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WSL
WSL
WSL - Wescoal Holdings - Audited Results For The Year Ended 31 March 2008
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 40%
- Operating profits up 166%
- Headline earnings up 209%
- Operating cash flow up 380%
- Net Asset Value up 27%
CONDENSED AUDITED RESULTS FOR THE YEAR ENDED 31 MARCH 2008
The audited results for the year ended 31 March 2008, with comparative
audited results for the year ended 31 March 2007 are presented.
Condensed Consolidated Income Statements
Audited Audited results for
results for the the year ended
year ended 31 March 2007
31 March R`000
2008
R`000
Revenue 376 088 269 558
Gross Profit 34 180 18 146
Other operating income 296 204
Operating costs (16 436) (11 581)
Profit from operations 18 040 6 769
Acquisition expenses (899) (2 105)
written off
Profit on sale of fixed 319 -
assets
Finance costs (1 245) (1 132)
Profit before taxation 16 215 3 532
Taxation (4 385) (1 089)
Profit for the year 11 830 2 443
11 830 2 443
Headline earnings
reconciliation:
Net profit for the year
Less: Profit on sale of (290) -
fixed assets 639 1 494
Plus: Acquisition expenses
written off
Headline earnings for the 12 179 3 937
year
Ordinary shares in issue
(000`s)
-Total at period end 105 931 103 709
-Weighted average shares 105 450 103 709
in issue
-Fully diluted weighted 106 086 104 209
average shares in issue
(Note 1)
Earnings per share:
Attributable earnings per 11.2 2.4
ordinary share (cents)
Headline earnings per 11.5 3.8
share (cents)
Fully diluted attributable 11.2 2.3
earnings per share(cents)
Fully diluted headline 11.5 3.8
earnings per share(cents)
Note:
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 2007
2008 R`000
R`000
ASSETS
Non-current assets 78 014 47 705
Property, plant and 14 703 13 065
equipment
Goodwill and license 36 726 32 691
fees
Investments 24 000 -
Deferred taxation 2 585 1 949
Current assets 78 246 54 665
Total assets 156 260 102 370
EQUITY AND LIABILITIES
Total Shareholders` 58 333 45 103
funds
Long-term debt 19 833 4 995
Current liabilities 78 094 52 272
Total equity and 156 260 102 370
liabilities
Net asset value per 55.32 43.49
share (cents)
Tangible net asset value 20.49 11.97
per share (cents)
Condensed Consolidated Statement of Changes in Equity
Share Share Distributable Total
Capital Premium Reserve R`000
R`000 R`000 R`000
Balance at 1 104 37 959 7 040 45 103
April 2007
Share issued 2 1 398 - 1 400
Listing expenses - - - -
Earnings attributable - - 11 830 11 830
to shareholders
Balance as at 31 March 106 39 357 18 870 58 333
2008
Condensed Consolidated Cash Flow Statements
Audited Audited
results results for
for the year the year
ended ended
31 March 31 March
2008 2007
R`000 R`000
Net cash from operating 12 708 2 647
activities
Investing activities (32 415) (5 239)
Financing activities 19 712 846
Net increase/(decrease) 5 (1 746)
in cash and cash
equivalents
Cash and cash 1 216 2 962
equivalents at
beginning of year
Cash and cash 1 221 1 216
equivalents at end of
year
Commentary
Operations and market review
Overall the group posted excellent results for the financial year ended 31
March 2008, proving that strategies implemented have continued to pay
dividends throughout the year under review.
Trading continues to post improved performances with revenues, margins and
profit from operations showing substantial increases. The washing operation
has now reached a point of sustained profitability contributing to headline
earnings.
The group`s revenue for the financial year was 40% up on the previous year
and although coal prices were at export parity earlier during the year,
this is no longer the case. Further substantial price increases have been
implemented subsequent to the reporting period.
The gross margin improved by 2.4 percentage points to 9.1% compared to the
previous financial year fuelled by management`s focus on margin retention
and the sustained profitability at the coal beneficiation plant. The
upgrade of the plant, secure supply of run of mine and improved yields
contributed to this improvement and should continue to do so.
Operating costs increased by 41.9% and includes an increase in the
provision for doubtful debts of R 2.4 million. The group`s history on bad
debts remains extremely healthy but management felt it prudent to increase
the provision in view of the large increases experienced in the price of
coal. Excluding this bad debt provision, operating costs increased by only
21.2%.
Profits from operating activities increased by 166.5% compared to last year
and attributable earnings and headline earnings increased by 384.2% and
209.3% respectively compared to last year.
Despite the increase in operating levels, finance costs increased by only
10%. The containment of finance costs is due to management focus on asset
management and strict control over credit control policies.
The group generated operating cash of R 12.7 million which is an
improvement of 380.1% on last year. Cash flow from investing activities
includes a prepayment of R 24 million which was made on the last day of the
financial year as payment for the Express Coal acquisition. The remainder
of the cash flow spend on investing activities was made on property, plant,
equipment and intellectual property of which the benefits will only be
enjoyed in the future. This does however reflect management`s commitment to
sustainable growth.
These results do not yet reflect the positive impact the following
developments will have on results as they occurred subsequent to the
reporting period:
- A 78% increase in the price of coal with a forecast total increase of
121% by 1 October 2008;
- The incorporation of the Express Coal acquisition effective 1 April
2008; and
- Wescoal Mineral Recovery (Pty) Limited sold out order book of 2 000
tons per month for its briquetted product.
Resource Statement.
Wescoal`s resource statement including the proposed acquisitions as
detailed in the prospects section below:
- Portion 16 of the farm Vlakvarkfontein 213 IR - an indicated resource
of 1,8 million tons and an inferred resource of 238,000 tons of Eskom grade
coal.
- Portion 12 of the farm Vlakvarkfontein 213 IR - an inferred resource
of 1,9 million tons of high grade thermal coal.
- Portion 10 of the farm Bankfontein 216 IR - an inferred resource of
5,1 million tons of high grade thermal coal.
- Portions 8,9 & 10 of the farm Mooiplaats 165 IS - sufficient
information available to indicate the presence of coal but insufficient for
any additional comment.
- Portions 1,3,4,6,14,23,30-36,38,40 and 62 of the farm Elandspruit 291
JS district of Middleburg - a prospecting area of 2 946 hectares with an
inferred resource of 5,1 million tons of high grade thermal coal.
- Portions 4,5,22,23,28,42,48,60 and 69-74 of the farm Keerom 374 JS
district of Middleburg - a prospecting area of 6 828 hectares with
sufficient information available to indicate the presence of coal but
insufficient for any additional comment.
- The farm Verblyden 387 IS, excluding portions 18 and 35, district of
Standerton - a prospecting area of 2 266 hectares with an inferred resource
of 37 million tons of Eskom and thermal coal.
- The farm Silverbank 611 IR, excluding portions 1,10,12 and 14 district
of Standerton - a prospecting area of 3 925 hectares with an inferred
resource of 24,5 million tons of Eskom and thermal coal.
Segment Analysis
The analysis below, details the contribution of the two main divisions
within the group:
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 license 34 266 - 2 460 36 726
fees 57 696 (1 823) 2 460 58 333
Shareholders Funds 17 013 18 302 (15 482) 19 833
Non-current 69 615 8 479 - 78 094
liabilities
Current liabilities
R`000
31 March 2007
Income Statement Trading Washing Non Total
Operating
Revenue 259 275 10 283 - 269 558
Profit from 8 866 (2 097) - 6 769
Operations 7 440 (2 009) (1 494) 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
Prospects
The demand for coal remains at high levels and with producers finding it
difficult to fulfill Richards Bay Coal Terminal allocations, the pressure
on local supply and pricing will remain for some time to come. Prices will
continue to track RBCT API#4 which continues to break record levels. Severe
price increases have already been experienced subsequent to the reporting
period as a result of this.
Planning is under way to build a new production facility for Wescoal
Mineral Recovery to increase production of briquettes from 2,000 to 20,000
tons per month. With the high pricing levels for coal, some industries are
turning to the more cost effective briquetted product.
Prospecting is ongoing in some of the exploration areas but the work rate
will, in conjunction with drilling contractors, be accelerated to complete
the process within 2 years. In addition, the group will continue to seek
additional resources.
The following developments which took place during the financial year are
expected to lead to substantial growth and an increased asset base for the
future:
The acquisition of Express Coal during November 2007 that became
unconditional and effective 1 April 2008;
The proposed acquisition of coal prospecting rights from Vuselela Mining
(Pty) Limited and Razorbill Properties (Pty) Limited as announced on SENS
on 10 April 2008 with an estimated 9 million tons of coal detailed in the
resource statement above; and
The proposed acquisition of coal prospecting rights in conjunction with
Proudafrique Trading 147 (Pty) Limited as announced on SENS on 2 June 2008
with an estimated 66, 5 million tons of coal detailed in the resource
statement above.
Overall the group can look forward to further improved results fuelled by
the continuing high demand for coal and the escalating price structures.
Black Economic Empowerment.
Waterberg Portion Property Investments (Pty) Limited, headed by Mr.
Robinson Ramaite acquired 31.4% of Wescoal Holdings Limited during November
2007 and the board was pleased to welcome Robinson and Mpume Sikhosana to
the group
Their contribution has been immediate and substantial with specific
emphasis on coal reserves, a different approach to the industry and an
involvement in all aspects of the business.
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 dividend has been declared.
Accounting policies and presentation
The annual financial statements for the year ended 31 March 2008 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.
Review 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
11 June 2008
M.R. Ramaite A.R. Boje
Chairman Chief Executive Officer
CORPORATE INFORMATION
Non-Executive directors: MR Ramaite
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 (Pty) Limited
Date: 11/06/2008 15:09:52 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,
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howsoever arising, from the use of SENS or the use of, or reliance on,
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