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Wescoal Holdings Limited - Reviewed Condensed Results For The Year Ended 31 March 2013

Release Date: 24/06/2013 07:10:00      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")

REVIEWED CONDENSED CONSOLIDATED RESULTS FOR THE YEAR ENDED 31 MARCH 2013

The results for the year ended 31 March 2013, with comparative audited results for the year ended 31 March 2012
are presented.

SALIENT FEATURES

Revenue up 7,3% to R676,9 million
EBITDA  R45,3 million ( 2012: R45,2 million)
Headline earnings  R19.3 million ( 2012: R17.9 million)
HEPS  12,2 cents ( 2012: 11.4 cents)
Cash reserves  R21,4million (2012: R19,9 million)
Maiden dividend of 3 cents per share

Condensed consolidated statement of comprehensive income                                           
                                                                       Reviewed          Audited   
                                                           results for the year      results for   
                                                                          ended   the year ended   
                                                                 31 March  2013    31 March 2012   
                                                                          R000            R000 
  
Revenue                                                                 676 927          630 751   
Cost of sales                                                         (604 253)        (566 613)   
Gross profit                                                             72 674           64 138   
Other income                                                              3 883            7 221   
Operating expenses                                                     (48 849)         (40 872)   
Operating profit                                                         27 708           30 487   
Finance income                                                              695              168   
Finance costs                                                           (3 358)          (4 464)   
Profit before taxation                                                   25 045           26 191   
Taxation                                                                (5 338)          (5 589)   
Profit from continued operations                                         19 707           20 602   
Total comprehensive income attributable to:                                                        
Owners of the parent                                                     19 707           20 602   
Non-controlling interest                                                      -                -   
Profit for the year                                                      19 707           20 602   
Headline earnings reconciliation:                                                                  
Net profit for the year                                                  19 707           20 602   
Less: Profit on sale of assets                                            (380)          (2 655)   
Headline earnings for the year                                           19 327           17 947   
Ordinary shares in issue (000's)                                
-Total at year end                                                      157 931          157 931   
-Weighted average shares in issue                                       157 931          157 931   
-Fully diluted weighted average shares in                       
issue (Note 1)                                                          158 306          158 247   
Basic earnings per ordinary share                               
(cents)                                                                    12.5             13.1   
Fully diluted basic earnings per                                
ordinary share (cents):                                         
                                                                           12.4             13.0   
Headline earnings per ordinary share                            
(cents):                                                        
                                                                           12.2             11.4   
Fully diluted headline earnings per                             
ordinary share (cents):                                                    12.2             11.4   

    Note:

(1) Fully diluted earnings per share information reflected shows the potential effect of dilution for 14.97 million options
    held in terms of the share incentive trust by the directors and employees of the Wescoal Holdings group.

Condensed consolidated statement of financial position

                                               Reviewed          Audited   
                                   results for the year      results for   
                                                  ended   the year ended   
                                          31 March 2013    31 March 2012   
                                                  R000            R000   
ASSETS                                                                     
Non-current assets                              142 176          135 124   
Property, plant and                                                        
equipment                                        57 704           55 685   
Investment property                                 709              709   
Investments                                       2 293            1 210   
Goodwill                                         49 737           49 737   
Intangible assets                                28 014           18 801   
Deferred taxation                                 3 719            8 982   
Current assets                                  146 948          146 453   
Inventories and work in progress                 15 986           13 157   
Trade and other receivables                     109 592          113 133   
Cash and cash equivalents                        21 370           20 163   
Total assets                                    289 124          281 577   
EQUITY AND LIABILITIES                                                     
Total shareholders' funds                       177 321          157 062   
Stated capital                                  137 092          137 092   
Retained earnings                                39 050           19 343   
Employee share option reserve                     1 355              803   
Non-controlling interest                          (176)            (176)   
Non-current liabilities                          15 368           17 656   
Instalment sale agreement                           786            8 183   
Interest bearing loans                              338              548   
Rehabilitation provision                         14 188            8 793   
Deferred tax                                         56              132   
Current liabilities                              96 435          106 859   
Trade and other payables                         87 630           96 206   
Bank overdraft                                        -              250   
Current portion of interest bearing loans           210              189   
Current portion of installment sale agreements    8 595           10 214   
Total equity and liabilities                    289 124          281 577   
Net asset value per share                                            
(cents)                                          112.28            99.45   
Tangible net asset value per share                                   
(cents)                                           63.05            56.05   

Condensed consolidated statement of changes in equity

Attributable to owners of the parent
                                      Employee                                          
                                         share                                          
                  Stated   Retained     option                    Non-                  
                 capital   earnings    reserve     Total   Controlling   Total Equity   
                   R'000      R'000      R'000     R'000     Interests 
                 
Balance as       137 092    (1 259)        803   136 636         (176)        136 460   
at 1 April                                                                              
2011                                                                                    
Profit for the         -     20 602          -    20 602             -         20 602   
period                                                                                  
Balance as       137 092     19 343        803   157 238         (176)        157 062   
at 31 March                                                                             
2012                                                                                    
Share-                 -          -        552       552             -            552   
based                                                                                   
payment                                                                                 
reserve                                                                                 
Profit for the         -     19 707          -    19 707             -         19 707   
period                                                                                  
Balance as       137 092     39 050      1 355   177 497         (176)        177 321   
at 31 March                                                                             
2013                                                                                    

Condensed Consolidated Statement of cash flows
                                                                                Reviewed   Audited results for   
                                                                    results for the year     the year ended 31   
                                                                     ended 31 March 2013            March 2012   
                                                                                   R'000                 R'000 
  
Cash flow from operating activities:                                              35 654                 5 586   
                                                                                  38 456                12 533   
Cash generated in operations                                                                                     
Interest income                                                                      696                   168   
Finance costs                                                                    (3 358)               (3 870)   
Tax paid                                                                           (140)               (3 245)   
Cash flows from investing activities:                                           (24 992)               (4 365)   
Purchase of property, plant and equipment                                       (13 371)               (8 343)   
Sale of property, plant and equipment                                                863                 9 392   
Capitalised development costs                                                   (11 519)               (4 204)   
Purchase of financial assets                                                       (965)               (1 210)   
Cash flows from financing activities:                                            (9 205)              (12 631)   
Movements in interest bearing debt                                                 (189)                 (146)   
Movements on Installment sale agreements                                         (9 016)              (12 485)   
Total cash, cash equivalents and bank overdrafts movement for the                  1 457              (11 410)   
year                                                                                                             
Total cash, cash equivalents and bank overdrafts at beginning of                  19 913                31 323   
year                                                                                                             
Total cash,  cash equivalents and bank overdrafts at end                          21 370                19 913   
of year                                                                                                          

Operations, market and financial review

Operations and market review

Wescoal produced a solid set of results from continuing operations considering the challenges faced by
the industry during the year.

The challenges include the increasing cost of coal production; diesel price increases and the mass strike
action affecting the entire country during the first half of the financial year. Despite this the group results
exceeded the comparable period ending March 2012 with revenues of R676, 9 million (2012: R630, 8
million), EBITDA of R45, 3 million (2012: R45, 2 million) and profit from continuing operations of R19, 7
million (2012: R20, 6 million). These challenges continue to be well managed and the executive
management is confident of further substantial improvements going forward.

The board has decided to declare a maiden final dividend of 3 cents per share being a conservative
dividend cover policy of four times.

Mining division

The mining division continues to focus on supplying quality product to Eskom however escalating costs
are impacting on profitability. The original commissioning of the Intibane Colliery took longer than
management had expected and commissioning commenced in April 2013, this will reverse the trend and
overall profitability will show substantial improvement. Intibane will offer Wescoal an overall reduction in
costs as the stripping ratio is 1, 5:1.

Mining revenues are up 16, 3% to R318, 3 million (2012: R273, 8 million) and profit from continuing
operations up 15, 9% to R 34,7million (2012: R 29,9 million). These results are on the back of increased
production volumes of 1, 31 million tons from 1, 18 million tons, a 10, 6% increase.

With the commissioning of the Intibane Colliery, overall volumes will increase, as Khanyisa will continue
to produce for both Eskom and the Quattro export allocation of 200,000 tons per annum through the
Richards Bay Coal Terminal.

Trading division

The division delivered disappointing results for the second half of the year resulting in a 20,5% reduction
in trading volumes to 413,165 tons for the period to March 2013 (2012: 519,402 tons). On the back of
this, revenue remained static at R358, 6 million (2012: R356, 7 million) and profit from operations
reduced 18.4% to R4, 2 million (2012: R5, 1 million).

The anticipated acquisition of a third party trading company announced on SENS on 13 June 2013 will
enhance the trading division bringing additional management expertise, synergy cost savings, additional
outlets and critical mass to address the challenges facing the trading division.

Despite export prices remaining as low as $77, indications are that inland prices will remain static for the
second quarter of 2013.

Financial overview

Revenue from all operations which includes coal mining, processing and trading reflected an increase of
R46, 2 million up 7, 3% from the comparative financial period. Revenue from the trading division was 0,
5% up on the prior period despite the depressed market conditions in the trading environment. Revenue
from the mining division increased by 16.3%. This division continued to perform exceptionally well with
revenue up by 22.5% in the second half of the financial year when compared to the first half.

Gross profit increased by R8, 5million mainly due to the increase in revenue. Margins improved slightly
to end on 10, 7% for the full financial year.

Operating costs increased by 19.5% to R48, 8 million due primarily to inflationary factors and a strategic
increase in corporate head office expenses, which included the strengthening of the top management
team together with increased professional fees.

Group EBIDTA ended on R45, 3million up 0, 2% on the comparative period. Operating profit, however
declined by 9, 1% to end on R27, 7 million.

Finance costs reduced by 24, 8% to R3, 4 million due to the net debt reduction of R9, 2 million. Cash
generation in the second half of the financial year was strong with only 28.1% of the finance costs
incurred during this period.

Profit after tax decreased by 4, 3% to R19, 7 million. The prior year profit included a profit on sale of
assets of R 2, 7 million. Headline earnings, which excludes the profit on sale of assets, increased by R 1,
4 million to R 19, 3 million. Fully diluted headline earnings per share increased by 7, 0% to 12, 2 cents.

The groups financial position strengthened during the financial period with total shareholders funds
increasing by 12.9% to R 177, 3 million. Net asset value per share and net tangible asset value per
share increased by 12, 9% and 12, 5% respectively.

The debt equity ratio improved to 5, 6% from 12, 2% in the comparative period. Based on current debt
levels the majority of total debt will be repaid in the next financial year.

Cash generated by operations increased by R 25, 9 million compared to prior year. The group utilised
this cash to invest in infrastructure, exploration and debt repayment.

Legal matters

As announced to shareholders previously an application has been served on Wescoal, Wescoal Mining
(Pty) Ltd, Wescoal Exploration (Pty) Ltd, Proudafrique Trading 147 (Pty) Ltd (40% shareholder in
Wescoal Exploration), Minoscape (Pty) Ltd (majority shareholder in Proudafrique) and three other
respondents by JC van der Westhuizen, the minority shareholder in Proudafrique to set aside
agreements relating to the establishment of Wescoal Exploration and the sale of the Vlaklaagte
Prospecting right by Wescoal Exploration to Wescoal Mining.

The application is being opposed by Wescoal, Wescoal Exploration, Wescoal Mining and Minoscape.
Wescoals legal advisors are very confident in defending this application. There have been no further
developments on the matter.

Prospects

Intibane Colliery was commissioned during April 2013 and will result in the mining division increasing
volumes to more than 1.6 million tons for the financial year to March 2014. Of this, 700,000 will be
produced from Intibane at substantially lower strip ratios than Khanyisa.

The Elandspruit transaction with Xstrata coal is expected to become unconditional on 31 July 2013
following which focus will be placed on commissioning the project in early 2014. This will be the groups
flagship project and is expected to ramp up production to 2, 4 million tons per annum by end 2014.

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

Resource and reserve statement

The below is an extract from the full SAMREC compliant report dated 20 June 2013 issued by DS
Coetzee(PhD Geology, Pr.Sci. Nat.:400136/00).

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

(1) 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;

(2) Intibane Colliery (Mining Right number MP30/5/1/1/2/483MR) covering Portion 16 of the farm
    Vlakvarkfontein 213 IR;
(3) 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.

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

Summary of resources and reserves (million tons)

Area                             Seam   Resources                                       Reserves           
                                             GTIS   Reconnaissance   Measured   Total       MTIS     ROM
   
Khanyisa                       4 Seam        0.06                        0.06    0.06       0.06    0.05   
                               2 Seam        0.42                        0.39    0.39       0.39    0.35   
Sarie Marais                   2 Seam        0.07                        0.07    0.07       0.07    0.06   
Sub-total                                    0.55                        0.52    0.52       0.52    0.45   
Khanyisa UG Project            2 Seam        0.88                        0.79    0.79       0.79    0.42   
Sarie Marais Pillar project    2 Seam        0.58                        0.52    0.52       0.52    0.25   
Sub-total                                    1.46                        1.32    1.32       1.32    0.70   
Intibane                       4 Seam        0.18                        0.16    0.16       0.16    0.10   
                               2 Seam        1.69                        1.57    1.57       1.57    1.30   
Sub-total                                    1.92                        1.73    1.73       1.73    1.40   
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      281.06            67.45                                         
Verblyden                      4 Seam       54.30            13.03                                         

Segment analysis

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

                                            R'000
                                      31 March 2013

Statement of             Trading    Mining      Other      Total   
comprehensive                                                      
income                                                             
Total segment revenue    358 580   318 347     54 705    731 632   
Inter-segment                  -         -   (54 705)   (54 705)   
revenue                                                            
External                 358 580   318 347          -    676 927   
revenues                                                           
Profit from operations     4 166    34 691   (11 688)     27 169   

                                          R'000
                                      31 March 2012

Statement of             Trading     Mining      Other      Total   
comprehensive                                                       
income                                                              
Total segment            359 267    290 827     27 314    677 408   
revenue                                                             
Inter-segment            (2 576)   (17 042)   (27 038)   (46 656)   
revenue                                                             
External                 356 691    273 785        275    630 751   
revenues                                                            
Profit from operations     5 108     29 923    (9 072)     25 959   

Profit from operations excludes profits or losses on the sale of property, plant and equipment, interest received and
finance charges.

Black Economic Empowerment

Waterberg Portion Property (Pty) Ltd ("WPP"), headed by Mr Robinson Ramaite and other BEE
shareholders hold 34.9% of the issued share capital of Wescoal. WPP is a BEE company in the minerals
and energy space.

Subsequent events

Chandler Coal (Pty) Ltd, a wholly owned subsidiary of Wescoal, made an offer to acquire a Third Party's
coal trading business which offer has been accepted by the Third Party for a total purchase price of R 79
million. The acquisition is conditional upon inter alia the completion of legal agreements and various
suspensive conditions. Shareholders are referred to the detailed announcement released on SENS on
13 June 2013.

The Elandspruit and Vlaklaagte transactions are expected to be concluded by 31 July 2013.

Dividends

The board has declared a final gross dividend of 3 cents per share in respect of the year ended 31
March 2013 payable to shareholders recorded in the register of the company at the close of business on
the record date appearing below. The dividend is payable from the companys cash reserves.

The salient dates applicable to the final dividend are as follows:

                                                2013 
  
Last day to trade shares cum div      Friday 26 July   
Shares trade ex dividend              Monday 29 July   
Record date                          Friday 2 August   
Payment date                         Monday 5 August   

No share certificates may be dematerialised or rematerialised between Monday, 29 July 2013 and
Friday, 2 August 2013, both dates inclusive.

In terms of the new Dividends Tax effective 1 April 2012, the following additional information is
disclosed:

1. The local Dividend Tax rate is 15%;
2. The net local dividend amount is 2.55 cents per share for shareholders liable to pay the new
   Dividends Tax and 3 cents per share for shareholders exempt from paying the new Dividends Tax;
3. The issued ordinary share capital of Wescoal is 166 801 361 ordinary shares;
4. The companys tax reference number is 9876593147; and
5. No STC credits have been utilized.

Basis of preparation

The condensed consolidated financial information for the year ended 31 March 2013 has been prepared
in accordance with the recognition and measurement criteria of International Financial Reporting
Standards (IFRS), the preparation and disclosure requirements of IAS 34; 'Interim financial reporting',
SAICA Financial Reporting Guides as issued by the accounting practices committee and financial
pronouncements as issued by Financial Reporting Standards, the JSE Listings Requirements and as per
the requirements of the South African Companies Act, 2008, as amended, on the basis consistent with
prior year .

The preparation of these financial results was done under the supervision of the Group Financial
Director, Piet Janse van Rensburg CA(SA).

Any references to the future financial performance has not been reviewed or reported on by the
Companys auditors.

Independent audit review

The preliminary financial statements have been reviewed by the companys independent auditors,
PricewaterhouseCoopers Inc. Their unmodified review opinion is available for inspection at the
companys registered office.

Directorate

There were no changes to the Board during the year under review.

By order of the Board
24 June 2013

MR Ramaite                                             AR Boje
Chairman                                               Chief Executive Officer

CORPORATE INFORMATION 
                               
Non-Executive directors:   MR Ramaite                
                           JG Pansegrouw             
                           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 & Associates   
Telephone:                 011  954 2721            
Facsimile:                 011  954 6737       
Transfer secretaries:      Computershare Investor Services (Pty) Ltd
Sponsor:                   Exchange Sponsors (2008) (Pty) Ltd     
Date: 24/06/2013 07:10:00 Supplied by www.sharenet.co.za                     
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