Wescoal’s shares after Heps update
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.