Photo by: Bloomberg
A strong performance by construction products provider WG Wearne’s ready-mixed concrete division has helped to narrow the group’s comprehensive loss by 61.18%, or R2.22-million, to R1.4-million for the six months ended August 31.
This resulted in a reduction in the basic and diluted headline loss a share from 1.28c to 0.06c apiece.
The ready-mix concrete business, which yielded a 19.13%, or R18.2-million, increase in revenue period-on-period, boosted group revenue by 14.7% to R243.9-million for the six months.
But despite an improved showing by the division, the company’s loss-making position, coupled with a negative liquidity position, had highlighted a possible going concern issue.
“We have been working closely in conjunction with our financiers to meet all our working capital requirements and continue to maintain a solvent position with a net asset value of R34.1-million, or 12.49c a share.
“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,” the company said in a statement on Wednesday.
The group’s aggregates division, meanwhile, remained a consistent contributor to its turnover, with an 11.32%, or R12.6-million, increase in revenue, while the precast division’s revenue grew by 6.4%, or R400 000.
The increased revenues, in conjunction with the group’s focus on efficiencies, resulted in a 19.37% increase in the operating profit, which fourth-generation CEO John Wearne attributed to the streamlining overhead structures and the implementation of cost-monitoring processes.
The group’s gross profit margin had increased to 22.67% compared with the 21.13% for the year ended February 28.
PROSPECTS
Wearne said the company would continue to focus on “key strategic areas” and monitor individual business operating units at a management level to mitigate the risk of future losses.
He expected market conditions to remain competitive, citing spare capacity in the cement industry, but noted that new entrants could change the operating environment of this business.
“The outlook for the aggregate business remains positive as government’s planned infrastructure development starts to materialise. The increased demand for road building material and railway ballast that was seen towards the end of the 2013 financial year is expected to continue,” he commented.
The order book for aggregates indicated that revenue targets set at the beginning of the financial year would be met.
Meanwhile, the concrete manufactured products division, which showed period-on-period growth of 6.37% continued to be constrained by the issuing of “very few” tenders by the Limpopo Roads Agency for concrete pipes and culverts in the province.