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Delivering effective and safe solutions

Integrated report 2012

Scope of this report 3

Vision and Values 4

About BuildmaxGroup at a glance 6

Corporate profile 6

Group structure 6

Geographical footprint 7

Group highlights 8

Report to stakeholdersChairman’s statement 10

CEO’s report 12

Who governs us 16

Who leads us 16

Corporate profile 17

Employees 18

Corporate governance 19

Abridged corporate governance statement: Statement of Compliance 19

Audit and Risk Committee report 26

Social and environmental performance 28

Social performance 28

Environmental performance 34

Economic performance 36

Consolidated annual financial statementsDirectors’ statement of responsibility and approval 38

Declaration by Company Secretary 38

Independent auditors’ report 39

Directors’ report 40

Statements of financial position 45

Statements of comprehensive income 46

Ordinary share statistics 49

Statements of changes in equity 49

Statements of cash flow 50

Segmental report 51

Accounting policies 55

Notes to the annual financial statements 62

Standards and interpretations issued but not yet effective 94

Shareholder informationAnalysis of shareholders 97

Shareholders’ diary 97

Glossary of terms 98

Notice of Annual General Meeting 100

Form of proxy 105

Administration 107

Contents

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The JSE Limited (“JSE”) requires listed companies to produce integrated reports in line with the recommendations of the South

African Code of Corporate Practice and Conduct as set out in the third King Report on Corporate Governance (“King III”). We continue to use the Global Reporting Initiative (“GRI”) G3 guidelines to inform our sustainable development reporting process and to facilitate comparability with the reports of other organisations. As there are no material changes to the Company for the year under review, it was agreed by management and supported by the CSIR, that we adopt the same performance and GRI indicators as the previous year.

Buildmax Limited (“Buildmax”, the “Group” or the “Company”) has reviewed the Discussion Paper on the Framework for integrated reporting and the integrated report issued by the Integrated Reporting Committee of South Africa in January 2011, and has incorporated several of the recommendations in our 2012 integrated report.

This report, compiled for the Company and its subsidiaries, covers the financial year 1 March 2011 to 29 February 2012 and covers the Group’s continuing operations as identified in the organisational structure on page 6 of this report. In line with the overall Group strategy, the Group has disposed of its entire shareholding in the following entities that constituted the Construction Materials business unit:

Scope of this report

The Group’s statement of comprehensive income reflects the financial results of these entities, up to the effective date of sale, and the net loss incurred due to the disposal of these businesses. The Board agreed that the non-financial performance of these entities will not be included in this report.

It is our aim, with our second integrated report, to present the risks and opportunities that the Company faces, together with disclosure of our environmental, social and governance issues. This allows us to emphasise the fundamental link between our financial and non-financial performance and how they influence our business strategy.

Our annual financial statements were prepared according to International Financial Reporting Standards (“IFRS”), the requirements of the South African Companies Act, 71 of 2008 (the “Act”), the regulations of the JSE and recommendations of King III.

This report has focused on the most material sustainability issues that drive business strategy. The issues identified are as a result of an analysis of stakeholder concerns, business risk analysis and global trends and how they impact the long-term business sustainability.

This report has been approved by the Buildmax Limited Board of Directors and has been signed on their behalf by the Chief Executive Officer, Mr T Bantock, and the Financial Director, Mr C Els.

Effective date

Watertite Guttering (Proprietary) Limited (“Watertite”) 1 March 2011

Benoni Sand and Buildware (Proprietary) Limited (“BSB”) 31 August 2011

Buildmax Industries (Proprietary) Limited (“BMI”) 30 November 2011

Columbia DBL (Proprietary) Limited (“Columbia”) 30 November 2011

Cast Industries (Proprietary) Limited (“Cast”) 31 January 2012

3

Buildmax 2012 ⁄ About Buildmax ⁄ Scope of this report

This integrated report has focused

on the most material sustainability

issues that drive business strategy.

The issues identified are as a result of

an analysis of stakeholder concerns,

business risk analysis and global trends

and how they impact the long-term

business sustainability.


Buildmax commits to being the preferred provider of

innovative, quality and superior solutions in our chosen

sectors of the mining and construction industries providing

all stakeholders with effective and sustainable outcomes.

Supporting our Vision and directing the strategy are six core

Values that apply to every decision we make and every

action we take:

• Integrity

• Working together

• Commitment to excellence

• Innovation

• Customer focus

• “Vasbyt”

Vision and Values

4

Buildmax 2012 ⁄ About Buildmax ⁄ Vision and Values


About Buildmax

David Mathibula David joined Diesel Power in 2006 as a

site clerk and by 2011 was promoted to a

principal clerk. Due to David’s work ethic and

attention to detail, he was promoted again in

2012 to a site administrator.


6 Group at a glance

Buildmax 2012 ⁄ About Buildmax ⁄ Group at a glance

Corporate profileBuildmax is a major diversified supplier of opencast mining services, civil earthworks and aggregates in South Africa and is listed on the JSE in the “Coal Mining” sector. The Buildmax Group operates through four key strategic business units (“segments”), namely:

1. Mining Services;

2. Equipment Sales and Rental;

3. Civils and Earthworks; and

4. Aggregates and Quarries.

The Group is able to service these industries due to its investment in mining and construction equipment as well as its management of information, wealth of intellectual capital and experience gained over more than 20 years.

DivisionsMining ServicesThis business unit (largely trading through its flagship brand Diesel Power) provides opencast mining, SHECQ management, plant hire and rehabilitation services to the opencast coal mining sector.

Equipment Sales and RentalThe Equipment Sales and Rental unit was formed after the restructure of Buildmax Equipment (Proprietary) Limited to focus on the efficient disposal of the Group’s second-hand equipment as well as short-term rental of equipment to preferred customers and Group subsidiaries at market-related rates.

Civils and EarthworksThe Civils and Earthworks division is a leading and highly regarded service provider of civils and bulk earthworks solutions to the mining sector and property developers.

Aggregate and QuarriesThe Group’s Quarry operations manufacture and distribute a wide range of materials to the construction industry through its two quarries which are strategically positioned in the East Rand of Gauteng.

This diagram represents our operating structure and does not represent the legal structure. Refer to our legal structure. buildmax.co.za

Wit Deep Sand and Stone

Alfa Sand Works Crushco Verlesha Aflease Mystic Blue

Mining Services – Diesel Power

Equipment Sales and Rental

Civils andEarthworks

Aggregates and Quarries

Group structure

Refer to the CEO’s report for further details regarding the Group’s structural change.

http://www.buildmax.co.za/legalStructure.html


7 Group at a glance (continued)

Buildmax 2012 ⁄ About Buildmax ⁄ Group at a glance (continued)

Johannesburg

Vereeniging

Pretoria

Benoni

Johannesburg

Vereeniging

Pretoria

Benoni

Johannesburg

Vereeniging

Pretoria

Benoni

Geographical footprint

Mining Sites

Civils

Aflease

Alfa Sands and Verlesha

Wit Deep

Buildmax Melrose Arch

High Road

Offices

Butterfly Isibonello

Kriel

Palesa

Leeuwpan

Zaaiwater

Platinum Square BEW & Services (SC GD Irons)

Heritage Mall – Bulk Earthworks

Bulk EW & Underground services for proposed new office development (Erf 86 & and 87 Bryanston)

Sandton Sky Phase 1

Cashan Rustenburg

Palesa Hall Road

Highveld Mall Phase 3 Roads and Paving

Builders Warehouse Sunninghill – Site Clearance

and Bulk Earthworks

Sandton Sky Phase

New Clydesdale

Proposed new offices at 30 Jellicoe Avenue, Rosebank – bulk earthworks contract

Benoni Head Office

Witbank

Crushco

Mystic Blue


8

Buildmax 2012 ⁄ About Buildmax ⁄ Group highlights

Group at a glance (continued)

Revenue (ZAR million)

Six-monthly reporting period

Continuing operations

0

100

200

300

400

500

600

700

800

Feb12

Aug11

Feb11

Aug10

Feb10

Aug09

Feb09

Aug08

Feb08

Acquisition ofDiesel Power

Peak of CAPEX cycle

EBITDA margin (EBITDA percentage)

0%

5%

10%

15%

20%

25%

30%

35%

40%

Feb12

Aug11

Feb11

Aug10

Feb10

Aug09

Feb09

Aug08

Feb08

Aug07

Slow but steady recovery

Positive impact of R500 million CAPEX and bouyant market conditions

Effect of global economic down turn

Six-monthly reporting periodContinuing operations

EBITDAfrom continuing operations increased fromR127,9 million to R278,3 million

PBITfrom continuing operations improved from(R259,0 million) to a profit of R96,6 million

PBTfrom continuing operations improved from(R281,4 million) to a profit of R71,1 million

Group highlights


Report to stakeholders

Angel Sikhosana Angel started in 2011 as a cleaner, working for our

labour broker. Angel started assisting the training

clerks with administration and filing. Due to her

enthusiasm and potential, she was permanently

employed as a training clerk in May 2012.


10

Dear stakeholderWe present to you our second integrated report which provides an overview of the progress we have made in building the many elements that affect the long-term performance of each area of our Group.

There is a fundamental link between building a sustainable business, ethics, governance, and the creation of long-term shareholder value.

Our objective is to build these important elements into our strategy, thus the foundation of our long-term sustainability is dependent on the strength of our relationships, the quality of our resources and our ability to manage them to the best advantage of our customers, suppliers, employees, shareholders and the societies in our areas of operation.

Buildmax operates businesses that are characterised by aggressive competition, low margins, substantial investment in equipment and a need for highly skilled and well-motivated staff at every level.

The 2011 year and the earlier periods of 2012 were devoted to improving the quality and competitiveness of each of our businesses to enable us to assess their long-term future and to decide where we wished to focus our attention.

We came to the conclusion that we could never be significant players in certain markets in which we were involved and commenced a programme aimed at disposing of those businesses which was completed early in the 2012 financial year.

This left Buildmax focused on the mining services, civils and earthworks and aggregates and quarries industries, all business areas where we believe that we have the resources, skills, track record and experience to become significant players.

Turning to the operating environment, we believe that the future growth prospects are excellent both in South Africa and elsewhere in Africa. The likelihood of coal being replaced to any significant extent by renewable sources of energy, nuclear power or gas seems to be either improbable or a long way off. The energy demands required to enable South Africa to improve economic growth rates, reduce poverty and increase employment opportunities make the use of coal an imperative.

However, there are two important factors on which South Africa’s growth is dependent. The first of these is growth in the industrialised areas of the world. Global debt levels are at an all time high and as a result certain countries are focusing on reducing borrowings to a more sustainable level. This, together with varying fiscal policies, has resulted in minimal to sluggish growth in Asia, Europe and the United States. Considerable pressure is building for governments to find a way of balancing recently introduced austerity measures with growth projects to reduce global unemployment but whatever is done is unlikely to result in strong growth in the short-term. The second is the urgent need to improve the infrastructure in South Africa as we will not be in a position to benefit from a growth in world demand without considerable expenditure, particularly in transport. The South African Government announced a major infrastructure spending programme that includes R50 billion set aside for the Richards Bay coal corridor and the opening of export capacity from the coal rich Waterberg region. This investment could increase coal volumes by 44% by 2020. It goes without saying that all infrastructure projects are highly dependent on the global availability of funding on acceptable terms.

Maintaining high standards of Corporate Governance is integral to the Group’s success. We continued to focus

The financial results of the continuing businesses show

considerable improvement in relation to the previous year

and an analysis of the various cost elements highlights the

success of the team in increasing efficiency and reducing

costs of operations.

Colin Wood

Chairman’s statement

Buildmax 2012 ⁄ Report to stakeholders ⁄ Chairman’s statement


11

this year on developing and implementing systems to ensure full compliance with legislative and governance requirements. We have also invested significant effort in fostering ethical and fair business practices. I am confident that these efforts will result in the highest standards of governance being maintained throughout the Group.

Buildmax is committed to playing its role in the development of historically disadvantaged communities in South Africa and in contributing to the transformation process in the country. The Group’s strategy in respect of procurement of goods and services from Small, Medium and Micro Enterprises (SMMEs), Black Empowerment Enterprises (BEE) and from Disabled Owned Enterprises (DOE) is one of the key components of Buildmax’s transformation programme. The Social, Ethics and Transformation Committee has formulated a medium-term plan to improve the Group’s BEE rating and to meet the shareholding requirements of the Mining Charter.

The safety performance of the Group remains our priority. Our continued success can be gauged by the fact that 2012 was again a year free of any fatalities. The Board remains steadfast in their determination to ensure a zero harm workplace environment is attained. Together with a proactive approach our philosophy is that all accidents are preventable and to this extent the Board has reinforced its stance to management of striving for a zero harm work place.

Buildmax’s success is dependent on management of the highest calibre who regard the Group as their career and who lead a motivated and productive team. The Board believes that our management and staff complement meet these standards and during the year introduced an innovative remuneration and incentive package to ensure that the team was fairly rewarded for the efforts they made.

The incentives are built around both non-financial and financial targets, weighted in favour of financial targets based on a return on investment and a return on shareholders’ funds. There are also incentives to ensure tenure and to encourage executives to invest personal funds in the shares of the Company.

The financial results of the continuing businesses show considerable improvement in relation to the previous year and an analysis of the various cost elements highlights the success of the team in increasing efficiency and reducing costs of operations. The work that has been put into building modern workshops, preventative maintenance systems, development of management information systems and training at all levels, is clearly playing a large part in improving performance and will continue to do so. It should be noted, however, that the results in the continuing businesses include both profits and losses derived from management’s resolution of difficult legal and contractual situations that had arisen in previous years and these, together with substantial profits from plant disposals, may be exceptional. For this reason, the results may not necessarily represent a typical year, bearing in mind, however, that every year in this industry is full of opportunities and risks.

In conclusion, I would like to thank my fellow Board members, CEO Terry Bantock, his management team, and all the employees of the Group for their dedication and effort during a challenging year which delivered a significant improvement in our results. I look forward to a successful year ahead.

Colin WoodChairman

Chairman’s statement (continued)

Buildmax 2012 ⁄ Report to stakeholders ⁄ Chairman’s statement (continued)

Every year this industry is full of opportunities and risks.


12

Dear stakeholderDuring the period under review, the Company stabilised and achieved many of its objectives resulting in a considerable improvement in the financial and operational performance of the Group. The Group’s flagship operation Diesel Power performed particularly well.

We successfully disposed of all the Construction Materials businesses that were classified at half-year as discontinued operations. This capped the Group’s exposure relating to these businesses.

The majority of our continuing business units (Mining Services, Equipment Sales and Rental, Civils and Earthworks, and Aggregates and Quarries), are profitable and cash positive. Our business units continue to be supported by a stable and dedicated management team and workforce. The Group’s business model is on a solid footing, with numerous prospects emanating from Buildmax’s existing blue chip customer base and the markets that the Group serves.

The financial position of the Group has improved significantly and as a result Buildmax now has debt to equity and debt to EBITDA ratios that enable it to replace plant when appropriate, and take advantage of growth opportunities supported by our bankers. Over and above this, there are further opportunities to reduce costs, improve efficiencies and effectively manage risk.

One of our foremost focus areas has been to employ better qualified technical staff and to introduce modern maintenance facilities and preventative maintenance systems. This, in conjunction with the development of information and internal control systems and training, will benefit the Group in years to come.

Ongoing improvement in financial performanceBuildmax is pleased to report on a considerably improved financial performance during the 2012 financial year. The results of the continuing businesses include the effects, both positive and negative, of the resolution of difficult legal and contractual situations, which arose in previous years.

The financial performance of the Group reflects the challenging macro-economic conditions we have experienced since the onset of the global financial crisis. Our principal business, Mining Services, remains highly dependent on fleet replacement, availability of asset-based funding, a stable and productive workforce and securing reasonable prices for second-hand equipment. We are pleased with the progress that we have made on all fronts.

The results from continuing operations are summarised as follows:• Revenue increased by 5,74% to R1 087,5 million;• Operating profit improved from a loss of R43,3 million

to a profit of R102,5 million; and• EBITDA improved significantly by 117,5% to

R278,3 million.

Despite the negative impact associated with the disposal of the discontinued operations, the Group as a whole:• Improved its loss per share from 14,31 cents to a loss

per share of 0,16 cents;• Reported headline earnings of R10,0 million compared

to a headline loss of R112,0 million at February 2011;• Spent R415,9 million on capex to expand and maintain

operations which were funded by cash and asset-based finance facilities;

• Increased its interest-bearing debt from R276,7 million at February 2011 to R324,4 million; and

Our foremost focus areas continue to be replacement

of fleet, employment of better qualified technical staff

and introducing maintenance facilities and preventative

maintenance systems. This, in conjunction with the

development of and investment in information and

internal control systems and training will benefit the

Group in years to come.

Terry Bantock

CEO’s report

Buildmax 2012 ⁄ Report to stakeholders ⁄ CEO’s report


13 CEO’s report (continued)

• Closed off the financial year with a positive cash balance of R108,8 million (2011: R117,8 million). The variance in the closing cash position was as a result of capital expenditure of R114,6 million funded from our cash resources.

Shareholders’ funds decreased marginally from R550,1 million at the end of February 2011 to R547,0 million at the end of February 2012. No dividends were declared or are currently being contemplated, and the Group is not in breach of any borrowing covenants.

Industry outlookCoal remains one of the cheapest sources of energy available globally and its abundant reserves compared to other fossil fuels renders it likely to remain the primary source of energy for the foreseeable future. Whilst Eskom has curtailed its projected demand for coal over the medium-term and has announced its intention to introduce alternative energy sources, the continued roll-out of coal fired power stations coupled with international demand for thermal and coking coal, particularly from China and India, should ensure continued growth in this sector for the foreseeable future. Additional export capacity continues to come on stream at Richards Bay, Durban and Maputo. Furthermore, Transnet has announced that it intends to increase the size of its rolling stock fleet and improve its rail network, which should alleviate some bottlenecks currently experienced by coal exporters.

As a result of the scale and on-going growth prospects of the mining industry, prospects for mining contractors that operate safely, efficiently and cost-effectively are vast within an environment where there are approximately 600 opencast mining projects in the prefeasibility, feasibility and bankable phase in our geographic target market.

Building on strategic initiativesMaintaining competitiveness and returning to profitability

was the top priority and was successfully achieved

during the 2012 financial year. We remained steadfast

and achieved most of the strategic initiatives which

commenced during the review period. These included:

• Strengthening the senior management team

The introduction of senior managers in crucial positions

within the Group’s Mining division as well as bolstering

the management team in terms of technical, marketing

and human resource skills.

• Re-evaluating our asset portfolio

Internal evaluation of the asset portfolio to achieve

strategic alignment, improve profitability and cash flow.

As a result, the Group disposed of its discontinued loss

making businesses.

• Restructuring the Mining Services business unit

Mining Services has benefited significantly from various

initiatives including right sizing, renegotiating contract

rates, active marketing, introducing a robust tendering

methodology, introduction of advanced information

systems and implementing improvements in maintenance

facilities and programmes.

• Establishment of the Equipment Sales and Rental business unit

All equipment that was held for sale at year-end was

disposed of and as a result the Group only owns assets

that contribute to operational efficiency. The second-

hand value of mining equipment has improved as a result

of improved maintenance and selective procurement.

Buildmax provides services that cater to the demands of the mining and construction industries.

Buildmax 2012 ⁄ Report to stakeholders ⁄ CEO’s report (continued)



• Strengthening our financial positionThe financial position of the Group continues to improve subsequent to the rights offer of R300,5 million in November 2010. This has enabled the Group to introduce a mission critical, robust, asset replacement strategy. During the period under review, gross capital expenditure on plant amounted to R415,9 million.

• Strategic repositioning of the Group The Group has been strategically aligned, focusing largely on the opencast mining sector of the economy, striving towards unlocking bottlenecks and strategic value on behalf of customers. Ongoing strategic initiatives are continuously being introduced to reduce the geographic and commodity concentration of the Group.

Continuing operations reviewMining Services – Diesel PowerDiesel Power is a leading coal mining contractor, operating in a competitive environment, offering competitive safe solutions to its clients. Revenue for this business unit increased by 17,65% to R888,5 million as a result of improved contract rates and increased plant availability and efficiency.

EBITDA increased by 215,27% to R247,5 million from R78,5 million as of February 2011. The business unit spent R372,9 million on gross capex during the financial year.

Mining Services – Equipment Sales and RentalThis business unit generated most of its current revenue from short-term plant rentals to Diesel Power at market-related rates. External plant rental revenue for the period under review was not significant. During the comparative period, the business unit rented most of its plant items to an external customer which acquired certain of the equipment at the end of the rental period.

The division’s EBITDA for the period under review was R13,8 million and it reported an operating profit of R4,3 million. The business unit spent R21,9 million on gross capex for the period under review.

Civils and EarthworksThis business unit generates its revenue by providing civil and bulk earth moving services to the mining sector and property developers. Whilst revenue for the period decreased to R65,8 million from R69,7 million, the EBITDA and profit before interest and tax improved from a loss of R7,3 million to a profit of R3,0 million. The business unit spent R9,8 million on gross capex for the period under review.

Aggregates and QuarriesDue to the lack of new infrastructure projects in the current weak construction market, the Group’s quarry operations remain largely dependent on short-term construction contracts. Revenue from the Group’s quarrying businesses increased by 11,74% to R132,6 million compared to the previous financial period.

EBITDA margins reduced from 17,41% in the previous financial period to 10,58%, due to stronger competition in the business unit’s target markets and its inability to pass on all operating cost increases to its customers.

The business unit reported a loss before interest and taxation of R3,8 million compared to a loss of R63,5 million for the comparative period that included non-cash flow pre-tax impairments of R63,9 million on goodwill, intangible assets and equipment.

Gross capex for the period amounted to R8,9 million compared to R4,5 million during the comparative period.

Key sustainability issuesMining, as an industry, is pivotal in meeting the demand for commodities. The continuing extraction of our natural resources renders a major impact on not just the environment, but also from a social and economic perspective. The challenge for companies who operate in this industry is to ensure that they are able to integrate into their conventional business strategy and practice a framework for sustainable development. This requires the implementation of sound risk processes to identify material issues that could have an impact on the long-term sustainability of the business as well as implementing proactive strategies to manage these risks.

Buildmax provides services that cater to the demands of the mining and construction industries. Both industries have major impacts on natural resources. Given the nature of these industries there are many environmental and socio-economic ramifications. It is therefore imperative to be mindful of sustainability within our business framework. This requires taking a holistic approach on all significant strategic factors which impact the long-term sustainability of our business, and further implementing proactive solutions to manage these factors.

The key material sustainability factors which have been identified include:

SafetyThe Group has an excellent safety record and safety remains one of its highest priorities. During the period

Buildmax 2012 ⁄ Report to stakeholders ⁄ CEO’s report (continued)



under review no fatalities were recorded at any of the Group’s operations. Various systems and processes are in place to ensure that workplaces are safe. Safety awareness is encouraged amongst all levels of employees.

The Group’s SHECQ Management System has been successfully implemented, maintained and monitored to ensure continual improvement in safety. This system has been assessed and certified by SABS to confirm compliance with ISO 9001:2008 (quality management) and the OHSAS 18001:2007 (Occupational Health and Safety Standards).

Organisational health and wellnessIt is important to the Group that all levels of our staff are both healthy and cared for. Our Wellness Programme aims to identify health risks, provide health education and influence positive behaviour change amongst our employees. We therefore ensure counselling for employees with stress-related problems, provide support for chronic disease management such as HIV/AIDS, and address issues such as alcoholism and drug abuse in the workplace. Through the introduction of mobile clinics the educational component of our Wellness Programme encourages employees to live healthier lifestyles. Regular medical screening of employees for diabetes, high cholesterol and high blood pressure is also undertaken and encouraged as preventative healthcare.

EnvironmentThe Group is committed to maintaining sound environmental measures and practices in all its operating activities. However, the environmental risks and impacts vary amongst each of our operations.

Skills attraction and retentionThe Group continues to experience a shortage of skills at operator and technical levels. The key concerns are a high turnover of staff in these jobs and competition for skilled resources. The Group remains committed to critical skills development through implementation of training programmes, in order to meet current and future skills requirements.

Committed to transformationThe Group’s BEE shareholding has significantly reduced from 17% to 6,75%, due to dilution subsequent to the finalisation of the rights issue in 2010. The Social,

Ethics and Transformation Committee has formulated a medium-term plan to improve the Group’s current Level 5 to a Level 4 rating. In addition, the Group is committed to meeting the shareholding requirements of the Mining Charter.

For more detail on our material sustainability issues please refer to the social and environmental performance section of this report.

ProspectsWe are grateful for the meaningful contractual relationships with some of the leading mining groups in the country. Our aim is to grow these relationships for the mutual benefit of both parties as the propensity to outsource by many mine owners continues to grow. Buildmax is well positioned to participate in additional coal mining supply chain activities albeit that the current operating environment is challenging.

The outlook for the construction industry is reliant on spending by both government and the private sector. The lack of funding continues to hamper public sector projects while high levels of debt, excess stock and a lack of bank funding continue to impact negatively on the private sector. In positioning Buildmax to continue delivering stakeholder value we are strengthening our intelligence-gathering network to inform our long-term strategy.

Finally, I would like to thank the Board, our employees, management and all other relevant stakeholders for their dedication and support towards achieving the restructuring initiatives over the past 12 to 18 months, and for achieving relatively outstanding financial results in tough market conditions whilst maintaining an exceptional safety track record. Our continuing businesses are all on a sound footing with scope for improvement in a challenging macro and operating environment.

Terry BantockCEO

Buildmax 2012 ⁄ Report to stakeholders ⁄ CEO’s Report (continued)


16

Buildmax 2012 ⁄ Report to stakeholders ⁄ Who governs us ⁄ Who leads us

Who governs us

Executive Directors

Christie Els (48) Financial DirectorMember of the Social, Ethics and Transformation Committee Appointed in 2010...read more >

Terry Bantock (51) Chief Executive OfficerMember of the Social, Ethics and Transformation Committee Appointed in 2010...read more >

Non-executive Directors

Dennis Mack (43) Appointed in 2008...read more >

Bulelani Ngcuka (58) Appointed in 2008...read more >

Malcolm McCulloch (58) Appointed in 2011...read more >

Graeme Montgomery (52) Appointed in 2011...read more >

Independent Non-executive Directors

Colin Brayshaw (77) Chairman of the Audit and Risk CommitteeChairman of the Remuneration CommitteeAppointed in 2008...read more >

Colin Wood (77) Independent Non-executive Chairman of the Board Member of the Audit and Risk CommitteeMember of the Remuneration CommitteeAppointed Chairman in 2008...read more >

David Lamola (69) Chairman of the Social, Ethics and Transformation CommitteeMember of the Audit and Risk CommitteeAppointed in 2008...read more >

Executive Committee

Christie Els (48) Financial DirectorAppointed in 2010...read more >

Terry Bantock (51) Chief Executive OfficerAppointed in 2010...read more >

Kobus van Biljon (55)CEO: Mining ServicesAppointed in 2010...read more >

Herman Fourie (41)Director: Commercial, MIIS & IT Appointed in 2008...read more >

Geoff Jordaan (66)Managing Director: Aggregates and QuarriesAppointed in 2008...read more >

Stephen Lambert (52) Technical Director: Mining Services Appointed in 2010...read more >

buildmax.co.zaFor full CVs of our Board of Directors and ExCo visit

Who leads us

http://www.buildmax.co.za/directorate.html









http://www.buildmax.co.za/executiveCommitee.html








17 Corporate profile

Buildmax is a major diversified supplier of opencast

mining services, civil earthworks and aggregates in South

Africa and is listed on the JSE in the “Coal Mining”

sector. The Buildmax Group operates through four key

strategic business units (“segments”), namely:

• Mining Services: This business unit (largely trading

through its flagship brand Diesel Power) provides

opencast mining, SHECQ management, plant hire and

rehabilitation services to the opencast coal mining

sector;

• Equipment Sales and Rental: Provides plant hire and

sales services on behalf of the Group;

• Civils and Earthworks: A leading and highly regarded

service provider of civils and bulk earthworks to the

mining sector and property developers; and

• Aggregate and Quarries: The Group’s quarries

are strategically positioned in the East Rand of

Gauteng. The operations manufacture and distribute a

wide range of aggregates and building materials to the

roads, construction, civils and do-it-yourself industries.

In addition, this business unit has a well-structured

transport fleet that delivers materials to customers.

Mining ServicesThe Mining Services business unit does not own any

mining and/or prospecting rights hence it assumes

no geological risk on any of its opencast mining

contracts. The nature of the Group’s blue chip client

contracts stipulates the Group’s responsibilities in terms

of SHECQ, which continue to evolve and contain

fixed predetermined formulas for the recovery of cost

increases. The strategy is to reduce commodity and

geographic concentration risk.

Diesel PowerEstablished in the mid-1980s, Diesel Power is one of the leading opencast contract coal mining and earthmoving contractors in the country. Diesel Power has a large fleet of heavy duty mining equipment based in the Mpumalanga region.

Civils and EarthworksThe Civils and Earthworks division owns a sizeable fleet of vehicles and earthmoving equipment. It is a leading and highly regarded service provider of civils and bulk earthworks services to the mining and property development sectors of the economy.

Equipment Sales and RentalThis business unit focuses on improving the Group’s brand for second-hand equipment as well as the efficiency of asset disposals. The Group continues disposing of its surplus equipment when compelling opportunities present themselves both locally and internationally.

Aggregates and QuarriesThis business unit has established operations which are situated in the major growth nodes of eastern Gauteng. Unlike the Mining Services, this business owns prospecting and mining rights and has a cradle-to-grave responsibility in terms of SHECQ. The mining rights held in Crushco, Alfa and Verlesha have been converted to new order mining rights.

• CrushcoCrushco is one of the largest river sand quarries in Gauteng with a lifespan of at least 50 years and covers an area of 137 ha. Crushco was originally established in 1990 and is situated in Benoni, Gauteng, and supplies large quantities of sand and stone products to major contractors and wholesale merchants.

Buildmax 2012 ⁄ Report to stakeholders ⁄ Corporate profile

Buildmax is a major diversified supplier of opencast mining services,

civil earthworks and aggregates.


18 Corporate profile (continued)

• Wit DeepWit Deep was established in 1939. The company is based in Knights, Germiston, and distributes sand, aggregates, bricks and cement to smaller independent building and civils contractors.

• Alfa and Verlesha QuarriesAlfa was established in the 1970s and Verlesha in 2007. Both companies produce washed and sifted sand and together have a lifespan of approximately 30 years and combined cover an area of 120 ha. Furthermore, both operations are based in Bronkhorstspruit, Gauteng.

• Mystic BlueMystic Blue has secured prospecting rights for sand on a number of properties throughout Gauteng, including a property adjacent to the current Crushco quarry. Steady progress has been made with the conversion of the mining right held by Mystic Blue to a new order mining right. During the period under review, an application for the mining of stone at the Crushco quarry was approved by the Department of Mineral Resource (“DMR”).

EmployeesAt the end of 2012 the Group employed 1 821 people, consisting of 1 349 permanent and 472 labour hire staff members. Compared to the results reported previously the Group’s total number of employees decreased by 24% due to the disposal of the various companies in the Construction Materials business unit.

Buildmax 2012 ⁄ Report to stakeholders ⁄ Corporate profile (continued)

The operations manufacture and distribute a wide range of aggregates

and building materials to the roads, construction, civils and do-it-yourself

industries.

Diesel Power 85%

Buildmax Head Office1%

Buildmax Equipment

3%Wit DeepSand and Stone

6%Crushco

4%Alfa Sand Works

1%

Group headcount 2012


19 Corporate governance

Buildmax 2012 ⁄ Report to stakeholders ⁄ Corporate governance

Abridged corporate governance statement: Statement of ComplianceBuildmax is committed to the highest standards of business integrity, ethics and professionalism. The Board recognises the need to conduct the business in accordance with the principles of the King Code of Corporate Practices and Conduct (“King III”). These principles include discipline, independence, responsibility, fairness, social responsibility, transparency and the accountability of Directors to all stakeholders. A number of these principles are entrenched in the Group’s internal controls and policy procedures governing corporate conduct. The Board is satisfied that every effort has been made in 2011/2012 to comply in all material aspects with King III. Where we do not comply, this is stated and explained.

In addition, the new Companies Act, 71 of 2008 (the “Act”) came into effect on 1 May 2011, and the Board confirms compliance to the new Act. The Company is in the process of conducting a gap analysis to determine the requirements of the new Act and related regulations against current practices, and expects to be able to verify behavioural compliance and a programme towards structural compliance in the integrated report for 2013.

The Company continues to comply with all the Listings Requirements of The Johannesburg Stock Exchange Limited (the “JSE”).

The role and purpose of the BoardThe Board of Directors is responsible for the strategic direction and performance of the Company by exercising independent judgement on all issues reserved for its review and approval. More importantly, the Board remains cognisant of its accountability to stakeholders and that the Company conducts all its business activities in a proper and transparent manner. The role of the Board is documented in a formal Board Charter that defines matters reserved for Board approval. The Board Charter is reviewed and updated annually, in accordance with any new guidelines and legislation that is enacted during the period under review. The Charter has been updated to ensure compliance with the new Companies Act and related regulations. The Board approved Charter is available on the Company’s website, buildmax.co.za

In addition to the Board Charter, a formal delegation of authority (“Authorities Framework”) is in place that defines the powers and authority of the Board and management. This Framework is reviewed regularly and approved by the Board on an annual basis.

Board of DirectorsThe Company maintains a unitary Board comprising

nine directors. Seven are non-executive of which three

are independent. In line with King III, four Directors

are defined as non-executive due to relationships to

substantial shareholders of the Company. Mr Colin Wood,

an independent non-executive Director, is Chairman

of the Board. Mr Terry Bantock is the Chief Executive

Officer and an executive Director. The roles of the

Chairman and CEO are separate.

During the period under review, Mr A Maharaj resigned

as a non-executive Director on 16 May 2011. Messrs

Malcolm McCullough and Graeme Montgomery were

appointed on 12 January and 1 June 2011 respectively.

Appointment of DirectorsThe matter of Board appointments remains the

responsibility of the Board as they continue with the view

that a Nomination Committee is not warranted. This

will be reviewed on an annual basis. Non-executive

Directors are chosen for their business skills and expertise

appropriate to the strategic direction of the Company.

Diversity in race and gender, as well as in business,

geographic and academic backgrounds are also taken

into account. The Board ensures that it has the right

balance of skills, expertise, experience and independence

to discharge its responsibilities.

In terms of the Company’s Memorandum of Incorporation

("MoI"), Board members are appointed for a three-year

term of office. Re-election of Board members is staggered

to ensure continuity and succession planning. The names

of the retiring Directors and curriculum vitae are

stated under the heading of “Notice of Annual General

Meeting” on page 100 of this report. The Chairman is

elected annually.

Board effectivenessDuring the year under review, the Board underwent a

performance assessment. The process was led by the

Audit and Risk Committee, and carried out by KPMG, as

an external service provider. The results of the evaluation

were tabled at a Board meeting and all areas of concerns

were acted upon with a view to improvement. An

evaluation of the Chairman, Directors retiring from office

and respective Committees will be performed in the

next financial year and will be reported on in the next

integrated report.


20 Corporate governance (continued)

Buildmax 2012 ⁄ Report to stakeholders ⁄ Corporate governance (continued)

Board meetingsThe Board meets quarterly and on an ad-hoc basis to consider specific issues as the need arises. The progress and status of identified strategic issues are reported and monitored at the quarterly Board meetings. Non-executive Directors meet both officially and unofficially with management on a regular basis.

Attendance at Board Meetings and Annual General Meeting:

10 March 2011

22 March 2011

12 May 2011

2 July 2011

6 September 2011

9 November 2011

23 November 2011 (AGM)

22 February 2012

Executive Directors

TP Bantock

CS Els

Non-executive Directors

CJM Wood* (Chairman)

CB Brayshaw*

MD Lamola*

DJ Mack

A Maharaj (2) A N/A N/A N/A N/A N/A

M McCulloch (1) A A

G Montgomery (3) N/A N/A N/A

BT Ngcuka A A

Legend:* Independent 1 Appointed 12 January 2011A Apologies 2 Resigned 16 May 2011 3 Appointed 1 June 2011

Declaration of interestsThe necessary declaration of interests are made in terms of section 75 of the new Companies Act and are disclosed at every meeting.

Financial DirectorThe Audit and Risk Committee has considered the expertise and experience of the Financial Director and concluded that it is appropriate. The Committee is also satisfied that the expertise, resources and experience of the finance function are of a high standard.

Company SecretaryThe principal responsibilities of the Company Secretary are set out in section 88 of the new Companies Act. The Company Secretary is also Secretary to the Board Committees. All Directors have access to the services of the Company Secretary.

Board and Statutory CommitteesBoard Committees operate in terms of mandates reviewed and approved by the Board. These mandates

were amended during the year to comply with the

requirements of King III and the new Companies Act,

where applicable. All Committees report to the Board

at quarterly Board meetings and verbal reports from the

Chairmen of the Committees and the minutes of previous

meetings are tabled at these Board meetings. The Board

functions are supported by the following Committees:

1. Audit and Risk Committee;

2. Remuneration Committee;

3. Social, Ethics and Transformation Committee; and

4. Executive Committee.

The Audit and Risk CommitteeMembers during the financial year included:

CB Brayshaw (Chairman)

CJM Wood

MD Lamola

The Committee’s Board approved mandate and approved

internal audit charter can be found on the Company’s

website, buildmax.co.za

http://www.buildmax.co.za/CorpGov/termsofRef.html




In the year, the Committee met three times with attendance as follows:

12 May 2011

9 November 2011

22 February 2012


CJM Wood

MD Lamola

The Remuneration CommitteeMembers during the financial year included:CB Brayshaw (Chairman)CJM Wood

The Committee’s Board approved mandate can be found on the Company’s website, buildmax.co.za

The Company’s remuneration policy and Directors’ remuneration is detailed in the remuneration overview on pages 41 to 44.

In the year, the Committee met twice with attendance as follows:

14 March 2011

22 February 2012


CJM Wood

The Social, Ethics and Transformation CommitteeIn terms of the new Companies Act, the Company appointed a Social, Ethics and Transformation Committee with effect from 1 May 2012. This will be reported on in the 2013 integrated report. The Committee’s Board approved mandate can be found on the Company’s website, buildmax.co.za

Executive CommitteeThe Executive Committee (“ExCo”) is not a Committee of the Board. It is primarily responsible for the implementation of Company strategy, as well as carrying out the Board’s mandates and directives. ExCo meets monthly to review Company performance against set objectives and develops Company strategy and policy proposals for consideration by the Board.

Members of ExCo, with the exception of the Company Secretary, have also been identified as the Prescribed Officers of the Company in terms of section 66(10) of the Companies Act, 71 of 2008.

Education and trainingAt the quarterly Board meetings the Directors are kept abreast of all applicable legislation and regulations, changes to rules, standards and codes, as well as relevant sector developments, which could potentially impact the Group and its operations.

Internal controlManagement adopts internal controls including policies, procedures and processes to provide reasonable assurance in safeguarding assets, preventing and detecting errors, the accuracy and completeness of accounting records, and the reliability of financial statements. Internal audit provides independent, objective assurance of the system of internal controls within the Group.

Internal auditThe Group has an outsourced internal audit function (KPMG) that covers all its operations. To ensure that the internal audit function works independently of management, the Audit and Risk Committee approves its charter, audit plan and budget. The internal audit plan is based on an assessment of risk areas identified by internal audit and management, as well as focus areas identified by the Audit and Risk Committee. A comprehensive report on internal audit findings is presented to the Committee quarterly. Follow-up audits are conducted in areas where major internal control weaknesses are found.

Risk managementThe Company has a well-developed, comprehensive enterprise risk management programme (“ERMP”). KPMG continues to assist the Group, through an independently managed, formal and structured approach in identifying risks, measuring their potential impact against a broad set of assumptions and initiating mitigating activities to reduce the calculated exposures to acceptable levels. The Group’s Audit and Risk Committee provides oversight over the Group’s risk management activities. Disaster recovery plans are continually reviewed for critical information management systems that could have a material impact on the Group’s operations. Certain of these plans are subject to regular testing and, in other cases, ongoing tests to ensure they are robust and reliable.






Internal audit’s approach followed by KPMG is represented graphically below:

External auditPKF Inc. expresses an opinion on the fair presentation of the Group’s annual financial statements.

The Group’s Audit and Risk Committee is responsible for ensuring that the combined assurance model introduced by the King III Code is applied to provide a coordinated approach to all assurance activities. The Committee is also responsible for ensuring that the combined assurance received is appropriate to address all the significant risks facing the Company and for monitoring the relationship between the external service providers and the Company.

GRC Guiding Principles

Strategy

Values

Business model

Value drivers

MISSIO

N

Technology

Continuous Im

provement

In

tegr

atio

n an

d C

hang

eGRC Guiding Principles

Compliance

Performance

RESILIEN

CE

GRC Operational M

odel

G

RC Operational M

odel

Governance,organisation and

infrastructure• Accountability

and responsibilities

Enterpriseassurance

• Continuousmonitoring

• Effectivenessand efficiency

review• Integratedreporting

BusinessProcesses

Culture and behaviour• Motivation/Incentives• Ethics and compliance

Risk profile• Risk drivers

• Emerging risks• Interdependencies

Internal audit approach (followed by KPMG)

The table below sets out the risks that are inherent in our businesses. Management has introduced satisfactory mitigating controls to minimise these risks.

RiskBEE – Inability to meet charter and client expectationInappropriate human resources and industrial relations practices, policies, procedures and processesSHECQ non-compliance Stability of workforceAvailability of funding

Combined assuranceBuildmax follows a combined assurance model, which we believe optimises the assurance obtained from management and internal and external assurance providers. The model is graphically represented below.

ManagementManagement provides the Board with assurance that it has implemented and monitored the Group’s risk management plan and that this is integrated into day-to-day activities. Management monitors and implements internal controls through an extensive process.

Internal auditThis is overseen by the Group’s Audit and Risk Committee and provides an assessment of the effectiveness of Buildmax’s system of internal control and risk management.

External audit Internal audit

Management

Combined assurance model




Information managementThe Group’s information technology (“IT”) governance is systematic and based on control objectives for information and related technologies (“CoBIT”) principles. Group management is accountable for information management (“IM”) governance (which includes IT) across the Group. The IM strategy is aligned to the Group’s business needs and sustainability objectives. The IM risk management framework is aligned to the integrated Group risk management framework, which includes disaster recovery measures. IT solutions that impact financial reporting are part of the internal and external auditing scope.

Compliance with laws, rules, codes and standardsLegal compliance systems and processes are continuously being improved to mitigate the risk of non-compliance with the complex web of laws in the various jurisdictions in which Group companies do business. Specific areas of law have been identified as key Group legal compliance risk areas. Risk mitigation and control steps have been implemented in these areas. The Board and its Committees continue to monitor the implementation of the Company’s legal compliance policy and processes closely.

The Group’s tax management policy, approved by the Board, is aligned with our business strategy and risk management objectives. It seeks to achieve effective tax structures across the Group that are compliant with all applicable legislation, as well as cooperative relationships with tax authorities.

Employee participation and employment equityThe Group is committed to promoting equal opportunities and fair employment practices and has established participative structures on issues that affect employees. For the year under review, the Group was not fined for any discriminatory practices.

Code of EthicsThe Group’s Code of Ethics sets out four fundamental ethical principles – responsibility, honesty, fairness and respect. The Code of Ethics has been communicated to

all employees, suppliers, service providers and customers

and is available on our website, buildmax.co.za

Employees and other stakeholders may contact an

independently run fraud and ethics reporting line which

is available 24 hours a day, seven days a week in eleven

of the official languages. This facility deals with fraud,

statutory malpractice and other crimes, unsafe behaviour,

deviations from the procurement policy, financial and

accounting reporting irregularities and other ethical

misconduct. Calls are monitored and progress on their

resolution is reported via the CEO to the Audit and Risk

Committee on a regular basis.

Dealings in securitiesThe Group observes a closed period from the end of

the relevant accounting period to the announcement of

the interim or year-end results, and any period when the

Company is trading under a cautionary announcement,

during which neither Directors or employees may deal,

either directly or indirectly, in the shares of the Company.

Certain employees, by virtue of their positions or

access to information, are also prohibited from trading

during certain periods when they are in possession of

unpublished price-sensitive information.

Political donationsThe Group policy prohibits political donations, either

directly or indirectly.

Stakeholder relationshipsBuildmax subscribes to the King III Code’s stakeholder

management principles. Management has developed a

strategy and formulated policies for the management

of relationships with each stakeholder group. The

Board takes account of the legitimate interests and

expectations of the Group’s stakeholders in its decision-

making. A more integrated approach to stakeholder

management is under development. The Board will

receive periodic reports on group-wide stakeholder

mapping, prioritisation and engagement plans to enable

it and the Board to discharge their responsibilities for

stakeholder management and reporting.

http://www.buildmax.co.za/CorpGov/Ethics.html




Buildmax invites all shareholders to attend its Annual General Meeting and also facilitates participation by proxy. Other ways to encourage participation in voting will be investigated.

Whilst the Group recognises that all stakeholders are important, certain key strategic relationships have been identified with the following stakeholders:

Stakeholder model

Shareholders

Financiers

Government

Customers

BEE partners

Employees

Local communities

A summary of the types of engagement and any material developments during the year are identified below:

Stakeholder Type of engagement Material issues

Shareholders, BEE partners and investing community

Annual report, Annual General Meeting, SENS, interims, website, fact sheets, road shows, presentations and one-on-one conferences

Group strategyBusiness risksOpportunitiesProspectsFinancial results

Banks, funders and insurance companies

Debt, insurance engagements and site visits

Group strategyBusiness risksOpportunitiesProspectsFinancial results

Government – national to provincial and local

Close liaison with and reporting to relevant Government departments, district municipalities and local municipalities

BBBEE statusRehabilitation guaranteesHealth and SafetyQuarry developmentWater managementOperator trainingABET and Learnership ProgrammesMentorship ProgrammeSocial Upliftment and Enterprise DevelopmentPerformance statisticsMonthly reporting to the DMR




Stakeholder Type of engagement Material issues

Suppliers Meetings as required Supply and Service Level Agreements

Customers Personal visits, quality control, regular meetings and presentations as required

Customer contractsService level agreementsProduction planning and targetsRate negotiations

Employees Social economic development, health, safety and environment, publications, road shows, reports, presentations, as required

TrainingCareer developmentRemuneration

Local communities Regular meetings Social Upliftment ProgrammesEvery effort is made to procure from BBBEE rated suppliers in each of the operations’ geographical areas Due to the nature of our business, the Group has limited scope to procure products and services from businesses owned and managed by local communities

More information can be found in the Group’s Sustainability Framework report and is available on our website, buildmax.co.za

Access to informationBuildmax complies with the requirements of the Promotion of Access to Information Act of 2000. The corporate manuals are available on our website, buildmax.co.za and from the Company Secretary.

Buildmax is committed to the highest standards of business

integrity, ethics and professionalism.

http://www.buildmax.co.za/Sustainability/sustReport.html

http://www.buildmax.co.za/CorpGov/policyStatement.html


26 Audit and Risk Committee report

Buildmax 2012 ⁄ Report to stakeholders ⁄ Audit and Risk Committee report

IntroductionThe Audit and Risk Committee presents its report for

the financial year 29 February 2012. The Audit and Risk

Committee is an important part of the Board’s system of

monitoring and control.

The Audit and Risk Committee has decision-making

authority in its statutory duties and is accountable in this

regard to the Board and the shareholders. The Board

has delegated extensive powers to this Committee to,

amongst others, implement a procedure for pre-approval

of all audit services and permissible non-audit services

provided by the external auditor.

On all delegated responsibilities outside of the statutory

duties, the Committee makes recommendations for

Board approval. The Audit and Risk Committee assists

the Board in overseeing:

• The quality and integrity of the Company’s integrated

reporting process, incorporating the financial statements

(including consolidated Group financial statements)

and sustainability reporting, and announcements in

respect of the financial results;

• The qualification and independence of the external

auditors for Buildmax and its subsidiaries;

• The scope and effectiveness of the external audit

function for Buildmax and its subsidiaries;

• The effectiveness of the Group’s internal controls and

internal audit function; and

• Compliance with legal and regulatory requirements

to the extent that they might have an impact on the

integrated report.

The Committee is satisfied that it has fulfilled its

obligations in respect of its scope of responsibilities.

Membership of the CommitteeThe membership of the Committee comprised solely

independent non-executive Directors. In addition,

the CEO, FD, internal and external auditors are also

permanent invitees to meetings. Details of membership

can be found on page 21 and the attendance record of

the members is available on page 21. The effectiveness

of the Committee will be assessed in the forthcoming

year. As required by the Companies Act, 71 of 2008, (the

“Act”) the Committee members were elected by the

shareholders at the AGM.

External auditThe Committee has satisfied itself through enquiry that

the auditor of Buildmax Limited and its subsidiaries are

independent as defined by the Act. Meetings were held

with the auditor where management was not present.

No material non-audit services were provided by the

external auditors during the year under review.

The Committee has reviewed the performance of the

external auditors and nominated, for approval at the

AGM, PKF (Jhb) Inc. as the external auditor for the 2012

financial year. Mr RJ Lawson was the designated auditor at

the date of this report. Mr P Badrick has been appointed

as the designated auditor for the 2013 financial year. The

Committee confirms that the auditor and designated

auditors are accredited by the JSE.

Integrated reportThe Committee has evaluated the integrated report,

incorporating the annual financial statements, for the

year ended 29 February 2012. It has also considered the

sustainability information as disclosed in the integrated

report and has assessed its consistency with operational

Based on the results of the formal documented review of the Company’s system of internal financial controls, which was performed by the internal audit function and external auditors, nothing had come to the attention of the Audit and Risk Committee to indicate that the internal financial controls were not operating effectively.

Colin Brayshaw


27 Audit and Risk Committee report (continued)

and other information known to its members. The annual

financial statements have been prepared using appropriate

accounting policies, which conform to International

Financial Reporting Standards. The Committee has

therefore recommended the integrated report for

approval to the Board. The Board has subsequently

approved the report and the annual financial statements,

which will be open for discussion at the AGM.

Based on the results of the formal documented review

of the Company’s system of internal financial controls,

which was performed by the internal audit function and

external auditors, nothing had come to the attention

of the Audit and Risk Committee to indicate that the

internal financial controls were not operating effectively.

CB Brayshaw

Chairman of the Committee

24 May 2012

Buildmax 2012 ⁄ Report to stakeholders ⁄ Audit and Risk Committee report (continued)

The Audit and Risk Committee is an important part of the Board’s system of monitoring and control.


28 Social and environmental performance

Buildmax 2012 ⁄ Report to stakeholders ⁄ Social and environmental performance

Social performanceMany of the communities in which we operate have

multiple social and development challenges. We invest in

creating value for communities by supporting strategic

economic drivers, skills and capacity development and

by increasing the involvement of communities in our

value chain.

We channel the majority of our CSI into three priority

areas:

1. Job creation – by investing in initiatives that promote

the sustainable creation of employment;

2. Community development – by supporting the needs

of the local communities; and

3. Health and welfare – with an emphasis on key social

challenges.

The Group’s material sustainability issues, defined in those

that are imperative for the Group to create and sustain

value, have been identified and summarised, as follows:

1. Job creationBeadmakingAlfa Sand and Stone assisted 10 ladies to establish a

beadmaking business. This project is currently self-funding

through their own marketing initiatives. Due to the

success of this project, we are currently in the process of

establishing a factory/retail outlet in Rayton.

For World AIDS Day Buildmax asked the beadmaking

team to make 200 beaded AIDS ribbons to the value

of R1 880 which were distributed to staff on 1 December

2011.

Furthermore, at the results presentation in 2011, the

beaders displayed their products and a further R4 120

was raised due to the selling of their products.

Bagging plant

The Group assisted five of its previously disadvantaged

employees in establishing a micro-enterprise. These

ex-employees bag bulk building materials provided by

Wit Deep Sand and Stone into 40 kg bags. These bags

are sold to the do-it-yourself building segment by Wit

Deep Sand and Stone. It is envisaged that it will be self-

funding by next year-end.

2. Community developmentDuring the year, we invested in various community-based initiatives according to particular needs. Some of these included:

Warburton Combined SchoolWe continue to support the needs of Warburton School. This year we fulfilled their requirements by supplying them with mattresses for their students.


29 Social and environmental performance (continued)

Buildmax 2012 ⁄ Report to stakeholders ⁄ Social and environmental performance (continued)

Adopt a SchoolThe Quarry division is in the process of embarking

upon ‘’Adopt a School’’ project. The school identified is

situated near the Crushco Operation and is endorsed

and approved by the DMR.

Siphetu Primary School in DaveytonIn November 2011 we were approached by the principal

of the school to assist them in feeding 198 of their

children, 49 of whom were orphans, during the December

holidays. The staff at Buildmax made grocery donations

which were handed over to the school.

Tour de TuliThe Tour de Tuli is a fundraising initiative by Wilderness

Safaris to the benefit of the charity – Children in the

Wilderness. Diesel Power sponsors the use of nine of its

new Toyota 4x4s for the duration of the Tour de Tuli. For

a few weeks a year, Wilderness Safaris closes its safari

camps to paying guests and hosts groups of children for

a five-night programme that ultimately aims to get the

children of our continent to understand the wilderness,

to respect it and care for it.

Raffle for various charities

Various charitiesIn January 2012 the ladies in the administration offices

decided to raise funds for various charities. A raffle was

decided upon where each lady was requested to donate

something towards the hamper. This hamper is valued at

R45 000 and the money raised was donated to various

charities as identified by the Company.

Baard challengeAn inter-unit challenge between our operations at

Zaaiwater and Diesel Power took place and the funds

raised were donated to Wonderpark Kinderhuis outside

Middelburg.

3. Health and welfareA key challenge for the Group is ensuring the health of all employees and promoting their overall wellbeing. The Group has embarked on a number of strategies to effectively address these issues which include:

Promoting productivity, health and wellbeingIn many senses, health poses as much of a legal, operational and reputational risk as our safety performance – albeit over a longer time scale. Our approach to managing this risk is characterised by our holistic focus on worker wellbeing, which goes beyond conventional compliance-based measures of occupational health and communicable disease.

A broad range of initiatives around occupational health and safety, healthcare, living conditions, nutrition, education, sport and recreation have been initiated by the Group. Through this approach, we aim to ensure that we have a fit and motivated workforce.

Promoting occupational healthBuildmax provides a range of healthcare services to employees. Our mining operations tend to pose higher occupational health risks. Two mobile Clinic Units, operated jointly with the Corridor Empowerment Project (“CEP”) (www.truckingwellness.co.za) were introduced. These units rotate to every operation and perform voluntary testing in the following areas:• HIV, including referrals for ART;• Hypertension testing;• Glucose testing;• Cholesterol testing;• Screening for STIs;• Screening for tuberculosis;• Body Mass Index (BMI);• Condom distribution;• Fatigue management; and• Patient referral.

The Company is pleased with the participation of its staff in these initiatives.




Supporting employee wellbeingBeyond this, our holistic approach to employee care means we also address employees’ broader social, psychological and emotional wellbeing. If left unaddressed, these can have a significant impact on motivation and productivity and can also contribute to health and safety incidents.

The Group provides all employees access to a resident psychologist who is registered with the Health and Professionals Council of South Africa. She brings with her an abundance of experience and in addition presents to the staff on the following:• Time management;• Insights;• Discipline and behavioural issues in teenagers and

older children; and• Stress management both in the workplace and at home.

Healthy eating remains a responsibility of each and every one of us. The staff canteen at the Benoni office opened its doors on 2 September 2011. The objective is to offer employees a healthy, balanced meal on a daily basis. All meals are subsidised by the Company. In addition the Weigh-less programme was introduced for staff in October 2011. This programme has reported positive results. As a result management have approved their support of this programme for another year.

Whilst the Company encourages healthy eating, exercise should also form part of everyday living. Fitness classes

were introduced this year and take place twice a week. In addition to the fitness programmes, the Company encourages employees to participate in Smoke-Enders – a programme designed to assist those who want to stop smoking.

Material sustainability issuesThe Group’s material sustainability issues, defined as those that are imperative for the Group to create and sustain value, have been identified and summarised, as follows:

SafetyAll of our employees receive both general and role-specific health and safety training during induction. This is supported through annual refresher training, risk specific training (where required) and regular safety awareness campaigns.

Our ability to promote safe production is supported by the active involvement of our employee representative organisations and unions and regulators. This includes the DMR in South Africa, which continues to provide us with valuable guidance on how to improve our safety performance and meet their Mine Health and Safety Council health and safety milestones.

Buildmax is committed to making “Efficient Zero Harm Production” a reality and this is achieved with the combined commitment of every member of our team and other relevant stakeholders.




All of our project feasibility assessments include occupational health risk management. Relevant risks are addressed through targeted design interventions to ensure all structures, equipment and processes are safe before they become operational. The following risk process chart has been developed:

Communicate and consult

• Analyse stakeholders and needs • Acts and regulations • Advisory standards and practices• Plan communications • Involve

Establish the context

• SWOT analysis

• Objectives

• Stakeholders

• Criteria

• Key elements

Identify the risks

• What activities can happen?

• What critical tasks can happen?

• Record significant hazards

• Analyse the level of the inherent risk

Analyse the risks

• Review the current controls

• Probability – likelihood

• Consequences

• Analyse the level of the residual risk

Evaluate the risks

• Apply criteria

• Rank

• Screen out minor risks

• Risk profile

Control or treat the risks

• Identify options

• Evaluate options

• Develop action plans

• Risk control effectiveness

• Make records available to employees

Monitor and review• Monitor risks • Assure controls/treatment plans • Lessons learned

• Consult with Health and Safety Committee

We comply with the Mine Health and Safety Act, 29 of 1996 as well as the Occupational Health and Safety Act, 2003. Health and Safety Committees including collective agreements are in place at all our operations. These Committees meet on a regular basis to discuss and resolve health and safety-related matters.

The Lost Time Injury Frequency Rate in the Group’s Mining Services operations was 0,15 [calculated as (total injuries x 200 000)/total man hours worked]. This equated to nine minor incidents during the course of the 2012 financial year – benchmarked against industry norms this was a remarkable achievement.

We seek to continuously improve the recording and analysis of our safety performance through the following means:

1. Holistic measurement of all safety incidentsDuring 2012, we continued to record Total Incident Frequency Rates ("TIFR") at our operations, which include a broad range of safety, environmental and operational measures. This a) delivers a holistic, risk-based view of safety performance; and b) reduces overreliance on Lost Time Injury (“LTI”) reporting, which can discourage employees and managers from pursuing the early and effective treatment of some injuries.




2. SHECQ Management SystemThe Buildmax SHECQ Management System (the “system”) has been successfully implemented, maintained and monitored for the purpose of continual improvement. The compliance model is illustrated below:

SHECQ Management System

SHECQ

SHECQPolicy

Continualimprovement

Performancemonitoring

Proactivemanagement

On the jobtraining

Safe operating procedure

Riskmanagement

Legal and other

requirements

Core values/SHECQ

agreement

Our ongoing commitment towards our values and customer requirements has driven us to meeting best practice in SHECQ. The system was assessed and certified by SABS to confirm compliance with the standards, namely ISO 9001: 2008 (Quality Management) and the OHSAS 1 8001: 2007 (Occupational Health and Safety). The system received no exclusions.

For further details refer to the Group’s Annual SHECQ Report on our website, buildmax.co.za

PeopleThe Group is committed to the principles of employment equity as well as to achieving a productive and fair working environment, free of discrimination. The Group recognises the need to implement affirmative action measures to counteract the underrepresentation of certain designated groups in the workplace through recruitment, training and promotion of HDSA’s.

We are a significant employer in the Gauteng, Mpumalanga provinces. In certain areas, the Group’s operations are

located in regions where few economic activities take place. The Group provides transport from where our staff live to the Company’s operational sites.

Buildmax ensures compliance with South African labour and other legislation which includes the Labour Relations Act, Basic Conditions of Employment Act, the Employment Equity Act and the Mining Charter. Wherever possible, appointments are made in line with employment equity plans and in compliance with legal statutory provisions. In support of these targets and current legislation, the Group places special emphasis on recruiting, training and promoting employees from local communities, particularly HDSA’s and women, taking into account the available skills pool in that particular area. Several training initiatives have been identified within the Group, which aim to identify, train and develop HDSA’s to fulfil these leadership and management positions in the future.




All employment equity targets are set annually and detailed in the Buildmax subsidiaries’ employment equity plans which are submitted to the South African Department of Labour. The individual entities report against these targets monthly to the Group’s head office.

Women in mining – the Mining Services and Quarrying business units have further embarked on decisive steps in appointing, training and developing women within the operations of both business units. There is a fair representation of women operators, safety officers as well as screening operators, on the quarrying side.

Total number of employees and labour hire staff complement as at 29 February 2012:

By gender Male Female

By race Black Coloured

Asian/Indian White

Non-executive Directors 10 8 2 10 5 – – 5 Salaried – Directors 7 6 1 7 1 – – 6 Salaried – Department heads 22 20 2 22 1 – – 21 Salaried employees 302 241 61 302 92 7 6 197 Salaried Contractors – – – – – – – – Waged Employees 1 008 987 21 1 008 984 7 1 16 Waged Labour hire 472 439 33 472 470 1 – 1 Waged casual – – – – – – – –

Total 1 821 1 701 120 1 821 1 553 15 7 246

Employment equity statistics excluding labour hire and casuals year ended 30 September 2011:

NameBy

gender Male FemaleBy

race Black Coloured Asian/Indian White

Top management 16 14 2 16 4 – – 12 Senior management 18 16 2 18 1 – – 17 Professional qualified and experienced 74 59 15 73 10 2 1 60 Skilled technically and academically 1 058 1 008 50 1 058 907 15 5 131 Semi-skilled 195 168 27 195 174 2 1 18 Unskilled 277 243 34 278 382 1 – (105) Temporary – – – – – – – –

Headcount as at 30 September 2011 1 638 1 508 130 1 638 1 478 20 7 133

Employee turnover excluding labour hire and casuals for the year ended 30 September 2011:

NameBy

gender Male FemaleBy

race Black Coloured Asian/Indian White

Headcount as at 1 October 2010 (see note below) 1 431 1 338 93 1 431 1 222 20 7 182 Appointments 605 551 54 613 595 – – 18 Resignations (266) (250) (16) (274) (216) – – (58) Retrenchments – – – – – – – – Dismissals (115) (114) (1) (115) (108) – – (7) Retirement (1) (1) – (1) – – – (1) Disability (2) (2) – (2) (1) – – (1) Death (14) (14) – (14) (14) – – –

Headcount as at 30 September 2011 1 638 1 508 130 1 638 1 478 20 7 133

Note: The opening balance excludes people previously employed in the Group’s discontinued operations.




Labour relationsThe Buildmax Group recognises the right of every employee to exercise freedom of association and to join a trade union of their choice to collectively represent their interests. A three-year agreement with NUM has been signed and expires on 28 February 2013. The NUM representation for the Group at the end of the 2012 financial year was 616 members.

Training and developmentA key initiative of the Group is to nurture and develop the skills base internally so as to meet both the current and future skills requirements of the organisation. The Group’s culture offers an environment of advancement and provides various training programmes to assist employees to advance in their careers.

During the year under review the Group provided classroom and onsite training covering production, safety and certain administrative functions to 3 434 trainees totalling 343 685 hours.

Adult basic education trainingIn recognition of a number of legacy issues and in support of our objective to develop and promote our own employees, as well as to enhance our levels of effectiveness and efficiency in business, Buildmax made a decision to identify and remove identifiable barriers to upward mobility by our employees. It became evident that numeracy and literacy, particularly at the junior levels of the Group, was a major barrier. To that end, the Group has embarked on an ABET programme, starting at Level 1 through to 3. The plan is to articulate this with the National Qualifications Framework levels, which will then enable our employees to be trained and developed for higher levels of deployment and promotion within the Group. Seven of the Quarry division staff have successfully passed their ABET Level 1 and will continue with Level 2 this year.

Environmental performanceBuildmax recognises the importance of managing environmental issues which affect not only the natural ecosystem but also the communities in the vicinity of our operations. We are committed to world-class environmental stewardship and thorough ecological management in our opencast mining, quarrying and manufacturing activities. The necessary policies and practices have been put in place to ensure that the Group’s operating entities are managed within the relevant legal and statutory parameters.

Managing environmental impactsOpencast mining operationsThis unit does not own any prospecting and/or mining rights and operates on customers’ sites. The business unit’s responsibility, in terms of SHECQ, is stipulated and agreed to in the individual opencast mining contracts. In certain instances the Group is expected to perform rehabilitation services on behalf of customers. Most opencast mining activities take place on brownfields operations acquired by customers and in general these would already be in a disturbed state. Although management might provide input into the mining plan, once the tender has been awarded, customers are ultimately responsible for the development of the initial mining and rehabilitation plans. No closure liabilities are provided for and no liability existed at the end of the financial year.

Quarry operationsThis operation has prospecting and mining rights and as a result is responsible for the rehabilitation of land to appropriate land use where this is possible. As a minimum, these operations adhere to the environmental laws, regulations and permits associated with mining activities, in particular the MPRDA and NEMA. As is required by legislation each operation has an EMP in place and performance against these is regularly reviewed.

As is required by law in South Africa, closure liabilities have been estimated for all such operations. This is based on the cost to rehabilitate land should all quarries cease to operate immediately, which is improbable. Financial provisions have been made and proof of this has been submitted to the DMR.

There are no protected areas in close proximity of the Group’s quarrying operations.

The extent of the Group’s rehabilitation provisions are disclosed in note 6 and 20 to the annual financial statements.

PerformanceEnvironmental risks and impacts vary from operation to operation. The primary environmental concerns for the Group are:

1. Water management;

2. Energy consumption and greenhouse gas emissions;

3. Waste management and disposal; and

4. Contractual closure responsibilities and management. (Refer to paragraph above)

The Group has implemented the necessary control measures to ensure, where possible, the prevention of




potential pollution and to mitigate the negative impact of actual pollution to air, land and water. Underpinning the Group’s approach to environmental performance and reporting is open and honest communication with all stakeholders on environmental matters.

The Group is proud to report that no spillages, which could have had a negative impact on the surrounding environment, occurred during the period under review.

1. Water managementThe Group recognises the fact that water is a scarce resource in South Africa and that this situation might further deteriorate in the future. It also acknowledges that the Group’s operations, together with climate change, are placing increasing pressures on this limited resource. Water management is therefore a key concern.

Opencast operationsThe management of these facilities remains the responsibility of the customer.

Quarrying operationsThe operation is registered with the DWA as a water user. The next step to legal compliance is to obtain Integrated Water Use Licences for each of the operations from the DWA that govern water usage and discharge into the natural environment. Processed water is kept separate in settlement ponds, and re-used in the mining activities after the fine material has settled. The recycled water accounts for 90% of the requirement in the processing of sand and is supplemented by stormwater and seepage collected within the individual mining basins. Methods to reduce water usage are continuously being investigated. One such method is the recent introduction of a Dakota Air Separator to remove unwanted fine material from sand instead of using water.

2. Energy consumption and greenhouse gas emissionsOur energy consumption is primarily electricity sourced from the national energy utility, Eskom, either directly or via our customers’ site infrastructure. Our ongoing energy saving initiatives include training on creating awareness on climate change and instilling in staff a culture of switching

off power sources not in use. The Group also encourages the electronic storage (if possible) of emails and other documents.

Due to the nature of the operations in the Mining Services business unit, the Group generates significant amounts of carbon emissions. Opportunities to reduce these emissions, however, are limited. The Group remains committed to exploring initiatives to reduce these emissions.

3. Waste management and disposalThe primary materials used by the Company in its operational activities are fuel, lubricating oil, tyres, consumables and spares. The efficient and safe usage and disposal of these materials form part of the Group’s environmental management strategy. The disposal of second-hand tyres remains problematic and the Group has consulted with its tyre supplier and manufacturer to identify methods of disposal that will not have a long-term impact on the environment.

The Group purchases lubricating grease, oils, consumables and spares in line with Original Equipment Manufacturers’ (“OEM”) specifications and maintenance programmes. These items are disposed in terms of the local municipality legislation and no fines were levied on or paid by the Group for the period under review.

We are required to adhere to the OEM’s maintenance specifications and in addition comply with the production requirements as reflected in our customer contracts. As a result, the Group has limited opportunity to reduce its carbon footprint. We continue to strive towards finding ways to reduce consumption in areas within our control.

Materials used during the year under review:

Diesel supplied by customers and used in mining operations (ℓ)

40 328 011

Diesel and petrol directly acquired by the group and used in its operations (ℓ)

4 106 917

Number of tyres used in mining and other operations

4 900

Oil and other lubricants used in mining and other operations (ℓ)

534 096


3636 Economic performance

The value-added statement measures performance in terms of value added by the Group through the collective efforts of management, employees and providers of capital.

2012 2011

R’000 % R’000 %

Value added during the yearRevenue 1 272 052 1 369 214

Other operating income 45 998 48 596

Costs directly associated with revenue and other income (663 581) (963 826)

Value added from operations 654 469 99,6 453 984 98,5

Interest received 2 790 0,4 6 796 1,5

Wealth created 657 259 100,0 460 780 100,0

Distributions during the yearManagement, employees and employee taxes, skills development and other related levies 382 616 58,2 321 283 69,7

Providers of capital 30 324 4,6 41 759 9,1

Government – taxation 369 0,1 4 881 1,1

Reinvested in the Group 243 950 37,1 92 857 20,2

Wealth distribution 657 259 100,0 460 780 100,0

Number of employees at reporting date 1 821 2 405

Revenue per employee 699 569

Wealth created per employee 361 192

Financial highlights for 2012

• Revenue increased by 5,74% to R1 087,5 million;

• Operating profit improved from a loss of R43,3 million to a profit of R102,5 million; and

• EBITDA improved significantly by 117,5% to R278,3 million.

Value-added statementas at 29 February 2012

Buildmax 2012 ⁄ Report to stakeholders ⁄ Economic performance


Ennica Sibanyoni Ennica joined Diesel Power in 2008 as rigid operator, was appointed as

a part-time SHE representative in 2009, and by 2010 was appointed as a

full-time SHE representative. Due to the vast knowledge and experience

she gained over the years, compounded by the enthusiastic way to which

she approached her duties and responsibilities, Ennica was promoted and

is currently a trainee SHECQ officer at Isibonelo Box-Cut. She aspires to

become a safety superintendent.

Consolidated annual financial statements


38

In our capacity as Company Secretary we declare, in terms of the South African Companies Act, 71 of 2008 that for the year ended 29 February 2012 the Company has lodged with the Registrar of Companies all such returns as are required of a public company in terms of this Act and that all such returns are true, correct and up to date.

Probity Business Services (Proprietary) LimitedCompany Secretary

23 May 2012

The Directors are required in terms of the Companies Act, 71 of 2008 of South Africa to maintain adequate accounting records and are responsible for the content and integrity of the annual financial statements and related financial information included in this report. It is their responsibility to ensure that the annual financial statements fairly present the state of affairs of the Company as at the end of the financial year and the results of its operations and cash flows for the period then ended, in conformity with International Financial Repor ting Standards. The external auditors are engaged to express an independent opinion on the annual financial statements.

The annual financial statements are prepared in accordance with International Financial Reporting Standards and are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgements and estimates.

The Company and the Group operated in a well-established controlled environment, which is well documented and regularly reviewed. This incorporates risk management and internal control procedures, which are designed to provide reasonable assurance that assets are safeguarded and the material risks facing the business are being controlled.

The Directors are of the opinion, based on the information and explanations given by management, that the system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the annual financial statements.

Directors’ statement of responsibility and approval

for the year ended 29 February 2012

The Directors believe that the Company and Group have adequate resources to continue operations as a going concern in the foreseeable future, based on forecast and available cash resources. The financial statements support the viability of the Company and Group.

The external auditors are responsible for independently reviewing and reporting on the Group and Company’s annual financial statements. The annual financial statements have been examined by the Company’s external auditors and their report is presented on page 39.

Board approvalThe annual financial statements which have been prepared on the going concern basis, were approved by the Board of Directors and are signed on their behalf by:

CJM Wood TP BantockChairman CEO

24 May 2012

Declaration by Company Secretaryfor the year ended 29 February 2012

Buildmax 2012 ⁄ Consolidated annual financial statements ⁄ Directors’ statement of responsibility and approval ⁄ Declaration by Company Secretary


39 Independent auditors’ report


TO THE SHAREHOLDERS OF BUILDMAX LIMITED

Report on the financial statementsWe have audited the annual financial statements of Buildmax Limited, which comprise the consolidated and separate statements of financial position as at 29 February 2012, and the consolidated and separate statements of comprehensive income, statements of changes in equity and statements of cash flows for the year then ended, and a summary of significant accounting policies and other explanatory notes, and the Directors’ report, as set out on pages 40 to 44.

Directors’ responsibility for the financial statementsThe Company’s Directors are responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, and the requirements of the Companies Act of South Africa, and for such internal control as the Directors determine what is necessary to enable the preparation of financial statements that are free from material misstatements, whether due to fraud or error.

Auditors’ responsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgement, including the assessment of the

risks of material misstatement of the financial statements,

whether due to fraud or error. In making those risk

assessments, the auditors consider internal control relevant

to the entity’s preparation and fair presentation of the

financial statements in order to design audit procedures

that are appropriate in the circumstances, but not for the

purpose of expressing an opinion on the effectiveness

of the entity’s internal control. An audit also includes

evaluating the appropriateness of accounting policies used

and the reasonableness of accounting estimates made by

Directors, as well as evaluating the overall presentation of

the financial statements.

We believe that the audit evidence we have obtained is

sufficient and appropriate to provide a basis for our audit

opinion.

OpinionIn our opinion, the financial statements present fairly, in all

material respects, the consolidated and separate financial

position of Buildmax Limited as of 28 February 2012,

and its consolidated and separate financial performance

and cash flows for the year then ended in accordance

with International Financial Reporting Standards and the

requirements of the Companies Act of South Africa.

PKF (Jhb) Inc.Registered Auditors

Chartered Accountants (SA)

Registration number 1994/001166/211

Director: RJ Lawson

24 May 2012

Buildmax 2012 ⁄ Consolidated annual financial statements ⁄ Independent auditors’ report


40

The Directors present their report, which forms part of

the annual financial statements of the Company and the

Group for the year ended 28 February 2012.

Nature of businessBuildmax is a major diversified supplier of opencast

mining services, civil earthworks and aggregates in

South Africa and is listed on the JSE in the “Coal

Mining” sector. The Buildmax Group operates through

four key strategic business units (“segments”), namely

Mining Services, Equipment, Sales and Rental, Civils and

Earthworks and Aggregates and Quarries.

Financial resultsDetails of the Group consolidated and Company financial

results, financial position and cash flows are set out in the

accompanying audited annual financial statements.

DirectorsDirectors in office at the date of this report are:

Executive DirectorsTP Bantock (CEO)

CS Els (FD)

Independent non-executive DirectorsC Wood (Chairman)

CB Brayshaw

MD Lamola

Non-executive DirectorsDJ Mack

MW McCulloch (appointed 12 January 2011)

G Montgomery (appointed 1 June 2011)

BT Ngcuka

In terms of the Memorandum of Incorporation, CJM Wood,

MD Lamola, TP Bantock and CS Els will retire as Directors

at the upcoming Annual General Meeting, and being

eligible, offer themselves for re-election.

Share capitalDetails of the authorised and issued ordinary share capital

are included in note 13 to the annual financial statements

and in the statement of changes in equity. A detailed

reconciliation of the movement in ordinary share capital

and share premium is provided.

The Company’s unissued ordinary shares have been placed

under the control of the Directors until the forthcoming

Annual General Meeting.

Directors’ report


Going concern After making the necessary enquiries, the Board of Directors believes that the Buildmax Group has adequate cash resources and banking facilities available to continue in operational existence for the foreseeable future. The Group’s forecasts and projections, taking account of reasonable possible changes in trading performance, show that the Group will be able to meet its short and medium-term debt repayments and that it will have adequate working capital facilities available to continue to operate within the level of its current financing structure.

Goodwill and other intangible assetsManagement reviewed the carrying amounts of its goodwill and intangible assets to determine whether there was any indication that those assets have suffered an impairment loss. These reviews have been consistently applied at the end of each reporting period.

The recoverable amount for each separate cash-generating unit was calculated by management for both the 2012 and 2011 financial years and verified by independent experts for the 2011 financial year. An impairment of R255,8 million was recognised in the statement of comprehensive income during the previous financial year with no charge for any impairments required at the end of 2012.

The impairment is disclosed in notes 2, 3 and 25 to the financial statements.

Property, plant and equipmentThe Group acquired property, plant and equipment amounting to R415,9 million (2010: R89,9 million) during the year under review (refer to note 2).

ImpairmentIndications of impairment existed during the year ended 28 February 2011. These indications of impairment included increased repairs and maintenance, increased down time and the constrained market for second-hand mining equipment market. Based on these indicators the recoverable amount of property, plant and equipment had to be re-assessed. Utilising the services of internal industry experts, management completed a detailed item-by-item estimate of the recoverable amounts of all property plant and equipment. The impairment amount was calculated as the difference between the recoverable amount and the carrying amount at the end of the 2011 reporting period.

Buildmax 2012 ⁄ Consolidated annual financial statements ⁄ Directors’ report


41 Directors’ report (continued)

Therefore an impairment of R39,9 million was recognised in the statement of comprehensive income in 2011 against property, plant and equipment while no impairment charges are required at the end of 2012. Refer to disclosure in notes 2; 3.1 and 25 to the financial statements.

Change in accounting estimatesIn order to comply with the Group’s accounting policies management reviewed the remaining economic useful lives and residual values of all items of property, plant and equipment subsequent to the 2012 financial year-end. This revision identified the need to expand the categories of mining plant and equipment in the Group’s accounting policies to cater for the different economic useful lives and residual value estimates applied to the various assets. These revised estimates will be implemented prospectively and would not have had a material impact on the financial results for the 2012 financial year.

SubsidiariesDetails of the Company’s interest in subsidiaries at financial statement date and at the date of this report respectively, are set out in note 5 to these annual financial statements.

Discontinued operationsIn line with the Group’s stated strategic decision to focus on its core business activity – opencast mining, equipment sales and rental, civils and earthworks and quarrying – the Group disposed of its interests in the Construction Materials business unit. The financial results of these businesses has been presented as discontinued operations.

Business combinationsAll conditions precedent to the acquisition of a further company in Buildco, Mystic Blue Trading 135 (Proprietary) Limited, have not been fulfilled at the date of this report and accordingly the results of this company have still not been included in the results of the Group. This company holds a number of prospecting rights which would not have had a material effect on the trading results or financial position of the Group had these been included in the results.

Estimates and contingenciesManagement makes estimates and judgements concerning the future with regards to opencast mining contracts, provisions, residual values and economic useful live of property, plant and equipment, claims and other fair value accounting policies. The resulting estimates and judgements can only approximate the actual results. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

DividendsIt is the Group’s policy to consider the declaration of a dividend annually. Given the need to protect the Group’s financial position, the Board of Directors has decided not to declare a dividend for the year ended 29 February 2012. No dividend was declared or proposed during the prior year.

Directors and prescribed officersDirectors’ remuneration, including direct and indirect benefits, for the year ended 29 February 2012 was as follows:

Board and Committee

feesR’000

SalaryR’000

BonusR’000

Contributions to medical

aid and retirement

fundsR’000

Expense allowance

R’000Total

R’000

Directors’ emolumentsExecutive DirectorsTP Bantock – 2 668 2 581 82 69 5 400 CS Els – 1 866 1 751 – 67 3 684

Non-executive DirectorsCB Brayshaw 366 – – – – 366 MD Lamola 256 – – – – 256 DJ Mack 150 – – – – 150 MW McCulloch 150 – – – – 150 G Montgomery 150 – – – – 150 BT Ngcuka 150 – – – – 150 CJM Wood 408 – – – – 408

1 630 4 534 4 332 82 136 10 714

Buildmax 2012 ⁄ Consolidated annual financial statements ⁄ Directors’ report (continued)



42

Prescribed officers^

Number of months employed

SalaryR’000

BonusR’000


aid and retirement

fundsR’000

Expense allowance

R’000Total

R’000

CEO: Mining Services 12 1 873 2 368 277 73 4 591 Technical Director: Mining Services 12 1 567 1 326 39 95 3 027 Director: Commercial, MIIS & IT 12 1 647 2 055 219 63 3 984 Managing Director: Aggregates and Quarries 12 1 187 432 – – 1 619

6 274 6 181 535 231 13 221

Directors’ remuneration, including direct and indirect benefits, for the year ended 28 February 2011 was as follows:

Board and Committee

feesR’000

SalaryR’000

BonusR’000


aid and retirement

fundsR’000

Expense allowance

R’000 Total

Executive DirectorsTP Bantock – 2 468 1 000 32 38 3 538 PJ de Klerk* – 749 94 26 21 890 CS Els – 1 494 1 000 – 29 2 523 HP Fourie* – 639 167 94 22 922

Non-executive DirectorsCB Brayshaw 301 – – – – 301 MD Lamola 238 – – – – 238 DJ Mack 140 – – – – 140 A Maharaj 140 – – – – 140 M Matisonn 105 – – – – 105 MW McCulloch 23 – – – – 23 R Munitz 105 – – – – 105 BT Ngcuka 140 – – – – 140 CJM Wood 331 – – – – 331

1 523 5 350 2 261 152 110 9 396

Prescribed officers^

Number of months employed

CEO: Mining Services 8 1 108 600 92 28 1 828 Technical Director: Mining Services 6 778 642 17 35 1 472 Director: Commercial, MIIS & IT 7 895 234 132 31 1 292 Managing Director: Aggregates and Quarries 12 1 120 214 102 – 1 436

3 901 1 690 343 94 6 028

The top three earners outside of the Directors and prescribed officers earned an average of R1 999 670 (2011: R1 602 188).

All bonus amounts have been calculated in terms of the Group’s Remuneration Policy approved by shareholders on 26 March 2012 and are payable at the end of May 2012.

^ Prescribed officers have been defined as those employees that exercise general executive control over a significant portion of the business.* This represents their proportionate remuneration for the period 1 March 2010 to 31 July 2010.



Directors’ report (continued)


43

Directors’ shareholdingAt 29 February 2012, Directors in office held 50 206 681 (2011: 41 736 681) shares or 1,46% (2011: 1,21%) of the issued ordinary share capital of the Company. Save for the shareholding detailed below, no other Director in office held any interest in the issued ordinary share capital of the Company.

TotalDirect

beneficialIndirect

beneficial TotalDirect

beneficialIndirect

beneficial2012 2012 2012 2011 2011 2011

Executive DirectorsTP Bantock* 6 000 000 – 6 000 000 1 530 000 – 1 530 000 CS Els 4 000 000 4 000 000 – – – –

Non-executive DirectorsCB Brayshaw 331 000 331 000 – 331 000 331 000 – MD Lamola 331 000 331 000 – 331 000 331 000 – DJ Mack* – – – – – – MW McCulloch* – – – – – – G Montgomery* – – – – – – BT Ngcuka 39 544 681 99 300 39 445 381 39 544 681 99 300 39 445 381 CJM Wood – – – – – –

Total number of shares 50 206 681 4 761 300 45 445 381 41 736 681 761 300 40 975 381

* Has an indirect beneficial, but not material, interest in Brait and CAS.




No significant changes in Directors’ shareholding were reported between 29 February 2012 and the date of this report.

Borrowing powersThe Company has unlimited borrowing powers in terms of its Memorandum of Incorporation.

Buildmax Remuneration Policy and Incentive SchemesRemuneration policies within the Group have evolved independently from one subsidiary company to another for a number of years, resulting in some diverse approaches within the Group to the incentivisation of employees. A decision was taken by the Directors of the Company during 2010 to introduce an integrated Remuneration Policy for the Group and abandon previous employee schemes formulated under previous remuneration policies.

In this regard Buildmax appointed a human resource consulting firm to assist with the process of preparing and adopting new employee schemes that reflect the Group’s streamlined employee retention strategies.

One of the most important objectives of the financial reward system contemplated in the integrated Remuneration Policy is to attract and retain employees who have outstanding competencies and people skills into appropriate positions in all business units, and to build long-term relationships with employees.

The Company’s Remuneration Policy is strongly influenced

by the beliefs that: the guaranteed remuneration package

of employees must provide all employees with pay which

is adequate and market related, with appropriate benefits;

variable pay of employees must incentivise both team and

individual effort; and talent must be attracted and retained

at top management level to provide stakeholders with the

assurance that the Company is run by a team which can

ensure profitability in the long term.

Pursuant to the Company’s stream-lined Remuneration

Policy three incentive schemes based on incentivising

employees in the short, medium and long term have

been implemented. As the implementation of the Long-

term Incentive Programme will result in the issue of

shares in the Company, this scheme has been approved

by the Company’s shareholders in accordance with

the requirements of Schedule 14 of the JSE Listings

Requirements. The Short-term Incentive Scheme and the

Medium-term Incentive Scheme are cash settled schemes,

not involving the issue of any shares in the Company and

therefore did not require shareholder approval.

The Remuneration Policy (including the rules of the

Short-term and Medium-term Incentive Schemes) and

the Long-term Incentive Programmes were approved by

the Company’s shareholders at a General Meeting that

was held on 26 March 2012.


44




Refer to note 38 to these annual financial statements for more details.

Non-executive Directors’ (including independent non-executive Chairman) remuneration The Board applies principles of good corporate governance relating to non-executive Directors’ remuneration and also keeps abreast of changing trends.

Non-executive Directors are appointed to the Buildmax Board based on their ability to contribute competence, insight and experience appropriate to assist the Group to achieve its objectives.

Non-executive Directors receive remuneration for services to the Buildmax Limited Board and other Board Committees.

Buildmax’s non-executive Directors do not receive Short-term or Long-term share-based incentives, recognising that this can create potential conflicts of interest which can impair the independence which non-executive Directors are expected to bring to bear in decision-making by the Board.

No arrangement exists for emoluments in respect of loss of office.

Proposals for remuneration are prepared by management, for consideration by the Buildmax Remuneration Committee and the Buildmax Board. Consideration is given to the increased responsibility placed on non-executive Directors due to burdensome legal and regulatory requirements and the commensurate risk assumed. Benchmarking information of companies of similar size and complexity and the projected inflation rate over the period are factors considered when reviewing the annual remuneration.

Buildmax’s policy on remuneration for non-executive Directors is that this should be: • market related (having regard to the factors listed

above plus the number of meetings attended by non-executive Directors of companies of similar size and structure and operating in similar sectors); and

• it must not be linked to share price or Buildmax’s performance.

Buildmax pays for all travel and accommodation expenses incurred by Directors to attend Board and Committee meetings as well as visits to company sites and businesses.

The annual remuneration payable to the Chairman and non-executive Directors is submitted for approval by the Company’s shareholders at the Annual General Meeting.

Audit and Risk CommitteeThe Audit and Risk Committee fulfilled its responsibilities in terms of the Companies Act, 71 of 2008 and King III for the year under review. The Committee satisfied itself as to the independence of the external auditors and their suitability for re-appointment for the ensuing year. The Committee has recommended to the Board that PKF continues in office in accordance with section 90(1) of the Companies Act, No 71 of 2008. In addition, the Committee satisfied itself as to the competency, experience and qualifications of the Financial Director of the Company. The Committee considers the financial statements, the accounting practices and the internal financial control of the Company as appropriate.

Company SecretaryThe Company Secretary is Probity Business Services (Proprietary) Limited.

Special resolutionsThe following special resolutions were passed and registered during the year under review.

21 November 2011 To approve general authority to effect share repurchases

21 November 2011 To approve non-executive Directors’ remuneration

21 November 2011 To approve financial assistance to related or inter-related companies

26 March 2012 To approve the adoption of the Buildmax Limited Long-term Incentive Plan

Events after reporting dateThe Directors are not aware of any matter or circumstance arising since the end of the financial year not otherwise dealt with in the annual financial statements (refer to note 37), which significantly affect the financial position of the Group or Company or the results of their operations for the year under review.


45

GROUP COmPANy

Notes 2012 2011 2012 2011 R’000 R’000 R’000 R’000

ASSETSNon-current assetsProperty, plant and equipment 2 711 649 613 915 – – Goodwill 3 27 111 27 111 – – Other intangible assets 4 65 485 71 393 – – Investment in subsidiaries 5 – – 469 244 487 440Environmental guarantee investment 6 422 – – – Amounts owing by subsidiaries 7 – – 249 350 293 850Deferred taxation 8 17 331 12 124 – –

821 998 724 543 718 594 781 290

Current assetsInventories 9 21 923 44 832 – – Trade and other receivables 10 162 991 155 001 17 417 288Amounts owing by subsidiaries 7 – – 118 234 30 890Taxation receivable 5 087 4 425 236 236Bank and cash balances 11 108 869 127 029 14 134 52 467

298 870 331 287 150 021 83 881

Assets classified as held for sale 12 – 53 543 – –

Total assets 1 120 868 1 109 373 868 615 865 171

EQUITY AND LIABILITIESCapital and reservesShare capital 13 34 447 34 447 34 447 34 447Share premium 14 1 988 759 1 988 759 1 988 759 1 988 759Cash flow hedging reserve 15 (280) (2 453) – – Accumulated loss (1 468 863) (1 463 301) (1 160 481) (1 160 646)

Attributable to equity holders of the Company 554 063 557 452 862 725 862 560Outside shareholders’ interest (7 043) (7 328) – –

Total shareholders’ interest 547 020 550 124 862 725 862 560

Non-current liabilitiesInterest-bearing liabilities 16 147 943 101 886 – – Derivative instruments 17 – 290 – – Provisions 20 889 4 751 – – Deferred taxation 8 53 682 28 948 – –

202 514 135 875 – –

Current liabilitiesInterest-bearing liabilities 16 176 499 174 764 – – Derivative instruments 17 389 3 118 – – Amounts owing to subsidiaries 18 – – – 1 818Trade and other payables 19 191 680 190 539 5 849 752Provisions 20 2 300 25 471 – – Taxation payable 336 883 – – Shareholders for dividends 41 41 41 41Bank overdrafts 89 9 261 – –

371 334 404 077 5 890 2 611

Liabilities directly associated with assets classified as held for sale 12 – 19 297 – –

Total equity and liabilities 1 120 868 1 109 373 868 615 865 171

Statements of financial position

as at 29 February 2012

Buildmax 2012 ⁄ Consolidated annual financial statements ⁄ Statements of financial position


46 Statements of comprehensive income


2012

Continuing Discontinued Total Notes operations operations operations

R’000 R’000 R’000

GROUPRevenue 22 1 087 503 184 549 1 272 052Cost of sales and services (746 502) (115 351) (861 853)

Gross profit 341 001 69 198 410 199Operating income 44 498 1 500 45 998Operating expenses (107 159) (77 185) (184 344)

Operating profit/(loss) before depreciation and amortisation 278 340 (6 487) 271 853Depreciation (175 867) (5 917) (181 784)

Operating profit/(loss) before amortisation 102 473 (12 404) 90 069Amortisation of intangible assets 23 (5 908) – (5 908)

Operating profit/(loss) 96 565 (12 404) 84 161Loss on disposal of subsidiaries 24 – (41 827) (41 827) Impairment losses 25 – – –

Profit/(loss) before interest and taxation 26 96 565 (54 231) 42 334Interest received 27 2 502 288 2 790Interest paid 28 (27 951) (2 373) (30 324)

Profit/(loss) before taxation 71 116 (56 316) 14 800Taxation 29 (19 913) (164) (20 077)

Profit/(loss) for the year 51 203 (56 480) (5 277)

Other comprehensive incomeRecycled portion of cash flow reserve 2 905 – 2 905Effective portion raised on cash flow hedge 113 – 113Taxation (845) – (845)

Total comprehensive income/(loss) for the year 53 376 (56 480) (3 104)

Profit/(loss) for the year attributable to:Equity holders of the Company 50 918 (56 480) (5 562) Outside shareholders’ interest 285 – 285

51 203 (56 480) (5 277)

Total comprehensive profit/(loss) for the year attributable to:Equity holders of the Company 53 091 (56 480) (3 389) Outside shareholders’ interest 285 – 285

53 376 (56 480) (3 104)

Buildmax 2012 ⁄ Consolidated annual financial statements ⁄ Statements of comprehensive income


47 Statements of comprehensive income (continued)


2011

Continuing Discontinued Total Notes operations operations operations

R’000 R’000 R’000

GROUPRevenue 22 1 028 433 340 781 1 369 214Cost of sales and services (817 155) (289 351) (1 106 506)

Gross profit 211 278 51 430 262 708Operating income 10 622 37 974 48 596Operating expenses (93 927) (84 676) (178 603)

Operating profit/(loss) before depreciation and amortisation 127 973 4 728 132 701Depreciation (171 233) (35 462) (206 695)

Operating profit/(loss) before amortisation (43 260) (30 734) (73 994) Amortisation of intangible assets 23 (11 298) – (11 298)

Operating profit/(loss) (54 558) (30 734) (85 292) Loss on disposal of subsidiaries 24 – – – Impairment losses 25 (204 467) (91 253) (295 720)

Profit/(loss) before interest and taxation 26 (259 025) (121 987) (381 012) Interest received 27 4 505 2 291 6 796Interest paid 28 (26 922) (14 837) (41 759)

Profit/(loss) before taxation (281 442) (134 533) (415 975)Taxation 29 45 629 (1 385) 44 244

Profit/(loss) for the year (235 813) (135 918) (371 731)

Other comprehensive incomeRecycled portion of cash flow reserve 4 220 – 4 220Effective portion raised on cash flow hedge (1 600) – (1 600) Taxation (733) – (733)

Total comprehensive income/(loss) for the year (233 926) (135 918) (369 844)

Profit/(loss) for the year attributable to:Equity holders of the Company (228 485) (135 918) (364 403)Outside shareholders’ interest (7 328) – (7 328)

(235 813) (135 918) (371 731)

Total comprehensive profit/(loss) for the year attributable to:Equity holders of the Company (226 598) (135 918) (362 516) Outside shareholders’ interest (7 328) – (7 328)

(233 926) (135 918) (369 844)

Buildmax 2012 ⁄ Consolidated annual financial statements ⁄ Statements of comprehensive income (continued)


48 Statements of comprehensive income (continued)


2012 2011 Notes R’000 R’000

COmPANyOperating income – 3 883Operating expenses (4 126) (5 155)

Gross loss (4 126) (1 272)Loss on disposal of subsidiaries (37 463) –Reversal of impairment loss/(impairment loss) 25 39 842 (88 246)

Loss before interest and taxation 26 (1 747) (89 518)Interest received 27 2 079 9 629Interest paid 28 (167) (1 676)

Profit/(loss) before taxation 165 (81 565)Taxation 29 – (1 915)

Profit/(loss) for the year 165 (83 480)

Buildmax 2012 ⁄ Consolidated annual financial statements ⁄ Statements of comprehensive income (continued)


49

GROUP

Notes 2012 2011cents cents

Headline earnings/(loss) per share 30Continuing and discontinued operations 0,3 (4,4)

– Continuing operations 0,7 (2,7)– Discontinued operations (0,4) (1,7)

Basic earnings/(loss) per share 30Continuing and discontinued operations (0,1) (14,3)

– Continuing operations 1,5 (9,0)– Discontinued operations (1,6) (5,3)

Net asset value per ordinary share 31 16,1 16,2Net tangible asset value per ordinary share 31 13,9 13,9

Ordinary share statistics


Share Cash flow Outside capital and hedging Accumulated shareholders’

premium reserve loss interest Total R’000 R’000 R’000 R’000 R’000

GROUPBalances as at 28 February 2010 1 732 382 (4 340) (1 098 898) – 629 144Shares issued 290 824 – – – 290 824Total comprehensive income/(loss) for the year – 1 887 (364 403) (7 328) (369 844)

Balances as at 28 February 2011 2 023 206 (2 453) (1 463 301) (7 328) 550 124Total comprehensive income/(loss) for the year – 2 173 (5 562) 285 (3 104)

Balances as at 29 February 2012 2 023 206 (280) (1 468 863) (7 043) 547 020

COmPANyBalances as at 28 February 2010 1 732 382 – (1 077 166) – 655 216Shares issued 290 824 – – – 290 824Total comprehensive loss for the year – – (83 480) – (83 480)

Balances as at 28 February 2011 2 023 206 – (1 160 646) – 862 560Total comprehensive income for the year – – 165 – 165

Balances as at 29 February 2012 2 023 206 – (1 160 481) – 862 725

Statements of changes in equityfor the year ended 29 February 2012

Buildmax 2012 ⁄ Consolidated annual financial statements ⁄ Ordinary share statistics ⁄ Statements of changes in equity


50 Statements of cash flow


GROUP COmPANy

Notes 2012 2011 2012 2011 R’000 R’000 R’000 R’000

OPERATING ACTIVITIESReceipts from customers and clients 1 254 249 1 527 418 – 383Payments to suppliers and employees (1 022 248) (1 399 382) (3 872) (5 803)

Cash generated from/(utilised in) operations 32 232 001 128 036 (3 872) (5 420) Interest received in cash 33 3 067 7 541 2 356 10 374Interest paid in cash (30 324) (41 759) (167) (1 676) Taxation paid 34 (1 578) (3 312) – (2 238)

Net cash inflow/(outflow) from operating activities 203 166 90 506 (1 683) 1 040

INVESTING ACTIVITIESAdditions to property, plant and equipment (415 856) (89 950) – –

– to expand operations (334) (5 402) – – – to maintain operations (415 522) (84 548) – –

Proceeds from disposal of property, plant and equipment 35 167 903 92 199 – – Proceeds on disposal of subsidiaries 24 736 – (1 000) – Increase in environmental guarantee investment 6 (600) – – –Net increase in amounts owing by subsidiaries – – (35 650) (215 905)

Net cash (outflow)/inflow from investing activities (247 817) 2 249 (36 650) (215 905)

FINANCING ACTIVITIESNet proceeds from issue of shares – 290 824 – 290 824Vendor loans repaid – (43 500) – (43 500) Interest-bearing liabilities raised 301 233 89 186 – – Interest-bearing liabilities repaid (265 570) (416 272) – –

Net cash inflow/(outflow) from financing activities 35 663 (79 762) – 247 324

Net (decrease)/increase in cash and cash equivalents (8 988) 12 993 (38 333) 32 459Cash and cash equivalents at the beginning of the year 117 768 104 775 52 467 20 008

Cash and cash equivalents at the end of the year 108 780 117 768 14 134 52 467

Bank and cash balances 108 869 127 029 14 134 52 467Bank overdrafts (89) (9 261) – –

Cash and cash equivalents at the end of the year 108 780 117 768 14 134 52 467

Buildmax 2012 ⁄ Consolidated annual financial statements ⁄ Statements of cash flow


51

The Group operates within four strategic business units: Mining Services, Equipment Sales and Rental, Civils and Earthworks and Aggregate and Quarries.

The mining services strategic business unit provides opencast mining services, civils earthworks and rehabilitation. The Equipment Sales and Rental unit was formed after the restructure of Buildmax Equipment (Proprietary) Limited to focus on the efficient disposal of the Group’s second-hand equipment as well as short-term rental of equipment to preferred customers. Civils and Earthworks is a leading and highly regarded provider of civils and bulk earthworks to the mining sector and property developers. Aggregates and Quarries comprises the Group’s quarrying activities and distribution of sand and other building supplies. Both the Bricks and Blocks and the Building Materials divisions were disposed during the period under review. The financial results of these businesses is presented as discontinued operations.


Mining Services –

Diesel Power

Mining Services – Equipment

Sales and Rental

Total mining

ServicesCivils and

EarthworksAggregates

and Quarries

Total continuing operations

R’000 R’000 R’000 R’000 R’000 R’000

28 February 2012RevenueExternal revenue 888 541 566 889 107 65 794 132 602 1 087 503Inter-segment revenue 5 903 32 767 38 670 – 7 352 46 022

894 444 33 333 927 777 65 794 139 954 1 133 525

Operating profit/(loss) before depreciation and amortisation 247 497 13 788 261 285 3 023 14 032 278 340Depreciation (154 501) (9 457) (163 958) – (11 909) (175 867)

Operating profit/(loss) before amortisation 92 996 4 331 97 327 3 023 2 123 102 473Amortisation of intangible assets – – – – (5 908) (5 908)

Operating profit/(loss) 92 996 4 331 97 327 3 023 (3 785) 96 565Loss on disposal of subsidiaries – – – – – –

Profit/(loss) before interest and taxation 92 996 4 331 97 327 3 023 (3 785) 96 565

Segmental assets and liabilitiesPPE and other segmental assets 804 747 33 901 838 648 61 752 155 693 1 056 093Goodwill – – – – 27 111 27 111Other intangible assets – – – – 65 485 65 485Segmental interest-bearing liabilities (311 187) – (311 187) (6 880) (6 375) (324 442) Other segmental liabilities (588 663) (146 092) (734 755) (7 967) (176 475) (919 197)

Segmental net asset value (95 103) (112 191) (207 294) 46 905 65 439 (94 950)

Segmental capital additions during the period (372 904) (21 943) (394 847) (9 799) (8 927) (413 573)

Segmental report


Buildmax 2012 ⁄ Consolidated annual financial statements ⁄ Segmental report


52 Segmental report (continued)

Discontinued operations

Mining Services

Con-struction

Materials

Total discon-tinued

operations Corporate Eliminations TotalR’000 R’000 R’000 R’000 R’000 R’000

28 February 2012RevenueExternal revenue – 184 549 184 549 – – 1 272 052Inter-segment revenue – – – – (46 022) –

– 184 549 184 549 – (46 022) 1 272 052

Operating profit/(loss) before depreciation and amortisation – (6 487) (6 487) – – 271 853Depreciation – (5 917) (5 917) – – (181 784)

Operating profit/(loss) before amortisation – (12 404) (12 404) – – 90 069Amortisation of intangible assets – – – – – (5 908)

Operating profit/(loss) – (12 404) (12 404) – – 84 161Loss on disposal of subsidiaries – (41 827) (41 827) – – (41 827)

Profit/(loss) before interest and taxation – (54 231) (54 231) – – 42 334

Segmental assets and liabilitiesPPE and other segmental assets – – – 404 754 (432 575) 1 028 272Goodwill – – – – – 27 111Other intangible assets – – – – – 65 485Segmental interest-bearing liabilities – – – – – (324 442) Other segmental liabilities – – – (28 287) 698 078 (249 406)

Segmental net asset value – – – 376 467 265 503 547 020

Segmental capital additions during the period – (2 124) (2 124) (159) – (415 856)

Buildmax 2012 ⁄ Consolidated annual financial statements ⁄ Segmental report (continued)





Mining Services –

Diesel Power

Mining Services – Equipment

Sales and Rental

Total Mining

ServicesCivils and

EarthworksAggregates

and Quarries

Total continuing operations

R’000 R’000 R’000 R’000 R’000 R’000

28 February 2011RevenueExternal revenue 755 264 84 748 840 012 69 747 118 674 1 028 433Inter-segment revenue 1 079 19 579 20 658 – 957 21 615

756 343 104 327 860 670 69 747 119 631 1 050 048

Operating profit/(loss) before depreciation and amortisation 78 503 36 068 114 571 (7 261) 20 663 127 973Depreciation (135 334) (22 473) (157 807) – (13 426) (171 233)

Operating (loss)/profit before amortisation (56 831) 13 595 (43 236) (7 261) 7 237 (43 260) Amortisation of intangible assets (4 550) – (4 550) – (6 748) (11 298)

Operating (loss)/profit (61 381) 13 595 (47 786) (7 261) 489 (54 558) Impairment losses– Property, plant and equipment (16 574) – (16 574) – – (16 574) – Goodwill (64 758) – (64 758) – (31 025) (95 783) – Other intangible assets (59 190) – (59 190) – (32 920) (92 110) – Investments in subsidiaries – – – – – – – Amounts owing by subsidiaries – – – – – –

Loss before interest and taxation (201 903) 13 595 (188 308) (7 261) (63 456) (259 025)

Segmental assets and liabilitiesPPE and other segmental assets 540 852 50 105 590 957 34 168 182 960 808 085Goodwill – – – – 27 111 27 111Other intangible assets – – – – 71 393 71 393Assets classified as held for sale 32 955 – 32 955 – – 32 955Segmental interest-bearing liabilities (188 144) (39 580) (227 724) (1 968) (24 057) (253 749) Other segmental liabilities (542 985) (196 666) (739 651) (1 049) (178 313) (919 013) Liabilities directly associated with assets classified as held for sale (5 965) – (5 965) – – (5 965)

Segmental net asset value (163 287) (186 141) (349 428) 31 151 79 094 (239 183)

Segmental capital additions during the period 69 091 10 431 79 522 – 4 450 83 972

No geographical information is presented as the Group operates predominately in the Republic of South Africa.






Mining Services

Con-struction

Materials

Total discon-tinued

operations Corporate Eliminations TotalR’000 R’000 R’000 R’000 R’000 R’000

28 February 2011RevenueExternal revenue 69 669 271 112 340 781 – – 1 369 214Inter-segment revenue – – – – (21 615) –

69 669 271 112 340 781 – (21 615) 1 369 214

Operating profit/(loss) before depreciation and amortisation 15 678 (10 950) 4 728 – – 132 701Depreciation (25 207) (10 255) (35 462) – – (206 695)

Operating (loss)/profit before amortisation (9 529) (21 205) (30 734) – – (73 994) Amortisation of intangible assets – – – – – (11 298)

Operating (loss)/profit (9 529) (21 205) (30 734) – – (85 292) Impairment losses– Property, plant and equipment (21 313) (1 986) (23 299) – – (39 873) – Goodwill – (67 954) (67 954) – – (163 737) – Other intangible assets – – – – – (92 110) – Investments in subsidiaries – – – (3 100) 3 100 – – Amounts owing by subsidiaries – – – (85 246) 85 246 –

Loss before interest and taxation (30 842) (91 145) (121 987) (88 346) 88 346 (381 012)

Segmental assets and liabilitiesPPE and other segmental assets – 145 481 145 481 467 834 (464 074) 957 326Goodwill – – – – – 27 111Other intangible assets – – – – – 71 393Assets classified as held for sale 19 114 1 474 20 588 – – 53 543Segmental interest-bearing liabilities – (22 901) (22 901) – – (276 650) Other segmental liabilities – (171 043) (171 043) (13 832) 840 586 (263 302) Liabilities directly associated with assets classified as held for sale (12 858) (474) (13 332) – – (19 297)

Segmental net asset value 6 256 (47 463) (41 207) 454 002 376 512 550 124

Segmental capital additions during the period – 5 872 5 872 106 – 89 950

No geographical information is presented as the Group operates predominately in the Republic of South Africa.




55

1. Basis of preparation These annual financial statements have been prepared in conformity with International Financial Reporting Standards

(“IFRS”), the AC 500 standards as issued by the Accounting Practices Board, the requirements of the South African Companies Act 2008 and the Listing Requirements of the JSE Limited on the historic cost basis except in the case of financial instruments which are measured using the fair value and amortised cost models. The preparation of annual financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts in the annual financial statements. The areas involving a higher degree of judgement or complexity, or areas where assumptions or estimates are significant to the annual financial statements, are disclosed under the management estimates heading.

Except for the adoption of the new and revised accounting standards the principal accounting policies of the Group are consistent with those applied in the audited consolidated financial statements for the year ended 28 February 2011.

1.2 Basis of consolidation Goodwill All business combinations are accounted for by applying the acquisition method. The consideration transferred

in a business combination is measured at fair value, which is calculated as the sum of the acquisition date fair values of the assets transferred to the Group, liabilities incurred by the Group and the equity interests issued by the Group in exchange for the control of the acquiree. Goodwill represents amounts arising on the acquisition of businesses. In respect of business combinations that have occurred since the IFRS transition date, goodwill represents the difference between the cost of the acquisition and the fair value of the net identifiable assets, liabilities and contingent liabilities acquired.

Goodwill is measured at cost less accumulated impairment losses. For impairment testing purposes, goodwill is allocated to cash-generating units expected to benefit from synergies of the combination and is tested at least annually for impairment. Negative goodwill arising on an acquisition is recognised directly in profit or loss.

Investments in subsidiary companies In the Company’s financial statements the investments in subsidiary companies are carried at cost less any

accumulated impairment losses. The results of subsidiaries are consolidated in the consolidated financial statements of the Group from the effective date of control up to the date that control ceases.

Intra-Group transactions and balances Consolidation principles relating to the elimination of intra-Company transactions and balances and adjustments

for unrealised intra-Company profits, are applied in all intra-Group transactions.

Transactions and outside shareholders’ interests The Group applies a policy of treating transactions with outside shareholders as transactions with parties

external to the Group. Disposals to outside shareholders resulting in gains or losses for the Group are recorded in the statement of comprehensive income. For purchases from minority interests, the cost of the business combination is the aggregate of the consideration transferred and the amount of any non-controlling interest in the acquiree measured in accordance with IFRS 3.

1.3 Impairment of assets The carrying amounts of the Company’s assets are reviewed at financial year-end to determine whether there

is any indication of impairment. If there is an indication that an asset may be impaired, its recoverable amount is estimated. For goodwill, intangible assets that have an indefinite useful life and intangible assets that are not yet available for use, the recoverable amount is estimated at least annually.

The recoverable amount is the higher of an asset’s fair market value less cost to sell and its value in use. In assessing value in use, the expected future cash flows from the asset are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. An impairment loss is recognised in the statement of comprehensive income whenever the carrying amount of an asset exceeds its recoverable amount.

For an asset that does not generate cash inflows that are largely independent of those from other assets, the recoverable amount is determined for the cash-generating unit to which the asset belongs. An impairment loss is recognised in the statement of comprehensive income whenever the carrying amount of the cash-

Accounting policies


Buildmax 2012 ⁄ Consolidated annual financial statements ⁄ Accounting policies


56 Accounting policies (continued)

generating unit exceeds its recoverable amount. Impairment losses recognised in respect of cash-generating units are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating units and then to reduce the carrying amount of other assets in the unit on a pro rata basis.

Where an impairment loss on tangible and intangible assets (other than goodwill) subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in the statement of comprehensive income. An impairment loss recognised for goodwill is not reversed in a subsequent period.

1.4 Property, plant and equipment Items of plant and equipment are recorded at historic cost less accumulated depreciation and amortisation.

They are depreciated over the estimated useful lives of the assets, on an hourly basis, as follows:

Articulated dump trucks, graders, dozers, rollers, front-end loaders and drilling machines

12 000 hours with 20% residual value

Excavators 15 000 hours with 20% residual value

Rigid dump trucks 18 000 hours with 20% residual value

Diesel and water bowsers, tippers and service trucks 30 000 hours with 20% residual value

Other items are recorded at historic cost less accumulated depreciation and amortisation. They are depreciated over the estimated useful lives of the assets, on a straight-line basis, as follows:

Other plant and equipment 5 – 20 years

Other equipment 3 years

Motor vehicles 4 – 5 years

Leasehold improvements Over the term of the lease

Land No depreciation is provided

Computer and office equipment

Computer equipment and software 2 – 4 years

Office equipment 10 years

Furniture and equipment 6 – 10 years

The carrying value of assets is reviewed at each reporting date to assess whether there is an indication of impairment. If any indication exists, the recoverable amount of the asset is estimated. Where the carrying amount is greater than its estimated recoverable amount, the asset is written down to its estimated recoverable amount and an impairment loss is recognised in the statement of comprehensive income.

The useful lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In reassessing assets’ lives, factors such as technological innovation, product life cycles and maintenance programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values.

Gains and losses on disposal of property, plant and equipment are determined by comparing proceeds with the carrying value and are included in operating profit.

Repairs and maintenance are charged to the statement of comprehensive income during the financial year in which they are incurred. The cost of major refurbishments is included in the carrying amount of the asset when it is probable that future economic benefits will flow to the Company. Major refurbishments are depreciated over their remaining useful lives.

1.5 Borrowing costs Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, which

take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

Buildmax 2012 ⁄ Consolidated annual financial statements ⁄ Accounting policies (continued)



57

All other borrowing costs are recognised in the statement of comprehensive income in the period in which they are incurred.

1.6 Intangible assets Intangible assets are stated at cost less accumulated amortisation and impairment losses. Intangible assets

include mining rights, marketing-related intangibles and customer-related intangibles.

Marketing-related intangibles include trademarks, trade names, and service marks. Customer-related intangibles include customer lists, order or production backlog, customer contracts and the related customer relationships and non-contractual customer relationships.

Intangible assets with finite lives are amortised over their estimated useful economic lives, and tested for impairment where there is a triggering event. The Directors’ assessment of the useful life of intangible assets is based on the nature of the asset acquired, the durability of the products to which the asset attaches and the expected future impact of competition on the business. The intangible assets are amortised over the following periods:

Mining rights 16 – 23 years

Marketing-related intangibles 7 – 10 years

Customer-related intangibles 5 – 8 years

1.7 Leases Leases are classified as finance leases where substantially all the risks and rewards associated with ownership

of an asset are transferred from the lessor to the Company as lessee.

Assets subject to finance leases are recognised at the commencement of the lease term at the amount equal to their fair value or, if lower, the present value of the minimum lease payments determined at inception of the lease, using a discount rate implicit in the lease. The related lease obligation is recognised at the same value. Capitalised leased assets are depreciated to their estimated residual values over their estimated useful lives. Finance lease payments are allocated, using the effective interest rate method, between lease finance costs, which is included in financing costs, and the capital repayment, which reduced the liability to the lessor.

Leases where the lessor retains significant risks and rewards of ownership of the underlying asset are classified as operating leases. Payments made under operating leases are charged against income. Rentals payable under operating leases are charged to the statement of comprehensive income on a straight-line basis over the term of the relevant lease.

1.8 Inventories Inventories are valued at the lower of cost or net realisable value using the first-in-first-out (FIFO) basis, and

includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. In the case of manufactured inventories and work in progress costs includes an appropriate share of production overheads.

Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

Inventories include contract work in progress which include direct labour, other costs and fixed production overheads incurred for services rendered but not invoiced at year-end.

Where necessary, specific provision is made for obsolete, redundant and slow-moving inventories based on the age of merchandise.

1.9 Foreign currency transactions Transactions in foreign currencies are converted to South African Rand at the rate of exchange ruling at the

date of the transaction. Assets and liabilities in foreign currencies are stated in South African Rand using rates of exchange ruling at the financial year-end. Resulting surpluses and deficits are included in interest expense and are separately identified.

Accounting policies (continued)





1.10 Taxation Current taxation comprises taxation payable calculated on the basis of the expected taxable income for

the year, using the taxation rates and laws enacted and substantively enacted at the reporting date, and any adjustment of taxation payable for previous years.

Current and deferred tax are recognised in statement of comprehensive income, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively. Where the current or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for such transactions.

1.11 Deferred taxation Deferred taxation is provided in full, using the liability method, on temporary differences arising between the

taxation bases of assets and liabilities and their carrying amounts for financial reporting purposes. Current enacted or substantively enacted taxation laws and rates are used to calculate deferred taxation.

Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which deductible temporary differences can be utilised. The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is not probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit or loss nor the accounting profit or loss.

1.12 Provisions Provisions are recognised when the Company has a legal or constructive obligation as a result of a past event,

for which it is probable that an outflow of economic benefit will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

The amount recognised as a provision is the present value of future expenditure expected to settle the current obligation using a discount rate that reflects the current assessment of the risks and uncertainties surrounding the obligation.

Present obligations arising under onerous contracts are recognised and measured as provisions. An onerous contract is considered to exist where the Group has a contract where the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it.

1.13 Revenue Revenue is stated at invoice value of finished goods, excluding value-added tax. Service revenue is recognised

when the service is completed in terms of the substance of the various customer agreements. Revenue from sale of goods is recognised when the significant risks and rewards of ownership are transferred to the buyer, costs can be measured reliably and receipt of the future benefits is probable.

Other income earned by the Group is recognised on the following basis: • Interest income is recognised as it accrues on the effective interest method unless collectability is in doubt. • Rental income from operating leases in respect of property is recognised in the statement of comprehensive

income on a straight-line basis – including escalations – over the term of the lease.

Revenue is recognised net of VAT, returns, rebates and discounts.

1.14 Employee benefits Short-term employee benefits The cost of all short-term employee benefits is recognised during the period in which the employee renders

the related service. The provisions for employees’ entitlements to wages, salaries, annual and sick leave represent the amount which the Company has a present obligation to pay as a result of the employees’ services provided to the reporting date.




59

Retirement benefits The Company provides retirement benefits for employees by payments to independent defined contribution

funds and contributions are charged against income as incurred. The Company has no liability towards any pension or provident fund, apart from normal recurring monthly contributions deducted from employees to be paid to relevant funds.

1.15 Government grants Government grants are not recognised until there is reasonable assurance that the Group will comply with

the conditions attaching to them and that the grants will be received.

Government grants whose primary condition is that the Group should purchase, construct or otherwise acquire non-current assets are recognised as deferred revenue in the statement of financial position and transferred to the statement of comprehensive income on a systematic and rational basis over the useful lives of the related assets.

Other Government grants are recognised as revenue over the periods necessary to match them with the costs for which they are intended to compensate, on a systematic basis. Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognised in the statement of comprehensive income in the period in which they become receivable.

1.16 Financial instruments Initial recognition and measurement All financial instruments are recognised in the statement of financial position. Financial instruments are initially

recognised when the Company becomes party to the contractual terms of the instruments and are measured at cost, which is the fair value of the consideration given (financial asset) or received (financial liability or equity instrument). Financial liabilities and equity instruments are classified according to the substance of the contractual arrangement on initial recognition. Transaction costs are included in the initial measurement of the financial instrument other than for financial instruments recognised at fair value through profit or loss. Subsequent to initial recognition these instruments are measured as set out below.

Financial assets Trade and other receivables Trade and other receivables are stated at amortised cost using the effective interest rate method less provision

for impairment. The allowance for impairment is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Bad debts are written off during the year in which they are identified.

Amounts owing by subsidiaries Amounts owing by subsidiaries are stated at amortised cost using the effective interest rate method.

Cash and cash equivalents Cash and cash equivalents are measured at their fair value. For the purpose of the cash flow statement,

cash and cash equivalents comprise cash on hand, deposits held on call, and investments in money market instruments, net of bank overdrafts, all of which are available for use by the Company unless otherwise stated.

The carrying amount of financial assets are reduced by impairment losses directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in the statement of comprehensive income.

Financial liabilities The Company’s principal financial liabilities are borrowings, trade and other payables and bank overdrafts.

Borrowings Borrowings are recognised initially at fair value, net of transaction costs incurred. Borrowings are subsequently

stated at amortised cost using the effective interest method. Any difference between the proceeds and the redemption value is recognised in the statement of comprehensive income over the period of the borrowings.

Accounting policies (continued)





Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the reporting date.

Trade and other payables Trade payables are measured initially at fair value, and are subsequently measured at amortised cost, using the

effective interest rate method.

Derivative instruments Hedge accounting is applied to derivatives designated as cash flow hedges provided certain criteria are met. At

the inception of a hedging transaction, the relationship between the hedging instrument and the hedged items, the Group’s management objective and its strategy for undertaking the hedge, is documented. A documented assessment, both at the inception of the hedge and on an ongoing basis, of whether the hedging instruments that are used in hedging transactions are highly effective in offsetting the changes attributable to the hedged risks in the cash flows of the hedged items, is also prepared.

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges are recognised as other comprehensive income until the hedging instrument expires or is sold, or when the hedge no longer meets the criteria for hedge accounting.

Derecognition Financial assets (or a portion thereof) are derecognised when the Company realises the rights to the benefits

specified in the contract, the rights expire or the Company surrenders or otherwise loses control of the contractual rights that comprise the financial asset. In derecognition, the difference between the carrying amount of the financial asset and proceeds receivable and any prior adjustment to reflect fair value that have been reported as other comprehensive income are included in profit or loss.

Financial liabilities (or a portion thereof) are derecognised when the obligation specified in the contract is discharged, cancelled or expires. On derecognition, the difference between the carrying amount of the financial liability, including related unamortised costs, and amount paid for it are included in the statement of comprehensive income.

Fair value methods and assumptions The fair value of financial instruments not traded in an organised financial market, is determined using a

variety of methods and assumptions that are based on market conditions and risk existing at reporting date, including independent appraisals and discounted cash flow methods. The fair value determined is adjusted for any transaction costs necessary to realise the assets or settle the liabilities.

The carrying amounts of financial assets and liabilities with a maturity of less than one year are assumed to approximate their nominal amounts as the effects of the time value of money are considered to be immaterial.

Set-off Where a legally enforceable right to set-off exists for recognised financial assets and financial liabilities, and

there is an intention to settle the liability and realise the asset simultaneously, or to settle on a net basis, all related financial effects are set-off in the financial statements.

1.17 Non-current assets held for sale Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered

principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the non-current assets (or disposal group) is available for immediate sale in its present condition.

When the Group is committed to a sale plan involving loss of control of a subsidiary, all the assets and liabilities of that subsidiary are classified as held for sale when the criteria described above are met, regardless of whether the Group will retain a non-controlling interest in its former subsidiary after the sale.

Non-current assets and disposal groups classified as held for sale are measured at the lower of their previous carrying amounts and fair value less cost to sell.





1.18 Discontinued operations A discontinued operations is a component of the Group that either has been disposed off, or is classified as

held for sale, and represents a separate major line of business or geographical area of operation and is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations. The results of a operations classified as discontinued is disclosed separately for all periods presented in the statement of comprehensive income.

1.19 management estimates Certain accounting policies have been identified as involving particularly complex or subjective judgements or

assessments, as follows:

Assets’ lives and residual values Property, plant and equipment are depreciated over their useful lives taking into account residual values, where

appropriate. The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In reassessing assets’ lives, factors such as usage, manufacturer, technological innovation, product life cycles and maintenance programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projected disposal values.

Impairment of assets Goodwill is tested for impairment at least annually. Property, plant and equipment and intangible assets are

also considered for impairment if there is any reason to believe that impairment may be necessary. Factors taken into consideration include the economic viability of the asset itself and where it is a component of a larger cash-generating unit, the viability of the unit. Future cash flows expected to be generated by the assets are projected, taking into account market conditions and the expected useful lives of the assets. The present value of these cash flows determined using an appropriate discount rate, is compared to the current asset value and, if lower, the assets are impaired to the present value.

Trade and other receivables The Company assesses its trade and other receivables for impairment at each reporting date. In determining

whether impairment should be recognised in the statement of comprehensive income, the Company makes judgements as to whether there is observable data indicating a measurable decrease in the estimated future cash flows from each receivable.

Stock impairments Impairment of stock is calculated on a line by line basis with reference to average consumption to identify slow

moving, defective or obsolete items.

Deferred tax asset The Group recognises the future tax benefit related to deferred income tax assets to the extent that it

is probable that the deductible temporary differences will reverse in the foreseeable future. Assessing the recoverability of deferred income tax assets requires the Company to make significant estimates related to expectations of future taxable income.

Estimates of future taxable income are based on forecast cash flows from operations and the application of existing tax laws. To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the Company to realise the net deferred tax assets recorded at the reporting date could be impacted.

Provision for ground rehabilitation The Group’s quarrying activities are subject to various laws and regulations governing the protection of the

environment. Management estimates the Company’s expected expenditure for the rehabilitation, management and remediation of environmental impacts on closure at the end of the lives of the quarries. The estimation of future costs on environmental obligations relating to decommissioning and rehabilitation is particularly complex and requires management to make estimates, assumptions and judgements. These estimates are dependent on a number of factors including assumptions around current environmental legislation, life of mine estimates and discount rates.




62 Notes to annual financial statements


Computer Land and Plant and motor and office leasehold

equipment vehicles equipment improvements Total R’000 R’000 R’000 R’000 R’000

2. Property, plant and equipmentGroup – at 29 February 2012Cost 1 250 028 70 575 12 707 14 139 1 347 449Accumulated depreciation and impairments (579 973) (45 144) (8 775) (1 908) (635 800)

Net carrying value 670 055 25 431 3 932 12 231 711 649

Movement summaryCarrying value 1 March 2011 557 032 36 416 6 549 13 918 613 915Additions 401 693 11 770 2 307 86 415 856Disposals (78 254) (1 207) (124) – (79 585) Depreciation (164 405) (13 152) (3 289) (938) (181 784) Derecognised on disposal of subsidiaries (46 011) (8 396) (1 511) (835) (56 753)


Group – at 28 February 2011Cost 1 302 476 85 679 18 907 17 436 1 424 498Accumulated depreciation and impairments (745 444) (49 263) (12 358) (3 518) (810 583)


Movement summaryCarrying value 1 March 2010 812 237 66 061 9 578 14 121 901 997Additions 82 016 3 711 2 973 1 250 89 950Disposals (69 555) (8 219) (1 610) – (79 384) Depreciation (181 292) (19 733) (4 258) (1 412) (206 695) Impairments (37 766) (2 074) (1) (32) (39 873) Transfer to assets held for sale (47 890) (4 182) – (8) (52 080) Transfer between categories (718) 852 (133) (1) –


Property, plant and equipment with a carrying value of R450,3 million (2011: R347,2 million) is encumbered by certain interest-bearing liabilities and banking facilities. Notarial bonds of R284,0 million (2011: R200,0 million) have been registered against movable assets owned by the Group (refer to note 21).

In terms of the Group’s Accounting Policies, management decided to review the current remaining economic useful lives and residual values of all items of property, plant and equipment subsequent to the 2012 financial year-end. This revision identified the need to expand the categories of mining plant and equipment in the Group’s accounting policy to cater for the different economic useful lives and residual values applied to the various items of plant and equipment. These revised estimates will be implemented prospectively and would not have had a material impact on the financial results for the 2012 financial year.

GROUP

2012 2011 R’000 R’000

Details of propertiesFarm being Portion 20 (a portion of Portion 3) and the remaining portion of Portion 3 of the farm Rietvlei 518, BronkhorstspruitAcquired as part of business combination 4 841 4 840Additions at cost – 2009 15 16Additions at cost – 2010 90 90

4 946 4 946

Buildmax 2012 ⁄ Consolidated annual financial statements ⁄ Notes to annual financial statements


63 Notes to annual financial statements (continued)

GROUP

2012 2011 R’000 R’000

2. Property, plant and equipment (continued)Details of properties (continued)Portion 7 (a portion of Portion 1) of the farm Puntlyf 520 Registration Division IR Gauteng provinceAcquired as part of business combination 1 400 1 400Additions at cost – 2009 29 28Additions at cost – 2010 1 598 1 598Additions at cost – 2011 404 405

3 431 3 431

Portion of Portion 5 (a portion of Portion 2) of the farm Rietvlei 518, BronkhorstspruitAcquired as part of business combination 2 182 2 182

Erf 27, Portion 106 of the farm ZestfonteinPurchase price – 2009 1 093 1 093

The Company has no property, plant and equipment.

3. GoodwillMovement summaryCarrying value at the beginning of the year 27 111 190 848Impairments – (163 737)

Net carrying value at the end of the year 27 111 27 111

The residual goodwill relates to the Aggregates and Quarry business units that was acquired on 2 April 2008 27 111 27 111

3.1 Impairment reviewIn accordance with IAS 36 impairment of assets, goodwill and intangible assets with indefinite useful lives are reviewed annually for impairment, or more frequently if there is an indication that goodwill might be impaired.

The recoverable amount of each cash-generating unit was based on its value in use. The carrying amount of each cash-generating unit was compared to the recoverable amount. The carrying amount of certain cash-generating units in the Group was determined to be higher than its recoverable amount and an impairment loss was recognised in 2011. The impairment loss was first allocated to goodwill and then to intangible assets and property, plant and equipment on a proportionate basis. Refer to note 25 for allocation of the loss.

The value in use of each cash-generating unit was determined by discounting the future cash flow generated from the continuing use of the unit and was based on the following key assumptions:

Cash flows were projected based on actual operating results and the 2013 budgets for each cash-generating unit. Cash flows for a further four years were extrapolated using average revenue growth rates of 9% matching the internal inflation of the major businesses in the Group and a terminal rate of 8,5%, which does not exceed the long-term average growth rate for the industry. The Board believes that this forecast was justified due to the long-term nature of each business.

A discount rate of 8,5% was applied in determining the recoverable amount of each cash-generating unit. The discount rate was estimated on a cash-generating unit’s specific weighted average cost of capital, which was based on a possible range of debt leveraging of between 0 and 25% at respective long-term borrowing rates.

The values assigned to key assumptions represent management’s assessment of the business of each cash-generating unit and are based on both external sources and internal sources of historical data. At the time of this report the Board believes that changes in any of these key assumptions would not cause any significant additional impairment losses.


Buildmax 2012 ⁄ Consolidated annual financial statements ⁄ Notes to annual financial statements


64

mining marketing- Customer- rights related related Total R’000 R’000 R’000 R’000

4. Other intangible assetsGroup – at 29 February 2012Cost as result of business combinations 135 885 55 892 52 285 244 062Accumulated amortisation and impairments (70 400) (55 892) (52 285) (178 577)

Net carrying value at the end of the year 65 485 – – 65 485

Movement summaryCarrying value at the beginning of the year 71 393 – – 71 393Amortisation for the year (5 908) – – (5 908)


Estimated remaining useful life (years) 15 to 22 years Group – at 28 February 2011Cost as result of business combinations 135 885 55 892 52 285 244 062Accumulated amortisation and impairments (64 492) (55 892) (52 285) (172 669)


Movement summaryCarrying value at the beginning of the year 111 063 33 920 29 818 174 801Amortisation for the year (6 749) (2 098) (2 451) (11 298)

Carrying value of intangible assets before impairments 104 314 31 822 27 367 163 503Impairments (32 921) (31 822) (27 367) (92 110)

71 393 – – 71 393

Estimated remaining useful life (years) 16 to 23 years

GROUP

2012 2011 R’000 R’000

The carrying value of the intangible assets allocated to the cash-generating units for the purpose of the impairment review prior to impairment were as follows:Aggregates and Quarries 65 485 104 314Diesel Power – 59 189

65 485 163 503

Refer to note 3.1 for details of impairment review.

The Company has no intangible assets.

COmPANy

Gross Impairment Net investment provision investment

R’000 R’000 R’000

5. Investment in subsidiariesCompany – at 29 February 2012Buildmax Aggregates and Quarries (Proprietary) Limited 665 526 (394 219) 271 307Buildmax Equipment and Services (Proprietary) Limited 151 431 (151 431) –Diesel Power Opencast Mining (Proprietary) Limited 388 980 (191 043) 197 937

1 205 937 (736 693) 469 244

Notes to annual financial statements (continued)


Buildmax 2012 ⁄ Consolidated annual financial statements ⁄ Notes to annual financial statements (continued)



COmPANy

Gross Impairment Net investment provision investment

R’000 R’000 R’000

5. Investment in subsidiaries (continued)Company – at 29 February 2011Buildmax Aggregates and Quarries (Proprietary) Limited 665 526 (394 219) 271 307Buildmax Bricks and Blocks (Proprietary) Limited 126 127 (107 931) 18 196Buildmax Equipment and Services (Proprietary) Limited 151 431 (151 431) –Buildmax Industries (Proprietary) Limited 3 100 (3 100) –Cast Industries (Proprietary) Limited 69 699 (69 699) –Diesel Power Opencast Mining (Proprietary) Limited 388 980 (191 043) 197 937

1 404 863 (917 423) 487 440

COmPANy Effective shareholding

2012 2011Companies controlled by Buildmax Limited Segment % %

Continuing operationsDirectly heldBuildmax Equipment and Services (Proprietary) Limited (1) Mining Services 100 100Diesel Power Opencast Mining (Proprietary) Limited Mining Services 100 100Buildmax Aggregates and Quarries (Proprietary) Limited (1) Construction Materials 100 100Buildmax Bricks and Blocks (Proprietary) Limited Construction Materials 100 100

Indirectly heldBuildmax Equipment (Proprietary) Limited (1) Mining Services 100 100Alfa Sand Works (Proprietary) Limited (1) Construction Materials 100 100Bridport Properties (Proprietary ) Limited Construction Materials 100 100Crushco (Proprietary) Limited (1) Construction Materials 100 100Pentonville Properties (Proprietary) Limited (1) Construction Materials 100 100Thanda Kwakho Holdings (Proprietary) Limited (1) Construction Materials 100 100Verlesha Investments (Proprietary) Limited (1) Construction Materials 74 74Wit Deep Sand and Stone (Proprietary) Limited (1) Construction Materials 100 100Buildmax Management Services (Proprietary) Limited (1) Corporate 100 100

Discontinued operationsDirectly heldBuildmax Industries (Proprietary) Limited Construction Materials – 100Cast Industries (Proprietary) Limited Construction Materials – 100

Indirectly heldBenoni Sand and Buildware (Proprietary) Limited Construction Materials – 100Columbia DBL (Proprietary) Limited Construction Materials – 100Watertite Guttering (Proprietary) Limited Construction Materials – 100

1 The Company pledged and ceded these investments to the Group’s bankers. (Refer to note 21)




66

GROUP COmPANy

2012 2011 2012 2011 R’000 R’000 R’000 R’000

6. Environmental guarantee investmentGroup – at 29 February 2012Cost 600 – – –Management fees (178) – – –

422 – – –

The Environmental Guarantee Investment policy was issued during 2012. In terms of the investment policy an insurance guarantee for R6,7 million (2011: R nil) was issued to the Department of Mineral Rights.

COmPANy

Gross Impairment Net amount provision amount

2012 2012 2012 2011 R’000 R’000 R’000 R’000

7. Amounts owing by subsidiariesInterest bearingAlfa Sand Works (Proprietary) Limited 3 969 – 3 969 –

Interest freeBenoni Sand and Buildware (Proprietary) Limited – – – 2 346Buildmax Aggregates and Quarries (Proprietary) Limited 70 478 – 70 478 70 029Buildmax Equipment and Services (Proprietary) Limited 142 518 (142 518) – –Buildmax Industries (Proprietary) Limited – – – 3 500Buildmax Management Services (Proprietary) Limited 5 400 – 5 400 –Columbia DBL (Proprietary) Limited – – – 7 000Crushco (Proprietary) Limited 3 910 – 3 910 –Diesel Power Opencast Mining (Proprietary) Limited 283 177 – 283 177 241 215Pentonville Properties (Proprietary) Limited 7 – 7 7Thanda Kwakho Holdings (Proprietary) Limited 143 – 143 143Buildmax Equipment (Proprietary) Limited 30 285 (30 285) – –Wit Deep Sand and Stone (Proprietary) Limited 500 – 500 500

536 418 (172 803) 363 615 324 740

540 387 (172 803) 367 584 324 740

Disclosed on the statements of financial position as follows: Non-current assets 249 350 293 850Current assets 118 234 30 890

367 584 324 740

These loans to subsidiary companies are unsecured with no fixed terms of repayment. The interest-bearing loans bear interest at rates linked to the prime lending rate.

The Directors consider the carrying amounts owing by subsidiaries to approximate their fair value.

Amounts owing by certain subsidiaries have been subordinated and/or ceded in favour of the Group’s bankers. Due to certain terms and conditions of the banking facility agreements and the forecasted cash flows of these subsidiaries for the next 12 months, the Company unconditionally deferred its rights to payments for the next 12 months.

Amounts owing by subsidiaries of R540,4 million (2011: R560,7 million) have been encumbered by certain banking facility and funding agreements. (Refer to note 21)






GROUP COmPANy

2012 2011 2012 2011 R’000 R’000 R’000 R’000

8. Deferred taxationThe balance consists of:Accrual for leave pay and bonuses 11 583 9 791 – –Calculated tax losses 62 445 94 209 – –Capital allowances (89 879) (110 907) – –Contract work in progress (261) (397) – –Derivative instruments 109 955 – –Impairment provisions against receivables (1 942) 3 752 – –Intangible assets (18 336) (19 990) – –Lease obligations 167 394 – –Onerous contract provision – 4 200 – –Prepaid expenses (115) (121) – –Rehabilitation provision 131 1 330 – –Retention debtors (904) (1 283) – –Other 651 1 243 – –

(36 351) (16 824) – –

Disclosed on the statements of financial position as follows:Non-current assets 17 331 12 124 – –Non-current liabilities (53 682) (28 948) – –

(36 351) (16 824) – –

Movement summaryBalance at the beginning of the year (16 824) (65 400) – –Temporary differences for the year (19 708) 49 125 – –

Accrual for leave pay and bonuses 2 107 1 998 – –Calculated tax losses utilised during the year (31 385) 9 642 – –Capital allowances 18 989 7 070 – –Contract work in progress 136 3 588 – –Impairment provisions against receivables (5 559) (1 300) – –Intangible assets 1 654 28 954 – –Lease obligations (103) (971) – –Onerous contract provision (4 200) (300) – –Prepaid expenses 6 64 – –Rehabilitation provision (1 199) (758) – –Retention debtors 379 (99) – –Other (533) 1 237 – –

Deferred tax on the fair value of derivative instruments (846) (733) – –Transfer to liabilities directly associated with assets classified as held for sale – 184 – –Derecognised on disposal of subsidiaries 1 027 – – –

Balance at the end of the year (36 351) (16 824) – –

Calculated tax lossesCalculated tax losses at the end of the year 335 466 494 302 1 712 –Utilised to raise deferred tax asset (223 018) (336 461) – –

Available to reduce future taxable income 112 448 157 841 1 712 –




68

GROUP COmPANy

2012 2011 2012 2011 R’000 R’000 R’000 R’000

9. InventoriesFinished goods 4 522 25 760 – –Consumables 17 356 13 182 – –Raw materials 127 6 858 – –Contract work in progress 934 1 417 – –Manufacturing work in progress – 1 297 – –

Gross inventories 22 939 48 514 – –Impairment provisions raised against inventories (1 016) (3 682) – –

21 923 44 832 – –

Inventories with a carrying value of R15,0 million is carried at net realisable value.

Movement in impairment provisions raised against inventoriesBalance at the beginning of the year 3 682 2 744 – –Derecognised on disposal of subsidiaries (2 838) – – –Impairment provisions raised 625 1 997 – –Impairment provisions utilised (453) (1 059) – –

1 016 3 682 – –

10. Trade and other receivablesGross trade receivables 133 173 152 860 – –Impairment provisions raised against trade receivables (1 011) (5 936) – –

Net trade receivables 132 162 146 924 – –Prepayments 1 097 421 217 –Deposits 981 808 – –Secured vendor loan receivable 17 000 1 786 17 000 –VAT receivable 4 588 860 – –Other receivables 7 163 4 202 200 288

162 991 155 001 17 417 288

Trade and other receivables of R133,2 million (2011: R144,1 million) have been encumbered by banking facility and funding agreements. (Refer to note 21)

Trade receivables are stated at cost less impairment provisions which approximate their fair value due to short-term maturity.

Movement in impairment provisions raised against receivablesBalance at the beginning of the year 5 936 22 656 – –Derecognised on disposal of subsidiaries (4 231) – – –Transfer from assets held for sale – (372) – –Impairment provisions raised 810 2 742 – –Impairment provisions utilised/reversed (1 504) (19 090) – –

1 011 5 936 – –

Basis of impairment provisions against receivablesAll trade and other receivables are continuously reviewed on an individual basis. When all reasonable measures have been taken, without success, in recovering a receivable amount and when reasonable doubt exists as to the recoverability of any such individual receivable amount, a provision for impairment is raised. Provisions for impairment raised against receivables are reversed when a receivable amount is either written off as irrecoverable, or when an amount previously provided against it is received.






GROUP COmPANy

2012 2011 2012 2011 R’000 R’000 R’000 R’000

11. Bank and cash balancesBank balances 108 665 126 894 14 134 52 467Cash balances 204 135 – –

108 869 127 029 14 134 52 467

Refer to note 21 regarding encumbrances against bank and cash balances with a book value of R108,9 million (2011: R63,5 million).

mining Services


R’000


R’000 Sub-total

R’000

Construction Materials

R’000 Total R’000

12. Assets classified as held for saleGroup – at 28 February 2011Property, plant and equipment 32 460 19 114 51 574 506 52 080Inventories 495 – 495 491 986Trade and other receivables – – – 430 430Taxation receivable – – – 47 47

Assets classified as held for sale 32 955 19 114 52 069 1 474 53 543

Trade and other payables – – – (290) (290) Deferred taxation – – – (184) (184) Interest-bearing liabilities (5 965) (12 858) (18 823) – (18 823)

Liabilities directly associated with assets classified as held for sale (5 965) (12 858) (18 823) (474) (19 297)

Remeasurement loss on the sale of Watertite Guttering – – – (2 487) (2 487)

Property, plant and equipment with a carrying value of R26,2 million was encumbered in 2011 by certain interest-bearing liabilities and banking facilities.

GROUP COmPANy

2012 2011 2012 2011 R’000 R’000 R’000 R’000

13. Share capitalAuthorised6 000 000 000 ordinary shares of R0,01 each 60 000 60 000 60 000 60 000

Issued3 444 715 941 ordinary shares (2011: 3 444 715 941) of R0,01 each 34 447 34 447 34 447 34 447

Shares Shares Shares Shares ‘000 ‘000 ‘000 ‘000

movement summaryIssued at the beginning of the year 3 444 716 1 040 700 3 444 716 1 040 700Issued on 15 November 2010 at 12,5 cents – 2 404 016 – 2 404 016

3 444 716 3 444 716 3 444 716 3 444 716

All unissued shares are under the control of the Directors until the next Annual General Meeting, subject to the provisions of the Companies Act.




70

GROUP COmPANy

2012 2011 2012 2011 R’000 R’000 R’000 R’000

14. Share premiumShare premium on issued ordinary shares – legal value 1 864 972 1 864 972 1 864 972 1 864 972Fair value adjustments 147 952 147 952 147 952 147 952

Share premium on issued ordinary shares – fair value 2 012 924 2 012 924 2 012 924 2 012 924Issue expenses written off against share premium (24 165) (24 165) (24 165) (24 165)

1 988 759 1 988 759 1 988 759 1 988 759

15. Cash flow hedging reserveUnrealised interest rate hedging loss (389) (3 408) – –Deferred taxation thereon 109 955 – –

(280) (2 453) – –

The hedging reserve represents hedging losses recognised on the effective portion of cash flow hedges.

16. Interest-bearing liabilitiesNon-current portionTerm loans – 9 931 – –Instalment sale liabilities 147 943 91 530 – –Other – 425 – –

147 943 101 886 – –

Current portion 176 499 174 764 – –

Term loans 2 583 22 551 – –Instalment sale liabilities 173 916 152 006 – –Other – 207 – –

324 442 276 650 – –

Repayable within

1 year 2 – 5 years TotalRepayment of interest-bearing liabilities R’000 R’000 R’000

Group – at 29 February 2012Future minimum payments 195 894 158 515 354 409Finance costs (19 395) (10 572) (29 967)

176 499 147 943 324 442

Group – at 28 February 2011Future minimum payments 189 662 107 964 297 626Finance costs (14 898) (6 078) (20 976)

174 764 101 886 276 650

The interest-bearing liabilities bear interest at various rates linked to the prime lending rate and are repayable in average monthly instalments of R16,3 million (2011: R15,8 million). Details of securities provided are disclosed in note 21. The Group hedges a portion of the borrowings for interest rate risk via a interest rate swap agreement allowing the Group to swap floating interest rates into fixed interest rates (refer to note 17).

All interest-bearing borrowings are denominated in South African Rand.

The Directors consider the carrying amount of interest-bearing borrowings to approximate its fair value.






17. Derivative instrumentsA subsidiary company has entered into interest rate swap contracts that obliges it to pay interest at a fixed interest rate on notional principal amounts and entitles it to receive interest at floating interest rates on the same notional principal amounts. The interest rate contracts allow the subsidiary to swap interest-bearing liabilities from floating interest rates into fixed interest rates that are lower, or higher, than those available if it had borrowed at fixed interest rates directly. Under the interest rate swaps, the subsidiary agrees with counter parties to exchange, at specified intervals, the difference between fixed interest rates and floating interest rates, interest amounts calculated by reference to the agreed notional principal amounts.

Interest rate swaps are fair valued according to forward rates and discount rates determined from a yield curve derived from similar market traded instruments as follows:

Derivatives designated and effective as hedging instruments carried at fair value

Fixed Floating notional interest Interest Fair value Fair value amount rate rate Maturity date 2012 2011

R’000 % % % R’000 R’000

Contract 1 76 343 12,75% nacm Prime -0,7% November 2011 – 1 076 Contract 2 156 061 11,62% nacm Prime -2% August 2012 389 2 332

232 404 389 3 408

GROUP

2012 2011 R’000 R’000

Disclosed on the statements of financial position as follows:Non-current liabilities – 290Current liabilities 389 3 118

389 3 408

The fair value of the derivative instruments was determined with reference to inputs other than quoted market prices, by obtaining valuations from the Group’s bankers (Level 2 valuation).

COmPANy

2012 2011 R’000 R’000

18. Amounts owing to subsidiaries Interest bearing Buildmax Management Services (Proprietary) Limited – 563Crushco (Proprietary) Limited – 200Watertite Guttering (Proprietary) Limited – 1 055

– 1 818

Disclosed on the statements of financial position as follows: Non-current liabilities – –Current liabilities – 1 818

– 1 818

These loans to subsidiary companies are unsecured with no fixed terms of repayment. The interest-bearing loans bear interest at rates linked to the prime lending rate.

The Directors consider the carrying amount of amounts owing to subsidiaries to approximate their fair value.




72

GROUP COmPANy

2012 2011 2012 2011 R’000 R’000 R’000 R’000

19. Trade and other payablesTrade payables 86 609 104 475 – –Accruals 28 089 54 960 662 552Payroll accruals 41 982 19 508 106 –Amounts payable to taxation authorities 4 778 6 473 642 200Other 30 222 5 123 4 439 –

191 680 190 539 5 849 752

The Directors consider the carrying amount of trade payables and accruals to approximate their fair value.

Onerous Rehabilitation contract Insurance Other

provisions provisions provisions provisions Total R’000 R’000 R’000 R’000 R’000

20. ProvisionsGroup – at 29 February 2012Balance at the beginning of the year 5 001 15 000 6 841 3 380 30 222Provisions utilised/reversed (4 112) (15 000) (4 541) (3 380) (27 033)

Balance at the end of the year 889 – 2 300 – 3 189

Group – at 28 February 2011Balance at the beginning of the year 7 456 16 071 – – 23 527Provisions raised 1 045 15 000 6 841 3 380 26 266Provisions utilised (3 500) (16 071) – – (19 571)

Balance at the end of the year 5 001 15 000 6 841 3 380 30 222

GROUP

2012 2011 R’000 R’000

Disclosed on the statements of financial position as follows: Non-current liabilities 889 4 751Current liabilities 2 300 25 471

3 189 30 222

Rehabilitation provisionsThe Group’s activities in its Aggregates and Quarries strategic business unit are, inter alia, subject to the requirements of the Mineral and Petroleum Resource Development Act No 28 of 2002 and various other laws and regulations governing the protection of the environment. Management estimates the Group’s expected expenditure for the rehabilitation, management and remediation of the negative environmental impacts of its activities on closure at the end of the lives of the quarries. The estimation of future costs on environmental obligations relating to decommissioning and rehabilitation is particularly complex and requires management to make estimates, assumptions and judgements. These estimates are dependent on a number of factors including assumptions around current environmental legislation, lives of mine estimates and discount rates. The cash flows for rehabilitation are expected to occur in 15 years for the Verlesha operations and in an estimated 50 years for the Crushco operations.

The present value of the of the environmental restoration obligation is determined by applying a pre-tax discount rate of 8% (2011: nil) over the estimated remaining lives of the Group’s various quarry operations.

The future restoration costs are reviewed on an annual basis and at the reporting date the net unfunded future obligations are R6,3 million (2011: R nil).






20. Provisions (continued)Onerous contract provisionsDuring the 2011 financial year an opencast mining contract in Diesel Power Opencast Mining (Proprietary) Limited, a subsidiary in the Mining Services business unit, become unprofitable largely as a result of unforeseen geological conditions adversely affecting the Company’s ability to perform in terms of the contract. Management considered it prudent to raise a provision against this onerous contract for estimated future losses. During the current financial year management was able to renegotiate the contract terms and rates and the contract returned to profitability. Subsequently management took a decision to reverse the onerous contract provision that was created during the previous financial year.

Insurance provisionsCertain of the Group’s insurance policies were renewed on a burning costs basis. Under the burning costs basis the companies in the Group paid reduced insurance premiums based on the assumption that the agreed annual insurance claim limits will not be exceeded. Management provided for the probable increase in insurance premiums if the claim limits were to be exceeded.

Other provisionsDuring the wind-down of Buildmax Equipment (Proprietary) Limited (previously Vukuza Earth Works (Proprietary) Limited) certain customers raised disputes on invoices for opencast mining services delivered. Management was of the opinion that the recoverability of these amounts remained doubtful and raised the appropriate provisions. These disputes were settled subsequent to the end of the previous financial year.

The Group is involved in a historical labour dispute that is in the process of being settled. The information required by IAS 37 Provisions, Contingent Liabilities and Contingent Assets is not disclosed on the grounds that it could be expected to seriously prejudice the outcome of the potential litigation.

The Company has no provisions.

GROUP COmPANy

2012 2011 2012 2011 R’000 R’000 R’000 R’000

21. Banking facilitiesAvailable facilitiesGeneral banking facilities 32 000 44 300 – –Asset-based facilities 422 603 425 472 – –

454 603 469 772 – –

Utilised facilitiesGeneral banking facilities – 9 261 – –Asset-based facilities 324 441 295 473 – –

324 441 304 734 – –

Security providedCarrying value of property, plant and equipment (refer to note 2) 450 272 347 243 – –General and special notarial bonds (refer to note 2) 284 000 200 000 – –Inventories (refer to note 9) – 5 500 – –Trade and other receivables (refer to note 10) 132 162 144 123 – –Amounts owing by Group companies – – 540 387 560 731Bank deposits (refer to note 11) 108 869 63 519 – –

975 303 760 385 540 387 560 731

In addition to specific cessions and securities disclosed above, some entities in the Group are bound under certain terms and conditions, by cross suretyship agreements and/or banking facility agreements with ABSA Bank, Nedbank Limited and The Standard Bank of South Africa Limited.




74

GROUP COmPANy

2012 2011 2012 2011 R’000 R’000 R’000 R’000

22. RevenueServices rendered 954 032 979 427 – –Sale of goods 318 020 389 787 – –

1 272 052 1 369 214 – –

23. Amortisation of intangible assetsMining rights (5 908) (6 749) – –Marketing-related – (2 098) – –Customer-related – (2 451) – –

(5 908) (11 298) – –

24. Loss on disposal of subsidiariesDuring the period under review the Group sold its interests in the following subsidiaries in line with its stated strategy to focus on its core activities:

Effective date

Watertite Guttering (Proprietary) Limited (“Watertite”) 1 March 2011Benoni Sand and Buildware (Proprietary) Limited (“BSB”) 31 August 2011Buildmax Industries (Proprietary) Limited (“BMI”) 30 November 2011Columbia DBL (Proprietary) Limited (“Columbia”) 30 November 2011Cast Industries (Proprietary) Limited (“Cast”) 31 January 2012

Watertite BSB BMI Columbia Cast Total R’000 R’000 R’000 R’000 R’000 R’000

Group – at 29 February 2012Assets and liabilities disposedProperty, plant and equipment – 9 063 2 040 15 524 30 126 56 753 Deferred taxation – (1 027) – – – (1 027) Inventories – 6 123 7 698 6 225 3 072 23 118 Trade and other receivables – 9 310 10 642 10 444 4 939 35 335 Bank and cash balances – – 2 282 2 699 540 5 521 Assets classified as held for sale 1 474 – – – – 1 474 Interest-bearing liabilities (5 745) (951) – (6 696) Amounts owing by/(to) Group companies 1 174 (9 155) (19 923) (10 486) (71 030) (109 420) Trade and other payables – (8 680) (12 215) (19 024) (8 163) (48 082) Bank overdrafts (923) (826) – – – (1 749) Liabilities directly associated with assets classified as held for sale (474) – – – – (474)

1 251 (937) (9 476) 4 431 (40 516) (45 247)

Loss on disposal of subsidiariesProceeds 1 000 508 4 000 4 000 12 000 21 508 Net asset value disposed (1 251) 937 9 476 (4 431) 40 516 45 247 Amounts owing by subsidiaries impaired – (7 146) (20 070) (10 336) (71 030) (108 582)

(251) (5 701) (6 594) (10 767) (18 514) (41 827)






Watertite BSB BMI Columbia Cast Total R’000 R’000 R’000 R’000 R’000 R’000

24. Loss on disposal of subsidiaries (continued)Group – at 29 February 2012Proceeds from disposal of subsidiariesProceeds 1 000 508 4 000 4 000 12 000 21 508 Amounts owing by purchasers – – (2 000) (3 000) (12 000) (17 000)

Proceeds received in cash and cash equivalents 1 000 508 2 000 1 000 – 4 508 Bank and cash balances disposed – – (2 282) (2 699) (540) (5 521) Bank overdrafts disposed 923 826 – – – 1 749

1 923 1 334 (282) (1 699) (540) 736

Company – at 29 February 2012Loss on disposal of subsidiariesProceeds – – 4 000 – 12 000 16 000 Carrying value of investments – – – (18 196) – (18 196) Amounts owing from subsidiaries – (2 346) 2 065 (21 859) (13 127) (35 267)

– (2 346) 6 065 (40 055) (1 127) (37 463)

GROUP COmPANy

2012 2011 2012 2011 R’000 R’000 R’000 R’000

25. (Impairment losses)/reversal of impairment lossesInvestments in subsidiaries – – – (3 100) Amounts owing by subsidiaries – – 39 842 (85 146) Goodwill – (163 737) – –Intangible assets – (92 110) – –Property, plant and equipment – (39 873) – –

– (295 720) 39 842 (88 246)

Refer to note 3.1 for details of impairment review.

26. Profit/(loss) before interest and taxationProfit/(loss) before interest and taxation is stated after taking into account the following items:

IncomeForeign exchange gains – 1 – –Management and administration fees received from related parties (refer to note 41) 42 42 – –Profit on disposal of property, plant and equipment 38 028 13 913 – –

ExpensesAuditors’ remunerationCurrent year (3 014) (2 974) (855) (669) Prior year underprovision (388) (534) (194) (7) Non-audit services (33) (59) (13) (11)

(3 435) (3 567) (1 062) (687)

DepreciationPlant and equipment (164 405) (181 292) – –Motor vehicles (13 152) (19 733) – –Computer and office equipment (3 289) (4 258) – –Land and leasehold improvements (938) (1 412) – –

(181 784) (206 695) – –




76

GROUP COmPANy

2012 2011 2012 2011 R’000 R’000 R’000 R’000

26. Profit/(loss) before interest and taxation (continued)Directors’ emolumentsBoard and Committee fees (1 630) (1 523) (1 630) (1 523) Salaries (4 534) (5 350) – –Contributions to medical aid and retirement funds (82) (152) – –Bonus (4 332) (2 261) – –Expense allowances (136) (110) – –

(10 714) (9 396) (1 630) (1 523) Paid by subsidiaries 9 084 7 873 – –

(1 630) (1 523) (1 630) (1 523)

Details of Directors’ emoluments and shareholding have been provided in the Directors’ report.

EmployeesSalaries (365 070) (305 232) – –Contributions to medical aid and retirement funds (15 916) (14 528) – –

(380 986) (319 760) – –

Foreign exchange losses – (1) – –Inventories written off – (1 288) – –Loss on disposal of property, plant and equipment (1 790) (1 098) – –Management and administration fees paid to related parties (refer to note 41) (342) (150) – (930)

Operating lease chargesPlant and equipment (9 167) (38 636) – –Computer and office equipment (243) (69) – –Premises (8 496) (16 569) – –

(17 906) (55 274) – –

Remeasurement loss on the sale of Watertite Guttering – (2 487) – –Royalties paid (3 709) (5 294) – –

27. Interest receivedFunds and deposits with banks 2 106 3 782 1 558 2 179Related parties (refer to note 41) – – 462 7 450Taxation authorities 417 33 – –Other 267 2 981 59 –

2 790 6 796 2 079 9 629

28. Interest paidBank overdrafts (2 215) (3 074) (2) –Derivative instruments (2 905) (4 220) – –Interest-bearing liabilities (25 087) (32 685) – –Related parties (refer to note 41) – – (165) (308) Taxation authorities (3) (161) – (83) Other (114) (1 619) – (1 285)

(30 324) (41 759) (167) (1 676)

29. TaxationSouth African normal taxationCurrent year (556) (4 854) – (1 915) Secondary tax on companies (133) – – –Prior year underprovision 320 (27) – –

(369) (4 881) – (1 915)






GROUP COmPANy

2012 2011 2012 2011 R’000 R’000 R’000 R’000

29. Taxation (continued)Deferred taxationCurrent year (19 684) 48 978 – –Prior year overprovision (24) 147 – –

(19 708) 49 125 – –

(20 077) 44 244 – (1 915)

% % % %Reconciliation of rate of taxationSouth African normal taxation rate 28,0 28,0 28,0 28,0Impairment losses and loss on disposal of businesses 79,1 (11,0) (402,7) (30,3) Other permanent differences 3,8 (1,2) 84,9 –Capital gains tax and secondary tax on companies 1,0 – – –Calculated tax losses 25,9 (5,2) 289,8 –Prior year underprovision (2,1) – – –

Effective rate 135,7 10,6 – (2,3)

30. Loss per shareThe calculation of basic loss from continuing and discontinued operations per share for the Group is based on a loss of R5,6 million (2011: R364,4 million) and a weighted average of 3 444 715 941 (2011: 2 546 426 037) shares in issue during the year under review.

29 February 2012

Continued Discontinued Totaloperations operations operations

R’000 R’000 R’000

Reconciliation of profit/(loss) to headline (earnings)/lossProfit/(loss) attributable to equity holders of the Company 50 918 (56 480) (5 562) Adjusted for :Loss on disposal of business unit – 41 827 41 827Remeasurement of assets held for sale – – –(Profit)/loss on disposal of property, plant and equipment (26 045) (139) (26 184)

– Gross (36 087) (151) (36 238) – Taxation 10 042 12 10 054

Impairment of goodwill and other intangible assets – – –

– Gross – – –– Taxation – – –– Outside shareholders’ interest – – –

Impairment of property, plant and equipment

– Gross – – –– Taxation – – –

Headline earnings/(loss) 24 873 (14 792) 10 081

Ordinary shares in issue at year-end (‘000) 3 444 716 3 444 716 –Weighted average shares in issue (‘000) 3 444 716 2 546 426 –Headline earnings/(loss) per share (cents) 0,7 (0,4) 0,3Basic earnings/(loss) per share (cents) 1,5 (1,6) (0,1)




78

28 February 2011

Continued Discontinued Total operations operations operations

R’000 R’000 R’000

30. Loss per share (continued)Reconciliation of profit/(loss) to headline (earnings)/loss(Profit)/loss attributable to equity holders of the Company (228 485) (135 918) (364 403) Adjusted for :Loss on disposal of business unit – – –Remeasurement of assets held for sale – 2 487 2 487 Profit/(loss) on disposal of property, plant and equipment (8 021) (1 206) (9 227)

– Gross (11 140) (1 675) (12 815) – Taxation 3 119 469 3 588

Impairment of goodwill and other intangible assets 155 939 67 954 223 893

– Gross 187 893 67 954 255 847 – Taxation (25 791) – (25 791) – Outside shareholders’ interest (6 163) – (6 163)

Impairment of property, plant and equipment 11 933 23 299 35 232

– Gross 16 574 23 299 39 873 – Taxation (4 641) – (4 641)

Headline earnings/(loss) (68 634) (43 384) (112 018)

Ordinary shares in issue at year-end (‘000)Weighted average shares in issue (‘000)Headline earnings/(loss) per share (cents) (2,7) (1,7) (4,4) Basic earnings/(loss) per share (cents) (9,0) (5,3) (14,3)

The Group does not have any contingent issuable instruments that could potentially dilute earnings per share and headline earnings per share.

GROUP

2012 2011 R’000 R’000

31. Net asset value per shareTotal assets 1 120 868 1 109 373Non-current liabilities (202 514) (135 875) Current liabilities (371 334) (404 077) Liabilities directly associated with assets classified as held for sale – (19 297) Outside shareholders’ interest 7 043 7 328

Net asset value 554 063 557 452Goodwill (27 111) (27 111) Other intangible assets (65 485) (71 393) Associated deferred tax 18 336 19 990

Net tangible asset value 479 803 478 938

Ordinary shares in issue at year-end (‘000) 3 444 716 3 444 716

Net asset value per ordinary share in issue (cents) 16,1 16,2Net tangible asset value per ordinary share in issue (cents) 13,9 13,9






GROUP COmPANy

2012 2011 2012 2011 R’000 R’000 R’000 R’000

32. Cash generated from/(utilised in) operationsProfit/(loss) before taxation 14 800 (415 975) 165 (81 565) Adjusted for :Depreciation, amortisation and impairments 187 692 513 713 (39 842) 88 246Profit on disposal of property, plant and equipment (36 238) (12 815) – –Net interest paid/(received) 27 534 34 963 (1 912) (7 953) Remeasurement of vendor loan payable – (3 500) – (3 500) Remeasurement of assets classified as held for sale – (2 487) – –Loss on disposal of subsidiaries 41 827 – 37 463 –Impairment provision against inventories raised (refer to note 9) 172 938 – –Impairment provision against trade and other receivables raised (refer to note 10) (694) (16 348) – –

Operating profit/(loss) before working capital changes 235 093 98 489 (4 126) (4 772) (Increase)/decrease in working capital (3 092) 29 547 254 (648)

(Increase)/decrease in inventories (381) 27 224 – –(Increase)/decrease in trade and other receivables (25 079) 131 151 (406) (887) Increase/(decrease) in trade and other payables 49 401 (135 523) 660 239(Decrease)/increase in provisions (27 033) 6 695 – –

Cash generated from/(utilised in) operations 232 001 128 036 (3 872) (5 420)

33. Interest received in cashInterest received (refer to note 27) 2 790 6 796 2 079 9 629Interest receivable (included in trade and other receivables) 277 745 277 745

3 067 7 541 2 356 10 374

34. Taxation paidTaxation (payable)/receivable at the beginning of the year 3 542 5 158 236 (87) Taxation payable per statements of comprehensive income (369) (4 881) – (1 915) Transfer to assets held for sale – (47) – –Taxation payable/(receivable) at the end of the year (4 751) (3 542) (236) (236)

(1 578) (3 312) – (2 238)

35. Proceeds from disposal of property, plant and equipmentBook value of assets disposed 79 585 79 384 – –Asset held for sale, disposed in continued and discontinued operations 52 080 – – –Profit on disposal of property, plant and equipment 36 238 12 815 – –

167 903 92 199 – –

36. Commitments and contingenciesCapital commitmentsCommitments in respect of acquisition of property, plant and equipmentContracted for 181 796 239 468 – –Not contracted for 173 971 90 778 – –

355 767 330 246 – –




80

GROUP COmPANy

2012 2011 2012 2011 R’000 R’000 R’000 R’000

36. Commitments and contingencies (continued)Operating leases commitmentsPlant and equipment – 470 – –Computer and office equipment – 84 – –Premises 12 822 31 397 – –

12 822 31 951 – –

These commitments accrue within:One year 360 167 343 457 – –Two to five years 8 421 18 740 – –

368 588 362 197 – –

The Group has contingent liabilities in respect of legal claims arising in the ordinary course of business. It is not anticipated that any material liabilities will arise from contingent liabilities other than those provided for.

37. Events after reporting date The Directors and management are not aware of any matter or circumstance, other than the approval of the

Group’s Remuneration Policy and Long-term Incentive Plan by the shareholders at a General Meeting on 26 March 2012 and further disclosed in note 38, arising since the end of the financial year not otherwise dealt with in the annual financial statements which significantly affect the financial position of the Group or Company or the results of their operations for the year under review.

38. Summary of the Buildmax Remuneration Policy38.1 Remuneration philosophy Remuneration policies within the Buildmax Group have evolved independently from one subsidiary company

to another for a number of years, resulting in some diversity in approach to remuneration amongst the Group companies. Management took a decision during 2010 to rationalise policy and introduce an integrated Group policy. A senior HR executive and a consulting firm were appointed in the same financial year to assist with this process, which continued during the 2011 and 2012 financial years. Although refining the policy is an ongoing process the current policy was approved by RemCo and the Board during 2012 and subsequently circulated to and approved by shareholders at a General Meeting held on 26 March 2012. Refer to the SENS announcement released on 27 March 2012 for the detailed results of the General Meeting.

One of the most important objectives of the financial reward system is to attract and retain employees who have outstanding competencies and people skills into appropriate positions in all our business units, and to build long-term relationships with them – providing for each one a career opportunity on the one hand, whilst securing for the Company the benefits of their talents, entrepreneurial flair and loyal service on a sustainable basis on the other.

The remuneration philosophy of the Company recognises that each employee is making an important contribution in a different way and at a different level. Accordingly the policy needs to be flexible and adaptable. The elements of the Remuneration Policy can be summarised as follows:

• The remuneration of hourly paid employees and other employees that fall within the bargaining unit is negotiated with representative trade unions. The Company will continue to respect these agreements;

• The guaranteed packages of salaried employees are determined on an annual cost to Company basis, must provide all employees with pay which is adequate, market related and with appropriate benefits;

• The variable component of the remuneration package must incentivise both team and individual effort. The incentive schemes must therefore serve as a tool which managers can use to attract, motivate and retain staff of the calibre that is needed to achieve organisational goals;

• The total remuneration package must ensure that employees with the appropriate talent are attracted and retained at top management level to provide shareholders with the assurance that the Company is run by a team which can ensure acceptable long-term financial returns to the Group’s shareholders;






38. Summary of the Buildmax Remuneration Policy (continued)38.1 Remuneration philosophy (continued) • Eachyearsalaryscaleswillbeadoptedforthedeterminationofremunerationpackagelevels,theminimum

foreachgradedpositionbeingfixedata levelwhichis25%belowthemarketmedianfortheposition,andthemaximum25%abovethemarketmedian.MarketmediansarebenchmarkedforthispurposeonthebasisofstatisticsapplyingtothepositionusingRemchannelonaconsistentbasis.Theamountoftheremunerationpackagewillbedeterminedwitheffectfrom1MarchineachyearbasedonsalaryscalesapprovedbytheBoardforthatyear,differentiatingpaylevelsbyposition,competencyandresponsibility;

• Every employee’s performance and annual package will be reviewed in February of each year, and ifappropriate,theremunerationpackagewillbeadjustedwitheffectfrom1Marchofthesameyear ;

•TheremunerationoftheExecutivepayrollaremanagedcentrallybytheGroup’sCFO.Anyadjustments(includingthecalculationoftheannual incentivesintermsoftheapprovedRemunerationPolicy)totheremunerationoftheExecutivepayrollarepresentedtoandapprovedbyRemCo;

•ThecalculationofthecashsettledShort-termandMedium-termIncentiveschemesarelimitedtoamaximumpercentageofeachExecutivePayrollmember’sannualcosttoCompany.Theseincentivepercentagesvaryfromexecutivetoexecutiveandarebasedonanumberoffactorswhichincludelevelsofresponsibilityandseniority.Thepercentagesrangefrom50%to100%ofannualcosttoCompany;

• Where executives receive a 13th cheque (whether guaranteed or discretionary), this amount will bedeductedfromthecashincentivepayabletotheExecutiveeachyearinMay;and

• IntheeventofmanagementfulfillingaroleasanExecutiveDirectorofBuildmaxLimitedand/oranyofitssubsidiaries,noadditionalcompensationwillbepaidfortheseservices.

TheGroup’semployeesaretreatedasamajorstakeholderandallremunerationpolicieswillbereviewedcontinuouslybyRemCotoensureemploymentequity,asiscalledforintheKingIIIReport.

Asageneralprinciple,above-averagerewardsonlyaccruetothoseemployeeswhogotheextramile,assisttheGrouptoachieveitsstrategicobjectivesandexcelinsodoing.

38.2 Key policies regulating short-term variable pay Cash settled Short-term Incentive Scheme (“STIP”) AllmanagersasdefinedontheexecutivepayrollparticipateintheShort-termIncentiveSchemeandreceive

a performance cash bonus, payable at the endofMayof every year.This incentive is basedon a formalassessment of their occupation-related performance during the year ended 28 February of that year, intermsoftheGroup’sperformancemanagementsystem.Theperformancecashbonus isdeterminedusinga scorecardwhichassessesperformancebasedonbothfinancial andnon-financial criteriaonaweightedbasis.Aweightingof60%isattributedtothefinancialcriteriaand40%tothenon-financial/keyperformanceindicators.

TheexecutivesontheBuildmaxLimitedBoardwillbeassessedonGroupperformancewhilstexecutivesinthesubsidiarycompanieswillbeassessedonabasisoftheirownbusinessunit’sperformancecomparedtobudgetusingtheRONAapproach.InassessingindividualbonusesRemCowillattheirdiscretiondecideontheproportionoftheGroup’sresultstobetakenintoaccountindeterminationofindividualbonusawards.

ThefinancialcriteriaarerequiredtobeapprovedbyRemCoannuallyinadvance.ARONAmanagedapproachiscurrentlyusedforthispurpose,thetargetsbeinginlinewiththelong-termplansfortheGroupwhichweredevelopedduring2010andrefinedin2011,andwhichhavebeenapprovedbytheBoard.Forthesepurposes,athresholdtargetwillbefixedatalevelmarginallylowerthanthelong-termtargetforeachbusinessunit,andastretchtargetabovethelong-termtarget.However,thetargetswillbereviewedannuallyinadvancebyRemCoandtheymayberesetonafairandreasonablebasisintheprocesstakingallrelevanteconomicandcircumstantialfactorsintoaccount.Theguidelinetobeobservedinthisprocessshould,however,beconsistentonthebasisthatthethresholdtargetmusthavea90%,theexpectedtargeta80%andthestretchtargeta50%probabilityofachievement.TheRONAandEBITtargetsapprovedbyRemCoandtheBoardarestatedafterprovidingtheappropriateexpenseitemsassociatedwithallincentiveschemesapprovedbytheGroup’sshareholders.

fortheyearended29February2012



82

38. Summary of the Buildmax Remuneration Policy (continued)38.2 Key policies regulating short-term variable pay (continued) For the 2012 financial year the following EBIT targets were applied as the numerator in the RONA calculation: • Stretch EBIT target: R60 million (100% of maximum bonus cap applicable to financial portion (ie 60%) of

incentive). • Expected EBIT target: R30 million (50% of maximum bonus cap applicable to financial portion (ie 60%) of

incentive). • Threshold EBIT target: R25 million (25% of maximum bonus cap applicable to financial portion (ie 60%) of

incentive).

It should be noted that the incentive payment in respect of financial criteria is always based on 60% of that percentage of CTC and the cash bonus payment in respect of non-financial criteria is always based on 40% of that percentage of CTC.

The non-financial criteria are defined by the Group’s performance management rating system. A rating of performance is made of these occupation-related factors at year-end.

At the end of the current financial year a provision of R15,9 million (2011: R nil) was made in terms of the approved cash settled Short-term Incentive Scheme applicable to Executive Payroll employees. This obligation will be settled, in cash, by the end of May 2012.

Cash settled Medium-term Incentive Scheme (“MTIP”) This scheme provides for the granting of a further cash award at the discretion of RemCo and the Board to

senior executives and managers, paid via the Executive Payroll, equal in value to their maximum performance bonus cap.

The cash awards will be made with effect from 1 March each year. The cash awards will be determined by reference to a target performance initially based on the threshold and stretch EBIT targets referred to above on the basis that an award of 30% of the maximum performance bonus will be made at the achievement of the threshold EBIT target and increasing linearly to an award of 100% of the maximum performance bonus being made at the achievement of the stretch EBIT target.

The purpose of the scheme is to align shareholders and employee objectives. The ultimate intention is to base the scheme on growth in “earnings per share” each year and if the target performance levels are met, cash awards will be made and settled over a three-year period. As the Company is in a recovery stage, it is impossible to establish a base line from which growth in “earnings per share” can be measured, hence, the Board has decided to use the respective EBIT targets represented as a percentage of the quantum of issued shares as the objective in the 2012 financial year.

The cash award, as determined by RemCo and based on the Group meeting the relevant targets referred to above, will be settled in three equal cash instalments on the following basis:

• the total value of the cash award will be calculated on the financial results for each year ending 28 February, payable as to one third at the end of May in that financial year (after the release and finalisation of the of the Group’s financial results for that year), the second third payable in May of the following financial year and the final third payable in May of the following financial year in which the second payment was made.

The settlement of cash awards made under this scheme is not conditional upon performance during the payment period, but only conditional upon performance being achieved at the time the cash award is made.

If a participant’s employment with any company within the Group terminates before the entire cash award has been settled, by reason of his resignation or dismissal for severe disciplinary reasons; being gross misconduct, gross negligence, theft or fraud, he will be classified as a bad leaver, in which event the part of the cash award that has not been settled will be forfeited in its entirety and will lapse immediately on the date of his termination of employment. For the avoidance of doubt, any cash award which has already been paid to the participant concerned will be unaffected by this provision.

If the participant’s employment with any company within the Group terminates before the entire cash award has been settled, by reason of:

• his or her death; • retrenchment, as determined in accordance with the relevant company’s policy; • retirement; ill health, injury or disability as determined to the satisfaction of RemCo; and • or any other reason other than a reason which would classify the participant as a “bad leaver”.






38. Summary of the Buildmax Remuneration Policy (continued)38.2 Key policies regulating short-term variable pay (continued) Cash settled Medium-term Incentive Scheme (continued) He will be classified as a “good leaver”. In the event of being classified as a “good leaver”, the entire cash

award outstanding on the date of his termination of employment shall be settled as soon as reasonably possible thereafter.

At the end of the current financial year a provision of R14,5 million (2011: R nil) was made in terms of the approved cash settled Medium-term Incentive Scheme applicable to Executive Payroll employees. This obligation will be settled, in cash, as follows:

• R4,8 million at the end of May 2012; • R4,8 million at the end of May 2013; and • R4,8 million at the end of May 2014.

Long-term Incentive Plan (“LTIP”) The purposes of the LTIP are as follows: • All obligations in terms of the LTIP will be equity settled in terms of IFRS2; • It firstly serves as an incentive whereby Performance Shares will be delivered to Participants. These

Performance Shares will be subject to Performance Conditions; and • Secondly it will serve as an incentive to encourage co-investment in the Company by Participants and

retention by delivering Leveraged Shares to Participants subject to continued employment only and proof of a specified Shareholding in the Company.

Under the LITP, Participants will become owners of the Shares from the Settlement Date and will immediately benefit from dividends and have Shareholder voting rights thus providing direct alignment between Participants and Shareholders.

Salient features of the LTIP RemCo may, in its discretion, call upon the Employer Companies to make recommendations to RemCo as to

which of their respective Employees they recommend to incentivise or retain the services of, by the making of an LTIP Award of Leveraged Shares and/or an LTIP Award of Performance Shares. Eligible Employees include any person holding permanent salaried employment or office with any Employer Company, including any Executive Director, but excluding any non-executive Director of the Group. RemCo decided that the first allocation of the LTIP Awards will be restricted to five senior executives. The executives identified by RemCo are:

• Terry Bantock – Group CEO; • Christie Els – Group FD; • Kobus van Biljon – CEO Mining Services; • Herman Fourie – Director: Commercial, MIIS & IT; and • Steve Lambert – Technical Director Mining Services.

LTIP Awards of Leveraged Shares will be made on an ad hoc basis, as and when RemCo, in consultation with the CEO of the Group, decides that there is a merit in making the LTIP Award to a particular Employee. The number of Leveraged Shares to be awarded to an Employee will primarily be at the discretion of RemCo.

LTIP Awards of Performance Shares will be made on an annual basis, but subject to the discretion of RemCo. The number of Performance Shares subject to an Award made to an Employee, and the extent to which the LTIP Award of Performance Shares will be subject to a Performance Condition, will primarily be based on the Employee’s annual salary, grade and performance. The Employees’ total remuneration (including annual salary and incentives) will be benchmarked on an annual basis.

An LTIP Award of Leveraged Shares will be subject to a Participation Condition, a Vesting Condition and an Ownership Condition.

The LTIP Award of Leveraged Shares will be subject to an Employee owning a certain number of Owned Shares. Should he/she not meet the Participation Condition the LTIP Award of Leveraged Shares will lapse.




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38. Summary of the Buildmax Remuneration Policy (continued)38.2 Key policies regulating short-term variable pay (continued) Long-term Incentive Plan (“LTIP”) (continued) Salient features of the LTIP (continued) The vesting of Leveraged Shares is subject to the Ownership Condition and the Vesting Condition. Currently,

the number of Leveraged Shares which vest will correspond to the number of Owned Shares in a ratio of 3.5:1 which the Employee held for the duration of the Vesting Period. This ratio is at the discretion of RemCo and will be determined prior to each LTIP Award of Leveraged Shares.

The Vesting of Performance Shares will be subject to a Vesting Condition and a Performance Condition.

RemCo will set appropriate Vesting Periods, Vesting Conditions, Ownership Conditions, Participation Conditions and Performance Conditions, as relevant, for each Award.

The LTIP Rules will be flexible in order to allow for Settlement in any of the following manners: • By way of a market purchase of Shares; • Use of treasury Shares; • Issue of new Shares; and • The exact method will be determined by RemCo.

In order to affect any forfeiture of LTIP Awards, the Performance Shares and Leveraged Shares will be held by an Escrow Agent on behalf of the Employee.

The maximum number of Shares which may at any one time be allocated under the LTIP shall not exceed 192 500 000 Shares. The shares to be issued in terms of the Leverage Shares will not exceed 40% of the total number of shares allocated to the LTIP. The balance of 60% will only be issued to the executives mentioned above once the Performance and Vesting Conditions, associated with the Performance Shares, have been met.

The maximum number of Shares which may be allocated to an individual in respect of all unvested LTIP Awards may not exceed 69 000 000 Shares. Shares allocated under the LTIP, which are not subsequently awarded to an Employee as a result of the forfeiture thereof, will be excluded in calculating the Company limit. Similarly, any Shares purchased in the market in Settlement of the LTIP will be excluded.

The Employee will pay no consideration for the grant or Settlement of an LTIP Award.

Employees terminating employment due to resignation or dismissal for severe disciplinary reasons will be classified as bad leavers and will forfeit all unvested LTIP Awards.

Employees terminating employment due to death, retirement, involuntary retrenchment, involuntary ill health, disability, injury, sale of the Employer Company or any reason other than being classified as a bad leaver will be classified as a good leaver. The entire unvested LTIP Award of Leveraged Shares will vest on the Date of Termination of Employment to the extent that the Ownership Condition is met. In the case of Performance Shares a portion of the LTIP Award will vest on the Date of Termination of Employment. This portion will reflect the number of months served since the Award Date to the Date of Termination of Employment over the total number of months in the Vesting Period and the extent to which the Performance Condition has been met. The remainder of the LTIP Award will lapse.

If Leveraged or Performance Shares are forfeited under the LTIP, the Company will use the Leveraged Shares or Performance Shares so forfeited for new awards to Employees identified and approved by RemCo or instruct the Escrow Agent to sell or to procure the sale of any forfeited Leveraged Shares and Performance Shares held for the absolute benefit of the Participant on such terms as the Company in its sole and absolute discretion, may consider appropriate. From the date the Leveraged Shares or Performance Shares are forfeited until such time as the Shares are settled to a new Participant or sold, these Shares will not have their votes at general meetings or Annual General Meetings taken into account for the purposes of resolutions proposed in terms of the JSE Listings Requirements and shall not be taken into account for the purposes of determining categorisations as detailed in section 9 of the JSE Listings Requirements.

In the event of a Change of Control, unvested Leveraged Shares will vest in full and in the case of Performance Shares, a portion of the LTIP Award will vest. This portion will reflect the number of months served since the Award Date to the Date of Termination of Employment over the total number of months in the Vesting Period and the extent to which the Performance Condition has been met. The remainder of the LTIP Award will continue under the LTIP unless, RemCo, determines that the terms of the Award Letter relating thereto are no longer appropriate. In this case, RemCo shall make such adjustment to the number of LTIP Awards or convert LTIP Awards into grants in respect of Shares in one or more other companies provided the Participants are no worse off.






38. Summary of the Buildmax Remuneration Policy (continued)38.2 Key policies regulating short-term variable pay (continued) Long-term Incentive Plan (“LTIP”) (continued) Salient features of the LTIP (continued) In the event of a variation in Share capital such as a Capitalisation Issue, subdivision of Shares, consolidation of

Shares, the Company entering into a scheme of arrangement as contemplated in section 114 of the Act, or the Company making distributions, other than a dividend paid in the ordinary course of business out of the current year’s retained earnings, Participants shall continue to participate in the LTIP. RemCo may make such adjustment to the Leveraged Shares or Performance Shares or take such other action to place Participants in no worse a position than they were prior to the happening of the relevant event. Such adjustment should give the Participant an entitlement to an equivalent proportion of the equity capital of the Company as that to which he or she was entitled prior to the occurrence of the relevant event.

The issue of Shares as consideration for an acquisition, and the issue of Shares for a vendor consideration placing will not be regarded as a circumstance that requires any adjustment to Awards.

Where RemCo regards an adjustment as necessary, in respect of any such adjustments, the Company’s auditors, acting as experts and not as arbitrators and whose decision shall be final and binding on all persons affected thereby, shall confirm to the Company in writing that these are calculated on a non-prejudicial basis.

The auditors shall confirm in writing to the JSE at the time such adjustment is finalised, whether those adjustments were calculated in accordance with the LTIP Rules. Any adjustments made will be reported in the Company’s annual financial reports in the year during which the adjustment is made.

In the event of a Rights Issue, a Participant shall, subject to approval by the JSE, be entitled to participate in any Rights Issue in respect of his Restricted Shares and any additional Shares subject to the Awards of Restricted Shares as a result of any event listed in the LTIP Rules.

To the extent that the Participant is not permitted to participate in a Rights Issue the LTIP Rules shall apply mutatis mutandis to Restricted Shares that have not vested.

Due to the fact that both the LTIP approval and award dates are subsequent to the Company’s year-end no obligation existed at year-end and thus no provision was raised.

Subsequent to the 2012 financial year-end the following awards were made:

Leveraged Shares As soon as the senior executives referred to above, provide adequate proof to the members of RemCo of

their ownership of the following Owned Shares:

Executive Position Owned

Shares

Terry Bantock Group CEO 6 000 000Kobus van Biljon CEO Mining Services 5 142 857Christie Els Group FD 4 000 000Herman Fourie Director: Commercial, MIIS & IT 4 000 000Steve Lambert Technical Director Mining Services 2 857 143

The following Leverage Shares, in a ratio of 3,5 for every one Owned Share held, will be issued to the executive and placed under the control of the Escrow Agent:

Executive Position Leverage

Shares


77 000 000




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38. Summary of the Buildmax Remuneration Policy (continued)38.2 Key policies regulating short-term variable pay (continued) Long-term Incentive Plan (“LTIP”) (continued) Leveraged Shares (continued) Depending on the extent to which each executive mentioned above meets the applicable Ownership and

Vesting Conditions the leverage shares will vest as follows: • May 2012 – one third, • May 2013 – one third, and • May 2014 – one third.

The Executive will be responsible for payment of any applicable income tax and securities transfers tax on the date that the Leverage Shares vest.

The Company’s auditors will assist management in calculating the IFRS2 cost relating to the Leverage Shares. The IFRS2 cost relating to the leveraged shares will be booked over the three financial years in which the Vesting and Ownership conditions will be met, ie the 2013, 2014 and 2015 financial years.

Performance Shares As mentioned above, 60% of the LTIP award to the executives in the first allocation will be subject to

performance conditions (Performance Shares). The vesting date for Performance Shares will be the later of: • The Vesting Period; and • The date on which the Performance Conditions have been satisfied.

The Performance Shares will also require the executives to remain in the employment of the Company throughout the Vesting Period.

The initial allocation will be made at the end of May, subsequent to the 2012 financial year. The performance period for 50% of the initial allocation of Performance Shares will effectively be one year starting from 1 March 2012 and ending on 28 February 2013. However, the return will be based on the average Shareholders’ Equity for the 2012 and 2013 financial years (the profit after tax for the 2013 financial year will be used). The vesting period for this portion will be from the date of the approval of the LTIP to 28 February 2013.

The performance period for the remaining 50% will be one year from 1 March 2013 and ending on 28 February 2014. However, the return will be calculated on the average Shareholders’ Equity for the 2013 and 2014 financial years (the profit after tax for the 2014 financial year will be used). For this portion the vesting period will be for the period between the approval of the LTIP and 28 February 2014.

Therefore, 50% of the initial allocation will vest in May 2013 once RemCo has determined to what extent the Company has met the Performance Conditions for the 2013 financial year and the remaining 50% in May 2014 once RemCo has determined to what extent the Company has met the Performance Conditions for the 2014 financial year.

RemCo has approved the following Performance Conditions for the first allocation:

year

Threshold Return on Shareholders’ Equity for the

performance period

Target Return on Shareholders’ Equity for the

performance period

2013 5% 10%2014 10% 15%

30% of the Performance Shares will vest at threshold performance and 100% will vest at target performance. Linear vesting will be applied for performance between threshold and target levels.

Subsequent allocations of Performance Shares will have a three-year performance period, coinciding with the financial year-end of the Company and a three-year vesting period.

RemCo will be entitled to review the performance metrics and vesting conditions from time to time to ensure that the Company remains abreast with a dynamic and challenging operating environment.






38. Summary of the Buildmax Remuneration Policy (continued)38.2 Key policies regulating short-term variable pay (continued) Long-term Incentive Plan (“LTIP”) (continued) Performance Shares (continued) RemCo has approved the following allocations in terms of the Performance Shares to the participants

mentioned above:

Executive Position Performance

Shares


115 500 000

The Executive will be responsible for payment of any applicable income tax and securities transfers tax on the date that the Performance Shares vest.

The Company’s auditors will assist management in calculating the IFRS2 cost relating to the Performance Shares and these charges will be booked over the two financial years in which the Vesting and Performance conditions will be met, ie 2013 and 2014.

39. Retirement benefitsAll contributions on behalf of employees are charged to the statement of comprehensive income as they are made. The Company and Group have no liability towards any pension or provident fund, apart from normal recurring monthly contributions deducted from employees to be paid to relevant funds.

Financial Non- liabilities at financial

Held for Loans and amortised assets and trading receivables cost liabilities Equity Total R’000 R’000 R’000 R’000 R’000 R’000

40. Financial instruments40.1 Categories of financial

instrumentsGroup – at 29 February 2012AssetsProperty, plant and equipment – – – 711 649 – 711 649 Goodwill – – – 27 111 – 27 111 Other intangible assets – – – 65 485 – 65 485 Environmental guarantee investment – – – 422 – 422 Deferred taxation – – – 17 331 – 17 331 Inventories – – – 21 923 – 21 923 Trade and other receivables – 156 325 – 6 666 – 162 991 Taxation receivable – – – 5 087 – 5 087 Bank and cash balances – 108 869 – – – 108 869

Total assets – 265 194 – 855 674 – 1 120 868




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Financial Non- liabilities at financial

Held for Loans and amortised assets and trading receivables cost liabilities Equity Total R’000 R’000 R’000 R’000 R’000 R’000

40. Financial instruments (continued)40.1 Categories of financial

instruments (continued)Group – at 29 February 2012Equity and liabilitiesShare capital – – – – 34 447 34 447 Share premium – – – – 1 988 759 1 988 759 Cash flow hedging reserve – – – – (280) (280) Accumulated loss – – – – (1 468 863) (1 468 863) Outside shareholders’ interest – – – – (7 043) (7 043) Interest-bearing liabilities – – 324 442 – – 324 442 Derivative instruments 389 – – – – 389 Deferred taxation – – – 53 682 – 53 682 Trade and other payables – – 186 902 4 778 – 191 680 Provisions – – – 3 189 – 3 189 Taxation payable – – – 336 – 336 Shareholders for dividends – – 41 – – 41 Bank overdrafts – – 89 – – 89

Total equity and liabilities 389 – 511 474 61 985 547 020 1 120 868

Group – at 28 February 2011AssetsProperty, plant and equipment – – – 613 915 – 613 915 Goodwill – – – 27 111 – 27 111 Other intangible assets – – – 71 393 – 71 393 Deferred taxation – – – 12 124 – 12 124 Inventories – – – 44 832 – 44 832 Trade and other receivables – 152 912 – 2 089 – 155 001 Taxation receivable – – – 4 425 – 4 425 Bank and cash balances – 127 029 – – – 127 029 Assets classified as held for sale – – – 53 543 – 53 543

Total assets – 279 941 – 829 432 – 1 109 373

Equity and liabilitiesShare capital – – – – 34 447 34 447 Share premium – – – – 1 988 759 1 988 759 Cash flow hedging reserve – – – – (2 453) (2 453) Accumulated loss – – – – (1 463 301) (1 463 301) Outside shareholders’ interest – – – – (7 328) (7 328) Interest-bearing liabilities – – 276 650 – – 276 650 Derivative instruments 3 408 – – – – 3 408 Deferred taxation – – – 28 948 – 28 948 Trade and other payables – – 184 066 6 473 – 190 539 Provisions – – – 30 222 – 30 222 Taxation payable – – – 883 – 883 Shareholders for dividends – – 41 – – 41 Bank overdrafts – – 9 261 – – 9 261 Liabilities directly associated with assets classified as held for sale – – – 19 297 – 19 297

Total equity and liabilities 3 408 – 470 018 85 823 550 124 1 109 373





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40. Financial instruments (continued)40.2 Interest rate risk management

Interest rate risk refers to the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Interest rate risk exposures are measured using sensitivity analysis. A sensitivity analysis shows how profit before taxation and equity would have been affected by changes in the interest rate that were reasonably possible at the reporting date.

GROUP

2012 2011 R’000 R’000

The Group’s interest rate profile consists of fixed and floating rate loans and bank balances which exposes the Group to fair value interest rate risk and cash flow interest rate risk and can be summarised as follows:

Financial assetsLoans and receivables granted at no interest 156 529 153 047Bank deposits linked to South African money market rates 108 665 126 894

265 194 279 941

Financial liabilitiesDerivative instruments 389 3 408Trade payables and other financing received at no interest 186 943 184 107Financing received and banking facilities linked to South African prime rates 324 531 285 911

511 863 473 426

The risk is managed by the Group by maintaining an appropriate mix between fixed and floating rate borrowings and by the use of interest rate swap contracts by a subsidiary detailed in note 17.

Carrying Pre-tax value at Reasonable income

reporting possible statement date change impact R’000 % R’000

Interest rate sensitivity analysisGroup – at 29 February 2012Bank deposits linked to South African money market rates 108 665 0,5 543Financing received and banking facilities linked to South African prime rates (324 531) 0,5 (1 623) Notional amount on interest rate swap (232 404) 0,5 (1 162)

(2 242)

Interest rate sensitivity analysisGroup – at 28 February 2011Bank deposits linked to South African money market rates 126 894 0,5 634Financing received and banking facilities linked to South African prime rates (285 911) 0,5 (1 430) Notional amount on interest rate swap (232 404) 0,5 (1 162)

(1 958)

40.3 Credit risk managementCredit risk refers to the risk that a counterparty will default in its contractual obligations resulting in financial loss to the Group. The Group minimised its risk by ensuring that counterparties are creditworthy institutions.Financial assets, which potentially subject the Group to concentrations of credit risk, consists principally of cash and cash equivalents, short-term deposits, derivative contracts including interest rate swaps, loans and receivables and trade and other receivables.The Group’s cash and cash equivalents and short-term deposits are placed with major banks and financial institutions with strong credit ratings.The Group minimises credit risk relating to interest rate swaps by limiting counterparties to major banks, and does not expect to incur any losses as a result of non-performance by these counterparties. The carrying amounts of financial assets and liabilities, excluding interest rate swaps, included in the consolidated statements of financial position represent the Group’s maximum exposure to credit risk in relation to these assets. The maximum credit exposure of interest rate swaps is represented by the fair value of these contracts.





90

Small andGovernment/ major medium

Parastatals corporates enterprises Other Total R’000 R’000 R’000 R’000 R’000

40. Financial instruments (continued)40.3 Credit risk management

(continued)29 February 2012Financial assets that are neither past due nor impaired 1 226 171 175 28 589 24 836 225 826

Financial assets that are past due but not yet impairedSecured 14 24 576 13 770 – 38 360

Overdue less than 30 days 1 8 306 962 – 9 269Between 30 and 60 days 13 13 235 9 549 – 22 797Between 60 and 90 days – 967 823 – 1 79090 days and more – 2 068 2 436 – 4 504

Unsecured – – 904 – 904

Overdue less than 30 days – – 196 – 196Between 30 and 60 days – – 634 – 634Between 60 and 90 days – – 20 – 2090 days and more – – 54 – 54

Financial assets that are impaired – – 104 – 104

Carrying amount – – 1 115 – 1 115Provision for impairment – – (1 011) – (1 011)

Total credit exposure 1 240 195 751 43 367 24 836 265 194

28 February 2011Financial assets that are neither past due nor impaired 1 925 191 038 28 339 3 247 224 549

Financial assets that are past due but not yet impairedSecured 204 11 529 12 656 92 24 481

Overdue less than 30 days 21 9 647 8 338 3 18 009Between 30 and 60 days 183 896 2 591 1 3 671Between 60 and 90 days – 961 951 – 1 91290 days and more – 25 776 88 889

Unsecured – 21 915 7 673 247 29 835

Overdue less than 30 days – 1 852 2 957 86 4 895Between 30 and 60 days – 13 229 2 410 56 15 695Between 60 and 90 days – 2 031 473 87 2 59190 days and more – 4 803 1 833 18 6 654

Financial assets that are impaired – 165 911 – 1 076

Carrying amount – 1 429 5 583 – 7 012Provision for impairment – (1 264) (4 672) – (5 936)

Total credit exposure 2 129 224 647 49 579 3 586 279 941

Collateral held against receivablesAs a rule no collateral is held against trade and other receivables, apart from insurance and normal personal suretyships provided by individuals and/or legal entities on behalf of certain trade debtors. Suretyships are not a prerequisite for the Group to grant credit terms to its customers and are obtained when it is normal industry practice and/or deemed prudent to do so.





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40. Financial instruments (continued)40.4 Liquidity risk management

Liquidity risk is the risk that the Group will on due date be unable to meet a financial commitment. The cash requirements of the Group are managed according to its needs from time to time. The Group manages liquidity risk by monitoring forecast cash flows and ensuring that adequate cash resources and unutilised borrowing facilities are maintained.

The following tables detail the Group’s remaining contractual maturity for its financial liabilities based on the expected repayment profile. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be expected to pay. The tables include both interest and principal cash flows.

Repayable on demand 1 year 2 – 5 years Total

R’000 R’000 R’000 R’000

Maturity analysis – Non-derivative instruments:Group – at 29 February 2012Interest-bearing liabilities– Capital portion – 176 499 147 943 324 442– Interest portion – 19 395 10 572 29 967Trade and other payables – 186 902 – 186 902Shareholders for dividends 41 – – 41Bank overdrafts 89 – – 89

130 382 796 158 515 541 441

Group – at 28 February 2011Interest-bearing liabilities– Capital portion – 174 764 101 886 276 650– Interest portion – 14 898 6 078 20 976Trade and other payables – 184 066 – 184 066Shareholders for dividends 41 – – 41Bank overdrafts 9 261 – – 9 261

9 302 373 728 107 964 490 994

Refer to note 17 for maturity dates of derivative instruments.

40.5 Capital risk managementThe Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximising the return to stakeholders through the optimisation of the debt and equity balance. The Group’s overall strategy remains unchanged from the previous reporting period.

The capital structure of the Group consists of debt, which includes interest-bearing liabilities disclosed in note 16, cash and cash equivalents and equity attributable to holders of the parent, comprising issued capital, reserves and retained earnings respectively.

In order to maintain or adjust the capital structure, the Group may adjust the dividend policy, return capital to shareholders, issue new shares or sell assets to reduce debt.

GROUP COmPANy

2012 2011 2012 2011 R’000 R’000 R’000 R’000

41. Related party transactions and balances41.1 Related party transactions

Revenue earned from Directors of subsidiaries or entities, directly or indirectly, controlled by those DirectorsDBL Projects (Proprietary) Limited – 1 078 – –

Purchases from and expenses paid to Directors of subsidiaries or entities, directly or indirectly, controlled by those DirectorsDBL Projects (Proprietary) Limited – (750) – –Kaleka Development Solutions Inc. (300) (300) – –Western Granite (Proprietary) Limited – (1 504) – –

(300) (2 554) – –





92

GROUP COmPANy

2012 2011 2012 2011 R’000 R’000 R’000 R’000

41. Related party transactions and balances (continued)41.1 Related party transactions (continued)

management fees received from Group companiesMystic Blue Trading 135 (Proprietary) Limited (refer Directors’ report) 42 42 – –

management fees paid to Group companiesBuildmax Management Services (Proprietary) Limited – – – (930) Rent paid to Directors of subsidiaries or entities, directly or indirectly, controlled by those DirectorsFalconville Investments (Proprietary) Limited – (2 909) – –FGN Properties (Proprietary) Limited – (432) – –Valleylight Investments (Proprietary) Limited – (935) – –

– (4 276) – –

Interest received from Group companiesAlfa Sand Works (Proprietary) Limited – – 130 –Buildmax Aggregates and Quarries (Proprietary) Limited – – – 575Buildmax Equipment and Services (Proprietary) Limited – – – 2 967Buildmax Industries (Proprietary) Limited – – 37 –Cast Industries (Proprietary) Limited – – 295 906Columbia DBL (Proprietary) Limited – – – 61Diesel Power Opencast Mining (Proprietary) Limited – – – 2 936Thanda Kwakho Holdings (Proprietary) Limited – – – 5

– – 462 7 450

Interest paid to Group companiesBuildmax Industries (Proprietary) Limited – – (165) (59) Buildmax Management Services (Proprietary) Limited – – – (115) Watertite Guttering (Proprietary) Limited – – – (134)

– – (165) (308)

41.2 Related party balancesAmounts receivable from Group companiesAlfa Sand Works (Proprietary) Limited – – 3 969 –Benoni Sand and Buildware (Proprietary) Limited – – – 2 346Buildmax Aggregates and Quarries (Proprietary) Limited – – 70 478 70 029Buildmax Industries (Proprietary) Limited – – – 3 500Buildmax Management Services (Proprietary) Limited – – 5 400 –Columbia DBL (Proprietary) Limited – – – 7 000Crushco (Proprietary) Limited – – 3 910 –Diesel Power Opencast Mining (Proprietary) Limited – – 283 177 241 215Mystic Blue Trading 135 (Proprietary) Limited (refer Directors’ report) 192 144 – –Pentonville Properties (Proprietary) Limited – – 7 7Thanda Kwakho Holdings (Proprietary) Limited – – 143 143Wit Deep Sand and Stone (Proprietary) Limited – – 500 500

192 144 367 584 324 740





93

GROUP COmPANy

2012 2011 2012 2011 R’000 R’000 R’000 R’000

41. Related party transactions and balances (continued)41.2 Related party balances (continued)

Amounts receivable from Directors of subsidiaries or entities, directly or indirectly, controlled by those DirectorsCN Masondo 1 786 1 786 – –

Amounts payable to Group companiesBuildmax Management Services (Proprietary) Limited – – – (563) Crushco (Proprietary) Limited – – – (200) Watertite Guttering (Proprietary) Limited – – – (1 055)

– – – (1 818)

All transactions with related parties were priced on a arm’s length basis. The amounts outstanding are unsecured and will be settled in cash. No guarantees have been given or received. No expense has been recognised in the current or prior years for bad or doubtful debts in respect of amounts owed by related parties.

Salary and fees Bonus

Contri-butions to

medical aid and

retirement funds

Expenseallowance Total

R’000 R’000 R’000 R’000 R’000

42. Remuneration and benefits of key executivesGroup – at 29 February 2012Directors’ emoluments 4 534 4 332 82 136 9 084Prescribed officers 6 274 6 181 535 231 13 221Other key executives 22 560 12 456 1 968 454 37 438

33 368 22 969 2 585 821 59 743

Group – at 28 February 2011Directors’ emoluments 6 873 2 261 152 110 9 396Prescribed officers 3 901 1 690 343 94 6 028Other key executives 30 247 2 704 2 351 2 142 37 444

41 021 6 655 2 846 2 346 52 868

Key executives have been defined as those employees with authority and responsibility for planning, directing and controlling the activities of the Group.





94


A list of amendments to standards and interpretations that are in issue but not yet effective at the date of this report have been attached as Annexure A to the consolidated annual financial statements.

Standard Details of Amendment

Effective for annual periods beginning on or after

IFRS 1 First-time Adoption of International Financial Reporting Standards

Standard amended to provide guidance for entities emerging from severe hyperinflation and resuming presentation of IFRS compliant financial statements, or presenting IFRS complaint financial statements for the first time.

1 July 2011

Standard amended to remove the fixed date of 1 January 2004 relating to the retrospective application of the derecognition requirements of IAS 39, and relief for first-time adopters from calculating day one gains on transactions that occurred before the date of adoption.

1 July 2011

IFRS 7 Financial Instruments: Disclosures

Amendments require additional disclosure on transfer transactions of financial assets, including the possible effects of any residual risks that the transferring entity retains. The amendments also require additional disclosures if a disproportionate amount of transfer transactions are undertaken around the end of a reporting period.

1 July 2011

Amendments require entities to disclose gross amounts subject to rights of set-off, amounts set off in accordance with the accounting standards followed, and the related net credit exposure. This information will help investors understand the extent to which an entity has set off in its balance sheet and the effects of rights of set-off on the entity’s rights and obligations.

1 January 2013

IFRS 9 Financial Instruments

New standard that forms the first part of a three-part project to replace IAS 39 Financial Instruments: Recognition and Measurement.

1 January 2015

IFRS 10 Consolidated Financial Statements

New standard that replaces the consolidation requirements in SIC-12 Consolidation – Special Purpose Entities and IAS 27 Consolidated and Separate Financial Statements. Standard builds on existing principles by identifying the concept of control as the determining factor in whether an entity should be included within the consolidated financial statements of the parent Company and provides additional guidance to assist in the determination of control where this is difficult to assess.

1 January 2013

IFRS 11 Joint Arrangements

New standard that deals with the accounting for joint arrangements and focuses on the rights and obligations of the arrangement, rather than its legal form. The standard requires a single method for accounting for interests in jointly controlled entities.

1 January 2013

IFRS 12 Disclosure of Interests in Other Entities

New and comprehensive standard on disclosure requirements for all forms of interests in other entities, including joint arrangements, associates, special purpose vehicles and other off balance sheet vehicles.

1 January 2013

Buildmax 2012 ⁄ Consolidated annual financial statements ⁄ Standards and interpretations issued but not yet effective

Standards and interpretations issued but not yet effective


95


Standard Details of Amendment

Effective for annual periods beginning on or after

IFRS 13 Fair Value Measurement

New guidance on fair value measurement and disclosure requirements.

1 January 2013

IAS 1 Presentation of Financial Statements

New requirements to Group together items within other comprehensive income that may be reclassified to the profit or loss section of the income statement in order to facilitate the assessment of their impact on the overall performance of an entity.

1 July 2012

IAS 12 Income Taxes Rebuttable presumption introduced that an investment property will be recovered in its entirety through sale.

1 January 2012

IAS 19 Employee Benefits

Amendments to the accounting for current and future obligations resulting from the provision of defined benefit plans.

1 January 2013

IAS 27 Consolidated and separate financial statements

Consequential amendments resulting from the issue of IFRS 10,11 and 12.

1 January 2013

IAS 28 Investments in Associates

Amendments require entities to disclose gross amounts subject to rights of set-off, amounts set off in accordance with the accounting standards followed, and the net-related credit exposure. This information will help investors understand the extent to which an entity has set off in its balance sheet and the effects of rights of set-off on the entity’s rights and obligations.

1 January 2013

IFRIC 20 Stripping costs in the Production Phase of a Surface Mine

1 January 2013

The Directors have not yet determined which are applicable to the Company and what the impact of these Standards and Interpretations on the Company will be.

Buildmax 2012 ⁄ Consolidated annual financial statements ⁄ Standards and interpretations issued but not yet effective (continued)

Standards and interpretations issued but not yet effective (continued)


Shareholder information

Moses Nkosinathi Mdlulimoses joined Diesel Power nine years ago and has been exposed

to a large spectrum of roles within the Company. These include site

clerk to principal clerk to site administrator. moses is a dedicated

employee who always takes pride in his work.


97

2012 2011

Number

of holders

Number of shares

(‘000)

% of issued capital

Number of holders

Number of shares

(‘000)

% of issued capital

Non-public – Directors 8 50 207 1,46 5 41 737 1,21– Holders holding more

than 10% 2 1 577 366 45,79 7 2 160 433 62,72

10 1 627 573 47,25 12 2 202 170 63,93Public 1 658 1 817 143 52,75 1 551 1 242 546 36,07

1 668 3 444 716 100,00 1 563 3 444 716 100,00

Breakdown by classification Individuals 1 434 287 033 8,33 1 337 284 989 8,27Trusts 53 42 890 1,25 47 43 973 1,28Investment funds 93 1 240 082 36,00 90 2 324 264 67,47Private companies 40 1 853 319 53,80 39 774 685 22,49Close corporations 35 15 825 0,46 33 8 058 0,23Nominee companies 9 1 177 0,03 13 2 948 0,09Public companies 4 4 390 0,13 4 5 799 0,17

1 668 3 444 716 100,00 1 563 3 444 716 100,00

major shareholders The following are the principal shareholders whose holding, directly or indirectly, in the Company total more than 3% (2011: 5%) of the issued share capital as at balance sheet date:

2012 2011

Number of shares

(‘000)

% of issued capital

Number of shares

(‘000)

% of issued capital

Brait 1 394 703 40,49 1 394 703 40,49Coronation Fund Managers 1 018 462 29,56 765 730 22,23Interactive 134 612 3,91 246 678 7,16Westbrooke 110 393 3,20 246 662 7,16Vuwa Investments 232 430 6,75 232 430 6,75

2 890 600 83,91 2 886 203 83,79

Analysis of shareholders


Shareholders’ diary

Financial year-end 29 February 2012

Announcement of annual results 30 May 2012

Annual report released August 2012

Annual General Meeting 27 November 2012

Announcement of interim results October 2012

Buildmax 2012 ⁄ Shareholder information ⁄ Analysis of shareholders ⁄ Shareholders’ diary


98 Glossary of terms

“ABET” Adult Basic Education Training

“Aflease” Division of Crushco (Proprietary) Limited

“Alfa” Alfa Sand Works (Proprietary) Limited

“BBBEE” Broad-based Black Economic Empowerment

“BEE” Black Economic Empowerment

Black Ginger 372 (Proprietary) Limited

Now renamed Buildmax Aggregates and Quarries (Proprietary) Limited

“the Board” or “Board”

The Board of Directors of Buildmax Limited

“Brait” Collectively Brait IV Investment L.P., Brait IV SA Partnership and Brait SA Limited

“Brownfield” Brownfield sites are abandoned or underused industrial and commercial facilities available for reuse

“BSB” Benoni Sand and Buildware (Proprietary) Limited

“Buildco” or “the Buildco group”

Collectively, Black Ginger 372 (Proprietary) Limited and its subsidiaries, Burnleigh Investments (Proprietary) Limited, Clarewick Investments (Proprietary) Limited and its subsidiary and Hollyberry Props 41 (Proprietary) Limited and its subsidiary

“Buildmax” or “the Company”

Buildmax Limited

“Buildmax Equipment”

Buildmax Equipment (Proprietary) Limited

Burnleigh Investments (Proprietary) Limited

Now renamed Cast Industries (Proprietary) Limited

“Capex” Capital expenditure

“Cast” Cast Industries (Proprietary) Limited

“CEO” Chief Executive Officer

“CFO” Chief Financial Officer

Clarewick Investments (Proprietary) Limited

Now renamed Buildmax Bricks and Blocks (Proprietary) Limited

“Columbia” or “Columbia DBL”

Columbia DBL (Proprietary) Limited

“Companies Act” The South African Companies Act, 71 of 2008

“Crushco” Crushco (Proprietary) Limited

“CSI” Corporate Social Investment

“CSIR” Council for Scientific and Industrial Research

“CTC” Cost to Company

“Diesel Power” Diesel Power Opencast Mining (Proprietary) Limited

“DMR” Department of Mineral Resources

“DWA” Department of Water Affairs

“EBIT/PBIT” Earnings per Interest and Tax

“EBITDA” Earnings before interest, taxation, depreciation and amortisation

“EE” Employment Equity Act

“EMP” Environmental Management Plan

“ExCo” Buildmax Limited Executive Committee

“Executive payroll”

Group Executive Directors and prescribed officers

“FD” Financial Director

“GHG” Greenhouse Gas

“GRI” Global Reporting Index G3 guidelines

“the Group” Buildmax Limited and its subsidiaries

“ha” hectare

“HDSAs” Historically Disadvantaged South Africans

“Head Office” Buildmax Head Office

“HLPS” Headline loss per share

“Hollyberry Props 41 (Proprietary) Limited”

now renamed Buildmax Equipment and Services (Proprietary) Limited

“HR” Human Resources

“IBR” Inverted Box Rib

“IDC” Industrial Development Corporation of South Africa

“IFRS” International Financial Reporting Standards

Buildmax 2012 ⁄ Shareholder information ⁄ Glossary of terms


99 Glossary of terms (continued)

Buildmax 2012 ⁄ Shareholder information ⁄ Glossary of terms (continued)

“Interactive” Collectively Interactive Capital (Proprietary) Limited, Interactive Capital Management (Proprietary) Limited and Cream Magenta 36 (Proprietary) Limited

“ISO” International Organization for Standardization

“IT” Information Technology Systems

“IUCN” International Union for Conservation of Nature

“JSE” The JSE Limited

“Kensmark” Division of Buildmax Industries (Proprietary) Limited

“King III Report” King Code of Corporate Governance Principles” and the “King Report on Governance for South Africa 2009” issued by the Institute of Directors in Southern Africa

“KPMG” KPMG (Internal Audit and Compliance Services)

“LTIFR” Lost Time Injury Frequency Rate

“MHSA” Mine Health and Safety Act, 29 of 1996

“MPRDA” Mineral Resource and Petroleum Development Act, 28 of 2002

“MQA” Mining Qualifications Authority

“NDCAWU” National Democratic Change and Allied Workers Union

“NEMA” National Environmental Management Act, 107 of 1998

“NOx” Nitrogen Oxide

“NUM” National Union of Mineworkers

“NUMSA” National Union of Metalworkers of South Africa

“OEM” Original Equipment Manufacturers

“OHSAS” Occupational Health and Safety Advisory Services

“PAT” Profit after Tax

“PBT” Profit before Tax

“PPE” Property, plant and equipment

“prior/previous year” or “prior/previous period”

The 12 months ended 28 February 2011

“Remchannel” PricewaterhouseCoopers Remchannel

“RemCo” Buildmax Limited Remuneration Committee

“RONA” Return on Average Net Assets

“SA” South Africa

“SABS” South African Bureau of Standards

“S Burde” Division of Buildmax Industries (Proprietary) Limited

“SENS” Stock Exchange News Service

“SHECQ” Safety, Health, Environment, Community and Quality

“SMME” Small and Medium and Micro Enterprises

“SOx” Sulfur oxide refers to lower sulfur oxides

“Verlesha” Verlesha Investments (Proprietary) Limited

“Vukuza” Vukuza Earth Works (Proprietary) Limited now renamed Buildmax Equipment (Proprietary) Limited

“Vuwa Investments”

Collectively Arrowville Investments (Proprietary) Limited, Austinville Investments (Proprietary) Limited and Ashbrooke Investments (Proprietary) Limited

“Watertite” Watertite Guttering (Proprietary) Limited

“Watson” Division of Buildmax Industries (Proprietary) Limited

“Westbrooke” Collectively Westbrooke Investments (Proprietary) Limited, Westbrooke Special Opportunities (Proprietary) Limited and Westbrooke Capital Partners (Proprietary) Limited

“Wit Deep” or “Wit Deep Sand and Stone”

Wit Deep Sand and Stone (Proprietary) Limited


100

BUILDMAX LIMITED(Incorporated in the Republic of South Africa) (Registration number: 1995/012209/06)(“Buildmax” or “the Company”)JSE Code: BDMISIN. ZAE000011250

Notice is hereby given that the Annual General Meeting of shareholders of Buildmax will be held at 11:00 on Tuesday, 27 November 2012 at The Country Club Johannesburg, 1 Napier Road, Auckland Park, Johannesburg, for the following purposes:

1. To consider the annual financial statements for the financial year ended 29 February 2012 as presented in the integrated report to which this notice is attached. A copy of the annual financial statements for the financial year ended 29 February 2012 may be obtained from the registered office of the Company during normal working hours;

2. To transact such other business as may be transacted at an Annual General Meeting of a company including the re-appointment of the auditors, members of the Audit and Risk Committee and the re-election of retiring Directors; and

3. To consider and, if deemed fit, to pass, with or without modification, the special and ordinary resolutions set out below. The record date for determining which shareholders are entitled to: (i) receive notice of the Annual General Meeting is 31 August 2012 and (ii) participate in and vote at the Annual General Meeting is Friday, 16 November 2012, in terms of section 62(3)(a), as read with section 59 of the South African Companies Act (Act 71 of 2008) (the “Act”).

Special resolution number 1: Share repurchases“Resolved that the Directors be authorised by way of a general authority to approve the repurchase by the Company or its subsidiaries of shares of the Company on such terms and conditions and in such amounts that the Directors of the Company may determine subject to the Company’s Memorandum of Incorporation (previously Articles and Association) (“MoI”), the JSE Limited (“JSE”) Listings Requirements and the Act on the following basis:

1. Repurchases of shares must be effected through the order book operated by the JSE trading system, and done without any prior understanding or arrangement between the Company and the counter-party;

2. At any point in time, the Company may only appoint one agent to effect repurchases on its behalf;

3. The Company (or any subsidiary) must be authorised thereto by its MoI;

Notice of Annual General meeting

4. The number of shares which may be acquired pursuant to this authority in any financial year (which commenced 1 March 2012) may not in the aggregate exceed 20% (twenty percent) (or 10% (ten percent) where such acquisitions are effected by a subsidiary) of the Company’s share capital as at the date of this notice of Annual General Meeting;

5. Repurchases of shares may not be made at a price more than 10% (ten percent) above the weighted average of the market value on the JSE of the shares in question for the five business days immediately preceding the repurchase;

6. Repurchases may not take place during a prohibited period (as defined in paragraph 3.67 of the JSE Listings Requirements) unless a repurchase programme (where the dates and quantities of shares to be repurchased during the prohibited period are fixed) is in place and full details thereof announced on SENS prior to commencement of the prohibited period;

7. After the Company has acquired shares which constitute, on a cumulative basis, 3% (three percent) of the number of shares in issue (at the time that authority from shareholders for the repurchase is granted), the company shall publish an announcement to such effect, or any other announcements that may be required in such regard in terms of the Listings Requirements of the JSE which may be applicable from time to time;

8. The Company’s sponsor shall confirm the adequacy of the Company’s working capital for purposes of undertaking the repurchase of shares in writing to the JSE prior to the Company entering the market to proceed with the repurchase; and

9. This general authority shall be valid until the next Annual General Meeting of the Company provided that it shall not extend beyond 15 months from the date of passing of this special resolution.”

In accordance with the Listings Requirements of the JSE, the Directors record that:

The Directors would utilise the general authority to repurchase securities as and when suitable opportunities present themselves, which opportunities may require expeditious and immediate action.

The Directors undertake that, after considering the maximum number of securities which may be repurchased and the price at which the repurchases may take place pursuant to the buyback general authority, for a period of 12 months after the date of notice of this Annual General Meeting:• The Company and the Group will be able to pay their

debts in the ordinary course of business;

Buildmax 2012 ⁄ Shareholder information ⁄ Notice of Annual General Meeting


101 Notice of Annual General meeting (continued)

• The consolidated assets of the Company and of the Group fairly valued in accordance with International Financial Reporting Standards will exceed the consolidated liabilities of the company and of the Group; and

• The working capital, share capital and reserves of the Company and of the Group will be adequate for the purposes of the business of the Company and its subsidiaries.

The following additional information is provided in terms of paragraph 11.26 of the Listings Requirements of the JSE for purposes of this general authority:

• Directors – page 40• Major shareholders – page 97• Directors’ interests in ordinary shares – page 43• Share capital of the Company – pages 69 to 70

Litigation statementAs stated in the annual financial statements for the year ended 29 February 2012, the Directors, whose names appear on page 40 of the integrated report, are not aware of any other legal or arbitration proceedings, including proceedings that are pending or threatened, that may have or have had in the recent past (being at least the previous 12 (twelve) months) a material effect on the Group’s financial position.

Directors’ responsibility statementDirectors, whose names appear on page 40 of the integrated report, collectively and individually accept full responsibility for the accuracy of the information pertaining to this special resolution and certify that, to the best of their knowledge and belief, there are no facts that have been omitted which would make any statement false or misleading, and that all reasonable enquiries to ascertain such facts have been made and that the special resolution contains all information required in terms of the Listings Requirements of the JSE.

material changesOther than the facts and developments reported on in the integrated report, there have been no material changes in the affairs or financial position of the Company and its subsidiaries since the date of signature of the audit report for the financial year ended 29 February 2012 and up to the date of this notice.

Reasons for and affect of special resolution 1The reason for special resolution 1 is to afford Directors of the Company or a subsidiary of the Company general authority to affect a buy-back of the Company’s shares on the JSE. The effect of the resolution will be that the Directors will have the authority, subject to the Rules and Requirements of the JSE, to effect acquisitions of the Company’s shares on the JSE.

Special resolution number 2: Approval of Non-executive Directors’remuneration for their services as DirectorsTo consider and if deemed fit, to pass with or without modification, the following special resolutions by way of separate resolutions:

2.1. “Resolved, as a special resolution, that the fees payable by the Company to the Non-executive Directors for their services as Directors (in terms of section 66 of the Companies Act) for the year ending 28 February 2013 be and are hereby approved from the passing of this resolution or until its renewal, whichever is the earliest, as follows:

2.1.1. Chairman R300 0002.1.2. Non-executive Directors R150 0002.1.3. Audit and Risk Committee Chair R136 0002.1.4. Audit and Risk Committee Member R68 0002.1.5. Remuneration Committee Chair R80 0002.1.6. Remuneration Committee Member R40 0002.1.7. Social, Ethics and Transformation

Committee Chair R40 000”2.1.8. Social, Ethics and Transformation

Committee Member R38 000”

2.2. “Resolved, as a special resolution that an annual increase not exceeding 7,8% of the fees payable by the company to the Non-executive Directors for their services as Directors be and is hereby approved for the following year from the passing of this resolution or until its renewal, whichever is the earliest.”

Reasons and effectThe reason and affect for special resolution number 2.1In terms of section 66(9) of the Companies Act such remuneration must be approved as a special resolution. Therefore, the company requests that a resolution be proposed and passed as a special resolution.

The reason and affect for special resolution number 2.2To obtain shareholder approval by way of a special resolution in accordance with section 66(9) of the Companies Act for the payment by the Company of remuneration of each of the Non-executive Directors of the company for each Non-executive Directors’ services for the ensuing financial year in the amounts set out under special resolution number 2.2.

The reason and affect for special resolution number 2.3As the fees payable to Non-executive Directors are, from time to time, benchmarked to other companies with a similar market capitalisation taking into account the estimated time and the other requirements of Directors, an annual increase not exceeding 7,8% is proposed for approval in the subsequent year.

Buildmax 2012 ⁄ Shareholder information ⁄ Notice of Annual General Meeting (continued)


102

Percentage of voting rights required for the adoption of special resolution number 2In order for special resolutions numbers 2.1, 2.2 and 2.3 to be adopted, the support of 75% of the total number of votes exercisable by shareholders, present in person or by proxy, is required to pass this resolution.

Special resolution number 3: Financial Assistance to related or inter-related companiesTo consider and if deemed fit, to pass with or without modification, the following special resolution:

“Resolved that, to the extent required by the Companies Act, the Board of Directors of the Company may, subject to compliance with the requirements of the Company’s Memorandum of Incorporation, the Companies Act and the JSE Listings Requirements, each as presently constituted and as amended from time to time, authorise the Company to provide direct or indirect financial assistance in terms of section 45 of the Companies Act by way of loans, guarantees, the provisions of security or otherwise, to any of its present or future subsidiaries and/or any other company or corporation that is or becomes related or inter-related (as defined in the Companies Act) to the Company for any purpose or in connection with any matter, such authority to endure until the Annual General Meeting of the Company to be held in 2013.”

Reason for and affect of special resolution Number 3This authority is necessary for the Company to continue to provide financial assistance in appropriate circumstances. Under the Companies Act, the Company will, however, require the special resolution referred to above to be adopted, provided that the Board of Directors of the company be satisfied that the terms under which the financial assistance is proposed to be given are fair and reasonable to the Company and, immediately after providing the financial assistance, the Company would satisfy the solvency and liquidity test contemplated in the Companies Act. In the circumstances and in order to, inter alia, ensure that the Company’s subsidiaries and other related and inter-related companies and corporations have access to financing and/or financial backing from the Company (as opposed to banks), it is necessary to obtain the approval of shareholders, as set out in special resolution number 3. Therefore, the reason for, and effect of, special resolution number 3 is to permit the Company to provide direct or indirect financial assistance (within the meaning attributed to that term in section 45 of the Companies Act) to the entities referred to in special resolution number 3 above.

Percentage of voting rights required for the adoption of special resolution number 3In order for special resolution number 3 to be adopted, the support of 75% of the total number of votes exercisable by

Notice of Annual General meeting (continued)

shareholders, present in person or by proxy, is required to pass this resolution.

Ordinary resolution number 1: Issue of shares for cash“Resolved that the Directors be authorised pursuant inter alia to the Company’s MoI until this authority lapses at the next Annual General Meeting of the Company, unless it is then renewed at the next Annual General Meeting of the company provided that it shall not extend beyond 15 months to allot and issue ordinary shares for cash subject to the Rules and Requirements of the JSE Limited (“JSE) on the following basis:

1. The allotment and issue of the shares must be made to persons qualifying as public shareholders and not to related parties as defined in the Listings Requirements of the JSE;

2. The shares which are the subject of the issue for cash must be of a class already in issue, or where this is not the case, must be limited to such shares or rights that are convertible into a class already in issue;

3. The number of shares issued for cash shall not in the aggregate in any one financial year exceed 15% (fifteen percent) of the Company’s issued share capital of ordinary shares. The number of ordinary shares which may be issued shall be based on the number of ordinary shares in issue at the date of such application less any ordinary shares issued during the current financial year, provided that any ordinary shares to be issued pursuant to a rights issue (announced, irrevocable and fully underwritten) or acquisition (concluded up to the date of application including announcement of the final terms) may be included as though they were shares in issue at the date of application;

4. The maximum discount at which ordinary shares may be issued is 10% (ten percent) of the weighted average traded price on the JSE of those shares over the 30 business days prior to the date that the price of the issue is agreed between the Company and the party subscribing for the shares; and

5. After the Company has issued shares for cash which represent, on a cumulative basis within a financial year, 5% (five percent) or more of the number of shares in issue prior to that issue, the Company shall publish an announcement containing full details of the issue, (including the number of shares issued, the average discount to the weighted average traded price of the shares over the 30 days prior to the date that the price of the issue is agreed in writing between the Company and the parties subscribing for the shares



103 Notice of Annual General meeting (continued)

and the effect of the issue on net asset value per share, net tangible asset value per share, earnings per share, headline earnings per share and, if applicable, diluted earnings and headline earnings per share), or any other announcements that may be required in such regard in terms of the JSE Listings Requirements which may be applicable from time to time.”

In terms of the Listings Requirements of the JSE a 75% (seventy-five percent) majority of the votes cast by shareholders present or represented by proxy at the Annual General Meeting must be cast in favour of ordinary resolution number 1 for it to be approved.

Ordinary resolution number 2: Unissued ordinary shares“Resolved that the authorised and unissued ordinary share capital of the Company be and is hereby placed under the control of the Directors of the Company which Directors are, subject to the Rules and Regulations of the JSE Limited and the provisions of the Companies Act as amended, authorised to allot and issue any of such shares at such time or times, to such person or persons, company or companies and upon such terms and conditions as they may determine, such authority to remain in force until the next Annual General Meeting of the Company.”

Ordinary resolution number 3: Re-election of CJm Wood as a Director of the Company“Resolved that CJM Wood be re-elected as a Director of the Company.”

A brief curriculum vitae is set out in the integrated report of which this notice forms part.

Ordinary resolution number 4: Re-election of MD Lamola as a Director of the Company“Resolved that MD Lamola be re-elected as a Director of the Company.”


Ordinary resolution number 5: Re-election of TP Bantock as a Director of the Company“Resolved that TP Bantock be re-elected as a Director of the Company.”


Ordinary resolution number 6: Re-election of CS Els as a Director of the Company“Resolved that CS Els be re-elected as a Director of the company.”


Ordinary resolution number 7: Re-appointment of the members of the Audit and Risk Committee“Resolved that the following Directors be re-appointed as members of the Audit and Risk Committee:

• CB Brayshaw (Chairman);• CJM Wood; and• MD Lamola.”

Ordinary resolution number 8: Re-appointment of auditors“Resolved that PKF (Jhb) Inc be re-appointed as auditors of the Company.”

Ordinary resolution number 9: Signature of documentation“Resolved that any Director or the Company Secretary of the Company be and is hereby authorised to sign all such documentation and do all such things as may be necessary for or incidental to the implementation of special resolution numbers 1, 2 and 3 as well as ordinary resolution numbers 1, 2, 3, 4, 5, 6, 7 and 8 which are passed by the members in accordance with and subject to the terms thereof.”

Statement in terms of section 62(3)(e) of the Companies ActShareholders holding certificated shares and shareholders holding shares in dematerialised form in “own name”:

• May attend and vote at the Annual General Meeting; alternatively; and

• May appoint an individual as a proxy (who need not also be a shareholder of the Company) to attend, participate in and speak and vote in your place at the Annual General Meeting by completing the attached form of proxy and returning it to the registered office of Buildmax Limited or to the transfer secretaries, by no later than 8:30 on Friday 23 November 2012. Alternatively, the form of proxy may be handed to the Chairman of the Annual General Meeting at the Annual General Meeting at any time prior to the commencement of the Annual General Meeting. Please note that your proxy may delegate his/her authority to act on your behalf to another person, subject to the restrictions set out in the attached form of proxy. Please also note that the attached form of proxy must be delivered to the registered office of Buildmax Limited or to the transfer secretaries or handed to the chairman of the Annual General Meeting, before your proxy may exercise any of your rights as a shareholder of the Company at the Annual General Meeting.

Please note that any shareholder of the company that is a company may authorise any person to act as its representative at the Annual General Meeting. Please also note that section 63(1) of the Companies Act requires that persons wishing to participate in the Annual General



104

Meeting (including the aforementioned representative) must provide satisfactory identification before they may so participate.

Notice to owners of dematerialised sharesPlease note that if you are the owner of dematerialised shares held through a CSDP or broker (or their nominee) and are not registered as an “own name” dematerialised shareholder then you are not a registered shareholder of the Company, but your CSDP or broker (or their nominee) would be.

Accordingly, in these circumstances, subject to the mandate between yourself and your CSDP or broker as the case may be:

• If you wish to attend the Annual General Meeting you must contact your CSDP or broker, and obtain the relevant letter of representation from it; alternatively; and

• If you are unable to attend the Annual General Meeting but wish to be represented at the Annual General Meeting, you must contact your CSDP or broker, and furnish it with your voting instructions in respect of the Annual General Meeting and/or request it to appoint a proxy. You must not complete the attached form of proxy. The instructions must be provided in accordance with the mandate between yourself and your CSDP or broker, within the time period required by your CSDP or broker.

CSDPs, brokers or their nominees, as the case may be, recorded in the company’s sub-register as holders of dematerialised shares should, when authorised in terms of their mandate or instructed to do so by the owner on behalf of whom they hold dematerialised shares, vote

Notice of Annual General meeting (continued)

by either appointing a duly authorised representative to attend and vote at the Annual General Meeting or by completing the attached form of proxy in accordance with the instructions thereon and returning it to the registered office of the Company or to the transfer secretaries, by no later than 8:30 on 21 November 2012. Alternatively, the form of proxy may be handed to the Chairman of the Annual General Meeting at the Annual General Meeting at any time prior to the commencement of the Annual General Meeting.

Voting at the Annual General MeetingIn order to more effectively record the votes and give effect to the intentions of shareholders, voting on all resolutions will be conducted by way of a poll.

By order of the Board

Gillian Hope MillerGroup Company Secretary30 August 2012

Registered address of Buildmax Limited515 Pretoria RoadFairleads Benoni1512(Postnet Suite 435, Private Bag X108, Centurion, 0046)

Transfer secretariesComputershare Investor Services (Proprietary) Limited 70 Marshall StreetJohannesburg2001(PO Box 61051, Marshalltown, 2107)



105 Form of proxy

BUILDMAX LIMITED(Incorporated in the Republic of South Africa) (Registration number: 1995/012209/06)(“Buildmax” or “the Company”)JSE Code: BDMISIN. ZAE000011250

For use by the holders of the Company’s certificated ordinary shares (“certificated shareholders”) and/or dematerialised ordinary shares held through a Central Securities Depository Participant (“CSDP”) or broker who have selected “own name” registration (“own name dematerialised shareholders”) at the Annual General Meeting of the Company to be held at 11:00 on Tuesday, 27 November 2012 at The Country Club Johannesburg, 1 Napier Road, Auckland Park, Johannesburg, or at any adjournment thereof if required. Additional forms of proxy are available from the transfer secretaries of the Company.

Not for use by holders of the company’s dematerialised ordinary shares who have not selected “own name” registration. Such shareholders must contact their CSDP or broker timeously if they wish to attend and vote at the Annual General Meeting and request that they be issued with the necessary authorisation to do so or provide the CSDP or broker timeously with their voting instructions should they not wish to attend the Annual General Meeting in order for the CSDP or broker to vote in accordance with their instructions at the Annual General Meeting.

I/We (Name in block letters)

of (Address)

being the registered holder of ordinary shares in the capital of the company hereby appoint

or failing him/her

or failing him/her

the Chairperson of the meeting

as my/our proxy to act for me/us on my/our behalf at the Annual General Meeting, or any adjournment thereof, which will be held for the purpose of considering and, if deemed fit, passing with or without modification, the ordinary and special resolutions as detailed in the Notice of Annual General Meeting, and to vote for and/or against such resolutions and/or abstain from voting in respect of the ordinary shares registered in my/our name(s), in accordance with the following instructions:

Number of votesIn favour Against Abstain

To pass special resolutions:1. General authority to effect share repurchases2. Approval of Non-executive Directors’ remuneration for their

services as Directors3. Financial assistance to Group inter-related companiesTo pass ordinary resolutions:1. General authority to issue shares for cash2. To place the unissued shares under the control of the directors3. To re-elect CJM Wood as a Director of the Company4. To re-elect MD Lamola as a Director of the Company5. To re-elect TP Bantock as a Director of the Company6. To re-elect CS Els as a Director of the Company7. To re-appoint members of the Audit and Risk Committee8. To re-appoint PKF (Jhb) Inc as auditors of the Company9. To authorise the signature of documentation

Indicate instructions to proxy in the spaces provided above. Unless otherwise instructed, my proxy may vote as he thinks fit.

Signed this day of 2012

Signature Assisted by (if applicable)

Please see notes on reverse.

Buildmax 2012 ⁄ Shareholder information ⁄ Form of proxy


106

1. Each shareholder is entitled to appoint one or more proxies (none of whom need be a shareholder of the company) to attend, speak and vote in place of that shareholder at the Annual General Meeting.

2. Shareholder(s) that are certificated or own name dematerialised shareholders may insert the name of a proxy or the names of two alternative proxies of the member’s choice in the space/s provided, with or without deleting “the Chairperson of the meeting”, but any such deletion must be initialled by the shareholder(s). The person whose name stands first on the form of proxy and who is present at the Annual General Meeting will be entitled to act as proxy to the exclusion of those whose names follow. If no proxy is named on a lodged form of proxy the Chairperson shall be deemed to be appointed as the proxy.

3. A shareholder’s instructions to the proxy must be indicated by the insertion of the relevant number of votes exercisable by the shareholder in the appropriate box provided. Failure to comply with the above will be deemed to authorise the proxy, in the case of any proxy other than the Chairperson, to vote or abstain from voting as deemed fit and in the case of the Chairperson to vote in favour of the resolution.

4. A shareholder or his/her proxy is not obliged to use all the votes exercisable by the shareholder, but the total of the votes cast or abstained may not exceed the total of the votes exercisable in respect of the shares held by the shareholder.

5. Forms of proxy must be lodged at or posted to Computershare Investor Services (Proprietary) Limited, 70 Marshall Street, Johannesburg, 2001 (PO Box 61051. Marshalltown, 21071 to be received not less than 48 hours prior to the meeting.

6. The completion and lodging of this form of proxy will not preclude the relevant shareholder from attending the Annual General Meeting and speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof, should such shareholder wish to do so. Where there are joint holders of shares, the vote of the first joint holder who tenders a vote, as determined by the order in which the names stand in the register of members, will be accepted.

7. The Chairperson of the Annual General Meeting may reject or accept any form of proxy which is completed and/or received otherwise than in accordance with these notes, provided that, in respect of acceptances, the Chairperson is satisfied as to the manner in which the shareholder concerned wishes to vote.

8. Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity must be attached to this form of proxy unless previously recorded by the company or the transfer secretaries or waived by the Chairperson of the Annual General Meeting.

9. Any alteration or correction made to this form of proxy must be initialled by the signatories.

10. A minor must be assisted by his/her parent guardian unless the relevant documents establishing his/her legal capacity are produced or have been registered by the transfer secretaries.

11. Where there are joint holders of any shares, only that holder whose name appears first in the register in respect of such shares need sign this form of proxy.

Notes to form of proxy

Buildmax 2012 ⁄ Shareholder information ⁄ Notes to form of proxy


107

Shareholder helplineAssistance with AGM queries and proxy forms:Tel: 086 169 1177E-mail: [email protected]

BUILDMAX LIMITED(Incorporated in the Republic of South Africa)(Company registration number: 1995/012209/06)JSE code: BDMISIN: ZAE000011250

Business address and registered office515 Pretoria Road FairleadsBenoni

Postal and electronic addresses and telecommunication numbers:Postnet Suite 435 Private Bag X108 Centurion, 0046Tel: 086 169 1177Website: www.buildmax.co.za

Investor relations and corporate affairsTel: 086 169 1177Email: [email protected]

Corporate SponsorJava Capital (Proprietary) Limited(Registration number: 2002/031862/07)(A sponsor registered with the JSE Limited) 2nd Floor2 Arnold RoadRosebankJohannesburg, 2196

PO Box 2087 Parklands, 2121

Company SecretaryProbity Business Services (Proprietary) Limited 3rd FloorThe Mall Offices11 Cradock Avenue, RosebankJohannesburg, 2196

PO Box 85392 Emmarentia, 2029

BankersInvestec Bank LimitedNedbank LimitedThe Standard Bank of South Africa LimitedIndustrial Development Corporation of South Africa ABSA Bank LimitedWesbank

DirectorsCJM Wood (Chairman)TP Bantock (CEO)CS Els (FD)CB BrayshawMD LamolaDJ MackMW McCullochG MontgomeryBT Ngcuka

Share RegistrarsComputershare Investor Services (Proprietary) Limited (Registration number: 2004/003647/07) Ground Floor70 Marshall StreetJohannesburg, 2001

PO Box 61051 Marshalltown, 2107Tel: 086 110 0933

AuditorsPKF (Jhb) Inc.(Registration number: 1994/001166/07)Registered AuditorsChartered Accountants (SA)42 Wierda Road WestWierda Valley Sandton, 2196

Private Bag X10046Sandton, 2146

FeedbackThrough our reporting process, we seek to move beyond compliance and enter into an inclusive and challenging dialogue with our stakeholders, with the aim of informing our strategy and building trust. We value feedback, invite questions and comments on our reporting. For these or requests for hard copies, please direct to our corporate affairs division.

Administration

Maxx Corporate Communications©

Buildmax 2012 ⁄ Shareholder information ⁄ Administration


515 Pretoria RoadFairleadsBenoni

Postnet Suite 435Private Bag X108Centurion0046

BUILDMAX LIMITED

www.buildmax.co.za

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