| Wed 27 May 2009, 16:30 | | BWK - Buildworks - Unaudited consolidated interim results for the six months |
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BWK
BWK
BWK - Buildworks - Unaudited consolidated interim results for the six months
ended 28 February 2009
Buildworks Group Limited
(Incorporated in the Republic of South Africa)
(Registration number 2007/004935/06)
Share code: BWK & ISIN: ZAE000110219
("Buildworks" or "the group")
UNAUDITED CONSOLIDATED INTERIM RESULTS FOR THE SIX MONTHS ENDED 28 FEBRUARY 2009
ABRIDGED CONSOLIDATED INCOME STATEMENTS
Unaudited Unaudited Audited Unaudited
6 months 6 months 12 months Pro-forma
ended ended ended 6 months
28 February 29 February 31 August ended 29
2009 2008 2008 February
R`000 R`000 R`000 2009
R`000
Revenue 136,604 98,046 201,344 575,548
Cost of Sales (85,564) (43,196) (92,899) (420,440)
Gross profit 51,040 54,850 108,445 155,108
Other income 1,105 - 325 4,878
Operating expenses (21,876) (14,280) (25,824) (74,656)
Earnings before 30,269 40,570 82,946 85,330
interest, tax,
depreciation and
amortisation ("EBITDA")
Depreciation (3,828) (3,499) (8,252) (10,055)
Profit before interest 26,441 37,071 74,694 75,275
and taxation
Interest Paid (2,675) (4,317) (6,416) (9,810)
Profit before taxation 23,766 32,754 68,278 65,465
Taxation (6,839) (9,171) (19,221) (19,349)
Profit attributable to 16,927 23,583 49,057 46,116
ordinary shareholders
RECONCILIATION OF HEADLINE EARNINGS:
Profit attributable to 16,927 23,583 49,057 46,116
ordinary shareholders
Add IAS16 loss on 22 70 39 22
disposal or property,
plant and equipment
Headline earnings 16,949 23,653 49,096 46,138
attributable to
ordinary shareholders
Weighted average number 488,257 418,729 444,575 936,409
of shares in issue
(000)
Earnings per share 3.47 5.63 11.03 4,92
(cents)
Headline earnings per 3.47 5.65 11.04 4,93
share (cents)
ABRIDGED CONSOLIDATED BALANCE SHEETS
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
28 February 29 February 31 August
2009 2008 2008
R`000 R`000 R`000
ASSETS
Non-current assets 832,520 290,687 333,850
Property plant and equipment 274,787 179,360 196,735
Goodwill 491,479 - 102,423
Intangible assets 65,724 111,327 20,656
Financial assets 530 - 14,036
Current assets 351,842 66,614 111,911
Inventories 90,668 24,021 38,084
Trade and other receivables 200,442 23,677 31,552
Cash and cash equivalents 60,732 18,916 42,275
Total assets 1,184,362 357,301 445,761
EQUITY AND LIABILITIES
Equity 743,713 240,353 266,364
Issued capital 9 5 5
Share premium 537,721 216,765 217,302
Shares to be issued 140,000 - -
Accumulated profits 65,983 23,583 49,057
Non-current liabilities 200,794 50,475 109,191
Other financial liabilities 130,141 44,251 46,212
Environmental obligation 7,076 5,954 8,792
Instalment sale agreements 44,080 - 42,770
Deferred tax 19,497 270 11,417
Current liabilities 239,855 66,473 70,206
Other financial liabilities 32,430 27,832 13,708
Trade and other payables 140,344 24,207 22,176
Advance payments 17,896 - -
Instalment sale agreements 12,827 - 11,892
Taxation 36,358 14,434 22,430
Total equity and liabilities 1,184,362 357,301 445,761
Number of shares in issue (000) 936,409 470,000 470,000
Net asset value per share (cents) 79.42 51.14 56.67
Net tangible asset value per share 19.92 27.45 30.49
(cents)
ABRIDGED CONSOLIDATED CASH FLOW STATEMENTS
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
28 February 29 February 31 August
2009 2008 2008
R`000 R`000 R`000
Cash flows from operating activities 9,624 24,249 39,533
Cash flows from investing activities (227,278) (77,416) (24,554)
Cash flows from financing activities 236,112 72,083 27,295
Net increase in cash and cash 18,458 18,916 42,274
equivalents
Cash and cash equivalents at beginning 42,274 - -
of period
Cash and cash equivalents at end of 60,732 18,916 42,274
period
ABRIDGED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
28 February 29 February 31 August
2009 2008 2008
R`000 R`000 R`000
Balance at beginning of period 266,364 - -
Acquisition of businesses - 90,626 90,626
Rights offer - 80,000 80,000
Issue of share capital and share issue 320,422 46,144 46,681
expenses
Shares to be issued 140,000
Net profit for period 16,927 23,583 49,057
Balance at end of period 743,713 240,353 266,364
SEGMENTAL ANALYSIS
Unaudited % of Unaudited % of
28 February 2009 total Pro-forma total
R`000 28 February 2009
R`000
Revenue
Heavy building materials 78,631 58% 78,631 14%
Power infrastructure 57,974 42% 496,917 86%
Corporate - - - -
Total 136,604 100% 575,548 100%
Unaudited % of Unaudited % of
28 February 2009 total Pro-forma total
28 February 2009
Profit before taxation
Heavy building materials 11,232 47% 11,232 17%
Power infrastructure 6,547 28% 48,246 74%
Corporate 5,987 25% 5,987 9%
Total 23,766 100% 65,465 100%
Unaudited % of Unaudited % of
28 February 2009 total Pro-forma total
Net asset value
Heavy building materials 124,378 17% 124,378 17%
Power infrastructure 132,970 18% 132,970 18%
Corporate 486,365 65% 486,365 65%
Total 743,713 100% 743,713 100%
COMMENTARY
INTRODUCTION
The transformation of Buildworks is now complete. The group has completed the
acquisition of Consolidated Power Projects (Proprietary) Limited ("Conco"). As a
result 86% of the group`s revenue is generated from the establishment of
electrical infrastructure in South Africa and the rest of Africa. The Heavy
Building Materials business, listed in November 2007, has now become a much
smaller component of the group.
On a pro-forma basis 74% of the group`s profits are generated from the
establishment of electrical infrastructure.
FINANCIAL REVIEW
Following the conclusion of the acquisition of Conco by Buildworks during
February 2009, Buildworks consolidated the trading results of Conco from the 18
February 2009 which was the effective date of the transaction in terms of IFRS3
when all the conditions precedent to the transaction were met. In order to
reflect the benefit that Conco will bring to the group, a pro-forma income
statement has been prepared reflecting the results of the group including
Conco`s results for the full six month period. The pro-forma income statement is
prepared for illustrative purposes only and is the responsibility of the
directors of Buildworks. By its nature the pro-forma income statement may not
fairly reflect the results of the group after the Conco acquisition. The pro-
forma income statement has not been reviewed or reported on by the group`s
auditors.
The actual increase in revenue of 39% is therefore distorted by the significant
levels of turnover generated by Conco in comparison to our other divisions.
Actual operating profit decreased by 28% to R16,9million (2008: R23,5million)
due to the effects of the slowdown in the residential and commercial markets
experienced by our businesses that supply heavy building materials to the
construction industry. On a pro-forma basis operating profit increased to
R46,1million which represents an increase of 96% over the prior corresponding
period.
Earnings per share decreased by 39% to 3.47 cents per share (2008: 5.63 cents
per share) and headline earnings per share also decreased to 3.47 cents per
share (2008: 5.65 cents per share).
The balance sheet of the group has been transformed since the acquisition of
Conco, by Conco bringing additional cash resources into the group as well as
increasing the ability of the group to generate strong cash flows going forward.
The group`s debt:equity ratio has improved from 43% at 31 August 2008 to 30% at
28 February 2009.
OPERATING REVIEW
Power Infrastructure
The Conco business had an excellent performance for the six months ended 28
February 2009. The business currently has an order book of approximately
R1,2billion. The verification of the 2009 warranted after tax profit for Conco,
the details of which were included in the circular to Buildworks shareholders
issued on 20 June 2008, will only be done in April 2010.It is probable that
Conco will achieve its warranted profit of R72,5million.
While the group`s ethos is to run decentralised businesses the integration
process has commenced and the strategic objectives of Conco have been aligned to
those of Buildworks. These objectives should ensure that Conco remains the
market leader in substation development on the African continent and that they
improve their market position in overhead lines and automation. Growth
objectives have been agreed and new target markets have been identified.
Building Materials
As forecast in our 2008 results announcement, the current business climate has
been extremely challenging for the building materials division. The result of
the above has seen a fall off in demand and postponement and cancellation of
projects and developments in the residential and commercial sectors. The weaker
results for the trading period under review were exacerbated by excessive
rainfall in January and February 2009 as well as certain customers` orders being
suspended as a result of their accounts being in arrears. Although the extensive
expansion in roads infrastructure grew aggregate volumes, the increase was still
insufficient to offset the drop in activity experienced in the residential and
commercial sectors. Turnover from heavy building materials dropped by 20% and
pre-tax profitability fell by 47%.
Prospects
Establishment of Power Infrastructure is the key growth driver of Conco`s
business. Conco have historically operated successfully in 14 African countries
and are currently active in 9 of these countries. We plan to expand our
footprints in the higher growth economies across the continent to ensure that we
get a greater share of available electrical work. To counter any potential
slowdown in our historic markets we are expanding into new geographic markets
and intend to improve our tender success ratio with enhanced business
development.
The roof tile plant has been commissioned and we are currently producing a
single shift at full capacity. We have built up sufficient levels of stock and
we have now turned our full attention to achieving an acceptable level of market
penetration. The roof tile plant will provide us with better margins and
improved profitability once sales volumes reach desired levels. The intended
model of supplying the full range of heavy building materials from a single
location seems to have been well received in the market.
We expect trading conditions in the short term to remain difficult and are
uncertain what impact the current changes, both locally and abroad, will have on
the South African and African economy. The longer term outlook remains far more
positive with the continued industrialisation of China and India and their need
for commodities to support the growth and development of their countries. It is
our assessment that continued urbanisation, industrialisation and a continent
starved of infrastructure will create demand for the goods and services of
Buildworks.
ACQUISITIONS
Effective 18 February 2009 Buildworks acquired 100% of the share capital
Consolidated Power Projects (Proprietary) Limited for a total investment of
R497,5million. Assets of R374million and liabilities of R241million were
acquired which resulted in a positive differential to intangible assets of
R364,5million. The transaction was funded through the initial issue of
150million Buildworks shares to the vendors of Conco and a cash payment of
R202,5million. The balance of the purchase price will be settled during April
2010 in terms of the acquisition agreement, once the final warranted profits
have been calculated.
The allocation between goodwill and identifiable intangible assets as a result
of the excess of the cost of the acquisition over the fair value of the net
tangible assets acquired will be performed in terms of IFRS3 in the year end
financial statements.
Fair value of assets acquired:
R`000
Property, plant and equipment 14,770
Inventories 48,303
Trade and other receivables 172,986
Cash 45,917
Deferred tax liability (8,322)
Trade and other payables (127,090)
Amounts received in advance (17,896)
Tax liability (31,262)
Borrowings (23,205)
Loans from shareholders (33,316)
Net tangible assets and liabilities 40,885
Intangible assets 92,085
132,970
DIVIDEND POLICY
The dividend policy will be reviewed every six months taking into account
prevailing circumstances and future cash requirements. At present, all earnings
generated by the group will be utilised to fund future growth.
Accordingly no dividend has been recommended for the interim period.
BASIS OF PREPARATION
The interim results have been prepared in accordance with International
Financial Reporting Standards ("IFRS") specifically IAS 34 (Interim Financial
Reporting). The accounting policies applied in preparing these interim results
are consistent with those applied in the prior year end and the prior interim
period and comply with the Companies Act, 1973. This announcement has been
prepared in accordance with the Listings Requirements of the JSE Limited. These
interim results have not been audited or reviewed by the group`s auditors.
APPRECIATION
We thank our loyal staff for their commitment and hard work which contributed to
Buildworks` achievements since 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
Chairman CEO
27 May 2009
Non-executive directors:
HSP Mashaba (Chairman), NC Machingawuta, AD Dixon#, P Voutyritsas*, N Mintah**,
A Geisser**
Executive directors:
RD Gamsu, IM Klitzner
# Independent
*Greek, **American
Registration number:
2007/004935/06
Business address:
6A Sandown Valley Crescent, Sandown, Sandton
Business postal address:
PO Box 651455, Benmore, Johannesburg 2010
Company secretary:
Sandra Saunders BA LLB(WITS) DIP CORP GOV(RAU)
Telephone: 011 722 7430
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: 27/05/2009 16:30:02 Produced by the JSE SENS Department.
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