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Wsl - Wescoal Holdings Limited - Reviewed Interim Results For The Six Months

Release Date: 24/10/2007 12:54:02      Code(s): WSL
WSL - Wescoal Holdings Limited - Reviewed interim results for the six months    
                                ended 30 September 2007                         
WESCOAL HOLDINGS LIMITED                                                        
REVIEWED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2007             
Wescoal Holdings Limited                                                        
(Incorporated in the Republic of South Africa)                                  
(Registration number 2005/006913/06)                                            
(JSE code: WSL ISIN: ZAE000069639)                                              
("Wescoal" or "the Group")                                                      
HIGHLIGHTS                                                                      
Revenue up 43%                                                                  
Operating profits up 82%                                                        
Headline earnings up 83%                                                        
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2007            
The interim results for the six months ended 30 September 2007, with comparative
results for the period ended 2006 and the audited results for the year ended 31 
March 2007 are presented.                                                       
Consolidated Group Income Statements                                            
                           Reviewed    Reviewed     Audited                     
interim     interim      results                     
                           results for results for  for the                     
                           the six     the six      year                        
                           months      months       ended                       
ended       ended         31 March                   
                           30          30           2007                        
                           September   September    R`000                       
                           2007        2006                                     
R`000       R`000                                    
                                                                                
Revenue                     194 519     136 057      269 558                    
Gross Profit                18 465                   18 146                     
11 689                                   
Other operating income      193         91           204                        
Other operating costs       (7 573)     (5 701)      (11 581)                   
Profit from operations      11 085      6 079        6 769                      
Acquisition expenses        (26)        (1 527)      (2 105)                    
written off                                                                     
Profit on sale of fixed     319         -            -                          
assets                                                                          
Finance costs               (673)       (386)        (1 132)                    
Profit before taxation      10 705      4 166        3 532                      
Taxation                    (3 063)     (1 177)      (1 089)                    
Profit for the period       7 642       2 989        2 443                      
7 642       2 989        2 443                       
Headline earnings                                                               
reconciliation:                                                                 
Net profit for the period                                                       
Less: Profit on sale of     (220)       -            -                          
fixed assets                19          1 084        1 494                      
Plus: Acquisition expenses                                                      
written off                                                                     
Headline earnings for the   7 441       4 073        3 937                      
period                                                                          
                                                                                
Ordinary shares in issue                                                        
(000`s)                                                                         
-Total at period end        105 931     103 709      103 709                    
-Weighted average shares    104 972     103 709      103 709                    
in issue                                                                        
-Fully diluted weighted     105 472     104 114      104 209                    
average shares in issue                                                         
(Note 1)                                                                        
                                                                                
Earnings per share:                                                             
Attributable earnings per   7.3         2.9          2.4                        
ordinary share (cents)                                                          
Headline earnings per       7.1         3.9          3.8                        
share (cents)                                                                   
Fully diluted attributable  7.2         2.9          2.3                        
earnings per share(cents)                                                       
Fully diluted headline      7.1         3.9          3.8                        
earnings per share(cents)                                                       
Note:                                                                           
1    Fully diluted earnings per share information is reflected showing the      
    potential effect of full dilution  for 1 million options held by the        
Wescoal directors to subscribe for new shares in Wescoal at 50 cents per    
    share.                                                                      
Consolidated Group balance sheets                                               
                   Reviewed       Reviewed      Audited                         
interim        interim       results for                     
                   results for    results for   the year                        
                   the six        the six       ended                           
                   months ended   months ended  31 March                        
30 September    30           2007                            
                     2007         September     R`000                           
                   R`000          2006                                          
                                  R`000                                         
ASSETS                                                                          
                                                                                
Non-current assets  51 839         47 407        47 705                         
                                                                                
Property, plant     13 010         12 850        13 065                         
and equipment                                                                   
Goodwill and        36 711         32 691        32 691                         
license fees                                                                    
Interests in        -              -             -                              
associate company                                                               
Deferred taxation   2 118          1 866         1 949                          
                                                                                
Current assets      68 998         48 520        54 665                         
                                                                                
Total assets        120 837        95 927        102 370                        
                                                                                
EQUITY AND                                                                      
LIABILITIES                                                                     
                                                                                
Total               54 146         45 650        45 103                         
Shareholders`                                                                   
funds                                                                           
                                                                                
Long-term debt      3 894          6 367         4 995                          

Current             62 797         43 910        52 272                         
liabilities                                                                     
                                                                                
Total equity and    120 837        95 927        102 370                        
liabilities                                                                     
                                                                                
Net asset value     51.11          44.02         43.49                          
per share (cents)                                                               
Tangible net asset  16.46          12.50         11.97                          
value per share                                                                 
(cents)                                                                         
Consolidated Statement of Changes in Equity                                     
                        Share   Share     Distribut  Total                      
                        Capital Premium   able       R`000                      
                        R`000   R`000     Reserve                               
R`000                                 
Balance at 1 April       104     37 959    7 040      45 103                    
2007                                                                            
Share issued             2       1 398     -          1 400                     
Listing expenses         -       -         -          -                         
Earnings attributable    -       -         7 643      7 643                     
to shareholders                                                                 
Balance as at 30         106     39 357    14 683     54 146                    
September 2007                                                                  
Group Cash Flow Statements                                                      
                        Reviewed     Reviewed      Audited                      
                        interim      interim       results for                  
results for  results for   the year                     
                        Wescoal for  Wescoal for   ended                        
                        the six      the six        31 March                    
                        months       months ended  2007                         
ended        30 September  R`000                        
                        30           2006                                       
                        September    R`000                                      
                        2007                                                    
R`000                                                   
Net cash from operating  10 184       (2 266)       2 647                       
activities                                                                      
Investing activities     (4 217)      (3 559)       (5 239)                     
Financing activities     493          2 187         846                         
Net increase/(decrease)  6 460        (3 638)       (1 746)                     
in cash and cash                                                                
equivalents                                                                     
Cash and cash            1 216        2 962         2 962                       
equivalents at                                                                  
beginning of period                                                             
Cash and cash            7 676        (676)         1 216                       
equivalents at end of                                                           
period                                                                          
Commentary                                                                      
Operations and market review                                                    
The results for the reporting period show that strategies implemented during the
latter part of the previous financial year have paid dividends.                 
Trading once again posted excellent results with revenues, margins and profit   
from operations all showing substantial increases. The washing operation        
returned to profitability mainly due to a stable supply of run of mine and      
increased volume throughput which should continue for the rest of the financial 
year.                                                                           
The group`s revenue for the six month period was 43% higher than the comparative
period. The inland price of coal has now reached export parity and the demand   
for coal during the six month period remained at the high levels experienced    
during the previous financial year.                                             
The gross margin improved by 0.9% to 9.5% compared to the six month period ended
September 2006 and by 2.7% compared to the financial year ended 31 March 2007.  
This improvement is due to management`s focus on margin retention in an         
extremely high price inflation environment and a turnaround experienced at the  
coal beneficiation plant. Coal washing margins at the Witbank plant improved due
to the improvement in washing yields and the increase in plant availability. The
Board approved a R 1.5m upgrade of the washing plant at the beginning of the    
financial year and this project has now reached it final stages.                
Profits from operating activities increased by 82.3% compared to last year and  
attributable earnings and headline earnings increased by 155.7% and 82.7%       
respectively compared to last year. Finance costs for the six month period is   
74.4% up on last year but the forecast to year end is in line with last year.   
This is due to strong cash flows generated during the past six months. The group
generated R 7.7m cash during this period.                                       
The analysis below, details the contribution of the two main divisions within   
the Group:                                                                      
R`000                                                                           
30 September 2007                                                               
Income Statement       Trading  Washing  Non        Total                       
                                        operating                               
                                                                                
Revenue                179 215  15 304   -          194 519                     
Profit from            10 339   746      -          11 085                      
Operations             6 681    559      201        7 441                       
Headline earnings                                                               

R`000                                                                           
30 September 2007                                                               
Balance Sheet          Trading  Washing   Elimination Total                     
entries                                
                                                                                
                                                                                
Current assets         58 359   10 639    -           68 998                    
Non current assets     19 841   9 470     (14 183)    15 128                    
Goodwill               34 251   -         2 460       36 711                    
Shareholders Funds     54 105   (2 419)   2 460       54 146                    
Non current            333      17 744    (14 183)    3 894                     
liabilities            58 013   4 784     -           62 797                    
Current liabilities                                                             
R`000                                                                           
30 September 2006                                                               
Income Statement       Trading  Washing   Non       Total                       
                                         Operating                              
                                                                                
Revenue                131 904  4 153     -         136 057                     
Profit from            6 935    (856)     -         6 079                       
Operations             5 970    (813)     (1 084)   4 073                       
Headline earnings                                                               
                                                                                
R`000                                                                           
30 September 2006                                                               
Balance Sheet        Trading  Washing   Elimination Total                       
                                       entries                                  

Current assets       41 360   7 160     -           48 520                      
Non current assets   11 390   11 146    (7 820)     14 716                      
Goodwill             30 231   -         2 460       32 691                      
Shareholders Funds   45 182   (1 992)   2 460       45 650                      
Non current          -        14 187    (7 820)     6 367                       
liabilities          37 799   6 111     -           43 910                      
Current liabilities                                                             

                                                                                
                                                                                
Prospects                                                                       
The demand for coal is extremely high and the expansion of the Richards Bay Coal
Terminal will put additional pressure on the inland supply of coal. The inland  
price of coal has reached export parity and will continue to closely track      
dollar prices achieved in London and Rotterdam which have reached record levels.
The group and the coal industry in general are experiencing the most buoyant    
market conditions for many years and this is expected to continue in the short  
to medium term due to worldwide energy demand. The group therefore continues    
with its objective of seeking acquisitions with synergies to existing           
operations.                                                                     
Black Empowerment                                                               
The board is currently considering proposals from various BEE entities who wish 
to take up the shareholding disposed of by Fikza Investment Holdings (Pty) Ltd  
during the period under review.                                                 
Corporate Governance                                                            
The Group subscribes to and is in the process of implementing where applicable, 
the principal recommendations of the King II Code of Corporate Governance.      
Dividends                                                                       
No interim dividend has been declared.                                          
Accounting policies and presentation                                            
The consolidated unaudited interim financial statements have been prepared in   
accordance with International Financial Reporting Standards ("IFRS") and the    
presentation as well as the disclosure requirements of IAS 34 -Interim Financial
Reporting in compliance with the Listing Requirements of the JSE Limited as well
as the South African Companies Act, 1973.                                       
Review opinion                                                                  
The group`s auditors, Middel & Partners have reviewed the financial information 
in terms of Rule 3.18 of the listing requirements of the JSE. Their unqualified 
review opinion is available for inspection at Wescoal`s offices.                
By order of the Board                                                           
25 October 2007                                                                 
A R Boje                      P. Janse van Rensburg                             
Chief Executive Officer            Chief Financial Officer                      
CORPORATE INFORMATION                                                           
Non-Executive          JG Pansegrouw,                                           
directors:                                                                      
                                                                                
Executive directors:   AR Boje                                                  
                      P Janse van Rensburg                                      
Registration number:   2005/006913/06                                           
Registered address:    228 Voortrekker Street                                   
Krugersdorp                                               
                      1740                                                      
Postal address:        PO Box 133                                               
                      Krugersdorp                                               
1740                                                      
Company secretary:     P Janse van Rensburg                                     
Telephone:             011 - 954 2721                                           
Facsimile:             011 - 954 6737                                           
Transfer secretaries:  Computershare Investor Services 2004                     
                      (Pty) Limited                                             
Designated Advisor:    Exchange Sponsors (Pty) Limited                          
Date: 24/10/2007 12:54:01 Supplied by www.sharenet.co.za                     
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