WG WEARNE THE FIRST CONSTRUCTION LISTING ON ALTX
96 year-old WG Wearne, SA's oldest privately-owned supplier of ready mixed concrete and aggregates, earlier today founded AltX's new construction sector when it was the first in an expected stream of construction companies to list on the exchange. The share debuted strongly at R1,91, almost double the R1 value at which shares had been priced in the private placement. Only two hours after listing more than 3 million shares had changed hands in 323 separate transactions with an aggregate value of R5,2 million.
Commitment letters for the 25 million shares offered in the private placement showed more than 27 times oversubscription, leaving no shares available for purchase by the public until this morning's listing. New capital of R25 million raised from the private placement “will be used for organic growth through plant and fleet expansion as well as geographic expansion,” says CEO John Wearne.
The company reported profit after tax (PAT) at February 2005 of R10,3 million off a revenue base of R175,4 million. With WG Wearne then still a private company, pro forma headline earnings per share (“HEPS”) were calculated at 7,1 cents. For its current financial year ending next week, revenue is forecast to increase substantially to R188,6 million driving 16,2% growth in PAT to R12,3 million. HEPS is forecast to jump to 11,9 cents.
WG Wearne's annual results announcement is expected in April and Wearne says he is confident that the group is on track to meet its forecasts for the 2006 financial year. “WG Wearne's management and operational fundamentals as well as positive industry conditions will enable us to deliver on our forecasts, and investor appetite for our shares supports this view.”
An announcement by the company earlier today proves Wearne's confidence in the group's prospects to be well-grounded in fact. Wearne says that “new contracts recently won by WG Wearne are expected to generate an additional R68 million over the next 18 months”. The contracts include the supply of ready mixed concrete to the Grinaker-LTA/WBHO Fairlands joint venture for RMB Properties' building projects and the Group 5/Murray & Roberts joint venture for the VRESAP pipeline.
Recent analyst reports and news articles have reinforced that the estimated
R372 billion to be spent on upgrading infrastructure over the next few years
is a powerful growth driver for the construction industry. “Obviously
the 2010 Soccer World Cup adds impetus to WG Wearne's prospects, with
stadiums to be upgraded and new ones built as well as the necessary road work
to be done and knock-on expansion expected for instance in the hotel and leisure
industry.” Industry outlook is so rosy that certain securities houses
such as Sasfin Frankel Pollak Securities have started a dedicated infrastructure
fund to house companies such as WG Wearne who are set to benefit from the
However, Wearne emphasises that although a percentage of WG Wearne's forecast growth is due to the planned building roll-out, a large portion is also attributable to growth within the group. “Expanding our crushing operations will enable us to source more raw materials in-house, boosting profit by reducing dependence on third party suppliers.”
Keeping in his sights a possible later transfer to the JSE's main board, Wearne says that he is happy to list on AltX. “The AltX is a well-regulated, historically successful platform that enables market newcomers to establish a profile and familiarise themselves with the listed environment before making a leap to main board,” he says.
Issued by: Envisage Communications
(011) 325 5944 / 083 287 2771
On behalf of: WG Wearne Limited
John Wearne, CEO
(011) 412 3000
Issue date: 21 February 2006