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WSL
WSL
WSL - Wescoal - Condensed Audited Results For The Year Ended 31 March 2009
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 51.7%
Operating profits up 40.1%
Headline earnings up 47.1%
Operating cash flow up 273.0%
Net Asset Value up 164.7%
CONDENSED AUDITED RESULTS FOR THE YEAR ENDED 31 MARCH 2009
The audited results for the year ended 31 March 2009, with comparative audited
results for the year ended 31 March 2008 are presented.
Condensed Consolidated Income Statements
Audited Audited results for
results for the year ended
the year ended 31 March 2008
31 March R`000
2009
R`000
Revenue 570 561 376 088
Gross Profit 56 352 34 180
Other operating income 1 621 296
Operating costs (32 696) (16 436)
Profit from operations 25 277 18 040
Acquisition expenses ( 557) (899)
written off
Profit on sale of fixed - 319
assets
Investment revenue 3 367 436
Finance costs (2 080) (1 681)
Profit before taxation 26 007 16 215
Taxation (8 086) (4 385)
Profit for the year 17 921 11 830
Attributable to:
Equity holders of the 18 491 11 830
group
Minority interest (570) -
17 921 11 830
17 921 11 830
Headline earnings
reconciliation:
Net profit for the year
Less: Profit on sale of - ( 290)
fixed assets - 639
Plus: Acquisition expenses
written off
Headline earnings for the 17 921 12 179
year
Ordinary shares in issue
(000`s)
-Total at period end 137 323 105 931
-Weighted average shares 105 450
in issue 129 950
-Fully diluted weighted 132 139 106 086
average shares in issue
(Note 1)
Earnings per share:
Attributable earnings per 14.2 11.2
ordinary share (cents)
Headline earnings per 14.2 11.5
share (cents)
Fully diluted attributable 14.0 11.2
earnings per share(cents)
Fully diluted headline 14.3 11.5
earnings per share(cents)
Note:
1. 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 2008
2009 R`000
R`000
ASSETS
Non-current assets 98 776 78 014
Property, plant 26 686 14 703
and equipment
Investment 709 -
Property
Intangible Assets 12 695 3 115
Goodwill 55 432 33 610
Pre-payment - 24 000
Deferred taxation 3 254 2 586
Current assets 151 454 78 246
Total assets 250 230 156 260
EQUITY AND
LIABILITIES
Total 154 421 58 333
Shareholders`
funds
Long-term debt 4 072 20 044
Current 91 737 77 883
liabilities
Total equity and 250 230 156 260
liabilities
Net asset value 112.45 55.07
per share (cents)
Tangible net asset 62.84 20.40
value per share
(cents)
Condensed Consolidated Statement of Changes in Equity
Attributable to equity holders of
the company
Share Share Retained Share Total Minority Total
Capital Premium Earnings options R`000 Interests Equity
R`000 R`000 R`000 reserves
R`000
Balance at 1 106 39 357 18 870 58 333
April 2008 - 58 333
Share issued 40 85 810 - 85 850 - 85 850
Listing - (1 463) - (1 463)
expenses - (1 463)
Treasury (8) (6 405) - (6 413)
shares held
by - (6 413)
subsidiary
Share based 193
payment 193 - 193
Earnings - - 18 491 18 491
attributable
to (570) 17 921
shareholders
Balance as 138 117 299 36 761 154 991
at 31 March 193 (570) 154 421
2009
Condensed Consolidated Cash Flow Statements
Audited Audited
results results for
for the year the year
ended ended
31 March 31 March
2009 2008
R`000 R`000
Net cash from operating 28 754 7 709
activities
Investing activities (26 678) (32 416)
Financing activities 53 340 24 712
Net increase in cash 55 416 5
and cash equivalents
Cash and cash 1 221 1 216
equivalents at
beginning of year
Cash and cash 56 637 1 221
equivalents at end of
year
Commentary
Operations, market and financial review
Although the overall results for the year under review were good, trading
conditions during the second half proved to be far tougher than initially
expected. The scale of the economic decline since October 2008 proved to be more
severe than anyone had anticipated or predicted.
The coal industry in general was affected by a rapid decline in the API#4 export
price of coal from $US 131.50 in September 2008 to $US 58.65 at the end of March
2009, a reduction of 55%. The knock on effect was a reduction of inland pricing
of 20% and increased competition for volumes as the local pricing structures are
now more lucrative than export revenues.
The group more specifically experienced a reduced demand from the manufacturing
sector that experienced an annualised decrease of 20% in production activity.
Pricing structures and margins had to be adapted to the circumstances and more
focus placed on cost reductions and volume retention.
Despite these circumstances, the group has posted net profit increases of 21,1%
for the second half and 51,5% for the full year under review. The trading
division continues to perform well but the reduced input costs at the production
facility were eroded by the severe reduction in pricing structures. In addition,
a deferred tax adjustment relating to the previous year of R 896K contributed to
the minor loss at the washing plant.
Capital expenditure on the upgrading of the briquetting plant was slowed until
the brick making industry shows a revival. The current plant is producing at
full capacity and will contribute to the group`s earnings going forward
Profit from operations increased by 40.1% to R 25.3m and the increase can be
attributed to the increase in selling prices as well as an increase in margins.
Gross margins improved to 9.9% from 9.1% achieved in the previous year.
Profit attributable to equity holders of the group improved by 56.3% to R 18.5m.
This is despite a 98.9% increase in operating costs. The increase in operating
costs is due to the following:
New coal depots acquired - R 8.8m 53.7%)
Increase in headcount - R 2.1m (12.8%)
Inflation and other factors - R 5.4m (32.4%)
Net cash from operating activities improved by 273% to R 28.8m. The group ended
the year with R 56.6m cash and cash equivalents even after R 26.7m was spend on
investing activities. The following investments are included in investing
activities:
Properties acquired - R 5.1m
Plant and equipment acquired - R 14.2m
Mineral rights acquired - R 9.6m
All of these investments will enhance earnings in future.
Segment Analysis
The analysis below, details the contribution of the two main divisions within
the group:
R`000
31 March 2009
Income Statement Trading Washing Non Total
operating
Revenue 519 074 51 487 - 570 561
Profit from 24 882 395 - 25 277
Operations 18 925 (1 004) - 17 921
Headline earnings
R`000
31 March 2009
Balance Sheet Trading Washing Elimination Total
entries
Current assets 126 622 24 832 - 151 454
Non-current assets 37 586 11 366 (18 303) 30 649
Goodwill and 65 667 - 2 460 68 127
intangible assets 154 978 (3 017) 2 460 154 421
Shareholders Funds 962 21 413 (18 303) 4 072
Non-current 73 935 17 802 - 91 737
liabilities
Current liabilities
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 34 266 - 2 460 36 726
intangible assets 57 696 (1 823) 2 460 58 333
Shareholders Funds 17 224 18 302 (15 482) 20 044
Non current 69 404 8 479 - 77 883
liabilities
Current liabilities
Prospects
Export prices of coal appear to have stabilised that will in turn stabilise
inland pricing however, we believe there could be further reductions in the
short term to bring it in line with API#4. Manufacturing activity continues to
be depressed and we will therefore still experience reduced demand for the
balance of 2009 and possibly the first half of 2010.
The decision taken in November 2008 to focus capital expenditure on short term
revenue generating projects has paid dividends in the recently announced
acquisition of Khanyisa Mine in Mpumalanga. This is the first time the group
will have a low cost producer of raw coal bringing a new dimension to the group
and resulting in many additional opportunities for Wescoal. The rationale and
terms of the transaction were announced on SENS on 24 June 2009 however to
emphasise, the acquisition will undoubtedly reduce current input costs
substantially and thereby enhance earnings.
In addition, the group continues to seek and review any additional opportunities
and in the current economic climate, we are confident that positive results will
be achieved.
Black Economic Empowerment.
Wescoal`s black shareholding currently stands at 28.1%. Wescoal remains strongly
committed to BEE and is constantly striving to increase black ownership of the
group.
45% 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 II Code of Corporate Governance. The
Board is in the process of appointing two independent directors and an
announcement in this regard will be made in the near future.
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 2009 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
30 June 2009
M.R. Ramaite A.R. Boje
Chairman Chief Executive Officer
CORPORATE INFORMATION
Non-Executive MR Ramaite
directors: 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 (2008) (Pty) Limited
Date: 30/06/2009 12:31:01 Produced by the JSE SENS Department.
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