| Thu 9 Apr 2009, 17:48 | | SAH - SACMH - Unaudited results for the year ended 31 December 2008 and reminder |
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SAH
SAH
SAH - SACMH - Unaudited results for the year ended 31 December 2008 and reminder
of cautionary announcement
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")
UNAUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2008 AND REMINDER OF
CAUTIONARY ANNOUNCEMENT
Shareholders are referred to the announcement released by the company on 30
March 2009 advising that the board had resolved to place the company`s
operations under care and maintenance for a period of three months. Given this
situation, the auditors of the company are not able to provide a review or
audit opinion on the financial results presented below as they have not
completed their audit procedures. However, the board is of the view that,
in the interests of full, transparent and timeous disclosure,
it is appropriate to release the financial results for the year ended 31
December 2008 without an opinion. Audited or reviewed results will be released
as soon as it is possible to do so.
Consolidated balance sheet as at 31 December 2008
Group
Unaudited and
Unaudited restated
as at as at
31 December 31 December
2008 2007
R`000 R`000
Assets
Noncurrent assets 521,830 513,795
Property, plant and equipment 151,460 135,440
Intangible assets 370,370 378,355
Current assets 52,136 21,858
Inventories 15,320 7,891
Trade and other receivables 22,106 12,387
Cash and cash equivalents 14,710 1,580
Total assets 573,966 535,653
Equity and liabilities
Capital and reserves 203,179 194,055
Issued capital 227,784 124,473
Retained (loss) / income (24,605) 69,544
Revaluation reserve - 38
Noncurrent liabilities 241,765 274,672
Interest bearing liabilities 107,273 117,276
Noninterest bearing liabilities - 1,500
Noncurrent provisions 34,431 35,444
Deferred taxation 100,061 120,452
Current liabilities 129,022 66,926
Trade and other payables 98,283 36,769
Provisions 5,883 1,870
Current portion of noncurrent liabilities 24,856 23,297
Bank overdraft - 4,990
Total equity and liabilities 573,966 535,653
Number of shares in issue (`000) 438,454 411,810
Net asset value per share (cents) 46.34 47.12
Tangible net asset value per share (cents) (38.13) (44.75)
Consolidated income statement for the period ended 31 December 2008
Group
Unaudited and
Unaudited for restated for
the 12 the 18
months months
ended 31 ended 31
December December
2008 2007
R`000 R`000
Revenue 179,177 88,060
Cost of sales (146,970) (53,161)
Gross profit 32,207 34,899
Other gains and losses (712) 138,020
Impairment loss (63,008) (25,396)
Depreciation and amortisation (24,459) (6,404)
Operating expenses (25,529) (13,765)
Operating (loss)/profit (81,501) 127,354
Finance income 1,397 490
Finance costs (25,861) (7,247)
(Loss)/profit before taxation (105,965) 120,597
Income tax expense/(credit) 11,778 (8,730)
Net (loss)/profit for the period (94,187) 111,867
Attributable to Equity holders of the parent (94,187) 111,867
(Loss) / earnings per share
Number of ordinary shares in issue at the
end of the period (`000) 438,454 411,810
Weighted average number of ordinary shares
in issue (`000) 415,299 137,524
Basic and dilutive (loss) / earnings per
share (cents) (22.68) 81.34
Reconciliation between (loss) / earnings and
headline (loss)/earnings per share
Basic (loss)/earnings per share (cents) (22.68) 81.34
Profit on debt restructure and acquisitions
per share (cents) - (98.90)
Impairments per share (cents) 15.17 18.47
Headline basic and dilutive (loss)/earnings
per share (cents) (7.51) 0.91
Consolidated statement of changes in equity for the period ended 31 December
Group - Unaudited Share Share Revaluation
capital premium Reserve
R`000 R`000 R`000
Balance at 1 July 2006 6,000 12,562 -
Issue of ordinary shares 35,181 70,730
Gain on revaluation of property,
plant and equipment - - 145
Transfer on revaluation reserve realised - - (107)
Restated net profit for the period - - -
Net profit as previously reported - - -
Prior year adjustment - - -
Restated revaluation reserve
Gain on revaluation of mineral rights
as previously reported - - 325,890
Change in accounting policy - - (325,890)
Balance at 1 January 2008 41,181 83,292 38
Issue of ordinary shares 2,664 103,914
Share issue costs - (3,267) -
Transfer on revaluation reserve realised - - (38)
Net loss for the period - - -
Balance at 31 December 2008 43,845 183,939 -
Group - Unaudited Accumulated Total
profit/(loss)
R`000 R`000
Balance at 1 July 2006 (42,430) (23,868)
Issue of ordinary shares 105,911
Gain on revaluation of property,
plant and equipment - 145
Transfer on revaluation reserve realised 107 -
Restated net profit for the period 111,867 111,867
Net profit as previously reported 115,143 115,143
Prior year adjustment (3,276) (3,276)
Restated revaluation reserve
Gain on revaluation of mineral rights
as previously reported - 325,890
Change in accounting policy - (325,890)
Balance at 1 January 2008 69,544 194,055
Issue of ordinary shares 106,578
Share issue costs - (3,267)
Transfer on revaluation reserve realised 38 -
Net loss for the period (94,187) (94,187)
Balance at 31 December 2008 (24,605) 203,179
Consolidated cash flow statement for the period ended 31 December 2008
Group
Unaudited and
Unaudited for restated for
the 12 months the 18 months
ended 31 December ended 31 December
2008 2007
R`000 R`000
Cash flows from operating activities
Cash generated by operations 26,766 60,993
Net financing costs (24,464) (6,757)
2,302 56,236
Cash flows from investing activities
Acquisition through business combination - (124,783)
Payments for property,
plant and equipment (92,399) (51,137)
Proceeds from disposal of property,
plant and equipment 17,657 -
Payments for intangible assets (2,808) -
(77,550) (175,920)
Cash flows from financing activities
Proceeds from share issue 106,578 -
Payments for share issue costs (3,267) -
Proceeds from borrowings 59,744 107,282
Repayment of borrowings (69,687) -
93,368 107,282
Net increase / (decrease) in cash
and cash equivalents 18,120 (12,402)
Cash and cash equivalents at
beginning of the period (3,410) 8,992
Cash and cash equivalents at the
end of the period 14,710 (3,410)
Segment information
For management purposes, the group is organised into three major operating
divisions - coal, equipment leasing and railway siding. These divisions are
the basis on which the group reports its primary segment information. The
principal products and services of each of these divisions are as follows:
Coal - the mining and sale of coal.
Equipment leasing - the leasing of movable mining equipment.
Railway siding - the leasing of owned and leased railway sidings.
Segment revenue and segment results - continuing operations
Coal Equipment leasing
Unaudited Unaudited and Unaudited Unaudited and
2008 restated 2008 restated
2007 2007
R`000 R`000 R`000 R`000
Segment revenue
and segment result
Continuing operations
Segment revenue
External sales 157,984 74,429 21,193 13,631
Intersegment
sales
External revenue 157,984 74,429 21,193 13,631
Other gains and losses 712 138,020 - -
Operating
(loss)/profit (83,334) 123,287 2,074 4,067
Net finance charges (18,801) (5,262) (5,663) (1,495)
(Loss)/profit
before tax (102,135) 118,025 (3,589) 2,572
Income tax expense 11,883 (6,504) 105 (743)
(Loss)/profit for
the year from
continuing operations (89,883) 110,038 (4,063) 1,829
Segment assets and
liabilities
Assets 478,107 457,165 34,780 55,533
Total assets 478,107 457,165 34,780 55,533
Liabilities (234,764) (190,364) (26,724) (38,714)
Deferred tax (99,746) (120,033) (315) (419)
liabilities
Total liabilities (334,510) (293,227) (27,039) (39,133)
Capital expenditure 11,674 133,820 20,745 41,003
Depreciation 5,726 491 8,340 2,408
Amortisation 10,163 950
Noncash items 59,901 110,614 3,107 -
Railway siding Total
Unaudited Unaudited and Unaudited Unaudited and
2008 restated 2008 restated
2007 2007
R`000 R`000 R`000 R`000
Segment revenue
and segment result
Continuing operations
Segment revenue
External sales - - 179,177 88,060
Intersegment
sales
External revenue - - 179,177 88,060
Other gains and losses - - 712 138,020
Operating
(loss)/profit (241) - (81,501) 127,354
Net finance charges - - (24,464) (6,757)
(Loss)/profit
before tax (241) - (105,965) 120,597
Income tax expense - - 11,778 (7,247)
(Loss)/profit for
the year from
continuing operations (241) - (94,187) 111,867
Segment assets
and liabilities
Assets 61,079 1,097 573,966 513,795
Total assets 61,079 1,097 573,966 513,795
Liabilities (9,238) (989) (270,726) (230,067)
Deferred tax - - (100,061) (120,452)
liabilities
Total liabilities (9,238) (9,238) (370,787) (341,598)
Capital expenditure 59,980 1,097 92,399 175,920
Depreciation 230 - 14,296 3,129
Amortisation 10,163 950
Noncash items - - 63,008 110,614
Prior period adjustments
As previously Unaudited Unaudited and
reported prior period restated
31 Dec 2007 adjustment 31 Dec 2007
R`000 R`000 R`000
Balance sheet
Noncurrent assets 976,070 (462,275) 513,795
Current assets 21,858 21,858
Capital and reserves (523,220) 329,165 (194,055)
Noncurrent liabilities (407,781) 133,109 (274,672)
Current liabilities (66,925) (1) (66,926)
Income statement
Gain on debt restructure 30,762 - 30,762
Gain on acquisitions 105,248 - 105,248
Impairment on acquisitions (24,407) - (24,407)
Depreciation and amortisation (3,129) (3,275) (6,404)
Nett profit for the period 115,143 (3,275) 111,867
Earnings per share 83.72 (2.38) 81.34
Headline earnings per share 3.29 (2.38) 0.91
Care and maintenance and unaudited results
On 30 March 2009, the board announced, with regret, that following
significantly reduced coal prices and difficult operating conditions, the
company`s operations were to be placed on "care and maintenance" for a period
of 3 months. External financing has been sourced to cover the expenses during
this care and maintenance period. During this period, the board will review the
operations of the company, including capital requirements and cost structures,
with a view to determining the future direction of the company`s business.
The board is currently actively engaging in several processes to find an
optimal long term solution for the company including:
- an internal process to reduce costs as a matter of urgency;
- an externally assisted process to explore the recapitalisation of the
business; and
- an externally assisted process to find a technology partner to assist with
cost reductions.
Shareholders will be kept informed of developments in this regard and are
reminded that the company released a cautionary announcement on 30 March 2009
and that they should accordingly be exercising caution when trading in the
company`s securities.
Review of operations
During the year, the company advanced its strategy of logistical development
with the completion of the Umlabu siding, thereby reducing road transport
costs, and securing access to 500 000 tons of RBCT allocation through the Phase
V development.
However, the year under review was very challenging to the small operational
team as the complexities of conversion from `mining right holder` to `mining
operator` overextended capacity and capabilities. The group previously followed
a strategy of contract mining with outsourced partners. The strategic services
partnership with Fraser Alexander, which was concluded in order to add skills
and capacity to support the mining contractor, has since been terminated and an
internal Chief Operating Officer, Mining Engineer and a Logistics and
Maintenance Manager have been appointed.
The Umlabu mine was in `start up` phase during the year. Operations were
affected by heavy rain in January, February and December 2008 as well as
operational problems at the plant. Fraser Alexander took over the management of
the plant on 1 July 2008 and a significant amount of time and resources were
invested in bringing the plant into sustainable production. Despite this,
production at the plant remained disappointing resulting in a decision to in
source this process. In short, despite the increase in the spot coal price in
the period of May and September 2008, the operations still returned a loss as
a result of a material stock loss, significant increases in contractor mining
costs and higher interest rates. During October, a material stock discrepancy
was detected between the production records and the weighbridge. An extensive
external investigation did not result in any recovery and a claim is being
investigated. Improved internal controls have now been instituted and the
security company is also being replaced. Although, subsequent to the year end,
the prices of diesel and steel have come down, mining costs during the 2008
financial year increased more than 40% as a result of increases in diesel,
explosives, steel, TFR railage and equipment costs.
No mining was conducted at the Ilanga site this year. The old order mining
right was not converted to a new order right and a mine closure certificate has
been applied for. As a result, the group had to impair the remaining Ilanga
assets to realisable value but is actively seeking to deploy these in the
existing operations.
During the year, the company embarked on a capital raising program to raise
R150 million in terms of which R79.5 million was raised from a 79% subscribed
rights offer and R27 million from a private placement of shares, both of which
were priced at R4,00 per share. These funds were used to build the Umlabu
siding, upgrade the Blinkpan siding and to acquire other assets. Building cost
increases had a significant effect on the Umlabu siding costs where the full
cost of R61 million exceeded the R42 million reported in the rights offer
circular. Additional capital expenditure will be required to continue the plant
upgrade process into the 2009 financial year.
Changes to the board
Karl Gribnitz, the founder of the group and the previous CEO, was not available
for reappointment upon the expiry of his contract as CEO in December 2008.
However, he has remained on the board. Grant Scrutton was appointed as CEO
with effect from 1 March 2009.
Notes to the annual financial statements
1. Basis of reporting
The annual financial statements set out above have been prepared in
accordance with the measurement and recognition criteria of International
Financial Reporting Standards ("IFRS"), and its interpretations adopted by the
International Accounting Standards Board ("IASB"), the Listings Requirements of
the JSE Limited and Schedule 4 of the South African Companies Act. The
accounting policies and methods of computation applied in these annual
financial statements are consistent with those used in the preparation of the
financial statements for the period ended 31 December 2007, except where it is
specifically indicated that this is not the case (refer note 2 Change in
accounting policy).
The results presented above have been prepared on the going concern basis.
However, until the matters set out in the paragraph "Care and maintenance
and unaudited results" have been satisfactorily resolved, the board
of directors is not able to determine the appropriateness of the going concern
basis.
2. Change in accounting policy
The audit committee and board have reviewed the accounting policy for
intangible assets relating to mineral rights. These assets were previously
revalued using the revaluation model and the revaluation portion shown as non
distributable reserves. The board has decided to change to the historical cost
basis to enhance industry comparability. This resulted in a reduction of R 459
million in the carrying value of intangible assets (mineral rights) from R 840
million as previously reported (31 December 2007) to the restated cost of R 381
million, before amortisation of R 3,275 million, resulting in the restated
carrying value of R 378,3 million as at 31 December 2007.
3. Property, plant and equipment ("PPE")
3.1 Additions
The total payments for additions to PPE amounted to R 92,399 million (2007: R
175,920 million), of which R 61,077 million (2007: R 0,3 million) was
attributable to the construction and commissioning of the Umlabu railway
siding.
3.2 Impairments
The total impairments on PPE are R 45,056 million (2007: R Nil). The asset
classes affected in the impairments are "Land & buildings" in the amount of R
6,048 million (relating to the Blinkpan siding) as well as the old Ilanga
"Plant & equipment" (R 35,901 million) and other movable mining equipment which
was impaired by R 3,107million.
4. Trade and other receivables
The total impairment on trade and other receivables is R 17,953 million (2007:
R 0,9 million). Trade and other receivables in the subsidiary, Ilanga Coal
(Pty) Ltd, which related to the acquisition of the subsidiary in the prior
period, were impaired by R 11,521 million. In another subsidiary, South African
Coal Mining Operations (Pty) Ltd, trade and other receivables to the value of R
6,431 million were impaired.
5. Capital and reserves
5.1 Issued capital
On 21 July 2008, SACMH announced a rights offer and a general issue of shares
for cash at an issue price of 400 cents per share. The company raised R 106,5
million through this capital raising process. Share issue costs attributable to
this capital raising process amounted to R 3,267 million.
5.2 Revaluation reserve
The revaluation reserve previously reported at R 326 million was reversed as a
result of the change in accounting policy (refer note 2 Change in accounting
policy.)
6. Contingencies and commitments
6.1 Summonses issued against Ingwe Collieries
The summonses against Ingwe Collieries instituted by the subsidiaries of SACMH
(Jigmining No 1 (Pty) Ltd and Jigmining No 3 (Pty) Ltd) have not been resolved
through arbitration as at balance sheet date. The board has resolved to
reactivate the legal process while still continuing to negotiate commercial
alternatives.
6.2 Commitment to deliver coal
SACMH has two outstanding contracts for 165 000 tons of coal to be delivered
including deliveries for the period under "care and maintenance." The group is
currently endeavouring to find alternative ways of completing the undelivered
portions of these contracts.
6.3 Mkhulu Resources (Pty) Ltd
Subsequent to the year end, the company has formally put this contractor in
breach of the outsource mining contract and is in discussions to resolve the
issues. A claim is also being investigated as a result of the breach and a
counter claim has been intimated.
7. Related parties
With effect from 1 June 2008, Mkhulu Resources (Pty) Ltd no longer qualified as
a related party due to the resignation of its key shareholder from the board.
8. Capital commitments
Capital commitments as at 31 December 2008 amounted to R 4,4 million relating
to a new beneficiation plant at the Umlabu mine and R 3,6 million in relation
to the upgrade of the Blinkpan siding.
9. Prior period adjustments
The prior period adjustments as set out in the table above "Prior period
adjustments" reflects the change in accounting policy and the resultant impact
thereof in addition to the amortisation of mineral rights (refer to note 2
Change in accounting policy).
10. Post balance sheet events
As reported above, the board of SACMH resolved on 30 March 2009 to cease
operations of the company with immediate effect for a period of three months
and to place the operations on care and maintenance.
For and on behalf of the board
TV Mokgatlha GM Scrutton
Chairman Chief Executive Officer
Mirkwood
9 April 2009
Directors: P Kotze, M Steyn TV Mokgatlha (Chairman)*, KJ Gribnitz*,
WN Gardyne*, LM Ndala*, V Lickfold* (* Nonexecutive)
Registered office: Mirkwood Estate, Plot 26, Klipkop, JR 396
Transfer secretaries: Computershare Investor Services (Pty) Ltd
Sponsor: QuestCo Sponsors (Pty) Ltd
Auditors: Deloitte & Touche
Date: 09/04/2009 17:48:55 Produced by the JSE SENS Department.
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