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RBX - Raubex Group Limited - Unaudited Interim Results for the six months
ended 31 August 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")
Unaudited Interim Results for the six months ended 31 August 2010
Highlights
- Revenues up 10,7% to R2,52 billion (H1 2010: R2,27 billion)
- Operating profit down 6,6% to R411,2 million (H1 2010: R440,2 million)
- HEPS down 7,4% to 147,6 cents per share (H1 2010: 159,4 cents per share)
- Cash flow from operations down 13,5% to R403,8 million (H1 2010: R466,6
million)
- Capex spend of R119,7 million (H1 2010: R164,6 million)
- Stable order book of R4,7 billion (H1 2010: R5,2 billion)
- Interim dividend of 32 cents per share
Francois Diedrechsen, Financial and Commercial Director of Raubex Group, said:
"The first half of the year was challenging for Raubex and marked by a strong
increase in competition for road contracts. Notwithstanding this, we are
pleased with what has been achieved, including maintaining a stable order book
since the year end.
Whilst the general construction and residential market remains weak,
government is committed to essential infrastructure build-up and this bodes
well for Raubex over the long-term in South Africa.
Looking ahead, we expect difficult conditions to prevail in the next year and
management will continue to assess various opportunities to diversify long-
term revenue streams, including the exploration of geographies beyond southern
Africa."
8 November 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
Morne Reinders +27 (0) 82 815 1844
COMMENTARY
FINANCIAL OVERVIEW
Revenue increased 10,7% to R2,52 billion whilst operating profit decreased
6,6% to R411,2 million from the corresponding prior period as a result of
increased competition in the road construction industry.
Profit before tax decreased 5,8% to R404 million.
Earnings per share decreased 8,2% to 148 cents with headline earnings per
share decreasing 7,4% to 147,6 cents.
Group operating margin decreased 16% from 19,4% to 16,3% compared to the
corresponding prior year period.
The Group generated healthy operating cash flows of R403,8 million before
finance charges and taxation.
Capital expenditure on fixed assets to the value of R119,7 million was
incurred during the period under review and the Group is focused on optimal
fleet utilisation across all business segments.
Net cash outflow for the six months ended 31 August 2010 was R20,7 million
with total cash and cash equivalents at the end of the period amounting to
R473,9 million.
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, contributing 51,4%
of total revenue to the Group. The division continues to be supported by a
healthy order book, however, performance for the period was impacted by
increased competition in the light rehabilitation segment of the business
resulting in a decrease in margins.
Revenue for the division increased 37,2% to R1,29 billion (H1 2010: R943,6
million) driven by the increase in demand for asphalt and paving to complete
projects in time for the FIFA World Cup as well as the continued strong demand
for the division`s light rehabilitation services.
Operating profit increased 2% to R202,1 million (H1 2010: R198,2 million) as
the increased revenues were offset by the lower operating margins of the
current contracts.
The divisional operating margins decreased to 15,6% (H1 2010: 21%) and it is
envisaged that there will be continued margin pressure in the second half of
the year.
The division incurred capital expenditure of R29,7 million during the period
(H1 2010: R42,7 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.
Work on the Gauteng Freeway Improvement Project National Route 21 (R21) work
package is near to completion and good progress was made on this contract in
the run up to the FIFA World Cup.
The environment in which Raubex Construction operates remains very
competitive. As a result, only a few new contracts were awarded during the
period but recent successful tenders have reflected more favourable margins.
These include various contracts awarded in the Free State for the Provincial
Government which have ensured a healthy order book for the 2012 financial
year.
Internationally, good progress continues to be made on the Namibian contract,
with the construction teams now reaching optimal levels of efficiency whilst
work in Malawi is well underway. In Zambia, most contracts are nearing
completion and management has adopted a cautious approach to tendering for new
work as a result of the currency risk exposure and the slow payment from the
local Roads Development Agency. Further afield, a Memorandum of Understanding
has been signed between Raubex and UB Engineering Limited of India to
cautiously begin exploring opportunities relating to the country`s growing
roads sector.
Revenue for the division decreased 5,9% to R704,3 million (H1 2010: R748,3
million) whilst operating profit was flat at R106,4 million (H1 2010: R105,5
million).
The divisional margins increased to 15,1% (H1 2010: 14,1%).
The division incurred capital expenditure of R28 million during the period (H1
2010: R67,8 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.
Contract crushing operations experienced reduced activity in the first half of
the year having completed some large contracts during the period and they are
now tendering in a more competitive environment.
Commercial quarry operations reported stable results for the period and
continued to benefit from infrastructure projects in Gauteng. With no signs of
recovery in the residential building market and with phase 1 of the Gauteng
Freeway Improvement Project near to completion, conditions are set to become
more challenging in the short term.
Material handling operations have experienced increased diamond mining
activity. Operations in the gold mining sector reported stable results with
margin pressure resulting from the inability to pass through some inflationary
costs to the client.
Revenue for the division decreased 11% to R517,7 million (H1 2010: R581,4
million) and operating profit by 24,7% to R102,7 million (H1 2010: R136,4
million).
The divisional margins decreased to 19,8% (H1 2010: 23,5%).
The division incurred capital expenditure of R62 million during the period (H1
2010: R54,2 million).
PROSPECTS
Despite the adverse conditions experienced in the first half of the year, the
Group has been able to maintain a stable order book at R4,7 billion since year
end (H1 2010: R5,2 billion).
In the short-term, trading conditions in the industry will be challenging and
the impact of the current pressure on margins will continue to be felt
throughout the second half of the year.
The medium and longer term outlook remains positive and the amount of work out
on tender is encouraging as the government continues to deliver on its
infrastructure development plans.
Tenders for the N1N2 Winelands concession have been submitted with the
preferred bidders expected to be announced in early 2011. The awarding of this
project is expected to take some capacity out of the market and relieve some
of the pressure on new contract margins. The N2 Wild Coast concession project
and the second phase of the Gauteng Freeway Improvement Project are gaining
momentum with the tender process expected to commence by the end of 2011.
Internationally, new opportunities are constantly being evaluated both in
southern Africa and beyond with a view to diversify the Group`s long-term
revenue streams.
DIVIDEND DECLARATION
The directors have declared an interim cash dividend of 32 cents per share on
8 November 2010. The salient dates for the payment of the dividend are as
follows:
Last day to trade cum dividend Friday, 26 November 2010
Commence trading ex dividend Monday, 29 November 2010
Record date Friday, 3 December 2010
Payment date Monday, 6 December 2010
No share certificates may be dematerialised or rematerialised between Monday,
29 November 2010 and Friday, 3 December 2010, both dates inclusive.
GROUP INCOME STATEMENT
Unaudited Unaudited Audited
six months six months 12 months
31 August 31 August 28 February
2010 2009 2010
R`000 R`000 R`000
Revenue 2 516 208 2 273 345 4 582 883
Cost of sales (1 981 992) (1 738 795) (3 508 522)
Gross profit 534 216 534 550 1 074 361
Other income 20 355 3 070 27 327
Other (losses)/gains- net (19 555) 5 044 3 902
Administrative expenses (123 787) (102 481) (218 327)
Operating profit 411 229 440 183 887 263
Finance income 16 569 21 710 36 837
Finance costs (23 781) (32 947) (65 544)
Share of profit of associate - - 20
Profit before income tax 404 017 428 946 858 576
Income tax expense (128 161) (133 683) (266 269)
Profit for the period 275 856 295 263 592 307
Profit for the period
attributable to:
Owners of the parent 273 037 294 490 594 643
Non-controlling interest 2 819 773 (2 336)
Basic earnings per share 148,0 161,3 325,6
(cents)
Diluted earnings per share 148,0 159,2 323,6
(cents)
GROUP STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
six months six months 12 months
31 August 31 August 28 February
2010 2009 2010
R`000 R`000 R`000
Profit for the period 275 856 295 263 592 307
Other comprehensive income for
the period, net of tax
Currency translation (1 203) (4 135) (3 813)
differences
Total comprehensive income for 274 653 291 128 588 494
the period
Comprehensive income for the
period attributable to:
Owners of the parent 271 834 290 355 590 830
Non-controlling interest 2 819 773 (2 336)
Total comprehensive income for 274 653 291 128 588 494
the period
CALCULATION OF DILUTED EARNINGS PER SHARE
Unaudited Unaudited Audited
six months six months 12 months
31 August 31 August 28 February
2010 2009 2010
R`000 R`000 R`000
Profit attributable to equity 273 037 294 490 594 643
holders of the parent
Weighted average number of 184 536 182 624 182 624
ordinary shares in issue (`000)
Adjustments for:
Shares deemed issued for no - 2 367 1 144
consideration (share options)
(`000)
Weighted average number of 184 536 184 991 183 768
ordinary shares for diluted
earnings per share (`000)
Diluted earnings per share 148,0 159,2 323,6
(cents)
CALCULATION OF HEADLINE EARNINGS PER SHARE
Unaudited Unaudited Audited
six months six months 12 months
31 August 31 August 28 February
2010 2009 2010
R`000 R`000 R`000
Profit attributable to equity 273 037 294 490 594 643
holders of the parent
Adjustments for:
(Gain)/loss on sale of plant (858) (4 636) (7 635)
and equipment
Impairment of goodwill - - 2 271
Total tax effects of 240 1 298 2 138
adjustments
Basic headline earnings 272 419 291 152 591 417
Weighted average number of 184 536 182 624 182 624
shares (`000)
Headline earnings per share 147,6 159,4 323,8
(cents)
Diluted headline earnings per 147,6 157,4 321,8
share (cents)
GROUP STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
six months six months 12 months
31 August 31 August 28 February
2010 2009 2010
R`000 R`000 R`000
ASSETS
Non-current assets
Property, plant and equipment 1 236 262 1 264 648 1 243 360
Intangible assets 762 626 727 464 723 824
Investment in associate - 354 324
Deferred income tax assets 34 401 49 349 35 569
Trade and other receivables 639 612 496
Total non-current assets 2 033 928 2 042 427 2 003 573
Current assets
Inventories 115 508 123 951 123 983
Construction contracts in 244 994 222 564 220 098
progress and retentions
Trade and other receivables 1 045 021 776 578 977 675
Current income tax receivable 14 434 5 212 6 412
Cash and cash equivalents 473 926 583 650 494 669
Total current assets 1 893 883 1 711 955 1 822 837
Total assets 3 927 811 3 754 382 3 826 410
EQUITY AND LIABILITIES
Equity
Share capital 1 845 1 826 1 826
Share premium 2 179 613 2 139 632 2 139 632
Other reserves (1 156 772) (1 144 823) (1 139 446)
Retained earnings 1 399 409 1 022 648 1 263 340
Equity attributable to equity 2 424 095 2 019 283 2 265 352
holders of the parent
Non-controlling interest 8 819 7 730 4 344
Total equity 2 432 914 2 027 013 2 269 696
LIABILITIES
Non-current liabilities
Borrowings 215 805 317 890 263 906
Provisions for other 13 614 14 135 12 624
liabilities and charges
Deferred income tax liabilities 222 356 214 369 206 268
Total non-current liabilities 451 775 546 394 482 798
Current liabilities
Trade and other payables 707 980 771 988 736 315
Borrowings 252 143 315 940 269 672
Current income tax liabilities 72 752 82 760 67 929
Bank overdrafts - 10 287 -
Provisions for other 10 247 - -
liabilities and charges
Total current liabilities 1 043 122 1 180 975 1 073 916
Total liabilities 1 494 897 1 727 369 1 556 714
Total equity and liabilities 3 927 811 3 754 382 3 826 410
GROUP STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
six months six months 12 months
31 August 31 August 28 February
2010 2009 2010
R`000 R`000 R`000
Cash flows from operating
activities
Cash generated from operations 403 840 466 573 793 099
Finance income 16 569 21 710 36 837
Finance costs (23 781) (32 947) (65 544)
Dividend received 3 107 - 4 139
Income tax paid (114 105) (154 794) (300 122)
Net cash generated from 285 630 300 542 468 409
operating activities
Cash flows from investing
activities
Purchases of property, plant (119 725) (164 631) (252 357)
and equipment
Proceeds from sale of property, 15 949 41 078 49 693
plant and equipment
Acquisition of subsidiaries - (40 438) (49 887)
Loan repayments received from - 6 500 6 550
associates
Net cash used in investing (103 776) (157 491) (246 001)
activities
Cash flows from financing
activities
Proceeds from borrowings 102 049 142 748 186 060
Repayment of borrowings (167 678) (160 988) (303 429)
Proceeds on disposal of - - 6 000
investment
Dividends paid to company`s (136 968) (127 837) (191 755)
shareholders
Dividends paid to non- - - (1 004)
controlling interests
Net cash used in financing (202 597) (146 077) (304 128)
activities
Net decrease in cash and cash (20 743) (3 026) (81 720)
equivalents
Cash and cash equivalents at 494 669 576 389 576 389
the beginning of the period
Cash and cash equivalents at 473 926 573 363 494 669
the end of the period
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 2009 1 826 2 139 632 (1 148 471) 855 995
Share option reserve - - 7 783 -
Total comprehensive - - (4 135) 294 490
income for the period
Dividends paid - - - (127 837)
Balance at 31 August 1 826 2 139 632 (1 144 823) 1 022 648
2009
Share option reserve - - 5 055 -
Disposal to non- - - - 4 457
controlling interest
Total comprehensive - - 322 300 153
income for the period
Dividends paid - - - (63 918)
Balance at 28 February 1 826 2 139 632 (1 139 446) 1 263 340
2010
Shares to be issued 19 39 981 - -
Share option reserve - - (16 123) -
Non-controlling - - - -
interest on acquisition
of subsidiary
Total comprehensive - - (1 203) 273 037
income for the period
Dividends paid - - - (136 968)
Balance at 31 August 1 845 2 179 613 (1 156 772) 1 399 409
2010
Total attributable
to equity holders Non-
of the parent controlling Total
company interest equity
R`000 R`000 R`000
Balance at 1 March 2009 1 848 982 6 957 1 855 939
Share option reserve 7 783 - 7 783
Total comprehensive 290 355 773 291 128
income for the period
Dividends paid (127 837) - (127 837)
Balance at 31 August 2 019 283 7 730 2 027 013
2009
Share option reserve 5 055 - 5 055
Disposal to non- 4 457 727 5 184
controlling interest
Total comprehensive 300 475 (3 109) 297 366
income for the period
Dividends paid (63 918) (1 004) (64 922)
Balance at 28 February 2 265 352 4 344 2 269 696
2010
Shares to be issued 40 000 - 40 000
Share option reserve (16 123) - (16 123)
Non-controlling - 1 656 1 656
interest on acquisition
of subsidiary
Total comprehensive 271 834 2 819 274 653
income for the period
Dividends paid (136 968) - (136 968)
Balance at 31 August 2 424 095 8 819 2 432 914
2010
GROUP SEGMENTAL ANALYSIS
Road Road
surfacing construction
Aggregate and and
and crusher rehabilitation earthworks Consolidated
R`000 R`000 R`000 R`000
Reportable
segments
At 31 August
2010
Segment revenue 517 662 1 294 267 704 279 2 516 208
- external
Segment result 102 745 202 125 106 359 411 229
(operating
profit)
At 31 August
2009
Segment revenue 581 431 943 593 748 321 2 273 345
- external
Segment result 136 421 198 248 105 514 440 183
(operating
profit)
At 28 February
2010
Segment revenue 1 020 927 1 976 883 1 585 073 4 582 883
- external
Segment result 218 698 405 414 263 151 887 263
(operating
profit)
Local International Consolidated
R`000 R`000 R`000
Geographical information
At 31 August 2010
Segment revenue - external 2 234 103 282 105 2 516 208
Segment result (operating 392 512 18 717 411 229
profit)
At 31 August 2009
Segment revenue - external 2 067 554 205 791 2 273 345
Segment result (operating 429 928 10 255 440 183
profit)
At 28 February 2010
Segment revenue - external 4 075 849 507 034 4 582 883
Segment result (operating 851 625 35 638 887 263
profit)
SHARE CAPITAL
Number of shares
`000
Balance at 1 March 2010 182 624
Shares to be issued
- Purchase price adjustment on acquisition of 1 912
subsidiaries
Balance at 31 August 2010 184 536
EMPLOYEE BENEFIT EXPENSE
Unaudited Unaudited Audited
six months six months 12 months
31 August 31 August 28 February
2010 2009 2010
R`000 R`000 R`000
Employee benefit expense in the
income statement consists of:
- Salaries, wages and 474 780 406 347 783 023
contributions
- Share options granted to 1 411 7 783 12 838
employees
Total employee benefit expense 476 191 414 130 795 861
CAPITAL EXPENDITURE AND DEPRECIATION
Unaudited Unaudited Audited
six months six months 12 months
31 August 31 August 28 February
2010 2009 2010
R`000 R`000 R`000
Capital expenditure for the period 119 725 164 631 252 357
Depreciation for the period 111 091 111 834 224 959
Amortisation of intangible assets 1 198 1 148 2 280
for the period
NOTES
Basis of preparation
These condensed consolidated interim financial statements have been prepared
in accordance with International Financial Reporting Standards ("IFRS"),
IAS34: "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 2010 are consistent with those applied for the year ended 28 February
2010 and for the unaudited results for the six months ended 31 August 2009 in
terms of IFRS.
Business combinations
Muscle Construction (Pty) Ltd
On 1 March 2010 the Group acquired effective control of its dormant associate
company, Muscle Construction (Pty) Ltd through a shareholding restructure. The
company is now considered to be a subsidiary entity of the Group for purposes
of consolidation.
Space Construction (Pty) Ltd and Space Indlela Construction (Pty) Ltd purchase
price adjustment
On 10 April 2008 the Group acquired 100% of the share capital of Space
Construction (Pty) Ltd and Space Indlela Construction (Pty) Ltd for R50
million. The purchase price is subject to adjustment after expiry of a profit
warranty period which ended 31 August 2010 with the total purchase price being
limited to a maximum of R90 million. Conditions giving rise to a purchase
price adjustment have been met and an additional consideration of R40 million
is payable to the sellers. In terms of the purchase agreement this additional
consideration will be settled by procuring the allotment and issue to the
sellers such number of fully paid up certificated Raubex shares calculated by
dividing the additional consideration by the weighted average traded price of
the shares of Raubex on the JSE for the 30 day trading period immediately
preceding 31 August 2010. This event is considered to be an adjusting post
balance sheet event with the resulting increase in share capital, share
premium and goodwill as well as the additional ordinary shares to be issued
being accounted for as at 31 August 2010.
Employee Share Option Scheme
During the period participants to the Raubex Group share option scheme were
offered a cash settlement alternative equivalent to the fair value of the
share options vested on 20 March 2010. In terms of IFRS 2 Share-based Payment,
this alternative settlement method has resulted in the fair value of the
options granted being transferred from the share option reserve account to a
financial liability account.
On behalf of the Board:
MC Matjila RJ Fourie F Diedrechsen
Chairman Chief Executive Group Financial &
Officer Commercial Director
8 November 2010
Directors:
MC Matjila (Chairman)#
JE Raubenheimer#
RJ Fourie
F Diedrechsen
F Kenney#
L Maxwell*
# Non-executive
* Independent non-executive
Company Secretary:
Mrs HE Ernst
Registered office:
The Highgrove Office Park, Building No 1,Tegel Avenue
Centurion 0169South Africa
Transfer secretaries:
Computershare Investor Services (Pty) Ltd
70 Marshall StreetJohannesburg, 2001South Africa
Auditors:
PricewaterhouseCoopers Inc.
Sponsor:
Investec Bank Limited
www.raubex.co.za
Date: 08/11/2010 07:15:06 Supplied by www.sharenet.co.za
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