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WESCOAL HOLDINGS LIMITED - Announcement regarding update on the debt refinance process and trading statement

Release Date: 31/05/2019 08:00
Code(s): WSL     PDF:  
 
Wrap Text
Announcement regarding update on the debt refinance process and trading statement

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”)

ANNOUNCEMENT REGARDING:

-       UPDATE ON THE DEBT REFINANCE PROCESS; AND
-       TRADING STATEMENT


UPDATE ON THE DEBT REFINANCE PROCESS

Wescoal’s strategy is to grow sustainably and become a leading provider of reliable energy source, anchored in three strategic
pillars, namely:

-           stability of existing operations and related support services;
-           sustainability of the business to operate optimally at steady state level; and
-           scalability of the business and operations through inorganic and organic development growth opportunities.

In order to achieve the stated strategic objectives, Wescoal believes that optimisation of Wescoal’s funding and capital structure
is of paramount importance. In this regard, Wescoal is pleased to inform shareholders that the Company is currently finalising the
refinance of its existing credit facilities, through a consortium of South African commercial banks consisting of Nedbank Limited
(acting through its Corporate and Investment Banking Division) and The Standard Bank of South Africa Limited (acting through its
Corporate and Investment Banking Division). The new credit approved comprehensive, long-term refinance facilities are for a
combined R1.1 billion, with a provision that also allows Wescoal access to an additional R500 million accordion facility subject to
credit approval but within the legal agreements of the refinance facilities, thus reducing significantly the lead time towards
accessing this extra liquidity facility.

The improved capital structure will consolidate and optimise various debt instruments thereby enhancing the Group’s liquidity
and overall balance sheet strength. This will further enable the Group to pursue specific existing organic growth expansion projects
and, subject to lenders approval, to take advantage of further inorganic acquisition opportunities in the market.

TRADING STATEMENT

Shareholders are referred to the operational update released on SENS on 6 May 2019 and are advised that the Company
expects, with reasonable certainty, that headline Earnings per share (“HEPS”) and earnings per share (“EPS”) for the year ended
31 March 2019 (“FY2019”), will vary by the amounts set out below:

-       HEPS of between 17.4 cents and 20.8 cents, being a decrease of between 63% and 55% (31 March 2018: 46.4 cents); and
-       EPS of between 19.3 cents and 23.1 cents, being a decrease of between 60% and 52% (31 March 2018: 48.1 cents).

The significant decrease in the Group’s HEPS and EPS was driven by lower production and sales volumes as a result of reported
operational production impacts outlined below.

Summary Production and Sales

                                                                                      1’HY to
                             QTR Dec18        QTR Mar19        Variance                         2’HY to Mar19
       Volumes                                                                          Sep18                     Variance
                                 t'000            t'000           t'000       %         t'000           t'000        t'000       %

    Production                  1268.5           1428.4           159.9     13%        3184.2          2696.8       -487.4    -15%

    Elandspruit                  681.2            564.9          -116.2    -17%        1419.4          1246.1       -173.3    -12%
    Khanyisa                      24.2            293.2           269.0   1112%          77.2           317.4        240.2    311%
    Intibane                       0.0              0.0             0.0                 132.7             0.0       -132.7   -100%
    Vanggatfontein               563.1            570.2             7.1      1%        1554.9          1133.3       -421.6    -27%

    Sales                       1284.9           1634.5           349.6     27%        3046.7          2919.4       -127.3     -4%

    Elandspruit                  586.2            512.8           -73.4    -13%        1054.6          1098.9         44.3      4%
    Khanyisa                      54.9            346.8           291.9    531%         103.5           401.7        298.2    288%
    Intibane                      13.8              0.0           -13.8   -100%         166.2            13.8       -152.4    -92%
    Vanggatfontein               426.1            508.5            82.0     19%        1121.7           934.2       -187.5    -17%

    Mining                      1081.0           1368.1           286.7      27%       2446.0          2448.6          2.6      0%
    Trading                      203.9            266.9            63.0      31%        600.7           470.8       -129.9    -22%


    Volumes                   Full Year       Full Year                                2HY to          2HY to
                                                                     Variance                                          Variance
                                  Mar18           Mar19                                 Mar18           Mar19

                                  t'000           t'000           t'000        %        t'000           t'000        t'000       %

    PRODUCTION                   6815.7          5881.0          -934.7     -14%       3504.1          2696.8       -807.2    -30%

    Elandspruit                  3065.6          2665.5          -400.2     -13%       1482.0          1246.1       -235.9    -19%
    Khanyisa                      468.0           394.6           -73.4     -16%        112.1           317.4        205.3     65%
    Intibane                      863.7           132.7          -730.9     -85%        413.4             0.0       -413.4
    Vanggatfontein               2418.4          2688.2           269.8      11%       1496.6          1133.3       -363.3    -32%

    SALES                        6480.0          5966.1           513.9       8%       3291.7          2919.4       -372.1    -13%

    Elandspruit                  2197.9          2153.5           -44.3      -2%       1040.1          1098.9         58.8      5%
    Khanyisa                      554.0           505.3           -48.7      -9%        226.4           401.7        175.4     44%
    Intibane                      942.1           179.9          -762.2     -81%        440.4            13.8       -426.6
    Vanggatfontein               1744.0          2055.9           311.9      18%       1063.6           934.2       -129.5    -14%

    Mining                       5438.0          4894.6          -543.4     -10%       2770.5          2448.6       -321.9    -13%
    Trading                      1042.0          1071.7            29.7       3%        521.2           471.0        -50.2    -11%

Production: Overall Group mining production levels were 15% lower during the second half of FY2019. The last quarter of the
second half of FY2019, during ramp-up of the new mining contractor, showed better production when compared to the first
quarter of the second half. Group production for FY2019 at 5.881mt, is 935kt lower than for the year ended 31 March 2018
(“FY2018”). The lower than expected overall production resulted mainly from:

-           Vanggatfontein mining contractor change over and subsequent labour disruptions;
-           Elandspruit being impacted by the suspension of the underground mining section;
-           Above average seasonal rainfall during February and March 2019 respectively;
-           The dispute regarding Khanyisa Triangle JV resulting in production downtime; and
-           The disposal of Intibane Colliery during June 2018.

Sales: Coal sales volumes of both Trading and Mining segments increased by 31% and 27% respectively in the quarter ending 31
March 2019 compared to the preceding quarter ending 31 December 2018. The total sales volume for the second half of the
financial year ending March 2019, is 4% lower than the first half. The effect of Intibane Colliery disposal was offset by extensive
increases in both production and sales volumes from the Khanyisa Triangle during the last quarter. The seasonal cycle of sales
associated with the Trading division resulted in sales being 22% lower compared to the first half of FY2019, with sales volume
being more aligned to those during the comparable period of FY2018.

The financial information on which this trading statement is based has not been reviewed or reported on by the Company’s
auditors.

Wescoal will release its audited financial results for the year ended 31 March 2019 on or about 25 June 2019. The Company is
currently in a closed period and shareholders will be engaged directly after the results have been published.

31 May 2019

JSE Sponsor
Nedbank Corporate and Investment Banking

IR Advisor
Singular IR

Date: 31/05/2019 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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