Wrap Text
WSL - Wescoal Holdings Limited - Reviewed condensed consolidated results for
the year ended 31 March 2012
Wescoal Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 2005/006913/06)
(JSE code: WSL ISIN: ZAE000069639)
("Wescoal" or "the Group")
SALIENT FEATURES - CONTINUING OPERATIONS
Revenue up 13,1% to R 630,8 million
EBITDA - R 45 million ( 2011: - R 6,2 million)
Operating profit - R 26 million ( 2011: - R 21,4 million)
HEPS - 11.4 cents ( 2011: - 8.1 cents)
Cash reserves - R 20m
REVIEWED CONDENSED CONSOLIDATED RESULTS FOR THE YEAR ENDED 31 MARCH 2012
The results for the year ended 31 March 2012, with comparative audited
results for the year ended 31 March 2011
are presented.
Condensed consolidated statement of comprehensive income
Reviewed Restated
results for audited
the year results for
ended the year
31 March ended
2012 31 March
2011
R`000
R`000
Continuing operations
Revenue 630 752 557 614
Gross profit 81 440 28 390
Other operating income 2 693 644
Operating costs (38 903) (35 232)
Earnings /(Loss) before interest, tax 45 230 (6 198)
depreciation and amortization
Depreciation (11 413) (5 420)
Amortisation (7 858) (9 744)
Earnings/(Loss) before interest, tax and 25 959 (21 362)
other costs
Profit on sale of assets (171) 90
Impairment of assets - (4 776)
Investment income 168 175
Finance costs (4 464) (3 296)
Profit/ (Loss) before taxation 21 492 (29 169)
Taxation (3 873) 12 150
Profit/ (Loss) for the year from 17 619 (17 019)
continuing operations
Discontinued operations
- (26 714)
Operating loss from discontinued 2 983 -
operations
Profit on sale of fixed assets
Profit/(Loss) for the year 20 602 (43 733)
Attributable to:
Owners of the parent 20 602 (43 589)
Non-controlling interest - ( 144)
Profit for the year 20 602 (43 733)
Headline earnings reconciliation:
Net profit for the year 20 602 (43 733)
Less: Profit on sale of assets (2 655) ( 501)
Plus: Impairment of assets - 4 776
Plus: Minority interest - 144
Headline earnings for the year 17 947 (39 314)
17 947 (12 190)
Continuing operations - Profit/(Loss)
Discontinued operations - (Loss) - (27 124)
Headline earnings for the year 17 947 (39 314)
Ordinary shares in issue (000`s)
-Total at year end 157 931 157 931
-Weighted average shares in issue 157 931 150 271
158 247 151 931
-Fully diluted weighted average shares in
issue (Note 1)
Basic earnings per ordinary share
(cents):
Profit/(Loss) from continuing operations 11.2 (11.3)
Profit/(Loss) from discontinued 1.9 (17.8)
operations
Profit/(Loss) attributable to ordinary 13.1
Owners (29.1)
Fully diluted basic earnings per
ordinary share (cents):
Profit/(Loss) from continuing operations 11.1 (11.3)
Profit/(Loss) from discontinued 1.9 (17.8)
operations
Profit/(Loss) attributable to ordinary 13.0
Owners
(29.1)
Headline earnings per ordinary share
(cents):
Profit/(Loss) from continuing operations 11.4 (8.1)
Profit/(Loss) from discontinued - (18.1)
operations
Profit/(Loss) attributable to ordinary 11.4 (26.2)
Owners
Fully diluted headline earnings per
ordinary share (cents):
11.4 (8.0)
Profit/(Loss) from continuing operations
Profit/(Loss) from discontinued - (17.9)
operations
Profit/(Loss) attributable to ordinary (25.9)
Owners 11.4
Note:
(1) Fully diluted earnings per share information s 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
group.
Reviewed Restated Restated
results for audited audited
the year results results for
ended for the year
31 March the year ended
2012 ended 31 March
31 March 2010
R`000 2011
R`000
R`000
ASSETS `
Non-current assets 135 124 150 290 136 146
Property, plant and 55 685 67 510
Equipment 57 033
Investment property 709 709 709
Investments 1 210 - -
Goodwill 49 737 49 737 54 513
Intangible assets 18 801 16 871 19 743
Deferred taxation 8 982 15 463 4 148
Non-current assets held for - 2 079 3 058
sale
146 453 121 602 116 454
Current assets
Inventories and work in 13 157 13 032 37 449
progress
Trade and other receivables 113 133 77 230 67 624
Cash and cash equivalents 20 163 31 340 11 381
Total assets 281 577 273 971 255 658
EQUITY AND LIABILITIES
157 062 136 460 166 453
Total Shareholders` funds
Share capital 158 158 146
Share premium 136 934 136 934 123 704
Retained earnings 19 343 (1 259) 43831
Employee share option reserve 803 803 305
(176) (176) (1533)
Non-controlling interest
17 656 28 243 17.825
Non-current liabilities
Installment sale agreement 8 183 18 550 8 106
Interest bearing loans 548 683 -
Rehabilitation provision 8 793 8 911 8 393
Deferred tax 132 99 1 326
106 859 109 268 71.380
Current liabilities
Trade and other payables 96 206 96 720 66 869
Bank overdraft 250 17 -
Current portion of installment 10 403 12 531 4 511
sale agreements and bank loans
Total equity and liabilities 281 577 273 971 255 658
Net asset value per share 99.45 90.81 114.06
(cents)
Tangible net asset value per 56.05 46.48 63.18
share
(cents)
Condensed consolidated statement of changes in equity
Attributable to owners of the parent
Employee Total Non- Total
share R`000 Controlling Equity
Share Share Retained option Interests
Capital Premium Earnings reserve
R`000 R`000 R`000 R`000
Restated 146 123 704 43 831 305 167 988 (1 533) 166 453
Balance
at 1
April
2010
Loss for - - (43 589) - (43 589) (144) (43
the 733))
period
Shares 21 21 921 - - 21 942 21 942
issued,
including
treasury
shares
Treasury (9) (8 373) - - (8 382) - (8 382)
shares
Capital - (318) - - (318) - (318)
raising
costs
Share- - - - 498 498 - 498
based
payment
reserve
Change in - - (1 501) - (1 501) 1501 -
ownership
Restated 158 136 934 (1 259) 803 136 636 (176) 136 460
Balance
as at 31
March
2011
Profit - - 20 602 - 20 602 - 20 602
for the
period
Balance 158 136 934 19 343 803 157 238 (176) 157 062
as at 31
March
2012
Reviewed Restated
results for audited
the year ended results for
31 March the year
2012 ended 31
R`000 March 2011
R`000
Cash flow from operating activities: 5 612 12 234
Cash generated by operations 12 721 17 209
Interest paid (3 870) (2 655)
Income tax paid (3 239) (2 320)
Cash flows from investing activities (4 367) (24 682)
Purchase of property, plant and (7 655) (29 123)
equipment
Capitalised exploration costs (4 658) ( 1 247)
Proceeds from the sale of property,
plant 8 998 5 513
and equipment (1 220) -
Increase in restricted investments 168 175
Interest received
Cash flows from financing activities (12 655) 32 390
Loans raised - 906
Loans repaid (169) (23)
Installment sale agreements repaid (12 486) 18 266
Proceeds from shares issued, net of - 13 241
share issue expenses
Net increase/in cash and cash (11 410) 19 942
equivalents
Cash and cash equivalents at beginning 31 323 11 381
of period
Cash and Cash equivalents at end 19 913 31 323
of period
Operations, market and financial review
Operations and market review
The group produced a solid set of results for the financial year ending March
2012, which reinforces the clear turnaround from the loss position in March
2011.
The mining division achieved revenues of R291-million and EBITDA of R47,2-
million from a total of 1,52 million tons of coal while the trading division
revenues grew by 13,2% generating EBITDA of R7,0-million. Overall the Group
increased its revenue by 13,1% to R630,8 million with EBITDA increasing from
a loss of R6,2 million to a profit of R45,3 million.
Discounting the non-recurring write off of R29,3 million in the year to March
2011, the group increased EBITDA by R22,1 million (96%) an extremely positive
result. Management is confident of strong growth going forward and is focused
on maximizing profitability of the divisions.
Mining division
The goal for the Mining division to focus on supplying Eskom with quality
product and to dispose of all other associated operations is continuing to
prove to be a valid strategy.
While revenues in the division are down by 7,5% due to the disposals, when
excluding the non-recurring write off R29,3 million, EBITDA has increased by
73%. In addition to the ongoing rehabilitation program, R7,7 million was
spent in the period November 2011 to March 2012 to accelerate the
rehabilitation of two mined out areas at Khanyisa.
Deliveries to Eskom continue unabated however negotiations are at an advanced
stage to secure a three year contract to include the Vlakvarkfontein
resource.
Executive management at Wescoal Mining (Pty) Ltd. has been strengthened by
the appointment of an executive director for group development and a project
manager to focus on development and the various prospects outlined below and
to separate the operational management from group development and projects.
Trading division
The division delivered positive results with revenue up by 13,2% and EBITDA
at R7,0 million, an increase of 67% on the results to March 2011.
Transnet Freight Rail (TFR) railings to Richards Bay Coal Terminal (RBCT) for
the calendar year to April 2012 totaled 23,8 million tons, an annualized rate
of 71,5 million tons. The increase on the 2011 calendar year of 5,8 million
tons is primarily being taken from domestic coal supply resulting in
shortages of sized coal for the domestic market.
Despite export prices decreasing to as low as $82, the railings continue and
domestic prices have increased with demand remaining strong. Management is of
the opinion that the trading environment will show significant improvement in
the next financial year.
Financial overview
The current year financial results reflect the final sale of the
Blesboklaagte beneficiation plant in the discontinued results of the group.
An after tax profit of R 2.9 million was made on the sale of the plant and
substantial rehabilitation work was done on the Witbank site and recouped
from the proceeds of the sale. Management is comfortable that this business
venture has now been concluded successfully but will monitor the sub-lessee
activities until the end of the lease period.
Continuing operations within the group which includes coal mining, processing
and trading reflected a healthy growth in revenue of R 73.1 million up 13.1%
from the comparative financial period. It is notable that the half year
revenue only reflected an R 2.8 million (0.8%) increase in revenue and
substantial improvement in revenue was experienced towards the latter part of
the financial year. During the month of March the Group experienced an
increase in revenue of R 30 million compared to the previous financial year.
This is specifically disclosed because of the trend in revenue improvement
but more to substantiate the high levels of trade and other receivables and
the decline in cash generated from operations.
Market conditions in the trading environment continued to improve with
revenue ending on R 359 million which is R 42 million (13.2%) up on the
previous reporting period.
Mining activities at Khanyisa were stabilised towards the end of the previous
financial year and this division managed to generate revenues of R 291
million. This is however 7.5% lower than the previous financial year but
generated an EBITDA of R 47 million compared to a loss of R 2 million last
year.
Operating costs increased by 10.45% to R 38.9 million mainly due to
inflationary factors, expansion in the mining division and legal,
professional and consulting fees incurred in the Sutha dispute. All of these
costs have been expensed and the group is involved in a legal process to
recover the punitive cost orders.
Group EBIDTA ended on R 45 million compared to a loss of R 6 million. This
improvement was driven by cost savings in the mining division, lower cost per
stripping ratio achievements and increased selling prices in the trading
environment.
Headline earnings per share is 11.4 cents compared to a loss of 25.9 cents in
the comparative period. The current financial period also carried an
additional 6 million (4.2%) fully diluted weighted average shares in issue
due to a shares for cash issue done in the previous financial year.
The debt to equity levels remain low at 12% compared to 23% in the previous
financial year and significantly below industry norms. The group is committed
to balance the level of debt to other funding alternatives and continuously
monitors the cost effects thereof. The group reduced debt to the value of
R 13 million during the reporting period.
Cash and cash equivalents reduced by R 11 million to R 20 million but it must
be noted that trade receivables increased by R 36 million without a
corresponding increase in trade payables. Instead, trade payables remained
constant year on year. The above scenario is a feature of increased sales
towards the latter part of the financial year mentioned earlier and a trend
in the trading environment where upfront payment for coal supply is required.
Cash flow was further impacted by R 7.7 million spent on mine rehabilitation
(referred to earlier).
The issues mentioned in cash and cash equivalents have had a negative impact
on cash generated from operations but will have a positive free cash impact
on the cash flow for the group going into the new financial year. The group
invested a further R 5 million into the improvement of the resource
statement of it`s existing reserves and this investment will unlock value in
the next financial year.
Legal matters
Management has dealt with numerous legal issues during the financial year and
with the exception of some costs orders awarded to Wescoal, the board
considers these matters as closed and behind us.
Prospects
It is expected that the trading division will continue to experience strong
demand and with the large producers` focus on export, restricted supply will
continue.
The mining division will continue at maximum production and with
Vlakvarkfontein coming on stream later in the year, increased profitability
is forecast going forward.
Overall management expects strong growth in both divisions for the year
ending March 2013 with the Vlakvarkfontein resource contributing
substantially from there on.
Wescoal is very aware that the major assets the company has are resources,
people and intellectual capital which it will continue to hone into producing
greater shareholder value.
Resource statement.
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 expected to be granted
shortly. Mining is expected to commence in the latter half of 2012 with
the first coal available by February 2013.
- 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.
- 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.
Restatement
A restatement of the financial results for the year ended 31 March 2011 was
presented together with the half year results for the period ended 30
September 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 and the environmental rehabilitation provision are now raised
as an asset and a full liability.
The impact of the restatement is as follows:
Restated Restated
audited results for the audited results for the
year ended year ended
31 March 2011 31 March 2010
R`000 R`000
Condensed consolidated
Statement of financial
position
Property, plant and
equipment
Previously reported 62 140 49 557
Restated 67 510 57 033
Retained income
Previously reported (1 086) 44 033
Restated (1 259) 43 831
Rehabilitation
provision
Previously reported (3 368) (716)
Restated (8 911) (8 393)
Deferred tax
Previously reported 15 470 2 822
Restated 15 463 2 822
Condensed consolidated
Statement of
comprehensive
income
Gross profit
Previously reported 25 731 58 511
Restated 28 390 59 227
Depreciation
Previously reported (3 438) (1 946)
Restated (5 420) (2 657)
Finance costs
Previously reported (2 655) (795)
Restated (3 296) (1 001)
Profit/(Loss) before
tax
Previously reported (29 205) 28 948
Restated (29 169) 28 746
Tax
Previously reported 12 158 2 936
Restated 12 150 2 936
Segment analysis
The analysis below, details the contribution of the main divisions within the
group:
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 356 691 273 785 276 630 752
revenues
EBITDA 6 932 47 248 (8 950) 45 230
R`000
31 March 2011
Statement of Trading Mining Other Total
Comprehensive
income
Total segment 317 358 314 367 6 686 638 411
revenue
Inter-segment 3 645 71 498 5 654 80 797
revenue
External 313 713 242 869 1 032 557 614
revenues
EBITDA 4 165 (2 088) (8 275) (6 198)
Black Economic Empowerment
Waterberg Portion Property (Pty) Limited("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
No material subsequent events occurred the period 31 March 2012 and the date
of the publication of this condensed consolidated annual financial
information.
Dividends
No dividend has been declared. The Board reviews the dividend policy on an
ongoing basis and use new projects, possible acquisitions and the group`s
financial position as as indicators in this decision making process.
Basis of preparation
The condensed consolidated preliminary financial information for the year
ended 31 March 2012 has been prepared in accordance with International
Accounting Standard (IAS) 34, `Interim financial reporting`. The condensed
consolidated preliminary financial information should be read in conjunction
with the restated annual financial statements for the year ended 31 March
2011, which have been prepared in accordance with International Financial
Reporting Standards (IFRS) and Interpretations, the AC 500 standards (as
issued by the Accounting Practices Board or its successor), requirements of
the South African Companies Act and regulations of the JSE Limited.
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.
Directorate
There were no changes to the Board during the period under review.
By order of the Board
20 June 2012
M.R. Ramaite A.R. 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) Limited
Sponsor: Exchange Sponsors (2008) (Pty) Limited
Date: 20/06/2012 07:05:01 Supplied by www.sharenet.co.za
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