| Mon 7 Nov 2011, 7:15 | | RBX - Raubex Group Limited - Unaudited interim results for the six months ended |
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RBX
RBX
RBX - Raubex Group Limited - Unaudited interim results for the six months ended
31 August 2011
Raubex Group Limited
(Incorporated in the Republic of South Africa)
Registration number 2006/023666/06
Share Code: RBX
ISIN Code: ZAE000093183
("Raubex" or the "Group")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2011
- Revenues up 3,7% to R2,61 billion (H1 2011: R2,52 billion)
- Operating profit down 31,4% to R282 million (H1 2011: R411,2 million)
- HEPS down 37,1% to 92,9 cents per share (H1 2011: 147,6 cents per share)
- Cash flow from operations down 34,8% to R263,3 million (H1 2011: R403,8
million)
- Capex spend of R88,3 million ( H1 2011: R119,7 million)
- Stable order book of R4,6 billion (H1 2011: R4,7 billion)
- Interim dividend of 25 cents per share
"We have delivered a satisfactory performance for the six month period given the
extremely difficult and highly competitive market in which the Group is
currently operating.
"Our revenues have grown and we have maintained a stable order book supported by
a good performance from the materials division. Although anticipated, the
decrease in operating profit and cash flows was compounded by the bitumen supply
problems and delays on certain provincial work.
"Whilst the long-term outlook for the South African road construction remains
positive, we will continue to monitor the effects of the tolling controversy on
the Group and on our clients closely whilst growing our portfolio of African
projects.
"We are confident that the Group will maintain a healthy financial position and
stable order book of profitable work for the remainder of the year."
Francois Diedrechsen, Financial and Commercial Director of Raubex Group
7 November 2011
ENQUIRIES
Raubex Group +27 (0) 12 665 3226
Francois Diedrechsen
College Hill +27 (0) 11 447 3030
Frederic Cornet +27 (0) 83 307 8286
Lexi Ball +27 (0) 82 815 1821
GROUP INCOME STATEMENT
Unaudited Unaudited Audited
6 months 6 months 12 months
31 August 31 August 28 February
2011 2010 2011
R`000 R`000 R`000
Revenue 2 609 998 2 516 208 4 545 974
Cost of sales (2 206 542) (1 981 992) (3 645 552)
Gross profit 403 456 534 216 900 422
Other income 7 572 20 355 27 665
Other gains/(losses) - net (443) (19 555) (18 934)
Administrative expenses (128 533) (123 787) (246 595)
Operating profit 282 052 411 229 662 558
Finance income 13 986 16 569 30 422
Finance costs (18 647) (23 781) (43 875)
Profit before income tax 277 391 404 017 649 105
Income tax expense (100 647) (128 161) (202 096)
Profit for the period 176 744 275 856 447 009
Profit for the period
attributable to:
Owners of the parent 173 496 273 037 443 405
Non-controlling interest 3 248 2 819 3 604
Basic earnings per share 94,0 148,0 241,5
(cents)
Diluted earnings per share 93,6 148,0 240,3
(cents)
GROUP STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
6 months 6 months 12 months
31 August 31 August 28 February
2011 2010 2011
R`000 R`000 R`000
Profit for the period 176 744 275 856 447 009
Other comprehensive income for
the period, net of tax
Currency translation 326 (1 203) (1 279)
differences
Total comprehensive income for 177 070 274 653 445 730
the period
Comprehensive income for the
period attributable to:
Owners of the parent 173 822 271 834 442 126
Non-controlling interest 3 248 2 819 3 604
Total comprehensive income for 177 070 274 653 445 730
the period
CALCULATION OF DILUTED EARNINGS PER SHARE
Unaudited Unaudited Audited
6 months 6 months 12 months
31 August 31 August 28 February
2011 2010 2011
R`000 R`000 R`000
Profit attributable to equity 173 496 273 037 443 405
holders of the parent entity
Weighted average number of 184 536 184 536 183 572
ordinary shares in issue (`000)
Adjustments for:
Shares deemed issued for no 848 - -
consideration (`000)
Contingently issuable shares - - 964
(`000)
Weighted average number of 185 384 184 536 184 536
ordinary shares for diluted
earnings per share (`000)
Diluted earnings per share 93,6 148,0 240,3
(cents)
CALCULATION OF HEADLINE EARNINGS PER SHARE
Unaudited Unaudited Audited
6 months 6 months 12 months
31 August 31 August 28 February
2011 2010 2011
R`000 R`000 R`000
Profit attributable to equity 173 496 273 037 443 405
holders of the parent entity
Adjustments for:
Profit on sale of plant and (2 843) (858) (3 313)
equipment
Total tax effect of adjustments 796 240 928
Basic headline earnings 171 449 272 419 441 020
Weighted average number of 184 536 184 536 183 572
shares (`000)
Headline earnings per share 92,9 147,6 240,2
(cents)
Diluted headline earnings per 92,5 147,6 239,0
share (cents)
GROUP STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
6 months 6 months 12 months
31 August 31 August 28 February
2011 2010 2011
R`000 R`000 R`000
ASSETS
Non-current assets
Property, plant and equipment 1 294 874 1 236 262 1 276 133
Intangible assets 760 046 762 626 761 445
Deferred income tax assets 39 681 34 401 45 047
Trade and other receivables 520 639 585
Total non-current assets 2 095 121 2 033 928 2 083 210
Current assets
Inventories 152 891 115 508 126 333
Construction contracts in 310 212 244 994 244 116
progress and retentions
Trade and other receivables 1 115 359 1 045 021 948 367
Current income tax receivable 19 028 14 434 14 192
Cash and cash equivalents 479 028 473 926 594 914
Total current assets 2 076 518 1 893 883 1 927 922
Total assets 4 171 639 3 927 811 4 011 132
EQUITY
Share capital 1 845 1 845 1 845
Share premium 2 179 613 2 179 613 2 179 613
Other reserves (1 147 722) (1 156 772) (1 156 847)
Retained earnings 1 558 738 1 399 409 1 510 726
Equity attributable to equity 2 592 474 2 424 095 2 535 337
holders of the parent
Non-controlling interest 10 212 8 819 9 276
Total equity 2 602 686 2 432 914 2 544 613
LIABILITIES
Non-current liabilities
Borrowings 215 168 215 805 231 905
Provisions for liabilities and 15 420 13 614 18 058
charges
Deferred income tax liabilities 261 368 222 356 236 038
Total non-current liabilities 491 956 451 775 486 001
Current liabilities
Trade and other payables 838 394 707 980 712 789
Borrowings 220 645 252 143 245 654
Current income tax liabilities 13 751 72 752 17 498
Provisions for other liabilities 4 207 10 247 4 577
and charges
Total current liabilities 1 076 997 1 043 122 980 518
Total liabilities 1 568 953 1 494 897 1 466 519
Total equity and liabilities 4 171 639 3 927 811 4 011 132
GROUP STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
6 months 6 months 12 months
31 August 31 August 28 February
2011 2010 2011
R`000 R`000 R`000
Cash flows from operating
activities
Cash generated from operations 263 269 403 840 853 013
Finance income 13 986 16 569 30 422
Finance costs (18 647) (23 781) (43 875)
Dividend received 2 552 3 107 5 476
Income tax paid (87 013) (114 105) (241 159)
Net cash generated from 174 147 285 630 603 877
operating activities
Cash flows from investing
activities
Purchases of property, plant and (88 274) (119 725) (292 490)
equipment
Proceeds from sale of property, 13 454 15 949 42 110
plant and equipment
Acquisition of subsidiaries (7 760) - 141
Repayment of loan from associate - - (750)
Net cash used in investing (82 580) (103 776) (250 989)
activities
Cash flows from financing
activities
Proceeds from borrowings 66 438 102 049 246 699
Repayment of borrowings (146 095) (167 678) (302 722)
Dividends paid to owners of the (125 484) (136 968) (196 019)
parent
Dividends paid to non- (2 312) - (601)
controlling interests
Net cash used in financing (207 453) (202 597) (252 643)
activities
Net (decrease)/increase in cash (115 886) (20 743) 100 245
and cash equivalents
Cash and cash equivalents at the 594 914 494 669 494 669
beginning of the year
Cash and cash equivalents at the 479 028 473 926 594 914
end of the period
GROUP STATEMENT OF CHANGES IN EQUITY
Share Share Other
capital premium reserves
R`000 R`000 R`000
Balance at 1 March 2010 1 826 2 139 632 (1 139 446)
Shares issued 19 39 981 -
Share option reserve - - (16 123)
Non-controlling interest on - - -
acquisition of subsidiary
Total comprehensive income for - - (1 203)
the period
Dividends paid - - -
Balance at 31 August 2010 1 845 2 179 613 (1 156 772)
Shares issued - - -
Non-controlling interest on - - -
acquisition of subsidiary
Total comprehensive income for - - (75)
the Period
Dividends paid - - -
Balance at 28 February 2011 1 845 2 179 613 (1 156 847)
Share option reserve - - 8 799
Total comprehensive income for - - 326
the period
Dividends paid - - -
Balance at 31 August 2011 1 845 2 179 613 (1 147 722)
GROUP STATEMENT OF CHANGES IN EQUITY
(continued)
Retained Total attri-Non- Total
earnings butable to controlling equity
equity interest
holders of
the parent
company
R`000 R`000 R`000 R`000
Balance at 1 March 1 263 340 2 265 352 4 344 2 269 696
2010
Shares issued - 40 000 - 40 000
Share option reserve - (16 123) - (16 123)
Non-controlling - - 1 656 1 656
interest on
acquisition of
subsidiary
Total comprehensive 273 037 271 834 2 819 274 653
income for the period
Dividends paid (136 968) (136 968) - (136 968)
Balance at 31 August 1 399 409 2 424 095 8 819 2 432 914
2010
Shares issued - - 70 70
Non-controlling - - 202 202
interest on
acquisition of
subsidiary
Total comprehensive 170 368 170 293 786 171 079
income for the period
Dividends paid (59 051) (59 051) (601) (59 652)
Balance at 28 February 1 510 726 2 535 337 9 276 2 544 613
2011
Share option reserve - 8 799 - 8 799
Total comprehensive 173 496 173 822 3 248 177 070
income for the period
Dividends paid (125 484) (125 484) (2 312) (127 796)
Balance at 31 August 1 558 738 2 592 474 10 212 2 602 686
2011
GROUP SEGMENTAL ANALYSIS
Aggregate Road Road Consolidated
and surfacing construction
crusher and and
rehabili- earthworks
tation
R`000 R`000 R`000 R`000
Reportable segments
At 31 August 2011
Segment revenue - 696 510 1 337 594 575 894 2 609 998
external
Segment result 126 076 130 938 25 038 282 052
(operating profit)
At 31 August 2010
Segment revenue - 517 662 1 294 267 704 279 2 516 208
external
Segment result 102 745 202 125 106 359 411 229
(operating profit)
At 28 February 2011
Segment revenue - 1 040 147 2 178 339 1 327 488 4 545 974
external
Segment result 178 203 300 187 184 168 662 558
(operating profit)
Local Inter- Consolidated
national
R`000 R`000 R`000
Geographical information
At 31 August 2011
Segment revenue - external 2 196 068 413 930 2 609 998
Segment result (operating profit) 245 630 36 422 282 052
At 31 August 2010
Segment revenue - external 2 234 103 282 105 2 516 208
Segment result (operating profit) 392 512 18 717 411 229
At 28 February 2011
Segment revenue - external 3 932 876 613 098 4 545 974
Segment result (operating profit) 583 669 78 889 662 558
Additional information
EMPLOYEE BENEFIT EXPENSE
Unaudited Unaudited Audited
6 months 6 months 12 months
31 August 31 August 28 February
2011 2010 2011
R`000 R`000 R`000
Employee benefit expense in the
income statement consists of:
- Salaries, wages and contributions 529 334 474 780 893 407
- Share options granted to employees 8 799 1 411 (5 280)
Total employee benefit expense 538 133 476 191 888 127
CAPITAL EXPENDITURE AND DEPRECIATION
Unaudited Unaudited Audited
6 months 6 months 12 months
31 August 31 August 28 February
2011 2010 2011
R`000 R`000 R`000
Capital expenditure for the period 88 274 119 725 292 490
Depreciation for the period 110 134 111 091 220 184
Amortisation of intangible assets 1 398 1 198 2 380
for the period
NOTES
Basis of preparation
These condensed consolidated interim financial statements have been prepared
in accordance with International Financial Reporting Standards ("IFRS"), IAS
34: "Interim Financial Reporting", the South African Companies Act 71 of
2008, as amended, and the JSE Listings Requirements. The principal accounting
policies used in the preparation of the unaudited results for the period
ended 31 August 2011 are consistent with those applied for the year ended 28
February 2011 and for the unaudited results for the six months ended 31
August 2010 in terms of IFRS.
Business combinations
Burma Plant Hire (Pty) Ltd
On 1 July 2011, the Group acquired 51% of the share capital and related sale
claims of Burma Plant Hire (Pty) Ltd for R4,04 million cash. The acquired
company specialises in plant hire to the broader construction industry.
Contingencies
On 29 April 2011, shareholders were advised that the Group had become aware
of certain irregularities in terms of the provisions of the Competition Act,
No 89 of 1998. The transgressions were not covered by leniency under the
Corporate Leniency Provision of the Act. The Group filed a Fast Track
application to the Competition Commission by the required deadline date of 15
April 2011. The Competition Commission is currently in the process of
assessing this submission and the Group remains committed to fully co-operate
with the Commission and to ensure that its employees, management and
directors do not engage in any conduct which constitutes a prohibited
practice. No provision for penalties has been made in the results for the
period ended 31 August 2011.
Events after the reporting period
There were no material events after the reporting period to report up to the
date of preparation of these Group financial statements.
COMMENTARY
FINANCIAL OVERVIEW
Revenue increased 3,7% to R2,61 billion whilst operating profit decreased
31,4% to R282 million from the corresponding prior period as a result of the
declining margins and extremely competitive conditions being experienced in
the road construction industry.
Profit before tax decreased 31,3% to R277,4 million.
The effective tax rate increased to 36,3% from 31,7% in the corresponding
prior period due to the reversal of a previously recognised deferred tax
asset arising from the Group`s share incentive scheme.
Earnings per share decreased 36,5% to 94 cents with headline earnings per
share decreasing 37,1% to 92,9 cents.
Group operating margin decreased 33,7% from 16,3% to 10,8% compared to the
corresponding prior period.
The Group generated operating cash flows of R263,3 million before finance
charges and taxation.
Trade and other receivables increased by 6,7% to R1,11 billion due to payment
delays from the Free State Provincial Government which continue to have a
negative impact on the Group`s working capital as well as an increasing
number of public and private customers settling outside of standard terms.
Capital expenditure on fixed assets to the value of R88,3 million was
incurred during the period under review.
Net cash outflow for the six months ended 31 August 2011 was R115,9 million,
with total cash and cash equivalents at the end of the period amounting to
R479 million.
OPERATIONAL REVIEW
Roadmac
Roadmac is a specialist in light road rehabilitation, the manufacturing and
the laying of asphalt, chip and spray, surface dressing, enrichments and
slurry seals.
Roadmac is the largest contributor to Group revenue, contributing 51,3% of
total revenue. The divisional performance continues to be impacted by strong
competition in the light rehabilitation market with the resulting decrease in
margins being reflected in the results for the period. The division has been
operating near capacity and has maintained a healthy order book with new work
being secured at the prevailing lower margins.
A short supply of bitumen in the country has had a negative effect on asphalt
production and surfacing operations as sites struggle to achieve efficiencies
due to the erratic supply of this key product.
Revenue for the division increased 3,4% to R1,34 billion (H1 2011: R1,29
billion) and operating profit decreased 35,2% to R130,9 million (H1 2011:
R202,1 million) as the increased revenues were offset by the lower operating
margins of the current contracts.
The divisional operating margins decreased to 9,8% (H1 2011: 15,6%), with
margin pressure expected to continue in the second half of the year.
The division incurred capital expenditure of R22,6 million during the period
(H1 2011: R29,7 million).
Raubex Construction
Raubex Construction is a road and civil infrastructure construction company
focused on the key areas of new road construction (greenfields) and heavy
road rehabilitation.
This division has been affected the most by the pricing pressures of the
current operating environment. A stable order book has been maintained while
management has adopted a cautious approach to tendering for new work at the
current low margins.
Revenue for the division decreased 18,2% to R575,9 million (H1 2011: R704,3
million) whilst operating profit decreased 76,5% to R25 million (H1 2011:
R106,4 million).
The divisional margins decreased to 4,3% (H1 2011: 15,1%), as the lower
margin work secured in the current operating environment is realised. A
cautious revenue recognition policy has been applied to certain Free State
provincial contracts until clarity is obtained regarding the outcome of this
work.
The division incurred capital expenditure of R16,2 million during the period
(H1 2011: R28 million).
Raumix
Raumix is the materials division of the Group with its core focus spread over
three areas, including contract crushing, production of aggregates for the
commercial market and materials handling for the mining industry.
Commercial quarry operations have reported stable results for the period,
supported by infrastructure projects in the Free State and Eastern Cape
regions and encouraging results from the Gauteng area, despite the
residential building market remaining depressed.
Contract crushing operations have maintained a stable order book and continue
to perform well despite pressure on margins. Whilst the plants have been
operating at capacity during the period, new contracts will need to be
secured before year-end to maintain the current operating efficiencies.
There has been a noticeable improvement in the mining and material handling
operations of the division with increased tonnages being reported and new
contracts having been secured. The diamond mining activities of B&E
International are particularly encouraging with two new contracts recently
secured with Namdeb in Namibia and ongoing operations at Mbada in Zimbabwe.
Increased activity has also been reported by SPH Kundalila in South Africa,
with a contract recently secured at a new platinum mine in the Pilanesberg
area of the North West province and an iron ore screening contract secured at
Thabazimbi in the Limpopo province.
Revenue for the division increased 34,6% to R696,5 million (H1 2011: R517,7
million) and operating profit by 22,7% to R126,1 million (H1 2011: R102,7
million).
The divisional margins decreased to 18,1% (H1 2011: 19,8%).
The division incurred capital expenditure of R49,5 million during the period
(H1 2011: R62 million).
International
Internationally, revenue increased 46,7% to R413,9 million (H1 2011: R282,1
million) and operating profit by 94,6% to R36,4 million (H1 2011: R18,7
million).
The international margins increased to 8,8% (H1 2011: 6,6%).
The road contracts in the north of Namibia continue to progress well, while a
cautious approach to tendering in Zambia has been maintained with careful
consideration given to currency and funding risks. The Group`s results from
international operations were supplemented by the improvement in mining
activities of B&E International.
PROSPECTS
In the short term, trading conditions in the road construction industry will
be challenging and the impact of margin pressure will continue to be felt
during the remainder of the financial year and into 2013. The Group has
adopted a cautious approach to tendering for new work at the prevailing low
margins and has maintained a stable order book of R4,6 billion (H1 2011: R4,7
billion).
The improvement in mining activities will continue to benefit the material
handling and screening operations of B&E International and SPH Kundalila over
the short and medium term.
Whilst management remains optimistic with respect to the long-term outlook
for the South African road construction industry, government policy towards
future toll roads in South Africa remains uncertain. This uncertainty and
potential delays in the award of future toll concessions, including the N1/N2
Winelands project, could retard the industry`s recovery. With this in mind,
the Group continues to look for growth in other geographies and valuable
experience is being gained around the tendering processes in the promising
Indian roads sector, whilst the Group`s African expansion drive remains a
priority.
Despite the current market conditions, the Group has been able to maintain a
healthy balance sheet and strong cash position together with a stable order
book of profitable work. This, combined with Raubex`s considerable industry
experience across its management team, sets the Group on a strong footing to
navigate the challenging period ahead.
DIVIDEND DECLARATION
The directors have declared an interim cash dividend of 25 cents per share on
7 November 2011. The salient dates for the payment of the dividend are as
follows:
Last day to trade cum dividend Friday, 25 November 2011
Commence trading ex dividend Monday, 28 November 2011
Record date Friday, 2 December 2011
Payment date Monday, 5 December 2011
No share certificates may be dematerialised or rematerialised between Monday,
28 November 2011, and Friday, 2 December 2011, both dates inclusive.
On behalf of the Board:
MC Matjila
Chairman
RJ Fourie
Chief Executive Officer
F Diedrechsen
Group Financial and Commercial Director
7 November 2011
Directors:
MC Matjila (Chairman)# , JE Raubenheimer#, RJ Fourie, F Diedrechsen, F
Kenney#, L Maxwell* BH Kent*, NF Msiza*# Non-executive * Independent non-
executive
Company secretary:
Mrs HE Ernst
Registered office:
The Highgrove Office Park
Building No 1
Tegel Avenue
Centurion
South Africa
Transfer secretaries:
Computershare Investor Services (Pty) Ltd
70 Marshall Street
Johannesburg
2001
South Africa
Auditors:
PricewaterhouseCoopers Inc.
Sponsor:
Investec Bank Limited
www.raubex.co.za
Date: 07/11/2011 07:15:32 Produced by the JSE SENS Department.
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