Infrastructure development group Raubex said on Monday that it expected to report a more than 70% increase in earnings for the year to February 2020 due to profits from property sales. The company also attributed the performance to its decision to “rightsize” the business, which is starting to bear fruit.

The company said earnings per share were expected to be at least 325% higher, which translates to at least 103.7c higher than the 31.9c in the previous comparative period.

At the same time, headline earnings per share (HEPS) are expected to increase by at least 42.8c from 57.0c in the previous comparative period, a rise of at least 75%, the company said.

This comes as the group said last week that it had sold its property interests for R383m to private equity firm Acorn Black Investments (ABI).

Raubex’s subsidiary, Raubex Property Investments, has a commercial and residential property portfolio that the group has designated as noncore assets.

The company said the initial fair value charge of R53m after tax relating to the financing structure of the transaction, and the profit on disposal of R56.7m after tax relating to the disposal of the property portfolio, have been taken into consideration in the earnings guidance given.

Proceeds from the sale will be used to strengthen the cash reserves of the company, it said.

Raubex said the significant increase in full-year earnings is due to a present value charge and work in progress adjustment of R75.9m after tax, related to the accounts receivable balance due from the Road Development Agency in Zambia, together with a goodwill impairment charge of R51.5m after tax, attributable to the asphalt cash-generating unit. Both of these charges have been incurred in the previous corresponding period and are nonrecurring, it said.

The group also said improvement in operating performance “is attributable to the positive effect from the rightsizing initiatives undertaken in the previous corresponding period in the roads and earthworks division, as well as an increase in activity in the infrastructure division”.


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