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South African Coal Mining Hldgs Limited - Reviewed Provisional Group For The Year Ended 31 December 2015

Release Date: 01/08/2016 13:06:00      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 code: ZAE0000102034
(?SACMH?, ?the Group? or ?the Company?)
          
 REVIEWED PROVISIONAL GROUP RESULTS FOR THE YEAR ENDED 31 DECEMBER 2015


The reviewed condensed annual results for the year ended 31 December 2015 are presented below.
  PROVISIONAL CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 DECEMBER
  2015
                                                                                                 Restated
                                                                             31 December
                                                                                               31 December
                                                                                 2015
                                                                   Notes                           2014
                                                                               Reviewed
                                                                                                 Audited
                                                                                 R?000
                                                                                                   R?000
  Assets
  Non-current assets                                                                 293 812       321 386
  Property, plant and equipment                                           14          62 404        75 430
  Intangible assets                                                                  180 908       180 908
  Deferred Tax                                                                              -       14 548
  Investments                                                                         50 500        50 500
  Current assets                                                                         570          8 190
  Trade and other receivables                                                            294          4 845
  Cash and cash equivalents                                                              276          3 345
  Total assets                                                                       294 382       329 576
  Equity and liabilities
  Capital and reserves                                                              (428 918)     (229 791)
  Issued capital and premium                                                         233 885       233 885
  Accumulated loss                                                                  (398 268)     (199 141)
  Revaluation reserve                                                               (264 535)     (264 535)
  Non-current liabilities                                                            715 215       553 940
  Shareholder?s loan                                                                 659 962       498 693
  Non-current provisions                                                              46 576        46 576
  Deferred taxation                                                        9           8 677          8 613
  Other liability
                                                                                            -           58
  Current liabilities                                                                  8 085         5 427
  Trade and other payables                                                             2 507         3 309
  Current provisions                                                                   2 672             -
  Other liability                                                                      2 906         2 118
  Total equity and liabilities                                                       294 382       329 576
PROVISIONAL CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE
YEAR ENDED    31 DECEMBER 2015

                                                                                             Restated
                                                                         31 December
                                                                                           31 December
                                                                             2015
                                                                                               2014
                                                                 Notes    Reviewed           Audited
                                                                           R?000               R?000

Revenue                                                                        18 841            42 595
Cost of sales                                                                 (13 086)          (37 714)
Gross profit                                                                    5 755             4 881
Foreign exchange losses                                                      (141 745)          (75 575)
Net impairment charge                                             13           (2 002)          (53 510)
Depreciation                                                      14          (11 025)           (6 004)
Finance income                                                                       54              28
Other income                                                                           -            400
Operating expenses                                                            (18 210)           (9 462)
Operating loss before finance costs and taxation                             (167 173)         (139 242)
Finance costs                                                                 (16 069)           (9 907)
Loss before taxation                                                         (183 242)         (149 149)
Taxation                                                                      (15 885)           68 577
Loss for the year                                                            (199 127)          (80 572)
Total comprehensive loss for the year                                        (199 127)          (80 572)
Total comprehensive loss attributable to ordinary shareholders               (199 127)          (80 572)

Loss attributable to Minority shareholders                                    (65 712)          (26 589)
Loss attributable to Majority shareholders                                   (133 415)          (53 983)


Weighted average number of shares (?000)                                      452 454           452 454

Diluted average number of shares (?000)                                       452 454           452 454

Basic loss per share (cents)                                       2           (44.01)           (17.81)

Diluted loss per share (cents)                                     2           (44.01)           (17.81)

Headline loss per share (cents)                                    2           (44.01)            (9.29)
  PROVISIONAL CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
  For the year ended 31 December 2015

                                    Share       Share   Revaluation   Accumulated       Total
                                   Capital   Premium        reserve          loss       R?000
                                    R?000       R?000         R?000        R?000
Balance at 31 December 2013 ?
                                   45 246     188 639     (264 535)      (118 569)   (149 219)
Audited


Total comprehensive loss for the
                                         -          -             -       (80 572)    (80 572)
year
Balance at 31 December 2014 ?
                                   45 246     188 639     (264 535)      (199 141)   (229 791)
Audited (Restated)
Total comprehensive loss for the
                                         -          -             -      (199 127)   (199 127)
year
Balance at 31 December 2015 ?
                                   45 246     188 639     (264 535)      (398 268)   (428 918)
Reviewed
PROVISIONAL CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2015
                                                   31 December                                 31 December
                                                       2015                                        2014
                                                    Reviewed                                      Audited
                                                       R?000                                       R?000
  Cash flows generated from operations                                            (5 815)                   4 549
  Finance charges paid                                                                  -                   (184)
  Interest received                                                                    54                      28
  Tax paid                                                                              -                        -
  Net cash for operating activities                                               (5 761)                   4 393
  Cash flows from investing activities                                                  -                        -
  Cash flows from financing activities
  Repayment of shareholders loans                                                      -                  (5 000)
  Increase in shareholders loans                                                   4 800                        -
  RBCT Loan movement                                                              (2 108)                        -
  Net cash from financing activities                                               2 692                  (5 000)
  Net decrease in cash and cash equivalents                                       (3 069)                   (607)
  Cash and cash equivalents at beginning of year                                   3 345                    3 952
  Cash and cash equivalents at end of year                                           276                    3 345

Notes to the Provisional results as at 31 December 2015

Note 1

Provisional statement of compliance and basis of preparation

The condensed consolidated financial statements are prepared in accordance with the requirements of the JSE
Limited Listings Requirements for provisional reports and the requirements of the Companies Act of South Africa.
The Listings Requirements require provisional reports to be prepared in accordance with the framework concepts
and the measurement and recognition requirements of International Financial Reporting Standards (IFRS) and the
SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial
Pronouncements as issued by Financial Reporting Standards Council and to also, as a minimum, contain the
information required by IAS 34 Interim Financial Reporting. The accounting policies applied in the preparation of
the condensed consolidated financial statements are in terms of IFRS and are consistent with those applied in the
previous consolidated annual financial statements.

These provisional reports were prepared under the supervision of Chandra Prakash Tated, CA( India), CFO.

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, and
    -    JSW remains the majority shareholder, and retain the management and operational control of SACMH.

JSW have demonstrated their on-going support during the current financial year.
Note 2

Earnings and Headline Earnings per Share



                                              31 December     Restated
                                                      2015           31
                                                 Reviewed    December
                                                     R?000        2014
                                                               Audited
                                                                 R?000
 Basic earnings loss                             (199 127)     (80 572)
 Diluted earnings loss                           (199 127)     (80 572)
 Headline earnings reconciliation:
 Basic earnings loss                             (199 127)     (80 572)
 Adjusted for:                                           -      53 510
 Impairment of mining right                              -     (14 983)
 Headline loss                                   (199 127)     (42 045)
 Ordinary shares (?000)
     -    In Issue                                 452 454     452 454
     -    Weighted Average                         452 454     452 454
     -    Diluted Weighted Average                 452 454     452 454

 Basic loss per share (cents)                      (44.01)     (17.81)
 Diluted loss per share (cents)                    (44.01)     (17.81)
                                                R?000         R?000
 Determinations of headline loss:
 Loss attributable to ordinary shareholders      (199 127)     (80 994)
 Headline Loss
                                                 (199 127)     (42 467)
 Headline loss per share (cents)
                                                   (44.01)       (9.29)
Review Conclusion

The condensed consolidated group results have been reviewed by Nkonki, 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 conclusion, we draw attention to note 11 of the commentary which indicates that the
company incurred a loss of R199.1 million. These conditions, along with other matters as set forth in note 11 of
the condensed consolidated financial statements, indicate the existence of a material uncertainty which may cast
significant doubt on the company?s ability to continue as a going concern?.

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.?
Commentary

   1.   Performance for the 12 months to 31 December 2015
        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
        are being maintained under a ?Care and Maintenance? program.

        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 following items
        reflected in the statement of comprehensive income:

            -    Turnover decreased by R23.754 million
            -    Cost of sales decreased by R24.628 million
            -    Gross profit increased by R0.874 million
            -    Operating expenses increased by R8.748 million

   2.   Foreign exchange loss

        The depreciation of the US$/ZAR rate from R10.674 to R15.398 during the reporting period resulted in an
        unrealised foreign exchange loss of R141.7 million (2014: R75.3 million) on the shareholders loan.


   3.   Depreciation

        Depreciation charges of R11 million (2014: R6 million) are higher than the comparative period as a result
        of continued strain on the global coal market and uncertainty as to when mining operations can resume.

   4.   Amortisation of mining right

        An assessment was made of the expected future cash flows from the mining rights held by the company.
        Based on the assessment, no amortisation charge was recorded (2014: 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 relates to foreign exchange movement as a result of the
        weakening Rand, an addition of R4.8 million to the loan from JSW and interest on the capital amount.

   7.   Asset management

        The significant decrease in trade receivables is due to the write off of long outstanding accounts as bad
        debt. This was done in order to present the figure on a conservative basis.

        Cash and cash equivalents reduced significantly due to additional expenses incurred for delisting
        purposes during the current financial year.

        Trade and other payables reduced due to less operating expenses in South African Coal Mining
        Operations (Pty) Ltd with less suppliers outstanding at year end.

   8.   Directors? remuneration

        The following non-executive, independent directors were paid directors? fees (total cost to company)
        during the financial year as follows:
        -        Mr QMSM Mokoetle                                                      R 176 090
        -        Mr A Ashraff                                                          R 145 840
        -        Mr HMC Dhlamini (Chairman: Audit Committee)                           R 127 510
        -        Mr JM Mokgokong                                                       R 112 165
        -        Mr LR Mamba (Chairman: Board)                                         R 36 690
     Total:                                                                              R 598 295

9.   Income and deferred tax

                                                                      2015                           2014
                                                                      R?000                       R?000
     Deferred tax was raised on the following items:

     a.   Rehabilitation Provision                                           -                    13 044
     b.   Gain on loss acquired from subsidiaries                     ( 8 613)                    (8 613)
     c.   Bad debts provision                                                -                      1 504
     d.   Prepayments                                                     (64)                           -
                                                                      _______                     ______
                                                                       (8 677)                     5 935

     Due to uncertainty over realisation of deferred tax assets balance resulting from the rehabilitation cost
     and bad debts provision, the deferred tax asset previously raised was reversed in the current year.

10. 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 (2014: R53.5 million) has been raised against the value of
     Mining Rights during the financial year.

     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 13.10% (2014: 19.41%)

11. Going Concern

     The Group incurred a loss of R199.1 million (2014: R80.6 million) during the 12 months ended 31
     December 2015.

     The Group?s final 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 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 the additional funding at the time,
     -        JSW fulfils all regulatory requirements as prescribed by India legislation, and
     -        JSW remains the majority shareholder, and retain the management and operational control of
              SACMH.

     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.

12. Restatement

     During the current year, it was found that expenses incurred in relation to the RBCT Deferred Loan in
     2014 were not accounted for in that year. A correction has been processed whereby the RBCT Deferred
     Loan was increased by R 2 066 000 with a corresponding increase in RBCT Expense.

     During inspection of the fixed asset register in 2015, it was found that certain assets had been incorrectly
     depreciated by amounts greater than their carrying value, resulting in assets being reflected at negative
     values. A correcting journal was passed that reduces accumulated depreciation by the following amounts:
         -    Office Equipment by R 1 916
        -   Owned Assets by R 26 945
        -   Site Establishment by R 2 042
        -   Plant and Equipment by R 717 252


   The correction of these errors has resulted in the following changes:

     Statement       of       Financial    Audited      Restated                    Difference
     Position                                31            31                   31 December 2014
                                          December      December                      R?000
                                            2014          2014
                                            R?000         R?000
     Assets
     Non-current assets
     Property, Plant and Equipment            74 682         75 430                       748

     Equity and liabilities
     Current liabilities
     Other Liability                             (52)        (2 118)                  (2 066)

     Statement of Profit or Loss
     Depreciation                            (6 752)         (6 004)                    748
     Operating Expenses                      (7 396)         (9 462)                  (2 066)


     Basic loss per share                    (17.51)         (17.81)                   (0.29)
     Diluted loss per share                  (17.51)         (17.81)                   (0.29)
     Headline earning per share               (9.00)          (9.29)                   (0.29)


13. Impairment and Reversal of Impairment

   During a site inspection conducted in relation to the audit of the 2015 financial statements, it was
   ascertained that the following assets needed to be impaired in order to accurately reflect their fair value:

                                                                    2015             2014
     Item                                                          R?000            R?000
     Impairment:
         -   Furniture and Fittings                                 (52)                -
         -   Land and Buildings                                  (1 464)                -
         -   Plant and Equipment                                   (185)                -
         -   Leased Equipment                                      (301)                -
         -   Mineral Rights                                            -         (53 510)
     Net Impairment Charge                                       (2 002)         (53 510)




14. Property, Plant and Equipment

     Item                               Opening          Depreciation      Impairments        Closing
                                      Balance as at                                         Balance as at
                                       01/01/2016                                            31/12/2016
                                          R?000              R?000            R?000             R?000
     Furniture & Fittings                      1 028             (242)             (52)                734
     Land and buildings                       58 356           (3 945)          (1 464)             52 947
     Plant and equipment                       5 251           (2 764)            (185)              2 302
     SACMEC leased                               474             (174)            (301)                 (1)
     Motor vehicles                              214             (100)                -                114
     Big tools                                    52              (43)                -                   9
     Plant and equipment                       1 629             (376)                -              1 253
     upgrades
     Earth moving equipment                       367              (73)                -                294
     Parnaby plant cost                         1 700             (340)                -              1 360
     Spiral plant cost                          1 618             (603)                -              1 015
     Exploration drilling                       1 863           (1 863)                -                  -
     Site establishment                         2 878             (502)                -              2 376
                                               75 430          (11 025)          (2 002)             62 404




15. Events After the Reporting Period

    On 1 March 2016, the company entered into a service agreement with Signature Business Solutions (Pty)
    Limited to provide professional services of drawing up of financial statements and monthly basic
    bookkeeping.

    The directors are not aware of any other material event which occurred after the reporting date and up to
    the date of this report.

16. Capital expenditure commitments

    The Group has no capital expenditure commitments.

17. Contingencies and commitments

    There have been no changes from those disclosed in the Group?s Integrated Report for the year ended
    31 December 2014.

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 will continue to lease its logistical and its 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.

19. Proposed de-listing of SACMH

    Shareholders are referred to the firm intention announcement made on 19 October 2015 and various other
    subsequent announcements on SENS regarding an offer made by JSW SA to all remaining SACMH
    shareholders and the subsequent de-listing of SACMH.

    The release of these results will enable the offeror and the company to complete the circular and re-submit
    it to the JSE and the Take-over Regulation Panel for approval.

20. Related Parties

    During the period under review, Group entities entered into the following transactions with related parties
    that are not members of the group:

                                                                                       2015             2014
                                                                                      R?000            R?000
     Interest paid
     -Mainsail Trading 55 (Pty) Limited                                               2 009            1 849
     -JSW Energy Natural Resources South Africa (Pty) Limited                        12 716            7 875
     Loan repayment
     -JSW Energy Natural Resources South Africa (Pty) Limited                              -          (5 000)
     Loan addition
     -JSW Energy Natural Resources South Africa (Pty) Limited                         4 800                   -
     Loans from Related Parties
          -   Mainsail Trading 55 (Pty) Limited                                      23 731           21 722
          -   JSW Energy Natural Resources South Africa (Pty) Limited               636 232          476 971
    There were no other related party transactions or balances during the year.



21. Changes to directorate

    Mr QMSM Mokoetle resigned as chairman and a director of the Company on 15 February 2016. Mr L R
    Mamba, non-executive director of the company, was appointed as Chairman to replace Mr Mokoetle.


    L R Mamba                                             CP Tated
    Chairman                                              Chief Financial Officer

    Directors:                 L R Mamba (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:         c/o Umlabu Mine, Farm Voorslag, Ermelo/Breyten R36, 2360
    Company secretary:         Mrs P F Smit
    Transfer secretary:        Computershare Investor Services (Pty) Ltd
    Sponsor:                   Exchange Sponsors
    Auditors:                  Nkonki
    Website:                   www.sacmh.co.za

Date: 01/08/2016 01:06:00 Supplied by www.sharenet.co.za                     
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