Wrap Text
Reviewed Interim Financial Results 31 August 2013
Buildmax Limited
(Incorporated in the Republic of South Africa)
Registration number 1995/012209/06
Share code: BDM ISIN: ZAE000167318
("Buildmax" or the "Group" or the "Company")
REVIEWED INTERIM FINANCIAL RESULTS 31 AUGUST 2013
- headline earnings
increased to R36.6 million
from R17.9 million
- HEPS increased to
20.2 cents
UP 104%
from 9.9 cents
- earnings
increased to
R33.3 million
from R17.9 million
- earnings per share increased to
18.4 cents
UP 85.9%
from 9.9 cents
- revenue increased to
R687.1 million
UP 4.7%
from R656.2 million
- EBITDA increased to
R136.3 million
UP 3.3%
from R131.9 million
- PBIT increased to
R58.8 million
UP 33.9%
from R43.9 million
- net asset value per share
improved to
346.6 cents
UP 8.9%
from 318.2 cents
- tangible net asset value
per share improved to
309.1 cents
UP 11.0%
from 278.4 cents
- net asset value (excluding
goodwill) improved to
331.6 cents
UP 9.3%
from 303.3 cents
- interest-bearing debt decreased to
R414.3 million
DOWN 18.1%
from R505.9 million
- gross capital expenditure
on new equipment was
R155.8 million
- net debt decreased to
R345.2 million
DOWN 23.5%
from R451.4 million
- cash generated from
operating activities increased to
R123.6 million
UP 63.5%
from R75.6 million
Commentary
Illustrated by a 104% increase in HEPS, the Group's financial performance continues on a positive trend
and has made significant strides towards meeting its strategic objectives due to the investment in new plant
and preventative maintenance coupled with a focus on operator training. Whilst we have improved in this
regard, significant scope exists for further improvement.
One of the key objectives set by management was to reduce concentration by targeting and winning
business with exposure to different mining commodities in diverse geographic locations. Albeit in an extremely
competitive environment, the Group was awarded an iron ore open pit quarry and mining contract in
the Republic of Congo by DMC Iron Congo SA, which is controlled by Exxaro Resources Limited. Due to
the fact that the majority of the assets used in the mining process are owned by the client, the earnings have
contributed positively towards most key financial ratios.
Our strategic focus areas remain relevant and outward looking, and our objective is to continue to grow
organically and by acquisition.
Safety and quality management
The Group boasts a proud track record of more than 5.3 million fatality free production shifts and 50 million
fatality free hours. Safety is a core value of the Buildmax Group and integral to the way it conducts business.
It is demonstrated by commitment to high standards and assignment of specific responsibilities for safety.
The value the Group places on the safety of employees, and subcontractors is reflected in the safety vision,
"Committed to Efficient Zero Harm Production".
The safety policy and framework supports the Group safety vision, provides direction and sets standards
for operations to develop and manage their proactive safety programmes and strategies with the objective
of continuously improving in terms of safety performance.
The Group's operations continue to maintain certification for the OHSAS 1801 health and safety management
standard, and ISO 9001 which specifies requirements for a quality management system.
People
The quality of our people is a critical source of the Group's competitive advantage. We recognise that in order
to achieve the sustained high performance that is necessary for Buildmax to meet the demands of its business
environment, it needs to attract, retain and continuously develop its employees at all levels.
Investment in learning and development remains a top priority across the Group which invested R21 million
in a range of training, learning and career development opportunities during the year. A bursary scheme for
previously disadvantaged individuals ensures that Buildmax attracts an ongoing pipeline of engineering talent
and invests in its transformation strategy.
Operational overview
The Group operates within four strategic business units: mining services, equipment sales and rental, civils
and earthworks and aggregate and quarries.
Mining services and equipment sales and rental
The mining services business unit provides opencast mining, rehabilitation services as well as equipment
sales and rental. The scope of these services include expertise in mine planning, pit designing, production
scheduling, drilling and blasting, opencast mining, pillar mining, surveying and mine rehabilitation.The
companies that form part of the mining services business unit include, Diesel Power South Africa, Buildmax
Equipment and Diesel Power Congo.
Operations in South Africa continue to experience tough trading conditions. This challenging environment has
been offset by the growth in Africa.
Civils and earthworks
Civils and Earthworks, a division of Diesel Power South Africa, is a highly regarded provider of civils and bulk
earthworks services to the mining and property development sector of the economy.
This division contributed significantly to group turnover, however, it has been negatively impacted by the
depressed construction industry in which margins remain subdued.
Aggregates and quarries
Buildmax Aggregates and Quarries ("BAQ"), through its ownership of the Crushco quarry, Alfa & Witdeep
Sand and Stone, delivers aggregates, bulk transportation and retail services of selected building materials.
This division is also making significant strides into the contract crushing and screening industry by investing
in mobile crushing and screening equipment.
BAQ have performed above expectations and short to medium term prospects are promising.
Property, plant and equipment
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 having operated for less than 20,000 hours
(this represents 98% of book value).
Management reviewed the current remaining economic useful lives and residual values of all items of plant and
equipment. The following was considered:
- replacement value - reliable availability of spare parts
- market value - maintenance history
- local and international demand - operational application
- OEM support and their value perspective - value in use
A positive consequence of the replacement and maintenance strategy is that the useful lives of various plant
categories now range from 8,000 to 36,000 hours depending on the category and brand of the plant item.
Working capital
Due to the nature of the Group's conservative asset based funding methodology and environment, it is
anticipated that in the foreseeable future, we will reflect a net current liability position. Plant and equipment is
funded over a three year period with no residual values. Generally, deposits are not paid on mining equipment
and 50% of the capital obligation is settled in the first year with the balance over the remaining two years
Sustainability
The board and executive leadership team remain committed to building a sustainable business that takes into
account the economic, social and environmental impacts on the communities in which the Group operates.
This commitment to sustainable development is driven at a group level, endorsed and measured by the board,
and implemented across the operations. The chairman and directors, through their involvement on various
board committees, are accountable for group sustainability performance.
The Buildmax Group is committed to conducting its operational activities in an environmentally responsible
and sustainable manner within its scope of control.
Transformation
It is our vision to make Buildmax Group a home for all South Africans, where there are no divisions or
boundaries and where no-one feels excluded. A successful BEE transaction was concluded which, together
with a focus on all code categories, resulted in Diesel Power South Africa obtaining a Level 4 rating and being
able to achieve an effective shareholding in excess of 25% in terms of the Codes of Good Practice and the
Mining Charter.
Governance
The recently published integrated report outlines how the Group is progressing with its journey to apply the
principles set out in the King Report on Governance for South Africa, 2009. The Buildmax Group complies with
the Companies Act, 71 of 2008 and the Listings Requirements of the JSE Limited.
Outlook and prospects
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.
We are fortunate to have meaningful, value-adding and service orientated contractual relationships with most
of the leading mining groups in the country. The propensity to outsource remains buoyant and our aim is to
continue to grow these customers' focused strategic alliances.
One of the most significant risks in the industry is labour uncertainty and the looming expectation gap between
unions' increasing demands and the ability by companies to meet these requests. To mitigate against this risk,
good communication is imperative and we are pleased to have signed a five-year wage agreement with our
recognised union.
Dividend
No interim dividend has been declared.
Acknowledgements
The board would like to express its appreciation to all its customers, staff, business partners, shareholders
and other stakeholders for their support during the past six months and for their continued confidence in
the sustainability of the Group and its strong underlying businesses.
On behalf of the board
Colin Wood Terry Bantock Christie Els
Chairman CEO CFO
Johannesburg
7 November 2013
Condensed consolidated statement of financial position
Reviewed Reviewed Audited
31 August 31 August 28 February
2013 2012 2013
R'000 R'000 R'000
ASSETS
Non-current assets
Property, plant and equipment 930 859 929 938 872 592
Goodwill and other Intangible assets 83 731 89 639 86 688
Environmental guarantee investment 940 393 1 002
Other noncurrent assets 1 323 1 580
Deferred taxation 26 503 19 094 20 607
1 043 356 1 039 064 982 469
Current assets
Inventories 28 758 23 348 26 074
Trade and other receivables 201 817 195 623 168 177
Taxation receivable 184 421 1 477
Bank and cash balances 69 040 54 647 67 837
299 799 274 039 263 565
Total assets 1 343 155 1 321 000 1 246 034
EQUITY AND LIABILITIES
Share capital and premium 1 994 196 2 023 206 1 994 196
Foreign currency translation reserve 2 297
Share-based payment reserve 14 376 4 700 8 815
Accumulated loss (1 383 794) (1 450 962) (1 417 154)
Attributable to equity holders of the company 627 075 576 944 585 857
Outside shareholders' interests (7 158) (7 025) (7 105)
Total shareholders' interests 619 917 569 919 578 752
Non-current liabilities
Interest-bearing liabilities 177 667 247 727 181 418
Provisions 886 886
Deferred taxation 73 471 55 069 68 754
252 024 302 796 251 058
Current liabilities
Interestbearing liabilities 236 615 258 272 214 789
Trade and other payables 224 607 188 584 198 130
Provisions 1 066 1 429
Taxation payable 8 926 1 035
Bank overdrafts 2 270
471 214 448 285 416 224
Total equity and liabilities 1 343 155 1 321 000 1 246 034
Shares in issue at end of period 180 910 181 301 181 250
Net asset value per share (cents) 346.6 318.2 323.2
Net asset value (excluding goodwill per share) (cents) 331.6 303.3 308.3
Tangible net asset value per share (cents) 309.1 278.4 284.6
Condensed consolidated statement of comprehensive income
Reviewed Reviewed Audited
Six months Six months Year
ended ended ended
31 August 31 August 28 February
2013 2012 2013
R'000 R'000 R'000
Revenue 687 062 656 167 1 186 428
Operating profit before depreciation and amortisation ("EBITDA") 136 293 131 978 246 814
Depreciation (74 537) (85 068) (141 507)
Operating profit before amortisation 61 756 46 910 105 307
Amortisation of intangible assets (2 954) (2 954) (5 908)
Operating profit 58 802 43 956 99 399
Profit on disposal of business 1 100
Profit before interest and taxation ("PBIT") 58 802 43 956 100 499
Net interest paid (17 431) (17 891) (35 646)
Interest paid (17 714) (19 615) (38 453)
Interest received 283 1 724 2 807
Profit before taxation ("PBT") 41 371 26 065 64 853
Taxation (8 064) (8 146) (13 206)
Profit for the period ("PAT") 33 307 17 919 51 647
Other comprehensive items for the period
Foreign currency translation reserve 2 297
Recycled portion of cash flow reserve 399 399
Effective portion raised on cash flow hedge (10) (10)
Taxation (109) (109)
Total comprehensive profit for the period 35 604 18 199 51 927
Profit for the period attributable to:
Equity holders of the Company 33 360 17 901 51 709
Outside shareholders' interests (53) 18 (62)
33 307 17 919 51 647
Total comprehensive profit for the period attributable to:
Equity holders of the Company 35 657 18 181 51 989
Outside shareholders' interests (53) 18 (62)
35 604 18 199 51 927
Reconciliation of headline earnings
Reviewed Reviewed Audited
Six months Six months Year
ended ended ended
31 August 31 August 28 February
2013 2012 2013
R'000 R'000 R'000
Profit for the period attributable to shareholders of Buildmax 33 360 17 901 51 709
Less profit on disposal of business (1 100)
Add back loss on disposal of property, plant and equipment 3 221 69 1 231
Gross 4 473 96 1 709
Taxation (1 252) (27) (478)
Headline earnings attributable to ordinary shareholders 36 581 17 970 51 840
Supplementary information
earnings per share
Reviewed Reviewed Audited
Six months Six months Year
ended ended ended
31 August 31 August 28 February
2013 2012 2013
cents cents cents
Headline earnings per share ("HEPS") (cents) 20.22 9.91 28.60
Basic earnings per share (cents) 18.44 9.87 28.53
Shares in issue ('000)
at end of the period 180 910 181 301 181 250
weighted 180 910 181 301 181 250
Condensed consolidated statement of cash flows
Reviewed Reviewed Audited
Six months Six months Year
ended ended ended
31 August 31 August 28 February
2013 2012 2013
R'000 R'000 R'000
Operating activities
Profit before taxation 41 371 26 065 64 853
Working capital movement (9 847) (47 333) (2 138)
Other non-cash flow items 91 830 92 703 154 838
Net interest paid 17 431 17 891 35 646
Cash generated from operations 140 785 89 326 253 199
Net interest paid in cash (17 431) (17 891) (35 646)
Taxation received/(paid) 259 4 212 2 791
Cash generated from operating activities 123 613 75 647 220 344
Investing activities
Purchase of property, plant and equipment
Expanding operations (69)
Maintaining operations (155 819) (334 132) (400 031)
Environmental guarantee investment (245) 29 (580)
Mine stripping asset (43) (1 580)
Proceeds on disposal of businesses 1 100
Proceeds on disposal of property, plant and equipment 18 544 22 850 94 779
Net cash utilised by investing activities (137 563) (311 322) (306 312)
Financing activities
Repurchase of issued shares (29 010)
Vendor loans repaid 1 024
Interest-bearing liabilities raised 155 472 287 541 402 170
Interest-bearing liabilities repaid (138 049) (107 023) (330 405)
Net cash flows generated from financing activities 17 423 181 542 42 755
Net increase/(decrease) in cash and cash equivalents 3 473 (54 133) (43 213)
Cash and cash equivalents at the beginning of the period 65 567 108 780 108 780
Cash and cash equivalents at the end of the period 69 040 54 647 65 567
Condensed consolidated statement of changes in equity
Other components of equity
Other components of equity
Attributable
Share Foreign Cash Share- to equity Outside
capital currency flow based Accumu- holders share- Total
and translation hedging payment lated of the holders' share-
premium reserve reserve reserve loss company interest holders'
R'000 R'000 R'000 R'000 R'000 R'000 R'000 interest
Balances as at
28 February 2012 2 023 206 (280) (1 468 863) 554 063 (7 043) 547 020
Share-based payment reserve:
IFRS2 share-based payment
reserve cost 4 700 4 700 4 700
Total comprehensive profit
for the period 280 17 901 18 181 18 18 199
Balances as at
31 August 2012 2 023 206 4 700 (1 450 962) 576 944 (7 025) 569 919
Share repurchase allocated to:
Share capital (1 934) (1 934) (1 934)
Share premium (27 076) (27 076) (27 076)
Share-based payment reserve:
IFRS2 share-based payment
reserve cost 4 115 4 115 4 115
Total comprehensive profit
for the period 33 808 33 808 (80) 33 728
Balances as at
28 February 2013 1 994 196 8 815 (1 417 154) 585 857 (7 105) 578 752
Share-based payment reserve:
IFRS2 share-based payment
reserve cost 4 366 4 366 4 366
BEE IFRS2 costs - 1 195 1 195 1 195
Total comprehensive profit
for the period 2 297 33 360 35 657 (53) 35 604
Balances as at
31 August 2013 1 994 196 2 297 14 376 (1 383 794) 627 075 (7 158) 619 917
Condensed segmental analysis
Reviewed Reviewed Audited
Six months Six months Year
ended ended ended
31 August 31 August 28 February
2013 2012 2013
R'000 R'000 R'000
EXTERNAL REVENUE
Total mining services 488 301 491 620 898 357
Civils and earthworks 121 836 78 799 162 792
Aggregates and quarries 76 925 85 748 125 279
687 062 656 167 1 186 428
INTERSEGMENT REVENUE
Mining services Diesel Power 1 680 1 076 4 252
Mining services Equipment sales and rental 7 309 12 850 22 315
Total mining services 8 989 13 926 26 567
Aggregates and quarries 12 120 4 090 10 483
21 109 18 016 37 050
EBITDA
Mining services Diesel Power 130 493 127 319 237 677
Mining services Equipment sales and rental 3 045 4 154 6 778
Total mining services 133 538 131 473 244 455
Civils and earthworks (5 221) 2 376 5 490
Aggregates and quarries 12 040 9 299 9 919
Corporate head office (4 064) (11 170) (13 050)
136 293 131 978 246 814
OPERATING PROFIT/(LOSS) BEFORE AMORTISATION
Mining services Diesel Power 61 504 50 943 110 834
Mining services Equipment sales and rental 2 695 3 113 5 346
Total mining services 64 199 54 056 116 180
Civils and earthworks (5 221) 2 376 5 485
Aggregates and quarries 6 882 1 697 (3 308)
Corporate head office (4 104) (11 219) (13 050)
61 756 46 910 105 307
Notes to the reviewed group interim financial results
for the six-month period ended 31 August 2013
This interim report should be read in conjunction with the Buildmax Group 2013 integrated report which is
available at www.buildmax.co.za.
Approval of the interim financial results
The reviewed interim financial results have been prepared in accordance with International Financial Reporting
Standards, IAS 34: Interim Financial Reporting, the SAICA Financial Reporting Guides as issued by the
Accounting Practices Committee, the JSE Listings Requirements, and the Companies Act, 71 of 2008.
The accounting policies used in the preparation of these interim results are consistent with those used in the
annual financial results for the year ended 28 February 2013, which have been prepared in accordance with
International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board
(IASB). The reviewed group interim financial results have been prepared on the historical cost basis.
This report was compiled under the supervision of Mr CS Els, Chief Financial Officer. These results were
reviewed by Grant Thornton (Jhb) Inc and the unmodified review opinion is available for inspection at the
registered office of the Company.
The interim financial results have been prepared on a going-concern basis as the directors believe that the
Company and the Group will continue to be in operation in the foreseeable future.
The interim financial results were approved by the board of directors on 7 November 2013.
Estimates and contingencies
Management makes estimates and judgements concerning the future with regards to opencast mining
contracts, remaining life of quarries, future rehabilitation costs, provisions, claims, depreciation methods
and residual values when estimating the recoverable amounts of assets.
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.
The Group has contingent liabilities in respect of legal claims and contractual guarantees arising in the
ordinary course of business. It is not anticipated that any material liabilities will arise from the contingent
liabilities other than those provided for.
DIRECTORS Registered office
Executive 515 Pretoria Road, Fairleads, Benoni
TP Bantock (CEO) (Postnet Suite 435
CS Els (CFO) Private Bag X108 Centurion, 0046)
J Mathebula
Independent non-executive directors Sponsor
CJM Wood (Chairman) QuestCo (Pty) Limited, 2nd Floor
CB Brayshaw No 1 Montecasino Blvd, Fourways, 2055
MD Lamola South Africa
MW McCulloch (PO Box 98956, Sloane Park, 2152
South Africa)
Non-executive directors Auditors
DJ Mack Grant Thornton (Jhb) Inc
BT Ngcuka
G Montgomery Transfer secretaries
Computershare Investor Services (Pty) Limited
70 Marshall Street
Company secretary Johannesburg, 2001
GH Miller (PO Box 61763, Marshalltown, 2107)
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