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South African Coal Mining Hldgs Ltd - Reviewed Provisional Group Results For The Year Ended 31 December 2014

Release Date: 25/06/2015 17:00:00      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", "the Group" or "the Company")

REVIEWED PROVISIONAL
GROUP RESULTS FOR THE YEAR
ENDED 31 DECEMBER 2014

The reviewed condensed annual results for the year ended 31 December 2014 are presented below.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

at 31 December 2014                                              31 December   31 December   
                                                                        2014          2013   
R'000                                                               Reviewed       Audited   
Assets                                                                                       
Non-current assets                                                   359 302       367 094   
Property, plant and equipment                                         74 682        82 176   
Intangible assets                                                    180 908       234 418   
Deferred tax                                                          53 213             ?   
Investments                                                           50 500        50 500   
Current assets                                                         8 190        11 451   
Trade and other receivables                                            4 845         7 499   
Cash and cash equivalents                                              3 345         3 952   
Total assets                                                         367 492       378 545   
Equity and liabilities                                                                       
Capital and reserves                                               (181 201)     (149 219)   
Issued capital and premium                                           233 885       233 885   
Accumulated loss                                                   (415 086)     (383 104)   
Non-current liabilities                                              545 327       525 326   
Shareholders' loan                                                   498 693       418 395   
Non-current provisions                                                46 576        44 286   
Deferred taxation                                                          ?        62 645   
Other liability                                                           58             ?   
Current liabilities                                                    3 366         2 438   
Trade and other payables                                               3 314         2 438   
Other liability                                                           52             ?   
Total equity and liabilities                                         367 492       378 545   

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31 December 2014                                                          
                                                                 31 December   31 December   
                                                                        2014          2013   
R'000                                                               Reviewed       Audited   
Revenue                                                               42 595        23 180   
Cost of sales                                                       (37 714)      (13 386)   
Gross profit                                                           4 881         9 794   
Foreign exchange losses                                             (75 575)      (61 244)   
Net impairment charge                                               (53 510)     (115 350)   
Depreciation                                                         (6 752)       (8 421)   
Profit on sale of assets                                                   ?           800   
Other income                                                             400             ?   
Operating expenses                                                   (7 368)       (6 447)   
Operating loss before finance costs and taxation                   (137 924)     (180 866)   
Finance costs                                                        (9 907)      (11 236)   
Loss before taxation                                               (147 831)     (180 866)   
Taxation                                                             115 857        32 298   
Loss for the year                                                   (31 974)     (159 804)   
Total comprehensive loss for the year                               (31 974)     (159 804)   
Total comprehensive loss attributable to ordinary shareholders      (31 974)     (159 804)   
Diluted average number of shares ('000)                              452 454       452 454   
Basic and diluted loss per share (cents)                              (7,06)       (35,32)   

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

for the year ended 31 December 2014                                                        
                                               Share     Share   Accumulated               
R'000                                        capital   premium          loss         Total   
Balance  at 31 December 2012  ? Audited       45 246   188 639     (223 300)        10 585   
Total comprehensive loss for the year              ?         ?     (159 804)     (159 804)   
Balance at 31 December 2013 ? Audited         45 246   188 639     (383 104)     (149 219)   
Total comprehensive loss for the year              ?         ?      (31 974)      (31 974)   
Balance at 31 December 2014 ? Reviewed        45 246   188 639     (415 084)     (181 201)   

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

for the year ended 31 December 2014                                                      
                                                                 31 December   31 December   
                                                                        2014          2013   
R'000                                                               Reviewed       Audited   
Cash flows generated from/(utilised in) operations                     6 397           431   
Finance charges paid                                                 (2 032)      (11 236)   
Interest received                                                         28             2   
Net cash generated from/(utilised in) operating activities             4 393      (10 803)   
Net cash generated from/(utilised in) investing activities                 ?           800   
Net cash from financing activities                                   (5 000)         8 570   
Net decrease in cash and cash equivalents                              (607)       (1 433)   
Cash and cash equivalents at beginning of year                         3 952         5 385   
Cash and cash equivalents at end of year                               3 345         3 952   

Statement of compliance and basis of preparation
The condensed provisional financial statements have been prepared in accordance with the framework concepts and the
measurement and recognition requirements of International Financial Reporting Standards (IFRS) and in terms of IAS 34 Interim
Financial Reporting, the SAICA Reporting Guides, as issued by the Accounting Practices Committee, the Companies Act of
South Africa and the Listings Requirements of the JSE Limited. The accounting policies and methods of computation used to
prepare the financial statements have been consistently applied to all periods presented and are consistent with those used in
the annual financial statements for the financial year ended 31 December 2014.

The financial statements have been prepared on the going-concern basis taking into account the fact that the Group is dependent
on JSW Energy Limited (a company listed on the Indian Stock Exchanges and operating through its subsidiary JSW Energy
Natural Resources South Africa (Proprietary) Limited ("JSW"), which will continue to support SACMH. JSW have indicated their
firm intention to continue financial support in writing subject to the following:

- JSW obtains board approval for the additional funding at the time;
- JSW fulfils all regulatory requirements as prescribed by India legislation;
- JSW remains the majority shareholder, and retain the management and operational control of SACMH; and
- JSW has demonstrated its ongoing support during the current financial year.

NOTES TO THE PROVISIONAL RESULTS AS AT 31 DECEMBER 2014
Note 1 Earnings and headline earnings per share

                                                                           31 December   31 December   
                                                                                  2014          2013   
R'000                                                                         Reviewed       Audited   
Basic loss                                                                    (31 974)     (159 804)   
Adjusted for:                                                                                          
Impairment of mining right                                                      53 510       115 350   
Tax effect of impairment of mining right                                      (14 983)      (32 298)   
(Profit) on sale of non-current assets                                               ?         (800)   
Headline loss                                                                  (6 553)      (77 552)   
Diluted average number of shares ('000)                                        452 454       452 454   
Basic and diluted loss per share (cents)                                        (7,06)       (35,32)   
Weighted average shares in issue for the year ('000)                           452 454       452 454   
Diluted average shares in issue ('000)                                         452 454       452 454   
Headline and diluted loss per share (cents)                                     (1,44)       (17,14)   
Net asset value per share (cents)                                              (40,04)       (32,98)   
Tangible less all intangibles; net asset deficit value per share (cents)       (41,23)       (70,28)

REVIEW OPINION
The condensed consolidated group results have been reviewed by Mazars, who have performed the review in accordance with ISRE 2410
"Review of interim financial information performed by the independent auditor of the entity". A modified report with an emphasis of matter on
going concern has been issued. A copy of the full modified review report is available at the registered office of the company. An extract of the
emphasis of matter in the report is as follows:

"Without qualifying our opinion, we draw attention to note 10 of the condensed consolidated results of South African Coal Mining Holdings
Limited for the year ended 31 December 2014 and the financial results which indicate that the Group incurred a net loss of R31.9 million for the
year ended 31 December 2014, and as at that date, the Group's total liabilities exceed its total assets by R181,2 million. In addition, the Group's
going concern status is dependent on the continued financial support of JSW Energy Limited (a company listed on the Indian stock exchange
and operating through its subsidiary, JSW Energy Natural Resources South Africa Proprietary Limited (JSWSA)). JSWSA has confirmed, in
writing, their firm intention to continue their financial support to South African Coal Mining Holdings Limited (SACMH).

This support is subject to JSW India Limited remaining the majority shareholder of the Group; the Company obtaining board approval to provide
the further funding; and the Company obtaining regulatory approval specific to the laws of India. These conditions, along with other matters,
indicate the existence of a material uncertainty which may cast significant doubt on the Company's ability to continue as a going concern."
Other legal and regulatory matters relating to non-compliance with certain requirements of the Company's Act of 2008, King III and Broad-Broad
Based Socio-Economic Empowerment Charter for the South African Mining and Minerals Industry have been reported. Further details on these
areas of non-compliance are detailed in the modified review report.

COMMENTARY

1.   Performance for the 12 months to 31 December 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 Water Affairs (DWAF). 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. This has resulted in a movement in the f ollowing items reflected in the statement of comprehensive income:

     -  Turnover increased by R19,4 million
     -  Cost of sales increased by R24,3 million
     -  Gross profit decreased by R4,5 million
     -  Operating expenses increased by R0,9 milllion

2.   Foreign exchange loss
     The depreciation of the US$/ZAR rate from R10.674 to R11.697 during the reporting period resulted in an unrealised foreign exchange
     loss of R75.3 million (2013: R61,2 million) on the shareholders' loan.

3.   Depreciation
     Depreciation charges of R6.7 million (2013: R8.4 million) are lower than the previous comparative period as a result of certain assets being
     fully depreciated in the current year.

4.   Amortisation of mining right
     No amortisation charge was recorded (2013: Nil) as no mining activities were conducted during the year.

5.   Statement of reserves and resources and prospects
     There are no changes to the Group's estimated reserves and resources as no mining activities took place.

6.   Financing activities
     The movement on the shareholders loan relate to foreign exchange movement as a result of the weakening Rand as well as a capital
     repayment of R5 mIllion.

7.   Asset management
     Working capital has reduced primarily due to tighter credit management hence the lower trade receivables number.Cash and trade
     payables combined are slightly lower than previous year due to subdued trading conditions.

8.   Taxation
     No normal taxation adjustments have been made for the year as the group has incurred further tax losses for the current year. A movement
     in the deferred tax liability of R115.8 million (2013: R32.3 million) was recorded as a result of the reduction in the carrying amount of the
     mining right due to the impairment loss recognised as well as the increase in the of the rehabilitation provision.

9.   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 is any impairment of the value of the Mineral Rights at year end. An impairment of R53.5 million
     (2013: R115,3 million) has been raised against the value of Mining Rights as a result of the reduction of the forecast export price of coal
     as well as the increase in anticipated mining costs.

     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 19.41% (2013: 20.7%).

10.  Going concern
     The Group incurred a net loss of R31.9 million (2013: R159.8 million) during the year. The Group's going concern has been underwritten
     by the support of JSW to SACMH. JSW has confirmed its support in writing of their intention to continue financial support of SACMH.

     In terms of the loan agreements JSW has undertaken not to accept repayment of its loan accounts until such stage as SACMH's assets,
     fairly valued, exceed its liabilities. The Group's Life of Mine plan, reflects that operations are expected to produce positive cash flows after
     servicing capital requirements by 2016 once the WULA is received.

11.  Events after the reporting period
     The general coal market remains under pressure due to the commodity price of coal remaining depressed.
 
     As a result of the prevailing market conditions lower revenues are expected as coal producers are reducing production.
 
     The direct effect of this on the Company is that allocation revenue as well as siding rental income will reduce as the market slows down.
 
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 year 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 will continue to lease its logistical and infrastructural assets to third parties in the interim to offset the costs of 'Care and
     Maintenance'.
 
     No commitment has been received from the Department of Water Affairs 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   
                                                                                R'000     R'000   
Interest paid                                                                                     
? Mainsail Trading 55 (Pty) Limited                                             1 849     1 696   
? JSW Energy Natural Resources South Africa (Pty) Limited                       7 875     7 393   
Loan repayment                                                                                    
? JSW Energy Natural Resources South Africa (Pty) Limited                     (5 000)         ?   
Loans from related parties                                                                        
? Mainsail Trading 55 (Pty) Limited                                            21 722    19 874   
? JSW Energy Natural Resources South Africa (Pty) Limited                     476 971   398 521   
There were no other related party transactions or balances during the year.                       

16. Changes to directorate
    Mr DGA Miller resigned CEO/CFO on 30 June 2014 and was replaced by Mr AP Singh. Mr CP Tated was appointed on
    30 September 2014 to fill the vacant position of CEO/CFO following the resignation of Mr AP Singh on 29 September 2014.

    Mr VP Garg, non-executive director, resigned as a director of the Company on 18 December 2014.

    Mr Kareem Ashraff was appointed an independent non-executive director on 30 January 2015 to fill the vacant seat on the board
    following the resignation of Mr Garg.

    Mr Keith Harris was appointed CEO on 2 February 2015. Mr CP Tated would retain the position of CFO.

    Messrs Mesuli Dhlamini and Joe Mokgokong were appointed as independent non-executive directors on 18 May 2015.

QMSM Mokoetle                                             CP Tated
Chairman                                                  Chief Financial Officer
18 June 2015

Directors:             QMSM Mokoetle (Independent non-executive Chairman), K G Harris (CEO), CP Tated (CFO),
                       K Ashraff (Indpendent non-executive), PP Menon (non-executive)*,
                       MHC Dhlamini (independent non-executive), JM Mokgokong (independent non-executive)      *India
  
Registered office:     1st Floor, Oxford Muse, 198 Oxford Road, Illovo, Sandton
  
Company secretary:     Mrs PF Smit
  
Transfer secretary:    Computershare Investor Services (Pty) Ltd
  
Sponsor:               Exchange Sponsors
  
Auditors:              Mazars

Website:               www.sacmh.co.za
Date: 25/06/2015 05:00:00 Supplied by www.sharenet.co.za                     
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