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CONSOLIDATED INFRASTRUCTURE GRP LTD - Unaudited consolidated interim results for the six months ended 29 February 2016

Release Date: 19/04/2016 07:05
Code(s): CIL     PDF:  
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Unaudited consolidated interim results for the six months ended 29 February 2016

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



Unaudited consolidated interim results for the six months ended 29 February 2016



Salient features

– Revenue up 26% to R2,1 billion (2015: R1,7 billion)

– EBITDA up 33% to R274 million (2015: R206 million)

– HEPS up 24% to 136,3 cents per share (2015: 110,1 cents per share)

– Conco order book up 35% to R5 billion (2015: R3,7 billion)



Overview

Consolidated Infrastructure improved revenue by 26% to 

R2,1 billion from R1,7 billion in 2015 and grew profit after tax by 

28% to R209 million compared to R164 million for the previous period. 

Earnings per share and headline earnings per share were 136 cents 

per share, a 24% increase from 110 cents per share for the

previous period.



The group’s strategy to operate across a wider geographic footprint 

enabled CIG to generate 55% of profits after tax from outside of 

South Africa. The group’s flagship Power division contributed half of 

the group’s profits, while management continues with its objective to 

diversify earnings across a wider operational portfolio.



The group’s segmental analysis of profit after tax is:

                                                2016           2015

                                                   %              %

Power                                             50             53

Oil and Gas                                       30             31

Building Materials                                 7              8

Rail                                               4              3

Corporate                                          9              5



Strong demand for the group’s energy services and products across the 

geographies has continued over the past six months. The group’s major 

sectors have consequently experienced high growth, while management 

continues to manage the associated risks. Sufficient capital was 

raised to fund the organic expansion in the power sector and the 

intensive working capital requirements of the projects cycle. The 

delivery risk associated with projects is mitigated by conservative 

procurement practices and policies.



The group reported a cash balance of R481 million as at 29 February 2016 

(2015: R460 million). The debt-to-equity ratio of 23,8% (2015: 39,2%) 

is below the targeted debt-to-equity ratio of between 30% and 40% that 

the group considers an appropriate gearing level. On a net debt basis, 

the group reported a 9,1% debt-to-equity ratio (2015: 20,1%).



The group maintains a R1 billion medium-term note programme, which to 

date has issued R625 million in debt. There is still R375 million 

available under the current programme which, given appropriate market 

conditions, can be tapped to fund the group’s growth profile. The 

programme has maintained a consistent Moody’s credit rating of 

Baa2.za.



Management fosters ongoing working relationships with relevant banks 

to ensure that sufficient guarantees and working capital facilities 

are available to meet all foreseeable capital requirements. Interest 

cover as measured against EBITDA remained at a satisfactory level of 

5,9 times. The group recently closed additional bank guarantee 

facilities of R500 million and working capital lines of R300 million.



Divisional overview

Power

– Revenue up 28% to R1,8 billion (2015: R1,4 billion)

– EBITDA up 31% to R218 million (2015: R166 million)

– Conco order book up 35% to R5 billion (2015: R3,7 billion)



Consolidated Power Projects Group Proprietary Limited (“Conco”), the 

group’s turnkey developer of high voltage electrical infrastructure 

across Africa and the Middle East, produced strong growth across 

Namibia, Botswana, Zambia, Tanzania, Mozambique, Ghana and Rwanda. 

Recently, Conco expanded its operations into Ethiopia, where ageing 

electrical infrastructure has created a demand for Conco’s flexible 

electrical solutions.



The demand for Conco products and services amongst African utilities 

remains strong and the international order book grew to USD116 

million, representing a three-fold increase over the last three 

years. Order book growth in South Africa was flat during the six 

month period although growth in the demand from Eskom compensated for 

some of the weakness in spending by the municipalities on 

substations. Renewable energy has sustained its momentum, although 

undergoing some delay.



Consolidated Power Maintenance (“O&M”), which operates and maintains 

renewable energy, transmission and distribution assets on behalf of 

asset owners in South Africa, reported disappointing results due to 

delays in the renewable energy project rollouts and a slowdown in 

South African municipality spend. Consequently, this business was 

unable to increase its market share in the period under review.



Energy Solutions, which designs, engineers, manufactures and 

commissions protection and control equipment for substations, 

containerised substations, batteries, chargers and smart grid 

solutions, performed in line with expectations. The division is 

making great strides to increase its presence and market share in the 

solar market, by providing innovative solar solutions for clients. 

This includes its recent foray into offering small-scale solar photo 

voltaic (“PV”’) solutions in response to the high demand across South 

Africa and the rest of the continent. The division has also entered 

the low voltage market sector to supply motor control centres and 

distribution boards to industry.



Building Materials

– Revenue down 1% to R228 million (2015: R231 million)

– EBITDA up 11% to R36,2 million (2015: R32,7 million)



The Building Materials division, which supplies aggregates, clay 

brick and concrete roof tiles in the Gauteng region, reported a 1% 

decrease in revenue as a result of the subdued demand from the civils 

and construction sectors. Profitability was however increased due 

to an improved mix of product sales and cost control.



Oil and Gas Services

– Profit attributable to AES up 24% to R62 million 

(2015: R50 million)



Angola Environmental Servicos Limitida (“AES”) collects, recycles and 

disposes of waste generated in the oil production and drilling 

process from oil and gas rigs located off the coast of Angola. In 

December 2015, the zero discharge regulation was implemented in 

Angola and as oil and gas rig operators adopted the new environmental 

law, volumes for AES increased. AES results were resilient 

considering the volatility of the sector and the resulting impact on 

the country. While there is still risk associated with remittance of 

foreign currency in Angola, the situation improved during the period.



Rail

– Revenue on a comparative basis up 35% to R112 million 

(2015 for four months: R60 million)

– EBITDA on a comparative basis up 17% to R17 million 

(2015 for four months: R9 million)

– Order book up 200% to R400 million (2015: R132 million)



Tension Overhead Electrification Proprietary Limited (“Tractionel”), 

which specialises in the electrification of railways and installation 

of Overhead Traction Equipment, performed in line with expectation. 

The group made progress to integrate the Tractionel management team 

into the CIG culture andstructures. Danie Lubbe was promoted to CEO 

from CFO after Johan Boschoff, the founder and former CEO of the 

business, retired.



Prospects

General

Notwithstanding the exceptional volatility experienced in emerging

markets over the past six months, CIG has not had any cancellations 

in projects nor experienced any untoward delays in project awards or 

issue of tenders. Management has identified an under investment by 

South African corporates and increased levels of disinvestment by 

internationals out of South Africa.



The group continues to seek acquisition opportunities among those 

companies that operate across the continent and supply services and 

products into sectors where management expects higher levels of 

infrastructure investment. Solid progress has been made on the 

acquisition front.



Power

The prospects of the Power division are robust and the order book

has grown substantially in absolute terms. The average size of 

projects has also lengthened the execution timelines. The improved 

focus of Conco on its regional markets, and its diversified 

geographic base, enable the business to manage the potential risk of 

a downturn in any one of its individual markets.



Geographic diversification will remain a priority and significant 

business development initiatives are underway in a number of markets 

to entrench the Conco brand and services. These initiatives are 

gaining momentum and should lead to a successful outcome over the 

next twelve months.



Conco’s position in the renewable energy sector is unique in that the 

operation has developed a competitive edge as a preferred provider 

with the capacity and ability to execute to world class standards. 

Management is of the view that momentum in the renewable energy 

sector will continue to grow within South Africa and across the 

continent.



The change in the broad based black economic empowerment (“BEE”) 

legislation and the weakness in local manufacturing poses a short- 

term challenge to the Power division’s traction in South Africa. 

Management is following the required actions to ensure that the Conco 

South African business maintains its required BEE rating.



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 

technically complex work.



CIGenCo, a developer of and investor in generation projects, is 

making excellent progress on power generation opportunities across 

the African continent that offer internal rates of return of 18%

or higher depending on the commercial nature of the project and its 

risks. The group’s broad footprint, ability to partner with local 

developers and technical expertise have made CIGenCo an attractive 

partner for other stakeholders on the African continent.



Building Materials

There are signs of a slowdown in the demand for building materials 

across all of the division’s markets. Despite these factors, there is 

a reasonable probability that existing levels of performance

can be sustained.



Oil and Gas Services

AES should sustain current activity levels with the processing of 

high volumes of waste. Growth in processing volumes will offset

any decline in rental revenue, which may have a negative impact on

net margins. The current level of oil production is expected to be 

sustained although it is difficult to predict the future with any 

certainty until greenfield exploration levels pick up.



Rail

The Tractionel rail business continues to provide enormous short- and 

medium-term potential as South Africa upgrades its rail infrastructure 

to manage the rollout of its new locomotive programme. Management 

expects project awards over the next 12 months to have a material 

impact on the future of the rail business.



Dividends

The group’s policy is for the board to consider a dividend on an

annual basis after reviewing the annual results.



Basis of preparation

These unaudited consolidated interim results for the six months ended 

29 February 2016 have been prepared in accordance with International 

Financial Reporting Standards (“IFRS”) as issued by the International 

Accounting Standards Board (“IASB”), Interim Financial Reporting 

(IAS 34), the SAICA Financial Reporting Guides as issued by the Accounting 

Practices Committee and the JSE Listings Requirements, and comply 

with the South African Companies Act (2008), as amended.



All amendments to standards applicable to CIG’s financial period 

beginning on 1 September 2015 have been considered. Based on 

management’s assessment, the following new amendments do not have a 

material impact on the group’s interim financial statements: 

IFRS 2 – Share-based Payments

IFRS 3 – Business Combinations

IFRS 8 – Operating Segments

IFRS 10 – Consolidated Financial Statements

IFRS 12 – Disclosure of Interest in Other Entities

IFRS 13 – Fair Value Measurement

IAS 19 – Employee Benefits

IAS 24 – Related Party Disclosure

IAS 27 – Consolidated and Separate Financial Statements

IAS 36 – Impairment of Assets

IAS 40 – Investment Property



Other than the amendments, all accounting policies applied in the 

preparation of these interim financial statements are consistent with 

those applied by CIG in its consolidated financial statements for the 

year ended 31 August 2015.



These results have not been audited or reviewed by the group’s 

auditors.



These unaudited interim results have been prepared under the 

supervision of the group financial director, I Klitzner CA(SA).



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, advisors, suppliers and our 

shareholders for their ongoing support.



By order of the board

Frank Boner              Raoul Gamsu

Chairman                 CEO



19 April 2016



Condensed consolidated statements of comprehensive income

                             Unaudited     Unaudited      Audited

                            Six months     Six month         Year

                                 ended         ended        ended

                           29 February   28 February    31 August

                                  2016          2015         2015

                                 R’000         R’000        R’000

Revenue                      2 101 323     1 662 864    3 603 953

Cost of sales               (1 616 534)   (1 277 753)  (2 818 381) 

Gross profit                   484 789       385 111      785 572

Other income                    34 798        21 516       62 088

Operating expenses            (274 317)     (204 261)    (439 098) 

Foreign exchange gain           23 066         4 116        5 899

Earnings before interest,

taxation, depreciation and

amortisation (“EBITDA”)        274 317       206 482      414 461

Depreciation and

amortisation                   (34 717)      (29 294)     (56 249)

Profit before interest and

taxation                       239 600       177 188      358 212

Interest received                9 896        12 999       33 268

Interest paid                  (56 118)      (36 261)     (90 250) 

Profit before taxation         193 377       153 296      301 230

Taxation                       (47 015)      (40 701)     (79 341)

Income from joint

arrangement                     62 318        50 420      109 517

Profit for the period          208 680       163 645      331 406

Total profit for the period 

attributable to:

Equity holders of the

parent                         208 499       163 482      330 266

Non-controlling interest           181           163        1 180

Other comprehensive income:

Recyclable in profit and loss:

Exchange rate differences on 

translating foreign 

operations                     134 070        19 480      112 502

Total comprehensive income     342 750       183 125      443 908

Total comprehensive income 

attributable to:

Equity holders of company      342 569       182 962      436 945

Non-controlling interest           181           163        2 133

Basic earnings per share

(cents)                          136,4         110,3        222,5

Diluted earnings per share

(cents)                          132,7         107,6        216,3

Reconciliation of headline 

earnings:

Profit attributable to

ordinary shareholders          208 499       163 482      330 226

Adjusted for:

Profit on disposal of property, 

plant and equipment               (155)         (399)      (3 770) 

Tax effect on adjustments           43           112        1 055

Headline earnings

attributable to ordinary

shareholders                   208 387       163 195      327 511

Weighted average number of

shares in issue (000s)         152 883       148 272      148 407

Diluted weighted average        

number of shares in issue

(000s)                         157 130       151 936      152 654

Headline earnings per

share (cents)                    136,3         110,1        220,7

Diluted headline earnings

per share (cents)                132,6         107,4        214,5



Condensed consolidated statements of financial position

                             Unaudited     Unaudited      Audited

                                 as at         as at   Year ended

                           29 February   28 February    31 August

                                  2016          2015         2015

                                 R’000         R’000        R’000



Assets

Non-current assets           1 877 821     1 523 307    1 676 514

Property, plant and

equipment                      460 751       432 692      450 076

Goodwill                       534 272       537 514      534 272

Intangible assets               19 634        23 118       21 419

Deferred tax                    72 159        63 238       75 070

Investment in joint

arrangement                    779 556       457 797      584 170

Financial assets                11 449         8 948       11 507

Current assets               4 159 754     3 022 291    3 550 357

Inventories                    121 764        94 810      109 050

Trade and other

receivables                    278 742       274 829      245 101

Amounts due from contract

customers                    3 271 418     2 192 323    2 707 486

Taxation receivable              7 068           326        6 243

Cash and cash equivalents      480 762       460 003      482 477

Total assets                 6 037 575     4 545 598    5 226 871

Equity and liabilities

Equity                       3 271 880     2 406 494    2 675 244

Share capital                1 605 110     1 351 712    1 356 130

Share-based payment

reserve                         35 549        27 094       30 643

Foreign currency

translation reserve            249 194        23 055      115 124

Non-controlling interest         4 145         1 994        3 964

Accumulated profits          1 377 882     1 002 639    1 169 383

Non-current liabilities        850 061       747 629      846 901

Other financial liabilities 

– interest bearing             632 333       544 691      635 514

Other financial

liabilities – non-interest

bearing                        108 209        78 149       89 677

Provisions                       8 566         8 373        8 166

Instalment sale

liabilities                     16 177        34 967       22 729

Deferred tax                    84 776        81 449       90 815

Current liabilities          1 915 634     1 391 475    1 704 726

Other financial

liabilities                    107 113       339 780        8 892

Trade and other payables     1 528 918       813 554    1 427 761

Amounts received in

advance                        155 826        52 144      172 645

Amounts due to contract 

customers                       95 741       134 304       66 611

Instalment sale

liabilities                     24 486        24 110       23 364

Taxation payable                 3 550        27 583        5 443

Total equity and

liabilities                  6 037 575     4 545 598    5 226 871

Number of shares in issue

(000s)                         156 884       148 594      148 884

Net asset value per share

(cents)                          2 085         1 620        1 797

Net tangible asset value

per share (cents)                1 732         1 242        1 423





Condensed consolidated statements of cash

                             Unaudited     Unaudited      Audited

                            Six months     Six month         Year

                                 ended         ended        ended

                           29 February   28 February    31 August

                                  2016          2015         2015

                                 R’000         R’000        R’000

Cash flows utilised in

operating activities          (324 887)     (562 432)    (260 203)

Cash flows utilised in

investing activities           (43 437)     (102 358)    (122 152)

Cash flows from financing

activities                     357 122       166 747      (89 167)

Net decrease in cash and

cash equivalents               (11 202)     (498 043)    (471 522)

Effect on foreign currency 

translation reserve

movement on cash balances        9 487         9 062        5 015

Cash and cash equivalents

at beginning of period          482 477      948 984      948 984

Cash and cash equivalents

at end of period                480 762      460 003      482 477



Condensed consolidated statements of changes in equity

                             Unaudited     Unaudited      Audited

                            Six months     Six month         Year

                                 ended         ended        ended

                           29 February   28 February    31 August

                                  2016          2015         2015

                                 R’000         R’000        R’000

Balance at beginning of

period                       2 675 244     2 178 496    2 178 496

Issue of share capital and

share issue expenses           248 980        41 573       45 991

Share-based payment

reserve                          4 906         3 300        6 849

Total comprehensive income

for the period                 342 569       182 962      441 775

Non-controlling interest           181           163        2 133

Balance at end of period     3 271 880     2 406 494    2 675 244





Segmental analysis

                             Unaudited     Unaudited      Audited

                           29 February   28 February    31 August

                                  2016          2015         2015

                                 R’000         R’000        R’000

Revenue

Building Materials             228 222       230 777      499 807

Power                        1 760 659     1 371 774    2 951 149

Rail                           112 442        60 313      152 996

Total                        2 101 323     1 662 864    3 603 953

EBITDA

Building Materials              36 240        32 763       86 017

Power                          218 192       166 301      300 698

Rail                            16 520         9 418       20 048

Corporate                        3 365       (2 000)        7 698

Total                          274 317       206 482      414 461

Profit after tax 

Building Materials              13 811        12 689       39 346

Power                          104 748        86 428      146 879

Oil and Gas                     62 318        50 410      109 517

Rail                             9 328         6 108       11 253

Corporate                       18 475         8 000       24 410

Total                          208 680       163 645      331 406





                             Unaudited     Unaudited      Audited

                           29 February   28 February    31 August

                                  2016          2015         2015

                            % of total    % of total   % of total

Revenue

Building Materials                  11            14           14

Power                               84            82           82

Rail                                 5             4            4

Total                              100           100          100

EBITDA

Building Materials                  13            16           19

Power                               80            81           73

Rail                                 6             4            5

Corporate                            1            (1)           3

Total                              100           100          100

Profit after tax

Building Materials                   7             8           12

Power                               50            53           44

Oil and Gas                         30            31           33

Rail                                 4             3            3

Corporate                            9             5            7

Total                              100           100          100





                             Unaudited     Unaudited      Audited

                           29 February   28 February    31 August

                                  2016          2015         2015

                                 R’000         R’000        R’000

Assets

Building Materials             582 776       593 890      599 983

Power                        2 762 518     1 934 526    2 394 459

Oil and Gas                    799 556       457 797      584 170

Rail                           120 304        88 209       96 600

Corporate                    2 852 030     2 258 212    2 447 727

Total assets including

group loan accounts          7 117 184     5 332 634    6 122 939

Inter-group elimination     (1 079 609)     (787 036)    (896 070) 

Total                        6 037 505     4 545 598    5 226 871 

liabilities

Building Materials             422 797       463 326      460 653

Power                        1 814 977     1 171 657    1 581 365

Oil and Gas                    108 209       177 117       89 677

Rail                            48 024        33 937       33 764

Corporate                      808 105       590 749      694 573

Total liabilities including 

group loan accounts          3 202 112     2 436 786    2 860 032

Inter-group elimination       (436 417)     (297 682)    (308 405) 

Total                        2 765 695     2 139 104    2 551 627



Corporate information

Executive directors

RD Gamsu, IM Klitzner



Independent non-executive directors

F Boner (Chairman), K Bucknor*, A Darko*, AD Dixon, R Horton, 

J Nwokedi

* Ghanaian



There were no changes to the board of directors during this period. 



Business address

Commerce Square, Building 2, 39 Rivonia Road, Sandhurst



Business postal address

PO Box 651455, Benmore, Johannesburg 2010

Telephone: 011 280 4040

Facsimile: 086 748 9169



Company secretary

CIS Company Secretaries Proprietary Limited



Transfer secretaries

Computershare Investor Services Proprietary Limited



Sponsor

Java Capital



Auditors

Grant Thornton


19 April 2016



Visit our website

www.ciglimited.co.za, to review the investor presentation relating

to the interim results for the six months ended 29 February 2016.



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.


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