WSL - Wescoal - Condensed audited results for the year ended 31 March 2010
WESCOAL HOLDINGS LIMITED
Wescoal Holdings Limited (Incorporated in the Republic of South Africa)
(Registration number 2005/006913/06) (JSE code: WSL ISIN: ZAE000069639)
("Wescoal" or "the group")
CONDENSED AUDITED RESULTS FOR THE YEAR ENDED 31 MARCH 2010
The audited results for the year ended 31 March 2010, with comparative
audited results for the year ended 31 March 2009 are presented.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Audited Audited
results for results for
the year the year
ended ended
31 March 31 March
2010 2009
R'000 R'000
Revenue 386 549 570 561
Gross Profit 36 618 56 352
Other operating income 1 432 1 621
Operating costs (29 204) (32 696)
Profit from operations 8 846 25 277
Acquisition expenses written off - (557)
Profit on sale of assets 3 294 -
Impairment of assets (3 716) -
Investment revenue 1 459 3 367
Finance costs (1 339) (2 080)
Profit before taxation 8 544 26 007
Taxation (2 836) (8 086)
Profit for the year 5 708 17 921
Attributable to:
Equity holders of the group 6 672 18 491
Minority interest (964) (570)
5 708 17 921
Headline earnings reconciliation:
Net profit for the year 6 672 18 491
Less: Profit on sale of assets (2 566) -
Plus: Impairment of assets 2 140 -
Headline earnings for the year 6 246 18 491
Ordinary shares in issue (000's)
- Total at period end 145 931 137 323
- Weighted average shares in issue 145 931 129 950
- Fully diluted weighted average shares in issue 146 314 132 139
(Note 1)
Earnings per share:
Attributable earnings per ordinary share (cents) 4,6 14,2
Headline earnings per share (cents) 4,3 14,2
Fully diluted attributable earnings per share 4,6 14,0
(cents)
Fully diluted headline earnings per share (cents) 4,3 14,0
Note:
(1) Fully diluted earnings per share information is reflected showing the
potential effect of dilution for 3,47 million options held in terms of
the share incentive trust by the directors and employees to subscribe
for new shares in Wescoal.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Audited Audited
results for results for
the year the year
ended ended
31 March 31 March
2010 2009
R'000 R'000
ASSETS
Non-current assets 128 670 98 776
Property, plant and equipment 49 557 26 686
Investment Property 709 709
Intangible Assets 19 743 13 614
Goodwill 54 513 54 513
Deferred taxation 4 148 3 254
Current assets 119 512 151 454
Total assets 248 182 250 230
EQUITY AND LIABILITIES
Total Shareholders' funds 166 654 154 421
Long-term debt 10 146 4 072
Current liabilities 71 382 91 737
Total equity and liabilities 248 182 250 230
Net asset value per share (cents) 114,20 112,45
Tangible net asset value per share (cents) 63,32 62,84
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS
Audited Audited
results for results for
the year the year
ended ended
31 March 31 March
2010 2009
R'000 R'000
Net cash from operating activities before changes 22 641 24 719
in working capital
Change in working capital (33 152) 4 035
Net cash from operating activities after changes (10 511) 28 754
in working capital
Investing activities (41 007) (26 678)
Financing activities 6 262 53 340
Net increase in cash and cash equivalents (45 256) 55 416
Cash and cash equivalents at beginning of year 56 637 1 221
Cash and cash equivalents at end of year 11 381 56 637
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to equity holders of the
company
Share Share Retained Share
options
capital premium earnings reserves
R'000 R'000 R'000 R'000
Balance at 138 117 299 37 361 193
1 April 2009
Shares issued 8 6 405 - -
Share based payment 112
Earnings attributable to - - 6 672
shareholders
Balance as at 31 March 2010 146 123 704 44 033 305
Minority Total
Total interests equity
R'000
Balance at 154 991 (570) 154 421
1 April 2009
Shares issued 6 413 - 6 413
Share based payment 112 - 112
Earnings attributable to 6 672 (964) 5 708
shareholders
Balance as at 31 March 2010 168 188 (1 534) 166 654
COMMENTARY
OPERATIONS, MARKET AND FINANCIAL REVIEW
Trading Division
Despite the strengthening of international coal markets, domestic volumes are
down in line with the national decline in manufacturing activity and
increased competition from producers who traditionally favoured exports over
local sales. During the year under review, volumes and margins remained under
pressure due to compounding factors such as:
- Manufacturing sector, the division's primary source of revenue, down by
20%;
- Inland pricing down 34%;
- Export prices down 50% thereby favouring domestic supply over export;
- General oversupply in the domestic market leading to increasing competitive
activity from new entrants.
The division retained a volume retention approach that has affected margins
but will bear fruit during the anticipated economic recovery.
Mining division
During the last quarter of the financial year the mining division was boosted
by the Khanyisa Mine ("Khanyisa") acquisition which achieved excellent
results for the quarter. The Khanyisa acquisition became effective October
2009, an initial blast was carried out in December 2009 and the first revenue
flowed during February 2010. This revenue accounted for the bulk of the
operating profit achieved by the division during the second half of the year.
Highlights during the year included:
- The successful commissioning of the Jig plant at Blesboklaagte;
- The Khanyisa acquisition generating revenue and contributing significant
profits during the period under review;
- Securing of a rail siding;
- Additional washing facility processing run of mine at Khanyisa;
- Delivery of the initial order of 100,000 tons on a three year Eskom
contract.
Wescoal Mineral Recovery, the briquette making business, once again delivered
disappointing results due to the subdued construction industry and under the
circumstances an impairment on the project of R2,1 million was deemed
prudent.
Financial review
Overall the group suffered a decline in revenue of R184 million (32,3%) due
to significantly reduced pricing structures and volume reduction to the
manufacturing sector. These factors resulted in a reduction in gross profit
of R19,7 million (35,0%) and together with impairments, a reduction in
operating profit of R16,4 million (65,0%). On the positive side, overheads
reduced by R3,5 million (10,7%) due to increased focus on this area.
Investment revenue reduced R 1.9m (56.7%) due to the investment in Khanyisa
mine during October 2009. During the previous financial year management
identified the possibility of releasing the debt linked to the purchase of a
coal reserve with the repurchase of Wescoal shares. This exercise realized an
after tax profit of R 2.6m which is not reflected as headline earnings but
contribute a significant amount to the group earnings.
Segmental analysis
The analysis below, details the contribution of the two main divisions within
the group:
Income statement
31 March 2010 Non-
R'000 Trading Mining operating Total
Revenue 273 727 112 822 - 386 549
Profit from Operations 41 8 805 - 8 846
Headline earnings 317 5 503 426 6 246
31 March 2009 Non-
R'000 Trading Mining operating Total
Revenue 475 503 95 058 - 570 561
Profit from Operations 24 882 395 - 25 277
Headline earnings 19 495 (1 004) - 18 491
PROSPECTS
Subsequent to the financial year under review, export prices have risen on
the back of Asian demand and are steady at $US90 per ton that, coupled with
an exchange rate of around R7.60 = $US1, should result in higher domestic
pricing during the latter half of 2010. Subject to the logistical
infrastructure surrounding the export market performing adequately, the
commissioning of Phase V at Richards Bay Coal Terminal (RBCT) will reduce the
amount of product available domestically and in turn will benefit the trading
division.
The trading division has proven to be the mainstay of the group for many
years and will ultimately return to the levels achieved in the past.
Due to the dynamics of the coal industry, the mining division will produce
the bulk of the group's profits going forward. The last two months of the
financial year under review proved that this division can contribute
significant profits when compared to other activities. This will continue
going forward due to:
- The division is on track to achieve the stated production target of 1,2
million tons per annum;
- Saleable washed product will increase from 220,000 tons to 558,000 tons for
the coming year;
- The division secured new contracts to account for the majority of
production output;
- In addition to the washed product, a proven capability of delivering the
monthly Eskom contractual requirement.
The group is currently busy with an active drilling and exploration program
on its existing Khanyisa and nearby reserves to ensure that production can be
maintained at the target of 1,2 million tons per annum. In addition to ensure
future growth and sustainability, the group is assessing its existing rights
and is exploring a number of additional opportunities that have arisen out of
the pending expiry of rights issued to others in 2004 and 2005.
BLACK ECONOMIC EMPOWERMENT
Wescoal's black shareholding currently stands at 34%. Wescoal remains
strongly committed to BEE and is constantly striving to increase black
ownership of the group.
75% 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 appointed two independent directors during the past
financial year.
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 2010 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
MR Ramaite AR Boje
Chairman Chief executive officer
8 June 2010
Corporate information
Non-executive directors: MR Ramaite, JG Pansegrouw, WN Khumalo,
DMT van Gaalen Executive directors: AR Boje, P Janse van Rensburg
Registration number: 2005/006913/06
Registered address: 228 Voortrekker Street, Krugersdorp, 1740
Company secretary: CIS Company Secretaries (Pty) Limited
Telephone: (011) 954 2721 Facsimile: (011) 954 6737
Transfer secretaries: Computershare Investor Services (Pty) Limited Sponsor:
Exchange Sponsors (2008) (Pty) Limited
www.wescoal.com
Date: 09/06/2010 07:05:02 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,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
|