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Wsl - Wescoal Holdings - Audited Results For The Year Ended 31 March 2008

Release Date: 11/06/2008 15:09:52      Code(s): WSL
WSL - Wescoal Holdings - Audited Results For The Year Ended 31 March 2008       
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 40%                                                             
-    Operating profits up 166%                                                  
-    Headline earnings up 209%                                                  
-    Operating cash flow up 380%                                                
-    Net Asset Value up 27%                                                     
CONDENSED AUDITED RESULTS FOR THE YEAR ENDED 31 MARCH 2008                      
The audited results for the year ended 31 March 2008, with comparative          
audited results for the year ended 31 March 2007 are presented.                 
Condensed Consolidated Income Statements                                        
                           Audited             Audited results for              
                           results for the     the year ended                   
                           year ended          31 March 2007                    
31 March            R`000                            
                           2008                                                 
                           R`000                                                
                                                                                
Revenue                     376 088             269 558                         
Gross Profit                34 180              18 146                          
Other operating income      296                 204                             
Operating costs             (16 436)            (11 581)                        
Profit from operations      18 040              6 769                           
Acquisition expenses        (899)               (2 105)                         
written off                                                                     
Profit on sale of fixed     319                 -                               
assets                                                                          
Finance costs               (1 245)             (1 132)                         
Profit before taxation      16 215              3 532                           
Taxation                    (4 385)             (1 089)                         
Profit for the year         11 830              2 443                           
                           11 830              2 443                            
Headline earnings                                                               
reconciliation:                                                                 
Net profit for the year                                                         
Less: Profit on sale of     (290)               -                               
fixed assets                639                 1 494                           
Plus: Acquisition expenses                                                      
written off                                                                     
Headline earnings for the   12 179              3 937                           
year                                                                            
                                                                                
Ordinary shares in issue                                                        
(000`s)                                                                         
-Total at period end        105 931             103 709                         
-Weighted average shares    105 450             103 709                         
in issue                                                                        
-Fully diluted weighted     106 086             104 209                         
average shares in issue                                                         
(Note 1)                                                                        

Earnings per share:                                                             
Attributable earnings per   11.2                2.4                             
ordinary share (cents)                                                          
Headline earnings per       11.5                3.8                             
share (cents)                                                                   
Fully diluted attributable  11.2                2.3                             
earnings per share(cents)                                                       
Fully diluted headline      11.5                3.8                             
earnings per share(cents)                                                       
Note:                                                                           
Fully diluted earnings per share information is reflected showing the           
potential effect of dilution for 2.2 million options held in terms of the       
share incentive trust by the directors and employees to subscribe for new       
shares in Wescoal.                                                              
Condensed Consolidated balance sheets                                           
Audited results      Audited results for the          
                          for the year         year ended                       
                          ended                31 March                         
                          31 March             2007                             
2008                 R`000                            
                          R`000                                                 
ASSETS                                                                          
                                                                                
Non-current assets         78 014               47 705                          
                                                                                
Property, plant and        14 703               13 065                          
equipment                                                                       
Goodwill and license       36 726               32 691                          
fees                                                                            
Investments                24 000               -                               
Deferred taxation          2 585                1 949                           

Current assets             78 246               54 665                          
                                                                                
Total assets               156 260              102 370                         

EQUITY AND LIABILITIES                                                          
                                                                                
Total Shareholders`        58 333               45 103                          
funds                                                                           
                                                                                
Long-term debt             19 833               4 995                           
                                                                                
Current liabilities        78 094               52 272                          
                                                                                
Total equity and           156 260              102 370                         
liabilities                                                                     

Net asset value per        55.32                43.49                           
share (cents)                                                                   
Tangible net asset value   20.49                11.97                           
per share (cents)                                                               
Condensed Consolidated Statement of Changes in Equity                           
                        Share   Share     Distributable  Total                  
                        Capital Premium   Reserve        R`000                  
R`000   R`000     R`000                                 
Balance at 1             104     37 959    7 040          45 103                
April 2007                                                                      
Share issued             2       1 398     -              1 400                 
Listing expenses         -       -         -              -                     
Earnings attributable    -       -         11 830         11 830                
to shareholders                                                                 
Balance as at 31 March   106     39 357    18 870         58 333                
2008                                                                            
Condensed Consolidated Cash Flow Statements                                     
                                     Audited       Audited                      
                                     results       results for                  
for the year  the year                     
                                     ended         ended                        
                                     31 March      31 March                     
                                     2008          2007                         
R`000         R`000                        
Net cash from operating               12 708        2 647                       
activities                                                                      
Investing activities                  (32 415)      (5 239)                     
Financing activities                  19 712        846                         
Net increase/(decrease)               5             (1 746)                     
in cash and cash                                                                
equivalents                                                                     
Cash and cash                         1 216         2 962                       
equivalents at                                                                  
beginning of year                                                               
Cash and cash                         1 221         1 216                       
equivalents at end of                                                           
year                                                                            
Commentary                                                                      
Operations and market review                                                    
Overall the group posted excellent results for the financial year ended 31      
March 2008, proving that strategies implemented have continued to pay           
dividends throughout the year under review.                                     
Trading continues to post improved performances with revenues, margins and      
profit from operations showing substantial increases. The washing operation     
has now reached a point of sustained profitability contributing to headline     
earnings.                                                                       
The group`s revenue for the financial year was 40% up on the previous year      
and although coal prices were at export parity earlier during the year,         
this is no longer the case. Further substantial price increases have been       
implemented subsequent to the reporting period.                                 
The gross margin improved by 2.4 percentage points to 9.1% compared to the      
previous financial year fuelled by management`s focus on margin retention       
and the sustained profitability at the coal beneficiation plant. The            
upgrade of the plant, secure supply of run of mine and improved yields          
contributed to this improvement and should continue to do so.                   
Operating costs increased by 41.9% and includes an increase in the              
provision for doubtful debts of R 2.4 million. The group`s history on bad       
debts remains extremely healthy but management felt it prudent to increase      
the provision in view of the large increases experienced in the price of        
coal. Excluding this bad debt provision, operating costs increased by only      
21.2%.                                                                          
Profits from operating activities increased by 166.5% compared to last year     
and attributable earnings and headline earnings increased by 384.2% and         
209.3% respectively compared to last year.                                      
Despite the increase in operating levels, finance costs increased by only       
10%. The containment of finance costs is due to management focus on asset       
management and strict control over credit control policies.                     
The group generated operating cash of R 12.7 million which is an                
improvement of 380.1% on last year. Cash flow from investing activities         
includes a prepayment of R 24 million which was made on the last day of the     
financial year as payment for the Express Coal acquisition. The remainder       
of the cash flow spend on investing activities was made on property, plant,     
equipment and intellectual property of which the benefits will only be          
enjoyed in the future. This does however reflect management`s commitment to     
sustainable growth.                                                             
These results do not yet reflect the positive impact the following              
developments will have on results as they occurred subsequent to the            
reporting period:                                                               
-    A 78% increase in the price of coal with a forecast total increase of      
121% by 1 October 2008;                                                         
-    The incorporation of the Express Coal acquisition effective 1 April        
2008; and                                                                       
-    Wescoal Mineral Recovery (Pty) Limited sold out order book of 2 000        
tons per month for its briquetted product.                                      
Resource Statement.                                                             
Wescoal`s resource statement including the proposed acquisitions as             
detailed in the prospects section below:                                        
-    Portion 16 of the farm Vlakvarkfontein 213 IR - an indicated resource      
of 1,8 million tons and an inferred resource of 238,000 tons of Eskom grade     
coal.                                                                           
-    Portion 12 of the farm Vlakvarkfontein 213 IR - an inferred resource       
of 1,9 million tons of high grade thermal coal.                                 
-    Portion 10 of the farm Bankfontein 216 IR - an inferred resource of        
5,1 million tons of high grade thermal coal.                                    
-    Portions 8,9 & 10 of the farm Mooiplaats 165 IS - sufficient               
information available to indicate the presence of coal but insufficient for     
any additional comment.                                                         
-    Portions 1,3,4,6,14,23,30-36,38,40 and 62 of the farm Elandspruit 291      
JS district of Middleburg - a prospecting area of 2 946 hectares with an        
inferred resource of 5,1 million tons of high grade thermal coal.               
-    Portions 4,5,22,23,28,42,48,60 and 69-74 of the farm Keerom 374 JS         
district of Middleburg - a prospecting area of 6 828 hectares with              
sufficient information available to indicate the presence of coal but           
insufficient for any additional comment.                                        
-    The farm Verblyden 387 IS, excluding portions 18 and 35, district of       
Standerton - a prospecting area of 2 266 hectares with an inferred resource     
of 37 million tons of Eskom and thermal coal.                                   
-    The farm Silverbank 611 IR, excluding portions 1,10,12 and 14 district     
of Standerton - a prospecting area of 3 925 hectares with an inferred           
resource of 24,5 million tons of Eskom and thermal coal.                        
Segment Analysis                                                                
The analysis below, details the contribution of the two main divisions          
within the group:                                                               
R`000                                                                           
31 March 2008                                                                   
Income Statement       Trading  Washing  Non        Total                       
                                        operating                               
                                                                                
Revenue                343 047  33 041   -          376 088                     
Profit from            16 301   1 739    -          18 040                      
Operations             11 252   1 276    (349)      12 179                      
Headline earnings                                                               
                                                                                
R`000                                                                           
31 March 2008                                                                   
Balance Sheet          Trading     Washing   Elimination Total                  
                                            entries                             

                                                                                
Current assets         62 864      15 382    -           78 246                 
Non-current assets     47 194      9 576     (15 482)    41 288                 
Goodwill and license   34 266      -         2 460       36 726                 
fees                   57 696      (1 823)   2 460       58 333                 
Shareholders Funds     17 013      18 302    (15 482)    19 833                 
Non-current            69 615      8 479     -           78 094                 
liabilities                                                                     
Current liabilities                                                             
R`000                                                                           
31 March 2007                                                                   
Income Statement       Trading  Washing   Non       Total                       
                                         Operating                              
                                                                                
Revenue                259 275  10 283    -         269 558                     
Profit from            8 866    (2 097)   -         6 769                       
Operations             7 440    (2 009)   (1 494)   3 937                       
Headline earnings                                                               
                                                                                
R`000                                                                           
31 March 2007                                                                   
Balance Sheet        Trading  Washing   Elimination Total                       
                                       entries                                  

Current assets       45 106   9 559     -           54 665                      
Non-current assets   16 043   9 996     (11 025)    15 014                      
Goodwill             30 231   -         2 460       32 691                      
Shareholders Funds   44 963   (2 320)   2 460       45 103                      
Non current          -        16 020    (11 025)    4 995                       
liabilities          46 417   5 855     -           52 272                      
Current liabilities                                                             

                                                                                
                                                                                
Prospects                                                                       
The demand for coal remains at high levels and with producers finding it        
difficult to fulfill Richards Bay Coal Terminal allocations, the pressure       
on local supply and pricing will remain for some time to come. Prices will      
continue to track RBCT API#4 which continues to break record levels. Severe     
price increases have already been experienced subsequent to the reporting       
period as a result of this.                                                     
Planning is under way to build a new production facility for Wescoal            
Mineral Recovery to increase production of briquettes from 2,000 to 20,000      
tons per month. With the high pricing levels for coal, some industries are      
turning to the more cost effective briquetted product.                          
Prospecting is ongoing in some of the exploration areas but the work rate       
will, in conjunction with drilling contractors, be accelerated to complete      
the process within 2 years. In addition, the group will continue to seek        
additional resources.                                                           
The following developments which took place during the financial year are       
expected to lead to substantial growth and an increased asset base for the      
future:                                                                         
The acquisition of Express Coal during November 2007 that became                
unconditional and effective 1 April 2008;                                       
The proposed acquisition of coal prospecting rights from Vuselela Mining        
(Pty) Limited and Razorbill Properties (Pty) Limited as announced on SENS       
on 10 April 2008 with an estimated 9 million tons of coal detailed in the       
resource statement above; and                                                   
The proposed acquisition of coal prospecting rights in conjunction with         
Proudafrique Trading 147 (Pty) Limited as announced on SENS on 2 June 2008      
with an estimated 66, 5 million tons of coal detailed in the resource           
statement above.                                                                
Overall the group can look forward to further improved results fuelled by       
the continuing high demand for coal and the escalating price structures.        
Black Economic Empowerment.                                                     
Waterberg Portion Property Investments (Pty) Limited, headed by Mr.             
Robinson Ramaite acquired 31.4% of Wescoal Holdings Limited during November     
2007 and the board was pleased to welcome Robinson and Mpume Sikhosana to       
the group                                                                       
Their contribution has been immediate and substantial with specific             
emphasis on coal reserves, a different approach to the industry and an          
involvement in all aspects of the business.                                     
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 dividend has been declared.                                                  
Accounting policies and presentation                                            
The annual financial statements for the year ended 31 March 2008 are            
prepared in accordance with International Financial Reporting Standards,        
and in a manner required by the Companies Act, and incorporates responsible     
disclosure in line with the accounting philosophy of the group. The             
financial statements are based on appropriate accounting policies               
consistently applied and supported by responsible and prudent judgments and     
estimates.                                                                      
Review opinion                                                                  
The group`s auditors, Middel & Partners have audited the financial              
information in terms of Rule 3.18 of the listing requirements of the JSE.       
Their unqualified audit opinion is available for inspection at Wescoal`s        
offices.                                                                        
By order of the Board                                                           
11 June 2008                                                                    
M.R. Ramaite                       A.R. Boje                                    
Chairman                           Chief Executive Officer                      
CORPORATE INFORMATION                                                           
Non-Executive directors:  MR Ramaite                                            
                         JG Pansegrouw                                          
                         MJ Sikhosana                                           

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 (Pty)                 
                         Limited                                                
Designated adviser:       Exchange Sponsors (Pty) Limited                       
Date: 11/06/2008 15:09:52 Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department                             .                  
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employees and agents accept no liability for (or in respect of) any direct,     
indirect, incidental or consequential loss or damage of any kind or nature,     
howsoever arising, from the use of SENS or the use of, or reliance on,          
information disseminated through SENS.                                          



                                        
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