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Sah - South African Coal Mining Holding Limited - Unaudited Results Of

Release Date: 07/10/2011 14:54:02      Code(s): SAH
SAH - South African Coal Mining Holding Limited - Unaudited results of          
SACMH and its subsidiaries for the 6 months ended 30 June 2011                  
South African Coal Mining Holding Limited                                       
(Incorporated in the Republic of South Africa)                                  
Registration number 1994/009012/06                                              
Share code: SAH ISIN : ZAE0000102034                                            
("SACMH" or "the company")                                                      
UNAUDITED RESULTS OF SACMH AND ITS SUBSIDIARIES ("THE GROUP") FOR THE           
6 MONTHS ENDED 30 JUNE 2011                                                     
                                         Unaudited                              
                                         &         Audited                      
Unaudited    Restated  as at 31                     
Consolidated statement of    as at 30     as at 30  December                    
financial position           June 2011    June 2011 2010                        
Assets                                                                          
Non-current assets           557 223      541 372   537 204                     
Property, Plant & Equipment  134 171      113 829   111 003                     
Intangibles                  418 517      427 543   421 666                     
Investments                  4 535        -         4 535                       

Current assets               47 555       12 378    67 717                      
Inventories                  17 463       -         44 286                      
Trade and other receivables  22 267       2 330     17 957                      
Cash and cash equivalents    7 825        10 048    5 474                       
                                                                                
Total assets                 604 778      553 750   604 921                     
                                                                                
Equity and liabilities                                                          
Capital and reserves         139 246      165 238   173 166                     
Issued capital               233 885      233 885   233 885                     
Retained loss                (94 639)     (83 153)  (75 965)                    
Shareholders` loans          -            14 506    15 246                      
                                                                                
Non-current liabilities      416 490      236 819   372 420                     
Interest bearing             220 611      46 723    176 562                     
liabilities                                                                     
Non-interest bearing         46 600       -         46 600                      
liabilities                                                                     
Non-current provisions       47 027       50 595    45 772                      
Deferred taxation            102 252      139 501   103 486                     
                                                                                
Current liabilities          49 042       151 693   59 335                      
Trade and other payables     24 372       12 307    27 066                      
Short term borrowings        -            -         7 012                       
Current portion of interest  19 550       139 386   20 137                      
bearing liabilities                                                             
Current portion of           5 120        -         5 120                       
provisions                                                                      
                                                                                
Total equity and             604 778      553 750   604 921                     
liabilities                                                                     

Number of shares in issue    452 454      452 454   452 454                     
(`000)                                                                          
Net asset value per share    30.78        36.52     38.27                       
Net tangible asset value     (38.67)      (40.86)   (31.78)                     
per share                                                                       
Consolidated statement of      Unaudited  Unaudited Audited                     
comprehensive income (R`000)   6 months   6 months  12 months                   
30 June    30 June   31 Dec                       
                              2011       2010      2010                         
                                                                                
Revenue                        174 247    5 093     18 810                      
Cost of sales                  (159 309)  (538)     (7 444)                     
Gross profit                   14 938     4 555     11 366                      
Other losses                   (1 288)              (1 247)                     
Foreign exchange gain          601                  3 781                       
Net impairment of assets       -                    385                         
Loss on sale/scrapping of      -                    (11 150)                    
asset                                                                           
Depreciation                   (6 931)    (4 873)   (10 877)                    
Amortisation of mining rights  (3 149)              (1 340)                     
Rehabilitation provision       (1 255)              (296)                       
Operating expenses (see note   (15 801)   (4 836)   (24 985)                    
8)                                                                              
Operating loss before finance  (14 087)   (5 154)   (34 363)                    
costs and taxation                                                              
Finance costs                  (5 816)    (12 065)  (11 683)                    
Loss before taxation           (19 903)   (17 219)  (46 046)                    
Taxation                       1 229      -         36 015                      
Total comprehensive loss                                                        
attributable to ordinary       (18 674)   (17 219)  (10 031)                    
shareholders                                                                    

Headline loss                                                                   
Weighted average shares in     452 454    452 454   452 454                     
issue (R`000)                                                                   
Basic loss per share (cents)   (4.13)     (3.81)    (2.21)                      
Headline loss per share        (4.13)     (3.81)    (0.53)                      
(cents)                                                                         
                                                                                
Unaudited  Unaudited Audited                      
                              6 months   6 months  12 months                    
Consolidated statement of      30 June    30 June   31 Dec                      
cash flow                      2011       2010      2010                        

Cash flow from operations      17 064     5 037     (50 164)                    
Net finance charges            (5 816)    (12 065)  (11 683)                    
Taxation refunded/(paid)       (5)        2 083     2 083                       
Net cash flow from operating   11 243     (4 945)   (59 765)                    
activities                                                                      
Cash flow from investing                                                        
activities                                                                      
Purchase of property, plant    (30 097)   -         (13 942)                    
and equipment                                                                   
Increase in investment         -          -         (4 535)                     
Net cash utilised in           (30 097)   -         (18 477)                    
investing activities                                                            
Cash from financing                                                             
activities                                                                      
New liabilities raised         21 205     8 011     76 734                      
Net cash from financing        21 205     8 011     76 734                      
activities                                                                      
Net decrease in cash and cash  2 351      3 066     (1 508)                     
equivalent                                                                      
Cash and cash equivalent at                                                     
the beginning of the year      5 474      6 982     6 982                       
Cash and cash equivalent at                                                     
the end of the year            7 825      10 048    5 474                       

Consolidated         Share    Share   Shareholder  Accumulated                  
statement of changes capital  premium loan         loss        Total            
in equity (R`000)                                                               
Balance at 1 January 45 246   188 639 11 607       (65 934)    179              
2010                                                           558              
Increase in equity                    3 639                    3 639            
loans                                                                           
Total comprehensive                                                             
loss attributable to                                                            
ordinary                                           (10 031)    (10              
shareholders                                                   031)             
Balance at 31        45 246   188 639 15 246       (75 965)    173              
December 2010                                                  166              
Transfer to interest                                                            
bearing liabilities                   (15 246)                 (15              
246)              
Total comprehensive                                                             
loss attributable to                                                            
ordinary                                           (18 674)    (18              
shareholders                                                   674)             
Balance at 30 June   45 246   188 639 -            (94 639)    139              
2011                                                           246)             
Statement of compliance and basis of preparation                                
The condensed financial statements have been prepared in accordance             
with International Financial Reporting Standards (IAS34 Interim                 
financial reporting and AC500 standards as issued by the Accounting             
Practice Board), 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 not been reviewed or            
audited by the company`s auditors, Deloitte & Touche.                           
The financial statements have been prepared on the going concern basis          
taking into account JSW Energy Limited, (a company listed on the                
Mumbai stock exchange and operating through its subsidiary JSW Natural          
Resources South Africa (Proprietary) Limited)("JSW"), continues to              
support SACMH as reflected in the Annual Report issued in July 2011.            
Commentary                                                                      
1.   Restatement of comparative figures                                         
    The financial position at 30 June 2010 has been restated to                 
reflect the estimated cost of rehabilitation of historical mining           
    operation shortfalls in existence prior to the acquisition of               
    Umlabu Colliery as well as historical shortfalls not previously             
    valued by the company. These have no impact on the performance              
for the 6 months period to 30 June 2010. The net effect of the              
    restatement is to increase the net tangible asset value at 30               
    June 2010 by R5.7 million.                                                  
    These changes were effected in the 31 December 2010 results and             
reported in the company`s annual report.                                    
2.   Performance for the 6 months to 30 June 2011                               
    2.1 Mining Performance                                                      
    Open cast and underground mining activities continued to be in              
ramp-up phase during these 6 months, with monthly ROM levels,               
    increasing from 13,406 tons per month to 76,864 tons (2010: Nil)            
    in June 2011.                                                               
    High strip ratios and difficulties with the underlying geology              
continued to plague the mining operations, resulting in a higher            
    cost per ton and lower ROM volumes than originally anticipated.             
    The new management instituted a comprehensive review of the                 
    resource to obtain more detailed geological information and                 
improve the geoscientific confidence in the resource. This has              
    resulted in a comprehensive drilling programme and consequent               
    detailed new life of mine plan being prepared which will be                 
    completed during the month of October.                                      
The open cast mining operations are contracted to Megacube and to           
    STA for the underground operations.                                         
    2.2 Production Performance                                                  
    During the period the wash plant was upgraded to a 200 t.p.h                
facility with a spiral and centrifuge component.                            
    A total of 139,477 tons (2010: Nil) was produced from operations,           
    during this period with and average yield of 52 %, the underlying           
    resource, inter alia, constraining yield to below than expected             
levels for the period.                                                      
    ROM has been processed to a RB1 specification during the period,            
    save for the products inherent sulphur levels which are between             
    1.0% and 1.2% on average, which is consistent with expectations             
from the reserve.,                                                          
    2.3 Health and Safety                                                       
    The company managed to achieve a 0 Lost Time Injury Frequency               
    Rate during the period, and continues to have a key focus on                
maintaining this standard and achievement.                                  
    2.4 Management                                                              
    During the period, management decided to effect changes to the              
    operations and mining teams; Phillip Buckle was appointed as the            
mine manager and Roelof Hugo as Chief Operating Officer (                   
    subsequent to the period in review ), replacing previous                    
    incumbents.  Both Philip and Roelof have significant experience             
    in the industry; we believe they will add meaningful value to the           
company`s operations and in particular in improving the mining              
    and operational controls and systems.                                       
3.   Logistics                                                                  
    The Companys rail allocation to Richards Bay Coal Terminal (RBCT)           
in terms of the Quattro allocation scheme administrated by the              
    Department of Minerals and Resources (DMR) was reduced to 157,000           
    tons (2010: 207,000 tons) resulting in a total rail allocation of           
    227,000 tons (2010: 257,000 tons) of rail allocation being                  
available. The company is concerned about this reduction and has            
    made representation on this matter to DMR.  The impact of                   
    reducing allocation at this stage of the company`s life is                  
    effectively to significantly constrain future export potential              
and concomitant profitability. Production in excess of the RBCT /           
    Quattro Channel is being shipped through an alternative export              
    channel.   Additional export channels are being explored, in                
    addition to inland market opportunities.                                    
4.   Revenue                                                                    
A total of 204,304 tons (2010: Nil) of product was sold on the export           
market during the period, representing R171 million (2010: Nil) of              
total turnover.                                                                 
5.   Asset Management                                                           
    Capital expenditure of R30 million was incurred during the year.            
    The upgraded wash plant was fully commissioned at a cost of R12             
    million during the year and development of the Vlakfontein open             
cast reserve was completed together with the recommencement of              
    mining operations on the Mooifontein underground section at a               
    cost of R14.5 million. No further major capital commitments were            
    approved.                                                                   
Mining rights were amortised based on production volumes. The               
    necessary rehabilitation costs have been provided for and include           
    full mine closure and the rehabilitations of previous operations.           
6.   Updated Statement of Reserves and Resources and Prospects                  
As an integral part of the aforementioned resource evaluation               
    programme, the company is in the process of updating the                    
    statement of reserves and resources; this is expected to be                 
    issued by the end of October. Once the statement is complete,               
details of the company`s future prospects will be made available.           
7.   Financing Activities                                                       
    JSW                                                                         
    During the year a further R21.2 million was advanced by JSW to              
finance the upgrades to the wash plant and to supplement working            
    capital requirements.                                                       
    Standard Bank of South Africa                                               
    The company formalised banking facilities with the Standard Bank            
of South Africa over and above the existing term loan of R58                
    million previously in existence.                                            
8.   Taxation                                                                   
    Due to the losses incurred during the period no income tax                  
liability was incurred. A reduction in the deferred tax provision           
    of R1.2 million (2010: Nil) was recorded.                                   
    Mining Royalty tax of R1.9million (2010: nil) has been included             
    in operating expenses.                                                      
Condensed Segmental Analysis                                                    
Segmental information has not been prepared as more than 90% of the             
company`s operations relate to its mining activities.                           
Post Balance Sheet Events                                                       
The following events occurred after the balance sheet date:                     
    1.   Mainsail Shareholder Loan                                              
    The shareholder loan of R15,8 million by Mainsail Trading 55                
    (Pty) Limited was acquired by JSW, which has elected not to                 
convert the loan to equity, and the loan has been reclassified to           
    an interest bearing liability. The loan will continue to bear               
    interest at the prime overdraft rate.                                       
    2.   Mining Activities                                                      
An independent investigation which may include a forensic                   
    investigation is currently being undertaken into certain of the             
    company`s mining activities over the period.   Shareholders will            
    be informed of the outcome of the investigation.                            
Capital Expenditure Commitments                                                 
No material commitments have been approved.                                     
Contingencies and Commitments                                                   
There has been no change in the previously disclosed contingent assets          
and liabilities.                                                                
Changes to Directorate                                                          
Dr V Lickfold, an independent non-executive director was required to            
retire by rotation at the annual general meeting held on 18 August              
2011 and advised that she would not seek re-election.                           
Mr L M Ndala, a non-executive director and audit committee chairman,            
resigned with effect from                                                       
31 August 2011.                                                                 
The board wishes to extend its appreciation to both Dr Lickfold and Mr          
Ndala for their invaluable contributions to the board over the past             
years.                                                                          
Change of address                                                               
The company relocated from 2nd Floor, 198 Oxford Road to 3rd Floor,             
198 Oxford Road on 30 September 2011.                                           
For and behalf of the board                                                     
TV MOKGATLHA   AJL RAYMENT                                                      
Chairman       Chief Executive Officer                                          
7 October 2011                                                                  
Johannesburg                                                                    
Directors : TV Mokgatlha (Chairman), AJL Rayment (Chief Executive               
Officer), VP Garg (Non-Executive), DGA Miller (Chief Financial                  
Officer)                                                                        
Registered Office : 3rd Floor, 198 Oxford Road, Illovo, Sandton,                
Gauteng                                                                         
Company Secretary: Mrs P F Smit                                                 
Transfer Secretary : Computershare Investor Services (Pty) Ltd                  
Sponsor : Exchange Sponsors (2008) (Pty) Ltd                                    
Auditors : Deloitte & Touche                                                    
Date: 07/10/2011 14:54:01 Supplied by www.sharenet.co.za                     
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