Audited summary consolidated financial statements for the year ended 30 June 2014

Despite challenging conditions within certain sectors, the group’s construction divisions have delivered a credible performance. However, the poor performance from the pipe factory in Mozambique, Capital Star Steel (CSS), has been of great concern and significantly affected the overall financial performance of the group. Reference to discontinued operations includes the trading results for CSS, Symo Steel and Krost (Pty) Ltd and the equity accounted income from Dywidag-Systems International (Pty) Ltd (DSI).

Continuing operations
Revenue from continuing operations increased by 8,4% during the year, however, approximately 3,2% relates to the full consolidation of Capital Africa Steel from 1 July 2013. Following strong growth of 24% in FY13, the Building and civil engineering division achieved moderate growth of 7,2% in the current year in what remains a buoyant private sector building market. The Roads and earthworks division has performed well to achieve revenue which is only marginally down (1,4% decrease) from the prior year, given the effect of very little activity in the mining sector both locally and in Africa.

Revenue from the Australian businesses was essentially static in dollar terms (2,4% decrease) and this was primarily due to start-up delays on certain projects in the second half of the year. In rand terms, revenue increased by 2,4% after the effects of currency conversions. Revenue from continuing operations within the construction materials division amounted to R1,3 billion and relates to the rebar, ready-mix and aggregate businesses.

Operating profit from continuing operations before non-trading items increased by 10,2% to R1 billion at a margin of 4,0% compared to R939 million at 3,9% in FY13. Improvement in building margins in the second half of the year were unfortunately offset by declining margins in the Civil engineering and Roads and earthworks divisions due to the lack of work from the mining sector and strong competition in the road sector. The Australian construction margin returned to the 2,0% level in the current year. Margins in the materials businesses have been under severe pressure in the second half particularly in the rebar market and this is reflected in the disappointing margin achieved of 1,1%.

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