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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
- Main and Ventilation Shafts completed as scheduled, at 825m and 810m
respectively.
- Achieved 472m Flat Development for Main and Ventilation Shafts.
- Connected the two shafts on 72 Level with ore.
- Loading box excavation was completed.
- Ensured implementation of the continuous improvement on shafts
infrastructure by shortening the shafts from 960m to 820m
- Commenced with the process plant enquiry for the EPCM.
- Third drawdown of US$100 million on the US$650 million project loan from
China Development Bank (CDB) took place in July 2015. Cash on hand as of
31 December 2015 is R1.4 billion.
- Implemented community SLP programs per requirements of the mining license
amounting to an investment of R29 million.
- Implemented various Human Resources Development Programs as required by
the Mining Charter, Investment of R18 million was incurred.
- Services projects are on schedule.
- Secured an additional 20 Mwa to phase 1 power supply sufficient
to ensure commissioning of the shafts.
- Commissioned 1.5 million liters per day capacity as part of the
permanent water supply to the mine.
NOTICE OF ANNUAL GENERAL MEETING
Shareholders are hereby advised that the integrated annual report will be
released tomorrow, which incorporates the notice of annual general meeting
to be held at Holiday Inn Sandton, 123 Rivonia Road, Sandton, Johannesburg
on Wednesday, 4 May 2016 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, 22 April
2016 with the last day to trade being Friday, 15 April 2016.
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 2015
2015 2014
Notes R’000 R’000
ASSETS
Property, plant and equipment 5 5 395 023 4 120 176
Intangible asset 5 871 7 448
Available-for-sale financial
6 628 000 788 700
asset
Restricted cash 8 134 641 134 641
Non-current assets 6 163 535 5 050 965
Other receivables 32 269 25 912
Taxation 10 4 916 4 363
Restricted cash 8 27 000 32 700
Cash and cash equivalents 1 398 823 1 066 094
Current assets 1 463 008 1 129 069
Total assets 7 626 543 6 180 034
EQUITY AND LIABILITIES
Stated capital 9 3 425 544 3 425 544
Available-for-sale financial
- 22 581
asset reserve
Accumulated loss (621 103) (64 318)
Capital and reserves 2 804 441 3 383 807
Deferred tax liability 10 157 763 362 218
Interest-bearing borrowings 14 4 548 772 2 310 114
Mine closure and environmental
11 16 620 39 618
rehabilitation obligation
Provision 3 540 -
Non-current liabilities 4 726 695 2 711 950
Interest-bearing borrowings 14 - -
Trade and other payables 95 407 84 277
Taxation 10 - -
Current liabilities 95 407 84 277
Total equity and liabilities 7 626 543 6 180 034
ABRIDGED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
for the year ended 31 December 2015
2015 2014
Notes R’000 R’000
Operations
Administration expenses (216 224) (165 634)
Project-related expenses capitalised 186 300 133 839
Loss on scrapping of property, plant
(13) -
and equipment
Profit on sale of property, plant
- 111
and equipment
Share of (loss)/profit in equity-
- (194)
accounted investee
Net operating costs (29 937) (31 878)
Loss on adjustment of investment in
equity-accounted investee - (159 556)
Impairment of available-for-sale
financial asset reclassified from (133 000) -
other comprehensive income
Financial income/(expense)
Finance income 83 153 56 413
Finance expense (142 889) (69 817)
Foreign exchange loss (1 087 759) (199 935)
Finance costs capitalised 554 311 234 385
Net finance (expense)/income (593 184) 21 046
Loss before tax (756 121) (170 388)
Income tax income/(expense) 199 336 (92 816)
Loss for the year (556 785) (263 204)
Other comprehensive income
Items that are or may be
reclassified to profit or loss
(Loss)/gain on fair value movements
(160 700) 27 700
of available-for-sale asset
Tax on other comprehensive income 29 967 (5 119)
Reclassification of available-for-
sale financial asset to profit or 133 000 -
loss
Related tax (24 848) -
Total other comprehensive
(22 581) 22 581
(loss)/income
Total comprehensive loss for the
(579 366) (240 623)
year
Loss per share
Basic loss per share cents (34.20) (16.17)
Diluted loss per share cents (34.20) (16.17)
Stated/ Available- Retained Total
Share for-sale Income/
Capital Reserves (Accumu
lated
loss)
R’000 R’000 R’000 R’000
3 425
Balance at 1 January 2014 - 198 886 3 624 430
544
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 22 581 (64 318) 3 383 807
3 425 544
Total comprehensive income for
the year
Loss for the year - - (556 785) (556 785)
Other comprehensive income - (22 581) - (22 581)
Balance at 31 December 2015 - (621 103) 2 804 441
3 425 544
ABRIDGED CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2015
2015 2014
Note R’000 R’000
Cash flows from operating activities
Cash receipts from customers - -
Cash paid to suppliers and employees (9 104) (36 528)
Cash utilised in operations (9 104) (36 528)
Finance income received 33 601 27 682
Finance cost paid (86 825) (8 822)
Taxation paid (3 109) (3 855)
Taxation received 2 556 -
Cash utilised in from operating
(62 881) (21 523)
activities
Cash flows from investing activities
Acquisition of property, plant and
equipment as a result of increase in (859 811) (709 327)
operations
Acquisition of intangible assets (693) (7 827)
Proceeds on disposal of property,
- 138
plant and equipment
Net cash outflow from investing
(860 504) (717 016)
activities
Cash flows from financing activities
Interest-bearing borrowings raised 1 238 500 2 125 523
Interest-bearing borrowings repaid - (1 022 460)
Net cash inflow from financing
1 238 500 1 103 063
activities
Net increase in cash and cash
315 115 364 524
equivalents
Cash at beginning of year 1 229 673 865 149
Cash at end of year 1 544 788 1 229 673
Cash at end of year comprises:
Cash balances 1 398 823 1 066 094
Less: interest accrued (15 676) (3 762)
Cash and cash equivalents 1 383 147 1 062 332
Restricted cash 8 161 641 167 341
Cash at end of year 1 544 788 1 229 673
ABRIDGED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2015
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 2015 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 2015 will be
available at www.wesizwe.com.
2. Statement of compliance
These abridged consolidated financial statements (“abridged report”)
are prepared in accordance with the framework concepts and the
recognition and measurement principles of International Financial
Reporting Standards (“IFRS”), the presentation and disclosure
requirements of IAS 34 Interim Financial Reporting, the Companies Act
of South Africa 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 in terms of
IFRS and are consistent with those used in the previous annual
financial statements.
4. Estimates
The preparation of the interim financial information requires
management to make judgements, estimates and assumptions that affect
the application of accounting policies and the reported amounts of
assets and liabilities, as well as income and expense. Actual results
may differ from these estimates.
Except as described below, in preparing the condensed consolidated
interim financial information, the significant judgements made by
management in applying the Group’s accounting policies and the key
sources of estimation are consistent with those that applied to the
consolidated financial statements for the year ended 31 December
2014.
During the year management reassessed its estimate in respect of
the available-for-sale financial asset (note 6).
5. Property, plant and equipment
Mine
Assets Other Total
R'000 R'000 R'000
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 1 January 2015 4 061 200 58 976 4 120 176
Additions 1 267 175 13 872 1 281 047
Disposals - (13) (13)
Depreciation - (6 187) (6 187)
Balance at 31 December 2015 5 328 375 66 648 5 395 023
6. Available-for-sale financial asset
2015 2014
R’000 R’000
Opening Balance 788 700 -
Reclassified to available-for-sale
- 761 000
financial asset
(Loss)/gain included in OCI – fair
(160 700) 27 700
value adjustment
Closing Balance 628 000 788 700
The group currently holds 17.1% of Maseve Investments 11 (Pty) Ltd
(“Maseve”). The available-for-sale financial asset is classified as
a level 3 fair value as the fair value is determined on inputs not
based on observable market data. The fair value of the unlisted equity
securities are based on the discounted cash flows method. The
valuation model considers the present value of estimated future cash
flows, discounted using a risk-adjusted discount rate.
The significant unobservable inputs are:
2015 2014
US$ exchange rate (ZAR) up to 2025/2019 13.10–16.30 10.54–11.62
US$ exchange rate (ZAR) long-term 14.85 11.62
Pt price (US$/oz) up to 2025/2019 843–1 514 1 385-1 714
Pt price (US$/oz) long-term 1 526 1 714
Pd price (US$/oz) up to 2025/2019 566–1 043 859-1 016
Pd price (US$/oz) long-term 1 046 1 016
Rh price (US$/oz) up to 2025/2019 739–2 239 1 320-2 423
Rh price (US$/oz) long-term 3 069 2 423
Au price (US$/oz) up to 2025/2019 1 125 1 200-1 358
Au price (US$/oz) long-term 1 125 1 358
Pre-tax discount rate/weighted average
cost of capital (%) (Real) 14.94 14.91
Sensitivity analysis on the fair value of the investment in Maseve:
2015 2014
R’million R’million
10% increase in the US$ exchange
211.5 209.3
rate
10% decrease in the US$ exchange
(214.4) (213.2)
rate
10% increase in the platinum price 137.6 137.8
10% decrease in the platinum price (139.6) (138.6)
7. Investment in equity accounted investee
2015 2014
R'000 R'000
Opening balance - 920 750
Share of loss in equity-accounted
investee - (194)
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 - -
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
2015 2014
R'000 R'000
Non-Current
Eskom — Connection guarantees 77 641 77 641
Aveng Mining Limited — Performance payment
57 000 57 000
guarantee
134 641 134 641
Current
Department of Mineral Resources —
27 000 27 000
Rehabilitation obligation
Land purchase agreement - 5 700
27 000 32 700
Total 161 641 167 341
9. Stated capital
2015 2014
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
2015 2014
R'000 R'000
Balance at the beginning of the year (4 363) (534)
Profit or loss charge - 6
Tax penalties - 20
Taxation paid (3 109) (3 855)
Taxation refund received 2 556 -
Balance at the end of the year (4 916) (4 363)
10.2 Deferred tax
2015 2014
R'000 R'000
Deferred tax liability
Balance at the beginning of the year 362 218 264 289
Current year charges (204 455) 97 929
Unredeemed exploration expenditure -
Property, plant and equipment 354 893 248 161
Available-for-sale financial asset (29 967) 98 043
Unredeemed mining capex (535 819) (245 413)
Provisions 6 438 (2 862)
Balance at the end of the year 157 763 362 218
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 (2014: 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
2015 2014
R’000 R’000
Non-current
Opening balance 2 310 114 -
China Development Bank – drawdown 1 238 500 2 125 523
Interest accrual 132 731 59 897
China Development Bank – interest
(219 453) (58 865)
repayment
Realised foreign exchange loss (18 261) (1 270)
Unrealised foreign exchange loss 1 105 141 184 829
Closing balance 4 548 772 2 310 114
The group has a secured US$300 million loan with a carrying amount
of R4 548.8 million at 31 December 2015 (2014: R2 310.1 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:
2015 2014
R R
Loss attributable to ordinary
shareholders (rand) (556 784 945) (263 203 837)
Profit on disposal of property plant
and equipment - (110 539)
Loss on scrapping of property, plant
and equipment 12 931 -
Reclassification of gains or losses
upon impairment of available-for-sale
financial asset 133 000 000 -
Loss on adjustment of value in
interest in equity-accounted investee - 159 555 896
Total tax effects of adjustments (24 851 996) 92 954 954
Headline loss (448 624 010) (10 803 526)
Weighted average number of ordinary
shares in issue (shares) 1 627 827 058 1 627 827 058
Headline loss and diluted headline
loss per share (cents) (27.56) (0.66)
16.Capital Commitments
Capital commitments for the next 12 months amounts to R465.0 million
(2014: R430.1 million).
17.Mineral Resources and Reserves
There were no changes to the mineral resources and reserves for the
year ended 31 December 2015.
18.Dividends
No dividends were declared for the year ended 31 December 2015.
19.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.
20.Changes to the Board of Directors
Mr W Eksteen resigned from the Wesizwe board on 1 July 2015 as an
independent non-executive director. Mr J Li resigned from the Wesizwe
board on 28 January 2016 as a non-executive director.
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)#, 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
29 March 2016
Johannesburg
Date: 29/03/2016 05:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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