Wrap Text
Audited Provisional Financial Results for the year ended 28 February 2014
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")
AUDITED PROVISIONAL FINANCIAL RESULTS 2014
headline earnings
increased to
R59.6 million
from R51.8 million
increase 15%
HEPS increased to
32.9 cents from 28.6 cents
increase 15%
PAT increased to
R61.3 million
from R51.7 million
increase 19%
earnings per share
increased to
33.4 cents
from 28.5 cents
increase 17%
revenue
increased to
R1.274 billion
from R1.186 billion
increase 7%
EBITDA
increased to
R269.8 million
from R246.8 million
increase 9%
PBIT
increased to
R117.7 million
from R100.5 million
increase 17%
net asset value per
share improved to
361.2 cents
from 323.2 cents
increase 12%
tangible net asset
value per share
improved to
323.01 cents
from 284.6 cents
increase 13%
net asset value
(excluding goodwill)
improved to
346.2 cents
from 308.3 cents
increase 12%
interest-bearing
debt decreased to
R367.2 million
from R398.5 million
decrease 8%
net debt*
decreased to
R271 million
from R330.6 million
decrease 18%
net debt* to
equity improved
from 56% to 41%
decrease 27 %
net capital
expenditure on
equipment decreased
from R305.3 million to
R178.3 million
decrease 41%
cash flow from
operations
increased to
R274.7 million
from R253.2 million
increase 8%
return on average
equity (RoE)
improved
from 9.2% to 10%
increase 9%
*Interest-bearing
commentary
Illustrated by all financial ratios and
overall operational performance, the
group continues on a positive trend and
has made significant strides towards
meeting its strategic objectives. Our
strategic focus areas remain relevant
and outward looking, and our objective
is to continue to grow organically and by
acquisition.
We are particularly pleased with our
recent successes in the Republic of
Congo and Botswana where we have
simultaneously achieved geographic
and commodity diversification. The
Congo project which has low risk, asset
light features, has been placed in 'care
and maintenance' by the client.
We continue to actively pursue
opportunities in the Platinum and Gold
industry, with the objective of winning
a substantial contract with acceptable
margins taking into account the industry
specific risks.
Our civils business has not performed in
line with expectations largely impacted
by the depressed construction industry
in which margins remain subdued and
under pressure.
The performance of our quarry business
has improved significantly despite
difficult trading conditions, characterised
by pressure on pricing and erratic
demand.
safety and quality management
The group boasts a proud track record
of more than 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 18001:
2007 health and safety management
standard, as well as the ISO 9001: 2008
quality management standard.
people
The current quality of the Buildmax
team 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 R32,9 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
design, 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, Diesel Power Congo and
more recently Diesel Power Botswana.
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.
aggregates and quarries
Buildmax Aggregates and Quarries
("BAQ"), through its ownership of the
Crushco and Alfa/Verlesha quarries,
and Witdeep Sand and Stone,
delivers aggregates, provides bulk
transportation and offers retail services
of selected building materials. This
division is also making significant
strides into the contract crushing and
screening industry by investing in static
and mobile crushing and screening
equipment.
plant and equipment
The improved financial position,
coupled with the continued 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, is that
in excess of 98% of plant has operated
for less than 20,000 hours.
Furthermore 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.
When reviewing the current economic
useful lives and residual lives of plant
management considered the following:
- 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.
financial performance and working capital
The groups revenue showed growth
of 7% to R1.274 billion delivering an
improved EBITDA of R269.8 million up
by 9% compared to the previous year.
This improved performance translated
to a 17% increase in earnings per share
("EPS") and a 15% increase in headline
earnings per share ("HEPS"). As a result
of the increase in attributable earnings,
the group's net asset value per share
improved by 12% to 361.2 cents.
Cash flow from operations improved by
8% to R274.7 million with an improvement
in net working capital of R24.6 million. Net
interest bearing debt to equity improved
by 27% and net interest bearing debt
reduced by 18% and the group continue
to comply with all banking covenants.
A decision to outsource the management
of the group's light delivery vehicles to
Imperial Fleet Management bolstered
the group's working capital position by
R12.3 million.
Due to the conservative approach to asset
funding, the group reflects a net current
liability position. Our assets are funded
over three years with no residual value and
have useful lives of between four and ten
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 activities in an
environmentally responsible and
sustainable manner within its scope of
control.
transformation
It is our vision to make the Buildmax
group a home for all South Africans,
where there are no divisions or
boundaries and where no-one feels
excluded.
Diesel Power South Africa maintains a
Level 4 rating and continuous to achieve
an effective shareholding in excess of
25% in terms of the B-BBEE Codes of
Good Practice and the Mining Charter.
governance
The Buildmax group complies with the
Companies Act, 71 of 2008 and the Listings
Requirements of the JSE Limited.
outlook and prospects
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
customer focused strategic alliances.
In order to unlock our strategy, we are
highly reliant on our ability to maintain our
volumes in the coal sector which is under
pressure largely due to low commodity
prices exacerbated by weak global
demand. We are however, confident that
this will change in the next 12 to 18 months
and we will be well positioned to take
advantage of outsourcing opportunities.
We believe that the propensity to outsource
will increase as a result of the following
factors:
- shorter term project horizons
- mining houses wanting to reduce risk
- flexibility in supply of equipment
- onerous regulatory requirements
- labour relations.
Diesel Power, with their robust plant
replacement strategy, systems, labour
relations and equipment mix, are well
positioned to take advantage of these
opportunities as and when they occur.
Our experience is that demand in the
construction and civils sector of the
economy is slowly gaining momentum
but margins will remain under pressure.
To this extent we remain optimistic that
these operations will steadily improve in
the forthcoming financial year buoyed
by acquisition and improved pricing
prospects in our quarries business.
One of the most significant risks is
labour uncertainty in the industry and
the 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 final 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 year 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
19 May 2014
condensed consolidated provisional statement of financial position
28 February 2014 28 February 2013
R'000 R'000
ASSETS
Non-current assets
Property, plant and equipment 901 169 872 592
Goodwill and other intangible assets(1) 85 450 86 688
Environmental guarantee investment 1 580 1 002
Other Non-current assets 2 222 1 580
Deferred taxation 24 978 20 607
1 015 399 982 469
Current assets
Inventories 33 220 26 074
Trade and other receivables 156 914 168 177
Taxation receivable 1 314 1 477
Bank and cash balances 96 220 67 837
287 668 263 565
Total assets 1 303 067 1 246 034
EQUITY AND LIABILITIES
Share capital and premium 1 994 196 1 994 196
Share based payment reserve 13 315 8 815
Accumulated loss (1 354 043) (1 417 154)
Attributable to equity holders of the company 653 468 585 857
Outside shareholders' interests (6 245) (7 105)
Total shareholders' interests 647 223 578 752
Non-current liabilities
Interest-bearing liabilities 83 519 181 418
Capitalised Finance Leases 56 138 -
Provisions 1 770 886
Deferred taxation 77 931 68 754
219 358 251 058
Current liabilities
Interest-bearing liabilities 197 883 214 789
Capitalised Finance Leases 27 502 -
Trade and other payables 192 025 198 130
Taxation payable 16 884 1 035
Bank overdrafts 2 192 2 270
436 486 416 224
Total equity and liabilities 1 303 067 1 246 034
Shares in issue 180 910 181 250
Net asset value per share (cents) 361.20 323.20
Net asset value (excluding goodwill) per share (cents) 346.20 308.30
Tangible net asset value per share (cents) 323.01 284.61
(1) Intangible assets represents the group's mining rights owned by the Aggregates and Quarries Business Unit
condensed consolidated provisional statement of comprehensive income
Total Total
operations operations
year ended year ended
28 February 2014 28 February 2013
R'000 R'000
Revenue 1 274 437 1 186 428
Operating profit before depreciation & amortisation ("EBITDA") 269 806 246 814
Depreciation (150 873) (141 507)
Operating profit before amortisation 118 933 105 307
Amortisation of intangible assets (1 239) (5 908)
Operating profit 117 694 99 399
Profit on disposal of businesses - 1 100
Profit before interest and taxation ("PBIT") 117 694 100 499
Net interest paid (36 467) (35 646)
Profit before taxation ("PBT") 81 227 64 853
Taxation (19 888) (13 206)
Profit for the year 61 339 51 647
Other comprehensive income for the year (net of tax)
Items that will subsequently be reclassified to profit or loss:
Foreign currency translation reserve 2 632 -
Recycled portion of cash flow reserve - 290
Effective portion raised on cash flow hedge - (10)
Total comprehensive income for the year 63 971 51 927
Profit for the year attributable to:
Equity holders of the company 60 479 51 709
Outside shareholders' interests 860 (62)
61 339 51 647
Total comprehensive income for the year
attributable to:
Equity holders of the company 63 111 51 989
Outside shareholders' interests 860 (62)
63 971 51 927
Total operations Total operations
year ended year ended
28 February 2014 28 February 2013
Headline earnings per share (cents) 32.95 28.66
Earnings per share (cents) 33.43 28.53
reconciliation of headline earnings
Total operations Total operations
year ended year ended
28 February 2014 28 February 2013
R'000 R'000
Profit for the year attributable to equity holders of the company 60 479 51 709
Adjusted for:
Profit on disposal of subsidiary - (1 100)
(Profit) / Loss on disposal of property, plant and equipment (876) 1 231
- Gross (1 216) 1 709
- Taxation 340 (478)
Headline profit attributable to equity holders of the company 59 603 51 840
supplementary information
Total operations Total operations
year ended year ended
28 February 2014 28 February 2013
Headline earnings per share (cents) 32.95 28.66
Earnings per share (cents) 33.43 28.53
Shares in issue ('000) 180 910 181 250
Weighted average shares in issue ('000) 180 910 181 250
Note: There are no dilutionary instruments in issue
condensed consolidated provisional statement of cash flows
Total operations Total operations
year ended year ended
28 February 2014 28 February 2013
R'000 R'000
Operating activities
Profit before taxation ("PBT") 81 227 64 853
Working capital movement (1 850) (2 138)
Other non-cash flow items 158 845 154 838
Net interest paid 36 467 35 646
Cash generated from operations 274 689 253 199
Net interest paid in cash (36 467) (35 646)
Taxation received 927 2 791
Net cash inflow from operating activities 239 149 220 344
Investing activities
Purchase of property, plant and equipment
- Maintaining operations (263 628) (400 031)
Environmental guarantee investment (578) (580)
Mining stripping asset (642) (1 580)
Proceeds on disposal of subsidiary - 1 100
Proceeds on disposal of property plant and equipment 85 326 94 779
Net cash (outflow) / inflow from investing activities (179 522) (306 312)
Financing activities
Re-purchase of issued shares - (29 010)
Interest-bearing liabilities raised 256 083 402 170
Interest-bearing liabilities repaid (287 249) (330 405)
Net cash inflow from financing activities (31 166) 42 755
Net increase / (decrease) in cash and cash equivalents 28 461 (43 213)
Cash and cash equivalents at the beginning of the year 65 567 108 780
Cash and cash equivalents at the end of the year 94 028 65 567
condensed consolidated provisional statement of changes in equity
Foreign Cash Total
Share Share currency flow attribut- Outside
capital based BEE trans- hedg- able to share-
and payment IFRS 2 lation ing Accumulat- equity holders'
premium reserve cost reserve reserve ed loss holders interest Total
R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000 R'000
Balances
as at
29 February
2012 2 023 206 - - - (280) (1 468 863) 554 063 (7 043) 547 020
Total
comprehen-
sive income
for the year - - - - 280 51 709 51 989 (62) 51 927
Share repurchase allocated to:
- Share
capital (1 934) - - - - - (1 934) - (1 934)
- Share
premium (27 076) - - - - - (27 076) - (27 076)
Share based
payment
reserve - 8 815 - - - - 8 815 - 8 815
Balances
as at
28 February
2013 1 994 196 8 815 - - - (1 417 154) 585 857 (7 105) 578 752
Total com-
prehensive
income for
the year - - - 2 632 - 60 479 63 111 860 63 971
Share based
payment
reserve - 3 305 1 195 - - - 4 500 - 4 500
Balances
as at
28 February
2014 1 994 196 12 120 1 195 2 632 - (1 356 675) 653 468 (6 245) 647 223
condensed segmental analysis
Reviewed Reviewed Audited Reviewed Reviewed Audited
6 months 6 months year 6 months 6 months year
ended ended ended ended ended ended
31 August 28 February 28 February 31 August 28 February 28 February
2013 2014 2014 2012 2013 2013
R'000 R'000 R'000 R'000 R'000 R'000
EXTERNAL REVENUE
Total Operations 687 062 587 375 1 274 437 656 167 530 261 1 186 428
Mining services
- Diesel Power 488 301 452 771 941 072 491 620 406 737 898 357
Mining services
- Equipment
sales and rental - - - - - -
Total Mining
Services 488 301 452 771 941 072 491 620 406 737 898 357
Civils & Earth-
works 121 836 69 054 190 890 78 799 83 993 162 792
Aggregates &
Quarries 76 925 65 550 142 475 85 748 39 531 125 279
687 062 587 375 1 274 437 656 167 530 261 1 186 428
INTER-SEGMENT REVENUE
Total operations 21 109 16 813 37 922 18 016 19 034 37 050
Mining services
- Diesel Power 1 680 2 680 4 360 1 076 3 176 4 252
Mining services
- Equipment
sales and rental 7 309 6 236 13 545 12 850 9 465 22 315
Total Mining
Services 8 989 8 916 17 905 13 926 12 641 26 567
Aggregates &
Quarries 12 120 7 897 20 017 4 090 6 393 10 483
21 109 16 813 37 922 18 016 19 034 37 050
Reviewed Reviewed Audited Reviewed Reviewed Audited
6 months 6 months year 6 months 6 months year
ended ended ended ended ended ended
31 August 28 February 28 February 31 August 28 February 28 February
2013 2014 2014 2012 2013 2013
R'000 R'000 R'000 R'000 R'000 R'000
EBITDA
Total
Operations 136 293 133 513 269 806 131 978 114 836 246 814
Mining services
- Diesel Power 130 493 129 696 260 189 127 319 110 358 237 677
Mining services
- Equipment
sales and rental 3 045 1 614 4 659 4 154 2 624 6 778
Total Mining
Services 133 538 131 310 264 848 131 473 112 982 244 455
Civils & Earth-
works (5 221) (1 392) (6 613) 2 376 3 114 5 490
Aggregates &
Quarries 12 040 2 243 14 283 9 299 620 9 919
Corporate Head
Office (4 064) 1 352 (2 712) (11 170) (1 880) (13 050)
136 293 133 513 269 806 131 978 114 836 246 814
OPERATING PROFIT
BEFORE AMORTISATION
Total
Operations 61 756 57 177 118 933 49 168 56 139 105 307
Mining services
- Diesel Power 61 504 59 252 120 756 50 943 59 891 110 834
Mining services
- Equipment
sales and rental 2 695 1 320 4 015 3 113 2 233 5 346
Total Mining
Services 64 199 60 572 124 771 54 056 62 124 116 180
Civils & Earth-
works (5 221) (1 392) (6 613) 2 376 3 109 5 485
Aggregates &
Quarries 6 882 (3 316) 3 566 3 955 (7 263) (3 308)
Corporate head
Office (4 104) 1 313 (2 791) (11 219) (1 831) (13 050)
61 756 57 177 118 933 49 168 56 139 105 307
Note: Numbers and percentages have been rounded to zero decimal places
notes to the audited provisional financial results for the period ended 28 february 2014
approval of the provisional financial results
These audited condensed consolidated
provisional annual financial results
have been prepared in conformity
with International Financial Reporting
Standards ('IFRS') as issued by the
International Accounting Standards
Board ('IASB'), 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.
The accounting policies used in the
preparation of these provisional year-
end 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
IFRS as issued by the IASB.
Accounting standards including
amendments and interpretations relevant
to the group, but not yet effective at
28 February 2014, have not been adopted.
Where applicable these standards and
amendments will be adopted on each
respective effective date.
This provisional report was compiled
under the supervision of Mr CS Els,
Chief Financial Officer, CA (SA). These
provisional results were reviewed by
Grant Thornton (Jhb) Inc and were
extracted from audited financial
information, but are not audited
themselves.
The audited financial statements,
together with Grant Thornton (Jhb)
Inc's unmodified review opinion and
unmodified audit opinion, are available
for inspection at the registered office of
Buildmax.
These condensed consolidated
provisional 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 board of directors take full responsibility
for the preparation of this provisional report
and that the financial information has been
correctly extracted from the underlying
annual financial statements.
These condensed consolidated
provisional financial results were
approved by the board of directors on
19 May 2014.
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.
Venmyn Deloitte were appointed to
prepare a technical statement in the
form of a short form competent persons
report in compliance with the SAMREC
Code, SAMVAL Code and JSE Listings
Requirements section 12, on the sand
and aggregate mineral rights owned
by the group. These technical reports
included the Crushco, Mystic Blue
and Verlesha projects. These reports
indicated that the remaining life of mine
of these various projects to range from
20 to 48 years.
As a result the intangible assets are
now amortised over periods ranging
from 20 to 48 years compared to 15
to 22 years used during the previous
financial year. This change in estimate
was implemented prospectively from
1 March 2013 and resulted in a reduction
of R4.7 million in annual amortisation.
The group has contingent liabilities in
respect of legal claims and contractual
guarantees arising in the ordinary
course of business. It is anticipated that
no material liabilities will arise from the
contingent liabilities other than those
provided for. There are no material
changes to the contingent liabilities
compared to the previous financial year.
directors
executive
TP Bantock (CEO)
CS Els (CFO)
J Mathebula
independent non-executive directors
CJM Wood (Chairman)
CB Brayshaw
MD Lamola
MW McCulloch
non-executive directors
DJ Mack
BT Ngcuka
G Montgomery
company secretary
GH 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
Grant Thornton (Jhb) Inc
42 Wierda Road West,
Wierda Valley, 2196
transfer secretaries
Computershare Investor Services (Pty) Limited
70 Marshall Street
Johannesburg, 2001
(PO Box 61763, Marshalltown, 2107
www.buildmax.co.za
Date: 19/05/2014 12:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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