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Sah - South African Coal Mining Holdings Limited - Audited Results Of Sacmh

Release Date: 02/07/2010 17:00:01      Code(s): SAH
SAH - South African Coal Mining Holdings Limited - Audited results of SACMH     
and its subsidiaries ("The Group") for the years ended 31 December 2008 and 31  
December 2009 and renewal of cautionary announcement                            
South African Coal Mining Holdings Limited                                      
(Incorporated in the Republic of South Africa)                                  
Registration number 1994/009012/06                                              
Share code : SAH ISIN : ZAE0000102034                                           
("SACMH" or "the company")                                                      
AUDITED RESULTS OF SACMH AND ITS SUBSIDIARIES ("THE GROUP") FOR THE YEARS       
ENDED 31 DECEMBER 2008 AND 31 DECEMBER 2009 AND RENEWAL OF CAUTIONARY           
ANNOUNCEMENT                                                                    
31 Dec 09   31 Dec 08  31 Dec 07  31 Dec 07    
                                   Audited     Audited   Restated Previously    
                                                          Audited    Audited    
Statements of financial position as at 31 December 2009 (R`000)                 

Assets                                                                          
Non -current assets                 538 102     521 830    513 794    976 070   
Property, plant &                   118 703     151 460    136 069    135 440   
equipment                                                                       
Mining rights                       419 399     370 370    377 725    840 630   
                                                                                
Current assets                       15 915      52 136     21 858     21 858   
Inventories                               -      15 320      7 891      7 891   
Trade and other                       6 850      22 106     12 387     12 387   
receivables                                                                     
Taxation receivable                   2 083           -          -          -   
Cash and cash equivalents             6 982      14 710      1 580      1 580   
                                                                                
Total assets                        554 017     573 966    535 652    997 928   
                                                                                
Equity and liabilities                                                          
Capital and reserves                185 308     198 656    194 055    523 220   
Issued capital and                  233 885     227 784    124 473    124 473   
premium                                                                         
(Accumulated loss)/                (60 184)    (29 128)     69 582     72 819   
retained income                                                                 
Revaluation reserve                       -           -          -    325 928   
Share holder loans                   11 607           -          -          -   

Non-current liabilities             226 490     254 901    274 671    407 781   
Interest bearing                     50 289     107 273    118 775    118 775   
liabilities                                                                     
Non-current provisions               34 431      34 431     35 444     35 444   
Deferred taxation                   141 770     113 197    120 452    253 562   
                                                                                
Current liabilities                 142 219     120 409     66 926     66 927   
Trade and other payables             11 511      46 500     32 772     32 773   
Short term borrowings                     -      32 334      2 017      2 017   
Taxation Liability                        -      16 719      3 850      3 850   
Current portion non-                130 708      24 856     23 297     23 297   
current liabilities                                                             
Bank overdrafts                           -           -      4 990      4 990   
Total equity and                    554 017     573 966    535 652    997 928   
liabilities                                                                     

Number of shares in Issue           452 454     438 454    411,810    411 810   
(000`s)                                                                         
Net asset value per share             40.96       45.31      47.12     127.05   
(cents)                                                                         
Tangible net asset value            (28.91)     (15.51)    (17.96)    (17.96)   
per share  (cents)                                                              
                                                                                
Statement of comprehensive income for the periods ended 31 December 2008 and    
31 December 2009 (R`000)                                                        
                                 12 months   12 Months  18 Months  18 Months    
                               31 Dec 2009      31 Dec     31 Dec     31 Dec    
2008       2007       2007    
Revenue                              38 520     179 177     88 060     88 060   
Cost of Sales                      (62 248)   (148 072)   (53 161)   (53 161)   
Gross (loss) / profit              (23 728)      31 105     34 899     34 899   
Other gains and losses                    -       (712)      2 010      2 010   
Gain on restructuring               114 520           -     30 762     30 762   
Gain on acquisitions                      -           -    105 248    105 248   
Impairment of assets               (11 781)    (63 008)   (25 396)   (25 396)   
Loss from sale of non              (21 170)           -                         
current assets                                                                  
Depreciation and                   (12 188)    (24 460)    (6 404)    (3 128)   
amortisation                                                                    
Rehabilitation provision                  -       1 103          -          -   
release                                                                         
Operating expenses                 (22 771)    (25 529)   (13 765)   (13 765)   
Operating income / (loss)            22 882    (81 501)    127 354    130 630   
Finance income                            -       1 397        490        490   
Finance costs                      (25 019)    (25 861)    (7 247)    (7 247)   
(Loss) / income before              (2 137)   (105 965)    120 597    123 873   
taxation                                                                        
Taxation                           (28 919)       7 255    (8 730)    (8 730)   
Total comprehensive                (31 056)    (98 710)    111 867    115 143   
(loss)/income for the                                                           
period                                                                          

Weighted average shares             438 454     422 438    137 524    137 524   
in issue                                                                        
Basic earnings per share             (7.08)     (23.37)      81.34      83.73   
Gain on restructure per             (26.12)           -    (98.94)    (98.94)   
share                                                                           
Impairments per share                  2.50        9.93      18.47      18.47   
Loss on sale of non-                   4.83           -          -          -   
current assets per share                                                        
Tax effects thereon                  (7.31)           -          -          -   
Headline earnings per               (18.56)     (13.44)     (0.87)       3.26   
share                                                                           

                                                                                
Statement of cash flows for the periods ended 31 December 2008 and 31           
December 2009 (R`000)                                                           
12 months   12 Months  18 Months  18 Months    
                               31 Dec 2009      31 Dec     31 Dec     31 Dec    
                                                  2008       2007       2007    
Cash flow from operations             3 801     (6 657)     62 993     62 993   
Net finance charges paid           (25 019)    (24 464)    (6 757)    (6 757)   
Taxation paid                       (9 497)           -          -          -   
Net cash flow from                 (30 715)    (31 121)     56 236     56 236   
operating activities                                                            
Cash flows from investing                                                       
activities                                                                      
Acquisition of                            -           -  (124 783)  (124 783)   
subsidiaries                                                                    
Purchase of property,              (10 083)    (98 371)   (51 137)   (51 137)   
plant and equipment                                                             
Purchase of intangibles                   -     (2 808)          -          -   
Disposal of property,                     -      26 735          -          -   
plant and equipment                                                             
Net cash used in                   (10 083)    (74 444)  (175 920)  (175 920)   
investing activities                                                            
Cash flow from financing                                                        
activities                                                                      
Net proceeds from share                (57)      99 811          -          -   
issue                                                                           
Movement in borrowings               16 133     (6 443)    107 281    107 281   
Movement in short term               16 994      30 317          -          -   
borrowings                                                                      
Net cash from financing              33 070     123 685    107 281    107 281   
activities                                                                      
Net (decrease) / increase           (7 728)      18 120   (12 403)   (12 403)   
in cash                                                                         
Cash at the beginning of             14 710     (3 410)      8 993      8 993   
the period                                                                      
Cash at the end of the                6 982      14 710    (3 410)    (3 410)   
period                                                                          
                                                                                
Consolidated statement of changes in equity for the years ended 31 December     
2008 and 31 December 2009                                                       
                             Share   Share   Equity     Accumulated     Total   
                           Capital Premium     Loan            Loss             
Balance at 30 June 2006       6 000  12 562        -        (42 285)  (23 723)  
Issue of ordinary shares     35 181  70 730        -               -   105 911  
Restated comprehensive                                       111 867   111 867  
income                                                                          
- As previously reported         -       -        -         115 142   115 142   
- Amortisation of mineral        -       -        -         (3 275)   (3 275)   
right                                                                           
                                                                                
Balance at 31 December       41 181  83 292        -          69 582   194 055  
2007                                                                            
Issue of ordinary shares      2 665 103 913        -               -   106 578  
Share issue costs                 - (3 267)        -               -   (3 267)  
Total comprehensive loss          -       -        -        (98 710)  (98 710)  
for period                                                                      
Balance at 31 December       43 846 183 938        -        (29 128)   198 656  
2008                                                                            
Issue of ordinary shares      1 400   4 758        -               -     6 158  
Share issue costs                 -    (57)        -               -      (57)  
Increase in equity loans          -       -   11 607               -    11 607  
Total comprehensive loss          -       -        -        (31 056)  (31 056)  
for period                                                                      
Balance at 31 December       45 246 188 639   11 607        (60 184)   185 308  
2009                                                                            
Restructuring and results of the Group`s strategic equity partner search        
During May 2010, JSW Energy Limited of India ("JSW") acquired 49.8% of SACMH`s  
controlling company Royal Bafokeng Capital (Pty) Ltd ("RBC") and made a firm    
intention to make an offer to other minorities at 30 cents a share and have     
provided the SRP with the required guarantees. In addition, JSW has committed   
to providing the working capital to restart the mine and to return the Group    
to a going concern position. Based on the JSW commitments, the directors are    
of the opinion that the financial statements fairly present the financial       
position the Group at 31 December 2009 and the results of their operations and  
cash flows for the year then ended.                                             
Statement of compliance and basis of preparation                                
The annual financial statements have been prepared in accordance with           
International Financial Reporting Standards, the Companies Act of South Africa  
and the Listings Requirements of the JSE Limited. The accounting policies used  
to prepare the financial statements have been consistently applied to all       
periods presented. These financial results have been audited by the company`s   
auditors, Deloitte & Touche.                                                    
Audit opinion                                                                   
Without qualifying their report, the auditors have reported an "emphasis of     
matter" that highlights that the Group`s going concern is dependent on JSW      
investing into SACMH, restructuring the Standard Bank loans and recommencing    
operations. JSW have indicated their firm intention to provide CAPEX funding    
of R25 million (of the estimated R65 million required) in the short term and    
R40 million of working capital to restart the operations at the mine in the     
next few months. A copy of their audit report is available for inspection at    
the company`s registered office.                                                
Review of Operations and Restructuring                                          
The 2009 results above reflect three months of trading and the results of the   
"Care and Maintenance" for the remaining nine months where assets such as the   
two sidings (Blinkpan and Umlabu) were utilised to generate income.             
Subsequent to the year end the price of export coal has increased from an       
average $55/ton to $93/ton.                                                     
The R114 million "Gain on Restructuring" reflects the result of the schemes of  
arrangements and places the Group in a viable state to re employ staff and      
restart operations once the required working capital has been transferred.  A   
deferred taxation liability of R32.1 million was raised against this gain       
The loss from sale of non-current assets of R21.1 million includes R10.3        
million resulting from BHP Billiton serving formal notice on the Group to       
remove its equipment from the Koornfontein site as part of their sale of this   
operation to third parties. The balance of the loss is as a result of the       
return of equipment on cancellation of the lease agreements as part of the      
restructuring process.                                                          
Depreciation and amortisation is significantly less than the previous year as   
a result of the mining right not being amortised while the mine was under care  
and maintenance.                                                                
Savings in operating costs have been off-set by bad debts of R4.6 million and   
restructuring legal and technical fees of R5.5 million.                         
There has been no change in the rehabilitation provision as a result of the     
rehabilitation being done at the Umlabu site during the "Care and Maintenance"  
period and an adjustment of the Ilanga provision from a "new licence            
application basis" to a "mine closure basis".                                   
The RBCT Phase V allocation was formally awarded on 15 December 2009 and has    
been accounted for in the results for the period. R50.5 million of the amount   
due will be paid as allocation is made available, while R5 million is           
reflected under the current portion of non-current liabilities. This            
allocation is subject to the conditions precedent that the allocation is mined  
from the Umlabu mine and delivered via the Umlabu siding. An additional         
condition is that the BBBEE status of SACMH remains unchanged for another       
year.                                                                           
The bulk of the additions to property, plant and equipment during the year      
were improvements to the Blinkpan siding and the new Parnaby plant acquired.    
The company issued 14 million shares to a secured creditor for a portion of     
their claim as part of the restructuring plan. Shareholder loans reflected on   
the balance sheet of R11.6 million will subsequently be converted into such     
number of ordinary shares in SACMH as may arise by dividing the loans plus      
interest by the 30 trading day volume weighted average price of SACMH per       
share on the JSE, three months after SACMH has first received funds from its    
new strategic equity partner.                                                   
The entire Standard bank loan of R128 million has been reflected on the         
balance sheet under current liabilities due to it being in default. JSW is      
currently in negotiations with Standard Bank to settle the loan on the basis    
that the Group borrows R70 million from JSW in terms of a dollar denominated    
loan with an interest rate linked to LIBOR. The Group will then settle R70      
million of the loan, while the balance will be repaid over a five year period.  
Summary of restatements to the 2007 financial period                            
As previously announced on SENS in April 2009, the Group changed its            
accounting policy for mineral rights and therefore restated the 2007 financial  
statements which also incorporated a number of other small amendments.  Set     
out below is a summary of the major changes:                                    
As at 31 December  Intangible Revaluation   Deferred    Income     Tax     Net  
2007                   Assets     Reserve        Tax Statement  impact  income  
                                          liability    impact          impact   
As previously         840 630     325 928    253 562         -       -       -  
reported                                                                        
Change in           (459 000)   (325 890)  (133 110)         -       -       -  
accounting policy                                                               
-intangible                                                                     
assets (1)                                                                      
amortisation of       (3 275)           -          -     3 275       -   3 275  
mineral rights                                                                  
(2)                                                                             
Reclassification        (630)           -          -         -       -       -  
Restated balance      377 725          38    120 452     3 275       -   3 275  
                                                                                
As at 31 December      Assets  Tax impact        Net                            
2007                                          income                            
                                             impact                             
Property, plant       135 440           -          -                            
and equipment                                                                   
Reclassification          629           -          -                            
Restated balance      136 069           -          -                            
as at 31 December                                                               
2007                                                                            
    Notes:                                                                      
    (1)  Change in accounting policy for the mineral rights                     
         The group changed its accounting policy for the valuation of mineral   
rights.  These assets were previously re-valued using the              
         revaluation model and the surplus portion shown as non distributable   
         reserves.  The board has changed the accounting policy to the          
         historical cost basis to enhance industry compatibility.  The 2007     
results have been restated to reflect this change in accounting        
         policy.                                                                
    (2)  Amortisation of mineral rights                                         
         The mineral rights were not amortised during the 2007 financial        
year, which numbers have been restated to include the amortisation     
         charge of R3.3 million.                                                
    Contingencies and Commitments                                               
1.   Ingwe Collieries Ltd (Contingent asset)                                    
The Group issued a summons against BHP`s Ingwe Collieries where damages     
    were claimed as a result of repudiation and breach of contract by Ingwe     
    Collieries Ltd ("Ingwe"). Ingwe`s counterclaim has since prescribed. The    
    summons submitted totals approximately R48 million. Commercial solutions    
to this dispute will be sought once mining operations commence.             
2.   Commitment to deliver coal                                                 
    As part of the restructuring, the SACMH subsidiary, SACM Breyten, has       
    cancelled a contract to deliver 65 000 tons of coal. This contingent        
creditor has applied to the Court to have the SACM Breyten compromise       
    overturned. No claim amounts have been communicated, however, the           
    claimant voted against the compromise at the meeting of creditors in the    
    amount of R25 million. While this creditor voted against the motion, the    
required majority of creditors voted for and approved the scheme.           
    Provision for this potential claim has been made in the compromise with     
    creditors and the matter awaits the Court`s formal sanction.                
3.   Mkhulu Resources (Pty) Ltd ("Mkhulu")                                      
In March 2009 the Group formally put this contractor in breach of the       
    outsourced mining contract.  Both parties have intimated claims against     
    each other in excess of R30 million.  The contractor has since been         
    liquidated, the scheme of arrangement has been approved by the Court and    
the liquidators of Mkhulu have made no claims. As a result, the board       
    believes that no exposure will materialise. The Mkhulu liquidators have     
    also notified SACMH that they will seek to set aside the acquisition of     
    certain assets acquired from Mkhulu for R3 million. As this acquisition     
was advertised in terms of Section 34 of the Insolvency Act and fair        
    value was paid, the board is of the opinion that this acquisition cannot    
    be set aside and no provision for any loss has been raised in this          
    regard.                                                                     
Change in Directors                                                             
Subsequent to year-end Mr VP Garg of JSW, was appointed to the board in June    
2010 and both Messers P Kotze and K Gribnitz resigned from the board to pursue  
personal interests.  The board would like to thank them for their contribution  
during this difficult restructure period and wishes them well in their future   
endeavours.                                                                     
Renewal of Cautionary Announcement                                              
Shareholders are referred to the announcements released on SENS on 30 March     
2010 and 20 May 2010, regarding offers and proposals received by the board.     
The process is still ongoing and shareholders are accordingly advised to        
continue exercising caution when dealing in the company`s securities until a    
further announcement is made.                                                   
For and on behalf of the board                                                  
TV MOKGATLHA                                 GM SCRUTTON                        
Chairman                                     Chief Executive Officer            
2 July 2010                                                                     
Johannesburg                                                                    
Directors : TV Mokgatlha (Chairman), VP Garg (Non-Executive), WN Gardyne (Non-  
Executive), LN Ndala (Non-Executive), Dr V Lickfold (Non-Executive), GM         
Scrutton (CEO)                                                                  
Registered Office :  Mirkwood Estate, Farm Klipkop JR396, Gauteng               
Transfer Secretary :  Computershare Investor Services (Pty) Ltd                 
Sponsor :  Exchange Sponsors (2008) (Pty) Ltd                                   
Auditors : Deloitte & Touche                                                    
Date: 02/07/2010 17:00:01 Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department                             .                  
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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.                                          



                                        
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