Wescoal Holdings Limited, junior coal miner and supplier, results for the six months ending 20 September 2013 came in solid as the group realised total revenue inflows of R465,7 million from across all operations, a 32.5.% revenue increase on the same interim period last year.

“Wescoal management is extremely proud and pleased with the results”, said Andre Boje, CEO of Wescoal Holdings. Revenue from the mining division surged to R261, 7 million, largely attributed to the commission of Intibane Colliery which produced 350,234 tons of the total 895,185 tons of coal produced. Supply contracts with ESKOM remain in place; however, the utility has placed emphasis on the transportation of coal by rail and to this end the mining division increased rail delivery to 45% of total sales.

Andre Boje said he expects further improvements in the financial performance of the group into the future. “The finalisation of the Elandspruit transaction with Glencore Xstrata and the pending acquisition of MacPhail distributors will have a positive impact on the business. Furthermore, Wescoal has secured a R179 million debt facility from Investec Bank for the MacPhail acquisition and working capital requirements” he added.

At R203, 9 million, revenue from the trading division is flat and profits from the division fell by 57% from R6, 7 million in 2012 to R2,9 million for this interim period.  While results from the trading division are disappointing, Wescoal has in place strategies to address margin pressure.

According to Boje, Wescoal’s results are a reflection of the excellent management team and the quality of assets acquired. He said there had been an impressive improvement from last year’s figures as gross profit increased by R16,7 million to R53,8 million, EBITDA came in at R48,7 million, up from R27,8 million in 2012 and margins improved by one percentage point to 11% as a result of price and volume increases in the mining division. Inflation coupled with increased strategic head office costs pushed operating expenses up by 30, 8% to R27,6 million.

Wescoal attained a 66,0% increase in headline earnings of R18,1 million, up from R10,9 million in the comparative reporting period. The company has R89,1 million cash reserves on hand.

Wescoal expects an increase in production levels going into 2014 with an increased contribution from Intibane, while the trading division should get a boost once the acquisition of MacPhail is concluded, pending approval by the Competition Commission.

On 2 August the Elandspruit transaction with Glencore Xstrata became unconditional and Wescoal is progressing with the necessary environmental authorisation and water licence applications. This should be in place during the first half of 2014 and will be followed by the commission of the mine, which should be in production in the last quarter of 2014.

Wescoal further expects that as major coal producers review their mineral assets and dispose of the non-core assets, so further opportunities for acquisitions will open up. “Given the acquisitions made during 2013 and investments in infrastructure, we anticipate Wescoal to continue delivering solid financial results,” concluded Boje