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RAUBEX GROUP LIMITED - Unaudited Interim Results for six months ended 31 Aug 2012

Release Date: 05/11/2012 07:15
Code(s): RBX     PDF:  
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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