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BWK
BWK
BWK - Buildworks - Abridged reviewed consolidated results for the year ended 31
August 2008
Buildworks Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 2007/004935/06)
Share code: BWK ISIN: ZAE000110219
("Buildworks" or "the company" or "the group")
ABRIDGED REVIEWED CONSOLIDATED RESULTS FOR THE YEAR ENDED 31 AUGUST 2008
HIGHLIGHTS
- Revenue R201 million
- Net profit after tax R49 million
- Headline earnings per share of 11.04 cents per share
- EBITDA percentage 41,2%
- Profit after tax percentage 24,40%
ABRIDGED CONSOLIDATED INCOME STATEMENT
Reviewed
12 months ended
31 August 2008
R`000
Revenue 201,344
Cost of sales (92,899)
Gross profit 108,445
Other income 325
Operating expenses (25,824)
Earnings before interest, tax, depreciation and 82,946
amortisation ("EBITDA")
Depreciation and amortisation (8,252)
Profit before interest and taxation 74,694
Interest received 586
Interest paid (7,002)
Profit before taxation 68,278
Taxation (19,221)
Profit attributable to ordinary shareholders 49,057
Reconciliation of headline earnings:
Profit attributable to ordinary shareholders 49,057
Add IAS16 loss on disposal of property, plant and equipment 39
Headline earnings attributable to ordinary shareholders 49,096
Weighted average shares in issue on which earnings are 444,575
based (`000)
Earnings per share (cents) 11.03
Headline earnings per share (cents) 11.04
ABRIDGED CONSOLIDATED BALANCE SHEET
Reviewed
As at
31 August 2008
R`000
ASSETS
Non-current assets 333,850
Property, plant and equipment 196,735
Goodwill 102,423
Other intangible assets 20,656
Financial assets 14,036
Current assets 111,911
Inventories 38,084
Trade and other receivables 31,552
Cash and cash equivalents 42,275
Total assets 445,761
EQUITY AND LIABILITIES
Equity 266,364
Issued capital 5
Share premium 217,302
Accumulated profits 49,057
Non-current liabilities 109,191
Other financial liabilities 46,212
Environmental obligations 8,792
Instalment sale liabilities 42,770
Deferred taxation 11,417
Current liabilities 70,206
Other financial liabilities 13,708
Trade and other payables 22,176
Instalment sale liabilities 11,892
Taxation payable 22,430
Total equity and liabilities 445,761
Number of shares in issue (`000) 470,000
Net asset value per share (cents) 56.67
Net tangible asset per share (cents) 30.49
ABRIDGED CONSOLIDATED CASH FLOW STATEMENT
Reviewed
12 months ended
31 August 2008
R`000
Cash flows from operating activities 51,306
Cash flows utilised in investing activities (38,059)
Cash flows from financing activities 29,028
Net increase in cash and cash equivalents 42,275
Cash and cash equivalents at beginning of -
period
Cash and cash equivalents at end of period 42,275
ABRIDGED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Reviewed
12 months ended
31 August 2008
R`000
Balance at beginning of period -
Acquisition of businesses 90,626
Rights offer 80,000
Issue of shares nett of share issue expenses 46,681
Net profit for period 49,057
Balance at end of period 266,364
SEGMENTAL INFORMATION
Reviewed
12 months ended
31 August 2008
R`000
Revenue
Drift Supersand
104,207
West End 97,137
Corporate
0
201,344
Reviewed
12 months ended
31 August 2008
R`000
Net profit before interest and taxation
Drift Supersand 30,893
West End 48,538
Corporate (4,737)
74,694
Reviewed
12 months ended
31 August 2008
R`000
Net Assets
Drift Supersand 15,455
West End 102,982
Corporate 147,927
266,364
COMMENTARY
INTRODUCTION
The directors are pleased to present the maiden annual
financial results of the company for the year ended 31 August
2008.
Buildworks is a group focused on manufacturing and providing
heavy building materials to the construction industry and in
most cases direct to the end user. Its products are an
integral component of the basic building structure and are an
irreplaceable cornerstone used in the construction of roads,
stadiums, shopping centers, railways, schools, offices, houses
and other infrastructure and will benefit from the continued
capital formation in South Africa.
FINANCIAL RESULTS
Buildworks has produced a highly satisfactory set of maiden
annual results. The group`s turnover was below the forecast
for the period however the group achieved a net profit after
tax of R49,1 million which was in line with the forecast
included in our pre-listing statement of 2007. This was due to
the group being able to improve slightly upon the anticipated
gross margins and tight control of expenses.
The Drift Supersand business enjoyed growth in the road
building and civils sectors which more than offset the
weakness experienced in the commercial and residential market.
Turnover at West End in the building products division was
below anticipation as residential building slowed but the
business achieved outstanding results in the face of tough
macro-economic factors.
The group`s gross margin improved as a result of the strict
adherence to manufacturing processes, higher quality yields
and higher manufacturing economies of scale as a result of
larger volume orders. The group was highly conscious of the
rate at which input costs were escalating in the second half
of the year and an exceptional effort was made to mitigate
these increases through substitution and the additional buy in
and holding of raw materials.
Effective 1 September 2007 the group acquired Drift Supersand
& West End. 100% of Drift Supersand was acquired for a total
investment of 95,7 million shares in Buildworks which
represented 28% of the issued share capital at the time.
Assets of R142,2 million and liabilities of R138.4 million
were acquired in Drift Supersand resulting in a positive
differential of goodwill of R12,1 million.99% of West End was
acquired for a total investment of 204,7 million shares in
Buildworks which represented 61% of the total issued share
capital at the time. Assets of R154.9 million and liabilities
of R144.8 million were acquired in West End resulting in a
positive differential of goodwill of R93,3 million.
The allocation between goodwill and identifiable intangible
assets as a result of the excess of the cost of the
acquisitions over the fair value of the net tangible assets
acquired in terms of IFRS 3 has now been included in the year-
end accounts.
PROSPECTS
The global financial crisis that we are currently experiencing
and the anticipated recession aftermath has changed the
short term economic outlook dramatically since our listing
date last year, with a significant slowdown in growth in first-
world economies having a knock on effect on emerging-market
economies like South Africa.
There is however early indications that inflation will start
to subside in early 2009 and the prospects that there will be
a reduction in the prime interest rate appear likely. The
building products division is sensitive to the interest rate
environment and the availability of capital. A recovery in the
residential housing will have an immediate impact on the
prospects. In the short term, margin contraction is expected
as excess inventories make it difficult to recover the
historical increase in input costs. The aggregates business
should sustain its growth as it compensates for the downturn
in residential and commercial with increased volumes for the
massive roads program in Gauteng.
The roof tile plant is progressing well and installation of
the equipment has commenced. The planning around the
production and marketing is well advanced and we anticipate
launching in the second half of the financial year. It is
expected that the roof tile plant will have a moderate impact
on the second half of our 2009 year and a material impact the
2010 financial year. It is anticipated that roof tile plant`s
final cost will be R70 million as a result of the selection of
higher production capacity and greater levels of automation.
The option on the paver`s plant remains and we continue to
assess the optimum time to exercise this option.
The current operating climate will certainly be challenging
over the next year and the success factors that generated our
returns will remain in place, those being our ability to
produce quality product at the low end of the cost curve, our
marketing coverage which ensures reasonable selling margins
and our relatively low levels of debt.
We are however still confident that the government`s drive to
improve the quality of living and general infrastructure in
the country will continue and their commitment is clear with
their continued additional budget allocations. We are
confident that our positioning will offer a long term future
with strong underlying growth.
SUBSEQUENT EVENTS
Buildworks shareholders were advised by way of a SENS
announcement on 21 July 2008 and circular dated 20 October
2008 that the group had concluded an agreement to acquire the
entire issued ordinary share capital in and shareholders
claims against Consolidated Power Projects
(Proprietary)_Limited ("CONCO") ("the proposed acquisition").
The proposed acquisition remains subject to the condition
precedent that the company raise the requisite capital.
CONCO is a leading provider of Turnkey Solutions for and power
services to the electricity supply industry. CONCO`s expertise
in the design, project management, construction and
commissioning of high voltage switchyards, substations and
overhead power lines and Green Energy Projects has resulted in
CONCO gaining a reputation as an established market leader
with a proven track record achieved from over 22 years of
industry experience. To date CONCO has completed in excess of
450 projects throughout South Africa and on the African
continent and is ideally positioned in a high growth market
with relatively few competitors offering high voltage
solutions.
The CONCO proposed acquisition forms part of a strategy to
identify and assess value enhancing acquisition opportunities
in the construction and infrastructure related industries. The
proposed acquisition significantly enhances the group`s
ability to benefit from the parastatals` and public`s planned
roll-out of infrastructure development and related spend in
South Africa specifically in relation to South Africa`s power
generating capacity and the distribution and transmission
thereof. Post the transaction it is anticipated that 83% of
the group`s revenue will be generated by the power supply
sector. On the 1 September 2008 CONCO had an order book of
R1,2 billion and had submitted tenders for which they were
awaiting adjudication of R1,76 billion.
The company has received interest from prospective investors
to subscribe for new Buildworks shares at a price of between
75 to 80 cents sufficient to fulfil the outstanding condition.
The company is engaged in negotiations with the prospective
investors to finalise the terms and conditions of the offers
on a basis satisfactory to the company, the vendors of CONCO
and the prospective investors. Accordingly, Buildworks
shareholders were advised in the SENS announcement on 13
November 2008 to exercise caution when dealing in Buildworks
shares.
BASIS OF PREPARATION
These consolidated annual results have been prepared in
accordance with International Financial Reporting Standards
("IFRS") and the presentation and disclosure requirements of
IAS 34 (Interim Financial Reporting) and comply with the
requirements of the South African Companies Act (Act 61 of
1973) and the Listings Requirements of the JSE Limited. A copy
of this annual financial results announcement is available on
the company`s website (www.buildworksgroup.co.za) and on the
AltX website (www.altx.co.za).
ISSUE OF EQUITY
Prior to the initial public offer of 50 million shares at
R1.00 per share, shareholders of Buildworks subscribed for 80
million shares at R1.00 per share in terms of a rights offer.
COMMITMENTS
The group has an outstanding capital commitment of R39 million
at year end relating to the roof tile plant at West End of
which R37 million will be funded from the pre-approved
facility provided by Wesbank and the balance of R2 million
from our internal resources.
REVIEW OPINION
These consolidated annual financial results have been reviewed
by PKF (JHB) Inc. Their unqualified review opinion is
available for inspection at the company`s registered address.
DIVIDEND POLICY
The dividend policy will be reviewed periodically taking into
account prevailing circumstances and future cash requirements.
Initially, all earnings generated by the company will be
utilised to fund future growth.
Accordingly, in line with group policy, no dividend has been
declared for the period.
APPRECIATION
We thank our loyal staff for their commitment and hard work
which contributed to Buildworks`s achievement of its milestone
listing on the JSE. We also thank our customers, business
partners, advisors, suppliers and our shareholders for their
ongoing support and faith in the group.
By order of the board
Herman Mashaba Raoul Gamsu
Director Director
24 November 2008
Non-executive directors:
HSP Mashaba (Chairman), NC Machingawuta, A Dixon
Executive directors:
RD Gamsu, J Hooman, IM Klitzner
Business address:
6A Sandown Valley Crescent, Sandown, Sandton
Business postal address:
PO Box 651455, Benmore, Johannesburg 2010
Company secretary:
Morestat Corporate Services (Proprietary) Limited
Telephone: 011 722 7428
Facsimile: 011 722 7431
Transfer secretaries:
Computershare Investor Services 2004 (Pty) Limited
Designated advisor:
Java Capital (Proprietary) Limited
Visit our website: www.buildworksgroup.co.za
Date: 24/11/2008 09:30:01 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.
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