Wrap Text
Unaudited Condensed Consolidated Intdrim Results for the six months ended 28 February 2013
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”)
CONSOLIDATED INFRASTRUCTURE UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 28 FEBRUARY 2013
Salient features
- Revenue up 27% to R970 million
- EBITDA up 27% to R124 million
- HEPS up 23% to 59.0 cps (2012: 47.8 cps)
- Order book up 17% to R2.1 billion
Consolidated Infrastructure delivered solid growth and strong profits over the past six months. This
was driven by the South African Renewable Energy Programme and increased spending on electrical
infrastructure in the rest of Africa.
Business Overview
Consolidated Infrastructure, through its subsidiary Consolidated Power Projects (Pty) Ltd (“Conco”), is
the largest turnkey developer and installer of high-voltage electrical substations and overhead cables
and Renewable Energy balance of plant electrical work in sub-Sahara Africa.
Financial Overview
Revenue grew by 27% to R970 million (2012: R764 million). Trading margins remained unchanged at 26.6%
as management continued their focus on maintaining efficiencies, supply chain initiatives, geographic
and project mix at Conco and margin focus in the Building Materials division.
The power and electrification sector is the core sector for CIG with 85% of CIG’s revenue and earnings
and 80% of earnings before interest, taxation, depreciation and amortisation (“EBITDA”) directly
attributed to this sector.
Profit and headline earnings for the six month period improved by 27% to R70 million from the prior
year’s R55 million.
Earnings and headline earnings per share of 59.0 cents represents an increase of 23% over the previous
year.
The debt-to-equity ratio increased to 29.6% (2012: 9.8%) as additional funds of R270 million were
raised during the prior year through the medium-term note programme. Despite the additional debt raised
in June 2012, interest cover as measured against EBITDA remained at a satisfactory level of 19.8 times.
The group still has R230 million of unissued debt available as part of the programme. The Group has
maintained a consistent Moody’s Baa2.za credit rating.
Due to the timing of payment milestones, the Conco business funded a significant portion of the growth
of the Renewable Energy projects through internally generated funds. As a consequence, no draw-down on
any of the funds raised from the medium-term note programme were required. Subsequent to 28 February 2013,
the group has deployed R100 million of these funds into Renewable Energy projects. These projects
are expected to be completed by February 2014 at which time management expect at least 95% of all cash
invested, to be returned.
The rapid growth in turnover within Conco has placed some additional strain on the business to ensure
all elements of efficient project management are maintained, including the timeous invoicing of work in
progress and collection of receivables. In the period under review there has been a build-up of amounts
due from contract customers. Strict contract management has always been a strength of the business and
management are satisfied that steps to ensure the timeous invoicing of work in progress are in place.
Those debtors that have exceeded credit terms are represented by blue chip clients with whom Conco have
had long-standing and successful business relationships. Management actions are expected to improve the
collection efficiency of our debtors book by year end.
The second half of the financial year has historically produced a stronger earnings performance due to
the December shut down period that takes place during the interim reporting period. The group expects
this trend to continue in the current financial year.
Despite a constrained market the Building Materials division maintained its market share and produced a
steady performance for the six months under review. The division recorded an increase in operating
profit.
Divisional overview
Conco
Conco, a market leader in its field, performed well over the past six months, securing a healthy 17%
increase in its order book to R2.1 billion (2012:R1.8 billion).
The division won substantial work of R800 million for Renewable Energy Projects as part of the first
round of the Department of Energy Renewable Energy Programme.
Conco won tenders to build and upgrade electrical substations across the African subcontinent,
including Angola, Mozambique, Tanzania, Botswana, Ghana and Zambia. The market remained robust and
significant work and tenders were submitted to Global Resource Companies and African utilities. Despite
winning a few small tenders in Saudi Arabia this market remains a challenge and prospects of securing a
reasonable market share in the Middle East seem limited. The South African Municipality market, a key
market for Conco, continued to remain disappointing and the levels of activity in this sector continued
to decline.
Revenue from the division increased 29% to R825 million (2012: R640 million) and EBITDA improved 25% to
R99 million (2012: R79 million). A supplier of choice, the division continues to differentiate itself
through distinctive design, a superior skills base and an excellent delivery record.
Building Materials
The Building Materials division maintained its market share.
Revenue increased 17% to R144 million (2012: R123 million). EBITDA remained fairly static at R26.3 million
(2012: R26 million) as the division was unable to sufficiently increase selling prices relative
to the cost increases incurred in production.
Angola Environmental Servicos Limitada (“AES”) update
Management are making progress with regards to the completion of all regulatory requirements to effect
the AES acquisition which is currently anticipated to become effective in August 2013. CIG’s management
team has become extensively involved in the operational management of AES and has been working together
with the Angolan shareholders and management to enhance the business.
AES delivered solid growth in their past financial year with turnover increasing 29% to $54 million
(2011: $42 million) to the year ended 31 December 2012.
If the deal had been effective for the current interim period ending 28 February 2013, headline
earnings per share of 68.1 cents per share would have been earned as compared to our current 59.0 cents
per share, an increase in headline earnings per share of 15% for the 6 month period.
As previously stated, CIG intends to issue equity to fund a portion of the AES acquisition although the
timing of the placement is still to be finalised.
Prospects
The current order book at Conco together with higher than expected levels of bidding tenders awaiting
adjudication and prospects places the group on a solid foundation to continue to deliver growth.
The group is strategically positioned to provide infrastructure to the African Power Market, with the
majority of clients being South African or African utilities. The geographic mix provides a fairly
robust buffer against the volatility of the market place. The drivers of growth in these markets
remain the growth in commodity markets and urbanisation and we continue to pursue opportunities across
the continent. Within South Africa the substantial backlog identified in the National Development Plan
together with increased Renewable and Conventional Independent Power Providers offers sustainable
longer term growth opportunities.
It is expected that over the medium and longer term the greatest constraint to growth remains the
availability of suitably qualified engineers to execute the expected increase in work.
The Building Materials Division has made substantial progress in acquiring an aggregate and sand quarry
in the Gauteng region and while the acquisition consideration is not substantial from the group’s
perspective, the improved geographic footprint within Gauteng will enhance the long-term growth
opportunities.
The AES business continues to grow organically off the back of increased oil drilling in Angola and
legislated changes in the drill cutting law which will become effective on 1 January 2014. It is
anticipated that CIG will invest an additional $7 million to support the organic expansion, after the
effective date.
The newly launched Operations and Maintenance division made steady progress with the winning of two
small electrical maintenance contracts. The objective of winning larger contracts to maintain and
operate entire wind farms remains and the division is in extensive discussions with Original Equipment
Manufacturers and Renewable Energy Developers.
UNAUDITED CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED 28 FEBRUARY 2013
Condensed consolidated statements of comprehensive income
Unaudited Unaudited Audited
six months ended six months ended year ended
28 February 2013 29 February 2012 31 August 2012
R'000 R'000 R'000
Revenue 969,671 763,524 1,553,522
Cost of sales (711,406) (560,696) (1,116,409)
Gross profit 258,265 202,828 437,113
Other income 7,000 0 1,690
Operating expenses (145,516) (111,183) (241,734)
Foreign exchange gain 4,115 5,767 27,990
Earnings before interest, taxation, depreciation
and amortisation ("EBITDA") 123,864 97,412 225,059
Depreciation (20,630) (18,646) (39,680)
Profit before interest and taxation 103,234 78,766 185,379
Interest received 7,958 3,510 18,457
Interest paid (14,211) (5,122) (15,786)
Profit before taxation 96,981 77,154 188,050
Taxation (26,497) (21,603) (51,146)
Profit for the period 70,484 55,551 136,904
Other comprehensive income:
Exchange rate differences on translating foreign
operations (1,328) 266 851
Total comprehensive income 69,156 55,817 137,755
Total comprehensive income attributable to:
Equity holders of company 68,807 55,817 137,743
Non-controlling interest 349 0 12
Basic earnings per share (cents) 59.0 47.8 116.5
Diluted earnings per share 58.1 47.8 116.2
Fully diluted earnings per share (cents) 58.1 46.7 115.0
Reconciliation of headline earnings:
Profit attributable to ordinary shareholders 70,135 55,551 136,892
Adjusted for:
(Profit)on disposal of property, plant and
equipment (19) (3) (407)
Headline earnings attributable to ordinary
shareholders 70,116 55,548 136,485
Weighted average number of shares in issue
(000's) 118,841 116,240 117,548
Diluted weighted average number of shares in
issue (000's) 120,748 116,240 117,800
Fully diluted weighted average number of shares
in issue (000's) 120,748 118,841 119,093
Headline earnings per share (cents) 59.0 47.8 116.1
Diluted headline earnings per share (cents) 58.1 47.8 115.9
Fully diluted headline earnings per share (cents) 58.1 46.8 114.6
Condensed consolidated statements of financial
position
Unaudited Unaudited Audited
as at as at year ended
28 February 2013 29 February 2012 31 August 2012
R'000 R'000 R'000
ASSETS
Non-current assets 818,357 819,418 819,151
Property, plant and equipment 316,096 312,950 313,704
Goodwill 462,220 462,220 462,220
Intangible assets 30,084 33,567 31,825
Deferred tax 6,805 8,124 8,250
Financial assets 3,152 2,557 3,152
Current assets 1,477,028 854,884 1,163,277
Inventories 71,931 44,354 65,972
Trade and other receivables 55,701 46,485 57,086
Amounts due from contract customers 1,048,962 611,151 635,412
Taxation receivable 292 352 368
Cash and cash equivalents 300,142 152,542 404,389
Total assets 2,295,385 1,674,302 1,982,378
EQUITY AND LIABILITIES
Equity 1,217,757 1,053,020 1,146,503
Issued capital 11 11 11
Share premium 726,892 726,892 726,892
Share based payment reserve 13,643 11,545
Foreign currency translation reserve (4,401) (3,658) (3,073)
Non-controlling interest 361 12
Accumulated profits 481,251 329,775 411,116
Non-current liabilities 371,802 134,542 396,053
Other financial liabilities 308,711 72,330 328,787
Provisions 8,165 7,964 8,065
Instalment sale liabilities 10,114 11,492 13,799
Deferred tax 44,812 42,756 45,402
Current liabilities 705,826 486,740 439,822
Other financial liabilities 30,962 10,845 17,711
Trade and other payables 375,632 229,089 232,569
Amounts received in advance 78,302 31,494 34,589
Amounts due to contract customers 187,470 186,058 108,930
Bank overdraft 0 2,967 0
Instalment sale liabilities 10,490 8,779 9,975
Taxation payable 22,970 17,508 36,048
Total equity and liabilities 2,295,385 1,674,302 1,982,378
Number of shares in issue (000’s) 118,841 118,841 118,841
Net asset value per share (cents) 1025 886 964
Net tangible asset value per share (cents) 610 469 549
Condensed consolidated statements of cashflow
Unaudited Unaudited Audited
six months ended six months ended year ended
28 February 2013 29 February 2012 31 August 2012
R'000 R'000 R'000
Cash generated by operations before changes in
working capital 115,640 98,129 226,523
Changes in working capital (152,808) (110,944) (225,068)
Net (interest paid)/ received (6,253) (1,612) 2,671
Taxation paid (29,265) (5,208) (13,845)
Cash flows from operating activities (72,686) (19,635) (9,719)
Cash flows from investing activities (21,280) (22,632) (42,789)
Cash flows from financing activities (9,995) 55,806 320,870
Net (decrease)/ increase in cash and cash
equivalents (103,961) 13,492 268,362
Effect on foreign currency translation reserve
movement on cash balances (286) 47 (9)
Cash and cash equivalents at beginning of year 404,389 136,036 136,036
Cash and cash equivalents at end of period 300,142 149,575 404,389
Condensed consolidated statements of changes in
equity
Unaudited Unaudited Audited
six months ended six months ended year ended
28 February 2013 29 February 2012 31 August 2011
R'000 R'000 R'000
Balance at beginning of the period 1,146,503 946,310 946,310
Issue of share capital and share issue expenses 0 50,893 50,893
Share based payment reserve 2,098 11,545
Total comprehensive income for the period 68,807 55,817 137,743
Non-controlling interest 349 12
Balance at end of period 1,217,757 1,053,020 1,146,503
SEGMENTAL ANALYSIS
Unaudited Unaudited Audited Unaudited Unaudited Audited
28 February 29 February 31 August 28 February 29 February 31 August
2013 2012 2012 2013 2012 2012
% of R'000 R'000 R'000 % of total % of total total
Revenue
Building materials 144,279 123,329 272,898 15% 16% 18%
Power 825,392 640,195 1,280,624 85% 84% 82%
Corporate - - - 0% 0% 0%
Total 969,671 763,524 1,553,522 100% 100% 100%
Unaudited Unaudited Audited Unaudited Unaudited Audited
28 February 28 February 31 August 28 February 29 February 31 August
2013 2012 2012 2013 2012 2012 % of
R'000 R'000 R'000 % of total % of total % of total
EBITDA
Building materials 26,344 26,028 57,840 21% 27% 26%
Power 98,957 78,987 179,264 80% 81% 80%
Corporate (1,437) (7,603) (12,045) (1%) (8%) (6%)
Total 123,864 97,412 225,059 100% 100% 100%
Unaudited Unaudited Audited
28 February 2013 29 February 2012 31 August 2012
Reconciliation of profit before tax R'000 R'000 R'000
EBITDA per segment analysis 123,864 97,412 225,059
Depreciation (20,630) (18,646) (39,680)
Net interest (paid)/ received (6,253) (1,612) 2,671
Profit before tax 96,981 77,154 188,050
Unaudited Unaudited Audited
28 February 2013 29 February 2012 31 August 2012
R'000 R'000 R'000
Assets
Building materials 446,227 425,734 448,705
Power 1,206,823 851,623 868,846
Corporate 1,421,175 1,175,099 1,442,983
Total assets including group loan accounts 3,074,225 2,452,456 2,760,534
Inter-group elimination (778,840) (778,154) (778,156)
Total 2,295,385 1,674,302 1,982,378
Unaudited Unaudited Audited
28 February 2013 29 February 2012 31 August 2012
R’000 R’000 R'000
Liabilities
Building materials 354,146 341,778 363,029
Power 699,110 468,327 419,397
Corporate 280,564 51,031 316,426
Total liabilities including group loan accounts 1,333,820 861,136 1,098,852
Inter-group elimination (256,192) (239,854) (262,977)
Total 1,077,628 621,282 835,875
INTERIM DIVIDEND
The group’s policy is for the board to consider a dividend on an annual basis after reviewing the
annual results. Accordingly, no interim dividend has been considered.
BASIS OF PREPARATION
These consolidated interim results have been prepared in accordance with International Financial
Reporting Standards (“IFRS”), Interim Financial Reporting (IAS34), the SAICA Financial Reporting Guides
as issued by the Accounting Practices Committee, 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 annual financial statements for the year ended 31 August 2012. These results have
not been audited or reviewed by the group’s auditors.
These unaudited interim 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
Chairman CEO
17 April 2013
Non-executive directors:
K Bucknor*
Independent non-executive directors:
R Horton, AD Dixon, A Darko*, J Nwokedi, F Boner (Chairman)
Executive directors:
RD Gamsu, IM Klitzner, B Berelowitz,
*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: 011 280 4040
Facsimile: 086 748 9169
Company secretary: Probity Business Services (Pty) Ltd
Transfer secretaries: Computershare Investor Services (Pty) Ltd
Sponsor
Java Capital
Auditors
PKF (Jhb) Inc.
Visit our website: www.ciglimited.co.za
DISCLAIMER –
Disclaimer
The Group has in good faith made reasonable effort to ensure the
accuracy and completeness of the information contained in this
document, including all information that may be regarded as
“forward-looking statements”.
Forward-looking statements may be identified by words such as
“believe”, “anticipate”, “expect”, “plan”, “estimate”, “intend”,
“project”, “target”.
Forward-looking statements are not statements of fact, but
statements by the management of the Group based on its current
estimates, projections, expectations, beliefs and assumptions
regarding the Group’s future performance and no assurance can be
given to this effect.
The risks and uncertainties inherent in the forward-looking
statements contained in this document include but are not limited
to changes to IFRS and the interpretations, applications and
practices subject thereto as they apply to past, present and
future periods; domestic and international business and market
conditions such as exchange rate and interest rate movements;
changes in the domestic and international regulatory and
legislative environments; changes to domestic and international
operational, social, economic and political risks; and the effects
of both current and future litigation.
The Group does not undertake to update any forward-looking
statements contained in this document and does not assume
responsibility for any loss or damage and howsoever arising as a
result of the reliance by any party thereon, including, but not
limited to, loss of earnings, profits or consequential loss or
damage.
Date: 17/04/2013 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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