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RBX - Raubex Group Limited - Audited results for the year ended 28 February
2011
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 2011
Highlights
- Revenues down 0,8% to R4,55 billion (2010: R4,58 billion)
- Operating profit down 25,3% to R662,6 million (2010: R887,3 million)
- Group operating profit margin of 14,6% (2010: 19,4%)
- HEPS down 25,8% to 240,2 cents per share (2010: 323,8 cents per share)
- Cash flow from operations up 7,6% to R853 million (2010: R793,1 million)
- Capex spend of R292,5 million (2010: R252,4 million)
- Order book of R4,4 billion (2010: R4,7 billion)
- Final dividend of 68 cents per share declared
Francois Diedrechsen, Financial and Commercial Director of Raubex Group,
said: "Whilst the decrease in earnings is disappointing, the performance
achieved over the past year remains satisfactory given the state of the
construction industry and increasingly competitive landscape.
"With the general construction market expected to remain depressed, Raubex
will continue to focus on maintaining a healthy order book, in particular
through its growing international exposure, whilst the Group`s strong balance
sheet and cash position provide management with a solid base to navigate
another challenging year ahead."
16 May 2011
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 decreased 0,8% to R4,55 billion and operating profit decreased 25,3%
to R662,6 million from the corresponding prior period. Profit before tax
decreased 24,4% to R649,1 million.
Earnings per share decreased 25,8% to 241,5 cents with headline earnings per
share decreasing 25,8% to 240,2 cents.
Group operating profit margin decreased to 14,6% (2010: 19,4%).
The Group generated operating cash flows of R853 million before finance
charges, dividends received and taxation. Cash generation was positively
affected through improved working capital management.
Trade and other receivables decreased by 3% to R949 million as the positive
effect of the payment of overdue accounts from the Road Development Agency in
Zambia and the strong focus on collection of accounts receivable was offset
by delayed payments on South African Provincial Government contracts,
particularly in the Free State Province due to new funding arrangements with
the province.
Capital expenditure on fixed assets to the value of R292,5 million was
incurred during the year ended 28 February 2011.
Total cash and cash equivalents at the end of the period amounted to R594,9
million.
Total cash inflow for the period was R100,2 million.
Foreign exchange losses of R22,2 million were incurred during the period as a
result of the strong rand.
Operational overview
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. Performance for the
period was impacted by strong competition in the light rehabilitation market
and resulting decrease in margins.
The division has secured a healthy order book going into the 2012 year and is
operating at full capacity but at lower margins.
High rainfalls caused delays in the execution of some work, particularly in
the Gauteng region towards the end of the financial year. Bitumen supply
issues have also frustrated efficiencies at some operations and had a
negative impact on the performance of the division.
Revenue for the division increased 10,2% to R2,18 billion (2010: R1,98
billion) and operating profit decreased by 26% to R300,2 million (2010:
R405,4 million).
The divisional operating profit margins decreased to 13,8% (2010: 20,5%) due
to the increased competition experienced during the year.
The division incurred capital expenditure of R79,4 million during the year
(2010: R79,5 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.
Strong tendering competition continues to be experienced for the division`s
line of work. The current order book needs to be supplemented and the
division has adjusted its pricing strategy accordingly to secure new work at
the current lower margins. This is reflected in the order book mix, which
constitutes a higher percentage of lower margin contracts. Whilst the
environment is expected to remain very competitive in the short term, Raubex
Construction will continue ensuring that it maintains a healthy order book,
in particular through its growing international exposure.
Revenue for the division decreased 16,3% to R1,33 billion (2010: R1,59
billion) whilst operating profit decreased 30% to R184,2 million (2010:
R263,2 million).
The divisional operating profit margins decreased to 13,9% (2010: 16,6%).
The division incurred capital expenditure of R71 million during the year
(2010: R73,9 million).
Internationally, revenue increased 20,9% to R613,1 million (2010: R507
million) with operating profit margins increasing to 12,9% (2010: 7%) as a
result of the Namibian contracts running at optimal efficiencies. Operations
in Zambia have been curtailed and a cautious approach has been adopted when
tendering in that country with careful consideration being given to currency
and funding issues. Good progress was made on collection of overdue accounts
from the Zambian Roads Development Agency during the period, with trading
accounts now paid up to date.
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.
Whilst commercial quarry operations benefited from infrastructure projects,
including the Gauteng Freeway Improvement Project, the residential building
market remains depressed, particularly in the Gauteng area. Despite difficult
trading conditions, good results were reported across the more rural southern
quarries due to their geographic location and various regional developments
in those areas.
The contract crushing operations of B&E International are supported by a
strong order book and continue performing well despite pressure on margins.
Market conditions were seen to improve towards the end of the year.
The material handling operations of SPH Kundalila continue being profitable
with improved revenue streams being reported. Mining activities are starting
to show signs of recovery with increased activity forecasted for the new
year.
Revenue for the division increased 1,9% to R1,04 billion (2010: R1,02
billion) and operating profit decreased by 18,5% to R178,2 million (2010:
R218,7 million).
The divisional operating profit margins decreased to 17,1% (2010: 21,4%).
The division incurred capital expenditure of R142,1 million during the period
(2010: R99 million).
Prospects
Despite difficult trading conditions over the past year, the Group has been
able to maintain a stable revenue stream without altering its approach
towards tendering for new work. Whilst the secured order book decreased by
7,3% to R4, 38 billion (2010: R4,72 billion), the Group has recently been the
lowest tenderer on a number of large contracts which are pending award. It is
the Group`s policy to include only secured revenue in the order book.
In the short term, trading conditions in the industry will be challenging and
the impact of pressures on margins will continue being felt during the 2012
financial year.
The long-term outlook remains positive with the N1-N2 Winelands Project now
in advanced stages with the Group being party to one of the consortia to have
reached the Best and Final Offer (BAFO) phase of the process.
Although the second phase of the Gauteng Freeway Improvement Project is still
anticipated to take place, the Group has adopted a cautious outlook towards
the government`s policy regarding future toll roads in South Africa.
Mining activities are forecast to improve and this bodes well for both B&E
International and SPH Kundalila`s material handling operations.
The Group continues to explore opportunities in the growing Indian roads
sector together with UB Engineering Ltd. Initial findings are encouraging but
the Group will maintain its very cautious approach.
Valuable experience is constantly being gained through the Group`s African
expansion drive. A joint venture with Sanyati produced the lowest tender on a
contract in Uganda which is now pending award. The joint venture is also the
preferred tenderer on a second contract in the country.
Whilst Raubex will continue evaluating ways to diversify the Group`s long-
term revenue streams, the current healthy statement of financial position and
cash balances set Raubex on a strong footing to navigate the challenging year
ahead.
Dividend declaration
The directors have declared a final dividend of 68 cents per share on 16 May
2011. The salient dates for the payment of the dividend are as follows:
Last day to trade cum dividend Friday, 3 June 2011
Commence trading ex dividend Monday, 6 June 2011
Record date Friday, 10 June 2011
Payment date Monday, 13 June 2011
No share certificates may be dematerialised or rematerialised between Monday,
6 June 2011 and Friday, 10 June 2011, both dates inclusive.
Group income statement
Audited Audited
12 months 12 months
28 February 28 February
2011 2010
R`000 R`000
Revenue 4 545 974 4 582 883
Cost of sales (3 645 552) (3 508 522)
Gross profit 900 422 1 074 361
Other income 27 665 27 327
Other gains/(losses) - net (18 934) 3 902
Administrative expenses (246 595) (218 327)
Operating profit 662 558 887 263
Finance income 30 422 36 837
Finance costs (43 875) (65 544)
Share of profit of associate - 20
Profit before income tax 649 105 858 576
Income tax expense (202 096) (266 269)
Profit for the year 447 009 592 307
Profit for the year attributable to:
Owners of the parent 443 405 594 643
Non-controlling interest 3 604 (2 336)
Basic earnings per share (cents) 241,5 325,6
Diluted earnings per share (cents) 240,3 323,6
Group statement of comprehensive income
Audited Audited
12 months 12 months
28 February 28 February
2011 2010
R`000 R`000
Profit for the year 447 009 592 307
Other comprehensive income for the year,
net of tax
Currency translation differences (1,279) (3,813)
Total comprehensive income for the year 445 730 588 494
Comprehensive income for the year
attributable to:
Owners of the parent 442 126 590 830
Non-controlling interest 3 604 (2 336)
Total comprehensive income for the year 445 730 588 494
Calculation of diluted earnings per share
Audited Audited
12 months 12 months
28 February 28 February
2011 2010
R`000 R`000
Profit attributable to owners of the parent 443 405 594 643
Weighted average number of ordinary shares
in issue (`000) 183 572 182 624
Adjustments for:
Shares deemed issued for no consideration (`000) - 1 144
Contingently issuable shares (`000) 964 -
Weighted average number of ordinary shares
for diluted earnings per share 184 536 183 768
Diluted earnings per share (cents) 240,3 323,6
Calculation of headline earnings per share
Audited Audited
12 months 12 months
28 February 28 February
2011 2010
R`000 R`000
Profit attributable to owners of the parent 443 405 594 643
Adjustments for:
Profit on sale of plant and equipment (3 313) (7 635)
Impairment of goodwill - 2 271
Total tax effects of adjustments 928 2 138
Basic headline earnings 441 020 591 417
Weighted average number of shares (`000) 183 572 182 624
Headline earnings per share (cents) 240,2 323,8
Diluted headline earnings per share (cents) 239,0 321,8
Group statement of financial position
Audited Audited
28 February 28 February
2011 2010
R`000 R`000
Assets
Non-current assets
Property, plant and equipment 1 276 133 1 243 360
Intangible assets 761 445 723 824
Investment in associate - 324
Deferred income tax assets 45 047 35 569
Trade and other receivables 585 496
Total non-current assets 2 083 210 2 003 573
Current assets
Inventories 126 333 123 983
Construction contracts in progress
and retentions 244 116 220 098
Trade and other receivables 948 367 977 675
Current income tax receivable 14 192 6 412
Cash and cash equivalents 594 914 494 669
Total current assets 1 927 922 1 822 837
Total assets 4 011 132 3 826 410
Equity
Share capital 1 845 1 826
Share premium 2 179 613 2 139 632
Other reserves (1 156 847) (1 139 446)
Retained earnings 1 510 726 1 263 340
Equity attributable to owners of the parent 2 535 337 2 265 352
Non-controlling interest 9 276 4 344
Total equity 2 544 613 2 269 696
Liabilities
Non-current liabilities
Borrowings 231 905 263 906
Provisions for liabilities and charges 18 058 12 624
Deferred income tax liabilities 236 038 206 268
Total non-current liabilities 486 001 482 798
Current liabilities
Trade and other payables 712 789 736 315
Borrowings 245 654 269 672
Current income tax liabilities 17 498 67 929
Provisions for liabilities and charges 4 577 -
Total current liabilities 980 518 1 073 916
Total liabilities 1 466 519 1 556 714
Total equity and liabilities 4 011 132 3 826 410
Group statement of cash flows
Audited Audited
12 months 12 months
28 February 28 February
2011 2010
R`000 R`000
Cash flows from operating activities
Cash generated from operations 853 013 793 099
Finance income 30 422 36 837
Finance costs (43 875) (65 544)
Dividend received 5 476 4 139
Income tax paid (241 159) (300 122)
Net cash generated from operating activities 603 877 468 409
Cash flows from investing activities
Purchases of property, plant and equipment (292 490) (252 357)
Proceeds from sale of property,
plant and equipment 42 110 49 693
Acquisition of subsidiaries 141 (49 887)
Loan (repayments)/proceeds from associates (750) 6 550
Net cash used in investing activities (250 989) (246 001)
Cash flows from financing activities
Proceeds from borrowings 246 699 186 060
Repayment of borrowings (302 722) (303 429)
Proceeds on disposal of investment to
non-controlling interest - 6 000
Dividends paid to owners of the parent (196 019) (191 755)
Dividends paid to non-controlling interests (601) (1 004)
Net cash used in financing activities (252 643) (304 128)
Net increase/(decrease) in cash
and cash equivalents 100 245 (81 720)
Cash and cash equivalents at the
beginning of the year 494 669 576 389
Cash and cash equivalents at the
end of the year 594 914 494 669
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
Transfer to share option - - 12 838 -
reserve
Disposal of interest
to non-controlling
interest - - - 4 457
Total comprehensive
income for the year - - (3 813) 594 643
Dividends paid - - - (191 755)
Balance at
28 February 2010 1 826 2 139 632 (1 139 446) 1 263 340
Shares issued 19 39 981 - -
Transfer from share - - (16 122) -
option reserve
Non-controlling
interest on acquisition
of subsidiary - - - -
Total comprehensive
income for the year - - (1 279) 443 405
Dividends paid - - - (196 019)
Balance at
28 February 2011 1 845 2 179 613 (1 156 847) 1 510 726
Group statement of changes in equity (continued)
Total
attributable
to owners of Non-
the parent controlling
company interest Total equity
R`000 R`000 R`000
Balance at 1 March 2009 1 848 982 6 957 1 855 939
Transfer to share option 12 838 - 12 838
reserve
Disposal of interest to
non-controlling interest 4 457 727 5 184
Total comprehensive
income for the year 590 830 (2,336) 588 494
Dividends paid (191 755) (1,004) (192 759)
Balance at 28 February 2010 2 265 352 4 344 2 269 696
Shares issued 40 000 70 40 070
Transfer from share option (16 122) - (16,122)
reserve
Non-controlling interest on
acquisition of subsidiary - 1 858 1 858
Total comprehensive
income for the year 442 126 3 605 445 731
Dividends paid (196 019) (601) (196 620)
Balance at
28 February 2011 2 535 337 9 276 2 544 613
Group segmental analysis
Road Road
surfacing Construc-
Aggregates and tion
and Rehab- and Consoli-
crusher ilitation earthworks dated
R`000 R`000 R`000 R`000
Reportable segments
28 February 2011
Segment revenue 1 040 147 2 178 339 1 327 488 4 545 974
Segment result
(operating profit) 178 203 300 187 184 168 662 558
28 February 2010
Segment revenue 1 020 927 1 976 883 1 585 073 4 582 883
Segment result
(operating profit) 218 698 405 414 263 151 887 263
Interna- Consoli-
Local tional dated
R`000 R`000 R`000
Geographical information
28 February 2011
Segment revenue 3 932 876 613 098 4 545 974
Segment result (operating profit) 583 669 78 889 662 558
28 February 2010
Segment revenue 4 075 849 507 034 4 582 883
Segment result (operating profit) 851 625 35 638 887 263
Employee benefit expense Audited Audited
12 months 12 months
28 February 28 February
2011 2010
R`000 R`000
Employee benefit expense in the
income statement consists of:
- Salaries, wages and contributions 893 407 783 023
- Share options granted to employees (5 280) 12 838
Total employee benefit expense 888 127 795 861
Capital expenditure and depreciation
Audited Audited
12 months 12 months
28 February 28 February
2011 2010
R`000 R`000
Capital expenditure for the year 292 490 252 357
Depreciation for the year 220 184 224 959
Amortisation of intangible assets
for the year 2 380 2 280
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 2011, 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.
Share capital
On 26 November 2010 the Group issued 1 912 363 ordinary shares (1,04% of the
total ordinary share capital issued) to the sellers of Space Construction
(Pty) Ltd and Space Indlela Construction (Pty) Ltd as settlement of the
purchase price adjustment that became payable on the expiry of the profit
warranty period ending on 31 August 2010. The ordinary shares issued have the
same rights as the other shares issued. The fair value of the shares issued
amounted to R40 million (R20,92 per share).
Share capital Number of shares
`000
Balance at 1 March 2010 182 624
Shares issued 1 912
Balance at 28 February 2011 184 536
Earnings per share
In accordance with IAS 33 par 24, contingently issuable shares are treated as
outstanding and are included in the calculation of basic earnings per share
only from the date when all the necessary conditions for their issue have
been satisfied. The contingently issuable shares issued for the purchase of
Space Construction (Pty) Ltd and Space Indlela Construction (Pty) Ltd have
been included in the calculation of basic earnings per share from 1 September
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.
Business combinations
Space Construction (Pty) Ltd and Space Indlela Construction (Pty) Ltd
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 was subject to an adjustment after the expiry of
a profit warranty period ending 31 August 2010 with the total purchase
consideration being limited to a maximum of R90 million. The profit warranty
conditions were met and an additional consideration of R40 million was
settled by the issue of 1,912,363 Raubex shares at a fair value of R20,92 per
share.
Muscle Construction (Pty) Ltd
On 1 March 2010 the Group acquired effective control of Muscle Construction
(Pty) Ltd through a shareholder restructure that resulted in the Group having
the power to govern the financial and operating policies of the entity so as
to obtain benefits from its activities. The company was previously equity
accounted as an associate entity. The acquired business is operationally
dormant and did not contribute to revenues and net profit during the period.
Tekweni Roadmarking (Pty) Ltd
On 1 March 2010 the Group acquired control of Tekweni Roadmarking (Pty) Ltd
due to the Groups ability to exercise significant influence over the non-
controlling interests and having the power to govern the financial and
operating policies of the entity so as to obtain benefits from its
activities. The acquired company specialises in road marking in the Western
Cape region. The acquired business contributed revenues of R11 million with
no contribution to net profit being recognised during the period.
National Cold Asphalt (Pty) Ltd (previously Picalinx (Pty) Ltd)
On 1 March 2010 the Group acquired 50% of a dormant shelf company, Picalinx
(Pty) Ltd, for the purposes of establishing a cold mix asphalt product in the
South African market. The business contributed revenues of R4,4 million with
no contribution to net profit being recognised during the period.
Zimbabwe Screening and Mining (Pty) Ltd (previously N Power Trade and Invest
(Pty) Ltd)
On 24 August 2010 the Group acquired 100% of a dormant shelf company, N Power
Trade and Invest (Pty) Ltd, for the purpose of establishing a branch office
in Zimbabwe through which to procure screening and materials handling
contracts in Zimbabwe. The business established contributed positively
towards revenues and net profit during the period.
Capital commitments
The Group is a party to a consortium bidding for the N1-N2 Winelands Toll
Highway project. The project includes the design, construction, finance,
operation and maintenance of sections of N1 and N2 as toll highways,
including associated developments and facilities under a Concession Contract.
In the event that the consortium is successful in their bid, the Group has
committed to an equity contribution of R300 million towards the project.
Contingencies
On 29 April 2011, shareholders were advised that the Group had become aware
of certain irregularities in terms of the provisions of the Competition Act,
No 89 of 1998. The transgressions are not covered by leniency under the
Corporate Leniency Provision of the Act and the company has filed a fast
track application to the Competition Commission by the required deadline date
of 15 April 2011. The company remains committed to fully co-operate with the
Commission and to ensure that its employees, management and directors do not
engage in any conduct which constitutes a prohibited practice.
Events after the reporting period
There were no material events between the reporting period and the date of
preparation of these Group financial statements.
On behalf of the Board:
MC Matjila
Chairman
RJ Fourie
Chief Executive Officer
F Diedrechsen
Group Financial and Commercial Director
16 May 2011
Directors:
MC Matjila (Chairman#
JE Raubenheimer#
RJ Fourie
F Diedrechsen
F Kenney#
L Maxwell*
BH Kent*,
NF Msiza*
# Non-executive * Independent non-executive
Company secretary:
Mrs H E Ernst
Registered office:
The Highgrove Office Park
Building No 1
Tegel Avenue
Centurion
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: 16/05/2011 07:15:02 Supplied by www.sharenet.co.za
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