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BUILDMAX LIMITED - Consolidated Audited Abridged Financial Results for the year ended February 2013

Release Date: 20/05/2013 14:50
Code(s): BDM     PDF:  
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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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