| Mon 14 Nov 2011, 7:05 | | PKH - Protech Khuthele Holdings Limited - Reviewed consolidated interim |
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PKH
PKH
PKH - Protech Khuthele Holdings Limited - Reviewed consolidated interim
results for the period ended 31 August 2011
Protech Khuthele Holdings Limited
Registration number 2000/024352/06
JSE code: PKH ISIN: ZAE000101986
("Protech" or "the Company" or "the Group")
Protech Khuthele Holdings Limited
Revenue down 8% Net tangible asset value up 11%
Earnings per share down 51%
REVIEWED CONSOLIDATED INTERIM RESULTS?FOR THE PERIOD ENDED 31 AUGUST 2011
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AT 31 AUGUST 2011
Reviewed Reviewed Audited
Group Group Group
R`000 31/08/ 31/08/ 28/02/
2011 2010 2011
ASSETS
Non-current assets 481 579 475 759 469 998
Property, plant and equipment 443 649 437 294 429 430
Goodwill 33 549 33 549 33 549
Other intangible assets 4 381 4 916 4 648
Deferred tax - - 2 371
Current assets 359 621 370 192 383 879
Inventory 11 489 8 206 11 434
Amounts due from contract customers 64 789 91 856 80 265
Trade and other receivables 157 552 153 743 171 903
Retention receivables 45 769 66 327 44 164
Other financial assets 7 959 6 057 3 501
Bank balances and cash 72 063 44 003 72 612
Total assets 841 200 845 951 853 877
EQUITY AND LIABILITIES
Share capital and reserves
Shareholders` equity 344 934 316 263 334 898
Share capital and share premium 228 598 228 598 228 598
Other reserves (124 035) (123 932) (124 029)
Retained earnings 240 371 211 597 230 329
Equity attributable to equity holders of 344 934 316 263 334 898
the holding company
Non-controlling interests - - -
Total liabilities 496 266 529 688 518 979
Non-current liabilities 235 256 241 329 238 280
Borrowings - interest bearing 176 660 180 774 171 102
Deferred tax 58 596 60 555 67 178
Current liabilities 261 010 288 359 280 699
Borrowings - interest bearing 119 125 121 503 122 535
Trade and other payables 118 867 118 895 120 778
Subcontractor liabilities 23 018 40 727 28 844
Current tax liabilities - 7 234 8 542
Total equity and liabilities 841 200 845 951 853 877
SUPPLEMENTARY STATEMENT OF FINANCIAL
POSITION INFORMATION
Total number of shares in issue 362 500 362 500 362 500
(thousands)
Net asset value per share (cents) 95,2 87,2 92,4
NTAV/Share (cents) 84,7 76,6 81,8
Capital expenditure (R`000)
- Spent 100 636 121 771 211 667
- Commitments - Authorised but unspent 121 170 45 324 226 360
Performance guarantees issued (R`000) 135 174 106 925 133 356
OPERATIONAL SEGMENTAL REPORTING
for the six months ended 31 August 2011
SERVICES WITHIN EACH BUSINESS SEGMENT
For management purposes, the Group is organised into three major operating
business units - contracting, geo-technical laboratory and readymix. These
business units are the basis on which the Group reports its primary segment
information. The principal services and products of each of these business
units are as follows:
Contracting - bulk earthworks, roads and civil engineering contractors,
plant hire, impact compaction and logistical services.
Geotechnical laboratory - geotechnical laboratory and surveying services.
Readymix - supplier of readymixed concrete and pumping services.
SEGMENT REVENUE AND SEGMENT RESULT
Segment revenue Segment result
6 months 6 months 6 months 6 months
ended ended ended ended
R`000 31/08/ 31/08/ 31/08/ 31/08/
2011 2010 2011 2010
Contracting 417 151 478 743 10 212 40 199
Geotechnical laboratory 11 055 9 454 4 127 1 648
Readymix 73 190 65 353 2 145 (368)
501 396 553 550 16 484 41 479
Corporate* 4 350 4 580 307 (2 134)
Eliminations (10 976) (19 800) - -
494 770 538 330
Profit before interest and 16 791 39 345
taxation
Net interest paid (9 660) (14 206)
Profit before taxation 7 131 25 139
Taxation 2 911 (4 642)
Profit for the period 10 042 20 497
Segment revenue reported above represents revenue generated from external
customers. Intersegment sales amounted to R11,0 million (2011: R19,8
million). Segment result reported above represents operating profit per
segment prior to taking interest into account.
The accounting policies of the reportable segments are the same as the
Group`s accounting policies.
REVIEWED SEGMENT ASSETS AND LIABILITIES
Segment assets Segment liabilities
6 months 12 months 6 months 12 months
ended ended ended ended
R`000 31/08/ 28/02/ 31/08/ 28/02/
2011 2011 2011 2011
Contracting 753 712 815 776 485 429 517 052
Geotechnical laboratory 4 708 9 216 2 147 2 188
Readymix 78 507 72 293 24 632 85 856
836 927 897 285 512 208 605 096
Corporate* 75 599 391 872 46 448 157 470
Eliminations (71 326) (435 280) (62 390) (243 587)
841 200 853 877 496 266 518 979
REVIEWED OTHER SEGMENT INFORMATION
Depreciation and Capital expenditure
amortisation
6 months 6 months 6 months 6 months
ended ended ended ended
R`000 31/08/ 31/08/ 31/08/ 31/08/
2011 2010 2011 2010
Contracting 31 056 23 213 100 012 124 842
Geotechnical laboratory 668 563 132 175
Readymix 1 693 1 999 329 110
Corporate 609 - 163 -
34 026 25 775 100 636 125 127
* Corporate includes the transactions of the holding company.
Information about major customers
Included in revenues arising from contracting income of
R417,2 million (2011: R478,7 million) are revenues of approximately R166,6
million (2011: R253,6 million) which arose from contracting income from two
of the Group`s largest customers.
Operating segments
The operating segments reported above form the basis on which internal
reporting are structured for the chief decision makers. Therefore there are
no differences in terms of the numbers reported to shareholders and
management.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the six months ended 31 August 2011
R`000 Reviewed Reviewed Audited
Group Group Group
6 months 6 months year
ended ended ended
31/08/ 31/08/ 28/02/
2011 2010 2011
Revenue 494 770 538 330 1 069 665
Earnings before interest, taxation, 50 817 65 120 141 596
depreciation and amortisation
Depreciation and amortisation (34 026) (25 775) (64 475)
Earnings before interest and taxation 16 791 39 345 77 121
Net interest expense (9 660) (14 206) (23 226)
Earnings before taxation 7 131 25 139 53 895
Taxation 2 911 (4 642) (14 666)
Earnings for the period 10 042 20 497 39 229
Other comprehensive income for the (6) 11 (86)
period, net of tax
Movement in foreign currency translation (6) 11 (86)
reserve
Total comprehensive income for the 10 036 20 508 39 143
period
Earnings per share (cents)
- Basic 2,8 5,7 10,8
SUPPLEMENTARY INCOME STATEMENT
INFORMATION
Weighted average number of shares in
issue:
- Weighted average number of shares in 362 500 362 500 362 500
issue (thousands)
Reconciliation of headline earnings:
Profit attributable to shareholders of 10 042 20 497 39 229
the holding company
Adjusted for loss on disposal of assets 3 656 752 3 713
Headline earnings 13 698 21 249 42 942
Headline earnings per share (cents)
- Basic 3,8 5,9 11,8
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the six months ended 31 August 2011
R`000 Share Share Common Foreign
capital premium control currency
reserve translation
reserve
Balance at 2 228 596 (123 998) 55
28 February 2010 -
Audited
Dividends paid
Total comprehensive (86)
income for the
period
Balance at 2 228 596 (123 998) (31)
28 February 2011 -
Audited
Total comprehensive (6)
income for the
period
Balance at 2 228 596 (123 998) (37)
31 August 2011
- Reviewed
R`000 Retained Equity Non- Total
earnings attribut-able controlling equity
to the interest
share-holders
of the
company
Balance at 205 600 310 255 - 310 255
28 February 2010 -
Audited
Dividends paid (14 500) (14 500) (14 500)
Total comprehensive 39 229 39 143 39 143
income for the
period
Balance at 230 329 334 898 - 334 898
28 February 2011 -
Audited
Total comprehensive 10 042 10 036 10 036
income for the
period
Balance at 240 371 344 934 - 344 934
31 August 2011
- Reviewed
CONSOLIDATED STATEMENT OF CASH FLOWS
for the six months ended 31 August 2011
R`000 Reviewed Reviewed Audited
Group Group Group
6 months 6 months 12 months
ended ended ended
31/08/ 31/08/ 28/02/
2011 2010 2011
Cash flows from operating activities 54 307 9 451 78 825
Cash generated by operations 76 325 38 516 121 377
Net interest paid (9 660) (14 206) (23 226)
Dividends paid - (14 500) (14 500)
Income taxes paid (12 358) (359) (4 826)
Cash flows from investing activities (57 004) (90 290) (122 415)
Purchase of property, plant and (100 636) (121 771) (211 667)
equipment
Replacement (75 293) (48 127) (114 502)
Additions (25 343) (73 644) (97 165)
Purchase of intangible assets - (3 356) (3 357)
Proceeds on disposal of property, plant 47 530 31 519 86 735
and equipment
(Increase)/decrease in loans granted (3 898) 3 318 5 874
Cash flows from financing activities 2 148 37 696 29 056
Payments in terms of loan finance (5 765) (3 567) (7 476)
Increase in borrowings related to 111 160 131 914 222 778
instalment sale agreements
Payments in terms of instalment sale (103 247) (90 651) (186 246)
agreements
Net (decrease) in cash and cash (549) (43 143) (14 534)
equivalents
Cash and cash equivalents at the 72 612 87 146 87 146
beginning of the period
Cash and cash equivalents at the end of 72 063 44 003 72 612
the period
Cash and cash equivalents comprise of:
Bank balances and cash 72 063 44 003 72 612
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL REPORT
for the six months ended 31 August 2011
CORPORATE INFORMATION
Protech is incorporated and domiciled in South Africa. Protech is listed on
the JSE Limited. The main business of Protech and its operating
subsidiaries is bulk earthworks, plant hire, civil engineering services and
sale and distribution of readymix concrete.
The directors of Protech authorised the issue of the condensed consolidated
financial report for the six months ended 31 August 2011 on 11 November
2011.
BASIS OF PREPARATION AND ACCOUNTING POLICIES
This condensed consolidated interim report complies with International
Accounting Standard 34 - Interim Financial Reporting, the disclosure
requirements of the JSE Limited`s Listings Requirements and the
requirements of the South African Companies Act, 2008, as amended. The
condensed financial information has been prepared in accordance with the
framework concepts and the measurement and recognition requirements of
International Financial Reporting Standards (IFRS) and the AC 500 standards
as issued by the Accounting Practices Board. The accounting policies
comply with IFRS and are consistent with those applied in the prior
financial year except for those standards that became effective during the
reporting period. The adoption of these standards has had no effect on the
results. This report was compiled under the supervision of the chief
financial officer, CJA Wolmarans CA(SA).
PROPERTY, PLANT AND EQUIPMENT
Capital expenditure on property, plant and equipment was R100,6 million
(2011: R121,8 million) for the six months ended 31 August 2011.
SUBSEQUENT EVENTS
The directors are not aware of any matter or circumstance arising since the
end of the period and up to the date of this report, not otherwise dealt
with in this report.
INDEPENDENT REVIEW REPORT
The auditors, Deloitte & Touche have issued their unmodified review report
on the condensed consolidated financial report for the six months ended 31
August 2011. A copy of their unmodified review report is available for
inspection at the company`s registered office.
COMMENTARY
INTRODUCTION
The first six months of the 2012 financial year saw a continuation of the
difficult trading conditions and economic pressure experienced worldwide.
The effects of the global economic fall-out impacted significantly on the
South African construction sector as investor confidence dwindled and the
availability of development funding remained tenuous.
The effects of the economic downturn manifested in the half year results of
the Group which saw a reduction of revenue and margin contraction against
the backdrop of heightened competition and a slow roll out of new
contracts. The results of the largest business unit in the Group, namely
Contracting, were particularly affected. Pleasingly though, the results of
the two other business units, Geotechnical and Readymix, improved
significantly with both businesses achieving revenue growth and improved
operating margins.
STATEMENT OF COMPREHENSIVE INCOME
Group revenue decreased by 8% to R494,8 million
(2011: R538,3 million) due to the low activity levels experienced in the
private commercial and public infrastructure sectors and delays in mining
capital expenditure contracts. Lengthy establishment periods of projects in
the rest of Africa caused interruptions in the revenue stream. Heightened
competition in a soft market saw the Group operating margin decrease to
3,4% (compared to the first half of F2011: 7,3%).
Group operating profit before interest was 57% lower at
R16,8 million (2011: R39,3 million) due to the factors outlined above.
Earnings per share was 51% lower at 2,8 cents per share (2011: 5,7 cents
per share) and headline earnings per share decreased 36% to 3,8 cents per
share (2011: 5,9 cents per share).
STATEMENT OF FINANCIAL POSITION
The net asset value per share at 31 August 2011 amounted to
95,2 cents compared to 92,4 cents at 28 February 2011. Shareholders equity
improved to R344,9 million from R334,9 million over the same period.
Interest bearing debt relating to asset backed finance increased marginally
by 0,7% to R295,8 million from R293,6 million at
28 February 2011. The debt:equity ratio remained steady at 64,9% compared
to 66,0% at 28 February 2011 despite net capital expenditure of R53,1
million (2011: R90,3 million) on plant replacement and expansion. The cash
position of the group remained unchanged in the six months under review.
The cash balance at
31 August 2011 was R72,1 million compared to R72,6 million at
28 February 2011.
STATEMENT OF CASH FLOWS
Cash generated after working capital improved by 98% to
R76,3 million (2011: R38,5 million) as a result of focused cash management.
When comparing cash generated by operations before working capital changes
to EBITDA, the ratio of cash generated to EBITDA is 1,5 times (2011: 1,0).
The group therefore remains confident of its cash generating ability.
OPERATIONAL REVIEW
Contracting - 83% of group revenue
The Contracting business unit remains the largest part of the business,
contributing 83% (2011: 86%) to group revenue and 62% (2011: 97%) to
operating profit. Revenue for Contracting decreased by 13% to R417 million
(2011: R479 million) mainly due to the prevailing weak market conditions
and the lag in revenue generation caused by the lengthy establishment
periods on projects in the rest of Africa.
Operating profit of the contracting business decreased to
R10,2 million from the comparative period`s R40,2 million against the
backdrop of a keenly competed and soft local construction market.
GEOTECHNICAL - 2% OF GROUP REVENUE
The revenue of the smallest business unit in the Group increased by 17% to
R11,1 million (2011: R9,5 million) and operating profits increased by 150%
to R4,1 million(2011: R1,6 million) for the period.
READYMIX - 15% OF GROUP REVENUE
Revenue increased by 12% to R73,2 million (2011: R65,4 million) on the back
of an 8% increase in sales volumes in a beleaguered market that has seen
further declines over the last six months. The increase in sales volumes
was achieved through management focus to extract maximum value from the
service differentiation advantage.
The Readymix business achieved an operating profit of R2,1 million compared
to a loss of R0,4 million in the comparative period. The return to profits
is attributable to the increased sales volumes coupled with a pricing
policy of not sacrificing margin to secure volume and continued focus on
cost management.
BOARD CHANGES
Mr ASW Page was appointed to the board on 1 September 2011 as an executive
director and to the position of chief executive officer. Mr MSG Mareletse
was appointed as the independent chairman of Protech on 25 October 2011.
OUTLOOK
The Group continues to focus on the mining sector which will form the base
load of work until such time as the activity levels in the private
commercial and public infrastructure sectors start to pick up. The
Contracting business unit will continue to target selected contracts in the
rest of Africa to complement existing African operations and the Readymix
business will seek opportunities to increase its current market share and
reduce costs.
The current project pipeline is healthy and currently stands at a realistic
value of R1,4 billion which includes current projects in progress still to
be completed with a value of R706 million. The bulk of the project pipeline
relates to mining related projects and this is not expected to change in
the short term.
The figures as quoted under the heading "Outlook" in the commentary have
not been reviewed nor audited by the Company`s auditors.
On behalf of the directors
MSG Mareletse ASW Page CJA Wolmarans
Chairman Chief Executive Officer Financial Director
Lanseria
11 November 2011
Directors: MSG Mareletse*+ (Chairman), ASW Page (Chief Executive Officer),
CJA Wolmarans (Financial Director), V Raseroka*,
MJ Vuso*+
*non-executive +independent
Secretary: A van der Merwe
Registered office: Corner R512 and Elandsdrift Road, Bultfontein, Lanseria
(PO Box 1326, Lanseria, 1748) (Website: www.pkh.co.za)
Transfer secretary: Link Market Services South Africa (Proprietary)
Limited, 13th Floor, Rennie House, 19 Ameshoff Street, Braamfontein. PO Box
4844, Johannesburg, 2000)
Sponsor: Deloitte & Touche Sponsor Services (Proprietary) Limited
www.pkh.co.za
Date: 14/11/2011 07:05:51 Produced by the JSE SENS Department.
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