| Wed 2 May 2012, 14:48 | | CIL - Consolidated Infrastructure Group Limited - Consolidated Infrastructure |
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CIL
CIL
CIL - Consolidated Infrastructure Group Limited - Consolidated Infrastructure
unaudited results for the six months ended 29 February 2012
Consolidated Infrastructure 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")
CONSOLIDATED INFRASTRUCTURE UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 29
FEBRUARY 2012
Salient features
- Revenue up 12% to R763 million
- Ebitda up 27% to R97 million
- HEPS up 17% to 47.79 cps (2010: 40.85 cps)
- Order book up 24% to R1.8 billion
We have delivered positive growth in all of our markets over the past six
months. Specifically, we are benefitting from the estimated R100 billion
increased spend in power generation and transmission in South Africa, which
is apparent in the sizeable growth of our order book.
Our initiatives to position the group in the Alternative Energy sector are
gaining momentum and the Department of Energy tender places Conco in an
exciting position where we have a reasonable probability of being awarded
meaningful amounts of work throughout the roll out of the Refit Program.
In the core business of turnkey development and installation of substations,
overhead lines and protection systems Conco experienced growth in all its
target markets.
Business Overview
Consolidated Infrastructure, the largest turnkey developer and installer of
high-voltage electrical substations and overhead cables in sub-Sahara Africa
recorded strong profits for the 6 months ended 29 February 2012. The group
continued its strategy of investing for the medium and longer term by adding
project execution capacity for Conco, setting up of the Middle East region
and incurring substantial bidding, legal and due diligence costs in the
Renewable Energy division. At the corporate level the group expanded its
investment in capacity to assess opportunities arising in the energy and
infrastructure sectors.
Financial Overview
Revenue grew by 12% to R763 million (2011: R680 million). Trading margins
increased to 26.6% (2011: 25.4%) as management continued their focus on
improved efficiencies, supply chain initiatives, geographic and project mix
at Conco and realising cost savings in the Building Materials division.
The power and electrification sector is the core sector for CIG with 84% of
CIG`s revenue and earnings and 81% of earnings before interest, taxation,
depreciation and amortisation ("EBITDA") directly attributed to this sector.
Profit and headline earnings for the period improved by 19% to R55 million
from the prior year`s R46 million.
Earnings and headline earnings per share of 47.79 cents represents an
increase of 17% over the previous year.
The debt-to-equity ratio increased to 9.8% (2011: 6.3%) as additional funds
were raised in the prior year to recapitalise the Building Materials
division. Interest cover as measured against EBITDA was 60 times. Net finance
charges of R1.6 million were incurred against interest earned in the prior
period of R0.6 million.
CIG`s financial position remains strong due to strict contract management,
where advance and progress payments are negotiated upfront. Working capital
management remained an area of key focus. The current ratio has improved to
1.76 times (2010: 1.45 times) and during the period there has been no
relative increase in arrear accounts.
Due to the December shut down period that takes place during the interim
reporting period, the second half of the financial year has historically
produced a stronger earnings performance. We expect this trend to continue in
the current financial year.
As a result of the substantial increase in orderbook and extensive growth in
tenders awaiting adjudication (including potential renewable energy work),
sufficient working capital and guarantee facilities are a critical constraint
to successful delivery of results. Accordingly, the group continues in its
efforts with bankers and other providers of debt capital, to ensure
appropriate levels of facilities are in place at all times. On 30 November
2011 CIG raised R50 million cash by placing 5.2 million shares with selected
institutions at R9.80 per share and in addition, has secured a R100 million
revolving credit facility with the Industrial Development Corporation ("IDC")
which to date is still unutilised.
The group is in the process of implementing a Medium Term Note Programme to
assist with its working capital requirements and has already received a
Moody`s credit rating of Baa2.za.The group intends to finalise the programme
by the end of May 2012 by raising R200 to R250m with a tenor of 36 months.
The Building Materials division continues to operate at a satisfactory
capacity, which is pleasing given the continued constrained market
conditions. Despite this, the division has again managed to increase its
market share and recorded an increased operating profit for the period.
Divisional overview
Conco
Conco, a market leader in its field, performed well over the past six months,
securing a healthy 24% increase in its order book to R1.8bn.
The division won project tenders to build and upgrade electrical substations
across the African sub continent, including South Africa, Mozambique,
Tanzania, Botswana, Ghana, and expanded its African footprint into Kenya and
Uganda, where tenders were secured. The period was characterised by higher
than expected tender submissions.
New business increased some five fold out of the South African transportation
sector, where sizable tenders were won from Transnet for the upgrade and
electrification of existing infrastructure across South Africa. These tender
projects involve the electrification upgrade of the existing Metrorail
network and port structures.
Conco maintained a robust development programme for new operating capacity
into Africa and the Middle East to meet the increased demand for power from
these regions. The Saudi Arabian office based in Al-Khobar remains active in
seeking and tendering for opportunities.
Revenue from the division increased 10% to R640 million (2011: R583 million)
and EBITDA improved 26% to R79 million (2011: R62 million). A supplier of
choice, the division continues to differentiate itself through distinctive
design, a superior skills base and an excellent delivery record.
Building Materials
Despite a constrained building sector and downward pressure on margins, the
Building Materials division managed to maintain its market share. This was
partly due to managements` decision to consolidate the division into a more
efficient single business unit which will realise the expected cost savings
in the current financial year.
Revenue increased 27% to R123 million (2011:R96 million) and EBITDA increased
48% to R27 million (2011: R17 million).
Prospects
The current order book at Conco together with higher than expected levels of
bidding, tenders awaiting adjudication and the prospects of the Department
of Energy Renewable Energy Tender places the group on a solid foundation to
continue to deliver growth.
The group is strategically positioned to provide infrastructure to the
African Power Market, with the majority of clients being South African or
African utilities. The geographic mix provides a fairly robust buffer against
the volatility of the market place. The drivers of growth in these markets
remain commoditisation and urbanisation and we continue to pursue
opportunities across the continent. It is expected that over the medium and
longer term the greatest constraint to growth is the availability of
qualified engineers to execute work. In order to overcome this constraint
Conco has implemented a Conco Skills Academy to educate and train young
engineers and embarked on a recruitment drive to increase its skills base.
UNAUDITED CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED 29 FEBRUARY 2012
Condensed consolidated statements of comprehensive income
Unaudited Unaudited Audited
Six months Six months Year ended
ended ended
29 February 28 February 31 August
2012 2011 2011
R`000 R`000 R`000
Revenue 763,524 680,034 1,445,556
Cost of sales (560,696) (507,504) (1,036,075)
Gross profit 202,828 172,530 409,481
Other income 0 0 1,273
Operating expenses (111,183) (92,011) (216,864)
Foreign exchange gain/(loss) 5,767 (4,025) (7,096)
Earnings before interest, 97,412 76,494 186,794
taxation, depreciation and
amortisation ("EBITDA")
Depreciation (18,646) (12,680) (27,469)
Profit before interest and 78,766 63,814 159,325
taxation
Interest received 3,510 1,762 3,628
Interest paid (5,122) (1,095) (8,547)
Profit before taxation 77,154 64,481 154,406
Taxation (21,603) (17,942) (43,314)
Profit for the period 55,551 46,539 111,092
Other comprehensive income:
Exchange rate differences on 266 (3,115) (545)
translating foreign operations
Total comprehensive income 55,817 43,424 110,547
Basic earnings per share (cents) 47.79 40.95 97.76
Fully diluted earnings per share 46.74 40.95 97.76
(cents)
Reconciliation of headline
earnings:
Profit attributable to ordinary 55,551 46,539 111,092
shareholders
Adjusted for:
(Profit)/loss on disposal of (3) (120) 3,131
property, plant and equipment
Headline earnings attributable to 55,548 46,419 114,223
ordinary shareholders
Weighted average number of shares 116,240 113,641 113,641
in issue (000`s)
Fully diluted weighted average 118,841 113,641 113,641
number of shares in issue (000`s)
Headline earnings per share 47.79 40.85 100.51
(cents)
Fully diluted headline earnings 46.74 40.85 100.51
per share (cents)
Condensed consolidated statements
of financial position
Unaudited Unaudited Audited
As at As at As at
29 February 28 February 31 August
2012 2011 2011
R ` 000 R ` 000 R ` 000
ASSETS
Non-current assets 819,418 784,414 817,423
Property, plant and equipment 312,950 276,247 307,529
Goodwill 462,220 462,220 462,220
Intangible assets 33,567 37,050 35,309
Deferred tax 8,124 7,040 10,115
Financial assets 2,557 1,857 2,250
Current assets 854,884 572,683 807,528
Inventories 44,354 40,665 40,228
Trade and other receivables 46,485 25,682 51,102
Amounts due from contract 611,151 381,429 569,624
customers
Taxation receivable 352 5,524 7,811
Cash and cash equivalents 152,542 119,383 138,763
Total assets 1,674,302 1,357,097 1,624,951
EQUITY AND LIABILITIES
Equity 1,053,020 879,341 946,311
Issued capital 11 11 11
Share premium 726,892 676,153 676,000
Foreign currency translation (3,658) (6,494) (3,924)
reserve
Accumulated profits 329,775 209,671 274,224
Non-current liabilities 134,542 82,342 132,570
Other financial liabilities 72,330 32,567 70,469
Provisions 7,964 8,346 7,881
Instalment sale liabilities 11,492 10,273 11,182
Deferred tax 42,756 31,156 43,038
Current liabilities 486,740 395,414 546,070
Other financial liabilities 10,845 7,615 10,029
Trade and other payables 229,089 180,177 299,816
Amounts received in advance 31,494 1,385 45,883
Amounts due to contract customers 186,058 155,374 170,850
Bank overdraft 2,967 14,766 2,727
Instalment sale liabilities 8,779 5,288 6,852
Taxation payable 17,508 30,809 9,913
Total equity and liabilities 1,674,302 1,357,097 1,624,951
Number of shares in issue (000`s) 118,841 113,641 113,641
Net asset value per share (cents) 886.08 773.79 832.72
Net tangible asset value per share 468.89 334.49 394.91
(cents)
Condensed consolidated statements
of cashflow
Unaudited Unaudited Audited
Six months Six months Year ended
ended ended
29 February 28 February 31 August
2012 2011 2011
R`000 R`000 R`000
Cash generated by operations 98,129 79,927 190,736
before changes in working capital
Changes in working capital (110,944) (145,906) (179,735)
Net interest (interest paid)/ (1,612) 667 (4,919)
received
Taxation paid (5,208) (6,577) (39,986)
Cash flows from operating (19,635) (71,889) (33,904)
activities
Cash flows from investing (22,632) (9,214) (58,567)
activities
Cash flows from financing 55,806 (47,896) (5,261)
activities
Net increase/(decrease) in cash 13,492 (128,999) (97,732)
and cash equivalents
Effect on foreign currency 47 (244) (92)
translation reserve movement on
cash balances
Cash and cash equivalents at 136,036 233,860 233,860
beginning of year
Cash and cash equivalents at end 149,575 104,617 136,036
of period
Condensed consolidated statements
of changes in equity
Unaudited Unaudited Audited
Six months Six months Year ended
ended ended
29 February 28 February 31 August
2012 2011 2011
R`000 R`000 R`000
Balance at beginning of the period 946,311 835,917 835,917
Issue of share capital and share 50,892 (153)
issue expenses
Total comprehensive income for the 55,817 43,424 110,547
period
Balance at end of period 1,053,020 879,341 946,311
SEGMENTAL ANALYSIS
Unaudited Unaudited Audited Unaudited Unaudited Audited
29 28 31 August 29 28 31
February February 2011 February February August
2012 2011 2012 2011 2011
R`000 R`000 R`000 % of % of % of
total total total
Revenue
Heavy building 123,329 96,729 202,890 16% 14% 14%
materials
Power 640,195 583,305 1,242,666 84% 86% 86%
Corporate - - - 0% 0% 0%
Total 763,524 680,034 1,445,556 100% 100% 100%
Unaudited Unaudited Audited Unaudited Unaudited Audited
28 28 31 August 28 28 31
February February 2011 February February August
2012 2011 2012 2011 2011
R`000 R`000 R`000 % of % of % of
total total total
EBITDA
Heavy building 26,028 17,541 28,299 27% 23% 15%
materials
Power 78,987 62,609 165,866 81% 82% 89%
Corporate (7,603) (3,656) (7,371) (8%) (5%) (4%)
Total 97,412 76,494 186,794 100% 100% 100%
Unaudited Unaudited Audited
29 February 28 February 31 August
2012 2011 2011
R`000 R`000 R`000
Reconciliation of profit before tax
EBITDA per segment analysis 97,412 76,494 186,794
Depreciation (18,646) (12,680) (27,469)
Net interest (paid)/ received (1,612) 667 (4,919)
Profit before tax 77,154 64,481 154,406
Unaudited Unaudited Audited
28 February 28 February 31 August
2012 2011 2011
R`000 R`000 R`000
Assets
Heavy building materials 425,734 394,913 422,954
Power 851,623 624,788 848,016
Corporate 1,175,099 1,127,436 1,137,134
Total assets including group loan 2,452,456 2,408,104 2,408,104
accounts
Inter-group elimination (778,154) (790,040) (783,153)
Total 1,674,302 1,357,097 1,624,951
Unaudited Unaudited Audited
29 February 28 February 31 August
2012 2011 2011
R`000 R`000 R`000
Liabilities
Heavy building materials 341,778 308,329 336,101
Power 468,327 361,279 515,704
Corporate 51,031 43,178 60,630
Total liabilities including group 861,136 712,786 912,435
loan accounts
Inter-group elimination (239,854) (235,030) (233,795)
Total 621,282 477,756 678,640
SHARES ISSUED FOR CASH
On 30 November 2011, the group placed 5.2 million shares (4.6% of shares in
issue) for cash at R9.80 per share, to selected institutions. The proceeds
raised will be used to bolster expected working capital requirements to
facilitate further growth.
The increased number of shares has been used in calculating the earnings per
share and fully diluted earnings per share for the period.
CHANGES TO THE BOARD OF DIRECTORS
Frank Boner, who has been acting as chairman since 10 January 2012, was
appointed chairman of the group.
Panos Voutyritsas, previously a non-executive director, is now employed as an
executive director of the group.
SHARE CONSOLIDATION
CIG consolidated its share capital on a 10 for 1 basis with effect from 20
June 2011. Earnings per share, headline earnings per share and net asset
value per share for the prior year have been adjusted accordingly.
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 period.
BASIS OF PREPARATION
These consolidated interim 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 (2008), as
amended. The accounting policies applied are consistent with those applied in
the annual financial statements for the year ended 31 August 2011. These
results have not been audited or reviewed by the group`s auditors.
Due to a change in management structures within the Building Materials
division and given the size of each operation relative to the overall
profitability and asset base of the group, Building Materials is reported as
one segment in the current year and the prior year`s segmental reporting has
been adjusted accordingly.
These unaudited interim results have been prepared under the supervision of
the group financial director I Klitzner CA(SA).
Appreciation
The directors and management of Consolidated Infrastructure wish to thank all
staff for their focused efforts and loyalty. 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
Frank Boner Raoul Gamsu
Chairman CEO
2 May 2012
Non-executive directors:
R Horton
Independent non-executive directors:
AD Dixon, A Darko***, N Mintah**, F Boner (Chairman)
Executive directors:
RD Gamsu, IM Klitzner, B Berelowitz, P Voutyritsas*
*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
Telephone: 011 722 7430
Facsimile: 011 722 7431
Company secretary: Probity Business Services (Pty) Ltd
Transfer secretaries: Computershare Investor Services (Pty) Limited
Sponsor
Java Capital
Auditors
PKF (Jhb) Inc.
Visit our website: www.ciglimited.co.za
Date: 02/05/2012 14:48:02 Produced by the JSE SENS Department.
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