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WSL
WSL
WSL - Wescoal Holdings Limited - Audited results for the year ended 31 March
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")
AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED 31 MARCH 2007
CONSOLIDATED GROUP INCOME STATEMENTS
Audited Audited
results results
for the for the
year ended year
31 March ended
2007 31 March
R`000 2006
R`000
Revenue 269 558 178 735
Gross Profit 18 189 14 357
Other operating income 204 117
Operating costs (11 625) (10 739)
Profit on sale of - 437
associate company
Profit from operations 6 768 4 172
Acquisition expenses (2 105) -
written off
Finance costs (1 132) (323)
Profit before taxation 3 531 3 849
Taxation (1 089) 748
Profit for the period 2 442 4 597
2 442 4 597
Headline earnings
reconciliation:
Net profit for the period
Less: Profit on sale of - (437)
associate company 1 495 -
Plus: Acquisition expenses
written off
Headline earnings for the 3 937 4 160
period
Ordinary shares in issue
(000`s)
-Total at period end 103 709 103 709
-Weighted average shares 103 709 98 098
in issue
-Fully diluted weighted 104 209 98 233
average shares in issue
(Note 1)
Earnings per share:
Attributable earnings per 2.4 4.7
ordinary share (cents)
Headline earnings per 3.8 4.2
share (cents)
Fully diluted attributable 2.3 4.7
earnings per share (cents)
Fully diluted headline 3.8 4.2
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
Audited Audited
results for results for
the year the year
ended ended
31 March 31 March
2007 2006
R`000 R`000
ASSETS
Non-current assets 47 705 44 787
Property, plant 13 065 10 588
and equipment
Goodwill 32 691 32 691
Deferred taxation 1 949 1 508
Current assets 54 665 36 502
Total assets 102 370 81 289
EQUITY AND
LIABILITIES
Total 45 103 42 661
Shareholders`
funds
Long-term debt 4 995 6 435
Current 52 272 32 193
liabilities
Total equity and 102 370 81 289
liabilities
Net asset value 43.49 41.14
per share (cents)
Tangible net asset 11.97 9.61
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 204 37 860 4 597 42 661
2006
Share issued - - - -
Listing expenses - - - -
Earnings attributable - - 2 442 2 442
to shareholders
Balance as at 31 March 204 37 860 7 039 45 103
2007
GROUP CASH FLOW STATEMENTS
Audited Audited
results results for
for the the year
year ended ended
31 March 31 March
2007 2006
R`000 R`000
Net cash from operating 2 610 80
activities
Investing activities (5 202) (7 344)
Financing activities 846 9 458
Net (decrease)/increase (1 746) 2 194
in cash and cash
equivalents
Cash and cash 2 962 768
equivalents at
beginning of period
Cash and cash 1 216 2 962
equivalents at end of
period
Commentary
Operations and market review
The group`s revenue for the year was 51% higher than prior year. The group
experienced strong demand from both the domestic market and from sales of coal
into the industrial market. The improvement in revenue levels is both volume and
price driven with volume increasing by 20.5% and price increases contributing
25.2%. The domestic coal price has now reached export parity and is expected to
remain at that level. Demand for coal has been extremely high throughout this
financial year and this trend has continued into the first quarter of the new
financial year.
The trading division performed exceptionally well with revenue up by 48,6%,
profit from operations up by 194% and after tax profit up 181%. Trading gross
margin remained relatively static but the washing operation however posted a
dismal performance in the second half of the financial year, affecting both the
gross margin and after tax profit.
The gross margin decreased by 1.3% to 6.7% since March 2006. Margins achieved
from trading decreased by 0.2% to 7.8% compared to last year but increased costs
in the second half of the financial year from the coal washing operation
accounted for the biggest drop in margin. Following the termination of the Anker
Coal and Mineral Holdings South Africa (Pty) Limited ("Anker Coal") acquisition,
the group was forced to source alternative run of mine supply for the coal
washing operation to service existing supply contracts and maintain certain
sectors of the trading operation`s customer base. A short term source of supply
was found at substantially higher input costs without any improvement in the
quality of coal. Subsequent to the reporting period the group secured a new long
term supplier of quality run of mine with substantial improvements in coal
washing yields being experienced. This is expected to continue for the year
ending 31 March 2008 and the goal is to achieve a minimum of break even for the
washing operation going forward
Profits from operating activities are up 62.2% however headline earnings for the
period are 5.4% lower and attributable earnings 46.9% lower than the
comparative period due to the expenses incurred during the acquisition process
of Anker Coal a 245.6% increase in the taxation charge and a 250.5% increase in
finance costs.
During the year, the group terminated the proposed acquisition of Anker Coal as
the outstanding regulatory approvals could not be obtained timeously. The costs
associated with this proposed transaction have been expensed.
Segment analysis:
R`000
31 March 2007
Income Statement Trading Washing Acquisition Total
expense
written off
Revenue 259 275 10 283 - 269 558
Profit from 8 865 (2 097) - 6 768
Operations 7 441 (2 009) (1 495) 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
R`000
31 March 2006
Income Statement Trading Washing Profit on Total
sale of
associate
Revenue 174 452 4 283 company 178 735
Profit from 3 015 720 - 4 172
Operations 2 647 1 513 437 4 160
Headline earnings -
R`000
31 March 2006
Balance Sheet Trading Washing Elimination Total
entries
Current assets 25 825 10 677 - 36 502
Non current assets 13 946 8 784 (10 634) 12 096
Goodwill 30 231 - 2 460 32 691
Shareholders Funds 41 396 (1 195) 2 460 42 661
Non current - 17 069 (10 634) 6 435
liabilities 28 606 3 587 - 32 193
Current liabilities
Prospects
The group continues to aggressively pursue additional coal deposits and value
adding businesses. 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. Additional coal deposits will therefore secure part of the future
supply line. The inland price of coal has reached export parity with the price
increase of 15% to 20% on 1 April 2007.
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.
Corporate Governance
The group fully subscribes to the principles of, and implements where possible,
the recommendations of the King II Code on Corporate Governance.
Dividends
No interim dividend has been declared.
Accounting policies and presentation
The consolidated interim financial statements have been prepared in accordance
with International Financial Reporting Standards (IFRS) as well as the South
African Companies Act, 1973.
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 review opinion is available for inspection at Wescoal`s
offices.
By order of the Board
28 June 2007
A R Boje
Chief Executive 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 Adviser: Exchange Sponsors (Pty) Limited
Date: 28/06/2007 12:33:42 Produced by the JSE SENS Department.
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