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SOUTH AFRICAN COAL MINING HLDGS LIMITED - Reviewed condensed consolidated results for the six months ended 30 June 2016

Release Date: 29/09/2016 16:49:00      Code(s): SAH     
(Incorporated in the Republic of South Africa)
Registration number 1994/009012/06
Share code: SAH     ISIN: ZAE000102034
("SACMH" or "the company")


                                                                                         Reviewed            Restated
                                                                                            As at               As at
                                                                                          30 June         31 December
R'000                                                                  Notes                 2016                2015
Non-current assets                                                                        289 527             294 040
Property, plant and equipment                                                              58 119              62 404
Intangible assets                                                         12              180 908             180 908
Loans to shareholders                                                                           -                 228
Investment in subsidiaries                                                                 50 500              50 500
Current assets                                                                              2 650                 342
Trade and other receivables                                               11                2 309                  66
Cash and cash equivalents                                                                     341                 276
Total assets                                                                              292 177             294 382
Capital and reserves                                                                    (426 943)           (429 512)
Issued capital and premium                                                                233 885             233 885
Accumulated loss                                                                        (396 293)           (398 862)
Revaluation reserve                                                                     (264 535)           (264 535)
Non-current liabilities                                                                   708 270             715 215
Shareholders' loan                                                                        645 652             659 962
Non-current provisions                                                    10               53 751              46 576
Deferred taxation                                                          9                8 867               8 677
Other liability                                                                                 -                   -
Current liabilities                                                                        10 850               8 679
Trade and other payables                                                                    4 603               3 101
Current provisions                                                                          3 202               2 672
Other liability                                                                             3 045               2 906
Total equity and liabilities                                                              292 177             294 382

                                                                                         Reviewed            Restated
                                                                                    six months to       six months to
R'000                                                                  Notes         30 June 2016        30 June 2015
Revenue                                                                    3                4 098               3 490
Cost of sales                                                                                   -             (5 222)
Gross profit/(Loss)                                                                         4 098             (1 732)
Foreign exchange gain/(loss)                                                               28 762            (31 379)
Other income                                                                                   82
Depreciation                                                               4              (4 202)            ( 2 663)
Operating expenses                                                                       (15 627)             (3 633)
Operating profit/(loss) before finance costs and taxation                                  13 113            (39 407)
Finance costs                                                              7             (10 355)             (7 380)
Profit/(Loss) before taxation                                                               2 758            (46 787)
Taxation                                                                   9                (189)            (14 545)
Profit/(loss) for the year                                                                  2 569            (61 332)
Other comprehensive income                                                                      -                   -
Total comprehensive loss attributable to ordinary shareholders                              2 569            (61 332)
Profit/(loss) attributable to ordinary shareholders                                         2 569            (61 332)
Profit/(loss) attributable to Minority shareholders                                           841            (20 076)
Profit/(loss) attributable to Majority shareholders                                         1 728            (41 256)
Earnings/(loss) per share in (cents)                                                         0.57             (13.56)
Diluted earnings/(loss) per share (cents)                                                    0.57             (13.56)

                                                                                         Reviewed            Restated
                                                                                    six months to       six months to
R'000                                                                                30 June 2016        30 June 2015
Cash flows generated from operations                                                      (5 049)             (2 086)
Net cash from operating activities                                                        (5 049)             (2 086)
Cash flows from financing activities   
Sale of property, plant and equipment                                                         120                   -
Net cash from operating activities                                                            120
Cash flows from financing activities   
Increase in shareholders' loans                                                             4 855                   -
RBCT loan movement                                                                            139                   -
Cash from financing activities                                                              4 994                   -
Net decrease in cash and cash equivalents                                                      65             (2 086)
Cash and cash equivalents at the beginning of the period                                      276               3 345
Cash and cash equivalents at the end of the period                                            341               1 259

                                                    Share       Share      Revaluation   Accumulated
R'000                                             capital     premium          reserve          loss            Total
Balance at 31 December 2014                        45 246     188 639        (264 535)     (199 141)        (229 791)
Total comprehensive loss                                -           -                -      (61 332)         (61 332)
Balance at 30 June 2015                            45 246     188 639        (264 535)     (260 473)        (291 123)
Balance at 31 December 2015                        45 246     188 639        (264 535)     (398 862)        (429 512)
Total comprehensive income                              -           -                -         2 569            2 569
Balance at 30 June 2016                            45 246     188 639        (264 535)     (396 293)        (426 942)

                                                                                         30 June 2016    30 June 2015
R'000                                                                                        Reviewed        Restated
Basic earnings profit/(loss)                                                                    2 569        (61 332)
Diluted earnings profit/(loss)                                                                  2 569        (61 332)
Headline earnings reconciliation:                                   
Basic earnings profit/(loss)                                                                    2 569        (61 332)
Adjusted for:                                   
Tax effect                                                                                          -          14 545
Headline profit/(loss)                                                                          2 569        (46 787)
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 earnings/(loss):                                   
Profit/(loss) attributable to ordinary shareholders                                             2 569        (61 332)
Less: Tax effect                                                                                    -          14 545
Headline profit/(loss)                                                                          2 569        (46 787)
Headline and diluted profit/(loss) per share(cents)                                              0.57         (10.34)

Statement of compliance and basis of preparation
The condensed consolidated interim financial statements have been prepared under the supervision of the Chief Financial Officer, Chandra
Prakash Tated CA. The directors take full responsibility for the preparation of this report, 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 2015.
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 thousand Rand (R'000) denomination, 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 2015 issued in September 2016.

1.  Performance for the six months to 30 June 2016
    Operations at the Groups 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 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 gain
    The decrease of the US$/ZAR rate from R15.56 to R14.86 during the reporting period resulted in an unrealised gain of R28.762 million
    (2015: loss of R31.379 million) on the shareholders loan.

3.  Revenue
    Revenue has increased to R4.098 million (2015: R3.490 million) due to more income from renting of logistic assets.

4.  Depreciation
    Depreciation charges of R4.2 million (2015: R2.7 million) are higher than the previous year as a result of assets that had depreciation
    against them reversed as a result of a prior period error.
5.  Cash flow statement generated from operations for interim review period
                                                                                                             30 June 2016      30 June 2015
    R'000                                                                                                        Reviewed          Restated
    Net profit/(loss) per income statement                                                                          2 569          (61 332)
    Adjustments for non-cash item
    Depreciation                                                                                                    4 202             2 663
    Profit on sale of assets                                                                                         (37)                 -
    (Profit)/loss on foreign exchange                                                                            (28 762)            31 379
    Finance costs (not yet paid)                                                                                   10 355             7 080
    Movements in provisions                                                                                         7 176                 -
    Deferred tax                                                                                                      189            14 545
    Changes in working capital
    Accounts receivable                                                                                           (2 243)             4 545
    Accounts payable                                                                                                1 502             (966)
    Cash flow from operations                                                                                     (5 049)           (2 086)

6.  Statement of reserves and resources and prospects
    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 R10.4 million (2015: R7.4 million) are as a result of the Shareholders' loan value being increased by an additional loan
    being granted by JSW to Umlabu during the period.

8.  Asset management
    Working capital has increased by 24% due to trading volumes with suppliers and customers being reduced at Umlabu Colliery.

9.   Income and deferred tax
                                                                                                             30 June 2016   31 December 2015
                                                                                                                    R'000              R'000
    Deferred tax was raised on the following items:
    a)  Gain on loans acquired from subsidiaries                                                                  (8 613)            (8 613)
    b)  Bad debts provision                                                                                         (253)                  -
    c) Prepayments                                                                                                      -               (64)
                                                                                                                  (8 866)            (8 677)

    Prepayments made on behalf of JSW fell due during the period. As a result, the deferred tax liability attached thereto was recognised
    through the statement of profit and loss. A provision for bad debts was raised, resulting in a deferred tax liability being recognised
    through the statement of profit and loss. The impact of these movements in the deferred tax liability on the statement of profit and loss
    are summarised as follows:
    Description                                                                                                                       R'000
    Reversal of deferred tax liability on prepayments                                                                                    64
    Raising of deferred tax liability on bad debts provision                                                                          (253)
    Total                                                                                                                             (189)

10. Non-current provisions
    This pertains to the rehabilitation provision of R53.751 million (2015: R46.576 million) in the current year. The increase in the provision was driven
    mainly by inflation caused by the weakening of the exchange rate from 2015 to 2016. The mine remains under care and maintenance.

11. Trade and other receivables
    Movement of trade and other receivables during interim period:
                                                                                                                 Reviewed          Restated
                                                                                                                    As at             As at
    R'000                                                                                                    30 June 2016  31 December 2015
    Gross trade and other receivables                                                                               3 566                66
    Less provision for doubtful debts                                                                             (1 257)                 -
    Net trade and other receivables                                                                                 2 309                66

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 during the reporting period.
    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 13.1 % (2015: 13.1%).

13. Going concern
    We draw attention to the fact that as at 30 June 2016, the Group had accumulated losses of (R396 293 000) and that the Group's
    total liabilities exceed its assets by (R426 943 000). 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.

14. Events after the reporting period
    On 9 September 2016, the Company published a circular to the effect that it proposed delisting from the JSE and that JSWSA, which
    currently held 67.27% of the issued shares, were offering to purchase the remaining shares for a consideration equal to nine cents per
    share. The general meeting where the delisting is to be ratified is expected to occur on 12 October 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:

    Finance cost in ("R'000")                                                                                 2016                 2015
    -Mainsail Trading                                                                                        1 119                1 024
    -JSW Natural Energy Resources South Africa Proprietary Limited                                           8 704                6 055
    Loans Balance with Related Parties
    -Mainsail Trading                                                                                       24 850               22 746
    -JSW Natural Energy Resources South Africa Proprietary Limited                                         620 801              514 405

20. Restatement
    During the current year, it was found that expenses incurred in paying one of our service providers during the 2015 year actually related
    to expenses paid on behalf of JSW Natural Energy Resources South Africa Proprietary Limited. As a result, trade and other receivables
    was reduced by R228 360 and loans to Shareholders was increased by the same amount.
    An account statement was received from one of our creditors during September 2016, indicating that an amount was still outstanding
    to them as at 31 December 2015. As a result, trade and other payables was increased by R593 619 and accumulated loss was
    increased by the same amount. Of this amount, R19 224 related to the six months ending 30 June 2015, necessitating an increase of
    operating expenses by the said amount.
    The correction of these errors have resulted in the following changes.
                                                                                    30 June          31 December
                                                                                       2015                 2015            Difference
    Statement of Financial Position                                                   R'000                R'000                 R'000
    Non-current assets
    Loans to Shareholders                                                                 -                  228                   228
    Trade and Other Receivables                                                         294                   66                 (228)
    Equity and liabilities
    Accumulated Loss                                                              (398 268)            (398 862)                 (594)
    Current liabilities
    Trade and Other Payables                                                          2 507                3 101                   594

                                                                                    30 June              30 June
                                                                                       2015                 2015             Difference
    Statement of Profit or Loss                                                       R'000                R'000                  R'000
    Operating Expenses                                                              (3 614)              (3 633)                   (19)
    Basic loss per share                                                            (13.55)              (13.56)                 (0.01)
    Diluted loss per share                                                          (13.55)              (13.56)                 (0.01)
    Headline earning per share                                                      (13.55)              (13.56)                 (0.01)
21. Changes to directorate
    The following directors have been appointed to, or resigned from (as the case may be) the board during the period under review:
    His Excellency K Ashraff (appointed as independent non-executive)                                                   3 February 2015
    Mr KG Harris (appointed as Chief Executive Officer)                                                                 3 February 2015
    Mr MCH Dhlamini (appointed as independent non-executive)                                                                19 May 2015
    JM Mokogong (appointed as independent non-executive)                                                                    19 May 2015
    LR Mamba (appointed as non-executive)                                                                             21 September 2015
    Mr QMSM Mokoetle resigned as chairman and a director of the Company on 15 February 2016. Me LR Mamba was appointed as
    chairman by resolution of the board on 24 June 2016.

KG Harris                                                         CP Tated
Chief Executive Officer                                           Chief Financial Officer
30 September 2016
Directors:                 LR Mamba (Chairman), KG Harris (CEO), CP Tated (CFO)*, K Ashraff (independent non-executive)**, 
                           MCH Dhlamini (independent non-executive), JM Mokgokong (independent non-executive) PP Menon (non-executive)*
                           *India   ** Swaziland
Registered office:         Building 6, Woodmead Willows Office Park, 19B Morris Street, Woodmead, Johannesburg
Company secretary:         Mr FJ Jansen van Rensburg
Transfer secretary:        Computershare Investor Services Proprietary Limited
Sponsor:                   Exchange Sponsors
Auditors:                  Nkonki Incorporated
Website:                   www.sacmh.co.za

Date: 29/09/2016 04:49:00 Supplied by www.sharenet.co.za                     
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