Wrap Text
Reviewed condensed consolidated results for the year ended 31 March 2014
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 2014
FINANCIAL AND OTHER HIGHLIGHTS
- Revenue up 69,5% to R1,1 billion (2013: R676,9 million)
- HEPS up 28,7% to 15,7 cents (2013: 12,2 cents)
- Operational EBITDA up 123,6% to R101,2 million (2013: R45,3 million)
- Cash reserves up 143,3% to R52,0 million (2013: R21,4 million)
- Dividend of 3,8 cents per share (2013: 3,0 cents per share)
- Commissioning of Intibane Colliery
- Successful integration of MacPhail Distributors ("MacPhail")
- Finalisation of Elandspruit acquisition
REVIEWED CONDENSED CONSOLIDATED RESULTS FOR THE YEAR ENDED 31 MARCH 2014
The reviewed results for the year ended 31 March 2014 with comparative audited results for the year ended 31
March 2013 are presented.
Condensed consolidated statement of comprehensive income
Reviewed results
for the year Audited results for
ended the year ended
31 March 2014 31 March 2013
R'000 R'000
Revenue 1 147 444 676 927
Cost of sales (1 021 915) (604 253)
Gross Profit 125 529 72 674
Other (expenses)/income (1 174) 3 883
Profit on sale of mineral assets 75 773 -
Operating expenses (81 259) (48 849)
Operating profit 118 869 27 708
Finance income 265 695
Finance costs (9 615) (3 358)
Profit before taxation 109 519 25 045
Taxation (22 839) (5 338)
Profit for the year 86 680 19 707
Other comprehensive income - -
Total comprehensive income 86 680 19 707
Attributable to:
Owners of the parent 69 764 19 707
Non-controlling interest 16 916 -
Profit for the year 86 680 19 707
Headline earnings reconciliation:
Net profit for the year 86 680 19 707
- Profit on sale of mineral assets (61 521) -
- Loss/(profit) on the sale of assets 1 491 (388)
Headline earnings for the year 26 650 19 319
Ordinary shares in issue (000's)
-Total at period end (Note 1) 184 771 157 931
-Weighted average shares in issue 170 067 157 931
-Fully diluted weighted average shares in issue
(Note 2) 173 484 158 312
Basic earnings per ordinary share (cents): 41.0 12.5
Fully diluted basic earnings per ordinary share 40.2 12.4
(cents)
Headline earnings per ordinary share (cents): 15.7 12.2
Fully diluted headline earnings per ordinary share 15.4 12.2
(cents):
Note:
(1) Excludes shares held by the share incentive trust
(2) Fully diluted earnings per share information as reflected shows the potential effect of dilution for
11.52 million (2013: 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 results for Audited results
the year ended for the year ended
31 March 31 March
2014 2013
R'000 R'000
ASSETS
Non-current assets 355 752 142 176
Property, plant and equipment 116 004 75 589
Investment property 709 709
Investments 6 664 2 293
Goodwill and intangible assets 111 722 50 655
Investment in associates 19 365 -
Mineral assets 101 118 9 211
Deferred taxation 170 3 719
Current assets
368 391 146 948
Inventories and work in progress 60 839 15 986
Trade and other receivables 255 389 109 592
Cash and cash equivalents 52 163 21 370
Total assets 724 143 289 124
EQUITY AND LIABILITIES
Total Shareholders' funds 273 225 177 321
Stated capital 166 715 137 092
Retained earnings 103 627 39 050
Employee share option reserve 3 059 1 355
Non-controlling interest (176) (176)
Non-current liabilities 96 471 15 368
Interest bearing loans 57 113 1 124
Rehabilitation provision 24 282 14 188
Deferred tax 15 076 56
Current liabilities 354 447 96 435
Trade and other payables 220 211 87 619
Bank overdraft 176 -
Taxation payable 10 268 11
Interest bearing loans 123 792 8 805
Total equity and liabilities 724 143 289 124
Net asset value per share (cents) 147.87 112.28
Tangible net asset value per share (cents)(Note 3) 87.41 80.20
Note:
(3) Regulatory approved mineral rights are 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 Changes in Equity
Attributable to owners of the parent
Employee Non- Total
share controlling Equity
Stated Retained option Interests
Capital Earnings reserve Total
R'000 R'000 R'000 R'000
Balance as at
31 March 2012 137 092 19 343 803 157 238 (176) 157 062
Share based
payment - 552
reserve - - 552 552
Profit for the
year - 19 707 - 19 707 - 19 707
Balance as at
31 March 2013 137 092 39 050 1 355 177 497 (176) 177 321
Shares issued 29 623 - - 29 623 - 29 623
Share based
payment
reserve - - 1 704 1 704 - 1 704
Dividends paid - (5 187) - (5 187) (16 916) (22 103)
Profit for the
year - 69 764 - 69 764 16 916 86 680
Balance as at
31 March 2014 166 715 103 627 3 059 273 401 (176) 273 225
Condensed Consolidated Statement of Cash Flows
Reviewed results for Audited results for
the year ended the year ended
31 March 2014 31 March 2013
R'000 R'000
Cash flows from operating activities 29 810 35 654
Cash generated in operations 47 134 38 456
Finance income 265 696
Finance costs (7 715) (3 358)
Income tax paid (4 687) (140)
Dividends paid (5 187) -
Cash flows from investing activities (175 426) (24 992)
Purchase of property, plant and equipment
and mineral assets (103 542) (24 890)
Sale of property, plant and equipment 8 049 863
Purchase of business (70 784) -
Purchase of investment in associate (5 000) -
Purchase of financial assets (4 149) (965)
Cash flows from financing activities 176 233 (9 205)
Movements in interest bearing loans 170 975 (9 205)
Shares issued 5 258 -
Net increase in cash and cash equivalents 30 617 1 457
Cash and cash equivalents at beginning of
year 21 370 19 913
Cash and cash equivalents at end of year 51 987 21 370
Operations, market and financial review
These results depict a solid financial performance despite some challenges which arose in the second half of
the financial year including reduced take off from Eskom and the integration of MacPhail into the trading
division. Highlights included the finalisation of both the Elandspruit transaction with Glencore Xstrata and the
transaction with Genet to acquire the business of MacPhail, the award of a Quattro export allocation and the
securing of a R180 million debt facility from Investec.
Group revenues exceed the billion rand mark for the first time at R1,15 billion (2013: R676,9 million),
operational EBITDA of R101,2 million (2013: R45,3 million) and headline earnings of R26,7 million (2013:
R19,3 million) an increase in headline earnings of 37,9%. Operating profit of R118,9 million (2013:
R27,7 million) includes R75,8 million profit on the sale of the Vlaklaagte mineral asset to Glencore Xstrata.
Mining division
The commissioning of the Intibane Colliery in June 2013 contributed significantly to the results from
the division producing 1,03 million tons of the 1,92 million tons of total production. Due to Eskom
operational reasons, Khanyisa colliery delivered significantly less coal to the utility during the
second half of the year affecting the profitability of the colliery. Subsequent to the reporting period
the situation has normalised at Khanyisa. Intibane did not experience a similar situation.
Mining revenues are R556,2 million (2013: R318,4 million), EBITDA of R103,7 million (2013: R50,7 million) and
profit from operations of R52,3 million (2013: R34,7 million). Operating costs are however excessive and
require renewed focus to bring in line with budgets.
Trading division
Immense effort and focus was placed on the successful integration of MacPhail into the trading division and
the physical integration was completed in January 2014 with the Chandler Coal and Wescoal Holdings offices
relocating to Isando. Synergy savings that are flowing through, together with the combined businesses, will
prove to be a significant contributor to group results going forward.
Trading revenues are significantly higher at R591,2 million (2013: R358,6 million), EBITDA of R9,3 million
(2013: R6,1 million) and profit from operations marginally up at R4,7 million (2012: R4,2 million). Benefits
accrued from the four months trading incorporating the MacPhail acquisition were eroded by once off
restructuring costs of R8 million.
Financial overview
Revenue from all operations which includes coal mining, processing and trading reflected an increase of 69,5%
to R1,15 billion from the comparative financial period and it is especially pleasing that the group achieved
annual revenues in excess of R1 billion for the first time. Revenue from the trading division increased by 64,9%
however when excluding the MacPhail trading revenue for the period December 2013 to March 2014,
revenues are only marginally up by 8,5%. Revenue from the mining division increased by 74,7% to R556,2
million and the division continued to perform exceptionally well despite reduced Eskom take off from the
Khanyisa operation during the 4th quarter.
Gross profit of R125, 5 million is an increase of 72,7% on the comparative financial period mainly due to the
increase in revenue. Margins remained relatively static at 10,9% however operating costs increased by 66,4%
to R81,3 million due primarily to the establishment of the Intibane Colliery and the incorporation of the
MacPhail acquisition for four months. Restructuring costs, the relocation of the Wescoal offices from
Krugersdorp to Isando and inflationary factors further contributed to the increase.
Group operational EBIDTA of R101,2 million is especially pleasing and is a 123,6% increase on the
comparative period. Operating profit, excluding the once off profit on the sale of mineral rights, increased by
55,5%. Finance costs showed nearly a threefold increase due to the financing of the MacPhail acquisition,
mining infrastructure at Intibane Colliery and working capital requirements.
Profit after tax of R86,6 million includes the R61,5 million once off profit on the sale of mineral rights.
Headline earnings and headline earnings per share are respectively 37,9% and 28,7% up on the comparative
period and HEPS has shown the effect of the shares issued for Wescoal Mining acquiring 30% of the total
issued share capital of Proudafrique from Minoscape.
The group's financial position strengthened during the financial period with total shareholders' funds increasing
by 54,1% to R273,2 million, the net asset value per share and net tangible asset value per share increased by
31,7% and 9,0% respectively. The debt equity ratio increased to 66,2% (2013: 5,5%) due to the MacPhail
acquisition, the cash portion for the acquisitions of the Elandspruit reserve and Proudafrique shares and the
mining infrastructure at the Intibane Colliery.
Acquisition of remaining 40% shareholding in Wescoal Exploration
Wescoal owns 60% of Wescoal Exploration Proprietary Limited ("Wescoal Exploration") via its wholly-owned
subsidiary Wescoal Mining Proprietary Limited ("Wescoal Mining"). The remaining 40% is held by
Proudafrique Trading 147 Proprietary Limited ("Proudafrique").
An opportunity arose for Wescoal Mining to acquire all the issued shares of Proudafrique from Minoscape
Proprietary Limited ("Minoscape"), thereby indirectly acquiring the remaining 40% shareholding in Wescoal
Exploration.
On 26 November 2013 Wescoal Mining acquired 30% of the total issued share capital of Proudafrique from
Minoscape for R18 million.
A circular was issued to Wescoal shareholders on 9 June 2014 in respect of the acquisition by Wescoal Mining
of the remaining 70% of the total issued share capital of Proudafrique from Minoscape for R25.6 million and a
royalty fee of R3.50 per ton of saleable coal mined at the Elandspruit Mining area. The circular contained a
notice of meeting to take place on 14 July 2014, at which shareholders will be requested to approve the
transaction.
Prospects
There is a probability that both Khanyisa and Intibane life of mine can be extended into 2017 by acquiring
adjacent mineral rights with far reaching effect on results going forward.
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. Wescoal has commenced negotiations with surface right owners and has concluded the majority of the
agreements to acquire these surface rights. These processes are expected to be complete during the latter
half of 2014 following which the commissioning of the Elandspruit mine will commence with production
expected to attain 200,000 tons per month by the last quarter of 2015.
The Board has approved future capex of R170 million for the commissioning of the Elandspruit Colliery
including the acquisition of an existing plant, mine operational infrastructure, surface rights and production start
up costs.
Further synergy savings and margin enhancement initiatives are expected from the trading division that will
have a positive effect on the group as a whole
Major coal producers are reviewing mineral assets on an on-going 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:
R'000
31 March 2014
Statement of comprehensive Trading Mining Other Total
income
Total segment 591 199 556 246 116 445 1 263 890
Revenue
Inter-segment revenue - - (116 445) (116 445)
External revenues 591 199 556 246 - 1 147 445
Profit from operations 4 687 52 387 (11 906) 45 168
Operational EBITDA 9 289 103 783 (11 779) 101 293
R'000
31 March 2013
Statement of comprehensive Trading Mining Other Total
income
Total segment revenue 358 580 318 347 54 705 731 632
Inter-segment revenue (54 705) (54 705)
External revenues 358 580 318 347 - 676 927
Profit from operations 4 166 34 691 (11 688) 27 169
Operational EBIDTA 6 110 50 762 (11 566) 45 306
Note:
(4) Profit from operations excludes profit or losses on the sale of property, plant, equipment, mineral
assets, finance income and finance costs.
(5) Operational EBITDA excludes profit or losses on sale of assets.
Resources and reserves statement
The resources and reserves statement below is an extract from the full SAMREC compliant report dated 20
June 2014 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 proscpects:
- Khanyisa Colliery (including Sarie Marais) (Mining Right number MP30/5/1/2/2/107MR) covering portions 96,
97 and 103 of the farm Heuwelfontein 215 IR;
- Intibane Colliery (Mining Right number MP30/5/1/1/2/483MR) covering portion 16 of the farm Vlakvarkfontein
213 IR;
- Elandspruit Prospect (Mining Right number MP30/1/1/2/10035MR) covering portions 29, 30,32, 33, 34, 36
and 40 of the farm Elandspruit 291 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; and
- Verblyden Prospect (Mining Right number MP30/1/1/2/10036MR) covering the entire farm Verblyden 387 IS,
excluding portions 18 and 35.
The water use licenses for Khanyisa Colliery (WUL 04/B20F/ABGJ/1507) and Intibane Colliery (WUL
04/B20E/AGJ/2149) have been reviewed. A water use license for Elandspruit has been applied for, but is still
pending.
The information contained in the table below is an update to the geological information in the Competent
Person's Report ("CPR") dated April 2014. The full CPR as at March 2014 will be published with the Integrated
Annual Report and will be made available on the Wescoal website.
Resources
Area Seam GTIS Reconnissance MTIS (1) ROM (2)
Khanyisa 4 Seam 0.02 0.02 0.02
2 Seam OC 0.09 0.09 0.08
2 Seam UG 0.60 0.36 0.34
2 Seam PP 0.43 0.39 0.19
Sub Total 1.15 0.86 0.63
Intibane 4 Seam 0.01 0.01 0.01
2 Seam 0.81 0.73 0.69
Sub Total 0.82 0.74 0.70
Elandspruit 4L Seam 2.96 2.66 2.53
3 Seam 1.28 1.15 1.09
2U Seam 8.78 7.90 7.51
2L Seam 11.17 10.05 9.55
1 Seam 15.98 14.38 13.66
Sub Total 40.17 36.15 34.35
Silverbank 2 Seam 281.00 67.45
Verblyden 4 Seam 54.30 13.03
Total 377.44 80.48 37.75 35.67
Notes: OC - Opencast; UG - Underground; PP - Pillar Project
Note (1) + (2) - Indicative Calculations
Black Economic Empowerment
Waterberg Portion Property Investments Proprietary Limited ("WPP"), headed by Mr. Robinson Ramaite and
other BEE shareholders hold 35,7% of the issued share capital of Wescoal Holdings Limited. WPP is a BEE
Company operating in the minerals and energy space.
Corporate Governance
The Wescoal Board of Directors continues to be mindful and cognisant that corporate governance is essential
to protect the interests of all stakeholders, and remains committed to compliance with legal requirements and
sound corporate governance principles. The Group subscribes to and is in the process of implementing where
applicable, the principal recommendations of the King III Code of Corporate Governance.
Directorate and Secretary
The following changes took place during the year:
- K Moroga – appointed as an independent non-executive director on 1 July 2013;
- H Mathe – appointed as an independent non-executive director on 10 July 2013;
- P Janse van Rensburg – resigned as Chief Financial Officer on 17 April 2014 with effect from the
30 June 2014;
- M du Plessis – appointed as Acting Chief Financial Officer on 6 May 2014 with effect from
1 July 2014; and
- I de Wet – appointed as Company Secretary on 1 October 2013.
The board wishes to thank Piet for the valuable contribution he has made to the company, and wishes him all
the best in future endeavours.
Dividends
The board has declared a final gross dividend of 3,8 cents per share in respect of the year ended 31 March
2014 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 company's cash reserves.
The salient dates applicable to the final dividend are as follows:
2014
Last day to trade shares cum dividend Friday, 25 July
Shares trade ex dividend Monday, 28 July
Record date Friday, 1 August
Payment date Monday, 4 August
No share certificates may be dematerialised or rematerialised between Monday, 28 July 2014 and Friday, 1
August 2014, 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 3,23 cents per share for shareholders liable to pay the new Dividends Tax
and 3,8 cents per share for shareholders exempt from paying the new Dividends Tax;
3. The issued ordinary share capital of Wescoal is 193 687 075 ordinary shares;
4. The company's tax reference number is 9876593147; and
5. No STC credits have been utilised.
Basis of preparation
The condensed consolidated financial information for the year ended 31 March 2014 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 Council, 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 company's
auditors.
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 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.
By order of the Board
23 June 2014
MR Ramaite AR Boje
Chairman Chief Executive Officer
CORPORATE INFORMATION
Non-Executive chairman: MR Ramaite
Lead independent director: DMT van Gaalen
Independent non-executive directors JG Pansegrouw
Executive directors: AR Boje
W Khumalo
P Janse van Rensburg
Registration number: 2005/006913/06
Registered address: Corner of Gewel and Hulley Road,
Isando
1600
Postal address: PO Box 1962
Edenvale
1610
Company secretary: I de Wet
Telephone: 011 570 5800
Facsimile: 011 570 5848
Transfer secretaries: Computershare Investor Services (Pty) Limited
Sponsor: Exchange Sponsors (2008) (Pty) Limited
Website www.wescoal.com
Date: 24/06/2014 07:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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