Wescoal’s shares af­ter Heps up­date

The Star Early Edition - - NEWS - Di­neo Faku

JU­NIOR coal pro­ducer and trad­ing firm, Wescoal, weak­ened 0.48 per­cent on the JSE yes­ter­day to close at R2.09 fol­low­ing news that non-re­cur­ring costs had hit earn­ings a share for the year ended March.

Wescoal, which last year signed a se­ries of ex­port con­tracts, said yes­ter­day that it an­tic­i­pated head­line earn­ings a share (Heps) to drop by be­tween 54 per­cent and 62 per­cent to be­tween 10.4 cents and 12.4c a share.

Last year Wescoal re­ported Heps of 27.1c a share on March 31, 2016.

The com­pany also said that it ex­pected earn­ings a share of be­tween 10.7c and 12.8c a share com­pared with 26.2c a share on March 31, 2016, rep­re­sent­ing a drop of 51 per­cent and 59 per­cent.

Wescoal said that non-re­cur­ring costs re­lated to three items.

Firstly, the non-cash em­pow­er­ment dis­count of 32c a share re­sult­ing from its em­pow­er­ment trans­ac­tion.

Sec­ondly, the di­lu­tion im­pact of its em­pow­er­ment trans­ac­tion’s in­crease in the num­ber of is­sued shares was 7c a share.

Thirdly, the once-off Keaton ac­qui­si­tion trans­ac­tion costs of 3c a share.

Si­bonginkosi Nyanga, an an­a­lyst at Mo­men­tum SP Reid, said he ex­pected bet­ter num­bers from the com­pany go­ing for­ward.

“That non-re­cur­ring items were in­cluded in the pe­riod means that there is room for much bet­ter num­bers in the near fu­ture.

“It means that next year earn­ings a share will be more than 40c a share,” he said.

Wescoal, which paid R525 mil­lion to ac­quire Keaton En­ergy ear­lier this year in an ef­fort to es­tab­lish it­self as an 8-mil­lion­ton-a-year pro­ducer, said it was on track to meet this tar­get.

“The En­ergy ac­qui­si­tion will be on track to achieve an an­nual run of mine pro­duc­tion tar­get of 8 mil­lion tons per an­num in the short to medium term,” the com­pany said.

Share­hold­ers and the com­pe­ti­tion com­mis­sion had ap­proved the deal the com­pany said, adding that the com­pa­nies would is­sue a joint an­nounce­ment once there was more cer­tainty around the date of ful­fil­ment of the re­main­ing scheme con­di­tions for the trans­ac­tion.

Wescoal, which achieved bet­ter em­pow­er­ment rank­ings last year, said its min­i­mum 51 per­cent em­pow­er­ment own­er­ship was a thresh­old which would be pro­tected and main­tained.

“A broad-based own­er­ship scheme is be­ing de­signed for im­ple­men­ta­tion dur­ing the fi­nan­cial year to March 31, 2018, and will en­hance BEE own­er­ship,” it said.

In terms of strat­egy, Wescoal said its pri­or­i­ties re­mained growth, safe pro­duc­tion, and pre­dictable op­er­a­tional and fi­nan­cial per­for­mances.

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