Wrap Text
Reviewed consolidated results for the financial year ended 31 August 2012
Consolidated Infrastructure Group Limited
(Incorporated in the Republic of South Africa)
Registration number 2007/004935/06)
Share code: CIL
ISIN: ZAE000148201
(“Consolidated Infrastructure” or “CIG” or “the group”)
Reviewed consolidated results for the financial year ended 31 August 2012
Salient features
Revenue up 7,5% to R1 553 million (2011: R1 445 million)
EBITDA up 20,5% to R225 million (2011: R187 million)
HEPS up 15,5% to 116,1 cents per share (2011: 100,5 cents per share)
Order book up 33% to R2 billion
Condensed consolidated statements of financial position
Reviewed Audited
As at As at
31 August 2012 31 August 2011
R’000 R’000
Assets
Non-current assets 819 151 817 424
Property, plant and equipment 313 704 307 528
Goodwill 462 220 462 220
Intangible assets 31 825 35 308
Deferred tax 8 250 10 118
Financial assets 3 152 2 250
Current assets 1 163 277 807 529
Inventories 65 972 40 228
Trade and other receivables 57 086 51 103
Amounts due from contract customers 635 412 569 624
Taxation receivable 368 7 811
Cash and cash equivalents 404 389 138 763
Total assets 1 982 378 1 624 953
Equity and liabilities
Equity 1 146 503 946 310
Issued capital 11 11
Share premium 726 892 676 004
Share based payment reserve 11 545 –
Foreign currency translation reserve (3 073) (3 925)
Non-controlling interest 12 –
Accumulated profits 411 116 274 220
Non-current liabilities 396 053 132 570
Other financial liabilities 328 787 70 469
Provisions 8 065 7 881
Instalment sale liabilities 13 799 11 182
Deferred tax 45 402 43 038
Current liabilities 439 822 546 073
Other financial liabilities 17 711 10 029
Trade and other payables 232 569 299 816
Amounts received in advance 34 589 45 883
Amounts due to contract customers 108 930 170 851
Bank overdraft – 2 728
Instalment sale liabilities 9 975 6 852
Taxation payable 36 048 9 914
Total equity and liabilities 1 982 378 1 624 953
Number of shares in issue (000’s) 118 841 113 641
Net asset value per share (cents) 964,7 832,7
Net tangible asset value per share(cents) 549,0 394,9
Condensed consolidated statements of comprehensive income
Reviewed Audited
31 August 2012 31 August 2011
R’000 R’000
Revenue 1 553 522 1 445 556
Cost of sales (1 116 409) (1 036 075)
Gross profit 437 113 409 481
Other income 1 690 1 274
Operating expenses (241 734) (216 870)
Foreign exchange gain/(loss) 27 990 (7 096)
Earnings before interest, taxation,depreciation
and amortisation (EBITDA) 225 059 186 789
Depreciation (39 680) (27 469)
Profit before interest and taxation 185 379 159 320
Interest received 18 457 3 627
Interest paid (15 786) (8 546)
Profit before taxation 188 050 154 401
Taxation (51 146) (43 313)
Profit for the year 136 904 111 088
Other comprehensive income:
Exchange rate differences on translating
foreign operations 851 (545)
Total comprehensive income 137 755 110 543
Total comprehensive income attributable to:
Equity holders of company 137 743 110 543
Non-controlling interest 12 –
Basic earnings per share (cents) 116,5 97,8
Diluted earnings per share (cents) 116,2 97,8
Fully diluted earnings per share (cents) 115,0 97,8
Reconciliation of headline earnings:
Profit attributable to ordinary
shareholders 136 892 111 088
Adjusted for:
(Profit)/loss on disposal of property,
plant and equipment (407) 3 131
Headline earnings attributable to
ordinary shareholders 136 485 114 219
Weighted average number of shares in
issue (000's) 117 548 113 641
Diluted weighted average number of
shares in issue (000's) 117 800 113 641
Fully diluted weighted average number of
shares in issue (000's) 119 093 113 641
Headline earnings per share (cents) 116,1 100,5
Diluted headline earnings per share(cents) 115,9 100,5
Fully diluted headline earnings per share (cents) 114,6 100,5
Condensed consolidated statements of cashflow
Reviewed Audited
31 August 2012 31 August 2011
R’000 R’000
Cash generated by operations before changes
in working capital 226 523 190 736
Changes in working capital (225 068) (179 741)
Net interest received /(interest paid) 2 671 (4 919)
Taxation paid (13 845) (39 986)
Cash flows from operating activities (9 719) (33 910)
Cash flows from investing activities (42 789) (58 567)
Cash flows from financing activities 320 870 (5 256)
Net increase/(decrease) in cash and cash
equivalents 268 362 (97 733)
Effect on foreign currency translation
reserve movement on cash balances (9) (91)
Cash and cash equivalents at beginning of year 136 036 233 860
Cash and cash equivalents at end of year 404 389 136 036
Condensed consolidated statements of changes in equity
Reviewed Audited
31 August 2012 31 August 2011
R’000 R’000
Balance at beginning of year 946 310 835 917
Issue of share capital and share issue expenses 50 893 (150)
Share based payment reserve 11 545 –
Total comprehensive income for the year 137 743 110 543
Non-controlling interest 12 –
Balance at end of year 1 146 503 946 310
Segmental analysis
Reviewed Audited Reviewed Audited
31 August 31 August 31 August 31 August
2012 2011 2012 2011
R’000 R’000 % of total % of total
Revenue
Heavy building materials 272 898 202 890 18 14
Power 1 280 624 1 242 666 82 86
Corporate – – – –
Total 1 553 522 1 445 556 100 100
EBITDA
Heavy building materials 57 840 28 299 26 15
Power 179 264 165 866 80 89
Corporate (12 045) (7 375) (6) (4)
Total 225 059 186 790 100 100
Reviewed Audited
31 August 2012 31 August 2011
R’000 R’000
Reconciliation of profit before tax
EBITDA per segment analysis 225 059 186 790
Depreciation (39 681) (27 470)
Net interest received/(paid) 2 671 (4 919)
Profit before tax 188 050 154 401
Assets
Heavy building materials 448 705 422 956
Power 868 846 848 016
Corporate 1 442 983 1 137 134
Total assets including group loan accounts 2 758 925 2 408 106
Inter-group elimination (778 156) (783 153)
Total 1 982 378 1 624 953
Liabilities
Heavy building materials 363 029 336 104
Power 419 397 515 704
Corporate 316 426 60 630
Total liabilities including group loan accounts 1 097 243 8
Inter-group elimination (262 977) (233 795)
Total 835 875 678 643
Commentary
CEO of CIG, Raoul Gamsu commented, “We achieved steady progress over the
past year, benefiting from the continued demand for the upgrading of
ageing electrical networks and the rolling out of new electrical projects
in West and East Africa.
In South Africa the group increased its market share from the
infrastructure development and spend of Eskom and Transnet. The South
African municipal market, traditionally a key source of revenue for
Conco, has pulled back on spend over the past year, although their
requirement to refurbish their ageing electrical grid remains.
In the alternative energy sector, Conco’s South African expertise, track
record and ability to execute the complex electrical work are fundamental
for the successful implementation of the Renewable Energy IPP Procurement
Programme. A number of agreements with wind and solar developers were
concluded during the year.
The group expanded its service offering and established a separate
operations and maintenance division. Incubated at Conco, the new division
intends to supply the prescribed operational and maintenance services to
turbine wind farms and solar parks on a long-term basis.”
Business overview
Consolidated Infrastructure, through its power subsidiary Conco, is the
largest turnkey developer and installer of high-voltage electrical
substations and overhead cables in sub-Sahara Africa. The group recorded
another set of robust profits for the year ended 31 August 2012. The group
remained focused on its strategy of investing for the medium and longer
term by adding project execution and business development capacity for
Conco, incurring substantial bidding, legal and due diligence costs in the
Renewable Energy Division and expanding its footprint on the African
continent.
CIG’s Building Materials division produces and supplies a range of
construction materials including aggregates and a wide variety of brick
and roof tiles within its Building Materials division.
Financial overview
Revenue grew by 7,5% to R1 553 million (2011: R1 445 million). Trading
margins remained stable at 28% (2011: 28,3%) assisted by the increase in
business from outside South Africa.
The power and electrification sector continues to be the core sector for
CIG with 82% of CIG’s revenue and earnings and 80% of earnings before
interest, taxation, depreciation and amortisation (EBITDA) directly
attributed to this sector.
Profit for the year improved by 23% to R136 million (2011: R110 million)
while headline earnings improved by 19% to R136 million (2011: R114 million).
Earnings per share of 116,5 cents and headline earnings per share of 116,1
cents represents an increase of 19,1% and 15,5% respectively over the
previous year.
The debt-to-equity ratio increased to 32% (2011: 10%) as additional
funds were raised through the successful implementation of a R500 million
medium-term note programme in June 2012. As at year end, the first
R270 million raised to finance the growth expected from the alternative
energy sector had not yet been deployed into any projects. The group
obtained a Moody’s credit rating of Baa2.za as part of the programme.
CIG’s financial position remains strong due to strict contract management,
where advance and progress payments are negotiated upfront. Working capital
management remained an area of key focus. The current ratio has improved to
2,64 times (2011: 1,48 times) and on a year on year comparison there has
been a reduction in the trade and contract receivables over 60 days.
As a result of the substantial increase in order-book and growth in tenders
awaiting adjudication (including renewable energy work), sufficient working
capital and guarantee facilities have to be in place for successful delivery
of results. Accordingly, the group continues in its efforts with bankers and
other providers of debt capital, to ensure appropriate levels of facilities
are in place at all times. On 30 November 2011 the group raised R50 million
cash by placing 5,2 million shares with selected institutions at R9,80 per
share and in addition, secured a R100 million revolving credit facility with
the Industrial Development Corporation (IDC) which at year end was
unutilised.
The Building Materials division delivered an improved performance for the
year. The division increased its market share and recorded a significant
increase in operating profit for the period.
Divisional overview
Substations and high voltage electrification work
Conco, a market leader in its field, continued with its excellent track
record and delivered solid results for the year. Revenue from the division
increased 3% to R1 280 million (2011: R1 242 million) while EBITDA
improved 8% to R179 million (2011: R166 million).
Conco secured a sizable 33% increase in its order book to R2 billion
2011: R1,45 billion).
New business increased five-fold out of the South African transportation
sector, where sizable tenders were won from Transnet for the upgrade and
electrification of existing infrastructure across South Africa. These
tender projects involve the electrification upgrade of the existing
Metrorail network and port structures, the bulk of which will be executed
during the coming year. Conco secured a number of three year contracts
with some of South Africa’s leading municipalities to upgrade ageing
electrical infrastructure but overall work stemming from the South
African municipalities was otherwise disappointing.
The division maintains a development programme for new operating capacity
and has an enhanced profile throughout the African sub-continent, allowing
it to win and execute work as and when it becomes available. Tenders were
won to build and upgrade electrical substations across the African
continent notably in Botswana, Namibia, Swaziland, Mozambique, Angola,
Ghana, Kenya, Tanzania and Uganda.
Long-term power demands in the Middle East are still evident and although
challenging, the Saudi Arabian office based in Al-Khobar remains active in
seeking and tendering for opportunities.
Renewable energy
Conco concluded agreements with wind and solar energy developers and where
applicable, with turbine manufacturers, for the provision of the electrical
work required to connect renewable energy projects to the main electrical
grid known as “Balance of Plant Electrical” work. These orders are subject
to certificates to proceed, which are issued when the developers reach
financial closure with the relevant regulatory authorities. In the first
round of the Renewable Energy IPP Procurement Programme Conco signed
contracts of R570 million and has letters of intent with other developers
and turbine manufacturers for additional work.
Operations and maintenance
Management recognised an opportunity to provide ongoing maintenance to
renewable energy turbine farms and solar parks. After due consideration,
the group established a separate operations and maintenance company to be
incubated at Congo. Pius Gumbi, the previous chairman of the South Power
Pool and Chief Executive Officer of Swaziland Electric Company, was
appointed as CEO. The company intends to secure work to serve as a
locally headquartered independent service provider on behalf of the
developers and original equipment manufacturers, which will have the
additional benefit of providing the group with a stream of annuity income.
Developing skills
In order to overcome a potential skills constraint Conco implemented the
Conco Skills Academy to educate and train quality young engineers. A
recruitment drive to increase our skills base was undertaken and over the
past year thirteen interns were enrolled in our programme.
Building materials
The Building Materials division had a successful year and gained market
share particularly in the roof tile market.
Revenue increased 35% to R273 million (2011: R203 million) and EBITDA
increased 104% to R58 million (2011: R28 million).
Prospects
The current order book at Conco together with higher than expected
levels of bidding, tenders awaiting adjudication and the prospects of
the Department of Energy Renewable Energy Tender places the group on a
solid foundation to deliver growth and financial reward for our
shareholders.
The group’s geographical mix of about 60% supply into South Africa and
40% supply into Africa provides a robust buffer against the volatility
of the market place. The continent continues to experience higher than
average growth rates, which are expected to accelerate with the demand
for minerals, oil, gas and food security. Favourable demographics and
increasing population growth rates together with increasing urbanisation
and purchasing power will increase the opportunities for Conco and the
group.
The group’s new investment into operating and maintaining wind turbines
could provide upside to our already strong domestic foothold in the
renewable market as well as provide the potential for annuity income.
The group is actively pursuing acquisitions in South Africa and on the
African continent, which are synergistic to the current business lines
or transformative in nature across the infrastructure services sector.
Review opinion
These consolidated annual financial results have been reviewed by PKF (Jhb)
Inc. Their unqualified review opinion is available for inspection at
Consolidated Infrastructure’s registered address.
Shares issued for cash
On 30 November 2011, the group placed 5,2 million shares (4,6% of shares in
issue) for cash at R9,80 per share, to selected institutions. The proceeds
raised will be used to bolster expected working capital requirements to
facilitate further growth.
The increased number of shares has been used in calculating the earnings per
share, diluted and fully diluted earnings per share for the year.
Changes to the board of directors
Frank Boner, who has been acting as chairman since 10 January 2012, was
appointed chairman of the group.
Kofi Bucknor and Judy Nwokedi were appointed to the board on
28 August 2012. Panos Voutyritsas and Nathan Mintah stood down from
the board.
Dividend policy
The dividend policy will be reviewed annually. After taking into account
prevailing circumstances and future cash requirements, all earnings
generated by the group will be utilised to fund the anticipated growth
in the coming year.
Accordingly, no dividend has been recommended for the period.
Basis of preparation
These reviewed consolidated annual results have been prepared in accordance
with International Financial Reporting Standards (IFRS), Interim Financial
Reporting (IAS34), AC500 series of interpretations and the JSE Listings
Requirements, and comply with the South African Companies Act (2008), as
amended. The accounting policies applied are consistent with those applied
in the prior year.
These reviewed results have been prepared under the supervision of the
group financial director, I Klitzner CA(SA).
Appreciation
The directors and management of Consolidated Infrastructure wish to thank
all staff for their focused efforts and loyalty. We also thank our
customers, business partners, advisors, suppliers and our shareholders
for their ongoing support and faith in the group.
By order of the board
Frank Boner Raoul Gamsu 30 October 2012
Chairman CEO
Executive directors: RD Gamsu, IM Klitzner, B Berelowitz
Non-executive directors: K Bucknor^
Independent non-executive directors: R Horton, AD Dixon, A Darko•,
J Nwokedi, F Boner (Chairman)
^ Ghanaian
Registration number: 2007/004935/06
Business address: Commerce Square, Building 2, 39 Rivonia Road, Sandhurst
Business postal address: PO Box 651455, Benmore, Johannesburg 2010
Telephone: 010 591 0593
Facsimile: 086 748 9169
Company secretary: Probity Business Services (Pty) Limited
Transfer secretaries: Computershare Investor Services (Pty) Limited
Sponsor: Java Capital
Auditors: PKF (Jhb) Inc.
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