audited
provisional
results

for the year ended 29 February 2012
Condensed consolidated statement of financial position
at 29 February 2012
Audited Group
2012
R’000

2011
R’000

ASSETS
No...
Condensed consolidated statement of comprehensive income
for the year ended 29 February 2012

2012
R’000

2011
R’000

Reve...
Condensed consolidated statement of cash flows
for the year ended 29 February 2012

Cash flows from operating activities
C...
Condensed consolidated statement of changes in equity
for the year ended 29 February 2012

R’000
Balance at
1 March 2010
D...
Operational segmental reporting
for the year ended 29 February 2012

SERVICES WITHIN EACH BUSINESS SEGMENT
For management ...
Other segment information
Depreciation and amortisation

Additions to non-current assets

Contracting
Geotechnical laborat...
Notes to the condensed consolidated annual financial statements
for the year ended 29 February 2012

1.

2.

3.

7

Basis ...
Commentary
Introduction
Protech Khuthele Holdings Limited (“Protech” or “the group”) is a bulk earthworks and civil engine...
As a result of net debt repayments of R5,5 million on it’s interest bearing liabilities, Protech’s net debt:equity
ratio i...
Outlook
The Group has seen evidence of improved tender activity since the beginning of the new financial year, both in
the...
22

Agenda

Introduction
Financial review
Divisional review
Outlook

Introduction

11
Introduction
Introduction

44

Results summary

Revenue

R965,8m
R965,8m

10%
10%

Operating (loss)

(R3,8m)
(R3,8m)

--

...
Introduction

5

Introduction

6

Weathering the tough market
1. Decisive action by new management

HIGHS

Review of strat...
Introduction

7

Management successes in F2012
1. Development of new strategy
2. Phenomenology study including internal cu...
Introduction
Introduction

Strategic repositioning
3. Impact:
3. Impact:
Unlocking value
Unlocking value

Existing operati...
Financial

10

Consolidated statement of comprehensive income
Year ended 29 February 2012
Rm
Revenue

2012
965.8

2011
1 0...
Financial

11

Statement of financial position
Year ended 29 February 2012

Rm

2012

2011

Assets

818,6

853,9

Property...
Financial

13

Capital expenditure
F2013
Budget

Rm
Plant  Equipment
Expansion
Replacement

Proceeds on sales

F2012

F201...
Financial
Financial

14
14

Summarised statement of cash flows
of cash flows
2012 (Rm)

2011 (Rm)
2011 (Rm)
74.1
74.1

146...
Business unit review

Notes
	
	
	
	
	
	
	
	
	
	
	
	

	
20
Business unit

17

Business unit contribution
1 1
Revenueand 2

F2012: R1,0bn
F2011

F2011:F2010
R1,1bn
Contracting

Ready...
Business unit

19

Review of Geotechnical
Operating Margin %

Revenue: R23,4m

1st Half Operating Profit (Rm)
2nd Half Ope...
Business unit

Review of Readymix
Operating Margin %

Revenue: R139,4m

1st Half Operating Profit (Rm)
2nd Half Operating ...
Group outlook

22

Key objectives
Achieved
F2012

F2011

Medium
term
goals

-105%

-35%

GFCF

Return on capital employed
...
Group outlook

23

Outlook: Pipeline
R3,5bn Pipeline as at May 2012
Total

Still to be executed
Recommended by
professiona...
BU outlook

25

Outlook: Readymix
Sector

Anticipated market conditions

Outlook1

Residential

Constrained by credit avai...
Concluding thoughts

Conclusion
Conclusion

Conclusion
Conclusion
Positive signs of turnaround
Positive signs of turnaroun...
Conclusion

28

Investment case
Investment case
Energised and experienced management team with industry track record
Energ...
29

Forward looking statements

Certain statements in this release that are neither reported financial results nor other h...
31

Contact details
Protech Khuthele Holdings Limited
Corner of R512 and Elandsdrift Road, Lanseria
PO Box 1326, Lanseria,...
Protech Khuthele Holdings Ltd FY 2012 results
Upcoming SlideShare
Loading in...5
×

Protech Khuthele Holdings Ltd FY 2012 results

157
-1

Published on

Protech Khuthele Holdings Ltd FY 2012 results

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
157
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
0
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

Protech Khuthele Holdings Ltd FY 2012 results

  1. 1. audited provisional results for the year ended 29 February 2012
  2. 2. Condensed consolidated statement of financial position at 29 February 2012 Audited Group 2012 R’000 2011 R’000 ASSETS Non-current assets 460 045 469 998 Property, plant and equipment Goodwill Other intangible assets Deferred taxation 411 278 33 549 4 100 11 118 429 430 33 549 4 648 2 371 Current assets 358 595 383 879 Inventory Amounts due from contract customers Trade and other receivables Other financial assets Current taxation assets Bank balances and cash 11 305 64 614 192 309 3 428 6 967 79 972 11 434 80 265 216 067 3 501 – 72 612 Total assets 818 640 853 877 EQUITY AND LIABILITIES Total equity 324 589 334 898 228 598 (123 273) 219 264 228 598 (124 029) 230 329 Equity attributable to equity holders of the holding company Non-controlling interests 324 589 – 334 898 – Share capital and share premium Reserves Retained earnings Total liabilities 494 051 518 979 Non-current liabilities 226 837 238 280 Borrowings Deferred taxation 170 686 56 151 171 102 67 178 Current liabilities 267 214 280 699 Borrowings Trade and other payables Subcontractor liabilities Amounts due to contract customers Current taxation liabilities 117 451 109 086 20 212 20 465 – 122 535 120 778 28 844 – 8 542 Total equity and liabilities 818 640 853 877 362 500 89,5 362 500 92,4 160 721 20 000 98 687 211 667 226 360 133 356 SUPPLEMENTARY STATEMENT OF FINANCIAL POSITION INFORMATION Total number of shares in issue (‘000) Net asset value per share (cents) Capital expenditure (R’000) – Spent –  Commitments – Authorised but unspent Performance guarantees in issue (R’000) 1
  3. 3. Condensed consolidated statement of comprehensive income for the year ended 29 February 2012 2012 R’000 2011 R’000 Revenue 965 794 1 069 665 Earnings before interest, taxation, depreciation and amortisation Depreciation and amortisation 63 162 (66 985) 141 596 (64 475) (Loss)/earnings before interest and taxation Net interest paid (3 823) (19 442) 77 121 (23 226) (Loss)/earnings before taxation Taxation (23 265) 12 200 53 895 (14 666) (Loss)/earnings for the year (11 065) 39 229 Other comprehensive income for the year, net of tax 756 (86) Movement in foreign currency translation reserve 756 (86) Total comprehensive (loss)/income for the year (10 309) 39 143 Attributable to: (11 065) 39 229 –  Equity holders of the holding company (11 065) 39 229 –  Non-controlling interests – – Total comprehensive (loss)/income attributable to: –  Equity shareholders of the company –  Non-controlling interests (10 309) – 39 143 – Total comprehensive (loss)/income for the year (10 309) 39 143 (3,1) (3,1) 10,8 10,8 Earnings per share (cents) Basic (loss)/earnings per share Diluted (loss)/earnings per share Supplementary Statement of comprehensive income information Reconciliation of weighted average number of shares in issue: –  Weighted average number of shares in issue (thousands) 362 500 362 500 Reconciliation of headline earnings: (Loss)/earnings attributable to shareholders of the holding company Adjusted for loss on disposal of plant and equipment (net of tax) (11 065) 7 360 39 229 3 713 (3 705) 42 942 (1,0) 11,8 Headline (loss)/earnings Headline (loss)/earnings per share (cents) – Basic 2
  4. 4. Condensed consolidated statement of cash flows for the year ended 29 February 2012 Cash flows from operating activities Cash generated by operations Net interest paid Dividends paid Income taxes paid Cash flows from investing activities 2012 R’000 2011 R’000 71 294 78 825 113 820 (19 442) – (23 084) 121 377 (23 226) (14 500) (4 826) (58 434) (122 415) (160 721) – 102 214 73 (211 667) (3 357) 86 735 5 874 Cash flows from financing activities (5 500) 29 056 Net movement in terms of bank loans Net movement in terms of instalment sale agreements 3 732 (9 232) (7 476) 36 532 Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year 7 360 72 612 (14 534) 87 146 Cash and cash equivalents at the end of the year 79 972 72 612 Cash and cash equivalents comprise of: Bank balances and cash 79 972 72 612 Purchase of property, plant and equipment Purchase of intangible assets Proceeds on disposal of property, plant and equipment Decrease in loans granted 3
  5. 5. Condensed consolidated statement of changes in equity for the year ended 29 February 2012 R’000 Balance at 1 March 2010 Dividends paid Total comprehensive income for the year Balance at 28 February 2011 Total comprehensive loss for the year Balance at 29 February 2012 Foreign Common currency Share Share control translation Retained capital premium reserve reserve earnings 2 – 228 596 – (123 998) – – – – 2 228 596 (123 998) – – – 2 228 596 (123 998) Equity attributable to the shareholders of the company Noncontrolling interest Total equity 310 255 (14 500) – – 310 255 (14 500) 39 229 39 143 – 39 143 (31) 230 329 334 898 – 334 898 756 (10 309) – (10 309) 324 589 – 324 589 55 205 600 – (14 500) (86) (11 065) 725 219 264 4
  6. 6. Operational segmental reporting for the year ended 29 February 2012 SERVICES WITHIN EACH BUSINESS SEGMENT For management purposes, the group is organised into three major operating divisions – contracting, geo­ technical laboratory and readymix. These three divisions are the basis on which the Group reports its primary segment information. The principal services and products of each of these divisions are as follows: Contracting – bulk earthworks, roads and civil engineering contractors, plant hire, impact compaction and logistical services. Geotechnical laboratory – geotechnical laboratory and surveying services. Readymix – supplier of readymixed concrete and pumping services. Segment revenue and segment result Segment revenue Segment result 2012 2011 Contracting Geotechnical laboratory Readymix 865 767 23 405 139 386 942 890 18 827 128 617 (17 902) 7 123 5 541 74 485 3 575 (1 500) Corporate¹ Intergroup eliminations 1 028 558 51 823 (114 587) 1 090 334 8 930 (29 599) (5 238) 3 415 (2 000) 76 560 15 298 (14 737) 965 794 1 069 665 Operating (loss)/profit Net interest paid (3 823) (19 442) 77 121 (23 226) (Loss)/profit before tax Taxation (23 265) 12 200 53 895 (14 666) (Loss)/profit for the year (11 065) 39 229 R’000 2012 2011 Segment revenue reported above represents revenue generated from external customers. Intersegment sales amounted to R114,6 million (2011: R29,6 million). Segment result reported above represents operating profit per segment prior to taking interest into account. The accounting policies of the reportable segments are the same as the Group’s accounting policies. Segment assets and liabilities Segment assets Segment liabilities 2012 2011 2012 2011 Contracting Geotechnical laboratory Readymix 841 518 17 476 72 171 815 776 9 216 72 293 563 527 5 383 83 204 517 052 2 188 85 856 931 165 897 285 652 114 605 096 Corporate¹ Intergroup eliminations 422 537 (535 062) 391 872 (435 280) 183 849 (341 912) 157 470 (243 587) 818 640 853 877 494 051 518 979 R’000 5
  7. 7. Other segment information Depreciation and amortisation Additions to non-current assets Contracting Geotechnical laboratory Readymix Corporate¹ 2012 2011 2012 2011 61 486 1 319 3 439 741 58 106 1 196 3 933 1 240 158 103 854 1 243 521 209 506 878 494 789 66 985 R’000 64 475 160 721 211 667 1  Corporate includes the transactions of the holding company. Geographical segmental reporting Revenue Non-current assets South Africa Rest of Africa2 2012 2011 2012 2011 751 017 214 777 1 029 448 40 217 410 154 1 124 429 191 239 965 794 R’000 1 069 665 411 278 429 430 2  Non-current assets in the rest of Africa comprise assets acquired through subsidiaries or joint venture operations. The operations in the rest of Africa hire plant and machinery locally as well as from South Africa. Information about major customers Included in revenues arising from contracting income of R865,8 million (2011: R942,9 million) are revenues of approximately R279,7 million (2011: R511,2 million) which arose from contracting income from two of the Group’s largest customers. Operating segments The operating segments reported above form the basis on which internal reporting is structured for the chief decision makers. Therefore there are no differences in terms of the information reported to shareholders and management. 6
  8. 8. Notes to the condensed consolidated annual financial statements for the year ended 29 February 2012 1. 2. 3. 7 Basis of preparation and accounting policies The condensed financial information has been prepared in accordance with the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards (IFRS) of the International Accounting Standards Board, the AC 500 standards as issued by the Accounting Practices Board, the information as required by IAS 34: Interim Financial Reporting, the JSE Limited’s Listings Requirements and the requirements of the Companies Act of South Africa. The report has been prepared using accounting policies that comply with IFRS, which are consistent with those applied in the financial statements for the year ended 28 February 2011. The preparation of the Group’s consolidated year-end results for the year ended 29 February 2012 was supervised by the Group Financial Director, CJA Wolmarans CA(SA). Subsequent events No material events have occurred subsequent to 29 February 2012 which may have an impact on the group’s reported financial position at this date. Audit opinion The auditors, Deloitte Touche, have issued their unmodified audit opinion on the group’s financial state­ ments for the year ended 29 February 2012. The audit was conducted in accordance with International Standards on Auditing. A copy of their audit report is available for inspection at the company’s registered office. These provisional financial statements have been derived from the group financial statements and are consistent, in all material respects, with the group financial statements. Any reference to future financial performance included in this announcement has not been reviewed or reported on by the Company’s auditors.
  9. 9. Commentary Introduction Protech Khuthele Holdings Limited (“Protech” or “the group”) is a bulk earthworks and civil engineering group that offers fast track contracting to the mining, public and private sectors, mainly in southern Africa. The group is extending its reach in the infrastructure value chain and selectively pursuing projects in the rest of Africa. Activity levels in the broader construction industry in South Africa remained muted during the year under review. Despite large infrastructure investment budgets, public sector spending continued to be slow. The economic uncertainty led to drawn out decision-making and erratic spending patterns among top mining companies. Accordingly, tenders and new project opportunities are highly contested, with lower margins on new contracts. Expansion in South Africa and the rest of Africa by junior miners is opening up opportunities for second tier contractors such as Protech who can provide a wide range of value added services. However, the challenges of operating in Africa lead to longer establishment cycles and contractors need to be compensated for the additional risks. The group’s performance in 2012 reflected the tight operating environment which is impacting the whole con­ truction industry. The Contracting business unit incurred a loss, largely due to impairments recognised s on three projects in Africa that the group has fully exited and accounted for in 2012. The Readymix business unit sustained the momentum of its turnaround while the Geotechnical business unit continued to achieve solid margins. Strategy Review The focus of new management, which took over from 1 September 2011, was on repositioning the group to weather the current market environment while gearing up for growth for an anticipated market recovery in 2013. Three core areas of the business have been prioritised: •  review of market opportunities led Protech’s initiatives to extend its reach in the infrastructure value chain. A A seasoned executive has been appointed to drive growth in the civils segment while public sector transport and energy infrastructure projects will also be targeted. •  renewed focus on nurturing entrepreneurship and delivering innovative solutions is underpinned by the A alignment of the human resources strategy to the business strategy, to be driven by the Organisational Performance Executive who recently joined the group. •  he plant policy has been modified without compromising the service quality for which Protech is known. T Replacement cycles for plant and equipment have been extended within their warranty periods to optimise asset utilization and reduce the capital requirements with the overall effect of reducing the inherent financial risks of the business. Financial Review Statement of comprehensive income Group revenue decreased by 10% to R965,8 million (2011: R1 069,7 million), in line with the tough prevailing market as well as the challenges of starting up projects in Africa. Judicious management of input costs enabled the group to contain growth in expenses and it maintained its gross margin at 35%. Operational expenditure increased 18% to R286,3 million (2011: R242,0 million). The major impact was the impairments recognised on three projects in Africa which had not progressed beyond the first phase. The full effect has been accounted for in the 2012 financial year. The group reported an operating loss before interest and taxation of R3,8 million (2011: operating profit of R77,1 million). A loss per share of 3,1 cents per share (2011: 10,8 cents earnings per share) and a headline loss per share of 1,0 cents per share (2011: 11,8 cents earnings per share) were recorded for the year ended 29 February 2012. Statement of financial position Total property, plant and equipment decreased to R411,3 million (2011: R429,4 million) at the financial year end, in line with the lower net capital expenditure of R58,5 million (2011: R124,9 million) that reflects the group’s modified plant policy. 8
  10. 10. As a result of net debt repayments of R5,5 million on it’s interest bearing liabilities, Protech’s net debt:equity ratio improved from 66% in 2011 to 64% in 2012. The outstanding interest bearing liabilities decreased to R288,1 million (2011: R293,6 million). The financial position remains strong with a cash balance at 29 February 2012 of R80,0 million compared to R72,6 million at 28 February 2011. Net working capital amounted to R91,4 million (2011: R103,2 million). The net asset value per share at 29 February 2012 was reported at 89,5 cents compared to 92,4 cents at 28 February 2011. Statement of cash flows Protech remains strongly cash generative despite the more challenging operating environment with total cash generated by operations of R113,8 million (2011: R121,4 million). When comparing cash generated by operations before working capital changes to EBITDA, the ratio of cash generated to EBITDA improved to 1,16 times (2011: 1,04). Operational Review Contracting – 84% of group revenue The Contracting business unit showed an 8% decline in revenue to R865,8 million (2011: R942,9 million) as a result of fewer project opportunities in South Africa and the long project establishment cycles in the rest of Africa. An operating loss of R17,9 million (2011: operating profit of R74,5 million) was reported. Increased competition and lower project margins had an impact, but the loss was predominantly due to impairments recognised on three contracts in Africa which did not progress beyond the first phase. No further losses will be incurred in relation to these projects that the group has now fully exited. During the second half of the financial year, the new management team initiated a full review of the Contracting project portfolio. Notwithstanding the loss making east African projects, management has a solid understanding of the inherent risks in the remaining projects. Protech has fully adapted its operating practices to the challenges of working in Africa. In addition, the creation of a dedicated risk management function will ensure that the increased risks of working outside of South Africa are addressed. Geotechnical – 2% of group revenue The Geotechnical business unit which primarily services Protech’s Contracting business unit achieved a 24% increase in revenue to R23,4 million (2011: R18,8 million) with 97% growth in operating profit to R7,1 million (2011: R3,6 million). Readymix – 14% of group revenue The Readymix business unit achieved a strong financial turnaround in 2012. Its revenue growth of 8% to R139,4 million (2011: R128,6 million) outpaced the current industry growth rate by a factor of two. This was due to the successful development and launch of new products as well as its flexibility and rapid lead times, which enabled the business unit to supply customers’ requirements on short notice. Readymix did not pursue volume growth at lower margins. This together with a continued focus on driving down production costs led to improved gross margins and a reported operating profit of R5,5 million (2011: operating loss of R1,5 million). Board of Directors The Board of Protech has been strengthened with several new appointments since 1 March 2011: •  r ASW Page was appointed to the board on 1 September 2011 as an executive director and to the position M of chief executive officer. •  r MSG Mareletse was appointed as the independent chairman on 25 October 2011. M •  r TW Rensen was appointed as an independent non-executive director with effect from 19 April 2012. M Dividend The prevailing economic environment is prompting the group to take a very conservative view as far as the preservation of cash resources is concerned. Consequently no dividend was declared in respect of the 2012 financial year. 9
  11. 11. Outlook The Group has seen evidence of improved tender activity since the beginning of the new financial year, both in the mining sector and commercial infrastructure. Renewed commitments from the South African government to accelerate infrastructure investments are encouraging, particularly in the transport and energy sectors which are strategic focus areas for Protech. There are numerous opportunities to work in Africa, in mining and related infrastructure, but a conservative and highly selective approach has been adopted, in relation to clients and partners. The total order book, which consists of awarded projects currently in progress in the Contracting business unit amounted to R1,1 billion at 29 February 2012. In addition, the total value of work tendered, submitted and awaiting adjudication and award to the successful contractor is currently valued at some R2,4 billion on a probability weighted basis. With its internal repositioning and capacity building, Protech is on a sound footing to benefit from these oppor­ unities, leveraging its unique sales model to drive new business development. Best in class practices t which are being implemented throughout the business should ensure Protech’s capacity to deliver profitable growth. Initiatives to extend its capability in specific areas of the construction value chain are on track, including the recent announcement to establish a civils division. These should provide further growth as the group delivers more diversified solutions to its customers. The figures as stated in the outlook section of the commentary have not been reviewed nor audited by the Company’s auditors. Renewal of cautionary announcement Shareholders are referred to the cautionary announcement published on the Securities Exchange News Service (“SENS”) on 2 May 2012 wherein they were advised that the Company had entered into discussions which, if successfully concluded may have a material effect on the price of the Company`s securities. Accordingly, Shareholders are advised to continue to exercise caution when dealing in the Company`s securities until a further announcement is made. On behalf of the directors MSG Mareletse Chairman ASW Page Chief Executive Officer CJA Wolmarans Group Financial Director Lanseria 25 May 2012 Directors: MSG Mareletse*† (Chairman), ASW Page (Chief Executive Officer), CJA Wolmarans (Group Financial Director), V Raseroka*, MJ Vuso*†, TW Rensen*† * non-executive   † independent Secretary: iThemba Governance, Statutory Solutions (Pty) Ltd. Registered office: Corner R512 and Elandsdrift Road, Bultfontein, Lanseria (Private Bag X6, Lanseria, 1748) (Website: www.pkh.co.za) Transfer secretary: Link Market Services South Africa (Proprietary) Limited, 13th Floor, Rennie House, 19 Ameshoff Street, Braamfontein. (PO Box 4844, Johannesburg, 2000) Sponsor: Deloitte Touche Sponsor Services (Proprietary) Limited www.pkh.co.za 10
  12. 12. 22 Agenda Introduction Financial review Divisional review Outlook Introduction 11
  13. 13. Introduction Introduction 44 Results summary Revenue R965,8m R965,8m 10% 10% Operating (loss) (R3,8m) (R3,8m) -- Cash flow from operating activities operating activities R71,3m R71,3m 10% 10% Headline loss per share share (1,0c) (1,0c) Cash balance R80,0m R80,0m 10% 10% NAV per share 89,5c 89,5c 3% 3% Notes 12
  14. 14. Introduction 5 Introduction 6 Weathering the tough market 1. Decisive action by new management HIGHS Review of strategy to position Protech for growth Nurturing entrepreneurship and innovation through focus on people Review of Contracting project portfolio Optimised plant model 2. Sustained turnaround of Readymix Growth outpaced market by factor of two New product development Effective control of input costs 1. Market conditions remained tight LOWS Disappointing pace of public sector spending Volatile and erratic spending in mining sector with high rate of tender delays Heightened competition putting pressure on new contract margins 2. Impairments recognised on contracts in Africa Three projects in Africa exited and fully accounted for Projects which did not progress beyond first phase Sectoral and geographical focus F2011 Sectoral: F2012 12% 12% 4% Mining 11% R965,8m Commercial R1 069,7m Public 84% 77% Geographic: F2011 F2012 4% Rules of engagement: Africa 22% • Country selection South Africa R1 069,7m • Follow clients into Africa R965,8m • Partners with local capability Rest of Africa 96% 13 78%
  15. 15. Introduction 7 Management successes in F2012 1. Development of new strategy 2. Phenomenology study including internal culture and values assessment 3. External review of market opportunities 4. Key appointments: CEO, senior management and board 5. Decisive action on African contracts 6. Developed stringent criteria for new contracts in Africa 7. Optimised the plant model to enhance returns 8. Sustained turnaround of Readymix in tough market Notes 14
  16. 16. Introduction Introduction Strategic repositioning 3. Impact: 3. Impact: Unlocking value Unlocking value Existing operations Existing operations
 Development opportunity Development opportunity
 JV’s partnership JV’s partnership
 1. Analysis: 1. Analysis: Opportunities and Capability Opportunities and Capability Primary considerations Primary considerations ••  Capital + Skills + Relationships • Capital + Skills + Relationships Internal: strategic levers Internal: strategic levers • Business development ••  Business development • Finance ••  Finance • Skills and intellectual capital ••  Skills and intellectual capital Culture and values ••  Culture and values Operational excellence ••  Operational excellence Leadership ••  Leadership External: Industry opportunities External: Industry opportunities Mining ••  Mining Energy (Renewables and IPPs) ••  Energy (Renewables and IPPs) Transport infrastructure ••  Transport infrastructure 2. Implementation: Value chain enhancements Short term: Protech Khuthele Civils and Earthworks • Earthworks •  • Compaction Technology •  • Geotechnical •  •  • Plant Equipment •  • Drill and Blast •  • Surfacing •  • Concrete Works Medium term: Protech Khuthele Manufacturing •  • Readymix •  • Precast Concrete Products •  • Crushing and Screening Longer term value chain enhancements Financial Review 15 • • Operating Profit Growth •  Operating Profit Growth • • Return on Capital Employed •  Return on Capital Employed • • Employer of Choice •  Employer of Choice • • Market Reputation •  Market Reputation Nimble and Nimble and Flexible Flexible Entrepreneurial Entrepreneurial culture culture Focus on Focus on Innovation Innovation People and People and skills skills Differentiators Differentiators Business Business Development Development Model Model 88
  17. 17. Financial 10 Consolidated statement of comprehensive income Year ended 29 February 2012 Rm Revenue 2012 965.8 2011 1 069.7 % ch -10 (286.3) (242.0) +18 EBITDA 63.2 141.6 -55 Operating (loss)/profit before interest (3.8) 77.1 - Trading margin (%) (0.4%) 7.2% Net interest (paid) Limited new project opportunities Contract delays in mining sector Operating expenses (19.4) (23.2) Taxation credit / (charge) 12.2 (14.7) - (Loss)/profit for the year (11.1) 39.2 - EPS (c) (3.1) 10.8 (1.0) 11.8 - Negative margin attributable to African losses - HEPS (c) Losses recognised on three African contracts -16 Reduced debt and effective cash utilisation Difference between EPS + HEPS: Loss on asset disposal Notes 16
  18. 18. Financial 11 Statement of financial position Year ended 29 February 2012 Rm 2012 2011 Assets 818,6 853,9 Property, plant and equipment 411,3 429,4 80,0 72,6 Cash 37,6 38,2 Other 289,7 313,7 Liabilities 494,0 519,0 Interest bearing liabilities 288,1 293,6 Other liabilities 205,9 225,4 Shareholder’s equity 324,6 334,9 NAV per share (cents) 89,5 92,4 NTAV per share (cents) 79,2 Modification of plant model 81,8 Intangible Improved cash balances: focus on cash flow management Net debt repayments of R5,5m Financial Gearing Rm % 300 100 90 80 70 60 50 40 30 20 10 0 250 73,6% 200 150 50,3% 64,1% 221.0 208.2 F2011 F2012 35,9% 100 50 66,0% 57,2% 172.8 28.6 F2008 F2009 F2010 71.3 F2007 177.4 0 Net gearing 17 Total net interest-bearing debt Gearing target 50% to 80% gearing target 12
  19. 19. Financial 13 Capital expenditure F2013 Budget Rm Plant Equipment Expansion Replacement Proceeds on sales F2012 F2011 20,0 160,7 211,7 20,0 30,8 97,2 - 129,9 114,5 - 102,2 86,0 No replacement capex projected in F2013 In line with modified plant model OPTIMISED PLANT MODEL: • Extended replacement cycles for plant and equipment - still within warranty • Reduces financial risks: higher asset utilisation and lower capital requirements • Without compromising service quality for which Protech is known Notes 18
  20. 20. Financial Financial 14 14 Summarised statement of cash flows of cash flows 2012 (Rm) 2011 (Rm) 2011 (Rm) 74.1 74.1 146.7 146.7 Cash generated by ops Cash generated by ops Working capital changes Working capital changes -23.2 -23.2 Dividend paid Dividend paid -19.4 -25.3 -25.3 Net Finance charges Net Finance charges 39.7 39.7 -14.5 -14.5 -23.1 -4.8 -4.8 Tax paid Tax paid -58.4 Investing activities Investing activities -5.5 -122.4 -122.4 29.1 29.1 Finance activities Finance activities Closing cash balance Closing cash balance 80.0 80.0 72.6 72.6 •  R7.4m increase in cash balance • R7.4m increase in cash balance •  Cash generated by operations before working capital changes to EBITDA: Up to 1,16x from 1,04x in 2011 • Cash generated by operations before working capital changes to EBITDA: Up to 1,16x from 1,04x in 2011 Financial Working capital movements (Rm) F2012 F2011 257 Debtors +R39m 296 11 Inventory R0m 11 150 Creditors +R1m 149 0 19 50 100 150 200 250 300 350 Net cash inflow of R40m 15
  21. 21. Business unit review Notes 20
  22. 22. Business unit 17 Business unit contribution 1 1 Revenueand 2 F2012: R1,0bn F2011 F2011:F2010 R1,1bn Contracting Readymix Readymix R139,4m R128,6m Geotechnical Geotechnical Geotechnical R23,4m R865,8m Contracting Operating profit F2012: (R3,8m) R18,8m Readymix R942,9m Contracting F2011: R77,1m 1 Readymix Geotechnical Readymix Geotechnical R5,5m R7,1m Contracting (R17,9m) Before eliminations (R1,5m) R3,6m Contracting R74,5m Business unit Review of Contracting Revenue: R865,8m 10% Fewer project opportunities in South Africa Long project establishment cycles in rest of Africa Drawn our decision-making and erratic spending in mining sector Operating loss: R17,9m Increased competition and lower project margins Impairments recognised on three contracts in Africa Did not progress beyond first phase No further losses as now fully exited from these projects 21 • Full review of Contracting project portfolio • To analyse inherent risks of remaining projects • Adapted operating practices to challenges of working in Africa • Appointed dedicated risk manager 18
  23. 23. Business unit 19 Review of Geotechnical Operating Margin % Revenue: R23,4m 1st Half Operating Profit (Rm) 2nd Half Operating Profit (Rm) 24% Benefited from more technically intensive infrastructure projects in contracting Investments in new technology improved service offering 8.0 7.0 6.0 3.0 24.3% 5.0 Operating profit: R7,1m 97% Economies of scale Higher margins due to niche focus Delivered on projects to reduce costs 20.6% 4.0 3.0 2.0 2.0 4.1 37.3% 17.4% 1.0 1.6 - F2012 F2011 Notes 22
  24. 24. Business unit Review of Readymix Operating Margin % Revenue: R139,4m 1st Half Operating Profit (Rm) 2nd Half Operating Profit (Rm) 8% Growth outpaced cement industry growth 6.0 Development and launch of new products Able to supply on short notice due to flexibility 5.0 and rapid lead times Operating profit: R5,5m 4.0 3.4 2.9% 2.1 5.1% 3.0 2.0 R7,0m turnaround Avoided trap of lower margin business to grow volumes Implemented systems contain production costs 1.0 - -0.4 -0.6% -1.0 -1.1 -1.8% -2.0 F2012 Outlook 23 F2011 20
  25. 25. Group outlook 22 Key objectives Achieved F2012 F2011 Medium term goals -105% -35% GFCF Return on capital employed -3% 12% 8% – 12% Net interest-bearing D:E (asset backed) 64% 66% 50% – 80% Safety – LTIFR 0,37 0,44 0,25 Operating profit growth Notes 24
  26. 26. Group outlook 23 Outlook: Pipeline R3,5bn Pipeline as at May 2012 Total Still to be executed Recommended by professional team + shortlisted Total Work tendered for but not yet adjudicated 1,1 6,7 4,6 Realistic expectation 1,1 Current Work in Progress 2,4 Probability Weighted 3 year Pipeline 3,5 (Rbn) 3 year horizon, 98% Mining – Not included in Pipeline Description Work in Progress (Rbn) May 2012 Oct 2011 Total contracts awarded 1,5 1,5 Already executed 0,4 0,8 Total still to be executed 1,1 0,7 BU outlook Outlook: Contracting Sector Anticipated market conditions Outlook1 Private Spend occurring in select pockets, but competition to remain rife Uptick anticipated in 2013 Unchanged Public infrastructure Increased government impetus to develop infrastructure, especially in transport, energy (IPPs and renewables) and water reticulation Opportunity Protech2 Transport and energy Continuing mining operations provide a steady revenue stream Mining Conservative approach to junior mining opportunities in South Africa Ongoing delays in awarding projected capital expenditure projects Unchanged Revised risk parameters and criteria for pursuing African opportunities Africa Consider mining and associated infrastructure opportunities Current contracts in Zambia, Sierra Leone and DRC 1. Relative to F2012 activity levels 2. Sector targeted in terms of new Protech strategy 25 Unchanged New selection criteria 24
  27. 27. BU outlook 25 Outlook: Readymix Sector Anticipated market conditions Outlook1 Residential Constrained by credit availability and investor uncertainty Improvements especially in lower end of the market Leading indicator of broader infrastructure recovery Unchanged Industrial commercial Increased design activity indicating future improvement in infrastructure projects Improving Mining Infrastructure contracts are expected to show moderate growth but dependent on government infrastructure roll out and business confidence Growth Public infrastructure Renewed impetus from central government but timing dependent on ability to bring projects to fruition Improving Affordable housing Government priority; require secured payment Protech2 Unchanged 1. Relative to F2012 activity levels 2. Sector targeted in terms of new Protech strategy Notes 26
  28. 28. Concluding thoughts Conclusion Conclusion Conclusion Conclusion Positive signs of turnaround Positive signs of turnaround Evidence of improved tender activity in mining and •• Evidence of improved tender activity in mining and commercial infrastructure Renewed commitments from South African government •• Renewed commitments from South African government to accelerate infrastructure investments Transport and energy sectors are strategic focus •• Transport and energy sectors are strategic focus areas for Protech Numerous opportunities to work in Africa, Numerous opportunities to work in Africa, in mining and related infrastructure Conservative and highly selective approach to clients •• Conservative and highly selective approach to clients and partners Pipeline of work Pipeline of work Total order book of R1,1bn (Awarded Contracting •• Total order book of R1,1bn (Awarded Contracting projects currently in progress) Work valued at R2,4bn tendered, submitted and awaiting •• Work valued at R2,4bn tendered, submitted and awaiting adjudication (probability weighted + term up to 3 years) (probability weighted + term up to 3 years) Protech on a sound footing Protech on a sound footing Internal repositioning and capacity building •• Internal repositioning and capacity building Unique sales model to drive new business development •• Unique sales model to drive new business development Implementing “Best in Class” practices to ensure ability deliver profitable growth •• Implementing “Best in Class” practices to ensure ability deliver profitable growth Extending reach in specific areas of the construction value chain to grow spend with existing customers •• Extending reach in specific areas of the construction value chain to grow spend with existing customers 27 27 27
  29. 29. Conclusion 28 Investment case Investment case Energised and experienced management team with industry track record Energised and experienced management team with Clearly defined strategy Clearly defined strategy • • Value chain enhancements Value chain enhancements • • Clear criteria for African opportunities Clear criteria for African opportunities New focus on public sector, particularly transport and energy • • New focus on public sector, particularly transport and energy NAV 89,5 cps Focus on nurturing entrepreneurship through skills Focus on nurturing entrepreneurship through skills Attracting experienced industry specialists: Human Resources, Risk Management, • • Attracting experienced industry specialists: Human Resources, Risk Management, Civil Engineering Civil Engineering Key focus on organisational development to grow talent pool • • Key focus on organisational development to grow talent pool Business development Business development Unique business development model to increase revenues • • Unique business development model to increase revenues Innovation and flexibility Innovation and flexibility Ingrained into Protech’s culture and recognised by the market • • Ingrained into Protech’s culture and recognised by the market Ability to react to opportunities on short notice • • Ability to react to opportunities on short notice Strong financial position Strong financial position Modified plant model to improve capital allocation without compromising service quality • • Modified plant model to improve capital allocation without compromising service quality Cash balances to fund organic growth • • Cash balances to fund organic growth Notes 28
  30. 30. 29 Forward looking statements Certain statements in this release that are neither reported financial results nor other historical information are forward looking statements including but not limited to predictions of or indications of future earnings. Undue reliance should not be placed on such statements because, by their very nature, they are subject to known and unknown risks and uncertainties and can be affected by other factors that could cause actual results and company plans and objectives to differ materially from those expressed or implied in the forward looking statements. The information in this presentation has not been reviewed or reported on by Protech’s auditors. Questions answers 29
  31. 31. 31 Contact details Protech Khuthele Holdings Limited Corner of R512 and Elandsdrift Road, Lanseria PO Box 1326, Lanseria, 1748 +2711 301 5599 +2786 633 7892 Antony Page (CEO) Nellis Wolmarans (CFO) +2782 411 4555 +2782 468 8521 antony@pkh.co.za nellis@pkh.co.za This presentation is available on http://www.pkh.co.za Notes 30

×