Wrap Text
Consolidated Audited Abridged Financial Results for the year ended February 2013
Buildmax Limited
(Incorporated in the Republic of South Africa)
Registration number 1995/012209/06)
Share code: BDM ISIN: ZAE000011250
("Buildmax" or the "group" or the "company")
CONSOLIDATED AUDITED ABRIDGED
FINANCIAL RESULTS
FOR THE YEAR ENDED
FEBRUARY 2013
Introduction
The group's mining services division led by Diesel Power Open Cast Mining (Pty) Limited ("Diesel
Power"), which accounts for over 90% of the group's EBITDA, continued to perform well and met
their targets. Diesel Power Civils and Earthworks ("Civils") and Buildmax Aggregates and Quarries
(Pty) Limited ("BAQ") continued to experience tough trading conditions and did not meet budgeted
expectations.
All the group's business units are profitable (before allocation of head office costs), generate positive
cash flows and are supported by a secure and dedicated management team and workforce.
The improved financial position coupled with the support of the banks has enabled the company to
replace plant where appropriate on a consistent basis. A positive consequence of the replacement
policy, implemented during 2011, has resulted in excess of 95% of plant items having operated for less
than 20,000 hours (this represents 99% of book value and on average a remaining useful life of 53%).
Useful lives of various plant categories range from 12,000 to 36,000 hours depending on the category
and brand of the plant item.
The consolidated debt to equity and debt to EBITDA ratios are within acceptable ranges and enabled
the company to take advantage of growth opportunities. We are operating in an environment where
internal inflation is higher than increases in contract rates, however management are of the view that
there remain further opportunities to reduce costs, improve efficiencies and effectively manage risk.
An ongoing focus area has been to develop technical excellence through the company's recruitment
philosophy, the introduction of upgraded maintenance facilities and more robust preventative
maintenance systems. This, in conjunction with the ongoing development of information and internal
control systems and training, will continue to benefit Buildmax.
In accordance with the group's accounting policies, management reviewed the current remaining
economic useful lives and residual values of all items of property, plant and equipment. When
determining these estimates, the company considered the following: replacement and market value,
local and international demand, OEM support and their value perspective, reliable availability of spare
parts, maintenance philosophy and history, operational application and value in use.
This exercise, coupled with preferred brand purchases and balancing of applications, identified the
need to expand the categories of plant in order to cater for the different economic useful lives of
different brands. These revised estimates were implemented from March 2012 and resulted in a
reduction in depreciation costs.
The financial highlights are summarised as follows:
- headline earnings per share ('HEPS') increased by 414.39% from 5.56 cents to 28.60 cents and
accordingly headline earnings increased from R10.08 million to R51.84 million;
- earnings improved from a loss of R5.56 million to a profit of R51.71 million;
- net asset value ('NAV') increased by 5.76% to 323.20 cents per share;
- tangible net asset value ('TNAV') increased by 7.55% to 284.61 cents per share;
- operating EBITDA (which ignores profit or loss on sale of assets) improved by 5.48% from
R235.62 million to R248.52 million;
- EBITDA reduced by 9.21% to R246.81 million largely due to the difference in profit on sale of assets;
- the group spent R400.03 million on gross capex resulting in net capex of R305.25 million after plant
sales of R94.78 million. This was funded through operating cash flow and asset-based financing
facilities;
- gross interest-bearing debt increased from R324.92 million to R398.48 million;
- cash generated from operations improved by 9.14% to R253.19 million; and
- net cash reduced from R108.78 million to R65.57 million mainly as a result of the capital expenditure
programme and the share buy-back of R29.01 million (the share buy-back was funded from the
company's cash resources).
Outlook
The challenges besetting the local mining industry stem from a combination of micro and macro factors.
It is envisaged that conditions in the sector will continue to be difficult, largely as a result of rising input
costs, labour unrest, demand for second-hand plant, access to finance and commodity prices.
Internationally, demand for commodities and commodity prices are still under pressure. Contributing
factors are the Eurozone crisis and uncertainty of demand from China.
Adding to ongoing concerns for investors, was the Mangaung conference's failure to thoroughly debate
and to provide certainty with regard to the mining regulatory environment.
South Africa is likely to be subjected to the ongoing impact of the tragedy at London-based Lonmin's
Marikana mine and has not yet felt the full effect of last year's labour strikes, ongoing demands by
labour and the subsequent compounding impact of wage increases.
Despite a challenging outlook for mining companies in 2013 the outlook for Buildmax is buoyed by the
following:
- in the most recent budget speech by Finance Minister Pravin Gordhan, the government has taken
heed of many of the concerns that were raised about exports and imports and the development of
industries related to mining and the beneficiation of mining commodities. In addition the government
will seek to increase their focus on cross-border trade;
- there are promising mining and civils opportunities in other African countries where investor-friendly
conditions prevail. According to Mining IQ Projects (February 2013) there are a total of 914 open
cast mining projects in exploration, grassroots, prefeasibility, feasibility and bankable phase of
execution within the African continent;
- Buildmax, through its subsidiary Diesel Power Congo has been awarded an open pit mining and
quarrying contract in the Republic of Congo, a country with significant long-term mining prospects
and reserves. This new mining contract meets the group's strategic growth and diversification
objectives (ie geographical, commodity and asset ownership diversification);
- we have meaningful, value-adding and service orientated contractual relationships with some of the
leading mining groups in the country and our aim is to continue to grow these strategic alliances;
- the stable and experienced management team is committed to serving all its stakeholders;
- the company has signed a five-year wage agreement with its recognised union;
- a successful BEE transaction was concluded post year-end which resulted in Diesel Power obtaining a level
4 rating and being able to recognise an effective shareholding in excess of 25% in terms of the
Codes of Good Practice;
- other than a secured outstanding vendor loan for R2.24 million, there are no remaining risks
pertaining to the discontinued operations of the Group; and
- the group remains fully committed to zero harm production in the workplace. No fatalities or serious
injuries were recorded at any of its operations. Diesel Power, the group's largest business unit,
achieved a lost time injury frequency rate of 0.08.
Dividend
No final dividend has been declared.
Conclusion
We would like to thank the board, employees and stakeholders for their dedication and support.
C J M Wood T P Bantock C S Els
Chairman CEO CFO
20 May 2013
Audited abridged consolidated statement of
financial position
28 February 29 February
2013 2012
R'000 R'000
ASSETS
Non-current assets
Property, plant and equipment 872 592 711 649
Goodwill and other intangible assets 86 688 92 596
Environmental guarantee investment 1 002 422
Other non-current assets 1 580 -
Deferred taxation 20 607 17 331
982 469 821 998
Current assets
Inventories 26 074 21 923
Trade and other receivables 168 177 162 991
Taxation receivable 1 477 5 087
Bank and cash balances 67 837 108 869
263 565 298 870
Total assets 1 246 034 1 120 868
EQUITY AND LIABILITIES
Share capital and premium 1 994 196 2 023 206
Cash flow hedging reserve - (280)
Share-based payment reserve 8 815 -
Accumulated loss (1 417 154) (1 468 863)
Attributable to equity holders of the company 585 857 554 063
Outside shareholders' interests (7 105) (7 043)
Total shareholders' interests 578 752 547 020
Non-current liabilities
Interest-bearing liabilities 181 418 147 943
Provisions 886 889
Deferred taxation 68 754 53 682
251 058 202 514
Current liabilities
Interest-bearing liabilities 214 789 176 499
Derivative instruments - 389
Trade and other payables 198 130 191 721
Provisions - 2 300
Taxation payable 1 035 336
Bank overdrafts 2 270 89
416 224 371 334
Total equity and liabilities 1 246 034 1 120 868
Shares in issue 181 250 181 301
Net asset value per share (cents) 323.20 305.60
Net tangible asset value per share (cents) 284.61 264.64
Audited abridged consolidated statement of comprehensive income
Total Continuing Discontinued Total
operations operations operations operations
year ended year ended year ended year ended
28 February 29 February 29 February 29 February
2013 2012 2012 2012
R'000 R'000 R'000 R'000
Revenue 1 186 428 1 087 503 184 549 1 272 052
Operating profit/(loss) before depreciation and
amortisation ("EBITDA") 246 814 278 340 (6 487) 271 853
Depreciation (141 507) (175 867) (5 917) (181 784)
Operating profit/(loss) before amortisation 105 307 102 473 (12 404) 90 069
Amortisation of intangible assets (5 908) (5 908) - (5 908)
Operating profit/(loss) 99 399 96 565 (12 404) 84 161
Profit/(Loss) on disposal of businesses 1 100 - (41 827) (41 827)
Profit/(Loss) before interest and taxation ("PBIT") 100 499 96 565 (54 231) 42 334
Net interest paid (35 646) (25 449) (2 085) (27 534)
Profit/(Loss) before taxation ("PBT") 64 853 71 116 (56 316) 14 800
Taxation (13 206) (19 913) (164) (20 077)
Profit/(Loss) for the year 51 647 51 203 (56 480) (5 277)
Other comprehensive income for the year
Recycled portion of cash flow reserve 399 2 905 - 2 905
Effective portion raised on cash flow hedge (10) 113 - 113
Taxation (109) (845) - (845)
Total comprehensive income/(loss) for the year 51 927 53 376 (56 480) (3 104)
Profit/(Loss) for the year attributable to:
Equity holders of the company 51 709 50 918 (56 480) (5 562)
Outside shareholders' interests (62) 285 - 285
51 647 51 203 (56 480) (5 277)
Total comprehensive income/(loss) for the year
attributable to:
Equity holders of the company 51 989 53 091 (56 480) (3 389)
Outside shareholders' interests (62) 285 - 285
51 927 53 376 (56 480) (3 104)
Audited supplementary information
Total Continuing Discontinued Total
operations operations operations operations
year ended year ended year ended year ended
28 February 29 February 29 February 29 February
2013 2012 2012 2012
R'000 R'000 R'000 R'000
Headline earnings/(loss) per share (cents) 28.60 13.72 (8.16) 5.56
Earnings/(Loss) per share (cents) 28.53 28.09 (31.16) (3.07)
Shares in issue 181 250 - - 181 301
Audited abridged consolidated statement of
cash flows
Year ended Year ended
28 February 29 February
2013 2012
R'000 R'000
Operating activities
Profit before taxation ("PBT") 64 853 14 800
Working capital movement (2 138) (3 092)
Other non-cash flow items 154 838 192 759
Net interest paid 35 646 27 534
Cash generated from operations 253 199 232 001
Net interest paid in cash (35 646) (27 257)
Taxation received/(paid) 2 791 (1 578)
Net cash inflow from operating activities 220 344 203 166
Investing activities
Purchase of property, plant and equipment
- Maintaining operations (400 031) (415 856)
Environmental guarantee investment (580) (600)
Mining stripping asset (1 580) -
Proceeds on disposal of subsidiary 1 100 736
Proceeds on disposal of property, plant and equipment 94 779 167 903
Net cash outflow from investing activities (306 312) (247 817)
Financing activities
Repurchase of issued shares (29 010) -
Interest-bearing liabilities raised 402 170 301 233
Interest-bearing liabilities repaid (330 405) (265 570)
Net cash inflow from financing activities 42 755 35 663
Net decrease in cash and cash equivalents (43 213) (8 988)
Cash and cash equivalents at the beginning of the year 108 780 117 768
Cash and cash equivalents at the end of the year 65 567 108 780
Audited abridged consolidated statement of changes in equity
Share capital Share-based Cash flow Outside
and payment hedging Accumulated shareholders'
premium reserve reserve loss interest Total
R'000 R'000 R'000 R'000 R'000 R'000
Balances as at 28 February 2011 2 023 206 - (2 453) (1 463 301) (7 328) 550 124
Total comprehensive income/(loss) for the year - - 2 173 (5 562) 285 (3 104)
Balances as at 29 February 2012 2 023 206 - (280) (1 468 863) (7 043) 547 020
Total comprehensive income/(loss) for the year - - 280 51 709 (62) 51 927
Share repurchase allocated to: - - - - - -
- Share capital (1 934) - - - - (1 934)
- Share premium (27 076) - - - - (27 076)
Share based payment adjustment - 8 815 - - - 8 815
Balances as at 28 February 2013 1 994 196 8 815 - (1 417 154) (7 105) 578 752
Audited reconciliation of headline earnings
Total Continuing Discontinued Total
operations operations operations operations
year ended year ended year ended year ended
28 February 29 February 29 February 29 February
2013 2012 2012 2012
R'000 R'000 R'000 R'000
Profit/(Loss) for the year attributable to
equity holders of the company 51 709 50 918 (56 480) (5 562)
Adjusted for:
(Profit)/Loss on disposal of business units (1 100) - 41 827 41 827
Loss/(Profit) on disposal of property, plant and
equipment 1 231 (26 045) (139) (26 184)
- Gross 1 709 (36 087) (151) (36 238)
- Taxation (478) 10 042 12 10 054
Headline profit/(loss) attributable to
equity holders of the company 51 840 24 873 (14 792) 10 081
Abridged segmental analysis
Reviewed Unaudited Reviewed Unaudited
six months six months Audited six months six months Audited
ended ended year ended ended ended year ended
31 August 28 February 28 February 31 August 29 February 29 February
2012 2013 2013 2011 2012 2012
R'000 R'000 R'000 R'000 R'000 R'000
EXTERNAL REVENUE
Continuing operations 656 167 530 261 1 186 428 545 847 541 656 1 087 503
Mining services - Diesel Power 491 620 406 737 898 357 458 563 429 978 888 541
Mining services - Equipment sales and rental - - - 566 - 566
Total mining services 491 620 406 737 898 357 459 129 429 978 889 107
Civils and earthworks 78 799 83 993 162 792 21 147 44 647 65 794
Aggregates and quarries 85 748 39 531 125 279 65 571 67 031 132 602
Discontinued operations - - - 130 450 54 099 184 549
Construction materials - - - 130 450 54 099 184 549
656 167 530 261 1 186 428 676 297 595 755 1 272 052
INTERSEGMENT REVENUE
Continuing operations 18 016 19 034 37 050 24 945 21 077 46 022
Mining services - Diesel Power 1 076 3 176 4 252 4 068 1 835 5 903
Mining services - Equipment sales and rental 12 850 9 465 22 315 19 404 13 363 32 767
Total mining services 13 926 12 641 26 567 23 472 15 198 38 670
Aggregates and quarries 4 090 6 393 10 483 1 473 5 879 7 352
Discontinued operations - - - 1 346 (1 346) -
Construction materials - - - 1 346 (1 346) -
18 016 19 034 37 050 26 291 19 731 46 022
Abridged segmental analysis (continued)
Reviewed Unaudited Reviewed Unaudited
six months six months Audited six months six months Audited
ended ended year ended ended ended year ended
31 August 28 February 28 February 31 August 29 February 29 February
2012 2013 2013 2011 2012 2012
R'000 R'000 R'000 R'000 R'000 R'000
EBITDA
Continuing operations 131 978 114 836 246 814 112 421 165 919 278 340
Mining services - Diesel Power 127 319 110 358 237 677 94 371 153 126 247 497
Mining services - Equipment sales and rental 4 154 2 624 6 778 9 140 4 648 13 788
Total mining services 131 473 112 982 244 455 103 511 157 774 261 285
Civils and earthworks 2 376 3 114 5 490 (927) 3 950 3 023
Aggregates and quarries 9 299 620 9 919 9 837 4 195 14 032
Corporate head office (11 170) (1 880) (13 050) - - -
Discontinued operations - - - (4 199) (2 288) (6 487)
Construction materials - - - (4 199) (2 288) (6 487)
131 978 114 836 246 814 108 222 163 631 271 853
Operating profit before amortisation
Continuing operations 49 168 56 139 105 307 26 230 76 243 102 473
Mining services - Diesel Power 50 943 59 891 110 834 19 532 73 464 92 996
Mining services - Equipment sales and rental 3 113 2 233 5 346 3 670 661 4 331
Total mining services 54 056 62 124 116 180 23 202 74 125 97 327
Civils and earthworks 2 376 3 109 5 485 (927) 3 950 3 023
Aggregates and quarries 3 955 (7 263) (3 308) 3 955 (1 832) 2 123
Corporate head office (11 219) (1 831) (13 050) - - -
Discontinued operations - - - (8 312) (4 092) (12 404)
Construction materials - - - (8 312) (4 092) (12 404)
49 168 56 139 105 307 17 918 72 151 90 069
Abridged segmental analysis (continued)
Reviewed Unaudited Reviewed Unaudited
six months six months Audited six months six months Audited
ended ended year ended ended ended year ended
31 August 28 February 28 February 31 August 29 February 29 February
2012 2013 2013 2011 2012 2012
R'000 R'000 R'000 R'000 R'000 R'000
Profit before interest and taxation ("PBIT")
Continuing operations 12 057 88 442 100 499 23 276 73 289 96 565
Mining services - Diesel Power 19 532 91 302 110 834 19 532 73 464 92 996
Mining services - Equipment sales and rental 3 670 1 676 5 346 3 670 661 4 331
Total mining services 23 202 92 978 116 180 23 202 74 125 97 327
Civils and earthworks (927) 6 412 5 485 (927) 3 950 3 023
Aggregates and quarries 1 001 (9 117) (8 116) 1 001 (4 786) (3 785)
Corporate head office (11 219) (1 831) (13 050) - - -
Discontinued operations - - - (14 264) (39 967) (54 231)
Construction materials - - - (14 264) (39 967) (54 231)
12 057 88 442 100 499 9 012 33 322 42 334
Notes to the audited abridged consolidated annual
results
Basis of preparation and accounting policies
The abridged consolidated annual financial statements have been prepared in conformity with International Financial
Reporting Standards ('IFRS'), SAICA Financial Reporting Guides as issued by the Accounting Practices
Committee, the requirements of the South African Companies Act, 71 2008, the JSE Listings
Requirements, and the minimum information as required by IAS 34 on the historic cost basis except in the case of
financial instruments which are measured using the fair value and amortised cost models.
Except for the adoption of the new and revised accounting standards the principal accounting policies
of the group are consistent with those applied in the audited consolidated financial statements for the
year ended 29 February 2012. These statements have been compiled under the supervision of the Chief
Financial Officer, C S Els CA(SA).
The audited abridged consolidated financial statements and the unqualified audit report of the external
auditors, PKF (Jhb) Inc., is available for inspection at the registered office of the company.
Estimates and contingencies
Management makes estimates and judgements concerning the future with regards to opencast mining
contracts, provisions, residual values and economic useful life of property, plant and equipment, claims
and other fair value accounting policies. The resulting estimates and judgements can only approximate
the actual results. Estimates and judgements are continually evaluated and are based on historical
experience and other factors, including expectations of future events that are believed to be reasonable
under the circumstances.
Contingent liabilities
The group has no significant contingent liabilities.
Directors
Executive
T P Bantock (CEO)
C S Els (CFO)
J Mathebula
Independent non-executive directors
C J M Wood (Chairman)
C B Brayshaw
M D Lamola
M W McCulloch
Non-executive directors
D J Mack
B T Ngcuka
G Montgomery
Company secretary
G H Miller
Registered office
515 Pretoria Road, Fairleads, Benoni
(Postnet Suite 435, Private Bag X108
Centurion, 0046)
Sponsor
QuestCo (Pty) Limited, 2nd Floor
No 1 Montecasino Blvd, Fourways, 2055
South Africa
(PO Box 98956, Sloane Park, 2152
South Africa)
Auditors
PKF (Jhb) Inc., 42 Wierda Road West
Wierda Valley, Sandton, 2196
Transfer secretaries
Computershare Investor Services
(Pty) Limited, 70 Marshall Street
Johannesburg, 2001
(PO Box 61763, Marshalltown, 2107)
www.buildmax.co.za
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