Robin Berry, CEO Sentula Mining
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» Sentula bolts up on profit forecast
» Sentula trade halted pending mkt update
» House cleaning underway at Sentula
» Searching questions for Sentula
» Another top executive quits Sentula
» Sentula scrutinised for insider trading
» Sentula nailed by poor accounting

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Sentula prepares legal action
Allan Seccombe
Posted: Tue, 09 Sep 2008

[miningmx.com] -- SENTULA Mining is preparing to take legal action against people and entities after a forensic investigation into events that led to a restatement of the coal and mining contractor’s results.

JSE-listed Sentula, formerly Scharrig Mining, is also the subject of an investigation by the Financial Services Board for possible insider trading ahead of an announcement in June that it was restating its 2007 financial results.

Sentula’s price was hammered down by a third to R12/share when it told the market of the restatement it blamed on a number of accounting "errors" - mainly related to the R53.9m acquisition of Benicon.
instituting action against individuals and entities
These included "an incorrect valuation of certain fixed assets on the date of acquisition" and an "erroneous conclusion as to the accounting effective date of the acquisition resulting in the incorrect measurement of the fair value of the consideration paid," Sentula said at the time.

Sentula appointed KPMG Forensic to investigate events that led to that restatement. KPMG’s findings have been reported to Sentula, which will make these known to shareholders at an unspecified point in the future.

“The company is in the process of obtaining legal advice with regards to instituting action against individuals and entities that have been implicated in these findings,” Sentula said on Tuesday.

“Certain of the individuals implicated are past members of management,” it said.

While it’s not immediately clear if there is any link, there has been a steady exodus of top management from the company since June.

“Flowing from this initial investigation, the company has mandated KPMG Forensic to investigate other possible irregular transactions which may have a material impact on the company’s reviewed results for the year ended 31 March 2008 and 31 March 2007, as presented on 25 June 2008,” it said.

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“The company believes that these irregularities will not have an impact on the company’s cash position and that the prospects for the current year remain intact,” it said, adding the release of its annual report has been delayed until late October.

Sentula said the FSB was continuing its investigations into trade in its shares between the start of 2008 and the end of May.

Former major shareholders Coronation Capital and Jonah Capital sold most of their stakes at R21.75/share in March this year, incurring the wrath of shareholders who a short while later were left with shares worth a fraction of that.

Shareholders were also irate with broking firm Barnard Jacobs Mellet, which ran the book-build exercise through which Coronation and Jonah Capital found buyers for the stock they sold, worth R680m in total.

A June review of directors' dealings showed two then-current directors of Sentula and one former director sold shares worth R14.2m in total between 10 January and 27 February ahead of the sale by Jonah Capital and Coronation on 10 March.

The three were non-executive director Trevor Hendry, who sold shares worth R3.1m, former financial director Jason Holland, who sold R6m worth of shares, and then-executive director Clint Moorcroft, who sold R5m worth of shares. Since 27 February only one of the three has traded again: Hendry took up 38,800 options at 53c/share each on 11 March.

All three are no longer with Sentula, with Moorcroft’s immediate resignation announced on Monday, 8 September.

There was also a flurry of activity in Sentula's shares ahead of the 2 June announcement of the restated results.