Wrap Text
Reviewed condensed results for the year ended 31 March 2013
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 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.
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