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WEA
WEA
W G Wearne Limited - Audited financial results for the year ended
28 February 2006
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")
Highlights
Attributable earnings up 52.6% to R15.7 million
EPS up 82.8%
HEPS up 104.9%
Net tangible asset value per share up
132.5%
Successful listing on AltX
AUDITED FINANCIAL RESULTS
FOR THE YEAR ENDED 28 FEBRUARY 2006
CONSOLIDATED INCOME STATEMENT
Year ended Year ended
28 February 28 February
2006 2005
Audited Audited *
R R
Revenue 196 601 607 175 403 442
Cost of sales (137 069 (129 841
374) 819)
Gross profit 59 532 233 45 561 623
Other income 3 908 673 6 225 646
Administration expenses (33 444 (27 603
682) 239)
Earnings before interest, tax, 29 996 224 24 184 030
depreciation and amortisation
Depreciation (6 241 167) (7 270 102)
Profit before interest and taxation 23 755 057 16 913 928
Net interest paid (2 153 891) (1 417 740)
Profit before taxation 21 601 166 15 496 188
Taxation (5 868 219) (5 185 707)
Profit attributable to ordinary 15 732 947 10 310 481
shareholders
Reconciliation of headline earnings:
Profit attributable to ordinary 15 732 947 10 310 481
shareholders
Adjusted for non-trading items
Adjusted for profit on disposal of (1 028 689) (1 714 955)
property, plant and equipment
Headline earnings 14 704 258 8 595 526
Weighted average shares in issue on 100 547 945 120 395 001
which earnings are based
Basic earnings per share (cents) 15.65 8.56
Adjusted for -
Profit on disposal of property, plant (1.02) (1.42)
and equipment (after tax) (cents)
Headline earnings per share (cents) 14.63 7.14
Dividend per share (cents) - 2.75
* Restated in terms of IFRS
CONSOLIDATED BALANCE SHEET
28 February 28 February
2006 2005
Audited Audited*
R R
ASSETS
Non-current assets 68 786 895 35 604 426
Property, plant and equipment 64 004 353 34 225 375
Goodwill 2 418 638 -
Unlisted investments and associates 2 363 904 1 379 051
Current assets 60 319 240 34 874 273
Inventories 10 100 269 9 299 509
Trade and other receivables 30 232 775 25 559 578
Bank and cash 19 986 196 15 186
Total assets 129 106 135 70 478 699
EQUITY AND LIABILITIES
Equity 58 760 289 19 361 235
Issued capital 125 000 82 625
Share premium 23 442 393 -
Accumulated profits 35 192 896 19 278 610
Non-current liabilities 33 002 873 14 946 092
Environmental obligation 5 461 256 5 056 719
Instalment sale creditors 20 815 424 6 734 281
Deferred taxation 6 726 193 3 155 092
Current liabilities 37 342 973 36 171 372
Trade and other payables 28 076 933 20 117 295
Current portion of non-current 7 309 973 7 084 427
liabilities
Taxation 1 956 067 4 131 152
Bank overdraft - 4 838 498
Total equity and liabilities 129 106 135 70 478 699
Shares in issue 125 000 000 100 000 000
Net asset value per share (cents) 47.0 19.4
Net tangible asset value per share 45.1 19.4
(cents)
* Restated in terms of IFRS
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Shareholders" Accumulated
funds profits * Total
R R R
Balance at 29 February 2004 100 000 17 375 225 17 475
225
Prior year restatement -
Decommissioning and quarry - 2 095 035 2 095
rehabilitation assets raised 035
Deferred tax thereon - (628 510) (628
510)
Environmental obligations - (4 682 148) (4 682
raised 148)
Rehabilitation Trust - 579 127 579 127
contributions previously
expensed
Balance at 1 March 2004 100 000 14 738 729 14 838
729
Shares repurchased (17 375) - (17 375)
Premium on share capital - (2 482 625) (2 482
repurchased 625)
Net profit for the year - 10 310 481 10 310
481
Fair value adjustment to - 17 026 17 026
investment
Dividend paid - (3 305 000) (3 305
000)
Balance at 28 February 2005 82 625 19 278 611 19 361
236
Share capital issued 42 375 - 42 375
Premium on share capital issued 23 442 393 - 23 442
393
Net profit for the year - 15 732 947 15 732
947
Fair value adjustment to - 181 338 181 338
investments
Balance at 28 February 2006 23 567 393 35 192 896 58 760
289
* Restated in terms of IFRS
CONSOLIDATED CASH FLOW STATEMENT
Year ended Year ended
28 February 28 February
2006 2005
Audited Audited *
R R
Cash flows from operating activities 22 438 750 11 562 726
Net profit before taxation 21 601 166 15 496 188
Net interest paid 2 168 913 1 417 740
Depreciation 6 241 167 7 270 102
Profit on disposal of property, (1 407 954) (2 295 824)
plant and equipment
Operating profit before changes in 28 603 292 21 888 206
working capital
Changes in working capital items 727 312 (5 283 322)
Inventories (800 760) (5 747 168)
Trade and other receivables (4 310 101) (1 175 068)
Trade and other payables 5 838 173 1 638 914
Cash generated from operations 29 330 604 16 604 884
Less (6 891 854) (5 042 158)
Interest received 941 879 300 729
Interest paid (3 110 792) (1 343 948)
Dividends paid 0 (3 305 000)
Taxation paid (4 722 941) (693 939)
Cash flows from investing activities (27 015 (11 424
364) 165)
Purchase of property, plant and (26 685 (13 992
equipment 546) 551)
Proceeds on disposal of property, 2 832 635 3 351 284
plant and equipment
Investment in subsidiary and (2 763 523) -
associates
Purchase of investments (398 930) (782 898)
Cash flows from financing activities 29 386 122 (3 046 383)
Share capital 42 375 (17 375)
Premium on shares issued / 23 442 393 (2 482 625)
(repurchased)
Non-current liabilities 2 952 478 (2 627 080)
Short term loans 2 948 876 2 080 697
Net cash inflows / (outflows) 24 809 508 (2 907 822)
Bank and cash balances at start of (4 823 312) (1 915 490)
year
Bank and cash balances at end of 19 986 196 (4 823 312)
year
* Restated in terms of IFRS
SEGMENTAL ANALYSIS OF GROUP
OPERATIONS
Year ended Year ended
28 February 28 February
2006 2005
R R
Revenue
Aggregates 47 759 500 32 792 219
Ready mixed concrete 148 842 107 142 611 223
196 601 607 175 403 442
Gross profit
Aggregates 18 432 359 13 904 810
Ready mixed concrete 41 099 874 31 656 813
59 532 233 45 561 623
COMMENTS
The directors of Wearne have pleasure in presenting the
maiden annual financial results for the year ended 28
February 2006 ("the year"). Wearne successfully listed as the
first construction related company on the Alternative
Exchange (AltX) of the JSE Limited, on 21 February 2006.
REVIEW OF OPERATIONS
The group improved its performance substantially. Turnover
of aggregates increased by 45.6% while operating margins
declined marginally to 38.6%. Ready mixed concrete turnover
remained stable in a highly competitive environment with
operating margins increasing significantly to 27.6%.
BLACK ECONOMIC EMPOWERMENT ("BEE")
Wearne has achieved a 16% BEE shareholding at date of this
report. The group has a staff complement of 426 of which 80%
are Historically Disadvantaged South Africans.
FINANCIAL RESULTS
Revenue for the group increased by 12% to R196.6 million
for the year while EBITDA increased by 24% to R30 million.
The increase can largely be attributed to an improvement in
gross profit margins as a result of the general up-turn in
the construction industry that boosted demand for the
group"s products and services.
The group purchased capital equipment to the value of R26.6
million to increase the production capacity of its current
operations as well as to execute two new contracts to the
value of R68 million which were awarded to the group just
before year end.
PROSPECTS
The monies raised through the pre-listing private placement
will be used to strengthen the company"s balance sheet for
possible future acquisitions and growth opportunities.
Robust trading conditions continue in the construction
industry and the directors are confident that the group
will show real growth in headline earnings per share for
the year ahead ending 28 February 2007.
DIVIDEND POLICY
In line with the group"s growth strategy, no dividend was
declared for the year.
APPRECIATION
We thank our staff for their dedication, tenacity and hard
work that has been critical to the group"s successful
listing on AltX. A special thanks also to Wearne"s
advisers, business partners and stakeholders for their
loyalty and ongoing support.
BASIS OF PREPARATION, ACCOUNTING POLICIES AND NOTES
BASIS OF PREPARATION
The consolidated annual financial statements have been
prepared in accordance with International Financial
Reporting Standards (IFRS). These are the group"s first
IFRS consolidated annual financial statements and the
provisions of IFRS 1 (first time adoption of IFRS) have
been applied.
COMPARATIVE INFORMATION
The group has restated the comparative information to take
account of the effects of correctly providing for
decommissioning and rehabilitation of mining sites, as
required by the relevant authorities and IAS 16, which was
not previously provided for historically, since a
rehabilitation trust had been established. The
decommissioning requirements have now been correctly
accounted for retrospectively, and the trust consolidated
as part of the group annual financial statements.
SUBSEQUENT EVENTS
Prior to the date of listing on AltX, an offer was made to
the group"s employees, to acquire shares in the company
through the Share Incentive Trust at the listing price of
R1.00 per share. Employees have accepted 4 185 000 shares
of the 5 000 000 ordinary shares that were offered by the
Share Incentive Trust. These shares were allotted after the
year end.
AUDITORS" REPORT
The group"s auditors, Clarke and Patterson, have audited
the group annual financial statements. A copy of their
unqualified audit opinion is available for inspection at
the company"s registered office.
By order of the Board
17 May 2006
S J Wearne O J G Harvey
Chief Executive Officer Chief Financial
Officer
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
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: 17/05/2006 08:41:05 AM Produced by the JSE SENS Department
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