Presentation of the Annual Report for the Year Ended 31 March 2014 - PowerPoint PPT Presentation

Loading...

PPT – Presentation of the Annual Report for the Year Ended 31 March 2014 PowerPoint presentation | free to download - id: 707a25-ZjZlZ



Loading


The Adobe Flash plugin is needed to view this content

Get the plugin now

View by Category
About This Presentation
Title:

Presentation of the Annual Report for the Year Ended 31 March 2014

Description:

Presentation of the Annual Report for the Year Ended 31 March 2014 19 NOVEMBER 2014 Implementation of the Deed of Settlement (1 of 2) Key areas Deliverables 1. – PowerPoint PPT presentation

Number of Views:20
Avg rating:3.0/5.0
Date added: 16 January 2019
Slides: 42
Provided by: Alexk160
Learn more at: http://pmg-assets.s3-website-eu-west-1.amazonaws.com
Category:

less

Write a Comment
User Comments (0)
Transcript and Presenter's Notes

Title: Presentation of the Annual Report for the Year Ended 31 March 2014


1
Presentation of the Annual Report for the Year
Ended 31 March 2014
  • 19 NOVEMBER 2014

2
Contents
  • Predetermined Objectives (Performance Overview)
  • Corporate Governance
  • PSJV Operations
  • Human Resources and Social Development
  • Control Environment
  • Statement of the Audit Risk Committee
  • Auditors Report
  • Annual Financial Statements
  • Alexkor Strategy
  • Deed of Settlement
  • End State of Mining
  • Expanded Mandate

3
Introduction
  • Background to the land claim
  • Split of the Company into the RMC and Alexkor
    (creating the PSJV)
  • Once the Board was appointed, the Board evaluated
    the status of the Company
  • Commercial imperatives
  • Socio-economic imperatives
  • Board heeded the call of the Shareholder

4
Predetermined Objectives (1 of 2)
  • Alexkor had 17 approved targets during the year
    and 16 of those were achieved resulting in a
    success rate of 94. In 2013, Alexkor achieved 28
    of 30 objectives with a success rate of 93.
  • The Predetermined Objectives that have been
    achieved include-
  • On Alexkor Sustainability-
  • Developing a strategy for Alexkor outside of the
    PSJV
  • Financial Ratios
  • On Township Establishment-
  • Establishing the town of Alexander Bay
  • Ensuring that the township is ready for handover
    to the Municipality
  • Dealing with municipal challenges

5
Predetermined Objectives (2 of 2)
  • On the Rehabilitation Obligation-
  • Implementing and executing a 5-year
    rehabilitation plan
  • On PSJV Sustainability-
  • Increased profitability
  • Increased exploration
  • Safety matters catered for
  • On Socio-Economic factors-
  • New corporate structure as detailed later
  • Increased BEE as detailed later
  • The only objective not achieved included the PSJV
    production target of 70 213 carats with the
    actual outcome being 46 681 carats and a variance
    of 23 532 carats.

Source Refer to the
Integrated Report, Report on Predetermined
Objectives for the year ended 31 March 2014.
6
Corporate Governance (1 of 2)
  • The Independent Non-Executive Directors (INEDs)
    of the Board of Alexkor SOC Ltd

Name Appointed
Dr R Paul April 2008
Mr R Bagus September 2012
Dr N Mohutsioa-Mathabathe September 2012
Mr M Bhabha September 2012
Ms Z Ntlangula September 2012
Dr D Mkhwanazi June 2013
Ms S Zilwa June 2013
Mr B Grobbelaar June 2013

7
Corporate Governance (2 of 2)
  • Alexkor SOC Ltd had four Sub-committees during
    the year being the
  • Audit and Risk Committee
  • Social, Ethics Human Resources Committee
  • Environmental Rehabilitation Committee
  • Tender Committee
  • The PSJV is an unincorporated Joint Venture
    arrangement between Alexkor SOC Limited and the
    community of the Richtersveld. Alexkor SOC
    Limited owns 51 in the PSJV and the community
    own 49.
  • When the new Board of Directors took office in
    September 2012, corporate governance at Alexkor
    SOC Limited and at the PSJV was very poor. No
    proper Minutes of Board and Committee meetings
    were kept, budgeting was poor, there was no
    proper record of mine dump allocations,
    documentation and/or agreements with the
    contractors were not in order including in
    particular docmentation relating to PFMA
    compliance such as tax clearance certificates for
    contractors.
  • As a result, proper stuctures were put in place
    which included the PSJV Technical Committee,
    Remuneration Committee and Audit and Risk
    Committee. Alexkor INEDs hold positions on the
    PSJV Board as well as these Sub-committees.

8
PSJV Operations (1 of 4)
  • Diamond revenue amounted to R277.0m (2013
    R184.1m).
  • The PSJV produced 46 681 carats (2013 35 358
    carats).
  • Sea-days decreased to 20 (2013 22 sea-days) for
    the year.
  • A net profit of R23.7m (2013 R4.7m) was achieved
    for the year.
  • Cash reserves were stable during the year.
  • Capital expenditure of just over R54m was
    incurred.

9
Comparative Annual Diamond Production (2 of 4)
10
Carat production per Sector (3 of 4)
11
Sea-days over the last Decade (4 of 4)
12
Human Resources and Social Development (1 of 6)
Alexkor Staff Complement 2014

HEAD OFFICE Number
Permanent employees at Head 0ffice 13
External contractors and others 16
TOTAL 29
ALEXANDER BAY - MINE Number
Permanent employees at the Mine 51
Temporary and casual employees at the Mine 26
TOTAL 77
  • Total STAFF 106
  • Alexkor employees at head office in 2013
    consisted of 2 permanent employees, the CEO and a
    PA. All other duties were outsourced to
    contractors.
  • Alexkor employees at the Mine are managed by PSJV
    Management.

13
Human Resources and Social Development (2 of 6) -
PSJV Staff Complement
PSJV EMPLOYEES 2013 2014
Permanent Employees 115 230
Temporary and Casual employees 55 36
External Contractors and Others 703 821
TOTAL 873 1087

Union Membership
2013 2014
NUM 60.5 56
UASA 23.9 7
Non-affiliates 15.6 37
14
Human Resources and Social Development (3 of 6)
  • Total Staff Complement between Alexkor and the
    PSJV went from 88 employees in 2012 to 873
    employees in 2013 to 1193 employees in 2014
  • The Muisvlak Plant saw a total of 140 new
    employees being recruited from 6 towns as
    follows
  • Sanddrift 23
  • Kuboes 34
  • Eksteenfntein 24
  • Lekkersing 37
  • Port Nolloth 14
  • Alexander Bay and surrounding 8

15
Human Resources and Social Development (4 of 6)
EE figures for Alexkor only
Employment Equity March 2014 Employment Equity March 2014 Employment Equity March 2014 Employment Equity March 2014 Employment Equity March 2014 Employment Equity March 2014 Employment Equity March 2014 Employment Equity March 2014 Employment Equity March 2014 Employment Equity March 2014
Occupational Level Number of Incumbents Male Male Male Female Female Female Female of Designated Group
Occupational Level Number of Incumbents AM CM WM AF IF CF WF of Designated Group
Top Management 4 3 1 100
Senior Management 3 1 2 100
Professionally Qualified 2 1 1 50
Skilled 5 1 2 2 100
Semi-Skilled 5 2 1 2 100
Unskilled 45 2 40 3 100
Total 64 7 44 1 6 1 5 100
16
Human Resources and Social Development (5 of 6)
EE figures include Alexkor and PSJV Figures
include Alexkor and PSJV management
Employment Equity March 2013 Employment Equity March 2013 Employment Equity March 2013 Employment Equity March 2013 Employment Equity March 2013 Employment Equity March 2013 Employment Equity March 2013 Employment Equity March 2013 Employment Equity March 2013 Employment Equity March 2013
Occupational Level Number of Incumbents Male Male Male Female Female Female Female of Designated Group
Occupational Level Number of Incumbents AM CM WM AF IF CF WF of Designated Group
Senior Management 7 2 3 1 1 86
Professionally Qualified 5 2 3 100
Skilled 44 22 15 5 2 64
Semi-Skilled 54 2 44 4 1 3 93
Unskilled 5 1 4 100
Total 115 5 75 20 2 0 11 2 83
Employment Equity March 2014 Employment Equity March 2014 Employment Equity March 2014 Employment Equity March 2014 Employment Equity March 2014 Employment Equity March 2014 Employment Equity March 2014 Employment Equity March 2014 Employment Equity March 2014 Employment Equity March 2014 Employment Equity March 2014
Occupational Level Number of Incumbents Male Male Male Male Female Female Female Female of Designated Group
Occupational Level Number of Incumbents AM IM CM WM AF IF CF WF of Designated Group
Senior Management 6 1 3 1 1 83
Professionally Qualified 12 7 5 100
Skilled 52 33 10 7 2 81
Semi-Skilled 109 2 80 4 21 2 96
Unskilled 51 1 21 29 100
Total 230 4 144 15 63 4 93
17
Human resources and social development (3 of 3)
Revised Social and Labour Plan Budget Commitments Page 6 of 6 Revised Social and Labour Plan Budget Commitments Page 6 of 6 Revised Social and Labour Plan Budget Commitments Page 6 of 6 Revised Social and Labour Plan Budget Commitments Page 6 of 6 Revised Social and Labour Plan Budget Commitments Page 6 of 6
2013/14 2013/14 2014/15 2014/15
Plan Budget Plan Budget
Commercial diver training 1 40 000
Hyperbaric chamber operators and attendant courses 2 20 000
Diving first-aid and emergency response 20 70 000 20 77 000
Skipper course 1 4 500 1 4 950
Diving equipment technician 20 1 500
Basic rigging and welding 1 20 000 1 22 000
Commercial diver supervisor 10 000
Training
Sub-Total 166 000 103 950
Acommodation 600 000
Bursaries 2 115 000 126 500
Learners 6 514 800 660 660
ABET - Alexkor 8 000 13 200
ABET - Contractors 4 000
Projects 976, 877 1 528 000
Total 2 384 677 2 432 310
18
Control Environment
  • Internal controls are designed to provide
    reasonable but not absolute assurance as to the
    reliability of the financial statements,
    safeguarding of assets and to prevent and detect
    misstatements and losses.
  • Alexkors internal audit function is outsourced
    and provides an independent appraisal to examine
    and evaluate the Companys activities.
  • Alexkors fraud hotline facility has been
    operational throughout the financial year to
    enable all stakeholders or any other parties to
    report fraudulent, corrupt and unethical
    practices in the work place. However, the fraud
    hotline facility has not been effective and as a
    result, steps are being taken to change the
    service provider and market the hotline within
    the communities.
  • Internal audit has identified internal control
    issues within Alexkors environment with regards
    to its HR and payroll, procurement and IT
    management processes. Measures are being put in
    place to address the identified issues.

19
Annual Financial Statements (1 of 6)
  • The Annual Financial Statements (AFS) were
    approved and signed by the Board on 30 July 2014.
  • The Audit and Risk Committees report was
    included in the Integrated Report on pages 53 and
    54.
  • The External Auditors opinion was unqualified.
    Issues were however raised with regards to
  • Material adjustments were made to property, plant
    and equipment due to a revision in the useful
    lives
  • The reclassification of grant income and
  • Management did not adequately review the draft
    financial statements for completeness and
    accuracy before submission for audit.

20
Annual Financial Statements (2 of 6)
  • Statement of Financial Position (material
    movements)
  • Property, plant and equipment R72.1m (2013
    R31.6m)
  • Cash in the rehabilitation trust R115.0m (2013
    R109.5m)
  • Loan to joint venture R38.1m (2013 R10.0m)
  • Cash and cash equivalents R475.1m (2013 R556.7m)
  • Trade and other payables R170.6m (2013 R234.9m)

21
Annual Financial Statements (3 of 6)
  • Statement of Comprehensive Income
  • Revenue R141.3m (2013 R93.9m)
  • Provision for the rehab liability R15.9m (2013
    R10.7m)
  • Operating profit R20.7m (2013 loss of R38.3m)
  • Net finance income R30.4m (2013 R51.0m)
  • Total comprehensive income R47.0m (2013 R29.7m)

22
Annual Financial Statements (4 of 6)
  • Alexkors cash position at 31 March 2014

Cash Category Balance at 31 March 2014 Balance at 31 March 2013
R R
Operational cash 113.6 million 139.4 million
Recapitalisation funds (MTEF) 211.4 million 201.1 million
Cash held in legal trust 10.7 million 10.8 million
Cash held in GFR 139.4 million 205.1 million
TOTAL 475.1 million 556.6 million
23
Annual Financial Statements (5 of 6)
  • Reconciliation of government funded obligations
  • All four phases with regards to the Township
    upgrade have been completed. The balance of the
    funds are retention funds that will become
    payable once the retention period expires.

Opening Balance at beginning of the year Transfers Received Utilised during the year Interest earned on investment of funds Closing balance at the end of the year
Township establishment 10 710 376 - (2 769 771) 445 380 8 385 985
Costs related to Deed of Settlement 12 548 027 - (5 230 540) 550 519 7 868 006
PSJV recapitalisation 180 749 667 - (65 730 757) 7 241 091 122 260 000
Total government funded obligations 204 008 071 - (73 731 068) 8 236 990 138 513 992
24
Annual Financial Statements (6 of 6)
  • Litigation matters at 31 March 2014
  • 1. Nabera Mining (Pty) Ltd Nabera instituted
    legal action against the Compan yin 2004 and the
    South African Government for alleged amounts in
    respect of a contract wherein Nabera managed the
    Companys mining assets and operations from 1999
    to 2001. This matter has been dormant since 2005.
  • 2. Ruslyn Mining and Plant Hire (Pty) Ltd
    Ruslyn instituted action in 2006 for damages
    arising out of a profit sharing agreement entered
    into on 22 June 2003. The matter was set down for
    hearing on 10 to 14 March 2014 but by agreement
    between the parties has been postponed to 2015.
    Settlement negotiations are ongoing.
  • 3. Compensation for assets transferred to
    Richtersveld Community claim
  • No provisions were made for the above cases after
    consultation with legal representation.

25
Strategy (1 of 9)Shareholder Mandate
  • When the Board was appointed in September 2012,
    the mandate given to it was as follows-
  • Commercial imperatives-
  • Ensure that the mine is stabilised
  • Appoint a CEO and CFO for Alexkor SOC Limited
  • Increase production
  • Socio-economic imperatives-
  • Re-engagement with the community
  • Re-establishing relationships with the Communal
    Property Association (CPA)
  • Ensuring that there is direct benefit to the
    community from Alexkors efforts

26
Strategy (2 of 9)
  • What we inherited was the following-
  • A. On the commercial side
  • Alexkor is currently the core business and the
    PSJV partnership the only commercial asset
  • However this business was in serious distress and
    the initial engagement identified critical
    problem areas.
  • 2. Profitability Eroded
  • The PSJV was in a loss making position for more
    than 10 years.
  • 3. Corporate Governance Compromised
  • No Minutes of Audit Committee Meetings kept
  • Budgetting needed to be improved and
  • No record kept of mine dump allocations, and no
    tax clearance certificates for contractors.

27
Strategy (3 of 9)
  • 4. Decline in Production and Employment
  • Carat production dropped from 216,000 carats in
    1995/6 to only 37,000 carats in 2011 and
  • Employment dropped from more than 700 fulltime
    employees to about 88 in October 2012.
  • 5. Environment Became Hostile
  • A significant loss of trust in community
    structures and a growing feeling that the old
    scheme was better.
  • 6. Executive vacancies
  • No CEO for over 2 years with a single consultant
    filling the CEO, COO and CFO roles. The
    secretary was the only full-time employee.

28
Strategy (4 of 9)B. On the socio-economic
side
  • 1. Community was extremely divided
  • There were various factions and there were all
    manner of accusations against various
  • people within the community including the
    then existing CPA members.
  • 2. Mistrust
  • Alexkors relationship with the community,
    between the period of the filing of the land
    claim and 2012, when the new Board ws appointed,
    deteriorated significantly due to job losses.
  • 3. Laid blame on Alexkor for the decline
  • 4. Court cases

29
Strategy (5 of 9) Steps taken by the Board to
address the challengesA. Commercial
Imperatives
Key activities Deliverables
Ensure continued direct board level involvement at the PSJV to guide actions. At least one board member is always available at the PSJV to provide guidance. One Board meeting in Alexander Bay per annum the Chairman visits the mine every four to six weeks.
Significantly reduce overall quantum cost including telecommunications, health and safety etc Change the existing mindsets of all the employees in Alexander Bay. Cost savings vs increase in revenue (R1 saved is an R1 to profit).
Ensure effective management of marine contracts Focus on enhancing productive and revenue from marine contracts. Review performance of all 52 marine contracts, terminate poor performers and incentivize good performers. Introduce middle water contractors to optimize marine concessions and extraction. Optimize execution plans to extract value out of Deep Sea Zone with Contractor IMDSA.
4. Indicative Resources Z-Star was appointed to undertake a proper geological assessment of the land mining areas.
30
Strategy (6 of 9)B. Unlocking Value of the PSJV
Key activities Deliverables
1. Extract value at mine dump Re-treating old glove-box tailings and final recovery tailings, machinery and equipment to commence. Machinery prepared started in February 2013. One year project. Contributed towards the land mining targets set out in the 2013 Corporate Plan.
2. Development of Muisvlak and Kaap Voltas Rolling up of 20 million tons of indicated resources through the Muisvlak plant. Purchase of roaming modular 300tph diamond plant. Contributed an additional 40 000 carats per annum as per the 2013 Corporate Plan.
The objective is to embark on an aggressive
growth strategy to ramp up operations over the
next 5 years from 35,550 carats to over 70,000
carats per annum.
31
Strategy (7 of 9)Failure is not an Option
  • Failure of the PSJV will pose significant and
    broad political consequences
  • To date this was the largest successful land
    claim against the state with significant external
    pressure to succeed.
  • Failure will have a major impact on the
    community
  • The development of the Richtersveld, Alexander
    Bay and Port Nolloth communities have been
    neglected for many years
  • In the 10 years since the settlement the
    community regressed rather than progressed
  • Failure might have minimal impact on the State,
    but for the Alexander Bay Community and region it
    will be severe and will have material
    socio-economic impact.
  • The state has an obligation to the wellbeing of
    the community
  • The state as a shareholder has an obligation to
    enhance the wellbeing of the community. Failure
    to do so will create a significant socio-economic
    burden for the State.
  • A successful turnaround strategy will create a
    flourishing economic viable and sustainable
    community.

Unlocking the PSJV value provides a final
opportunity to revive the community now in
critical distress.
32
Strategy (8 of 9)Socio-Economic Imperatives
Key activities Deliverables
Direct Engagement Direct engagement between the Board and the community with the Board making personal visits to each of the towns to understand the needs of the community.
DM Task Team A government Task Team led by Deputy Minister Mr Bulelani Magwanishe, visited all four towns in order to intervene and restore stability to the region.
IEC Run Elections Arrangements for the IEC to assist the community to have an election process in September 2013, which resulted in a legitimate CPA being appointed.
4. Farms made functional The allocation of R7 million to revitalise the farms for outstanding water and electricity bills.
5. Formal Investigations Investigations into maladministration and mismanagement of the Agricultural Holding Company and the Alexkor Development Trust.
6. Training for newly elected office bearers Training for directors and trustees of the CPA entities to ensure that they were equipped to act as directors and trustees in an attempt to comply with the DoS implementation.. Training was given in pertinent areas of PFMA, Companies Act, King III, MPRDA and Mine Health and Safety.
33
Strategy (9 of 9)Impact of Turnaround
Key areas Deliverables
1. Production Production increased to 46 000 carats Jobs created from 106 to 266 Profit for the 2013/14 financial year was R23.7 million
2. Trust Trust with the legitimate leaders of the community was re-established through the process
34
Implementation of the Deed of Settlement (1 of
2)
Key areas Deliverables
1. Township Upgrade In order to establish the township, Alexkor had to upgrade the existing municipal services to exceed municipal standards. This changed the companys focus to one of a social focus. Upgraded services included water, sewerage, electricity, dams, houses and infrastructure.
2. Township Establishment The Alexander Bay township was established on 22 November 2013 by the transfer of the first property i.e. the SAPS .Although the company is in a position to handover the township, the Municipality is not in a position to assume these responsibilties. As a result, a transitional agreement is being envisaged with the municipality to assist them in these services. The transitional agreement remains unsigned by the municipality. In order to finalise the transfer of the remaining properties, deeds of servitude need to be signed by the municipality. These have been negotiated with the Municipality and are in the process of registration.
35
Implementation of the Deed of Settlement (2 of
2)
Key areas Deliverables
3. Rehabilitation The DoS requires that all overdue historic rehabilitation responsibilities remain the responsibility of Alexkor. An amount of R200 million has been received from Treasury for this purpose. Alexkor already had an amount of R56 million in Trust for rehabilitation. Alexkor has awarded a tender for the rehabilitation plan to a company called Myezo Environmental Consulting Services, a 100 black female owned company. A team of 40 (forty) general workers are working on historic rehabilitation. 4 (four) bursaries were awarded to students from the Western cape and Northern Cape and a further 4 (four) internships for Environmental management and Geology.  
36
End State of Mining Exiting the Structure
  • DoS envisages the state will exit to a strategic
    partner. The exit must however be in a
    responsible manner to ensure long term
    sustainability
  • Options whereby the community can receive cash
    rather then shares.
  • The sale must derive maximum value for the State.
  • The only real opportunity for meaningful job
    creation and economic development in that region
    is for there to be a consolidation of the various
    mining companies including De Beers, Transhex and
    Alexkor.
  • Alexkor has to ensure the sustainability of the
    community post-mining due to the anticipated life
    of mine of 15 to 20 years. It has therefore taken
    steps to create non-mining opportunities for the
    community by putting out a tender for a company
    to partner with the community and create
    opportunities.

37
Expansion of Mandate (1 of 4) The need to
diversify
  • Exit from diamonds and the Richtersveld
  • Challenge by the Deputy Minister and the
    Department at the strategy session in December
    2012 to broaden its focus within the context of
    the mandate specified in the Alexkor Act 116 of
    1992 as amended by the Alexkor Act 29 of 2001.
  • Alexkor Act is broad and covers all mining.
  • To provide a counter-cyclical approach of
    disinvestment by major companies.

38
Expansion of Mandate (2 of 4) Why Coal Mining?
  • The Coal Security of Supply Task Team study,
    commissioned by DPE, predicted a crisis in coal
    supply to Eskom by 2018
  • By 2022, the coal shortfall could exceed 30Mtpa,
    equivalent to 6 - 10 large coal mines and over
    20 of Eskoms total demand
  • This is mainly due to mining companies cherry
    picking mining licence provisions to concentrate
    mainly on high grade coal for export and moving
    away from less profitable steam coal.
  • This creates multiple opportunities for Alexkor
    to reduce Eskoms coal supply risk
  • Utilise the current Eskom Infrastructure
    investment fund to develop a state owned
    capability in Alexkor
  • Agree a cost plus commercial model with Eskom to
    supply coal
  • Renegotiate lossmaking supply contracts with
    companies like Glencore-Optimum
  • Long and expensive litigation can be avoided by
    ceding coal supply rights to Alexkor e.g.
    Khuthala.

Source Coal Security of Supply Task Team Report
(CSSTT 2012), 31 January 2013
39
Expansion of Mandate (3 of 4) Benefits of
Alexkors entry into coal
  • To ensure security of supply to Eskom
  • To create a stable economic and investment
    environment
  • To improve the national credit rating
  • To ensure transformation of the sector
  • Perception of conflict of the Mangaung Resolution
  • The Mangaung resolution requires that the State
    Owned Mining Company (SOMCO) should be
    established and be under the direct supervision
    of the Department of Mineral Resources.
    Furthermore, SOMCO should gather all the States
    interests in mining including those in Alexkor,
    AEMFC and other stakes which Government holds in
    mining corporations.
  • As a result, Alexkors entry into coal is
    actually no conflict to the Mangaung resolution.
  • This is a policy and political discussion and
    Alexkor will comply and has no preference as to
    where it is located.
  • The energy crisis is now and the responsibility
    to resolve it lies with the DPE (with Government
    through the Integrated Resource Plan)

40
Expansion of Mandate (4 of 4) Steps for
Implementation
  • Collaboration between Eskom and Alexkor including
    the transfer of certain assets from Eskom to
    Alexkor in respect of coal.
  • A policy document being prepared by Alexkor and
    DPE for submission to the Economic Transformation
    Committee by December 2014 to be tabled at the
    Policy Conference in June 2015.
  • The implementation set out above will now take
    effect in January 2015 when the Boards of Eskom
    and Alexkor have been reconstituted.

41
Thank You
About PowerShow.com