| Mon 13 Feb 2006, 7:05 | | WG Wearne Limited - Abridged Prospectus |
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JSE
WG Wearne Limited - Abridged Prospectus
W G Wearne Limited
(Incorporated in the Republic of South Africa)
(Registration number: 1994/005983/06)
(JSE code: WEA & ISIN: ZAE000078002)
("Wearne" or "the company")
This abridged prospectus is not an invitation to the public to subscribe for
shares in Wearne, but is issued in compliance with the Listings Requirements of
the JSE for information purposes only. The information in this abridged
prospectus has been extracted from a full prospectus issued by Wearne on 10
February 2006 ("the detailed prospectus"), which is available as set out in
paragraph 8. At the date of listing the authorised share capital of Wearne
comprises 500 million ordinary shares with a par value of 0.1 cent each, of
which, after a private placement of 25 million ordinary shares at 100 cents per
share ("the placement"), 125 million shares will be in issue.
ABRIDGED PROSPECTUS
Listing of Wearne ordinary shares ("shares") on JSE Limited ("the JSE").
1. INCORPORATION AND HISTORY
1.1 Wearne was established in 1910 as a construction concern by its founder,
William George Wearne. The concern became involved in the sand and stone
business in the 1920"s when a dump crushing operation was started in
Carletonville in support of the shaft sinking operations of gold mining
companies on the West Rand. Wearne was incorporated as a legal persona on
26 October 1949.
1.2 The business grew quickly and operations commenced in other mining areas
such as Virginia and Welkom in the Free State. At one stage the company
operated stone crushers at seven mines in the Carletonville area and three
in the Free State goldfields. The company"s main customers being Goldfields
and Anglo American. In 1971 the company acquired Noordvaal Crushers to
further expand its footprint into the Northern Province. The company"s
Bethlehem quarry was acquired in 1974 and as the company expanded over the
years, it became involved in various big construction projects such as the
construction of Rand Afrikaans University, the Western Bypass and the
Lesotho Highlands Water Scheme.
1.3 The delivery of aggregates (sand and stone) for civil projects has seen the
company supporting the big five construction companies in the construction
and resurfacing of various national roads and highways.
1.4 The Ready Mixed Concrete Division was started in the 1970"s and has
subsequently grown to twelve fixed plants and three mobile plants.
2. NATURE OF THE COMPANY"S BUSINESS AND INDUSTRY
2.1 Wearne is the largest black empowered, South African owned, ready mixed
concrete and aggregate supplier in the country. The company provides its
products to customers in the construction, housing and mining industries
and to various government projects such as the Kliptown housing project.
2.2 The current Chief Executive Officer is the fourth generation of the family
to manage this family owned business. The company"s stone crushing and
ready mixed concrete plants are strategically located in areas that cover
the Free State, Gauteng, North West and Limpopo Provinces.
2.3 With annual revenues totalling R175 million for the year ended 28 February
2005, the company"s Ready Mixed Concrete Division contributed more than 57%
of the revenues, its Stone Crushing Division 12% and transportation
contributing the remainder. In terms of the Listings Requirements the
company is not a mining company as stone crushing does not constitute the
principal activity.
2.4 The divisions of the business are as follows:
2.4.1 Ready Mixed Concrete Division
Material is sourced from its own crushing operations and other
suppliers to centralised batch plants where the concrete is
manufactured and then delivered to construction sites using the
company"s fleet of vehicles.
2.4.2 Stone Crushing Operations
Material from quarries or rock dumps are crushed at the crushing
plants and then delivered as sized aggregates for use in the
company"s ready mixed division and for large scale civil
engineering projects.
2.4.3 Transport Division
The company"s transport fleet operates from its various plants
throughout Free State, Gauteng, North West and Limpopo Provinces.
The current fleet consist of 90 mixer trucks and 25 tipper
vehicles. The company also utilises sub-contractors to meet
customers" needs.
3. PROSPECTS
3.1 Aggregate Division
The raising of cash through the private placement will facilitate potential
acquisition opportunities of additional quarries and/or aggregate
operations and will potentially allow the company to secure higher margins
by reducing its reliance on third party suppliers. The company is
continuously working on the expansion of its existing capacity and the
improvement of its margins.
3.2 Ready Mixed Concrete Division
Possible geographical expansion into the Western Cape, Eastern Cape and
KwaZulu-Natal would enable the company to supply its customers anywhere in
South Africa.
3.3 Transport Division
Expansion of the transport fleet would enable the company to be less
reliant on sub-contractors and would increase the profit margins on
transport.
3.4 Empowerment
The company has identified Bonke Mkhonto and Ernest Moloi, prominent black
entrepreneurs, as the preferred empowerment partners that can contribute to
the company"s objectives, given their operational experience in the
construction industry. The Black Economic Empowerment shareholding of
Wearne after the private placement will exceed 16%.
4. SUMMARY OF HISTORICAL AND FORECAST INCOME STATEMENTS
The historical and forecast financial information of Wearne and its
subsidiaries for the financial year ended 28 February 2005, years ending 28
February 2006 and 28 February 2007, the preparation of which is the
responsibility of the directors, are set out below. The forecast financial
information is contained in the detailed prospectus referred to in
paragraph 4.1 below and has been reviewed and reported upon by the
reporting accountants. Such report will be contained in the detailed
prospectus and will also be available for inspection.
4.1 Extracts from the historical and forecast income statements
Audited Forecast Forecast
28 February 28 February 28 February
2005 2006 2007
R"000 R"000 R"000
Revenue 175 403 188 556 231 169
Gross profit 45 562 56 724 69 544
Other income 6 225 2 621 3 213
Operating expenses (27 603) (33 640) (40 605)
EBITDA 24 184 25 705 32 152
Depreciation (7 270) (5 079) (6 226)
Profit before interest and 16 914 20 626 25 926
taxation
Net interest paid (1 418) (3 028) (1 963)
Profit before taxation 15 496 17 598 23 963
Taxation (5 186) (5 279) (7 189)
Earnings attributable to 10 310 12 319 16 774
ordinary shareholders
Pro forma weighted average 120 395 001 100 547 945 125 000 000
shares in issue (1)
Pro forma earnings per share 8.56 12.25 13.42
(cents)
Adjusted for: (1.42) (0.35)
Profit on disposal of (0.35)
property, plant and equipment 7.14 11.90
Pro forma headline earnings 13.07
per share (cents)
Pro forma dividend per share 2.75 - -
(cents)
Notes:
(1). The pro forma calculation for 28 February 2005 is based on the
conversion (after the repurchase of 17 375 ordinary shares on 17 February
2005, the subdivision of the ordinary shares on the basis of 1000:1 and the
issue of further shares) of 82 625 ordinary shares in issue to 100 000 000
ordinary shares in issue on the last practicable date.
5. DIRECTORS, COMPANY SECRETARY AND REGISTERED OFFICE
5.1 Full names, nationalities, ages, business addresses and functions of the
board of directors of Wearne
Director Age Function Business address
Samuel John Wearne 35 Managing director Main Road Randfontein 1759
(Chairperson)
Jan Christiaan 30 Operations Main Road Randfontein 1759
Wearne director
Barend Johannes du 55 Quarrying director Main Road Randfontein 1759
Toit
Owen John Garrett 42 Financial director Main Road Randfontein 1759
Harvey
Bonke Mkhonto * 52 Non-executive 19 Les Maisons, 18
director Sterling Street, Waverley,
2090
Ernest Moloi * 50 Non-executive 61 Buitfontein, Lanseria
director 1748
* Non-executive
All of the directors are South African citizens.
5.1 Company secretary and registered office are:
O J G Harvey CA (SA)
Main Road
Aureus
Randfontein, 1759
(PO Box 1422, Randfontein, 1760)
6. THE PLACEMENT
6.1 Salient features
6.1.1 The salient features of the private placement are as follows:
Offer price per ordinary share 100
(cents)
Par value per ordinary share (cents) 0.1
Premium per ordinary share (cents) 99.9
Number of ordinary shares offered in 25 000 000
terms of private placement
Issue consideration before expenses R25 million
6.1.2 The opening and closing dates of the private placement
are as follows:
Opening date of the private placement Monday, 13 February
at 09:00 on 2006
Closing date of private placement at Wednesday, 15
12:00 on February 2006
Anticipated listing date on ALTx Tuesday, 21 February
2006
Safe custody accounts at CSDP or Tuesday, 21 February
broker updated in respect of 2006
dematerialised shareholders on or
about
Posting of share certificates in Tuesday, 21 February
respect of certificated shareholders 2006
on or about
Refund of surplus private placement Wednesday, 22
application monies received (where February 2006
applicable) on
Note:
These dates are subject to change at the discretion of the company. Any
changes will be released on SENS.
6.2 Wearne holds irrevocable undertakings from various selected investors to
subscribe for 25 000 000 shares in terms of the private placement,
amounting to 100% of the private placement shares.
6.3 The private placement of 25 000 000 ordinary shares have been fully
allocated to the investors who have given irrevocable undertakings as set
out in paragraph 6.2 above.
6.4 The placement has not been underwritten and is not subject to a minimum
subscription, being achieved.
7. LISTING ON THE JSE
The JSE has approved the listing of 125 million shares on ALTx with effect
from the commencement of business on Tuesday, 21 February 2006. The shares
will trade under the abbreviated name "Wearne" and the JSE code "WEA".
8. COPIES OF THE PROSPECTUS
Copies of the prospectus, in English, may be obtained, during business
hours, prior to the closing of the private placement, from the registered
offices of Wearne, Exchange Sponsors (Pty) Limited and the transfer
secretaries, details of which are set out below:
- the registered office of the company - ; Main Road, Aureus,
Randfontein, 1759
- the offices of Exchange Sponsors (Pty) Limited - 39 First Road, Hyde
Park, 2196;
- the offices of Computershare Investor Services 2004 (Pty) Limited -
Ground Floor, 70 Marshall Street, Johannesburg, 2001;
- the web-site of Wearne at www.wearne.co.za.
Johannesburg
13 February 2006
Designated Adviser
Exchange Sponsors (Pty) Limited
Auditors and reporting accountants
Clarke and Patterson
Attorneys
Fluxmans Inc
www.wearne.co.za
Warning: The listing of ordinary shares in the company is on ALTx. Investors
are advised of the risks of investing in a company listed on ALTx. Investors are
advised that the JSE does not guarantee the viability or the success of a
company listed on ALTx. In terms of the Listings Requirements, the company is
obliged to appoint and retain a Designated Adviser, which is required to, inter
alia, attend all board meetings held by the company to ensure that all the
Listings Requirements and applicable regulations are complied with, approve the
Financial Director of the company and guide the company in a competent,
professional and impartial manner. If the company fails to retain a Designated
Adviser, it must make arrangements to appoint a new Designated Adviser within 10
business days, failing which the company faces suspension of trading of its
securities. If a Designated Adviser is not appointed within 30 days of its
suspension, the company faces the termination of its listing without the
prospect of an appropriate offer to minority shareholders.
Date: 13/02/2006 07:05:08 AM Produced by the JSE SENS Department
