Price collusion settlement knocks Raubex profit | Fin24
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Price collusion settlement knocks Raubex profit

May 08 2017 11:15
Lameez Omarjee

Johannesburg – Construction group Raubex has taken a profit knock following the inclusion of a Voluntary Rebuilding Programme (VRP) due to a settlement agreement reached with the government.

The bottom line dropped 12% from R469m in the previous financial year to R409m, according to the group’s audited results for the year ended February 28 2017.

The VRP incurred a once-off cost of R119.9m, impacting the group’s operating profit which came down 6.9% to R661.7m over the period. Before the VRP expense, operating profit essentially increased 10% to R781.6m, according to the group’s report.

Last year, Raubex and six other listed construction companies entered into a settlement agreement with government. The companies agreed to contribute R1.5bn towards a construction fund for socio-economic development over a 12-year period.

This agreement came following the Competition Commission’s findings that the companies were caught in price collusion in the sector. In addition, a R1.4bn fine was imposed on the companies WBHO, Aveng, Murray & Roberts, Group Five, Basil Read, Stefanutti Stocks and Raubex.

READ: Construction cartel: Firms agree to pay R1.5bn to fund

For the next 12 years, Raubex will make an annual payment of R15m to the fund, according to its report.

Raubex also emphasised its commitment to the VRP and transformation in the sector. “From an industry perspective, we are pleased to have reached the settlement agreement with government which paves the way for a healthy working relationship and affirms our commitment to the transformation of the construction sector,” said chief executive Rudolf Fourie.

Raubex has reached an agreement with two emerging contractors. They are Enza Construction and Umso Construction, explained Fourie. Part of the VRP involves the listed company partnering with emerging players to help them develop.

ALSO READ: Black industrialists to earn R27bn in construction partnerships

The VRP expense also cut into the group’s headline earnings per share (Heps), which decreased 14% to 201.7 cents. Before the VRP, Heps was up 14.8% to 269.1c. A final dividend of 45c was declared.

The group’s capital expenditure for the year was also reduced, from R549.5m previously to R440.5m.

This is the tenth year Raubex has been operating as a listed company on the JSE. Fourie commented that the group’s results reflect a recovery in its road surfacing and asphalt operations.

However, results were also negatively impacted by softer margins reported in its materials division. This was caused by reduced iron-ore material handling activities in the Northern Cape, foreign exchange losses in Mozambique and extreme weather conditions which affected quarry operations in Gauteng, the report said. 

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