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SAH - South African Coal Mining Holdings Limited - Reviewed provisional annual
results for the year ended 31 December 2010 and re-stated results for the years
ended 31 December 2009 and 31 December 2008
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" or "the company")
REVIEWED PROVISIONAL ANNUAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2010 AND
RE-STATED RESULTS FOR THE YEARS ENDED 31 DECEMBER 2009 AND 31 DECEMBER 2008
The reviewed condensed annual results for the year ending 31 December 2010 as
well as the restated annual results for the years ending 31 December 2009 and
31 December 2008, are presented below.
The re-statement of the 2009 and 2008 results relates to the group having valued
the estimated cost of rehabilitation of mining operations based on the estimated
value of final closure of operations only. Rehabilitation of existing operations
was completed as part of the continuous mining process. The estimated cost of
rehabilitation of historical mining operations shortfalls in existence prior to
the acquisition of the Umlabu Colliery as well as unrehabilitated operations in
2008 were previously not valued by the group. These shortfalls have now been
surveyed to establish the extent of the shortfall and previously reported
figures have been restated to include the shortfall which was previously
omitted. There has been no impact on the statement of comprehensive income for
the 2009 financial year.
The estimated value of outstanding rehabilitation on acquisition of the Umlabu
colliery was not accounted for on acquisition of the asset in 2007. The value of
the mining rights has been restated to reflect the estimated value of historical
rehabilitation as well as the liability.
Re-statement of the value of mineral rights had the following effect on the
financial statements:
R`000 31 Dec 09 31 Dec 08 31 Dec 07
Intangible assets as previously 419 399 370 370 377 725
reported
At acquisition rehabilitation now 8 144 8 144 8 340
valued
Re-stated intangible assets 427 543 378 514 386 065
Re-statement of the rehabilitation cost had the following effect on the
financial statements:
R`000 31 Dec 09 31 Dec 08 31 Dec 07
Non-current provisions as 34 431 34 431 35 444
previously reported
Historical rehabilitation now 13 864 13 864 8 388
valued
Re-stated non-current provisions 48 295 48 295 43 832
Re-statement of the deferred tax liability had the following effect on the
financial statements:
R`000 31 Dec 09 31 Dec 08 31 Dec 07
Deferred taxation as previously 141 770 113 197 120 452
reported
Timing differences on 102 102 1 690
rehabilitation now valued and
amortisation mineral rights
Re-stated deferred taxation 141 872 113 299 122 142
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 December 31 December 31 December
2010 2009 2008
R`000 Reviewed Audited Audited
(Restated) (Restated)
Assets
Non-current assets 537 204 546 246 529 974
Property, plant and 111 003 118 703 151 460
equipment
Intangible assets 421 666 427 543 378 514
Investments 4 535 - -
Current assets 67 717 15 915 52 136
Inventories 44 286 - 15 320
Trade and other receivables 17 957 6 850 22 106
Tax receivable 2 083
Cash and cash equivalents 5 474 6 982 14 710
Total assets 604 921 562 161 582 110
Equity and liabilities
Capital and reserves 172 942 179 486 192 834
Issued capital and premium 233 885 233 885 227 784
Accumulated loss (76 189) (66 006) (34 950)
Shareholder`s loan (refer to 15 246 11 607 -
note 3)
Non-current liabilities 372 644 240 456 268 867
Interest bearing liabilities 176 562 50 289 107 273
Non-interest bearing 46 600 - -
liabilities
Non-current provisions 45 839 48 295 48 295
Deferred taxation 103 643 141 872 113 299
Current liabilities 59 335 142 219 120 409
Trade and other payables 27 066 11 511 46 500
Short term borrowings 7 012 - 32 334
Current portion of non- 20 137 130 708 24 856
current liabilities
Current portion of 5 120
provisions
Current tax payable - - 16 719
Total equity and liabilities 604 921 562 161 582 110
Number of shares in issue 452 454 452 454 438 454
(`000)
Net asset value per share 38.22 39.67 43.98
(cents)
Tangible net asset value per (31.83) (31.99) (18.70)
share (cents)
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
31 December 31 December 2009
2010
R`000
Reviewed Audited
Revenue 18 810 38 520
Cost of sales (7 444) (62 248)
Gross profit/ (loss) 11 366 (23 728)
Other (losses) and gains (1 247) 114 520
Foreign exchange gain 3 780 -
Net impairment of assets 385 (11 781)
Loss on sale/scrapping of assets (11 150) (21 170)
Depreciation (10 877) (10 717)
Amortisation of mining right (1 340) (1 471)
Rehabilitation provision (296) -
Operating expenses (24 984) (22 771)
Operating (loss)/income before finance (34 363) 22 882
costs and taxation
Finance costs (11 683) (25 019)
Loss before taxation (46 046) (2 137)
Taxation 35 863 (28 919)
Total comprehensive loss attributable to (10 183) (31 056)
ordinary shareholders
Weighted average number of shares in 452 454 438 454
issue
Basic and diluted loss per share (2.25) (7.08)
Gain on group restructure - (26.12)
Impairments per share (0.09) 2.50
Loss on sale/scrapping of non-current 2.46 4.83
assets per share
Tax effects thereon (0.69) 7.31
Headline loss per share (0.56) (18.56)
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
For the year ended 31 December 2010
Share Share Sharehol Revaluation Accumulated Total
Capital Premium ders Reserve loss R`000
R`000 R`000 loan R`000 R`000
R`000
Restated 41 181 83 292 - - 67 843* 192 316
balance at 1
January 2008
Issue of 688 26 812 - - - 27 500
ordinary
shares under
general
authority
Issue of 1 977 77 101 - - - 79 078
ordinary
shares under
rights issue
Share issue - (3 267) - - - (3 267)
costs
Restated net - - - - (102 793) (102
loss for the 793)
year
As previously - - - - (98 710) (98 710)
reported
Amortisation - - - - (141) (141)
of mineral
right
Rehabilitatio - - - - (3 942) (3 942)
n valued
Restated 43 846 183 938 - (34 950) 192 834
balance at 31
December 2008
Issue of 1 400 4 758 - - - 6 158
ordinary
shares
Share issue - (57) - - - (57)
costs
Increase in - - 11 607 - - 11 607
equity loans
Net loss for - - - - (31 056) (31 056)
the year
Restated 45 246 188 639 11 607 - (66 006) 179 486
balance as
at 31
December 2009
Increase in - - 3 639 - - 3 639
equity loans
Net loss for - - - - (10 183) (10 183)
the year
Balance at 31 45 246 188 639 15 246 - (76 189) 172 942
December 2010
*Retained earnings at 1 January 2008 previously reported as R69 582, have been
restated to account for the change to rehabilitation provisions.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2010
R`000 31 December 2010 31 December
(Reviewed) 2009
(Audited)
Cash flows from operations (50 947) 3 801
Net finance charges paid (11 683) (25 019)
Taxation refunded/(paid) 2 083 (9 497)
Net cash flow from operating (60 547) (30 715)
activities
Cash flows from investing activities
Purchase of property, plant and (13 172) (10 083)
equipment
Increase in investments (4 535)
Proceeds on disposal of property, 13 -
plant and equipment
Net cash used in investing activities (17 694) (10 083)
Cash from financing activities - (57)
Share issue expenses
Net liabilities raised 76 733 33 127
Net cash from financing activities 76 733 33 070
Net decrease in cash and cash (1 508) (7 728)
equivalents
Cash and cash equivalents at beginning 6 982 14 710
of year
Cash and cash equivalents at end of 5 474 6 982
year
CONDENSED SEGMENTAL ANALYSIS
R`000 Coal Mining Equipment Leasing Total
2010 2009 2010 2009 2010 2009
Continuing -
operations
External sales - 33 136 18 810 5 384 18 38 520
810
External revenue - 33 136 18 810 5 384 18 38 520
810
Other gains and (1 111 168 - 3 352 (1 114 520
losses 247) 247)
Operating profit (48 (68 068) 15 505 (23 (33 (91 638)
621) 570) 116)
Net finance (11 (21 519) (174) (3 (11 (25 019)
charges 509) 500) 683)
Profit/(loss) (61 21 581 15 331 (23 (46 (2 137)
before tax 377) 718) 046)
Income tax 35 (29 556) - 637 35 (28 919)
(expense) credit 863 863
Loss for the (25 (7 975) 15 331 (23 (10 (31 056)
year from 514) 081) 183)
continuing
operations
Assets and
liabilities
Assets 542 483 320 62 660 78 604 562 161
261 841 921
Total assets 542 483 320 62 660 78 604 562 161
261 841 921
Liabilities (325 (223 112) (3 247) (17 (328 (240
089) 691) 336) 803)
Deferred tax (103 (141 872) - - (103 (141
liabilities 643) 643) 872)
Total (428 (364 984) (3 247) (17 (431 (382
liabilities 731) 691) 979) 675)
STATEMENT OF COMPLIANCE AND BASIS OF PREPARATION
The condensed financial statements have been prepared in accordance with the
measurement and recognition criteria of the International Financial Reporting
Standards (IFRS), the Companies Act of South Africa, the AC 500 standards as
issued by the Accounting Practices Board or its successor and the Listings
Requirements of the JSE Limited. The financial statements are in accordance with
IAS34 Interim Financial Reporting, using accounting policies that have been
consistently applied to the prior periods. These financial results have been
reviewed by the company`s auditors, Deloitte & Touche.
Without qualifying their report, the auditors have reported an "emphasis of
matter" that highlights that the Group`s going concern is dependent on JSW
Energy Limited, (a company listed on the Mumbai stock exchange) and operating
through its subsidiary JSW Natural Resources South Africa (Proprietary) Limited
("JSW") supporting SACMH. JSW have confirmed their firm intention to continue
their financial support to SACMH, in writing.
COMMENTARY
Following the investment in the group by JSW and the financial support received,
mining operations were resumed at Umlabu Colliery with effect from 1 October
2010. Operations remain at an early stage with additional plant being
commissioned during the last quarter of the financial year.
Stock of product has been established at Richards Bay Coal Terminal ("RBCT")
utilising the group`s rail allocation which will allow for the export product in
the new financial year.
FINANCIAL REVIEW
1 Performance for the year ended 31 December 2010
Turnover for the year is represented by rental income received from the
sidings owned by the group as well as the leasing of rail allocation. SACMH
made use of the rail entitlement with effect from 1 October 2010 to
establish a stockpile of product at the RBCT. Subsequent to the year end
this product was sold profitably at an average price of $116.29 per ton.
51 951 tonnes of coal produced and acquired during the re-commencement of
operations have been valued at cost including overheads.
Costs incurred while the group was under care and maintenance have been
included in operating costs together with costs incurred as part of the
start-up of operations. Fixed assets at Ilanga which were vandalised and
destroyed during the period that operations were suspended, have been
scrapped.
Due to the losses incurred by the group, no tax liability has been
incurred. The deferred tax liability previously reflected at R32 million on
the group restructure has been reversed as it has been established that no
liability exists.
2 Asset Management
Capital expenditure of R13.1 million was incurred during the year for the
re-establishment of mining operations at the Umlabu Colliery.
RBCT Phase V allocation entitlement was increased to 70 000 tonnes a year
with effect from October 2010.
Mining rights have been amortised based on production volumes. The
necessary rehabilitation costs have been provided for and includes full
mine closure and rehabilitation costs of all previous operations.
3 Financing Activities
JSW:
$ 19 million was advanced to the group by JSW to fund the start-up of
operations. This loan is repayable after seven years and bears interest at
2.75% above the monthly USD LIBOR rate. The loan has also been sub-
ordinated by JSW in favour of The Standard Bank of South Africa Limited.
Standard Bank of South Africa:
The loan from Standard Bank of South Africa has been restructured with
R70.0 million having been repaid. The balance of the loan is interest free
and is repayable in annual instalments over five years.
Conversion of Shareholder Loan:
Mainsail agreed to advance working capital to fund the care and maintenance
of the mine. The loan attracts interest at variable rates linked to prime
and will convert into ordinary shares at the 30-day weighted average share
price, 90 days after the share suspension is lifted. As the suspension of
the listing on the JSE was only lifted on 25 March 2011, a calculation in
respect of this contingency cannot be made as yet.
EVENTS SUBSEQUENT TO THE REPORTING DATE
The existing wash plant is being upgraded at an estimated cost of R18.9 million
which will increase capacity to 200 tons per hour. The plant is expected to be
fully commissioned by May 2011. Funding will be provided by JSW.
Mining operations have been started on the Vlakfontein reserve and have also
been resumed on the Mooifontein underground reserve.
The group`s suspension on the JSE was lifted on 25 March 2011.
CAPITAL EXPENDITURE COMMITMENTS
Over and above the R18.9 million committed to for the upgrade of the wash plant,
a further R13.9 million has been authorised. Funding of the expenditure will be
made available by JSW.
CONTINGENCIES AND COMMITMENTS
There are no changes to previously reported contingencies and commitments other
than as detailed below:
Rehabilitation Provisions:
Historical as well as the estimated final cost of rehabilitation have now been
provided against in full.
PROSPECTS
SACMH operations will allow for the full utilisation of all rail allocation
which amounts to an annual capacity of 277,000 tonnes to RBCT during the next
financial year. Additional export capacity is currently being investigated,
which would allow the group to achieve a more sustainable operation.
The API-4 index price of RBC1 coal has risen steadily since 2010. Indications
are that it will remain above $100 per ton for the greater part of 2011.
CHANGES TO DIRECTORATE
Messrs P J Kotze and K J Gribnitz resigned from the board on 26 February and 25
March 2010, respectively, to pursue personal interests.
Mr V P Garg, a representative of JSW Energy Limited, India which had purchased a
49% shareholding in Royal Bafokeng Capital (Pty) Limited, a major shareholder of
the company was appointed to the board on 10 June 2010.
Mr G M Scrutton resigned as CEO of the company on 31 August 2010 and as a non-
executive director on 1 February 2011.
Mr D G A Miller was appointed CFO of the company with effect from 1 October
2010.
Mr A J L Rayment was appointed CEO of the company with effect from 1 December
2010.
Mr W N Gardyne, non-executive director of the company and who represented New
Africa Mining Fund which has accepted the JSW offer to shareholders to acquire
their shares, resigned as a director on 10 January 2011.
For and on behalf of the board
TV MOKGATLHA AJL RAYMENT
Chairman Chief Executive Officer
1 April 2011
Johannesburg
Directors : TV Mokgatlha (Non-Executive Chairman), AJL Rayment (CEO), DGA Miller
(CFO) VP Garg (Non-Executive),Dr V Lickfold (Independent Non-Executive) LM Ndala
(Non-Executive)
Registered Office : 2nd Floor, 198 Oxford Road, Illovo, Sandton
Transfer Secretary : Computershare Investor Services (Pty) Ltd
Sponsor : Exchange Sponsors (2008) (Pty) Ltd
Auditors : Deloitte & Touche
Date: 01/04/2011 13:15:15 Supplied by www.sharenet.co.za
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