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RAUBEX GROUP LIMITED - Audited results for the year ended 28 February 2019

Release Date: 13/05/2019 07:15
Code(s): RBX     PDF:  
Wrap Text
Audited results for the year ended 28 February 2019

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")

Audited results for the year ended 28 February 2019

Salient features
Revenue down 0,3% to R8,52 billion (2018: R8,54 billion)
Operating profit down 69,2% to R207,0 million (2018: R671,9 million)
HEPS down 75,1% to 57,0 cents per share (2018: 228,6 cents per share)
Cash generated from operations down 24,1% to R788,9 million (2018: R1,04 billion)
Capex spend of R420,9 million (2018: R441,3 million)
Order book of R8,01 billion (2018: R8,19 billion)
Final dividend of 22 cents per share declared (2018: 33 cents)

Rudolf Fourie, CEO of Raubex Group, said:
"The 2019 financial year has without doubt been the most difficult I have experienced in my
30 years in the South African road construction industry. The lack of work, coupled with
violent community unrest affecting a number of sites, has caused very unfavourable
operating conditions in the South African market. These adverse conditions have
unfortunately resulted in Raubex having to rightsize a number of its operations in order to
adapt to the current market conditions.

"Fortunately, the group's diversification strategy which it embarked on some six years ago,
to establish an infrastructure division focused on disciplines outside of the road construction
sector, has now come to fruition. Good progress has been made in the affordable housing
space where conditions are more favourable, including also participation in the Renewable
Energy Independent Power Producer Procurement Programme, where a solid order book
of work has now been secured.

"Stable results from the materials division, where activities are focused on materials handling
and screening services provided to the mining industry, as well as commercial quarry
operations throughout southern Africa, have supported the group's earnings for the year and
will continue to differentiate the group from the overall construction sector."

Commentary
Financial overview
Revenue decreased by 0,3% to R8,52 billion while operating profit decreased by 69,2% to
R207,0 million from the corresponding prior year.

Profit before tax decreased by 71,8% to R180,7 million (2018: R640,6 million), with the
effective tax rate increasing to 35,3% (2018: 29,3%). The increase in the tax rate is mainly
due to the effect of the non-tax deductible goodwill impairment charge attributable to the
asphalt cash-generating unit.

Earnings per share decreased by 86,3% to 31,9 cents with headline earnings per share
decreasing by 75,1% to 57,0 cents.

The following two items had a material impact on the results for the year:

(1) A present value charge and work in progress adjustment with respect to the long overdue
    accounts receivable balance due from the Road Development Agency ("RDA") in Zambia
    for a combined value of R116,7 million before tax (R75,9 million after tax). This charge
    effectively provides for the full accounts receivable balance due from the RDA as at
    28 February 2019. The company will, however, aggressively pursue the outstanding accounts
    receivable from the RDA, although timing of the recovery of this debt is uncertain. The
    outstanding debt relates to the two Link 8000 road contracts in Zambia which have been
    suspended, pending resolution of the current funding impasse.

(2) A goodwill impairment charge of R51,5 million before tax (R51,5 million after tax),
    attributable to the asphalt cash-generating unit in the road surfacing and rehabilitation
    division, which is primarily dependent on the South African road construction sector. The
    asphalt cash-generating unit has experienced a significant decrease in earnings during the
    year due to the lower volume of asphalt supplied to the road construction sector and has
    undertaken rightsizing initiatives to reduce excess capacity. The lower asphalt volumes are
    primarily as a result of less road maintenance work undertaken by the South African public
    sector during the year. The goodwill impaired amounts to 40% of the total goodwill
    attributable to the asphalt cash-generating unit.

If the present value charge and work in progress adjustment with respect to the accounts
receivable balance due from the RDA in Zambia and the goodwill impairment charge
attributable to the asphalt cash-generating unit were to be excluded from the results, then
earnings per share would have decreased by 56,3% to 102,0 cents and headline earnings
per share would have decreased by 56,8% to 98,8 cents.
Group operating profit margin decreased to 2,4% (2018: 7,9%), while excluding the two
items above, operating profit margin decreased to 4,4% (2018: 7,9%).

Cash generated from operations decreased by 24,1% to R788,9 million (2018: R1,04 billion)
before finance charges and taxation.

Net finance costs decreased to R25,3 million (2018: R31,8 million) due to an increase in the
average net cash balances during the year as a result of decreasing borrowings. Total
non-cash finance costs were R16,1 million (2018: R16,3 million) for the year.

The group has maintained a strong balance sheet during the year, with particular focus on
working capital management.

Trade and other receivables decreased by 4,4% to R1,50 billion (2018: R1,57 billion).

Inventories increased by 15,1%   to R765,7 million (2018: R665,2 million), which was mainly
due to an increase in property   development stock previously accounted for under investments
in associates. Due to a change   in control, property development stock of R111,6 million
has now been consolidated into   the group results and is included under inventories.

Contract assets increased by 4,6% to R294,0 million (2018: R280,9 million).

Trade and other payables, including contract liabilities, increased by 10,6% to R1,69 billion
(2018: R1,53 billion).

Capital expenditure on property, plant and equipment decreased to R420,9 million (2018:
R441,3 million). Net capital expenditure increased by 4,5% to R360,7 million (2018:
R345,3 million), due to less asset disposals compared to the prior year. The capital
expenditure for the year includes R44,1 million for the purchase of new office premises and
workshops in Perth, Western Australia, which will position the group to deliver on its organic
growth strategy in the country.

Borrowings decreased by 14,8% to R661,7 million (2018: R776,6 million) and consist mainly
of instalment sale agreements over plant and equipment, which are repayable in monthly
instalments.

The group had a net cash outflow for the year of R133,8 million, with R115,4 million relating
to the acquisition of subsidiaries settled in cash. Total cash and cash equivalents at the end
of the year amounted to R962,6 million (2018: R1,08 billion).

Operational overview

Materials Division
The materials division comprises three main disciplines including (i) commercial quarries,
(ii) contract crushing and (iii) materials handling and processing services for the mining
industry.

The materials division diversifies the group from the construction industry and was the
main contributor to group operating profit during the year, mitigating the losses reported
in the roads and earthworks division.

Stable conditions have been experienced in the mining services sector where operations
have been predominantly focused on the commodities of diamonds, gold, coal, copper,
platinum and iron ore during the year. Certain diamond mining contracts reached completion
towards the end of the financial year, this work was mainly replaced with work in the coal
sector. A total of 233 employees were retrenched by the division due to end of life and
changes in scope of certain mining contracts, with retrenchment costs of R17,1 million
being incurred.

Commercial quarry operations have experienced an overall increase in volumes of ~12%
off a low base from the prior year with site specific pockets of improvement. However,
community unrest at certain sites and Eskom load shedding have had a negative impact on
operations.

Contract crushing operations continue to experience weak demand in line with the low level
of activity in the overall construction sector.

Revenue for the division increased by 6,5% to R2,75 billion (2018: R2,58 billion) while
operating profit decreased by 2,2% to R358,5 million (2018: R366,4 million).

The divisional operating profit margin decreased to 13,0% (2018: 14,2%).

The division incurred capital expenditure of R260,6 million during the year (2018:
R225,8 million).

The division has a secured order book of R1,93 billion (2018: R1,87 billion).
Roads and Earthworks Division
In order to streamline reporting, the road surfacing and rehabilitation division and the road
construction and earthworks division have been combined into one reportable segment, the
roads and earthworks division. This division specialises in road construction and earthworks
as well as road surfacing and rehabilitation which includes the manufacturing and laying of
asphalt, chip and spray, surface dressing, enrichments, slurry seals and the manufacture
and distribution of value added bituminous products throughout southern Africa.

The division is primarily dependent on the South African road construction sector and is
directly and indirectly, through asphalt and bitumen supply, exposed to government
expenditure on road construction and maintenance in the country. During the period under
review there was a significant reduction in the volume of road construction and maintenance
work from the public sector. Road construction and maintenance teams were able to partially
replace their order book with work on roads operated by concessionaires. However, the
subsidiaries which supply asphalt and bitumen to Raubex contracts as well as the external
market, experienced a significant decrease in earnings due to lower volumes supplied. The
volume of asphalt sold decreased by ~30% from the prior year.

Due to the lower volume of work, the division embarked on rightsizing initiatives during the
year to reduce excess capacity. The division has, however, retained some excess capacity
in anticipation of an increase in public sector spend and will review its position and market
conditions in the year ahead. The rightsizing initiatives have resulted in 443 employees
being retrenched in the division with once-off retrenchment costs of R24,8 million incurred.

In addition to the lack of infrastructure spend in the road construction sector, the results for
the year were also adversely affected by violent community unrest in certain areas which
impacted production efficiencies.

The results for this division also include a present value charge and work in progress
adjustment with respect to the accounts receivable balance due from the RDA in Zambia
for an amount of R116,7 million and a goodwill impairment charge attributable to the asphalt
cash-generating unit for an amount of R51,5 million. Operationally, an onerous contract
was completed on the Moloto road, this contract reported an operating loss of R36,3 million
for the year.

Revenue for the division decreased by 20,7% to R3,63 billion (2018: R4,58 billion) and
operating profit decreased by 184,9% to an operating loss of R245,8 million (2018:
R289,5 million operating profit).

The divisional operating profit margin decreased to an operating loss margin of 6,8% (2018:
6,3% operating profit margin).

The division incurred capital expenditure of R61,0 million during the year (2018:
R183,6 million).

The division has a secured order book of R3,19 billion (2018: R3,69 billion). The order book
excludes the two Zambia Link 8000 contracts that have been suspended.

Infrastructure Division
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 and housing infrastructure and commercial building projects.

The division has experienced favourable conditions during the year and has continued to
expand its affordable housing and commercial building operations.

Excess capacity was absorbed in the second half of the year due to the commencement of
work in the Renewable Energy Independent Power Producer Procurement Programme
("REIPPPP"). The division is well positioned to benefit from the roll-out of the REIPPPP in
which a number of contracts are still being negotiated, four of which have been secured to
the total value of R729,0 million.

Outside of South Africa, work in Cameroon has progressed well and a conservative approach
to revenue recognition has been adopted. The acquisition of Westforce Construction in
Western Australia which was effective 1 January 2018, has now reported its first 12 month
set of results post-acquisition and has contributed to the growth reported in this division.

The division undertook limited rightsizing of its operations during the year in anticipation of
future work, which resulted in 48 employees being retrenched and once-off retrenchment
costs of R1,4 million incurred.

Revenue for the division increased by 55,1% to R2,13 billion (2018: R1,38 billion) and
operating profit increased by 488,5% to R94,3 million (2018: R16,0 million).

The divisional operating profit margin increased to 4,4% (2018: 1,2%).
The division incurred capital expenditure of R99,3 million (2018: R31,8 million). The capital
expenditure for the year includes R44,1 million for the purchase of new office premises and
workshops in Perth, Western Australia.

The division has a secured order book of R2,89 billion (2018: R2,62 billion).

International
The group's international operations consist of materials supply and mining services as well
as construction activities which are located in the African jurisdictions of Botswana,
Cameroon, Namibia, Zambia and Zimbabwe. The group has also established a footprint in
Western Australia, through the acquisition of Westforce Construction.

In Western Australia, the Westforce acquisition has been bedded down and supported
international growth while diversifying the group's revenue streams. The financial results
reported are in line with management expectations for the year.

In Namibia, the materials division has serviced diamond and copper mining operations
where results have been stable during the year, while in Botswana, commercial quarry
operations have continued to perform well. Certain diamond mining contracts reached
completion towards the end of the year, which work was largely replaced with work in the
coal sector in South Africa.

In Cameroon, good progress has been made with the construction of a hotel for the Onomo
Hotel group which is estimated to be completed in June 2019, while progress on the Douala
Grand Mall development has now reached ~50% completion.

As previously stated, the international results have been negatively affected by a present
value charge and work in progress adjustment with respect to the long overdue accounts
receivable balance due from the RDA in Zambia for a combined value of R116,7 million
before tax. This charge effectively provides for the full accounts receivable balance due from
the RDA as at 28 February 2019. The outstanding debt relates to the two Link 8000 road
contracts in Zambia which have been suspended, pending resolution of the current funding
impasse.

International revenue increased by 37,4% to R1,53 billion (2018: R1,11 billion) while
operating profit decreased by 33,0% to R126,3 million (2018: R188,5 million). Excluding the
R116,7 million charge in Zambia, operating profit increased by 29,0% to R243,1 million
(2018: R188,5 million).

Operating profit margin decreased to 8,3% (2018: 16,9%), while excluding the R116,7 million
charge in Zambia, operating profit margin decreased by 1,0% to 15,9% (2018: 16,9%).

The international order book has decreased to R1,13 billion (2018: R2,55 billion) and is
included in the group's divisional order books. The two Link 8000 road contracts in Zambia,
which have R791,6 million of work left to complete, have been excluded from the group's
order book.

Prospects
The group's secured order book, which now excludes the Zambia link 8000 contracts,
decreased 2,2% to R8,01 billion (2018: R8,19 billion, of which R835,8 million related to the
two Link 8000 contracts in Zambia). Of the total order book, 14,1% represents contracts
outside of South Africa in the rest of Africa and Western Australia.

Overall conditions in the South African construction sector are expected to remain
challenging and the short-term outlook is uncertain. The sector is still severely under
pressure from the slow roll-out of general infrastructure spend in the country. In order to
mitigate the uncertain local conditions the group is looking to the rest of Africa for growth
and some large project opportunities are being negotiated in southern African jurisdictions,
including the Beitbridge border post upgrade in Zimbabwe.

In the road construction and maintenance sector, prospects remain uncertain. SANRAL has
received a healthy budget allocation from treasury over the 2019/20 period as well as over
the medium-term framework and are expected to bring some large capital projects to the
market. These budget allocations could however be at risk if the Gauteng Freeway
Improvement Project ("GFIP") toll collection shortfall is not resolved. If SANRAL work does
return to more normalised levels, there should be a significant improvement in the group's
road construction and maintenance operations.

The Minister of Energy established policy certainty with regards to the country's renewable
energy programme on 4 April 2018 by signing the power purchase agreements for 27 REIPPPP
projects. The group is well positioned to benefit from the roll-out of this work and has now
secured four projects to the value of R729,0 million. A number of other projects are in the
process of being negotiated which will further support the prospects of the infrastructure
division over the medium term.

The prospects for the group's operations in the affordable housing sector are encouraging,
with good growth anticipated over the medium term through the acceleration of the roll-out
of Woodwind Estates in Centurion and participation in the Lufhereng Integrated Housing
Development in Soweto. Other longer-term opportunities are also being pursued.

The construction market in Western Australia is buoyant, driven by activity in the mining
sector. The group will continue to explore this market and look to grow its business organically
at a measured pace leveraging off the skills within the group.

Notwithstanding the challenging conditions being faced by the South African construction
industry, the group is expecting an improvement in its performance in the period ahead,
where it is anticipated that earnings will continue to be supported by a stable materials
division and a growing infrastructure division. The rightsizing initiatives undertaken during
the year by the roads and earthworks division have better positioned the group to manage
the challenges in the current market, while maintaining sufficient flexibility to participate in
any potential increase in activity in the South African construction sector, driven by the newly
elected government, in the period ahead.

Dividend declaration
The board has declared a gross final cash dividend from income reserves of 22 cents per
share on 13 May 2019 for the year ended 28 February 2019. The salient dates for the
payment of the dividend are as follows:

Last day to trade cum dividend                              Tuesday,    28 May   2019
Commence trading ex dividend                              Wednesday,    29 May   2019
Record date                                                  Friday,    31 May   2019
Payment date                                                 Monday,    3 June   2019

No share certificates may be dematerialised or rematerialised between Wednesday,
29 May 2019 and Friday, 31 May 2019, 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 22 cents per share.
- The DT amounts to 4,4 cents per share.
- The net local dividend amount is 17,6 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 Security 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.

Summary group income statement
                                                           Audited          Audited
                                                         12 months        12 months
                                                       28 February      28 February
                                                              2019             2018
                                                             R'000            R'000
Revenue                                                  8 519 142        8 542 247
Cost of sales                                           (7 792 319)      (7 416 511)
Gross profit                                               726 823        1 125 736
Other income                                                31 844           40 133
Other gains/(losses) - net                                 (24 580)          14 383
Administrative expenses                                   (527 042)        (508 339)
Operating profit                                           207 045          671 913
Finance income                                              48 612           59 495
Finance costs                                              (73 858)         (91 245)
Share of (loss)/profit of investments
accounted for using the equity method                       (1   115)           477
Profit before income tax                                   180   684        640 640
Income tax expense                                         (63   842)      (187 956)
Profit for the year                                        116   842        452 684
Profit for the year attributable to:
Owners of the parent                                        57 957          423 573
Non-controlling interest                                    58 885           29 111
Basic earnings per share (cents)                              31,9            233,5
Diluted earnings per share (cents)                            31,8            233,5

Summary group statement of comprehensive income
                                                           Audited          Audited
                                                         12 months        12 months
                                                       28 February      28 February
                                                              2019             2018
                                                             R'000            R'000
Profit for the year                                        116 842          452 684
Other comprehensive income for the year, net of tax
Currency translation differences                             14 670            (14 284)
Actuarial gain on post-employment benefit obligations           461                374
Total comprehensive income for the year                     131 973            438 774
Comprehensive income for the year attributable to:
Owners of the parent                                         73 045            410 356
Non-controlling interest                                     58 928             28 418
Total comprehensive income for the year                     131 973            438 774

Calculation of diluted earnings per share
                                                            Audited          Audited
                                                          12 months        12 months
                                                        28 February      28 February
                                                               2019             2018
                                                              R'000            R'000
Profit attributable to owners of the parent entity           57 957          423 573
Weighted average number of ordinary shares
in issue ('000)                                             181 680            181 381
Adjustments for:
Shares deemed issued for no consideration
(performance shares) ('000)                                       508                  -
Weighted average number of ordinary shares
for diluted earnings per share ('000)                       182 188            181 381
Diluted earnings per share (cents)                             31,8              233,5

Calculation of headline earnings per share
                                                            Audited          Audited
                                                          12 months        12 months
                                                        28 February      28 February
                                                               2019             2018
                                                              R'000            R'000
Profit attributable to owners of the parent entity           57 957          423 573
Adjustments for:
Profit on sale of property, plant and equipment              (9 930)           (17 471)
Goodwill written off                                         51 477              2 799
Loss of control of subsidiary                                     -                767
Add back: Non-controlling interest's portion of
profit on sale of property, plant and equipment               1 758                 79
Total tax effects of adjustments                              2 288              4 870
Basic headline earnings                                     103 550            414 617
Weighted average number of shares ('000)                    181 680            181 381
Headline earnings per share (cents)                            57,0              228,6
Diluted headline earnings per share (cents)                    56,8              228,6

Summary group statement of financial position
                                                            Audited          Audited
                                                          12 months        12 months
                                                        28 February      28 February
                                                               2019             2018
                                                              R'000            R'000
ASSETS
Non-current assets
Property, plant and equipment                             2 535 579        2 410     165
Intangible assets                                         1 037 605          947     806
Investment in associates and joint ventures                  42 566          111     789
Deferred income tax assets                                   94 684           39     614
Inventories                                                  67 474           64     533
Trade and other receivables                                  53 978           81     915
Total non-current assets                                  3 831 886        3 655     822
Current assets
Inventories                                                 698   178          600   636
Contract assets                                             293   993          280   933
Trade and other receivables                               1 448   393      1   489   575
Current income tax receivable                                30   541           28   617
Cash and cash equivalents                                   962   611      1   084   088
Total current assets                                      3 433   716      3   483   849
Total assets                                              7 265   602      7   139   671
EQUITY
Share capital                                                 1   817          1     817
Share premium                                             2 059   688      2 059     688
Treasury shares                                              (1   218)        (1     218)
Other reserves                                           (1 177   135)    (1 219     859)
Retained earnings                                         3 181   700      3 200     300
Equity attributable to owners of the parent               4 064   852      4 040     728
Non-controlling interest                                    262   272        157     240
Total equity                                              4 327   124      4 197     968
LIABILITIES
Non-current liabilities
Borrowings                                                   362   989        411   284
Provisions for liabilities and charges                       105   625         82   780
Deferred income tax liabilities                              292   389        342   036
Other financial liabilities                                  119   868         86   980
Total non-current liabilities                                880   871        923   080
Current liabilities
Trade and other payables                                   1 366   715      1 302   641
Contract liabilities                                         326   852        227   940
Borrowings                                                   298   758        365   272
Current income tax liabilities                                38   923         31   680
Provisions for liabilities and charges                        11   359         15   823
Other financial liabilities                                   15   000         75   267
Total current liabilities                                  2 057   607      2 018   623
Total liabilities                                          2 938   478      2 941   703
Total equity and liabilities                               7 265   602      7 139   671

Summary group statement of cash flows
                                                             Audited          Audited
                                                           12 months        12 months
                                                         28 February      28 February
                                                                2019             2018
                                                               R'000            R'000
Cash flows from operating activities
Cash generated from operations                               788   924      1 039   786
Interest received                                             48   612         59   495
Interest paid                                                (57   782)       (74   908)
Income tax paid                                             (163   926)      (177   950)
Net cash generated from operating
activities                                                   615 828          846 423
Cash flows from investing activities
Purchases of property, plant and equipment                  (420 865)        (441 286)
Proceeds from sale of property, plant
and equipment                                                 60 142           95 960
Acquisition of subsidiaries                                 (115 434)         (81 737)
Loan granted to associates and joint
ventures                                                     (36 919)         (37 698)
Net cash used in investing activities                       (513 076)        (464 761)
Cash flows from financing activities
Proceeds from borrowings                                     341 286          360 921
Repayment of borrowings                                     (481 625)        (542 815)
Dividends paid to owners of the parent                       (81 756)        (163 513)
Dividends paid to non-controlling interests                  (12 758)         (14 855)
Disposal of interest in a subsidiary                               -            4 423
Acquisition of non-controlling interest                       (1 700)         (41 185)
Sale of treasury shares                                            -               14
Net cash used in financing activities                       (236 553)        (397 010)
Net decrease in cash and cash equivalents                   (133 801)         (15 348)
Cash and cash equivalents at the beginning
of the year                                                1 084 088        1 103 618
Effects of exchange rates on cash and cash
equivalents                                                   12 324           (4 182)
Cash and cash equivalents at the end of
the year                                                     962 611        1 084 088

Summary group statement of changes in equity
                                                 Share         Share         Treasury
                                               capital       premium           shares
                                                 R'000         R'000            R'000
Balance at 1 March 2017                          1 817     2 059 688          (23 664)
Treasury shares issued in terms
of equity-settled share option scheme                -               -         22 446
Share option reserve utilised during
the year                                             -               -                -
Non-controlling interest arising on
business combination                                 -               -                -
Acquisition of non-controlling interest              -               -                -
Disposal of interest to non-controlling
interest                                             -               -                -
Loss of control of subsidiary                        -               -                -
Profit for the year                                  -               -                -
Other comprehensive income for
the year                                             -             -                -
Dividends paid                                       -             -                -
Balance at 28 February 2018                      1 817     2 059 688           (1 218)
Change in accounting policy                          -             -                -
Restated balance at 1 March 2018                 1 817     2 059 688           (1 218)
Unutilised share option reserve
reversed                                           -                -                 -
Share option reserve                               -                -                 -
Unutilised put option reserve reversed             -                -                 -
Non-controlling interest arising on
business combination                               -                -                 -
Acquisition of non-controlling interest            -                -                 -
Profit for the year                                -                -                 -
Other comprehensive income for
the year                                           -              -                 -
Dividends paid                                     -              -                 -
Balance at 28 February 2019                    1 817      2 059 688            (1 218)

                                                                                Total
                                                                         attributable
                                                                         to owners of
                                               Other       Retained        the parent
                                            reserves       earnings           company
                                               R'000          R'000             R'000
Balance at 1 March 2017                   (1 179 094)     2 938 678         3 797 425
Treasury shares issued in terms
of equity-settled share option scheme              -        (22 432)                 14
Share option reserve utilised during
the year                                     (27 175)        27 175                   -
Non-controlling interest arising on
business combination                               -              -                 -
Acquisition of non-controlling interest            -         (7 591)           (7 591)
Disposal of interest to non-controlling
interest                                           -          4 036             4 036
Loss of control of subsidiary                      -              -                 -
Profit for the year                                -        423 573           423 573
Other comprehensive income for
the year                                     (13 590)             374         (13   216)
Dividends paid                                     -       (163   513)       (163   513)
Balance at 28 February 2018               (1 219 859)     3 200   300       4 040   728
Change in accounting policy                        -        (22   617)        (22   617)
Restated balance at 1 March 2018          (1 219 859)     3 177   683       4 018   111
Unutilised share option reserve
reversed                                     (27 267)        27 267                 -
Share option reserve                           6 905              -             6 905
Unutilised put option reserve reversed        48 459              -            48 459
Non-controlling interest arising on
business combination                               -             (4)               (4)
Acquisition of non-controlling interest            -             92                92
Profit for the year                                -         57 957            57 957
Other comprehensive income for
the year                                      14 627            461            15 088
Dividends paid                                     -        (81 756)          (81 756)
Balance at 28 February 2019               (1 177 135)     3 181 700         4 064 852

                                                               Non-
                                                        controlling             Total
                                                           interest            equity
                                                              R'000             R'000
Balance at 1 March 2017                                     152 300         3 949 725
Treasury shares issued in terms
of equity-settled share option scheme                               -                14
Share option reserve utilised during
the year                                                            -                 -
Non-controlling interest arising on
business combination                                         17 109            17 109
Acquisition of non-controlling interest                     (26 094)          (33 685)
Disposal of interest to non-controlling
interest                                                        387             4 423
Loss of control of subsidiary                                   (25)              (25)
Profit for the year                                          29 111           452 684
Other comprehensive income for
the year                                                       (693)          (13   909)
Dividends paid                                              (14 855)         (178   368)
Balance at 28 February 2018                                 157 240         4 197   968
Change in accounting policy                                       -           (22   617)
Restated balance at 1 March 2018                            157 240         4 175   351
Unutilised share option reserve
reversed                                                            -               -
Share option reserve                                                -           6 905
Unutilised put option reserve reversed                              -          48 459
Non-controlling interest arising on
business combination                                         60 654            60 650
Acquisition of non-controlling interest                         (1 792)         (1 700)
Profit for the year                                             58 885         116 842
Other comprehensive income for
the year                                                            43          15 131
Dividends paid                                                 (12 758)        (94 514)
Balance at 28 February 2019                                    262 272       4 327 124

Summary group segmental analysis
                                        Roads and
                           Materials   Earthworks       Infrastructure    Consolidated
                               R'000        R'000                R'000           R'000
Operating segments
28 February 2019
Segment revenue            2 750 801      3 634 494          2 133 847       8 519 142
Operating profit/(loss)      358 543       (245 796)            94 298         207 045
Margin                         13,0%          (6,8%)              4,4%            2,4%
28 February 2018
Segment revenue            2 583 677      4 583 053          1 375 517       8 542 247
Operating profit             366 428        289 462             16 023         671 913
Margin                         14,2%           6,3%               1,2%            7,9%

                                              Local      International    Consolidated
                                              R'000              R'000           R'000
Geographical information
28 February 2019
Segment revenue                           6 990 062          1 529 080       8 519 142
Operating profit                             80 736            126 309         207 045
Margin                                         1,2%               8,3%            2,4%
28 February 2018
Segment revenue                           7 429 769          1 112 478       8 542 247
Operating profit                            483 463            188 450         671 913
Margin                                         6,5%              16,9%            7,9%

Reclassification of comparative figures
In the prior year, the group reported four operating segments for information purposes, these
being (i) materials, (ii) road surfacing and rehabilitation, (iii) road construction and earthworks,
and (iv) infrastructure. During the year, the group consolidated the disclosure to that which
is reported to the group's chief operating decision maker, the executive committee and
combined the road surfacing and rehabilitation division and road construction and earthworks
division into one reportable segment, namely roads and earthworks. Since the two historical
segments have very similar business drivers, this change allows for a more streamlined
disclosure and does not take anything away from the understanding of the group's business
activities. The segment disclosure has therefore been amended to include three reportable
segments, i.e. (i) materials, (ii) roads and earthworks and (iii) infrastructure, which has
resulted in the restatement of the prior year figures.

Summary group operating segments as previously disclosed

                                                                 Road           Road
                                                        Surfacing and   Construction
                                       Materials       Rehabilitation and Earthworks
                                           R'000                R'000          R'000
Operating segments
28 February 2018
Segment revenue                        2 583 677            3 250 728        1 332 325
Operating profit                         366 428              222 399           67 063
Margin                                     14,2%                 6,8%             5,0%

                                                       Infrastructure     Consolidated
                                                                R'000            R'000
Operating segments
28 February 2018
Segment revenue                                             1 375 517        8 542 247
Operating profit                                               16 023          671 913
Margin                                                           1,2%             7,9%

Employee benefit expense

                                                              Audited          Audited
                                                            12 months        12 months
                                                          28 February      28 February
                                                                 2019             2018
                                                                R'000            R'000
Employee benefit expense in the income
statement consists of:
Salaries, wages and contributions                           2 112 943        2 173 553
Performance shares granted to employees                         6 905                -
Total employee benefit expense                          2 119 848      2 173 553

Capital expenditure and depreciation
                                                          Audited        Audited
                                                        12 months      12 months
                                                      28 February    28 February
                                                             2019           2018
                                                            R'000          R'000
Capital expenditure for the year                          420 865        441 286
Depreciation for the year                                 376 887        357 280
Amortisation of intangible assets for the year             11 188          4 077

Notes
Basis of preparation
The summary consolidated financial statements are prepared in accordance with the
requirements of the JSE Limited Listings Requirements for abridged reports and the
requirements of the Companies Act (2008) applicable to summary financial statements. The
Listings Requirements require abridged reports to be prepared in accordance with the
framework concepts and the measurement and recognition requirements of International
Financial Reporting Standards ("IFRS") and the SAICA Financial Reporting Guides as issued
by the Accounting Practices Committee and Financial Pronouncements as issued by the
Financial Reporting Standards Council and also, as a minimum, to contain the information
required by IAS 34: Interim Financial Reporting.

A number of International Financial Reporting Standards, Interpretations and Amendments
as issued by the International Accounting Standards Board ("IASB") became applicable to
the group, effective 1 March 2018, which have required changes to our accounting policies.
The following standards had an impact on the group:
- IFRS 9: Financial Instruments ("IFRS 9"); and
- IFRS 15: Revenue from Contracts with Customers ("IFRS 15").

Refer to the "Changes in accounting policies" note below for further details of the impact the
adoption of these standards have had on the group. The other new standards, interpretations
and amendments that became applicable to the group during the current reporting period
did not have a significant impact on the group.

Except for those mentioned above, the principal accounting policies used in the preparation
of the audited results for the year ended 28 February 2019 are consistent with those applied
for the year ended 28 February 2018 in terms of IFRS.

These summary consolidated financial statements for the year ended 28 February 2019 have
been prepared under the supervision of the Financial Director, Mr JF Gibson CA(SA) and
audited by PricewaterhouseCoopers Inc., who expressed an unmodified opinion thereon.
The auditor also expressed an unmodified opinion on the annual financial statements from
which these summary consolidated financial statements were derived. A copy of the auditor's
report on the summary consolidated financial statements and of the auditor's report on the
annual consolidated financial statements are available for inspection at the company's
registered office.

The auditor's report does not necessarily report on all of the information contained in this
announcement. Any reference to pro forma or future financial information included in this
announcement has not been reviewed or reported on by the auditors. Shareholders are
advised that in order to obtain a full understanding of the nature of the auditor's engagement
they should obtain a copy of that report together with the accompanying financial information
from the company's registered office.

Business combinations
The following acquisitions were made during the year:
Metadynamics (Pty) Ltd ("Metadynamics")
On 1 March 2018, the group effectively acquired 49% of Metadynamics, through its subsidiary
OMV (Pty) Ltd who acquired 70% of the shareholding, for a purchase price of R18,2 million
settled in cash. An additional consideration is payable contingent on certain profit outcomes
over the course of the next four years, being 1 March 2018 to 28 February 2022.
Metadynamics adds value to various products through calcining and milling processes in
Gauteng that produces value added gypsum and various other products. The acquisition is
in line with the group's strategy to expand geographically and also provides an opportunity
to diversify its product mix.

The revenue included in the consolidated income statement since 1 March 2018 contributed
by Metadynamics was R41,2 million with a net profit contribution of R4,7 million over the
same period.

Donkerhoek Quarry (Pty) Ltd ("Donkerhoek")
On 18 April 2018, the group effectively acquired 70% of Donkerhoek, through its subsidiary
Raumix Aggregates (Pty) Ltd, for a purchase price of R31,1 million settled in cash.
Donkerhoek is a commercial quarry operating in Northern Gauteng supplying aggregates to
the construction market. 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 18 April 2018 contributed
by Donkerhoek was R40,1 million with a net loss contribution of R3,1 million over the same period.

Transkei Quarries (Pty) Ltd ("Transkei Quarries")
On 3 April 2018, the group effectively acquired 49% of Transkei Quarries, through its
subsidiary Raumix Aggregates (Pty) Ltd, for a net purchase price of R49,0 million settled in
cash. An additional consideration is payable contingent on certain profit outcomes over the
course of the next four years, being 3 April 2018 to 28 February 2022. Transkei Quarries
operates two commercial quarries in Mthatha and Butterworth supplying aggregates to the
construction market. 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 3 April 2018 contributed
by Transkei Quarries was R101,0 million with a net profit contribution of R5,1 million over
the same period.

Operations of Forte Demolition Services (Pty) Ltd ("Forte Demolition")
On 31 January 2019, the group acquired 100% of Forte Demolition's operations, through its
subsidiary SPH Kundalila (Pty) Ltd, for a purchase price of R18,0 million settled in cash.
Forte Demolition provides innovative turnkey demolition, remediation and asbestos
abatement solutions to the mining industry.

The revenue and net profit contribution included in the consolidated income statement since
31 January 2019 contributed by Forte Demolition is immaterial to the group.

Turnkey Real Estate Company (Pty) Ltd ("TREC")
On 1 October 2018, an agreement was entered into by the group to acquire the remaining
issued share capital of TREC through its subsidiary Raubex Building (Pty) Ltd. TREC was
established in 2015 to execute property development projects in the Northern Cape in a joint
venture relationship with the land owner. The group's effective shareholding was increased
from 50% to 77% resulting in a change in ownership. Effective 1 October 2018, TREC has
been accounted for as a subsidiary as the group obtained control in terms of IFRS 10.

There were no disposals of property development stock held by TREC during the period
and as such the revenue and net profit contribution included in the consolidated income
statement since 1 October 2018 were immaterial to the group.

Details of the net assets acquired, purchase consideration and goodwill are set out below:

                                                      Meta     Donker    Transkei
                                                     R'000      R'000       R'000
Consideration
Cash                                                18 200     31 142      49 000
Contingent consideration                            24 851          -      12 183
Total consideration                                 43 051     31 142      61 183
Recognised amounts of identifiable
assets and acquired liabilities assumed
Property, plant and equipment                       46 572     30 400      36 265
Intangible asset - mining rights                         -     15 500      75 300
Inventories                                          3 290      6 891       9 891
Trade and other receivables                          8 272          4           -
Deferred tax asset                                     171      2 325       2 818
Cash and cash equivalents                             (929)         -           -
Borrowings                                               -          -     (24 581)
Deferred tax liability                              (6 348)    (4 340)    (21 084)
Income tax payable                                     (82)       (13)          -
Rehabilitation provision                                 -     (8 305)    (10 063)
Trade and other payables                           (24 609)      (344)       (381)
Total identifiable net assets                       26 337     42 118      68 165
Non-controlling interest                           (13 432)   (12 635)    (34 764)
Fair value of previously held investment                 -          -           -
Goodwill attributable to owners of
the parent                                          30 146      1 659      27 782
Total                                               43 051     31 142      61 183
Purchase consideration settled in cash              18 200     31 142      49 000
Less: Cash and cash equivalents in
the business combination acquired                      929          -           -
Cash outflow on acquisition for
cash flow statement                                 19 129     31 142      49 000

                                                     Forte       TREC       Total
                                                     R'000      R'000       R'000
Consideration
Cash                                                16 200          1     114 543
Contingent consideration                             1 800          -      38 834
Total consideration                                 18 000          1     153 377
Recognised amounts of identifiable
assets and acquired liabilities assumed
Property, plant and equipment                       16 700          -     129 937
Intangible asset - mining rights                         -          -      90 800
Inventories                                          1 300    103 672     125 044
Trade and other receivables                              -      2 804      11 080
Deferred tax asset                                       -        318       5 632
Cash and cash equivalents                                -         38        (891)
Borrowings                                               -   (105 422)   (130 003)
Deferred tax liability                                   -          -     (31 772)
Income tax payable                                       -          -         (95)
Rehabilitation provision                                 -          -     (18 368)
Trade and other payables                                 -     (2 200)    (27 534)
Total identifiable net assets                       18 000       (790)    153 830
Non-controlling interest                                 -        182     (60 649)
Fair value of previously held investment                 -        395         395
Goodwill attributable to owners of
the parent                                               -        214      59 801
Total                                               18 000          1     153 377
Purchase consideration settled in cash              16 200          1     114 543
Less: Cash and cash equivalents in
the business combination acquired                        -        (38)          891
Cash outflow on acquisition for
cash flow statement                                 16 200        (37)    115 434

Changes in accounting policies
The group has adopted the following new International Financial Reporting Standards as
issued by the IASB, which were effective for the group from 1 March 2018:
- IFRS 9: Financial Instruments ("IFRS 9"); and
- IFRS 15: Revenue from Contracts with Customers ("IFRS 15").

Adoption of IFRS 9
IFRS 9 replaces the provisions of IAS 39 and was adopted by the group without restating
comparative information in accordance with the transitional provisions included in the standard
(IFRS 9, paragraph 7.2.15 and 7.2.26). The adoption of IFRS 9 had the following impact on
the group:
- Change in classification of the measurement categories for financial instruments.
- Change from the IAS 39 incurred loss model to the expected credit loss ("ECL") model to
  calculate impairments of financial instruments.

Details of the impact are provided below:

Classification, initial recognition and subsequent measurement
IFRS 9 introduces new measurement categories for financial assets. The measurement
categories of IFRS 9 and IAS 39 are illustrated in the table below:

IAS 39*                            IFRS 9*
Loans and receivables              Financial assets at amortised cost
* Only those categories of financial assets applicable to the group have been disclosed above.

Effective 1 March 2018, the group classifies its financial assets in each of the IFRS 9
measurement categories according to the group's business model for managing the
financial asset together with the cash flow characteristics of the financial asset. The
reclassification into the new measurement categories of IFRS 9 did not have a significant
impact on the group.

Financial liabilities are measured at amortised cost except for those designated as at fair
value through profit and loss, which are measured at fair value.

Impairment
Prior to the adoption of IFRS 9 the group's methodology for calculating the allowance for
credit losses was based on an incurred loss model in terms of IAS 39, where at the end of
each reporting period the group assessed whether any objective evidence of impairment
existed. Had any evidence existed at the time of consideration, an allowance for credit losses
was calculated on the financial asset at amortised cost as the difference between the financial
asset's carrying value and the present value of the estimated future cash flows discounted
at the original effective interest rate (its recoverable amount).

Under IFRS 9, the group revised its methodology for calculating the allowance for credit
losses on its financial assets to an expected credit loss model.

The group has two types of financial assets that are subject to IFRS 9's new expected credit
loss model:
- Trade receivables, including receivables under finance leases; and
- Contract assets relating to construction contracts in progress and retentions.
The group applies the IFRS 9's simplified approach to measuring expected credit losses
which uses a lifetime expected loss allowance for all trade receivables and contract assets.

To measure the expected credit losses, trade receivables and contract assets have been
grouped together based on their similar credit risk characteristics and the days past due. The
contract assets relate to retentions and unbilled work in progress on construction contracts
which have substantially the same risk characteristics as the trade receivables for the same
types of contracts. The group has therefore concluded that the expected loss rates for trade
receivables are a reasonable approximation of the loss rates for the contract assets.

The expected loss rates are based on the revenue payment profiles over a 12-month period
ended 1 March 2018 together with the corresponding historical credit losses experienced
within these periods per customer classification. The historical loss rates are adjusted to
reflect current and forward-looking information on macroeconomic factors affecting the
ability of the customers to settle the receivables. The group has identified the GDPs, inflation
rates, prime lending rates, US dollar exchange rates and the credit ratings of the countries
in which it operates to be the most relevant factors, and has accordingly adjusted the
historical loss rates based on expected changes in these factors.

Impact on the group's financial results due to the adoption of IFRS 9

Statement of financial position*
                                            Balance at                   Balance at
                                           28 February      IFRS 9          1 March
                                                  2018      Effect             2018
                                                 R'000       R'000            R'000
Assets
Non-current assets
Trade and other receivables                     81 915     (2   409)         79 506
Deferred income tax assets                      39 614      8   795          48 409
Current assets
Trade and other receivables                  1 489 575    (16   873)      1 472 702
Contract assets                                280 933    (12   130)        268 803
Equity
Retained earnings                            3 200 300    (22   617)      3 177 683
* Only those line items affected by IFRS 9 have been included   above.

The group's opening retained earnings as at 1 March 2018 are as follows:

                                                                              R'000
Closing balance at 28 February 2018                                       3 200 300
Increase in cost of sales                                                   (31 412)
Increase in deferred tax due to impairment provisions                         8 795
Opening retained earnings at 1 March 2018                                 3 177 683

Adoption of IFRS 15
In accordance with the transition paragraphs of IFRS 15, the group decided to recognise the
cumulative effect of initially applying IFRS 15 as an adjustment to opening retained earnings
under the modified retrospective restatement method, where applicable.

The adoption of IFRS 15 from 1 March 2018 has resulted in changes to the accounting
policies with regards to the process followed in order to recognise revenue from the various
sources applicable to the group. However, these changes have not resulted in the need to
restate any prior period figures.

The group's revenue is primarily generated from the following sources:
- Contracting revenue
- Commercial quarry revenue
- Bitumen and emulsion products and services
- Asphalt supply revenue
- Plant hire revenue
- Property sales and development fees

IFRS 15 establishes a comprehensive framework for determining whether, how much and
when revenue is recognised. It replaced IAS 18: Revenue, IAS 11: Construction Contracts
and related interpretations. Under IFRS 15, revenue is recognised at an amount that reflects
the consideration to which an entity expects to be entitled for transferring goods or services
to a customer based on the satisfaction of performance obligations.

Revenue is measured based on the consideration specified in a contract with a customer
and excludes amounts collected on behalf of third parties. The group recognises revenue
when it transfers control over a product or services to a customer.
The nature of the changes in the accounting policies were as follows:

                                      Previous accounting                New accounting
Revenue                               treatment under                    treatment under
type           Description            IAS 11 and IAS 18                  IFRS 15
Contracting    Revenue generated       Revenue from construction       The group recognises revenue
revenue        through construction    contracts was recognised on     over time by measuring the
               contracts, where the    the stage of completion         progress towards the
               group's performance     method.                         satisfaction of performance
               creates or enhances                                     obligations stipulated in the
               customer controlled                                     construction contracts.
               assets.                                                 Progress measured using the
                                                                       costs incurred to date over the
                                                                       total estimated construction
                                                                       cost of the contract.

Commercial     Revenue is generated    Revenue from the sale           The group recognises revenue
quarry         through the sales of    of goods was recognised when    at a point in time, being when
revenue        aggregates to the       significant risks and rewards   the customer takes possession
               construction market.    of ownership were passed to     of the goods.
                                       the customer.

Bitumen and    Revenue generated       Revenue was recognised          The group recognises revenue
emulsion       through the sales of    when significant risks and      at a point in time, being when
products       bitumen products        rewards of ownership of         the customer takes possession
and services   and the provision of    the goods have passed to        of the products; or
               bitumen-related         the buyer.                      The group recognises revenue
               services.                                               over time by measuring the
                                                                       progress towards the satisfaction
                                                                       of performance obligations
                                                                       for bitumen services provided.

Asphalt        Revenue is generated    Revenue from the sale of        The group recognises revenue
supply         through the supply of   asphalt was recognised          at a point in time, being when
revenue        asphalt to the road     when significant risks and      the customer takes possession
               construction market.    rewards of ownership were       of the asphalt.
                                       passed to the customer.

Plant hire     Revenue generated       Revenue from plant hire is      The group recognises revenue
revenue        from plant hired out    recognised on a percentage      over time by measuring the
               to customers.           completion basis over time      progress towards the
                                       based on operating hours.       satisfaction of performance
                                                                       obligations.
                                                                       Progress measured using
                                                                       operating hours for which the
                                                                       customer received and
                                                                       consumed the benefits
                                                                       provided.

Property       Property sales:         Property sales:                 Property sales:
sales and      Revenue generated       Revenue was recognised when     Revenue recognised at a point
development    from the sale of        risks and rewards of            in time once ownership has
fees           property.               ownership were transferred.     transferred.
               Development fees:       Development fees:               Development fees:
               Revenue receivable      These fees were recognised      Revenue recognised over
               for project             on the stage of completion      time based on the satisfaction
               management              method.                         of performance obligations
               services, development                                   stipulated in the contracts
               fees and subsidies                                      with customers.
               receivable for the
               development of
               housing.

Events after the reporting period
Transactions with non-controlling shareholders
Shisalanga Construction (Pty) Ltd ("Shisalanga")
Effective 1 March 2019, the group restructured its asphalt operations in KwaZulu-Natal and
effectively acquired a further 16% of Shisalanga from the non-controlling shareholders through
a subscription and buyback agreement. The subscription was settled through the transfer of
assets held by National Asphalt (Pty) Ltd to Shisalanga and the buyback was settled in cash.
The total combined value of the transaction was R49,9 million. These transactions increased
the group's effective interest in Shisalanga from 60% to 76%.

No other material events after the reporting period occurred 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

13 May 2019

Company information
Directors
RJ Fourie
JF Gibson
NF Msiza
F Kenney#
LA Maxwell*
BH Kent*
SR Bogatsu*
# Non-Executive Chairman
* Independent Non-Executive

Company Secretary
GM Chemaly

Registered office
Building No 1
Highgrove Office Park
50 Tegel Avenue
Centurion
South Africa

Transfer secretaries
Computershare Investor Services (Pty) Ltd
Rosebank Towers
15 Biermann Avenue
Rosebank
2196

Auditors
PricewaterhouseCoopers Inc.

Sponsor
Investec Bank Limited

Contacts
Raubex Group
Rudolf Fourie
+27 (0) 51 406 2000

James Gibson
+27 (0) 12 648 9400

Investor relations
investor.relations@raubex.com

www.raubex.com

Date: 13/05/2019 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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