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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)
REVISED REVIEWED CONDENSED PROVISIONAL ANNUAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2011 1. Background disclaimed review opinion
Shareholders are referred to the reviewed condensed annual results of SACMH for the year ended 31 December 2011 which were released on SENS on 31 May 2012 and subsequently published in the press. The announcement stated that the financial results have been reviewed by the company`s auditors, Deloitte & Touche. They disclaimed their review opinion on a material uncertainty on the valuation of mineral rights and the companys ability to continue as a going concern. Their disclaimed review report was available at the registered offices of the company.
2. Revised review opinion unmodified audit report
Deloitte & Touche have now revised their review opinion and issued an unmodified audit opinion with an emphasis of matter paragraph regarding the going concern status of the group and on subsequent events. Their revised unmodified report is available at the registered offices of the company.
The conclusions of the auditors in the paragraphs of their revised report dealing with these matters, read as follows:
Life of mine assessment and related impairments of mineral rights
We also draw your attention to the subsequent events note in the directors report of the annual financial statements that details the changes in the assumptions used to assess the mineral rights valuation at year end. The main change is the forecasted coal price that has declined post year end as detailed in the directors report. The impact of this results in an estimated impairment of R106.7 million. Going concern status of the group
JSW Energy India Limited have confirmed, in writing, their firm intention to continue the financial support to SACMH. This support is subject to JSW Energy 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.
3. Annual financial statements report of auditors
In the Annual Financial Statements of SACMH to be released soon, the report of the auditors will include the following Emphasis of Matter paragraph: Emphasis of Matter going concern
Without qualifying our opinion, we draw attention to the directors report of to the financial statements which indicates that the company incurred a net loss of R98.5 million for the year ended 31 December 2011 and, as at that date, the companys total assets exceeded its total liabilities by R59.3 million. The directors report highlights the fact that the group and companys going concern status is dependent upon JSW Energy Limiteds (a company listed on the Mumbai stock exchange) and operating through its subsidiary, JSW Natural Resources South Africa Proprietary Limited (JSWSA) financial support to SACMHL. JSWSA have confirmed, in writing, their firm intention to continue the financial support to SACMH. This support is subject to JSW Energy 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 companys ability to continue as a going concern.
Emphasis of matter Subsequent events - Life of mine assessment and related impairments of mineral rights
We also draw your attention to the subsequent events within the directors report in the annual financial statements that details the changes in the assumptions used to assess the mineral rights valuation at year end. The main change is the forecasted coal price that has declined post year end as detailed in the directors report. The impact of this results in an estimated impairment of R106.7 million. 4. Annual financial statements directors report
In the Annual Financial Statements of SACMH the Directors Report will include the following Subsequent Events paragraph:
The following events have occurred subsequent to the reporting date: Funding
JSW Energy has made further funds available to replace Standard Banks short-term facilities.
The Groups major shareholder JSW Energy India has committed to support funding requirements necessary during this period, subject to the following: JSW obtain board approval for the additional funding at the time; JSW fulfills all regulatory requirements as prescribed by Indian legislation; and JSW remains the majority shareholder.
JSW has demonstrated its on-going financial support throughout the financial year. Management is confident that despite the material uncertainty that the above conditions imply, JSW will continue to support the group in the foreseeable future. Mining operations
Environmental approval for the mining of the Voorslag area has been applied for from the Department of Water Affairs. As indicated in the announcement made on 18 April 2012 via SENS, the delays in the approval process have resulted in a reduction in production levels, as the Vlakfontein opencast operations were completed during the month of March 2012. The Company is embarking on cost reduction exercises to mitigate this situation. Mineral rights
The Group assesses at the reporting date whether there is objective evidence that either a financial asset or a group of financial assets is impaired. The expected economic gain that is expected from the Groups investment in the mining right is estimated based on information available at reporting date and includes forecasts of future costs and returns.
The estimated future economic benefit of the mining right at the reporting date indicated that no impairment was required and consequently no impairment was provided for. Since the statement of financial position the following index values utilised in estimating the expected value of future cash flows have changed as a result of changes in market conditions:
Index As at 31 December As at 15 June
2011 2012 Forecasted coal export price AP14
- 2012 USD 108,55 USD 85,08
- 2013 USD 111.08 USD 93.85
- Thereafter USD 116.13 USD101.73 SA Rand / US Dollar exchange
rate R8,01 R8,35
The impact of these changes on the estimated future economic benefit of the mining right would have resulted in an impairment of R106,7 million if applied at the reporting date.
All other aspects of the results as announced on 31 May 2012 remain unaltered. For and on behalf of the board
QMSM MOKOETLE AJL RAYMENT
Chairman Chief Executive Officer 10 July 2012 Johannesburg Sponsor: Exchange Sponsors (2008) (Pty) Limited
Investor Relations: Renay Tandy, Ngage Tel 011 867 7763
Date: 10/07/2012 01:24:00 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.
