Wrap Text
Unaudited Interim Results for six months ended 31 Aug 2012
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 2012
HIGHLIGHTS
Revenues up 7,7% to R2,81 billion (H1 2012: R2,61 billion)
Operating profit up 3,1% to R290,8 million (H1 2012: R282,1 million)
HEPS up 3,0% to 95,7 cents per share (H1 2012: 92,9 cents per share)
Cash flow from operations up 68,6% to R443,8 million (H1 2012: R263,3 million)
Capex spend of R280,9 million ( H1 2012: R88,3 million)
Stable order book of R5,0 billion (H1 2012: R4,6 billion)
Interim dividend of 30 cents per share
Francois Diedrechsen, Financial and Commercial Director of Raubex Group, said:
"Although the operating environment remained challenging during the period, we have continued to grow
revenue and maintained a stable order book through a steady flow of new tender work.
"The roads division is beginning to show signs of stabilising, supported by a relative easing of competitive
pressures. This positive development is being monitored against the impact of the tolling dispute on our client as
well as the impact of the labour unrest across our operations.
"The group's healthy balance sheet and strong cash position maintained through difficult times allows us to take
advantage of opportunities arising from a more stable competitive environment locally but also internationally
as we grow our portfolio of African projects across all three divisions."
5 November 2012
ENQUIRIES
Raubex Group +27 (0) 12 665 3226
Francois Diedrechsen
College Hill +27 (0) 11 447 3030
Frédéric Cornet +27 (0) 83 307 8286
Lexi Ball +27 (0) 82 815 1821
COMMENTARY
FINANCIAL OVERVIEW
Revenue increased 7,7% to R2,81 billion and operating profit increased 3,1% to R290,8 million from the
corresponding prior period.
Profit before tax increased 2,3% to R283,7 million.
The effective tax rate decreased to 31,6% from 36,3% in the corresponding prior period due to the reversal of a
deferred tax asset in the prior period and Secondary Tax on Companies ("STC") being replaced by Dividends Tax in
the current period.
Earnings per share increased 5,1% to 98,8 cents with headline earnings per share increasing 3,0% to 95,7 cents.
Group operating margin decreased slightly from 10,8% to 10,3% compared to the corresponding prior period.
The Group generated strong operating cash flows up 68,6% from R263,3 million to R443,8 million before finance
charges and taxation.
Trade and other receivables decreased by 2,3% to R1,09 billion.
A settlement has been reached with the Free State Provincial Government and a revised payment plan negotiated.
In terms of the settlement R130 million was outstanding at 31 August 2012 and is payable in two instalments with
R97,5 million payable in November 2012 and R32,5 million payable in April 2013. Despite the slight improvement
in trade receivables, slow payments continue to be experienced from a number of public and private customer
accounts.
Capital expenditure on fixed assets to the value of R280,9 million was incurred during the period under review with
R41,8 million relating to the purchase of administrative land and buildings.
Net cash inflow for the six months ended 31 August 2012 was R124,1 million with total cash and cash equivalents
at the end of the period of R749,1 million.
OPERATIONAL REVIEW
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 is the largest contributor to Group revenue, contributing 50,2% of total revenue. The division's
performance continues to be impacted by strong competition in the light rehabilitation market. A steady volume of
work out for tender has enabled the division to secure a healthy order book. Margins continue to be under
pressure but are showing signs of stabilising at current levels.
A re-occurring short supply of bitumen is anticipated in the country during the summer months ahead and the
group has various strategies in place, including importation and storage solutions, to mitigate any potential supply
disruptions from the national refineries.
Revenue for the division increased 5,5% to R1,41 billion (H1 2012: R1,34 billion) and operating profit decreased
14,0% to R112,6 million (H1 2012: R130,9 million).
The divisional operating margins decreased to 8,0% (H1 2012: 9,8%).
The division incurred capital expenditure of R55 million during the period (H1 2012: R22,6 million) with R12 million
of this relating to bitumen storage containers. A further R8 million will be incurred on Bitutainers before year end.
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.
This division continues to feel the effect of pricing pressures despite an increase in competitor attrition in recent
months. The division has secured a satisfactory order book but conditions will remain challenging for this division
in the period ahead.
A cautious revenue recognition policy was applied for the Free State Province contracts in the prior period. A final
settlement was reached since then and the recognition of revenues supported the division's earnings for the
period.
Revenue for the division increased 9,4% to R629,9 million (H1 2012: R575,9 million) and operating profit increased
176,3% to R69,2 million (H1 2012: R25,0 million).
The divisional margins increased to 11,0% (H1 2012: 4,3%).
The division incurred capital expenditure of R26,1 million during the period (H1 2012: R16,2 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.
Commercial quarry operations have reported satisfactory results for the period supported by an increase in
volumes from the Gauteng based quarries.
Contract crushing operations have maintained a stable order book during the period while margins continue to be
under pressure in this sector.
The mining and material handling operations of the division have continued to report good results and increased
tonnages for the period.
Revenue for the division increased 10,4% to R769,2 million (H1 2012: R696,5 million) whilst operating profit
decreased by 13,5% to R109,1 million (H1 2012: R126,1 million).
The divisional margins decreased to 14,2% (H1 2012: 18,1%).
The division incurred capital expenditure of R158 million during the period (H1 2012: R49,5 million).
International
The large road contract between Nkurenkuru and Elundu in the Kavango region of northern Namibia was
completed during the period and a three year maintenance contract for the reseal of roads in the Otjiwarango and
Otshakati regions is in progress.
A low level of activity and tender success was reported in Zambia during the period.
The road contract in Malawi is progressing well with completion anticipated before year end.
The mining related activities of B&E have made an increased contribution to the results of the group's
international operations.
International revenue decreased 45,8% to R224,2 million (H1 2012: R413,9 million) mainly as a result of the
completion of the Namibian road contract.
Operating profit increased by 17,9% to R43,0 million (H1 2012: R36,4 million).
The international margins increased to 19,2% (H1 2012: 8,8%).
PROSPECTS
Trading conditions in the road construction industry are expected to remain challenging in the short term and the
impact of the lower margin work in the current order book will continue to be felt for the remainder of the year.
The volume of work in the road construction and maintenance industry is sufficient but pricing pressures persist.
The results reported from the group's mining related activities are encouraging and new opportunities continue to
be explored in this area.
The recent strikes experienced in the mining and transport sectors will have a negative effect on the performance
of the Materials division for the second half of the year. The operations of SPH Kundalila and B&E International
have experienced disruptions, whilst the transport strikes affected the supply of bitumen to sites. Management
continues to monitor the situation closely.
The group has maintained a stable order book of R5,0 billion (H1 2012: R4,6 billion) and will continue to adopt a
cautious approach to tendering for new work in the current low margin environment.
Further expansion into Africa remains a priority as the group continues to look for growth in other geographies.
The group has maintained a healthy balance sheet and strong cash position together with a stable order book
during this challenging period. The group is well positioned to take advantage of opportunities that may arise from
improved pricing and competitor attrition.
DIVIDEND DECLARATION
The directors have declared a gross interim cash dividend from income reserves of 30 cents per share on 5
November 2012. The salient dates for the payment of the dividend are as follows:
Last day to trade cum dividend Friday, 23 November 2012
Commence trading ex dividend Monday, 26 November 2012
Record date Friday, 30 November 2012
Payment date Monday, 3 December 2012
No share certificates may be dematerialised or rematerialised between Monday, 26 November 2012 and Friday,
30 November 2012, both dates inclusive.
In terms of the new Dividends Tax ("DT") effective 1 April 2012, the following additional information is disclosed:
- The local DT rate is 15%.
- The company has no STC credits to utilise as part of this declaration.
- The number of ordinary shares in issue at the date of this declaration is 184 535 946.
- The dividend to utilise for determining the DT due is 30 cents per share.
- The DT amounts to 4.50 cents per share.
- The net local dividend amount is 25.50 cents per share for shareholders liable to pay the new DT and 30 cents
per share for shareholders exempt from paying the new DT.
- Raubex Group Limited's income tax reference number is 9370/905/151.
In terms of the DT legislation, the DT amount due will be withheld and paid over to the South African Revenue
Services by a nominee-company, stockbroker or Central Securities Depository Participant ( collectively "Regulated
Intermediary") on behalf of shareholders. All shareholders should declare their status to their Regulated
Intermediary, as they may qualify for a reduced DT rate or exemption.
GROUP INCOME STATEMENT Unaudited Unaudited Audited
6 months 6 months 12 months
31 August 31 August 29 February
2012 2011 2012
R'000 R'000 R'000
Revenue 2 810 013 2 609 998 5 032 625
Cost of sales (2 394 391) (2 206 542) (4 257 404)
Gross profit 415 622 403 456 775 221
Other income 3 167 7 572 14 429
Other gains/(losses) - net 9 357 (443) 4 818
Administrative expenses (137 313) (128 533) (263 006)
Operating profit 290 833 282 052 531 462
Finance income 14 342 13 986 29 353
Finance costs (21 518) (18 647) (41 388)
Profit before income tax 283 657 277 391 519 427
Income tax expense (89 733) (100 647) (178 230)
Profit for the period 193 924 176 744 341 197
Profit for the period attributable to:
Owners of the parent 182 331 173 496 331 247
Non-controlling interest 11 593 3 248 9 950
Basic earnings per share (cents) 98,8 94,0 179,5
Diluted earnings per share (cents) 98,0 93,6 178,5
GROUP STATEMENT OF COMPREHENSIVE INCOME Unaudited Unaudited Audited
6 months 6 months 12 months
31 August 31 August 29 February
2012 2011 2012
R'000 R'000 R'000
Profit for the period 193 924 176 744 341 197
Other comprehensive income for the period, net of tax
Currency translation differences 4 494 326 (323)
Total comprehensive income for the period 198 418 177 070 340 874
Comprehensive income for the period attributable to:
Owners of the parent 186 825 173 822 330 924
Non-controlling interest 11 593 3 248 9 950
Total comprehensive income for the period 198 418 177 070 340 874
CALCULATION OF DILUTED EARNINGS PER SHARE Unaudited Unaudited Audited
6 months 6 months 12 months
31 August 31 August 29 February
2012 2011 2012
R'000 R'000 R'000
Profit attributable to owners of the parent entity 182 331 173 496 331 247
Weighted average number of ordinary shares in issue ('000) 184 536 184 536 184 536
Adjustments for:
Shares deemed issued for no consideration ('000) 1 560 848 1 079
Weighted average number of ordinary shares for diluted earnings
per share ('000) 186 096 185 384 185 615
Diluted earnings per share (cents) 98,0 93,6 178,5
CALCULATION OF HEADLINE EARNINGS PER SHARE Unaudited Unaudited Audited
6 months 6 months 12 months
31 August 31 August 29 February
2012 2011 2012
R'000 R'000 R'000
Profit attributable to owners of the parent entity 182 331 173 496 331 247
Adjustments for:
Profit on sale of property, plant and equipment (8 066) (2 843) (3 365)
Impairment of goodwill - - 1 030
Excess from fair value of assets acquired over purchase price - - (2 813)
Total tax effects of adjustments 2 258 796 942
Basic headline earnings 176 523 171 449 327 041
Weighted average number of shares ('000) 184 536 184 536 184 536
Headline earnings per share (cents) 95,7 92,9 177,2
Diluted headline earnings per share (cents) 94,9 92,5 176,2
GROUP STATEMENT OF FINANCIAL POSITION Unaudited Unaudited Audited
6 months 6 months 12 months
31 August 31 August 29 February
2012 2011 2012
R'000 R'000 R'000
ASSETS
Non-current assets
Property, plant and equipment 1 535 344 1 294 874 1 353 753
Intangible assets 766 209 760 046 757 629
Deferred income tax assets 16 449 39 681 17 940
Trade and other receivables 26 520 404
Total non-current assets 2 318 028 2 095 121 2 129 726
Current assets
Inventories 201 821 152 891 153 157
Construction contracts in progress and retentions 308 118 310 212 296 382
Trade and other receivables 1 089 329 1 115 359 1 164 508
Current income tax receivable 12 416 19 028 17 862
Cash and cash equivalents 749 061 479 028 624 919
Total current assets 2 360 745 2 076 518 2 256 828
Total assets 4 678 773 4 171 639 4 386 554
EQUITY
Share capital 1 845 1 845 1 845
Share premium 2 179 613 2 179 613 2 179 613
Other reserves (1 125 464) (1 147 722) (1 142 401)
Retained earnings 1 788 098 1 558 738 1 670 355
Equity attributable to owners of the parent 2 844 092 2 592 474 2 709 412
Non-controlling interest 34 500 10 212 19 468
Total equity 2 878 592 2 602 686 2 728 880
LIABILITIES
Non-current liabilities
Borrowings 349 990 215 168 263 112
Provisions for liabilities and charges 24 579 15 420 23 066
Deferred income tax liabilities 235 345 261 368 229 612
Total non-current liabilities 609 914 491 956 515 790
Current liabilities
Trade and other payables 913 191 838 394 899 807
Borrowings 235 548 220 645 215 690
Current income tax liabilities 41 528 13 751 26 387
Provisions for liabilities and charges - 4 207 -
Total current liabilities 1 190 267 1 076 997 1 141 884
Total liabilities 1 800 181 1 568 953 1 657 674
Total equity and liabilities 4 678 773 4 171 639 4 386 554
GROUP STATEMENT OF CASH FLOWS Unaudited Unaudited Audited
6 months 6 months 12 months
31 August 31 August 29 February
2012 2011 2012
R'000 R'000 R'000
Cash flows from operating activities
Cash generated from operations 443 781 263 269 663 228
Finance income 14 342 13 986 29 353
Finance costs (21 518) (18 647) (41 388)
Dividend received 1 037 2 552 4 264
Income tax paid (65 861) (87 013) (154 701)
Net cash generated from operating activities 371 781 174 147 500 756
Cash flows from investing activities
Purchases of property, plant and equipment (280 928) (88 274) (286 594)
Proceeds from sale of property, plant and equipment 26 866 13 454 37 340
Acquisition of subsidiaries (15 110) (7 760) (10 821)
Net cash used in investing activities (269 172) (82 580) (260 075)
Cash flows from financing activities
Proceeds from borrowings 241 690 66 438 257 512
Repayment of borrowings (154 295) (146 095) (294 180)
Dividends paid to owners of the parent (64 588) (125 484) (171 618)
Dividends paid to non-controlling interests (1 274) (2 312) (2 390)
Net cash used in financing activities 21 533 (207 453) (210 676)
Net increase/(decrease) in cash and cash equivalents 124 142 (115 886) 30 005
Cash and cash equivalents at the beginning of the year 624 919 594 914 594 914
Cash and cash equivalents at the end of the period 749 061 479 028 624 919
Total
attributable
to owners of Non-
Share Share Other Retained the parent controlling
GROUP STATEMENT OF CHANGES IN EQUITY capital premium reserves earnings company interest Total equity
R R R R R R R
Balance at 1 March 2011 1 845 2 179 613 (1 156 847) 1 510 726 2 535 337 9 276 2 544 613
Share option reserve - - 8 799 - 8 799 - 8 799
Total comprehensive income for the period - - 326 173 496 173 822 3 248 177 070
Dividends paid - - - (125 484) (125 484) (2 312) (127 796)
Balance at 31 August 2011 1 845 2 179 613 (1 147 722) 1 558 738 2 592 474 10 212 2 602 686
Share capital repaid - - - - - (70) (70)
Share option reserve - - 5 971 - 5 971 - 5 971
Non-controlling interest on acquisition of subsidiary - - - - - 2 703 2 703
Total comprehensive income for the period - - (650) 157 751 157 101 6 701 163 802
Dividends paid - - - (46 134) (46 134) (78) (46 212)
Balance at 28 February 2012 1 845 2 179 613 (1 142 401) 1 670 355 2 709 412 19 468 2 728 880
Share option reserve - - 12 443 - 12 443 - 12 443
Non-controlling interest on acquisition of subsidiary - - - - - 4 713 4 713
Total comprehensive income for the period - - 4 494 182 331 186 825 11 593 198 418
Dividends paid - - - (64 588) (64 588) (1 274) (65 862)
Balance at 31 August 2012 1 845 2 179 613 (1 125 464) 1 788 098 2 844 092 34 500 2 878 592
Road
Road surfacing construction
Aggregate and and and
GROUP SEGMENTAL ANALYSIS crusher rehabilitation earthworks Consolidated
R'000 R'000 R'000 R'000
Reportable segments
31 August 2012
Segment revenue 769 217 1 410 901 629 895 2 810 013
Segment result (operating profit) 109 076 112 569 69 188 290 833
31 August 2011
Segment revenue 696 510 1 337 594 575 894 2 609 998
Segment result (operating profit) 126 076 130 938 25 038 282 052
29 February 2012
Segment revenue 1 372 282 2 523 708 1 136 635 5 032 625
Segment result (operating profit) 211 161 229 376 90 925 531 462
Local International Consolidated
R'000 R'000 R'000
Geographical information
31 August 2012
Segment revenue 2 585 834 224 179 2 810 013
Segment result (operating profit) 247 875 42 958 290 833
31 August 2011
Segment revenue 2 196 068 413 930 2 609 998
Segment result (operating profit) 245 630 36 422 282 052
29 February 2012
Segment revenue 4 142 221 890 404 5 032 625
Segment result (operating profit) 415 357 116 105 531 462
EMPLOYEE BENEFIT EXPENSE Unaudited Unaudited Audited
6 months 6 months 12 months
31 August 31 August 29 February
2012 2011 2012
Employee benefit expense in the
income statement consists of: R'000 R'000 R'000
Salaries, wages and contributions 567 004 529 334 1 028 195
Share options granted to employees 12 443 8 799 13 488
Total employee benefit expense 579 447 538 133 1 041 683
CAPITAL EXPENDITURE AND DEPRECIATION Unaudited Unaudited Audited
6 months 6 months 12 months
31 August 31 August 29 February
2012 2011 2012
R'000 R'000 R'000
Capital expenditure for the period 280 928 88 274 286 594
Depreciation for the period 123 773 110 134 228 366
Amortisation of intangible assets for the period 1 387 1 398 2 785
NOTES
Basis of preparation:
These condensed consolidated interim financial statements have been prepared by the Group Financial Manager, JF
Gibson CA(SA), in accordance with International Financial Reporting Standards ("IFRS"), IAS34 "Interim Financial
Reporting", the South African Companies Act 71 of 2008 and the JSE Listings Requirements. The principal accounting
policies used in the preparation of the unaudited results for the period ended 31 August 2012 are consistent with
those applied for the year ended 29 February 2012 and for the unaudited results for the six months ended 31 August
2011 in terms of IFRS.
Business combinations
L&R Civils (Pty) Ltd
On 1 July 2012 the group acquired 80% of the share capital of L&R Civils (Pty) Ltd, including Mpipho Plant Hire CC for
R17,6 million cash. An additional contingent consideration limited to R13,0 million is payable dependent on the
company's earnings over a five year period from the effective date of the acquisition. The company specialises in
bulk water mains, storm water and sewer reticulation and roads. The acquired company contributed revenues of
R8,1 million and made no contribution to net profit for the period from 1 July 2012 to 31 August 2012.
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. The group filed a Fast Track application to the Competition Commission by
the required deadline date of 15 April 2011. The Competition Commission is in the process of assessing this
submission and the group 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. No
provision for penalties has been made in the results for the period ended 31 August 2012.
Events after the reporting period
There were no material events after the reporting period to report up to the date of preparation of these group
financial statements.
On behalf of the Board:
J E Raubenheimer R J Fourie F Diedrechsen
Chairman Chief Executive Officer Group Financial & Commercial Director
05 November 2012
Directors:
J E Raubenheimer# , R J Fourie, F Diedrechsen, F Kenney# , L A Maxwell*, B H Kent*, N F 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.com
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