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Sah - South African Coal Mining Holdings Limited - Reviewed Provisional Annual

Release Date: 01/04/2011 13:15:16      Code(s): SAH
SAH - South African Coal Mining Holdings Limited - Reviewed provisional annual  
results for the year ended 31 December 2010 and re-stated results for the years 
ended 31 December 2009 and 31 December 2008                                     
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")                                                      
REVIEWED PROVISIONAL ANNUAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2010 AND     
RE-STATED RESULTS FOR THE YEARS ENDED 31 DECEMBER 2009 AND 31 DECEMBER 2008     
The reviewed condensed annual results for the year ending 31 December 2010 as   
well as the restated annual results for the years ending 31 December 2009 and   
31 December 2008, are presented below.                                          
The re-statement of the 2009 and 2008 results relates to the group having valued
the estimated cost of rehabilitation of mining operations based on the estimated
value of final closure of operations only. Rehabilitation of existing operations
was completed as part of the continuous mining process. The estimated cost of   
rehabilitation of historical mining operations shortfalls in existence prior to 
the acquisition of the Umlabu Colliery as well as unrehabilitated operations in 
2008 were previously not valued by the group. These shortfalls have now been    
surveyed to establish the extent of the shortfall and previously reported       
figures have been restated to include the shortfall which was previously        
omitted. There has been no impact on the statement of comprehensive income for  
the 2009 financial year.                                                        
The estimated value of outstanding rehabilitation on acquisition of the Umlabu  
colliery was not accounted for on acquisition of the asset in 2007. The value of
the mining rights has been restated to reflect the estimated value of historical
rehabilitation as well as the liability.                                        
Re-statement of the value of mineral rights had the following effect on the     
financial statements:                                                           
R`000                              31 Dec 09    31 Dec 08     31 Dec 07         
Intangible assets as previously    419 399      370 370       377 725           
reported                                                                        
At acquisition rehabilitation now  8 144        8 144         8 340             
valued                                                                          
Re-stated intangible assets        427 543      378 514       386 065           
Re-statement of the rehabilitation cost had the following effect on the         
financial statements:                                                           
R`000                              31 Dec 09    31 Dec 08   31 Dec 07           
Non-current provisions as          34 431       34 431      35 444              
previously reported                                                             
Historical rehabilitation now      13 864       13 864      8 388               
valued                                                                          
Re-stated non-current provisions   48 295       48 295      43 832              
Re-statement of the deferred tax liability had the following effect on the      
financial statements:                                                           
R`000                              31 Dec 09    31 Dec 08  31 Dec 07            
Deferred taxation as previously    141 770      113 197    120 452              
reported                                                                        
Timing differences on              102          102        1 690                
rehabilitation now valued and                                                   
amortisation mineral rights                                                     
Re-stated deferred taxation        141 872      113 299    122 142              
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION                          
                             31 December     31 December   31 December          
2010            2009          2008                 
R`000                         Reviewed        Audited       Audited             
                                             (Restated)    (Restated)           
Assets                                                                          
Non-current assets            537 204         546 246       529 974             
Property, plant and           111 003         118 703       151 460             
equipment                                                                       
Intangible assets             421 666         427 543       378 514             
Investments                   4 535           -             -                   
                                                                                
Current assets                67 717          15 915        52 136              
Inventories                   44 286          -             15 320              
Trade and other receivables   17 957          6 850         22 106              
Tax receivable                                2 083                             
Cash and cash equivalents     5 474           6 982         14 710              
Total assets                  604 921         562 161       582 110             

Equity and liabilities                                                          
Capital and reserves          172 942         179 486       192 834             
Issued capital and premium    233 885         233 885       227 784             
Accumulated loss              (76 189)        (66 006)      (34 950)            
Shareholder`s loan (refer to  15 246          11 607        -                   
note 3)                                                                         
                                                                                
Non-current liabilities       372 644         240 456       268 867             
Interest bearing liabilities  176 562         50 289        107 273             
Non-interest bearing          46 600          -             -                   
liabilities                                                                     
Non-current provisions        45 839          48 295        48 295              
Deferred taxation             103 643         141 872       113 299             
                                                                                
Current liabilities           59 335          142 219       120 409             
Trade and other payables      27 066          11 511        46 500              
Short term borrowings         7 012           -             32 334              
Current portion of non-       20 137          130 708       24 856              
current liabilities                                                             
Current portion of            5 120                                             
provisions                                                                      
Current tax payable           -               -             16 719              
Total equity and liabilities  604 921         562 161       582 110             
Number of shares in issue     452 454         452 454       438 454             
(`000)                                                                          
Net asset value per share     38.22           39.67         43.98               
(cents)                                                                         
Tangible net asset value per  (31.83)         (31.99)       (18.70)             
share (cents)                                                                   
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME                        
                                        31 December     31 December 2009        
2010                                    
R`000                                                                           
                                        Reviewed        Audited                 
                                                                                
Revenue                                  18 810          38 520                 
Cost of sales                            (7 444)         (62 248)               
Gross profit/ (loss)                     11 366          (23 728)               
Other (losses) and gains                 (1 247)         114 520                
Foreign exchange gain                    3 780           -                      
Net impairment of assets                 385             (11 781)               
Loss on sale/scrapping of assets         (11 150)        (21 170)               
Depreciation                             (10 877)        (10 717)               
Amortisation of mining right             (1 340)         (1 471)                
Rehabilitation provision                 (296)           -                      
Operating expenses                       (24 984)        (22 771)               
Operating (loss)/income before finance   (34 363)        22 882                 
costs and taxation                                                              
Finance costs                            (11 683)        (25 019)               
Loss before taxation                     (46 046)        (2 137)                
Taxation                                 35 863          (28 919)               
Total comprehensive loss attributable to (10 183)        (31 056)               
ordinary shareholders                                                           
                                                                                
Weighted average number of shares in     452 454         438 454                
issue                                                                           
Basic and diluted loss per share         (2.25)          (7.08)                 
Gain on group restructure                -               (26.12)                
Impairments per share                    (0.09)          2.50                   
Loss on sale/scrapping of non-current    2.46            4.83                   
assets per share                                                                
Tax effects thereon                      (0.69)          7.31                   
Headline loss per share                  (0.56)          (18.56)                
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY                          
For the year ended 31 December 2010                                             
              Share     Share     Sharehol  Revaluation  Accumulated Total      
              Capital   Premium   ders      Reserve      loss        R`000      
R`000     R`000     loan      R`000        R`000                  
                                  R`000                                         
Restated       41 181    83 292    -         -            67 843*     192 316   
balance at 1                                                                    
January 2008                                                                    
Issue of       688       26 812    -         -            -           27 500    
ordinary                                                                        
shares under                                                                    
general                                                                         
authority                                                                       
Issue of       1 977     77 101    -         -            -           79 078    
ordinary                                                                        
shares under                                                                    
rights issue                                                                    
Share issue    -         (3 267)   -         -            -           (3 267)   
costs                                                                           
Restated net   -         -         -         -            (102 793)   (102      
loss for the                                                          793)      
year                                                                            
As previously  -         -         -         -            (98 710)    (98 710)  
reported                                                                        
Amortisation   -         -         -         -            (141)       (141)     
of mineral                                                                      
right                                                                           
Rehabilitatio  -         -         -         -            (3 942)     (3 942)   
n valued                                                                        
Restated       43 846    183 938   -                       (34 950)   192 834   
balance at 31                                                                   
December 2008                                                                   
Issue of       1 400     4 758     -         -            -           6 158     
ordinary                                                                        
shares                                                                          
Share issue    -         (57)      -         -            -           (57)      
costs                                                                           
Increase in    -         -         11 607    -            -           11 607    
equity loans                                                                    
Net loss for   -         -         -         -            (31 056)    (31 056)  
the year                                                                        
Restated       45 246    188 639   11 607    -             (66 006)   179 486   
balance  as                                                                     
at 31                                                                           
December 2009                                                                   
Increase in    -         -         3 639     -            -           3 639     
equity loans                                                                    
Net loss for   -         -         -         -            (10 183)    (10 183)  
the year                                                                        
Balance at 31  45 246    188 639   15 246    -            (76 189)    172 942   
December 2010                                                                   
*Retained earnings at 1 January 2008 previously reported as R69 582, have been  
restated to account for the change to rehabilitation provisions.                
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS                                  
For the year ended 31 December 2010                                             
R`000                                   31 December 2010   31 December          
                                       (Reviewed)         2009                  
                                                          (Audited)             
Cash flows from operations              (50 947)           3 801                
Net finance charges paid                (11 683)           (25 019)             
Taxation refunded/(paid)                2 083              (9 497)              
Net cash flow from operating            (60 547)           (30 715)             
activities                                                                      
Cash flows from investing activities                                            
Purchase of property, plant and         (13 172)           (10 083)             
equipment                                                                       
Increase in investments                 (4 535)                                 
Proceeds on disposal of property,       13                 -                    
plant and equipment                                                             
Net cash used in investing activities   (17 694)           (10 083)             
Cash from financing activities          -                  (57)                 
Share issue expenses                                                            
Net liabilities raised                  76 733             33 127               
Net cash from financing activities      76 733             33 070               
Net decrease in cash and cash           (1 508)            (7 728)              
equivalents                                                                     
Cash and cash equivalents at beginning  6 982              14 710               
of year                                                                         
Cash and cash equivalents at end of     5 474              6 982                
year                                                                            
CONDENSED SEGMENTAL ANALYSIS                                                    
R`000            Coal Mining      Equipment Leasing     Total                   
                2010   2009      2010           2009   2010    2009             
Continuing       -                                                              
operations                                                                      
External sales   -      33 136    18 810         5 384  18      38 520          
                                                       810                      
External revenue -      33 136    18 810         5 384  18      38 520          
                                                       810                      
Other gains and  (1     111 168   -              3 352  (1      114 520         
losses           247)                                   247)                    
Operating profit (48    (68 068)  15 505         (23    (33     (91 638)        
                621)                            570)   116)                     
Net finance      (11    (21 519)  (174)          (3     (11     (25 019)        
charges          509)                            500)   683)                    
Profit/(loss)    (61    21 581    15 331         (23    (46     (2 137)         
before tax       377)                            718)   046)                    
Income tax       35     (29 556)  -              637    35      (28 919)        
(expense) credit 863                                    863                     
Loss for the     (25    (7 975)   15 331         (23    (10     (31 056)        
year from        514)                            081)   183)                    
continuing                                                                      
operations                                                                      

Assets and                                                                      
liabilities                                                                     
Assets           542    483 320   62 660         78     604     562 161         
261                             841    921                      
Total assets     542    483 320   62 660         78     604     562 161         
                261                             841    921                      
Liabilities      (325   (223 112) (3 247)        (17    (328    (240            
089)                            691)   336)    803)             
Deferred tax     (103   (141 872) -              -      (103    (141            
liabilities      643)                                   643)    872)            
Total            (428   (364 984) (3 247)        (17    (431    (382            
liabilities      731)                            691)   979)    675)            
STATEMENT OF COMPLIANCE AND BASIS OF PREPARATION                                
The condensed financial statements have been prepared in accordance with the    
measurement and recognition criteria of the International Financial Reporting   
Standards (IFRS), the Companies Act of South Africa, the AC 500 standards as    
issued by the Accounting Practices Board or its successor  and the Listings     
Requirements of the JSE Limited. The financial statements are in accordance with
IAS34 Interim Financial Reporting, using accounting policies that have been     
consistently applied to the prior periods. These financial results have been    
reviewed by the company`s auditors, Deloitte & Touche.                          
Without qualifying their report, the auditors have reported an "emphasis of     
matter" that highlights that the Group`s going concern is dependent on JSW      
Energy Limited, (a company listed on the Mumbai stock exchange) and operating   
through its subsidiary JSW Natural Resources South Africa (Proprietary) Limited 
("JSW") supporting SACMH. JSW have confirmed their firm intention to continue   
their financial support to SACMH, in writing.                                   
COMMENTARY                                                                      
Following the investment in the group by JSW and the financial support received,
mining operations were resumed at Umlabu Colliery with effect from 1 October    
2010. Operations remain at an early stage with additional plant being           
commissioned during the last quarter of the financial year.                     
Stock of product has been established at Richards Bay Coal Terminal ("RBCT")    
utilising the group`s rail allocation which will allow for the export product in
the new financial year.                                                         
FINANCIAL REVIEW                                                                
1    Performance for the year ended 31 December 2010                            
    Turnover for the year is represented by rental income received from the     
    sidings owned by the group as well as the leasing of rail allocation. SACMH 
made use of the rail entitlement with effect from 1 October 2010 to         
    establish a stockpile of product at the RBCT. Subsequent to the year end    
    this product was sold profitably at an average price of $116.29 per ton.    
    51 951 tonnes of coal produced and acquired during the re-commencement of   
operations have been valued at cost including overheads.                    
    Costs incurred while the group was under care and maintenance have been     
    included in operating costs together with costs incurred as part of the     
    start-up of operations. Fixed assets at Ilanga which were vandalised and    
destroyed during the period that operations were suspended, have been       
    scrapped.                                                                   
    Due to the losses incurred by the group, no tax liability has been          
    incurred. The deferred tax liability previously reflected at R32 million on 
the group restructure has been reversed as it has been established that no  
    liability exists.                                                           
2    Asset Management                                                           
    Capital expenditure of R13.1 million was incurred during the year for the   
re-establishment of mining operations at the Umlabu Colliery.               
    RBCT Phase V allocation entitlement was increased to 70 000 tonnes a year   
    with effect from October 2010.                                              
    Mining rights have been amortised based on production volumes. The          
necessary rehabilitation costs have been provided for and includes full     
    mine closure and rehabilitation costs of all previous operations.           
3    Financing Activities                                                       
    JSW:                                                                        
$ 19 million was advanced to the group by JSW to fund the start-up of       
    operations. This loan is repayable after seven years and bears interest at  
    2.75% above the monthly USD LIBOR rate. The loan has also been sub-         
    ordinated by JSW in favour of The Standard Bank of South Africa Limited.    
Standard Bank of South Africa:                                              
    The loan from Standard Bank of South Africa has been restructured with      
    R70.0 million having been repaid. The balance of the loan is interest free  
    and is repayable in annual instalments over five years.                     
Conversion of Shareholder Loan:                                             
    Mainsail agreed to advance working capital to fund the care and maintenance 
    of the mine. The loan attracts interest at variable rates linked to prime   
    and will convert into ordinary shares at the 30-day weighted average share  
price, 90 days after the share suspension is lifted. As the suspension of   
    the listing on the JSE was only lifted on 25 March 2011, a calculation in   
    respect of this contingency cannot be made as yet.                          
EVENTS SUBSEQUENT TO THE REPORTING DATE                                         
The existing wash plant is being upgraded at an estimated cost of R18.9 million 
which will increase capacity to 200 tons per hour. The plant is expected to be  
fully commissioned by May 2011. Funding will be provided by JSW.                
Mining operations have been started on the Vlakfontein reserve and have also    
been resumed on the Mooifontein underground reserve.                            
The group`s suspension on the JSE was lifted on 25 March 2011.                  
CAPITAL EXPENDITURE COMMITMENTS                                                 
Over and above the R18.9 million committed to for the upgrade of the wash plant,
a further R13.9 million has been authorised. Funding of the expenditure will be 
made available by JSW.                                                          
CONTINGENCIES AND COMMITMENTS                                                   
There are no changes to previously reported contingencies and commitments other 
than as detailed below:                                                         
Rehabilitation Provisions:                                                      
Historical as well as the estimated final cost of rehabilitation have now been  
provided against in full.                                                       
PROSPECTS                                                                       
SACMH operations will allow for the full utilisation of all rail allocation     
which amounts to an annual capacity of 277,000 tonnes to RBCT during the next   
financial year. Additional export capacity is currently being investigated,     
which would allow the group to achieve a more sustainable operation.            
The API-4 index price of RBC1 coal has risen steadily since 2010. Indications   
are that it will remain above $100 per ton for the greater part of 2011.        
CHANGES TO DIRECTORATE                                                          
Messrs P J Kotze and K J Gribnitz resigned from the board on 26 February and 25 
March 2010, respectively, to pursue personal interests.                         
Mr V P Garg, a representative of JSW Energy Limited, India which had purchased a
49% shareholding in Royal Bafokeng Capital (Pty) Limited, a major shareholder of
the company was appointed to the board on 10 June 2010.                         
Mr G M Scrutton resigned as CEO of the company on 31 August 2010 and as a non-  
executive director on 1 February 2011.                                          
Mr D G A Miller was appointed CFO of the company with effect from 1 October     
2010.                                                                           
Mr A J L Rayment was appointed CEO of the company with effect from 1 December   
2010.                                                                           
Mr W N Gardyne, non-executive director of the company and who represented New   
Africa Mining Fund which has accepted the JSW offer to shareholders to acquire  
their shares, resigned as a director on 10 January 2011.                        
For and on behalf of the board                                                  
TV MOKGATLHA                                 AJL RAYMENT                        
Chairman                                             Chief Executive Officer    
1 April 2011                                                                    
Johannesburg                                                                    
Directors : TV Mokgatlha (Non-Executive Chairman), AJL Rayment (CEO), DGA Miller
(CFO) VP Garg (Non-Executive),Dr V Lickfold (Independent Non-Executive) LM Ndala
(Non-Executive)                                                                 
Registered Office :  2nd Floor, 198 Oxford Road, Illovo, Sandton                
Transfer Secretary :  Computershare Investor Services (Pty) Ltd                 
Sponsor :  Exchange Sponsors (2008) (Pty) Ltd                                   
Auditors : Deloitte & Touche                                                    
Date: 01/04/2011 13:15:15 Supplied by www.sharenet.co.za                     
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