Wrap Text
Unaudited condensed results for the six months ended 30 September 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")
Unaudited condensed consolidated interim results
For the six months ended 30 September 2012
Salient features
continuing operations
Revenue up 4,2%
EBITDA R27,8 million (2011: R28,4 million)
EPS - 6,9 cents (2011: 7,3 cents)
Cash reserves - R36 million
UNAUDITED CONSOLIDATED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2012
The unaudited interim results for the six months ended 30 September 2012, with comparative reviewed results for the six months ended 30 September 2011
and the audited results for the year ended 31 March 2012 are presented.
Condensed consolidated statement of comprehensive income
Unaudited Reviewed
interim results interim results Audited
for the six for the six results for the
months ended months ended year ended
30 September 30 September 31 March
2012 2011 2012
R'000 R'000 R'000
Continuing operations
Revenue 351 361 337 067 630 752
Gross Profit 47 702 46 592 81 440
Other operating income 1 205 348 2 693
Operating costs (21 081) (18 585) (38 903)
Earnings before interest, tax, depreciation and
amortization 27 826 28 355 45 230
Depreciation (6 520) (6 053) (11 413)
Amortization (4 046) (2 626) (7 858)
Earnings before interest, tax and other costs 17 260 19 676 25 959
Profit on sale of assets (218) 22 (171)
Investment income 33 160 168
Finance costs (1 947) (2 811) (4 464)
Profit before taxation 15 128 17 047 21 492
Taxation (4 440) (5 541) (3 873)
Profit for the period from continuing operations 10 688 11 506 17 619
Discontinued operations
Profit after tax from discontinued operations/
profit on sale of assets 4 586 2 983
Profit for the period 10 688 16 092 20 602
Attributable to:
Owners of the parent 10 688 16 092 20 602
Non-controlling interest
Profit for the period 10 688 16 092 20 602
Headline earnings reconciliation:
Net profit for the period 10 688 16 092 20 602
Less: Profit on sale of assets 187 (4 608) (2 655)
Headline earnings for the period 10 875 11 484 17 947
Continuing operations Profit 10 875 11 484 17 947
Discontinued operations
Headline earnings for the period 10 875 11 484 17 947
Ordinary shares in issue (000's)
Total at period end 157 931 157 931 157 931
Weighted average shares in issue 157 931 157 931 157 931
Fully diluted weighted average shares in issue
(Note 1) 158 292 158 272 158 247
Basic earnings per ordinary share (cents):
Profit from continuing operations 6,8 7,3 11,2
Profit from discontinued operations 2,9 1,9
Profit attributable to ordinary owners 6,8 10,2 13,1
Fully diluted basic earnings per ordinary share
(cents):
Profit from continuing operations 6,8 7,3 11,1
Profit from discontinued operations 2,9 1,9
Profit attributable to ordinary owners 6,8 10,2 13,0
Headline earnings per ordinary share (cents):
Profit from continuing operations 6,9 7,3 11,4
Profit from discontinued operations
Profit attributable to ordinary owners 6,9 7,3 11,4
Fully diluted headline earnings per ordinary
share (cents):
Profit from continuing operations 6,9 7,3 11,4
Profit from discontinued operations
Profit attributable to ordinary owners 6,9 7,3 11,4
Condensed consolidated statement of financial position
Unaudited Reviewed
interim results interim results Audited
for the six for the six results for the
months ended months ended year ended
30 September 30 September 31 March
2012 2011 2012
R'000 R'000 R'000
ASSETS
Non-current assets 125 729 140 977 135 124
Property, plant and equipment 47 583 64 441 55 685
Investment property 709 709 709
Investments 1 580 990 1 210
Goodwill 49 737 49 737 49 737
Intangible assets 21 610 16 762 18 801
Deferred taxation 4 510 8 338 8 982
Current assets 178 840 156 898 146 453
Inventories and work in progress 22 222 11 952 13 157
Trade and other receivables 116 808 104 716 113 133
Cash and cash equivalents 39 810 40 230 20 163
Total assets 304 569 297 875 281 577
EQUITY AND LIABILITIES
Total Shareholders' funds 167 749 152 544 157 062
Share capital 158 158 158
Share premium 136 934 136 934 136 934
Retained earnings 30 031 14 826 19 343
Employee share option reserve 803 803 803
Non-controlling interest (177) (177) (177)
Non-current liabilities 12 152 22 295 17 656
Instalment sale agreements 3 191 13 316 8 183
Interest bearing loans 446 649 548
Rehabilitation provision 8 414 8 218 8 793
Deferred tax 101 112 132
Current liabilities 124 668 123 036 106 859
Trade and other payables 110 174 103 782 96 206
Bank overdraft 3 647 8 722 250
Current portion of interest bearing loans 199 176 189
Current portion of Instalment sale agreements 10 648 10 356 10 214
Total equity and liabilities 304 569 297 875 281 577
Net asset value per share (cents) 106,22 96,58 99,45
Tangible net asset value per share (cents) 61,04 54,48 56,05
Condensed Consolidated Statement of Cash Flows
Unaudited Reviewed
interim results interim results Audited
for the six for the six results for the
months ended months ended year ended
30 September 30 September 31 March
2012 2011 2012
R'000 R'000 R'000
Cash flows from operating activities 25 948 2 960 5 612
Cash generated by operations 27 400 7 286 12 721
Interest paid (1 415) (2 526) (3 870)
Income tax paid (37) (1 800) (3 239)
Cash flows from investing activities (5 048) 4 517 (4 367)
Purchase of property, plant and equipment (978) (170) (7 655)
Capitalised exploration costs (3 913) (814) (4 658)
Proceeds from the sale of property, plant and
equipment 180 6 249 8 998
Increase in restricted investment (370) (908) (1 220)
Interest received 33 160 168
Cash flows from financing activities (4 650) (7 292) (12 655)
Loans repaid (92) (83) (169)
Instalment sale agreements repaid (4 558) (7 209) (12 486)
Net increase/(decrease) in cash and cash equivalents 16 250 185 (11 410)
Cash and cash equivalents at beginning of period 19 913 31 323 31 323
Cash and cash equivalents at end of period 36 163 31 508 19 913
Note:
(1) 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 Changes in Equity
Attributable to owners of the parent
Employee
Share Share Retained share option Non-
Capital Premium Earnings reserve Total controlling Total
R'000 R'000 R'000 R'000 R'000 Interests Equity
Restated Balance at 1 April 2010 146 123 704 43 831 305 167 986 (1 533) 166 453
Loss for the period (43 589) (43 589) (144) (43 733)
Shares issued, including treasury shares 21 21 921 21 942 21 942
Treasury shares (9) (8 373) (8 382) (8 382)
Capital raising costs (318) (318) (318)
Share-based payment reserve 498 498 498
Change in ownership (1 501) (1 501) 1 501
158 136 934 (1 259) 803 136 636 (177) 136 459
Restated Balance at 31 March 2011
Profit for the period 20 602 20 602 20 602
Balance at 31 March 2012 158 136 934 19 343 803 157 238 (177) 157 061
Profit for the period 10 688 10 688 10 688
Balance as at 30 September 2012 158 136 934 30 031 803 167 926 (177) 167 749
Operations, market and financial review
Considering the challenges faced during the period, the group results for the half year ending September 2012
are good but reinforce the need to focus on low cost production in the mining division and maximizing margins
in the trading operation.
The challenges included the increasing cost of coal production; diesel price increases and the mass strike
action affecting the entire country. Despite this the group results were in line with the comparable period
ending September 2011 with revenues of R351,4 million (2011: R337,1 million), EBITDA of R27,8 million
(2011: R28,4 million) and profit from operations of R10,7 million (2011: R11,5 million). A non-recurring profit
on the sale of fixed assets of R4,6 million is included in the results for the period ending September 2011.
Whilst no direct strike action occurred at the mining division, the truckers strike resulted in delayed deliveries
of diesel and explosives and substantially reduced deliveries to Eskom during September 2012. The net effect
of this was a loss of R10 million in revenue and R3 million in profit for the mining division.
Mining division
The mining division continues to focus on supplying quality product to Eskom however escalating costs are
impacting on profitability. The average cost of production has risen by 23,7% due to increasing strip ratios at
Khanyisa Colliery and the diesel price increases.
External mining revenues are down 3,0% to R143,1 million (2011: R147,5 million) and EBITDA is 11,5% down
to R26,1 million from R29,5 million. These results would have been in line or exceeded the period to September
2011 had it not been for the countrywide strike action.
Deliveries to Eskom resumed during October 2012, and, as announced on 6 September 2012, a 3-year supply
contract has been concluded with Eskom that includes coal to be supplied from the proposed Intibane Colliery.
The executive management and engineering capacity of the mining division has been further strengthened by
the appointment of a chief executive officer for Wescoal Mining (Pty) Ltd to ensure the successful development
of the various prospects outlined below. With his experience, Mr. Dutch Botes has brought a new dimension to
the division and is investigating the possible extension of the life of Khanyisa by alternative mining methods
and the acquisition of adjacent properties.
Trading division
The division delivered excellent results with revenue up by 10,8% and, more impressively EBITDA up 46,9% to
R7,7 million. The division's focus to increase margins in a tight market is clearly paying dividends and this trend
should continue going forward.
Due to depressed export prices, forecast Transnet Freight Rail (TFR) railings to Richards Bay Coal Terminal (RBCT)
have been reduced to 68 million tons (2011: 65 million tons) from 75 million tons for the calendar year 2012. The
increase on the 2011 calendar year of 3 million tons continues to be primarily taken from domestic coal supply
resulting in continued shortages.
Despite the export prices remaining low at $80, early indications are that inland prices will escalate by between
7% to 10% in the first quarter of 2013.
Financial overview
Overall the group achieved a revenue increase of 4,2% to R351,4 million. Revenue in the trading division improved by
10,8% to R208,3 million but revenue in the mining division decreased by 3% to R143,0 million. The impact of the
transport workers' strike on deliveries to Eskom is estimated at R10 million on revenue and R3 million on profit.
EBIDTA for the period ended on R27,8 million. This is slightly lower than the R28,4 million achieved in the comparative
period. Mining cost pressure and a substantial increase in the cost of diesel are the main reasons for this decline.
Earnings before interest, tax and other costs is 12,3% lower than the prior period due to higher amortisation costs on
the increased tonnage of coal mined.
Finance costs decreased by 30,7% to R1,9 million due to a substantial repayment of debt over the period. Debt to equity
levels reduced from 15,6% as at 30 September 2011 to 8,4% at the end of the current reporting period.
Profit for the period is R5,4 million lower at R10,7 million. The comparative period however included a profit of
R4,6 million from the sale of the Blesboklaagte beneficiation plant. Headline earnings per share for the period is only
5,3% lower than prior period.
Cash and cash equivalents increased by R16,3 million with a strong contribution of R25,9 million cash flow from
operating activities. R3,4 million of these cash flows was used to reduce debt.
Prospects
Management expects the excellent performance from the trading division to continue through to the financial year-end
and beyond.
Intibane Colliery is on track to deliver coal during the first quarter of 2013 that will substantially reduce the cost of
production as the strip ratios at Intibane are 1,5:1 as compared to the current 4:1 at Khanyisa.
Shareholders are referred to the SENS announcements dated 31 July 2012, 3 September 2012 and 5 October 2012,
relating to the Vlaklaagte Disposal and the Elandspruit Acquisition ("the transactions"). The shareholders' circular is
expected to be distributed to shareholders on or before 30 November 2012. Irrevocable commitments to vote in
favour of the transactions have been received from major shareholders and directors totaling 53% of the issued
share capital.
Management continues to focus on securing high quality coal assets and maximizing margins in both divisions.
Segment analysis
The analysis below, details the contribution of the two main divisions within the group:
R'000
30 September 2012
Statement of comprehensive income Trading Mining Other Total
Total segment revenue 208 311 143 050 20 488 371 849
Inter-segment revenue 20 488 20 488
External revenues 208 311 143 050 351 361
EBITDA 7 629 26 119 (5 922) 27 826
R'000
30 September 2011
Statement of comprehensive income Trading Mining Other Total
Total segment revenue 190 680 154 994 4 798 350 472
Inter-segment revenue 2 609 7 481 3 315 13 405
External revenues 188 071 147 513 1 483 337 067
EBIDTA 5 194 29 524 (6 363) 28 355
Resources and reserves statement
The resources and reserves statement contained within the 2012 Wescoal annual report is an extract from the full
SAMREC compliant report dated August 2012 issued by DS Coetzee (PhD Geology, Pr. Sci. Nat.: 400136/00). The full
details of the resources and reserves statement prepared for Wescoal Holdings Limited is available on the Wescoal
website at www.wescoal.com and is subject to the assumptions disclaimer and notes therein. No report is available
for the 2011 period. Wescoal undertakes to comply with this regulation going forward as a further enhancement of
corporate governance.
The report covers the new order mining right at the operating collieries and prospects of:
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;
Intibane Colliery (Mining Right number MP30/5/1/1/2/483MR) covering Portion 16 of the farm Vlakvarkfontein
213 IR;
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;
Silverbank Prospect (Mining right number MP30/1/1/2/10037MR) covering the entire farm Silverbank 611 IR
excluding Portions 1, 10, 12 and 14;
Verblyden Prospect (Mining right number MP30/1/1/2/10036MR) covering the entire farm Verblyden 387 IS
excluding Portions 18 and 35.
All details regarding the geology, topography, climate, rainfall, drainage, veld type, land type and land use are
contained within the full resources and reserves statement on the Wescoal website.
Summary of resourc ces and reserves (million tons)
Resources Reserves
Recon- R Run of Mine
Area Seam GTIS naissance Measured Total Reserves (ROM)
Khanyisa 4 seam 0,06 0,06 0,06 0,06 0,05
2 seam 0,73 0,69 0,69 0,69 0,60
Sarie Marais 4 seam 0,08 0,08 0,08 0,08 0,07
Sub-total 0,87 0,82 0,82 0,82 0,72
Intibane 4 seam 0,19 0,17 0,17 0,17 0,14
2 seam 1,69 1,53 1,53 1,53 1,27
Sub-total 1,88 1,70 1,70 1,70 1,41
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 40,80 9,79
Verblyden 4 seam 61,70 14,81
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 2012 and the date of the publication of this
condensed consolidated interim financial information.
Dividends
No interim dividend has been declared.
Basis of preparation
The unaudited condensed consolidated interim financial information for the six months ended 30 September 2012
has been prepared in accordance with IAS 34, 'Interim Financial Reporting', the Companies Act No 71 of 2008 and
the Listing 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 2012, except for these standards that became effective during the reporting period. The adoption
of the standards had no 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 2012, 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.
Directorate
DMT van Gaalen was appointed as lead independent director on 30 October 2012.
By order of the Board
M.R. Ramaite A.R. Boje
Chairman Chief Executive Officer
CORPORATE INFORMATION
Non-Executive directors: MR Ramaite
JG Pansegrouw
Lead independent director: 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
Telephone: 011 954 2721
Facsimile: 011 954 6737
Transfer secretaries: Computershare Investor Services (Pty) Limited
Sponsor: Exchange Sponsors (2008) (Pty) Limited
Date: 05/11/2012 07:46:00 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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