| Mon 11 Oct 2010, 12:28 | | WEA - Wearne - Unaudited financial results for the six months ended 31 August |
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WEA
WEA
WEA - Wearne - Unaudited financial results for the six months ended 31 August
2010
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")
Unaudited financial results
for the six months ended 31 August 2010
Condensed Group Statement of Financial Position
Unaudited Unaudited Audited
6 months 6 months 12 months
August 2010 August 2009 February 2010
R`000 R`000 R`000
ASSETS
Non-current assets 568,869 642,892 596,308
Property, plant and equipment 525,992 572,585 545,441
Goodwill - 20,713 -
Intangible assets 33,465 38,749 34,153
Other financial assets 3,712 3,584 3,712
Deferred tax asset 5,700 7,261 13,002
Current assets 100,839 111,332 115,765
Inventories 31,713 30,643 28,658
Loans receivable 385 2,542 385
Other financial assets 5,329 - 5,572
Current tax receivable - 869 1,492
Trade and other receivables 63,131 77,010 76,814
Cash and cash equivalents 281 268 2,844
Total assets 669,708 754,224 712,073
EQUITY AND LIABILITIES
Equity 208,396 226,519 210,246
Issued capital 176,446 146,345 175,028
Reserves 276 97 276
Shareholder equity contribution - 9,005
Retained income 30,486 70,141 34,239
Non-controlling interest 1,188 931 703
Non-current liabilities 197,204 288,455 237,565
Secured loans 37,564 65,708 44,159
Instalment sale creditors 126,420 169,463 149,724
Deferred tax liability 18,032 34,720 28,849
Environmental provision 15,188 18,564 14,833
Current liabilities 264,108 239,250 264,262
Loans payable 4,473 5,313 4,777
Other financial liabilities 93,874 83,038 96,019
Current tax payable 718 - 2,782
Trade and other payables 102,927 94,076 90,917
Bank overdraft 62,116 56,823 69,767
Total equity and liabilities 669,708 754,224 712,073
Number of shares in issue (`000) 250,092 183,962 245,913
Net asset value per share (cents) 83.3 123.1 85.5
Net tangible asset value per
share (cents) 74.9 105.7 78.1
Condensed Group Statement of Comprehensive Income
Unaudited Unaudited Audited
6 months 6 months 12 months
August 2010 August 2009 February 2010
R`000 R`000 R`000
Revenue 266,040 294,001 534,932
Cost of sales (154,702) (168,458) (342,481)
Gross profit 111,338 125,543 192,451
Other income 3,696 3,380 5,134
Operating expenses (79,676) (93,992) (161,534)
Earnings before interest, tax,
depreciation and amortisation
("EBITDA") 35,358 34,931 36,051
Depreciation (24,099) (25,824) (52,324)
Amortisation (1,042) (1,642) (2,238)
Earnings/(loss) before
interest and taxation ("EBIT") 10,217 7,465 (18,511)
Investment income 60 276 846
Finance costs (16,855) (26,285) (45,855)
Loss before taxation (6,578) (18,544) (63,520)
Taxation 3,708 5,708 14,096
Loss for the period (2,870) (12,836) (49,424)
Other comprehensive income
for the period - - -
Total comprehensive loss
for the period (2,870) (12,836) (49,424)
Total comprehensive income/
(loss) attributable to:
Owners of the parent (3,355) (13,022) (49,382)
Non-controlling interests 485 186 (42)
Loss for the period (2,870) (12,836) (49,424)
Reconciliation of headline earnings:
Comprehensive loss attributable
to equity holders (3,355) (13,022) (49,382)
Impairments - - 25,657
Revaluations - - (7,688)
Loss/(profit) on sale of
property, plant and equipment 688 (215) 2,755
Headline loss attributable to
ordinary shareholders (2,667) (13,237) (28,658)
Weighted average number of
shares in issue (`000) 249,852 183,301 184,661
Fully diluted weighted average
number of shares (`000) 249,852 206,400 184,661
Loss per share (cents) (1.34) (7.10) (26.74)
Headline (loss)/earnings per
share (cents) (1.07) (7.22) (15.52)
Fully diluted loss per share (cents) (1.34) (6.31) (26.74)
Fully diluted headline loss per
share (cents) (1.07) (6.41) (15.52)
Condensed Group Statement of Changes in Equity
Unaudited Unaudited Audited
6 months 6 months 12 months
August 2010 August 2009 February 2010
R`000 R`000 R`000
Balance at beginning of period 210,246 226,186 226,186
Issue of share capital and share
issue expense 1,495 3,966 29,672
Movement treasury shares (77) 1 4,530
(Loss)/profit for the period (3,355) (13,022) (49,382)
Investment fair-value adjustment - 197 376
Shareholders equity raised - 9,005 -
Non-controlling interest 485 186 (42)
Dividends (398) - (1,094)
Balance at end of period 208,396 226,519 210,246
Condensed Group Statement of Cash Flows
Unaudited Unaudited Audited
6 months 6 months 12 months
August 2010 August 2009 February 2010
R`000 R`000 R`000
Cash flows from operating activities 39,562 36,592 37,921
Cash flows from investing activities (6,025) (3,857) (1,508)
Cash flows from financing activities(28,449) (29,220) (43,266)
Net increase/(decrease) in
cash and cash equivalents 5,088 3,515 (6,853)
Cash and cash equivalents at
beginning of period (66,923) (60,070) (60,070)
Cash and cash equivalents at end
of period (61,835) (56,555) (66,923)
Segmental reporting
Unaudited Unaudited Audited
6 months 6 months 12 months
August 2010 August 2009 February 2010
R`000 R`000 R`000
Revenue
Aggregates 236,199 245,531 553,262
Readymix concrete 123,832 166,166 251,978
Concrete manfactured products 14,744 7,331 28,069
374,775 419,028 833,309
less inter-segment revenue (108,735) (125,027) (298,377)
Total revenue 266,040 294,001 534,932
EBIT
Aggregates 16,033 12,608 4,605
Readymix concrete (6,831) (3,954) (23,715)
Concrete manfactured products 1,015 (1,189) 599
Total operating profit 10,217 7,465 (18,511)
Property, plant and equipment
Aggregates 385,424 389,634 389,992
Readymix concrete 97,155 140,703 105,399
Concrete manfactured products 43,413 42,248 50,050
Total property, plant and equipment 525,992 572,585 545,441
INTRODUCTION
Wearne and its subsidiaries provide a comprehensive range of products to the
building and construction industry in South Africa. The major operating
divisions comprise aggregates, ready mixed concrete and the manufacture of
specialised cast concrete products.
REVIEW OF RESULTS
Although the group has operated in a challenging environment for the six months
ended 31 August 2010 ("2010 period"), resulting in a loss of R2.8 million for
the period, this is a marked improvement when compared to the R12.8 million loss
reported for the six months ended 31 August 2009 ("2009 period").
The sector continues to contend with the effects of the slowdown in the South
African and indeed the world economy, with only a limited prospect of a recovery
in the short to medium term. Intense competition in a sector that has seen a
slowdown in commercial and industrial development and government projects and
very few new residential projects has resulted in revenue decreasing by 9.5%
when compared to the 2009 period. Revenue from Aggregates declined by 3.8% year
on year, but the hardest hit was, once again, the ready mixed concrete division
where revenue for the six months declined by 25.5%. The concrete products
divisions showed promising revenue growth of over 100% when compared to the 2009
period. This was mainly due to gains in market share.
It is pleasing to point out that operating expenses for the 2010 period have
reduced significantly when compared to the 2009 period, which included an amount
of R8.9 million relating to a hedging contract. The resulting group EBITDA
amounted to R35.5 million versus R34.9 million for the 2009 period.
Depreciation and amortisation and net interest paid reflect significant
decreases compared to the 2009 period, impacting positively on earnings. This
was the result of a combination of reduced interest rates, disposals of
unproductive assets and the reduction of long term debt.
Despite the improvement in the performance year on year, the group has remained
under considerable strain to fund its working capital requirements. It is
important to note that Wearne`s bankers and financiers have continued to support
the group by re-scheduling instalments on asset based debt and that a payment
moratorium totaling close to R20 million was granted in July and August with a
further moratorium having been agreed to over the traditionally quiet December
and January period.
The directors continue to examine all areas of the business in an effort to
streamline processes, reduce costs, and improve service to our customers. We are
pleased to report that the restructure of the group`s various operating
divisions is close to completion and will result in the elimination of much
administrative duplication. Furthermore, the first phase of the rightsizing of
the group`s workforce is now complete and has resulted in a reduction of 95
employees through a combination of natural attrition and retrenchment. We have
also completed the centralisation of the group`s shared services and this is
already having a significant impact on customer service and improved controls.
PROSPECTS
The board believes that while the worst of the downturn may be over we will
continue to experience tough trading conditions through to the second half of
2011. The full impact of our cost base initiatives should only be felt in the
2011 financial year, however, revenue initiatives will take longer to manifest.
The group`s order book is currently growing but due to the short term nature of
the contracts it is very difficult to predict for any period longer than six
months. Management`s view is that margins will still be under pressure for the
foreseeable future.
The directors have identified assets that are under-utilised as a consequence of
decreased activity and these assets will be sold over the next three months. The
cash will be utilized to settle any associated debts and to improve the working
capital position of the group.
GOING CONCERN
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
The interim results have been prepared in accordance with and contain the
information required in terms of International Financial Reporting Standards
("IFRS"), the Companies Act (Act 61 of 1973), as amended, and International
Accounting Standards (IAS 34 : Interim Financial Reporting). The accounting
policies and standards used to prepare these interim financial statements are in
terms of IFRS and are consistent with those applied in the prior interim period
and at year-end, except for the application of IAS 1 (revised): Presentation of
Financial Statements.
These consolidated interim financial statements incorporate the financial
statements 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.
By order of the board
11 October 2010
S J Wearne
Chairman and Chief Executive Officer
A W Bruens
Chief Financial Officer
CORPORATE INFORMATION
Non-executive directors: B Mkhonto, E Moloi, MM Patel, HWP Scholtz Executive
directors: SJ Wearne (Chairman and CEO); AW Bruens; N Heyns; JC Wearne
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: Vunani Corporate Finance
These results and an overview of Wearne are available at www.wearne.co.za
Date: 11/10/2010 12:28:01 Produced by the JSE SENS Department.
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