Raubex : Audited results for the year ended 29 February 2016

untitled Audited results

for the year ended 29 February 2016

Raubex Group Limited (Incorporated in the Republic of South Africa) Registration number 2006/023666/06

Share Code: RBX ISIN Code: ZAE000093183 ("Raubex" or the "Group")

Rudolf Fourie, CEO of Raubex Group, said:

"The Group has delivered another solid set of results in a competitive construction sector and a year during which the road construction industry

was again impacted by a shortage in the supply of bitumen.

A disciplined approach to securing a quality order book has resulted in a marked improvement in the performance of the Road Construction division.

The Materials division continued to see a healthy demand for its products and services in both its commercial quarrying operations and its mining and material handling operations with this division contributing over half of the Group's operating pro fi t.

We are very pleased with these results and our ability to produce

consistently good results year-on-year with strong cash flows to support healthy dividends for shareholders."

71

Salient features

Revenue

71

Operating

Group

71

71

HEPS

up 9,4% to R7,93 billion

(2015: R7,25 billion)

Capex spend of R549,5

million

(2015: R510,6 million)

Order book of

R8,27 billion

(2015: R8,68 billion)

Final dividend of 42 cents per share declared

71

pro fi t up 14,2% to

R710,6 million

(2015: R622,2 million)

operating pro fi t margin of 9,0%

(2015: 8,6%)

up 12,1% to

234,4 cents per share

(2015: 209,1 cents per share)

Cash flow

from operations up 33,8% to R1,05 billion

(2015: R785,1 million)

1 Raubex Group Limited Audited results for the year ended 29 February 2016

Commentary

Financial overview

Revenue increased 9,4% to R7,93 billion and operating profit increased by 14,2% to R710,6 million from the corresponding prior year. These results were supported by an improvement in the performance of the Road Construction division and favourable operating conditions in the Materials division which contributed 56,3% of total operating profit. The Infrastructure division results were stable, supported by solar energy projects gaining momentum in the second half of the year.

Profit before tax increased 9,1% to R661,6 million (2015: R606,6 million) with the effective tax rate stable at 29,1% compared to 29,4% in the prior year.

Earnings per share increased 11,0% to 236,9 cents with headline earnings per share increasing 12,1% to 234,4 cents.

Group operating profit margin increased to 9,0% (2015: 8,6%).

Cash generated from operations increased 33,8% to R1,05 billion (2015: R785,1 million) before finance charges and taxation.

Net finance costs increased to R49,2 million (2015: R15,7 million) due mainly to an increase in interest-bearing borrowings. Total non-cash finance costs amounted to R6,6 million for the year.

Trade and other receivables increased by 11,2% to R1,54 billion (2015: R1,38 billion). Payment delays from the Road Development Agency in Zambia continued to be experienced with an amount of R115,5 million outstanding at year-end included in accounts receivable.

Inventories increased by 6,6% to R564,1 million (2015: R529,0 million). The increase was mainly due to the Group's property development projects through its subsidiaries Raudev and Raubex Building with a value of R110,3 million included under inventories.

Borrowings remained flat at R1,09 billion (2015: R1,10 billion).

Capital expenditure on property, plant and equipment increased 7,6% to R549,5 million (2015: R510,6 million). The effect of the weaker rand on imported plant and equipment contributed towards the increase.

The Group's net cash inflow for the year was R29,0 million after a net cash outflow of R47,0 million on acquisition of subsidiaries and treasury shares acquired to the value of R46,6 million. Total cash and cash equivalents at the end of the year increased 3,5% to R969,7 million (2015: R937,3 million).

Operational overview

Materials division

The Materials division, which includes the Raumix operations, comprises three main disciplines including commercial quarries, contract crushing and materials handling and processing for the mining industry.

The division delivered another strong performance for the year and continued to experience favourable operating conditions. The commercial quarries were supported by a healthy demand for aggregates and the acquisition of Belabela Quarries in Botswana. Despite weaker commodity prices, conditions continued to favour the material handling and processing operations, which are mainly focused on the diamond, gold and copper mining sectors. Contract crushing operations have been stable and are operating in competitive conditions that are in line with the South African construction sector.

Revenue for the division increased 18,9% to R2,33 billion (2015: R1,96 billion) and operating profit increased by 23,5% to R399,8 million (2015: R323,6 million).

The divisional operating profit margins increased to 17,1% (2015: 16,5%).

The division incurred capital expenditure of R323,2 million during the year (2015: R358,3 million). The division has a secured order book of R1,76 billion (2015: R1,86 billion).

Raubex Group Limited Audited results for the year ended 29 February 2016 2

Commentary (continued)

Construction division

Road surfacing and rehabilitation

This segment 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. In the prior year, Tosas was reported as a segment on its own and their results have now been incorporated in the Road surfacing and rehabilitation segment. The comparative figures for the prior year have been restated.

This segment has a healthy order book and prospects for securing more work at both a National and Provincial Government level are encouraging. Revenue growth slowed during the year due to lower bitumen prices which are correlated to the international crude oil price and also a severe bitumen supply shortage in South Africa due to unplanned refinery shut downs in the first half of the year. The bitumen supply shortage was resolved in the second half of the year and management continuously monitors supply side dynamics in order to execute timely contingency plans.

Revenue for the division increased 3,1% to R3,05 billion (2015: R2,96 billion) with operating profit decreasing by 15,2% to R172,7 million (2015: R203,7 million).

The divisional operating profit margin decreased to 5,7% (2015: 6,9%).

The division incurred capital expenditure of R128,4 million during the year (2015: R70,0 million), with R57,3 million relating to expansion and modernisation of the Tosas operations and plant.

The division has a secured order book of R3,09 billion (2015: R2,60 billion).

Road construction and earthwork s

This segment includes the road and civil infrastructure construction operations focused on the key areas of new road construction and heavy road rehabilitation.

This segment has been working through a better quality order book during the year as a result of selective tendering and order book discipline. Teams have focused on daily production monitoring and the efficient execution of contracts. Execution on the Zambia Link 8000 work has been hindered by a delay in payment from the Zambian Road Development Agency.

Revenue for the division decreased 4,3% to R1,40 billion (2015: R1,46 billion) with operating profit increasing 86,7% to R103,0 million (2015: R55,2 million).

The divisional operating profit margins increased to 7,4% (2015: 3,8%).

The division incurred capital expenditure of R48,1 million during the year (2015: R44,6 million).

The division has a secured order book of R2,29 billion (2015: R3,20 billion) with R890 million relating to the Link 8000 contracts in Zambia.

Raubex Infrastructure

The Infrastructure segment specialises in disciplines outside of the road construction sector, including energy (with a specific focus on renewable energy), rail, telecommunications, pipeline construction and housing infrastructure projects.

Stable results were reported by this segment. The first half of the year saw the completion of works on some challenging mining infrastructure contracts and a delay in award of renewable energy work. The execution of solar energy work gained momentum in the second half of the year. Progress has been made in securing a pipeline of work opportuniti es in the affordable residential housing market.

Revenue for the division increased 32,7% to R1,14 billion (2015: R862,7 million) and operating profit decreased 11,6% to R35,1 million (2015: R39,6 million).

The divisional operating profit margins decreased to 3,1% (2015: 4,6%).

The division incurred capital expenditure of R49,9 million (2015: R37,7 million). The division has a secured order book of R1,12 billion (2015: R1,01 billion).

3 Raubex Group Limited Audited results for the year ended 29 February 2016