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RBX - Raubex - Audited Results For The Year Ended 28 February 2009
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")
AUDITED RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2009
HIGHLIGHTS
* Revenues up 94,9% to R4,16 billion (2008: R2,14 billion)
* Operating profit up 84,2% to R794,6 million (2008: R431,3 million)
* Group operating margin of 19,1% (2008: 20,2%)
* HEPS up 62% to 291,7 cents per share (2008: 180,1 cents per share)
* Strong cash flow from operations up 114,9% to R964,4 million (2008: R448,8
million)
* Capex spend of R382,8 million (2008: R244,6 million)
* Solid order book of R5,2 billion (2008: R2,7 billion)
* Final dividend of 70 cents per share declared
Francois Diedrechsen, Financial and Commercial Director of Raubex Group, said:
"Despite difficult global market conditions, the year under review saw the Group
deliver yet another solid operational and financial performance in line with
expectations.
The acquisitions incorporated during the past year are performing well and have
added significantly to our capacity and skills set. The benefits of the
government`s infrastructure spend have now filtered through to the bottom line
as demonstrated by our growing order book and the continued healthy demand for
our services.
Large contract wins locally and abroad, including two new significant contracts
in Namibia, is a very positive development for Raubex and we will continue to
carefully position the Group as a major player in SADC geographies meeting our
investment criteria.
We are confident that our healthy financial position, extended footprint and
cost conscious approach will allow the Group to maintain its strong performance
in the medium term."
18 May 2009
ENQUIRIES
Raubex Group +27 (0) 12 665 3226
Francois Diedrechsen
College Hill +27 (0) 11 447 3030
Frederic Cornet +27 (0) 83 307 8286
Hayley Crane
+27 (0) 82 815 1821
COMMENTARY
FINANCIAL OVERVIEW
Revenue increased 94,9% to R4,16 billion and operating profit increased 84,2% to
R794,6 million from the corresponding prior period. Profit before tax increased
81,8% to R757,5 million.
Earnings per share increased 59,9% to 289,2 cents with headline earnings per
share increasing 62% to 291,7 cents.
Group operating margin decreased from 20,2% to 19,1% compared to the
corresponding prior year period.
The Group generated operating cash flows of R964,4 million before finance
charges and taxation.
Capital expenditure on fixed assets to the value of R382,8 million was incurred
during the year ended 28 February 2009.
Total cash and cash equivalents at the end of the period amounted to R576,4
million. Total cash outflow for the period was R83,8 million, this includes an
outflow of R384,4 million being directly attributable to the acquisition of
subsidiaries.
Expenses related to the share incentive scheme amounted to R14,9 million during
the period.
Foreign exchange losses amounted to R19,4 million due to a significant
devaluation in the Zambian Kwacha.
OPERATIONAL OVERVIEW
The financial performance discussed herewith includes the first audited set of
earnings from the acquisitions completed during the past year and which enabled
Raubex to position itself as a sizeable and credible industry player with the
capacity and depth of skills to take full advantage of the accelerated demand
for its line of work in South Africa and the region.
In order to comply with International Financial Reporting Standards (IFRS), the
acquisitions of B&E International (Pty) Limited, Zamori Construction (Pty)
Limited, Space Construction (Pty) Limited and Space Indlela Construction (Pty)
Limited, being dependent on Competition Commission approval, have been
consolidated into the Group results from 10 April 2008 which was the effective
approval date for the transactions. Bonn Plant Hire (Pty) Limited, including the
business of Akasia Road Surfacing (Pty) Limited, has been consolidated from 1
June 2008, which was the month following Competition Commission approval. Thaba
Bosiu Construction (Pty) Limited has been consolidated from 1 March 2008. Users
are referred to the `acquisitions` note in the Abridged Financial Statements for
additional disclosure. The earnings per share figures have been calculated using
the weighted average number of shares in issue which takes account of the equity
settled portion of the purchase price relating to these acquisitions and weights
those shares accordingly.
Roadmac
Roadmac is a specialist in the manufacturing and laying of asphalt, chip and
spray, surface dressing, enrichments and slurry seals.
Roadmac is the largest contributor to Group revenue and performance for the year
was in line with expectations.
The division continues to operate in a favourable environment supported by a
healthy order book in Gauteng, the Western Cape and KwaZulu-Natal. With the
Gauteng Freeway Improvement Project now well underway, the division is set to
play a major role in the finalisation of most contracts.
The acquisition of Bonn Plant Hire and Akasia Road Surfacing was successfully
integrated during the first half of the year and is performing above
expectations. Akasia Road Surfacing and National Asphalt will be among some of
the main suppliers of asphalt for the Gauteng Freeway Improvement Project.
Revenue for the division increased 63,3% to R2,05 billion (2008: R1,25 billion)
and operating profit by 84,3% to R431 million (2008: R233,9 million).
The divisional margins increased to 21,1% (2008: 18,7%) due to a more favourable
geographical spread of contracts which allowed the division to operate more
efficiently during times of inclement weather.
The division incurred capital expenditure of R90,4 million during the year
(2008: R76,2 million).
Raubex Construction
Raubex Construction is the road and civil infrastructure construction division
focused on the key areas of new road construction (green fields) and heavy road
rehabilitation.
The acquisitions of Thaba Bosiu Construction, Zamori Construction and Space
Construction were successfully integrated during the past year and continue to
perform in line with expectations.
In August 2008, Raubex Construction was awarded a significant contract worth
some R720 million for the upgrading of National Route 21 (R21) as part of the
Gauteng Freeway Improvement Project. Despite increased competition, a number of
other large contracts were awarded during the period, including the section of
the new R30 Goldfields toll road between Beatrix and Virginia and the upgrade of
the N5 between Paul Roux and Vals River, for a combined value of around R400
million.
Internationally, the division has increased its activities in Zambia where 10
contracts are currently in progress including four major rehabilitation
contracts. Good progress continued to be made on the Group`s long-term
international strategy to carefully expand in the SADC region beyond South
Africa and Zambia. Post year end, two major contracts were awarded in Namibia
for a combined value of R1 billion.
Revenue for the division increased 110,5% to R1,09 billion (2008: R520 million)
whilst operating profit increased 50% to R142,7 million (2008: R95,1 million).
The divisional margins decreased to 13% (2008: 18,3%). The decrease is partly
attributable to unusually high summer rains in Gauteng and certain other
provinces. This factor also disrupted our international operations severely. In
addition, foreign exchange losses incurred in Zambia and low margin work having
to take place during the initial phase of some contracts also contributed to the
decrease.
The division incurred capital expenditure of R74,8 million during the year
(2008: R67,6 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.
The acquisition of B&E International was successfully integrated during the
period and a number of restructuring programmes are currently in progress
including administrative streamlining as well as the redeployment of capacity,
including personnel and equipment across operations.
The division`s materials handling operations were most exposed to the downturn
in commodities demand, particularly in the platinum and diamond sectors. This
should however be compensated for by the increase in mobile crushing
requirements on infrastructure related projects.
Revenue for the division increased 181,7% to R1,02 billion (2008: R362,9
million) and operating profit by 116,1% to R220,9 million (2008: R102,2
million). The variances in the divisional financial indicators are attributable
to a strong performance from both B&E International and SPH Kundalila.
The divisional margins decreased to 21,6% (2008: 28,2%) as a result of the
acquisition of B&E International and lower margins achieved by the commercial
quarry operations which remain very depressed by the slow-down in the
residential building market. Some of the capacity available as a result has been
utilised to meet the demand for aggregates by various infrastructure development
projects around Gauteng.
The division incurred capital expenditure of R217,6 million during the period
(2008: R100,8 million).
PROSPECTS
Whilst the impact of the global economic crisis is still being assessed, there
are no doubts that the local market has not been left unscathed. Despite the
difficulties experienced in the sector, Raubex`s order book has grown to R5,2
billion (2008: R2,7 billion).
Healthy demand for the Group`s services continues to be driven by the
government`s infrastructure investments which are underpinned by the global
economic stimulus focus on our sector. Raubex`s strategy to secure its medium-
term order book will ensure continued growth for the roads divisions over the
medium term and capital expenditure management will remain conservative until
long-term visibility improves.
The aggregates division is more exposed to the effect of the downturn in
commodities and all operations are being closely monitored. Current indications
are that the operations indirectly exposed to gold and coal will continue to
perform well. The scaling down of quarrying operations servicing the residential
sector is expected to continue whilst the redeployment of personnel and
equipment to support the contract crushing order book will be maintained.
Internationally, Raubex was recently awarded two large road contracts in Namibia
with a combined value of R1 billion. Looking ahead, the Group will maintain its
cautious growth strategy in Africa and continue to explore opportunities in
geographies meeting its investment criteria.
Based on current trading conditions and order book strength, the Board is
confident that the Group will continue delivering solid earnings growth over the
medium term.
SUCCESSION MANAGEMENT
As part of the Group`s management succession planning, Mr JE Raubenheimer
informed the Board of his intention to retire from his current position of Chief
Executive Officer in March 2010.
It is envisaged that Mr JE Raubenheimer will be replaced by Mr Rudolf Fourie,
current Managing Director of the Roadmac division, whilst he will remain on the
Board and assume a non-executive post.
DIVIDEND DECLARATION
The directors have declared a final dividend of 70 cents per share on 18 May
2009. The salient dates for the payment of the dividend are as follows:
Last day to trade cum dividend Friday, 5 June 2009
Commence trading ex dividend Monday, 8 June 2009
Record date Friday, 12 June 2009
Payment date Monday, 15 June 2009
No share certificates may be dematerialised or rematerialised between Monday, 8
June 2009 and Friday, 12 June 2009, both dates inclusive.
AUDITED GROUP INCOME STATEMENT
Audited Audited
28 February 29 February
2009 2008
R`000 R`000
Revenue 4 162 780 2 135 778
Cost of sales (3 148 561) (1 616 112)
Gross profit 1 014 219 519 666
- Other income 8 024 18 979
- Other gains/(losses) - net (24 448) 3 076
- Administrative expenses (203 201) (110 439)
Operating profit 794 594 431 282
- Finance income 42 630 12 997
- Finance costs (79 841) (27 986)
- Share of profit of associate 84 478
Profit before income tax 757 467 416 771
- Income tax expense (228 613) (121 153)
Profit for the year 528 854 295 618
Attributable to:
Equity holders of the company 525 852 294 150
Minority interest 3 002 1 468
Basic earnings per share (cents) 289,2 180,9
Diluted earnings per share (cents) 285,8 178,4
CALCULATION OF DILUTED EARNINGS PER SHARE
Audited Audited
28 February 29 February
2009 2008
R`000 R`000
Profit attributable to equity 525 852 294 150
holders of the company
Weighted average number of 181 825 162 641
ordinary shares in issue (`000)
Adjustments for:
- Share options (`000) 2 200 2 200
Weighted average number of 184 025 164 841
ordinary shares for diluted
earnings per share (`000)
Diluted earnings per share (cents) 285,8 178,4
CALCULATION OF HEADLINE EARNINGS PER SHARE
Audited Audited
28 February 29 February
2009 2008
R`000 R`000
Profit attributable to equity 525 852 294 150
holders of the company
Adjustments for:
- (Profit)/loss on sale of fixed 1 291 (555)
assets after tax
- Excess from fair value of assets - (682)
acquired over purchase price
- Impairment of asset held for 3 237 -
sale
Basic headline earnings 530 380 292 913
Weighted average number of shares 181 825 162 641
(`000)
Headline earnings per share 291,7 180,1
(cents)
Diluted headline earnings per 288,2 177,7
share (cents)
AUDITED GROUP BALANCE SHEET
Audited Audited
28 February 29 February
2009 2008
R`000 R`000
ASSETS
Non-current assets
- Property, plant and equipment 1 212 941 668 365
- Intangible assets 724 289 198 939
- Investment in associate 6 854 2 671
- Deferred income tax assets 28 398 9 283
- Trade and other receivables 728 402
Total non-current assets 1 973 210 879 660
Current assets
- Inventories 123 074 50 440
- Construction contracts in 171 232 73 644
progress
- Trade and other receivables 589 823 368 677
- Current income tax receivable 3 285 12 055
- Derivative financial instruments 1 167 -
- Cash and cash equivalents 588 345 660 233
Total current assets 1 476 926 1 165 049
Assets of disposal group 3 000 2 472
classified as held for sale
Total assets 3 453 136 2 047 181
EQUITY AND LIABILITIES
Equity
- Share capital 1 826 1 725
- Share premium 2 139 632 1 830 853
- Other reserves (1 148 471) (1 156 814)
- Retained earnings 855 995 457 979
Equity attributable to equity 1 848 982 1 133 743
holders of the company
Minority interest in equity 6 957 2 785
Total equity 1 855 939 1 136 528
Liabilities
Non-current liabilities
- Borrowings 394 060 249 070
- Provisions for liabilities and 14 215 7 955
charges
- Deferred income tax liability 207 999 113 897
Total non-current liabilities 616 274 370 922
Current liabilities
- Trade and other payables 624 636 318 624
- Borrowings 256 887 143 857
- Current income tax liabilities 87 444 77 230
- Bank overdrafts 11 956 20
Total current liabilities 980 923 539 731
Total liabilities 1 597 197 910 653
Total equity and liabilities 3 453 136 2 047 181
AUDITED GROUP CASH FLOW STATEMENT
Audited Audited
28 February 29 February
2009 2008
R`000 R`000
Cash flows from operating
activities
Cash generated from operations 964 405 448 815
Interest received 42 630 12 997
Interest paid (79 841) (27 986)
Income tax paid (200 026) (43 777)
Net cash from operating activities 727 168 390 049
Cash flows from investing
activities
Purchases of property, plant and (382 781) (244 585)
equipment
Proceeds from sale of property, 37 296 22 759
plant and equipment
Acquisition of subsidiaries (384 376) (57 143)
Associates` dividends received - 24
Loans to associates (4 100) -
Loan repayments received from - 5 707
associates
Net cash used in investing (733 961) (273 238)
activities
Cash flows from financing
activities
Net proceeds from borrowings 52 173 119 169
Proceeds from issuance of ordinary - 405 476
shares
Share issue expenses (1 107) (25 946)
Dividends paid to company`s (127 837) (32 426)
shareholders
Dividends paid to minorities (260) (200)
Net cash used in financing (77 031) 466 073
activities
Net (decrease)/increase in cash (83 824) 582 884
and cash equivalents
Cash and cash equivalents at the 660 213 77 329
beginning of the year
Cash and cash equivalents at the 576 389 660 213
end of the year
AUDITED GROUP STATEMENT OF CHANGES IN EQUITY
Share Share Other Retained
capital premium reserves earnings
R`000 R`000 R`000 R`000
Balance at 1 March 1 433 1 282 167 (1 174 085) 196 255
2007
Issue of share 292 574 631 - -
capital and share
premium
Share issue - (25 945) - -
expenses
Currency - - 2 910 -
translation
reserve
Share option - - 14 361 -
reserve
Profit for the - - - 294 150
year
Dividends paid - - - (32 426)
Balance at 29 1 725 1 830 853 (1 156 814) 457 979
February 2008
Issue of share 101 309 886 - -
capital and share
premium
Share issue - (1 107) - -
expenses
Currency - - (6 541) -
translation
reserve
Share option - - 14 884 -
reserve
Minorities` - - - -
interest in
acquired company
Profit for the - - - 525 852
year
Dividends paid - - - (127 836)
Balance at 28 1 826 2 139 632 (1 148 471) 855 995
February 2009
Total attributable
to equity holders
of the parent Minority Total
company interest equity
R`000 R`000 R`000
Balance at 1 March 305 770 1 517 307 287
2007
Issue of share 574 923 - 574 923
capital and share
premium
Share issue (25 945) - (25 945)
expenses
Currency 2 910 - 2 910
translation
reserve
Share option 14 361 - 14 361
reserve
Profit for the 294 150 1 468 295 618
year
Dividends paid (32 426) (200) (32 626)
Balance at 29 1 133 743 2 785 1 136 528
February 2008
Issue of share 309 987 - 309 987
capital and share
premium
Share issue (1 107) - (1 107)
expenses
Currency (6 541) - (6 541)
translation
reserve
Share option 14 884 - 14 884
reserve
Minorities` - 1 430 1 430
interest in
acquired company
Profit for the 525 852 3 002 528 854
year
Dividends paid (127 836) (260) (128 096)
Balance at 28 1 848 982 6 957 1 855 939
February 2009
AUDITED GROUP SEGMENTAL ANALYSIS
Road
Aggregate surfacing
and and
crusher rehabilitation
R`000 R`000
Business segments
At 28 February 2009
Segment revenue 1 022 455 2 045 908
Segment result (operating profit) 220 886 430 998
At 29 February 2008
Segment revenue 362 915 1 252 902
Segment result (operating profit) 102 240 233 922
Road
construction
and
earthworks Consolidated
R`000 R`000
Business segments
At 28 February 2009
Segment revenue 1 094 417 4 162 780
Segment result (operating profit) 142 710 794 594
At 29 February 2008
Segment revenue 519 961 2 135 778
Segment result (operating profit) 95 120 431 282
Local International Consolidated
R`000 R`000 R`000
Geographical segments
At 28 February 2009
Segment revenue 3 841 120 321 660 4 162 780
Segment result 763 630 30 964 794 594
(operating profit)
At 29 February 2008
Segment revenue 1 990 906 144 872 2 135 778
Segment result 407 734 23 548 431 282
(operating profit)
EMPLOYEE BENEFIT EXPENSE
Audited Audited
28 February 29 February
2009 2008
R`000 R`000
Employee benefit expense in the
income statement consists of:
- Salaries, wages and 688 198 304 051
contributions
- Share options granted to 14 884 14 361
employees
Total employee benefit expense 703 082 318 412
CAPITAL EXPENDITURE AND DEPRECIATION
Audited Audited
28 February 29 February
2009 2008
R`000 R`000
Capital expenditure for the year 382 781 244 584
Depreciation for the year 155 186 62 258
Amortisation of intangible assets 2 285 1 135
for the year
NOTES
Basis of preparation:
The abridged consolidated financial information is based on the audited
financial statements of the Group for the year ended 28 February 2009, which
have been prepared in accordance with International Financial Reporting
Standards ("IFRS"), International Accounting Standard 34, the Listings
Requirements of the JSE Limited and the South Africa Companies Act 61 of 1973 as
amended, on a consistent basis with that of the prior period.
These results have been audited by PricewaterhouseCoopers Inc., Chartered
Accountants (SA), Registered Auditors. Their unqualified audit opinion is
available for inspection at the Company`s registered office.
ACQUISITIONS
The Group made the following acquisitions during the year.
B&E International Holdings (Pty) Limited
On 10 April 2008, the Group acquired 100% of the share capital of B&E
International Holdings (Pty) Limited, a group of companies specialising in
contract crushing and mineral processing operations, at a cost of R474 million.
The purchase consideration was settled by the issuance of 9 029 677 ordinary
shares at a fair value of R270 million and cash of R204 million. The fair value
of the shares issued was determined in accordance with IFRS 3 using the ruling
market price at the date on which the sellers became unconditionally entitled to
these shares. The acquired business contributed revenues of R534 million and net
profit of R79,6 million to the Group for the period from 10 April 2008 to 28
February 2009. If the acquisition had occurred on 1 March 2008, contributions to
Group revenue would have been R572,9 million and net profit of R82,6 million.
Space Construction (Pty) Limited and Space Indlela Construction (Pty) Limited
On 10 April 2008, the Group acquired 100% of the share capital of Space
Construction (Pty) Limited and Space Indlela Construction (Pty) Limited, a group
of companies specialising in road construction, at a cost of R50 million. The
purchase consideration was settled by the issuance of 277 771 ordinary shares at
a fair value of R10 million and cash of R40 million. This purchase price is
subject to adjustment after expiry of a profit warranty period ending 31 August
2010. The total purchase price shall not exceed an amount of R90 million. The
acquired businesses contributed revenues of R165,9 million and net profit of
R13,1 million to the Group for the period 10 April 2008 to 28 February 2009. If
the acquisition had occurred on 1 March 2008, contributions to Group revenue
would have been R181 million and net profit of R14,2 million.
Zamori Construction (Pty) Limited
On 10 April 2008, the Group acquired 100% of the share capital of Zamori
Construction (Pty) Limited, a company specialising in road construction, at a
cost of R35,7 million. The purchase consideration was settled by the issuance of
281 921 ordinary shares at a fair value of R10,7 million and cash of R25
million. The acquired business contributed revenues of R88,9 million and net
profit of R16,8 million to the Group for the period from 10 April 2008 to 28
February 2009. If the acquisition had occurred on 1 March 2008, contributions to
Group revenue would have been R97 million and net profit of R18,4 million.
Thaba Bosiu Construction (Pty) Limited
On 1 March 2008, the Group acquired 100% of the share capital of Thaba Bosiu
Construction (Pty) Limited, a company specialising in road construction, at a
cost of R64,3 million. The purchase consideration was settled by the issuance of
507 553 ordinary shares at a fair value of R19,3 million and cash of R45
million. The acquired business contributed revenues of R69,8 million and net
profit of R13,1 million to the Group for the period 1 March 2008 to 28 February
2009.
Bonn Plant Hire (Pty) Limited and the business of Akasia Road Surfacing (Pty)
Limited
On 1 June 2008, the Group acquired 100% of the share capital of Bonn Plant Hire
(Pty) Limited and the business of Akasia Road Surfacing (Pty) Limited for R120
million cash. The company specialises in asphalt manufacturing and road
surfacing. The acquired businesses contributed revenues of R177 million and net
profit of R20,6 million to the Group for the period from 1 June 2008 to 28
February 2009. If the acquisition had occurred on 1 March 2008, contributions to
Group revenue would have been R233,4 million and net profit of R23,3 million.
POST BALANCE SHEET EVENTS
Acquisitions
The following acquisitions became effective after the balance sheet date.
Anchor Park Investments 71 (Pty) Limited
The group acquired 100% of the share capital of Anchor Park Investments 71 (Pty)
Limited for R35 million cash. The company owns a Pilatus PC12 aircraft and will
provide flight services to the Group.
On behalf of the Board
MC Matjila JE Raubenheimer F Diedrechsen
Chairman Chief Executive Officer Group Financial &
Commercial Director
18 May 2009
Directors:
MC Matjila (Chairman)# , JE Raubenheimer, GM Raubenheimer,
F Diedrechsen, F Kenney#, MB Swana#, L Maxwell*
# Non-executive * Independent non-executive
Company Secretary:
Mrs HE Ernst
Registered office:
1st Floor Leopard Creek Building,
The Greens Office Park, Centurion
Postal address:
PO Box 66192, Highveld 0169
Transfer secretaries:
Computershare Investor Services (Pty) Limited
70 Marshall Street, Johannesburg 2001,
PO Box 6105 Marshalltown 2107
Auditors:
PricewaterhouseCoopers Inc.
Sponsor:
Investec Bank Limited
www.raubex.co.za
Date: 18/05/2009 07:27:02 Supplied by www.sharenet.co.za
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