Go Back Email this Link to a friend


Wescoal Holdings Limited - Reviewed Condensed Consolidated Results For The Year Ended 31 March 2014

Release Date: 24/06/2014 07:30:00      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 2014

FINANCIAL AND OTHER HIGHLIGHTS

  -   Revenue up 69,5% to R1,1 billion (2013: R676,9 million)
  -   HEPS up 28,7% to 15,7 cents (2013: 12,2 cents)
  -   Operational EBITDA up 123,6% to R101,2 million (2013: R45,3 million)
  -   Cash reserves up 143,3% to R52,0 million (2013: R21,4 million)
  -   Dividend of 3,8 cents per share (2013: 3,0 cents per share)
  -   Commissioning of Intibane Colliery
  -   Successful integration of MacPhail Distributors ("MacPhail")
  -   Finalisation of Elandspruit acquisition

REVIEWED CONDENSED CONSOLIDATED RESULTS FOR THE YEAR ENDED 31 MARCH 2014

The reviewed results for the year ended 31 March 2014 with comparative audited results for the year ended 31
March 2013 are presented.

Condensed consolidated statement of comprehensive income

                                   Reviewed results                         
                                       for the year   Audited results for   
                                              ended        the year ended   
                                      31 March 2014         31 March 2013   
                                              R'000                 R'000   
Revenue                                   1 147 444               676 927   
Cost of sales                           (1 021 915)             (604 253)   
Gross Profit                                125 529                72 674   
Other (expenses)/income                     (1 174)                 3 883   
Profit on sale of mineral assets             75 773                     -   
Operating expenses                         (81 259)              (48 849)   
Operating profit                            118 869                27 708   
Finance income                                  265                   695   
Finance costs                               (9 615)               (3 358)   
Profit before taxation                      109 519                25 045   
Taxation                                   (22 839)               (5 338)   
Profit for the year                          86 680                19 707   
Other comprehensive income                        -                     -   
Total comprehensive income                   86 680                19 707   


Attributable to:                                                          
Owners of the parent                                   69 764    19 707   
Non-controlling interest                               16 916         -   
Profit for the year                                    86 680    19 707   
Headline earnings reconciliation:                                         
Net profit for the year                                86 680    19 707   
- Profit on sale of mineral assets                   (61 521)         -   
- Loss/(profit) on the sale of assets                   1 491     (388)   
Headline earnings for the year                         26 650    19 319   
Ordinary shares in issue (000's)                                          
-Total at period end (Note 1)                         184 771   157 931   
-Weighted average shares in issue                     170 067   157 931   
-Fully diluted weighted average shares in issue                           
(Note 2)                                              173 484   158 312   
Basic earnings per ordinary share (cents):               41.0      12.5   
Fully diluted basic earnings per ordinary share          40.2      12.4   
(cents)                                                                   
Headline earnings per ordinary share (cents):            15.7      12.2   
Fully diluted headline earnings per ordinary share       15.4      12.2   
(cents):                                                                  


Note:                                                                                                                
(1) Excludes shares held by the share incentive trust                                                            
(2) Fully diluted earnings per share information as reflected shows the potential effect of dilution for   
    11.52 million (2013: 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 results for      Audited results   
                                                        the year ended   for the year ended   
                                                              31 March             31 March   
                                                                  2014                 2013   
                                                                 R'000                R'000   
ASSETS                                                                                        
Non-current assets                                             355 752              142 176   
Property, plant and equipment                                  116 004               75 589   
Investment property                                                709                  709   
Investments                                                      6 664                2 293   
Goodwill and intangible assets                                 111 722               50 655   
Investment in associates                                        19 365                    -   
Mineral assets                                                 101 118                9 211   
Deferred taxation                                                  170                3 719   
Current assets                                                                                
                                                               368 391              146 948   
Inventories and work in progress                                60 839               15 986   
Trade and other receivables                                    255 389              109 592   
Cash and cash equivalents                                       52 163               21 370   
Total assets                                                   724 143              289 124   
EQUITY AND LIABILITIES                                                                        
Total Shareholders' funds                                      273 225              177 321   
Stated capital                                                 166 715              137 092   
Retained earnings                                              103 627               39 050   
Employee share option reserve                                    3 059                1 355   
Non-controlling interest                                         (176)                (176)   
Non-current liabilities                                         96 471               15 368   
Interest bearing loans                                          57 113                1 124   
Rehabilitation provision                                        24 282               14 188   
Deferred tax                                                    15 076                   56   
Current liabilities                                            354 447               96 435   
Trade and other payables                                       220 211               87 619   
Bank overdraft                                                     176                    -   
Taxation payable                                                10 268                   11   
Interest bearing loans                                         123 792                8 805   
Total equity and liabilities                                   724 143              289 124   
Net asset value per share (cents)                               147.87               112.28   
Tangible net asset value per share (cents)(Note 3)               87.41                80.20   


Note:                                                                                                
(3) Regulatory approved mineral rights are classified as tangible assets and included in the     
    tangible net asset value per share calculation. The comparative figures have been adjusted   
    accordingly.                                                                                 


Condensed Consolidated Statement of Changes in Equity

                Attributable to owners of the parent

                                      Employee                    Non-      Total   
                                         share             controlling     Equity   
                  Stated   Retained     option               Interests              
                 Capital   Earnings    reserve     Total                            
                   R'000      R'000      R'000     R'000                            
Balance as at                                                                       
31 March 2012    137 092     19 343        803   157 238         (176)    157 062   
Share based                                                                         
payment                                                              -        552   
reserve                -          -        552       552                            
Profit for the                                                                      
year                   -     19 707          -    19 707             -     19 707   
Balance as at                                                                       
31 March 2013    137 092     39 050      1 355   177 497         (176)    177 321   
Shares issued     29 623          -          -    29 623             -     29 623   
Share based                                                                         
payment                                                                             
reserve                -          -      1 704     1 704             -      1 704   
Dividends paid         -    (5 187)          -   (5 187)      (16 916)   (22 103)   
Profit for the                                                                      
year                   -     69 764          -    69 764        16 916     86 680   
Balance as at                                                                       
31 March 2014    166 715    103 627      3 059   273 401         (176)    273 225   


Condensed Consolidated Statement of Cash Flows

                                            Reviewed results for   Audited results for   
                                                  the year ended        the year ended   
                                                   31 March 2014         31 March 2013   
                                                           R'000                 R'000   
Cash flows from operating activities                      29 810                35 654   
Cash generated in operations                              47 134                38 456   
Finance income                                               265                   696   
Finance costs                                            (7 715)               (3 358)   
Income tax paid                                          (4 687)                 (140)   
Dividends paid                                           (5 187)                     -   
Cash flows from investing activities                   (175 426)              (24 992)   
Purchase of property, plant and equipment                                                
and mineral assets                                     (103 542)              (24 890)   
Sale of property, plant and equipment                      8 049                   863   
Purchase of business                                    (70 784)                     -   
Purchase of investment in associate                      (5 000)                     -   
Purchase of financial assets                             (4 149)                 (965)   
Cash flows from financing activities                     176 233               (9 205)   
Movements in interest bearing loans                      170 975               (9 205)   
Shares issued                                              5 258                     -   
Net increase in cash and cash equivalents                 30 617                 1 457   
Cash and cash equivalents at beginning of                                                
year                                                      21 370                19 913   
Cash and cash equivalents at end of year                  51 987                21 370   


Operations, market and financial review

These results depict a solid financial performance despite some challenges which arose in the second half of
the financial year including reduced take off from Eskom and the integration of MacPhail into the trading
division. Highlights included the finalisation of both the Elandspruit transaction with Glencore Xstrata and the
transaction with Genet to acquire the business of MacPhail, the award of a Quattro export allocation and the
securing of a R180 million debt facility from Investec.

Group revenues exceed the billion rand mark for the first time at R1,15 billion (2013: R676,9 million),
operational EBITDA of R101,2 million (2013: R45,3 million) and headline earnings of R26,7 million (2013:
R19,3 million) an increase in headline earnings of 37,9%. Operating profit of R118,9 million (2013: 
R27,7 million) includes R75,8 million profit on the sale of the Vlaklaagte mineral asset to Glencore Xstrata.

Mining division

The commissioning of the Intibane Colliery in June 2013 contributed significantly to the results from 
the division producing 1,03 million tons of the 1,92 million tons of total production. Due to Eskom 
operational reasons, Khanyisa colliery delivered significantly less coal to the utility during the 
second half of the year affecting the profitability of the colliery. Subsequent to the reporting period 
the situation has normalised at Khanyisa. Intibane did not experience a similar situation.

Mining revenues are R556,2 million (2013: R318,4 million), EBITDA of R103,7 million (2013: R50,7 million) and
profit from operations of R52,3 million (2013: R34,7 million). Operating costs are however excessive and
require renewed focus to bring in line with budgets.

Trading division

Immense effort and focus was placed on the successful integration of MacPhail into the trading division and
the physical integration was completed in January 2014 with the Chandler Coal and Wescoal Holdings offices
relocating to Isando. Synergy savings that are flowing through, together with the combined businesses, will
prove to be a significant contributor to group results going forward.

Trading revenues are significantly higher at R591,2 million (2013: R358,6 million), EBITDA of R9,3 million
(2013: R6,1 million) and profit from operations marginally up at R4,7 million (2012: R4,2 million). Benefits
accrued from the four months trading incorporating the MacPhail acquisition were eroded by once off
restructuring costs of R8 million.

Financial overview

Revenue from all operations which includes coal mining, processing and trading reflected an increase of 69,5%
to R1,15 billion from the comparative financial period and it is especially pleasing that the group achieved
annual revenues in excess of R1 billion for the first time. Revenue from the trading division increased by 64,9%
however when excluding the MacPhail trading revenue for the period December 2013 to March 2014,
revenues are only marginally up by 8,5%. Revenue from the mining division increased by 74,7% to R556,2
million and the division continued to perform exceptionally well despite reduced Eskom take off from the
Khanyisa operation during the 4th quarter.

Gross profit of R125, 5 million is an increase of 72,7% on the comparative financial period mainly due to the
increase in revenue. Margins remained relatively static at 10,9% however operating costs increased by 66,4%
to R81,3 million due primarily to the establishment of the Intibane Colliery and the incorporation of the
MacPhail acquisition for four months. Restructuring costs, the relocation of the Wescoal offices from
Krugersdorp to Isando and inflationary factors further contributed to the increase.

Group operational EBIDTA of R101,2 million is especially pleasing and is a 123,6% increase on the
comparative period. Operating profit, excluding the once off profit on the sale of mineral rights, increased by
55,5%. Finance costs showed nearly a threefold increase due to the financing of the MacPhail acquisition,
mining infrastructure at Intibane Colliery and working capital requirements.

Profit after tax of R86,6 million includes the R61,5 million once off profit on the sale of mineral rights. 
Headline earnings and headline earnings per share are respectively 37,9% and 28,7% up on the comparative 
period and HEPS has shown the effect of the shares issued for Wescoal Mining acquiring 30% of the total 
issued share capital of Proudafrique from Minoscape.

The group's financial position strengthened during the financial period with total shareholders' funds increasing
by 54,1% to R273,2 million, the net asset value per share and net tangible asset value per share increased by
31,7% and 9,0% respectively. The debt equity ratio increased to 66,2% (2013: 5,5%) due to the MacPhail
acquisition, the cash portion for the acquisitions of the Elandspruit reserve and Proudafrique shares and the
mining infrastructure at the Intibane Colliery.

Acquisition of remaining 40% shareholding in Wescoal Exploration

Wescoal owns 60% of Wescoal Exploration Proprietary Limited ("Wescoal Exploration") via its wholly-owned
subsidiary Wescoal Mining Proprietary Limited ("Wescoal Mining"). The remaining 40% is held by
Proudafrique Trading 147 Proprietary Limited ("Proudafrique").

An opportunity arose for Wescoal Mining to acquire all the issued shares of Proudafrique from Minoscape
Proprietary Limited ("Minoscape"), thereby indirectly acquiring the remaining 40% shareholding in Wescoal
Exploration.

On 26 November 2013 Wescoal Mining acquired 30% of the total issued share capital of Proudafrique from
Minoscape for R18 million.

A circular was issued to Wescoal shareholders on 9 June 2014 in respect of the acquisition by Wescoal Mining
of the remaining 70% of the total issued share capital of Proudafrique from Minoscape for R25.6 million and a
royalty fee of R3.50 per ton of saleable coal mined at the Elandspruit Mining area. The circular contained a
notice of meeting to take place on 14 July 2014, at which shareholders will be requested to approve the
transaction.

Prospects

There is a probability that both Khanyisa and Intibane life of mine can be extended into 2017 by acquiring
adjacent mineral rights with far reaching effect on results going forward.

The Elandspruit transaction with Glencore Xstrata became unconditional on 2 August 2013 and management
is progressing the required environmental authorisations in terms of the National Environmental Management
Act, National Water Act, National Environmental Management: Waste Act and National Heritage Resources
Act. Wescoal has commenced negotiations with surface right owners and has concluded the majority of the
agreements to acquire these surface rights. These processes are expected to be complete during the latter
half of 2014 following which the commissioning of the Elandspruit mine will commence with production
expected to attain 200,000 tons per month by the last quarter of 2015.

The Board has approved future capex of R170 million for the commissioning of the Elandspruit Colliery
including the acquisition of an existing plant, mine operational infrastructure, surface rights and production start
up costs.

Further synergy savings and margin enhancement initiatives are expected from the trading division that will
have a positive effect on the group as a whole

Major coal producers are reviewing mineral assets on an on-going basis and will dispose of non-core
operations. This could potentially bring opportunity for Wescoal to further enhance it's asset base and
sustainability.

Segment analysis

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

                                                       R'000
                                                   31 March 2014
Statement of comprehensive        Trading         Mining         Other           Total
income
Total segment                     591 199        556 246       116 445       1 263 890
Revenue
Inter-segment revenue                   -              -     (116 445)       (116 445)
External revenues                 591 199        556 246              -      1 147 445
Profit from operations              4 687         52 387      (11 906)          45 168
Operational EBITDA                  9 289        103 783      (11 779)         101 293

                                                       R'000
                                                   31 March 2013
Statement of comprehensive        Trading         Mining        Other            Total
income
Total segment revenue             358 580        318 347        54 705         731 632
Inter-segment revenue                                         (54 705)        (54 705)
External revenues                 358 580        318 347             -         676 927
Profit from operations              4 166         34 691      (11 688)          27 169
Operational EBIDTA                  6 110         50 762      (11 566)          45 306

Note:
   (4) Profit from operations excludes profit or losses on the sale of property, plant, equipment, mineral
       assets, finance income and finance costs.
   (5) Operational EBITDA excludes profit or losses on sale of assets.

Resources and reserves statement

The resources and reserves statement below is an extract from the full SAMREC compliant report dated 20
June 2014 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 proscpects:

- Khanyisa Colliery (including Sarie Marais) (Mining Right number MP30/5/1/2/2/107MR) covering portions 96,
  97 and 103 of the farm Heuwelfontein 215 IR;
- Intibane Colliery (Mining Right number MP30/5/1/1/2/483MR) covering portion 16 of the farm Vlakvarkfontein
  213 IR;
- Elandspruit Prospect (Mining Right number MP30/1/1/2/10035MR) covering portions 29, 30,32, 33, 34, 36
  and 40 of the farm Elandspruit 291 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; and
- Verblyden Prospect (Mining Right number MP30/1/1/2/10036MR) covering the entire farm Verblyden 387 IS,
  excluding portions 18 and 35.

The water use licenses for Khanyisa Colliery (WUL 04/B20F/ABGJ/1507) and Intibane Colliery (WUL
04/B20E/AGJ/2149) have been reviewed. A water use license for Elandspruit has been applied for, but is still
pending.

The information contained in the table below is an update to the geological information in the Competent
Person's Report ("CPR") dated April 2014. The full CPR as at March 2014 will be published with the Integrated
Annual Report and will be made available on the Wescoal website.

                                   Resources
Area           Seam               GTIS     Reconnissance MTIS  (1)        ROM (2)

Khanyisa       4 Seam             0.02                        0.02            0.02                                                                                               
               2 Seam OC          0.09                        0.09            0.08                                                                                           
               2 Seam UG         0.60                        0.36           0.34
               2 Seam PP          0.43                        0.39            0.19                                                                                                
Sub Total                        1.15                        0.86            0.63

Intibane       4 Seam            0.01                        0.01            0.01
               2 Seam             0.81                        0.73            0.69                                                                                                
Sub Total                        0.82                        0.74            0.70

Elandspruit    4L Seam            2.96                        2.66            2.53                                                                                                
               3 Seam            1.28                        1.15            1.09
               2U Seam            8.78                        7.90            7.51                                                                                               
               2L Seam          11.17                       10.05            9.55
               1 Seam           15.98                       14.38           13.66                                                                                          
Sub Total                       40.17                       36.15          34.35

Silverbank     2 Seam          281.00           67.45
Verblyden      4 Seam           54.30           13.03
Total                          377.44           80.48        37.75          35.67

Notes: OC - Opencast; UG - Underground; PP  - Pillar Project
Note (1) + (2) - Indicative Calculations

Black Economic Empowerment

Waterberg Portion Property Investments Proprietary Limited ("WPP"), headed by Mr. Robinson Ramaite and
other BEE shareholders hold 35,7% of the issued share capital of Wescoal Holdings Limited. WPP is a BEE
Company operating in the minerals and energy space.

Corporate Governance

The Wescoal Board of Directors continues to be mindful and cognisant that corporate governance is essential
to protect the interests of all stakeholders, and remains committed to compliance with legal requirements and
sound corporate governance principles. The Group subscribes to and is in the process of implementing where
applicable, the principal recommendations of the King III Code of Corporate Governance.

Directorate and Secretary

The following changes took place during the year:

-  K Moroga ? appointed as an independent non-executive director on 1 July 2013;
-  H Mathe ? appointed as an independent non-executive director on 10 July 2013;
-  P Janse van Rensburg ? resigned as Chief Financial Officer on 17 April 2014 with effect from the
   30 June 2014;
-  M du Plessis ? appointed as Acting Chief Financial Officer on 6 May 2014 with effect from 
   1 July 2014; and
-  I de Wet ? appointed as Company Secretary on 1 October 2013.

The board wishes to thank Piet for the valuable contribution he has made to the company, and wishes him all
the best in future endeavours.

Dividends

The board has declared a final gross dividend of 3,8 cents per share in respect of the year ended 31 March
2014 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 company's cash reserves.

The salient dates applicable to the final dividend are as follows:
                                                                                   2014
Last day to trade shares cum dividend                                              Friday, 25 July
Shares trade ex dividend                                                           Monday, 28 July
Record date                                                                        Friday, 1 August
Payment date                                                                       Monday, 4 August


No share certificates may be dematerialised or rematerialised between Monday, 28 July 2014 and Friday, 1
August 2014, 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 3,23 cents per share for shareholders liable to pay the new Dividends Tax
   and 3,8 cents per share for shareholders exempt from paying the new Dividends Tax;
3. The issued ordinary share capital of Wescoal is 193 687 075 ordinary shares;
4. The company's tax reference number is 9876593147; and
5. No STC credits have been utilised.

Basis of preparation

The condensed consolidated financial information for the year ended 31 March 2014 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 Council, 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 company's
auditors.

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.

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

By order of the Board                                                    
23 June 2014                                                             

MR Ramaite                                 AR Boje                          
Chairman                                   Chief Executive Officer            

CORPORATE INFORMATION                                                         

Non-Executive chairman:                    MR Ramaite                         

Lead independent director:                 DMT van Gaalen                     

Independent non-executive directors        JG Pansegrouw                      

Executive directors:                       AR Boje                            
                                           W Khumalo                          
                                           P Janse van Rensburg  
             
Registration number:                       2005/006913/06                     
Registered address:                        Corner of Gewel and Hulley Road,   
                                           Isando                             
                                           1600 
                              
Postal address:                            PO Box 1962                        
                                           Edenvale                           
                                           1610  
                             
Company secretary:                         I de Wet  
                         
Telephone:                                 011 570 5800
                       
Facsimile:                                 011 570 5848                       
     
     
Transfer secretaries:                      Computershare Investor Services (Pty) Limited

Sponsor:                                   Exchange Sponsors (2008) (Pty) Limited

Website                                    www.wescoal.com




Date: 24/06/2014 07:30:00 Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department                             . The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.


                                        
Email this JSE Sens Item to a Friend.

Send e-mail to
© 2017 SHARENET (PTY) Ltd, Cape Town, South Africa
Home     Terms & conditions    Privacy Policy
    Security Notice    Contact Details
Market Statistics are calculated by Sharenet and are therefore not the official JSE Market Statistics. The calculation/derivation may include underlying JSE data.