Wrap Text
Reviewed condensed results for the 6 months ended on 30 June 2012
SOUTH AFRICAN COAL MINING HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1994/009012/06
Share code: SAH ISIN: ZAE0000102034
("SACMH" or "the company")
REVIEWED CONDENSED RESULTS OF SACMH AND ITS SUBSIDIARIES
("THE GROUP")
for the six months ended 30 June 2012
CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION
Reviewed Unaudited Audited
As at As at As at
30 June 30 June 31 December
R'000 2012 2011 2011
ASSETS
Non-current assets 501 104 557 223 525 715
Property, plant and equipment 97 437 134 171 111 360
Intangibles 393 000 418 517 407 130
Investments 10 667 4 535 7 225
Current assets 47 731 47 555 58 731
Inventories 5 506 17 463 22 349
Trade and other receivables 37 716 22 267 35 681
Cash and cash equivalents 4 509 7 825 701
Current assets held for sale 3 242 3 242
Total assets 552 077 604 778 587 688
EQUITY AND LIABILITIES
Capital and reserves 23 924 139 246 59 384
Issued capital and premium 233 885 233 885 233 885
Accumulated loss (209 961) (94 639) (174 501)
Non-current liabilities 400 765 416 490 380 820
Shareholder's loan 235 629 213 353
Interest bearing liabilities 220 611 989
Non-interest bearing liabilities 34 800 46 600 34 800
Non-current provisions 36 680 47 027 34 540
Deferred taxation 93 656 102 252 97 138
Current liabilities 121 228 49 042 141 324
Trade and other payables 44 012 24 372 39 416
Current portion of non-interest bearing liabilities 11 600 18 200
Current portion of interest bearing liabilities 50 012 19 550 50 483
Current portion of provisions 15 604 5 120 16 001
Bank overdraft 17 224
Current liabilities held for sale 6 160 6 160
Total equity and liabilities 552 077 604 778 587 688
Number of shares in issue ('000) 452 454 452 454 452 454
Net asset value per share (cents) 5,29 30,78 13,12
Tangible net asset deficit per share (cents) (59,72) (38,67) (54,34)
CONSOLIDATED CONDENSED STATEMENT OF COMPREHENSIVE INCOME
Reviewed Unaudited Audited
Six months to Six months to As at
30 June 30 June 31 December
R'000 2012 2011 2011
Revenue 135 710 174 247 347 338
Cost of sales (127 287) (159 309) (341 039)
Gross profit 8 423 14 938 6 299
Other losses (1 288)
Foreign exchange loss (2 733) (601) (31 481)
Net impairment of assets (4 226)
Loss on sale/scrapping of assets (852)
Depreciation (14 483) (6 931) (28 352)
Amortisation of mining rights (10 689) (3 149) (11 846)
Rehabilitation provision (1 746) (1 255) (5 809)
Operating expenses (11 778) (15 801) (17 412)
Operating loss before finance costs and taxation (33 006) (14 087) (93 679)
Finance costs (5 936) (5 816) (12 882)
Finance income 1 680
Loss before taxation (38 942) (19 903) (104 880)
Taxation 3 482 1 229 6 344
Total comprehensive loss attributable
to ordinary shareholders (35 460) (18 674) (98 536)
Weighted average number of shares in issue ('000) 452 454 452 454 452 454
Headline loss reconciliation
Basic loss per share (cents) (7,84) (4,13) (21,78)
Impairments per share (cents) 0,93
Tax effects thereon (cents) 0,19
Headline loss per share (cents) (7,84) (4,13) (20,66)
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOW
Reviewed Unaudited Audited
Six months to Six months to As at
30 June 30 June 31 December
R'000 2012 2011 2011
Cash flows generated from operations 12 605 17 064 6 573
Net finance charges paid (5 936) (5 816) (11 201)
Taxation paid (5)
Net cash from/(utilised) in operating activities 6 669 11 243 (4 628)
Cash flows from investing activities
Purchase of property, plant and equipment (560) (30 097) (36 286)
Net cash used in investing activities (560) (30 097) (36 286)
Cash from financing activities
Borrowings repaid (7 890) (7 304)
Net liabilities raised 22 813 21 205 26 221
Net cash from financing activities 14 923 21 205 18 917
Net decrease in cash and cash equivalents 21 032 2 351 (21 997)
Cash and cash equivalents at the beginning of the period 4 509 7 825 (16 523)
Cash and cash equivalents at the end of the period 4 509 7 825 (16 523)
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Shareholder Accumulated
R'000 capital premium loan loss Total
Balance at 31 December 2010 45 246 188 639 15 246 (75 965) 173 166
Transfer to interest bearing liabilities (15 246) (15 246)
Total comprehensive loss attributable
to ordinary shareholders (18 674) (18 674)
Balance at 30 June 2011 45 246 188 639 (94 639) 139 246
Total comprehensive loss attributable
to ordinary shareholders (79 862) (79 862)
Balance at 31 December 2011 45 246 188 639 (174 501) 59 384
Total comprehensive loss attributable
to ordinary shareholders (35 460) (35 460)
Balance at 30 June 2012 45 246 188 639 (209 961) 23 924
Statement of compliance and basis of preparation
The reviewed condensed consolidated financial report has been prepared, under the supervision of David Miller, CA(SA), Chief Financial Officer,
in accordance with the recognition and measurement principles of International Financial Reporting Standards (IFRS), including the information required
by International Accounting Standard (IAS) 34: Interim Financial Reporting, the AC 500 standards issued by the Accounting Practices Board or its
successor, the Listings Requirements of the JSE Limited, and in compliance with the requirements of the South African Companies Act, 71 of 2008.
The condensed consolidated financial report has been prepared in accordance with the historical cost convention, except for certain financial instruments
which are stated at fair value, and is presented in Rand, which is SACMH's functional and presentation currency.
The auditors, Deloitte & Touche, have issued their modified review report with an emphasis of matter on going concern on the condensed consolidated
interim financial report for the six months ended 30 June 2012. The review was conducted in accordance with ISRE 2410 Review of Interim Financial
Information Performed by the Independent Auditor of the Entity. A copy of their modified review report is available for inspection at the company's registered
office. Any reference to future financial performance included in this announcement has not been reviewed and reported on by the company's auditors.
The auditor's report does not necessarily cover all of the information contained in this announcement. Shareholders are therefore advised that in order to
obtain a full understanding of the nature of the auditor's work they should obtain a copy of that report together with the accompanying financial information
from the registered office of the company.
Any reference to future financial performance included in this announcement has not been reviewed and reported on by the company's auditors. 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 the Annual Report for the year ended 31 December 2011 issued in July 2012.
COMMENTARY
1. Performance for the six months to 30 June 2012
Market prices for RB1 Export coal have rapidly depreciated over the six-month period to 30 June 2012. This deprecation in prices has been close
to 19% from the beginning of January to end of June 2012. Among the key reasons for these factors are the depressed demand conditions
that exist in Europe and China and a relatively benign demand from India; the latter was expected to play through much stronger during the first half
of this year. This has directly impacted the revenue per ton reflected below.
The gross profit for the period reduced to R8,4 million (2011: R14,9 million). The decrease was a result of a lower sales volume of 175 432 tons
(2011: 204 304 tons) as well as lower revenue per ton of R773,58 (2011: R852,14) which was not fully offset by the improved cost per ton of R725,56
(2011: R779,76).
1.1 Mining performance
Open cast operations at Vlakfontein came to an end in March 2012 which reduced total Run of Mine (ROM) volumes in the second quarter.
Underground operations at Mooifontein continued and a total of 302 080 (2011: 345 236) tons of ROM was mined during the period.
1.2 Production performance
ROM mined was processed through the wash plant at Umlabu. A total of 352 087 tons (2011: 268 225 tons) with an average yield of 47%
(2011: 52%); yields deteriorated after the completion of the Open Cast area at Vlakfontein in March 2012, due to the systemic yield of the
B Seam in Mooifontein not being blended with higher yielding seams. Total production for the period was 183 013 tons (2011: 139 477 tons).
1.3 Health and safety
Health and safety levels were maintained during the period with no recorded incidents.
1.4 Management
During the period the Mine Manager, Phillip Buckle, left the operation. His responsibilities are being fulfilled by existing staff including the
Group's Chief Operating Officer, Roelof Hugo.
2. Logistics
The Group's rail allocation to Richards Bay Coal Terminal (RBCT) in terms of the Quattro allocation scheme administered by the Department of
Minerals and Resources (DMR) is 157 000 (2011:157 000) tons per annum. This together with the direct allocation in terms of RBCT's Phase V
expansion of 100 000 tons (2011: 70 000 tons) per annum equates to a total annual allocation of 257 000 tons (2011: 227 000 tons).
3. Revenue
Sales revenue for the period was R135,7 million (2011: R174,3 million) representing 175 432 tons (2011: 204 304 tons) reflecting an average selling
price of USD95,20/ZAR773,52 (2011: USD119,98/ZAR:853.14) per ton. Sales volumes in the period included 47 861 tons of stock produced and
16 415 tons purchased from third parties, which was not included in this period.
4. Impairment of Mining Right
The adverse effect of the reduction in the forecast price of RB1 Export coal at 30 June 2012 has been largely offset by the depreciation of the Rand
Dollar exchange rate at 30 June 2012. The Life of Mine (LOM) valuation was also updated to reflect current yields from the reserves mined, which has
resulted in improving the forecasted performance over the expected LOM. This together with the reduction in the carrying value of assets at the end
of the period has resulted in no impairment of the mining right being required. This position will be reviewed again at year-end and any appropriate
adjustments will be effected as at 31 December 2012.
5. Depreciation
The estimated life of the Mooifontein and Vlakfontein areas have been reduced which has resulted in an additional charge of R3 million in depreciation
for the period, in addition the reduction in the estimated life of the wash plant resulted in a further charge of R4 million.
6. Amortisation of mining right
The rate at which the production was amortised against the mining right was increased from R11,74 per ton to R30,36 per ton as a result of
the reduction of the Group's provable reserves to 11,04 Mt from 25,7 Mt. As a result the amortisation charge in the current period increased by
R6,6 million.
7. Asset management
No significant capital expenditure took place during the period.
8. Investments
During the period a further 283 ordinary shares in RBCT were acquired in terms of the subscription and access agreement. In terms of the agreement
the additional shares increased the Group's entitlement to 100 000 tons (2011: 70 000 tons) at RBCT.
9. Updated statement of reserves and resources and prospects
As reported in the Group's Integrated Report for the year-end 31 December 2011 in July 2012, JSW Energy together with management is continuing
to evaluate the latest Independent Engineer's Report (IER) to identify opportunities to further maximise the economical extraction through detailed
engineering and feasibility studies. These are expected to be completed by 31 December 2012.
10. Financing activities
During the period working capital facilities with Standard Bank of South Africa were replaced by JSW Energy. JSW Energy has extended R18,8 million
(2011: R27,1 million) in support of the Group's operations and continues to commit financial support to the Group.
11. Taxation
No taxation has been provided as the Group has incurred a taxable loss for the period. Deferred tax provisions of R3,5 million (2011: R1,2 million)
have been released as a result of the reduction in the carrying value of the mineral right.
12. Going concern
The Group incurred a net loss of R35 million (2011: R19 million) during the six months. 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. The group's Life of Mine plan reflects that operations are expected to produce positive cash flows after servicing all debt
and capital requirements by 2015.
13. Events after the reporting period
Regulatory approval in respect of the approval of the Water Use Licence Application ("WULA") to allow the Group to begin operations on the Voorslag
reserve has not been received from the Department of Water Affairs. A number of on-going submissions have been made and every effort is being
made to expedite this process. While management is confident that approval will be granted, no commitment has, however, been received. This
delay will have a significant impact on production levels for the second half of the year, as well as the overall profitability of the Group.
14. Capital expenditure commitments
No significant commitments have been made.
15. Contingencies and commitments
There have been no significant changes from those disclosed in the Group's Integrated Report for the year ended 31 December 2011.
16. Prospects
The strategic challenges facing the Group as highlighted in the Annual Report are still key aspects to repositioning the Group. The urgency of these
matters has been enhanced by the deteriorating market conditions facing the company, in particular the significantly lower coal prices and lower
volumes of mining.
The planned BEE transaction is in progress with on-going discussions with various parties; the time taken to consummate a transaction is taking
longer due to the prevailing market conditions and potential acquirers requiring extended periods of time to complete their assessments of the
company and the synergies with their respective operations.
The Group is investigating the long-term acquisition of a meaningful and high-quality source of ROM to allow it to complement the quality of its
resource as well as to compensate for the loss of volumes in the mining of the Group's own reserves.
The Group needs to effect a strategic transaction, inter alia, with a BEE counterparty wherein it acquires/secures and/or effects a complementary
reserve asset base which will complement and de-risk the position of the Group and allow for a more sustainable business model to be effected.
Please refer to paragraph 13 above. Continued delays in the approval of the WULA will have a significant impact on the Group's future profitability.
17. Related party transactions
During the period the Group received funding from its shareholder JSWENRSAL.
18. Changes to directorate
Mr QMSM Mokoetle was appointed as Independent non-executive Chairman on 7 February 2012.
QMSM Mokoetle AJL Rayment
Chairman Chief Executive Officer
3 October 2012
Directors: QMSM Mokoetle (Independent Non-executive Chairman), AJL Rayment (CEO), DGA Miller (CFO)
VP Garg (Non-executive)*, PP Menon (Non-executive)* *India
Registered office: 3rd Floor, 198 Oxford Road, Illovo, Sandton
Company secretary: Mrs PF Smit
Transfer secretary: Computershare Investor Services (Pty) Limited
Sponsor: Exchange Sponsors
Auditors: Deloitte & Touche
Investor relations: Renay Tandy, Ngage Tel (011) 867 7763
Website: www.sacmh.co.za
Date: 08/10/2012 07:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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