Go Back Email this Link to a friend


Sah - South African Coal Mining Holdings - Interim Results For The Six Months

Release Date: 25/09/2008 12:16:02      Code(s): SAH
SAH - South African Coal Mining Holdings - Interim Results For The Six Months   
                   Ended 30 June 2008 And Cautionary Announcement               
South African Coal Mining Holdings Limited                                      
(Incorporated in the Republic of South Africa)                                  
Registration number 1994/009012/06                                              
Share code: SAH                                                                 
ISIN code: ZAE0000102034                                                        
("SACMH" or "the company")                                                      
INTERIM RESULTS                                                                 
for the six months ended 30 June 2008 and cautionary announcement               
HIGHLIGHTS                                                                      
* First six months of new Umlabu mine (Ilanga closed)                           
* New Chief Operating Officer appointed                                         
* Fraser Alexander Strategic Partnership implemented                            
* Average production 80 000 t per month run of mine                             
8 Earnings affected by beneficiation plant, set up delays and higher costs,     
particularly diesel, steel and blasting                                         
* Infrastructure upgrade at Umlabu commenced                                    
* R106,5 million equity raised to fund upgrades                                 
* Results not comparable with prior reporting periods due to restructuring and  
acquisitions                                                                    
Karl Gribnitz, Chief Executive, said:                                           
"We remain on track to increase our run of mine production to 150,000tpm by 2011
from the current 80 000tpm. We are making a major investment in the Umlabu mine 
both in skills and equipment to not only facilitate this increased production   
but also to realise greater efficiencies in our operations. The below budget    
plant yields during the start up time have been addressed and we are already    
seeing a significant improvement. We expect a much better performance in the    
second half."                                                                   
CONDENSED CONSOLIDATED BALANCE SHEET                                            
                                  Reviewed    Audited     *Restated             
as at       as at       as at                 
                                  30 June     31 December 30 June               
                                  2008        2007        2007                  
                                  R`000       R`000       R`000                 
Assets                                                                          
Non-current assets                 989 571     976 070     928 141              
Property, plant and equipment      148 128     135 440     87 511               
Intangible assets - mineral        841 082     840 630     840 630              
rights                                                                          
Deferred tax asset                 361         -           -                    
Current assets                     33 394      21 858      38 762               
Inventories                        18 745      7 891       2 784                
Trade and other receivables        11 672      12 387      23 426               
Cash and cash equivalents          2 977       1 580       12 552               
Total assets                       1 022 965   997 928     966 903              
Equity and liabilities                                                          
Capital and reserves               550 540     523 220     517 223              
Issued capital                     124 473     124 473     86 562               
Reserves                           352 640     325 928     361 890              
Retained earnings                  73 427      72 819      68 771               
Non-current liabilities            413 944     407 781     393 626              
Interest bearing liabilities       125 428     117 275     108 000              
Non-interest bearing liabilities   -           1 500       1 500                
Non-current provisions             35 668      35 444      35 444               
Deferred taxation                  252 848     253 562     248 682              
Current liabilities                58 481      66 927      56 054               
Trade and other payables           36 417      38 640      54 054               
Current portion of non-current     22 064      23 297      2 000                
liabilities                                                                     
Bank overdraft                     -           4 990       -                    
Total equity and liabilities       1 022 965   997 928     966 903              
Number of shares in issue (`000)   411 810     411 810     400 000              
Net asset value per share (cents)  133,69      127,05      129,31               
Tangible net asset value per       (70,55)     (77,08)     (80,85)              
share (cents)                                                                   
* The June 2007 figures have been restated to reflect the final results of the  
acquisitions of Ilanga and Umlabu in terms of IFRS 3 - Business Combinations.   
CONDENSED CONSOLIDATED INCOME STATEMENT                                         
                                  Reviewed    Audited     *Restated             
                                  6 months    18 months   6 months              
ended       ended       ended                 
                                  30 June     31 December 30 June               
                                  2008        2007        2007                  
                                  R`000       R`000       R`000                 
Revenue                            65 938      88 060      -                    
Cost of sales                      (49 625)    (53 161)    -                    
Gross profit                       16 313      34 899      -                    
Other income                       -           2 514       -                    
Gains and losses on debt           1 600       110 614     114 609              
restructure and acquisitions                                                    
Operating expenses                 (6 063)     (17 397)    (2 390)              
Operating profit                   11 850      130 630     112 219              
Investment income                  121         490         167                  
Finance costs                      (11 725)    (7 247)     -                    
Profit before taxation             246         123 873     112 386              
Taxation                           361         (8 730)     -                    
Profit after taxation              607         115 143     112 386              
Attributable to:                                                                
Equity holders of the parent       607         115 143     112 386              
Earnings per share                                                              
Number of ordinary shares in       411 810     411 810     400 000              
issue (`000)                                                                    
Weighted average number of         411 810     137 524     400 000              
ordinary shares in issue (`000)                                                 
Basic (cents per share)            0,15        83,73       28,10                
Diluted (cents per share)          0,15        83,73       28,10                
Reconciliation between earnings                                                 
and headline earnings per share                                                 
Basic (cents per share)            0,15        83,73       28,10                
Impairment per share (cents)       -           17,75       -                    
Profit on debt restructure and     (0,39)      (98,90)     (28,65)              
acquisitions (cents)                                                            
Tax effect                         -           -           -                    
Headline basic and dilutive        (0,24)      2,58        (0,55)               
(loss)/earnings per share                                                       
* The June 2007 figures have been restated to reflect the final results of the  
acquisitions of Ilanga and Umlabu in terms of IFRS 3 - Business Combinations.   
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY                           
                                                          Revalua-              
                                     Share       Share    tion                  
capital     premium  reserve               
                                     R`000       R`000    R`000                 
Balance at 1 July 2005                6 000       12 562   -                    
Net loss for the period                                                         
Balance 1 July 2006                   6 000       12 562   -                    
Net loss for the period                                                         
Balance at 1 January 2007             6 000       12 562   -                    
Issue of ordinary shares              34 000      34 000                        
Convertible instruments                                                         
Gain on revaluation of mineral                             325 890              
rights                                                                          
Restated net profit for the period                                              
Net profit as previously reported     -           -        -                    
IFRS 3 adjustment                     -           -        -                    
Balance at 1 July 2007                40 000      46 562   325 890              
Issue of ordinary shares              1 181       36 730                        
Gain on revaluation of property,                           145                  
plant and equipment                                                             
Transfer on revaluation reserve                            (107)                
realised                                                                        
Net loss for the period                                                         
Balance at 1 January 2008             41 181      83 292   325 928              
Proceeds from rights issue                                                      
Rights issue costs                                                              
Net profit for the period                                                       
Balance at 30 June 2008               41 181      83 292   325 928              
                                                                                
                                     Other       Retained                       
reserves    earnings Total                 
                                     R`000       R`000    R`000                 
Balance at 1 July 2005                -           (31 212) (12 650)             
Net loss for the period                           (11 219) (11 219)             
Balance 1 July 2006                   -           (42 431) (23 869)             
Net loss for the period                           (1 184)  (1 184)              
Balance at 1 January 2007             -           (43 615) (25 053)             
Issue of ordinary shares                                   68 000               
Convertible instruments               36 000               36 000               
Gain on revaluation of mineral                             325 890              
rights                                                                          
Restated net profit for the period                112 386  112 386              
Net profit as previously reported     -           131 202  131 202              
IFRS 3 adjustment                     -           (18 816) (18 816)             
Balance at 1 July 2007                36 000      68 771   517 223              
Issue of ordinary shares              (36 000)    -        1 911                
Gain on revaluation of property,                           145                  
plant and equipment                                                             
Transfer on revaluation reserve                   107      -                    
realised                                                                        
Net loss for the period                           3 941    3 941                
Balance at 1 January 2008             -           72 819   523 220              
Proceeds from rights issue            28 525               28 525               
Rights issue costs                    (1 813)              (1 813)              
Net profit for the period                         607      607                  
Balance at 30 June 2008               26 712      73 427   550 540              
CONDENSED CONSOLIDATED CASH FLOW STATEMENT                                      
                                 Reviewed    Audited     *Restated              
6 months    18 months   6 months               
                                 ended       ended       ended                  
                                 30 June     31 December 30 June                
                                 2008        2007        2007                   
R`000       R`000       R`000                  
Cash flows from operating                                                       
activities                                                                      
Receipts from customers           61 168      85 156      -                     
Payments to suppliers and         (46 379)    (62 011)    (2 760)               
employees                                                                       
Movement in working capital       (11 994)    39 848      7 143                 
Cash generated from operations    2 795       62 993      4 383                 
Interest and finance costs paid   (11 725)    (7 247)     -                     
Net cash (used in)/generated by   (8 930)     55 746      4 383                 
operations                                                                      
Cash flows from investing                                                       
activities                                                                      
Acquisition of subsidiaries       -           (124 783)   (166 831)             
Interest received                 121         490         -                     
Payments for property, plant and  (30 101)    (51 137)    -                     
equipment                                                                       
Proceeds from disposal of         11 932      -           -                     
property, plant and equipment                                                   
Net cash used in investing        (18 048)    (175 430)   (166 831)             
activities                                                                      
Cash flows from financing                                                       
activities                                                                      
Proceeds from issue of equity     -           -           68 000                
shares                                                                          
Proceeds from rights issue        28 525      -           -                     
Rights issue costs                (1 813)     -           -                     
Raising of borrowings             6 653       107 282     99 488                
Net cash generated by investing   33 365      107 282     167 488               
activities                                                                      
Net increase/(decrease) in cash   6 387       (12 402)    5 040                 
and cash equivalents                                                            
Cash and cash equivalents at      (3 410)     8 992       7 512                 
beginning of period                                                             
Cash and cash equivalents at end  2 977       (3 410)     12 552                
of period                                                                       
PRIOR PERIOD ADJUSTMENTS                                                        
                             As previously                                      
                             reported                    30 June                
                             30 June         IFRS 3      2007                   
2007            adjustments Restated               
                             R`000           R`000       R`000                  
Balance sheet                                                                   
Non-current assets            428 878         499 263     928 141               
Current assets                38 305          457         38 762                
Capital and reserves          (210 148)       (307 075)   (517 223)             
Non-current liabilities       (222 512)       (171 114)   (393 626)             
Current liabilities           (34 523)        (21 531)    (56 054)              
Income statement                                                                
Profit on debt restructure    30 762          -           30 762                
Profit on acquisitions        125 338         (17 084)    108 254               
Impairment on acquisitions    (22 675)        (1 732)     (24 407)              
Nett profit for the period    131 202         (18 816)    112 386               
Impact on earnings per share  32,80           (4,7)       28,10                 
Headline earnings per share   (0,55)          -           (0,55)                
SEGMENT REPORT                                                                  
Coal       Equipment                               
                              sales     rental      Consolidated                
                             R`000      R`000       R`000                       
30 June 2008                                                                    
Total revenue                 52 220     13 718      65 938                     
Operating profit              7 518      4 332       11 850                     
Net finance charges                                  (11 604)                   
Profit before tax                                    246                        
Assets                        979 311    43 654      1 022 965                  
Liabilities                   431 593    40 832      472 425                    
Capital expenditure           12 837     17 264      30 101                     
Depreciation                  1 647      3 382       5 029                      
Non-cash items                1 600      -           1 600                      
31 December 2007                                                                
Total revenue                 74 429     13 631      88 060                     
Other gains and losses        110 614    -           110 614                    
Operating profit              126 604    4 026       130 630                    
Net finance charges           -          -           (6 757)                    
Assets                        942 396    55 533      997 928                    
Liabilities                   435 575    39 133      474 708                    
Capital expenditure           83 813     41 003      124 816                    
Depreciation                  721        2 408       3 129                      
Non-cash items                110 614    -           110 614                    
30 June 2007                                                                    
Total revenue                 -          -           -                          
Other gains and losses        114 609    -           114 609                    
Operating profit              112 219    -           112 219                    
Net finance charges           -          -           167                        
Assets                        966 903                966 903                    
Liabilities                   449 680                449 680                    
Capital expenditure           73 680     -           73 680                     
Non-cash items                114 609    -           114 609                    
Introduction                                                                    
SACMH is a South African based coal mining and exploration holding company      
controlled by Royal Bafokeng Capital which is a broad-based black economic      
empowered entity. Its subsidiaries are involved in the business of coal         
production, exploration and marketing.                                          
Operational overview                                                            
The new Umlabu mine was in start up phase during the period under review and is 
now in a `stable state`, producing 80 000 tons run of mine ("ROM") per month.   
The mine broke even for the six months ended 30 June 2008.                      
Total tons mined and processed were below budget as a result of heavy rains in  
January and February, which affected the open cast mining and the beneficiation 
plant, as well as delays in plant set up and optimisation and operational       
management problems at the time. Total ROM production for the period was 486kt, 
with 260kt beneficiated and the remainder stockpiled. Yield averaged 35%.       
The following initiatives were agreed in May 2008 to improve Umlabu`s           
performance:                                                                    
- the replacement of the material handling and beneficiation plant contractor;  
- the appointment of a new Chief Operating Officer;                             
- the upgrade of the existing beneficiation plant and the approval of the       
construction of a new beneficiation plant;                                      
- a full review of the mine plan and optimisation of underground and open cast  
operations; and                                                                 
the commissioning of a new siding and related infrastructure at the Umlabu mine.
Fraser Alexander was accordingly appointed as the material handling and         
beneficiation contractor on 1 June 2008 and a new Chief Operating Officer, Peet 
Kotze, was also appointed.                                                      
Under the guidance of the new Chief Operating Officer, uneconomical mining      
operations, ineffective beneficiation methods and processes were ceased and cost
reduction strategies were implemented. Various refinements have been made to the
beneficiation plant and further modifications are planned which should be       
completed in the next 60 to 90 days. A marked plant process improvement has     
already been reported with product yields now averaging 45%. Further capex is   
planned to beneficiate `fines` which will further improve yields.               
The Group is confident that these changes will result in a marked improvement in
the performance of the Umlabu mine.                                             
The Group has started construction on the R67 million Umlabu siding (previously 
called New Voorslag), which will dramatically reduce the cost of road haulage   
and railage. In addition, a conveyor belt from the plant to the siding is       
planned and will further reduce costs of bulk materials handling and movement.  
Sales                                                                           
The 65kt tonnage sold through RBCT during the period was below expectations as  
it was affected not only by production levels but also by by the lack of        
availability of trains. A further 20kt was sold into Free on Rail contracts     
during the period.                                                              
Off-take from Eskom has not yet commenced, as all parties agreed to a trial     
period during which technical testing of the product would be conducted.        
Financial overview                                                              
Sales were lower than expected for the reasons set out above. The average       
realised price was also lower than the average spot price for the period of     
US116/t due to SACMH`s obligation to deliver into outstanding contracts on both 
FOB and FOR bases. These contracts have now been fulfilled, and SACMH will now  
be more directly exposed to spot prices for its beneficiated product.           
The gross profit margin was negatively affected by lower volumes, lower         
beneficiation yields during toll washing and delays in the configuration of the 
beneficiation plant. The increase in diesel prices, steel and explosive costs   
resulted in an increase in the mining costs for the period.                     
The comparatives for June 2007 were restated in compliance with IFRS 3,         
resulting in fair value adjustments for the acquisitions of Ilanga and Umlabu   
that were already reported (and audited) in the December 2007 Annual Financial  
Statements. This was as a result of the CPR report being finalised subsequent to
year end.                                                                       
Infrastructure upgrade                                                          
The infrastructure upgrade programme is expected to result in an increase in ROM
production capacity from 95ktpm to 150ktpm, of which 40ktpm is planned to be    
sold to Eskom, with the balance of 110ktpm (60ktpm finished products) processed 
in-house through the upgraded plant facility for the export market. This        
programme will also result in substantially enhanced operational efficiencies   
and cost savings. The company is currently at advanced stages of raising further
funding to complete the infrastructure upgrade.                                 
Exploration                                                                     
A full exploration programme is being rolled out on the Sterkfontein Prospecting
Right and the Kromkrans Prospecting Right areas. Findings of this programme will
be made available as soon as results are known.                                 
Outlook                                                                         
The current market price of USD138/t FOB should improve the profitability of    
SACMH as the company closes out its current contract obligations. The new       
management, investment in infrastructure and improved mining plans are also     
expected to result in a significant increase in volumes and reduced mining cost 
per ton.                                                                        
Management is confident that a significant improvement in performance can be    
expected in the second half of the year.                                        
Cautionary announcement                                                         
Shareholders are advised that the company has entered into negotiations which,  
if successfully concluded, may have a material effect on the price of the       
company`s securities. Accordingly, shareholders are advised to exercise caution 
when trading in SACMH securities until such time as a full announcement can be  
made.                                                                           
NOTES TO THE CONDENSED FINANCIAL STATEMENTS                                     
Basis of reporting                                                              
These interim financial statements have been prepared in accordance with the    
measurement and recognition criteria of International Financial Reporting       
Standards ("IFRS"), and its interpretations adopted by the International        
Accounting Standards Board ("IASB"), the preparation and disclosure requirements
of IAS 34 (Interim Financial Reporting), the Listings Requirements of the JSE   
Limited and Schedule 4 of the South African Companies Act. The accounting       
policies and methods of computation applied in these condensed financial        
statements are consistent with those used in the preparation of the financial   
statements for the period ended 31 December 2007.                               
Events after the balance sheet date                                             
On 21 July 2008, SACMH announced a rights offer and a general issue of shares   
for cash at an issue price of 400 cents per share. The company raised R106,5    
million through this capital raising process. The Group is actively seeking     
optimal and realistic acquisition opportunities, both brown and greenfields.    
Contingencies                                                                   
The summons against Ingwe Collieries instituted by the subsidiaries of SACMH    
(Jigmining No 1 (Pty) Limited and Jigmining No 3 (Pty) Limited) proceeded to    
mediation.                                                                      
Related parties                                                                 
Mkhulu Resources (Pty) Limited no longer qualifies as a related party with      
effect from 1 June 2008.                                                        
Capital commitments                                                             
Capital commitments as at 1 June 2008 relating to the capital upgrade programme 
were R70,2 million.                                                             
Review opinion                                                                  
The interim financial information relating to the six months ended 30 June 2008 
has been reviewed by Deloitte & Touche, whose unmodified review report is       
available for inspection at the company`s registered office.                    
For and on behalf of the board                                                  
TV Mokgatlha                       KJ Gribnitz                                  
Chairman                           Chief executive officer                      
Mirkwood                                                                        
25 September 2008                                                               
Executive directors: KJ Gribnitz, P Kotze, M Steyn                              
Non-executive directors: TV Mokgatlha, WN Gardyne, V Lickfold, LM Ndala         
Registered office: Mirkwood Estate, Plot 26, Klipkop JR 396                     
Transfer secretaries: Computershare Investor Services (Pty) Limited             
Sponsor: QuestCo Sponsors (Pty) Limited                                         
Auditors: Deloitte & Touche                                                     
Date: 25/09/2008 12:16:01 Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department                             .                  
The SENS service is an information dissemination service administered by the    
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or            
implicitly, represent, warrant or in any way guarantee the truth, accuracy or   
completeness of the information published on SENS. The JSE, their officers,     
employees and agents accept no liability for (or in respect of) any direct,     
indirect, incidental or consequential loss or damage of any kind or nature,     
howsoever arising, from the use of SENS or the use of, or reliance on,          
information disseminated through SENS.                                          



                                        
Email this JSE Sens Item to a Friend.

Send e-mail to
© 2017 SHARENET (PTY) Ltd, Cape Town, South Africa
Home     Terms & conditions    Privacy Policy
    Security Notice    Contact Details
Market Statistics are calculated by Sharenet and are therefore not the official JSE Market Statistics. The calculation/derivation may include underlying JSE data.