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Statement of Results
WINHOLD LIMITED
(Registration number 1945/019679/06)
Incorporated in the Republic of South Africa
Share code: WNH ISIN: ZAE000033916
STATEMENT OF RESULTS
Preliminary Audited (and related comparative) Consolidated Results for the
year ended 30 September 2013
Condensed Statement of Comprehensive
Income
Year ended Year ended
30 Sept 2013 30 Sept 2012
R 000’s R 000’s
Continuing operations
External revenue 988 350 916 899
Operating profit 17 471 23 474
Investment income 10 598 13 315
Profit on sale of Land & Buildings 4 023 279
Impairments (4 500)
Net finance costs (15 982) (19 988)
Profit before taxation 16 110 12 580
Taxation (1 415) (560)
Share of associates PAT 581 804
Profit for the period (continuing operations) 15 276 12 824
Loss from discontinued operations (3 628) (24 045)
Profit/(Loss)for the year 11 648 (11 221)
Other comprehensive income
- Actuarial profit /(loss) defined benefit
1 682 (623)
pension fund
Total comprehensive income/(loss) for the year 13 330 (11 844)
*Attributable to non controlling interests 2 312 8 842
Attributable to equity holders of the parent 15 642 (3 002)
- Continuing operations 18 204 14 139
- Discontinued operations (2 562) (17 141)
Earnings and diluted earnings per share(Cents) 11.1 (1.9)
- Continuing operations 13.1 11.8
- Discontinued operations (2.0) (13.7)
Headline and diluted headline earnings / share 8.6 1.4
- Continuing operations 10.6 15.1
- Discontinued operations (2.0) (13.7)
Weighted average ordinary shares
Adjusted for treasury stock (000’s) 125 506 125 506
Total ordinary shares issued (000’s) 126 215 126 215
Total depreciation and amortisation 14 146 14 099
EBITDA (continuing operations) 31 617 37 573
Reconciliation of headline earnings
- Comprehensive income for the period 15 642 (3 002)
- Reverse other comprehensive (loss)/income (1 682) 623
Year ended Year ended
30 Sept 2013 30 Sept 2012
R 000’s R 000’s
- Impairments - 4 500
- Profit on disposal of fixed assets (4 018) (375)
- Taxation effects of the above 774 44
Total headline earnings 10 716 1 790
- Continuing Operations 3 278 18 930
- Discontinued Operations (2 562) (17 141)
Year ended Year ended
30 Sept 2013 30 Sept 2012
R 000’s R 000’s
Condensed Statement of Financial
Position
ASSETS
Fixed assets 127 094 149 178
Investments and loans 86 293 121 926
Goodwill 19 541 19 541
Deferred Taxation 16 192 10 698
Current assets 319 101 352 886
- Inventory 145 431 121 568
- Receivables 166 435 163 212
- Bank and cash 6 196 12 944
- Assets of disposal group 1 039 55 162
TOTAL ASSETS 568 221 654 229
EQUITY AND LIABILITIES
Ordinary share capital and
122 793 122 793
premium
Retained earnings and Reserves 132 947 118 671
Equity attributable to owners of
255 740 241 464
the parent
Non controlling interests 6 835 9 530
Total Equity 262 575 250 994
Non current liabilities
- Interest bearing 100 518 139 736
- Interest free 2 995 23 067
- Deferred taxation 4 436 4 593
Current liabilities 197 697 235 839
Interest-bearing
- Bank overdraft 578 50 655
- Short-term borrowings 45 994 33 776
Liabilities of disposal group - 13 045
Interest free 151 125 138 363
- Payables and provisions
TOTAL LIABILITIES & EQUITY 568 221 654 229
Supporting information
Year ended Year ended
30 Sept 2013 30 Sept 2012
R 000’s R 000’s
- Capital commitments at period end 6 095 795
- Capital expenditure during the period 6 629 10 235
- Total interest-bearing borrowings 147 090 224 167
- Total interest-earning deposits 6 196 12 944
- Net asset value per share (cents) 203.77 192.39
- Total intangible assets 19 541 19 541
- Tangible net asset value per share (cents) 188.20 176.82
- Return on equity (%) 4.2 0.7
- Return on assets (%) 2.0 (1.7)
Condensed Statement of Changes in Equity
Equity attributable to holders of the parent
- Opening balance 241 464 253 550
- Total comprehensive income for the year 15 642 (3 002)
- Dividends paid - (9 084)
Change in minority holdings (1 366) -
Balance at the end of year 255 740 241 464
Condensed Statement of Cash Flow
Year ended Year ended
30 Sept 2013 30 Sept 2012
R 000’s R 000’s
Cash flow from operating activities (14 053) 398
Profit before interest, tax and non-cash items 29 373 19 115
Changes in working capital (23 849) 13 820
Net finance costs (15 972) (21 679)
Dividends from associates 393 639
Taxation paid (3 616) (2 412)
Dividends paid (382 (9 085)
Cash flow from investing activities 84 382 8 572
Investment in fixed assets 11 961 (6 795)
Realisation of assets held for sale 41 078 -
Proceeds from loans receivable 31 343 15 367
Cash flow from financing activities (27 000) (17 798)
Interest-bearing borrowings repaid (40 000) (32 918)
Interest-bearing loans raised 13 000 12 983
Interest free borrowings raised - 2 137
Net decrease in cash 43 329 (8 828)
Condensed Statement of Segment Results to 30 September
Flexible Consumer Flexible Building
2013 2012 2013 2012
R 000’s R 000’s R 000’s R 000’s
Revenue–External 299 147 247 134 189 279 154 556
Revenue–Inter-segment 81 047 111 287 64 531 58 176
Revenue – Total 380 194 358 421 253 810 212 732
Depreciation 9 102 9 563 2 870 2 442
Impairments - - - -
Profit before Tax (7 330) (4 979) 9 003 13 825
Loss discontinued
- - - -
operations
Capital expenditure 949 2 340 3 423 3 537
Total assets 223 546 224 900 126 849 89 443
Total liabilities 125 746 121 464 71 108 50 340
Trading Property & Group
2013 2012 2013 2012
R’000’s R’000’s R 000’s R 000’s
Revenue–External 499 924 515 209 - -
Revenue–Inter-segment 14 328 21 457 (159 906) (190 920)
Revenue - Total 514 252 536 666 (159 906) (190 920)
Investment Income - - 14 621 13 594
Depreciation 1 693 1 957 481 184
Impairments - (4 500) - -
Profit Before Tax 15 134 21 399 (697) (17 665)
Loss discontinued
- - (3 628) (24 045)
operations
Capital expenditure 2 080 1 883 177 2 475
Total assets 149 680 143 117 68 146 196 768
Total liabilities 83 682 65 259 25 110 166 172
GROUP PROFILE
Winhold Limited (“Winhold”) is a holding company with its main
investments being in its 74,9% owned subsidiaries Gundle and Inmins.
Gundle comprises three divisions, the Industrial and Consumer Flexible
Packaging Division with its factories in Germiston and Swaziland, the
Flexible Building, Construction and Agricultural Division in Springs
(including the Geosynthetics Dam Lining Division) and the trading
division with branches in the main coastal cities, Bloemfontein and
Mbombela. Gundle manufactures polyethylene bags, construction sheeting,
consumer and industrial packaging, agricultural film and dam linings and
distributes to the agricultural, chemical, construction, food processing,
industrial and consumer markets, as well as installing dam linings in
sub-Sahara Africa.
Inmins Trading comprises 19 strategically located operations servicing
the mining and industrial sectors with a wide range of consumable and
maintenance products, and includes divisions specialising in hose, mining
pipe systems, chain and sprocket systems and conveyor belting.
HEADLINE NUMBERS
The Group returned to profitability this year after a disappointing 2012.
Earnings were positive again as the negative effect of the discontinued
operation was only 2,0 cents per share (2012:-13,7cps) for the year.
Earnings were enhanced by the profit on the sale of the properties
occupied by the discontinued T & E division. The revenue of continued
operations increased by 7,8%. Gundle increased its revenue by R90m
(15,3%) but revenue of the continued operations of Inmins reduced by
R18,6m ( 5,9%). The operating profit reduced by R6,0m (25,6%).
Margins in the flexible plastics market were under severe pressure as the
production over capacity in the market reported on last year continued to
drive prices down while manufacturers chased volumes in order to recover
overheads resulting in an inability, over several years, to pass full
cost increases on to the market. The continued labour instability in the
mining industry as well as cost reductions by the mines reduced the
demand for mining consumables.
MARKET CONDITIONS
The social problems experienced by especially the platinum mines in the
Rustenburg region and a declining gold price, continued during the first
part of the financial year. Most of the mining groups have reported
improved earnings during the past few months, which were mainly
attributed to cost reductions and improved efficiencies. This resulted in
lower demand for mining consumables and was reflected in the reduced
revenue of Inmins. The weaker Rand impacted on the trading division’s
profitability as margins on imported items with local substitutes came
under pressure. This is only a short term effect as most of the raw
material commodity inputs into the Group’s products are “import parity
priced” and local costs will catch up with international products.
The main commodity prices influencing the input costs of the Group are
those of low density polyethylene (“LDPE”) and steel. LDPE prices were,
on average, 20% higher whilst steel increased by an average of 6,3% over
the prior year.
As noted above, production overcapacity in the flexible plastics market
continued. Demand was satisfied by the remaining capacity even after a
major fire at one of the country’s largest plastic manufacturers in
January 2013. Recent restructuring in the market has removed more of the
overcapacity and margins in the industry should start to improve during
2014. The low barriers to entry in some of our plastic markets and the
tendency of some of the smaller producers to produce below specification
product, particularly for the construction and agricultural markets, put
further pressure on the prices of commodity products.
The steel market was affected by a force majeure at ArcelorMittal’s Van
Der Bijl Park plant, following on from a force Majeure at their Newcastle
plant last year. This had an effect on the supply of steel, but the
depressed mining and construction sectors were largely able to absorb
this with limited imports filling the gap in production.
PERFORMANCE
Inmins
The revenue derived from the mining industry declined by 20%. Although
margins in this market segment were higher than 2012, the reduced
turnover and increased operating expenses lead to a reduction of profit
before tax of R5,4m (62%). The operations servicing the industrial market
managed to grow revenue by 8% while maintaining gross margins. Higher
than inflation cost increases related to new premises and staff, limited
the profit before tax growth to 2%. The weaker currency made certain of
the imported products uncompetitive. The efforts to identify and source
new products to distribute through Inmin’s distribution network
continued; however products with potentially high sales volumes at
acceptable margins have not yet been secured. Analysis and assessment of
a number of products is currently being done.
The closure of the Value Add T & E division has been completed. The costs
associated with this division are reflected in the Statements of
Comprehensive Income as “Discontinued operations”. The sale of the T&E
property was also successfully concluded and the proceeds were received
during the reporting period.
Inmins trades under a number of different names. Certain of the
operations will be rebranded to the well-known “Conway Jonson” brand over
the next year to enhance the corporate identity.
Gundle
The flexible plastics market continued to suffer from the production
overcapacity created over the last 3 to 5 years. Gundle revenue grew by
15,1%, volume increased by 4,1% and operating costs by 7,3%. However,
average raw material prices increased by 20,2% compared to the previous
period. This resulted in an operating income reduction of 17,6% and a
32,5% profit before tax decrease for 2013.
Gundle GeoSysnthetics, our geo-membrane supplier and installer, again
made a good contribution to Gundle’s bottom line even if the record
performance of 2012 could not be repeated. Large dam lining projects in
Africa were fewer and new competition entered this market segment.
The Building and Agricultural division continued its aggressive program
of new product development during the year to migrate the business into
differentiated and higher margin products. New products such as patented
termite proof underfloor sheeting and high quality flat roof sheeting
were launched. The range of co-extruded builders sheeting and ceiling
insulation products for the construction industry brought to market in
the last 2 years contributed to Gundle API improving profits in a market
in spite of recycled raw material being in short supply and below
specification products being supplied by unscrupulous competitors at very
low prices. We, together with other industry leaders are working with the
SABS and the NRCS to ensure that all products sold in the market comply
with the legal national standards.
The Industrial and Consumer division operations in Germiston and
Swaziland are the most affected by the pressure on margins due to the
overcapacity in the industry. Although revenue increased, it was on the
back of lower margins. The Germiston loss reduced by 18,6%, but the
Swaziland losses increased. Management has focussed on a strategy of
changing the mix of product manufactured by these factories. The efforts
over the last 2 years to increase the ratio of higher value-add products,
mainly printed sheeting, tubing and bags, has started to yield results.
Efficiency improvement and cost reduction is driven on an on-going basis.
Labour and energy costs remain a challenge with little room to move. The
technical team is working closely with key customers on “Gain/Share”
projects in order to reduce their costs but at the same time increasing
our profits. There has been some capacity rationalisation in this market
in the second half of the year with some competitive capacity being
withdrawn.
Revenue of the Gundle trading branches increased marginally, but margins
were lower as competition from small local manufacturers increased.
Export sales improved and these lessons learnt will be used to grow sales
in sub-Sahara Africa further. The sales team in Germiston has been
strengthened, freeing up executive time to concentrate more on the growth
of both the distribution branches and exports.
Repi colourants
This division once again made a valuable contribution from a low cost
base. Other major European manufacturers have recently increased their
presence in South Africa, aggressively chasing market share.
PROSPECTS
Gundle
Gundle is positioned to take advantage of the restructuring that took
place in the flexible plastic market recently. New products and new
customers which have been developed during the reporting period are
expected to lead to the return to profitability of the Germiston and
Swaziland operations.
Inmins
Recent press reports point to a recovery in the mining industry.
Reclamation programs in the mines to avoid buying consumables cannot
continue indefinitely and it is expected that our business with the mines
will improve. Efforts are continuing to introduce new products to mining
and industrial customers. The changes to the management teams at
different levels have brought new insights and energy to the business and
I am confident that we will be able to report some notable achievements
in 2014.
APPRECIATION
The support from customers, suppliers, financial institutions and
shareholders in a very difficult year is highly appreciated. The
commitment of the management team and staff was once again noted.
CAPITAL COMMITMENTS
The amount of R6.0 million (2012: R0.8 million) reflected in the
supplementary information, relates to plant upgrades (2012: plant
upgrades and vehicles) for existing operations.
BASIS OF PREPARATION AND AUDIT OPINION
These condensed consolidated preliminary Group results have been prepared
in accordance with the framework concepts and measurement recognition
requirements of International Financial Reporting Standards and the SAICA
Financial Reporting Guidelines as issued by the Accounting Practices
Committee and Financial Reporting Pronouncements issued by the Financial
Reporting Standards and contain the information required by International
Accounting Standard 34,the Listings Requirements of the Johannesburg
Stock Exchange (“the Listings Requirements”) and comply with the South
African Companies Act (2008). The accounting policies applied are
consistent with those used in the prior year. The preparation of the
preliminary financial information has been supervised by the CFO, Mr. GM
Scrutton CA(SA). BDO South Africa Inc has audited the preliminary
financial information and their unmodified report is available for
inspection at the company’s registered office. The Group Integrated
Annual Report will be distributed to shareholders in December 2013.
CORPORATE GOVERNANCE
The Group subscribes to the value of good corporate governance and, where
appropriate, is committed to continued implementation of the
recommendations of the King III Report and the Listings Requirements.
The Group endeavours to continue conducting its business in accordance
with the principles of accountability, transparency and integrity.
CONTINGENT LIABILITY, LITIGATION AND SUBSEQUENT EVENTS
There is no material pending litigation and the directors are not aware
of any material contingent liabilities or post balance sheet events
between the balance sheet date and the date of this report.
DIRECTORATE
Mr D B Mostert and Mr P J Kruger left the board of directors on
28 February 2013. Subsequent to the year end Ms R Naidoo was appointed
to the board of directors and the Remuneration & Nomination Committee on
1 November 2013.
DECLARATION OF DIVIDEND
The director’s regret that no dividend has been declared in order to
preserve cash within the Group.
For and on behalf of the board
WAR WENTELER W FOURIE
Chairman Chief Executive Officer
Date : 25 November 2013
Winhold Limited (Share code: WNH, ISIN ZAE000033916) Registration
number 1945/019679/06 Incorporated in the Republic of South Africa,
884 Linton Jones Street, Industries East, Germiston. +2711 345 9800.
Directors: W A R Wenteler (Chairman) ‡, W Fourie (CEO),
N P Mnxasana †‡, R Naidoo †‡,P C Nash‡, G M Scrutton (CFO): (‡non-
executive), († independent)
Company Secretary: G J O’Connor johnoc@winhold.co.za
Date: 25/11/2013 05:31:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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