|Wescoal interim results September 2015|
|21 October 2015 9:12|
|Turnover lowered to R758.1 million (R897.8 million). Gross profit decreased to R97.3 million (R120.4 million). Operating profit also dropped to R18.6 million (R48.4 million). Total comprehensive income attributable to owners fell to R9.8 million (R28.1 million). In addition, headline earnings per share tumbled to 5.1cps (15.2cps).
No dividends have been declared for the Period.
Wescoal is in the final stages of its stated strategy to bed down the Elandspruit project before embarking on additional major projects. The management team is cognisant of the volatile business environment and believes it is appropriate to consider future projects conservatively and with care.
Wescoal is assessing a number of organic and inorganic growth opportunities. Some of these focus on augmenting the Intibane and Khanyisa resource bases and others on potentially creating a new mining complex. Debottlenecking projects at the processing plant will ultimately increase the throughput capacity of the plant and reduce operating costs. The last phase of the Elandspruit project includes initiatives to reduce operational risk by optimising and upgrading water management and road network systems – these are considered important given the coming rainy season.
The challenging environment, specifically in the local coal sector, present opportunities for corporate activity. Consolidation in the junior coal sector is part of the natural evolution of the sector and Wescoal sees itself as a significant participant in this process.
While the overall results for the Period are somewhat disappointing, they are understandable in the context of the broader economic climate and delays in concluding Eskom contracts. Earnings per share attributable to the Period (5,3 cents) represents an increase of 960% compared to the 0,50 cents per share attributable to the immediately preceding six month period between 1 October 2014 and 31 March 2015 (15,7 cents per share for full year to 31 March 2015 less 15,2 cents per share for the period ranging from 1 April 2014 to 30 September 2014). Earnings per share attributable to the month of September 2015 was 2,50 cents per share, mainly on the back of the Elandspruit Eskom contract.
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