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Wsl - Wescoal - Condensed Audited Results For The Year Ended 31 March 2009

Release Date: 30/06/2009 12:31:02      Code(s): WSL
WSL - Wescoal - Condensed Audited Results For The Year Ended 31 March 2009      
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 51.7%                                                                
Operating profits up 40.1%                                                      
Headline earnings up 47.1%                                                      
Operating cash flow up 273.0%                                                   
Net Asset Value up 164.7%                                                       
CONDENSED AUDITED RESULTS FOR THE YEAR ENDED 31 MARCH 2009                      
The audited results for the year ended 31 March 2009, with comparative audited  
results for the year ended 31 March 2008 are presented.                         
Condensed Consolidated Income Statements                                        
                           Audited         Audited results for                  
                            results for    the year ended                       
                           the year ended   31 March 2008                       
31 March       R`000                                
                            2009                                                
                           R`000                                                
                                                                                
Revenue                     570 561         376 088                             
Gross Profit                56 352          34 180                              
Other operating income      1 621           296                                 
Operating costs             (32 696)        (16 436)                            
Profit from operations      25 277          18 040                              
Acquisition expenses        ( 557)          (899)                               
written off                                                                     
Profit on sale of fixed     -               319                                 
assets                                                                          
Investment revenue          3 367           436                                 
Finance costs               (2 080)         (1 681)                             
Profit before taxation      26 007          16 215                              
Taxation                         (8 086)    (4 385)                             
Profit for the year         17 921          11 830                              
                                                                                
Attributable to:                                                                

Equity holders of the       18 491          11 830                              
group                                                                           
Minority interest           (570)           -                                   
17 921          11 830                               
                                                                                
                           17 921          11 830                               
Headline earnings                                                               
reconciliation:                                                                 
Net profit for the year                                                         
Less: Profit on sale of     -               ( 290)                              
fixed assets                -               639                                 
Plus: Acquisition expenses                                                      
written off                                                                     
Headline earnings for the   17 921          12 179                              
year                                                                            

Ordinary shares in issue                                                        
(000`s)                                                                         
-Total at period end        137 323         105 931                             
-Weighted average shares                    105 450                             
in issue                    129 950                                             
-Fully diluted weighted     132 139         106 086                             
average shares in issue                                                         
(Note 1)                                                                        
                                                                                
Earnings per share:                                                             
Attributable earnings per   14.2            11.2                                
ordinary share (cents)                                                          
Headline earnings per       14.2            11.5                                
share (cents)                                                                   
Fully diluted attributable  14.0            11.2                                
earnings per share(cents)                                                       
Fully diluted headline      14.3            11.5                                
earnings per share(cents)                                                       
Note:                                                                           
1.   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                2008                                 
                    2009                   R`000                                
                   R`000                                                        
ASSETS                                                                          

Non-current assets  98 776                  78 014                              
                                                                                
Property, plant     26 686                  14 703                              
and equipment                                                                   
Investment          709                     -                                   
Property                                                                        
Intangible Assets   12 695                  3 115                               
Goodwill            55 432                  33 610                              
Pre-payment         -                       24 000                              
Deferred taxation   3 254                   2 586                               
                                                                                
Current assets      151 454                 78 246                              
                                                                                
Total assets        250 230                 156 260                             
                                                                                
EQUITY AND                                                                      
LIABILITIES                                                                     
                                                                                
Total               154 421                 58 333                              
Shareholders`                                                                   
funds                                                                           
                                                                                
Long-term debt      4 072                   20 044                              

Current             91 737                  77 883                              
liabilities                                                                     
                                                                                
Total equity and    250 230                 156 260                             
liabilities                                                                     
                                                                                
Net asset value     112.45                  55.07                               
per share (cents)                                                               
Tangible net asset  62.84                   20.40                               
value per share                                                                 
(cents)                                                                         
Condensed Consolidated Statement of Changes in Equity                           
             Attributable to equity holders of                                  
             the company                                                        
             Share    Share   Retained  Share      Total   Minority    Total    
Capital  Premium Earnings  options    R`000   Interests   Equity   
             R`000    R`000   R`000     reserves                                
                                        R`000                                   
Balance at 1  106      39 357  18 870               58 333                      
April 2008                                                  -           58 333  
Share issued  40       85 810  -                    85 850  -           85 850  
Listing       -        (1 463) -                    (1 463)                     
expenses                                                    -           (1 463) 
Treasury      (8)      (6 405) -                    (6 413)                     
shares held                                                                     
by                                                          -           (6 413) 
subsidiary                                                                      
Share based                                         193                         
payment                                  193                -           193     
Earnings      -        -       18 491               18 491                      
attributable                                                                    
to                                                          (570)       17 921  
shareholders                                                                    
Balance as    138      117 299 36 761               154 991                     
at 31 March                              193                (570)       154 421 
2009                                                                            
Condensed Consolidated Cash Flow Statements                                     
                                     Audited       Audited                      
                                     results       results for                  
for the year  the year                     
                                     ended         ended                        
                                     31 March       31 March                    
                                     2009          2008                         
R`000         R`000                        
Net cash from operating               28 754        7 709                       
activities                                                                      
Investing activities                  (26 678)      (32 416)                    
Financing activities                  53 340        24 712                      
Net increase in cash                   55 416       5                           
and cash equivalents                                                            
Cash and cash                         1 221         1 216                       
equivalents at                                                                  
beginning of year                                                               
Cash and cash                         56 637        1 221                       
equivalents at end of                                                           
year                                                                            
Commentary                                                                      
Operations, market and financial review                                         
Although the overall results for the year under review were good, trading       
conditions during the second half proved to be far tougher than initially       
expected. The scale of the economic decline since October 2008 proved to be more
severe than anyone had anticipated or predicted.                                
The coal industry in general was affected by a rapid decline in the API#4 export
price of coal from $US 131.50 in September 2008 to $US 58.65 at the end of March
2009, a reduction of 55%. The knock on effect was a reduction of inland pricing 
of 20% and increased competition for volumes as the local pricing structures are
now more lucrative than export revenues.                                        
The group more specifically experienced a reduced demand from the manufacturing 
sector that experienced an annualised decrease of 20% in production activity.   
Pricing structures and margins had to be adapted to the circumstances and more  
focus placed on cost reductions and volume retention.                           
Despite these circumstances, the group has posted net profit increases of 21,1% 
for the second half and 51,5% for the full year under review. The trading       
division continues to perform well but the reduced input costs at the production
facility were eroded by the severe reduction in pricing structures. In addition,
a deferred tax adjustment relating to the previous year of R 896K contributed to
the minor loss at the washing plant.                                            
Capital expenditure on the upgrading of the briquetting plant was slowed until  
the brick making industry shows a revival. The current plant is producing at    
full capacity and will contribute to the group`s earnings going forward         
Profit from operations increased by 40.1% to R 25.3m and the increase can be    
attributed to the increase in selling prices as well as an increase in margins. 
Gross margins improved to 9.9% from 9.1% achieved in the previous year.         
Profit attributable to equity holders of the group improved by 56.3% to R 18.5m.
This is despite a 98.9% increase in operating costs. The increase in operating  
costs is due to the following:                                                  
New coal depots acquired      -    R 8.8m 53.7%)                                
Increase in headcount         -    R 2.1m (12.8%)                               
Inflation and other factors   -    R 5.4m (32.4%)                               
Net cash from operating activities improved by 273% to R 28.8m. The group ended 
the year with R 56.6m cash and cash equivalents even after R 26.7m was spend on 
investing activities. The following investments are included in investing       
activities:                                                                     
Properties acquired           -    R  5.1m                                      
Plant and equipment acquired  -    R 14.2m                                      
Mineral rights acquired       -    R  9.6m                                      
All of these investments will enhance earnings in future.                       
Segment Analysis                                                                
The analysis below, details the contribution of the two main divisions within   
the group:                                                                      
R`000                                                                           
31 March 2009                                                                   
Income Statement       Trading  Washing  Non        Total                       
operating                               
                                                                                
Revenue                519 074  51 487   -          570 561                     
Profit from            24 882   395      -          25 277                      
Operations             18 925   (1 004)  -          17 921                      
Headline earnings                                                               
                                                                                
                                                                                
R`000                                                                           
31 March 2009                                                                   
Balance Sheet          Trading  Washing   Elimination Total                     
                                         entries                                

                                                                                
Current assets         126 622  24 832    -           151 454                   
Non-current assets     37 586   11 366    (18 303)    30 649                    
Goodwill and           65 667   -         2 460       68 127                    
intangible assets      154 978  (3 017)   2 460       154 421                   
Shareholders Funds     962      21 413    (18 303)    4 072                     
Non-current            73 935   17 802    -           91 737                    
liabilities                                                                     
Current liabilities                                                             
                                                                                
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         34 266   -         2 460       36 726                      
intangible assets    57 696   (1 823)   2 460       58 333                      
Shareholders Funds   17 224   18 302    (15 482)    20 044                      
Non current          69 404   8 479     -           77 883                      
liabilities                                                                     
Current liabilities                                                             
Prospects                                                                       
Export prices of coal appear to have stabilised that will in turn stabilise     
inland pricing however, we believe there could be further reductions in the     
short term to bring it in line with API#4. Manufacturing activity continues to  
be depressed and we will therefore still experience reduced demand for the      
balance of 2009 and possibly the first half of 2010.                            
The decision taken in November 2008 to focus capital expenditure on short term  
revenue generating projects has paid dividends in the recently announced        
acquisition of Khanyisa Mine in Mpumalanga. This is the first time the group    
will have a low cost producer of raw coal bringing a new dimension to the group 
and resulting in many additional opportunities for Wescoal. The rationale and   
terms of the transaction were announced on SENS on 24 June 2009 however to      
emphasise, the acquisition will undoubtedly reduce current input costs          
substantially and thereby enhance earnings.                                     
In addition, the group continues to seek and review any additional opportunities
and in the current economic climate, we are confident that positive results will
be achieved.                                                                    
Black Economic Empowerment.                                                     
Wescoal`s black shareholding currently stands at 28.1%. Wescoal remains strongly
committed to BEE and is constantly striving to increase black ownership of the  
group.                                                                          
45% of Wescoal`s workforce is black and two non-executive directors on the      
company`s board are black.                                                      
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. The  
Board is in the process of appointing two independent directors and an          
announcement in this regard will be made in the near future.                    
Dividends                                                                       
No dividend has been declared. The Board reviews the dividend policy on an      
ongoing basis and use new projects, possible acquisitions and the group`s       
financial position as indicators in this decision taking process.               
Basis of preparation                                                            
The annual financial statements for the year ended 31 March 2009 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.                                
Audit 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                                                           
30 June 2009                                                                    
M.R. Ramaite                       A.R. Boje                                    
Chairman                           Chief Executive Officer                      
CORPORATE INFORMATION                                                           
Non-Executive          MR Ramaite                                               
directors:             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 (2008) (Pty) Limited                   
Date: 30/06/2009 12:31:01 Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department                             .                  
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howsoever arising, from the use of SENS or the use of, or reliance on,          
information disseminated through SENS.                                          



                                        
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