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Winhold Limited - The Audited Abridged Consolidated Results Of The Group For The
Year Ended 30 September 2005
WINHOLD LIMITED
(Registration number 1945/019679/06)
(Incorporated in the Republic of South Africa)
(Share code: WNH)
(ISIN number: ZAE000033916)
STATEMENT OF RESULTS
The audited abridged consolidated results of the Group for the year ended 30
September 2005
Consolidated Income Statement
30 September
2005 2004
(restated)
R"000 R"000
Revenue 833 448 734 881
Operating profit 32 941 44 200
Goodwill amortisation (1 473)
Net finance costs (4 999) (3 907)
Profit before taxation 27 942 38 820
Taxation (8 773) (12 188)
Net profit after taxation 19 169 26 632
Share of after tax profit of associate companies 153 -
Attributable to: outside shareholders (2 839) (6 162)
Ordinary shareholders" profit 16 483 20 470
Earnings 16 479 20 326
Headline earnings 16 061 21 274
Earnings per ordinary share (cents) 15,2 21,6
Headline earnings per ordinary share (cents) 14,9 22,6
Weighted average ordinary shares in issue
(000"s) on which the earnings per share have
been calculated 108 074 94 197
Ordinary shares in issue (000"s) 126 215 94 197
Dividend per ordinary share (cents) 7,0 5,2
Reconciliation of headline earnings
Ordinary shareholders" profit 16 483 20 470
Net profit on disposal of assets (479) (575)
Taxation effect thereon 61 (53)
Amortisation of goodwill - 1 473
Minority share of goodwill amortisation
and profit on sale of assets - 103
Preference dividend (4) (144)
Headline earnings for the year 16 061 21 274
Change in accounting policies and re-statement of
prior year results
The Group has changed its accounting policy in
respect of goodwill in order to comply with the
requirements of IFRS3 - Business Combinations
(AC140). In terms of the transitional provisions of
IFRS3 (AC140), goodwill is no longer amortised,
and the carrying amounts of negative goodwill and
non-distributable reserves arising out of share issues
in subsidiaries have been credited to opening
retained earnings.
The non-distributable reserve arising on the
revaluation of a subsidiary company"s properties
has been reversed in order to comply with the
Group"s accounting policy on properties.
In addition to the above, the taxation expense
provided for in a Group subsidiary company was
understated in its reported results for its year ended
30 September 2004.
The effects of the above on the current year opening retained earnings
are as follows: R"000
- Opening retained earnings as previously reported 15 580
- Negative goodwill and non-distributable reserves
credited to retained earnings 22 962
- Change in subsidiary accounting policy on properties (1 166)
- Prior year understatement in subsidiary taxation charge (447)
- Tax effects of above adjustments -
- Opening retained earnings as currently reported 36 929
Summarised Consolidated Balance Sheet
30 September
2005 2004
(restated)
R"000 R"000
ASSETS
Fixed and other non-current assets 88 115 66 237
Goodwill 26 541
Deferred taxation 3 813 2 536
Current assets
- inventory 102 928 90 017
- receivables 131 095 124 324
- bank and cash 12 891 20 326
Total assets 365 383 303 440
EQUITY AND LIABILITIES
Ordinary share capital and premium 123 627 68 060
Preference share capital and premium - 1 602
Non-distributable reserves - 67
Retained earnings 48 577 36 929
Shareholders" interest 172 204 106 658
Outside shareholders" interest 30 28 324
Total equity 172 234 134 982
Non-current liabilities
- interest bearing 35 886 12 728
- interest free 1 268 1 448
- deferred taxation 1 387 1 092
Current liabilities
- bank overdraft 25 597 16 443
- short term borrowings 10 561 13 604
Current liabilities - interest bearing
- payables 116 455 114 997
- taxation 1 995 8 146
Total equity and liabilities 365 383 303 440
Supplementary information
Capital commitments - 11 544
Capital expenditure 34 651 14 281
Depreciation 11 704 10 353
Interest bearing borrowings 72 044 42 775
Interest earning deposits 12 774 20 426
Net asset value per ordinary share (cents) 136,4 111,5
Net tangible asset value per
ordinary share (cents) 114,8 111,1
Summarised Consolidated Cash Flow Statement
Year ended
30 September
2005 2004
R"000 R"000
Cash flow (used in)/from operating activities (2 223) 25 687
Profit before interest, tax and
non cash items 44 165 53 995
Change in inventory (12 911) (15 905)
Change in receivables (6 771) (11 649)
Change in payables 1 602 23 878
Cash flow from operations 26 085 50 319
Net finance costs (4 998) (3 907)
Share of results from associates 29
Taxation paid (15 906) (15 017)
Dividends paid (7 433) (5 708)
Cash flow used in investing activities (34 436) (13 262)
Buyout of minorities in a subsidiary (1 322)
Investment in fixed assets (34 651) (14 281)
Proceeds from disposal of fixed assets 1 537 1 019
Cash flow from financing activities 20 070 4 632
Interest bearing borrowings raised 26 238 9 666
Interest bearing borrowings repaid (6 303) (4 765)
Loans advanced 135 (269)
Change in cash and cash equivalents (16 589) 17 057
Cash and cash equivalents
at beginning of period 3 883 (13 174)
Cash and cash equivalents at end of period (12 706) 3 883
Summarised Consolidated Statement of Changes in Equity
Year ended
30 September
2005 2004
R"000 R"000
Shareholders" funds at beginning of the year 106 658 80 814
Changes in accounting policies and prior
year restatement - 5 518
Issue of ordinary shares 53 965 -
Changes in retained earnings 16 483 20 470
Dividends paid - ordinary (4 898) -
- preference (4) (144)
Shareholders" interests at end of the period 172 204 106 658
Segment Information
Mining Industrial
Consumables consumables
2005 2004 2005 2004
(restated)
Business segments R"000 R"000 R"000 R"000
Turnover 373 806 321 638 128 794 118 271
Operating Profit 12 913 15 521 6 282 7
Depreciation 1 004 1 109 713 652
Capital Expenditure 1 180 1 345 839 271
Total Assets 114 208 99 789 46 360 34 427
Total Liabilities 41 100 49 625 18 689 19 376
Segment Information
Flexible Property and
plastics other Totals
2005 2004 2005 2004 2005 2004
(restated)
Business segments R"000 R"000 R"000 R"000 R"000 R"000
Turnover 330 848 294 351 - - 833 448 734 881
Operating Profit 11 893 21 127 1 853 499 32 941 44 200
Depreciation 9 656 8 203 331 389 11 704 10 353
Capital Expenditure 32 332 12 630 300 35 34 651 14 281
Total Assets 194 039 157 126 10 776 12 098 365 383 303 440
Total Liabilities 127 548 94 979 5 812 4 478 193 149 168 458
COMMENTS
COMPANY PROFILE
Winhold Limited ("Winhold") is an investment holding company with its main
investments in wholly owned subsidiaries Gundle Limited ("Gundle") and Inmins
Limited ("Inmins")
Gundle is comprised of three manufacturing / distribution operations in Gauteng
and one in Swaziland, with a further four distribution centres in the main
coastal towns and Bloemfontein. Gundle manufactures and distributes
polyethylene and polypropylene bags, sheeting and packaging to the agricultural,
chemical, construction, food processing, industrial and consumer markets.
Inmins is comprised of two trading divisions that service the mining and
industrial sectors, supplying mainly consumer goods, and an added value division
also serving the mining sector.
MAIN CORPORATE ACTIVITIES DURING 2005
Conversion of preference shares - the automatic conversion of the preference
shares was announced on 21 January 2005, resulting in the issue of an additional
2 847 596 ordinary shares.
Acquisition of minorities - the interests of the minorities of Inmins were
acquired by the way of a share swop of 2,2 Winhold shares for each Inmins share.
This has resulted in the issue of an additional 29 170 231 ordinary Winhold
shares. The above resulted in the total number of ordinary shares increasing by
34% to 126 215 131 from 94 197 304 for the previous year. Inmins was delisted as
from 23 May 2005 and became a wholly owned subsidiary of Winhold.
Black economic empowerment ("BEE") - the board has resolved to implement a
proposal for internal restructuring to facilitate black empowerment. Details
were published on 2 December 2005. Full details will be posted to all
shareholders and a general meeting will be convened to consider the resolutions
required to implement the proposal.
After a number of alternatives have been considered over the past two years, the
board has come to the conclusion that the current proposal is the best solution
to introduce black economic empowerment to the operating companies of the Group.
The board looks forward to obtaining shareholder approval to ensure the positive
contribution of this initiative for future profitability growth.
OPERATIONAL REVIEW
Inmins (not listed)
Revenue increased by 14% to R502,6 million and operating profit decreased by
15,0% to R19,195 million. In both the industrial and mining sectors, margins
were eroded due to increased competition and cheaper imports. The output of the
gold mines was the lowest in many years. In the other sectors the group won
certain key contracts. Negotiations with current and new suppliers are ongoing,
in order to protect margins. High steel prices slowed demand for these products
and reduced margins. Long lead times on specific steel pipe sizes necessitated
an increase in inventory levels, in order to service current contracts and to be
in a position to quote on new work. The diversification of Inmins helped to
overcome the very competitive market and still produced acceptable results.
Gundle (not listed)
Revenue increased by 12,4%. However, the strong Rand, high polymer prices
(based on import parity pricing), low exports and oversupply in the local
markets caused margins to drop significantly. There was a delay in the
commissioning of major projects and this had an unavoidable impact on the
results of the period under review. All the profiles of the current
manufacturing units were revisited, and changes implemented during the last two
months of the financial year. Economies of scale should now again contribute
positively to future profits. Costs incurred due to these changes were written
off. During the last two months, severe cuts were experienced in polymer supply
from Sasol, which resulted in plant downtime. Although the situation improved
somewhat, we were advised by Sasol that normalization of supply can only be
expected during the second half of 2006. Long lead times of imported products,
as well as the volatility of polymer prices, resulted in increased inventory
levels and pressure on margins. There is also a shortage of recycled polymers,
which could be exacerbated by the announced closure as from 1 December 2005 of a
major recycler which belongs to Sasol.
REVIEW OF RESULTS
Revenue grew by 13,4% to R833 million (2004 : R735 million). Net finance charges
increased by 27,9% to R5,0 million (2004 : R3,9 million). Profit after tax
decreased by 28,0% to R19,2 million (2004: R26,6 million). Taxation decreased in
line with lower profitability. Earnings per share decreased by 29,3% to 15,2
cents (2004 : 21,6 cents). Headline earnings per share decreased by 34,2% to
14,9 cents (2004 : 22,6 cents).
The negative cash flow for the year of R16,6 million was mainly due to:
- increases in inventory levels as a result of price increases and the
strategic investment in stocks with long lead times
- increases in receivable levels due to increases in turnover
investment in plant and equipment to position the group for the future.
The gearing remains acceptable at 42% (2004 : 39%)
With the buy-out of the Inmins minorities, the board stated that these
minorities would be likely to maintain their historic dividend income, as
Winhold planned to reduce its dividend cover. In line with this statement, and
based on the full year"s results of Inmins, the positive steps undertaken by the
overall group, and the confidence of the board in future improved profits, the
ordinary dividend has been increased by 34% to 7,0 cents
(2004 : 5,2 cents) per share.
PROSPECTS
The restructuring and repositioning now enables the group to:
- accelerate growth
- simplify mergers and acquisitions
- facilitate BEE transactions
- increase liquidity in its shares
- save costs by removal of the group pyramid structure and reduce the price
discount of the underlying investment assets
- improve profitability.
Both Inmins and Gundle should improve future profitability due to:
- finalisation of major capital projects in Gundle
- finalisation and introduction of new products in Gundle operations
- normalisation of polymer supplies through import supplementation
- maximising production output
- certain capital projects put on hold by the mining industry having now been
reactivated
introduction of BEE partners.
The board is positive that new initiatives and actions undertaken should soon
contribute to increased profitability.
DIVIDENDS
Notice is hereby given that an ordinary dividend of 7,0 cents
(2004 : 5,2 cents) per share for the year ended 30 September 2005 has been
declared to holders of ordinary shares recorded in the share register of the
company at the close of business on 20 January 2006.
In compliance with the requirements of STRATE, the following dates are
applicable :
Last day to trade "cum" dividend is : Friday 13 January 2006
Commence trading "ex" dividend from : Monday 16 January 2006
Record date is : Friday 20 January 2006
Payment date is : Monday 23 January 2006
Share certificates may not be dematerialised / rematerialised between Monday 16
January 2006 and Friday 20 January 2006, both dates inclusive.
Ordinary individual shareholders to whom a dividend of less then R10,00 (ten
rand) has been declared, are reminded that in terms of a special resolution
registered on 26 March 2003, such amounts shall not be paid to the individual
shareholder concerned but shall be donated to an independent charity chosen by
the directors.
ACCOUNTING POLICIES
The results for the year ended 30 September 2005 have been prepared on a going
concern basis, in compliance with the South African Statements of Generally
Accepted Accounting Practice, and the Listings Requirements of the JSE Limited.
AUDITED RESULTS
The financial information set out in these abridged consolidated group results
has been audited by BDO Spencer Steward (Johannesburg) Inc. Their unqualified
report is available for inspection at the registered office of the company. The
annual report will be posted to shareholders in February 2006.
CORPORATE GOVERNANCE
The group subscribes to the value of good corporate governance and is committed
to continued implementation of the recommendations of the King II Report and the
requirements of the JSE Limited. The group endeavours to conduct its business in
accordance with the principles of accountability, transparency and integrity.
WITHDRAWAL OF CAUTIONARY
Shareholders are advised that the cautionary announcement issued on 1 December
2005 is hereby withdrawn, as the group results have now been published.
On behalf of the board
W A R Wenteler J H Henderson
Chairman Deputy Chairman
7 December 2005
Directors
WAR Wenteler (Chairman), JH Henderson* (Deputy Chairman), W Fourie (Financial),
PJ Kruger, DB Mostert*, CJ Pallas*
(*Non-executive)
Company secretary
D J de Villiers
e-mail: davedevilliers@inmins.co.za
Registered office
884 Linton Jones Street, Industries East, Germiston
(PO Box 5324, Johannesburg 2000)
Transfer secretaries:
Computershare Investor Services 2004 (Pty) Limited
70 Marshall Street, Johannesburg 2001
(PO Box 61051, Marshalltown 2107)
E-mail: registrar@computershare.co.za
Auditors:
BDO Spencer Steward (Johannesburg) Inc.
13 Wellington Road, Parktown 2193
(Private Bag X60500, Houghton 2041)
E-mail: sshaw@bdo.co.za
Sponsor:
LPC Manhattan Moela (Pty) Limited
4th Floor, South Office Block, Hyde Park Corner
E-mail: doug@lpcmanhattan.co.za
Website:
www.winhold.co.za
Date: 07/12/2005 05:20:45 PM Produced by the JSE SENS Department
