Wescoal Holdings Limited delivered a solid set of financial results for the year ending March 2014 as the business experienced a revenue surge of 69, 5% to R1, 1 billion. Andre Boje, Chief Executive Officer of Wescoal said, “The business is definitely in a stable position and is in a strong growth phase.”

The Mining Division is on solid ground, coal production by tonnage increased due to the commissioning of the Intibane Colliery in June 2013, which saw the asset produce 1, 03 million of the group’s 1, 92 million tons of total coal output. While ESKOM’s coal uptake from Intibane declined due to the utility’s operational reasons, revenue from the Mining Division surged to R556, 2 million, this is up from R318, 7 million in 2013. The Trading Division proved resilient, delivering R591, 2 million in revenue compared to R358, 6 million in the same period last year. Despite the strong revenue performance from the Trading Division, it accounts for only 8% of operational EBITDA whereas the Mining Division contributed 92% of the operational EBITDA. This will however change when the MacPhail acquisition is incorporated for a full financial year.

According to Boje, Wescoal has successfully merged the Macphail acquisition into its trading arm, Wescoal Trading. “Macphail is a coal trading and distribution company which Wescoal acquired for R79 million in August 2013 which we expect will continue to further contribute to Group revenue and profits in the future,” he said The Group’s gross profits for the financial year ending in March 2014 increased by 72, 7% to R125, 5 million largely due the increase in revenue.  The Group’s operational EBITDA reached R102,2 million; a 123,6% increase for the comparative period last year. Operating costs intensified by 66, 3% to R81, 3 million, owing to the commissioning of the Intibane Colliery during the year, restructuring costs related to the merger of McPhail and Chandler Coal and the relocation of Wescoal’s head office from Krugersdorp to Isando on the East Rand.

Shareholder funds have increased by 54, 1% to R273, 2 million net asset value per share; the net tangible asset value per share increased by 31, 7% and 9, 0% respectively. Headline earnings and headline earnings per share saw an uptick of 37, 9% and 28, 7% respectively. Wescoal ended the year with cash and cash equivalents up 143,2% to R51,9 million from R21,4 million in the prior year. The company also declared a final gross dividend of 3,8 cents per share. The Board approved future capex of R170 million for the commissioning of the Elandspruit Colliery including the acquisition of an existing plant, mine operational infrastructure, surface rights and production start up costs.

Boje remains upbeat about the future of Wescoal and believes that the business remains competitive and will continue to deliver quality coal to its clients.“The management team is contemplating extending the life of the mines in Khanyisa and Intibane to 2017 by acquiring nearby mineral rights.  This should have a further positive impact on the business and the establishment of the Elandspruit colliery is expected to commence during the last quarter of 2014.  The asset is expected to produce 200, 000 tons of coal per month by the end of 2015.”

“We expect the Trading Division to deliver even better results in the future as I’m confident there will be further synergy savings and margin enhancements across the entire Group. The coal mining landscape comprises positive growth prospects as large players consistently evaluate their mineral assets and are likely to unload non-core operations; this presents an opportunity for Wescoal to strengthen its position,” concluded Boje.