Wrap Text
Summarised audited consolidated results for the year ended 31 March 2017
Wescoal Holdings Limited (Incorporated in the Republic of South Africa)
(Registration number 2005/006913/06)
(JSE code: WSL ISIN: ZAE000069639)
("Wescoal" or "the Company" or "the Group")
SUMMARISED AUDITED CONDENSED CONSOLIDATED RESULTS
for the year ended 31 March 2017
Highlights and
key indicators
Excluding non-recurring costs:
HEPS INCREASED
96.9% to 53.4 cps
(2016: 27.1 cps)
OPERATIONAL
EBITDA (R'000)
up 93.5% to R294 298
(2016: R152 107)
MINING ROM PRODUCTION
up 82.1% to 3 371.0 kt
(2016: 1 851.0 kt)
REVENUE (R'000)
up 33.2%
R 2 118 020
(2016: R1 589 870)
OPERATIONAL
EBITDA (R'000)
up 33.8% to R203 518
(2016: R152 107)
HEPS
down 58.4%
11.3 cps
(2016: 27.1 cps)
EPS
down 55.7%
11.6 cps
(2016: 26.2 cps)
Consolidated income statement 2017 2016
for the year ended 31 March 2017 R'000 R'000
Turnover 2 118 020 1 589 870
Cost of sales (1 750 562) (1 338 150)
Gross profit 367 458 251 720
Other income 3 845 1 512
Profit/(loss) on sale of assets 933 (154)
Operating costs (167 212) (152 155)
BEE discount (82 280) -
Operating profit 122 744 100 923
Interest received 6 775 1 004
Finance costs (29 625) (21 923)
Net profit before taxation 99 894 80 004
Taxation (69 694) (28 239)
Net profit for the year 30 200 51 765
Other comprehensive income - -
Total comprehensive income 30 200 51 765
Attributable to:
Owners of the parent 30 200 51 765
Non-controlling interest - -
30 200 51 765
Headline earnings reconciliation
Net profit for the year 30 200 51 765
Less: Net (profit)/loss on sale of assets (933) 154
Impairment on investment property - 1 486
Headline earnings for the year 29 267 53 405
Ordinary shares in issue (R'000)
Total at period end (excl. treasury shares) 350 025 224 804
Weighted average shares in issue 259 559 197 361
Fully diluted weighted average shares in issue 260 058 197 399
Basic earnings per ordinary share (cents) 11.6 26.2
Fully diluted basic earnings per ordinary share (cents) 11.6 26.2
Headline earnings per ordinary share (cents) 11.3 27.1
Fully diluted headline earnings per ordinary share (cents) 11.3 27.1
Consolidated balance sheet 2017 2016
as at 31 March 2017 R'000 R'000
ASSETS 1 591 857 1 019 969
Non-current assets 818 273 631 121
Property, plant and equipment 641 198 496 350
Investment property 709 709
Investments 17 909 22 023
Goodwill and intangibles 95 989 96 301
Other receivables 52 935 11 366
Deferred taxation 9 533 4 372
Current assets 773 584 384 448
Inventories and work in progress 56 861 57 668
Prepaid royalty 1 272 874
Trade and other receivables 280 647 224 727
Cash and cash equivalents 84 411 101 179
Restricted cash 350 393 -
Non-current assets held for sale - 4 400
EQUITY AND LIABILITIES (1 591 857) (1 019 969)
Capital and reserves (684 632) (385 061)
Share capital (500 222) (213 156)
Share-based payment reserve (8 676) (7 263)
Retained income (175 734) (164 642)
Non-current liabilities (277 918) (86 932)
Interest-bearing debt - long term (60 553) (18 533)
Instalment sale agreements (552) (2 907)
Deferred tax (62 113) (19 306)
Other financial liabilities (6 494) -
Provision for rehabilitation (148 206) (46 186)
Current liabilities (629 307) (547 976)
Trade and other payables (331 863) (272 578)
Provision for rehabilitation (9 365) (13 890)
Bank overdraft (17 098) (15 781)
Taxation payable (13 486) (27 585)
Other financial liabilities (1 019) -
Instalment sale agreements (2 355) (2 856)
Interest-bearing debt - short term (254 121) (215 286)
- -
Net asset value per share (cents) 196 171
Tangible net asset value per share (cents) 168 128
Consolidated statement of changes in equity
for the year ended 31 March 2017
Share-based
Share payment Retained Total
Attributable to the owners capital reserve earnings equity
of the parent R'000 R'000 R'000 R'000
Balance at 31 March 2015 161 465 5 479 112 877 279 821
Rights share issue net of
transaction cost 39 254 - - 39 254
General issue of shares 12 437 - - 12 437
Total comprehensive income for
the year - - 51 765 51 765
Employee share option scheme - 1 784 - 1 784
Balance at 31 March 2016 213 156 7 263 164 642 385 061
General issue of shares 286 781 - - 286 781
Total comprehensive income for
the period - - 30 200 30 200
Dividends declared - - (19 108) (19 108)
Employee share option scheme 285 1 413 - 1 698
Balance at 31 March 2017 500 222 8 676 175 734 684 632
Consolidated statement of cash flows 2017 2016
for the year ended 31 March 2017 R'000 R'000
Cash flows from operating activities 187 041 207 731
Cash generated from operations 253 515 239 590
Finance income 5 621 1 004
Finance costs (25 948) (19 701)
Income tax paid (46 147) (13 162)
Cash flows from investing activities (437 755) (176 061)
Purchase of property, plant and equipment (98 924) (169 644)
Proceeds from sale of property, plant and equipment 7 243 1 023
Rehabilitation 11 759 -
Transfer to Restricted cash (350 393) -
Purchase of financial assets (7 440) (7 440)
Cash flows from financing activities 232 629 43 578
Movements in interest-bearing borrowings 77 999 (8 113)
Dividends paid (19 108) -
Shares/right issued 173 738 51 691
Net (decrease)/increase in cash and
cash equivalents (18 085) 75 248
Cash and cash equivalents at beginning of year 85 398 10 150
Cash and cash equivalents at end of year 67 313 85 398
Segmental analysis
Statement of Trading Mining Other Total
comprehensive income R'000 R'000 R'000 R'000
For the year ended
31 March 2017
Total segment revenue 1 094 265 1 113 845 (90 090) 2 118 020
Inter-segment revenue - (90 444) 90 444 -
External revenues 1 094 265 1 023 401 354 2 118 020
EBITDA 39 734 249 265 (85 481) 203 518
Operating profit/(loss) 29 977 179 032 (86 265) 122 744
For the year ended
31 March 2016
Total segment revenue 988 183 627 185 (25 498) (1 589 870)
Inter-segment revenue - (26 033) 26 033 -
External revenues 988 183 601 152 535 (1 589 870)
EBITDA 31 904 124 686 (4 483) 152 107
Operating profit/(loss) 19 153 88 117 (6 347) 100 923
CHIEF EXECUTIVE OFFICER'S REPORT
Milestone achievements realised on a solid platform
The results of our capital allocation programme are evident at the Elandspruit operations which
have matured into the stable, predictable flagship operation originally contemplated. Production
from the Elandspruit Mine has consistently averaged more than 200ktpm during FY17. Intibane
is averaging 75 ktpm and with all regulatory consents now in place Khanyisa is expected to
contribute 290kt during the first half of FY18.
The Trading division has benefited from a concerted optimisation and well-executed
right-sizing exercise.
We achieved significant successes in securing multiple coal supply contracts during FY17, including a
much anticipated coal supply agreement with Eskom which will see the delivery of some 7.8 million
tons of coal over a five-year period. New business development ventures have seen us secure
increased revenues from other domestic and export customers. Our business is no longer focused on
a single commodity and single client. We have grown into a multifaceted Group with a presence in
the domestic and international thermal coal markets, as well as coal logistics infrastructure. We see
opportunities to further diversify and grow revenue streams in FY18.
Acquisition of Keaton offers the benefits of consolidation, alignment of infrastructure, regional
synergies and also offers opportunities to expand existing markets and enter new ones. Once
concluded, it will result in an enlarged business with coal resources in excess of 150mt, four operating
mines and two processing plants.
During April 2017, regulatory approvals were obtained allowing Wescoal to consummate a joint
venture at the Khanyisa Complex. The joint venture company, which is 35% owned by Wescoal, owns
resources contiguous to existing wholly-owned Wescoal resources. The transaction secures additional
resources next to Wescoal's Khanyisa Mine and also unlocks operational synergies in the area.
Our transformation agenda was spearheaded by the implementation of a BEE transaction which not
only guaranteed black shareholding of more than 50% for the next five years, but also injected about
R176 million new equity.
Some R1.9 million has been allocated to enterprise development. The company has also made an
investment of approximately R5.6 million in local economic development initiatives aligned with the
needs of our host communities. In the period under review the company undertook Corporate Social
Investment initiatives ranging from community upliftment projects to renovation of primary school
facilities within host communities.
I am excited and optimistic about Wescoal's future. We have a solid operational platform, blossoming
track record of repeatable financial outcomes, de-risked business model and excellent growth options,
all overseen by a highly skilled and motivated management team.
CHIEF FINANCIAL OFFICER'S REVIEW
Introduction
The year under review has seen the company achieve milestones which are significant from a financial
point of view.
- The execution of key long-term supply contracts allowed us to translate strong operational
performance into consistent and predictable financial performance.
- Our BEE transaction secured our supply contract with Eskom while providing fresh equity
funding into the business.
- The predictable financial performance and the equity injection provide a platform for us to
further strengthen our balance sheet and advance discussions to secure long-term debt funding.
- All the above allows us to now focus on our strategic growth path starting with the close out of
the Keaton acquisition transaction and the successful integration of the two businesses.
Profitability
The strong operational performance in our mining division underpinned by our flagship Elandspruit
Colliery at steady state and the consistent performance from our trading division has seen group
revenue increase by 33% from R1.59 billion in 2016 to R2.12 billion in 2017.
Gross profit margins for the group have improved from 15.8% in 2016 to 17.4% in 2017 as the mining
division benefited from improved unit costs on the back of increased production while the trading
division's rationalisation resulted in better margins.
EBITDA for the group was impacted by non-recurring costs relating to a non-cash BEE discount of
R82 million as a result of our BEE transaction (being the difference between the market value of the
BEE subscription shares and the BEE proceeds) as well as Keaton acquisition transaction expenses
of R8.5 million incurred in the year under review. Excluding the impact of these non-recurring costs
EBITDA for the group at R294 million, was 94% above that of 2016.
Headline earnings per ordinary share of 11c for year ended 31 March 2017 reflect the impact on
earnings of the non-cash BEE discount of 32c, the dilution impact of the BEE transaction's increase
in the number of issues shares of 7c as well the one-off Keaton acquisition transaction costs of 3c.
Therefore, headline earnings per ordinary share before the impact of non-recurring costs and the BEE
share dilution amounted to 53c for the year.
Cash generation
Cash generated from operations increased from R240 million in 2016 to R254 million in 2017 on the
back of improved profitability. The cash generated from operations was largely applied to fund capital
expenditure (R99 million), towards higher tax payments on increasing profits (R46 million), to reward
shareholders with dividends (R19 million) and alongside drawn debt facilities and BEE transaction
proceeds to fund the cash portion of the Keaton acquisition. At 31 March 2017, R350 million had
been set aside for this acquisition.
Total cash at 31 March 2017 (including an amount of R350 million set aside for the cash portion of
the Keaton acquisition) amounted to R435 million while net cash after deducting bank overdraft
and drawn debt facilities amounted to R103 million compared to a net debt position of R148 million
at 31 March 2016.
Capital expenditure
Capital expenditure for the year amounted to R113 million (excl. rehab asset). At Elandspruit the main
components of spend were the construction of the D20 road and pollution control dam as well as
the purchase of an adjacent mining void for improved access to our reserves. While at Intibane we
purchased an XRT machine for improved processing.
Capital structure
The group improved its balance sheet strength through the BEE transaction which was completed
in December 2016 injecting R176 million of fresh equity into the business and locking in BEE equity
ownership of 58.93%.
Dividends
Wescoal in considering the Company's financial position and strong annual performance, has agreed
to distribute R12 million to shareholders as a dividend for the period. The full dividend declaration will
be announced on SENS in due course.
RESOURCE AND RESERVE SUMMARY
The resource and reserve summary is an extract of the SAMREC compliant, competent person's
report as compiled by Leonardt Raaths as Lead CP (BTech Mining degree from UJ, a BSc in
Operations Research from Unisa and an MBL from Unisa SBL) registered with SAIMM (registration
number 702015).
The totals for FY17 exclude specific restricted environmental sensitive areas, servitudes and areas
subject to further project work.
- 98% of FY17 Coal Resources are classified as Measured
- 96% of FY17 Coal Reserves are in the Proved category
- 15% of FY17 Resources for underground (8% of Reserves)
- MTIS-Mineable Tons in Situ (Resource Air Dried Basis)
- ROM-Run of Mine Tons (Reserve As Received Basis)
- All tonnages expressed in Millions of Tons
FY17 FY17 FY16
Reserve Resource Resource
(ROM AR) (MTIS AD) (MTIS AD)
Khanyisa Complex* 5.8 8.0 11.3
Intibane Complex 1.9 2.1 2.6
Elandspruit 21.3 21.5 33.1
Total 28.9 31.6 47.0
Wescoal Attributable 25.9 27.2 40.5
*Khanyisa includes Triangle area to which Wescoal has 35% interest.
SALES AND PRODUCTION PERFORMANCE
FY17 FY16 FY15
Wescoal Mining Sales kt 2 917 1 734 1 731
Wescoal Trading Sales kt 1 120 1 057 1 153
Wescoal
Mining Production kt 3 371 1 851 1 519
BASIS OF PREPARATION
The condensed consolidated financial information for the year ended 31 March 2017 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 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 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
This summarised report is extracted from audited information, but is not itself audited. The annual
financial statements were audited by PricewaterhouseCoopers Inc., who expressed an unmodified
opinion thereon. The audited annual financial statements and the auditor's report thereon are
available for inspection at the company's registered office. The directors take full responsibility for the
preparation of the abridged report and that the financial information has been correctly extracted
from the underlying annual financial statements.
By order of the board
MR Ramaite W Sulaiman
Chairman Chief Executive Officer
(28 June 2017)
Corporate information
Non-executive chairman: MR Ramaite Lead independent non-executive director: DMT van Gaalen
Non-executive independent directors: MH Mathe, KM Maroga Non-executive director: JG Pansegrouw
Executive directors: W Sulaiman, B Mazarura, T Tshithavhane Registration number: 2005/006913/06
Registered address: 1st Floor, Building 10, 142 Western Service Road, Woodmead Postal address: PO Box 1962,
Edenvale, 1610 Company secretary: Vikesh Dhanooklal Telephone: 011 049 8611, Facsimile: 011 570 5848
Transfer secretaries: Computershare Investor Services Proprietary Limited
Sponsor: Nedbank Corporate and Investment Banking Website: www.wescoal.com
Date: 28/06/2017 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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