Wrap Text
Reviewed condensed interim consolidated results for the six months ended 30 September 2018
Wescoal Holdings Limited
Incorporated in the Republic of South Africa
(Registration number 2005/006913/06)
Share code: WSL
ISIN: ZAE000069639
("Wescoal" or "the company" or "the group")
Reviewed condensed interim consolidated results
for the six months ended 30 September 2018
"We are pleased with the operating performance, production and sales from the
broader asset base in the first half. The management team has consistently
progressed the disposal of non-core assets and actively sought out
acquisitive value-enhancing opportunities in line with our strategy. The
company is solidly on track to meet its production targets and is
well-positioned for steady sustainable growth."
Waheed Sulaiman Chief executive officer
Financial and salient features
- Revenue up by 28% to R2 064 million (HY18: R1 610 million)
- Gross profit increased to R276 million (HY18: R267 million)
- Operating expenses down by 21% to R104 million
(HY18: R131 million)
- Operating profit up by 22% to R197 million (HY18: R161 million)
- Total comprehensive income up by 23% to R108 million
(HY18: R88 million)
- HEPS up by 16% to 23.5 cents per share (HY18: 20.2 cents per share)
- Cash generation increased up by 41% to R291 million
(HY18: R206 million)
- Conservative gearing ratio of 18% (HY18: 32%)
- Disposal of non-core assets Leeuw Braakfontein Colliery
Proprietary Limited ("LBC") and Intibane Collieries.
Chairman and chief executive officer's review
Introduction
Wescoal Holdings Limited's ("Wescoal") board of directors ("the board")
announces a 30% increase in headline earnings for the six months ended
30 September 2018 ("the period") to R103 million (HY18: R79 million). The
increase in the headline earnings is mainly due to a 3% increase in
gross profit to R276 million (HY18: R267 million), a 28% increase in
revenue to R2 064 million (HY18: R1 610 million), a reduction in operating
expenses by 21% to R104 million (HY18: R131 million) and a 23% increase
in both operating profit and total comprehensive income compared to the
six months ended 30 September 2018 ("the prior period"). Headline
earnings per share and earnings per share values increased to 23.5 cents
and 25.2 cents respectively. As at the reporting date, the group had
coal resources of approximately 300mt, which includes 60mt relating
to assets held for sale, three operating mines and three processing
plants.
Operational review
In 2017, the acquisition of Keaton Energy Proprietary Limited ("Keaton Energy")
strengthened Wescoal's balance sheet and free cash generation and further
diversified the asset base, realised economies of scale and synergies, as well
as enhanced optionality in contracts and off-take negotiations. The enlarged
business now has coal resources of approximately 300mt, together with three
operating mines, three processing plants and significant interests in coal
supply-chain infrastructure. The company is pleased to report that the
integration programme, as originally contemplated, is complete. Additionally,
as previously reported, an integrated resource management and reporting
system was implemented, which has demonstrated enhanced common reporting
across all operations and facilitates effective management with integrated,
data driven and informed decision-making.
In line with previous reports to shareholders, during the period under review,
two non-core assets have been disposed of in order to align the activities
of the group with the company's strategy of realising value for shareholders
and building a scalable, sustainable business. The non-core assets disposed
of are Intibane 1 and 2 Collieries and the consideration received from the
disposals were utilised to reduce short-term borrowings and will fund
strategic growth options that are identified. Wescoal has also announced
its agreement for the disposal of Leeuw Braakfontein Colliery assets
located in KwaZulu-Natal.
The Mining division's revenue of R1 325 million (HY18: R1 063 million) realised
EBITDA of R248 million (HY18: R250 million). Sales were positively impacted by
additional revenue from Vanggatfontein (an operation acquired with Keaton
Energy) and opportunistic short-term coal sales. Total Eskom sales volumes
during the period amounted to 1.9 million tonnes compared to 1.3 million
tonnes during the prior period. Total coal sales volumes from the Mining
division was 2.4 million tonnes during the period which was in line with
the prior comparative period. Run of mine ("ROM") production has remained
consistent with the prior period with only a 3% increase to 3.2 million
tonnes (HY18: 3.1 million tonnes) due to the disposal of the Intibane
Collieries. The Vanggatfontein operation has contributed an average of
259 000 tonnes per month to the total ROM production disclosed above.
Wescoal's Trading division outperformed its prior year result with a
considerable increase of 71% in operating profit to R45 million (HY18:
R26 million). The increase is mainly due to a 36% increase in revenue
to R808 million (HY18: R593 million) which has contributed 39% to the
total revenue generated by the group. The revenue contribution percentage
is in line with the prior period demonstrating consistent segmental revenue.
Financial overview profitability
The consistent strong operational performance contributed to an impressive
28% increase in group revenue to R2 064 million (HY18: R1 610 million).
Operating profit increased by 23% to R197 million (HY18: R161 million).
Total comprehensive income (net profit after tax) for the period increased
by 23% to R108 million (HY18: R88 million). The positive performance above
resulted in a 16% increase in HEPS to 23.5 cents per share (HY18:
20.2 cents per share).
Cash generation
The improved profitability translated into strong cash generation with
R291 million in cash generated from operations (HY18: R206 million). The
cash generated from operations was largely applied to fund capital expenditure
(R45 million), repayment of interest-bearing debt (R147 million), repurchase
of shares (R11 million) and to reward shareholders with a dividend payment
(R35 million). Overall cash and cash equivalents increased by R48 million
during the reporting period.
Capital expenditure
Wescoal invested R45 million in projects to improve and expand operations,
with immediate benefits already seen in operational performance. The main
focus areas were mining development, deferred stripping and plant
and machinery.
Capital structure
The reduction of interest-bearing borrowings and an increase in overall
equity strengthened the group's balance sheet resulting in an improved
gearing ratio of 18% (HY18: 32%, FY18: 29%). The net asset value per share
demonstrated an increasing trend at 257 cents compared to 216 cents at
30 September 2017 and 239 cents at 31 March 2018. Strong cash flows from
operations have enabled Wescoal to repay expensive short-term borrowings
whilst continuing to distribute dividends to shareholders. Wescoal has
maintained its long-term funding arrangement with secured facilities
amounting to R650 million of which R337 million remains unutilised. The
board is considering the company's financial position and performance
and leverages strong cash generation investing in portfolio growth and
sector consolidation strategy.
Transformation
The BEE transaction completed in 2016 was a significant step in Wescoal's
journey and its implementation not only facilitated black shareholding of
more than 51% over a five-year period but also resulted in the injection
of R176 million in new equity. The company continues to invest in and
strengthen its management team, paying special attention to diversity
targets. During the period, vacancies for senior roles in the company
secretary and finance functions have been filled by skilled female HDSA
candidates. Wescoal currently meets the DTI scorecard requirements of 30%
HDSA/female employees in senior roles.
Resources and reserves statement
The most recent SAMREC compliant Resource and Reserve statements of the
group are available on the Wescoal website (http://www.wescoal.com). The
Resource and Reserve statements contain details of all the competent
persons, their professional memberships, qualifications and experience.
Dividends
A final dividend of R35 million for the year ended 31 March 2018 was
declared and paid during the period.
Prospects
After the acquisition of Keaton Energy, the company now has a second
large operation in the form of Vanggatfontein, which has a remaining
life span of +11 years. The mine has been integrated into the group and
its mining philosophy has been aligned with that of the rest of the
group's mines. Productivity and cost saving opportunities have been
identified and implemented over the period. Moabsvelden (asset acquired
through the Keaton Energy acquisition) is adjacent to the Vanggatfontein
property and represents a significant organic growth option. The mine
development project plan is being optimised in conjunction with projected
commercial arrangements to sell the coal. With a 47.8mt resource,
Moabsvelden has the potential to be developed into a 1.5 to 2mt ROM
operation. The asset is fully permitted and conversations with surface
right holders are underway. ROM from Moabsvelden can be washed using
existing processing facilities at Vanggatfontein.
Wescoal is strongly positioned as a consolidator in the coal sector and
will continue to consider value enhancing opportunities. The acquisition
strategy is focused on securing additional resources and strategic
interests in coal and key logistics infrastructure as well as disposing
of non-core assets.
On 26 October 2018, Wescoal announced on SENS that it had joined a
consortium led by private equity firm, ATA Resources, to buy Universal
Coal listed in Australia. Universal Coal controls two operating mines
in South Africa – the 2.4mt per annum ROM Kangala Colliery and New
Clydesdale Colliery which is forecasted to produce 2.7mt per annum ROM.
Wescoal will not be actively involved in the management of the Universal
Coal business in the short term although this potential exists in the
medium to long term.
Review by the independent auditor
These condensed interim consolidated financial statements for the period
have been reviewed by PricewaterhouseCoopers Inc., who expressed an
unmodified conclusion thereon. A copy of the auditor's review report on
the condensed interim consolidated financial statements is available for
inspection at the company's registered office, together with the financial
statements identified in the auditor's review report. The auditor's
report does not necessarily report on all the information contained in this
announcement/financial results. Shareholders are therefore advised that,
in order to obtain a full understanding of the nature of the auditor's
engagement, they should obtain a copy of the auditor's report together
with the accompanying financial information from the company's
registered office.
By order of the board
MR Ramaite W Sulaiman
Chairman Chief executive officer
13 November 2018
Condensed consolidated statement of financial position
as at 30 September 2018
Reviewed Reviewed Audited
as at as at as at
30 September 30 September 31 March
2018 2017 2018
Notes R'000 R'000 R'000
Assets
Non-current assets 1 967 992 2 128 454 2 180 001
Property, plant and
equipment 7 1 731 691 1 932 639 1 949 160
Investment property 709 709 709
Investments 41 996 26 050 40 435
Goodwill and intangibles 89 614 91 389 91 513
Investments in joint
venture 5 7 912 - 7 912
Prepaid royalty 7 123 8 762 8 023
Other receivables 63 943 55 994 56 730
Deferred taxation 25 004 12 911 25 519
Current assets 746 942 604 341 820 198
Inventories and work in
progress 141 621 103 621 99 824
Prepaid royalty 1 374 1 275 1 175
Trade and other receivables 519 444 438 272 626 112
Cash and cash equivalents 84 503 61 173 93 087
Non-current assets held
for sale 7 121 761 - -
Total assets 2 836 695 2 732 795 3 000 199
Equity and liabilities
Capital and reserves 1 110 570 951 677 1 047 174
Share capital 664 816 679 836 675 346
Share-based payment reserve 11 222 10 692 10 320
Minority interest 8 699 9 258 10 388
Retained income 425 833 251 891 351 120
Non-current liabilities 1 050 849 950 545 1 063 400
Interest-bearing debt -
long-term 199 564 171 323 193 956
Instalment sale agreements 3 064 258 3 135
Other financial liabilities 30 360 351 508 30 167
Deferred tax 313 787 5 467 340 985
Provisions for
rehabilitation 504 074 421 989 495 157
Current liabilities 638 267 830 573 889 625
Trade and other payables 469 813 436 202 524 514
Provisions for
rehabilitation 1 334 9 260 6 088
Bank overdraft - 15 702 56 223
Taxation payable 46 357 44 945 39 478
Other financial liabilities 1 019 1 019 1 478
Instalment sale agreements 3 135 1 644 5 393
Interest-bearing debt -
short-term 116 609 321 801 256 451
Non-current liabilities
held for sale 37 009 - -
Total equity and liabilities 2 836 695 2 732 795 3 000 199
Net asset value per
share (cents) 257 216 239
Tangible net asset
value per share (cents) 236 196 218
Condensed consolidated statement of profit or loss and other comprehensive income
for the six months ended 30 September 2018
Reviewed Reviewed Audited
for the for the for the
six months six months year
ended ended ended
30 September 30 September 31 March
2018 2017 2018
Notes R'000 R'000 R'000
Turnover 8 2 064 296 1 610 120 3 527 057
Cost of sales 4 (1 788 568) (1 343 025) (2 962 043)
Gross profit 8 275 728 267 095 565 014
Negative goodwill - 6 637 6 638
Other income 15 637 15 880 23 570
Profit on sale of assets 9 939 2 145 638
Operating costs (104 128) (130 897) (251 459)
Operating profit 197 176 160 860 344 401
Interest income 6 320 10 475 18 613
Finance cost (43 506) (36 175) (79 393)
Share of net profit of
joint venture 5 - - 7 912
Net profit before taxation 159 990 135 160 291 533
Taxation (51 966) (47 520) (89 519)
Net profit for the period 108 024 87 640 202 014
Other comprehensive income - - -
Total comprehensive income 108 024 87 640 202 014
Attributable to:
Owners of the parent 109 713 88 157 201 401
Non-controlling interest (1 689) (517) 613
108 024 87 640 202 014
Headline earnings
reconciliation
Net profit for the year 109 713 87 640 201 401
Net profit on sale of
assets (7 156) (2 145) (638)
Negative goodwill - (6 637) (6 638)
Headline earnings for the
year 102 557 78 858 194 125
Ordinary shares in issue
('000)
Total at period end 432 322 437 856 437 685
Weighted average shares
in issue 435 737 392 266 418 606
Fully diluted weighted
average shares in issue 436 689 392 266 419 089
Earnings per share for
profit attributable to
the ordinary equity
holders of the company
(cents)
Basic earnings per
ordinary share 25.2 22.5 48.1
Fully diluted basic earnings
per ordinary share 25.1 22.5 48.1
Headline earnings per
ordinary share 23.5 20.2 46.4
Fully diluted headline
earnings per ordinary
share 23.5 20.2 46.3
Condensed consolidated statement of changes in equity
for the six months ended 30 September 2018
Total
attri-
butable
equity
to
Share-based holders
Share payment Retained of the
capital reserve earnings group
R'000 R'000 R'000 R'000
Balance at 31 March 2017 500 222 8 676 175 734 684 632
Acquisition of Keaton
Energy Holdings Limited 179 614 - - 179 614
Total comprehensive income
for the period - - 88 157 88 157
Non-controlling interest
on acquisition of subsidiary
Dividends declared - - (12 000) (12 000)
Employee share option scheme - 2 016 - 2 016
Balance at 30 September 2017 679 836 10 692 251 891 942 419
Balance at 31 March 2018 675 346 10 320 351 120 1 036 786
Total comprehensive income
for the period - - 109 713 109 713
Dividends declared - - (35 000) (35 000)
Share buyback (10 530) - - (10 530)
Employee share option scheme - 902 - 902
Balance at 30 September 2018 664 816 11 222 425 833 1 101 871
Non-controlling Total
interest equity
R'000 R'000
Balance at 31 March 2017 - 684 632
Acquisition of Keaton Energy Holdings Limited - 179 614
Total comprehensive income for the period (517) 87 640
Non-controlling interest on acquisition of subsidiary 9 775 9 775
Dividends declared - (12 000)
Employee share option scheme - 2 016
Balance at 30 September 2017 9 258 951 677
Balance at 31 March 2018 10 388 1 047 174
Total comprehensive income for the period (1 689) 108 024
Dividends declared - (35 000)
Share buyback - (10 530)
Employee share option scheme - 902
Balance at 30 September 2018 8 699 1 110 570
Condensed consolidated statement of cash flows
for the six months ended 30 September 2018
Reviewed Reviewed Audited
for the for the for the
six months six months year
ended ended ended
30 September 30 September 31 March
2018 2017 2018
Notes R'000 R'000 R'000
Cash flows from operating
activities 235 825 136 283 213 373
Cash generated from
operations 291 077 206 111 358 779
Net finance costs (18 990) (25 700) (30 596)
Income tax paid (36 263) (44 128) (114 810)
Cash flows from investing
activities 3 039 (63 553) (118 519)
Purchase of property, plant
and equipment 7 (44 861) (37 075) (63 228)
Purchase of an intangible
asset (2 013) - (4 888)
Proceeds from sale of
property, plant and equipment 7 56 733 2 145 1 153
Investment in rehabilitation
funds (10 641) - (15 290)
Proceeds from/(investment in)
other financial assets 3 821 (11 359) (22 496)
Acquisition of subsidiary, net
of cash acquired - (375 799) (375 799)
Transfer from restricted cash - 350 393 350 393
Divestment on rehabilitation
asset - 8 142 11 636
Cash flows from financing
activities (191 224) (94 572) (125 303)
Movement in interest-bearing
borrowings (147 374) (82 185) (94 411)
Dividends paid (34 222) (12 000) (26 015)
Share issue cost - (3 174) (3 485)
Share buyback (10 530) - (3 597)
Shares issued 902 2 787 2 205
Net increase in cash and cash
equivalents 47 639 (21 842) (30 449)
Cash and cash equivalents at
beginning of period 36 864 67 313 67 313
Cash and cash equivalents at
end of period 84 503 45 471 36 864
Notes to the condensed interim consolidated financial statements
1. Accounting policies
1.1 Basis of accounting
The condensed interim consolidated financial statements for the six months
ended 30 September 2018 are prepared in accordance with International
Financial Reporting Standards ("IFRS"), IAS 34: Interim Financial Reporting,
the SAICA Financial Reporting Guides as issued by the Accounting Practices
Committee and financial pronouncements as issued by the Financial Reporting
Standards Council and the requirements of the Companies Act of South Africa.
The accounting policies applied in the preparation of these interim financial
statements are in terms of IFRS and are consistent with those described and
applied in the previous consolidated audited financial statements except for
the adoption of IFRS 9 and IFRS 15.
1.2 New and amended standards adopted by the group
A number of new or amended standards became applicable for the current
reporting period and the group was required to change its accounting policies
and make retrospective adjustments as a result of adopting the following
standards:
- IFRS 9: Financial Instruments; and
- IFRS 15: Revenue from Contracts with Customers.
The impact of the adoption of these standards and the new accounting policies
are disclosed in note 2 below. The other standards did not have any impact
on the group's accounting policies and did not require retrospective
adjustments.
IFRS 16: Leases is mandatory for first interim periods within annual
reporting periods beginning on or after 1 January 2019. The group does not
intend to adopt the standard before its effective date.
2. Changes in accounting policies
IFRS 15: Revenue from Contracts with Customers (effective 1 April 2018)
The International Accounting Standards Board ("IASB") has amended IFRS 15
to clarify the guidance, but there were no major changes to the standard
itself. The amendments comprise clarifications of the guidance in identifying
performance obligations, accounting for licences of intellectual property and
the principal versus agent assessment (gross versus net revenue presentation).
New and amended illustrative examples have been added for each of these areas
of guidance. The IASB has also included additional practical expedients
related to transition to the new revenue standard.
The new standard did not have a significant impact on the group relating to
the timing of when revenue is recognised and the amount of revenue recognised
based on the company's operations and processes in place.
Under IFRS 15, revenue will be recognised when a customer obtains control
of the goods which is largely consistent with when revenue was previously
recognised by the company. The company does not have any other performance
obligations associated with the recognition of revenue.
IFRS 9: Financial Instruments (effective 1 April 2018)
On 24 July 2014, the IASB issued the final IFRS 9: Financial Instruments
standard, which replaced earlier versions of IFRS 9 and completes the IASB's
project to replace IAS 39: Financial Instruments: Recognition and Measurement.
Even though these measurement categories are similar to IAS 39, the criteria
for classification into these categories are significantly different. In
addition, the IFRS 9 impairment model has been changed from an "incurred loss"
model from IAS 39 to an "expected credit loss" model.
Classification - Financial assets
IFRS 9 contains a new classification and measurement approach for financial
assets that reflects the business model in which assets are managed and their
cash flow characteristics.
IFRS 9 contains three principal classification categories for financial assets:
measured at amortised cost, fair value through other comprehensive income
("FVOCI") and fair value through profit or loss ("FVTPL"). The standard
eliminates the existing IAS 39 categories of held to maturity, loans and
receivables and available for sale.
An assessment of the business model indicates that the company's loans to
group companies, trade and other receivables and cash and cash equivalents
currently classified as loans and receivables will be classified as measured
at amortised cost. The reclassification will not have a material effect on
the financial position of the group.
Impairment - Financial assets
IFRS 9 replaces the "incurred loss" model IAS 39 with a forward looking
"expected credit loss" ("ECL") model. This will require considerable judgement
as to how changes in economic factors affected ECLs, which will be determined
on a probability weighted basis. The new impairment model will apply to
financial assets measured at amortised cost or FVOCI, except for investments in
equity instruments.
An assessment by management indicated that the application of the expected
credit loss model did not result in material adjustments. The company has
determined that retrospective restatement would require the application of
hindsight. The company has therefore decided not to restate comparatives.
Classification - Financial liabilities
IFRS 9 largely retains the existing requirements in IAS 39 for the
classification of financial liabilities.
The company assessed the potential impact on the financial statements resulting
from these amendments. The reclassification will not have a material effect
on the financial position of the group.
3. Description of segments
For management purposes, the group is organised into business units based on
their products and activities and has four reportable operating segments:
- The Mining segment is involved in the exploration, beneficiation and mining
of bituminous coal;
- The Trading segment buys and sells coal to inland customers;
- The Wescoal holding company of the group also acts as a central treasury
function; and
- The other segments within the group.
The group executive committee is the group's chief decision-making body.
Management has determined the operating segments based on the information
received by the group executive committee. Segment performance is evaluated
based on operating profit or loss and is measured consistently with operating
profit or loss in the interim consolidated financial statements.
All revenue is generated from customers in southern Africa and all operating
assets are situated in South Africa. The Mining segment generates its revenue
mainly from sales to Eskom and large corporates. The Trading segment generates
its revenue from sales to a variety of customers that include private sector,
government institutions, mining entities and various small and medium enterprises.
Wescoal Wescoal Wescoal
Trading Mining Corporate
R'000 R'000 R'000
Six months ended
30 September 2018 (Reviewed)
Total segment revenue 808 290 1 324 562 48 437
Inter-segment revenue - 70 517 48 437
Revenue from external customers* 808 290 1 254 045 -
EBITDA 49 775 248 441 10 266
Six months ended
30 September 2017 (Reviewed)
Total segment revenue 593 078 1 062 579 50 320
Inter-segment revenue - 45 627 50 320
Revenue from external customers* 593 078 1 016 952 -
EBITDA 31 573 250 365 (6 137)
Total segment assets
At 30 September 2018 251 477 1 872 250 1 624 244
At 31 March 2018 271 214 1 943 746 1 663 123
Total segment liabilities
At 30 September 2018 162 600 1 722 316 100 697
At 31 March 2018 214 256 1 874 014 104 405
Other
segments Eliminations Total
R'000 R'000 R'000
Six months ended
30 September 2018 (Reviewed)
Total segment revenue 2 858 (119 852) 2 064 296
Inter-segment revenue 898 (119 852) -
Revenue from external customers* 1 961 - 2 064 296
EBITDA (5 649) (1 986) 300 847
Six months ended
30 September 2017 (Reviewed)
Total segment revenue 90 (95 947) 1 610 120
Inter-segment revenue - (95 947) -
Revenue from external customers* 90 - 1 610 120
EBITDA (834) (800) 274 167
Total segment assets
At 30 September 2018 193 500 (1 104 775) 2 836 695
At 31 March 2018 200 592 (1 078 476) 3 000 199
Total segment liabilities
At 30 September 2018 350 331 (609 819) 1 726 125
At 31 March 2018 345 856 (585 506) 1 953 025
*Revenue is generated at point in time when coal is delivered to customers
and for transport services at the time of rendering the service.
A reconciliation of adjusted EBITDA to operating profit before income tax is
provided as follows:
Reviewed Retained
for the for the
six months six months
ended ended
30 September 30 September
2018 2017
R'000 R'000
EBITDA 300 218 274 167
Net finance costs (37 186) (25 700)
Depreciation and amortisation expense (103 042) (113 307)
Profit before income tax from operations 159 990 135 160
4. Cost of sales
Reviewed Retained
for the for the
six months six months
ended ended
30 September 30 September
2018 2017
R'000 R'000
Direct purchases 1 043 933 665 740
Royalty expense 25 178 24 190
Mining contractor cost 368 914 266 793
Fuel costs 121 507 82 386
Other cost of sales including amortisation
and depreciation 229 036 303 916
1 788 568 1 343 025
5. Interest in joint venture
% of ownership interest Carrying amount
30 September 31 March 30 September 31 March
Name of Measurement 2018 2018 2018 2018
entity method % % R'000 R'000
Aztolinx
Proprietary
Limited Equity method 35% 35% 7 912 7 912
Aztolinx Proprietary Limited is a company specialising in coal mining
activities. The investment in the joint venture is held by Wescoal Mining
Proprietary Limited and is equity accounted for.
During the reporting period, the joint venture parties had differences of
opinions on how the Aztolinx coal should be marketed resulting in a dispute
that Wescoal believes will soon be resolved. Wescoal remains committed to a
practical, sustainable solution whilst ensuring its rights and interests are
maintained and protected.
6. Financial liabilities and facilities
The following tables analyse the group's financial liabilities into relevant
maturity groupings based on the remaining period at the statement of financial
position date to the contractual maturity date. The amounts disclosed in the
table are the contractual undiscounted cash flows.
Between Between
Less than one and two and
one year two years five years
R'000 R'000 R'000
Group
As at 30 September 2018
Trade and other payables 459 292 - -
Instalment sale agreements 5 929 719 -
Other financial liabilities 2 676 4 726 -
Interest-bearing borrowings 156 167 174 494 58 941
624 063 179 939 58 941
As at 31 March 2018
Trade and other payables 472 116 - -
Instalment sale agreements 6 035 3 237 -
Other financial liabilities 2 626 6 130 -
Interest-bearing borrowings 262 566 76 446 121 717
Bank overdraft 56 223 - -
799 566 85 813 121 717
Contractual Carrying
cash flows amount
R'000 R'000
Group
As at 30 September 2018
Trade and other payables 459 292 459 292
Instalment sale agreements 6 648 6 199
Other financial liabilities 7 402 5 709
Interest-bearing borrowings 389 602 316 174
862 944 787 374
As at 31 March 2018
Trade and other payables 472 116 472 116
Instalment sale agreements 9 272 8 528
Other financial liabilities 8 756 5 516
Interest-bearing borrowings 460 729 450 407
Bank overdraft 56 223 56 223
1 007 096 992 790
Facilities
As at 30 September 2018, total facilities available to the group amount to
R650 million, of which R337 million remains utilised.
7. Property, plant and equipment
Reviewed Audited
for the for the
six months year
ended ended
30 September 31 March
2018 2018
R'000 R'000
Reconciliation of property, plant and equipment
Opening balance 1 949 160 641 198
Business combination - 1 344 568
Additions 55 208 147 123
Disposals and scrapping (47 112) (626)
Depreciation (98 072) (183 103)
Closing balance 1 859 184 1 949 160
Leeuw Braakfontein disposal: On 7 August 2018, Wescoal announced, through its
wholly-owned subsidiary, Leeuw Braakfontein Colliery Proprietary Limited
("LBC") that it had disposed of its non-core LBC assets located in
KwaZulu-Natal (around 10km from Newcastle) to Sitatunga Resources Proprietary
Limited, for a total consideration of R103 million (excluding VAT) payable
in cash from funds within the Sitatunga group. This monetises a non-operating
asset. LBC falls outside Wescoal's strategic focus area and disposing of it
generates cash which may be used for other value-enhancing opportunities.
The carrying value of the asset to be disposed amounts to R84.7 million as
at 30 September 2018.
The disposal is subject to the fulfilment or waiver of regulatory consensus
from the Department of Mineral Resources and the Competition Commission as
well as procedural matters standard for this type of transaction.
Intibane disposals: Wescoal announced on 7 June 2018, the disposal of its
Intibane 1 and Intibane 2 Collieries located in Mpumalanga, which became
effective in July 2018. The disposal resulted in a total consideration of
R57 million and was paid in cash. Intibane had an operating lifespan of less
than two years and exiting from it freed up management's time to focus on
optimising the group's other operations.
These disposals are in line with the company's strategy of realising value
for shareholders and building a scalable, sustainable business.
8. Revenue and gross profit
Wescoal delivered 3 047kt (Mining 2 446kt and Trading 601kt) sales volumes
for the period ended 30 September 2018 compared to 2 906kt (Mining 2 385kt
and Trading 521kt) for the comparable period ended 30 September 2017.
During the period Wescoal generated external revenue of R2 064 million
(Mining R1 254 million and Trading R808 million) from coal sales compared
to R1 610 million (Mining R1 017 million and Trading R593 million) for
the comparable period ended 30 September 2017.
Wescoal Mining revenue was 23% higher than the prior period as a result
of the inclusion of Vanggatfontein revenue for the full six months ended
30 September 2018. The higher revenue was partially offset by lost revenue
as a result of the disposal of Intibane.
Wescoal Trading achieved higher sales volumes (+15%) and revenue (+36%)
generated was largely as a result of increased sales to independent power
producers.
Gross profit margins for the group decreased by 4% from 17% for the
comparable period ended 30 September 2017 to the current period gross
profit margin of 13%.
The decrease in gross profit margin is as a result of:
- Lower margins on sales distribution transport;
- Higher than inflation increase of input costs;
- Wescoal Trading's slightly lower gross profit margin; and
- Vanggatfontein's gross profit and cash generation improved on the prior
period, due to acquisition accounting in terms of the business combination
lower gross profit percentage.
9. Subsequent events
The following event occurred subsequent to 30 September 2018:
- The company is in advanced negotiations with ATA Resources to enter
into a consortium to acquire the entire issued share capital of Universal
Coal Plc, a company listed on the Australian Securities Exchange ("ASX").
On 22 October 2018, ATA Resources, on behalf of the consortium, delivered
a binding, conditional commitment to Universal Coal for the consortium,
through a special purpose bidding company, to acquire the entire issued
share capital of Universal Coal, for a fully cash settled consideration
of AUD0.35 per Universal Coal share.
10. Share buy back
In December 2017, Wescoal resolved to repurchase a maximum of R20 million
worth of its own shares in terms of the general approval granted by
shareholders of the company at the annual general meeting held on
14 November 2017. The share repurchase is subject to the board having
applied the solvency and liquidity test as required in terms of
sections 46(1)(b) and 46(1)(c) of the Companies Act, No 71 of 2008.
To date 7.6 million shares have been repurchased.
11. Contingencies and commitments
There are no changes to the contingent liabilities disclosed in the
integrated annual report for the year ended 31 March 2018.
Capital commitments comprised of R13 million of which R10 million mainly
relates to the upgrade of the dams.
Corporate information
Non-executive chairman
MR Ramaite
Lead independent non-executive director
DMT van Gaalen
Independent non-executive directors
HLM Mathe, KM Maroga
Non-executive directors
JG Pansegrouw, C Maswanganyi, ET Mzimela
Executive directors
W Sulaiman (chief executive officer)
IJ van der Walt (chief financial officer)
T Tshithavhane
Registered address
First Floor, Building 10
Woodmead Office Park
142 Western Service Road
Woodmead, Sandton 2191
South Africa
Postal address
PO Box 1962, Edenvale 1610
Company secretary
Sharon Ramoetlo
Telephone: +27 11 049 8611
Facsimile: +27 11 570 5848
Transfer secretaries
Computershare Investor Services Proprietary Limited
Sponsor
Nedbank Corporate and Investment Banking
IR Adviser
Singular Systems IR
Website www.wescoal.com
Date: 13/11/2018 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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