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RBX - Raubex Group Limited - Audited Annual Results for the year ended 28
February 2010
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 Annual Results
for the year ended 28 February 2010
Highlights
- Revenues up 10,1% to R4,58 billion (2009: R4,16 billion)
- Operating profit up 11,7% to R887,3 million (2009: R794,6 million)
- Group operating margin of 19,4% (2009: 19,1%)
- HEPS up 11% to 323,8 cents per share (2009: 291,7 cents per share)
- Cash flow from operations down 17,8% to R793,1 million (2009: R964,4 million)
- Capex spend of R252,4 million (2009: R382,8 million)
- Order book of R4,7 billion (2009: R5,2 billion)
- Final dividend of 75 cents per share declared
Francois Diedrechsen, Financial and Commercial Director of Raubex Group, said:
"The past year presented challenging trading conditions for the Group but we are
pleased with the overall performance and resulting growth in revenue and
profitability.
"Our international expansion is progressing well with work currently underway in
Namibia, Zambia and Malawi. Locally, a number of new contracts were secured in
the past year as part of our efforts to secure the medium-term order book. In
addition, we expect a number of tenders for large concession contracts to be
issued in the year ahead.
"We remain confident that our healthy financial position and extended footprint
sets us well for the challenging year ahead."
19 May 2010
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 10,1% to R4,58 billion and operating profit increased 11,7% to
R887,3 million from the corresponding prior period. Profit before tax increased
13,4% to R858,6 million.
Earnings per share increased 12,6% to 325,6 cents with headline earnings per
share increasing 11% to 323,8 cents.
Group operating profit margin increased 1,6% to 19,4% (2009: 19,1%).
The Group generated operating cash flows of R793,1 million before finance
charges and taxation. Cash generation was negatively affected by an increase in
working capital due to delayed payments from the Road Development Agency in
Zambia.
Trade receivables increased 65,8% to R977,7 million as a result of the increase
in accounts due by the Roads Development Agency in Zambia and South African
Provincial Government accounts that were collected post balance sheet date.
Capital expenditure on fixed assets to the value of R252,4 million was incurred
during the year ended 28 February 2010.
The Group`s depreciation charge for the period increased 45% to R225 million
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 R39,4
million during the period.
Total cash and cash equivalents at the end of the period amounted to R494,7
million.
Total cash outflow for the period was R81,7 million. Net cash outflow on
acquisition of subsidiaries and business combinations amounted to R49,9 million.
The cash outflow attributable to income tax payments increased by 50% to R300,1
million (2009: R200 million). This increase in tax payments is as a result of an
amendment to the Income Tax Act which has affected the timing of provisional tax
payments.
Expenses related to the share incentive scheme amounted to R12,8 million during
the period.
OPERATIONAL OVERVIEW
Roadmac
Roadmac is a specialist in the manufacturing and laying of asphalt, chip and
spray, surface dressing and slurry seals.
Roadmac continues to be the largest contributor to Group revenue. Performance
for the period was impacted by the increased competition in light rehabilitation
and resulting slight decrease in margins.
The division has secured a healthy order book going into 2011 with demand for
asphalt in the Gauteng market remaining strong.
Unusually high rainfalls caused delays in the execution of some work,
particularly in the Gauteng region. This had a negative impact on the asphalt
business with a number of orders now taking place during the new reporting
period.
Surfacing teams were deployed in Zambia during the latter part of the year to
assist with the completion of the seal work on some major contracts. This work
will be completed in the months ahead and the teams will be redeployed on South
African contracts.
The division currently operates at full capacity but the impact of new work
being completed at lower margins due to increased competition will become more
evident in the 2011 operating margins.
Revenue for the division decreased 3,4% to R1,98 billion (2009: R2,05 billion)
and operating profit by 5,9% to R405,4 million (2009: R431 million).
The divisional margins decreased to 20,5% (2009: 21,1%) due to the increased
competition experienced during the year.
The division incurred capital expenditure of R79,5 million during the year
(2009: R90,4 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 division operated at full capacity during the year as a result of the
contracts secured in the run up to the World Cup and the Namibian contracts
which were awarded at the beginning of the year.
Despite increased competition for Raubex Construction`s line of work, the
strength of the order book reduced the need for the division to tender on lower
margin contracts which are in higher demand at present. Whilst the environment
is expected to remain very competitive in the short term resulting in slightly
lower margins, Raubex Construction will continue to ensure that it maintains a
healthy order book, in particular through its growing international exposure.
Revenue for the division increased 44,8% to R1,59 billion (2009: R1,09 billion)
whilst operating profit increased 84,4% to R263,2 million (2009: R142,7
million).
The divisional margins increased to 16,6% (2009: 13%).
The division incurred capital expenditure of R73,9 million during the year
(2009: R74,8 million).
Internationally, revenue increased 57,6% to R507 million (2009: R321,7 million)
with margins decreasing to 7% (2009: 9,6%) as a result of tough trading
conditions experienced in Zambia.
Work on the Namibian contracts is progressing well and site establishment has
commenced in Malawi following the awarding of the Mchinji - Kawere Road
contract.
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 continue to benefit from infrastructure projects,
particularly in Gauteng.
The residential building market remains depressed, with the slowdown first felt
in the Gauteng region, now starting to filter through to other areas. Recovery
in the short term is not expected.
Contract crushing operations of B&E International performed well during the
first half of the year, but have experienced a reduced order book in the second
half and more pressure on margins.
Material handling operations of SPH Kundalila continue to be profitable and
appear to be favoured by the current economic conditions with stable revenue
streams being reported. Mining activities are starting to show signs of
recovery.
Revenue for the division remained flat at R1,02 billion (2009: R1,02 billion)
and operating profit decreased by 1% to R218,7 million (2009: R220,9 million).
The divisional margins decreased to 21,4% (2009: 21,6%)
The division incurred capital expenditure of R99 million during the period
(2009: R217,6 million).
PROSPECTS
Despite difficult trading conditions this year, the Group has been able to grow
both revenue and earnings whilst maintaining a secured order book of R4,7
billion (2009: R5,2 billion).
In the short-term, trading conditions in the industry will continue to be
challenging with the impact of pressures on margins likely to become more
evident in the 2011 financial year.
The long-term outlook remains positive with a number of concession contracts
expected to come out for tender. These include the N1 N2 Winelands Project which
is now out on tender as well as the N2 Wild Coast toll road and the second phase
of the Gauteng Freeway Improvement Project which is expected to commence by the
end of 2011.
SANRAL`s annual maintenance budgets remain encouraging and the poor condition of
the provincial and municipal road networks should see government and local
authorities place additional emphasis on this essential infrastructure.
Mining activities are showing signs of improvement and this bodes well for both
B&E International and SPH Kundalila`s material handling operations. In addition,
two suspended diamond related contracts have recently been revived whilst a
number of other prospects are in the offing in Namibia.
Valuable experience continues to be gained through the Group`s ongoing African
expansion drive and the resulting extended footprint coupled with a healthy
financial position sets Raubex well to navigate the challenging year ahead.
DIVIDEND DECLARATION
The directors have declared a final dividend of 75 cents per share on 19 May
2010. The salient dates for the payment of the dividend are as follows:
Last day to trade cum dividend Friday, 4 June 2010
Commence trading ex dividend Monday, 7 June 2010
Record date Friday, 11 June 2010
Payment date Monday, 14 June 2010
No share certificates may be dematerialised or rematerialised between Monday, 7
June 2010 and Friday, 11 June 2010, both dates inclusive.
GROUP INCOME STATEMENT
Audited Audited
12 months 12 months
28 February 28 February
2010 2009
R`000 R`000
Revenue 4 582 883 4 162 780
Cost of sales (3 508 522) (3 148 561)
Gross profit 1 074 361 1 014 219
Other income 27 327 8 024
Other gains/(losses) - net 3 902 (24 448)
Administrative expenses (218 327) (203 201)
Operating profit 887 263 794 594
Finance income 36 837 42 630
Finance costs (65 544) (79 841)
Share of profit of associate 20 84
Profit before income tax 858 576 757 467
Income tax expense (266 269) (228 613)
Profit for the year 592 307 528 854
Profit for the year attributable to:
Owners of the parent 594 643 525 852
Minority interest (2 336) 3 002
Basic earnings per share (cents) 325,6 289,2
Diluted earnings per share (cents) 323,6 285,8
GROUP STATEMENT OF COMPREHENSIVE INCOME
Audited Audited
12 months 12 months
28 February 28 February
2010 2009
R`000 R`000
Profit for the year 592 307 528 854
Other comprehensive income for the year,
net of tax
Currency translation differences (3 813) (6 541)
Total comprehensive income for the year 588 494 522 313
Comprehensive income for the year
attributable to:
Owners of the parent 590 830 519 311
Minority interest (2 336) 3 002
Total comprehensive income for the year 588 494 522 313
CALCULATION OF DILUTED EARNINGS PER SHARE
Audited Audited
12 months 12 months
28 February 28 February
2010 2009
R`000 R`000
Profit attributable to equity holders of 594 643 525 852
the parent
Weighted average number of ordinary shares 182 624 181 825
in issue (`000)
Adjustments for:
Shares deemed issued for no consideration 1 144 2 200
(share options) (`000)
Weighted average number of ordinary shares 183 768 184 025
for diluted earnings per share
Diluted earnings per share (cents) 323,6 285,8
CALCULATION OF HEADLINE EARNINGS PER SHARE
Audited Audited
12 months 12 months
28 February 28 February
2010 2009
R`000 R`000
Profit attributable to equity holders of 594 643 525 852
the parent
Adjustments for:
(Gain)/loss on sale of plant and equipment (7 635) 1 793
Impairment of asset held for sale - 3 237
Impairment of goodwill 2 271 -
Total tax effects of adjustments 2 138 (502)
Basic headline earnings 591 417 530 380
Weighted average number of shares (`000) 182 624 181 825
Headline earnings per share (cents) 323,8 291,7
Diluted headline earnings per share (cents) 321,8 288,2
GROUP STATEMENT OF FINANCIAL POSITION
Audited Audited
28 February 28 February
2010 2009
R`000 R`000
ASSETS
Non-current assets
Property, plant and equipment 1 243 360 1 212 941
Intangible assets 723 824 724 289
Investments in associate 324 6 854
Deferred income tax assets 35 569 28 398
Trade and other receivables 496 728
Total non-current assets 2 003 573 1 973 210
Current assets
Inventories 123 983 123 074
Construction contracts in progress and 220 098 171 232
retentions
Trade and other receivables 977 675 589 823
Current income tax receivable 6 412 3 285
Derivative financial instruments - 1 167
Cash and cash equivalents 494 669 588 345
Total current assets 1 822 837 1 476 926
Assets of disposal group classified as held - 3 000
for sale
Total assets 3 826 410 3 453 136
EQUITY
Share capital 1 826 1 826
Share premium 2 139 632 2 139 632
Other reserves (1 139 446) (1 148 471)
Retained earnings 1 263 340 855 995
Equity attributable to equity holders of 2 265 352 1 848 982
the parent
Minority interest in equity 4 344 6 957
Total equity 2 269 696 1 855 939
LIABILITIES
Non-current liabilities
Borrowings 263 906 394 060
Provisions for liabilities and charges 12 624 14 215
Deferred income tax liabilities 206 268 207 999
Total non-current liabilities 482 798 616 274
Current liabilities
Trade and other payables 736 315 624 636
Borrowings 269 672 256 887
Current income tax liabilities 67 929 87 444
Bank overdrafts - 11 956
Total current liabilities 1 073 916 980 923
Total liabilities 1 556 714 1 597 197
Total equity and liabilities 3 826 410 3 453 136
GROUP STATEMENT OF CASH FLOWS
Audited Audited
12 months 12 months
28 February 28 February
2010 2009
R`000 R`000
Cash flows from operating activities
Cash generated from operations 793 099 964 405
Finance income 36 837 42 630
Finance costs (65 544) (79 841)
Dividend received 4 139 -
Income tax paid (300 122) (200 026)
Net cash generated from operating 468 409 727 168
activities
Cash flows from investing activities
Purchases of property, plant and equipment (252 357) (382 781)
Proceeds from sale of property, plant and 49 693 37 296
equipment
Acquisition of subsidiaries (49 887) (384 376)
Loans granted to associates - (4 100)
Loan repayments received from associates 6 550 -
Net cash used in investing activities (246 001) (733 961)
Cash flows from financing activities
Proceeds from borrowings 186 060 375 648
Repayment of borrowings (303 429) (323 475)
Share issue expenses - (1 107)
Proceeds on disposal of investment to 6 000 -
minority
Dividends paid to company`s shareholders (191 755) (127 837)
Dividends paid to minority interests (1 004) (260)
Net cash used in financing activities (304 128) (77 031)
Net decrease in cash and cash equivalents (81 720) (83 824)
Cash and cash equivalents at the beginning 576 389 660 213
of the year
Cash and cash equivalents at the end of the 494 669 576 389
year
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 2008 1 725 1 830 853 (1 156 814) 457 979
Issue of share capital and 101 309 886 - -
share premium
Share issue expenses - (1 107) - -
Share option reserve - - 14 884 -
Minority interest in - - - -
acquired company
Total comprehensive income - - (6 541) 525 852
for the year
Dividends paid - - - (127 836)
Balance at 28 February 1 826 2 139 632 (1 148 471) 855 995
2009
Share option reserve - - 12 838 -
Disposal of interest to - - - 4 457
minorities
Total comprehensive income - - (3 813) 594 643
for the year
Dividends paid - - - (191 755)
Balance at 28 February 1 826 2 139 632 (1 139 446) 1 263 340
2010
Total attributable
to equity holders
of the parent Minority Total
company interest equity
R`000 R`000 R`000
Balance at 1 March 2008 1 133 743 2 785 1 136 528
Issue of share capital and 309 987 - 309 987
share premium
Share issue expenses (1 107) - (1 107)
Share option reserve 14 884 - 14 884
Minority interest in - 1 430 1 430
acquired company
Total comprehensive income 519 311 3 002 522 313
for the year
Dividends paid (127 836) (260) (128 096)
Balance at 28 February 1 848 982 6 957 1 855 939
2009
Share option reserve 12 838 - 12 838
Disposal of interest to 4 457 727 5 184
minorities
Total comprehensive income 590 830 (2 336) 588 494
for the year
Dividends paid (191 755) (1 004) (192 759)
Balance at 28 February 2 265 352 4 344 2 269 696
2010
GROUP SEGMENTAL ANALYSIS
Road Road
Aggregates surfacing construction
and and and
crusher rehabilitation earthworks Consolidated
R`000 R`000 R`000 R`000
Reportable
segments
28 February 2010
Segment revenue 1 020 927 1 976 883 1 585 073 4 582 883
Segment result 218 698 405 414 263 151 887 263
(operating
profit)
28 February 2009
Segment revenue 1 022 455 2 045 908 1 094 417 4 162 780
Segment result 220 886 430 998 142 710 794 594
(operating
profit)
Local International Consolidated
R`000 R`000 R`000
Geographical information
28 February 2010
Segment revenue 4 075 849 507 034 4 582 883
Segment result (operating 851 625 35 638 887 263
profit)
28 February 2009
Segment revenue 3 841 120 321 660 4 162 780
Segment result (operating 763 630 30 964 794 594
profit)
EMPLOYEE BENEFIT EXPENSE
Audited Audited
12 months 12 months
28 February 28 February
2010 2009
R`000 R`000
Employee benefit expense in the income
statement consists of:
- Salaries, wages and contributions 783 023 688 198
- Share options granted to employees 12 838 14 884
Total employee benefit expense 795 861 703 082
CAPITAL EXPENDITURE AND DEPRECIATION
Audited Audited
12 months 12 months
28 February 28 February
2010 2009
R`000 R`000
Capital expenditure for the year 252 357 382 781
Depreciation for the year 224 959 155 186
Amortisation of intangible assets for the 2 280 2 285
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 2010, 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.
Change in accounting estimate
Useful economic lives of property, plant and equipment
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 property, plant and equipment was
performed during the year ended 28 February 2010. This review has resulted in a
change in estimate and an additional depreciation charge of R39,4 million for
the year ended 28 February 2010 which is expected to recur over the remaining
useful life of the assets.
Business combinations
The Group made the following acquisitions during the year.
Anchor Park Investments 71 (Pty) Limited
On 1 March 2009 the group acquired 100% of the share capital and loan account of
Anchor Park Investments 71 (Pty) Limited for R35 million cash. The acquired
company owns a Pilatus PC12 aircraft which will provide flight services to the
Group and facilitate the Groups SADC expansion. The company`s name has
subsequently been changed to Raubair (Pty) Limited.
The business of Ianrob CC trading as Conspec and the business of Posi Traffic
Safety Products CC
On 1 September 2009 the Group through its dormant company Forward Infra (Pty)
Limited, acquired the business of Lanrob CC trading as Conspec and the business
of Posi Traffic Safety Products CC as a going concern for R6,1 million cash. The
acquired businesses specialise in road marking and the supply of road studs in
the KwaZulu Natal region. If the acquisition had occurred on 1 March 2009,
contributions to Group revenue would have been R17,2 million and net profit of
R0,03 million.
The business of Mbogoto Mining CC
On 1 February 2010 the Group through Raumix Aggregates (Pty) Limited, acquired
the business of Mbogoto Mining CC as a going concern for R8,3 million cash. The
acquired business consists of a quarrying operation near Harding in KwaZulu
Natal. If the acquisition had occurred on 1 March 2009, contributions to Group
revenue would have been R14 million and net profit of R1,2 million. It is the
Group`s intention to erect an asphalt plant on the site and realise the
synergies between the supply of aggregates and asphalt production.
Contingencies
On 10 April 2008 the Group acquired 100% of the share capital of Space
Construction (Pty) Limited and Space Indlela Construction (Pty) Limited for R50
million. The purchase price is subject to an adjustment after expiry of a profit
warranty period ending 31 August 2010. The total purchase price is limited to a
maximum of R90 million. The increased purchase consideration will only be
determined once the interim results of the acquired entity for the 6 months
ending 31 August 2010 have been audited.
Post balance sheet events
There were no material post balance sheet events to report up to the date of
preparation of these Group financial statements.
Restatement of comparative figures
In the prior year financial statements proceeds from borrowings and repayment of
borrowings were disclosed net in the Group`s statement of cash flows. In order
to more fairly present the cash flow information, proceeds from borrowings and
repayment of borrowings have been separately disclosed in the current year
statement of cash flows. This has resulted in the restatement of the prior year
figures.
Disclosure as per statement of cash flows for the year ended 28 February 2009.
R`000
Proceeds from borrowings 52 173
Disclosure of comparative figures as per statement of cash
flows for the year ended 28 February 2010.
Proceeds from borrowings 375,648
Repayment of borrowings (323 475)
On behalf of the Board:
MC Matjila RJ Fourie F Diedrechsen
Chairman Chief Executive Group Financial &
Officer Commercial Director
19 May 2010
Directors: MC Matjila (Chairman)#, JE Raubenheimer#, RJ FourieF Diedrechsen, F
Kenney#, MB Swana#, L Maxwell*
# 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) Limited
70 Marshall Street, Johannesburg, 2001, South Africa
Auditors:
PricewaterhouseCoopers Inc.
Sponsor:
Investec Bank Limited
www.raubex.co.za
Date: 19/05/2010 07:15:01 Supplied by www.sharenet.co.za
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