| Fri 24 Apr 2009, 15:08 | | BDM - Buildmax Limited - Trading Statement |
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BDM
BDM
BDM - Buildmax Limited - Trading Statement
Buildmax Limited
(Registration No. 1995/012209/06)
Share Code: BDM ISIN Code: ZAE000011250
("Buildmax" or the "group")
TRADING STATEMENT
In terms of the Listings Requirements of the JSE Limited companies are
required to publish a trading statement as soon as they are reasonably
satisfied that the financial results for the reporting period will differ by
20% or more from prior year results or a previous profit forecast in relation
to such period. Buildmax shareholders are referred to the profit forecast for
the year ended 28 February 2009 ("the year") set out in the Revised Listing
Particulars dated 5 March 2008 ("RLP") and related assumptions ("profit
forecast") which included inter alia no adjustment for amortisation of
intangibles or impairment of goodwill.
The year is the first financial year for Buildmax including the acquisitions
of Diesel Power Opencast Mining and the Buildco group of companies (together,
"the acquisitions"), which became effective on 2 April 2008. Earnings,
headline earnings and core headline earnings for the year therefore include
only 11 months of earnings from the acquisitions and 12 months of earnings
from Buildmax.
Core headline earnings per share ("Core HEPS")
Core HEPS is based on headline earnings per share ("HEPS") excluding non-cash
flow items relating to amortisation of intangibles (including mining rights),
and the implied interest incurred on a deferred vendor consideration as
required in terms of International Financial Reporting Standards("IFRS"). Core
HEPS is therefore the best indicator in comparing this year`s results with the
profit forecast of 22.5 cents per share as published in the RLP.
Shareholders are advised that Buildmax`s Core HEPS and HEPS for the year are
expected to be between 17 cents and 19 cents and 15 cents
and 17 cents respectively, being between 21% and 36% and 28% and 45% higher
than the comparative pro forma prior year including the acquisitions. The
comparative pro forma prior year results including the acquisitions will be
published in the year end results.
Forecast
Core HEPS for the year is expected to be lower than the profit forecast of
22.5 cents by between 16% and 24% as a result of the continued general
economic slowdown coupled with the factors highlighted below which were
unexpected at the time of publication of the interim results in October 2008
("interim results"):
Abnormally high rainfall in November 2008 and January 2009
caused significant loss of revenue for both mining services
and construction materials.
The group entered into two new long term mining contracts resulting in
the movement of plant to new sites causing a temporary loss in revenue
whilst incurring site moving and establishment costs.
Given the uncertainty caused by the global financial crisis and the
associated risks, the board decided to curtail capital expenditure in
favour of balance sheet protection. The effect of this strategy was
higher than budgeted subcontractor and plant costs and consequently a
reduction in operating margin.
Delays in implementation of contracts for both the mining services and
construction materials businesses (particularly road construction)
postponed expected revenue to the new financial year but the group still
incurred additional carrying costs relating to these contracts.
Capital expenditure, net debt and cash holdings
The defensive stance adopted by the group post the interim financial results
lowered planned capital expenditure for the year of R650 million by
approximately 14%. The group`s net debt position at 28 February 2009 was
approximately R660 million, significantly lower than the net debt forecast at
the interim stage of between R800 million and R900 million. At 28 February
2009 cash holdings were approximately R287 million.
Impairment of goodwill and plant and equipment
The Buildco group of companies was acquired for shares on a relative
earnings basis. In compliance with IFRS the majority of goodwill was raised
based on a price per share of R1.80 at the date the shares were issued
notwithstanding that the share price was substantially lower at the time of
negotiations. The deterioration in trading conditions in the construction
sector, particularly in the residential market, resulted in goodwill relating
to the building materials businesses being impaired by approximately R255
million.
The board mandated a third party to verify the existence and value of all
mining services plant and equipment. In accordance with IFRS, excess fair
value compared to book value of approximately R111 million was not recognised
at 28 February 2009.
As a result of the non-cash impairments above, the group expects to report an
attributable loss per share for the year of between 10.5 cents and 12.5 cents.
The information on which this trading statement has been based has not yet
been reviewed or reported on by the group`s auditors. Results for the year
are expected to be published on SENS in early May.
Rosebank
24 April 2009
Sponsor
Java Capital (Proprietary) Limited
Date: 24/04/2009 15:08:37 Produced by the JSE SENS Department.
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