise the Company to provide such financial assistance.”

In terms of section 44 of the Companies Act, a company is required to approve the provision of financial assistance to any person for the purpose of, or in connection with, the subscription for any option or securities issued or to be issued by the Company or a related or inter-related company by means of passing a special resolution in terms of section 44 of the Companies Act.

12. Special resolution number 3 Financial assistance in terms of section 45 of the Companies Act 2008 “Resolved as a special resolution that, in terms of section 45 of the Companies Act, the shareholders of the Company hereby

approve of the Company providing, at any time and from time to time during the period of 2 (two) years commencing on the date of this special resolution, any direct or indirect financial assistance as contemplated in section 45 of the Companies Act to any 1 (one) or more related or inter-related companies or corporations of the Company and/or to any 1 (one) or more members of any such related or inter-related company or corporation and/or to any 1 (one) or more persons related to any such company or corporation, provided that:

(i) the recipient or recipients of such financial assistance; (ii) the form, nature and extent of such financial assistance; (iii) the terms and conditions under which such financial assistance is provided, are determined by the Board of Directors from

time to time; (iv) the Board may not authorise the Company to provide any financial assistance pursuant to this special resolution unless the

Board meets all those requirements of section 45 of the Companies Act which it is required to meet in order to authorise the Company to provide such financial assistance; and

(v) such financial assistance to a recipient thereof is, in the opinion of the Board, required for the purpose of: (a) meeting all or any of such recipient’s operating expenses (including capital expenditure); and/or (b) funding the growth, expansion, reorganisation or restructuring of the businesses or operations of such recipient;

and/or (c) funding such recipient for any other purpose which in the opinion of the Board is directly or indirectly in the interests

of the Company.”

In terms of section 45 of the Companies Act, a company is required to approve the provision of financial assistance to a company within its group by means of passing a special resolution in terms of section 45 of the Companies Act. As part of the Company’s current Group operations, it provides financial assistance to subsidiaries and other related companies in its group.




Notice in terms of section 45(5) of the Companies Act in respect of special resolution number 3 Notice is hereby given to shareholders of the Company in terms of section 45(5) of the Companies Act of a resolution adopted

by the Board authorising the Company to provide such direct or indirect financial assistance in respect of special resolution number 3:

(a) by the time that this notice of annual general meeting is delivered to shareholders of the Company, the Board will have adopted a resolution (“section 45 Board resolution”) authorising the Company to provide, at any time and from time to time during the period of 2 (two) years commencing on the date on which the special resolution is adopted, any direct or indirect financial assistance as contemplated in section 45 of the Companies Act to any one or more related or inter-related companies or corporations of the Company and/or to any one or more members of any such related or inter-related company or corporation and/or to any one or more persons related to any such company or corporation;

(b) the section 45 Board resolution will be effective only if and to the extent that the special resolution number 3 is adopted by the shareholders of the Company, and the provision of any such direct or indirect financial assistance by the Company, pursuant to such resolution, will always be subject to the Board being satisfied that:

(i) immediately after providing such financial assistance, the Company will satisfy the solvency and liquidity test as referred to in section 45(3)(b)(i) of the Companies Act; and that

(ii) the terms under which such financial assistance is to be given are fair and reasonable to the Company as referred to in section 45(3)(b)(ii) of the Companies Act; and

(c) in as much as the section 45 Board resolution contemplates that such financial assistance will in the aggregate exceed one-tenth of 1% (one percent) of the Company’s net worth at the date of adoption of such resolution, the Company hereby provides notice of the section 45 Board resolution to shareholders of the Company. Such notice will also be provided to any trade union representing any employees of the Company.

13. Special resolution number 4 General authority to repurchase the Company’s securities “Resolved as a special resolution, that the Board of Directors is hereby authorised, by way of a general approval in terms of the

provisions of the Listings Requirements of JSE Limited (“Listings Requirements”) and sections 46 and 48 of the Companies Act , and as permitted by the Company’s MoI, to approve the purchase of its own ordinary shares by the Company, and the purchase of ordinary shares in the Company by any of its subsidiaries, upon such terms and conditions and in such amounts as the Board may from time to time determine, subject to the Companies Act, the MoI of the Company and each of its subsidiaries and the Listings Requirements, provided that:

(i) the acquisition of the ordinary shares must be effected through the order book operated by the JSE trading system and done without any prior understanding or arrangement between the Company and the counterparty;

(ii) this general authority shall only be valid until the earlier of the Company’s next annual general meeting or the expiry of a period of 15 (fifteen) months from the date of passing of this special resolution;

(iii) in determining the price at which the Company’s ordinary shares are acquired in terms of this general authority, the maximum premium at which such ordinary shares may be acquired will be 10% (ten percent) of the weighted average of the market value at which such ordinary shares are traded on the JSE, as determined over the 5 (five) business days immediately preceding the date on which the transaction is effected;

(iv) the acquisitions of ordinary shares in the aggregate in any one financial year may not exceed 20% (twenty percent) of the Company’s issued ordinary share capital;

(v) the Company may only effect the repurchase once a resolution has been passed by the Board confirming that the Board has authorised the repurchase, that the Company has passed the solvency and liquidity test (”test“) and that since this was done there have been no material changes to the financial position of the Group;

(vi) the Company or its subsidiaries may not acquire ordinary shares during a prohibited period as defined in the Listings Requirements, unless a repurchase programme is in place where dates and quantities of shares to be traded during the prohibited period are fixed and full details of the programme have been disclosed in an announcement over SENS prior to the commencement of the prohibited period;

(vii) an announcement will be published once the Company has cumulatively repurchased 3% (three percent) of the number of the ordinary shares in issue at the time this general authority is granted (“initial number”), and for each 3% (three percent) in aggregate of the initial number acquired thereafter; and

(viii) at any point in time, the Company may only appoint one agent to effect any acquisition/s on its behalf”.

Although there is no immediate intention to effect a repurchase of the Company’s securities, the directors would utilise this general authority as and when suitable opportunities arise.



The purpose of the special resolution is to grant the Company’s Board a general authority, up to and including the date of the following annual general meeting of the Company, to approve the Company’s purchase of shares in itself, or to permit a subsidiary of the Company to purchase shares in the Company.

The minimum percentage of voting rights that are required for all special resolution to be adopted at this annual general meeting, is at least 75% (seventy-five percent) of the votes exercised on the resolution by shareholders present or represented by proxy at the annual general meeting.

Other disclosure in terms of the Listings Requirements Further to special resolution number 4, the Listings Requirements require the following disclosures, which are contained in the

Integrated Annual Report of which this notice forms part: (i) major shareholders of Sentula – page 111; and (ii) share capital of the Company – page 88.

Material change Other than the proposed transaction with Close-Up Mining Propriety Limited as announced on SENS on 27 June 2016 whereby

Sentula will dispose of it’s investment in Sentula Coal, there have been no material changes in the affairs or financial position of the Company and its subsidiaries since the Company’s financial year-end and the date of this notice.

Directors’ responsibility statement The directors, whose names are given on pages 6 to 7 of the Integrated Annual Report of which this notice forms part,

collectively and individually accept full responsibility for the accuracy of the information pertaining to special resolution number 4 and certify that to the best of their knowledge and belief there are no facts in relation to special resolution number 4 that have been omitted which would make any statement in relation to special resolution number 4 false or misleading, and that all reasonable enquiries to ascertain such facts have been made and that special resolution number 4, together with this notice, contains all information required by law and the Listings Requirements in relation to special resolution number 4.

Adequacy of working capital At the time that the repurchase contemplated in special resolution number 4 is to take place, the Board will ensure that, after

considering the effect of the maximum repurchase and for a period of 12 (twelve) months thereafter: u the Company and its subsidiaries will be able to pay their debts as they become due in the ordinary course of business; u the consolidated assets of the Company and its subsidiaries, fairly valued in accordance with International Financial Reporting Standards, will be in excess of the consolidated liabilities of the Company and its subsidiaries;

u the issued share capital and reserves of the Company and its subsidiaries will be adequate for the purpose of the ordinary business of the Company and its subsidiaries; and

u the working capital available to the Company and its subsidiaries will be sufficient for the Company and its subsidiaries’ requirements.




14. Ordinary resolution number 10 Directors’ authority to take all such actions necessary to implement the resolutions contained in this notice “Resolved as an ordinary resolution, that any director of the Company be and is hereby authorised to do all such things, sign all

such documents and take all such actions as may be necessary for or incidental to the implementation of the ordinary and special resolutions approved in accordance with the provisions of this notice of annual general meeting.”

The minimum percentage of voting rights that is required for this ordinary resolution to be adopted, is more than 50% (fifty percent) of the voting rights exercised on the resolution by shareholders present or represented by proxy at the annual general meeting and further subject to the provisions of the Companies Act, the MoI of the Company and the Listings Requirements of the JSE.

Other businessTo transact such other business as may be required at this annual general meeting.

Voting and proxiesA shareholder entitled to attend and vote at the annual general meeting is entitled to appoint a proxy or proxies to attend and act in his/her stead. A proxy need not be a member of the Company. For the convenience of registered members of the Company, a form of proxy is attached hereto.

The attached form of proxy is only to be completed by those ordinary shareholders who:(i) hold ordinary shares in certificated form; or(ii) are recorded on the sub-register in “own-name”dematerialised form.

Ordinary shareholders who have dematerialised their ordinary shares through a CSDP or broker without “own-name” registration and who wish to attend the annual general meeting, must instruct their CSDP or broker to provide them with the relevant letter of representation to attend the annual general meeting in person or by proxy and vote. If they do not wish to attend the annual general meeting in person or by proxy and vote, they must provide the CSDP or broker with their voting instructions in terms of the relevant custody agreement entered into between them and the CSDP or broker.

Forms of proxy should be forwarded to reach the transfer secretaries, Computershare Investor Services Proprietary Limited, at least48 (forty-eight) hours excluding Saturdays, Sundays and public holidays in South Africa, before the time of the annual general meeting. Forms of proxy may also be obtained from the Company’s registered office.

By order of the Board

Ina CrossCompany Secretary

30 September 2016Johannesburg



FORM OF PROXY

Sentula Mining LimitedIncorporated in the Republic of South Africa(Registration number 1992/001973/06) Share code: SNU ISIN: ZAE000107223(“Sentula” or “the Company” or “the Group”)

For use only by ordinary shareholders who:• hold ordinary shares in certificated form (“certificated ordinary shareholders”); or• have dematerialised their ordinary shares (“dematerialised ordinary shareholders”) and are registered with “own-name” registration, at the annual general meeting

of ordinary shareholders of the Company to be held at Ground Floor, Building 14, The Woodlands Office Park, Woodlands Drive, Woodmead, at 10:00 on Wednesday, 16 November 2016 and any adjournment thereof.

Dematerialised ordinary shareholders holding ordinary shares other than with “own-name” registration who wish to attend the annual general meeting must inform their CSDP or broker of their intention to attend the annual general meeting and request their CSDP or broker to issue them with the relevant Letter of Representation to attend the annual general meeting in person or by proxy and vote. If they do not wish to attend the annual general meeting in person or by proxy, they must provide their CSDP or broker with their voting instructions in terms of the relevant custody agreement entered into between them and the CSDP or broker. These ordinary shareholders must not use this form of proxy.

I/We (BLOCK LETTERS please)

of (address)

Telephone work Telephone home Mobile

Email address

being the holder/custodian of ordinary shares in the Company, hereby appoint (see note):

1. or failing him/her,

2. or failing him/her,

3. the Chairperson of the annual general meeting,as my/our proxy to attend and act for me/us on my/our behalf at the annual general meeting of the Company convened for the purpose of considering and, if deemed fit, passing, with or without modification, the special and ordinary resolutions to be proposed thereat (“resolutions”) and at each postponement or adjournment thereof and to vote for and/or against such resolutions, and/or abstain from voting, in respect of the ordinary shares in the issued share capital of the Company registered in my/our name/s in accordance with the following instructions:

Number of ordinary sharesFor Against Abstain

1. Ordinary resolution number 1To receive, consider and adopt the annual financial statements of the Company and the Group for the financial year ended 30 June 2016

2. Ordinary resolution number 2To confirm the reappointment of PricewaterhouseCoopers Inc. as independent auditors of the Company and the Group, with Ms C Marais Roux being the individual registered auditor

3. Ordinary resolution number 3To approve the re-election as director of Ralph Patmore who retires by rotation and, being eligible, offers himself for re-election

4. Ordinary resolution number 4To approve the re-election as director of Mdu Gama who retires by rotation and, being eligible, offers himself for re-election

5. Ordinary resolution number 5To ratify the appointment of non-executive director Theunis de Bruyn

6. Ordinary resolution number 6To re-elect Stephen Naudé as member of the Audit and Risk Committee for the year ending 30 June 2017

7. Ordinary resolution number 7To re-elect Dalikhaya (Rain) Zihlangu as member of the Audit and Risk Committee for the year ending 30 June 2017

8. Ordinary resolution number 8To re-elect Mdu Gama as member of the Audit and Risk Committee for the year ending 30 June 2017

9. Ordinary resolution number 9To endorse the Company’s remuneration policy

10. Special resolution number 1To approve the non-executive directors’ remuneration for the year ending 30 June 2017

11. Special resolution number 2Financial assistance in terms of section 44 of the Companies Act 2008

12. Special resolution number 3Financial assistance in terms of section 45 of the Companies Act 2008

13. Special resolution number 4General authority to repurchase the Company’s securities

14. Ordinary resolution number 10Directors’ authority to take all such actions necessary to implement the resolutions contained in this notice

Please indicate instructions to proxy in the space provided above by the insertion therein of the relevant number of votes exercisable.

A member entitled to attend and vote at the annual general meeting may appoint one or more proxies to attend and act in his/her stead.

A proxy so appointed need not be a member of the Company.

Signed at on 2016

Signature

Assisted by (where applicable)

Each ordinary shareholder is entitled to appoint one or more proxies (who need not be a shareholder of the Company) to attend, speak and vote in place of that shareholder at the annual general meeting.



NOTES TO FORM OF PROXY

1. The form of proxy must only be used by shareholders who hold shares in certificated form or who are recorded on the sub-register in electronic form in “own name”.

2. All other beneficial owners who have dematerialised their shares through a CSDP or broker and wish to attend the annual general meeting must provide the CSDP or broker with their voting instructions in terms of the relevant agreement entered into between them and the CSDP or broker.

3. A shareholder entitled to attend and vote at the annual general meeting may insert the name of a proxy or the names of two alternate proxies of the shareholder’s choice in the space provided, with or without deleting “the Chairperson of the annual general meeting”. The person whose name stands first on the form of proxy and who is present at the annual general meeting will be entitled to act as proxy to the exclusion of such proxy(ies) whose names follow.

4. A shareholder is entitled to one vote on a show of hands and, on a poll, one vote in respect of each ordinary share held. A shareholder’s instructions to the proxy must be indicated by the insertion of the relevant number of votes exercisable by that shareholder in the appropriate space provided. If an “X” has been inserted in one of the blocks to a particular resolution, it will indicate the voting of all the shares held by the shareholder concerned. Failure to comply with this will be deemed to authorise the proxy to vote or to abstain from voting at the annual general meeting as he/she deems fit in respect of all of the shareholder’s votes exercisable thereat. A shareholder or the proxy is not obliged to use all the votes exercisable by the shareholder or by the proxy, but the total of the votes cast and in respect of which abstention is recorded may not exceed the total of the votes exercisable by the shareholder or the proxy.

5. A vote given in terms of an instrument of proxy shall be valid in relation to the annual general meeting notwithstanding the death, insanity or other legal disability of the person granting it, or the revocation of the proxy, or the transfer of the shares in respect of which the proxy is given, unless notice as to any of the aforementioned matters shall have been received by the transfer secretaries not less than 48 hours before the commencement of the annual general meeting.

6. If a shareholder does not indicate on this form that his/her proxy is to vote in favour of or against any resolution or to abstain from voting, or gives contradictory instructions, or should any further resolution(s) or any amendment(s) which may properly be put before the annual general meeting be proposed, such proxy shall be entitled to vote as he/she thinks fit.

7. The Chairperson of the annual general meeting may reject or accept any form of proxy which is completed and/or received other than in compliance with these notes.

8. A shareholder’s authorisation to the proxy, including the Chairperson of the annual general meeting, to vote on such shareholder’s behalf, shall be deemed to include the authority to vote on procedural matters at the annual general meeting.

9. The completion and lodging of this form of proxy will not preclude the relevant shareholder from attending the annual general meeting and speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof.

10. Documentary evidence establishing the authority of a person signing the form of proxy in a representative capacity must be attached to this form of proxy, unless previously recorded by the Company’s transfer secretaries or is waived by the Chairperson of the annual general meeting.

11. A minor or any other person under legal incapacity must be assisted by his/her parent or guardian, as applicable, unless the relevant documents establishing his/her capacity are produced or have been registered by the transfer secretaries of the Company.

12. Where there are joint holders of shares:• any one holder may sign the form of proxy;• the vote(s) of the senior shareholders (for that purpose seniority will be determined by the order in which the

names of shareholders appear in the Company’s register of shareholders) who tenders a vote (whether in person or by proxy) will be accepted to the exclusion of the vote(s) of the other joint shareholder(s).

13. Forms of proxy should be lodged with or mailed to the transfer secretaries, Computershare Investor Services Proprietary Limited, 70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107), to be received by no later than 10:00 (SA time) on Monday, 14 November 2016 (or 48 (forty-eight) hours before any adjournment of the annual general meeting which date, if necessary, will be notified on SENS).

14. A deletion of any printed matter and the completion of any blank space need not be signed or initialled. Any alteration or correction must be signed and not merely initialled.

Summary of the rights of a shareholder to be represented by proxy, as set out in section 58 of the Companies ActA proxy appointment must be in writing, dated and signed by the shareholder appointing a proxy and, subject to the rights of a shareholder to revoke such appointment (as set out below), remains valid only until the end of the relevant shareholders’ meeting.

A proxy may delegate the proxy’s authority to act on behalf of a shareholder to another person, subject to any restrictions set out in the instrument appointing the proxy.

The appointment of a proxy is suspended at any time and to the extent that the shareholder who appointed such proxy chooses to act directly and in person in the exercise of any rights as a shareholder.

The appointment of a proxy is revocable by the shareholder in question cancelling it in writing, or making a later inconsistent appointment of a proxy, and delivering a copy of the revocation instrument to the proxy and to the Company. The revocation of a proxy appointment constitutes a complete and final cancellation of the proxy’s authority to act on behalf of the shareholder as of the later of:(a) the date stated in the revocation instrument, if any; and(b) the date on which the revocation instrument is delivered to the Company as required in the first sentence of this paragraph.

If the instrument appointing the proxy or proxies has been delivered to the Company, as long as that appointment remains in effect, any notice that is required by the Act or the Company’s MoI to be delivered by the Company to the shareholder, must be delivered by the Company to:(a) the shareholder; or(b) the proxy or proxies, if the shareholder has: (i) directed the Company to do so in writing; and (ii) paid any reasonable fee charged by the Company for

doing so.

Attention is also drawn to the “Notes to proxy”.

The completion of a form of proxy does not preclude any shareholder from attending the annual general meeting.



ABBREVIATIONS

”AFRS” Anglo fatal risk standard“Aids” Acquired immune deficiency syndrome“AMCU” Association of Mineworkers and Construction

Union“BBBEE” Broad-based black economic empowerment“BEE” Black economic empowerment“Benicon” Benicon Opencast Mining Proprietary Limited“Benicon Sales” Benicon Sales Proprietary Limited “BWP” Botswana pula “Caston” Caston Plant Sales Proprietary Limited“CCT” Classic Challenge Trading Proprietary Limited “CEO” Chief Executive Officer“CIFR” Classified Injury Frequency Rate – per million

man-hours worked “CIPC” Companies and Intellectual Property

Commission“CFO” Chief Financial Officer“Close-Up” Close-Up Mining Proprietary Limited“ Companies Act (2008)”

Companies Act 71 of 2008

“DMR” Department of Mineral Resources “dti” Department of Trade and Industry“DWA” Department of Water Affairs“ED” Enterprise development“EE” Employment equity“EMPR” Environmental Management Programme

Report “EVA” Economic value add“FRCP” Fatal Risk Compliance Protocol“Geosearch” Geosearch Holdings Proprietary Limited “ha” Hectares “HCT” HIV counselling and testing “HDSA” Historically disadvantaged South Africans“HIV” Human Immunodeficiency Virus“HSBC” The Hongkong and Shanghai Banking

Corporation Limited “IFRS” International Financial Reporting Standards “ISO” International Organisation for Standardisation“JEF” JEF Drill and Blast Proprietary Limited “JSE” JSE Limited“Keaton” Keaton Mining Proprietary Limited“King III” or “King Reports”

King Report on Governance for South Africa – 2009 (the “Report”) and the King Code of Governance Principles – 2009 (the “Code”)

“kl” Kilolitre “km” Kilometre“KPIs” Key performance indicators

“kWh” Kilowatt-hour “ Listings Requirements”

Listings Requirements of the JSE Limited

“LTIP” Long-term incentive plan“MDEDET” Mpumalanga Department of Economic

Development, Environment and Tourism “Megacube” Megacube Mining Proprietary Limited “MEGA” Mpumalanga Economic Growth Agency“MHSA” Mine Health and Safety Act 1996 (Act 29

of 1996)“MoI” Memorandum of Incorporation of the

Company “NEMA” National Environmental Management Act “NGOs” Non-governmental organisations“ Nkomati Anthracite”

Nkomati Anthracite Proprietary Limited

“OHSA” Occupational Health and Safety Act 1993 (Act 85 of 1993)

“OHSAS” Occupational health and safety management system

“Ritchie” Ritchie Crane Hire Proprietary Limited“SA” the Republic of South Africa “SED” Socio-economic development“SENS” the Securities Exchange News Service “SHE” Safety, Health and Environment “SHEQ” Safety, Health, Environment and Quality “SBC” Standard Bank-led consortium, comprising

Standard Bank, Sanlam Capital Markets and HSBC

“SMMEs” small, medium and micro-enterprises“Sentula Coal” Sentula Coal Proprietary Limited“TIFR” Total injury frequency rate“the Board” the Board of Directors of Sentula Mining

Limited“the Company” Sentula Mining Limited“ the current year”

the financial period ended 30 June 2016

“the Group” Sentula Mining Limited and its subsidiaries “ the period” or the “period under review”


“ the previous year” or “the prior year”

the financial year ended 31 March 2015

“the year” or “ the year under review”


“USD” US dollar “VWAP” Volume weighted average price“ZAR” South African rand



SENTULA MINING GROUP OF COMPANIES

Name of company Registration number

Aqua Terra LOA 13533

Benicon Coal Proprietary Limited 1993/003007/07

Benicon Opencast Mining Proprietary Limited 1993/007616/07

Benicon Sales Proprietary Limited 1970/005781/07

Buenti Drilling Proprietary Limited 2007/001551/07

Caston Plant Sales Proprietary Limited 1992/003355/07

Classic Challenge Trading Proprietary Limited 2001/025633/07

JEF Drill and Blast Proprietary Limited 1996/017991/07

Megacube Mining Proprietary Limited 1989/000748/07

Myna Projects Proprietary Limited CO2000/5223

Nkomati Anthracite Proprietary Limited 1980/008581/07

Ritchie Crane Hire Proprietary Limited 2007/006831/07

Robust Opencast Resources Proprietary Limited 1994/004620/07

Sentula Coal Proprietary Limited 2007/032919/07

Sentula Contracting Proprietary Limited 2009/023760/07

Sentula Exploration Proprietary Limited 2006/019584/07

Sentula Mining Services Proprietary Limited 2007/023898/07

Sentula Mining Services Mauritius Limited 077730 C1/GBL

Sentula Mining Mauritius Limited 077609 C1/GBL

ADMINISTRATION

Sentula Mining LimitedIncorporated in the Republic of South Africa

(Registration number 1992/001973/06)

Share code: SNU

ISIN: ZAE000107223

Registered officeGround Floor, Building 14, The Woodlands Office Park

Woodlands Drive, Woodmead, 2080

(PO Box 76, Woodlands Office Park, Woodmead, 2080)

Telephone: 011 656 1303

Facsimile: 011 656 1300

Company SecretaryGC CrossGround Floor, Building 14, The Woodlands Office Park



Telephone: 011 656 1303

Auditors External PricewaterhouseCoopers Inc.

2 Eglin Road, Sunninghill, 2157

(Private Bag X36, Sunninghill, 2157)

Telephone: 011 797 4000

InternalBDO

22 Wellington Road, Parktown, 2193

(Private Bag X60500, Houghton, 2041)

Telephone: 010 060 5000

Legal advisersBaker & McKenzie1 Commerce Square, 39 Rivonia Road, Sandhurst

Johannesburg, 2196

Telephone: 011 911 4300

BankersThe Standard Bank of South Africa LimitedCorporate and Investment Banking

3rd Floor, 30 Baker Street, Rosebank, 2107

(PO Box 61029, Marshalltown, 2107)

Telephone: 011 721 9000

The Hongkong and Shanghai Banking Corporation Limited2 Exchange Square, 85 Maude Street, Sandown, 2196

(Private Bag X785434, Sandton, 2146)

Telephone: 011 676 4200

Sanlam Capital MarketsDebt Structuring Unit

3A Summit Road, Dunkeld West, Johannesburg, 2196

(PO Box 411420, Craighall, 2024)

Telephone: 011 778 6000

Share transfer secretariesComputershare Investor Services Proprietary Limited70 Marshall Street, Johannesburg, 2001

(PO Box 61051, Marshalltown, 2107)

Telephone: 011 370 5757

SponsorQuestco Proprietary LimitedFirst Floor, Yellowwood House, Ballywoods Office Park

33 Ballyclare Drive, Bryanston, 2192

(PO Box 98956, Sloane Park, 2152)

Telephone: 011 011 9200

Public relations/CommunicationsGround Floor, Building 14, The Woodlands Office Park



Telephone: 011 656 1303

Websitewww.sentula.co.za

BASTION GRAPHICS

www.sentula.co.za

Sentula Integrated

Annual R

epo

rt 2016

INTEGRATED ANNUAL REPORT 2016...2018/03/30 · BCom (Wits), CA(SA), MBA (Chicago Booth) Independent non-executive director Appointed: 27 May 2014 Board committee membership Chairman

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