Wrap Text
Unaudited Interim Results for the six months ended 31 August 2014
Raubex Group Limited
(Incorporated in the Republic of South Africa)
Registration number 2006/023666/06
Share Code: RBX
ISIN Code: ZAE000093183
("Raubex" or the "Group")
Unaudited interim results
for the six months ended 31 August 2014
Highlights
Revenues up 15,7% to R3,73 billion (H1 2014: R3,22 billion)
Operating profit up 9,6% to R300,8 million (H1 2014: R274,5 million)
HEPS up 5,5% to 101,6 cents per share (H1 2014: 96,3 cents per share)
Cash flow from operations up 50,3% to R537,4 million (H1 2014: R357,6 million)
Capex spend of R273,8 million (H1 2014: R241,9 million)
Order book of R7,5 billion (H1 2014: R6,2 billion)
Interim dividend of 35 cents per share declared
Commentary
Rudolf Fourie, CEO of Raubex Group, said: "We have delivered good results in a tough
environment. The recent earnings enhancing acquisitions have been successfully bedded
down and we are looking forward to their positive contributions in the second half of
the year.
"Internationally, the higher margin work secured in Zambia during the period will fill
capacity in our construction division and allow us to be more selective and secure
better margins in the work that we tender for in South Africa.
"The Group's order book is at an all-time high and our balance sheet remains very healthy.
Looking ahead, we expect a continued improvement in our performance whilst we remain on
the lookout for acquisitions that fit our integrated model."
Financial overview
Revenue increased 15,7% to R3,73 billion and operating profit increased 9,6% to
R300,8 million from the corresponding prior period. A strong performance from the
Group's Materials Division and good progress made by the Infrastructure Division
has off-set the impact of margin pressures that the road construction industry
continues to experience in South Africa.
Profit before tax increased 9,9% to R298,5 million.
The effective tax rate decreased to 29,1% (H1 2014: 29,6%).
Earnings per share increased 5,9% to 103,5 cents with headline earnings per share
increasing 5,5% to 101,6 cents.
Group operating margin decreased to 8,1% (H1 2014: 8,5%).
Cash generated from operations increased 50,3% to R537,4 million (H1 2014: R357,6 million)
before finance charges and taxation and was supported by advance payments received of
R77,0 million. These advances exclude those due on the Zambia Link 8000 contracts which
were outstanding at balance sheet date.
Trade and other receivables increased by 17,7% to R1,22 billion (H1 2014: R1,03 billion)
on increased revenue and the acquisitions of OMV and Shisalanga Construction.
Construction contracts in progress increased by 18,2% to R378,7 million
(H1 2014: R320,4 million) mainly due to contractual terms in the infrastructure
division where billing on certain projects is triggered by the achievement of
milestones.
Inventories increased 18,1% to R444,8 million (H1 2014: R376,5 million) due to higher
strategic bitumen and aggregate stocks, including the stock related to the OMV crushers
acquisition. Non-current inventories of R93,0 million also relate to the OMV crushers
acquisition and include mine dumps in Stilfontein and a synthetic gypsum dump in
Potchefstroom, which are classified as inventory under IFRS.
Capital expenditure on property, plant and equipment increased to R273,8 million
(H1 2014: R241,9 million) which includes work in progress relating to purpose built
processing plant for the Tschudi copper mine project in Namibia.
The Group's net cash inflow for the period was R18,3 million. Total cash and cash
equivalents at the end of the period increased to R889,7 million.
Operational review
Roadmac
Roadmac is a specialist in the manufacturing and laying of asphalt, chip and spray,
surface dressing, enrichments and slurry seals.
The division delivered a stable performance for the period and the volume of tender
work has been sufficient to maintain its order book. Conditions in the light rehabilitation
and maintenance market have been competitive but stable. Conditions in the asphalt supply
market have been more challenging and aggressive pricing has been experienced.
Revenue for the division increased 7,7% to R1,31 billion (H1 2014: R1,22 billion) and
operating profit increased 1,2% to R96,4 million (H1 2014: R95,2 million).
The divisional operating profit margin decreased to 7,3% (H1 2014: 7,8%).
The division incurred capital expenditure of R23,2 million during the period
(H1 2014: R40,3 million).
The division has an order book of R1,79 billion (H1 2014: R2,50 billion).
Raubex Construction
Raubex Construction is the road and civil infrastructure construction division focused
on the key areas of new road construction and heavy road rehabilitation.
The division's performance reflects the competitiveness of the current market in the
South African road construction industry as the low margin contracts in the order book
continue to be realised. The volume of work out to tender on remains healthy and the
division has secured a solid order book for the period ahead. Progress made on the
Zambia Link 8000 contracts was limited to site establishment activities during
the period.
Revenue for the division was flat at R774,9 million (H1 2014: R772,4 million),
while operating profit decreased 46,1% to R20,4 million (H1 2014: R37,8 million).
The divisional operating profit margin decreased to 2,6% (H1 2014: 4,9%).
The division incurred capital expenditure of R19,0 million during the period
(H1 2014: R32,9 million).
The division has an order book of R3,03 billion (H1 2014: R857 million) with
R1,57 billion relating to contracts in Zambia and Namibia.
Raumix
Raumix is the materials division of the Group with its core focus spread over three
areas including contract crushing, production of aggregates for the commercial market
and materials handling for the mining industry.
The division delivered a strong performance during the period supported by commercial
quarry operations where good demand is being experienced from the residential and
commercial building markets as well as road infrastructure works. The acquisition of
OMV crushers made a positive contribution to earnings.
Conditions were favourable for the mining and material handling operations where
production volumes increased to meet client requirements. Margins remained under
pressure in the contract crushing market and these operations have continued to
feel the effect of the competitive conditions in the local construction market.
Revenue for the division increased 16,7% to R968,2 million (H1 2014: R829,7 million)
and operating profit increased by 26,5% to R162,5 million (H1 2014: R128,5 million).
The divisional operating profit margin increased to 16,8% (H1 2014: 15,5%).
The division incurred capital expenditure of R204,8 million during the period
(H1 2014: R150,5 million) which includes work in progress relating to the processing
plant for the Tschudi copper mine in Namibia.
The division has an order book of R1,58 billion (H1 2014: R1,82 billion).
Raubex Infrastructure
Raubex Infrastructure specialises in disciplines outside of the road construction
sector, including energy (with a specific focus on renewable energy), rail,
telecommunications, pipeline construction and housing infrastructure projects.
The division has continued to make progress in building its reputation in the market
and is supported by a growing order book of work mainly focused on civil construction
works related to Eskom's Renewable Energy Independent Power Producer Procurement
Programme ("REIPPPP") and mine infrastructure development, including mine housing
solutions.
Revenue for the division increased 53,4% to R484,7 million (H1 2014: R316,1 million)
and operating profit increased 43,8% to R27,5 million (H1 2014: R19,2 million).
The divisional operating profit margin was 5,7% (H1 2014: 6,1%).
The division incurred capital expenditure of R24,6 million (H1 2014: R18,2 million)
during the period.
The division has an order book of R1,02 billion (H1 2014: R882 million).
Tosas
Tosas is a manufacturer and distributor of value added bituminous products used primarily
for road construction activities.
The division has made progress during the period with lost volume being re-captured and
short-term synergies realised through the efficient supply of bitumen to internal contract
sites. Conditions in the modified bitumen industry have been competitive and the lower
volume winter months were loss making. Initiatives are in progress to "right size" the
business which is forecast to be profitable for the financial year.
Tosas contributed external revenues of R183,4 million (H1 2014: R82,8 million) and an
operating loss of R6,1 million (H1 2014: R6,2 million). Total revenue including
inter-group supply amounted to R298,1 million (H1 2014: R118,4 million).
Tosas incurred capital expenditure of R2,2 million during the period.
Tosas has an order book of R127,6 million (H1 2014: R98,4 million).
International
The Group's international operations ("Africa") reported stable results for the period
supported by the Namibian operations where work on the upgrading of the road from
Rosh Pinah to Oranjemund is under way as well as various road maintenance and material
handling contracts across the country.
The two Zambia Link 8000 contracts are in progress with site establishment now completed
and bush-clearing under way on the Safwa to Chinsali road. The redesign and realignment
is being finalised on the Mpika-Nabwalya-Mfuwe road and major construction activities
are forecast to commence after the rainy season towards the end of March 2015.
International revenue increased 19,7% to R299,7 million (H1 2014: R250,4 million) and
operating profit decreased by 1,6% to R48,5 million (H1 2014: R49,3 million) due to the
Rosh Pinah to Oranjemund contract in Namibia being at lower margin.
Operating profit margins decreased to 16,2% (H1 2014: 19,7%).
Prospects
Conditions in the South African road construction industry are anticipated to be stable
but challenging in the period ahead with competitive pressure expected to continue.
Improvement in the sector remains dependent on the roll out and execution of the
government infrastructure development plan which will absorb excess capacity in
the industry.
The progress made by SANRAL in expanding its strategic network of roads previously under
provincial administration is encouraging and is expected to support a healthy volume of
maintenance work in future.
The award of the two Zambia Link 8000 contracts has ensured a mix of better margin work
in the current order book and will also see the Road Construction division operating near
capacity which will allow for more strategic tendering on opportunities in the South African
market where the volume of work is expected to remain healthy albeit at low margin.
In the infrastructure division, progress continues to be made to secure work related to
Eskom's REIPPPP and also in the fields of mine housing infrastructure and civil works.
The acquisition of Empa Structures will strengthen the skills required for concrete
works and structures and will further enhance the vertical integration of the Group.
The favourable conditions experienced by the Materials Division in the commercial
quarry and the material handling operations are expected to continue in the period
ahead. The Tschudi Copper Mine project will strengthen the Group's presence in
Namibia where good progress has been made in building the processing plant which
is due to be commissioned before year-end.
The bedding down of the OMV crushers and Shisalanga Construction acquisitions into
the Group structure has gone well. These businesses will contribute to the earnings
of the materials and asphalt operations. Management will continue to explore acquisition
opportunities that support the Group's vertically integrated model.
The Group has grown its order book to R7,5 billion (H1 2014: R6,2 billion) with 30% of
the order book attributable to contracts in Africa.
The Group has maintained a healthy balance sheet and strong cash position during the
period and will continue to manage this cautiously in the period ahead.
Dividend declaration
The directors have declared a gross interim cash dividend from income reserves of
35 cents per share on 10 November 2014 for the six month period ended 31 August 2014.
The salient dates for the payment of the dividend are as follows:
Last day to trade cum dividend Friday, 28 November 2014
Commence trading ex dividend Monday, 1 December 2014
Record date Friday, 5 December 2014
Payment date Monday, 8 December 2014
No share certificates may be dematerialised or rematerialised between
Monday, 1 December 2014 and Friday, 5 December 2014, both dates inclusive.
In terms of Dividends Tax ("DT"), the following additional information is disclosed:
- The local DT rate is 15%.
- The company has no STC credits to utilise as part of this declaration.
- The number of ordinary shares in issue at the date of this declaration
is 187 330 165.
- The dividend to utilise for determining the DT due is 35 cents per share.
- The DT amounts to 5,25 cents per share.
- The net local dividend amount is 29,75 cents per share for shareholders
liable to pay the DT.
- Raubex Group Limited's income tax reference number is 9370/905/151.
In terms of the DT legislation, the DT amount due will be withheld and paid over
to the South African Revenue Service by a nominee company, stockbroker or Central
Securities Depository Participant (collectively "Regulated Intermediary") on behalf
of shareholders. All shareholders should declare their status to their Regulated
Intermediary, as they may qualify for a reduced DT rate or exemption.
Directors:
JE Raubenheimer#,
RJ Fourie,
JF Gibson,
F Kenney#,
LA Maxwell*,
BH Kent*,
NF Msiza*
# Non-executive
* Independent non-executive
Company secretary:
Mrs HE Ernst
Registered office:
Building No 1,
The Highgrove Office Park,
50 Tegel Avenue,
Centurion,
South Africa
Transfer secretaries:
Computershare Investor Services (Pty) Ltd,
70 Marshall Street,
Johannesburg,
2001,
South Africa
Auditors:
PricewaterhouseCoopers Inc.
Sponsor:
Investec Bank Limited
Group income statement
Unaudited Unaudited Audited
6 months 6 months 12 months
31 August 31 August 28 February
2014 2013 2014
R'000 R'000 R'000
Revenue 3 725 793 3 221 366 6 325 012
Cost of sales (3 237 898) (2 792 483) (5 463 929)
Gross profit 487 895 428 883 861 083
Other income 4 228 6 119 11 302
Other gains/(losses) - net 5 157 8 442 16 021
Administrative expenses (196 514) (168 919) (348 531)
Operating profit 300 766 274 525 539 875
Finance income 22 388 16 754 38 749
Finance costs (24 667) (19 643) (44 162)
Profit before income tax 298 487 271 636 534 462
Income tax expense (86 890) (80 339) (154 786)
Profit for the period 211 597 191 297 379 676
Profit for the period attributable to:
Owners of the parent 193 938 181 582 355 573
Non-controlling interest 17 659 9 715 24 103
Basic earnings per share (cents) 103,5 97,7 191,3
Diluted earnings per share (cents) 102,0 96,2 187,9
Group statement of comprehensive income
Unaudited Unaudited Audited
6 months 6 months 12 months
31 August 31 August 28 February
2014 2013 2014
R'000 R'000 R'000
Profit for the period 211 597 191 297 379 676
Other comprehensive income
for the period, net of tax
Currency translation differences 327 4 804 4 688
Actuarial gain on post-
employment benefit obligations - 1 238 2 043
Total comprehensive income
for the period 211 924 197 339 386 407
Comprehensive income for
the period attributable to:
Owners of the parent 194 265 187 624 362 304
Non-controlling interest 17 659 9 715 24 103
Total comprehensive income
for the period 211 924 197 339 386 407
Calculation of diluted earnings per share
Unaudited Unaudited Audited
6 months 6 months 12 months
31 August 31 August 28 February
2014 2013 2014
R'000 R'000 R'000
Profit attributable to owners
of the parent entity 193 938 181 582 355 573
Weighted average number of
ordinary shares in issue ('000) 187 330 185 900 185 900
Adjustments for:
Shares deemed issued for
no consideration (share
options) ('000) 2 834 2 809 3 360
Weighted average number of
ordinary shares for diluted
earnings per share ('000) 190 164 188 709 189 260
Diluted earnings per share (cents) 102,0 96,2 187,9
Calculation of headline earnings per share
Unaudited Unaudited Audited
6 months 6 months 12 months
31 August 31 August 28 February
2014 2013 2014
R'000 R'000 R'000
Profit attributable to owners
of the parent entity 193 938 181 582 355 573
Adjustments for:
Profit on sale of property,
plant and equipment (5 020) (3 166) (10 244)
Excess from fair value of assets
acquired over purchase price - (368) (368)
Total tax effects of adjustments 1 406 886 2 868
Basic headline earnings 190 324 178 934 347 829
Weighted average number of
shares ('000) 187 330 185 900 185 900
Headline earnings per
share (cents) 101,6 96,3 187,1
Diluted headline earnings
per share (cents) 100,1 94,8 183,8
Group statement of financial position
Unaudited Unaudited Audited
6 months 6 months 12 months
31 August 31 August 28 February
2014 2013 2014
R'000 R'000 R'000
ASSETS
Non-current assets
Property, plant and equipment 2 012 857 1 755 560 1 841 611
Intangible assets 784 524 763 811 763 671
Deferred income tax assets 39 663 35 837 37 509
Non-current inventories 93 016 - -
Total non-current assets 2 930 060 2 555 208 2 642 791
Current assets
Inventories 444 760 376 484 420 240
Construction contracts in
progress and retentions 378 714 320 354 322 590
Trade and other receivables 1 216 064 1 032 867 1 068 410
Current income tax receivable 33 174 29 408 28 671
Cash and cash equivalents 889 719 786 741 871 260
Total current assets 2 962 431 2 545 854 2 711 171
Total assets 5 892 491 5 101 062 5 353 962
EQUITY
Share capital 1 873 1 859 1 859
Share premium 2 179 613 2 203 380 2 179 613
Other reserves (1 154 601) (1 118 153) (1 104 240)
Retained earnings 2 253 807 1 966 400 2 109 193
Equity attributable to owners
of the parent 3 280 692 3 053 486 3 186 425
Non-controlling interest 120 167 40 224 54 612
Total equity 3 400 859 3 093 710 3 241 037
LIABILITIES
Non-current liabilities
Borrowings 453 814 410 465 429 961
Provisions for liabilities
and charges 37 556 31 689 34 675
Deferred income tax liabilities 308 862 263 542 266 464
Other financial liabilities 67 333 - -
Total non-current liabilities 867 565 705 696 731 100
Current liabilities
Trade and other payables 1 320 516 1 020 580 1 075 529
Borrowings 285 150 255 657 287 600
Current income tax liabilities 18 401 25 419 18 696
Total current liabilities 1 624 067 1 301 656 1 381 825
Total liabilities 2 491 632 2 007 352 2 112 925
Total equity and liabilities 5 892 491 5 101 062 5 353 962
Group statement of cash flows
Unaudited Unaudited Audited
6 months 6 months 12 months
31 August 31 August 28 February
2014 2013 2014
R'000 R'000 R'000
Cash flows from operating
activities
Cash generated from operations 537 384 357 590 751 420
Finance income 22 388 16 754 38 749
Finance costs (24 667) (19 643) (44 162)
Income tax paid (84 743) (55 445) (136 438)
Net cash generated from
operating activities 450 362 299 256 609 569
Cash flows from investing
activities
Purchases of property,
plant and equipment (273 748) (241 910) (483 299)
Proceeds from sale of property,
plant and equipment 17 641 33 499 52 839
Acquisition of subsidiaries (94 926) (120 925) (115 040)
Net cash used in investing
activities (351 033) (329 336) (545 500)
Cash flows from financing
activities
Proceeds from borrowings 191 333 242 918 504 253
Repayment of borrowings (203 153) (194 423) (404 319)
Proceeds from shares issued 14 14 14
Dividends paid to owners
of the parent (65 566) (65 065) (120 835)
Dividends paid to
non-controlling interests (3 705) (2 308) (2 308)
Acquisition of interest in
a subsidiary - - (8 185)
Net cash used in
financing activities (81 077) (18 864) (31 380)
Net increase/(decrease) in
cash and cash equivalents 18 252 (48 944) 32 689
Cash and cash equivalents
at the beginning of the year 871 260 835 685 835 685
Effects of exchange rates on
cash and cash equivalents 207 - 2 886
Cash and cash equivalents at
the end of the period 889 719 786 741 871 260
Group statement of changes in equity
Share Share Other Retained
capital premium reserves earnings
R'000 R'000 R'000 R'000
Balance at 1 March 2013 1 845 2 179 613 (1 112 515) 1 850 616
Shares issued in terms of
equity-settled share
option scheme 14 23 767 - -
Share option reserve - - (10 442) -
Acquisition of
non-controlling interest - - - (1 971)
Total comprehensive income
for the period - - 4 804 182 820
Dividends paid - - - (65 065)
Balance at 31 August 2013 1 859 2 203 380 (1 118 153) 1 966 400
Shares issued in terms of
equity-settled share
option scheme - (23 767) (23 767) 23 767
Share option reserve - - 37 796 -
Total comprehensive income
for the period - - (116) 174 796
Dividends paid - - - (55 770)
Balance at 28 February 2014 1 859 2 179 613 (1 104 240) 2 109 193
Shares issued in terms of
equity-settled share
option scheme 14 - (16 242) 16 242
Share option reserve - - 14 013 -
Put option written on
non-controlling interest - - (48 459) -
Non-controlling
interest arising
on business combination - - - -
Total comprehensive income
for the period - - 327 193 938
Dividends paid - - - (65 566)
Balance at 31 August 2014 1 873 2 179 613 (1 154 601) 2 253 807
Total
attributable
to owners of Non-
the parent controlling Total
company interest equity
R'000 R'000 R'000
Balance at 1 March 2013 2 919 559 39 031 2 958 590
Shares issued in terms of
equity-settled share
option scheme 23 781 - 23 781
Share option reserve (10 442) - (10 442)
Acquisition of
non-controlling interest (1 971) (6 214) (8 185)
Total comprehensive income
for the period 187 624 9 715 197 339
Dividends paid (65 065) (2 308) (67 373)
Balance at 31 August 2013 3 053 486 40 224 3 093 710
Shares issued in terms of
equity-settled share
option scheme (23 767) - (23 767)
Share option reserve 37 796 - 37 796
Total comprehensive income
for the period 174 680 14 388 189 068
Dividends paid (55 770) - (55 770)
Balance at 28 February 2014 3 186 425 54 612 3 241 037
Shares issued in terms of
equity-settled share
option scheme 14 - 14
Share option reserve 14 013 - 14 013
Put option written on
non-controlling interest (48 459) - (48 459)
Non-controlling
interest arising
on business combination - 51 601 51 601
Total comprehensive income
for the period 194 265 17 659 211 924
Dividends paid (65 566) (3 705) (69 271)
Balance at 31 August 2014 3 280 692 120 167 3 400 859
Group segmental analysis
Road
surfacing Road
and construc-
rehabi- tion and
Materials litation earthworks
R'000 R'000 R'000
Reportable segments
31 August 2014
Segment revenue 968 231 1 314 566 774 875
Segment result
(operating profit) 162 544 96 400 20 400
31 August 2013
Segment revenue 829 719 1 220 262 772 435
Segment result
(operating profit) 128 490 95 212 37 843
28 February 2014
Segment revenue 1 624 577 2 505 115 1 179 805
Segment result
(operating profit) 259 152 209 260 40 026
Infra- Consoli-
structure Tosas dated
R'000 R'000 R'000
Reportable segments
31 August 2014
Segment revenue 484 737 183 384 3 725 793
Segment result
(operating profit) 27 547 (6 125) 300 766
31 August 2013
Segment revenue 316 100 82 850 3 221 366
Segment result
(operating profit) 19 160 (6 180) 274 525
28 February 2014
Segment revenue 730 759 284 756 6 325 012
Segment result
(operating profit) 36 966 (5 529) 539 875
Inter-
Local national Consolidated
R'000 R'000 R'000
Geographical information
31 August 2014
Segment revenue 3 426 085 299 708 3 725 793
Segment result
(operating profit) 252 231 48 535 300 766
31 August 2013
Segment revenue 2 970 998 250 368 3 221 366
Segment result
(operating profit) 225 203 49 322 274 525
28 February 2014
Segment revenue 5 890 468 434 544 6 325 012
Segment result
(operating profit) 459 116 80 759 539 875
Additional information
Employee benefit expense
Unaudited Unaudited Audited
6 months 6 months 12 months
31 August 31 August 28 February
2014 2013 2014
R'000 R'000 R'000
Employee benefit expense in the
income statement consists of:
Salaries, wages and contributions 820 435 736 900 1 436 923
Share options granted
to employees 14 013 13 325 27 354
Total employee benefit expense 834 448 750 225 1 464 277
Capital expenditure and depreciation
Unaudited Unaudited Audited
6 months 6 months 12 months
31 August 31 August 28 February
2014 2013 2014
R'000 R'000 R'000
Capital expenditure for the period 273 748 241 910 483 299
Depreciation for the period 158 873 135 242 282 968
Amortisation of intangible assets
for the period 140 140 280
Notes
Basis of preparation
These condensed consolidated interim financial statements have been prepared under the
supervision of the Financial Director, JF Gibson CA(SA), in accordance with International
Financial Reporting Standards ("IFRS"), IAS34 "Interim Financial Reporting", the SAICA
Financial Reporting Guides as issued by the Accounting Practices Committee and Financial
Pronouncements as issued by the Financial Reporting Standards Council and the requirements
of the South African Companies Act 71 of 2008 and the JSE Listings Requirements.
The principal accounting policies used in the preparation of the unaudited results for
the period ended 31 August 2014 are consistent with those applied for the year ended
28 February 2014 and for the unaudited results for the six months ended 31 August 2013
in terms of IFRS.
Business combinations
Oranje Mynbou en Vervoer Maatskappy (Pty) Ltd ("OMV")
On 1 July 2014 the Group acquired a 70% interest in OMV's aggregate crushing and ready-mix
concrete operations situated near Stilfontein and a 70% interest in OMV's gypsum operations
situated near Potchefstroom in the North West province for a purchase price of R70,3 million
settled in cash. An additional contingent consideration is payable dependent on future earnings
and a put option has been written on the remaining 30% in favour of the non-controlling
interest. The contingent consideration liability has been valued at R18,9 million and the
put option liability at R48,5 million. The acquired operations contributed revenues of
R28,7 million and a net profit of R4,5 million for the period from 1 July 2014 to
31 August 2014. If the acquisition had occurred on 1 March 2014 contributions to Group
revenue would have been R86,6 million and net profit R7,7 million.
Details of the net assets acquired, purchase consideration and goodwill are
set out below:
R'000
The purchase consideration
Cash 70 284
Contingent consideration
(fair value) 18 874
Total purchase consideration 89 158
Less: Fair value of net
assets acquired (81 658)
Goodwill 7 500
Fair value of net assets acquired
Property, plant and equipment 35 159
Inventories - non-current 95 184
Inventories - current 11 253
Trade and other receivables 22 195
Cash and cash equivalents 5 549
Borrowings (4 484)
Deferred tax liability (37 378)
Trade and other payables (10 824)
Net assets 116 654
Less: Non-controlling interest (34 996)
Total net assets acquired 81 658
Shisalanga Construction (Pty) Ltd ("Shisalanga")
On 1 June 2014 the Group acquired 60% of the issued share capital of Shisalanga for a
purchase price of R38,4 million settled in cash. Shisalanga manufactures a range of
asphalt products from its plants based in Northern KwaZulu-Natal. The acquired company
contributed revenues of R35,4 million and a net profit of R2,4 million for the period
from 1 June 2014 to 31 August 2014. If the acquisition had occurred on 1 March 2014
contributions to Group revenue would have been R56,8 million with no contribution to
net profit.
Details of the net assets acquired, purchase consideration and goodwill are
set out below:
R'000
The purchase consideration
Cash 38 400
Less: Fair value of net
assets acquired (24 907)
Goodwill 13 493
Fair value of net assets acquired
Property, plant and equipment 34 070
Inventories 762
Construction contracts in
progress 990
Trade and other receivables 34 765
Income tax receivable 490
Cash and cash equivalents 8 209
Borrowings (8 345)
Deferred tax liability (1 605)
Trade and other payables (27 824)
Net assets 41 512
Less: Non-controlling interest (16 605)
Total net assets acquired 24 907
Events after the reporting period
Business combinations
Buildmax Aggregates and Quarries (Pty) Ltd ("BAQ")
On 1 September 2014 the Group acquired certain business operations and assets
from BAQ for a purchase price of R54,8 million in cash. The business combination
acquired comprises the sand quarry operations of Crushco Quarry and Alphasand
Quarry and the Aflease crushing operations. These businesses are located in the
Gauteng area.
Burma Plant Hire (Pty) Ltd ("Burma")
On 1 September 2014 the Group acquired 19% of the issued share capital of Burma
from the non-controlling interest for R11,5 million in cash, increasing the Group's
shareholding from 51% to 70%.
Prodev Plant Hire (Pty) Ltd ("Prodev")
On 1 September 2014 Burma Plant Hire (Pty) Ltd acquired 100% of the issued share
capital of Prodev for N$31 million cash. Prodev is a plant hire company operating
in Namibia.
Empa Structures CC and Empa Plant CC ("Empa")
On 1 November 2014 the Group acquired a 70% interest in Empa for R25,5 million cash.
Empa specialises in the construction of concrete structures.
On behalf of the Board
JE Raubenheimer
Chairman
RJ Fourie
Chief Executive Officer
JF Gibson
Financial Director
10 November 2014
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