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PKH
PKH
PKH - Protech - Reviewed Consolidated Interim Results For The Period Ended 31
August 2007
Protech Khuthele Holdings Limited
(formerly M&W Prinsloo Management Services (Pty) Ltd)
Registration number 2000/024352/06
JSE code: PKH
ISIN: ZAE000101986
("Protech" or `the Company" or "the group")
REVIEWED CONSOLIDATED INTERIM RESULTS FOR THE PERIOD ENDED 31 AUGUST 2007
Protech is pleased to announce its maiden interim results for the period ended
31 august 2007. Protech, a broad based civil engineering company, listed on
the JSE Limited on 7 August 2007.
CONSOLIDATED BALANCE SHEET AT 31 AUGUST 2007
Reviewed Reviewed
Group Pro forma Group
6 months Year ended
31/08/2007 28/02/2007
R R
ASSETS
Non-current assets 133,875,381 98,846,027
Property, plant and equipment 133,875,381 98,846,027
Current assets 133,069,695 80,031,986
Inventory 6,301,698 3,622,071
Trade and other receivables 109,677,846 42,132,559
Loans granted to companies 2,015,085 6,871,093
Loans granted to shareholders 396,841 11,129,075
Bank balances and cash 14,678,225 16,277,188
Total assets 266,945,076 178,878,013
EQUITY AND LIABILITIES
Total equity 120,485,001 79,593,376
Share capital and share premium 228,598,287 228,598,287
Common Control Reserve (122,052,584) (149,004,911)
Retained earnings 13,939,298 -
Total liabilities 146,460,075 99,284,637
Non-current liabilities 39,131,753 20,502,058
Borrowings - interest bearing -
finance leases 27,190,635 8,416,169
Deferred tax 11,941,118 12,085,889
Current liabilities 107,328,322 78,782,579
Trade and other payables 31,081,359 21,056,977
Subcontractor liabilities 4,051,079 7,435,110
Borrowings - interest bearing 46,115,108 36,454,582
Borrowings - non-interest bearing - 3,198,353
Bank overdraft 74,236 1,332,829
Current tax liabilities 26,006,540 9,304,728
Total equity and liabilities 266,945,076 178,878,013
SUPPLEMENTARY BALANCE SHEET
INFORMATION
Total number of shares in issue 362,500,000.00 362,500,000.00
Net asset value per share (cents) 33.2 22.0
Capital expenditure
- Spent 70,122,286 41,411,946
- Commitments - Authorised but unspent 17,041,120 -
CONSOLIDATED INCOME STATEMENT FOR THE PERIOD ENDED 31 AUGUST 2007
Reviewed Reviewed Reviewed
Group Group Pro forma Group
6 months ended 2 months ended Year ended
31/08/07 31/08/07 28/02/07
R R R
Revenue 193,468,774 75,274,679 247,221,279
Earnings before
depreciation and
interest 68,193,548 23,943,973 64,870,862
Depreciation (7,344,767) (3,299,303) (10,300,335)
Earnings before
interest and taxation 60,848,781 20,644,670 54,570,526
Net interest expense (2,763,371) (1,029,157) (5,214,674)
Earnings before
taxation 58,085,410 19,615,513 49,355,852
Taxation (17,193,785) (5,676,216) (13,367,331)
Earnings for the
period 40,891,625 13,939,297 35,988,521
Earnings per share
(cents):
- Basic 11.7 4.0 10.3
SUPPLEMENTARY INCOME
STATEMENT INFORMATION
Reconciliation of
weighted average
number of shares in
issue:
- Weigted average
number of shares in
issue 350,887,978 350,887,978 350,000,000
Reconciliation of
headline earnings:
Earnings attributable
to shareholders of
the holding company 40,891,625 13,939,297 35,988,521
Adjusted for
(Profit)/loss on
disposal of assets (1,271,585) (720,984) 5,891,637
Headline earnings 39,620,040 13,218,313 41,880,158
Headline earnings per
share (cents):
- Basic 11.3 3.8 12.0
CASH FLOW STATEMENT FOR THE PERIOD ENDED 31 AUGUST 2007
Reviewed Reviewed
Group Pro forma
Group
6 months ended Year ended
31/08/07 28/02/07
R R
Cash flows from operating activities (101,300) 58,462,756
Cash receipts from customers 124,613,315 226,014,799
Cash paid to suppliers and employees (121,314,501) (161,790,146)
Cash generated by operations 3,298,814 64,224,653
Interest received 491,989 463,676
Interest paid (3,255,360) (5,678,350)
Income taxes paid (636,743) (547,223)
Cash flows from investing activities (28,674,062) (41,859,477)
Purchase of property, plant and
equipment (70,122,286) (41,411,946)
Proceeds on disposal of property, plant
and equipment 29,019,747 15,850,607
Increase in loans granted - (16,298,138)
Repayment of loans granted 12, 428,477 -
Cash flows from financing activities 28,434,992 (6,685,219)
Share Issue - 12,500,309
(Decrease) in loans from shareholders - (5,913,971)
Increase in borrowings related to
finance leases 77,577,505 45,042,971
Payments in terms of finance leases (49,142,513) (58,314,528)
Net (decrease)/increase in cash and
cash equivalents (340,370) 9,918,060
Cash and cash equivalents at the
beginning of the period 14,944,359 5,026,299
Cash and cash equivalents at the end of
the period 14,603,989 14,944,359
Cash and cash equivalents comprise of:
Cash and cash equivalents 14,678,225 16,277,188
Bank overdraft (74,236) (1,332,829)
14,603,989 14,944,359
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD ENDED
31 AUGUST 2007
Common
Share Share Control
Capital Premium Reserve
R R R
Share Issue 1,813 228,596,474
Common control reserve (149,004,911)
Profit for the period -
Transfer profit at acquisition
date to reserve 26,952,327
Balance at 31 August 2007 1,813 228,596,474 (122,052,584)
Retained
Earnings Total
R R
Share Issue 228,598,287
Common control reserve (149,004,911)
Profit for the period 40,891,625 40,891,625
Transfer profit at acquisition
date to reserve (26,952,327) -
Balance at 31 August 2007 13,939,298 120,485,001
CONDENSED OPERATIONAL SEGMENTAL REPORTING FOR THE PERIOD ENDED 31 AUGUST 2007
Revenue
6 months ended Year ended
31/08/07 28/02/07
Segment
Earthworks 189,718,259 267,116,706
Plant Hire 52,632,260 82,677,643
Geotechnical Laboratory and
Surveying Services 2,708,856 4,722,991
Total 245,059,375 354,517,340
Subsidiary adjustments (51,590,601) (107,296,061)
Total for the Group 193,468,774 247,221,279
EBIT
6 months ended Year ended
31/08/07 28/02/07
Segment
Earthworks 31,849,731 28,674,368
Plant Hire 28,343,116 24,321,521
Geotechnical Laboratory and
Surveying Services 655,933 1,574,637
Total 60,848,780 54,570,526
Subsidiary adjustments - -
Total for the Group 60,848,780 54,570,526
Assets
6 months ended Year ended
31/08/07 28/02/07
Segment
Earthworks 142,945,559 77,645,816
Plant Hire 159,881,530 110,305,712
Geotechnical Laboratory and
Surveying Services 3,224,832 2,231,703
Total 306,051,921 190,183,231
Subsidiary adjustments (39,106,845) (11,305,218)
Total for the Group 266,945,076 178,878,013
Liabilities
6 months ended Year ended
31/08/07 28/02/07
Segment
Earthworks (83,094,846) 37,492,167
Plant Hire (101,180,526) 72,137,549
Geotechnical Laboratory and
Surveying Services (1,291,547) 960,139
Total (185,566,919) 110,589,855
Subsidiary adjustments 39,106,844 (11,305,218)
Total for the Group (146,460,075) 99,284,637
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDED
31 AUGUST 2007
1. OVERVIEW
Protech was incorporated under the laws of the Republic of South Africa
on 22 September 2000 as M&W Prinsloo Management Services (Pty) Limited
and changed its name to Protech Khuthele Holdings (Pty) Limited on 16
July 2007. A shareholders resolution was passed on 18 July 2007 to
convert the company into a public company.
Protech acquired five subsidiaries in terms of a restructure process on a
share-for-share basis from the original shareholders of those
subsidiaries on 1 July 2007. Two of the five subsidiaries will cease
their operations in the 2008 financial year. The subsidiaries are:
- Protech Khuthele - (bulk earthworks, roads and civil engineering
contractors);
- Pela Plant - (plant hire);
- Gauteng Road Testing Services, subsequently renamed South African Road
Testing Services - Geotechnical Laboratory and Surveying Services;
- Protech Project Holdings (will cease operations in 2008); and
- Umvundla Investments No. 2 (will cease operations in 2008).
These consolidated financial results are published to provide information
to holders of Protech`s listed shares.
For interim reporting purposes, Protech prepared the financial statements
for the group for the six months ended 31 August 2007. In line with the
statement on predecessor accounting (also known as the pooling of
interest), the income statement was prepared for the group for the six
months ended 31 August 2007. The income statement prepared for the two
months ended 31 August 2007 reflects the profit attributable to the
shareholders of the group. The comparatives are based on the actual
numbers for the pro forma group for the year ended 28 February 2007.
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES
The condensed financial statements for the interim period have been
prepared using accounting policies consistent with International
Financial Reporting Standards and in accordance with International
Accounting Standard (IAS) 34 Interim Financial Reporting.
The principal accounting policies used in preparing the reviewed results
for the six months ended 31 August 2007 are consistent with those applied
in the annual financial statements for the year ended 28 February 2007.
There are no standards that are currently in issue but not effective
which would result in a change in accounting policy.
3. POST BALANCE SHEET EVENT
On 4 October 2007, Protech entered into agreements to acquire the
businesses of Instant Concrete Products (Proprietary) Limited, Amadou
Investments (Proprietary) Limited, Oudema Concrete (Proprietary) Limited,
Rockcrete Readymix (Proprietary) Limited, Rockcrete Transport
(Proprietary) Limited and property from Mille Investments 189
(Proprietary) Limited.
The effective date of the acquisitions is 1 July 2007 subject to certain
conditions precedent being fulfilled. These conditions were detailed in
an announcement to shareholders published on 10 October 2007. Once all
the precedent conditions are met, Protech will consolidate the businesses
acquired into its accounts from the date of effective control.
OPERATING REVIEW FOR THE SIX MONTHS ENDED 31 AUGUST 2007
Introduction
As these are the maiden interim results, there are no comparative figures
against which to measure the past performance of the group. For this
reason, management has decided to disclose the results for the two months
ended 31 August 2007, the reviewed actual results for the six months
ended 31 August 2007 as well as the reviewed pro forma results for the 12
months ended 28 February 2007.
These additional disclosures are not required by the accounting standards
but do, in the opinion of management, provide the users of the interim
financial statements with relevant and valuable information.
The profit attributable to the shareholders of Protech consists of the
earnings for the two months ended 31 August 2007.
Weighting of forecast results
As Protech`s business is cyclical, management expects the first two
quarters of the financial year ending February 2008, as reported here, to
yield approximately two thirds of the profit forecast for the full
financial year. This traditional cyclical pattern is largely due to
weather patterns (specifically rainfall) and the annual construction
sector shutdown in December.
A trading statement was issued on 10 October 2007 wherein management
indicated that the results for the full year were expected to be between
20% and 25% higher than the forecast results for the full year contained
in the Pre-Listing Statement.
Operating Profit
At R60,8 million, the operating profit is in line with the anticipated
increase in profits over the forecast as mentioned above. Both the
operating profit margin and net profit margin have increased over the
prior year and exceed the forecasted margins. The increased margins are
due to improved efficiency and extensions of the scope of work on certain
contracts. The trading profit at the half year stage is considered to
represent approximately two thirds of the expected annual trading profit
from the existing operations excluding any acquisitions.
Headline earnings per share
At R39,6 million, headline earnings for the period mirror the expected
increase in earnings over the forecast earnings. As mentioned above,
headline earnings for the six months ended 31 August 2007 are also
expected to represent approximately two thirds of the earnings for the
full year. Headline earnings per share for the six months were 11,3 cents
compared to headline earnings per share of 12 cents for the 12 months
ended 28 February 2007.
Balance sheet
The group balance sheet remains healthy, with equity having increased by
51% and growth in total assets by 49%.
At the reporting date of 31 August 2007 there was some cash lockup due to
an increase in the debtors` book, analysis of which shows that:
- 11.6% (R 12.6 million) of the debtors` balance relates to standard
industry contract retentions;
- 12.4% (R 13.6 million) relates to plant sales as part of plant
replacements in line with the plant policy;
- 42.0% (R 46.1 million) of debtors consisted of listed clients;
- 79.3% (R 76.9 million) of the debtors (excluding retentions) at 31 August
2007 were collected by mid-October 2007.
There were a few large contracts nearing completion stages and the
process of issuing and acceptance of the final certificates caused a
short delay in the payment of these final certificates. At the date of
this report most of these receivables had been collected and the group`s
cash position has improved significantly since then. There have been no
instances of irrecoverable debts or payment related disputes from
customers. The total cash and cash equivalents of the group at the date
of this report amounted to R40 million.
Dividends
In line with Protech`s policy, no dividend has been declared for the
period.
General comment, prospects and reminder of cautionary announcement
The buoyancy of the construction sector continues unabated, as is clear
from the results and forecasts of all industry participants. Protech has
had an excellent first six months and the trend is expected to continue,
with a number of large contracts having just started or due to commence
shortly.
Protech recently acquired two readymix concrete businesses consisting of
six readymix batching plants and related equipment and vehicles. These
acquisitions are expected to enhance Protech`s earnings going forward.
These transactions are conditional upon certain conditions precedent
(including a due diligence investigation) being fulfilled and no revenue
from these businesses is included in these interim results. Shareholders
are reminded to exercise caution in dealing in Protech`s shares until the
financial effects of the acquisitions are published.
Approval and review of the interim financial statements
The interim financial statements for the six months ended 31 August 2007
were reviewed by Deloitte & Touche and their review opinion is available
for inspection at Protech`s registered office.
On behalf of the directors
DA Ackerman GD Chapman CJA Wolmarans
Chairman of the Board Group Chief Executive Group Financial Director
Lanseria
29 October 2007
Directors:
DA Ackerman* (Chairman), GD Chapman (Chief Executive) CJA Wolmarans
(Group Financial Director), MSG Mareletse*, V Raseroka*, P van Tonder*
* non-executive
Secretary:
A van der Merwe
Registered office:
Corner R512 and Elandsdrift Road, Bultfontein, Lanseria.
(Private Bag X6, Lanseria, 1748)
Website: www.protechkhuthele.co.za
Transfer Secretary:
Link Market Services South Africa (Proprietary) Limited
11 Diagonal Street, Johannesburg, 2001
(PO Box 4844, Johannesburg, 2000)
Sponsor:
Ernst & Young Sponsors (Proprietary) Limited
Date: 29/10/2007 15:52:08 Produced by the JSE SENS Department.
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