| Mon 17 Nov 2008, 7:05 | | BWI - B&W - Preliminary Condensed Audited Financial Results For The Year Ended |
|
BWI
BWI
BWI - B&W - Preliminary Condensed Audited Financial Results For The Year Ended
31 August 2008
B&W Instrumentation and Electrical Limited
Incorporated in the Republic of South Africa
(Registration number 2001/008548/06)
Share code: BWI & ISIN: ZAE000098687
("B&W" or "the company" or "the group")
Preliminary condensed audited financial results for the year ended 31 August
2008
Financial highlights
* All key indicators ahead of pre-listing forecasts
* Revenue up 53% y-o-y
* NPAT up 133% y-o-y
* HEPS up 104% y-o-y to 29.02 cents
* Cash balance up 230% y-o-y
* Cash generated R77 million
* Total dividend of 7 cents (2007: 3.5 cents)
Balance sheet
Audited Audited
31 August 31 August
2008 2007
R`000 R`000
Assets
Non-current assets 10 561 6 486
Property, plant and equipment 10 561 6 486
Current assets 203 185 126 356
Inventories 4 690 10 929
Loans to group companies 940 6 034
Trade and other receivables 86 928 75 407
Foreign exchange contract asset - 433
Cash and cash equivalents 110 627 33 553
Total assets 213 746 132 842
Equity and liabilities
Equity 111 779 64 944
Share capital 32 285 32 285
Retained income 79 494 32 659
Minority interest * *
Non-current liabilities 11 608 8 124
Deferred tax 11 608 8 124
Current liabilities 90 359 59 774
Loans from group companies 1 185 -
Current tax payable 18 130 7 387
Trade and other payables 71 044 52 387
Total equity and liabilities 213 746 132 842
Number of ordinary shares in issue 200 000 000 200 000 000
Net asset value per share (cents) 55.9 32.5
Net tangible asset value per share
(cents) 55.9 32.5
Net asset value per ordinary share is based on the 200 000 000 shares in issue
at 31 August 2008 and 31 August 2007.
*Less than R1 000
Income statement
% Audited Audited
change year to year to
31 August 31 August
2008 2007
R`000 R`000
Revenue 53 450 333 294 042
Cost of sales (350 731) (239 583)
Gross profit 83 99 602 54 459
Other income 4 262 433
Operating expenses (28 509) (19 819)
Operating profit 115 75 355 35 073
Investment revenue 7 368 1 682
Finance costs (432) (875)
Profit before taxation 129 82 291 35 880
Taxation (24 456) (11 089)
Profit for the year 133 57 835 24 791
Adjustment for headline 207 161
earnings - loss on sale of
property, plant and
equipment
Headline earnings 133 58 042 24 952
attributable to ordinary
shareholders
Weighted average number of 200 000 000 175 000 000
ordinary shares in issue
Earnings per ordinary share 104 28.92 14.17
(cents)
Headline earnings per
ordinary share (cents) 104 29.02 14.26
Statement of changes in equity
Share Share Retained Total
capital premium income equity
Balance at 1 September * * 7 868 7 868
2006
Changes in equity
Profit for the year - - 24 791 24 791
Issue of share capital 2 32 283 - 32 285
Balance at 31 August 2007 2 32 283 32 659 64 944
Changes in equity
Profit for the year - - 57 835 57 835
Dividends - - (11 000) (11 000)
Balance at 31 August 2008 2 32 283 79 494 111 779
*Less than R1 000
Cash flow statement
Audited Audited
year to year to
31 August 31 August
2008 2007
R`000 R`000
Cash from operating activities 87 133 10 397
Net cash from investing activities 941 (7 686)
Net cash from financing activities (11 000) 20 246
Total cash movement for the year 77 074 22 957
Cash at beginning of the year 33 553 10 596
Total cash at end of the year 110 627 33 553
Commentary
Introduction
The annual financial results for the year ended 31 August 2008 ("the year")
reflect a strong performance for B&W`s first full 12 months trading as a listed
entity. Key performance indicators significantly exceeded both the prior year`s
performance and the forecasts set out in the prospectus issued on 27 June 2007
("the prospectus").
Growth was primarily attributable to continued development in the mining
industry in and across the borders of South Africa.
Basis of preparation and accounting policies
The accounting policies applied in the preparation of these preliminary
condensed audited annual financial statements for the year, which are based on
reasonable judgments and estimates, are in accordance with International
Financial Reporting Standards ("IFRS") and are consistent with those applied in
the audited annual financial statements for the year ended 31 August 2007. These
preliminary condensed audited annual financial statements as set out in this
report have been prepared in terms of IAS 34 - Interim Financial Reporting, the
Companies Act (Act 61 of 1973), as amended and the Listings Requirements of the
JSE Limited ("JSE").
Group profile
Boasting a 34-year track record, B&W is one of the three largest electrical &
instrumentation ("E&I") contractors in South Africa. The group`s services
include installing and commissioning infrastructure for process plants and
ensuring functionality in accordance with design specifications. This spans
equipment procurement, project supervision, installation, post-installation
calibration, commissioning and ongoing maintenance. B&W currently services the
industrial utilities, mining, chemical, oil and gas and food and beverage
industries.
Review of operations
During the year B&W secured orders to the aggregate value of R474 million in
open tender, and negotiated a further R163 million on the basis of orders
received.
The mining industry remains a core revenue generator for the group. The local
power crisis has resulted in numerous coal mine projects as Eskom`s demand for
coal soars to increase capacity. B&W secured two such projects during the year.
However, there was some negative impact on the group as a number of projects
were cancelled and others deferred pending adequate power supply. In order to
counter this B&W`s management has intensified the marketing of projects to
clients outside the borders of South Africa.
This strategy is proving successful and resulted in the receipt of orders for
cross-border projects to the value of R207 million (43% of total) during the
year. These included the early works and E&I installation for a nickel
concentrator in Madagascar. Due to the size of these and possible future
projects, B&W has established subsidiaries in Madagascar and Mozambique to
assist in facilitation.
During the year the group also carried out a number of contracts at
petrochemical plants increasing its presence in the high-growth "energy"
industries. Further, B&W was successful in securing infrastructure work for
Transnet Limited ("Transnet").
Financial results
Revenue grew year-on-year by 53%, generating net profit after tax ("NPAT") and
earnings per share ("EPS") of R58 million and 28.9 cents, respectively, equating
to increases of 133% and 104% year-on-year.
Notably revenue, NPAT and EPS were ahead of the forecasts set out in the
prospectus by 34%, 75% and 75%, respectively.
B&W`s NPAT margin of 12.8% compares favourably with the weighted average of 6.5%
for companies listed on the `Heavy Contracting` sector of the JSE.
A number of B&W`s cross-border contracts are US Dollar-denominated. Although the
group has hedged the South African cost portion of these contracts, the non-
South African cost portion which is largely denominated in the currency of the
country in which the installation is being built, is not hedged. The gain
resulting from the foreign exchange fluctuation impact on these costs amounted
to R4.7 million.
Positive cash flow of R77 million was recorded with R111 million cash on hand at
year-end.
Prospects
Work in hand for the current year to August 2009 amounts to R428 million, and
targeted projects that are either in progress or have been confirmed indicate
that B&W will continue improving on results.
B&W has active and bankable projects identified to 2013 in the group`s
traditional markets. While the current global financial crisis has not yet
affected these prospects, the sharp fall in the price of resources and in
particular metals, is expected to impact negatively in the medium-term. The
group is therefore actively targeting an increased presence in the high-growth
"energy" industries including oil and gas and power generation where
considerable construction activity is anticipated from 2010. A greater presence
in these markets is expected to help mitigate against a possible slowdown in the
long-term in the mining industry which currently generates the majority of
revenue for B&W.
In addressing the shortage of refining capacity, two new refineries are being
considered - one by The Petroleum Oil and Gas Corporation of South Africa
(Proprietary) Limited ("PetroSA") and another by Sasol Limited. B&W is well-
positioned to benefit from these projects through established relationships with
both entities as well as most of the leading engineering, procurement,
construction and management ("EPCM") contractors who would be involved. In
addition the group has a proven track record of successful prior projects in
related sectors.
A further potential revenue stream for the group will be government`s continued
spend on infrastructure development. B&W will build on the two substantial
contracts from Transnet during the year as management is satisfied that further
work can be sourced from this sector.
Skills remain a significant constraint to future growth. In an effort to counter
this, the group invests substantially in skills training. As the learners
complete their courses they are being fed into the lower levels of B&W`s
management structure to alleviate staff shortages in critical areas.
B&W is confident that the current local and African markets offer sufficient
scope for the group to grow organically at a rate of 20% year-on-year in the
short-term. As a result, B&W will pursue only select acquisitions according to
strict criteria, which will enable diversification into complementary niche
areas in the broader construction industry and have synergistic culture and
management.
Cash dividend
Notice is given that, in line with B&W`s policy, a final cash dividend of 5
cents per share is hereby declared. Together with the interim dividend of 2
cents per share paid on 19 May 2008, the total dividend for the year amounts to
25% of NPAT. The dividend will be financed out of B&W`s free cash flow.
The salient dates for the dividend are as follows:
Last day to trade shares cum Friday, 5 December 2008
dividend
Shares trade ex dividend Monday, 8 December 2008
Record date Friday, 12 December 2008
Payment date Monday, 15 December 2008
No share certificates may be dematerialised or rematerialised between Monday, 8
December 2008 and Friday, 12 December 2008, both dates inclusive.
Audit opinion
The preliminary condensed annual financial statements for the year have been
audited by B&W`s auditors, Certified Master Auditors Inc. Their unqualified
audit report is available for inspection at the company`s registered office.
Appreciation
We thank our employees without whose hard work and dedication these results
could not have been achieved. We also thank our fellow directors for their wise
counsel and our business partners and advisors for their ongoing support.
Finally, thank you to our clients and shareholders for their loyal faith in the
group.
John Barrow Brian Harley
Chairman Managing Director
On behalf of the board.
17 November 2008
Directors
John Barrow (Chairman); Brian Harley (Managing Director); Johan Breedt; Danie
Evert (Financial Director); Tom Lombard, Ken Nel; Dean Nevay; Gary Swanepoel;
Sam Vilakazi; Wolf Wassermeier*; Jimmy Oosthuizen*; Unati Mabandla*, Neels
Minnie+, Johan Rall+
*Non-executive director, Independent, +Alternate
Registered office
Master Business Associates VII, 139 Everfair Avenue, Randjesfontein, Midrand,
1685
(Private Bag X168, Halfway House, 1685)
Designated Adviser
Merchantec (Proprietary) Limited, 2nd Floor North Block, Hyde Park Office Tower,
Cnr 6th Road and
Jan Smuts Avenue, Hyde Park
(PO Box 41480 Craighall 2024)
Auditors
Certified Master Auditors Inc., 139 Everfair Avenue, Randjesfontein, Midrand,
1685
(PO Box 2506, Rivonia, 2128)
Transfer secretaries
Computershare Investor Services (Proprietary) Limited, 70 Marshall Street,
Johannesburg, 2001
(PO Box 61051, Marshalltown, 2107)
Company secretary
Master Business Associates VII, 139 Everfair Avenue, Randjesfontein, Midrand,
1685
(Private Bag X168, Halfway House, 1685)
Date: 17/11/2008 07:05:02 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
