To view the PDF file, sign up for a MySharenet subscription.

WSL - Wescoal Holdings Limited - Condensed consolidated audited results for the

Release Date: 29/06/2011 13:27
Code(s): WSL
Wrap Text

WSL - Wescoal Holdings Limited - Condensed consolidated audited results for the year ended 31 March 2011 Wescoal Holdings Limited (Incorporated in the Republic of South Africa) (Registration number 2005/006913/06) (JSE code: WSL ISIN: ZAE000069639) ("Wescoal" or "the group") CONDENSED CONSOLIDATED AUDITED RESULTS FOR THE YEAR ENDED 31 MARCH 2011 The audited results for the year ended 31 March 2011, with comparative audited results for the year ended 31 March 2010 are presented. Condensed consolidated statement of comprehensive income Audited Audited
results for the results for year ended the year 31 March ended 2011 31 March
R`000 2010 R`000 CONTINUING OPERATIONS Revenue 557 614 353 900 Gross profit 25 731 58 511 Other operating income 644 332 Operating costs (35 232) (29 205) (Loss)/Profit from operations (8 857) 29 638 Depreciation (3 438) (1 946) Amortisation (9 744) (2 323) (Loss)/Earnings before interest, tax (22 039) 25 370 and other costs Profit on sale of assets 90 2 917 Impairment of assets (4 776) - Investment revenue 175 1 456 Finance costs (2 655) (795) (Loss)/Profit before taxation (29 205) 28 948 Taxation 12 158 (2 936) (Loss)/Profit for the year from (17 047) 26 012 continuing operations DISCONTINUED OPERATIONS (26 714) (20 304) Loss after tax from discontinued operations (Loss)/Profit for the year from all (43 761) 5 708 operations Attributable to: Owners of the parent (43 617) 6 672 Non-controlling interest (144) (964) (43 761) 5 708
(43 761) 5 708 Headline earnings reconciliation: (Loss)/Profit for the year for all operations Less: Profit on sale of assets (501) (2 566) Plus: Impairment of assets 4 776 2 140 Plus: Minority interest 144 964 Headline (loss)/profit for the year (39 342) 6 246 Continued operations - (Loss)/Profit (12 218) 24 792 Discontinued operations - (Loss) (27 124) (18 546) Ordinary shares in issue (000`s) -Total at period end 157 931 145 931 -Weighted average ordinary shares in 150 271 145 931 issue -Fully diluted weighted average 151 931 146 314 ordinary shares in issue (Note 1)
Basic earnings per ordinary share (cents): (Loss)/Profit from continuing (11.2) 18.5 operations Loss from discontinued operations (17.8) (13.9) (Loss)/Profit attributable to (29.0) 4.6 ordinary owners Fully diluted earnings per ordinary share (cents): (Loss)/Profit from continuing (11.1) 18.5 operations Loss from discontinued operations (17.6) (13.9) (Loss)/Profit attributable to (28.7) 4.6 ordinary owners Headline earnings per ordinary share (cents): (Loss)/Profit from continuing (8.1) 17.0 operations Loss from discontinued operations (18.1) (12.7) (Loss)/Profit attributable to (26.2) 4.3 ordinary owners Fully diluted headline earnings per ordinary share (cents): (Loss)/Profit from continuing (8.0) 16.9 operations Loss from discontinued operations (17.9) (12.6) (Loss)/Profit attributable to (25.9) 4.3 ordinary owners Note: 1 Fully diluted earnings per share information is reflected showing the potential effect of dilution for 8.87 million options held in terms of the share incentive trust by the directors and employees to subscribe for new shares in Wescoal. Condensed consolidated statement of financial position Audited results Audited for the year results for ended the year
31 March ended 2011 31 March R`000 2010 R`000
ASSETS Non-current assets 144 919 128 670
Property, plant and equipment 62 140 49 557 Investment property 709 709 Intangible assets 16 871 19 743 Goodwill 49 737 54 513 Deferred taxation 15 462 4 148 Current assets 121 602 116 454
Inventories and work in progress 13 032 37 449 Trade and other receivables 77 230 67 624 Cash and cash equivalents 31 340 11 381
Non-current assets held for sale 2 079 3 058 TOTAL ASSETS 268 600 248 182
EQUITY AND LIABILITIES Total equity 136 632 166 654
Equity attributable to owners of the 136 809 168 188 parent Non-controlling interest (177) (1 534)
Non-current liabilities 22 700 10 148 Instalment sale agreements 19 233 8 106 Rehabilitation provision 3 368 716 Deferred tax 99 1 326 Current liabilities 109 268 71 380
Trade and other payables 96 737 66 869 Current portion of interest bearing 12 531 4 511 debt
TOTAL EQUITY AND LIABILITIES 286 600 248 182 Net asset value per share (cents) 86.51 114.20 Tangible net asset value per share 44.34 63.32 (cents) Condensed consolidated statement of changes in equity Attributable to owners of the parent
Share Share Retain Change Share Total Non- Total Capital Premium ed in optio R`000 Control Equity R`000 R`000 Earnin Owners ns ling gs hip reser Interes
R`000 ves ts R`000 Balance at 1 146 123 704 44 033 168 April 2010 - 305 188 (1 534) 166 654 Shares 21 21 921 - - - 21 - 21 942 issued 942 Treasury (9) (8 373) - - - (8 - (8 382) shares 382) Capital - (318) - - - (318) - (318) raising costs Share based - - - 498 payment - 498 - 498 reserve Change in - - - (1 - (1 1 501 - ownership 501) 501) Total - - (43 comprehensiv 618) (43 e income for - 618) (144) (43 the year 762) Balance as 158 136 934 415 136 at 31 March (1 803 809 (177) 136 632 2011 501) Condensed Consolidated Cash Flow Statements Audited results Audited for the year results for ended the year ended 31 March 2011 31 March 2010
R`000 R`000 Net cash from operating (30 493) 22 641 activities before changes in working capital Change in working 42 600 (33 152) capital Net cash from operating 12 107 (10 511) activities after changes in working capital Investing activities (24 857) (41 007) Financing activities 32 709 6 262 Net increase in cash 19 959 (45 256) and cash equivalents Cash and cash 11 381 56 637 equivalents at beginning of year Cash and cash 31 340 11 381 equivalents at end of year Commentary Operations, market and financial impacts The poor results are predominantly due to issues that arose in the quarter ended 31 March 2011 resulting in a board decision to account for them in the following manner: * The write off of all mining costs totaling R29,3 million incurred at the Sutha Civils (Pty) Limited. ("Sutha") operation at Khanyisa Colliery; * Accelerated write off of R7,5 million of mine establishment costs and mining in progress; and * Impairment of goodwill of R4,8 million in Chandler Coal (Pty) Limited ("Chandler Coal"). In addition to these write offs, the reduced production and increased costs relating to flooding accelerated losses especially at the Blesboklaagte washing plant that incurred an operating loss of R22, 6 million. To date, no action has been launched by Sutha to substantiate and demand the money, which they very publicly claimed was due to them. Wescoal did however approach the court in March 2011 to interdict Sutha from continuing to make unsubstantiated and derogatory statements to the media. An interim order was granted and should be made final during July 2011. Whilst legal opinion suggests any potential claim has a limited chance of success, provisions have been made for this eventuality. Mining Division The mining division achieved a revenue of R242,8 million on the back of a mined tonnage of 967,000 and supply to Eskom of 885,000 tons of coal. Profits were severely affected by the write offs resulting in an operating loss of R10,7 million and a headline loss of R36.1 million for the division. Meaningful comparisons are not possible as the prior year consisted of only two operating months at the major contributor to the division, Khanyisa Colliery. Khanyisa Colliery regained full production during April 2011 and the Blesboklaagte washing operation was closed on 31 March 2011 with the division`s focus now to maximize product supply to Eskom and Municipal power generators. Mining methods have been changed to prevent a reoccurrence of the problems caused by excessive rainfall during the quarter ended 31 March 2011 and management is confident of achieving stated targets of 1, 4 million tons total tonnage supplied for the 2011/2012 financial year. Trading Division A positive result was generated from the division with both volumes and revenue up 15% on the last financial year and the division positively contributing at operating profit level, however the impairment of goodwill in Chandler Coal relating to the Express Coal investment, affected headline earnings. Subsequent to the reporting period, producers implemented further price increases and the API#4 export price remains in excess of US$110 per ton. Product shortages are forecast as some producers are once again focusing on the export market and others have dwindling reserves in both quality and quantity. Increased demand from the manufacturing sector is still being experienced indicating further improvements in volumes going forward. Management is however increasing focused on margin improvement and cost reductions. Financial review The following operations are reported on as discontinued operations in the consolidated statement of comprehensive income: - Wescoal Mineral Recoveries` briquetting plant; and - Wescoal Mining`s (Blesboklaagte) beneficiation plant. These two operations contributed R26.7 million to the attributable loss of R43.8 million of the group for the year under review. The briquetting plant was sold during the year and the sale of the Blesboklaagte plant is currently being finalized. The loss for the year from continuing operations of R17 million includes an impairment of R4.8m of goodwill in the trading division. Management felt it prudent to provide for this impairment due to reduced margins being achieved. Overall the group achieved a revenue increase of R204 million (58%) due mainly to the incorporation of the Khanyisa operation for the full period under review. For the first time, since the decrease in coal prices started in the 2008/2009 financial year, the group experienced price increases in the latter part of the year under review. This will have a positive effect on revenue from the trading division in the new financial year. Gross profit decreased by R32.8m due to reduced trading margins, the write off of mining costs incurred by the Sutha operation, reduced production and increased costs due to flooding. Overheads increased by R6 million (21%) due to the establishment of a regional office for the mining division, acquisition costs incurred and normal inflationary pressure. Net finance costs increased by R3.1 million due the demand from the mining division for additional materials handling equipment. Management identified material cost savings in this area and decided to purchase new equipment rather than to continue sub-contacting resulting in the debt from financing of the new equipment increasing by R19 million Segment analysis The analysis below, details the contribution of the two main divisions within the group: Income statement Trading Mining Total Revenue from continued operations 314 745 242 869 557 614 Loss from continued operations 1 849 (10 706) (8 857)
Income statement Trading Mining Total 272 532 81 368 353 900 Revenue from continued operations 8 901 20 737 29 638 Profit from continued operations Prospects Whilst the write offs and other actions mentioned in the review above were severe, the losses at Blesboklaagte will not reoccur and the potential profit from the sale of the plant should be realized in the new financial year. In addition the group balance sheet has been cleared of potential pitfalls that could affect earnings going forward. The termination of the Elandspruit 291JS transaction was disappointing but nevertheless necessary. Following an intensive due diligence, it was decided that sufficient value was not present for the transaction to proceed and the associated risks were not warranted. The group continues to seek opportunities to obtain coal resources and is currently evaluating some options on this front. An application for a mining right on the Vlakvarkfontein 213 IR reserve near Khanyisa has been submitted and, on granting, will extend the life of Khanyisa by 12 months or more. The board is positive that the measures taken and the renewed focus by both the trading and mining divisions will return the group to the expected profitability. Black Economic Empowerment. Wescoal`s black shareholding currently stands at 34%. Wescoal remains strongly committed to BEE and is constantly striving to increase black ownership of the group. 75% 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 III Code of Corporate Governance. 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 2011 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 29 June 2011 M.R. Ramaite A.R. Boje Chairman Chief Executive Officer CORPORATE INFORMATION Non-Executive directors: MR Ramaite JG Pansegrouw
WN Khumalo DMT van Gaalen 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: CIS Company Secretaries (Pty) Ltd Telephone: 011 - 954 2721 Facsimile: 011 - 954 6737 Transfer secretaries: Computershare Investor Services (Pty) Limited
Sponsor: Exchange Sponsors (2008) (Pty) Limited Date: 29/06/2011 13:27:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, 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.

Share This Story