Wescoal turns in a sparkling performance

04 November 2014

 

Wescoal Holdings Limited, the junior coal miner and supplier has turned in a sparkling performance announcing an increase of 92.8% in revenue, HEPS is up by 33.3% and operational EBITDA up by 73.4% in the interim results for the six months ending September 30, 2014, in Johannesburg today.


"The Group's growth strategy and acquisitions have been hugely beneficial contributing substantially to our margins," says CEO Andre Boje. Revenue is R897,8m compared to R465,7m in 2013; HEPS is 15.2 cents (2013 11.4 cents) and operational EBITDA is R84,3m against R48,7m for the same interim period last year.


He says Wescoal's excellent results clearly indicate the input from MacPhail acquired in October 2013. "This acquisition has breathed new life into the trading division and places the Wescoal group in the unique position of having a sophisticated trading division servicing the domestic market together with a mining division. The division has been rebranded under the banner Wescoal Trading and the integration of the operation is almost complete."


Highlights for the period include the finalization of both the Intibane phase 2 transactions and the acquisition of the Muhanga coal processing plant near Middelburg. "The Intibane phase 2 mining right is significant in that it extends the life of this highly profitable operation to the end of 2016 and negotiations are at an advanced stage for a similar extension at the Khanyisa mining operation," Boje went on to say.


The Mining division also assumed ownership of the Muhanga coal processing plant this month and even though the Elandspruit project has not yet been commissioned, Muhanga will begin production on 6 November 2014 to supply the existing customer base which sources from the operation. "


Boje says excess Run of Mine (ROM) in the market has been acquired for this and management is upbeat about the potential contribution from the project which will complement the Elandspruit mine once production begins in early 2015.


Boje says the Group is immensely excited with regard to production starting at Elandspruit. "This secures a life-of-mine at this operation in excess of 15 years. Coupled with the Muhanga coal processing plant, Wescoal will be able to service clients and immediately earn income from this acquisition."


Wescoal indicated that the only outstanding issue at Elandspruit is the much publicised water use license however the regulatory authorities have been sensitized as to the impact of the continued delay in the issuing of this. "We have been assured of a sharp focus on the finalization of this matter," was the comment from Boje.


Wescoal management will continue to build on the base of the trading division servicing the domestic market together with a mining division – a combination which warrants that Wescoal has sufficient product and diversity to ensure sustainability into the future. Marketing efforts have ensured brand recognition and visibility and have results in greater
Press release – Wescoal Holdings Limited ("Wescoal") sales and this marketing drive to set to continue.


"With the integration of MacPhail into Wescoal Trading we believe it will go from strength to strength while we aim for even greater client diversification. The results are also a reflection of the way the excellent management team has handled quality of assets acquired," he concludes.


Segmental background to the results


MINING DIVISION
The division increased production by 5% however EBITDA contribution increased by 38,7% due to the bulk of the volume being delivered from the Intibane Colliery. Wescoal Mining produced 942 291 tons of coal for the six months compared to 895,185 tons in the same period in 2013. The division produced revenues of R296,8 million (2013:R261,7 million) an increase of 13,4%, operational EBITDA of R67,8 million (2013: R48,9 million) and profit from operations of R38,0 million (2013: R27,7 million).


TRADING DIVISION
The Trading division sold 625 949 tons for the six months ended 30 September 2014, a 187% increase, due to the inclusion of MacPhail, compared to the prior period (2013: 217 831) which excludes the MacPhail acquisition. The division achieved revenues of R601m (2013: R204m), operational EBITDA of R20,1m (2013: R3,7m) and profit from operations of R14,2m (2013: R2,9m)

 

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Wescoal Holdings Limited
Andre Boje, CEO
+27 11 954 2721
   
Compiled and released by:
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Keyter Rech Investor Solutions
Vanessa Rech
   
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04 November 2014
WSL
www.wescoal.co.za