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Unaudited condensed consolidated results for the six months ended 30 September 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")
Unaudited condensed
consolidated interim results
for the six months ended 30 September 2013
Financial and other highlights
Revenue
up 32,5%
EBITDA
R48,7 million (2012:
R27,8 million) up 74,9%
Headline earnings
R18,1 million (2012:
10,9 million) up 66,0%
HEPS
11,4 cents (2012:
6,9 cents) up 62,3%
Cash reserves
R89,1 million
Health and safety
Substantial achievements in
compliance, health and safety
Unaudited condensed consolidated interim results
for the six months ended 30 September 2013
The unaudited interim results for the six months ended 30 September 2013, with comparative
unaudited results for the six months ended 30 September 2012 and the audited results for the
year ended 31 March 2013 are presented.
Condensed consolidated statement of comprehensive income
Unaudited Unaudited
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
2013 2012 2013
R'000 R'000 R'000
Revenue 465 679 351 361 676 927
Cost of sales (411 812) (314 225) (604 253)
Gross profit 53 867 37 136 72 674
Other income 419 987 3 883
Profit on sale of mineral assets 71 273
Operating expenses (27 577) (21 081) (48 849)
Operating profit 97 982 17 042 27 708
Finance income 202 33 695
Finance costs (3 175) (1 947) (3 358)
Profit before taxation 95 009 15 128 25 045
Taxation (18 301) (4 440) (5 338)
Profit for the period 76 708 10 688 19 707
Attributable to:
Owners of the parent 58 806 10 688 19 707
Non-controlling interest 17 902
Profit for the period 76 708 10 688 19 707
Headline earnings reconciliation:
Net profit for the period 76 708 10 688 19 707
Less: Profit on sale of mineral assets (58 602)
Less: Profit on sale of assets (49) 187 (380)
Headline earnings for the period 18 057 10 875 19 327
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) 160 638 158 272 158 306
Basic earnings per ordinary share (cents): 37,2 6,8 12,5
Fully diluted basic earnings per ordinary
share (cents) 36,6 6,8 12,4
Headline earnings per ordinary share (cents): 11,4 6,9 12,2
Fully diluted headline earnings per
ordinary share (cents): 11,2 6,9 12,2
Note 1:
Fully diluted earnings per share information as 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
Unaudited Unaudited
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
2013 2012 2013
R'000 R'000 R'000
ASSETS
Non-current assets 239 341 125 729 142 176
Property, plant and equipment 69 246 47 583 57 704
Investment property 709 709 709
Investments 3 199 1 580 2 293
Goodwill and intangible assets 51 209 50 655 50 655
Mineral assets 113 744 20 692 27 096
Deferred taxation 1 234 4 510 3 719
Current assets 300 114 178 840 146 948
Inventories and work in progress 47 175 22 222 15 986
Trade and other receivables 158 932 116 808 109 592
Cash and cash equivalents 94 007 39 810 21 370
Total assets 539 455 304 569 289 124
EQUITY AND LIABILITIES
Total shareholders' funds 239 196 167 749 177 321
Stated capital 137 092 137 092 137 092
Retained earnings 82 669 30 031 39 050
Employee share option reserve 1 710 803 1 355
Non-controlling interest 17 725 (177) (176)
Non-current liabilities 33 552 12 152 15 368
Instalment sale agreements 3 087 3 191 786
Interest-bearing loans 224 446 338
Rehabilitation provision 22 382 8 414 14 188
Deferred tax 7 859 101 56
Current liabilities 266 707 124 668 96 435
Trade and other payables 196 536 110 174 87 630
Bank overdraft 4 942 3 647
Current portion of interest-bearing loans 60 547 199 210
Current portion of instalment sale
agreements 4 682 10 648 8 595
Total equity and liabilities 539 455 304 569 289 124
Net asset value per share (cents) 151,46 106,22 112,28
Tangible net asset value per share (cents)
(note 1) 119,03 74,14 80,20
Note 1:
Regulatory approved mineral rights are now 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 cash flows
Unaudited Unaudited
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
2013 2012 2013
R'000 R'000 R'000
Cash flows from operating activities 63 086 25 981 35 654
Cash generated in operations 84 746 27 400 38 456
Finance income 202 33 696
Finance costs (3 175) (1 415) (3 358)
Income tax paid (3 500) (37) (140)
Dividends paid (15 187)
Cash flows from investing activities (53 447) (5 081) (24 992)
Purchase of property, plant and
equipment (5 151) (978) (13 371)
Sale of property, plant and equipment 59 180 863
Capitalised development costs (34 827) (3 913) (11 519)
Purchase of mineral assets (93 810)
Proceeds on disposal of mineral assets 81 120
Purchase of financial assets (838) (370) (965)
Cash flows from financing activities 58 056 (4 650) (9 205)
Movements in interest-bearing debt 60 223 (92) (189)
Investment in acquisition activities (554)
Movements in instalment sale agreements (1 613) (4 558) (9 016)
Net increase in cash and cash equivalents 67 695 16 250 1 457
Cash and cash equivalents at beginning
of period 21 370 19 913 19 913
Cash and cash equivalents at end
of period 89 065 36 163 21 370
Condensed consolidated statement of changes in equity
Attributable to owners of the parent
Stated Retained Employee share Non-
capital earnings option reserve Total controlling Total
R'000 R'000 R'000 R'000 interests equity
Balance as at 1 April 2011 137 092 (1 259) 803 136 636 (176) 136 460
Profit for the period 20 602 20 602 20 602
Balance as at 31 March 2012 137 092 19 343 803 157 238 (176) 157 062
Share-based payment reserve 552 552 552
Profit for the period 19 707 19 707 19 707
Balance as at 31 March 2013 137 092 39 050 1 355 177 497 (176) 177 321
Share-based payment reserve 355 355 355
Dividends paid (15 187) (15 187) (15 187)
Profit for the period 58 806 58 806 17 902 76 708
Balance as at 30 September 2013 137 092 82 669 1 710 221 471 17 725 239 196
Operations, market and financial review
An excellent set of financials for the six-month period with further improvements expected going
forward. Additional highlights included the finalisation of the Elandspruit transaction with
Glencore Xstrata, the proposed acquisition of the business unit of MacPhail Distributors, award of
a Quattro export allocation and the securing of a R180 million debt facility from Investec Bank.
Group results exceeded the comparable period ending September 2012 with revenues of
R465,7 million (2012: R351,4 million), EBITDA of R48,7 million (2012: R27,8 million) and
headline earnings of R18,1 million (2012: R10,9 million) an increase in headline earnings of
66,0%. Profit for the period of R76,7 million (2012: R10,7 million) includes R58,6 million after
tax profit on the sale of the Vlaklaagte mineral asset to Xstrata.
Mining division
The commissioning of the Intibane Colliery in June 2013 contributed significantly to the
excellent results from the division producing 350 234 tons of the 895 185 tons total production.
Both Khanyisa and Intibane are now at full production and will continue so for life of mine.
Mining revenues are R261,7 million (2012: R143,1 million) and profit from continuing operations
R27,7 million (2012: R16,5 million). Operating costs are however up 64%, a high figure despite
the increased production and revenue. We are focusing on reducing mining costs.
Eskom has placed significant emphasis on moving of coal transport from road to rail and to
this end the division has increased the rail delivery to 45% of recent sales to the utility.
Mining increased focus during the reporting period on safety, health and environmental
management. Results from these changes are monitored on a regular basis and significant
positive results have been reported from this action plan. The most important achievements
reported thus far includes:
no critical compliance areas;
a reduction in the lost time injury rate; and
improved housekeeping.
Trading division
The division delivered disappointing results however as this was anticipated, structural change
to the trading operation has been undertaken to fully realise the benefits of the integration
of the business unit of MacPhail Distributors and to reduce costs.
For the reporting period, trading revenues are flat at R204 million (2012: R208 million) and
profit from operations of R2,9 million (2012: R6,7 million) is 57% down. The reduced
profitability is directly related to the volume reduction of 13% to 217 831 tons (2012: 250 127).
There has been an unexpected spike in the RBCT API#4 export price to $91 from around $82
which may lead to increased domestic pricing and restricted product availability.
Financial overview
Revenue from all operations which includes coal mining, processing and trading reflects an
increase of R114,3 million up 32,5% from the comparative financial period. Revenue from the
trading division was 2,1% down from the prior period. The mining division increased revenue
by 82,9% to R261,7 million.
Gross profit increased by R16,7 million to R53,9 million. Margins improved by 1% to 11,6%.
This improvement was mainly driven by price and volume increases in the mining division.
Sales volumes in the trading division decreased by 12,9% but it managed to increase sales
prices by an average of 12,4%.
Operating expenses increased by 30,8% to R27,6 million due primarily to inflationary factors
and a strategic increase in corporate head office expenses.
Group EBITDA ended on R48,7 million up 74,9% on the comparative period. The operating
profit of R97,9 million includes the profit on the sale of mineral assets of R71,3 million. The
operating profit from normalised business activities increased by R9,7 million up 56,7% on the
comparative period.
Net finance costs increased by 55,3% mainly due to the funding of the following projects:
Intibane capital expenditure R20,3 million
Khanyisa underground mining infrastructure R18,4 million
Elandspruit reserve acquisition net of the sale proceeds
of the Vlaklaagte reserve R12,7 million
The group's financial position strengthened substantially during the reporting period with
total shareholders' funds increasing by 34,9% to R239,2 million. Net asset value per share and
net tangible asset value per share increased by 34,9% and 48,4%, respectively.
Debt levels increased by R58,7 million but the debt equity ratio of 28,6% remain at an
acceptable level.
The group generated R84,7 million cash from operations which is 209,3% up on prior year.
Prospects
Intibane Colliery was commissioned during June 2013 and the increased contribution during
the second half of the financial year should lead to increased volumes to March 2014.
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 and has commenced negotiations with surface
right owners. These processes are expected to be completed during the first half of 2014
following which the commissioning of the Elandspruit mine will commence with production
expected to begin during the last quarter of 2014.
The only outstanding condition on the acquisition of MacPhail Distributors is Competition
Commission approval. This approval is expected before the middle of November 2013. The
integration of the two trading units will begin immediately after the transaction becomes
unconditional. This will fundamentally enhance the trading division adding to volumes,
revenue, management and group profitability. Funding for the transaction has been secured
from Investec Bank.
Major coal producers are reviewing all mineral assets on an ongoing 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:
Trading Mining Other Total
Statement of comprehensive income R'000 R'000 R'000 R'000
30 September 2013
Total segment revenue 203 986 261 693 65 627 531 306
Inter-segment revenue 65 627 65 627
External revenues 203 986 261 693 465 679
Profit from operations 2 894 27 682 (3 925) 26 651
EBITDA 3 649 48 874 (3 864) 48 659
30 September 2012
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
Profit from operations 6 664 16 541 (5 945) 17 260
EBITDA 7 629 26 119 (5 922) 27 826
Profit from operations excludes profit or losses on the sale of property, plant, equipment,
mineral assets, finance income and finance costs.
Resources and reserves statement
The resources and reserves statement is issued by DS Coetzee (PhD Geology, Pr. Sci. Nat.:
400136/00).
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 Heuvelfontein 215 IR;
- Intibane Colliery (Mining Right number MP30/5/1/1/2/483MR) covering Portion 16 of the
farm Vlakvarkfontein 213 IR;
- Elandspuit (Mining Right number MP30/5/1/2/2/351MR) covering mineral area no. 7 of
mineral area no. 5 situated on portion 29, mineral area no. 8 of mineral area no. 6 situated
on portions 32, 30, 33, 34, 36 and 40, all of the farm Elandspruit 291 J.S;
- 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.
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.
Total summary of resources and reserves (million tons)
Resources Reserves
Recon-
Area Seam GTIS naissance Measured Total MTIS ROM
Khanyisa 4 Seam 0,00 0,00 0,00 0,00 0,00
2 Seam 0,25 0,24 0,24 0,24 0,21
Sarie Marais 2 Seam 0,00 0,00 0,00 0,00 0,00
Sub-total 0,25 0,24 0,24 0,24 0,21
Khanyisa UG
Project Sarie Marais 2 Seam 0,74 0,66 0,66 0,66 0,35
Pillar Project 2 Seam 0,58 0,52 0,52 0,52 0,25
Sub-total 1,32 1,18 1,18 1,18 0,60
Intibane 4 Seam 0,18 0,16 0,16 0,16 0,05
2 Seam 1,74 1,57 1,57 1,57 1,00
Sub-total 1,92 1,73 1,73 1,73 1,05
Elandspruit 4L Seam 2,31 2,08 2,08 2,08 1,83
3 Seam 0,97 0,88 0,88 0,88 0,77
2U Seam 6,20 5,60 5,60 5,60 4,90
2L Seam 9,74 8,79 8,79 8,79 7,70
1 Seam 14,35 12,92 12,92 12,92 11,34
Sub-total 33,57 30,27 30,27 30,27 26,54
Silverbank 2 Seam 281,06 67,45
Verblyden 4 Seam 54,30 13,03
Total 372,42 80,48 33,42 30,42 30,42 28,40
Black Economic Empowerment
Waterberg Portion Property Investments Proprietary 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
The only outstanding condition on the acquisition of MacPhail Distributors is Competition
Commission approval. This approval is expected before the middle of November 2013.
Dividends
No interim dividend has been declared.
Basis of preparation
The unaudited condensed consolidated interim financial information for the six months ended
30 September 2013 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 2013, 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 Janse 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 2013, 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
MH Mathe and KM Maroga were appointed to the board during the period under review.
By order of the board
MR Ramaite AR Boje
Chairman Chief Executive Officer
4 November 2013
Corporate information
Non-Executive directors: MR Ramaite, JG Pansegrouw
Lead independent director: DMT van Gaalen
Independent Non-Executive Directors: MH Mathe, KM Maroga
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: I de Wet
Telephone: 011 954 2721
Facsimile: 011 954 6737
Transfer secretaries: Computershare Investor Services Proprietary Limited
Sponsor: Exchange Sponsors (2008) Proprietary Limited
Date: 04/11/2013 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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