Wrap Text
RBX - Raubex Group Limited - Unaudited interim results for the six months ended
31 August 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")
Unaudited Interim Results
for the six months ended 31 August 2009
Highlights
* Revenues up 1,8% to R2,27 billion (H1 2009: R2,23 billion)
* Operating profit up 10,6% to R440,2 million (H1 2009: R398 million)
* HEPS up 10,2% to 159,4 cents per share (H1 2009: 144,6 cents per share)
* Strong cash flow from operations up 40% to R466,6 million (H1 2009: R333,3
million)
* Capex spend of R164,6 million (H1 2009: R232 million)
* Stable order book of R 5,2 billion (H1 2009: R4,9 billion)
* Interim dividend of 35 cents per share
Francois Diedrechsen, Financial and Commercial Director of Raubex Group, said:
"Notwithstanding challenging conditions in the first half of the year, we have
delivered a satisfactory performance and grown the business.
"Our international expansion is progressing well following the successful
establishment of our footprint in Namibia and this has already led to further
work being awarded to Raubex in that country. In addition, a number of new
projects were secured locally following the interim period.
"We expect the performance of the second half of the year to improve and remain
confident that our strong financial and operational position will allow the
Group to maintain its performance in the medium term."
9 November 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 1,8% to R2,27 billion and operating profit increased 10,6% to
R440,2 million from the corresponding prior period.
Profit before tax increased 11,4% to R429 million.
Earnings per share increased 10,4% to 161,3 cents with headline earnings per
share increasing 10,2% to 159,4 cents.
Group operating margin increased 9% from 17,8% to 19,4% compared to the
corresponding prior year period.
The Group generated strong operating cashflows of R466,6 million before finance
charges and taxation.
Capital expenditure on fixed assets to the value of R164,6 million was incurred
during the period under review.
The Group`s depreciation charge for the period increased 45,2% from the
corresponding prior period as a result of the increased level of capital
expenditure incurred in the prior year and a change in accounting estimate of
the useful economic lives of plant and equipment. This change in accounting
estimate has given rise to an additional depreciation charge of R17 million
during the period.
Net cash outflow for the six months ended 31 August 2009 was R3 million with
total cash and cash equivalents at the end of the period amounting to R573,4
million. Net cash outflow on acquisition of subsidiaries and business
combinations amounted to R40,4 million.
Expenses related to the share incentive scheme amounted to R7,8 million during
the period.
OPERATIONAL OVERVIEW
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 remains the largest contributor to Group revenue although performance
for the period was impacted by the increased competition in the light
rehabilitation segment of the business resulting in a slight decrease in
margins. The division continues to be supported by a healthy order book and the
demand for Asphalt in the Gauteng market remains strong. The new Olifantsfontein
plant was commissioned in September 2009 with an initial production capacity of
14 000 tons per month, bringing the total current annual capacity for the three
plants to around 968 000 tons. It is envisaged that the asphalt manufacturing
facilities will be transferred under Raumix`s management during the second half
of the year to improve efficiencies.
In line with the Group`s SADC expansion strategy and following the awarding of a
R1 billion contract in Namibia earlier this year, Roadmac was awarded a R120
million contract for the upgrading and resurfacing of Windhoek`s Hosea Kutako
International Airport.
Revenue for the division decreased 19,9% to R943,6 million (H1 2009: R1,18
billion) and operating profit by 9,8% to R198,2 million (H1 2009: R219,9
million). The decline in revenue is attributed to a change in the segmental mix
as Roadmac`s resources are being deployed on various contracts in Namibia and
Zambia, increased competition resulting in a lower rate of tender successes
during the earlier part of the period as well as the effect of rise and fall
clauses as declining input costs were passed on to the clients.
The divisional margins increased to 21% (H1 2009: 18,7%) as the margins achieved
on the asphalt manufacturing improved.
The division incurred capital expenditure of R42,7 million during the period (H1
2009: R42 million).
Raubex Construction
Raubex Construction is a road and civil infrastructure construction company
focused on the key areas of new road construction (green fields) and heavy road
rehabilitation.
Whilst good progress is being made on the Gauteng Freeway Improvement Project
National Route 21 (R21) work package, a number of large contracts were awarded
during the first half of the year and have secured the division`s local order
book well into the 2011 financial year.
Internationally, the construction of the TR10 contract in Namibia between Elundu
and Rundu is well underway with the base camp now fully established and the
initial phases of the contract, including some earthwork and the commissioning
of quarrying operations, already completed.
In Zambia, conditions were more challenging due to exceptionally high rainfalls
impacting on the re-gravel contracts. Rehabilitation contracts with a high
content of cement and bitumen were also negatively affected by supply issues.
The strength of the South African Rand against the Zambian Kwacha resulted in
increased input costs having a negative effect on operating margins. The Group
is evaluating various currency hedging options to mitigate this risk going
forward.
Revenue for the division increased 46,4% to R748,3 million (H1 2009: R511
million) whilst operating profit increased 68,4% to R105,5 million (H1 2009:
R62,6 million).
The divisional margins increased to 14,1% (H1 2009: 12,3%).
The division incurred capital expenditure of R67,8 million during the period (H1
2009: R47,9 million); as more capital equipment was purchased to effectively
move into new geographies.
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.
Contract crushing operations continued to perform well with B&E International
delivering a particularly strong first half performance. Whilst operating
conditions in the commercial quarrying environment remain under pressure, the
geographical location of quarries in Gauteng has allowed the division to
mitigate the impact of the weak residential market with infrastructure project
related spend.
Revenue for the division increased 6,8% to R581,4 million (H1 2009: R544,5
million) and operating profit by 18,1% to R136,4 million (H1 2009: R115,5
million).
The divisional margins increased to 23,5% (H1 2009: 21,2%) as a result of the
completion of some higher margin contracts combined with an increased amount of
inter-group revenue between B&E International and Raubex Construction compared
to the prior period.
The division incurred capital expenditure of R54,2 million during the period (H1
2009: R142,1 million).
PROSPECTS
Despite the adverse conditions experienced in the first half of the year, the
Group has been able to grow and maintain a stable order book at R5,2 billion (H1
2009: R4,9 billion).
The healthy demand for the Group`s services continues to be driven by government
infrastructure spend both locally and abroad. However, recent tender results
indicate that in order to secure new work locally, current operating margins in
the Roadmac and Raubex Construction divisions will continue to be adjusted to
account for the increased competition, particularly in the light road surfacing
sector.
Internationally, the Group will continue to make good progress and new
opportunities are constantly being evaluated whilst maintaining a cautious risk
management approach.
Based on current trading conditions, order book strength and the contracts
awarded following the interim period, it is expected that the Group will deliver
a strong performance in the second half of the year.
DIVIDEND DECLARATION
The directors have declared an interim cash dividend of 35 cents per share on 9
November 2009. The salient dates for the payment of the dividend are as follows:
Last day to trade cum dividend Friday, 27 November 2009
Commence trading ex dividend Monday, 30 November 2009
Record date Friday, 4 December 2009
Payment date Monday, 7 December 2009
No share certificates may be dematerialised or rematerialised between Monday, 30
November 2009 and Friday, 4 December 2009, both dates inclusive.
CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited Audited
six months six months 12 months
31 August 31 August 28 February
2009 2008 2009
R`000 R`000 R`000
Revenue 2 273 345 2 232 676 4 162 780
Cost of sales (1 738 795) (1 754 348) (3 148 561)
Gross profit 534 550 478 328 1 014 219
- Other income 3 070 6 233 8 024
- Other gains/(losses) - 5 044 2 924 (24 448)
net
- Administrative expenses (102 481) (89 517) (203 201)
Operating profit 440 183 397 968 794 594
- Finance income 21 710 20 722 42 630
- Finance costs (32 947) (33 807) (79 841)
- Share of profit of - 50 84
associate
Profit before income tax 428 946 384 933 757 467
- Income tax expense (133 683) (116 699) (228 613)
Profit for the period 295 263 268 234 528 854
Profit for the period
attributable to:
Equity holders of the 294 490 266 810 525 852
company
Minority interest 773 1 424 3 002
Basic earnings per share 161,3 146,1 289,2
(cents)
Diluted earnings per 159,2 144,4 285,8
share (cents)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
six months six months 12 months
31 August 31 August 28 February
2009 2008 2009
R`000 R`000 R`000
Profit for the period 295 263 268 234 528 854
Other comprehensive
income for the period,
net of tax
- Movement in foreign (4 135) 1 816 (6 541)
currency translation
reserve
Total comprehensive 291 128 270 050 522 313
income for the period
Total comprehensive
income for the period
attributable to:
Equity holders of the 290 355 268 626 519 311
company
Minority interest 773 1 424 3 002
291 128 270 050 522 313
CALCULATION OF DILUTED EARNINGS PER SHARE
Unaudited Unaudited Audited
six months six months 12 months
31 August 31 August 28 February
2009 2008 2009
R`000 R`000 R`000
Profit attributable to 294 490 266 810 525 852
equity holders of the
company
Weighted average number 182 624 182 624 181 825
of ordinary shares in
issue (`000)
Adjustments for:
- Share options (`000) 2 367 2 200 2 200
Weighted average number 184 991 184 824 184 025
of ordinary shares for
diluted earnings per
share (`000)
Diluted earnings per 159,2 144,4 285,8
share (cents)
CALCULATION OF HEADLINE EARNINGS PER SHARE
Unaudited Unaudited Audited
six months six months 12 months
31 August 31 August 28 February
2009 2008 2009
R`000 R`000 R`000
Profit attributable to 294 490 266 810 525 852
equity holders of the
company
Adjustments for:
- (Profit)/loss on sale (3 338) (2 648) 1 291
of fixed assets after tax
- Impairment of asset - - 3 237
held for sale
Basic headline earnings 291 152 264 162 530 380
Weighted average number 182 624 182 624 181 825
of shares (`000)
Headline earnings per 159,4 144,6 291,7
share (cents)
Diluted headline earnings 157,4 142,9 288,2
per share (cents)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
six months six months 12 months
31 August 31 August 28 February
2009 2008 2009
R`000 R`000 R`000
ASSETS
Non-current assets
- Property, plant and 1 264 648 1 159 040 1 212 941
equipment
- Intangible assets 727 464 771 535 724 289
- Investments in 354 8 121 6 854
associate
- Deferred income tax 49 349 32 125 28 398
assets
- Trade and other 612 348 728
receivables
Total non-current assets 2 042 427 1 971 169 1 973 210
Current assets
- Inventories 123 951 120 596 123 074
- Construction contracts 222 564 115 283 171 232
in progress
- Trade and other 776 578 792 456 589 823
receivables
- Current income tax 5 212 2 283 3 285
receivable
- Derivative financial - - 1 167
instruments
- Cash and cash 583 650 366 337 588 345
equivalents
Total current assets 1 711 955 1 396 955 1 476 926
Assets of disposal group - - 3 000
classified as held for
sale
Total assets 3 754 382 3 368 124 3 453 136
EQUITY AND LIABILITIES
Equity
- Share capital 1 826 1 826 1 826
- Share premium 2 139 632 2 164 773 2 139 632
- Other reserves (1 144 823) (1 147 260) (1 148 471)
- Retained earnings 1 022 648 651 740 855 995
Equity attributable to 2 019 283 1 671 079 1 848 982
equity holders of the
company
Minority interest in 7 730 5 639 6 957
equity
Total equity 2 027 013 1 676 718 1 855 939
LIABILITIES
Non-current liabilities
- Borrowings 317 890 414 998 394 060
- Provisions for 14 135 12 533 14 215
liabilities and charges
- Deferred income tax 214 369 195 312 207 999
liability
Total non-current 546 394 622 843 616 274
liabilities
Current liabilities
- Trade and other 771 988 646 227 624 636
payables
- Borrowings 315 940 248 689 256 887
- Current income tax 82 760 165 863 87 444
liabilities
- Bank overdrafts 10 287 7 784 11 956
Total current liabilities 1 180 975 1 068 563 980 923
Total liabilities 1 727 369 1 691 406 1 597 197
Total equity and 3 754 382 3 368 124 3 453 136
liabilities
CONSOLIDATED CASH FLOW STATEMENT
Unaudited Unaudited Audited
six months six months 12 months
31 August 31 August 28 February
2009 2008 2009
R`000 R`000 R`000
Cash flows from operating
activities
Cash generated from 466 573 333 288 964 405
operations
Interest received 21 710 20 722 42 630
Interest paid (32 947) (33 808) (79 841)
Income tax paid (154 794) (30 172) (200 026)
Net cash from operating 300 542 290 030 727 168
activities
Cash flows from investing
activities
Purchases of property, (164 631) (231 990) (382 781)
plant and equipment
Proceeds from sale of 41 078 13 672 37 296
property, plant and
equipment
Acquisition of (40 438) (384 057) (384 376)
subsidiaries
Loans to associates 6 500 (5 400) (4 100)
repaid/(advanced)
Net cash used in (157 491) (607 775) (733 961)
investing activities
Cash flows from financing
activities
Net proceeds from (18 240) 90 241 52 173
borrowings
Share issue expenses - (1 107) (1 107)
Dividends paid to (127 837) (73 049) (127 837)
company`s shareholders
Dividends paid to - - (260)
minorities
Net cash used in (146 077) 16 085 (77 031)
financing activities
Net decrease in cash and (3 026) (301 660) (83 824)
cash equivalents
Cash and cash equivalents 576 389 660 213 660 213
at the beginning of the
year
Cash and cash equivalents 573 363 358 553 576 389
at the end of the period
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Other Retained
capital premium reserves earnings
R`000 R`000 R`000 R`000
Balance at 1 1 725 1 830 853 (1 156 814) 457 979
March 2008
Issue of share 101 335 027 - -
capital and share
premium
Share issue - (1 107) - -
expenses
Currency - - 1 816 -
translation
reserve
Share option - - 7 738 -
reserve
Minorities` - - - -
interest in
acquired company
Profit for the - - - 266 810
period
Dividends paid - - - (73 049)
Balance at 31 1 826 2 164 773 (1 147 260) 651 740
August 2008
Share based - (25 141) - -
payment
adjustment on
acquisition
Currency - - (8 357) -
translation
reserve
Share option - - 7 146 -
reserve
Profit for the - - - 259 042
period
Dividends paid - - - (54 787)
Balance at 28 1 826 2 139 632 (1 148 471) 855 995
February 2009
Currency - - (4 135) -
translation
reserve
Share option - - 7 783 -
reserve
Profit for the - - - 294 490
period
Dividends paid - - - (127 837)
Balance at 31 1 826 2 139 632 (1 144 823) 1 022 648
August 2009
Total attributable
to equity holders
of the parent Minority Total
company interest equity
R`000 R`000 R`000
Balance at 1 1 133 743 2 785 1 136 528
March 2008
Issue of share 335 128 - 335 128
capital and share
premium
Share issue (1 107) - (1 107)
expenses
Currency 1 816 - 1 816
translation
reserve
Share option 7 738 - 7 738
reserve
Minorities` - 1 430 1 430
interest in
acquired company
Profit for the 266 810 1 424 268 234
period
Dividends paid (73 049) - (73 049)
Balance at 31 1 671 079 5 639 1 676 718
August 2008
Share based (25 141) - (25 141)
payment
adjustment on
acquisition
Currency (8 357) - (8 357)
translation
reserve
Share option 7 146 - 7 146
reserve
Profit for the 259 042 1 578 260 620
period
Dividends paid (54 787) (260) (55 047)
Balance at 28 1 848 982 6 957 1 855 939
February 2009
Currency (4 135) - (4 135)
translation
reserve
Share option 7 783 - 7 783
reserve
Profit for the 294 490 773 295 263
period
Dividends paid (127 837) - (127 837)
Balance at 31 2 019 283 7 730 2 027 013
August 2009
CONSOLIDATED SEGMENTAL ANALYSIS
Road
surfacing
Aggregate and
and crusher rehabilitation
R`000 R`000
Business segments
At 31 August 2009
Segment revenue 581 431 943 593
Segment result (operating 136 421 198 248
profit)
At 31 August 2008
Segment revenue 544 447 1 177 227
Segment result (operating 115 469 219 855
profit)
At 28 February 2009
Segment revenue 1 022 455 2 045 908
Segment result (operating 220 886 430 998
profit)
Road
construction
and
earthworks Consolidated
R`000 R`000
Business segments
At 31 August 2009
Segment revenue 748 321 2 273 345
Segment result (operating 105 514 440 183
profit)
At 31 August 2008
Segment revenue 511 002 2 232 676
Segment result (operating 62 644 397 968
profit)
At 28 February 2009
Segment revenue 1 094 417 4 162 780
Segment result (operating 142 710 794 594
profit)
Local International Consolidated
R`000 R`000 R`000
Geographical segments
At 31 August 2009
Segment revenue 2 067 554 205 791 2 273 345
Segment result 429 928 10 255 440 183
(operating profit)
At 31 August 2008
Segment revenue 2 083 192 149 484 2 232 676
Segment result 374 664 23 304 397 968
(operating profit)
At 28 February 2009
Segment revenue 3 841 120 321 660 4 162 780
Segment result 763 630 30 964 794 594
(operating profit)
EMPLOYEE BENEFIT EXPENSE
Unaudited Unaudited Audited
six months six months 12 months
31 August 31 August 28 February
2009 2008 2009
R`000 R`000 R`000
Employee benefit expense
in the income statement
consists of:
- Salaries, wages and 406 347 364 371 688 198
contributions
- Share options granted 7 783 7 738 14 884
to employees
Total employee benefit 414 130 372 109 703 082
expense
CAPITAL EXPENDITURE AND DEPRECIATION
Unaudited Unaudited Audited
six months six months 12 months
31 August 31 August 28 February
2009 2008 2009
R`000 R`000 R`000
Capital expenditure for 164 631 231 990 382 781
the period
Depreciation for the 111 834 77 014 155 186
period
Amortisation of 1 148 1 154 2 285
intangible assets 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, 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 2009 are
consistent with those applied for the year ended 28 February 2009 and for the
unaudited results for the six months ended 31 August 2008 in terms of IFRS.
The following new amendment to "IFRS" is relevant to the Group and is mandatory
for the first time for the financial year beginning 1 March 2009.
IAS 1 (revised), Presentation of financial statements. The revised standard
prohibits the presentation of items of income and expense (that is `non-owner`
changes in equity) in the statement of changes in equity, requiring `non-owner
changes in equity` to be presented separately from owner changes in equity. All
`non-owner` changes in equity are required to be shown in a performance
statement. Entities can choose whether to present one performance statement (the
statement of comprehensive income) or two statements (the income statement and
statement of comprehensive income).
The Group has elected to present two statements: an income statement and a
statement of comprehensive income. The interim financial statements have been
prepared under the revised disclosure requirements.
Changes in estimates
Useful economic lives of tangible assets
In terms of IAS 16, Property Plant and Equipment, the residual value and the
useful life of an asset shall be reviewed at least at each financial year end
and, if expectations differ from previous estimates, the changes shall be
accounted for as a change in accounting estimate in accordance with IAS 8,
Accounting Policies, Changes in Accounting Estimates and Errors.
A review of the useful economic lives of tangible assets was performed during
the period ended 31 August 2009. This review has resulted in an additional
depreciation charge of R17 million for the six months ended 31 August 2009,
which is expected to recur over the remaining useful life of the assets.
Business combinations
The Group made the following acquisitions during the period.
Anchor Park Investments 71 (Pty) Ltd
On 1 March 2009, the Group acquired 100% of the share capital of Anchor Park
Investments 71 (Pty) Ltd for R35 million cash, the company owns a Pilatus PC12
aircraft which will provide flight services to the Group and facilitate the
Group`s SADC expansion.
Anchor Park Investments 71 (Pty) Ltd was acquired from Raubenbel (Pty) Ltd, a
company controlled by Mr JE Raubenheimer.
The businesses of Ianrob CC trading as Conspec and Posi Traffic Safety Products
CC
On 1 March 2009 the Group acquired the business of Ianrob CC trading as Conspec
and the business of Posi Traffic Safety Products CC as a going concern for R5
million cash. The acquired businesses specialise in road marking and the supply
of road studs in the KwaZulu Natal region.
On behalf of the Board
MC Matjila JE Raubenheimer F Diedrechsen
Chairman Chief Executive Group Financial &
Officer Commercial Director
9 November 2009
Directors:
MC Matjila (Chairman)# , JE Raubenheimer, RJ FourieF Diedrechsen, F Kenney#, M B
Swana#, L Maxwell*
# Non-executive * Independent non-executive
Company Secretary:
Mrs HE Ernst
Registered office:
1st Floor Leopard Creek Building, The Greens Office Park
Charles de Gaulle Crescent, Centurion, 0169, 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: 09/11/2009 07:15:01 Supplied by www.sharenet.co.za
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