Wrap Text
Unaudited condensed consolidated financial results for the period ended 31 August 2014
WG Wearne Limited
(Incorporated in the Republic of South Africa)
(Registration number 1994/005983/06)
JSE Code: WEA
ISIN: ZAE000078002
(“Wearne” or “the company” or “the Group”)
Gross profit Operating profit EBITDA Improved cash flow from
up 8.7% up 23% up 8.7% operating activities
Unaudited condensed consolidated financial results for the period ended 31
August 2014
Condensed Interim Consolidated Statement of Financial Position
Unaudited Unaudited Audited
6 months 6 months 12 months
August 2014 August 2013 February 2014
R'000 R'000 R'000
ASSETS
Non-current assets 335,632 336,884 344,832
Property, plant and equipment 322,789 321,321 332,307
Other financial assets 5,531 5,003 5,213
Deferred taxation asset 7,312 10,560 7,312
Current assets 93,698 99,943 87,828
Inventories 34,024 25,539 26,874
Other financial assets - 539 -
Trade and other receivables 58,489 71,007 60,025
Cash and cash equivalents 1,185 2,858 929
Non-current asset held for sale 3,685 4,500 8,185
Total assets 433,015 441,327 440,845
EQUITY AND LIABILITIES
Equity 47,730 34,090 48,908
Issued capital 178,357 178,316 178,357
Reserves 1,092 809 892
Revaluation reserve 44,743 37,294 45,098
Accumulated losses (176,462) (182,329) (175,439)
Non-current liabilities 223,960 244,897 224,560
Borrowings 203,895 220,069 203,658
Deferred taxation liability 9,152 13,722 9,152
Environmental provision 10,913 11,106 11,750
Current liabilities 161,325 162,340 167,377
Borrowings 41,729 42,755 62,465
Current taxation payable 899 898 899
Trade and other payables 87,324 80,993 87,112
Bank overdraft 31,373 37,694 16,901
Total liabilities 385,285 407,237 391,937
Total equity and liabilities 433,015 441,327 440,845
Number of shares in issue ('000) 273,038 273,038 273,038
Net asset value per share (cents) 17.48 12.49 17.91
Net tangible asset value per
share (cents) 17.48 12.49 17.91
Condensed Interim Consolidated Statement of Comprehensive Income
Unaudited Unaudited Audited
6 months 6 months 12 months
August 2014 August 2013 February 2014
R'000 R'000 R'000
Continuing Operations Revenue 244,705 243,917 463,277
Cost of sales (184,629) (188,631) (371,422)
Gross profit 60,076 55,286 91,855
Other income 6,668 2,241 7,147
Operating expenses (52,256) (45,747) (84,876)
Earnings before
interest and taxation ("EBIT") 14,488 11,780 14,126
Investment income 342 985 322
Revaluation of land and buildings:
Reversal of impairment - - 26,391
Finance costs (16,261) (14,322) (31,980)
(Loss) / Profit before taxation (1,431) (1,557) 8,861
Taxation 53 149 1,208
(Loss) / Profit from continuing
Operations (1,378) (1,408) 10,069
Other comprehensive income:
Items that will be reclassified
subsequently to profit or loss
Fair value adjustments 237 60 3,392
Deferred tax on revaluation (37) (10) (41)
Other comprehensive income
for the year 200 50 3,351
Total comprehensive loss
attributable to:
Owners of the parent (1,178) (1,358) 13,420
Reconciliation of headline loss:
Loss for the year (1,378) (1,408) 10,069
(Profit) / loss on sale of
property, plant and equipment (449) 1,239 (241)
Reversal of impairment - - (26,391)
Headline loss attributable to
ordinary shareholders (1,827) (169) (16,563)
Reconciliation of EBITDA:
Earnings before
interest and taxation ("EBIT") 14,488 11,780 14,126
Depreciation – Cost of sales 16,716 17,634 25,378
Depreciation – Operating expenses 1,254 459 13,982
Earnings before
interest, taxation, depreciation
and amortisation ("EBITDA") 32,458 29,873 53,486
Weighted average number
of shares in issue('000) 273,038 273,038 273,038
Fully diluted weighted average
number of shares ('000) 273,038 273,038 273,038
Basic and diluted loss
per share (cents) (0.50) (0.52) 3.69
Basic and diluted
headline loss per share (cents) (0.67) (0.06) (6.07)
Condensed Interim Consolidated Statement of Changes in Equity
Unaudited Unaudited Audited
6 months 6 months 12 months
August 2014 August 2013 February 2014
R'000 R'000 R'000
Balance at beginning of period 48,908 35,489 35,489
Total comprehensive (loss) / profit
for the period (1,378) (1,408) 10,068
Other comprehensive income 200 49 3,351
Movement treasury shares - (40) -
Balance at end of period 47,730 34,090 48,908
Condensed Interim Consolidated Statement of Cash Flows
Unaudited Unaudited Audited
6 months 6 months 12 months
August 2014 August 2013 February 2014
R'000 R'000 R'000
Cash flows from operating activities 8,232 1,453 21,766
Cash flows from investing activities (3,856) (428) (5,908)
Cash flows from financing activities (18,592) (8,022) (3,992)
Net cash flows from
continuing operations (14,216) (6,997) 11,866
Cash and cash equivalents
beginning of period (15,972) (27,838) (27,838)
Cash and cash equivalents at end
of period (30,188) (34,835) (15,972)
Segmental reporting
Unaudited Unaudited Audited
6 months 6 months 12 months
August 2014 August 2013 February 2014
R'000 R'000 R'000
Revenue: External sales
Aggregates 108,622 123,634 217,091
Readymix concrete 124,969 113,290 230,868
Concrete manufactured products 11,114 6,993 15,318
Total revenue: External sales 244,705 243,917 463,277
Revenue: Inter-segment sales
Aggregates 45,182 34,195 65,953
Readymix concrete 28 - 78
Concrete manufactured products - - -
Total revenue: Inter-segment sales 45,210 34,195 66,031
Revenue: Total sales
Aggregates 153,804 157,829 283,045
Readymix concrete 124,997 113,290 230,947
Concrete manufactured products 11,114 6,993 15,318
Total revenue: Total sales 289,915 278,112 529,310
Property, plant and equipment
Aggregates 269,195 261,977 277,788
Readymix concrete 31,304 37,145 32,780
Concrete manufactured products 22,291 22,199 21,738
Total property, plant and equipment 322,790 321,321 322,306
Total assets
Aggregates 332,390 336,408 343,402
Readymix concrete 75,402 80,863 72,388
Concrete manufactured products 25,223 24,056 25,055
Total assets 433,015 441,327 440,845
INTRODUCTION
WG Wearne Limited and its subsidiaries (“the Group”) provide a comprehensive
range of products to the building and construction industry in South Africa.
The major operating divisions comprise aggregates, ready mixed concrete, the
manufacture of precast concrete products as well as contract crushing and
screening services.
REVIEW OF RESULTS
For the six months ended 31 August 2014 (“2014 period”),the Group generated
revenue of R244.7 million (2013: R243.9 million) which represents a growth of
0.3% when compared to the six months ended 31 August 2013 (“2013 period”).
Included in the 2013 period revenue figure was revenue of R22.6 million that
related to a civil works contract for Abeinsa EPC (Pty) Ltd. Excluding this
contract, Group revenue increased by 10.6%.
The increased revenues in conjunction with the Group’s focus on efficiencies
have resulted in a 23% increase in the operating profit. The Group’s gross
profit margin has increased to 24.55% compared to the 22.67% for the 2013
period.
The Group’s EBITDA also increased by 8.70% to R32.5 million (2013 period:
R29.9 million) for the 2014 period. The Group’s total comprehensive loss for
the 6 month period has remained consistent with the prior year at R1.4
million. This resulted in the basic and diluted headline loss per share
increasing from 0.06 cents to 0.67 cents per share. The main contributing
factor to the loss incurred for the period was due to the high rainfall
experienced in March 2014 where 40% of monthly turnover was lost.
PROSPECTS
The Group continues to focus on key strategic areas and monitor individual
business operating units at an executive level. With relatively low gross
margin levels at certain business units constant monitoring and early
management intervention mitigates the risk of losses.
The ready-mixed concrete division continues to experience tough market
conditions that remain competitive due to the oversupply in the cement
industry. Gross profit margins and volumes sold are expected to remain under
pressure. The division will continue to manage margins closely in addition to
an improved marketing strategy, the division plans to offer more competitive
pricing and increase volumes. Customer service and product quality will
continue to remain the priority for the division.
The outlook for the aggregate business remains positive as the South African
Government’s planned infrastructure development starts to materialize. The
division is performing well as sales targets have exceeded budget and the
order book is full for the upcoming months. Forecasts for aggregates indicate
that revenue targets set at the beginning of the financial year will be met.
All Quarries are contributing positively to the Group as the implemented
pricing strategy continues to bear fruit.
The Concrete Manufactured Products division showed a remarkable growth in
revenue of 59% period-on-period. The Limpopo Roads Agency has begun to
increase their tenders which bode well for the prospects of the division.
Closer management attention, improved product capability and less competitive
pricing have all contributed to the divisions improved performance.
Wearne was awarded two contracts to the value of R 70 million for the supply
of ready mixed concrete as well as earthworks services by Abeinsa EPC Xina
(Pty) Ltd. Abeinsa EPC Xina is a subsidiary of the Abengoa group of companies
that has been selected by the Department of Energy to develop Xina Solar One
in Pofadder. Xina Solar One is a 100 MW parabolic trough plant with a five-
hour thermal energy storage system using molten salts. The supply of ready
mixed concrete will be over a period of twenty months while the earthworks
contract will be completed in five months. Wearne was selected after
successfully completing an R 30 million contract for Abeinsa EPC at their Khi
Solar One project in Upington. The company is also tendering on numerous other
contracts in the renewable energy sector and is confident that further
contracts will be awarded.
GOING CONCERN
Solvency and Liquidity
The Group incurred a total comprehensive loss of R1.4 million for the 2014
period and continues to remain in a loss making position. This coupled with
the negative liquidity position highlights a possible going concern issue. In
response to this position the Group has been working closely in conjunction
with its financiers in order to meet all its working capital requirements.
The Group continues to maintain a solvent position with a net asset value of
R47.7 million or 17.48 cents per share.
Cash Flow
In line with strict cash flow management policies the Group has managed to
meet its working capital obligations.
Continued Focus
Management continues to review all aspects of the business in order to ensure
that resources are being utilized effectively. This ensures that all cost
areas are closely monitored in order to reduce expenditure and release cash
reserves for the Group’s working capital.
In light of the above, the going concern basis has been adopted in preparing
these interim financial statements. The directors have no reason to believe
that the Group or any company within the Group will not be a going concern in
the foreseeable future.
BASIS OF PREPARATION
These interim results have been prepared in accordance with and contain the
information required in terms of International Financial Reporting Standards
(“IFRS”), the Companies Act of South Africa(Act 71 of 2008), as amended, and
International Accounting Standards (IAS 34 : Interim Financial Reporting), the
SAICA Financial Reporting Guides as issued by the Accounting Practices
Committee and Financial Reporting Pronouncements as issued by the Financial
Reporting Standards ,the requirements of the Companies Act of South Africa and
in compliance with the Listings Requirements of the JSE Limited.
Except for the new standards adopted as set out below, all accounting policies
applied by the Group in the preparation of these condensed consolidated
interim financial statements are consistent with those applied by the Group in
its consolidated financial statements as at and for the year ended 28 February
2014. The Group has adopted the following new standards and interpretations
effective as of 1 January 2014:
• Amendment to IAS 32 – Offsetting Financial Assets and Financial
Liabilities
• Amendments to IFRS 10, IFRS 12 and IAS 27 – Investment Entities
• Amendments to IAS 36 – Recoverable Amount Disclosures for Non-Financial
Assets
There was no material impact on the interim financial statements identified
based on management’s assessment of these standards.
These condensed interim consolidated financial statements incorporate the
financial information of the company, its subsidiaries and special purpose
entities that, in substance, are controlled by the Group. Results of
subsidiaries are included from the effective date of acquisition or up to the
effective date of disposal. All significant transactions and balances between
group enterprises are eliminated on consolidation.
DIVIDENDS
In line with past practice, no dividend has been declared for the period.
The preparation of the condensed interim consolidated financial results was
supervised by MJ Ross (CA) SA.
By order of the board
7 November 2014
S J Wearne
Chief Executive Officer
M J Ross
Chief Financial Officer
CORPORATE INFORMATION
Non-executive directors: M M Patel (Chairman); M C Khwinana; WP van der Merwe
Executive directors: S J Wearne; M J Ross
Registration number: 1994/005983/06
Registered address: 3 Kiepersol House, Stone Mill Office Park, 300 Acacia
Road, Cresta, 2195
Postal address: PO Box 1674, Cresta, 2118
Company secretary: Ithemba Governance and Statutory Solutions (Pty) Ltd
Telephone: (011) 459 4500 • Facsimile: (011) 478 5481
Transfer secretaries: Computershare Investor Services (Pty) Limited
Designated Adviser: Exchange Sponsors
These results and an overview of Wearne are available at www.wearne.co.za
Date: 07/11/2014 09:31:00 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.
Sharenet Sites 
