Dineo Faku
AFTER Sentula Mining brought legal action against former financial director Jason Holland, it decided to shut down its Megacube open pit mining asset as it was a “fundamentally rotten” business model, Robin Berry, the chief executive of the listed coal firm, said yesterday.
Presenting the consolidated results for the year to March, the company said it would put Megacube up for auction and that it was getting over a legacy of misappropriation of funds by executives.
In the next 18 months, the company would focus on the selling of Megacube, the loss-making remaining operational asset of the business.
This would be done through outright disposals, redeployment, and trade-in proceeds on new and replacement equipment. Berry said Sentula would redeploy some of Megacube’s employees across the group, but the remaining 350 employees would be retrenched by the end of August.
Sentula has retrenched 2 000 employees at Megacube since the restructuring began in 2010. Berry said there were 564 items with a book value of R364 million at Megacube, which was the first subsidiary established by Sentula when the group started its operations 40 years ago.
Berry said R1.5m a month was required to manage the process of selling the assets at Megacube and loss-making contracts were terminated in the first half of last year.
Sentula said revenue increased 5 percent to R2.51 billion from R2.4bn last year, and headline earnings a share increased 35 percent to 21.7c from 16.1c. The company did not declare a dividend for the year under review.
Sentula said it was working with the National Prosecuting Authority in the legal action against Holland and Casper Scharrighuisen, the former managing director, for the misappropriation of funds from Megacube in the 2008 financial year. The company said the total civil judgments against Scharrighuisen totalled R383m.
Benicon, also a subsidiary of Sentula, managed to negotiate improved mining rates for this financial year and saw sustained revenue growth while managing overall margins.
Benicon, which offers open cast mining services to Anglo American Coal, has extended its services to Xstrata and Keaton.
Berry said he was confident about the future of Sentula.
“Despite ongoing global economic volatility and its impact on the local mining industry, Sentula – having dealt decisively with its loss-making subsidiary Megacube – should benefit from improved earnings visibility in the future.”
In March, the company finalised a broad-based black economic empowerment transaction in which the Sentula Mining Empowerment Trust, the Sentula Mining Employee Trust, and Anglo American Khula Mining Fund Propriety acquired 16.75 percent direct equity in the company’s assets.
The operations at its Madadeni pit were suspended in March last year due to regulatory and environmental issues.
Subsequent to the suspension of the operation, the Department of Mineral Resources approved the amended environmental management programme. Operations are expected to recommence next year.
Sentula’s shares closed 2.7 percent higher at R1.90 on the JSE yesterday.