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Abridged Group Financial Statements and Notice of Annual General Meeting
WESIZWE PLATINUM LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2003/020161/06)
JSE code: WEZ ISIN: ZAE000075859
(“the company” or “Wesizwe”)
ABRIDGED GROUP FINANCIAL STATEMENTS AND NOTICE OF ANNUAL GENERAL MEETING
HIGHLIGHTS
- Wesizwe regrets the first fatality on the project on 17 October
2014, as announced previously. We send our condolences to the
family and colleagues of the deceased. Wesizwe and its contractors
continue to make every effort to consistently ensure a safe and
healthy work environment on the Project for all employees.
- The mine optimization plan was finalized and implemented. An
improvement of R2.1 billion on the Net Present value of the project
was achieved compared to the 2009 Bankable Feasibility Study.
- Main shaft achieved a depth of 737.7 meters and ventilation shaft
754 meters by the end of the reporting period.
- The mining surface lease agreement concluded with Bakubung Ba
Ratheo Community.
- The first and second drawdown on the US$650 million long-term debt
facility with China Development Bank occurred in January 2014 and
August 2014.
- Cash on hand at the end of the reporting period was
R1 066.1 million.
- A definitive metallurgical plant feasibility study has been
completed in 2014 subject to final Mintek analysis of bulk ore
sampling taken from shaft intersections.
- The bulk sampling programme has commenced with Mintek and reef
samples collected from both shafts.
- Services projects are on track and progressing well.
- Commissioning of Phase 2 Eskom Power supply to ensure
sufficient power for the plant.
- Water pipeline construction has commenced.
- The final Housing sites have been identified and the
conceptual design and feasibility has been confirmed and
construction is scheduled to commence in early 2015.
- Company training spend of R16 million which consists of
internships, bursaries, learnerships, core business skill training
and portable skills.
- Spent R19.6 million on SLP projects and employee housing plans.
- The upgrading of Bakubung clinic has been completed and a maternity
ward has been added to the clinic.
- New ablution blocks completed in Bothibelo Primary and Khayalethu
High School in Phatsima.
NOTICE OF ANNUAL GENERAL MEETING
Shareholders are hereby advised that the integrated annual report was
released today, which incorporates the notice of annual general meeting
to be held at Holiday Inn Sandton, 123 Rivonia Road, Sandton,
Johannesburg on Monday, 6 July 2015 at 09h00. The integrated report will
also be available on the company’s website at www.wesizwe.com. The date
on which shareholders must be recorded as such in the share register for
purposes of being entitled to attend and vote at this meeting is Friday,
26 June 2015 with the last day to trade being Friday, 19 June 2015.
The financial statements have been prepared under the supervision of the
Finance Director, Mr Wenliang Ma.
ABRIDGED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 31 December 2014
2014 2013
Notes R’000 R’000
ASSETS
Property, plant and equipment 5 4 120 176 3 241 329
Intangible asset 7 448 -
Available-for-sale financial
asset 6 788 700 -
Investment in equity-accounted
investee 7 - 920 750
Restricted cash 8 134 641 80 670
Non-current assets 5 050 965 4 242 749
Other receivables 25 912 11 606
Taxation 10 4 363 2 557
Restricted cash 8 32 700 34 458
Cash and cash equivalents 1 066 094 751 423
Current assets 1 129 069 800 044
Total assets 6 180 034 5 042 793
EQUITY AND LIABILITIES
Stated capital 9 3 425 544 3 425 544
Share-based payment reserve - -
Available-for-sale financial
asset reserve 22 581 -
(Accumulated loss)/retained
income (64 318) 198 886
Capital and reserves 3 383 807 3 624 430
Deferred tax liability 10 362 218 264 289
Interest-bearing borrowings 14 2 310 114 -
Mine closure and environmental
rehabilitation obligation 11 39 618 29 395
Non-current liabilities 2 711 950 293 684
Interest-bearing borrowings 14 - 1 049 552
Trade and other payables 84 277 73 104
Taxation 10 - 2 023
Current liabilities 84 277 1 124 679
Total equity and liabilities 6 180 034 5 042 793
ABRIDGED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
for the year ended 31 December 2014
2014 2013
Notes R’000 R’000
Operations
Administration expenses (165 634) (87 290)
Project-related expenses capitalised 133 839 53 691
Loss on scrapping of property, plant
and equipment - (18)
Profit on sale of property, plant
and equipment 111 70
Share of (loss)/profit in equity-
accounted investee (194) 1 235
Net operating costs (31 878) (32 312)
Loss on adjustment of investment in
equity-accounted investee (159 556) -
Available-for-sale financial asset
reclassified to profit or loss - 1 651
Profit on disposal of available-for-
sale financial asset - 412
Financial income/(expense)
Finance income 56 413 77 970
Finance expense (69 817) (42 050)
Foreign exchange loss (199 935) (144 890)
Finance costs capitalised 234 385 127 865
Net finance income 21 046 18 895
Loss before tax (170 388) (11 354)
Income tax (expense)/income (92 816) 2 343
Loss for the year (263 204) (9 011)
Other comprehensive income
Items that are or may be
reclassified to profit or loss
Gain/(loss) on fair value movements
of available-for-sale asset 27 700 (1 525)
Tax on other comprehensive income (5 119) 285
Available-for-sale financial asset
reclassified to profit or loss - (1 651)
Total other comprehensive
income/(loss) 22 581 (2 891)
Total comprehensive loss for the
year (240 623) (11 902)
Loss per share
Basic loss per share cents (16.17) (0.55)
Diluted loss per share cents (16.17) (0.55)
Retained
Share- Income/
Stated/ Available- based (Accumu
Share for-sale Payment lated
Capital Reserves Reserve loss) Total
R’000 R’000 R’000 R’000 R’000
Balance at
1 January 2013 3 425 544 2 891 472 179 (264 282) 3 636 332
Total
comprehensive
income for the
year
Loss for the
year - - - (9 011) (9 011)
Other
comprehensive
loss - (2 891) - - (2 891)
Transactions
with owners
recorded
directly in
equity
Transfer of
share-based
payment
reserve to
retained
income - - (472 179) 472 179 -
Balance at
31 December
2013 3 425 544 - - 198 886 3 624 430
Total
comprehensive
income for the
year
Loss for the
year - - - (263 204) (263 204)
Other
comprehensive
income - 22 581 - - 22 581
Balance at
31 December
2014 3 425 544 22 581 - (64 318) 3 383 807
ABRIDGED CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2014
2014 2013
Note R’000 R’000
Cash flows from operating activities
Cash receipts from customers - -
Cash paid to suppliers and employees (36 528) (19 734)
Cash utilised in operations (36 528) (19 734)
Finance income received 27 682 19 731
Finance cost paid (8 822) (666)
Taxation paid (3 855) (2 557)
Taxation received - 13 408
Cash (utilised in)/generated from
operating activities (21 523) 10 182
Cash flows from investing activities
Acquisition of property, plant and
equipment as a result of increase in
operations (709 327) (829 673)
Acquisition of intangible assets (7 827) -
Available-for-sale investment
contributions - (2 744)
Proceeds on available-for-sale
investment - 20 162
Proceeds on disposal of property,
plant and equipment 138 -
Net cash outflow from investing
activities (717 016) (812 255)
Cash flows from financing activities
Interest-bearing borrowings raised 2 125 523 1 022 460
Interest-bearing borrowings repaid (1 022 460) (847 250)
Net cash inflow from financing
activities 1 103 063 175 210
Net increase/(decrease) in cash and
cash equivalents 364 524 (626 863)
Cash at beginning of year 865 149 1 492 012
Cash at end of year 1 229 673 865 149
Cash at end of year comprises:
Cash balances 1 066 094 751 423
Less: interest accrued (3 762) (1 402)
Cash and cash equivalents 1 062 332 750 021
Restricted cash 8 167 341 115 128
Cash at end of year 1 229 673 865 149
ABRIDGED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2014
1. Reporting entity
Wesizwe is a company domiciled in the Republic of South Africa. The
abridged consolidated financial statements for the year ended 31
December 2014 comprise the company and its subsidiaries (together
referred to as the “group”). The audited consolidated financial
statements of the group for the year ended 31 December 2014 will be
available at www.wesizwe.com.
2. Statement of compliance
These abridged consolidated financial statements (“abridged
report”) are prepared in accordance with the recognition and
measurement principles of International Financial Reporting
Standards, the presentation and disclosure requirements of IAS 34
Interim Financial Reporting, the Companies Act, 2008 (as amended)
and the SAICA Financial Reporting Guides as issued by the
Accounting Practices Committee and Financial Reporting
Pronouncements as issued by Financial Reporting Standards Council.
These abridged financial statements have been extracted from the
complete set of financial statements, but is itself not audited, on
which the auditors, KPMG Inc, have expressed an unqualified audit
opinion. A copy of the auditor’s report is available for inspection
at the company’s registered office.
The financial statements have been prepared under the supervision
of the Finance Director, Mr Wenliang Ma.
The directors of Wesizwe take full responsibility for the
preparation of the abridged report and that the financial
information has been correctly extracted from the underlying
audited annual financial statements.
3. Accounting policies
The accounting policies used to prepare this report are consistent
with those used in the previous annual financial statements.
4. Estimates
The financial statements and commentary contain information and is
based on calculations that require management to make judgments,
estimates and assumptions that affect the application of accounting
policies and the reported amounts of assets and liabilities, income
and expenses. Actual results may differ from these estimates.
In preparing these abridged consolidated financial statements, the
significant judgments made by management in applying the group’s
accounting policies and the key sources of estimation, except as
listed below, were the same as those that applied to the
consolidated financial statements for the year ended 31 December
2013.
Management engaged the services of various professional research
and forecasting experts, including that of SFA Oxford Limited for
product prices to prepare projections and forecasts regarding
future economic outlook, exchange rates and product prices.
The following economic parameters were assumed:
2014 2013
US$ exchange rate (ZAR) up to 2019 10.54–11.62 8.85-11.15
US$ exchange rate (ZAR) long-term 11.62 11.15
Pt price (US$/oz) up to 2019 1 385-1 714 1 483-2 221
Pt price (US$/oz) long-term 1 714 2 210
Pd price (US$/oz) up to 2019 859-1 016 664-1 319
Pd price (US$/oz) long-term 1 016 1 267
Rh price (US$/oz) up to 2019 1 320-2 423 700-2 537
Rh price (US$/oz) long-term 2 423 2 356
Au price (US$/oz) up to 2019 1 200-1 358 1 219-1 490
Au price (US$/oz) long-term 1 358 1 355
Pre-tax discount rate/weighted average
cost of capital (%) (Real) 11.41 12.94
Management acknowledges that the ZAR/US$ exchange rate and
commodity prices have been volatile and movements would have an
impact on the values as determined by management. Management is of
the opinion that, given the fact that the net asset value of the
mining assets at year-end were below the determined fair values,
the assets of the group are not impaired.
5. Property, plant and equipment
Mine
Assets Other Total
R'000 R'000 R'000
Balance at 1 January 2013 2 371 670 24 294 2 395 964
Additions and transfers 823 272 24 110 847 382
Disposals - (18) (18)
Depreciation - (1 999) (1 999)
Balance at 1 January 2014 3 194 942 46 387 3 241 329
Additions 866 258 17 280 883 538
Disposals - (28) (28)
Depreciation - (4 663) (4 663)
Balance at 31 December 2014 4 061 200 58 976 4 120 176
6. Available-for-sale financial asset
2014 2013
R’000 R’000
Unlisted equity securities 788 700 -
The investment in equity accounted investee was reclassified as an
available-for-sale financial asset due to the loss of control in
the equity accounted investee. The group currently holds 17.1% of
Maseve Investments 11 (Pty) Ltd (“Maseve”).
7. Investment in equity accounted investee
2014 2013
R'000 R'000
Opening balance 920 750 919 515
Share of (loss)/profit in equity-
accounted investee (194) 1 235
Loss on adjustment of value in
interest in equity-accounted investee (159 556) -
Investment in equity-accounted
investee reclassified to available-
for-sale financial (761 000) -
Closing balance - 920 750
As at 30 September 2014, the group lost significant influence on
Maseve and discontinued reporting Maseve on the equity accounted
basis. The investment in Maseve was reclassified as an available-
for-sale financial asset.
8. Restricted cash
2014 2013
R'000 R'000
Non-Current
Eskom — Connection guarantees 77 641 23 670
Aveng Mining Limited — Performance payment
guarantee 57 000 57 000
134 641 80 670
Current
Department of Mineral Resources —
Rehabilitation obligation 27 000 27 000
Landlord — Operating lease agreement - 611
Eskom — Connection guarantees - 6 847
Land purchase agreement 5 700 -
32 700 34 458
Total 167 341 115 128
9. Stated capital
2014 2013
R'000 R'000
Authorised
2 000 000 000 no par value ordinary shares - -
Issued
1 627 827 058 no par value ordinary shares 3 425 544 3 425 544
10. Taxation
10.1 Income tax receivable
2014 2013
R'000 R'000
Balance at the beginning of the year (534) (9 309)
Profit or loss charge 6 (430)
Tax penalties 20 (1 646)
Taxation paid (3 855) (2 557)
Taxation refund received - 13 408
Balance at the end of the year (4 363) (534)
10.2 Deferred tax
2014 2013
R'000 R'000
Deferred tax liability
Balance at the beginning of the year 264 289 267 265
Current year charges 97 929 (2 976)
Unredeemed exploration expenditure - (1 191)
Property, plant and equipment 248 161 230 796
Available-for-sale financial asset 98 043 (664)
Unredeemed mining capex (245 413) (229 329)
Provisions (2 862) (2 588)
Balance at the end of the year 362 218 264 289
Deferred tax asset
Balance at the beginning of the year - (400)
Current year charges - provisions - 400
Balance at the end of the year - -
Net deferred tax liability 362 218 264 289
11. Mine closure and environmental rehabilitation obligation
This long-term obligation reflects the net present value of
closure, restoration and environmental rehabilitation (which
include the dismantling and demolition of infrastructure, removal
of residual materials and remediation of disturbed areas) cost. The
annual changes can be ascribed to additional disturbances caused
during the year and changes in the escalation and discount rates.
This estimate is based on the current cost estimate and escalated
to the future planned closure date and then discounted at an
appropriate rate. The current estimates are based on environmental
plans in accordance with current technology, environmental and
regulatory requirements and the measurements of an independent
professional surveyor. The discount rate is based on a pre-tax
risk-free rate available in the current market.
At the time of establishing the provision, a corresponding asset is
recognised that will be depreciated over the future life of the
asset to which it relates. The provision is re-assessed on an
annual basis for changes in cost estimates, discount rates and
useful lives.
As required by the Department of Mineral Resources a deposit of
R27.0 million (2013: R27.0 million) is held with a financial
institution. The deposit has been guaranteed to the Department of
Mineral Resources for the mine closure and environmental
rehabilitation.
12. Segment reporting
No segment reporting has been included as the group is conducting
activities in one geological location which represents only one
business activity.
An operating segment is a component of the group that engages in
business activities from which it may earn revenues and incur
expenses, including revenues and expenses that relate to
transactions with any of the group’s other companies. The operating
results for the group as a whole are reviewed regularly by the
group’s CEO to make decisions about resources to be allocated and
to assess its performance.
13. Subsequent events
No other material events have occurred after the reporting period
and up to the date of this report that required further disclosure
in these financial results.
14. Interest-bearing borrowings
2014 2013
R’000 R’000
Current
Opening balance 1 049 552 847 916
China Development Bank – drawdown - 1 022 460
Interest accrual 7 496 40 820
China Development Bank – loan repayment (1 022 460) (847 250)
China Development Bank – interest
repayment (8 257) (40 725)
Unrealised foreign exchange loss (26 331) 26 331
Closing balance - 1 049 552
Non-current
Opening balance - -
China Development Bank – drawdown 2 125 523 -
Interest accrual 59 897 -
China Development Bank – interest
repayment (58 865) -
Realised foreign exchange loss (1 270) -
Unrealised foreign exchange loss 184 829 -
Closing balance 2 310 114 -
The group has a secured US$200 million loan with a carrying amount
of R2 310.1 million at 31 December 2014 (2013: R1 049.6 million).
The interest rate on the facility is determined six monthly in
advance as the six-month LIBOR rate plus 3.5%. The term of the loan
is 15 years and no capital repayments are due during the first six
years. Repayments in semi-annual instalments over the last nine
years of the facility commence at an amount equal 0.077% of the
outstanding balance at the end of the sixth year, after which every
instalment increase until the second last payment amounts to 8.5%
of the initial outstanding amount. The last instalment repays the
total balance. A facility fee amounting to 0.5% of the unutilized
balance is payable annually. The interest expense is payable bi-
annually. The interest expense and facility fee is included in the
effective interest rate calculation.
15. Headline earnings per share
The basis of calculation of headline loss and diluted headline
loss per share is:
2014 2013
R R
Loss attributable to ordinary
shareholders (rand) (263 203 837) (9 011 003)
Profit on disposal of property plant
and equipment (110 539) (70 175)
Profit on disposal of available-for-
sale financial asset - (2 062 634)
Loss on scrapping of property, plant
and equipment - 17 514
Loss on adjustment of value in
interest in equity-accounted investee 159 555 896 -
Total tax effects of adjustments 92 954 954 404 674
Headline loss (10 803 526) (10 721 624)
Weighted average number of ordinary
shares in issue (shares) 627 827 058 1 627 827 058
Headline loss and diluted headline
loss per share (cents) (0.66) (0.66)
16. Contingencies
Wesizwe Platinum Limited is defending a claim brought by an
advisory firm. Although liability is not admitted, if the defence
against the claim is unsuccessful, then commission costs could
amount to R21.4 million. The directors do not expect the claim to
be successful.
17. Capital Commitments
Capital commitments for the next 12 months amounts to
R430.1 million (2013: R448.8 million).
18. Prospects
The Bakubung project remains on target both in terms of full
planned concentrate production output and project construction
costs budget. The updated feasibility study of the Bakubung project
was tested by the auditors for an impairment assessment and still
continues to yield very encouraging results.
By order of the board:
Dawn Mokhobo (Chairman) Jianke Gao (Chief Executive Officer)
Sponsors: PSG Capital Proprietary Limited
Directors: DNM Mokhobo (Chairman)*, D Chen (Deputy Chairman)*#, J Gao
(Chief Executive Officer)#, W Ma (Financial Director)#, WM Eksteen*,
J Li#, LV Ngculu*, L Teng*#, TV Mabuza*, K Mokoka*
*Non Executive #Chinese
Company secretary: V Mhlongo
Registered address: Wesizwe House, Devcon Park, 9 Autumn Road Rivonia
Ext 3, 2128, South Africa
www.wesizwe.com
31 March 2015
Johannesburg
Date: 31/03/2015 10:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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