Wescoal final results March 2019
Revenue for the year increased to R3.965 billion (2018: R3.527 billion), gross profit lowered to R461.6 million (2018: R565 million), operating profit fell to R224 million (2018: R344.4 million), profit attributable to owners of the parent dropped to R87.7 million (2018: R201.4 million), while earnings per share weakened to 20.16 cents per share (2018: 48.11 cents per share).
Dividends and share buy-backs
Considering the group's financial position and performance, the board resolved not to declare a final dividend. The capital allocation approach selected is to prioritise in the near term, second to development and growth objectives, a specific share repurchase programme within the scope of the resolution passed by the shareholders during the annual general meeting of January 2019.
During the year, Wescoal, in terms of the share repurchase programme, acquired 5.6 million shares in line with shareholder approval.
Company outlook statement
We expect the changes in the political environment to bring about gradual improvement in policy certainty and economic growth opportunities which will positively affect our relationship with Eskom and other parastatals.
Eskom remains a consistent and reliable customer and the company remains committed to maintaining strong and supportive relations with Eskom in the future.
We are optimistic that we will achieve stability in the next six months and add production volumes with the integration of Arnot. Additionally, we are well- positioned to continue playing a role as consolidator in the South African junior coal sector. We continue to optimise existing businesses and assets and bolster our balance sheet to enable us to fund other growth opportunities that may arise and we are currently looking at various value accretive acquisition opportunities, in an attempt to deliver more value for our shareholders and consolidate the coal market. In the medium term, we aim to create an environment of stable operations translating to predictability and consistency which will lead to efficiency in both our Mining and Trading segments.
The priority development of both Moabsvelden and the extension of Vanggatfontein are progressing well, with the former expected to be operational in the first half of 2020. In the long term, we are committed to exploring opportunities in our area of expertise, which is mining and coal-related activities.