Transcript Investec Bank Limited Corporate Finance Division

Raubex Group Limited
Interim results
for the six months ended 31 August 07
06 November 2007
AGENDA
Introduction
Highlights
Financial and Divisional Reviews
Some current projects
Share Incentive Scheme
Capacity Building
Achieving our vision as a public company
Prospects
Conclusion
Q&A
Introduction
“We are pleased to present our first set of interim results as a public
company. The listing was a great success and positioned us ideally to
achieve our stated vision and strategy. In fact, many of the benefits
associated with our public profile have already begun to materialise in the
past six months and we are very upbeat about the future.”
Koos Raubenheimer, CEO
__________________________
Raubex is a construction company that operates throughout Southern Africa. The company listed
on the Johannesburg Stock Exchange on 20 March 2007.
The company has been in the business of civil engineering construction since 1974.
It is a leader in road construction and rehabilitation, infrastructure development, pipelines,
concrete structures and the supply of materials to the construction industry.
Group Financial Highlights (period ended 31 Aug 2007)
Revenues up 67,4% to R963,5 (H1 2007: R575,6m)
Operating profit up 184% to R191,2m (H1 2007: R67,2m)
Group operating margins of 19,8% (H1 2007: 11,6%)
HEPS up 182% to 80.1 cents per share (H1 2007: 28.4 cents per share)
Strong cash flow from operations up 139% to R177m (H1 2007: R74m)
Capex spend of R160m
Maiden interim dividend of 20 cents per share declared
Group Operational Highlights
Strong growth experienced across all divisions
Operating margins improvement
– Roadmac
20,2%
– Raubex Construction
12%
– Raumix
28,8%
Acquisitions bedded down (SPH Kundalila, National Asphalt and Milling Techniks)
Ongoing capacity expansion
– Recruitment and training
– Acquisitions
– Continued operational efficiencies improvement
Order book grown to R2,3bn
Financial Review – Income Statement
31 Aug 07
31 Aug 06 Pro forma
31 Aug 06
Revenue (R’000)
963,498
792,747
575,561
% revenue growth
21,5%*
-
-
196,707
118,516
77,076
66%*
-
-
Profit before tax (R’000)
183,600
111,031
74,352
Profit after tax (R’000)
130,294
74,306
49,604
19,8%
14,2%
11,6%
Operating margin growth %
39,4%*
-
-
Effective tax rate
29,03%
33,08%
33,29%
79,8
45,8
28,4
74,2%*
-
-
DPS (cents)
20
13,44
13,44
DPS growth
48,8%
-
-
22,21%
20,18%
19,78%
EBIT (R’000)
% growth
Operating margin
EPS (cents)
EPS growth %
ROCE
* Pro forma growth
Financial Review – Balance Sheet
Aug 07
Aug 06
719,856
256,408
Property, plant and equipment
556,221
239,749
Goodwill
161,466
3,479
2,169
13,180
Current assets
611,603
340,679
Inventory
37,374
11,831
340,194
189,457
69,599
48,624
164,436
90,767
1,331,459
597,087
Equity
587,310
275,330
Non-current liabilities
298,293
114,340
Current liabilities
445,856
207,417
Trade and other payables
333,768
179,520
Other
112,088
27,897
1,331,459
597,087
(R’000)
Non-current assets
Other
Receivables
Construction contracts in progress
Cash
Total assets
Total equity and liabilities
Financial Review – Cashflow
31/08/2007
31/08/2006
177,045,002
74,020,284
5,097,029
4,636,924
-
(13,435,519)
Finance costs
(13,107,719)
(2,724,163)
Taxation paid
(10,474,666)
(22,470,519)
Net cash from operating activities
158,559,646
40,027,007
(160,396,278)
(33,438,490)
46,985,498
1,201,100
5,994,560
6,418,164
(107,416,220)
(25,819,226)
49,522,758
18,352,038
(19,755,679)
-
Net cash from financing activities
29,767,079
18,352,038
Total cash movement for the period
80,910,505
32,559,819
Cash at the beginning of the period
77,328,576
57,125,211
158,239,081
89,685,030
Cash flows from operating activities
Cash generated from operations
Finance income
Dividends paid
Cash flows from investing activities
Additions and acquisitions of fixed assets
Sale of fixed assets
Acquisition of subsidiaries
Net cash from investing activities
Cash flows from financing activities
Net proceeds from borrowings
Share issue expenses
Total cash at end of the period
Dividend declaration
Maiden interim dividend declared today
– 20 cents per share
– In line with the guidance provided prior to the listing
– 3X cover
Relevant date:
– Last day to trade cum dividend
Friday, 23 November 2007
– Commence trading ex dividend
Monday, 26 November 2007
– Record date
Friday, 30 November 2007
– Dividend payable
Monday 3 December 2007
Financial Review - Segmental Analysis
Raumix
Roadmac
Raubex
Construction
174,038,319
566,097,763
223,362,132
963,498,214
50,127,812
114,228,493
26,867,812
191,224,117
28,8%
20,2%
12%
19,8%
18,960,068
363,971,122
192,629,405
575,560,595
4,612,325
53,221,168
9,401,955
67,235,448
24,3%
14,6%
4,9%
11,6%
Local
% of
Group total
International
% of
Group total
Segmental Revenue
889,709,888
92,3%
73,788,326
7,7%
Operating profit
180,113,136
94,2%
11,110,981
5,8%
Segmental Analysis
Consolidated
31 August 07
Revenue
Operating profit
Operating Margin
31 August 06
Segmental Revenue
Operating profit
Operating Margin
Geographical segments
31 August 07
Operating Margin
20,2%
15%
31 August 06
Segmental Revenue
Operating profit
Operating Margin
493,235,936
85,7%
82,324,659
14,3%
69,001,159
103%
(1,765,711)
(3%)
14%
(2%)
Divisional review - Roadmac
Revenues increased 55% to R566m [H1 2007: R364m]
Operating profit increase 115% to R114,2m [H1 2007: R53,2m]
Operating margin improved to 20,2% [H1 2007: 14,6%]
Largest contributor to Group revenues
Capex of R70m
Steady workflow and promising pipeline
National Asphalt and Milling Techniks performing well
Contribution of acquisitions
Profit after tax
Price paid
National Asphalt
Milling Techniks
R6,7m
R12,5m
R30,1m
R25m
Divisional review – Raubex Construction
Revenues up 16% to R223m [H1 2007: R193m]
Operating profit increase 186% to R26,9m [H1 2007: R9,4m]
Operating margin improved to 12% [H1 2007: 4,9%]
Almost all lower margin contracts completed
Effect of new lucrative contracts being felt
Capex of R26m
Focus on greenfield type contracts
Divisional review - Raumix
Revenues increased 816% to R174m [H1 2007: R19m]
Operating profit increase 987% to R50,1m [H1 2007: R4,6m]
Operating margin increase to 28,8% [H1 2007: 24,3%]
Demand driven by government infrastructure programmes
– Low cost housing
– Road rehabilitation
Buoyant commodity market resulting in increase demand for material
handling services by mining houses
SPH Kundalila performing well
Contribution of acquisition
SPH Kundalila
Profit after tax
R17,8m
Price paid
R162m
Divisional review – Raubex Construction International
Operating profit increase by 12.9m to R11,1m
– 5,8% of Group total
Revenues down 10% to R73,8m [H1 2007: R82,3m]
– 7,6% of Group total
Operating margin improved to 15%
Cautious approach
EU funded projects (Zambia)
Good pipeline of opportunities
Manpower available to repatriate to SA if necessary
Share Incentive Scheme
All resolutions approved at the AGM on 21 September 07
Share Incentive Scheme approved
– Important strategic step in light of skills shortage
– Attract, retain and reward the best talent in the industry
76 beneficiaries to date
– All middle management level
– 2 055 000 shares awarded
– 3 years lock-in period and restraints
Important tool to build capacity
– 2 945 000 shares available
Capacity Building
Acquisition opportunities continually being explored
Three years apprenticeship programme
 Recruited from schools and local communities
 Bursaries and experiential training for tertiary education candidates
 Includes diesel mechanics, foremen, civil engineers and site clerks
– New recruits in 2007 - 39
– Current number of trainees - 57
– Trainees qualified since February 2007 - 10
– Projected intake in 2008 – 53
Capacity Building (cont.)
Two acquisitions announced today (subject to conditions precedent)
In-line with strategy
Strengthen capacity and geographical footprint
Name of company
Nature of business
Space Construction
Specialised road and civil engineering
Queenstown and Aliwal quarries
Specialist quarry and aggregate operations
Currently in talks to finalise a further two acquisitions
Location
KZN
EC
Deal value
R50 million
R33,6 million
Some current projects
N1 north of Bloemfontein – upgrading to dual carriageway and
construction of six major structures – R376m
N11 between Ermelo and Amersfoort – geometric upgrade – R350m
Zambia – rehabilitation of route between Chisamba and Kabwe
(important link between SA, the DRC and Tanzania) – R120m
N3 Marianhill Toll Plaza – asphalt overlay – R115m up
N3 between Heidelberg and Warden – Chip and Spray contract –
R90m
Achieving our vision as a public company
Rationale for listing was fourfold:
–
Greater access to capital markets
–
Attract and retain the best talents in the industry
–
Raise the Group’s profile to generate new opportunities
–
Unlock value for all shareholders
Realising tangible benefits as a public Group
–
Acquisitive drive
–
Share incentive scheme
–
PPP opportunities
–
Value creation for all shareholders
Prospects
Continued demand for road construction and increased allocations
34% or 5300km of the national road network has a remaining
structural lifespan of less than 5 years (source: SA Transport Ministry).
R30,2bn necessary to strengthen network
R23bn Gauteng road upgrade programme
–
Upgrading of existing freeways
–
New roads
–
Tollgates
–
2015 completion target
Public Private Partnerships
Further selective acquisition opportunities
Conclusion
Strong financial performance
The ability to identify, negotiate and fund value enhancing acquisitions
Management continuity
Middle management incentive scheme
Growing order book (R2,3bn) with better margins
Increasing demand for our line of work
Strong performance expected in the H2 driven by continued buoyant market conditions
in the South African infrastructure sector.
Questions & Answers
CONTACTS
Raubex Group
Francois Diedrechsen
+27 (0)12 665 3226
College Hill
Frédéric Cornet
Jacques de Bie
+27 (0)11 447 3030
+27 (0)83 307 8286
+27 (0)82 691 5384