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South African Coal Mining Hldgs Ltd - Reviewed Condensed Results For The 6 Months Ended 30 June 2014

Release Date: 30/09/2014 08:16:00      Code(s): SAH     
SOUTH AFRICAN COAL MINING HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1994/009012/06
Share code: SAH      ISIN: ZAE000102034
("SACMH" or "the company" or "the Group")

REVIEWED CONDENSED RESULTS OF SACMH AND
ITS SUBSIDIARIES ("THE GROUP")
for the six months ended 30 June 2014

CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION

                                                                Reviewed         Audited      
                                                                   As at           As at      
                                                                 30 June     31 December      
R'000                                                               2014            2013      
ASSETS                                                                                        
Non-current assets                                               363 456         367 094      
Property, plant and equipment                                     78 538          82 176      
Intangibles                                                      234 418         234 418      
Investments                                                       50 500          50 500      
Current assets                                                     9 028          11 451      
Trade and other receivables                                        7 510           7 498      
Cash and cash equivalents                                          1 518           3 953      
Total assets                                                     372 484         378 545      
EQUITY AND LIABILITIES                                                                        
Capital and reserves                                            188 469)       (149 217)      
Issued capital and premium                                       233 885         233 885      
Accumulated loss                                                422 354)       (383 102)      
Non-current liabilities                                          555 664         522 391      
Shareholders' loan                                               448 735         418 395      
Non-current provisions                                            44 284          41 351      
Deferred taxation                                                 62 645          62 645      
Current liabilities                                                5 289           5 371      
Current portion of non-current liabilities                             ?              52      
Current portion of provisions                                          ?           2 933      
Trade and other payables                                           5 289           2 386      
Total equity and liabilities                                     372 484         378 545      


CONSOLIDATED CONDENSED STATEMENT OF COMPREHENSIVE INCOME
   
                                                                Reviewed        Reviewed      
                                                           Six months to   Six months to      
                                                                 30 June         30 June      
R'000                                                               2014            2013      
Revenue                                                           11 328           7 568      
Turnover                                                          11 328           7 568      
Cost of sales                                                    (6 879)         (5 861)      
Gross profit                                                       4 449           1 707      
Foreign exchange loss                                           (30 497)        (49 997)      
Depreciation                                                     (3 638)         (7 847)      
Operating expenses                                               (4 470)         (3 607)      
Operating loss before finance costs and taxation                (34 156)        (59 744)      
Finance costs                                                    (5 095)         (3 861)      
Loss before taxation                                            (39 251)        (63 605)      
Taxation                                                               ?               ?      
Loss attributable to equity holders                             (39 251)        (63 605)      
Total comprehensive loss attributable to shareholders           (39 251)        (63 605)      
Earnings and diluted loss per share                               (0,09)          (0,14)      


CONSOLIDATED CONDENSED STATEMENT OF CASH FLOW

                                                                Reviewed        Reviewed      
                                                           Six months to   Six months to      
                                                                 30 June         30 June      
R'000                                                               2014            2013      
Cash flows generated from operations                               2 818         (2 535)      
Finance charges paid                                                   ?         (3 861)      
Net cash from/(utilised) in operating activities                   2 818         (6 396)      
Cash from financing activities                                                                
New loan from shareholder                                              ?           2 100      
Advances to shareholders                                         (5 252)               ?      
Net cash from financing activities                               (5 252)           2 100      
Net decrease in cash and cash equivalents                        (2 434)         (4 296)      
Cash and cash equivalents at the beginning of the period           3 952           5 385      
Cash and cash equivalents at the end of the period                 1 518           1 809      


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
       
                                                                   Share           Share     Accumulated                     
R'000                                                            capital         premium            loss          Total      
Balance at 31 December 2013                                       45 246         188 639       (223 300)         10 585      
Total comprehensive loss                                               ?               ?        (63 605)       (63 605)      
Balance at 30 June 2013                                           45 246         188 639       (286 905)       (53 020)      
Balance at 31 December 2013                                       45 246         188 639       (383 102)      (149 217)      
Total comprehensive loss                                               ?               ?        (39 251)       (39 251)      
Balance at 30 June 2014                                           45 246         188 639       (422 354)      (188 469)      
           

NOTE TO THE STATEMENT OF COMPREHENSIVE INCOME

                                                                Reviewed        Reviewed      
                                                                 30 June         30 June      
Ordinary shares ? '000                                              2014            2013      
? In issue                                                       452 454         452 454      
? Weighted average                                               452 454         452 454      
? Diluted weighted average                                       452 454         452 454      
                                                                   R'000           R'000      
Determinations of headline loss:                                                              
Loss attributable to ordinary shareholders                      (39 251)        (63 605)      
Headline loss                                                   (39 251)        (63 605)      
Headline and diluted loss per share (cents)                       (0,09)          (0,14)      


Statement of compliance and basis of preparation
The reviewed condensed consolidated interim results have been prepared, under the supervision of Ajit Pratap Singh,
Chief Financial Officer, in accordance with and containing the information required by International Accounting
Standard (IAS) 34, Financial Reporting Guides as issued by the Accounting Practices Committee, the Listings
Requirements of the JSE and in compliance with the requirements of the South African Companies Act, No 71 of 2008.
The accounting policies used are in terms of IFRS and are consistent with those of the Annual Financial Statements as
at 31 December 2013.

The condensed consolidated financial report has been prepared in accordance with the historical cost convention
except for certain investments which are stated at fair value, and is presented in Rands, which is SACMH's functional
and presentation currency.


The interim results have been reviewed by the Group's auditors, Mazars Inc. Their unqualified review opinion with an 
emphasis of matter on SACMH's ability to continue as a going concern with the details disclosed in commentary 
point 9, an emphasis of matter on the changes to directorate with details disclosed in commentary point 16 and 
specific reference to the reportable irregulatory reported in terms of section 44(2) and 44(3) of the Auditing 
Profession Act with reference to section 94 (4)(b)(i) of the Companies Act and sections 2.131, 2.45.2 and 2.57 of King III,
is available for inspection at the company's registered office. Their review was conducted in accordance with ISRE 2410 
"Review of interim financial information performed by the independent auditor of the entity."


These financial results have been prepared on the going concern basis taking into account that JSW Energy Limited
(a company listed on the Indian Stock Exchanges and operating through its subsidiary, JSW Energy Natural Resources
South Africa Proprietary Limited), continues to support SACMH as reflected in the Annual Report for the year ended
31 December 2013 issued in July 2014.

COMMENTARY
1.   Performance for the six months to 30 June 2014
     Operations at the Group's Umlabu Colliery continue to be suspended pending the finalisation of the Water Use
     Licence Application (WULA) by the Department of Minerals and Resources (DMR). All assets and infrastructure is
     being maintained under a "Care and Maintenance" programme.
     The Group is utilising its logistical and infrastructural assets to generate rental income to offset the costs incurred
     while operations remain suspended. Allocation income has increased compared to the same period last year
     due to greater volumes being processed through on SACMH's allocation apportionment with Richard's Bay Coal
     Terminal.

2.   Foreign exchange loss
     The depreciation of the US$/ZAR rate from R10,13 to R10,74 during the reporting period resulted in an unrealised
     loss of R30,5 million (2013: R50 million) on the shareholders' loan.

3.   Depreciation
     Depreciation charges of R3,6 million (2013: R7,8 million) are lower than the previous year due to certain categories
     of assets having being fully depreciated.

4.   Statement of reserves and resources and prospects
     There are no changes to the Groups' estimated reserves and resources.

5.   Financing activities
     Finance costs of R5,1 million (2013: R3,9 million) are as a result of the shareholders' loan value being inflated by
     the forex rate and subsequently greater interest charges on the increased value being charged.

6.   Asset management
     Working capital has reduced by 40% due to the suspension of operations at Umlabu Colliery.

7.   Taxation
     No taxation has been provided as the group has incurred a taxable loss for the period. No adjustment of the
     deferred tax provisions of R62,2 million was made as there was no change or reduction in the carrying value of the
     mineral right or rehabilitation liability.

8.   Mining Rights
     The carrying value of Mining Rights is tested against expected economic benefit based on expected cash flows
     discounted to their present value to determine whether there in any impairment of the value of the Mineral Rights
     at year-end. No impairment was considered necessary.

     The following significant assumptions have been made in determining the economic value of mineral rights:
     - Selling Prices ? the API4 index as quoted by McCloskeys.
     - Foreign Exchange ? the forecast as quoted by The Standard Bank of South Africa.
     - Discount Rate ? expected future cash flows have been discounted to their present value based on a Weighted
       Average Cost of Capital (WACC) of 20,7% (2013: 19%).

9.   Going concern
     The Group incurred a net loss of R39 million (2013: R63 million) during the six months. The Group's going concern
     has been underwritten by the support of JSW Energy (a company listed on the Indian Stock Exchanges) which
     operates through its subsidiary JSW Energy Natural Resources South Africa Proprietary Limited ("JSWENRSAL")
     supporting SACMH. JSW Energy has confirmed its support in writing of their intention to continue financial support
     of SACMH. Subject to the following:
     - JSW obtains Board approval for additional funding at the time;
     - JSW fulfils all regulatory requirements as prescribed by Indian legislation; and
     - JSW remains the majority shareholder.

     In terms of the loan agreements JSW Energy has undertaken not to accept repayment of its loan accounts until
     such stage as SACMH's assets, fairly valued, exceed its liabilities.

10. Events after the reporting period
    10.1  Transnet recently notified SACMH that the lease of its Blinkpan Siding had been cancelled due to a breach
          of its sub-lease arrangement of the lease. The cancellation of the lease will result in a loss of revenue from
          the siding facility.

     10.2 Management of the company are currently actively engaged with four different BBBEE parties with a
          view to obtaining a significant shareholding in SAMCH, which will result in changes to the composition of
          the board, audit and remuneration committees. Confidentiality Agreements have been signed and due
          diligence exercises commenced. It is expected that negotiations will be finalised by the end of December
          2014 and at the latest March 2015.

11. Composition of the audit and remuneration committees
    The audit committee consists of one independent non-executive director and two non-executive directors.
    The latter directors are employed by JSW Energy Limited, India. These appointments fail to meet the requirements
    of section 94 which stipulates that members of the audit committee must not be employees of a related party
    or inter-related party of the company. This action was necessitated by the need to reduce expenditure while
    the business was on care and maintenance and in attempts to engage with a new BBBEE partner. It is believed
    that the non-executive directors will be able to exercise the necessary controls to protect the rights of all
    stakeholders with the reduced business activities until the situation has been resolved.

    The company does not have a remuneration committee, the board having assumed these responsibilities, failing
    to meet the requirements of King IIII which stipulates that the Chairman of the board cannot chair the remuneration
    committee and the majority of members of that committee should be independent non-executive directors.

12. Capital expenditure commitments
    The Group has no capital expenditure commitments.

13. Contingencies and commitments
    There have been no changes from those disclosed in the Group's Integrated Report for the period ended
    31 December 2013.

14. Prospects
    Until such stage as approval of the WULA for the Voorslag reserve at Umlabu Colliery is received, operations will
    remain suspended. The Group is actively pursuing opportunities to lease its logistical as well as its infrastructure to
    third parties in the interim to offset the costs of "Care and Maintenance".

    No commitment has been received from the DMR with regard to finalisation of the WULA.

15. Related party transactions
    During the period under review, Group entities entered into the following trading transactions with related parties
    that are not members of the Group:

                                                                        2014        2013      
    Interest paid                                                                             
    ?  Mainsail Trading                                                  908         826      
    ?  JSW Energy Natural Resources South Africa (Pty) Limited         2 902       2 449      
    Loans from related parties                                                                
    ?  Mainsail Trading                                               20 783      19 005      
    ?  JSW Energy Natural Resources South Africa (Pty) Limited       306 780     238 901      
    
16. Changes to directorate
    Mr David Miller resigned as acting Chief Executive Officer and Chief Financial Officer and was replaced by
    Mr Ajit Pratap Singh, with effect from 30 June 2014.

    Mr Ajit Singh has announced his resignation as CEO/CFO of the company with immediate effect and JSW Energy Limited, 
    the major shareholder, have nominated Mr Chandra Prakash Tated to fill this role, subject to the JSE's approval and 
    in order to finalise the negotiations with BBBEE parties interested in acquiring shares in SACMH

    QMSM Mokoetle                      AP Singh
    Chairman                           Chief Executive Officer and Chief Financial Officer
    29 September 2014
    
    Directors:                         QMSM Mokoetle (Independent non-executive Chairman)
                                       AP Singh (CEO/CFO)*, VP Garg (non-executive)*, PP Menon (non-executive)*
                                       *India
    Registered office:                 1st Floor, 198 Oxford Road, Illovo, Sandton
    Company secretary:                 Mrs PF Smit
    Transfer secretary:                Computershare Investor Services (Pty) Limited
    Sponsor:                           Exchange Sponsors
    Auditors:                          Mazars Incorporated
    Website:                           www.sacmh.co.za



Date: 30/09/2014 08:16:00 Supplied by www.sharenet.co.za                     
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