Wrap Text
Interim results for period ended 31 August 2017
Buildmax Limited
(Incorporated in the Republic of South Africa)
Registration number 1995/012209/06
Share code: BDM ISIN: ZAE000167318
("Buildmax" or the "group" or the "company")
Unaudited consolidated financial results for the six months ended 31 August 2017
Condensed consolidated statement of financial position
Unaudited Unaudited Audited
31 August 2017 31 August 2016 28 February 2017
R'000 R'000 R'000
ASSETS
Non-current assets
Property, plant and equipment 376 358 401 645 359 070
Deferred taxation 29 448 33 294 38 035
405 806 434 938 397 105
Current assets
Inventories 15 620 10 744 11 261
Trade and other receivables 173 648 128 939 93 474
Taxation receivable 5 037 5 594 5 037
Bank and cash balances 2 844 24 774 12 438
197 149 170 050 122 210
Assets classified as held for sale 16 389 13 979 15 003
Total assets 619 345 618 967 534 318
EQUITY AND LIABILITIES
Share capital and premium 2 007 662 2 007 662 2 007 662
BEE IFRS 2 cost 1 195 1 195 1 195
Foreign currency translation reserve 11 135 7 361 12 493
Accumulated loss (1 823 126) (1 816 298) (1 835 717)
Attributable to owners of the parent 196 866 199 920 185 633
Non controlling interest (51 860) (49 726) ( 54 094)
Total shareholders' interests 145 006 150 194 131 539
Non-current liabilities
Interest-bearing liabilities - 7 366 6 694
Term loan 47 422 123 915 84 194
Capitalised finance leases 24 608 7 238 -
Deferred taxation 13 102 14 618 13 102
85 132 153 137 103 990
Current liabilities
Interest-bearing liabilities 28 329 28 189 27 649
Term loan 64 000 50 887 60 353
Capitalised finance leases 19 962 10 929 12 977
Trade and other payables 229 004 178 300 170 080
Taxation payable 171 - 171
Bank overdrafts 40 003 41 612 20 957
381 468 309 918 292 187
Liabilities directly associated with assets held for sale 7 739 5 717 6 602
Total equity and liabilities 619 345 618 967 534 318
Shares in issue at end of reporting period 178 782 178 782 178 782
Net asset value per share (cents) 110.1 111.8 103.8
Condensed consolidated statement of comprehensive income
Unaudited Unaudited Audited
6 months ended 6 months ended year ended
31 August 2017 31 August 2016 28 February 2017
R'000 R'000 R'000
Continuing operations
Revenue 623 674 420 466 910 462
Operating profit before depreciation and impairment ("EBITDA") 87 096 33 684 76 170
Depreciation (48 114) (43 281) (84 015)
Operating profit/(loss) before impairment 38 982 (9 597) (7 845)
Impairment of property plant and equipment - - (1 877)
Profit/(loss) before interest and taxation ("PBIT") 38 982 (12 551) (9 722)
Net interest paid (14 304) (18 239) (33 927)
Interest paid (14 311) (18 241) (33 931)
Interest received 7 2 4
Profit/(loss) before taxation ["PBT"] 24 678 (30 790) (43 649)
Taxation (8 587) 6 778 13 374
Profit/(loss) for the period ["PAT"] 16 091 (24 012) (30 275)
After tax loss from discontinued operations (see note below) (1 267) (3 425) (17 994)
Profit/(loss) for the period 14 825 (27 437) (48 269)
Other comprehensive (loss)/income for the period:
Foreign currency translation reserve (1 358) 2 990 8 122
Total comprehensive profit/(loss) for the period 13 467 (24 447) (40 147)
Profit/(loss) for the period attributable to:
Equity holders of the parent 12 591 (22 799) (42 218)
Non controlling interest 2 234 (1 683) (6 051)
14 825 (27 437) (48 269)
Total comprehensive profit/(loss) for the period attributable to:
Equity holders of the parent 11 233 (22 764) (34 096)
Non controlling interest 2 234 (1 683) (6 051)
13 467 (24 447) (40 147)
Reconciliation of headline profit/(loss)
Unaudited Unaudited Audited
6 months ended 6 months ended year ended
31 August 2017 31 August 2016 28 February 2017
R'000 R'000 R'000
Continuing operations
Profit/(loss) for the period attributable to shareholders of Buildmax 13 850 (19 374) (25 991)
Adjusted for:
(Deduct profit) / Add back loss on disposal of property, plant and equipment 59 1 565 (9)
- Gross 82 2 174 (13)
- Taxation (23) (609) 4
Impairment of property, plant and equipment - - 1 351
- Gross - - 1 877
- Taxation - - (526)
Headline profit/(loss) attributable to ordinary shareholders 13 909 (17 809) ( 24 648)
Unaudited Unaudited Audited
6 months ended 6 months ended year ended
31 August 2017 31 August 2016 28 February 2017
R'000 R'000 R'000
Discontinued operations
Loss for the period attributable to shareholders of Buildmax (1 259) ( 3 425) (16 227)
Adjusted for:
(Deduct profit) / Add back loss on disposal of property, plant and equipment (25) 3 259 4 623
- Gross (32) 4 178 5 926
- Taxation 7 (919) (1 303)
Headline loss attributable to ordinary shareholders (1 284) (166) (11 604)
Supplementary information
Profit/(Loss) per share
Unaudited Unaudited Audited
6 months ended 6 months ended year ended
31 August 2017 31 August 2016 28 February 2017
cents cents cents
Headline earnings/(loss) per share (cents) 7.06 (10.09) (20.28)
Continuing operations 7.78 (10.00) (13.79)
Discontinued operations (0.72) (0.09) (6.49)
Basic earnings/(loss) per share (cents) 7.05 (12.70) (23.62)
Continuing operations 7.75 (10.80) (14.54)
Discontinued operations (0.70) (1.90) (9.08)
Shares in issue (excluding treasury shares) ('000)
- at end of the period 178 782 178 782 178 782
- weighted 178 782 178 782 178 782
Condensed consolidated statement of cash flows
Unaudited Unaudited Audited
6 months ended 6 months ended year ended
31 August 2017 31 August 2016 28 February 2017
R'000 R'000 R'000
Operating activities
Profit/(loss) before taxation 23 411 (31 723) (62 106)
Working capital movement (25 609) (19 439) (1 057)
Impairments of property, plant & equipment, goodwill and intangible assets - - 1 877
Other non-cash flow items 49 726 57 274 115 663
Net interest paid 15 603 19 999 37 124
Cash generated by operations 63 131 26 111 91 502
Net interest paid in cash (15 603) (19 999) (37 125)
Dividends paid - (200) (200)
Taxation received - 440 1 507
Cash generated by operating activities 47 528 6 353 55 684
Investing activities
Purchase of property, plant and equipment
- Maintaining operations (68 391) (2 567) (16 043)
Environmental guarantee investment (249) (315) (159)
Proceeds on disposal of property plant and equipment 18 21 500 30 767
Net cash (utilised)/generated by investing activities (68 622) 18 618 14 565
Financing activities
Interest-bearing liabilities raised 61 488 - 402
Interest-bearing liabilities repaid (69 034) (45 333) (82 393)
Net cash utilised by financing activities (7 546) (45 333) (81 991)
Net decrease in cash and cash equivalents (28 640) (20 362) (11 742)
Cash and cash equivalents at the beginning of the year (8 519) 3 223 3 223
Cash and cash equivalents at the end of the year (37 159) (17 139) (8 519)
Condensed consolidated statement of changes in equity
Non Total
Share capital BEE IFRS2 Foreign currency Accumulated Attributable to owners controlling shareholders'
and premium pay costs translation reserve loss of the parent interest interest
R'000 R'000 R'000 R'000 R'000 R'000 R'000
Balances as at 29 February 2016 2 007 662 1 195 4 371 (1 793 299) 219 929 (48 043) 171 886
Total comprehensive loss for the year
Continuing Operations - - - (19 374) (19 374) (1 383) (20 757)
Discontinued Operations - - 2 990 (3 425) (435) (300) (735)
Dividends paid by Diesel Power Group
Holdings to its empowerment partner - - - (200) (200) - (200)
Balances as at 31 August 2016 2 007 662 1 195 7 361 (1 816 298) 199 920 (49 726) 150 194
Total comprehensive loss for the year
Continuing Operations - - - (6 617) (6 617) (2 901) (9 518)
Discontinued Operations - - 5 132 (12 802) (7 670) (1 467) (9 137)
Balances as at 28 February 2017 2 007 662 1 195 12 493 (1 835 717) 185 633 (54 094) 131 539
Total comprehensive profit/(loss) for
the year
Continuing Operations - 13 850 13 850 2 225 16 075
Discontinued Operations - - (1 358) (1 259) (2 617) 9 (2 608)
Balances as at 31 August 2017 2 007 662 1 195 11 135 (1 823 126) 196 866 (51 860) 145 006
Condensed segmental analysis
Unaudited Unaudited Audited
6 months ended 6 months ended year ended
31 August 2017 31 August 2016 28 February 2017
R'000 R'000 R'000
EXTERNAL REVENUE
Continuing Operations 623 674 420 466 910 462
Mining Services - Diesel Power 622 054 420 466 910 462
Training services 1 620 - -
Discontinued operations 1 907 17 040 14 735
Africa open cast mining operations (Congo and Botswana) - 9 241 2 984
Civils and Earthworks - 5 710 7 749
Aggregates and Quarries 1 907 2 089 4 002
625 581 437 506 925 197
INTER-SEGMENT REVENUE
Continuing Operations 29 945 6 987 12 347
Mining Services - Equipment sales and rental 28 851 6 987 12 347
Training services 1 094 - -
Discontinued operations 6 318 9 241 14 797
Africa open cast mining operations (Congo and Botswana) 6 318 9 241 14 797
36 263 16 228 27 144
EBITDA
Continuing Operations 87 096 33 684 76 170
Mining Services - Diesel Power 74 344 39 324 93 608
Mining Services - Equipment sales and rental 18 907 2 605 5 245
Total Mining services 93 251 41 930 98 853
Training services (190) - -
Corporate Head office (5 965) (8 246) (22 683)
Discontinued operations 2 953 2 524 (5 991)
Africa open cast mining operations (Congo and Botswana) 3 563 3 837 (5 946)
Civils and Earthworks - (1 020) (15)
Aggregates and Quarries (610) (293) (30)
90 049 36 208 70 179
OPERATING PROFIT/(LOSS) BEFORE IMPAIRMENTS
Continuing Operations 38 982 (9 597) (7 845)
Mining Services - Diesel Power 33 294 (3 537) 10 755
Mining Services - Equipment sales and rental 11 916 2 185 4 162
Total Mining services 45 210 (1 351) 14 917
Training services (263) - -
Corporate Head office (5 965) (8 246) (22 762)
Discontinued operations 32 (2 127) (15 258)
Africa open cast mining operations (Congo and Botswana) 642 (814) (15 213)
Civils and Earthworks - (1 020) (15)
Aggregates and Quarries (610) (293) (30)
39 014 (11 724) (23 103)
After tax loss from discontinued operations:
Unaudited Unaudited Audited
6 months ended 6 months ended year ended
31 August 2017 31 August 2016 28 February 2017
R'000 R'000 R'000
Revenue 1 907 17 040 14 735
Operating profit/(loss) before depreciation ("EBITDA") 2 953 2 524 (5 991)
Depreciation (2 921) (4 651) (9 267)
Profit/(loss) before interest and taxation ["PBIT"] 32 (2 127) (15 258)
Net interest paid (1 299) (1 760) (3 198)
Interest paid (1 351) (1 811) (3 314)
Interest received 52 51 116
Loss before taxation ["PBT"] (1 267) (3 887) (18 456)
Taxation - 462 462
Loss for the year ["PAT"] (1 267) (3 425) (17 994)
Commentary including outlook and prospects
Although the outlook for the global mining industry has improved since the end of 2016 with
increases in both the demand for and prices of commodities trading conditions will remain
challenging.
Global economic growth is expected to dip towards the end of 2017 but then gain momentum
during 2018 backed by growth in emerging economies like India and Indonesia.
In South Africa the publication of the amendments to the Mining Charter has created uncertainty
in the mining industry which resulted in stakeholders approaching the courts to stop the
implementation thereof. The impact on investments in the mining sector remains uncertain and
not promising.
The weaker trading conditions experienced during 2015 and the beginning of 2016 has taken a
heavy toll on the value of certain bulk commodities resulting in several of Buildmax's competitors
making business decisions to reduce their exposure to opencast mining.
Although the macro environment for opencast mining has substantially improved since November
2016, the contract mining business continues to be capital and labour intensive and currency
sensitive. There is very little if any pricing power. Our ability to grow is being hindered by:
- A global shortage of new and quality second hand plant.
- The weaker rand causing a considerable increase in the cost of new plant, constraining the
company's ability to replace equipment when required in terms of the group's current
replacement policy.
- Securing affordable asset based funding to finance the group's replacement capital
expenditure programmes.
- Any delay in replacing the group's ageing mining equipment will result in an increase in repairs
and maintenance and limit our ability to maximise operational efficiencies.
- The annual escalation of mining rates not being adequate to match the:
- increase in cost of spares and new equipment;
- increase in salaries and wages; and
- operational overheads.
- The ongoing liquidity crunch being experienced in the sector which is largely driven by bearish
sentiment surrounding the prospects of mining in a highly regulated environment with
unsettled legislation.
- Increasing and ongoing demands compounded by community unrest in close proximity to the
mining sites impacting productivity.
As reported previously, the company has not accounted for any possible benefit from the
liquidation process of Messina Copper Botswana Proprietary Limited in its interim results.
Unforseen delays in the finalisation of the liquidation process has resulted in a significant increase
in liquidation costs with a commensurate decrease in the calculated liquidation dividend. The
longer this matter continues, the smaller the distribution will be for the benefit of the unsecured
creditors.
Whilst the financial results for the period ended 31 August 2017 are an improvement on the
previous corresponding period, historically the second half of the financial year has always been
challenging due to the December holidays and the rainy season. This year, the challenges are
exacerbated by the uncertainity of clients extending or renewing our existing contracts on the
back of uncertain extensions with them agreeing new contracts with Eskom.
Financial
The financial results for the interim period ended 31 August 2017 are summarised below:
- Revenue from continuing operations increased by 48.3% to R623.7 million.
- An improvement of 158.6% in EBITDA from continuing operations from R33.7 million to
R87.1 million.
- Continuing operations reported an operating profit of R39 million for the first half of the 2018
financial year compared to an operating loss of R9.6 million for the previous reporting
period.
- Improved headline earnings from continuing operations of 7.1 cents per share compared to
a loss of 10.0 cents per share.
- Improved basic earnings from continuing operations of 7.0 cents per share compared to a
loss of 10.8 cents per share.
- Decline in headline loss from discontinued operations of 0.7 cents per share compared to a
loss of 0.1 cents per share.
- Improved basic loss from discontinued operations of 0.7 cents per share compared to a loss
of 1.9 cents per share.
- Tangible net asset value and net asset value per share increased from 103.8 cents at the
end of February 2017 to 110.1 cents at the end of the interim reporting period.
- Net debt reduced by R23.9 million from R245.4 million to R221.5 million.
- Cash generation by operating activities improved by R41.0 million from R6.6 million to R47.6
million.
- Diesel Power Group Holdings Proprietary Limited ("Diesel Power") met its banking
covenants.
Going concern
These unaudited interim financial results have been prepared on the basis of accounting policies
applicable to a going concern.
As at 31 August 2017, the group's current liabilities exceed current assets of which 58.8% is due
to the short-term portion of its debt.
The group's opencast mining contracts are all delivering positive operating profit and predictable
positive cash flows. Management's attention is now focused on ensuring that these contracts
deliver acceptable operating margins and returns on invested capital considering each project's
risk profile. This is an on-going process that could result in terminating contracts that do not meet
this criteria and redeploying its assets to contracts that meet minimum hurdle rates.
Management's focus will be on cost control, production efficiencies and the preservation of cash.
The board of directors of Buildmax ("the board") is satisfied that the group is a going concern and
has therefore applied the going concern principle in preparation of these interim financial results.
Safety and quality management
The mining division has maintained and boasts a proud track record of more than 53 million
fatality free injury hours and almost 6 million fatality free shifts. Safety is a core value of the group
and is integral to the way in which it conducts its business. This is demonstrated by its
commitment to high standards and assignment of specific responsibilities for safety. The value the
group places on the safety of employees and sub-contractors is reflected in the safety vision,
"Committed to Efficient Zero Harm Production".
People
Diesel Power reached an agreement on market related conditions with the National Union of Mine
Workers on a new 5-year substantive agreement which will apply from 1 March 2018 until
28 February 2023.
Transformation
Diesel Power has a 42.34% black ownership recognition with 8.98% exercisable voting rights in
the hands of black women.
Management acknowledge that transformation is a business imperative and have identified the
steps that need to be taken in order to increase Diesel Power's BEE shareholding in excess of
51% black ownership. It is anticipated that this process will be completed by 28 February 2018.
Governance
Buildmax complies with the Companies Act, No 71 of 2008, the Listings Requirements of the JSE
Limited and King IV Report on Corporate Governance for South Africa, 2016.
Dividend
There was no interim dividend declared by Buildmax.
Acknowledgements
The board would like to express its appreciation to all its customers, staff, business partners,
shareholders and other stakeholders for their support and continued confidence in the
sustainability of the group and its underlying business.
On behalf of the board:
Colin Wood
Chairman
Justin Colling
CEO
Christie Els
CFO
Benoni
3 November 2017
Notes to the unaudited interim financial results for 6 months ended 31 August 2017
This interim report should be read in conjunction with the Buildmax group 2017 integrated report
which is available at www.buildmax.co.za.
Approval of the interim financial results
The unaudited interim financial results have been prepared in accordance with International
Financial Reporting Standards, IAS 34: Interim Financial Reporting, the SAICA Financial
Reporting Guides as issued by the Accounting Practices Committee, the Financial
Pronouncements as issued by the Financial Reporting Standards Council, the Listings
Requirements of the JSE Limited and the Companies Act, No 71 of 2008.
The accounting policies used in the preparation of these interim results are consistent with those
used in the annual financial results for the year ended 28 February 2017, which have been
prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB). The group interim financial results have been
prepared on the historical cost basis.
This report and the financial statements were compiled under the supervision of Mr CS Els, Chief
Financial Officer, CA (SA). These interim financial results have not been reviewed by the
company's auditors.
The interim financial results have been prepared on a going concern basis as the board believe
that the company and the group will continue to be in operation for the foreseeable future.
The interim financial results were approved by the board on 1 November 2017.
Estimates and contingencies
Management makes estimates and judgments concerning the future with regards to opencast
mining contracts, provisions, claims, depreciation methods and residual values when estimating
the recoverable amounts of assets.
The resulting estimates and judgments can only approximate the actual results. Estimates and
judgments are continually evaluated and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the
circumstances.
The group has contingent liabilities in respect of legal claims and contractual guarantees
arising in the ordinary course of business. It is anticipated that no material liabilities will arise
from the contingent liabilities other than those provided for.
Changes to the Board
Save for the changes to the Board announced in the abridged audited financial statements for the
year ended 28 February 2017 released on SENS on 31 May 2017, there were no other changesduring the six-month
period.
Assets held for sale and discontinued operations
Diesel Power Botswana, Diesel Power Congo SARLU, the Aggregates and Quarries business, and the civils and earthworks
division have been reported as discontinued operations.
Aggregates and quarries (discontinued operation)
Shareholders are referred to the SENS announcement issued on 11 September 2017, 10 July
2015 and the "Notice of Annual General Meeting 2015" dated 31 August 2015 which incorporated
a category one circular disclosure relating to the disposal by Buildmax, through its wholly-owned
subsidiary, BAQ, of its interests in certain mining rights ("Mining Rights") and related properties to
Raumix. Shareholders are hereby advised that Ministerial consent to the cession and transfer of
the Mining Rights in terms of section 11 of the Mineral and Petroleum Resources Development
Act, No. 28 of 2002, as amended from time to time, has been obtained. Accordingly, all conditions
precedent to the sale of the Mining Rights have been fulfilled and the sale is now unconditional.
The parties will now commence with the transfer of the rehabilation funds from BAQ and its
subsidiaries (excluding Letamo quarry) to Raumix.
Directors
CJM Wood*# (Chairman)
J Colling (CEO)
CS Els (CFO)
CB Brayshaw*#
MD Lamola*#
G Montgomery*
BT Ngcuka*
#Independent
*Non-executive
Company secretary
GH Miller
Registered office
Reef Insurance Brokers Building
2 Mowbray Avenue
Benoni
1500
(PO Box 11962, Rynfield, 1514)
Sponsor
Sasfin Capital (a member of the Sasfin group)
Auditors
Grant Thornton Johannesburg Partnership
Registered Auditors and Chartered Accountants (SA)
52 Corlett Drive, Wanderers Office Park
Illovo, 2196
Transfer secretaries
Computershare Investor Services (Proprietary) Limited
2nd floor, Rosebank Towers
13 Bierman Avenue
Rosebank, 2196
(PO Box 61763, Marshalltown, 2107)
wwww.buildmax.co.za
Date: 03/11/2017 03:34:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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