Wrap Text
Reviewed provisional condensed consolidated results for the year ended 31 August 2014
Consolidated Infrastructure Group Limited
(Incorporated in the Republic of South Africa)
(Registration number: 2007/004935/06)
JSE share code: CIL ISIN: ZAE000153888
(Consolidated Infrastructure or CIG or the Group)
www.ciglimited.co.za
Reviewed provisional condensed consolidated results for the year
ended 31 August 2014
Salient features
- Revenue up 29% to R2.6 billion (2013: R2.0 billion)
- Profit for year up 50% to R258 million (2013: R172 million)
- HEPS up 36% to 187.8 cents per share (2013: 137.8 cents per share)
- Order book up 36% to R3.0 billion (2013: R2.2 billion)
Consolidated Infrastructure Group delivered strong profit growth for
the year ended 31 August 2014
The Group has made substantial progress on its objective of
diversifying its geographic footprint and earnings from outside South
Africa and to diversify its portfolio of operations across different
sectors. In the current year, 56% of profits after tax were earned
from outside South Africa and the Oil and Gas Division now makes a
significant contribution to our Group results.
Business overview
CIG has a diversified portfolio of operations. These operations
provide services, infrastructure or materials across sub-Saharan
Africa. The operations are involved in power and electrical, oil and
gas and building materials and post year-end has acquired an
operation in the railway sector.
Financial overview
Revenue grew by 29% to R2,6 billion (2013: R2 billion).
Profit for the year increased by 50% to R258 million from the prior
year’s R172 million. The growth in profit was driven to a large
extent by the first time of the results of Angola Environmental
Servicos Limitada (AES).
Earnings and headline earnings per share of 188,8 cents
(2013:138,3 cents) and 187,8 cents (2013:137,8 cents) respectively
represent an increase of 36% over the prior year.
Earnings before interest, taxation, depreciation and amortisation
(EBITDA) grew by R39 million to R317 million, a 14% increase over the
prior year of R278 million. EBITDA margins remain within our accepted
range at 12% (2013: 13,7%).
The Group’s segmented analysis of profit after tax is:
2014 2013
% %
Power and Electricity 46 80
Oil and Gas 32 –
Building Materials 14 17
Corporate 8 3
The Group reported a cash balance of R948 million for the
31 August 2014 year-end, R182 million of which is collateralised to
settle an Angolan obligation. After settlement of the Angolan debt,
the debt-to-equity ratio will reduce to 27,6% from the current 35,1%
(2013: 30,6%).
An additional R130 million of notes were issued during the second
half of the year through the medium-term note programme. On a net
debt basis, the Group had a negative debt-to-equity ratio.
The Group extended the maturity of the first R270 million medium-
term note tranche. Originally set to mature in June 2015, the tranche
was divided and will now mature in equal annual tranches commencing
in June 2017, 2018 and 2019. The maturities of the R130 million of
additional notes issued coincide with the extensions agreed above.
Interest cover as measured against EBITDA remained at a satisfactory
level of 8,4 times.
The Group has maintained a consistent Moody’s credit rating of
Baa2.za.
Divisional overview
Power and Electricity
- Revenue up 29% to R2,2 billion.
- EBITDA up 5% to R225 million
- Order book up 36% to R3 billion
Consolidated Power Projects Proprietary Limited (Conco), a market
leader in the supply of substations and high-voltage electrification
work-invested in substantial additional internal capacity to meet the
anticipated rising demand in the industry and to service an expanded
geographic footprint.
During the year under review Conco was unable to maximise on its
execution capacity. Internally the business had geared up to manage a
significant increase in anticipated revenue. This increase in revenue
failed to materialise in the latter half of the financial year, as
the Department of Energy shifted the contractual closure of Round 3
renewables from July 2014 to November 2014.
The division won substantial work from South African municipalities
who continue to award projects to alleviate the estimated
R39,6 billion electrical infrastructure backlog. Conco recently secured
the largest municipal contract in its history worth R800 million, which
is to be completed within a three-year period.
In sub-Saharan Africa, excluding SA, Conco won tenders to build and
upgrade electrical substations and the order book grew in US Dollar
terms. The African market demand for electrification remains robust
and significant tenders were submitted to African utilities. The
demand from global mining houses, traditionally a strong market
segment for Conco, was still weak and projects for these companies
remain shelved or delayed.
Consolidated Power Maintenance (O&M) has established traction in the
renewable energy sector and has successfully secured multiple long-
and short-term contracts. Additionally, O&M has also won contracts
for the maintenance of other transmission sites. O&M did not
contribute to trading profit for the period but it is anticipated
that the division will contribute to the Group profitability in the
coming year.
The Protection and Automation division performed in line with
expectations and the building blocks required for its expansion have
been put in place. Substantial investment in highly skilled
engineering personnel and a rental of new engineering facilities
required to handle the anticipated increase in volumes was completed
during the year.
Building Materials
- Revenue up 29% to R399 million
- EBITDA up 23% to R76 million
Demand from the residential sector and growth in market share boosted
earnings from the Building Materials division. The division benefited
from the inclusion of the full year’s contribution from the Laezonia
quarry although the complete turnaround of the Laezonia operation will
only be completed in the next financial year.
Oil and Gas Services
- Profit attributable to joint venture of R82 million
AES is a service provider to the oil and gas rigs located off the
coast of Angola. The primary service is to collect, recycle and
dispose of waste generated in the oil drilling process. As planned,
the business experienced strong growth as a function of increased
drilling, stricter environmental laws and growth in market share.
Prospects
Power and Electricity
The business is well positioned, with a strong order book and
sufficient tender awards across its core markets, to continue to
deliver steady growth. The Group’s prospects in South Africa within
the municipalities and REFIT programme are expected to yield
above-average growth prospects. It is probable that Conco will close
R1,4 billion of Round 3 renewable work. African utilities should also
continue to offer above-average growth prospects.
A key priority of CIG remains the focus on geographic
diversification. Consequently, significant business development
initiatives are under way in Nigeria, Angola, Mozambique, Ghana and
the Middle East Gulf region. These initiatives are gaining momentum
and will hopefully lead to a positive conclusion over the next twelve
months. Conco has strategically diversified its risk base and will
continue to mitigate downturns through successfully operating across
multiple geographies.
The power and electricity sector is going through some dynamic shifts
as the continent looks to harness the abundance of gas reserves and
explores the benefits of renewable energy. The Group now has
established the expertise within the sector to design, build, operate,
maintain and own power and electrical infrastructure.
In South Africa, Eskom’s intention is to balance its capital budgets
and increased pressure on the transmission grid. The industry is at a
critical juncture as the Eskom multi-year supply contracts are
re-tendered for the next four to five years and Eskom seeks
innovative ways to overcome backlogs.
It is expected that over the medium to longer term the biggest
constraint to growth will remain the availability of suitably
qualified engineers to execute on the expected increase in the
technically complex work.
Building Materials
Despite financial headwinds to consumers, there have been no signs of
a slowdown within the Buildings Materials division and it is expected
that the division should sustain its current growth trajectory.
Oil and Gas Services
The AES business will continue to grow organically due to the
increased oil drilling in Angola and legislated environmental
requirements in the drill cutting law. The business is in the process
of building a second site at Soyo, in the North of Angola, which will
allow AES to relocate all volumes originating from the north to Soyo
and free up approximately 30% of additional capacity in Luanda. In the
short term there is a cost implication, as additional operating
expenditure and capex is incurred, but this capex spend will enable
future operating capacity.
The business has built a sound track record in providing specialised
services of waste management to oil companies in Angola and is well
positioned to be the supplier of choice given its performance history.
Railways
Effective after the year-end the Group has acquired a business
specialising in the electrification of railways. The business
successfully installed the electrical system for Gautrain.
Substantial investments will be made to increase the footprint of the
business and expand the service offerings. The medium- and long-term
growth prospects are robust.
General
While our businesses are exposed to strong growth drivers, it is
difficult to fully anticipate the effects of possible austerity
measures in South Africa and the effect of the financial pressure
Eskom finds itself under.
The impact of Ebola on our markets remains uncertain. We have
experienced delays in travel and contracts negotiations but we are
monitoring the situation as we need to ensure that our staff are not
exposed to undue health risks.
We approach the new financial year with optimism that our geographic
and sector strategies are yielding results and we have sufficient
capital to take advantage of the opportunities.
Subsequent events
On 3 July 2014 CIG announced that subject to due diligence and other
regulatory approvals, the Group signed a binding offer to acquire
100% of the shares in Tension Overhead Electrification (Pty) Ltd
trading as Tractionel Enterprise (Tractionel), a company specialising
in electrification in the Railways Sector, for a purchase
consideration which is expected to be in the range from R111 million
to R141 million. Up to R90 million of the purchase price will be
settled through existing cash resources with the balance to be
settled through an issue of shares to the vendors.
On 15 October 2014 the Competition Commission approved the merger and
the acquisition has now become unconditional in all respects save for
the final close out conditions which are merely a formality.
Final information of fair values of assets and liabilities were not
yet available at the date of this announcement.
Subsequent to year end the Group obtained the necessary approvals to
invest the cash into Angola to repay the Angolan debt.
Dividend
The dividend policy was reviewed by the board. After taking into
account prevailing circumstances and future cash requirements, all
earnings generated by the Group will be utilised to fund the
anticipated growth in the coming year. Accordingly, no dividend
has been recommended for the period.
Resignation of director
Bernard Berelowitz, the founder of Conco, has tendered his
resignation from the board with effect from 27 October 2014. The
board would like to thank Bernard for his contribution to the Group
and to his guidance in developing Conco. Bernard will still act as
a consultant to Conco going forward. Bernard had previously stepped
down as CEO of Conco in July 2011 and was replaced by the current
CEO, David van Zyl, at the time.
Change in company secretary
Shareholders are advised that following the acquisition of Probity
Business Services Proprietary Limited by Computershare Investor
Services Proprietary Limited (“Computershare”), CIS Company
Secretaries Proprietary Limited, a subsidiary of Computershare,
has been appointed as the company secretary of Consolidated
Infrastructure with effect from 18 June 2014.
Basis of preparation
The reviewed condensed consolidated financial statements are prepared
in accordance with the requirements of the JSE Listings Requirements
for provisional reports and the requirements of the Companies Act of
South Africa. The JSE Listings Requirements require provisional
reports to be prepared in accordance with the framework concepts and
the measurement and recognition requirements of International Financial
Reporting Standards (IFRS) and the SAICA Financial Reporting Guides as
issued by the Accounting Practices Committee and Financial Pronouncements
as issued by Financial Reporting Standards Council and to also, as a
minimum, contain the information required by IAS 34: Interim Financial
Reporting. The accounting policies applied in the preparation of the
condensed consolidated financial statements are in terms of IFRS and are
consistent with those applied in the previous consolidated annual
financial statements.
The Group has adopted the following new standards:
i) IFRS 10: Consolidated Financial Statements
ii) IFRS 11: Joint Arrangements
iii) IFRS 12: Disclosure of Interests in Other Entities
iv) IFRS 13: Fair Value Measurement
There was no material impact on the financial statements identified
based on management’s assessment of these standards. These reviewed
results have been prepared under the supervision of the Group
financial director,I Klitzner CA(SA).
These provisional condensed consolidated financial statements for the
year ended 31 August 2014 have been reviewed by Grant Thornton, who
expressed an unmodified review conclusion. A copy of the auditor’s
review report is available for inspection at the company’s registered
office together with the financial statements identified in the
auditor’s report. The auditor’s report does not necessarily report on
all the information contained in these financial results. Shareholders
are therefore advised that in order to obtain a full understanding of
the nature of the auditor’s engagement they should obtain a copy of the
auditor’s report together with the accompanying financial information
from the issuer’s registered office.
The directors take full responsibility for the preparation of
these financial results and confirm that the financial information
has been correctly extracted from the underlying financial
statements.
Appreciation
The directors and management of Consolidated Infrastructure wish to
thank all staff for their focused efforts and loyalty. We also thank
our customers, business partners, advisers, suppliers and our
shareholders for their ongoing support.
By order of the board
Frank Boner Raoul Gamsu
Chairman CEO
29 October 2014
Condensed consolidated statements of financial position
Reviewed Audited
Year ended Year ended
31 August 31 August
R’000 2014 2013
Assets
Non-current assets 1 255 408 867 718
Property, plant and equipment 387 517 364 368
Goodwill 462 220 462 220
Intangible assets 24 880 28 342
Deferred tax – 6 316
Investment in joint venture 372 638 –
Financial assets 8 153 6 472
Current assets 2 671 496 1 910 571
Inventories 76 311 93 156
Trade and other receivables 196 471 94 786
Amounts due from contract customers 1 446 405 1 216 896
Taxation receivable 3 325 1 402
Cash and cash equivalents 948 984 504 331
Total assets 3 926 904 2 778 289
Equity and liabilities
Equity 2 178 496 1 579 991
Issued capital 13 13
Share premium 1 310 126 982 572
Share-based payment reserve 23 794 16 336
Foreign currency translation reserve 3 575 (1 960)
Accumulated profits 839 157 581 944
Non-controlling interest 1 831 1 086
Non-current liabilities 671 209 496 658
Other financial liabilities – interest
bearing 549 121 428 774
Other financial liabilities – non-
interest bearing 71 878 –
Provisions 8 073 8 232
Instalment sale liabilities 23 761 27 552
Deferred tax 18 376 32 100
Current liabilities 1 077 199 701 640
Other financial liabilities 173 371 10 256
Trade and other payables 711 728 499 467
Amounts received in advance 66 145 22 755
Amounts due to contract customers 80 463 113 369
Instalment sale liabilities 18 392 16 985
Taxation payable 27 100 38 808
Total equity and liabilities 3 926 904 2 778 289
Number of shares in issue (000’s) 146 851 133 999
Net asset value per share (cents) 1 483 1 179
Net tangible asset value per share
(cents) 1 152 813
Condensed consolidated statements of comprehensive income
Reviewed Audited
Year ended Year ended
31 August 31 August
R’000 2014 2013
Revenue 2 635 713 2 037 402
Cost of sales (2 046 565) (1 528 347)
Gross profit 589 148 509 055
Other income 48 286 22 589
Operating expenses (319 873) (290 359)
Foreign exchange (loss)/gain (405) 37 211
Earnings before interest, taxation,
depreciation and amortisation (EBITDA) 317 156 278 496
Depreciation (51 428) (44 646)
Profit before interest and taxation 265 728 233 850
Interest received 28 233 17 631
Interest paid (66 187) (33 758)
Profit before taxation 227 774 217 723
Taxation (52 310) (46 097)
Income from joint venture 82 644 –
Profit for the year 258 108 171 626
Total profit for the period attributable to:
Equity holders of the parent 257 213 170 832
Non-controlling interest 895 794
Other comprehensive income: Recyclable in profit and loss: Exchange
rate differences on
translating foreign operations 5 385 1 394
Total comprehensive income 263 493 173 020
Total comprehensive income attributable to:
Equity holders of company 262 748 171 946
Non-controlling interest 745 1 074
Basic earnings per share (cents) 188,8 138,3
Diluted earnings per share (cents) 183,4 136,9
Reconciliation of headline earnings:
Profit attributable to ordinary
shareholders 257 213 170 832
Adjusted for:
Profit on disposal of property, plant
and equipment (1 833) (760)
Tax effect on adjustments 513 213
Headline earnings attributable to
ordinary shareholders 255 893 170 285
Weighted average number of shares in
issue (000s) 136 249 123 533
Diluted weighted average number of
shares in issue (000s) 140 223 124 815
Headline earnings per share (cents) 187,8 137,8
Diluted headline earnings per share
(cents) 182,5 136,4
Condensed consolidated statements of cash flow
Reviewed Audited
Year ended Year ended
31 August 31 August
R’000 2014 2013
Cash flows from operating activities 103 345 (182 377)
Cash flows from investing activities (313 977) (60 928)
Cash flows from financing activities 655 355 343 257
Net increase in cash and cash
equivalents 444 723 99 952
Effect on foreign currency translation
reserve movement on cash balances (70) (10)
Cash and cash equivalents at beginning
of year 504 331 404 389
Cash and cash equivalents at end of
year 948 984 504 331
Condensed consolidated statements of changes in equity
Reviewed Audited
Year ended Year ended
31 August 31 August
R’000 2014 2013
Balance at beginning of year 1 579 991 1 146 503
Issue of share capital and share issue
expenses 327 554 255 677
Share-based payment reserve 7 458 4 791
Total comprehensive income for the
year 262 748 171 946
Non-controlling interest 745 1 074
Balance at end of year 2 178 496 1 579 991
Segmental analysis
Reviewed Audited Reviewed Audited
Year ended Year ended Year ended Year ended
31 August 31 August 31 August 31 August
2014 2013 2014 2013
R’000 R’000 % of total % of total
Revenue
Building Materials 399 452 309 923 15 15
Power 2 236 261 1 727 479 85 85
Total 2 635 713 2 037 402 100 100
EBITDA
Building Materials 75 848 61 865 24 22
Power 225 395 213 765 71 77
Corporate 15 913 2 866 5 1
Total 317 156 278 496 100 100
Profit after tax
Building Materials 35 052 29 162 14 17
Power 118 321 137 858 46 80
Oil and Gas 82 644 – 32 –
Corporate 22 092 4 606 8 3
Total 258 108 171 626 100 100
Reviewed Audited
Year ended Year ended
31 August 31 August
R’000 2014 2013
Assets
Building Materials 536 33 486 636
Power 1 503 096 1 259 482
Oil and Gas 372 638 –
Corporate 2 298 842 1 814 808
Total assets including Group loan
accounts 4 710 909 3 560 926
Inter-group elimination (784 005) (782 637)
Total 3 926 904 2 778 289
Liabilities
Building Materials 415 925 385 357
Power 819 268 676 214
Oil and Gas 266 341 –
Corporate 552 430 422 400
Total liabilities including Group loan
accounts 2 053 964 1 483 971
Inter-group elimination (305 556) (285 673)
Total 1 748 408 1 198 298
Corporate information
Executive directors
RD Gamsu, IM Klitzner, B Berelowitz
Non-executive directors
K Bucknor*
Independent non-executive directors
R Horton, AD Dixon, A Darko*, J Nwokedi, F Boner (Chairman)
* Ghanaian
Company secretary
Probity Business Services Proprietary Limited
Transfer secretaries
CIS Company Secretaries Proprietary Limited
Sponsor
Java Capital
Auditors
Grant Thornton (Jhb) Inc.
Disclaimer
The Group has in good faith made reasonable effort to ensure the
accuracy and completeness of the information contained in this
document, including all information that may be regarded as
“forward-looking statements”. Forward-looking statements may be
identified by words such as “believe”, “anticipate”, “expect”,
“plan”, “estimate”, “intend”, “project”, “target”. Forward-looking
statements are not statements of fact, but statements by the
management of the Group based on its current estimates, projections,
expectations, beliefs and assumptions regarding the Group’s future
performance and no assurance can be given to this effect. The risks
and uncertainties inherent in the forward- looking statements
contained in this document include but are not limited to changes to
IFRS and the interpretations, applications and practices subject
thereto as they apply to past, present and future periods; domestic
and international business and market conditions such as exchange
rate and interest rate movements; changes in the domestic and
international regulatory and legislative environments; changes to
domestic and international operational, social, economic and
political risks; and the effects of both current and future
litigation. The Group does not undertake to update any forward-
looking statements contained in this document and does not assume
responsibility for any loss or damage and howsoever arising as a
result of the reliance by any party thereon, including, but not
limited to, loss of earnings, profits or consequential loss or damage.
Date: 29/10/2014 07:10:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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