| Fri 2 Jul 2010, 17:00 | | SAH - South African Coal Mining Holdings Limited - Audited results of SACMH |
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SAH
SAH
SAH - South African Coal Mining Holdings Limited - Audited results of SACMH
and its subsidiaries ("The Group") for the years ended 31 December 2008 and 31
December 2009 and renewal 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")
AUDITED RESULTS OF SACMH AND ITS SUBSIDIARIES ("THE GROUP") FOR THE YEARS
ENDED 31 DECEMBER 2008 AND 31 DECEMBER 2009 AND RENEWAL OF CAUTIONARY
ANNOUNCEMENT
31 Dec 09 31 Dec 08 31 Dec 07 31 Dec 07
Audited Audited Restated Previously
Audited Audited
Statements of financial position as at 31 December 2009 (R`000)
Assets
Non -current assets 538 102 521 830 513 794 976 070
Property, plant & 118 703 151 460 136 069 135 440
equipment
Mining rights 419 399 370 370 377 725 840 630
Current assets 15 915 52 136 21 858 21 858
Inventories - 15 320 7 891 7 891
Trade and other 6 850 22 106 12 387 12 387
receivables
Taxation receivable 2 083 - - -
Cash and cash equivalents 6 982 14 710 1 580 1 580
Total assets 554 017 573 966 535 652 997 928
Equity and liabilities
Capital and reserves 185 308 198 656 194 055 523 220
Issued capital and 233 885 227 784 124 473 124 473
premium
(Accumulated loss)/ (60 184) (29 128) 69 582 72 819
retained income
Revaluation reserve - - - 325 928
Share holder loans 11 607 - - -
Non-current liabilities 226 490 254 901 274 671 407 781
Interest bearing 50 289 107 273 118 775 118 775
liabilities
Non-current provisions 34 431 34 431 35 444 35 444
Deferred taxation 141 770 113 197 120 452 253 562
Current liabilities 142 219 120 409 66 926 66 927
Trade and other payables 11 511 46 500 32 772 32 773
Short term borrowings - 32 334 2 017 2 017
Taxation Liability - 16 719 3 850 3 850
Current portion non- 130 708 24 856 23 297 23 297
current liabilities
Bank overdrafts - - 4 990 4 990
Total equity and 554 017 573 966 535 652 997 928
liabilities
Number of shares in Issue 452 454 438 454 411,810 411 810
(000`s)
Net asset value per share 40.96 45.31 47.12 127.05
(cents)
Tangible net asset value (28.91) (15.51) (17.96) (17.96)
per share (cents)
Statement of comprehensive income for the periods ended 31 December 2008 and
31 December 2009 (R`000)
12 months 12 Months 18 Months 18 Months
31 Dec 2009 31 Dec 31 Dec 31 Dec
2008 2007 2007
Revenue 38 520 179 177 88 060 88 060
Cost of Sales (62 248) (148 072) (53 161) (53 161)
Gross (loss) / profit (23 728) 31 105 34 899 34 899
Other gains and losses - (712) 2 010 2 010
Gain on restructuring 114 520 - 30 762 30 762
Gain on acquisitions - - 105 248 105 248
Impairment of assets (11 781) (63 008) (25 396) (25 396)
Loss from sale of non (21 170) -
current assets
Depreciation and (12 188) (24 460) (6 404) (3 128)
amortisation
Rehabilitation provision - 1 103 - -
release
Operating expenses (22 771) (25 529) (13 765) (13 765)
Operating income / (loss) 22 882 (81 501) 127 354 130 630
Finance income - 1 397 490 490
Finance costs (25 019) (25 861) (7 247) (7 247)
(Loss) / income before (2 137) (105 965) 120 597 123 873
taxation
Taxation (28 919) 7 255 (8 730) (8 730)
Total comprehensive (31 056) (98 710) 111 867 115 143
(loss)/income for the
period
Weighted average shares 438 454 422 438 137 524 137 524
in issue
Basic earnings per share (7.08) (23.37) 81.34 83.73
Gain on restructure per (26.12) - (98.94) (98.94)
share
Impairments per share 2.50 9.93 18.47 18.47
Loss on sale of non- 4.83 - - -
current assets per share
Tax effects thereon (7.31) - - -
Headline earnings per (18.56) (13.44) (0.87) 3.26
share
Statement of cash flows for the periods ended 31 December 2008 and 31
December 2009 (R`000)
12 months 12 Months 18 Months 18 Months
31 Dec 2009 31 Dec 31 Dec 31 Dec
2008 2007 2007
Cash flow from operations 3 801 (6 657) 62 993 62 993
Net finance charges paid (25 019) (24 464) (6 757) (6 757)
Taxation paid (9 497) - - -
Net cash flow from (30 715) (31 121) 56 236 56 236
operating activities
Cash flows from investing
activities
Acquisition of - - (124 783) (124 783)
subsidiaries
Purchase of property, (10 083) (98 371) (51 137) (51 137)
plant and equipment
Purchase of intangibles - (2 808) - -
Disposal of property, - 26 735 - -
plant and equipment
Net cash used in (10 083) (74 444) (175 920) (175 920)
investing activities
Cash flow from financing
activities
Net proceeds from share (57) 99 811 - -
issue
Movement in borrowings 16 133 (6 443) 107 281 107 281
Movement in short term 16 994 30 317 - -
borrowings
Net cash from financing 33 070 123 685 107 281 107 281
activities
Net (decrease) / increase (7 728) 18 120 (12 403) (12 403)
in cash
Cash at the beginning of 14 710 (3 410) 8 993 8 993
the period
Cash at the end of the 6 982 14 710 (3 410) (3 410)
period
Consolidated statement of changes in equity for the years ended 31 December
2008 and 31 December 2009
Share Share Equity Accumulated Total
Capital Premium Loan Loss
Balance at 30 June 2006 6 000 12 562 - (42 285) (23 723)
Issue of ordinary shares 35 181 70 730 - - 105 911
Restated comprehensive 111 867 111 867
income
- As previously reported - - - 115 142 115 142
- Amortisation of mineral - - - (3 275) (3 275)
right
Balance at 31 December 41 181 83 292 - 69 582 194 055
2007
Issue of ordinary shares 2 665 103 913 - - 106 578
Share issue costs - (3 267) - - (3 267)
Total comprehensive loss - - - (98 710) (98 710)
for period
Balance at 31 December 43 846 183 938 - (29 128) 198 656
2008
Issue of ordinary shares 1 400 4 758 - - 6 158
Share issue costs - (57) - - (57)
Increase in equity loans - - 11 607 - 11 607
Total comprehensive loss - - - (31 056) (31 056)
for period
Balance at 31 December 45 246 188 639 11 607 (60 184) 185 308
2009
Restructuring and results of the Group`s strategic equity partner search
During May 2010, JSW Energy Limited of India ("JSW") acquired 49.8% of SACMH`s
controlling company Royal Bafokeng Capital (Pty) Ltd ("RBC") and made a firm
intention to make an offer to other minorities at 30 cents a share and have
provided the SRP with the required guarantees. In addition, JSW has committed
to providing the working capital to restart the mine and to return the Group
to a going concern position. Based on the JSW commitments, the directors are
of the opinion that the financial statements fairly present the financial
position the Group at 31 December 2009 and the results of their operations and
cash flows for the year then ended.
Statement of compliance and basis of preparation
The annual financial statements have been prepared in accordance with
International Financial Reporting Standards, the Companies Act of South Africa
and the Listings Requirements of the JSE Limited. The accounting policies used
to prepare the financial statements have been consistently applied to all
periods presented. These financial results have been audited by the company`s
auditors, Deloitte & Touche.
Audit opinion
Without qualifying their report, the auditors have reported an "emphasis of
matter" that highlights that the Group`s going concern is dependent on JSW
investing into SACMH, restructuring the Standard Bank loans and recommencing
operations. JSW have indicated their firm intention to provide CAPEX funding
of R25 million (of the estimated R65 million required) in the short term and
R40 million of working capital to restart the operations at the mine in the
next few months. A copy of their audit report is available for inspection at
the company`s registered office.
Review of Operations and Restructuring
The 2009 results above reflect three months of trading and the results of the
"Care and Maintenance" for the remaining nine months where assets such as the
two sidings (Blinkpan and Umlabu) were utilised to generate income.
Subsequent to the year end the price of export coal has increased from an
average $55/ton to $93/ton.
The R114 million "Gain on Restructuring" reflects the result of the schemes of
arrangements and places the Group in a viable state to re employ staff and
restart operations once the required working capital has been transferred. A
deferred taxation liability of R32.1 million was raised against this gain
The loss from sale of non-current assets of R21.1 million includes R10.3
million resulting from BHP Billiton serving formal notice on the Group to
remove its equipment from the Koornfontein site as part of their sale of this
operation to third parties. The balance of the loss is as a result of the
return of equipment on cancellation of the lease agreements as part of the
restructuring process.
Depreciation and amortisation is significantly less than the previous year as
a result of the mining right not being amortised while the mine was under care
and maintenance.
Savings in operating costs have been off-set by bad debts of R4.6 million and
restructuring legal and technical fees of R5.5 million.
There has been no change in the rehabilitation provision as a result of the
rehabilitation being done at the Umlabu site during the "Care and Maintenance"
period and an adjustment of the Ilanga provision from a "new licence
application basis" to a "mine closure basis".
The RBCT Phase V allocation was formally awarded on 15 December 2009 and has
been accounted for in the results for the period. R50.5 million of the amount
due will be paid as allocation is made available, while R5 million is
reflected under the current portion of non-current liabilities. This
allocation is subject to the conditions precedent that the allocation is mined
from the Umlabu mine and delivered via the Umlabu siding. An additional
condition is that the BBBEE status of SACMH remains unchanged for another
year.
The bulk of the additions to property, plant and equipment during the year
were improvements to the Blinkpan siding and the new Parnaby plant acquired.
The company issued 14 million shares to a secured creditor for a portion of
their claim as part of the restructuring plan. Shareholder loans reflected on
the balance sheet of R11.6 million will subsequently be converted into such
number of ordinary shares in SACMH as may arise by dividing the loans plus
interest by the 30 trading day volume weighted average price of SACMH per
share on the JSE, three months after SACMH has first received funds from its
new strategic equity partner.
The entire Standard bank loan of R128 million has been reflected on the
balance sheet under current liabilities due to it being in default. JSW is
currently in negotiations with Standard Bank to settle the loan on the basis
that the Group borrows R70 million from JSW in terms of a dollar denominated
loan with an interest rate linked to LIBOR. The Group will then settle R70
million of the loan, while the balance will be repaid over a five year period.
Summary of restatements to the 2007 financial period
As previously announced on SENS in April 2009, the Group changed its
accounting policy for mineral rights and therefore restated the 2007 financial
statements which also incorporated a number of other small amendments. Set
out below is a summary of the major changes:
As at 31 December Intangible Revaluation Deferred Income Tax Net
2007 Assets Reserve Tax Statement impact income
liability impact impact
As previously 840 630 325 928 253 562 - - -
reported
Change in (459 000) (325 890) (133 110) - - -
accounting policy
-intangible
assets (1)
amortisation of (3 275) - - 3 275 - 3 275
mineral rights
(2)
Reclassification (630) - - - - -
Restated balance 377 725 38 120 452 3 275 - 3 275
As at 31 December Assets Tax impact Net
2007 income
impact
Property, plant 135 440 - -
and equipment
Reclassification 629 - -
Restated balance 136 069 - -
as at 31 December
2007
Notes:
(1) Change in accounting policy for the mineral rights
The group changed its accounting policy for the valuation of mineral
rights. These assets were previously re-valued using the
revaluation model and the surplus portion shown as non distributable
reserves. The board has changed the accounting policy to the
historical cost basis to enhance industry compatibility. The 2007
results have been restated to reflect this change in accounting
policy.
(2) Amortisation of mineral rights
The mineral rights were not amortised during the 2007 financial
year, which numbers have been restated to include the amortisation
charge of R3.3 million.
Contingencies and Commitments
1. Ingwe Collieries Ltd (Contingent asset)
The Group issued a summons against BHP`s Ingwe Collieries where damages
were claimed as a result of repudiation and breach of contract by Ingwe
Collieries Ltd ("Ingwe"). Ingwe`s counterclaim has since prescribed. The
summons submitted totals approximately R48 million. Commercial solutions
to this dispute will be sought once mining operations commence.
2. Commitment to deliver coal
As part of the restructuring, the SACMH subsidiary, SACM Breyten, has
cancelled a contract to deliver 65 000 tons of coal. This contingent
creditor has applied to the Court to have the SACM Breyten compromise
overturned. No claim amounts have been communicated, however, the
claimant voted against the compromise at the meeting of creditors in the
amount of R25 million. While this creditor voted against the motion, the
required majority of creditors voted for and approved the scheme.
Provision for this potential claim has been made in the compromise with
creditors and the matter awaits the Court`s formal sanction.
3. Mkhulu Resources (Pty) Ltd ("Mkhulu")
In March 2009 the Group formally put this contractor in breach of the
outsourced mining contract. Both parties have intimated claims against
each other in excess of R30 million. The contractor has since been
liquidated, the scheme of arrangement has been approved by the Court and
the liquidators of Mkhulu have made no claims. As a result, the board
believes that no exposure will materialise. The Mkhulu liquidators have
also notified SACMH that they will seek to set aside the acquisition of
certain assets acquired from Mkhulu for R3 million. As this acquisition
was advertised in terms of Section 34 of the Insolvency Act and fair
value was paid, the board is of the opinion that this acquisition cannot
be set aside and no provision for any loss has been raised in this
regard.
Change in Directors
Subsequent to year-end Mr VP Garg of JSW, was appointed to the board in June
2010 and both Messers P Kotze and K Gribnitz resigned from the board to pursue
personal interests. The board would like to thank them for their contribution
during this difficult restructure period and wishes them well in their future
endeavours.
Renewal of Cautionary Announcement
Shareholders are referred to the announcements released on SENS on 30 March
2010 and 20 May 2010, regarding offers and proposals received by the board.
The process is still ongoing and shareholders are accordingly advised to
continue exercising caution when dealing in the company`s securities until a
further announcement is made.
For and on behalf of the board
TV MOKGATLHA GM SCRUTTON
Chairman Chief Executive Officer
2 July 2010
Johannesburg
Directors : TV Mokgatlha (Chairman), VP Garg (Non-Executive), WN Gardyne (Non-
Executive), LN Ndala (Non-Executive), Dr V Lickfold (Non-Executive), GM
Scrutton (CEO)
Registered Office : Mirkwood Estate, Farm Klipkop JR396, Gauteng
Transfer Secretary : Computershare Investor Services (Pty) Ltd
Sponsor : Exchange Sponsors (2008) (Pty) Ltd
Auditors : Deloitte & Touche
Date: 02/07/2010 17:00:01 Produced by the JSE SENS Department.
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