Wrap Text
WSL - Wescoal Holdings Limited - Reviewed condensed consolidated interim
results for the six months ended 30 September 2011
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 INTERIM RESULTS FOR THE SIX MONTHS ENDED 30
SEPTEMBER 2011
SALIENT FEATURES - CONTINUING OPERATIONS
Revenue up 1%
Operating profits up 2%
Cash reserves - R 31.5m - up 57%
REVIEWED CONSOLIDATED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER
2011
The interim results for the six months ended 30 September 2011, with
comparative results for the six months ended 30 September 2010 and the audited
results for the year ended 31 March 2011 are presented.
Condensed consolidated statement of comprehensive income
Reviewed Restated Restated
interim Reviewed Audited
results for interim results
the six results for for the
months the six year
ended months ended
30 ended 31 March
September 30 2011
2011 September R`000
R`000 2010
R`000
Continuing operations
Revenue 337 067 334 303 557 614
Gross Profit 46 592 28 383
44 455
Other operating income 348 62
644
Operating costs (18 (14 641) (35 232)
585)
Earnings/(Loss) before 28 355 29 876 (6 205)
interest, tax,
depreciation and
amortisation
Depreciation (6 053) (3 938) (5 420)
Amortisation ( 2 626) ( 6 631) ( 9 744)
Earnings/(Loss) before 19 676 19 307 (21 369)
interest, tax and other
costs
Profit on sale of assets 22 416 90
Impairment of assets - - ( 4 776)
Investment income 160 93 175
Finance costs (2 811) (1 727) (3 296)
Profit/(Loss) before 17 047 18 089 (29 176)
taxation
Taxation (5 541) (5 12 150
178)
Profit/(Loss) for the 11 506 12 911 (17 026)
period from continuing
operations
Discontinued operations 4 586 (719) (26 714)
Profit/(Loss) after tax
from discontinued
operations/profit on sale
of assets
16 092 12 192 (43 740)
Profit/(Loss) for the
period
Attributable to: 16 092 12 336 (43 596)
- (144) (144)
Owners of the parent
Non-controlling interest
Profit for the period 16 092 12 192 (43 740)
Headline earnings
reconciliation:
Net profit for the period 16 092 12 192 (43 740)
Less: Profit on sale of (4 608) (329) (501)
assets
Plus: Impairment of assets - - 4 776
Plus: Minority interest - 144 144
Headline earnings for the 11 484 12 007 (39 321)
period
Continuing operations - 11 484 12 582 (12 197)
Profit/(Loss)
- (575) (27 124)
Discontinued operations -
(Loss)
Headline earnings for the 11 484 12 007
period (39 321)
Ordinary shares in issue
(000`s)
-Total at period end 157 931 145 931 157 931
-Weighted average shares 157 931 150 271
in issue 145 931
-Fully diluted weighted 158 272 147 558 151 931
average shares in issue
(Note 1)
Basic earnings per
ordinary share (cents):
Profit/(Loss) from 7.3 8.8 (11.3)
continuing operations
Profit/(Loss) from 2.9 (0.5) (17.8)
discontinued operations
Profit/(Loss) attributable 10.2 8.3 (29.1)
to ordinary owners
Fully diluted basic
earnings per ordinary
share (cents):
Profit/(Loss) from 7.3 8.8 (11.3)
continuing operations
Profit/(Loss) from 2.9 (0.5) (17.8)
discontinued operations
Profit/(Loss) attributable 10.2 8.3 (29.1)
to ordinary owners
Headline earnings per
ordinary share (cents):
Profit/(Loss) from 7.3 8.6 (8.1)
continuing operations
Profit/(Loss) from - (0.4) (18.1)
discontinued operations
Profit/(Loss) attributable 7.3 8.2 (26.2)
to ordinary owners
Fully diluted headline
earnings per ordinary
share (cents):
Profit/(Loss) from 7.3 8.5 (8.0)
continuing operations
Profit/(Loss) from - (0.4) (17.9)
discontinued operations
Profit/(Loss) attributable 7.3 8.1 (25.9)
to ordinary owners
Note:
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 financial position
Reviewed Restated Restated
interim Reviewed Audited
results for interim results for
the six results for the year
months ended the six ended
30 September months ended 31 March
2011 30 2011
R`000 September R`000
2010
R`000
ASSETS
Non-current assets 140 977 151 414 150 289
Property, plant 64 441 55 408 67 510
and equipment
Mine establishment - 18 496 -
costs
Investment 709 709 709
property
Investments 990 - -
Goodwill 49 737 54 513 49 737
Intangible assets 16 762 18 191 16 871
Deferred taxation 8 338 4 097 15 462
Non-current assets - - 2 079
held for sale
156 898 160 386 121 602
Current assets
Inventories and 11 952 29 002 13 032
work in progress
Trade and other 104 716 111 302 77 230
receivables
Cash and cash 40 230 20 082 31 340
equivalents
Total assets 297 875 311 800 273 970
EQUITY AND
LIABILITIES
Total 152 544 178 845 136 459
Shareholders`
funds
Share capital 158 146 158
Share premium 136 944 123 704 136 934
Retained earnings 14 816 56 167 (1 267)
Employee share 803 505 803
option reserve
Non-controlling (177) (1 677) (177)
interest
Non-current 22 295 20 459 28 243
liabilities
Instalment sale 13 316 9 745 18 550
agreements
Interest bearing 649 805 683
loans
Rehabilitation 8 218 8 584 8 911
provision
Deferred tax 112 1 325 99
123 036 112 496 109 268
Current
liabilities
Trade and other 103 782 106 885 96 720
payables
Bank overdraft 8 722 - 17
Current portion of 10 532 5 611 12 531
instalment sale
agreements
Total equity and 297 875 311 800 273 970
liabilities
Net asset value 96.58 122.55 90.81
per share (cents)
Tangible net asset 54.48 72.73 46.48
value per share
(cents)
Condensed Consolidated Statement of Changes in Equity
Attributable to owners of the parent
Share Share Retained Employee Total Non- Total
Capital Premium Earnings share R`000 controll Equity
R`000 R`000 R`000 option ing
reserve Interest
R`000 s
Restated 146 123 704 43 831 305 167
Balance at 1 986
April 2010 (1 533) 166 453
Profit for - - 12 336 - 12
the period 336 (144) 12 192
Share-based - - - 200 200
payments - 200
Restated 146 123 704 56 167 505 180
Balance at 30 522
September
2010 (1 677) 178 845
Loss for the - - (55 933) - (55
period 933) - (55
933)
Shares 21 21 921 - - 21
issued, 942
including - 21 942
treasury
shares
Treasury (9) (8 373) - - (8 - (8 382)
shares 382)
Capital - (318) - - (318)
raising costs - (318)
Share-based - - - 298 298
payment
reserve - 298
Change in - - (1 501) - (1
ownership 501) 1 501 -
Restated 158 136 934 (1 267) 803 136
Balance at 31 628
March 2011 (177) 136 452
Profit for - - 16 092 - 16
the period 092
- 16 092
Balance as at 158 136 934 14 825 152
30 September 711
2011 803 (177) 152 544
Condensed Consolidated Statement of Cash Flows
Reviewed Restated Restated
interim Reviewed Audited
results for interim results for
the six results for the year
months the six ended
ended months ended 31 March
30 30 September 2011
September 2010 R`000
2011 R`000
R`000
Cash flows from 2 960 14 284 12 234
operating activities
Cash generated by 7 286 17 340 17 209
operations
Interest paid (2 526) (736) (2 655)
Income tax paid (1 800) (2 320) (2 320)
Cash flows from 4 517 (9 127) (24 682)
investing activities
Purchase of property, (170) (9 670) (29 123)
plant and equipment
Capitalised exploration (814) - (1 247)
costs
Proceeds from the sale 6 249 450 5 513
of property, plant and
equipment
Increase in restricted (908) - -
investment
Interest received 160 93 175
(7 292) 3 544 32 390
Cash flows from
financing activities
Loans raised - 906 906
Loans repaid (83) (13) (23)
Proceeds from shares - - 13 241
issued, net of share
issue expenses
Net increase in cash 185 8 701 19 942
and cash equivalents
Cash and cash 31 323 11 381 11 381
equivalents at
beginning of period
Cash and cash 31 508 20 082 31 323
equivalents at end of
period
Operations, market and financial review
The outlook for Wescoal Holdings Limited is optimistic going forward based on a
solid set of results for the six month period ending September 2011 which
represent a clear turnaround from the loss position in March this year.
The mining division achieved revenues of R155-million and operating profits of
R28,3-million from a total of 702 713 tons of coal while the trading division
grew by 9% generating profit of R5,2-million. Overall the Group increased its
revenue by 1% to R337,1-million with gross profit increasing by 5,2% to R45,4-
million.
The period in review was beset by unwarranted negative publicity but the mining
division remained focused and highly motivated which enabled the positive
results. Well defined operational goals and strategies clearly paid off to
secure a strong, stable platform.
Mining division
The strategic imperative goal for the Mining division is to focus on supplying
Eskom with quality product and dispose of all other associated operations. In
line with this decision, during the financial year ended March 2011, the assets
of Wescoal Mineral Recoveries (Pty) Ltd were disposed of and in August 2011,
the Blesboklaagte washing plant was sold.
Khanyisa Colliery returned to full production during April 2011 and
consequently the mining division achieved revenues of R147,5-million and
operating profits of R28,3-million from a total sales tonnage of 702 713 tons
of coal.
In the event of exceptional rainfall this summer, measures are in place to
limit disruptions to planned production targets. . Management is confident of
achieving the stated sales target of 1,4-million tons for the financial year to
March 2012.
Trading division
The division delivered good results with revenue up by 8% and profits from
operations at R5,2-million in line with the previous comparable period.
Transnet Freight Rail (TFR) railings to Richards Bay Coal Terminal (RBCT)
increased during the period under review resulting in constrained sized coal
supply on the inland market. API#4 export prices have softened to current
levels of US$106.00 however at current exchange rates of R8,20 to the US$, a
significant premium to inland coal prices. Producers have advised of further
price increases going forward.
Financial Restatement
A restatement of the information is presented for the six month period ended 30
September 2010 and for the year ended 31 March 2011.
Environmental rehabilitation provisions recorded under IAS 37, Provisions,
contingent liabilities and contingent assets; were previously recorded directly
in the income statement. In accordance with IAS 16. Property, plant and
equipment; the environmental rehabilitation provisions are now raised as an
asset. In addition, a contingent asset in relation to the matters discussed
under the "legal matters" section below, that were previously offset against
the environmental rehabilitation provision have now been reinstated in
accordance with IAS 37. The contingent asset is now disclosed in the condensed
consolidated financial statements and is not raised as an asset given the
uncertainty surrounding the matter. Finally, a portion of the restatement
relates to management revisiting the environmental obligation base case
assessment.
The impact of the restatement is as follows:
Restated Restated
Reviewed interim Audited results for
results for the six the year ended
months ended 31 March 2011
30 September 2010 R`000
R`000
Condensed
consolidated
Statement of
financial position
Property, plant and
equipment 49 047 62 140
Previously reported 55 408 67 510
Restated
Retained income (55 837) 1 086
Previously reported (56 167) 1 267
Restated
Rehabilitation (2 760) (3 368)
provision (8 584) (8 911)
Previously reported
Restated
4 304 15 470
Deferred tax 4 097 15 462
Previously reported
Restated
Condensed
consolidated
statement of
comprehensive
income 42 412 25 731
Gross profit 44 455 28 383
Previously reported
Restated
(3 624) (3 438)
Depreciation (3 938) (5 420)
Previously reported
Restated
(736) (2 655)
Finance costs (1 727) (3 296)
Previously reported
Restated
17 351 (29 205)
Profit / (Loss) 18 089 (29 176)
before tax
Previously reported
Restated (4 971) 12 158
(5 178) 12 150
Tax
Previously reported
Restated
Financial overview
Overall the group achieved a revenue increase of 1% to R337,1 million and gross
profit increased 5,9% to R45,4 million from continuing operations. EBITDA
however remained flat due to an increase in overheads of R3,7 million (24%) due
to the establishment of a regional office in Witbank during the latter half of
the previous financial year and legal fees attributable to the legal disputes.
A headline earnings per share of 7,3 cents was achieved compared with the 7,9
cents for the comparative period of the previous year. Management is confident
that this positive result will continue or be improved upon through the second
half of the financial year.
Cash flow from investing activities includes R 6,2million proceeds from the
sale of the Blesboklaagte coal beneficiation plant. The outstanding balance of
the proceeds from the sale of the plant of R6m will be settled through coal
purchases.
The debt to equity ratio improved from 23% to 16% since March 2011.
Segment analysis
The analysis below, details the contribution of the two main divisions within
the group:
R`000
30 September 2011
Statement of Trading Mining Other Total
comprehensive
income
Total segment 190 680 154 994 4 798 347 157
Revenue
Inter-segment 2 609 7 481 3 315 10 090
revenue
External 188 071 147 513 1 483 337 067
revenues
EBITDA 5 194 29 524 (6 363) 28 355
R`000
30 September 2010
Statement of Trading Mining Other Total
comprehensive
income
Total segment 174 208 215 470 - 389 678
revenue
Inter-segment 168 55 207 - 55 375
revenue
External 174 040 160 263 - 334 303
revenues
EBIDTA 5 863 28 260 (4 247) 29 876
Legal matters
Management has dealt with numerous legal disputes during the current financial
year but remains focused on the day to day operations of the company. The order
and outcome of events so far are:
On 6 July 2011, Sutha applied for the liquidation of Wescoal Mining;
On 20 July 2011, Wescoal and Wescoal Mining filed a motion in respect of an
urgent application to set aside Sutha`s liquidation application;
On 28 July 2011, the South Gauteng High Court granted an order to interdict
Sutha from continuing to make unsubstantiated and derogatory statements in
respect of Wescoal and Wescoal Mining and the court found Sutha`s actions and
statements were unsubstantiated, malicious, groundless and devoid of the truth;
On 2 August 2011, the North Gauteng High Court granted an order in favour of
Wescoal and Wescoal Mining against Sutha. The order set aside Sutha`s
application for the liquidation of Wescoal Mining with costs.
On 27 October 2011, BSM Mining applied to the North Gauteng High Court for the
liquidation of Wescoal Mining; and
On 3 November 2011, Wescoal applied to the North Gauteng High Court to set
aside the above application. Regrettably the judge ruled that application is
not urgent and that the matter should take its normal course through the Court.
On 16 November 2011 Sutha applied to the North Gauteng High Court to firstly
join in BSM Mining`s Liquidation Application of 27 October 2011 and secondly to
itself apply for the liquidation of Wescoal Mining under the same case number
as the application on 27 October 2011 . The application relates to inter alia a
claim of R95, 9 million (which is disputed) based on the loss of income for the
remainder of the contract; costs incurred on the establishment and de-
establishment of machinery and retrenchment costs incurred.
Wescoal Mining has instructed its legal team to oppose the application as it
believes the application is totally unfounded and malicious and has no prospect
of succeeding.
Shareholders will be advised of any further developments.
Prospects
Management remains focused on increasing the sustainability of the group by
utilizing current coal resources and the acquisition of additional coal assets.
The current status of the coal resources is:
Portion 16 of the farm Vlakvarkfontein 213 IR - an indicated resource of 1,8
million tons and an inferred resource of 238,000 tons of Eskom grade coal. A
Mining Right application was submitted to the Department of Mineral Resources
during December 2010 and is ongoing. Further prospecting work is being
undertaken.
Portion 12 of the farm Vlakvarkfontein 213 IR - an inferred resource of 1.9
million tons of high-grade thermal coal. A Mining Right application was
submitted to the Department of Mineral Resources during December 2010 and is
ongoing. Further prospecting work is being undertaken.
The farm Vlaklaagte (excluding various mineral areas) situated in the district
of Witbank with an inferred resource of 29,5 million tons. A Mining Right
application was submitted to the Department of Mineral Resources during June
2011 and is ongoing. Further prospecting work is being undertaken.
The farm Silverbank 611 IR, excluding portions 1, 10, 12 and 14 district of
Standerton - a prospecting area of 3,925 hectares with an inferred resource of
24.5 million tons of Eskom and thermal coal. A Mining Right application was
submitted to the Department of Mineral Resources during August 2011 and is
ongoing. Further prospecting work is being undertaken.
The farm Verblyden 387 IS, excluding portions 18 and 35, district of Standerton
- a prospecting area of 2,266 hectares with an inferred resource of 37 million
tons of Eskom and thermal coal. A Mining Right application was submitted to the
Department of Mineral Resources during August 2011 and is ongoing.
Portions 8, 9 & 10 of the farm Mooiplaats 165 IS - sufficient information
available to indicate the presence of coal but insufficient for any additional
comment. An application for the renewal of the Prospecting Right has been
submitted to the Department of Mineral Resources.
Portions 1, 3, 4, 6, 14, 23, 30-36, 38, 40 and 62 of the farm Elandspruit 291
JS district of Middleburg - a prospecting area of 2 946 hectares with an
inferred resource of 5.1 million tons of high grade thermal coal. An
application for the renewal of the Prospecting Right has been submitted to the
Department of Mineral Resources
Following preliminary prospecting it was determined that the following two
resources are not economically viable and the Prospecting Rights will be
allowed to lapse.
Portion 10 of the farm Bankfontein 216 IR
Portions 4, 5, 22, 23, 28, 42, 48, 60 and 69-74 of the farm Keerom 374 JS
district of Middelburg.
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 2011 and
the date of the publication of this condensed consolidated interim financial
information.
Dividends
No interim dividend has been declared.
Basis of preparation
The condensed consolidated interim financial information for the six months
ended 30 September 2011 has been prepared in accordance with IAS 34, `Interim
Financial Reporting`, the Companies Act No 71 of 2008 and the Listings
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 2010, except for these
standards that became effective during the reporting period. The adoption of
the standards had no material 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 2011, 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.
Independent review conclusion
The condensed consolidated statement of financial position as at 30 September
2011 and related condensed consolidated statement of comprehensive income,
condensed consolidated statement of changes in equity and condensed
consolidated statement of cash flows for the period has been reviewed by
PricewaterhouseCoopers Inc. Their unqualified review report is available for
inspection at the Company`s registered office.
Directorate
There were no changes to the Board during the period under review.
By order of the Board
24 November 2011
M.R. Ramaite A.R. Boje
Chairman Chief Executive Officer
CORPORATE INFORMATION
Non-Executive MR Ramaite
directors: JG Pansegrouw
DMT van Gaalen
W Khumalo
Executive directors: AR Boje
P Janse van Rensburg
Registration number: 2005/006913/06
Registered address: 228 Voortrekker Street
Krugersdorp
1740
Postal address: PO Box 133
Krugersdorp
1740
Company secretary: CIS Company Secretaries (Pty) Limited
Telephone: 011 - 954 2721
Facsimile: 011 - 954 6737
Transfer secretaries: Computershare Investor Services (Pty)
Limited
Sponsor: Exchange Sponsors (2008) (Pty) Limited
Date: 24/11/2011 07:32:24 Supplied by www.sharenet.co.za
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