| Mon 12 May 2008, 7:00 | | PKH - Protech Khuthele Holdings Limited - Audited |
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PKH
PKH
PKH - Protech Khuthele Holdings Limited - Audited Preliminary Report For The
Year Ended 29 February 2008
Protech Khuthele Holdings Limited
(formerly M&W Prinsloo Management Services (Pty) Limited)
Registration number 2000/024352/06
JSE code: PKH & ISIN: ZAE000101986
("Protech" or "the Company" or "the Group")
AUDITED PRELIMINARY REPORT FOR THE YEAR ENDED 29 FEBRUARY 2008
REVENUE UP 50%
EARNINGS UP 73%
TNAV UP 87%
CONDENSED CONSOLIDATED INCOME STATEMENT
for the year ended 29 February 2008
Reviewed
Audited Pro forma Group
2008 2007
R R
Revenue 368 495 647 245 636 212
Earnings before depreciation and 112 469 895 64 870 862
interest
Depreciation (15 277 816) (10 300 336)
Earnings before interest and taxation 97 192 079 54 570 526
Net interest expense (8 093 071) (5 214 674)
Earnings before taxation 89 099 008 49 355 852
Taxation (26 989 385) (13 367 331)
Earnings for the year 62 109 623 35 988 521
Attributable to ordinary shareholders 62 109 623 35 988 521
- prior to listing 26 952 327 35 988 521
- subsequent to listing 35 157 296 -
Earnings per share (cents)
- Basic 17,4 10,3
- Diluted 17,4 10,3
SUPPLEMENTARY INCOME STATEMENT
INFORMATION
- Weighted average number of shares 357 069 672 350 000 000
in issue
Reconciliation of headline earnings:
Earnings attributable to ordinary 62 109 623 35 988 521
shareholders
Adjusted for (profit)/loss on (2 085 163) 5 234 291
disposal of plant and equipment (net
of tax)
Headline earnings 60 024 460 41 222 812
Headline earnings per share (cents)
- Basic 16,8 11,8
CONDENSED CONSOLIDATED BALANCE SHEET
at 29 February 2008
Reviewed
Audited Pro forma
Group
2008 2007
R R
ASSETS
Non-current assets 279 413 351 98 846 027
Property, plant and equipment 256 964 022 98 846 027
Goodwill 16 044 943 -
Deferred tax 6 404 386 -
Current assets 213 338 601 67 531 986
Inventory 13 780 994 3 622 071
Trade and other receivables 102 225 409 42 132 867
Other financial assets 4 094 575 18 000 169
Bank balances and cash 93 237 623 3 776 879
Total assets 492 751 952 166 378 013
EQUITY AND LIABILITIES
Total equity 141 702 999 67 093 376
Share capital and share premium 228 598 287 216 098 287
Common control reserve (122 052 584) (149 004 911)
Retained earnings 35 157 296 -
Total liabilities 351 048 953 99 284 637
Non-current liabilities 120 629 129 20 502 058
Interest bearing borrowings 95 451 154 8 416 169
Deferred tax 25 177 975 12 085 889
Current liabilities 230 419 824 78 782 579
Bank overdraft - 1 332 829
Interest bearing borrowings 69 091 814 36 454 582
Non-interest bearing borrowings - 3 198 353
Trade and other payables 49 178 589 20 446 122
Vendor liability 71 356 287 -
Subcontractor liabilities 8 898 103 7 435 110
Provisions 18 311 476 610 855
Current tax liabilities 13 583 555 9 304 728
Total equity and liabilities 492 751 952 166 378 013
SUPPLEMENTARY BALANCE SHEET
INFORMATION
Total number of shares in issue 362 500 000 350 000 000
Net asset value per share (cents) 39,1 19,2
Capital expenditure
- Spent 179 160 879 41 411 946
- Commitments - Authorised but 43 675 000 -
unspent
Profit guarantees issued 19 893 681 4 872 671
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
for the year ended 29 February 2008
Reviewed
Audited Pro forma
Group
2008 2007
R R
Cash flows from operating 81 084 478 58 462 547
activities
Cash generated by operations 98 796 021 64 224 444
Net interest paid (8 093 071) (5 214 674)
Income taxes paid (9 618 472) (547 223)
Cash flows from investing (119 752 778) (41 859 477)
activities
Purchase of property, plant and (179 160 879) (41 411 946)
equipment
Proceeds on disposal of property, 47 936 675 15 850 607
plant and equipment
Cash received from acquisition 8 694 907 -
Decrease/(increase) in loans 2 776 519 (16 298 138)
granted
Cash flows from financing 129 461 873 (19 185 319)
activities
Share issue 12 500 000 209
Decrease/(increase) in net loans 7 930 722 (5 913 971)
from shareholders
Increase in borrowings related to 191 393 610 45 042 971
instalment sale agreements and
finance leases
Payments in terms of instalment (82 362 459) (58 314 528)
sale agreements and finance
leases
Net increase/(decrease) in cash 90 793 573 (2 582 249)
and cash equivalents
Cash and cash equivalents at the 2 444 050 5 026 299
beginning of the year
Cash and cash equivalents at the 93 237 623 2 444 050
end of the year
Cash and cash equivalents
comprise:
Cash and cash equivalents 93 237 623 3 776 879
Bank overdraft - (1 332 829)
93 237 623 2 444 050
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 29 February 2008
Common
Share Share control
capital premium reserve
R R R
Balance at 28 February 100 - -
2007
Share issues
23 May 2007 - 20 000 - - -
000(footnote 3)
- 41 869 362(footnote 209 - -
2)
Common control share
issues
28 May 2007 - 288 130 1 441 216 096 537 -
638(footnote 1)
Common control reserve - - (149 004 911)
Reviewed pro forma 1 750 216 096 537 (149 004 911)
Group at 1 July 2007
Share issues
6 August 2007 - 12 500 63 12 499 937 -
000(footnote 2)
Profit for the year - - -
Transfer profit at - - 26 952 327
acquisition date to
reserve
Balance at 29 February 1 813 228 596 474 (122 052 584)
2008
Retained
earnings Total
R R
Balance at 28 February - 100
2007
Share issues
23 May 2007 - 20 000 - -
000(footnote 3)
- 41 869 362(footnote - 209
2)
Common control share
issues
28 May 2007 - 288 130 - 216 097 978
638(footnote 1)
Common control reserve - (149 004 911)
Reviewed pro forma - 67 093 376
Group at 1 July 2007
Share issues
6 August 2007 - 12 500 - 12 500 000
000(footnote 2)
Profit for the year 62 109 623 62 109 623
Transfer profit at (26 952 327) -
acquisition date to
reserve
Balance at 29 February 35 157 296 141 702 999
2008
Footnotes:
(1) Issued to acquire common control subsidiaries
(2) Issued for cash
(3) Share split of 200 000 to 1
OPERATIONAL SEGMENTAL REPORTING
for the year ended 29 February 2008
Services within each business segment
For management purposes, the Group is organised into four major operating
divisions - earthworks, plant hire, geotechnical laboratory and readymix. These
divisions are the basis on which the Group reports its primary segment
information. The principal services and products of each of these divisions are
as follows:
Earthworks - bulk earthworks and roads and civil engineering contractors.
Plant hire - plant hire and logistical services.
Geotechnical laboratory - geotechnical laboratory and surveying services.
Readymix - supplier of readymixed concrete and pumping services.
The Group acquired the Readymix business with effect from 29 February 2008 and
the assets and liabilities of the business are included in segment assets and
liabilities reported below.
Segment revenue and segment result
Segment revenue
Reviewed
Audited Pro forma Group
Year ended Year ended
29/02/2008 28/02/2007
R R
Earthworks 382 870 298 266 044 881
Plant hire 116 265 364 82 164 457
Geotechnical laboratory 6 639 330 4 722 935
Readymix - -
505 774 992 352 932 273
Corporate* 600 000 -
Eliminations (137 879 345) (107 296 061)
368 495 647 245 636 212
Earnings before taxation
Taxation
Earnings for the year
Segment result
Reviewed
Audited Pro forma Group
Year ended Year ended
29/02/2008 28/02/2007
R R
Earthworks 36 461 216 28 882 851
Plant hire 51 574 575 18 895 588
Geotechnical laboratory 907 229 1 577 413
Readymix - -
88 943 020 49 355 852
Corporate* 155 988 -
Eliminations
Earnings before taxation 89 099 008 49 355 852
Taxation (26 989 385) (13 367 331)
Earnings for the year 62 109 623 35 988 521
Segment assets and liabilities
Segment assets
Reviewed
Audited Pro forma Group
Year ended Year ended
29/02/2008 28/02/2007
R R
Earthworks 138 872 136 65 145 816
Plant hire 289 574 959 110 305 712
Geotechnical laboratory 4 921 148 2 231 703
Readymix 100 103 491 -
533 471 734 177 683 231
Corporate* 84 312 022 -
Eliminations (125 031 804) (11 305 218)
492 751 952 166 378 013
Segment liabilities
Reviewed
Audited Pro forma Group
Year ended Year ended
29/02/2008 28/02/2007
R R
Earthworks 85 384 390 37 492 167
Plant hire 215 879 999 72 137 549
Geotechnical laboratory 3 011 909 960 139
Readymix 100 103 491 -
404 379 789 110 589 855
Corporate* 71 700 968 -
Eliminations (125 031 804) (11 305 218)
351 048 953 99 284 637
Other segment information
Depreciation
Reviewed
Audited Pro forma Group
Year ended Year ended
29/02/2008 28/02/2007
R R
Earthworks 725 952 114 851
Plant hire 14 252 871 10 045 505
Geotechnical laboratory 298 993 139 980
Readymix - -
15 277 816 10 300 336
Additions to non-current assets
Reviewed
Audited Pro forma Group
Year ended Year ended
29/02/2008 28/02/2007
R R
Earthworks 1 832 549 350 590
Plant hire 176 172 352 40 839 580
Geotechnical laboratory 1 155 978 221 777
Readymix 39 234 758 -
218 395 637 41 411 947
* Corporate includes the transactions of the holding company.
The accounting policies of the reportable segments are the same as the Group`s
accounting policies. Segment profit represents the profit earned by each segment
after taking into account interest received and interest paid.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the year ended 29 February 2008
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 transferred their operations during the 2008
financial year to the other operating subsidiaries. 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 (operations transferred to Protech Khuthele during
2008); and
- Umvundla Investments No. 2 (operations transferred to Pela Plant during
2008).
Acquisitions
- Protech Readymix - supplier of readymixed concrete and pumping services
(with effect from 29 February 2008).
Protech Khuthele Holdings Limited listed on the JSE Limited on 7 August 2007.
These consolidated financial results are published to provide information to
holders of Protech`s listed shares.
For annual reporting purposes, Protech prepared the financial statements for the
Group for the twelve months ended 29 February 2008. In line with the statement
on merger accounting (also known as the pooling of interest), the after tax
profits of the pro forma Group for the four months ended June 2007, prior to the
listing, were transferred to the common control reserve as reported in the
interim report at 31 August 2007. The comparatives are based on the actual
numbers for the pro forma Group results for the year ended 28 February 2007.
2. BASIS OF PREPARATION AND ACCOUNTING POLICIES
This preliminary report complies with International Accounting Standard 34 -
Interim Financial Reporting as well as with Schedule 4 of the South African
Companies Act and the disclosure requirements of the JSE Limited`s Listings
Requirements. The preliminary report has been prepared using accounting policies
that comply with International Financial Reporting Standards. The accounting
policies are consistent with those applied in the financial statements for the
year ended 28 February 2007, except for the adoption of IFRS 7 Financial
Instruments: Disclosures. This is a disclosure standard which has no impact on
recognition, measurement and presentation of financial instruments and
consequently has no impact on profit or loss or equity for the year.
3. ACQUISITIONS
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. These businesses will
forthwith be operated as a single business within Protech Readymix (Proprietary)
Limited, a newly formed wholly owned subsidiary.
The agreed effective date of the acquisitions was 1 July 2007 subject to certain
conditions precedent being fulfilled. All conditions precedent were fulfilled on
29 February 2008 making this the effective date of control. Since revenue from
acquisitions may only be recognised in the Group results from the date of
effective control, no revenue or earnings pertaining to Protech Readymix were
included in the reported results of the Protech Group for the year under review.
Impact of the acquisition on the results of the Group
Had the business combination been effected at 1 March 2007, the revenue of the
Group from continuing operations would have been R536,1 million, and the net
profit for the year would have been R69,5 million. The directors of the Group
consider these `pro-forma` numbers to represent an approximate measure of the
performance of the combined Group on an annualised basis and to provide a
reference point for comparison in future periods.
In determining the `pro-forma` revenue and profit of the Group had Protech
Readymix (Pty) Limited been acquired at the beginning of the current reporting
period, the directors have:
calculated depreciation and amortisation of plant and equipment acquired on
the basis of the fair values arising in the initial accounting for the business
combination rather than the carrying amounts recognised in the pre-acquisition
financial statements; and
based borrowing costs on the funding levels, credit ratings and debt/equity
position of the Group after the business combination.
The assets and liabilities of Protech Readymix have, however, been included in
the consolidated group financial statements as at 29 February 2008.
R
Acquisition purchase price 71 356 287
Net assets acquired 55 311 344
Non-current assets acquired 39 234 758
Current assets acquired 38 419 404
Deferred tax asset acquired on fair value adjustment of 6 404 386
assets
Non-current liabilities acquired 10 641 067
Current liabilities acquired 18 106 137
Goodwill arising on acquisition 16 044 943
Goodwill arising on acquisition
Goodwill arose in the business combination because the cost of the combination
included a control premium paid to acquire the Readymix businesses. In addition,
the consideration paid for the combination effectively included amounts in
relation to the benefit of expected synergies, revenue growth, future market
development and the assembled workforce of the Readymix business. These benefits
are not recognised separately from goodwill as the future economic benefits
arising from them cannot be reliably measured.
At the date of finalisation of these condensed financial statements, the
necessary market valuations and other calculations had not been finalised and
the adjustments to deferred tax assets and goodwill noted above have therefore
only been provisionally determined based on the directors` best estimate.
4. POST BALANCE SHEET EVENT
The full acquisition purchase price due to the vendors in respect of the
Readymix acquisition was settled subsequent to the year end and was funded as
follows:
Debt raised R62 500 000
Cash R8 856 287
Long term liabilities to the value of R10,6 million pertaining to instalment
sale agreements were acquired through the Readymix acquisition. These
liabilities were settled subsequent to year end through cash resources.
OPERATING REVIEW
for the year ended 29 February 2008
Introduction
These are the maiden audited annual results of the Group. The comparatives used
for the current year are the reviewed pro forma results for the 12 months ended
28 February 2007.
Operating profit
The Group recorded an operating profit of R97,2 million for the year, which is
33% higher than the forecasted operating profits.
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 efficiencies and focussed cost
containment efforts.
Headline earnings
At R60,0 million, headline earnings for the year have increased by 46% over the
prior year.
Balance sheet
The Group balance sheet is healthy, with equity having increased by 111% and
total assets have grown by 196%. Cash and cash equivalents increased
significantly to R93,2 million (2007: R2,4 million).
Dividends
No dividend is proposed in the current year and this is line with the policy
stated in the pre-listing statement.
General commentary
Protech achieved exceptional results in its first year as a listed company. This
is in line with the Group`s expectations and forecasts and follows the trend set
by other industry participants. The demand for commercial and industrial space
continues to be high, and this will result in continued work opportunities for
Protech Khuthele. With reference to electricity, Protech Khuthele is not
dependent on electricity as far as its contracting operations are concerned but
the crisis will however impact on projects that we are currently, or will in
future be, tendering on.
In addition, the mining sector now offers increased opportunity with the
globally robust commodity prices and it is anticipated that more work will be
available in the mining earthworks sub-sector in the coming year. Protech
Khuthele will continue to monitor all sub-sectors of the bulk earthworks, roads
and infrastructure markets and explore, select and utilise the best
opportunities. With the addition of the Readymix business the Group is positive
about the forthcoming year`s prospects.
Audit opinion
The auditors, Deloitte & Touche, have issued their unmodified audit opinion on
the Group`s financial statements for the year ended 29 February 2008. The audit
was conducted in accordance with International Standards on Auditing. A copy of
their audit report is available for inspection at the company`s registered
office. These abridged financial statements have been derived from the Group
financial statements and are consistent in all material respects, with the Group
financial statements.
On behalf of the directors
DA Ackerman GD Chapman CJA Wolmarans
Chairman of the Board Group Chief Executive Group Financial
Director
Lanseria
12 May 2008
Directors:
DA Ackerman* (Chairman), GD Chapman (Group Chief Executive)
CJA Wolmarans (Group Financial Director), MSG Mareletse*+,
C Nkosi*, V Raseroka*, P van Tonder*
* non-executive + independent
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:
Deloitte & Touche Sponsor Services (Proprietary) Limited
Date: 12/05/2008 07:00:01 Produced by the JSE SENS Department.
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