Wrap Text
Reviewed condensed consolidated results for the year ended 31 March 2016
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 2016
FINANCIAL AND OTHER SALIENT FEATURES
"The outstanding financial and operational achievements speak for themselves. Most importantly they say to the market: 'Wescoal is well positioned for sustainable growth off a robust
platform' and to shareholders: 'The confidence you have placed in the transformation process and the team is now paying dividends". – Waheed Sulaiman, CEO.
HEPS of 27.1 cps
increased by 76.1%
[FY15: 15.4]
EPS of 26.2 cps
up 66.6%
[FY15: 15.7]
PAT
increased by 78.8% to R51.8 million
[FY15: R29.0 million]
OPERATIONAL EBITDA
increased by 42.1% to R152.1 million
[FY15: R107.0 million]
THE GROUP MARGIN
improved to 15.9%
[FY15: 13.1%]
MINING ROM PRODUCTION
increased 22% to 1851.0kt
[FY15: 1519.0kt]
The reviewed results for the year ended 31 March 2016 with comparative audited results for the year ended 31 March 2015 are presented.
Consolidated income statement
Reviewed Audited results
results for the for the
year ended year ended
31 March 2016 31 March 2015
R'000 R'000
Turnover 1 589 870 1 674 372
Cost of sales (1 338 150) (1 454 728)
Gross profit 251 720 219 644
Other income 1 511 1 557
Profit/(loss) on sale of assets (154) 696
Operating costs (152 154) (175 659)
Operating profit 100 924 46 238
Net finance costs (20 920) (9 154)
Net profit before taxation 80 004 37 084
Taxation (28 239) (8 129)
Net profit/loss for the period 51 765 28 955
Other comprehensive income – –
Total comprehensive income 51 765 28 955
Attributable to:
Owners of the parent 51 765 28 955
Non-controlling interest – –
51 765 28 955
EBITDA
Headline earnings reconciliation:
Net profit for the year 51 765 28 955
Net loss/(profit) on sale of assets 1 640 (696)
Headline earnings for the year 53 405 28 259
Ordinary shares in issue (R'000)
– Total at period end 224 804 183 527
– Weighted average shares in issue 197 361 183 929
– Fully diluted weighted average shares in issue 197 399 185 810
Basic earnings per ordinary share (cents) 26.2 15.7
Fully diluted basic earnings per ordinary share 26.2 15.6
Headline earnings per ordinary share (cents) 27.1 15.4
Fully diluted headline earnings per ordinary share (cents) 27.1 15.2
Consolidated balance sheet
Reviewed Audited results
results for the for the year
year ended ended
31 March 2016 31 March 2015
R'000 R'000
ASSETS 1 025 768 823 243
Non-current assets 631 120 474 673
Property, plant and equipment 496 350 324 740
Investment property 709 709
Investments 22 023 14 218
Goodwill and intangibles 96 300 104 539
Other receivables 11 366 12 909
Deferred taxation 4 372 17 558
Current assets 390 248 348 570
Inventories and work in progress 57 668 82 852
Trade and other receivables 231 401 238 741
Cash and cash equivalents 101 179 26 977
Non-current Assets Held for Sale 4 400 –
EQUITY AND LIABILITIES (1 025 768) (823 243)
Capital and reserves (385 061) (279 821)
Share capital (213 156) (161 465)
Share-based payment reserve (7 263) (5 479)
Minority interest – –
Retained income (164 642) (112 877)
Non-current liabilities (86 932) (97 137)
Interest-bearing debt – long term (21 441) (53 473)
Deferred tax (19 306) (5 101)
Provision for rehabilitation (46 186) (38 563)
Current liabilities (553 774) (446 284)
Trade and other payables (278 377) (218 946)
Provision for rehabilitation (13 890) –
Bank overdraft (15 781) (16 827)
Taxation payable (27 585) (39 899)
Interest-bearing debt – short term (218 141) (170 612)
– –
Net asset value per share (cents) 171,29 152,43
Tangible net asset value per share (cents) 128,45 95,48
Statement of changes in equity
Share-based Retained
Stated capital payment reserve earnings Total Non-controlling
R'000 R'000 R'000 R'000 interests Total equity
Balance at 31 March 2014 166 715 3 059 91 514 261 289 (177) 261 112
Shares issued 21 750 – – 21 750 – 21 750
Shares cancelled (27 000) – – (27 000) – (27 000)
Change in ownership – – (177) (177) 177 –
Total comprehensive income for the year – – 28 955 28 955 – 28 955
Dividends declared – – (7 415) (7 415) – (7 415)
Employees share option scheme – 2 420 – 2 420 – 2 420
Balance at 31 March 2015 161 465 5 479 112 877 279 821 – 279 821
Rights share issue 51 691 – – 51 691 – 51 691
Total comprehensive income for the year – – 51 765 51 765 – 51 765
Employees share option scheme – 1 784 – 1 784 – 1 784
Balance at 31 March 2016 213 156 7 263 164 642 385 061 – 385 061
Condensed Consolidated Statement of Cash Flows
Reviewed Audited results
results for the for the year
year ended ended
31 March 2016 31 March 2015
R'000 R'000
Cash flows from operating activities 207 729 76 099
Cash generated in operations 239 589 94 505
Finance costs – net (18 698) (6 811)
Income tax paid (13 162) (4 180)
Dividends paid – (7 415)
Cash flows from investing activities (176 060) (125 459)
Purchase of property, plant and equipment (170 729) (98 865)
Proceeds from sale of property, plant and equipment 2 109 4 655
Purchase of business – (24 445)
Purchase of investment in associate – –
Purchase of financial assets (7 440) (6 805)
Cash flows from financing activities 43 579 7 523
Movements in interest-bearing borrowings (8 112) 4 673
Shares issued 51 691 2 850
Net increase in cash and cash equivalents 75 248 (41 837)
Cash and cash equivalents at beginning of year 10 150 51 987
Cash and cash equivalents at end of year 85 398 10 150
Introduction
The main business of the Wescoal Group is the mining, processing and the sale and supply of coal. Coal
products are mined, sourced and supplied to end users including the power generation, manufacturing and
petrochemical sectors. The key strategic thrust of Wescoal is to be a leading coal miner with a sustainable
resource base and a coal trading operation. Our business aims to deliver value to stakeholders throughout
the business cycle in the context of our natural, socio and political and economic environment.
The 2016 financial year reflects the best results to date for Wescoal. The Company is pleased to report
some exceptional financial and non-financial achievements over the past 12 months.
Strategic and operational achievements
In our safety, performance and compliance we have had no reportable injuries during FY16.
The Elandspruit Colliery was fully operationalised in a short period of time, under an adverse economic
environment. This flagship project, was launched using internal funding mechanisms,ramped up to its
target of 165kt of production within three months and secured uninterrupted sales contracts from the
outset. Overall the project reversed the trend in the resources sector during 2015. The mine contains five
potentially minable coal seams, which are mined selectively to ensure optimal product recovery during the
beneficiation process. Elandspruit has a mine life of approximately 15 years and will continue to be a key
contributor to Wescoal's performance for many years. Negotiations with Eskom to conclude a long-term
Elandspruit coal supply contract are at an advanced stage.
ROM production for the Group was 1851kt during the reporting period.
Additionally, the Company has completed optimisation and quality management projects at the processing
plant, contributing to the value of Elandspruit. Wescoal now has the capacity to treat more than 200kt ROM.
Water use licences were obtained at both Intibane and Khanyisa Collieries which completes the stable for
all Wescoal's operations. Significant progress has been made increasing the Khanyisa resource base and
consequently, the life of mine (started in 2010) to around 2020.
Wescoal implemented productivity and cost saving initiatives in the trading business, significantly reducing
operating cost by 10.5% while largely maintaining sales volumes.
The Company's BEE shareholding increased to well over 40% and is on track strategically, to reach the
target of above 50% ownership by the calendar year-end.
The executive and management team was further strengthened in crucial disciplines such as finance, legal
and compliance, human capital and transformation. Key skills and experience have been retained and
deployed across the organisation and operations.
Sales and production performance/profitability charts
The sales volumes of the combined business was 2,788kt. Trading Division sales were reduced by 9% to
1057kt [FY15: 1153kt] due to increased focus on managing business risk and shareholder returns. The
reduced Trading Division sales were more than offset by a strong performance from the Mining Division
during the second half of the year.
Mining sales of 1 734kt closely matched the previous year [FY15: 1 731kt]. ESKOM sales were 27% lower
at 1 095kt compared with [FY15: 1 505kt].
On a segmented basis this is reflected in the table below:
Kt FY16 FY15
Elandspruit 816 –
Intibane 179 1 144
Khanyisa 100 360
Mining ROM Production increased to over 2 million tons per annum on an annualised basis.
On a segmented basis this is reflected in the table below:
Kt FY16 FY15
Elandspruit 1 214 –
Intibane 561 1 118
Khanyisa 76 401
Mining Beneficiated Production (Saleable) which shows an increase in the percentage of ROM sales from
Intibane are reflected in the table below:
Kt FY16 FY15
Elandspruit 1 017 –
Intibane 205 1 261
Khanyisa 100 390
Financial overview
Group revenue of R1,6 billion was relatively flat compared to 2015, reflecting a resilient sales performance
under challenging conditions. Relative contributions from the Mining and Trading Divisions mirrored that
of their sales performance. The Mining Division's contribution increased by 5.3% (R31.6 million), and the
Trading Division's revenue decrease of 11.5% (R128.8 million).
The Groups total comprehensive income (profit after tax) increased by 78.8% to R51.8 million. The
significant profit after tax increase is noteworthy in light of the relatively flat revenue stream. This
achievement is mainly as a result of a better quality debtor book, increased productivity and cost savings
across the Group.
HEPS of 27.1 cps increased by 76.1% delivering value from expanding the business.
EPS of 26.2 cps up 66.6% [FY15: 15.7].
Gross profit of R251.7 million demonstrates a robust 14.6% increase of R32.1 million
[FY15: R219.6 million] Mining's contribution was 45.5% greater or R44.4 million higher than last year with
the Trading business contributing 10.7% or R13 million lower.
The gross profit margin improved to 15.9% [FY15: 13.1%] with Mining's margin at 22.6% reflecting an
increase of 38.0%.
Operational EBITDA increased by 42.1% to R152.1 million [FY15: R107.0 million]. Mining Division' 31.2%
or R30.0 million higher than last year whilst Trading Division maintained its FY15 performance.
Nett financing cost increases were contained to R11.8 million, having funded much of development capex
operationally.
Balance sheet (debt equity gearing)
The Group improved its gearing and funding structures through various initiatives, including the raising
of capital and through delivery of strong operational cash flow. Cash flow pressure has largely dissipated.
Balance sheet gearing consistently improved over the last 18 months reflected in respective gearing ratios
comparisons of FY16: 0,29 and FY15: 0,43.
Working capital management
By improving credit risk on receivables the Company is pleased to report a 63% reduction in bad debts.
Various payment processes have been optimised to maximise working capital and reduce interest expenses.
Capital expenditure
Wescoal invested R170.7 million during the year on capital projects and development, mainly on
Elandspruit. Capex spending will be focused on developments which maximise shareholder value.
Prospects
Wescoal seeks to build on this robust operational performance and to continue delivering solid, predictable
and sustainable operational and financial performances. The Group is on its way to achieving its short
term strategic objective of BEE ownership in excess of 50% which may include employee participation. In
response to Eskom's RFP process, management is developing a detailed business plan for Eskom sales. A key
strategic objective is to diversify revenue streams, which includes increasing exports to 1Mtpa, over the
next three-years. The Group's short-term focus is the operationalisation of Intibane and Khanyisa Collieries,
while increasing the overall resource base through corporate activity and resource acquisitions. Additionally,
over the long term, to increase production to 8Mtpa. Management will continue to re-align the Trading
Division's business model to reduce business risk and increase shareholder returns.
Dividends
Wescoal's Board in considering the Company's financial position and strong annual performance, has
agreed to distribute R10 million to shareholders as a dividend for the period. The full dividend declaration
will be announced on SENS in due course.
Segmental analysis
Statement of Trading Mining Other Total
comprehensive income (R'000) (R'000) (R'000) (R'000)
31 March 2016
Total segment revenue 988 183 627 185 1 710 1 617 078
Inter-segment revenue – (26 033) (1 174) (27 207)
External revenues 988 183 601 152 536 1 589 871
Operational EBITDA 31 904 124 685 (4 483) 152 106
Profit from operations 19 223 88 166 (6 312) 101 077
31 March 2015
Total segment revenue 1 116 958 595 576 1 995 1 714 529
Inter-segment revenue – (38 298) (1 859) (40 157)
External revenues 1 116 958 557 278 136 1 674 372
Operational EBITDA 34 338 94 665 (21 962) 107 041
Profit from operations 22 083 45 591 (22 133) 45 541
Resource Summary
The Resource Summary is an extract of the SAMREC compliant, Resource Statement as compiled by
DS Coetzee (PhD Geology, Pr. Sci. Nat.: 400136/00). Included in this updated resources summary is the
acquisition of the Tri-Angle Area, being part of the Khanyisa Complex.
- TTIS – Total Tons In Situ
- MTIS – Minable Tons in Situ (Resource)
- All Coal resources are classified as Measured
- All Tonnages expressed in Millions of Tons
FY16 FY16 FY15
MTIS TTIS TTIS
Measured Resources
Khanyisa Complex 11.34 11.34 0.28
Intibane Complex 2.6 2.6 3.28
Elandspruit 33.08 33.99 36.33
Total 47.02 47.93 39.89
Basis of preparation
The condensed consolidated financial information for the year ended 31 March 2016 has been prepared
in accordance with the framework concepts and the recognition and measurement criteria of International
Financial Reporting Standards ("IFRS"), the preparation and disclosure requirements of IAS 34; "Interim
financial reporting", SAICA 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 the prior year. The preparation of these financial results was done under the supervision of
the Acting Chief Financial Officer, Izak van der Walt (CA)SA.
Any reference to the future financial performance has not been reviewed or reported on by the Group 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 financial results have been prepared on
a going concern basis.
Independent audit review
The preliminary financial statements have been reviewed by the Group's independent auditors,
PricewaterhouseCoopers Inc. Their unmodified review opinion is available for inspection at the
company's registered office.
By order of the board
2 June 2016
MR Ramaite W Sulaiman
Chairman Chief Executive Officer
Corporate information
Non-executive chairman: MR Ramaite,
Lead independent director: DMT van Gaalen
Independent non-executive directors:
JG Pansegrouw, MH Mathe, KM Maroga
Executive directors: W Sulaiman, I van der Walt, T Tshithavhane
Registration number: 2005/006913/06
Registered address: Corner of Gewel and Hulley Road, Isando, 1600
Postal address: PO Box 1962, Edenvale, 1610
Company secretary: Computershare
Telephone: 011 570 5800, Facsimile: 011 570 5848
Transfer secretaries: Computershare Investor
Services Proprietary Limited
Sponsor: Nedbank Corporate and Investment Banking
Website: www.wescoal.com
Date: 02/06/2016 07:10:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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