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Sah - South African Coal Mining Holdings Limited - Abridged Annual Results For

Release Date: 18/03/2008 12:28:02      Code(s): SAH
SAH - South African Coal Mining Holdings Limited - Abridged annual results for  
the eighteen months ended 31 December 2007                                      
South African Coal Mining Holdings Limited                                      
(formerly Yomhlaba Resources Limited)                                           
Registration number 1994/009012/06                                              
Share code: SAH                                                                 
ISIN: ZAE000102034                                                              
("SACMH" or "the company")                                                      
Abridged annual results for the eighteen months ended 31 December 2007          
Highlights                                                                      
-    Year of restructuring and transformation:                                  
-    Acquisition of Umlabu and Ilanga coal mines                            
    -    Royal Bafokeng Capital became controlling shareholder                  
-    Current production  at 100,000 tonnes per month run of mine - achieved     
    ahead of schedule:                                                          
-    Scheduled to reach run of mine of 1.7 million tonnes per annum in 2011 
-    Significantly increased resources and reserves:                            
    -    Total resources up 70% to 90 million tonnes (including 32.8 million    
         additional tonnes from the Sterkfontein property)                      
-    Total saleable reserves up 88% to 18.8 million tonnes                  
-    Focused on further operational expansion - investing in infrastructure     
-    Access to domestic (Eskom) and export (RBCT) markets established           
-    After tax profit of R 115 million :                                        
-    Coal mining and equipment rental operating profit of R20 million       
         generated over four months from end August 2007 to end December 2007   
    -    Effect of restructuring and acquisitions R111 million                  
    -    Head line earnings of R4.5 million                                     
-    Results not comparable with previous period due to restructuring and       
    acquisitions                                                                
Karl Gribnitz, Chief Executive, said:                                           
"SACMH is now firmly established as a profitable coal producing company.        
Production is going well and we reached our target production rate ahead of     
schedule.  Resources and reserves have increased significantly following        
publication of the independent Engineers` Report on the Umlabu Colliery in      
February.                                                                       
We have recently successfully negotiated an off-take agreement with Eskom in    
addition to our export allocation at Richards Bay Coal Terminal.  We are        
investing in infrastructure to improve transport logistics and are now focused  
on operational expansion. We are committed to achieve our objective of being the
premier BBBEE coal mining platform in South Africa."                            
Introduction                                                                    
In 2007, SACMH concluded the acquisition of the Ilanga and Umlabu mines,        
restructured its balance sheet and introduced Royal Bafokeng Capital as its     
strategic Black Economic Empowerment partner.  In line with its focus on        
infrastructure development, SACMH also signed a Heads of Agreement with Fraser  
Alexander in terms of which Fraser Alexander will be SACMH`s strategic services 
partner, providing materials handling and beneficiation services to both current
and future SACMH projects through its "Bulk Mech" division.  In addition, SACMH 
has concluded a 3 year contract with Eskom to supply 1.2 million tonnes to the  
Camden Power Station - underwriting the commitment of the company and its       
controlling shareholder to energy generation in South Africa, and its support of
the national generator on a long term basis.                                    
SACMH is now a fully operational, South African coal producer, delivering       
production into the export market and supplying coal to Eskom.                  
Operational review and outlook                                                  
SACMH`s current production is sourced from the Umlabu property.  Production at  
the Ilanga mine has been wound down pending acquisitive negotiations with owners
of neighbouring properties.  Kromkrans is at an early stage of exploration.     
The Umlabu property is divided into three sections; Umlabu, Vlakfontein and     
Sterkfontein. Current mining operations are taking place at Umlabu and          
Vlakfontein, while Sterkfontein is still in early exploration.                  
The Umlabu coal deposit is located in undulating terrain in the Breyten or      
greater Ermelo District of Mpumalanga.  As a result of this undulating terrain, 
the ore-body is generally extracted by means of open-cast operations on the     
outcrop, along the contours of the terrain.  The remaining ore-body is typically
accessed through the highwall by means of mechanised low seam underground mining
methods.  Approximately 41% of production will ultimately be open-cast, with the
balance mined from underground.                                                 
The Umlabu deposit consists of B-seam, C-upper and C-lower coal.  The C-lower   
seam is typically exported after washing.  The B-seam is currently sold to Eskom
after being washed, while the C-upper seam is sold to Eskom as a raw screened   
product.                                                                        
In February 2008, independent consultants, SRK Consulting South Africa (Pty)    
Ltd, compiled an Updated Engineers` Report on Umlabu Colliery. The key findings 
of the report are summarised below.  The results of this report were very       
encouraging and go a long way to proving the viability of this operation.       
               Competent        Updated         Percentage                      
               persons` report  engineers`      change                          
               (June 07)        report (January                                 
08)                                             
Peak ROM (1)    1.2Mt            1.7Mt           45%                            
production rate                                                                 
Total GTIS (2)  26.3Mt           56.7Mt          115%                           
resource                                                                        
(measured and                                                                   
indicated)                                                                      
Total GTIS      27.0Mt           33.5Mt          24%                            
resource                                                                        
(inferred) (3)                                                                  
ROM reserve     12.6Mt           25.7Mt          104%                           
Saleable        10.0Mt           18.8Mt          88%                            
reserve                                                                         
1.   ROM - run of mine                                                          
2.   GTIS - gross tonnes in situ                                                
3.   Includes 32.8Mt from Sterkfontein, which was not classified and taken into 
in the June 07 CPR                                                          
According to SRK Consulting, the total coal resource estimate for Umlabu is     
approximately 90 million tonnes (33 million tonnes of which is an inferred      
resource estimate for Sterkfontein). Based on the current mine plan, this       
translates to a run of mine reserve of 26 million tonnes and saleable reserves  
of 19 million tonnes. Of these saleable reserves, 55% is export quality and 41% 
is earmarked for consumption by Eskom. The remainder is destined for the        
domestic market.                                                                
Umlabu is currently producing at a run of mine production rate of 100,000 tonnes
per month and is scheduled to reach a full run of mine production rate in 2011  
of 1.7 million tonnes per annum. The Umlabu processing plant is currently       
washing at a rate of between 40,000 and 50,000 tonnes per month and, with minor 
modifications, is expected to sustain a rate of 50,000 tonnes per month. The    
scheduled full run of mine production rate of 1.7 million tonnes per annum      
translates into a plant feed of approximately 136,000 tonnes per month. An      
additional processing facility will therefore be commissioned in 2008 at an     
estimated cost of R 30m in order to provide the required additional production  
capacity.                                                                       
The current plant yields are approximately 58% and 56% for the B-seam and C-    
lower seams respectively. Modifications to the existing plant, combined with the
commissioning of a new processing plant, are expected to result in an increase  
of average yields to 60%.                                                       
Coal produced at Umlabu is currently road hauled to Camden power station or to  
Blinkpan siding for export through Richards Bay Coal Terminal. Once the New     
Voorslag siding is commissioned, all export production will be railed from this 
siding which should enhance the logistical processes as well as the operating   
margin of the company. Construction is planned to commence in the second quarter
of 2008, with completion expected by the end of August 2008.                    
Short and long term contracts have been concluded with Transnet Freight Rail,   
Richards Bay Coal Terminal Operations and Mhlatuze Bay Administrators for       
logistical movement of production.                                              
Major capital expenditure is planned to alleviate logistical risk and           
streamlining of product movement. Capital expenditure is forecast to be high in 
the next four years peaking at R88.7 million in 2009, thereafter dropping       
sharply. Infrastructure development is expected to total R133 million, with     
processing estimated at R48 million out of a total capital expenditure of       
approximately R 205 million over four years.                                    
Market review                                                                   
The final coal product is currently being sold at an average of the API 4 RBCT  
index price and contractual prices the company negotiated subsequent to the     
restructuring. The price of coal has been buoyant and market projections        
indicate that the demand for coal will remain strong for the next 12 to 24      
months.                                                                         
Financial review                                                                
The company has changed its year end from 30 June to 31 December in order to    
align itself with its major shareholder - Royal Bafokeng Capital. Accordingly,  
the financial period being reported on covers the period from 1 July 2006 to 31 
December 2007.                                                                  
Due to the extent of the restructuring referred to in the introduction,         
shareholders are reminded that the audited annual results presented cannot be   
compared with the financial results of the company for previous periods.        
Investors are referred to the circular to shareholders dated 8 June 2007 where  
the financial results of Ilanga Coal Mines (Pty) Limited and Umlabu Colliery    
(Pty) Limited for the 12 months ended 28 February 2007 are presented in         
Appendices 6 and 7.                                                             
Subsequent to the implementation of the acquisitions of Ilanga and Umlabu in    
August 2007, the company has successfully negotiated the startup phase for its  
mining operations, sales operations, as well as the equipment leasing           
operations. Both the coal mining and equipment rental divisions were profitable 
during the period and it is expected that they will continue to reflect positive
results in the next 12 months.                                                  
The operating profit (before taxation) reflects the activities of:              
-    The coal mining division                R 15,990,000                       
-    The equipment rental division           R 4,026,000.                       
The effects of the restructuring and the acquisitions of Ilanga and Umlabu are  
set out below and are included in the income statement for the period ended 31  
December 2007:                                                                  
-    Gain on debt restructure  R 30,762,000                                     
-    Gain at acquisition      R 105,248,000 (Umlabu mine)                       
-    Impairment of goodwill   (R 24,407,000) (Ilanga mine)                      
As discussed in the operational review above, SRK Consulting reviewed the       
Competent Persons Report issued in June 2007.  Their Updated Engineers` Report, 
with a cut-off and effective date of 31 December 2007, was used to revalue the  
mineral rights.  The report resulted in a material revaluation primarily due to 
the classification of additional resources, the formulation of a more detailed  
mine plan based on actual performance by SACMH, and higher coal price           
projections. This revaluation is reflected in the revaluation reserve in the    
balance sheet for 31 December 2007 set out below.                               
Prospects                                                                       
SACMH is now firmly established as a successful operator with a substantially   
improved resource and reserve statement, access to domestic and export markets, 
a motivated and experienced management team and a clear strategy centred on both
organic and acquisitive growth. As the only JSE-listed entity providing         
investors with exposure to coal as a single commodity, the current international
coal price and a supply price to Eskom, the board is of the view that SACMH     
provides an exciting and compelling investment opportunity.                     
FINANCIAL STATEMENTS                                                            
GROUP BALANCE SHEETS            Audited as at  Audited as at                    
31 Dec 2007    30 June 2006                      
                               R`000          R`000                             
ASSETS                                                                          
NON-CURRENT ASSETS              976,070        13,850                           
Property, plant and equipment   135,440        13,850                           
Intangible assets               840,630        -                                
                                                                                
CURRENT ASSETS                  21,858         10,017                           
Inventories                     7,891          -                                
Trade and other receivables     12,387         1,024                            
Cash and cash equivalents       1,580          8,993                            
                                                                                
TOTAL ASSETS                    997,928        23,867                           
                                                                                
EQUITY AND LIABILITIES                                                          
CAPITAL AND RESERVES            523,221        (23,868)                         
Issued Capital                  124,473        18,562                           
Retained income/(loss)          72,819         (42,430)                         
Revaluation reserve             325,928        -                                
                                                                                
NON-CURRENT LIABILITIES         407,782        44,900                           
Interest bearing liabilities    117,275        9,388                            
Non interest bearing            1,500          -                                
liabilities                                                                     
Shareholders loans              -              35,512                           
Non-current provisions          35,444         -                                
Deferred taxation               253,562        -                                
                                                                                
CURRENT LIABILITIES             66,925         2,835                            
Trade and other payables        38,639         2,429                            
Current portion of non-current  23,297         406                              
liabilities                                                                     
Bank overdraft                  4,989          -                                
                                                                                
TOTAL EQUITY AND LIABILITIES    997,928        23,867                           
                                                                                
Number of shares in issue       411,810        * 60,000                         
(`000)                                                                          
Net asset value per share       127            (40)                             
(cents)                                                                         
Tangible net asset value per    (77)           (40)                             
share (cents)                                                                   
                                                                                
* The number of issued ordinary shares has been adjusted                        
retrospectively as a result of the consolidation of shares in                   
the current period                                                              
                                                                                
GROUP INCOME STATEMENT          Audited        Audited                          
18 months      12 months ended                   
                               ended          30 June 2006                      
                               31 Dec 2007    R`000                             
                               R`000                                            

Revenue                         88,060         -                                
Cost of sales                   (53,161)       -                                
                                                                                
Gross profit                    34,899         -                                
Other income                    2,514          146                              
Gain on debt restructure        30,762         -                                
Gain at acquisitions            105,248        -                                
Impairment of goodwill          (24,407)       -                                
Impairment of trade             (989)          -                                
receivables                                                                     
Operating expenses              (17,397)       (4,337)                          

Operating profit/(loss)         130,630        (4,191)                          
Investment income               490            568                              
Finance costs                   (7,247)        (95)                             

Profit/(loss) before taxation   123,873        (3,718)                          
Income tax expense              (8,730)        -                                
                                                                                
Profit/(loss) after taxation    115,143        (3,718)                          
Loss from discontinued          -              (7,500)                          
operations                                                                      
                                                                                
Net profit/(loss) for the       115,143        (11,218)                         
period                                                                          
Attributable to                                                                 
equity holders of the parent    115,143        (11,218)                         
Minority interest               -              -                                
                                                                                
Number of ordinary shares in    411,810        60,000                           
issue (`000)                                                                    
Weighted average number of      137,524        60,000                           
ordinary shares                                                                 
in issue (`000)                                                                 
Attributable earnings per                                                       
ordinary share (cents)                                                          
From continuing operations                                                      
Basic                           84             (19)                             
Dilutive                        -              -                                
From continuing and                                                             
discontinuing operations                                                        
Basic                           84             (19)                             
Dilutive                        -              -                                

Reconciliation between                                                          
earnings and headline                                                           
earnings                                                                        
Basic earnings per share        84             (19)                             
(cents)                                                                         
Impairment per share (cents)    18             13                               
Profit on debt restructure and  (99)           -                                
acquisitions (cents)                                                            
Headline earnings per share     3              (6)                              
(cents)                                                                         
                                                                                
GROUP STATEMENT Share    Share   Revaluat`n  Accumulated Total                  
OF CHANGES IN   capital  premium reserve     profit/loss R`000                  
EQUITY          R`000    R`000   R`000       R`000                              
                                                                                
Balance at 1    6,000    12,562  -           (31,212)    (12,650)               
July 2005                                                                       
Net                                          (11,218)    (11,218)               
profit/(loss)                                                                   
for the period                                                                  
                                                                                
Balance at 1    6,000    12,562              (42,430)    (23,868)               
July 2006                                                                       
Issue of new    34,000   34,000                          68,000                 
shares                                                                          
Loans converted 1,181    36,730                          37,911                 
to share                                                                        
capital                                                                         
Revaluation of                   146                     146                    
property, plant                                                                 
and equipment                                                                   
Transfer on                      (108)       108                                
revaluation                                                                     
reserve                                                                         
realised                                                                        

Revaluation of                   325,890                 325,890                
mineral rights                                                                  
                                                                                
Net                                          115,141     115,141                
profit/(loss)                                                                   
for the period                                                                  
                                                                                
Balance at 31   41,181   83,292  325,928     72,819      523,220                
December 2007                                                                   
                                                                                
GROUP CASH FLOW STATEMENT          Audited        Audited                       
18 months      12 months                      
                                  ended          ended                          
                                  31 Dec 2007    30 June 2006                   
                                  R`000          R`000                          

Cash flows from operating                                                       
activities                                                                      
Cash receipts from customers       85,156         -                             
Cash paid to suppliers and         (22,163)       (3,749)                       
employees                                                                       
Cash flow from operations          62,993         (3,749)                       
Interest and finance charges paid  (7,247)        (95)                          

                                                                                
NET CASH FROM OPERATING            55,746         (3,844)                       
ACTIVITIES                                                                      

Cash flows used in investing                                                    
activities                                                                      
Acquisition through business       (124,783)      -                             
combination                                                                     
Purchase of property, plant and    (51,137)       -                             
equipment                                                                       
Interest received                  490            568                           

NET CASH USED IN INVESTING         (175,430)      568                           
ACTIVITIES                                                                      
                                                                                
Cash flows from financing                                                       
activities                                                                      
Raising/(repayment) of long-term   107,282        (793)                         
liabilities                                                                     

NET CASH FROM FINANCING            107,282        (793)                         
ACTIVITIES                                                                      
                                                                                
Net increase/(decrease) in cash                                                 
and cash equivalents               (12,403)       (4,069)                       
Cash and cash equivalents at       8,993          13,062                        
beginning of period/year                                                        

CASH AND CASH EQUIVALENTS AT END   (3,410)        8,993                         
OF PERIOD/YEAR                                                                  
NOTES TO THE ANNUAL FINANCIAL STATEMENTS                                        
The principal accounting policies applied in the preparation of these financial 
statements have been applied consistently to all the years presented, unless    
otherwise stated.                                                               
Basis of preparation                                                            
These financial statements have been prepared in conformity with International  
Financial Reporting Standards on the historic cost basis except in the case of  
financial instruments which are measured using the fair value and amortised cost
models and certain classes of Property, Plant and Equipment and Mineral Rights  
which have been measured using the revaluation model.                           
The preparation of financial statements in conformity with IFRS requires        
management to make judgements, estimates and assumptions that affect the        
application of policies and reported amounts in the financial statements. The   
areas involving a higher degree of judgement or complexity, or areas where      
assumptions or estimates are significant to the financial statements, are       
disclosed in the notes.                                                         
Appointment of Company Secretary                                                
Further to the announcement of 25 June 2007, with effect from 14 March 2008,    
Sylvan CSI (Pty) Limited, was appointed as Company Secretary to SACMH.          
Annual general meeting                                                          
Notice is hereby given that the annual general meeting of SACMH shareholders    
will be held at the offices of Royal Bafokeng Holdings, 17 Fricker Rd, Illovo,  
Johannesburg on Wednesday 30 April 2008 at 10:00. The notice of the annual      
general meeting, together with the annual report containing the annual financial
statements of SACMH for the period ended 31 December 2007, will be issued on or 
before 31 March 2008.                                                           
For and on behalf of the board                                                  
Mirkwood                                                                        
18 March 2008                                                                   
TV Mokgatlha                   KJ Gribnitz                                      
Chairman                      Chief executive officer                           
Executive Directors: KJ Gribnitz, P Swanepoel                                   
Non Executive Directors: TV Mokgatlha, LM Ndala, WN Gardyne                     
Registered office : Mirkwood Estate, Plot 26, Klipkop JR 396                    
Transfer Secretaries: Computershare Investor Services 2004 (Pty) Ltd            
Sponsor: QuestCo Sponsors (Pty) Ltd                                             
Enquiries:                                                                      
Karl Gribnitz, CEO, SACMH: 011 748 2800                                         
Melanie Steyn, Group Executive, SACMH: 011 748 2800                             
Nicholas Williams, College Hill: 011 447 3030                                   
Date: 18/03/2008 12:28:01 Supplied by www.sharenet.co.za                     
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