Wrap Text
Unaudited interim results for the six months ended 31 August 2017
Raubex Group Limited
(Incorporated in the Republic of South Africa)
Registration number 2006/023666/06
Share code: RBX
ISIN: ZAE000093183
("Raubex" or the "Group")
Unaudited interim results for the six months ended 31 August 2017
Highlights
Revenue down 2,0% to R4,67 billion (H1 2017: R4,76 billion)
Operating profit down 6,1% to R370,6 million (H1 2017: R394,7 million)
Cash flow from operations down 14,2% to R464,3 million (H1 2017: R541,4 million)
HEPS up 0,4% to 131,1 cents per share (H1 2017: 130,6 cents per share)
Capex spend of R253,2 million (H1 2017: R234,9 million)
Order book of R7,52 billion (H1 2017: R8,2 billion)
Interim dividend of 45 cents per share declared
Rudolf Fourie, CEO of Raubex Group, said:
"The period in review saw the Group's road construction companies execute their order book
efficiently and deliver some of the best quality road work in the country. Our infrastructure
division capitalised on affordable housing opportunities which assisted in offsetting the delay in
award of renewable energy projects.
The materials division experienced consistent activity in the mining sector which helped to
offset a slowdown in commercial aggregate sales in the Gauteng region.
The South African construction environment is currently not conducive to growth and we will
continue to explore opportunities to supplement our revenue streams internationally and
through acquisitions for our materials division which accounts for nearly half of the Group's
profits."
Commentary
Financial overview
Revenue decreased 2,0% to R4,67 billion and operating profit decreased 6,1% to R370,6 million
from the corresponding prior period.
Profit before tax decreased 5,0% to R354,7 million (H1 2017: R373,6 million) with the effective
tax rate decreasing to 28,1% (H1 2017: 29,5%).
Earnings per share increased 1,0% to 134,0 cents (H1 2017: 132,7 cents) with headline
earnings per share increasing 0,4% to 131,1 cents (H1 2017: 130,6 cents). The improvement in
earnings per share compared to the decrease in profit before tax is as a result of a decrease in
earnings attributable to non-controlling interests as well as the effect of a lower weighted
average number of shares in issue.
Group operating margin decreased to 7,9% (H1 2017: 8,3%).
Net finance costs decreased to R15,9 million (H1 2017: R22,2 million) due to higher net cash
balances during the period. Total non-cash finance costs increased to R6,08 million (H1 2017:
R1,6 million) due to the unwinding of discount on the Voluntary Rebuilding Programme ("VRP")
settlement agreement expense.
Cash generated from operations decreased 14,2% to R464,3 million (H1 2017: R541,4 million)
before finance charges and taxation. Cash generation was affected by an increase in working
capital due to delayed payment of certain provincial accounts in KwaZulu-Natal and an increase
in bitumen inventory in preparation for planned refinery shut downs.
Trade and other receivables decreased by 2,3% to R1,78 billion (H1 2017: R1,82 billion).
Inventories increased 11,0% to R649,9 million (H1 2017: R585,4 million) which increase is mainly
attributable to an increase in bitumen inventory.
Construction contracts in progress remained constant at R343,2 million (H1 2017: R343,9 million).
Trade and other payables increased 5,8% to R1,65 billion (H1 2017: R1,56 billion).
Borrowings decreased 15,9% to R871,8 billion (H1 2017: R1,04 billion).
Capital expenditure on property, plant and equipment increased 7,8% to R253,2 million
(H1 2017: R234,9 million). Net capital expenditure decreased to R182,2 million (H1 2017:
R189,7 million) due to proceeds on disposal of excess plant items on completion of contracts
during the period.
The Group had a net cash outflow for the period of R59,1 million and total cash and cash
equivalents at the end of the period of R1,05 billion.
Operational review
Materials Division
The materials division comprises three main disciplines including commercial quarries, contract
crushing and materials handling and processing services for the mining industry.
The division continued to contribute strongly to the Group's overall operating profit and to
differentiate Raubex from some of its peers in the construction sector with 46,3% of Group
operating profit generated from materials supply and mining-related services.
The commercial quarry operations in the Gauteng area experienced a slowdown in aggregate
sales during the period and the lower volumes had a negative impact on the division's overall
margin.
Materials handling and processing operations in the mining sector remained consistent and
supported the divisional results as commodity prices remained buoyant. The renewal of mining
contracts supported the division's order book growth.
Contract crushing and plant hire operations remained challenging, in line with the conditions in
the overall construction sector.
Revenue for the division increased 7,7% to R1,38 billion (H1 2017: R1,28 billion) while operating
profit decreased by 10,3% to R171,5 million (H1 2017: R191,2 million).
The divisional operating profit margin decreased to 12,4% (H1 2017: 14,9%).
The division incurred capital expenditure of R173,9 million during the period (H1 2017:
R136,7 million).
The division has a secured order book of R1,98 billion (H1 2017: R1,75 billion).
Construction Divisions
Road surfacing and rehabilitation
This division 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 throughout
southern Africa.
The division experienced favourable operating conditions during the period with a healthy order
book and a consistent supply of bitumen enabling the efficient execution of maintenance
contracts. Asphalt manufacturing operations reported lower volumes, due to the timing and
start-up of execution of certain works orders and a lower volume of contracts out to tender
compared to the prior period. The bitumen distribution operations of Tosas reported positive
results for the first half of the year despite this period including their lower volume winter months.
A good quality order book has been secured for the period ahead.
Revenue for the division decreased 7,4% to R1,77 billion (H1 2017: R1,91 billion) and operating
profit decreased 0,6% to R115,6 million (H1 2017: R116,3 million).
The divisional operating profit margin increased to 6,5% (H1 2017: 6,1%).
The division incurred capital expenditure of R60,9 million during the period (H1 2017:
R43,2 million).
The division's secured order book decreased to R2,23 billion (H1 2017: R3,04 billion) due to a
lower volume of maintenance contracts put out to tender from SANRAL compared to the prior
period during which an exceptionally high volume of tender activity was experienced for reseal
contracts on certain roads taken over from provincial authorities.
Road construction and earthworks
This division includes the road and civil infrastructure construction operations focused on the
key areas of new road construction and heavy road rehabilitation.
The division continued to experience tough competitive conditions during the period with a
slower roll out of road contracts compared to prior period activity levels. The results for the
period were supported by a good quality order book and the efficient execution of works as
well as the successful completion of the road contract in Namibia from Rosh Pinah to
Oranjemund. The division's focus is now on short-term order book replacement for the second
half of the year while longer-term work flow continues to be pursued.
Revenue for the division increased 5,3% to R834,1 million (H1 2017: R792,4 million) and
operating profit increased 21,0% to R63,9 million (H1 2017: R52,8 million).
The divisional operating profit margin increased to 7,7% (H1 2017: 6,7%).
The division incurred capital expenditure of R8,6 million during the period (H1 2017:
R35,7 million).
The division has a secured order book of R1,73 billion (H1 2017: R2,0 billion), with R841,5 million
relating to the Link 8000 contracts in Zambia where work remains suspended due to payment
delays from the client.
Raubex Infrastructure
The infrastructure division specialises in disciplines outside of the road construction sector,
including energy (with a specific focus on renewable energy), rail, telecommunications, pipeline
construction, housing infrastructure and commercial building projects.
The division experienced good growth in the affordable housing sector as well as commercial
building projects which helped support the results for the period and the growth in the order book.
Results were negatively affected by the delay in sign off of round 4 and 4.5 of the Renewable
Energy Independent Power Producer Procurement Programme ("REIPPP") by Eskom. After
completion of the earthworks contract on the Ilanga Solar 1 CSP project for Dankocom, a
dispute was declared with the client which is in the process of being settled through arbitration.
The claim value in dispute amounts to R50 million, none of which has been taken to book.
The roll-out of water infrastructure related work in South Africa remained critically slow during
the period and no new contracts were awarded in this sector.
Revenue for the division decreased 12,3% to R678,6 million (H1 2017: R773,5 million) and
operating profit decreased 43,4% to R19,5 million (H1 2017: R34,5 million).
The divisional operating profit margin decreased to 2,9% (H1 2017: 4,5%).
The division incurred capital expenditure of R9,8 million during the period (H1 2017:
R19,3 million).
The division has a secured order book of R1,59 billion (H1 2017: R1,40 billion).
International
The Group has continued to deliver good results from its African operations where a number of
business units are active in Namibia, Botswana and Zambia.
The results for the period were supported by the completion of works on the road contract
between Rosh Pinah and Oranjemund in Namibia. Regular payments amounting to R24,0 million
were received from the Zambian Road Development Agency ("RDA") during the period with a
further R12,7 million received after 31 August 2017 in September and October. The cycle of
payments from the RDA has become more consistent, but due to the amount of outstanding
debt, work on the Link 8000 road contracts remains suspended. The total amount included in
accounts receivable due from the RDA at 31 August 2017 amounted to R156,2 million.
International revenue decreased 15,9% to R541,1 million (H1 2017: R643,7 million) while
operating profit increased 3,8% to R109,8 million (H1 2017: R105,7 million).
Operating profit margins increased to 20,3% (H1 2017: 16,4%).
The international order book stands at R2,16 billion (H1 2017: R2,15 billion) and is included in
the materials and construction divisions' order book.
Prospects
The Group's secured order book decreased 8,2% to R7,52 billion (H1 2017: R8,19 billion) with
28,8% of the order book representing contracts outside of South Africa in the rest of Africa. The
order book for SANRAL decreased 26,9% to R1,46 billion (H1 2017: R1,99 billion) with provincial
and municipal order books decreasing 31,9% and 29,8% respectively. The decrease in SANRAL
as well as provincial and municipal work has been offset by an increase in order book from
private clients mainly in the affordable housing and commercial building sector as well as work
on road infrastructure managed by concessionaires.
In order to support growth in the infrastructure division, the Group has entered the market for
the renovation of commercial buildings through the establishment of Raubex Renovo, who has
a strong management team with the appropriate skills and experience in this niche market. This
business has secured an order book of R322 million during the period, which includes the
renovation of the Preller Mall in Bloemfontein and the construction of an Onomo Hotel in Douala,
Cameroon.
The Link 8000 contracts in Zambia are included in the order book at R841,5 million and although
this work remains suspended, the client's continued engagement with the International
Monetary Fund and the improvement in the copper price bode well for the country and
resumption of work over the medium term.
The Group will continue to look for acquisition opportunities in the commercial aggregates
sector in southern Africa with a number of opportunities currently being considered to further
expand the geographical footprint of the materials division. The Group has also embarked on a
strategy to look for longer-term growth in more developed international markets with
opportunities currently being considered in Australia. The Group has adopted a conservative
approach to entering the Australian market with a view to acquiring a smaller tier civil
construction company that is well positioned for growth as opposed to a larger more
established business
with associated risks.
In the materials division, the margin pressure experienced in the Gauteng commercial
aggregates market is expected to stabilise. Favourable conditions are expected to continue in
the materials handling and processing operations in the mining sector which are supported by
the prevailing commodity prices.
The timing of contract awards under the REIPPP programme remains uncertain but the Group
is well positioned to benefit if Eskom signs the Power Purchase Agreements. The Group has
secured work with clients on two wind farms to the value of R678 million. These two projects
fall below the 77c/kWh which was recently stated by the Minister of Energy as the maximum
cost threshold below which Eskom would sign off. It is anticipated that Eskom will sign off on
these projects towards the end of the current financial year with work commencing in FY19.
These projects have not been included in the Group's order book due to the policy uncertainty
surrounding the REIPPP programme.
Conditions in the South African construction sector are expected to remain challenging in the
period ahead and the Group will look for medium-term growth from a combination of high
margin opportunities in Africa and further acquisitions in the local commercial aggregate sector
to support the materials division.
Transformation
The Group is currently a level 2 B-BBEE contributor with 40,2% black economic interest
measured under the Generic Codes of Good Practice. On 29 September 2017, SANRAL
released its draft transformation policy for public comment which stipulates, inter alia,
prequalification criteria that construction companies must be a minimum of level 2 B-BBEE and
51% black owned. Raubex has had constructive engagements with SANRAL on this draft policy
to obtain clarity and discuss practical issues surrounding their transformation objectives.
SANRAL is a valued client of Raubex with c.17% of total revenue attributable to SANRAL
related work during the 2017 financial year. Raubex will continue to engage with SANRAL on
policy matters to effectively build a more inclusive economy for the benefit of all South Africans.
Board and committee changes
Changes to the board
Further to the SENS announcement made on 2 June 2017, Ms SR Bogatsu has been appointed
as independent non-executive director of the Company with effect from 1 June 2017. Ms Bogatsu
was also appointed as a member of the Audit Committee as well as a member of the
Remuneration and Nomination Committee effective 1 June 2017.
Further to the SENS announcement made on 22 June 2017:
- Mr JE Raubenheimer (Koos) has retired as chairman of the board and non-executive director
of the Company effective 8 September 2017;
- Mr F Kenney, a non-executive director, was appointed as chairman of the board effective
8 September 2017;
- Mrs HE Ernst resigned as Company Secretary of the Company effective 8 September 2017.
Further to the SENS announcement made on 29 August 2017, Ms GM Chemaly was appointed
as Company Secretary and Legal Advisor of the Group effective 16 October 2017.
Change in functions of directors
In compliance with paragraph 3.59 of the JSE Limited Listings Requirements, shareholders are
advised of the following changes to the functions of directors in order to comply with King IV
recommendations regarding the structure of the board committees:
Mr F Kenney has resigned as chairman of the Social and Ethics Committee and Ms SR Bogatsu
has been appointed as chairperson of this Committee. Mr F Kenney will continue to serve as a
member of the Social and Ethics Committee. Mr F Kenney and Mr LA Maxwell have been
appointed as members of the Risk Committee. These changes in function have been confirmed
by the Board on 31 October 2017, with these sub-committees of the board comprising the
following individuals:
Risk Committee
- Mr BH Kent (Chairman)
- Ms NF Msiza
- Mr F Kenney
- Mr LA Maxwell
- Mr RL Shedlock
Social and Ethics Committee
- Ms SR Bogatsu (Chairperson)
- Mr F Kenney
- Mr JA Louw
Dividend declaration
The directors have declared a gross interim cash dividend from income reserves of 45 cents
per share on 6 November 2017 for the six-month period ended 31 August 2017. The salient
dates for the payment of the dividend are as follows:
Last day to trade cum dividend Tuesday, 28 November 2017
Commence trading ex dividend Wednesday, 29 November 2017
Record date Friday, 1 December 2017
Payment date Monday, 4 December 2017
No share certificates may be dematerialised or rematerialised between Wednesday,
29 November 2017 and Friday, 1 December 2017, both dates inclusive.
In terms of Dividends Tax ("DT"), the following additional information is disclosed:
- The local DT rate is 20%.
- The number of ordinary shares in issue at the date of this declaration is 181 750 036.
- The dividend to utilise for determining the DT due is 45 cents per share.
- The DT amounts to 9 cents per share.
- The net local dividend amount is 36 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.
Group income statement
Unaudited Unaudited Audited
six months six months 12 months
31 August 31 August 28 February
2017 2016 2017
R'000 R'000 R'000
Revenue 4 668 172 4 763 620 9 005 645
Cost of sales (4 055 369) (4 128 161) (7 762 882)
Gross profit 612 803 635 459 1 242 763
Other income 18 827 16 421 30 030
Other gains/(losses) - net 9 893 (3 078) (8 319)
Administrative expenses (270 961) (254 076) (482 915)
Voluntary Rebuilding Programme
expense - - (119 884)
Operating profit 370 562 394 726 661 675
Finance income 29 718 27 486 57 366
Finance costs (45 631) (49 649) (100 937)
Share of profit of investments
accounted for using the equity method 76 1 002 855
Profit before income tax 354 725 373 565 618 959
Income tax expense (99 767) (110 230) (209 105)
Profit for the period 254 958 263 335 409 854
Profit for the period attributable to:
Owners of the parent 242 612 245 510 372 062
Non-controlling interest 12 346 17 825 37 792
Basic earnings per share (cents) 134,0 132,7 203,7
Diluted earnings per share (cents) 134,0 131,9 202,2
Group statement of comprehensive income
Unaudited Unaudited Audited
six months six months 12 months
31 August 31 August 28 February
2017 2016 2017
R'000 R'000 R'000
Profit for the period 254 958 263 335 409 854
Other comprehensive income for
the period, net of tax
Currency translation differences 3 170 1 535 (8 762)
Actuarial gain on post-employment
benefit obligations - - 70
Total comprehensive income
for the period 258 128 264 870 401 162
Comprehensive income for the
period attributable to:
Owners of the parent 245 782 247 045 363 370
Non-controlling interest 12 346 17 825 37 792
Total comprehensive income
for the period 258 128 264 870 401 162
Calculation of diluted earnings per share
Unaudited Unaudited Audited
six months six months 12 months
31 August 31 August 28 February
2017 2016 2017
R'000 R'000 R'000
Profit attributable to owners of
the parent entity 242 612 245 510 372 062
Weighted average number of
ordinary shares in issue ('000) 181 088 184 948 182 668
Adjustments for:
Shares deemed issued for no
consideration (share options) ('000) - 1 150 1 362
Weighted average number of
ordinary shares for diluted earnings
per share ('000) 181 088 186 098 184 030
Diluted earnings per share (cents) 134,0 131,9 202,2
Calculation of headline earnings per share
Unaudited Unaudited Audited
six months six months 12 months
31 August 31 August 28 February
2017 2016 2017
R'000 R'000 R'000
Profit attributable to owners of
the parent entity 242 612 245 510 372 062
Adjustments for:
Profit on sale of property, plant
and equipment (11 089) (5 544) (16 092)
Goodwill written off 2 799 - 7 906
Total tax effects of adjustments 3 105 1 552 4 506
Basic headline earnings 237 427 241 518 368 382
Weighted average number of shares ('000) 181 088 184 948 182 668
Headline earnings per share (cents) 131,1 130,6 201,7
Diluted headline earnings per share (cents) 131,1 129,8 200,2
Group statement of financial position
Unaudited Unaudited Audited
six months six months 12 months
31 August 31 August 28 February
2017 2016 2017
R'000 R'000 R'000
Assets
Non-current assets
Property, plant and equipment 2 384 804 2 385 347 2 364 319
Intangible assets 881 255 845 403 851 102
Investment in associates and joint ventures 49 433 49 314 49 087
Deferred income tax assets 46 083 46 017 40 938
Non-current inventories 69 030 77 434 73 459
Non-current trade and other receivables 90 854 106 091 100 557
Total non-current assets 3 521 459 3 509 606 3 479 462
Current assets
Inventories 580 876 507 954 523 600
Construction contracts in progress
and retentions 343 216 343 919 334 016
Trade and other receivables 1 691 701 1 717 542 1 525 373
Current income tax receivable 30 563 29 669 27 713
Cash and cash equivalents 1 045 331 895 959 1 103 618
Total current assets 3 691 687 3 495 043 3 514 320
Total assets 7 213 146 7 004 649 6 993 782
Equity
Share capital 1 817 1 817 1 817
Share premium 2 059 688 2 059 688 2 059 688
Treasury shares (1 218) (23 664) (23 664)
Other reserves (1 203 099) (1 173 528) (1 179 094)
Retained earnings 3 094 471 2 892 720 2 938 678
Equity attributable to owners of
the parent 3 951 659 3 757 033 3 797 425
Non-controlling interest 135 938 139 761 152 300
Total equity 4 087 597 3 896 794 3 949 725
Liabilities
Non-current liabilities
Borrowings 492 295 624 629 562 573
Provisions for liabilities and charges 79 055 74 383 74 838
Deferred income tax liabilities 307 600 301 138 311 608
Other financial liabilities 141 196 60 972 150 120
Total non-current liabilities 1 020 146 1 061 122 1 099 139
Current liabilities
Trade and other payables 1 654 037 1 563 019 1 514 324
Borrowings 379 502 411 453 388 227
Current income tax liabilities 54 617 49 327 25 120
Other financial liabilities 17 247 22 934 17 247
Total current liabilities 2 105 403 2 046 733 1 944 918
Total liabilities 3 125 549 3 107 855 3 044 057
Total equity and liabilities 7 213 146 7 004 649 6 993 782
Group statement of cash flows
Unaudited Unaudited Audited
six months six months 12 months
31 August 31 August 28 February
2017 2016 2017
R'000 R'000 R'000
Cash flows from operating activities
Cash generated from operations 464 310 541 410 1 223 840
Interest received 29 718 27 486 57 366
Interest paid (39 555) (48 062) (89 776)
Income tax paid (91 908) (98 867) (206 977)
Net cash generated from operating
activities 362 565 421 967 984 453
Cash flows from investing activities
Purchases of property, plant and
equipment (253 187) (234 904) (440 512)
Proceeds from sale of property,
plant and equipment 70 950 45 205 88 986
Acquisition of subsidiaries (32 889) (18 233) (26 148)
Loan (granted to)/repayment from
associates and joint ventures (270) 2 370 2 450
Net cash used in investing activities (215 396) (205 562) (375 224)
Cash flows from financing activities
Proceeds from borrowings 223 132 190 488 377 903
Repayment of borrowings (302 135) (261 496) (534 194)
Dividends paid to owners of the parent (81 756) (78 913) (160 087)
Dividends paid to non-controlling interests (11 888) (6 828) (14 256)
Disposal of interest in a subsidiary - - 510
Acquisition of interest in a subsidiary (33 685) - -
Contingent consideration settled - - (20 989)
Share buy-back transaction - (120 000) (120 000)
Sale of treasury shares 14 13 13
Net cash used in financing activities (206 318) (276 736) (471 100)
Net (decrease)/increase in cash and
cash equivalents (59 149) (60 331) 138 129
Cash and cash equivalents at the
beginning of the period 1 103 618 969 736 969 736
Effects of exchange rates on cash
and cash equivalents 862 (13 446) (4 247)
Cash and cash equivalents at the
end of the period 1 045 331 895 959 1 103 618
Group statement of changes in equity
Share Share Treasury Other
capital premium shares reserves
R'000 R'000 R'000 R'000
Balance at 1 March 2016 1 892 2 179 613 (46 599) (1 148 951)
Share option reserve - - - 4 810
Share buy-back (75) (119 925) - -
Treasury shares issued in
terms of equity-settled
share option scheme - - 22 935 -
Share option reserve
utilised during the period - - - (30 922)
Total comprehensive
income for the period - - - 1 535
Dividends paid - - - -
Balance at 31 August 2016 1 817 2 059 688 (23 664) (1 173 528)
Share option reserve - - - 4 731
Disposal of interest to
non-controlling interest - - - -
Total comprehensive
income for the period - - - (10 297)
Dividends paid - - - -
Balance at 28 February 2017 1 817 2 059 688 (23 664) (1 179 094)
Treasury shares issued in
terms of equity-settled
share option scheme - - 22 446 -
Share option reserve
utilised during the period - - - (27 175)
Non-controlling interest
arising on business
combination - - - -
Acquisition of non-
controlling interest - - - -
Total comprehensive
income for the period - - - 3 170
Dividends paid - - - -
Balance at 31 August 2017 1 817 2 059 688 (1 218) (1 203 099)
Total
attributable
to owners of Non-
Retained the parent controlling Total
earnings company interest equity
R'000 R'000 R'000 R'000
Balance at 1 March 2016 2 718 123 3 704 078 128 764 3 832 842
Share option reserve - 4 810 - 4 810
Share buy-back - (120 000) - (120 000)
Treasury shares issued in
terms of equity-settled
share option scheme (22 922) 13 - 13
Share option reserve
utilised during the period 30 922 - - -
Total comprehensive
income for the period 245 510 247 045 17 825 264 870
Dividends paid (78 913) (78 913) (6 828) (85 741)
Balance at 31 August 2016 2 892 720 3 757 033 139 761 3 896 794
Share option reserve - 4 731 - 4 731
Disposal of interest to
non-controlling interest 510 510 - 510
Total comprehensive
income for the period 126 622 116 325 19 967 136 292
Dividends paid (81 174) (81 174) (7 428) (88 602)
Balance at 28 February 2017 2 938 678 3 797 425 152 300 3 949 725
Treasury shares issued in
terms of equity-settled
share option scheme (22 432) 14 - 14
Share option reserve
utilised during the period 27 175 - - -
Non-controlling interest
arising on business
combination - - 7 059 7 059
Acquisition of non-
controlling interest (9 806) (9 806) (23 879) (33 685)
Total comprehensive
income for the period 242 612 245 782 12 346 258 128
Dividends paid (81 756) (81 756) (11 888) (93 644)
Balance at 31 August 2017 3 094 471 3 951 659 135 938 4 087 597
Group segmental analysis
Road Road
surfacing construction
and rehabi- and
Materials litation earthworks
R'000 R'000 R'000
Operating segments
31 August 2017
Segment revenue 1 382 835 1 772 675 834 056
Operating profit 171 545 115 626 63 859
Margin 12,4% 6,5% 7,7%
31 August 2016
Segment revenue 1 284 154 1 913 560 792 441
Operating profit 191 163 116 267 52 776
Margin 14,9% 6,1% 6,7%
28 February 2017
Segment revenue 2 439 016 3 575 199 1 435 421
Operating profit 345 532 258 872 109 633
Margin 14,2% 7,2% 7,6%
Infra- Consoli-
structure Other* dated
R'000 R'000 R'000
Operating segments
31 August 2017
Segment revenue 678 606 - 4 668 172
Operating profit 19 532 - 370 562
Margin 2,9% - 7,9%
31 August 2016
Segment revenue 773 465 - 4 763 620
Operating profit 34 520 - 394 726
Margin 4,5% - 8,3%
28 February 2017
Segment revenue 1 556 009 - 9 005 645
Operating profit 67 522 (119 884) 661 675
Margin 4,3% - 7,3%
Inter- Consoli-
Local national Other* dated
R'000 R'000 R'000 R'000
Geographical information
31 August 2017
Segment revenue 4 127 072 541 100 - 4 668 172
Operating profit 260 796 109 766 - 370 562
Margin 6,3% 20,3% - 7,9%
31 August 2016
Segment revenue 4 119 930 643 690 - 4 763 620
Operating profit 289 028 105 698 - 394 726
Margin 7,0% 16,4% - 8,3%
28 February 2017
Segment revenue 7 790 122 1 215 523 - 9 005 645
Operating profit 563 602 217 957 (119 884) 661 675
Margin 7,2% 17,9% - 7,3%
* Other consists of the Voluntary Rebuilding Programme expense.
Employee benefit expense
Unaudited Unaudited Audited
six months six months 12 months
31 August 31 August 28 February
2017 2016 2017
R'000 R'000 R'000
Employee benefit expense in the
income statement consists of:
Salaries, wages and contributions 1 129 122 1 077 169 2 113 760
Share options granted to employees - 4 810 9 541
Total employee benefit expense 1 129 122 1 081 979 2 123 301
Capital expenditure and depreciation
Unaudited Unaudited Audited
six months six months 12 months
31 August 31 August 28 February
2017 2016 2017
R'000 R'000 R'000
Capital expenditure for the period 253 187 234 904 440 512
Depreciation for the period 188 274 180 101 373 230
Amortisation of intangible assets for the period 1 406 335 1 433
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"), IAS 34: 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 2017 are consistent with those applied for the year ended 28 February 2017
and for the unaudited results for the six months ended 31 August 2016 in terms of IFRS.
Treasury shares
During the period 1 292 196 treasury shares were utilised to settle share options that vested in
terms of the employee share option scheme for an amount of R22,5 million. The related
weighted average share price at the time of exercise was R17,37. The weighted average share
price of the remaining treasury shares held is R17,37.
Analysis of movement in treasury shares:
Number Value
of shares R'000
At 1 March 2016 2 682 662 46 599
Treasury shares issued in terms of equity-settled
share option scheme (1 320 328) (22 935)
Total treasury shares held by Raubex (Pty) Ltd at
28 February 2017 1 362 334 23 664
Treasury shares issued in terms of equity-settled
share option scheme (1 292 196) (22 446)
Total treasury shares held by Raubex (Pty) Ltd at
31 August 2017 70 138 1 218
Business combinations
Acquisitions made during the period
Lime Sales Ltd ("Lime Sales")
On 1 March 2017, the Group effectively acquired 74% of the shares of Lime Sales Ltd ("Lime
Sales") for a purchase price of R37 million to be settled in cash. Lime Sales is a commercial
quarry operating in the Western Cape which produces metallurgical dolomite, agricultural lime
and aggregates. The acquisition is in line with the Group's strategy to expand its commercial
quarry business geographically. The revenue included in the consolidated income statement
since 1 March 2017 contributed by Lime Sales was R27,8 million with a net profit contribution
of R4,5 million over the same period.
Details of the net assets acquired, purchase consideration and goodwill are set out below:
R'000
Consideration
Cash 33 000
Deferred consideration* 4 000
Total consideration 37 000
Property, plant and equipment 14 015
Intangible asset - mining right 17 450
Inventories 6 564
Trade receivables 443
Current income tax receivable 338
Cash and cash equivalents 111
Other financial assets 7
Deferred tax liability (9 973)
Trade and other payables (118)
Rehabilitation provision (1 686)
Total identified net assets 27 151
Less: Non-controlling interest (26%) (7 059)
Goodwill attributable to owners of the parent 16 908
Total 37 000
Purchased consideration settled in cash 33 000
Less: Cash and cash equivalents in the business combination acquired (111)
Cash outflow on acquisition for cash flow statement 32 889
* The deferred consideration is an amount of R4 million payable to the previous shareholders
of Lime Sales once transfer of the mining right into the name of the Group has been
successfully completed. The deferred consideration is included in the cost of the business
combination at the fair value date of the acquisition. Subsequently the deferred consideration
is measured at amortised cost. However, the effect of discounting is deemed to be immaterial
as the Group expects to pay this amount before the end of the 2018 financial year.
Transactions with non-controlling interests
On 1 March 2017, the Group acquired 30% of the shares in Raubex Infra (Pty) Ltd from the
non-controlling shareholders for a purchase consideration of R33,7 million settled in cash.
Subsequent to the transaction, the Group's interest in Raubex Infra (Pty) Ltd increased from
70% to 100%.
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.
On behalf of the Board
F Kenney
Chairman
RJ Fourie
Chief Executive Officer
JF Gibson
Financial Director
6 November 2017
Company information
Directors
RJ Fourie
JF Gibson
NF Msiza
F Kenney#
LA Maxwell*
BH Kent*
SR Bogatsu*
# Non-executive
* Independent non-executive
Company secretary
Ms GM Chemaly
Registered office
Building No 1
The Highgrove Office Park
50 Tegel Avenue
Centurion
South Africa
Transfer secretaries
Computershare Investor Services (Pty) Ltd
Rosebank Towers
5 Biermann Avenue
Rosebank
Johannesburg
2196
Auditors
PricewaterhouseCoopers Inc.
Sponsor
Investec Bank Limited
www.raubex.com
Date: 06/11/2017 07:15:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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