Wrap Text
Reviewed condensed results for the 6 months ended 30 June 2014
SOUTH AFRICAN COAL MINING HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1994/009012/06
Share code: SAH ISIN: ZAE000102034
("SACMH" or "the company" or "the Group")
REVIEWED CONDENSED RESULTS OF SACMH AND
ITS SUBSIDIARIES ("THE GROUP")
for the six months ended 30 June 2014
CONSOLIDATED CONDENSED STATEMENT OF FINANCIAL POSITION
Reviewed Audited
As at As at
30 June 31 December
R'000 2014 2013
ASSETS
Non-current assets 363 456 367 094
Property, plant and equipment 78 538 82 176
Intangibles 234 418 234 418
Investments 50 500 50 500
Current assets 9 028 11 451
Trade and other receivables 7 510 7 498
Cash and cash equivalents 1 518 3 953
Total assets 372 484 378 545
EQUITY AND LIABILITIES
Capital and reserves 188 469) (149 217)
Issued capital and premium 233 885 233 885
Accumulated loss 422 354) (383 102)
Non-current liabilities 555 664 522 391
Shareholders' loan 448 735 418 395
Non-current provisions 44 284 41 351
Deferred taxation 62 645 62 645
Current liabilities 5 289 5 371
Current portion of non-current liabilities – 52
Current portion of provisions – 2 933
Trade and other payables 5 289 2 386
Total equity and liabilities 372 484 378 545
CONSOLIDATED CONDENSED STATEMENT OF COMPREHENSIVE INCOME
Reviewed Reviewed
Six months to Six months to
30 June 30 June
R'000 2014 2013
Revenue 11 328 7 568
Turnover 11 328 7 568
Cost of sales (6 879) (5 861)
Gross profit 4 449 1 707
Foreign exchange loss (30 497) (49 997)
Depreciation (3 638) (7 847)
Operating expenses (4 470) (3 607)
Operating loss before finance costs and taxation (34 156) (59 744)
Finance costs (5 095) (3 861)
Loss before taxation (39 251) (63 605)
Taxation – –
Loss attributable to equity holders (39 251) (63 605)
Total comprehensive loss attributable to shareholders (39 251) (63 605)
Earnings and diluted loss per share (0,09) (0,14)
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOW
Reviewed Reviewed
Six months to Six months to
30 June 30 June
R'000 2014 2013
Cash flows generated from operations 2 818 (2 535)
Finance charges paid – (3 861)
Net cash from/(utilised) in operating activities 2 818 (6 396)
Cash from financing activities
New loan from shareholder – 2 100
Advances to shareholders (5 252) –
Net cash from financing activities (5 252) 2 100
Net decrease in cash and cash equivalents (2 434) (4 296)
Cash and cash equivalents at the beginning of the period 3 952 5 385
Cash and cash equivalents at the end of the period 1 518 1 809
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Accumulated
R'000 capital premium loss Total
Balance at 31 December 2013 45 246 188 639 (223 300) 10 585
Total comprehensive loss – – (63 605) (63 605)
Balance at 30 June 2013 45 246 188 639 (286 905) (53 020)
Balance at 31 December 2013 45 246 188 639 (383 102) (149 217)
Total comprehensive loss – – (39 251) (39 251)
Balance at 30 June 2014 45 246 188 639 (422 354) (188 469)
NOTE TO THE STATEMENT OF COMPREHENSIVE INCOME
Reviewed Reviewed
30 June 30 June
Ordinary shares – '000 2014 2013
– 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 loss:
Loss attributable to ordinary shareholders (39 251) (63 605)
Headline loss (39 251) (63 605)
Headline and diluted loss per share (cents) (0,09) (0,14)
Statement of compliance and basis of preparation
The reviewed condensed consolidated interim results have been prepared, under the supervision of Ajit Pratap Singh,
Chief Financial Officer, 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 2013.
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 Rands, which is SACMH's functional
and presentation currency.
The interim results have been reviewed by the Group's auditors, Mazars Inc. Their unqualified review opinion with an
emphasis of matter on SACMH's ability to continue as a going concern with the details disclosed in commentary
point 9, an emphasis of matter on the changes to directorate with details disclosed in commentary point 16 and
specific reference to the reportable irregulatory reported in terms of section 44(2) and 44(3) of the Auditing
Profession Act with reference to section 94 (4)(b)(i) of the Companies Act and sections 2.131, 2.45.2 and 2.57 of King III,
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 the Annual Report for the year ended
31 December 2013 issued in July 2014.
COMMENTARY
1. Performance for the six months to 30 June 2014
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 Minerals and Resources (DMR). All assets and infrastructure is
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. Allocation income has increased compared to the same period last year
due to greater volumes being processed through on SACMH's allocation apportionment with Richard's Bay Coal
Terminal.
2. Foreign exchange loss
The depreciation of the US$/ZAR rate from R10,13 to R10,74 during the reporting period resulted in an unrealised
loss of R30,5 million (2013: R50 million) on the shareholders' loan.
3. Depreciation
Depreciation charges of R3,6 million (2013: R7,8 million) are lower than the previous year due to certain categories
of assets having being fully depreciated.
4. Statement of reserves and resources and prospects
There are no changes to the Groups' estimated reserves and resources.
5. Financing activities
Finance costs of R5,1 million (2013: R3,9 million) are as a result of the shareholders' loan value being inflated by
the forex rate and subsequently greater interest charges on the increased value being charged.
6. Asset management
Working capital has reduced by 40% due to the suspension of operations at Umlabu Colliery.
7. Taxation
No taxation has been provided as the group has incurred a taxable loss for the period. No adjustment of the
deferred tax provisions of R62,2 million was made as there was no change or reduction in the carrying value of the
mineral right or rehabilitation liability.
8. 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 in any impairment of the value of the Mineral Rights
at year-end. No impairment was considered necessary.
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 20,7% (2013: 19%).
9. Going concern
The Group incurred a net loss of R39 million (2013: R63 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.
10. Events after the reporting period
10.1 Transnet recently notified SACMH that the lease of its Blinkpan Siding had been cancelled due to a breach
of its sub-lease arrangement of the lease. The cancellation of the lease will result in a loss of revenue from
the siding facility.
10.2 Management of the company are currently actively engaged with four different BBBEE parties with a
view to obtaining a significant shareholding in SAMCH, which will result in changes to the composition of
the board, audit and remuneration committees. Confidentiality Agreements have been signed and due
diligence exercises commenced. It is expected that negotiations will be finalised by the end of December
2014 and at the latest March 2015.
11. Composition of the audit and remuneration committees
The audit committee consists of one independent non-executive director and two non-executive directors.
The latter directors are employed by JSW Energy Limited, India. These appointments fail to meet the requirements
of section 94 which stipulates that members of the audit committee must not be employees of a related party
or inter-related party of the company. This action was necessitated by the need to reduce expenditure while
the business was on care and maintenance and in attempts to engage with a new BBBEE partner. It is believed
that the non-executive directors will be able to exercise the necessary controls to protect the rights of all
stakeholders with the reduced business activities until the situation has been resolved.
The company does not have a remuneration committee, the board having assumed these responsibilities, failing
to meet the requirements of King IIII which stipulates that the Chairman of the board cannot chair the remuneration
committee and the majority of members of that committee should be independent non-executive directors.
12. Capital expenditure commitments
The Group has no capital expenditure commitments.
13. Contingencies and commitments
There have been no changes from those disclosed in the Group's Integrated Report for the period ended
31 December 2013.
14. 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 DMR with regard to finalisation of the WULA.
15. 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:
2014 2013
Interest paid
– Mainsail Trading 908 826
– JSW Energy Natural Resources South Africa (Pty) Limited 2 902 2 449
Loans from related parties
– Mainsail Trading 20 783 19 005
– JSW Energy Natural Resources South Africa (Pty) Limited 306 780 238 901
16. Changes to directorate
Mr David Miller resigned as acting Chief Executive Officer and Chief Financial Officer and was replaced by
Mr Ajit Pratap Singh, with effect from 30 June 2014.
Mr Ajit Singh has announced his resignation as CEO/CFO of the company with immediate effect and JSW Energy Limited,
the major shareholder, have nominated Mr Chandra Prakash Tated to fill this role, subject to the JSE's approval and
in order to finalise the negotiations with BBBEE parties interested in acquiring shares in SACMH
QMSM Mokoetle AP Singh
Chairman Chief Executive Officer and Chief Financial Officer
29 September 2014
Directors: QMSM Mokoetle (Independent non-executive Chairman)
AP Singh (CEO/CFO)*, VP Garg (non-executive)*, PP Menon (non-executive)*
*India
Registered office: 1st Floor, 198 Oxford Road, Illovo, Sandton
Company secretary: Mrs PF Smit
Transfer secretary: Computershare Investor Services (Pty) Limited
Sponsor: Exchange Sponsors
Auditors: Mazars Incorporated
Website: www.sacmh.co.za
Date: 30/09/2014 08:16:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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