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WSL
WSL
WSL - Wescoal Holdings Limited - Reviewed interim results for the six months
ended 30 September 2007
WESCOAL HOLDINGS LIMITED
REVIEWED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 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")
HIGHLIGHTS
Revenue up 43%
Operating profits up 82%
Headline earnings up 83%
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2007
The interim results for the six months ended 30 September 2007, with comparative
results for the period ended 2006 and the audited results for the year ended 31
March 2007 are presented.
Consolidated Group Income Statements
Reviewed Reviewed Audited
interim interim results
results for results for for the
the six the six year
months months ended
ended ended 31 March
30 30 2007
September September R`000
2007 2006
R`000 R`000
Revenue 194 519 136 057 269 558
Gross Profit 18 465 18 146
11 689
Other operating income 193 91 204
Other operating costs (7 573) (5 701) (11 581)
Profit from operations 11 085 6 079 6 769
Acquisition expenses (26) (1 527) (2 105)
written off
Profit on sale of fixed 319 - -
assets
Finance costs (673) (386) (1 132)
Profit before taxation 10 705 4 166 3 532
Taxation (3 063) (1 177) (1 089)
Profit for the period 7 642 2 989 2 443
7 642 2 989 2 443
Headline earnings
reconciliation:
Net profit for the period
Less: Profit on sale of (220) - -
fixed assets 19 1 084 1 494
Plus: Acquisition expenses
written off
Headline earnings for the 7 441 4 073 3 937
period
Ordinary shares in issue
(000`s)
-Total at period end 105 931 103 709 103 709
-Weighted average shares 104 972 103 709 103 709
in issue
-Fully diluted weighted 105 472 104 114 104 209
average shares in issue
(Note 1)
Earnings per share:
Attributable earnings per 7.3 2.9 2.4
ordinary share (cents)
Headline earnings per 7.1 3.9 3.8
share (cents)
Fully diluted attributable 7.2 2.9 2.3
earnings per share(cents)
Fully diluted headline 7.1 3.9 3.8
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
Reviewed Reviewed Audited
interim interim results for
results for results for the year
the six the six ended
months ended months ended 31 March
30 September 30 2007
2007 September R`000
R`000 2006
R`000
ASSETS
Non-current assets 51 839 47 407 47 705
Property, plant 13 010 12 850 13 065
and equipment
Goodwill and 36 711 32 691 32 691
license fees
Interests in - - -
associate company
Deferred taxation 2 118 1 866 1 949
Current assets 68 998 48 520 54 665
Total assets 120 837 95 927 102 370
EQUITY AND
LIABILITIES
Total 54 146 45 650 45 103
Shareholders`
funds
Long-term debt 3 894 6 367 4 995
Current 62 797 43 910 52 272
liabilities
Total equity and 120 837 95 927 102 370
liabilities
Net asset value 51.11 44.02 43.49
per share (cents)
Tangible net asset 16.46 12.50 11.97
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 104 37 959 7 040 45 103
2007
Share issued 2 1 398 - 1 400
Listing expenses - - - -
Earnings attributable - - 7 643 7 643
to shareholders
Balance as at 30 106 39 357 14 683 54 146
September 2007
Group Cash Flow Statements
Reviewed Reviewed Audited
interim interim results for
results for results for the year
Wescoal for Wescoal for ended
the six the six 31 March
months months ended 2007
ended 30 September R`000
30 2006
September R`000
2007
R`000
Net cash from operating 10 184 (2 266) 2 647
activities
Investing activities (4 217) (3 559) (5 239)
Financing activities 493 2 187 846
Net increase/(decrease) 6 460 (3 638) (1 746)
in cash and cash
equivalents
Cash and cash 1 216 2 962 2 962
equivalents at
beginning of period
Cash and cash 7 676 (676) 1 216
equivalents at end of
period
Commentary
Operations and market review
The results for the reporting period show that strategies implemented during the
latter part of the previous financial year have paid dividends.
Trading once again posted excellent results with revenues, margins and profit
from operations all showing substantial increases. The washing operation
returned to profitability mainly due to a stable supply of run of mine and
increased volume throughput which should continue for the rest of the financial
year.
The group`s revenue for the six month period was 43% higher than the comparative
period. The inland price of coal has now reached export parity and the demand
for coal during the six month period remained at the high levels experienced
during the previous financial year.
The gross margin improved by 0.9% to 9.5% compared to the six month period ended
September 2006 and by 2.7% compared to the financial year ended 31 March 2007.
This improvement is due to management`s focus on margin retention in an
extremely high price inflation environment and a turnaround experienced at the
coal beneficiation plant. Coal washing margins at the Witbank plant improved due
to the improvement in washing yields and the increase in plant availability. The
Board approved a R 1.5m upgrade of the washing plant at the beginning of the
financial year and this project has now reached it final stages.
Profits from operating activities increased by 82.3% compared to last year and
attributable earnings and headline earnings increased by 155.7% and 82.7%
respectively compared to last year. Finance costs for the six month period is
74.4% up on last year but the forecast to year end is in line with last year.
This is due to strong cash flows generated during the past six months. The group
generated R 7.7m cash during this period.
The analysis below, details the contribution of the two main divisions within
the Group:
R`000
30 September 2007
Income Statement Trading Washing Non Total
operating
Revenue 179 215 15 304 - 194 519
Profit from 10 339 746 - 11 085
Operations 6 681 559 201 7 441
Headline earnings
R`000
30 September 2007
Balance Sheet Trading Washing Elimination Total
entries
Current assets 58 359 10 639 - 68 998
Non current assets 19 841 9 470 (14 183) 15 128
Goodwill 34 251 - 2 460 36 711
Shareholders Funds 54 105 (2 419) 2 460 54 146
Non current 333 17 744 (14 183) 3 894
liabilities 58 013 4 784 - 62 797
Current liabilities
R`000
30 September 2006
Income Statement Trading Washing Non Total
Operating
Revenue 131 904 4 153 - 136 057
Profit from 6 935 (856) - 6 079
Operations 5 970 (813) (1 084) 4 073
Headline earnings
R`000
30 September 2006
Balance Sheet Trading Washing Elimination Total
entries
Current assets 41 360 7 160 - 48 520
Non current assets 11 390 11 146 (7 820) 14 716
Goodwill 30 231 - 2 460 32 691
Shareholders Funds 45 182 (1 992) 2 460 45 650
Non current - 14 187 (7 820) 6 367
liabilities 37 799 6 111 - 43 910
Current liabilities
Prospects
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. The inland
price of coal has reached export parity and will continue to closely track
dollar prices achieved in London and Rotterdam which have reached record levels.
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. The group therefore continues
with its objective of seeking acquisitions with synergies to existing
operations.
Black Empowerment
The board is currently considering proposals from various BEE entities who wish
to take up the shareholding disposed of by Fikza Investment Holdings (Pty) Ltd
during the period under review.
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 interim dividend has been declared.
Accounting policies and presentation
The consolidated unaudited interim financial statements have been prepared in
accordance with International Financial Reporting Standards ("IFRS") and the
presentation as well as the disclosure requirements of IAS 34 -Interim Financial
Reporting in compliance with the Listing Requirements of the JSE Limited as well
as the South African Companies Act, 1973.
Review opinion
The group`s auditors, Middel & Partners have reviewed 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
25 October 2007
A R Boje P. Janse van Rensburg
Chief Executive Officer Chief Financial 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 Advisor: Exchange Sponsors (Pty) Limited
Date: 24/10/2007 12:54:01 Produced by the JSE SENS Department.
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