Wrap Text
Reviewed Provisional Group Results For The Year Ended 31 December 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", "the Group" or "the Company")
REVIEWED PROVISIONAL
GROUP RESULTS FOR THE YEAR
ENDED 31 DECEMBER 2014
The reviewed condensed annual results for the year ended 31 December 2014 are presented below.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 31 December 2014 31 December 31 December
2014 2013
R'000 Reviewed Audited
Assets
Non-current assets 359 302 367 094
Property, plant and equipment 74 682 82 176
Intangible assets 180 908 234 418
Deferred tax 53 213 –
Investments 50 500 50 500
Current assets 8 190 11 451
Trade and other receivables 4 845 7 499
Cash and cash equivalents 3 345 3 952
Total assets 367 492 378 545
Equity and liabilities
Capital and reserves (181 201) (149 219)
Issued capital and premium 233 885 233 885
Accumulated loss (415 086) (383 104)
Non-current liabilities 545 327 525 326
Shareholders' loan 498 693 418 395
Non-current provisions 46 576 44 286
Deferred taxation – 62 645
Other liability 58 –
Current liabilities 3 366 2 438
Trade and other payables 3 314 2 438
Other liability 52 –
Total equity and liabilities 367 492 378 545
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2014
31 December 31 December
2014 2013
R'000 Reviewed Audited
Revenue 42 595 23 180
Cost of sales (37 714) (13 386)
Gross profit 4 881 9 794
Foreign exchange losses (75 575) (61 244)
Net impairment charge (53 510) (115 350)
Depreciation (6 752) (8 421)
Profit on sale of assets – 800
Other income 400 –
Operating expenses (7 368) (6 447)
Operating loss before finance costs and taxation (137 924) (180 866)
Finance costs (9 907) (11 236)
Loss before taxation (147 831) (180 866)
Taxation 115 857 32 298
Loss for the year (31 974) (159 804)
Total comprehensive loss for the year (31 974) (159 804)
Total comprehensive loss attributable to ordinary shareholders (31 974) (159 804)
Diluted average number of shares ('000) 452 454 452 454
Basic and diluted loss per share (cents) (7,06) (35,32)
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
for the year ended 31 December 2014
Share Share Accumulated
R'000 capital premium loss Total
Balance at 31 December 2012 – Audited 45 246 188 639 (223 300) 10 585
Total comprehensive loss for the year – – (159 804) (159 804)
Balance at 31 December 2013 – Audited 45 246 188 639 (383 104) (149 219)
Total comprehensive loss for the year – – (31 974) (31 974)
Balance at 31 December 2014 – Reviewed 45 246 188 639 (415 084) (181 201)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2014
31 December 31 December
2014 2013
R'000 Reviewed Audited
Cash flows generated from/(utilised in) operations 6 397 431
Finance charges paid (2 032) (11 236)
Interest received 28 2
Net cash generated from/(utilised in) operating activities 4 393 (10 803)
Net cash generated from/(utilised in) investing activities – 800
Net cash from financing activities (5 000) 8 570
Net decrease in cash and cash equivalents (607) (1 433)
Cash and cash equivalents at beginning of year 3 952 5 385
Cash and cash equivalents at end of year 3 345 3 952
Statement of compliance and basis of preparation
The condensed provisional financial statements have been prepared in accordance with the framework concepts and the
measurement and recognition requirements of International Financial Reporting Standards (IFRS) and in terms of IAS 34 Interim
Financial Reporting, the SAICA Reporting Guides, as issued by the Accounting Practices Committee, the Companies Act of
South Africa and the Listings Requirements of the JSE Limited. The accounting policies and methods of computation used to
prepare the financial statements have been consistently applied to all periods presented and are consistent with those used in
the annual financial statements for the financial year ended 31 December 2014.
The financial statements have been prepared on the going-concern basis taking into account the fact that the Group is dependent
on JSW Energy Limited (a company listed on the Indian Stock Exchanges and operating through its subsidiary JSW Energy
Natural Resources South Africa (Proprietary) Limited ("JSW"), which will continue to support SACMH. JSW have indicated their
firm intention to continue financial support in writing subject to the following:
- JSW obtains board approval for the additional funding at the time;
- JSW fulfils all regulatory requirements as prescribed by India legislation;
- JSW remains the majority shareholder, and retain the management and operational control of SACMH; and
- JSW has demonstrated its ongoing support during the current financial year.
NOTES TO THE PROVISIONAL RESULTS AS AT 31 DECEMBER 2014
Note 1 Earnings and headline earnings per share
31 December 31 December
2014 2013
R'000 Reviewed Audited
Basic loss (31 974) (159 804)
Adjusted for:
Impairment of mining right 53 510 115 350
Tax effect of impairment of mining right (14 983) (32 298)
(Profit) on sale of non-current assets – (800)
Headline loss (6 553) (77 552)
Diluted average number of shares ('000) 452 454 452 454
Basic and diluted loss per share (cents) (7,06) (35,32)
Weighted average shares in issue for the year ('000) 452 454 452 454
Diluted average shares in issue ('000) 452 454 452 454
Headline and diluted loss per share (cents) (1,44) (17,14)
Net asset value per share (cents) (40,04) (32,98)
Tangible less all intangibles; net asset deficit value per share (cents) (41,23) (70,28)
REVIEW OPINION
The condensed consolidated group results have been reviewed by Mazars, who have performed the review in accordance with ISRE 2410
"Review of interim financial information performed by the independent auditor of the entity". A modified report with an emphasis of matter on
going concern has been issued. A copy of the full modified review report is available at the registered office of the company. An extract of the
emphasis of matter in the report is as follows:
"Without qualifying our opinion, we draw attention to note 10 of the condensed consolidated results of South African Coal Mining Holdings
Limited for the year ended 31 December 2014 and the financial results which indicate that the Group incurred a net loss of R31.9 million for the
year ended 31 December 2014, and as at that date, the Group's total liabilities exceed its total assets by R181,2 million. In addition, the Group's
going concern status is dependent on the continued financial support of JSW Energy Limited (a company listed on the Indian stock exchange
and operating through its subsidiary, JSW Energy Natural Resources South Africa Proprietary Limited (JSWSA)). JSWSA has confirmed, in
writing, their firm intention to continue their financial support to South African Coal Mining Holdings Limited (SACMH).
This support is subject to JSW 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 Company's ability to continue as a going concern."
Other legal and regulatory matters relating to non-compliance with certain requirements of the Company's Act of 2008, King III and Broad-Broad
Based Socio-Economic Empowerment Charter for the South African Mining and Minerals Industry have been reported. Further details on these
areas of non-compliance are detailed in the modified review report.
COMMENTARY
1. Performance for the 12 months to 31 December 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 Water Affairs (DWAF). 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. This has resulted in a movement in the f ollowing items reflected in the statement of comprehensive income:
- Turnover increased by R19,4 million
- Cost of sales increased by R24,3 million
- Gross profit decreased by R4,5 million
- Operating expenses increased by R0,9 milllion
2. Foreign exchange loss
The depreciation of the US$/ZAR rate from R10.674 to R11.697 during the reporting period resulted in an unrealised foreign exchange
loss of R75.3 million (2013: R61,2 million) on the shareholders' loan.
3. Depreciation
Depreciation charges of R6.7 million (2013: R8.4 million) are lower than the previous comparative period as a result of certain assets being
fully depreciated in the current year.
4. Amortisation of mining right
No amortisation charge was recorded (2013: Nil) as no mining activities were conducted during the year.
5. Statement of reserves and resources and prospects
There are no changes to the Group's estimated reserves and resources as no mining activities took place.
6. Financing activities
The movement on the shareholders loan relate to foreign exchange movement as a result of the weakening Rand as well as a capital
repayment of R5 mIllion.
7. Asset management
Working capital has reduced primarily due to tighter credit management hence the lower trade receivables number.Cash and trade
payables combined are slightly lower than previous year due to subdued trading conditions.
8. Taxation
No normal taxation adjustments have been made for the year as the group has incurred further tax losses for the current year. A movement
in the deferred tax liability of R115.8 million (2013: R32.3 million) was recorded as a result of the reduction in the carrying amount of the
mining right due to the impairment loss recognised as well as the increase in the of the rehabilitation provision.
9. 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. An impairment of R53.5 million
(2013: R115,3 million) has been raised against the value of Mining Rights as a result of the reduction of the forecast export price of coal
as well as the increase in anticipated mining costs.
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 19.41% (2013: 20.7%).
10. Going concern
The Group incurred a net loss of R31.9 million (2013: R159.8 million) during the year. The Group's going concern has been underwritten
by the support of JSW to SACMH. JSW has confirmed its support in writing of their intention to continue financial support of SACMH.
In terms of the loan agreements JSW 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 capital requirements by 2016 once the WULA is received.
11. Events after the reporting period
The general coal market remains under pressure due to the commodity price of coal remaining depressed.
As a result of the prevailing market conditions lower revenues are expected as coal producers are reducing production.
The direct effect of this on the Company is that allocation revenue as well as siding rental income will reduce as the market slows down.
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 year 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 will continue to lease its logistical and infrastructural assets to third parties in the interim to offset the costs of 'Care and
Maintenance'.
No commitment has been received from the Department of Water Affairs 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
R'000 R'000
Interest paid
– Mainsail Trading 55 (Pty) Limited 1 849 1 696
– JSW Energy Natural Resources South Africa (Pty) Limited 7 875 7 393
Loan repayment
– JSW Energy Natural Resources South Africa (Pty) Limited (5 000) –
Loans from related parties
– Mainsail Trading 55 (Pty) Limited 21 722 19 874
– JSW Energy Natural Resources South Africa (Pty) Limited 476 971 398 521
There were no other related party transactions or balances during the year.
16. Changes to directorate
Mr DGA Miller resigned CEO/CFO on 30 June 2014 and was replaced by Mr AP Singh. Mr CP Tated was appointed on
30 September 2014 to fill the vacant position of CEO/CFO following the resignation of Mr AP Singh on 29 September 2014.
Mr VP Garg, non-executive director, resigned as a director of the Company on 18 December 2014.
Mr Kareem Ashraff was appointed an independent non-executive director on 30 January 2015 to fill the vacant seat on the board
following the resignation of Mr Garg.
Mr Keith Harris was appointed CEO on 2 February 2015. Mr CP Tated would retain the position of CFO.
Messrs Mesuli Dhlamini and Joe Mokgokong were appointed as independent non-executive directors on 18 May 2015.
QMSM Mokoetle CP Tated
Chairman Chief Financial Officer
18 June 2015
Directors: QMSM Mokoetle (Independent non-executive Chairman), K G Harris (CEO), CP Tated (CFO),
K Ashraff (Indpendent non-executive), PP Menon (non-executive)*,
MHC Dhlamini (independent non-executive), JM Mokgokong (independent non-executive) *India
Registered office: 1st Floor, Oxford Muse, 198 Oxford Road, Illovo, Sandton
Company secretary: Mrs PF Smit
Transfer secretary: Computershare Investor Services (Pty) Ltd
Sponsor: Exchange Sponsors
Auditors: Mazars
Website: www.sacmh.co.za
Date: 25/06/2015 05:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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