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South African Coal Mining Hldgs Limited - Reviewed Condensed Results For The Six Months Ended 30 June 2015

Release Date: 15/03/2016 08:46:00      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")

REVIEWED CONDENSED RESULTS OF
SACMH AND ITS SUBSIDIARIES
("THE GROUP") FOR THE SIX
MONTHS ENDED 30 JUNE 2015

CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION

                                                                         Reviewed         Audited
                                                                             As at          As at
                                                                           30 June    31 December
R?000                                                            Notes        2015           2014
ASSETS
Non-current assets                                                         303 430        320 638
Property, plant and equipment                                               72 022         74 682
Intangible assets                                                   12     180 908        180 908
Deferred tax                                                         9           ?         14 548
Investments in subsidiaries                                                 50 500         50 500
Current assets                                                               1 579          8 190
Trade and other receivables                                         11         320          4 845
Cash and cash equivalents                                                    1 259          3 345

Total assets                                                               305 009        328 828
EQUITY AND LIABILITIES
Capital and reserves                                                     (289 786)      (228 473)
Issued capital and premium                                                 233 885        233 885
Accumulated loss                                                         (523 671)      (462 358)
Non-current liabilities                                                    592 341        553 940
Shareholders? loan                                                         537 152        498 693
Non-current provisions                                              10      46 576         46 576
Deferred taxation                                                    9       8 613          8 613
Other liability                                                                  ?             58
Current liabilities                                                          2 453          3 361
Trade and other payables                                                     2 453          3 361
Total equity and liabilities                                               305 009        328 828

CONSOLIDATED CONDENSED STATEMENTS OF PROFIT AND LOSS AND
COMPREHENSIVE INCOME

                                                                         Reviewed        Reviewed
                                                                    six months to   six months to
R?000                                                      Notes     30 June 2015    30 June 2014
Revenue                                                        3            3 490          11 328
Cost of sales                                                             (5 203)         (6 879)
Gross profit/(loss)                                                       (1 713)           4 449
Foreign exchange loss                                                    (31 379)        (30 497)
Depreciation                                                   4          (2 663)         (3 638)
Operating expenses                                                        (3 633)         (4 470)
Operating (loss) before finance costs and taxation                       (39 388)        (34 156)
Finance costs                                                  7          (7 380)         (5 095)
(Loss) before taxation                                                   (46 767)        (39 251)
Taxation                                                       9         (14 545)               ?
(Loss) for the year                                                      (61 313)        (39 251)
Other comprehensive income                                                     ?                ?
Total comprehensive loss attributable to ordinary
shareholders                                                             (61 313)        (39 251)
Loss attributable to ordinary shareholders                               (61 313)        (39 251)
Loss attributable to minority shareholders                               (20 070)         (2 642)
Loss attributable to majority shareholders                               (41 243)        (36 609)
Loss per share (cents)                                                    (13.55)          (8.67)
Diluted loss per share (cents)                                            (13.55)          (8.67)

STATEMENTS OF CASH FLOWS
                                                                         Reviewed        Reviewed
                                                                    six months to   six months to
R?000                                                       Note     30 June 2015    30 June 2014
Cash flows generated from operations                           5          (2 086)         (2 434)
Net cash from operating activities                                        (2 086)         (2 434)
Cash from financing activities                                                  ?               ?
Net decrease in cash and cash equivalents                                 (2 086)         (2 434)
Cash and cash equivalents at the beginning of the period                    3 345           3 952
Cash and cash equivalents at the end of the period                          1 259           1 518

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

                                                     Share     Share     Accumulated
R?000                                              capital   premium            loss        Total
Balance at 31 December 2013                        45 246    188 639       (383 104)    (149 219)
Total comprehensive loss                                ?          ?        (39 251)     (39 251)
Balance at 30 June 2014                            45 246    188 639       (422 354)    (188 469)
Balance at 31 December 2014                        45 246    188 639       (462 358)    (228 473)
Total comprehensive loss                                ?          ?        (61 313)     (61 313)
Balance at 30 June 2015                            45 246    188 639       (523 671)    (289 786)

NOTE TO THE STATEMENT OF COMPREHENSIVE INCOME

                                                                     30 June 2015    30 June 2014
                                                                        Reviewed         Reviewed
Ordinary shares (?000)                       
?  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                               (61 313)        (39 251)
Less: Tax effect                                                           14 545 
Headline loss                                                            (46 768)        (39 251)
Headline and diluted loss per share (cents)                               (10.34)          (8.67)

Statement of compliance and basis of preparation
"The condensed consolidated interim results have been prepared, under the supervision of the Chief Financial Officer
Chandraprakash Tated CA. The directors take full responsibility for the preparation of this report, in accorance 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 2014. The Directors take full responsibility for the preparation of this report.

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, Nkonki Inc. Their unqualified review conclusion with an emphasis

of matter on SACMH?s ability to continue as a going concern with the details as disclosed in commentary point 13, 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 its annual report for the year ended 31 December 2014 issued
in August 2015.
COMMENTARY
1.  Performance for the six months to 30 June 2015
    Operations at the Group?s Umlabu Colliery continue to be suspended pending the finalisation of the Water Use License
    Application (WULA) by the Department of Minerals and Resources (DMR). All assets and infrastructure are 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.
2.  Foreign exchange loss
    The decline of the US$/ZAR rate from R11.57 to R12.27 during the reporting period resulted in an unrealised loss of R31.379
    million (2014: R30.497 million) on the shareholders? loan.
3.  Revenue
    Revenue has been reduced to R 3.490 million (2014: R 11.328 million) due to less income from renting of logistic assets.
4.  Depreciation
    Depreciation charges of R2.6 million (2014: R3.6 million) are lower than the previous year as a result of assets having been
    fully depreciated in prior years.

5.  Cash flow statement generated from operation for Interim review period: (R?000)
    
                                                      30 June 2015  30 June 2014
                                                       Reviewed         Reviewed
    Net profit per income statement                    (61 313)         (39 251)
    Adjustments for non-cash items
    Deferred tax                                         14 545                ?
    Forex losses                                         31 379           30 497
    Interest (not yet paid)                               7 080            4 659
    Depreciation                                          2 663            3 638
    Changes in working capital
    Accounts receivable                                   4 525             (12)
    Accounts payable                                      (966)            2 903
    Cash flow from operations                           (2 086)            2 434
    
6.  Statement of reserves and resources and prospects
    The resources of 10.mt of coal classified as proven and probable reserves in the integrated annual report for the year ended 31
    December 2013 and provisional results released on 18 June 2015 have been reclassified and the measured and indicated coal
    resources that were previously converted to reserves, have been reclassified as resources as the coal could not be economically
    extracted as a result of the downturn in the economy and the drop in world coal prices. No material changes have taken place since
    the last reporting period. The reserves and resources statement has been approved by the JSE, a copy of which is available on the
    company?s website.
7.  Financing activities
    Finance costs of R7.38 million (2014: R5.1 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.
8.  Asset management
    Working capital has reduced by 118% due to trading volumes with suppliers and customers being reduced at Umlabu Colliery.

9.   Income and deferred tax
                                                    30 June     31 December
                                                       2015            2014
                                                      R?000           R?000
   Deferred tax was raised on the following items
   (a) Mineral rights                                     ?               ?
   (b) Rehabilitation provision                           ?          13 041
   (c) Gain on loans acquired from subsidiaries     (8 613)         (8 613)
   (d) Bad debts provision                                ?           1 504
                                                    (8 613)           5 935

Due to uncertainty over realisation of deferred tax asset balance resulting from the rehabilitation costs and bad debts provision, it was
decided to charge off the deferred tax asset in the current year through the income statement as follows:

Description                                                             R?000 
Reversal of deferred tax assets due to uncertainly of realisation      14 545
Total                                                                  14 545

10.  Non-curent provisions
     This pertains to rehabilitation provision of R46 576 (2014: R46 576) in the current year. There has been no movement as the mine is
     under care and maintenance.
11.  Trade and other receivable
     Movement of trade and other receivables during interim period:

                                                    Reviewed         Audited
                                                       As at           As at
                                                     30 June     31 December
R?000                                                   2015            2014
Gross trade and other receivables                      7 927          12 104
Less: provision for doubtful debts                   (7 607)         (7 259)
Net trade and other receivables                          320           4 845

12.  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. No impairment was
     considered necessary as management has already impaired the mining rights by R 168.860 million and as per management internal
     working no further impairment is required.
     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 13.01% (2014: 20.7%).
13.  Going concern
     The Group incurred a loss of R61.3 million (2014: R39.25 million) during the 6 months ended 30 June 2015. The Group?s interim
     financial statements have been prepared on a going concern basis as there is no intention to close the company. The Group?s going
     concern is based on the conditional 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 fulfills 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.
14.  Events after the reporting period
     At the end of June 2015, Comogen Proprietary Limited, a historically disadvantaged South African Company that is 100% black-
     owned and controlled, acquired 26% of the shareholding of SACMH thereby rectifying the Company Broad-Based Black Economic
     Empowerment status to comply with legislative requirements.
     On 15 October 2016 the Company published a SENS announcement to the effect that it proposed delisting and that JSWSA, which
     currently held 67.27% of the issued shares, were offering to purchase the remaining shares for a consideration equal to 9 cents per
     share. A copy of the announcement can be viewed on the company?s website. The circular is expected to be released at the end of
     March.
     In November 2015 a contract was signed with Destridex Proprietary Limited ("Destridex") for the utilisation of the Coal Processing Plant
     at Umlabu Colliery. Negotiations are currently being finalised with Destridex for the use of the Voorslag Rail Siding. It is anticipated that
     Destridex will commence production during April 2016.
15.  Composition of the Audit and Remuneration Committees
     Messrs MCH Dhlamini (Chairman) and JM Mokgokong and His Excellency K Ashraff, being independent non-executive directors, were
     appointed as members of the Audit and Risk Committee on 19 May 2015.
     His Excellency K Ashraff (Chairman) and Messrs MCH Dhlamini and JM Mokgokong were appointed members of the Remuneration
     and Nominations Committee on 19 May 2015.
16.  Capital expenditure commitments
     The group has no capital expenditure commitments.
17.  Contingencies and commitments
     There are no contingencies and commitments at reporting date.
18.  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 DWAF with regard to finalisation of the WULA.
19.  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.

                                                                     2015      2014
                                                                    R?000     R?000
Finance cost in
? Mainsail Trading                                                  1 024       908
? JSW Natural Energy Resources South Africa Proprietary Limited     6 055     3 932
Loans balance with related parties
? Mainsail Trading                                                 22 746    21 722
? JSW Natural Energy Resources South Africa Proprietary Limited   514 405   476 971

20.  Changes to directorate
     The following directors have been appointed to/resigned from the board during the period under review:
     His Excellency K Ashraff (appointed as independent non-executive)                                             30 January 2015
     Mr KG Harris (appointed as Chief Executive Officer)                                                           2 February 2015
     Mr MCH Dhlamini (appointed as independent non-executive)                                                          18 May 2015
     M Mokogong (appointed as independent non-executive)                                                               18 May 2015
     Mr QMSM Mokoetle resigned as chairman and a director of the Company on                                       15 February 2016
     A chairman has not yet been appointed to replace Mr Mokoetle and this will be discussed at the next board meeting which has yet
     to be scheduled.
KG Harris                                                        CP Tated
Chief Executive Officer                                          Chief Financial Officer
9 March 2016
Directors:               KG Harris(CEO), CP Tated (CFO)*, K Ashraff (Independent non-executive)**, MCH Dhlamini (Independent
                         non-executive), LR Mamba (Non-executive), JM Mokgokong (Independent non-executive), PP Menon
                         (Non-executive)*
                         *India  ** Swaziland
Registered office:       1st Floor, 198 Oxford Road, Illovo, Sandton
Company secretary:       Mrs PF Smit
Transfer secretary:      Computershare Investor Services Proprietary Limited
Sponsor:                 Exchange Sponsors
Auditors:                Nkonki Incorporated
Website:                 www.sacmh.co.za



Date: 15/03/2016 08:46:00 Supplied by www.sharenet.co.za                     
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