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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 shaft has been commissioned.
– All winder licenses have been granted by the Department of Mineral
Resources.
– Holing between main shaft and service shaft on all levels were
completed.
– Connection of the ramp between levels 77 and 81 were completed.
– The level 77 level skip feed conveyer was constructed and
commissioned.
– A tail-end loading conveyer was commissioned enabling material from 81
and 77 levels to be loaded into skips.
– Total flat development achieved for 2017 being 1 217m.
– Cash on hand as of 31 December 2017 is R388 million.
– Implemented community SLP programs per requirements of the mining
license amounting to a total investment of R54 million of which R42
million was spent on bulk civil and electrical infrastructure for the
housing project.
– Implemented various Human Resources Development Programs as required
by the Mining Charter, Investment of R19 million was incurred.
– Achieved zero fatalities and the Lost Time Injury Frequency rate for
the period was 0.54.
– Services projects are on schedule.
- The 132/33kV power lines has been commissioned with power now
being supplied through the permanent Eskom infrastructure from
Ngwedi substation.
- Bakubung Platinum Mines has two transformers powered-up to 132kV
which are currently supplying the mine. Capacitor banks for power
filtration were also commissioned and are operational.
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 Friday, 4 May 2018 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
Thursday, 26 April 2018 with the last day to trade being Monday, 23
April 2018.
ABRIDGED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 31 December 2017
2017 2016
Notes R’000 R’000
ASSETS
Property, plant and equipment 5 7 454 753 6 389 880
Intangible asset 1 709 3 601
Available-for-sale financial
6 10 564 510 900
asset
Restricted cash 7 45 844 78 657
Non-current assets 7 512 870 6 983 038
Other receivables 51 244 56 723
Taxation 9 293 -
Restricted cash 7 27 000 84 000
Cash and cash equivalents 388 170 455 452
Current assets 466 707 596 175
Total assets 7 979 577 7 579 213
EQUITY AND LIABILITIES
Stated capital 8 3 425 544 3 425 544
Accumulated loss (412 621) (318 419)
Capital and reserves 3 012 923 3 107 125
Deferred tax liability 9 379 867 302 135
Interest-bearing borrowings 14 4 426 426 3 996 061
Mine closure and environmental
10 58 691 53 889
rehabilitation obligation
Cash-settled share-based payment
3 623 5 946
liability
Non-current liabilities 4 868 607 4 358 031
Interest-bearing borrowings 13 - -
Trade and other payables 98 047 112 499
Taxation 9 - 1 558
Current liabilities 98 047 114 057
Total equity and liabilities 7 979 577 7 579 213
ABRIDGED CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
for the year ended 31 December 2017
2017 2016
Notes R’000 R’000
Operations
Administration expenses (346 192) (214 179)
Project-related expenses capitalised 335 974 193 519
Loss on scrapping of property, plant
(5) (1 497)
and equipment
Profit on disposal of property,
1 803 -
plant and equipment
Net operating costs (8 420) (22 157)
Impairment of available-for-sale
financial asset reclassified from (500 336) (117 100)
other comprehensive income
Financial income
Finance income 48 859 76 493
Finance expense (249 127) (208 692)
Foreign exchange gain 460 990 535 373
Finance costs capitalised 232 955 190 332
Net finance income 493 677 593 506
Profit/(loss) before tax (15 079) 454 249
Income tax (expense) (79 123) (151 565)
Profit/(loss) for the year (94 202) 302 684
Other comprehensive income
Items that are or may be
reclassified to profit or loss
Loss on fair value movements of
(500 336) (117 100)
available-for-sale asset
Tax on other comprehensive income 56 613 11 463
Reclassification of available-for-
sale financial asset to profit or 500 336 117 100
loss
Related tax (56 613) (11 463)
Total other comprehensive loss - -
Total comprehensive income for the
(94 202) 302 684
year
Profit/(loss) per share
Basic and diluted earnings/(loss)
(5.79) 18.59
per share cents
ABRIDGED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2017
Stated/ (Accumu Total
Share lated
Capital loss)
R’000 R’000 R’000
Balance at 1 January 2016 3 425 544 (621 103) 2 804 441
Total comprehensive income for
the year
Profit for the year - 302 684 302 684
Balance at 31 December 2016 3 425 544 (318 419) 3 107 125
Total comprehensive loss for
the year
Loss for the year - (94 202) (94 202)
Balance at 31 December 2017 3 425 544 (412 621) 3 012 923
ABRIDGED CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2017
2017 2016
Note R’000 R’000
Cash flows from operating activities
Cash receipts from customers - -
Cash paid to suppliers and employees 19 143 (8 915)
Cash generated from /(utilised in)
19 143 (8 915)
operations
Finance income received 39 300 72 682
Finance cost paid (377) (17 267)
Taxation paid (3 245) (5 636)
Taxation received 3 4 916
Cash generated from operating
54 824 45 780
activities
Cash flows from investing activities
Acquisition of property, plant and
equipment as a result of increase in (1 101 882) (975 200)
operations
Net cash outflow from investing
(1 101 882) (975 200)
activities
Cash flows from financing activities
Interest-bearing borrowings raised 891 769 -
Net cash inflow from financing
891 769 -
activities
Net decrease in cash and cash
(155 289) (929 420)
equivalents
Cash at beginning of year 615 368 1 544 778
Cash at end of year 460 079 615 368
Cash at end of year comprises:
Cash balances 388 170 455 452
Less: interest accrued (935) (2 741)
Cash and cash equivalents 387 235 452 711
Restricted cash 7 72 844 162 657
Cash at end of year 460 079 615 368
ABRIDGED NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2017
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 2017 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 2017 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. Feng Tao.
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 year-end 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
year-end 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
2016.
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 2016 5 328 375 66 648 5 395 023
Additions 975 445 28 227 1 003 672
Disposals - (17) (17)
Depreciation - (8 798) (8 798)
Balance at 1 January 2017 6 303 820 86 060 6 389 880
Additions 978 070 96 444 1 074 514
Disposals - (4) (4)
Depreciation (11) (9 626) (9 637)
Balance at 31 December 2017 7 281 879 172 874 7 454 753
6. Available-for-sale financial asset
2017 2016
R’000 R’000
Opening Balance 510 900 628 000
Loss included in OCI – fair value
(500 336) (117 100)
adjustment
Closing Balance 10 564 510 900
The group currently holds 17.1% of Maseve Investments 11 (Pty) Ltd
(“Maseve”). The available-for-sale financial asset is classified as
a level 2 fair value as the fair value is determined on inputs not
based on observable market data. The fair value of the unlisted
equity securities as at 31 December 2016 is 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 investment in Maseve as at 31 December 2017 has
been valued at US$855,000 being the value that Wesizwe may receive
for its 17.1% investment in Maseve. The proposed sale by Platinum
Group Metals of its 82.9% shareholding in Maseve to Royal Bafokeng
Platinum Limited has been used as comparable transaction to
determine the fair value.
The significant unobservable inputs are:
2016
US$ exchange rate (ZAR) up to 2021 13.10–14.21
US$ exchange rate (ZAR) long-term 14.64
Pt price (US$/oz) up to 2021 978–1 236
Pt price (US$/oz) long-term 1 326
Pd price (US$/oz) up to 2021 711– 930
Pd price (US$/oz) long-term 981
Rh price (US$/oz) up to 2021 767– 898
Rh price (US$/oz) long-term 1 227
Au price (US$/oz) up to 2021 1 234-1 226
Au price (US$/oz) long-term 1 309
Pre-tax discount rate(%)(Real) 13.30
Sensitivity analysis on the fair value of the investment in Maseve:
2016
R’million
10% increase in the US$ exchange
233.8
rate
10% decrease in the US$ exchange
(235.8)
rate
10% increase in the platinum price 147.7
10% decrease in the platinum price (148.0)
7. Restricted cash
2017 2016
R'000 R'000
Non-Current
Department of Mineral Resources —
1 016 1 016
Rehabilitation obligation
Eskom — Connection guarantees 44 828 77 641
Aveng Mining Limited — Performance payment
- -
guarantee
45 844 78 657
Current
Department of Mineral Resources —
27 000 27 000
Rehabilitation obligation
Aveng Mining Limited — Performance payment
- 57 000
guarantee
27 000 27 000
Total 72 844 162 657
8. Stated capital
2017 2016
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
9. Taxation
9.1 Income tax receivable
2017 2016
R'000 R'000
Balance at the beginning of the year 1 558 (4 916)
Profit or loss charge 1 391 7 193
Taxation paid (3 245) (5 635)
Taxation refund received 3 4 916
1 558
Balance at the end of the year (293)
9.2 Deferred tax
2017 2016
R'000 R'000
Deferred tax liability
Balance at the beginning of the year 302 135 157 763
Current year charges 77 732 144 372
Unredeemed exploration expenditure
Property, plant and equipment 274 138 272 819
Available-for-sale financial asset (56 613) (11 463)
Unredeemed mining capex (138 449) (106 549)
Provisions (1 344) (10 435)
Balance at the end of the year 379 867 302 135
10.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
R28.0 million (2016: 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.
11.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.
12.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.
13.Interest-bearing borrowings
2017 2016
R’000 R’000
Non-current
Opening balance 3 996 061 4 548 772
China Development Bank – drawdown 891 770 -
Interest accrual 244 319 207 080
China Development Bank – interest
(244 689) (224 343)
repayment
Realised foreign exchange loss 8 879 11 439
Unrealised foreign exchange gain (469 914) (546 887)
Closing balance 4 426 426 3 996 061
The group has a secured US$650 million loan of which US$367.3
million was drawn down at year end (2016: US$300 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.
14.Headline earnings per share
The basis of calculation of headline earnings and diluted headline
earnings per share is:
2017 2016
R R
(Loss)/profit attributable to
ordinary shareholders (rand) (94 202 401) 302 683 874
Loss on scrapping of property, plant
and equipment 4 650 1 497 534
Profit on disposal of property, plant
and equipment (1 802 567) -
Reclassification of gains or losses
upon impairment of available-for-sale
financial asset 500 336 381 117 100 000
Total tax effects of adjustments (56 109 339) (11 882 182)
Headline earnings 348 226 724 409 399 226
Weighted average number of ordinary
shares in issue (shares) 1 627 827 058 1 627 827 058
Headline earnings and diluted
headline earnings per share (cents) 21.39 25.15
15.Capital Commitments
Capital commitments for the next 12 months amounts to
R355.9 million (2016: R397.5 million).
16.Mineral Resources and Reserves
There were no changes to the mineral resources and reserves for the
year ended 31 December 2017.
17.Dividends
No dividends were declared for the year ended 31 December 2017.
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.
19.Changes to the Board of Directors
Mr. Jianke Gao has resigned from his position as chief executive
officer and acting financial director with effect from 14 February
2017. Mr. Zhimin Li was appointed to the board as the chief
executive officer and acting financial director on 15 February
2017. Mr. Kenny Mokoka has resigned from his position as non-
executive director with effect from 01 May 2017. Mr. Feng Tao was
appointed to the board as financial director on 1 July 2017.
Mr. Dexin Chen has resigned from his position as non-executive
director and deputy chairman with effect from 28 August 2017. Mr
Fugui Qiao has been appointed to the board as non-executive
director on 22 September 2017. Ms Xiaoyin Zhou has resigned from
the board with effect from 30 January 2018. Mr Sun Pingan and Mr
Indresen Pillay has been appointed to the board as non-executive
directors with effect from 01 February 2018.
By order of the board:
Dawn Mokhobo (Chairman) Zhimin Li (Chief Executive Officer)
Sponsors: PSG Capital Proprietary Limited
Directors: DNM Mokhobo (Chairman)*, Z Li (Chief Executive Officer)#,
F Tao (Finance Director)#, LV Ngculu*, TV Mabuza*, S Pingan*#, P
Li*#, F Qiao*#, I Pillay*
*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 2018
Johannesburg
Date: 29/03/2018 05:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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