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WEA
WEA
WEA - WG Wearne Limited - Trading Statement
WG Wearne Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1994/005983/06)
(JSE code: WEA ISIN: ZAE000078002)
("Wearne" or "the company")
TRADING STATEMENT
Wearne is currently finalising its results for the year ended 28 February 2010
and shareholders are advised that the directors expect a loss per share of
between 17 cents and 19 cents and headline loss per share of between 23 cents
and 25 cents, compared to the restated loss per share and headline loss per
share of 11.19 and 11.25 cents respectively, reported for the year ended 28
February 2009. The reduction in earnings is mainly the result of:
- continued weak trading conditions experienced with particular reference to
the slow-down in the residential building market;
- the impact of a fuel hedge entered into during November 2008 which expired
during November 2009; and
- impairments of intangibles and goodwill arising as a result of assessments
of fair value and recoverability.
The past financial year has been particularly challenging and as a result the
Wearne directors have embarked on a complete restructure of the group`s
operations and looked hard at where costs can be cut, margins improved and
revenues enhanced.
The following initiatives will see significant cost savings going forward:
- the group`s various legal entities will be rationalised in order to reduce
the associated cost of administration and improve operational efficiencies;
- shared services will be centralised wherever possible in order to achieve
greater purchasing synergies and administrative cost savings;
- staff numbers have been reduced by approximately 15% year-on-year through
retrenchment and natural attrition in order to achieve greater productivity
and reduce payroll costs; and
- finance charges will reduce by an anticipated 20% as a result of a
reduction in the amount of long-term debt outstanding.
In addition to the above, the elimination of the diesel hedge entered into in
2008 will result in an annualised cost saving of approximately R18 million.
Taking the effect of all the expected cost savings listed above into account, as
well as an improving order book, the directors are expecting the 2011 financial
year to be significantly better than 2010.
The financial information on which this trading statement is based has not
been reviewed or reported on by the company`s auditors.
The company`s results for the year ended 28 February 2010 are expected
to be released on SENS during the week ending 28 May 2010.
Johannesburg
17 May 2010
Designated Adviser
Vunani Corporate Finance
Date: 17/05/2010 15:00:01 Produced by the JSE SENS Department.
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