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Wescoal Holdings Limited - Unaudited Condensed Results For The Six Months Ended 30 September 2012

Release Date: 05/11/2012 07:46:00      Code(s): WSL     
Wescoal Holdings Limited (Incorporated in the Republic of South Africa)
(Registration number 2005/006913/06) (JSE code: WSL ISIN: ZAE000069639)
("Wescoal" or "the Group")

Unaudited condensed consolidated interim results
For the six months ended 30 September 2012

Salient features 
continuing operations

 Revenue up 4,2%
 EBITDA  R27,8 million (2011: R28,4 million)
 EPS - 6,9 cents (2011: 7,3 cents)
 Cash reserves - R36 million

UNAUDITED CONSOLIDATED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2012
The unaudited interim results for the six months ended 30 September 2012, with comparative reviewed results for the six months ended 30 September 2011 
and the audited results for the year ended 31 March 2012 are presented.

Condensed consolidated statement of comprehensive income

                                                         Unaudited          Reviewed
                                                   interim results   interim results           Audited
                                                       for the six       for the six   results for the
                                                      months ended      months ended        year ended
                                                      30 September      30 September          31 March
                                                              2012              2011              2012
                                                             R'000             R'000             R'000

Continuing operations
Revenue                                                    351 361           337 067           630 752
Gross Profit                                                47 702            46 592            81 440
Other operating income                                       1 205               348             2 693
Operating costs                                            (21 081)          (18 585)          (38 903)
Earnings before interest, tax, depreciation and
amortization                                                27 826            28 355            45 230
Depreciation                                                (6 520)           (6 053)          (11 413)
Amortization                                                (4 046)           (2 626)           (7 858)
Earnings before interest, tax and other costs               17 260            19 676            25 959
Profit on sale of assets                                      (218)               22              (171)
Investment income                                               33               160               168
Finance costs                                               (1 947)           (2 811)           (4 464)
Profit before taxation                                      15 128            17 047            21 492
Taxation                                                    (4 440)           (5 541)           (3 873)
Profit for the period from continuing operations            10 688            11 506            17 619
Discontinued operations
Profit after tax from discontinued operations/
profit on sale of assets                                                      4 586             2 983
Profit for the period                                       10 688            16 092            20 602
Attributable to:
Owners of the parent                                        10 688            16 092            20 602
Non-controlling interest                                                                           
Profit for the period                                       10 688            16 092            20 602
Headline earnings reconciliation:
Net profit for the period                                   10 688            16 092            20 602
Less: Profit on sale of assets                                 187            (4 608)           (2 655)
Headline earnings for the period                            10 875            11 484            17 947
Continuing operations  Profit                              10 875            11 484            17 947
Discontinued operations                                                                            
Headline earnings for the period                            10 875            11 484            17 947
Ordinary shares in issue (000's)
 Total at period end                                      157 931           157 931           157 931
 Weighted average shares in issue                         157 931           157 931           157 931
 Fully diluted weighted average shares in issue
  (Note 1)                                                 158 292           158 272           158 247
Basic earnings per ordinary share (cents):
Profit from continuing operations                              6,8               7,3              11,2
Profit from discontinued operations                                             2,9               1,9
Profit attributable to ordinary owners                         6,8              10,2              13,1
Fully diluted basic earnings per ordinary share
(cents):
Profit from continuing operations                              6,8               7,3              11,1
Profit from discontinued operations                                             2,9               1,9
Profit attributable to ordinary owners                         6,8              10,2              13,0
Headline earnings per ordinary share (cents):
Profit from continuing operations                              6,9               7,3              11,4
Profit from discontinued operations                                                                
Profit attributable to ordinary owners                         6,9               7,3              11,4
Fully diluted headline earnings per ordinary
share (cents):
Profit from continuing operations                              6,9               7,3              11,4
Profit from discontinued operations                                                                
Profit attributable to ordinary owners                         6,9               7,3              11,4

Condensed consolidated statement of financial position

                                                            Unaudited           Reviewed
                                                      interim results    interim results            Audited
                                                          for the six        for the six    results for the
                                                         months ended       months ended         year ended
                                                         30 September       30 September           31 March
                                                                 2012               2011               2012
                                                                R'000              R'000              R'000
ASSETS
Non-current assets                                            125 729            140 977            135 124
Property, plant and equipment                                  47 583             64 441             55 685
Investment property                                               709                709                709
Investments                                                     1 580                990              1 210
Goodwill                                                       49 737             49 737             49 737
Intangible assets                                              21 610             16 762             18 801
Deferred taxation                                               4 510              8 338              8 982
Current assets                                                178 840            156 898            146 453
Inventories and work in progress                               22 222             11 952             13 157
Trade and other receivables                                   116 808            104 716            113 133
Cash and cash equivalents                                      39 810             40 230             20 163

Total assets                                                  304 569            297 875            281 577
EQUITY AND LIABILITIES 
Total Shareholders' funds                                     167 749            152 544            157 062
Share capital                                                     158                158                158
Share premium                                                 136 934            136 934            136 934
Retained earnings                                              30 031             14 826             19 343
Employee share option reserve                                     803                803                803
Non-controlling interest                                         (177)              (177)              (177)
Non-current liabilities                                        12 152             22 295             17 656
Instalment sale agreements                                      3 191             13 316              8 183
Interest bearing loans                                            446                649                548
Rehabilitation provision                                        8 414              8 218              8 793
Deferred tax                                                      101                112                132
Current liabilities                                           124 668            123 036            106 859
Trade and other payables                                      110 174            103 782             96 206
Bank overdraft                                                  3 647              8 722                250
Current portion of interest bearing loans                         199                176                189
Current portion of Instalment sale agreements                  10 648             10 356             10 214
Total equity and liabilities                                  304 569            297 875            281 577
Net asset value per share (cents)                              106,22              96,58              99,45
Tangible net asset value per share (cents)                      61,04              54,48              56,05

Condensed Consolidated Statement of Cash Flows

                                                            Unaudited           Reviewed
                                                      interim results    interim results            Audited
                                                          for the six        for the six    results for the
                                                         months ended       months ended         year ended
                                                         30 September       30 September           31 March
                                                                 2012               2011               2012
                                                                R'000              R'000              R'000
Cash flows from operating activities                           25 948              2 960              5 612
Cash generated by operations                                   27 400              7 286             12 721
Interest paid                                                  (1 415)            (2 526)            (3 870)
Income tax paid                                                   (37)            (1 800)            (3 239)
Cash flows from investing activities                           (5 048)             4 517             (4 367)
Purchase of property, plant and equipment                        (978)              (170)            (7 655)
Capitalised exploration costs                                  (3 913)              (814)            (4 658)
Proceeds from the sale of property, plant and
equipment                                                          180              6 249             8 998
Increase in restricted investment                                 (370)              (908)           (1 220)
Interest received                                                   33                160               168
Cash flows from financing activities                            (4 650)            (7 292)          (12 655)
Loans repaid                                                       (92)               (83)             (169)
Instalment sale agreements repaid                               (4 558)            (7 209)          (12 486)
Net increase/(decrease) in cash and cash equivalents            16 250                185           (11 410)
Cash and cash equivalents at beginning of period                19 913             31 323            31 323
Cash and cash equivalents at end of period                      36 163             31 508            19 913

Note:
(1) Fully diluted earnings per share information as reflected shows the potential effect of dilution for 8,87 million options held in terms of the 
share incentive trust by the directors and employees of the Wescoal Holdings Limited group.

Condensed Consolidated Statement of Changes in Equity
                                                                  Attributable to owners of the parent
                                                                                                    Employee
                                                         Share       Share        Retained      share option                     Non-
                                                        Capital   Premium         Earnings           reserve      Total   controlling      Total
                                                         R'000       R'000           R'000             R'000      R'000     Interests     Equity
Restated Balance at 1 April 2010                           146     123 704          43 831               305    167 986        (1 533)   166 453
Loss for the period                                                              (43 589)                    (43 589)         (144)   (43 733)
Shares issued, including treasury shares                    21      21 921                                     21 942                  21 942
Treasury shares                                             (9)     (8 373)                                    (8 382)                 (8 382)
Capital raising costs                                                (318)                                      (318)                   (318)
Share-based payment reserve                                                                           498        498                     498
Change in ownership                                                               (1 501)                     (1 501)        1 501          
                                                           158     136 934          (1 259)              803    136 636          (177)   136 459
Restated Balance at 31 March 2011
Profit for the period                                                             20 602                      20 602                  20 602
Balance at 31 March 2012                                   158     136 934          19 343               803    157 238          (177)   157 061
Profit for the period                                                             10 688                      10 688                  10 688
Balance as at 30 September 2012                            158     136 934          30 031               803    167 926          (177)   167 749

Operations, market and financial review
Considering the challenges faced during the period, the group results for the half year ending September 2012
are good but reinforce the need to focus on low cost production in the mining division and maximizing margins
in the trading operation.

The challenges included the increasing cost of coal production; diesel price increases and the mass strike
action affecting the entire country. Despite this the group results were in line with the comparable period
ending September 2011 with revenues of R351,4 million (2011: R337,1 million), EBITDA of R27,8 million
(2011: R28,4 million) and profit from operations of R10,7 million (2011: R11,5 million). A non-recurring profit
on the sale of fixed assets of R4,6 million is included in the results for the period ending September 2011.

Whilst no direct strike action occurred at the mining division, the truckers strike resulted in delayed deliveries
of diesel and explosives and substantially reduced deliveries to Eskom during September 2012. The net effect
of this was a loss of R10 million in revenue and R3 million in profit for the mining division.

Mining division
The mining division continues to focus on supplying quality product to Eskom however escalating costs are
impacting on profitability. The average cost of production has risen by 23,7% due to increasing strip ratios at
Khanyisa Colliery and the diesel price increases.

External mining revenues are down 3,0% to R143,1 million (2011: R147,5 million) and EBITDA is 11,5% down
to R26,1 million from R29,5 million. These results would have been in line or exceeded the period to September
2011 had it not been for the countrywide strike action.

Deliveries to Eskom resumed during October 2012, and, as announced on 6 September 2012, a 3-year supply
contract has been concluded with Eskom that includes coal to be supplied from the proposed Intibane Colliery.

The executive management and engineering capacity of the mining division has been further strengthened by
the appointment of a chief executive officer for Wescoal Mining (Pty) Ltd to ensure the successful development
of the various prospects outlined below. With his experience, Mr. Dutch Botes has brought a new dimension to
the division and is investigating the possible extension of the life of Khanyisa by alternative mining methods
and the acquisition of adjacent properties.

Trading division
The division delivered excellent results with revenue up by 10,8% and, more impressively EBITDA up 46,9% to
R7,7 million. The division's focus to increase margins in a tight market is clearly paying dividends and this trend
should continue going forward.

Due to depressed export prices, forecast Transnet Freight Rail (TFR) railings to Richards Bay Coal Terminal (RBCT)
have been reduced to 68 million tons (2011: 65 million tons) from 75 million tons for the calendar year 2012. The
increase on the 2011 calendar year of 3 million tons continues to be primarily taken from domestic coal supply
resulting in continued shortages.

Despite the export prices remaining low at $80, early indications are that inland prices will escalate by between
7% to 10% in the first quarter of 2013.

Financial overview
Overall the group achieved a revenue increase of 4,2% to R351,4 million. Revenue in the trading division improved by
10,8% to R208,3 million but revenue in the mining division decreased by 3% to R143,0 million. The impact of the
transport workers' strike on deliveries to Eskom is estimated at R10 million on revenue and R3 million on profit.

EBIDTA for the period ended on R27,8 million. This is slightly lower than the R28,4 million achieved in the comparative
period. Mining cost pressure and a substantial increase in the cost of diesel are the main reasons for this decline.

Earnings before interest, tax and other costs is 12,3% lower than the prior period due to higher amortisation costs on
the increased tonnage of coal mined.

Finance costs decreased by 30,7% to R1,9 million due to a substantial repayment of debt over the period. Debt to equity
levels reduced from 15,6% as at 30 September 2011 to 8,4% at the end of the current reporting period.

Profit for the period is R5,4 million lower at R10,7 million. The comparative period however included a profit of
R4,6 million from the sale of the Blesboklaagte beneficiation plant. Headline earnings per share for the period is only
5,3% lower than prior period.

Cash and cash equivalents increased by R16,3 million with a strong contribution of R25,9 million cash flow from
operating activities. R3,4 million of these cash flows was used to reduce debt.

Prospects
Management expects the excellent performance from the trading division to continue through to the financial year-end
and beyond.

Intibane Colliery is on track to deliver coal during the first quarter of 2013 that will substantially reduce the cost of
production as the strip ratios at Intibane are 1,5:1 as compared to the current 4:1 at Khanyisa.

Shareholders are referred to the SENS announcements dated 31 July 2012, 3 September 2012 and 5 October 2012,
relating to the Vlaklaagte Disposal and the Elandspruit Acquisition ("the transactions"). The shareholders' circular is
expected to be distributed to shareholders on or before 30 November 2012. Irrevocable commitments to vote in
favour of the transactions have been received from major shareholders and directors totaling 53% of the issued
share capital.

Management continues to focus on securing high quality coal assets and maximizing margins in both divisions.

Segment analysis
The analysis below, details the contribution of the two main divisions within the group:

                                                         R'000
                                                  30 September 2012
Statement of comprehensive income   Trading      Mining          Other       Total
Total segment revenue               208 311     143 050         20 488     371 849
Inter-segment revenue                                         20 488      20 488
External revenues                   208 311     143 050                   351 361
EBITDA                                7 629      26 119         (5 922)     27 826

                                                        R'000
                                                  30 September 2011
Statement of comprehensive income   Trading      Mining           Other      Total
Total segment revenue               190 680     154 994           4 798    350 472
Inter-segment revenue                 2 609       7 481           3 315     13 405
External revenues                   188 071     147 513           1 483    337 067
EBIDTA                                5 194      29 524          (6 363)    28 355

Resources and reserves statement
The resources and reserves statement contained within the 2012 Wescoal annual report is an extract from the full
SAMREC compliant report dated August 2012 issued by DS Coetzee (PhD Geology, Pr. Sci. Nat.: 400136/00). The full
details of the resources and reserves statement prepared for Wescoal Holdings Limited is available on the Wescoal
website at www.wescoal.com and is subject to the assumptions disclaimer and notes therein. No report is available
for the 2011 period. Wescoal undertakes to comply with this regulation going forward as a further enhancement of
corporate governance.

The report covers the new order mining right at the operating collieries and prospects of:

  Khanyisa Colliery (including Sarie Marais) (Mining Right number MP30/5/1/2/2/107MR) covering Portions 96, 97 and
   103 of the farm Heuvelfonten 215 IR;
  Intibane Colliery (Mining Right number MP30/5/1/1/2/483MR) covering Portion 16 of the farm Vlakvarkfontein
   213 IR;
  Vlaklaagte Prospect (Mining right number MP30/1/1/2/10035MR) covering Portions 1, 2, 4, 7, 8, 9, 10, 13, 14, 15,
   16, 17, 40 and 41 of the farm Vlaklaagte 330 JS;
  Silverbank Prospect (Mining right number MP30/1/1/2/10037MR) covering the entire farm Silverbank 611 IR
   excluding Portions 1, 10, 12 and 14;
  Verblyden Prospect (Mining right number MP30/1/1/2/10036MR) covering the entire farm Verblyden 387 IS
   excluding Portions 18 and 35.

All details regarding the geology, topography, climate, rainfall, drainage, veld type, land type and land use are
contained within the full resources and reserves statement on the Wescoal website.

Summary of resourc   ces and reserves (million tons) 

                                                                     Resources                Reserves   
                                                              Recon-                             R   Run of Mine   
Area                               Seam             GTIS   naissance   Measured   Total   Reserves         (ROM)   
Khanyisa                         4 seam             0,06                   0,06    0,06       0,06          0,05   
                                 2 seam             0,73                   0,69    0,69       0,69          0,60   
Sarie Marais                     4 seam             0,08                   0,08    0,08       0,08          0,07   
Sub-total                                           0,87                   0,82    0,82       0,82          0,72   
Intibane                         4 seam             0,19                   0,17    0,17       0,17          0,14   
                                 2 seam             1,69                   1,53    1,53       1,53          1,27   
Sub-total                                           1,88                   1,70    1,70       1,70          1,41   
Vlaklaagte                       5 seam             4,67                   4,22    4,22       4,22          2,24   
                                4U seam             2,56                   2,31    2,31       2,31          1,22   
                                4L seam             4,98                   4,50    4,50       4,50          2,38   
                                 2 seam            20,36                  18,37   18,37      18,37          9,74   
                                 1 seam             4,54                   4,09    4,09       4,09          2,17   
                                1L seam             1,44                   1,30    1,30       1,30          0,69   
Sub-total                                          38,55                  34,79   34,79      34,79         18,44   
Silverbank                       2 seam            40,80        9,79                                               
Verblyden                        4 seam            61,70       14,81                                               


Black Economic Empowerment
Waterberg Portion Property Investments (Pty) Limited ("WPP"), headed by Mr. Robinson Ramaite and other BEE
shareholders hold 34,9% of the issued share capital of Wescoal Holdings Limited. WPP is a BEE Company operating
in the minerals and energy space.

Corporate Governance
The Group subscribes to and is in the process of implementing where applicable, the principal recommendations of
the King III Code of Corporate Governance.

Subsequent events
No material subsequent events occurred during the period 30 September 2012 and the date of the publication of this
condensed consolidated interim financial information.

Dividends
No interim dividend has been declared.

Basis of preparation
The unaudited condensed consolidated interim financial information for the six months ended 30 September 2012
has been prepared in accordance with IAS 34, 'Interim Financial Reporting', the Companies Act No 71 of 2008 and
the Listing Requirements of the JSE Limited.

The accounting policies adopted are consistent with those applied in the annual financial statements for the year
ended 31 March 2012, except for these standards that became effective during the reporting period. The adoption
of the standards had no effect on the results. This report was compiled under the supervision of the financial director,
Piet van Rensburg CA (SA). The condensed consolidated interim financial information does not include all the
information and disclosures required in the annual financial statements, and should be read in conjunction with the
Group's annual financial statements as at 31 March 2012, which have been prepared in accordance with International
Financial Reporting Standards (IFRS).

The directors are of the opinion that the Group has adequate resources to continue in operation for the
foreseeable future and accordingly the condensed consolidated interim financial results have been prepared
on a going concern basis.

Directorate
DMT van Gaalen was appointed as lead independent director on 30 October 2012.

By order of the Board


M.R. Ramaite		                                 A.R. Boje		
Chairman		                                     Chief Executive Officer

CORPORATE INFORMATION

Non-Executive directors:     MR Ramaite
                             JG Pansegrouw
Lead independent director:   DMT van Gaalen
Executive directors:         AR Boje
                             P Janse van Rensburg
                             W Khumalo
Registration number:         2005/006913/06
Registered address:          228 Voortrekker Street
                             Krugersdorp
                             1740
Postal address:              PO Box 133
                             Krugersdorp
                             1740
Company secretary:           JW Walters
Telephone:                   011  954 2721
Facsimile:                   011  954 6737
Transfer secretaries:        Computershare Investor Services (Pty) Limited
Sponsor:                     Exchange Sponsors (2008) (Pty) Limited
Date: 05/11/2012 07:46:00 Supplied by www.sharenet.co.za                     
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