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RAUBEX GROUP LIMITED - Unaudited interim results for the six months ended 31 August 2015

Release Date: 09/11/2015 07:15
Code(s): RBX     PDF:  
Wrap Text
Unaudited interim results for the six months ended 31 August 2015

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 2015

Highlights
Revenues up 4,3% to R3,89 billion (H1 2015: R3,73 billion)
Operating profit up 9,5% to R329,3 million (H1 2015: R300,8 million)
HEPS up 5,3% to 107,0 cents per share (H1 2015: 101,6 cents per share)
Cash flow from operations down 30,2% to R375,0 million (H1 2015: R537,4 million)
Capex spend of R278,5 million (H1 2015: R273,8 million)
Order book of R8,2 billion (H1 2015: R7,5 billion)
Interim dividend of 36 cents per share declared

Commentary
Rudolf Fourie, CEO of Raubex Group, said: 'The first half of the year was marked by another consistent
performance from the Group under challenging industry conditions and in spite of the unplanned
refinery shutdowns which affected our asphalt operations locally.

'The Materials Division continued to perform strongly during the period and through the acquisition
of Belabela Quarries we established a presence from which to grow in Botswana.

'Our order book is solid and we anticipate an improved performance in the second half of the year
supported by the Materials Division, a stabilised asphalt production environment and the execution
of various solar projects in progress.'

Financial overview
Revenue increased 4,3% to R3,89 billion and operating profit increased 9,5% to R329,3 million
from the corresponding prior period. These results were supported by another strong performance
from the Group's Materials Division and Construction Division, which reported margin improvements
in its Road Construction and Earthworks segment, while the Road Surfacing and Rehabilitation segment
was adversely affected by a severe bitumen supply shortage due to unplanned refinery shutdowns.

Profit before tax increased 1,6% to R303,2 million (H1 2015: R298,5 million) with the effective tax rate
increasing to 29,2% (H1 2015: 29,1%).

Earnings per share increased 4,3% to 108,0 cents with headline earnings per share increasing 5,3%
to 107,0 cents.

Group operating margin increased to 8,5% (H1 2015: 8,1%).

Net finance costs increased to R26,0 million (H1 2015: R2,3 million) due mainly to an increase in
interest-bearing borrowings and slightly lower cash balances during the period. Total non-cash
finance costs amounted to R2,0 million for the period.

Cash generated from operations decreased 30,2% to R375 million (H1 2015: R537,4 million) before
finance charges and taxation as a result of increased working capital requirements.

Inventories increased 2,8% to R552,7 million (H1 2015: R537,8 million).

Trade and other receivables increased by 23,9% to R1,51 billion (H1 2015: R1,22 billion) due mainly
to the inclusion of purpose built plant for mining clients accounted for as receivables under finance
leases and payments due from the Zambia Road Development Agency on the Link 8000 contracts.
The mining rights and properties acquired from Buildmax Aggregates and Quarries (Pty) Ltd on
10 March 2015 for R37 million in cash have been accounted for as a pre-payment until consent
from the Minister to transfer the licences has been granted in terms of section 11 of the Mineral and
Petroleum Resources Development Act.

Construction contracts in progress increased by 11,8% to R423,4 million (H1 2015: R378,7 million)
mainly due to the works on solar energy projects where billing is based on the achievement of
milestones as opposed to percentage completion.

Trade and other payables decreased 5,9% to R1,24 billion (H1 2015: R1,32 billion).

Borrowings increased 45,3% to R1,07 billion (H1 2015: R739,0 million) due mainly to the financing
of plant and equipment for the Tschudi copper mine project in Namibia and the Buildmax and
Prodev assets acquired in the second half of the prior year.

Capital expenditure on property, plant and equipment increased to R278,5 million (H1 2015:
R273,8 million) and is mainly related to the replacement of assets to maintain current operations.

The Group's net cash outflow for the period was R147,3 million with total cash and cash equivalents
at the end of the period of R789,5 million.

Operational review
Materials Division
The Materials Division, which includes the Raumix operations, comprises three main disciplines
including commercial quarries, contract crushing and materials handling and processing for the
mining industry.

The division delivered a strong performance during the period and continues to experience favourable
operating conditions in the commercial quarry operations and the material handling and processing
operations. The acquisitions of Belabela Quarries during the current period and those of the prior
year have all bedded down well and made positive contributions to earnings.

Revenue for the division increased 23,7% to R1,20 billion (H1 2015: R968,2 million) and operating
profit increased by 35,6% to R220,3 million (H1 2015: R162,5 million).

The divisional operating profit margin increased to 18,4% (H1 2015: 16,8%).

The division incurred capital expenditure of R171,6 million during the period (H1 2015: R204,8 million).

The division has an order book of R1,72 billion (H1 2015: R1,58 billion).

Construction Division
Road surfacing and rehabilitation
This segment specialises in the manufacturing and laying of asphalt, chip and spray, surface dressing,
enrichments and slurry seals and includes the operations of Tosas, a company specialising in the
manufacture and distribution of value added bituminous products. In the prior period, Tosas was
reported as a standalone segment and their results have now been incorporated in the Road
Surfacing and Rehabilitation segment with the prior period comparative figures having been restated.

The segment has seen a healthy volume of work out on tender and despite competitive conditions
in the sector, it grew its order book during the period. It is encouraging to see the increasing
percentage of provincial road maintenance work in the order book.

The segment's asphalt production operations experienced a challenging period with their performance
negatively affected by a severe bitumen supply shortage due to unplanned refinery shut downs as
well as aggregate supply issues, both of which were resolved subsequently.

The Tosas operations continued to show improvements and the business reported a profit for the
period which included the lower volume winter months. Tosas has secured a good order book for
the upcoming summer months.

Revenue decreased 9,8% to R1,35 billion (H1 2015: R1,50 billion*) and operating profit decreased
55,4% to R40,2 million (H1 2015: R90,3 million*).

The segmental operating profit margin decreased to 3,0% (H1 2015: 6,0%*).

Capital expenditure of R55,8 million was incurred during the period (H1 2015: R25,4 million*).

The segment's order book stood at R2,83 billion (H1 2015: R1,91 billion*).

* Comparative period restated to include the results of Tosas.

Road construction and earthworks
This segment includes the road and civil infrastructure construction operations focused on the key
areas of new road construction and heavy road rehabilitation.

The segment's margins improved during the period due to a better quality order book and the teams'
continuing focus on efficient work execution. The volume of work out on tender was healthy in an
operating environment that remains very competitive. The solid order book secured at the end of
February 2015 allowed this segment to be more selective in its order book replacement and focus
on securing work at better margins.

Revenue was flat at R778,5 million (H1 2015: R774,9 million), while operating profit increased 180,3%
to R57,2 million (H1 2015: R20,4 million).

The segmental operating profit margin increased to 7,3% (H1 2015: 2,6%).

Capital expenditure of R29,4 million was incurred during the period (H1 2015: R19,0 million).

The segment's order book stood at R2,74 billion (H1 2015: R3,03 billion).

Raubex Infrastructure
The infrastructure segment 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 infrastructure segment experienced a slow start to the year, due mainly to the effect of the lower
commodity prices on mining clients' capital expenditure and also the timing of the execution of solar
energy projects. Site establishment on secured solar work was completed towards the end of the
period and this segment is expected to report a stronger second half performance as these projects
are executed.

The segment has maintained its order book at current levels with a good mix of solar, water 
infrastructure and housing development work.

Revenue increased 15,7% to R561,0 million (H1 2015: R484,7 million) and operating profit decreased
58,2% to R11,5 million (H1 2015: R27,5 million).

The operating profit margin decreased to 2,1% (H1 2015: 5,7%).

Capital expenditure of R21,7 million was incurred during the period (H1 2015: R24,6 million).

The order book stood at R945,9 million (H1 2015: R1,02 billion).

International
The Group's International operations ('Africa') reported good results for the period from both the
Materials and Construction Divisions. In Namibia operations include work on the upgrading of the
road from Rosh Pinah to Oranjemund as well as various road maintenance contracts and material
handling and processing contracts for the diamond and copper mining industries. In Botswana,
Belabela Quarries reported positive results and provided the Group with a base from which it can
expand and further develop its operating model in the country. Positive results were also reported
from contract crushing operations in Mozambique.

In Zambia, the two link 8000 contracts progressed well during the period, although a cautious
approach was assumed with regards to the pace of execution in light of the slow pace of payments
received from the client (the Zambia Roads Development Agency). These contracts are still in early
stages of completion with ZMW61,4 million of revenue recognised for the contracts' life to 31 August 
2015. The significant depreciation of the Zambian Kwacha during September 2015 will impact the future
profitability of these contracts should the Zambian Kwacha remain at current levels. The Group has
had constructive engagements with the client and is in the process of negotiating measures to
mitigate the exchange rate risk and support the successful completion of the contracts. These
negotiations are ongoing.

International revenue increased 105,0% to R614,3 million (H1 2015: R299,7 million) and operating
profit increased by 82,2% to R88,4 million (H1 2015: R48,5 million).

Operating profit margins decreased to 14,4% (H1 2015: 16,2%).

Prospects
The Medium Term Budget Policy Statement presented to Parliament on 21 October 2015 proposed
baseline increases to the SANRAL budget over the Medium Term Expenditure Framework period to
arrest deterioration of the national road network. To improve the efficiency of investments in the
secondary road network, a new performance component incorporating efficiency indicators for
managing road networks was proposed and will be introduced in the provincial roads maintenance
grant. These proposals are encouraging and should ensure that a healthy volume of road construction
and rehabilitation work is available for tender in the medium term.

The Group has a secured order book of R8,24 billion (H1 2015: R7,54 billion) and will use this base
to continue focusing on the effective execution of current contracts and selective tendering for
replacement work at better margins. The Zambia Link 8000 contracts account for R975,0 million
of the current order book.

The outlook for commercial quarry operations and material handling and processing operations
remains positive and the Group will continue to look for acquisitions in the materials sector to
expand its geographical footprint.

Prospects for future work in the solar energy sector are encouraging with a number of bids submitted
during the period.

With the bitumen and aggregate supply issues that affected asphalt production now resolved and
the execution of solar projects in progress, the Group is looking forward to an improved performance
in the period ahead.

Dividend declaration
The directors have declared a gross interim cash dividend from income reserves of 36 cents per
share on 9 November 2015 for the six-month period ended 31 August 2015. The salient dates for
the payment of the dividend are as follows:

Last day to trade cum dividend Friday, 27 November 2015
Commence trading ex dividend Monday, 30 November 2015
Record date Friday, 4 December 2015
Payment date Monday, 7 December 2015

No share certificates may be dematerialised or rematerialised between Monday, 30 November 2015
and Friday, 4 December 2015, both dates inclusive.

In terms of Dividends Tax ('DT'), the following additional information is disclosed:
- The local DT rate is 15%.
- The number of ordinary shares in issue at the date of this declaration is 189 250 036.
- The dividend to utilise for determining the DT due is 36 cents per share.
- The DT amounts to 5,40 cents per share.
- The net local dividend amount is 30,60 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.

On behalf of the Board

JE Raubenheimer
Chairman

RJ Fourie
Chief Executive Officer

JF Gibson
Financial Director

9 November 2015

Group income statement
                                                           Unaudited      Unaudited         Audited
                                                            6 months       6 months       12 months
                                                           31 August      31 August     28 February
                                                                2015           2014            2015
                                                               R'000          R'000           R'000
Revenue                                                    3 887 747      3 725 793       7 245 259
Cost of sales                                             (3 338 640)    (3 237 898)     (6 257 742)
Gross profit                                                 549 107        487 895         987 517
Other income                                                   6 502          4 228          12 113
Other gains/(losses) - net                                     3 197          5 157           9 984
Administrative expenses                                     (229 555)      (196 514)       (387 443)
Operating profit                                             329 251        300 766         622 171
Finance income                                                17 670         22 388          46 520
Finance costs                                                (43 705)       (24 667)        (62 259)
Share of profit of investments accounted                  
for using the equity method                                        -              -             205
Profit before income tax                                     303 216        298 487         606 637
Income tax expense                                           (88 559)       (86 890)       (178 563)
Profit for the period                                        214 657        211 597         428 074
Profit for the period attributable to:                    
Owners of the parent                                         204 322        193 938         399 837
Non-controlling interest                                      10 335         17 659          28 237
Basic earnings per share (cents)                               108,0          103,5           213,4
Diluted earnings per share (cents)                             107,1          102,0           209,9

Group statement of comprehensive income                   
                                                           Unaudited      Unaudited         Audited
                                                            6 months       6 months       12 months
                                                           31 August      31 August     28 February
                                                                2015           2014            2015
                                                               R'000          R'000           R'000
Profit for the period                                        214 657        211 597         428 074
Other comprehensive income for the                        
period, net of tax                                        
Currency translation differences                              (5 639)           327             382
Actuarial gain/(loss) on post-employment                  
benefit obligations                                                -              -            (137)
Total comprehensive income for the period                    209 018        211 924         428 319
Comprehensive income for the period                       
attributable to:                                          
Owners of the parent                                         198 683        194 265         400 082
Non-controlling interest                                      10 335         17 659          28 237
Total comprehensive income for the period                    209 018        211 924         428 319

Calculation of diluted earnings per share                 
                                                           Unaudited      Unaudited         Audited
                                                            6 months       6 months       12 months
                                                           31 August      31 August     28 February
                                                                2015           2014            2015
                                                               R'000          R'000           R'000
Profit attributable to owners of the                      
parent entity                                                204 322        193 938         399 837
Weighted average number of ordinary                       
shares in issue ('000)                                       189 250        187 330         187 330
Adjustments for:                                          
Shares deemed issued for no                               
consideration (share options) ('000)                           1 607          2 834           3 202
Weighted average number of ordinary
shares for diluted earnings per share ('000)                 190 857        190 164         190 532
Diluted earnings per share (cents)                             107,1          102,0           209,9

Calculation of headline earnings per share
                                                           Unaudited      Unaudited         Audited
                                                            6 months       6 months       12 months
                                                           31 August      31 August     28 February
                                                                2015           2014            2015
                                                               R'000          R'000           R'000
Profit attributable to owners of the                       
parent entity                                                204 322        193 938         399 837
Adjustments for:                                           
Profit on sale of property, plant                          
and equipment                                                 (2 580)        (5 020)        (11 348)
Total tax effects of adjustments                                 723          1 406           3 177
Basic headline earnings                                      202 465        190 324         391 666
Weighted average number of shares ('000)                     189 250        187 330         187 330
Headline earnings per share (cents)                            107,0          101,6           209,1
Diluted headline earnings per share (cents)                    106,1          100,1           205,6
                                                           
Group statement of financial position                      
                                                           Unaudited      Unaudited         Audited
                                                            6 months       6 months       12 months
                                                           31 August      31 August     28 February
                                                                2015           2014            2015
                                                               R'000          R'000           R'000
ASSETS                                                     
Non-current assets                                         
Property, plant and equipment                              2 271 755      2 012 857       2 171 829
Intangible assets                                            829 814        784 524         795 098
Investment in associates and joint ventures                   42 907              -          10 708
Deferred income tax assets                                    49 993         39 663          43 136
Non-current inventories                                       86 355         93 016          90 668
Non-current trade and other receivables                      122 178              -         129 355
Total non-current assets                                   3 403 002      2 930 060       3 240 794
Current assets                                                           
Inventories                                                  466 372        444 760         438 330
Construction contracts in progress                                       
and retentions                                               423 362        378 714         362 351
Trade and other receivables                                1 384 204      1 216 064       1 253 668
Current income tax receivable                                 33 159         33 174          40 964
Cash and cash equivalents                                    789 484        889 719         937 275
Total current assets                                       3 096 581      2 962 431       3 032 588
Total assets                                               6 499 583      5 892 491       6 273 382
EQUITY                                                     
Share capital                                                  1 892          1 873           1 873
Share premium                                              2 179 613      2 179 613       2 179 613
Other reserves                                            (1 162 390)    (1 154 601)     (1 140 762)
Retained earnings                                          2 544 038      2 253 807       2 381 905
Equity attributable to owners of the parent                3 563 153      3 280 692       3 422 629
Non-controlling interest                                     124 118        120 167         110 788
Total equity                                               3 687 271      3 400 859       3 533 417
LIABILITIES                                                
Non-current liabilities                                    
Borrowings                                                   696 880        453 814         672 320
Provisions for liabilities and charges                        60 384         37 556          54 253
Deferred income tax liabilities                              308 233        308 862         311 621
Other financial liabilities                                   79 282         67 333          77 262
Total non-current liabilities                              1 144 779        867 565       1 115 456
Current liabilities                                        
Trade and other payables                                   1 242 967      1 320 516       1 170 248
Borrowings                                                   377 194        285 150         427 620
Current income tax liabilities                                47 372         18 401          26 641
Total current liabilities                                  1 667 533      1 624 067       1 624 509
Total liabilities                                          2 812 312      2 491 632       2 739 965
Total equity and liabilities                               6 499 583      5 892 491       6 273 382

Group statement of cash flows
                                                           Unaudited      Unaudited         Audited
                                                            6 months       6 months       12 months
                                                           31 August      31 August     28 February
                                                                2015           2014            2015
                                                               R'000          R'000           R'000
Cash flows from operating activities                                     
Cash generated from operations                               375 002        537 384         785 053
Finance income                                                17 670         22 388          46 520
Finance costs                                                (41 685)       (24 667)        (57 900)
Dividend received                                              2 699              -               -
Income tax paid                                              (72 674)       (84 743)       (188 848)
Net cash generated from operating activities                 281 012        450 362         584 825
Cash flows from investing activities                                     
Purchases of property, plant and equipment                  (278 491)      (273 748)       (510 599)
Proceeds from sale of property, plant                                    
and equipment                                                 26 586         17 641          40 267
Acquisition of subsidiaries                                  (46 638)       (94 926)       (202 485)
Loans granted to associates and
joint ventures                                               (32 200)             -         (10 500)
Net cash (used in)/generated from
investing activities                                        (330 743)      (351 033)       (683 317)
Cash flows from financing activities
Proceeds from borrowings                                     247 872        191 333         752 827
Repayment of borrowings                                     (274 295)      (203 153)       (411 642)
Proceeds from shares issued                                       19             14              14
Dividends paid to owners of the parent                       (68 130)       (65 566)       (131 131)
Dividends paid to non-controlling interests                   (3 210)        (3 705)        (33 242)
Acquisition of interest in a subsidiary                            -              -         (12 294)
Disposal of interest in a subsidiary                             200              -               -
Net cash used in financing activities                        (97 544)       (81 077)        164 532
Net (decrease)/increase in cash and
cash equivalents                                            (147 275)        18 252          66 040
Cash and cash equivalents at the
beginning of the period                                      937 275        871 260         871 260
Effects of exchange rates on cash and
cash equivalents                                                (516)           207             (25)
Cash and cash equivalents at the end
of the period                                                789 484        889 719         937 275

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 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
Share option reserve                                   -           -         13 784               -
Non-controlling interest arising on                                                     
business combination                                   -           -              -               -
Acquisition of non-controlling interest                -           -              -         (12 099)
Total comprehensive income for                                                          
the period                                             -           -             55         205 762
Dividends paid                                         -           -              -         (65 565)
Balance at 28 February 2015                        1 873   2 179 613     (1 140 762)      2 381 905
Shares issued in terms of equity-                                                       
settled share option scheme                           19           -        (25 995)         25 995
Share option reserve                                   -           -         10 006               -
Non-controlling interest arising                                                        
on business combination                                -           -              -               -
Disposal of interest to non-controlling                                                 
interest                                               -           -              -             (54)
Total comprehensive income for                                                          
the period                                             -           -         (5 639)        204 322
Dividends paid                                         -           -              -         (68 130)
Balance at 31 August 2015                          1 892   2 179 613     (1 162 390)      2 544 038

                                                               Total
                                                     attributable to
                                                       owners of the           Non-
                                                              parent    controlling           Total
                                                             company       interest          equity
                                                               R'000          R'000           R'000
Balance at 1 March 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
Share option reserve                                          13 784              -          13 784
Non-controlling interest arising on
business combination                                               -          9 775           9 775
Acquisition of non-controlling interest                      (12 099)          (195)        (12 294)
Total comprehensive income for the period                    205 817         10 578         216 395
Dividends paid                                               (65 565)       (29 537)        (95 102)
Balance at 28 February 2015                                3 422 629        110 788       3 533 417
Shares issued in terms of equity-settled                 
share option scheme                                               19              -              19
Share option reserve                                          10 006              -          10 006
Non-controlling interest arising on
business combination                                               -          5 951           5 951
Disposal of interest to non-controlling interest                 (54)           254             200
Total comprehensive income for the period                    198 683         10 335         209 018
Dividends paid                                               (68 130)        (3 210)        (71 340)
Balance at 31 August 2015                                  3 563 153        124 118       3 687 271

Group segmental analysis
                                                                               Road            Road
                                                                          surfacing    construction
                                                                                and             and
                                                           Materials rehabilitation*     earthworks
                                                               R'000          R'000           R'000
Reportable segments
31 August 2015
Segment revenue                                            1 197 363      1 350 888         778 507
Segment result (operating profit)                            220 325         40 224          57 174
Margin                                                         18,4%           3,0%            7,3%
31 August 2014
Segment revenue                                              968 231      1 497 950         774 875
Segment result (operating profit)                            162 544         90 275          20 400
Margin                                                         16,8%           6,0%            2,6%
28 February 2015
Segment revenue                                            1 961 342     2 957 304        1 463 953
Segment result (operating profit)                            323 640       203 713           55 169
Margin                                                         16,5%          6,9%             3,8%

                                                                            Infra-         Consoli-
                                                                         structure            dated
                                                                             R'000            R'000
Reportable segments                                                        
31 August 2015                                                             
Segment revenue                                                            560 989        3 887 747
Segment result (operating profit)                                           11 528          329 251
Margin                                                                        2,1%             8,5%
31 August 2014                                                                          
Segment revenue                                                            484 737        3 725 793
Segment result (operating profit)                                           27 547          300 766
Margin                                                                        5,7%             8,1%
28 February 2015                                                                        
Segment revenue                                                            862 660        7 245 259
Segment result (operating profit)                                           39 649          622 171
Margin                                                                        4,6%             8,6%
* Comparative period restated to include the results of Tosas.
                                                                            Inter-
                                                               Local      national     Consolidated
                                                               R'000         R'000            R'000
Geographical information
31 August 2015
Segment revenue                                            3 273 497       614 250        3 887 747
Segment result (operating profit)                            240 825        88 426          329 251
Margin                                                          7,4%         14,4%             8,5%
31 August 2014
Segment revenue                                            3 426 085       299 708        3 725 793
Segment result (operating profit)                            252 231        48 535          300 766
Margin                                                          7,4%         16,2%             8,1%
28 February 2015
Segment revenue                                            6 606 290       638 969        7 245 259
Segment result (operating profit)                            538 722        83 449          622 171
Margin                                                          8,2%         13,1%             8,6%

Additional information
Employee benefit expense
                                                           Unaudited     Unaudited          Audited
                                                            6 months      6 months        12 months
                                                           31 August     31 August      28 February
                                                                2015          2014             2015
                                                               R'000         R'000            R'000
Employee benefit expense in the income
statement consists of:
Salaries, wages and contributions                            909 433       820 435        1 648 079
Share options granted to employees                            10 006        14 013           27 797
Total employee benefit expense                               919 439       834 448        1 675 876

Capital expenditure and depreciation
                                                           Unaudited     Unaudited          Audited
                                                            6 months      6 months        12 months
                                                           31 August     31 August      28 February
                                                                2015          2014             2015
                                                               R'000         R'000            R'000
Capital expenditure for the period                           278 491       273 748          510 599
Depreciation for the period                                  183 313       158 873          334 997
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 2015 are consistent with those applied for
the year ended 28 February 2015 and for the unaudited results for the six months ended 31 August
2014 in terms of IFRS.

Business combinations
Belabela Quarries (Pty) Ltd ('Belabela')
On 18 March 2015 the Group effectively acquired 74% of shares and sale claims of Belabela for a
purchase price of R43 million to be settled in cash. Belabela is a commercial quarry operating on
the outskirts of Gaberone in Botswana. The acquisition will give the Group a base from which it
can expand and further develop its operating model in Botswana. The revenue included in the
consolidated income statement since 1 March 2015 contributed by Belabela was R45,7 million with
a net profit contribution of R9,1 million over the same period.

Mokwena Surfacing (Pty) Ltd ('Mokwena')
On 31 July 2015 the Group acquired the asphalt manufacturing business including the asphalt plant
and related fixed assets from Mokwena for a purchase price of R22 million in cash. These operations
are located in Durbanville in the Western Cape province. The acquired operations contributed revenues
of R0,8 million, and a net loss of R0,2 million for the period from 31 July 2015 to 31 August 2015.

Details of the net assets acquired, purchase consideration and goodwill are set out below:

                                                            Belabela       Mokwena            Total
                                                               R'000         R'000            R'000
Consideration
Cash                                                          43 000        22 000           65 000
Less: Sale claims                                             (4 709)            -           (4 709)
Total consideration                                           38 291        22 000           60 291
Recognised amounts of identifiable assets
and acquired liabilities assumed
Property, plant and equipment                                 11 089        18 000           29 089
Intangible asset - mining right                                9 502             -            9 502
Deferred tax asset                                               875             -              875
Inventories                                                    7 719             -            7 719
Trade receivables                                              6 587             -            6 587
Current income tax receivable                                     79             -               79
Cash and cash equivalents                                     13 653             -           13 653
Borrowings                                                      (556)            -             (556)
Deferred tax liability                                        (3 361)            -           (3 361)
Trade and other payables                                     (18 721)            -          (18 721)
Rehabilitation provision                                      (3 978)            -           (3 978)
Total identifiable net assets                                 22 888        18 000           40 888
Non-controlling interest                                      (5 951)            -           (5 951)
Goodwill attributable to owners of the                                     
parent                                                        21 354         4 000           25 354
Total                                                         38 291        22 000           60 291
Purchased consideration settled in cash                       38 291        22 000           60 291
Less: Cash and cash equivalents in the                                     
business combination acquired                                (13 653)            -          (13 653)
Cash outflow on acquisition for cash flow                                  
statement                                                     24 638        22 000           46 638

Reclassification of comparative figures
In the prior period consolidated interim financial statements for the period ended 31 August 2014
and the consolidated financial statements for the year ended 28 February 2015 the results of Tosas
were disclosed as a separate segment in the segmental analysis. This was done in order to report
the results of Tosas separately until such time as the acquired business was bedded down within
the Group and returned to profitability. In order to more fairly present the segments and in line with
the disclosure of information reported to the chief operating decision maker in terms of IFRS, the
results of Tosas have been disclosed as part of the Road Surfacing and Rehabilitation segment.
This has resulted in the restatement of the prior period figures.
                                                                              Road             Road
                                                                         surfacing     construction
                                                                       and rehabi-       and earth-
                                                           Materials      litation            works
Segment report as previously disclosed                         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
Margin                                                         16,8%          7,3%             2,6%
28 February 2015                                          
Segment revenue                                            1 961 342     2 568 538        1 463 953
Segment result (operating profit)                            323 640       192 462           55 169
Margin                                                         16,5%          7,5%             3,8%
 
                                                              Infra-                       Consoli-
                                                           structure         Tosas            dated
Segment report as previously disclosed                         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
Margin                                                          5,7%         (3,3%)            8,1%
28 February 2015                                          
Segment revenue                                              862 660       388 766        7 245 259
Segment result (operating profit)                             39 649        11 251          622 171
Margin                                                          4,6%          2,9%             8,6%

Events after the reporting period
There were no material events after the reporting period to report up to the date of preparation of
these Group financial statements.

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






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