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WEA
WEA
WEA - WG Wearne Limited - Abridged Audited Financial Results: for the year
ended 28 February 2007
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")
Highlights
* Revenue up 79%
* Headline earnings up 76% to R26 million
* Earnings per share up 27%
* Headline earnings per share up 35%
Net tangible asset value per share up over 100%
ABRIDGED AUDITED FINANCIAL RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2007
CONSOLIDATED INCOME STATEMENTS
Year ended Year ended
28 February 28 February
2007 2006
Audited Audited
R`000 R`000
Revenue 352 500 196 603
Gross profit 106 367 61 490
Other income 1 789 1 952
Operating costs (48 877) (33 445)
Earnings before interest, tax, 59 279 29 997
depreciation and amortisation
(EBITDA)
Depreciation (16 484) (6 241)
Profit before interest and 42 795 23 756
taxation
Net interest paid (6 461) (2 154)
Profit before taxation 36 334 21 602
Taxation (10 252) (5 868)
Earnings attributable to 26 082 15 734
ordinary shareholders
Reconciliation of headline
earnings:
Earnings attributable to 26 082 15 734
ordinary shareholders
Adjusted for:
Profit on sale of property, (184) (1 029)
plant and equipment
Headline earnings attributable 25 898 14 705
to ordinary shareholders
Weighted average shares in 131 584 100 548
issue on which earnings per
share are based (000)
Fully diluted weighted average 136 119 100 548
shares in issue (000)
Shares in issue at period end 150 000 125 000
(000)
Earnings per share (cents) 19.8 15.6
Headline earnings per share 19.7 14.6
(cents)
Fully diluted earnings per 19.2 15.6
share (cents)
Fully diluted headline earnings 19.0 14.6
per share (cents)
CONSOLIDATED BALANCE SHEETS
28 February 28 February
2007 2006
Audited Audited
R`000 R`000
ASSETS
Non-current assets 269 911 68 786
Property, plant and equipment 263 896 64 003
Goodwill 2 419 2 419
Investments 3 596 2 364
Current assets 82 047 60 322
Inventories 13 857 10 100
Trade and other receivables 58 708 30 236
Cash and cash equivalents 9 482 19 986
Total assets 351 958 129 108
EQUITY AND LIABILITIES
Capital and reserves 139 312 58 760
Issued capital 145 125
Share premium 77 462 23 442
Non-distributable reserves 19 -
Retained income 61 686 35 193
Non-current liabilities 132 111 33 002
Environmental obligations 12 794 5 461
Secured loans 28 117 -
Instalment sale creditors 78 031 20 815
Deferred taxation 13 169 6 726
Current liabilities 80 535 37 346
Trade and other payables 51 969 28 080
Current portion of non-current 26 851 7 310
liabilities
Taxation 1 715 1 956
Total equity and liabilities 351 958 129 108
Shares in issue (`000) (1) 145 466 125 000
Net asset value per share 95.8 47.0
(cents)
Net tangible asset value per 94.1 45.1
share (cents)
Note:
Shares in issue have been adjusted for treasury shares issued in terms of the
WG Wearne Employee Share Trust.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Share Non- Retained Total
capital Distribut earnings equity
R`000 able R`000 R`000
reserves
R`000
Balance 1 March 2005 83 - 19 278 19 361
Changes in equity: 42 - - 42
Share capital issued
Share premium 23 442 - 23 442
Profit for the year - - 15 734 15 734
Fair value - - 181 181
adjustments to
investments
Balance 28 February 23 567 - 35 193 58 760
2006
Changes in equity: 20 20
Share capital issued
Share premium 54 020 - - 54 020
Share-based payment - 19 19
reserve
Profit for the year - - 26 082 26 082
Fair value adjustment - - 411 411
to investments
Balance at 28 77 607 19 61 686 139 312
February 2007
CONSOLIDATED CASH FLOW STATEMENTS
Year ended Year ended
28 February 28 February
2007 2006
Audited Audited
R`000 R`000
Cash flow from operating 39 763 22 439
activities
Cash generated by operating 49 891 29 331
activities
Net interest and dividends (5 653) (2 169)
received and paid
Taxation paid (4 475) (4 723)
Cash flows from investing (216 939) (27 015)
activities
Property, plant and (217 911) (26 686)
equipment acquired
Proceeds on disposals of 1 792 2 833
property, plant and
equipment
Investment in subsidiary and - (2 763)
associates
Investments acquired (820) (399)
Cash flows from financing 166 672 29 386
activities
Share capital 20 42
Share premium 54 445 23 442
Non-current loans 102 384 2 953
Short-term loans 9 823 2 949
Change in cash and cash (10 504) 24 810
equivalents
Cash and cash equivalents at 19 986 (4 824)
beginning of year
Cash and cash equivalents at 9 482 19 986
end of year
OVERVIEW
The directors of Wearne have pleasure in presenting the audited year end
results for the 12 months ended 28 February 2007 and are pleased to announce
that the group has significantly exceeded its growth forecasts for the year
as it took advantage of buoyant conditions in the construction industry.
FINANCIAL RESULTS
For the year, group revenue increased by 79% to R352,5 million
(2006: R196,6 million). EBITDA margins improved from 15,3% in February
2006 to 16,8% in February 2007 and were maintained even though some shortages
of materials for the ready mixed concrete division were experienced during
the year.
EBITDA increased 98% to R59,3 million (2006: R30.0 million) for the year
under review.
Headline earnings increased 76% from the previous year to R25,9 million
(2006: R14,7 million), and attributable earnings increased 65% from the
previous period to R26,1 million (2006: R15,7 million). Headline earnings
per share increased 35% to 19.7 cents (2006: 14.6 cents). The lower increase
in headline earnings per share is directly attributable to the issue of 20
million new ordinary shares on 1 November 2006 to partly fund the W De Bruyn
Sandwerke ("De Bruyn") acquisition.
Wearne acquired three sand and stone quarries from De Bruyn, which was only
incorporated into the Wearne results from January 2007. This acquisition
will strengthen Wearne`s presence in Gauteng as well as ensure aggregate
supply to the group`s concrete operations. The full benefits of the De Bruyn
acquisition will realise in the new financial year.
Total capital expenditure amounted to R217 million (2006: R27 million) and
related mainly to the De Bruyn quarry acquisition (R135 million) as well as
further investment in plant and delivery vehicles to meet the burgeoning
demand for the group`s products.
BASIS OF PREPARATION OF THE AUDITED RESULTS
Statement of compliance
The abridged financial statements comprise a consolidated balance sheet at
28 February 2007, a consolidated income statement, consolidated statement of
changes in equity and summarised consolidated cash flow statement for the
year ended 28 February 2007. The abridged financial statements have been
prepared in accordance with the recognition and measurement criteria of
International Financial Reporting Standards ("IFRS") and the presentation and
disclosure requirements of IAS 34, Interim Financial Reporting.
The basis of preparation is consistent with the prior comparative year.
The abridged financial statements were approved by the board of directors on
10 May 2007.
Basis of measurement
The abridged financial statements have been prepared on the historical cost
basis except for certain financial instruments measured at fair value.
AUDITOR`S REPORT
Clarke and Patterson`s unqualified auditor`s report on the abridged financial
statements contained in this report are available for inspection at the
company`s registered office.
PROSPECTS
The group`s results for the year ending 28 February 2008 will be enhanced
through the inclusion of the De Bruyn results for the full 12 months,
compared to only two months for the year ended 28 February 2007.
The company recently received an order from The Grinaker-Lta/Interbeton
Soccer City Joint Venture to supply all the concrete for the upgrading of the
FNB Stadium in Nasrec. Numerous other projects relating to the 2010 Soccer
World Cup, Government`s planned infrastructure spend, as well as mining
related projects bodes well for the group`s continued growth strategy.
The group will continue to seek growth opportunities as well as optimising
the current operations to increase operating cash flows.
SUBSEQUENT EVENTS
Shareholders are referred to the detailed announcement dated 23 April 2007
and are advised that Wearne has, subject to certain conditions precedent,
acquired two further quarry operations in Tzaneen and in Pietermaritzburg for
a maximum purchase consideration of R55 million. The purchase considerations
are subject to certain profit warranties. The Tzaneen acquisition will
expand Wearne`s presence in the fast growing Limpopo province aggregate
market and the Pietermaritzburg acquisition will strategically position
Wearne to expand its geographical footprint to include KwaZulu-Natal.
In addition shareholders are referred to the detailed announcement dated
23 April 2007 in which shareholders were advised that Wearne has entered into
further negotiations, which if successfully concluded may have a material
effect on the price of the company`s securities. Accordingly, shareholders
are advised to exercise caution when dealing in the company`s securities
until a full announcement is made.
DIVIDEND POLICY
In line with the group`s growth strategy, no dividend was declared for the
year.
APPRECIATION
We thank our management team as well as the rest of our staff for their
dedication and hard work in assisting to achieve and outperform our targets.
May we continue to create wealth for all our stakeholders.
On behalf of the Board
S J Wearne O J G Harvey
Chief Executive Officer Chief Financial
Officer
15 May 2007
CORPORATE INFORMATION
Non executive directors: B Mkhonto, E Moloi
Executive directors: S J Wearne (Chairman and CEO); J C Wearne;
B J du Toit; O J G Harvey
Registration number: 1994/005983/06
Registered address: Main Road, Aureus, Randfontein, 1759
Postal address: PO Box 1422, Randfontein, 1760
Company secretary: O J G Harvey
Telephone: (011) 412 3000
Facsimile: (011) 412 3002
Transfer secretaries: Computershare Investor Services 2004 (Pty)
Limited
Designated Adviser: Exchange Sponsors (Pty) Limited
These results and an overview of Wearne are available at www.wearne.co.za.
Date: 15/05/2007 09:30:02 Produced by the JSE SENS Department.
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