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Buildmax Limited HY 2014 results (South Africa)

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Buildmax Limited HY 2014 results (South Africa)

Buildmax Limited HY 2014 results (South Africa)

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  • 1. mining services materials REVIEWED INTERIM FINANCIAL RESULTS 31 AUGUST 2013
  • 2. HEPS increased to headline earnings increased to 20.2 cents from 9.9 cents R36.6 million é 104% from R17.9 million earnings per share increased to earnings increased to 18.4 cents from 9.9 cents R33.3 million é 85.9% from R17.9 million revenue increased to EBITDA increased to PBIT increased to R687.1 million R136.3 million R58.8 million é 4.7% é 3.3% é 33.9% net asset value per share improved to tangible net asset value per share improved to net asset value (excluding goodwill) improved to from R656.2 million 346.6 cents from 318.2 cents é 8.9% from R131.9 million 309.1 cents from 278.4 cents from R505.9 million ê 18.1% gross capital expenditure on new equipment was R155.8 million 331.6 cents from 303.3 cents é 11.0% é 9.3% net debt decreased to cash generated from operating activities increased to interest-bearing debt decreased to R414.3 million from R43.9 million R345.2 million from R451.4 million ê 23.5% R123.6 million from R75.6 million é 63.5% mining services aggregates and quarries 11.20% business unit contribution to revenue civils and earthworks 17.73% 2 | REVIEWED INTERIM FINANCIAL RESULTS 2013 | BUILDMAX 71.07%
  • 3. commentary Illustrated by a 104% increase in HEPS, the Group’s financial performance continues on a positive trend and has made significant strides towards meeting its strategic objectives due to the investment in new plant and preventative maintenance coupled with a focus on operator training. Whilst we have improved in this regard, significant scope exists for further improvement. One of the key objectives set by management was to reduce concentration by targeting and winning business with exposure to different mining commodities in diverse geographic locations. Albeit in an extremely competitive environment, the Group was awarded an iron ore open pit quarry and mining contract in the Republic of Congo by DMC Iron Congo SA, which is controlled by Exxaro Resources Limited. Due to the fact that the majority of the assets used in the mining process are owned by the client, the earnings have contributed positively towards most key financial ratios. Our strategic focus areas remain relevant and outward looking, and our objective is to continue to grow organically and by acquisition. safety and quality management The Group boasts a proud track record of more than 5.3 million fatality free production shifts and 50 million fatality free hours. Safety is a core value of the Buildmax Group and integral to the way it conducts business. It is demonstrated by commitment to high standards and assignment of specific responsibilities for safety. The value the Group places on the safety of employees, and subcontractors is reflected in the safety vision, “Committed to Efficient Zero Harm Production”. The safety policy and framework supports the Group safety vision, provides direction and sets standards for operations to develop and manage their proactive safety programmes and strategies with the objective of continuously improving in terms of safety performance. The Group’s operations continue to maintain certification for the OHSAS 18001: 2007 health and safety management standard, as well as the ISO 9001: 2008 quality management standard. people The quality of our people is a critical source of the Group’s competitive advantage. We recognise that in order to achieve the sustained high performance that is necessary for Buildmax to meet the demands of its business environment, it needs to attract, retain and continuously develop its employees at all levels. Investment in learning and development remains a top priority across the Group which invested R21 million in a range of training, learning and career development opportunities during the year. A bursary scheme for previously disadvantaged individuals ensures that Buildmax attracts an ongoing pipeline of engineering talent and invests in its transformation strategy. operational overview The Group operates within four strategic business units: mining services, equipment sales and rental, civils and earthworks and aggregate and quarries. mining services and equipment sales and rental The mining services business unit provides opencast mining, rehabilitation services as well as equipment sales and rental. The scope of these services include expertise in mine planning, pit designing, production scheduling, drilling and blasting, opencast mining, pillar mining, surveying and mine rehabilitation.The companies that form part of the mining services business unit include, Diesel Power South Africa, Buildmax Equipment and Diesel Power Congo. Operations in South Africa continue to experience tough trading conditions. This challenging environment has been offset by the growth in Africa. REVIEWED INTERIM FINANCIAL RESULTS 2013 | BUILDMAX | 3
  • 4. civils and earthworks Civils and Earthworks, a division of Diesel Power South Africa, is a highly regarded provider of civils and bulk earthworks services to the mining and property development sector of the economy. This division contributed significantly to group turnover, however, it has been negatively impacted by the depressed construction industry in which margins remain subdued. aggregates and quarries Buildmax Aggregates and Quarries (“BAQ”), through its ownership of the Crushco quarry, Alfa & Witdeep Sand and Stone, delivers aggregates, bulk transportation and retail services of selected building materials. This division is also making significant strides into the contract crushing and screening industry by investing in mobile crushing and screening equipment. BAQ have performed above expectations and short to medium term prospects are promising. property, plant and equipment The improved financial position, coupled with the support of the banks, has enabled the company to replace plant, where appropriate, on a consistent basis. A positive consequence of the replacement policy, implemented during 2011, has resulted in excess of 95% of plant having operated for less than 20,000 hours (this represents 98% of book value). Management reviewed the current remaining economic useful lives and residual values of all items of plant and equipment. The following was considered: •  replacement value •  reliable availability of spare parts •  market value •  maintenance history •  local and international demand •  operational application •  OEM support and their value perspective •  value in use A positive consequence of the replacement and maintenance strategy is that the useful lives of various plant categories now range from 8,000 to 36,000 hours depending on the category and brand of the plant item. analysis of mining PPE per age category 60 48.04% Percentage 50 40 35.42% 30 20 8.99% 10 5.90% 1.65% 0 R 00 0 0-5 R R SM 00 01 0 -10 50 SM 00 1 00 10 0 -10 R SM 00 1 00 15 0 -20 R SM 01 >= 0 20 SM working capital Due to the nature of the Group’s conservative asset based funding methodology and environment, it is anticipated that in the foreseeable future, we will reflect a net current liability position. Plant and equipment is funded over a three year period with no residual values. Generally, deposits are not paid on mining equipment and 50% of the capital obligation is settled in the first year with the balance over the remaining two years 4 | REVIEWED INTERIM FINANCIAL RESULTS 2013 | BUILDMAX
  • 5. sustainability The board and executive leadership team remain committed to building a sustainable business that takes into account the economic, social and environmental impacts on the communities in which the Group operates. This commitment to sustainable development is driven at a group level, endorsed and measured by the board, and implemented across the operations. The chairman and directors, through their involvement on various board committees, are accountable for group sustainability performance. The Buildmax Group is committed to conducting its operational activities in an environmentally responsible and sustainable manner within its scope of control. transformation It is our vision to make Buildmax Group a home for all South Africans, where there are no divisions or boundaries and where no-one feels excluded. A successful BEE transaction was concluded which, together with a focus on all code categories, resulted in Diesel Power South Africa obtaining a Level 4 rating and being able to achieve an effective shareholding in excess of 25% in terms of the Codes of Good Practice and the Mining Charter. governance The recently published integrated report outlines how the Group is progressing with its journey to apply the principles set out in the King Report on Governance for South Africa, 2009. The Buildmax Group complies with the Companies Act, 71 of 2008 and the Listings Requirements of the JSE Limited. outlook and prospects There are promising mining and civils opportunities in other African countries where investor-friendly conditions prevail. According to Mining IQ Projects (February 2013) there are a total of 914 open cast mining projects in exploration, grassroots, prefeasibility, feasibility and bankable phase of execution within the African continent. We are fortunate to have meaningful, value-adding and service orientated contractual relationships with most of the leading mining groups in the country. The propensity to outsource remains buoyant and our aim is to continue to grow these customers’ focused strategic alliances. One of the most significant risks in the industry is labour uncertainty and the looming expectation gap between unions’ increasing demands and the ability by companies to meet these requests. To mitigate against this risk, good communication is imperative and we are pleased to have signed a five-year wage agreement with our recognised union. dividend No interim dividend has been declared. acknowledgements The board would like to express its appreciation to all its customers, staff, business partners, shareholders and other stakeholders for their support during the past six months and for their continued confidence in the sustainability of the Group and its strong underlying businesses. On behalf of the board Terry Bantock Colin Wood CEO Chairman Christie Els CFO Johannesburg 7 November 2013 REVIEWED INTERIM FINANCIAL RESULTS 2013 | BUILDMAX | 5
  • 6. condensed consolidated statement of financial position Reviewed Reviewed Audited 31 August 31 August 28 February 2013 2012 2013 R’000 R’000 R’000 ASSETS Non-current assets Property, plant and equipment 930 859 929 938 872 592 Goodwill and other Intangible assets 83 731 89 639 86 688 Environmental guarantee investment 940 393 1 002 1 323 – 1 580 26 503 19 094 20 607 1 043 356 1 039 064 982 469 Other non–current assets Deferred taxation Current assets Inventories Trade and other receivables Taxation receivable 28 758 23 348 26 074 201 817 195 623 168 177 184 421 1 477 69 040 54 647 67 837 299 799 274 039 263 565 1 343 155 1 321 000 1 246 034 1 994 196 2 023 206 1 994 196 2 297 – – 14 376 4 700 8 815 (1 383 794) (1 450 962) (1 417 154) 627 075 576 944 585 857 (7 158) (7 025) (7 105) 619 917 569 919 578 752 177 667 247 727 181 418 886 – 886 73 471 55 069 68 754 252 024 302 796 251 058 Interest–bearing liabilities 236 615 258 272 214 789 Trade and other payables 224 607 188 584 198 130 Provisions 1 066 1 429 – Taxation payable 8 926 – 1 035 Bank and cash balances Total assets EQUITY AND LIABILITIES Share capital and premium Foreign currency translation reserve Share-based payment reserve Accumulated loss Attributable to equity holders of the company Outside shareholders’ interests Total shareholders’ interests Non-current liabilities Interest-bearing liabilities Provisions Deferred taxation Current liabilities Bank overdrafts – – 2 270 471 214 448 285 416 224 1 343 155 1 321 000 1 246 034 180 910 181 301 181 250 Net asset value per share (cents) 346.6 318.2 323.2 Net asset value (excluding goodwill per share) (cents) 331.6 303.3 308.3 Tangible net asset value per share (cents) 309.1 278.4 284.6 Total equity and liabilities Shares in issue at end of period 6 | REVIEWED INTERIM FINANCIAL RESULTS 2013 | BUILDMAX
  • 7. condensed consolidated statement of comprehensive income Audited Reviewed Reviewed Six months Six months Year ended ended ended 31 August 31 August 28 February 2013 2012 2013 R’000 R’000 R’000 Revenue 687 062 656 167 1 186 428 Operating profit before depreciation and amortisation (“EBITDA”) 136 293 131 978 246 814 Depreciation (74 537) (85 068) (141 507) Operating profit before amortisation 61 756 46 910 105 307 (2 954) (2 954) (5 908) 58 802 43 956 99 399 – – 1 100 Amortisation of intangible assets Operating profit Profit on disposal of business Profit before interest and taxation (“PBIT”) 58 802 43 956 100 499 Net interest paid (17 431) (17 891) (35 646) Interest paid (17 714) (19 615) (38 453) 283 1 724 2 807 41 371 26 065 64 853 (8 064) (8 146) (13 206) 33 307 17 919 51 647 Interest received Profit before taxation (“PBT”) Taxation Profit for the period (“PAT”) Other comprehensive items for the period Foreign currency translation reserve 2 297 – – Recycled portion of cash flow reserve – 399 399 Effective portion raised on cash flow hedge – (10) (10) Taxation – (109) (109) 35 604 18 199 51 927 Equity holders of the Company 33 360 17 901 51 709 Outside shareholders’ interests (53) 18 (62) 33 307 17 919 51 647 Equity holders of the Company 35 657 18 181 51 989 Outside shareholders’ interests (53) 18 (62) 35 604 18 199 51 927 Total comprehensive profit for the period Profit for the period attributable to: Total comprehensive profit for the period attributable to: REVIEWED INTERIM FINANCIAL RESULTS 2013 | BUILDMAX | 7
  • 8. reconciliation of headline earnings Audited Reviewed 31 August 28 February 2012 2013 R’000 – Gross ended 2013 Add back loss on disposal of property, plant and equipment Year ended 31 August Less profit on disposal of business Six months ended Profit for the period attributable to shareholders of Buildmax Reviewed Six months R’000 R’000 33 360 17 901 51 709 – – (1 100) 3 221 69 1 231 4 473 96 1 709 – Taxation ( 1 252) (27) (478) Headline earnings attributable to ordinary shareholders 36 581 17 970 51 840 Audited supplementary information earnings per share Reviewed Reviewed Six months Six months Year ended ended ended 31 August 31 August 28 February 2013 2012 2013 cents cents cents Headline earnings per share (”HEPS”) (cents) 20.22 9.91 28.60 Basic earnings per share (cents) 18.44 9.87 28.53 – at end of the period 180 910 181 301 181 250 – weighted 180 910 181 301 181 250 Shares in issue (’000) 8 | REVIEWED INTERIM FINANCIAL RESULTS 2013 | BUILDMAX
  • 9. condensed consolidated statement of cash flows Audited Reviewed Reviewed Six months Six months Year ended ended ended 31 August 31 August 28 February 2013 2012 2013 R’000 R’000 R’000 64 853 Operating activities Profit before taxation 41 371 26 065 Working capital movement (9 847) (47 333) (2 138) Other non-cash flow items 91 830 92 703 154 838 Net interest paid 17 431 17 891 35 646 140 785 89 326 253 199 (17 431) (17 891) (35 646) 259 4 212 2 791 123 613 75 647 220 344 Cash generated from operations Net interest paid in cash Taxation received/(paid) Cash generated from operating activities Investing activities Purchase of property, plant and equipment – Expanding operations – Maintaining operations Environmental guarantee investment Mine stripping asset Proceeds on disposal of businesses Proceeds on disposal of property, plant and equipment Net cash utilised by investing activities – (69) – (155 819) (334 132) (400 031) (245) 29 (580) (43) – (1 580) – – 1 100 18 544 22 850 94 779 (137 563) (311 322) (306 312) (29 010) Financing activities Repurchase of issued shares – – Vendor loans repaid – 1 024 – Interest-bearing liabilities raised 155 472 287 541 402 170 Interest-bearing liabilities repaid (138 049) (107 023) (330 405) 17 423 181 542 42 755 Net cash flows generated from financing activities Net increase/(decrease) in cash and cash equivalents 3 473 (54 133) (43 213) Cash and cash equivalents at the beginning of the period 65 567 108 780 108 780 Cash and cash equivalents at the end of the period 69 040 54 647 65 567 REVIEWED INTERIM FINANCIAL RESULTS 2013 | BUILDMAX | 9
  • 10. condensed consolidated statement of changes in equity Other components of equity Attributable to equity Outside Share Foreign Cash Share- capital currency flow based Accumu- holders share- Total and translation hedging payment lated of the holders’ share- premium reserve reserve reserve loss company interest holders’ R’000 R’000 R’000 R’000 R’000 R’000 R’000 interest 2 023 206 – (280) – (1 468 863) 554 063 (7 043) 547 020 – – – 4 700 – 4 700 – 4 700 – – 280 – 17 901 18 181 18 18 199 2 023 206 – – 4 700 (1 450 962) 576 944 (7 025) 569 919 Balances as at 28 February 2012 Share-based payment reserve: – FRS2 share-based payment I reserve cost Total comprehensive profit for the period Balances as at 31 August 2012 Share repurchase allocated to: – Share capital – Share premium (1 934) – – – – (1 934) – (1 934) (27 076) – – – – (27 076) – (27 076) – – – 4 115 – 4 115 – 4 115 – – – – 33 808 33 808 (80) 33 728 1 994 196 – – 8 815 (1 417 154) 585 857 (7 105) 578 752 Share-based payment reserve: – FRS2 share-based payment I reserve cost Total comprehensive profit for the period Balances as at 28 February 2013 Share-based payment reserve: – FRS2 share-based payment I reserve cost –  EE IFRS2 costs B – – – 4 366 – 4 366 – 4 366 – _ – 1 195 – 1 195 – 1 195 – 2 297 – – 33 360 35 657 (53) 35 604 1 994 196 2 297 – 14 376 (1 383 794) 627 075 (7 158) 619 917 Total comprehensive profit for the period Balances as at 31 August 2013 10 | REVIEWED INTERIM FINANCIAL RESULTS 2013 | BUILDMAX
  • 11. condensed segmental analysis Audited Reviewed Reviewed Six months Six months Year ended ended ended 31 August 31 August 28 February 2013 2012 2013 R’000 R’000 R’000 Total mining services 488 301 491 620 898 357 Civils and earthworks 121 836 78 799 162 792 76 925 85 748 125 279 687 062 656 167 1 186 428 EXTERNAL REVENUE Aggregates and quarries INTERSEGMENT REVENUE Mining services – Diesel Power 1 680 1 076 4 252 Mining services – Equipment sales and rental 7 309 12 850 22 315 Total mining services 8 989 13 926 26 567 12 120 4 090 10 483 21 109 Aggregates and quarries 18 016 37 050 130 493 127 319 237 677 3 045 4 154 6 778 133 538 131 473 244 455 EBITDA Mining services – Diesel Power Mining services – Equipment sales and rental Total mining services Civils and earthworks (5 221) 2 376 5 490 12 040 9 299 9 919 (4 064) (11 170) (13 050) 136 293 131 978 246 814 61 504 50 943 110 834 2 695 3 113 5 346 Total mining services 64 199 54 056 116 180 Aggregates and quarries Corporate head office OPERATING PROFIT/(LOSS) BEFORE AMORTISATION Mining services – Diesel Power Mining services – Equipment sales and rental Civils and earthworks (5 221) 2 376 5 485 Aggregates and quarries 6 882 1 697 (3 308) Corporate head office (4 104) (11 219) (13 050) 61 756 46 910 105 307 REVIEWED INTERIM FINANCIAL RESULTS 2013 | BUILDMAX | 11
  • 12. notes to the reviewed group interim financial results for the six-month period ended 31 august 2013 This interim report should be read in conjunction with the Buildmax Group 2013 integrated report which is available at www.buildmax.co.za. approval of the interim financial results The reviewed 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 JSE Listings Requirements, and the Companies Act, 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 2013, which have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB). The reviewed group interim financial results have been prepared on the historical cost basis. This report was compiled under the supervision of Mr CS Els, Chief Financial Officer. These results were reviewed by Grant Thornton (Jhb) Inc and the unmodified review opinion is available for inspection at the registered office of the Company. The interim financial results have been prepared on a going-concern basis as the directors believe that the Company and the Group will continue to be in operation in the foreseeable future. The interim financial results were approved by the board of directors on 7 November 2013. estimates and contingencies Management makes estimates and judgements concerning the future with regards to opencast mining contracts, remaining life of quarries, future rehabilitation costs, provisions, claims, depreciation methods and residual values when estimating the recoverable amounts of assets. The resulting estimates and judgements can only approximate the actual results. Estimates and judgements 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 not anticipated that any material liabilities will arise from the contingent liabilities other than those provided for. 12 | REVIEWED INTERIM FINANCIAL RESULTS 2013 | BUILDMAX
  • 13. mining services materials 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”) DIRECTORS Executive TP Bantock (CEO) CS Els (CFO) J Mathebula Independent non-executive directors CJM Wood (Chairman) CB Brayshaw MD Lamola Registered office 515 Pretoria Road, Fairleads, Benoni (Postnet Suite 435 Private Bag X108 Centurion, 0046) Sponsor QuestCo (Pty) Limited, 2nd Floor No 1 Montecasino Blvd, Fourways, 2055 South Africa (PO Box 98956, Sloane Park, 2152 South Africa) MW McCulloch Auditors Non-executive directors Grant Thornton (Jhb) Inc DJ Mack BT Ngcuka Transfer secretaries G Montgomery Computershare Investor Services (Pty) Limited 70 Marshall Street Johannesburg, 2001 (PO Box 61763, Marshalltown, 2107) Company secretary GH Miller www.buildmax.co.za REVIEWED INTERIM FINANCIAL RESULTS 2013 | BUILDMAX | 13