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CIL
CIL
CIL - Consolidated Infrastructure Group Limited - Reviewed consolidated
results for financial year ended 31 August 2010
Consolidated Infrastructure Group Limited
(Formerly Buildworks Group Limited)
(Incorporated in the Republic of South Africa)
(Registration number 2007/004935/06)
Share code: CIL ISIN: ZAE000148201
("Consolidated Infrastructure" or "CIG" or "the group")
- 84% of revenue and 85% of EBITDA earned from Electrical and Power sector
- Debt reduced by R100 million
- Profit increased by 105%
- Headline earnings increased by 98%
REVIEWED CONSOLIDATED RESULTS FOR FINANCIAL YEAR ENDED 31 AUGUST 2010
Condensed consolidated statements of comprehensive income
Pro-forma
Reviewed Audited Reviewed
Year Year Year
ended ended ended
31 August 31 August 31 August
2010 2009 2009
R`000 R`000 R`000
Revenue 1,229,748 745,323 1,184,266
Cost of sales (886,241) (534,353) (866,229)
Gross profit 343,507 210,970 318,037
Other income 1,209 1,974 5,747
Operating expenses (180,087) (102,739) (160,280)
Foreign exchange loss (12,611) (6,353) (4,907)
Earnings before interest, taxation, 152,018 103,852 158,597
depreciation and amortisation
("EBITDA")
Fair value adjustment 21,786
Depreciation (32,452) (28,493) (41,627)
Impairment of goodwill (24,578) (13,562) (13,562)
Profit before interest and taxation 116,774 61,797 103,408
Interest received 7,299 7,420 7,927
Interest paid (14,529) (12,197) (19,838)
Profit before taxation 109,544 57,020 91,497
Taxation (32,889) (19,599) (30,140)
Profit for the year 76,655 37,421 61,357
Other comprehensive income:
Exchange rate differences on (3,379)
translating foreign operations
Total comprehensive income 73,276 37,421 61,357
Basic earnings per share (cents) 7.99 5.24 6.55
Diluted earnings per share (cents) 6.75 4.88 5.92
Fully diluted earnings per share 6.75 4.57 5.40
(cents)
Reconciliation of headline earnings:
Profit attributable to ordinary 76,655 37,421 61,357
shareholders
Adjusted for:
Profit on disposal of property, plant (205) (33) (33)
and equipment
Impairment of goodwill 24,578 13,562 13,562
Headline earnings attributable to 101,028 50,950 74,886
ordinary shareholders
Weighted average number of shares in 959,971 714,067 936,409
issue (000`s)
Diluted weighted average number of 1,136,409 766,396 1,036,409
shares in issue (000`s)
Fully diluted weighted average number 1,136,409 818,724 1,136,409
of shares in issue (000`s)
Headline earnings per share (cents) 10.52 7.14 8.00
Diluted headline earnings per share 8.89 6.65 7.23
(cents)
Fully diluted headline earnings per 8.89 6.22 6.59
share (cents)
Condensed consolidated statements of financial
position
Reviewed Audited
As at As at
31 August 31 August
2010 2009
R ` 000 R ` 000
ASSETS
Non-current assets 788,083 818,849
Property, plant and equipment 277,971 277,966
Goodwill 462,220 486,799
Intangible assets 38,792 51,055
Deferred tax 7,522 2,022
Financial assets 1,578 1,007
Current assets 672,786 725,748
Inventories 34,388 43,175
Trade and other receivables 59,952 58,064
Amounts due from contract customers 328,683 395,168
Taxation receivable 6,568 2,451
Cash and cash equivalents 243,195 226,890
Total assets 1,460,869 1,544,597
EQUITY AND LIABILITIES
Equity 835,917 762,873
Issued capital 11 9
Share premium 676,153 536,387
Shares to be issued - 140,000
Foreign currency translation reserve (3,379) -
Accumulated profits 163,132 86,477
Non-current liabilities 84,556 153,413
Other financial liabilities 37,734 38,941
Environmental obligation 8,283 8,084
Instalment sale agreements 7,047 78,970
Deferred tax 31,492 27,418
Current liabilities 540,396 628,311
Other financial liabilities 53,698 60,878
Trade and other payables 170,137 191,296
Amounts received in advance 45,954 49,693
Amounts due to contract customers 241,719 242,909
Bank overdraft 9,335 6,920
Instalment sale agreements 5,160 24,329
Taxation payable 14,393 52,286
Total equity and liabilities 1,460,869 1,544,597
Number of shares in issue (000`s) 1,136,409 936,409
Net asset value per share (cents) 73.56 81.47
Net tangible asset value per share 29.47 24.03
(cents)
Condensed consolidated statements of cashflow
Reviewed Audited
Year Year
ended ended
31 August 31 August
2010 2009
R`000 R`000
Cash generated by operations 193,773 191,910
Net finance costs (7,230) (4,777)
Taxation paid (76,324) (31,380)
Cash flows from operating activities 110,219 155,753
Cash flows from investing activities (20,475) (236,222)
Cash flows from financing activities (75,854) 258,165
Net increase in cash and cash 13,890 177,696
equivalents
Cash and cash equivalents at 219,970 42,274
beginning of year
Cash and cash equivalents at end of 233,860 219,970
year
Condensed consolidated statements of changes in equity
Reviewed Audited
Year Year
ended ended
31 August 31 August
2010 2009
R`000 R`000
Balance at beginning of year 762,873 266,363
Issue of share capital and share (232) 319,089
issue expenses
Shares to be issued 0 140,000
Total comprehensive income for the 73,276 37,421
year
Balance at end of year 835,917 762,873
SEGMENTAL ANALYSIS
Reviewed Audited Pro-forma Reviewed Audited Pro-
Reviewed forma
Reviewed
31 August 31 31 August 31 31 31
2010 August 2009 August August August
2009 2010 2009 2009
R`000 R`000 R`000 R`000 R`000 R`000
Revenue % of % of % of
total total total
Heavy building 202,312 162,513 162,513 16% 22% 14%
materials
West End 86,881 63,323 63,323 7% 8% 5%
Claybrick
Drift Supersand 115,431 99,190 99,190 9% 14% 9%
Power 1,027,436 582,810 1,021,753 84% 78% 86%
Corporate - - - 0% 0% 0%
Total 1,229,748 745,323 1,184,266 100% 100% 100%
Reviewed Audited Pro-forma Reviewed Audited Pro-
forma
31 August 31 31 August 31 31 31
2010 August 2009 August August August
2009 2010 2009 2009
R`000 R`000 R`000 R`000 R`000 R`000
EBITDA % of % of % of
total total total
Heavy building 28,840 34,516 34,516 19% 33% 22%
materials
West End (1,966) 2,163 2,163 (1%) 2% 1%
Claybrick
Drift Supersand 30,806 32,353 32,353 20% 31% 21%
Power 129,716 73,724 128,469 85% 71% 81%
Corporate (6,538) (4,388) (4,388) (4%) (4%) (3%)
Total 152,018 103,852 158,597 100% 100% 100%
Reconciliation
of profit
before tax
EBITDA per 152,018
segment
analysis
Fair value 21,786
adjustment
Depreciation (32,452)
Impairment of (24,578)
goodwill
Net interest (7,230)
paid
Profit before 109,544
tax
Reviewed Audited
31 31
August August
2010 2009
R`000 R`000
Net asset value
Heavy building 82,492 107,439
materials
West End 42,807 80,140
Claybrick
Drift Supersand 39,685 27,299
Power 224,649 146,391
Corporate 522,676 509,043
Total 829,817 762,873
Commentary
Introduction
The name Consolidated Infrastructure Group
limited ("CIG") was changed from Buildworks
Group Limited "Buildworks" when all conditions
relating to the fulfilment of the acquisition
warranties of Consolidated Power Projects
("Conco") were met and shareholder approval was
obtained. The directors and shareholders felt
that CIG better represented the core business
of the group and is more closely aligned to the
identity of its major subsidiary. The change of
activities resulted in CIG migrating to the
Electrical sector of the JSE main board on 20
September 2010.
Consolidated Infrastructure is pleased to
report results for the year ended
31 August 2010,which includes the results of
Conco for the full twelve months. 84% of all
Consolidated Infrastructure`s revenue and 85%
of Consolidated Infrastructure`s earnings
before interest, taxation, depreciation and
amortisation ("EBITDA") are now directly
attributable to the power and electrification
sector.
Conco is a turnkey provider of high voltage
electrical substations, overhead cables,
protection and automation systems and wind
farms. Conco continued its planned investment
in additional capacity and geographic expansion
across the African continent. The markets in
which Conco operates saw an increase in
potential work. Growth was constrained by
projects taking longer to be awarded and higher
levels of competition.
Headline earnings per share is 10.52 cents and
basic earnings per share is 7.99 cents which is
an increase of 47% and 52% respectively over
the previous year. The increase in headline
earnings per share is due to the fair value
adjustment which arose on the restructuring of
the debt of West End Claybrick ("West End") in
our Building Materials Division.
Trading profits reflect a steady contribution
from Conco. The Building Materials Division
recorded lower trading profits.
Cash generated by operations remained strong at
R194 million as working capital management
improved across the group, and remains an area
of critical focus in an environment of
heightened debtor delinquencies.
Financial Overview
Revenue grew by 65% to R1,2 billion (2009: R745
million). This is as a result of including
Conco for the full twelve month period. Trading
margins are slightly down at 27.9% (2009:
28.3%). Although the upfront tender margins at
Conco were weaker, only through improved
efficiencies and supply chain initiatives at
Conco, was CIG
able to maintain its margins.
Our financial position is strong. Total debt,
after settling the vendor liability and
restructuring the debt in West End, decreased
by R100 million to R103 million (2009: R 203
million).
The group`s debt-to-equity ratio declined to
12% which is a significant improvement on the
26% in the previous year. Interest cover as
measured against EBITDA was 21 times (2009: 22
times). Net finance charges increased 51% to
R7,2 million due the effect of higher average
borrowings over the course of the year.
The year-end net cash position was R234 million
(2009:R220 million). The increase in cash on
hand is after retiring R100 million of debt.
Positive goodwill arose on the acquisition of
West End. The continued deterioration in
trading conditions in the residential and
commercial building sector resulted in an
impairment of R24,5 million (2009:R13,5
million) being recognised in the current year.
The number of shares in issue increased by 200
million, when in June 2010 the final warranties
were concluded and the additional shares were
issued to the Conco vendors.
Divisional Overview
Conco
The division had a steady year. Revenue was R1
billion. EBITDA was R130 million. At the end of
the prior financial year we reported an
outstanding orderbook of R1,2 billion. The
outstanding order book represents approximately
8 to 14 months of work.
Only 1 in 4 people have access to electricity
in Sub Saharan Africa and there is continued
emphasis by all the African Countries to expand
both their ability to generate electricity and
provide their citizens with access to
electricity. These factors mean that Conco
continues to experience an upward momentum in
both the number and size of High Voltage
substations and overhead cable enquiries.
Conco has a 24 year track record of providing
900 turnkey High Voltage Substations and
Overhead Cable projects. During the year it has
expanded the geographic footprint and it has
now operated successfully in 14 Sub Saharan
African Countries and this year commenced its
first project in Uganda. Conco tendered on a
record number and a record value of new
projects. Disappointingly the time taken for
projects to be awarded increased and the
general increase in competitiveness resulted in
revenue and earnings remaining flat for the
year. Conco continued to recruit highly skilled
personnel to assist with project execution and
increased key personnel by 21%. This investment
in execution ability and capacity will allow
Conco to benefit in the medium term.
Conco managed to grow its forward orderbook to
R1,3 billion. This represents slightly more
than 1 years` work. Embedded in the order book
is a slightly lower margin. This is a function
of our upfront pricing, geographic and project
mix.
Building Materials
The division had a tough year. Although the
division earned revenue of R202 million which
represented an increase of 24% over the
previous year, as a result of the roof-tile
plant at West End being in operation for the
full twelve month period (2009:4 months),
EBITDA declined by 16% to R29 million.
West End made a loss for year. Market
conditions were weak and pricing and volumes
were below expectations. Consolidated
Infrastructure successfully managed to
restructure the debt at West End and the
business is now in a position to take advantage
of any uptick in the residential building
cycle.
Drift continued to experience a decline in the
residential and commercial sectors. Actions
taken to replace the volumes resulted in growth
in products supplied to for the building of
roads. Volumes were up 15% and revenue
increased by 17%. However, lower margins
resulted from this sales mix. The net effect of
the actions at Drift resulted in an EBITDA
reduction of 5% from the previous year.
Prospects
The group`s strategic positioning in the
provision of infrastructure to the African
Power Market, with the majority of the clients
being South African or African utilities,
provides a fairly robust buffer against the
volatility of the market place. The imbalance
of substantially higher demand levels for power
generation and transmission against the current
supply shortage will remain for decades but the
constraints to growth remain a funding capacity
for projects and shortage of skills to execute
the projects.
Conco continues to add capacity to execute work
and expand on its business development network
across Africa. The regulatory approvals for our
investment in Saudi Arabia have been received
and our office in Al-Khobar on the East Coast
of the Arabian Gulf has been opened. A
dedicated Renewable Energy Division has been
staffed with an initial focus on providing
designs, budgets and costings for wind farm
developers and international turbine
manufacturers.
The Renewable Energy Division has a highly
competent team and successful track record. The
Renewable Energy Division will, if successful
in the medium term, have a material impact on
growth. There is still uncertainty over the
timing and scale of renewable energy projects.
Conco has recently experienced a pickup in its
order book and it currently stands at
R1.3billion
The Building Materials Division should benefit
from higher levels of business and consumer
confidence and the lower interest rate
environment. We do not anticipate an
improvement in trading conditions for the year
ahead. The division is currently operating a
tightly controlled expense base and we are
hopeful that expansion in sales and
distribution capacity will increase our market
share.
Purchase Price Allocation
The purchase price allocation for Conco is now
complete and the following adjustments to the
fair value of assets and liabilities were
recognised retrospectively in terms of IFRS3
(2004).
Amendments of fair value of assets and
liabilities acquired:
R`000
Increase in trade and other payables
4,204
Increase in goodwill
4,204
REVIEW OPINION
These consolidated annual financial results
have been reviewed by PKF (JHB) Inc. Their
unqualified review opinion is available for
inspection at Consolidated Infrastructure`s
registered address.
DIVIDEND POLICY
The dividend policy will be reviewed
periodically 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 year.
BASIS OF PREPARATION
These consolidated annual results have been
prepared in accordance with International
Financial Reporting Standards ("IFRS"), Interim
Financial Reporting (IAS34), AC500 series of
interpretations, the JSE Listing Requirements
and comply with the South African Companies Act
(1973), as amended. The accounting policies
applied are consistent with those applied in
the prior year, except for the adoption of
IFRS8 - Operating Segments.
PRO-FORMA STATEMENT OF COMPREHENSIVE INCOME -
2009
The pro-forma statement of comprehensive income
for 2009 ("the pro forma comparative statement
of comprehensive income") was prepared on the
basis that the acquisition of Conco had been
effective 1 September 2008.
This pro forma comparative statement of
comprehensive income has been prepared by
management in an effort to provide a meaningful
basis of comparison for users of the group`s
financial information and is the responsibility
of the directors of Consolidated
Infrastructure. By its nature, the pro forma
comparative statement of comprehensive income
may not fairly reflect the financial results of
the group after the acquisition of Conco.
An unqualified reporting accountants` report
was issued on the pro forma comparative
statement of comprehensive income of the group
for the year ended 31 August 2009
Appreciation
The directors and management of Consolidated
Infrastructure wish to thank all staff for
their focused efforts and loyalty over these
challenging times. 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
28 October 2010
Non-executive directors:
HSP Mashaba (Chairman), F Boner, P
Voutyritsas*, N Mintah**, A Geisser**,
Independent non-executive directors:
AD Dixon, P Baird**, A Darko***
Executive directors:
RD Gamsu, IM Klitzner, B Berelowitz
*Greek, **American, ***Ghanaian
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
Sponsor:
Java Capital
Auditors:
PKF(Jhb) Inc.
Visit our website: www.ciglimited.co.za
Date: 28/10/2010 07:05:07 Produced by the JSE SENS Department.
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