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WESIZWE:  39   0 (0.00%)  01/01/1970 00:00

WESIZWE PLATINUM LIMITED - Provisional Group Financial Statements

Release Date: 29/03/2019 16:38
Code(s): WEZ     PDF:  
 
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Provisional Group Financial Statements

WESIZWE PLATINUM LIMITED
(Incorporated in the Republic of
South Africa)
(Registration number:
2003/020161/06)
JSE code: WEZ ISIN: ZAE000075859
("the Company" or "Wesizwe")

PROVISIONAL GROUP FINANCIAL STATEMENTS

HIGHLIGHTS

– Capital and Operational Budgets:

      o The business operations budget was approved by the Board as per
        the Company’s approval framework, and was implemented diligently,
        with austerity measures by management.
      o All operating and capital expenses were screened and approval only
        granted for critical projects.
      o The business expended a total of R242 million by end of the
        financial year. The expenditure was used for a down payment to
        the flat development contractor, operations costs, and small
        capital packages focused on commissioning of the waste ore
        handling system from 77 Level.
      o Cash on hand as of 31 December 2018 is R582 million.

– Safety & Environment

      o Zero fatalities were recorded.
      o Lost Time Injury Frequency rate (LTIFR)of 0.486 was achieved
        against a target of 0.69
      o No environmental incidents and no penalties imposed.
      o The   environmental  incidents   procedures  were   updated   and
        implementation of environmental incidents reporting actioned.

– Development and Equipping

      o Commissioned the waste handling system.
      o Hot commissioned the 77 level conveyor belts to surface loading
        tower box.
      o Completed and synchronized the automated shaft loading box and
        skips.

– Human Resource Management

      o Successful restructuring of Phase 1 and 2 were achieved in line
        with the optimization plan.
      o The conclusion of the 2018 negotiated wage settlement contributed
        towards achieving a harmonious labour relations environment that
        resulted in no production shift lost due to strikes.

– Stakeholder Relations
    o Relationships with our key stakeholders were sustained through no
      less than 58 meaningful engagements.
    o The 2014 – 2018 SLP was successfully closed-out.

PROVISIONAL CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 31 December 2018


                                                    2018          2017
                                     Note          R’000         R’000
ASSETS
Property, plant and equipment         5        8 858 102     7 454 753
Intangible asset                                   1 139         1 709
Other financial asset                 6            9 191        10 564
Restricted cash                       7           44 828        45 844
Non-current assets                             8 913 260     7 512 870

Other receivables                                 87 689        51 244
Taxation                              9              280           293
Restricted cash                       7           36 200        27 000
Cash and cash equivalents                        582 468       388 170
Current assets                                   706 637       466 707
Total assets                                   9 619 897     7 979 577

EQUITY AND LIABILITIES
Stated capital                        8        3 425 544     3 425 544
Accumulated loss                               (500 448)     (412 621)
Capital and reserves                           2 925 096     3 012 923

Deferred tax liability                 9         359 939       379 867
Interest-bearing borrowings           13       6 193 998     4 426 426
Mine closure and environmental
                                      10          40 472        58 691
rehabilitation obligation
Cash-settled share-based payment
                                                   3 184         3 623
liability
Non-current liabilities                        6 597 593     4 868 607

Trade and other payables                          97 208        98 047
Current liabilities                               97 208        98 047
Total liabilities                              6 694 801     4 966 654
Total equity and liabilities                   9 619 897     7 979 577

PROVISIONAL CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME 
for the year ended 31 December 2018

                                                    2018           2017
                                                   R’000          R’000
Operations
Administration expenses                         (20 359)      (10 218)
Loss on scrapping of property, plant
                                                       -           (5)
and equipment
Loss on disposal of financial asset              (2 234)             -
Profit on disposal of property,
                                                       -         1 803
plant and equipment
Net operating costs                             (22 593)       (8 420)

Loss on adjustment of financial                        -     (500 336)
asset

Other income and other expenses
Finance income from financial
                                                  27 373       48 859
institutions
Finance expense                                (301 829)    (249 127)
Foreign exchange (loss)/gain                   (811 032)      460 990
Finance costs capitalised                        999 528      232 955
Net finance (expense)/income                    (85 960)      493 677
Loss before tax                                (108 553)     (15 079)
Income tax income/(expense)                       19 865     (79 123)
Loss for the year                               (88 688)     (94 202)
Other comprehensive income
Items that are or may be
reclassified to profit or loss
Gain on fair value movements of
equity instrument at FVOCI/(loss) on                 861    (500 336)
available-for-sale equity instrument
Tax on other comprehensive income                      -       56 613
Reclassification of available-for-
sale financial asset to profit or                      -      500 336
loss
Related tax                                            -     (56 613)
Total other comprehensive income                     861            -
Total comprehensive loss for the                (87 827)     (94 202)
year
Loss per share
Basic and diluted loss per share                  (5.40)       (5.79)
(cents)

PROVISIONAL CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2018


                                Stated/   Reserves    (Accumu       Total
                                  Share                 lated
                                Capital                 loss)
                                  R’000      R’000       R’000       R’000

Balance at 1 January 2017     3 425 544          -   (318 419)   3 107 125

Total comprehensive loss              -          -    (94 202)    (94 202)
for the year
Balance at 31 December                           -
                              3 425 544              (412 621)   3 012 923
2017

Loss for the year                     -          -    (88 688)    (88 688)
Other comprehensive                            861
                                      -                     -          861
income
Transfers                             -      (861)        861            -
Balance at 31 December                           -
                              3 425 544              (500 448)   2 925 096
2018

PROVISIONAL CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2018

                                                        2018         2017
                                        Note           R’000        R’000
Cash flows from operating activities
Cash paid to suppliers and employees                (51 312)        19 143
Cash (utilised in)/generated from                   (51 312)        19 143
operations
Finance income received                               20 057        39 300
Finance cost paid                                          -         (377)
Taxation paid                                           (53)       (3 245)
Taxation received                                          -             3
Cash (utilised in)/generated from                   (31 308)        54 824
operating activities

Cash flows from investing activities
Acquisition of property, plant and                 (767 748)   (1 101 882)
equipment
Net cash outflow from investing                    (767 748)   (1 101 882)
activities

Cash flows from financing activities
Interest-bearing borrowings raised       13        1 001 959      891 769
Net cash inflow from financing                     1 001 959      891 769
activities

Net increase/(decrease) in cash and                  202 903    (155 289)
cash equivalents
Cash at beginning of year                           460 079       615 368
Cash at end of year                                 662 982       460 079

Cash at end of year comprises:
Cash balances                                       582 468       388 170
Less: interest accrued                                (514)         (935)
Cash and cash equivalents                           581 954       387 235
Restricted cash                           7          81 028        72 844
Cash at end of year                                 662 982       460 079

PROVISIONAL NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 31 December 2018


1. Reporting entity
Wesizwe is a Company domiciled in the Republic of South Africa. The
provisional consolidated financial statements for the year ended 31
December 2018 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 2018 will be
available at www.wesizwe.com.

2. Statement of compliance
These provisional consolidated financial statements (“provisional
report”) are prepared in accordance with International Financial
Reporting Standards,IAS 34 - Interim Reporting, the SAICA Financial
Reporting Guides as issued by the Accounting Practices Committee,
the Financial Reporting Pronouncements as issued by the Financial
Reporting Standards Council and the requirements of the Companies
Act of South Africa as well as the Johannesburg Stock Exchange
(JSE) listings requirements.

These provisional summarised financial statements have been
extracted from the complete set of audited financial statements,
but is itself not audited, on which the auditors,
SizweNtsalubaGobodo Grant Thornton Inc, have expressed an
unmodified 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 provisional 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
International Financial Reporting Standards (“IFRS”) and are
consistent with those used in the previous annual financial
statements except for the adoption of new standards IFRS 9
‘Financial Instruments’ and IFRS 15 ‘Revenue from Contracts with
Customers’. The adoption of the new standards has not had a
material impact on the financial statements of the group other than
increased disclosure.

4. Estimates
The preparation of financial statements in terms of IFRS requires
management to use estimates and assumptions that may materially
affect the reported amounts of assets and liabilities, as well as
income and expenses.    These estimates and judgements are based on
historical experience, current and expected future economic
conditions and other factors, including expectations of future events
that are believed to be reasonable under the circumstances. Actual
results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the period
in which the estimate is revised and in any future periods affected.

Except as described below, in preparing the condensed consolidated
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 2017.

5. Property, plant and equipment

                                           Mine
                                         Assets       Other         Total
                                          R'000       R'000         R'000
   Balance at 1 January 2017          5 246 091   1 143 789     6 389 880
   Additions                            978 070      96 444     1 074 514
   Disposals                                  -         (4)           (4)
   Depreciation                            (11)     (9 626)       (9 637)
   Balance at 1 January 2018          6 224 150   1 230 603     7 454 753
   Additions                          1 393 227      18 411     1 411 638
   Disposals                                  -           -             -
   Depreciation                            (13)     (8 276)       (8 289)
   Balance at 31 December 2018        7 617 364   1 240 738     8 858 102

6. Other Financial Assets – Unlisted Equity Securities

                                                     2018          2017
                                                    R’000         R’000
   Opening Balance                                 10 564       510 900
   Disposal of financial asset                    (8 330)             -
   Loss on disposal of financial asset            (2 234)             -
   Fair value adjustments                               -     (500 336)
   Closing Balance                                      -        10 564

   Other Financial Assets – Listed Equity
   Securities*
                                                     2018           2017
                                                    R’000          R’000
   Acquisition of financial asset                   8 330              -
   Gain on fair value adjustment                      861              -
   Closing Balance                                  9 191              -

   Investment in unlisted equity was disposed of as a result of a
   transaction initiated by a fellow shareholder in the unlisted
   investment.

   Investment in equity is measured at fair value in the statement of
   financial position. Fair values of these shares have been calculated
   by reference to quoted bid prices in active markets at the reporting
   date and are categorised within Level 1 of the fair value hierarchy.
   * Royal Bafokeng Platinum Limited (“RBPlats”) and Platinum Group
   Metals South Africa (Pty) Ltd (“PTM SA”) concluded a transaction of
   sale in which RBPlats acquired Maseve Investments 11 (Pty) Ltd
   (“Maseve”), a concentrator plant and surface rights in respect of the
   immovable property owned by Maseve. Africa Wide Mineral Prospecting
   and Exploration Pty Ltd (“Africa Wide”), a subsidiary of Wesizwe
   owned 17.1% of Maseve and other assets forming part of the RBPlats
   acquisition. Africa Wide received an issue of RBPlats shares as
   proceeds of sale for its 17.1% of the assets acquired. Wesizwe and
   Africa Wide dispute the validity of the transaction concluded and
   have commenced with processes for litigious relief.

7. Restricted cash
                                                         2018       2017
                                                        R'000      R'000
   Non-Current
   Department of Mineral Resources —
                                                            -      1 016
   Rehabilitation obligation
   Eskom — Connection guarantees                       44 828     44 828
   Total non-current                                   44 828     45 844
   Current
   Department of Mineral Resources —
                                                       36 200     27 000
   Rehabilitation obligation
   Total current                                       36 200     27 000
   Total restricted cash                               81 028     72 844

   Call deposits have been encumbered as a result of guarantees issued
   to certain service providers. Management are in advanced stages of
   replacing Department of Mineral Resources restricted cash
   guarantees with insurance guarantees.

8. Stated capital
                                                         2018       2017
                                                        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
                                                          2018       2017
                                                         R'000      R'000
      Balance at the beginning of the year               (293)      1 558
      Profit or loss charge                                 66      1 391
      Taxation paid                                       (53)    (3 245)
      Taxation refund received                               -          3
      Balance at the end of the year                     (280)      (293)

9.2 Deferred tax
                                                           2018        2017
                                                          R'000       R'000
      Deferred tax liability
      Balance at the beginning of the year              379 867     302 135
      Current year charges                             (19 928)      77 732
      Property, plant and equipment                     401 169     274 138
      Available-for-sale financial asset                      -    (56 613)
      Unredeemed mining capex                         (426 198)   (138 449)
      Provisions                                          5 101     (1 344)
      Balance at the end of the year                    359 939     379 867


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 R36.2
million (2017: R28.0 million) is held with a financial institution.
This investment has been ceded as security in favour of the guarantees
which the bank issued on behalf of the Group. The guarantees have
been provided to the Department of Mineral Resources for the mine
closure and environmental rehabilitation.

11. Segment reporting
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 components. No segment reporting has
been produced as the group is conducting construction activities in
one geological location which represents it’s only business activity
with no revenue yet.

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
                                                     2018        2017
                                                    R’000       R’000
   Non-current
   Opening balance                              4 426 426   3 996 061
   China Development Bank – drawdown            1 001 959     891 770
   Interest accrual                               298 486     244 319
   China Development Bank – interest            (343 905)   (244 689)
   repayment
   Realised foreign exchange loss                  24 734       8 879
   Unrealised foreign exchange loss/(gain)        786 298   (469 914)
   Closing balance                              6 193 998   4 426 426

The group has a secured US$650 million loan facility of which US$441.7
million has been used with a carrying amount of R6 194 million at 31
December 2018 (2017: R4 426 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 bi-
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 increases 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 (loss)/earnings and diluted
   headline (loss)/earnings per share is:
                                                   2018           2017
                                                      R              R
   Loss attributable to ordinary
   shareholders (rand)                     (87 826 703)   (94 202 401)
   Loss on scrapping of property, plant
   and equipment                                      -          4 650
   Profit on disposal of property, plant
   and equipment                                      -    (1 802 567)
   Loss on disposal of financial asset        2 233 627              -
   Gain on adjustment of value in
   interest in equity financial asset         (860 766)              -
   Reclassification of gains or losses
   upon impairment of available-for-sale
   financial asset                                    -    500 336 381
   Total tax effects of adjustments                   -   (56 109 339)
   Headline (loss)/earnings                (86 453 842)    348 226 724
   Weighted average number of ordinary
   shares in issue (shares)               1 627 827 058  1 627 827 058
   Headline (loss)/earnings per share
   (cents)                                       (5.31)          21.39

15. Capital Commitments

Capital commitments for the next 12 months amounts to R576.7 million
(2017: R355.9 million).

16. Mineral Resources and Reserves

There were no changes to the mineral resources and reserves for the
year ended 31 December 2018.

17. Dividends

No dividends were declared for the year ended 31 December 2018.

18. Prospects

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.

Changes to the Board of Directors

Ms Xiaoyin Zhou resigned from the board with effect from 30 January
2018 and Mr Sun Pingan and Mr Indresen Pillay were appointed to the
board as non-executive directors with effect from 01 February 2018.
Mr Indresen Pillay and Mr Fugui Qiao subsequently resigned from the
board on 31 July 2018 and 19 March 2019 respectively.
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*#,
*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 2019
Johannesburg

Sponsor
PSG Capital

Date: 29/03/2019 04:38:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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