WG Wearne be­lieves it can come right

The Star Early Edition - - COMPANIES - Roy Cokayne

UN­CER­TAINTY re­mains about the continued ex­is­tence of WG Wearne de­spite the trou­bled listed ready-mix con­crete and ag­gre­gates sup­plier ex­press­ing con­fi­dence that a vi­able and prof­itable busi­ness would emerge once its re­struc­tur­ing plan had been fully im­ple­mented.

SJ Wearne, the com­pany’s chief ex­ec­u­tive, said yes­ter­day that the abil­ity of the group to fund short-term oper­a­tions in the forsee­able fu­ture would de­pend largely on the continued sup­port of the group’s fun­ders, a re­turn to prof­itable trad­ing and the abil­ity to gen­er­ate suf­fi­cient cash flows to hon­our com­mit­ments made to the South African Rev­enue Ser­vice (Sars) about a de­fer­ment agree­ment con­cluded af­ter its fi­nan­cial year end.

Wearne said the group was tech­ni­cally sol­vent, with a net asset value of R10.05 mil­lion, while cur­rent li­a­bil­i­ties of R287.4m ex­ceeded cur­rent as­sets of R80.1m by R207.3m.

He said cur­rent li­a­bil­i­ties in­cluded R40m owed to Sars.

“Sub­se­quent to year end, the group has en­tered into a de­fer­ment agree­ment with Sars, which re­sulted in the ma­jor­ity por­tion be­com­ing long term (R36.4m), as long as the cur­rent and de­fer­ral pay­ments re­main up to date,” he said.

Also in­cluded as cur­rent li­a­bil­i­ties were In­dus­trial Devel­op­ment Cor­po­ra­tion (IDC) loans to­talling R68.75m and Ned­bank loans of R9.2m.

Wearne said the IDC had in­di­cated that it was un­likely that the cor­po­ra­tion would call in its loans within the next 12 months.

He said the fi­nan­cial re­sults for the year to Fe­bru­ary had been pre­pared on the go­ing-con­cern ba­sis, be­cause the direc­tors be­lieved the group had ad­e­quate re­sources to con­tinue op­er­at­ing for the fore­see­able fu­ture.

“While man­age­ment are aware of the cash-flow pres­sures and sig­nif­i­cant liq­uid­ity un­cer­tainty at year-end, they con­tinue to as­sess the sit­u­a­tion as one whereby the group is able to ser­vice its debts that will be­come due in the next 12 months and also fund op­er­a­tional losses that may arise,” he said.

Wearne said man­age­ment would con­tinue to roll out the re­struc­tur­ing plan it had im­ple­mented last year.

“The aim of the process is to re­duce the cash flow pres­sures of the group, and to im­prove the liq­uid­ity and sol­vency of the in­di­vid­ual sub­sidiaries.

“The group is op­ti­mistic that, once the re-struc­ture plan has been im­ple­mented in full, a vi­able and prof­itable busi­ness will emerge,” he said.

Wearne said that the group ex­pe­ri­enced a tough fi­nan­cial year be­cause of the over-sup­ply of ce­ment and the lack of in­fras­truc­ture ex­pen­di­ture by the gov­ern­ment re­sult­ing in in­tense com­pe­ti­tion in the mar­kets in which the group op­er­ated.

The group yes­ter­day re­ported a widen­ing in its head­line loss a share in the year to Fe­bru­ary, from 6.95 cents to 16.89c. Net asset value a share de­creased from 15.47c to 3.68c.

Group rev­enue fell 18 per­cent, from R511.9m to R417.8m.

Op­er­at­ing profit dropped 63 per­cent, from R5.1m to R1.86m as gross profit mar­gins from con­tin­u­ing oper­a­tions de­te­ri­o­rated from 21.1 per­cent to 16.8 per­cent.

To­tal li­a­bil­i­ties de­creased 5.3 per­cent, from R360m to R341m, with R47m in bor­row­ings set­tled dur­ing the year.

Shares in WG Wearne rose 16.67 per­cent on the JSE yes­ter­day to close at 7c.

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