Felicia Msiza: There will be time at the end for questions and answers. Just to give context to the results, the H1 of FY 2027 tested the resilience of our businesses. Extreme weather associated with La Niña early in the year, the Middle East conflict, higher fuel and input costs, logistics pressures, and a strengthening rand created a demanding operating environment. These external challenges, together with other operational challenges, mainly impacted our Mining and Materials segments. Addressing those challenges remains a clear management priority, with a focus on operational improvements and cost optimization. Despite those challenges, we are proud to present a solid set of results for the H1 of 2027. The value of our diversified portfolio was evident during the period, providing balance as divisions faced differing operational and market pressures.
Felicia Msiza: This resilience supports our sustainable growth ambitions, but our priorities remained clear: disciplined execution, operational improvement, and long-term value creation. Now, let's discuss the period in review. The key message is clear: a stronger order book, improved cash generation, and a return to profitability in Australia. These are important foundations for growth, alongside the operational challenges we are addressing. Let's start with the financial performance. We delivered a solid financial performance in demanding trading conditions, with revenue growth across most divisions. Improved cash generation was a key strength of the period. Our strong balance sheet and lower gearing reinforce our financial resilience. Cash generated from operations reached ZAR 1.56 billion. Sam will take you through the financial results shortly. Looking at the operational performance, the performance across our divisions demonstrates the value of diversification.
Felicia Msiza: Materials Handling and Mining and Construction Materials faced a challenging H1, while Roads, Infrastructure, and Australia provided important balance. Roads sustained a solid performance, supported by strong cash generation. Infrastructure delivered improved margins. Australia's return to profitability is a particularly important development. Strong project execution drove the recovery, demonstrating the importance of disciplined delivery. Geopolitical pressures affected costs across most divisions. Our response is focused to improve operational efficiencies, optimize costs, and address the areas where performance remains under pressure. Now, unpacking our order book. Our quality order book grew by 24% to ZAR 39 billion. This is a substantial increase in secured work and a strong foundation for future delivery, with an expected pipeline of opportunities that could further grow the order book. The opportunity is clear. The priority is execution.
Felicia Msiza: We must convert this order book into profitable delivery, supported by a diversified business model that spreads risks and opportunities. Lastly, looking at the tender activities. Tender activity remains robust, although the pace has been slower than anticipated. We remain disciplined and selective. Growth must come with an appropriate balance of risk and reward. Significant new awards during the period strengthened our secured work, while we continued to progress opportunities in the PPP market. A stronger order book, improved cash generation, and Australia's return to profitability give us a solid platform. Our focus is to execute going forward. I will hand over to Sam to unpack the financial results.
Sam Odendaal: Thank you, Felicia. Good morning, ladies and gentlemen. From my side as well, I am very pleased to present the financial highlights for the six months in August 2026. Revenue increased 11.8% to ZAR 12.12 billion. Operating profit increased by 2.5% to ZAR 618 million. Our headline earnings per share increased to 254.3 cents per share, and we have generated good cash from our operations of ZAR 1.56 billion. That is up 104%. Capital expenditure increased 24.1% to ZAR 721.2 million. Our order book is currently at record levels at ZAR 39 billion. The group's operating profit margin decreased to 5.1% from 5.6% in the previous year, and we declared an interim dividend of 88 cents per share. Return on capital employed is slightly down to 10.7%. If we look at the summary of the income statement, we already looked at revenue, operating profit, and margin. Net finance cost increased to ZAR 60 million.
Sam Odendaal: With a reduction in borrowings, this should reduce going forward. Profit after tax is at ZAR 558 million, and our effective tax rate is slightly higher at 30.9%. The biggest reason for the increase in the tax rate is that the corporate tax rate in the other jurisdictions where we operate is higher than in South Africa, and with a higher tax rate in Australia, and Australia's operations returning to profitability, it increased the effective tax rate. Also paid withholding tax on dividends received from the rest of our Africa subsidiaries. Loss to non-controlling interest was a ZAR 95.5 million contribution, and our earnings per share is 266.9 cents per share. If we look at the segmental analysis, that is the makeup of the revenue and the operating profit per division as a percentage of total revenue and operating profit for the group.
Sam Odendaal: On the revenue side, revenue in the Materials Handling and Mining division is contributing 19% of the group's turnover. The Construction Materials division contribution is slightly higher than last year at 18%. Revenue in the Roads and Earthworks division is making up 35% of the group's turnover. The Infrastructure division revenue contribution decreased from 20% to 15%, and Australia's contribution this year was 13% to group turnover compared to 15% of the previous period. In summary, the contributions of revenue is a good spread between the five divisions and very much in line with that of last year. If we move over to the operating profit distribution, it was a good contribution by all divisions except for the Mining division, which was impacted by the loss at Bauba Resources. Geopolitical tensions impacted our results with increased input costs that could not be all recovered through sales.
Sam Odendaal: This specifically impacted the Construction Materials and Mining divisions' operating profits negatively. If we look at the Materials Handling and Mining division, operating profit contribution decreased from a 14% positive contribution to a negative contribution of 18%. As mentioned, the increased diesel price put pressure on input costs, and the increased logistical cost and the strengthening of the ZAR to the dollar impacted the net selling price of commodities negatively. At Kookfontein, lower yields resulted in less chrome concentrate sold, and at Moeijelijk, performance was negatively impacted by underperformance of the underground mine contractor, and that resulted in increased input costs. The Construction Materials division contribution decreased from 24% to 19%.
Sam Odendaal: Operations in this division were impacted by adverse weather conditions at the beginning of the year, as well as the negative effect of the ferrochrome smelters on the industrial mineral segment, but this reduction was mostly offset by the increase in gypsum sales. Operating profit contribution in the Roads and Earthworks division is 47%, in line with that of last year. The division is performing very well with a big focus on execution. The Infrastructure division contributed 28% to the group's total operating profit, with the biggest contribution in this division coming from the renewables operations. Australian division contribution increased drastically from a negative contribution of 16% to a positive contribution of 24% of the group's total operating profit, and all indications are that this positive trend will continue for the remainder of the year.
Sam Odendaal: Moving over to the geographical segment analysis, if we look at the revenue, the South African operations contributed 82% to the group's turnover. Revenue in the rest of Africa, again making up 5% of turnover. In Australia, the revenue contribution decreased slightly to 13% of revenue. If we look at the operating profit contribution, the Australian operations accounted for 24% of the group's operating profit, and because of the much-improved contribution by Australia, both the South African and the rest of Africa operations' contributions decreased. The South African operations contributed 56% of the group's operating profit, with the rest of Africa contributing 20% to operating profit. This slide demonstrates the group track record over the past five years. Revenue has grown from ZAR 7.4 billion in the H1 of 2023 to ZAR 12.1 billion in the current period, representing growth of approximately 64%, supported by our diversified portfolio of businesses.
Sam Odendaal: Operating profit has increased from ZAR 550 million to ZAR 618 million over the same period. While the profitability remains below the peak achieved in 2025, we are pleased with the resilience of the group's performance, particularly given the geopolitical developments during the current period and the resulting pressure on input costs. We are particularly encouraged by the performance of the Australian operations, which have not only returned to profitability following their loss in the comparative period, but they have done so at improved margins compared to 2025. We look at the headline earnings per share. Importantly, the growth of the group over the last few years have translated into shareholder earnings. Interim HEPS has increased by approximately 60% from 159 cents in 2023 to 254 cents in the current period, while full-year HEPS increased from 393 cents in 2023 to 611 cents in 2026.
Sam Odendaal: Historically, the group has also maintained strong returns on capital, with return on capital employed consistently between approximately 15% and 17% from 2023 to 2026. While this is reduced to 10.7% in the current period, improving returns remain an important focus for the group. Overall, the five-year track record demonstrates a business that has grown materially, remains diversified and resilient through changing market conditions, and delivered strong earnings growth and attracted returns on capital over the longer term. The group still have a strong balance sheet, and the result of that is that we have enough available facility in place to participate and to capitalize on new opportunities. Our biggest asset is property, plant, and equipment, and it increased 4.2% to ZAR 6.75 billion. Contract assets increased by 34.8% to ZAR 1.29 billion, and then cash and cash equivalents is at similar levels as last year on ZAR 1.88 billion.
Sam Odendaal: Importantly, borrowings decreased by 12.4% to ZAR 2.39 billion, and this reduced our debt-to-equity ratio to below 30%. Contract liabilities increased to ZAR 2.63 billion, and included in contract liabilities is roughly ZAR 700 million of advance payments received. The group's net asset value per share increased to ZAR 42.11. As mentioned in the highlights, the group generated good cash from operations. This slide indicate the major cash inflows and outflows. We generated cash from operations of just over ZAR 1 billion before working capital movements. There was net working capital inflows and net working capital inflow of ZAR 490 million, and there was inflows in inventories, debtors, and contract assets, and there were outflows in creditors and contract liabilities. The group paid tax of ZAR 251.8 million. The biggest cash outflow was from investing activities.
Sam Odendaal: It was an outflow of ZAR 646.7 million, and this included replacement and expansion CapEx requirements of the group. Net borrowings was an outflow of ZAR 315.1 million, and the group paid dividends of ZAR 230.8 million, and that brings our closing cash balance to ZAR 1.88 billion. The group will declare an interim dividend of ZAR 0.88 per share. This is in line with our normal three times dividend cover policy, and below is just the relevant dates for the dividend payments. I will now hand you over to Jaco van der Bijl to take you through the operational overview.
Jaco van der Bijl: Thank you, Sam. Good morning, ladies and gentlemen. I will take you through the operational performance across Raubex's five divisions: Materials Handling and Mining, Construction Materials, Roads and Earthworks, Infrastructure, and Australia. Together, they provide a diversified and a resilient platform across our key markets. Our diversified operating model combines complementary capabilities across the infrastructure value chain, strengthening the group's resilience and creating multiple avenues of growth. That strength was evident during the period, with solid performance in Roads, Infrastructure, and a strong turnaround in Australia, balancing the challenges within the Materials Handling and Mining, particularly at Bauba Resources. Starting with the Materials Handling and Mining, performance within the Materials Handling and Mining divisions was impacted by a number of operational challenges during the period. Revenue from the Materials Handling and Mining increased by 27% to ZAR 2.28 billion.
Jaco van der Bijl: Operating profit decreased from a profit of ZAR 87.7 million in the comparative period to a loss of ZAR 111.1 million, resulting in an operating loss margin of 4.9%. The order books increased significantly to ZAR 10.95 billion from ZAR 6.38 billion at February 2026, with capital expenditure of ZAR 295.5 million. At B&E International, performance during the period was affected by a few underperforming contracts. These contracts are expected to conclude early in the H2 of the financial year. Namdeb remains a flagship contract and delivered an exceptional performance, with demand for its high-quality natural diamonds remaining resilient despite pressure on the global diamond prices. Our Mozambique operations also performed strongly and operated at full capacity. During the period under review, B&E has secured a ZAR 5.8 billion, five-year operate and maintain contract for the Vedanta Zinc International Northern Cape plant. The project is in commissioning, with an earnings contribution expected from 2028.
Jaco van der Bijl: This establishes a substantial and long-term base workload for B&E. SPH Kundalila also delivered strong performance, supported by Kookfontein Mine, continued mine development and infrastructure work at Aroams Quarry, and a solid performance from the Gamsberg operations. Saldanha remained stable despite market volatilities. Looking more closely at Bauba Resources, Bauba's performance affected by a combination of operational and market pressures, with stable chrome prices offset by rand appreciating and higher freight costs linked to the Middle East conflict, placing pressure on realized pricing and margins. At Moeijelijk, the key challenge was underground contract underperformance, which resulted in constrained feed to the processing plant and requiring the purchase of more expensive third-party ore. Delays in Eskom connectivity prolonged reliance on diesel-generated power at a time when diesel prices were elevated.
Jaco van der Bijl: At Kookfontein, mining processed through lower-grade sections of the ore body had reduced production volumes, feed grades, plant recoveries, and chrome concentrate sales. Management has introduced owner mining at one pit to improve operational control, fleet utilization, and execution flexibilities. Eskom grid connectivity has reduced our reliance on diesel-generated power, helping to ease cost pressures. Importantly, both the chrome wash plant and the PGM processing plant continued to perform well. Naboom remains an important long-term asset with an estimated 24-year mine of life and PGM potential. Currently, activities remain focused on selective mining at Klipveld to optimize the future processing configurations. Looking at the combined financial results for Bauba Resources, revenue increased 47.6% to ZAR 1.38 billion, supported by higher chrome sales and the introduction of PGM sales.
Jaco van der Bijl: Despite the revenue growth, the operating loss increased to ZAR 192.7 million from ZAR 7.6 million in the comparative period, resulting in a negative operating margin of 14%, while EBITDA decreased to a negative ZAR 88 million. The results reflect operational and market pressures, including lower grade, contractor inefficiencies, higher input and freight costs, and rand appreciation. The exchange rate averaged at 16.46 rand to the US dollar, while the net grade chrome price ranged between 218 US dollars to 318 US dollars per ton CIF China. Operationally, ROM produced increased to 15.2% to 836.6 thousand tons, while chrome concentrate sales increased 9.5% to 320.9 thousand tons. We also sold 10,574 ounces of PGM concentrate, establishing an additional revenue stream. Capital expenditure increased to ZAR 219.8 million, primarily reflecting the investment in mining operations together with capitalized development and mine development activities. Looking at Moeijelijk Mine, revenue increased by 55% to ZAR 439.7 million.
Jaco van der Bijl: Despite the ROM revenue growth, the operation reported an operating loss of ZAR 95.7 million, representing an operating loss margin of 21.8%, and the EBITDA decreased to a negative ZAR 63.8 million. Capital expenditure decreased to ZAR 13.5 million, down 17.3% from the comparative period. Operationally, ROM production more than doubled to 165.6 thousand tons, while chrome concentrate sales increased to 121.8 thousand tons. At Bauba Resources, revenue increased to ZAR 939.9 million, supported by higher ROM sales and the reduction of the PGM sales. However, the operation moved from an operating profit of ZAR 18.2 million to a loss of ZAR 88.4 million, a negative margin of 9.4%, while EBITDA declined to a negative ZAR 22.1 million. Capital expenditure increased to ZAR 158.2 million. Lower ore grades reduced plant recoveries and concentrate yields, while pressure on profitability. ROM production decreased by 3.9%, while ROM sales increased significantly.
Jaco van der Bijl: Chrome concentrate sales reduced by 12.6% to 199.1 thousand tons, with 10,574 ounces of PGM concentrate sold during the period. We will now move over to the Construction Materials division. Construction Materials delivered a strong revenue growth, but margins came under pressure, mainly as a result of operational cost increases. Construction Materials delivered a revenue growth of 24.8% to ZAR 2.19 billion. Operating profit, however, decreased by 15.6% to ZAR 120.1 million, with the operation profit margin decreasing from 8.1% to 5.5%. The order book was ZAR 2.67 billion as of August, with CapEx expenditure of ZAR 83.4 million. The aggregate business experienced a difficult H1. Lower sales volume coincided with higher fuel and equipment higher costs. The effect was most pronounced in Gauteng. The intense competition restricted our ability to recover cost increases through this period.
Jaco van der Bijl: Loskop Silica Quarry was affected by a weaker demand from the ferrochrome sector, while Bela-Bela Quarry in Botswana experienced subdued market conditions. In asphalt, tender activities were slower during the H1, but National Asphalt maintained a healthy order book and continued to execute its projects effectively. The division, however, retains a healthy order book and remain encouraged by the pipeline of road construction and maintenance opportunities. Tosas was a particular strong performer. South Africa has been fully reliant on imported bitumen since November 2025, increasing exposure to exchange rates, international oil prices, and geopolitical volatility. Our diversified procurement arrangement and storage capabilities proved valuable in this environment and ensured uninterrupted supply with no stock shortages during the period. Tosas exceeded expectations through strong execution of its order book and disciplined management of imported bitumen and oil price volatility. Another strong performer in the Materials division was OMV.
Jaco van der Bijl: Bentonite remained subdued because of higher electricity costs affecting local ferrochrome producers. The approval of cheaper electricity arrangement is beginning to support market stabilization, and early signs of recovery are evident as selected smelters are resuming production. Gypsum delivered a strong result, supported by the resilient agricultural demand and increased cement offtakes. Ready-Mix had a slow start in a competitive market, but the order book for the H2 of the financial year is improving. The division enters the H2 with a solid operating base and remains well-positioned to benefit from increased infrastructure activities. Turning now to the Roads and Earthworks, this division continued to provide a strong and consistent operational base for the group. Roads and Earthworks delivered another solid H1 performance. Revenue increased by 19.5% to ZAR 4.26 billion, while operating profit increased marginally to ZAR 289.9 million.
Jaco van der Bijl: The operating profit margin was 6.8%, remaining within our target range of between 6% to 7%. The division closed the period with a healthy secured order book of ZAR 12.12 billion, with capital expenditure of ZAR 103.1 million. Although SANRAL awards during the first quarter remained below historical levels, four projects totaling approximately ZAR 1.54 billion were awarded between July and October 2026. This provided an encouraging indication that national and procurement is gaining momentum. Construction has also commenced on two major N2 contracts awarded in the prior year, the ZAR 3.22 billion Bloemendal-Piet Retief upgrade and the ZAR 2.36 billion Verzameling to Leiden contracts. Both these contracts are progressing in line with programs. We have invested significant CapEx in specialized equipment to support the concrete pavement works and improve the execution capabilities of both these projects. The toll concession market continues to provide reliable pipeline work.
Jaco van der Bijl: The N3TC, Bakwena, and TRAC are releasing maintenance and upgrade work ahead of the scheduled return of their routes back to SANRAL between 2028 and 2031. The ZAR 2.07 billion N4 Gorge widening project is progressing very well and remains on program. Aligned with the group's diversification strategy, we are also broadening our exposure to the PPP opportunity market. Several projects have reached preferred bidder status, supporting a more diversified and resilient future order book. Moving on to the Infrastructure division. Infrastructure division generated revenue of ZAR 1.81 billion, a decrease of 16% compared with the prior period. Despite the lower revenue, operational profit remained resilient at ZAR 173.9 million, while the operation margin improved from 8.4% to 9.6%. Very pleasingly, the secured order book has increased by 33.8% to just short of ZAR 10 billion across a diversified range on infrastructure markets.
Jaco van der Bijl: Capital expenditure increased to ZAR 67.2 million as the division invested in its capabilities required to support its expanded project base. In renewable energy, the ZAR 2.4 billion Murraysburg wind farm cluster is nearing completion and remains on schedule. Newer awards include Eskom power line foundations and a 250 megawatt PV facility near Beaufort West, providing continuity as Murraysburg is starting to wind down. Additional PV projects across the Northern and Western Cape also progressing well. In the building sector, the Parliament upgrade project remains one of the flagship projects, and as such, remains very much as a focus point for management in ensuring the successful execution thereof. The Potchefstroom wastewater treatment plant project also remains on schedule, with a group share value of approximately ZAR 800 million. Affordable housing performed well. The Welkom project was completed on time and produced a healthy return, while new-on-board sales exceeded expectations.
Jaco van der Bijl: Student accommodation project in Sasolburg and Orlando are progressing well and generated solid returns. The division has also secured a ZAR 770 million Gautrain civil works contract on an EPC basis. From a PPP perspective, preferred bidder status was secured by the Lebombo Border Post project, further strengthening the infrastructure pipeline with work anticipated to commence in the first to second quarter of FY28. Finally, I will turn to Australia, where the most significant improvement in profitability was achieved during the period. Australia delivered the strongest turnaround in the group during the period. Revenue remained mostly stable at ZAR 1.59 billion, but the division moved from an operational loss of ZAR 94.8 million to an operational profit of ZAR 145.1 million. The operating margin improved from a negative 6% to a positive 9.1%. Also extremely pleasing is a massive increase on secured order book of 69.1% to ZAR 3.27 billion.
Jaco van der Bijl: Capital expenditure increased to ZAR 172 million as the division is aligning itself with the increased capabilities required to deal with the increased secured order book. Each of the Australian businesses contributed to the improved divisional position. Raubex Construction Australia delivered a strong recovery, returning to profitable execution, performing ahead of budget, and building a strong order book outlook. Roadmac Australia remains stable. Its projects are generally smaller and shorter in duration, so the priority is to secure replacement work continuously and add larger projects to the pipeline. The full-year budget remains achievable. Axis Mineral Services continued to establish itself within the group, delivering stable turnover and consistent returns. Its full-year budget remains on track. Westforce had a particularly strong H1 and secured several significant awards, including an approximately AUD 70 million wind farm project with a repeat client.
Jaco van der Bijl: This slide provides the full track record of our Australian operations since we entered the market in 2018. Our approach to Australia has always been measured and deliberate, and we have grown the business progressively over a number of years. Turnover increased from a relatively small base in 2018 to more than ZAR 3.4 billion in 2025, supported by careful strategic planning and disciplined capital allocation. The business has also demonstrated its resilience. Following the loss recorded in 2026, we are particularly encouraged by the performance in the current period. Australia returned to profitability with a 9.1% operating margin and a return on capital employed of 15.8%. For the H1, the division generated ZAR 1.6 billion of revenue and ZAR 145 million of operating profits, representing a meaningful recovery. We believe the long-term track record demonstrates that our approach to Australia has been considered and disciplined.
Jaco van der Bijl: We have built a business scale, navigated periods of challenge, and importantly, demonstrated the ability to recover and generate attractive returns. Bringing the divisional performance together, our ZAR 39 billion secured order book is extremely pleasing and provides a very strong base across the group. Our focus for the H2 remains disciplined execution, protecting margins and cash generation, and allocating capital to opportunities that deliver sustainable returns. With a diverse portfolio and significant secured work, Raubex is well-positioned to drive sustainable growth and long-term shareholder value. I will now hand over to Felicia, who will take you through our order book and outlook. Thank you.
Felicia Msiza: Thank you, Jaco. We now move to the fourth and final section of today's presentation, the order book, strategy, and outlook. Let me now turn to our secured order book, where we have seen continued growth. At the end of the H1 of 2027, our order book grew to ZAR 39 billion, up 24% from ZAR 31.6 billion at the end of FY 2026. We expect to execute ZAR 12.83 billion in 2027, ZAR 14.53 billion in FY 2028, ZAR 6.07 billion in FY 2029, and ZAR 5.5 billion beyond FY 2029. Private clients now account for 46.5% of our order book, reflecting our strategy to grow this customer base. SANRAL's share has declined slightly to 17.3%, mainly as a result of the growth in our private client base. Australia's order book has also grown and now represents 8.4% of the group total.
Felicia Msiza: Overall, our order book is growing, with more prospects expected in the short and medium term. This slide shows how our order book is spread by customer across the periods 2027 and beyond 2029. The key takeaway is that SANRAL, private, international, and provincial work all extend beyond 3 years, giving us a solid base of secured work well into the future. Turning to our order book history, this slide tracks the customer mix from February 2021 to August 2026. The standout is the private sector. Its order book increased from ZAR 10.6 billion in February 2026 to ZAR 18 billion in August 2026, and now accounts for roughly 46% of our ZAR 39 billion total order book. SANRAL remains our largest public sector customer, with an order book of ZAR 6.8 billion, consistent with the ZAR 6 billion to ZAR 7 billion range of recent years.
Felicia Msiza: Provincial work has also grown, reaching ZAR 3.4 billion. As I said earlier, Australia's order book increased from ZAR 1.9 billion in February 2026 to a pleasing ZAR 3.2 billion. The rest of Africa order book also stands at ZAR 3.2 billion. The remaining customer categories include concessionaires at ZAR 2.3 billion, other parastatals at ZAR 1.4 billion, and municipal works at ZAR 396 million. Moving over to the next slide, this slide shows which customers make up the order book of each division. Our customer base is diversified, and each division has its own mix of customers. The most significant growth from this slide is the private clients in both the Materials Handling and Mining and the Infrastructure divisions, including growth in Australia. Finally, on the order book, the split per division is as follows: the Materials Handling and Mining, ZAR 10.95 billion, up from ZAR 6.38 billion.
Felicia Msiza: Construction Materials, ZAR 2.67 billion, slightly down from ZAR 2.99 billion. Roads and Earthworks, ZAR 12.12 billion against ZAR 12.69 billion, which is relatively flat. Infrastructure division, as Jaco has mentioned, a pleasing ZAR 9.99 billion, up from ZAR 7.47 billion. Lastly, Australia, ZAR 3.27 billion, up from ZAR 1.93 billion. The Materials Handling and Mining, Infrastructure, and Australia drive the increase of our order book. Roads and Earthworks remains our largest order book. Moving over to our ESG section, we continue to advance our sustainability and ESG work as an important part of our strategy. During the reporting period, our sustainability officer contributed to discussions on long-term sustainable impact at the Sustainability & ESG Africa Conference & Expo. She also presented on financing inclusive infrastructure and advancing women's participation in the project economy at the Energy, Engineering, and Infrastructure 2026. We are contributing positively to the sustainability agenda.
Felicia Msiza: I am pleased to report that on 22 October 2026, we opened the Raubex Academy in Bloemfontein. We are proud to share this important milestone in our investment in people and skills. So far, we have trained 1,936 employees, and 133,864 training hours have been delivered. 769 employees were trained in operator programs, and 535 employees in health and safety programs. The dedicated academy website is now live, and I encourage you to have a look at that. This strengthens the visibility and access to the academy programs. It is an investment in our people, the industry's skills pipeline, and a sustainable future for South Africa. This is our contribution to addressing the country's skill shortages and unemployment challenges. This slide demonstrates how well some of our projects have done.
Felicia Msiza: Some of our projects have earned national and international recognition in 2026, and I want to take a moment to celebrate that. Senqu Bridge Project in Lesotho. This project was named Infrastructure Project of the Year at the Big 5 South Africa Impact Awards 2026. It also won the International Project Award at the SAICE National Awards for Technical Excellence. The N3 Upgrade, Cato Ridge to Dardanelles. This project was named Civil Project Winner at the SAICE National Awards 2026 for Technical Excellence. Together, these awards and other recognitions reflect the quality of our work and the engineering excellence behind its delivery. Thank you, and congratulations to all the teams involved. Let's now move over to safety. Safety remains our first priority, but the increase in fatality and injury rates shows that we must do better.
Felicia Msiza: Breaches of life-saving rules and line-of-fire incidents remain key concerns, with a strict management focus. Several group companies were LTI-free in H1 2027. For asset management, H2 2027, we will be focusing on safe execution, stronger contractor controls, and line ownership. Accountability, effective leading indicators, and targeted safety campaigns will be a priority for us. Looking at our strategy, it remains unchanged. We continue to focus on profitability, growth, being the preferred supplier, alternative markets, technology, PPPs, our people, and ESG and sustainability. These priorities underpin our focus on improving margins and efficiencies, growing a diversified order book, and investing in people, safety, and sustainability. As I move forward to close and looking ahead, Raubex is built for growth. The global environment will keep testing us. Fuel prices, logistics costs, commodity markets, and currency movements will influence near-term profitability.
Felicia Msiza: We have navigated uncertainty before, and we are positioned to deliver resilient growth, backed by a healthy order book and strong prospects across our divisions. The four pillars that underpin our growth strategy are as follows. First, a diversified business model. Our revenue streams across infrastructure, materials, and Australian operations reduce cyclical risk and give us stability. Second, a committed workforce. More than 22,000 empowered employees drive operational excellence in every division. They are our greatest strength. Third, strength in leadership. Our experienced management team brings deep industry knowledge and a proven track record for delivery. Fourth, and last, a healthy balance sheet. It gives us the firepower to pursue strategic acquisitions and to keep investing in organic growth. With these foundations, we look to the future with confidence and with a drive to keep building value for our shareholders, our people, and the communities we serve.
Felicia Msiza: Now, let's look at the outlook for each of our five divisions. We are five divisions, one group, and one disciplined growth strategy. Let's start with Materials Handling and Mining. Bauba remains under pressure from geopolitical, logistics, energy, and input cost challenges, and management is prioritizing operational improvements and cost optimization. Following our strategic review and the announcement we made earlier in the year, we have decided to pursue the sale of our full interest in Bauba Resources. This allows us to sharpen our focus on our core infrastructure business and free up capital to reinvest in future growth. Discussions regarding the transaction are progressing well, although there is no certainty yet that a deal will be concluded. We will keep the market and our shareholders updated as the process unfolds. B&E International's outlook is more positive, supported by Namdeb and the Vedanta contract from FY 2028.
Felicia Msiza: Looking at Construction Materials, the outlook is positive, backed by a solid pipeline and government's infrastructure commitment, despite geopolitical and tender award delays. Industrial minerals should strengthen in the H2 of the financial year, as curtailed ferrochrome smelters resume. Looking at Roads and Earthworks division, we are optimistic and expect to meet our FY 2027 budget, supported by government's budget priorities, SANRAL focus, and concessionaire maintenance obligations. We continue to pursue selected opportunities across Africa. Looking at Infrastructure division, we have a strong order book and a growing pipeline, with several PPP proposals submitted. We see growth in affordable housing, student accommodation, and renewable energy, and the Lebombo Border Post is set to start in the Q1/Q2 of 2028. Lastly, on Australia, the outlook has improved materially as the legacy project issues have been resolved. Operations normalized, and new contracts are secured.
Felicia Msiza: We are selectively pursuing road and renewable energy work in a measured market. In summary, a diversified group with a disciplined strategy positioned for resilient growth. As we close, we would like to showcase one of our Roads and Earthworks projects, the N4 widening and the horizontal launch of the Crocodile Pool Station Rail Overpass Bridge extension. Our team built the 2,100-ton bridge structure 35 meters away from its final position, then jacked it sideways into place during a planned 10-day rail shutdown. This is the engineering execution Raubex is known for. Our people are the strength of Raubex. Behind every project and every achievement are teams whose expertise, commitment, and perseverance turn ambition into delivery. To every employee across the group, our ExCo, our management teams, thank you for your commitment and contribution. We are proud of what we achieved together.
Felicia Msiza: As we build for the future, we do so with our people at the heart of this group. Let's watch the video.
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[Video Narrator 4]: As part of TRAC N4's Maputo Corridor Spatial Development Initiative, Raubex Construction was contracted to extend an existing overhead rail bridge to accommodate the N4 dual carriageway upgrade. To minimize traffic disruption, the 29-meter-long, 2,172-ton reinforced concrete bridge structure was constructed 35 meters away and horizontally jacked into its final position. This is a visual timeline of the 10-day project.
Felicia Msiza: Ladies and gentlemen, that brings us to the end of the presentation. Thank you to everyone for your attendance and participation. We are happy to take your questions.
Grace Chemaly: Thank you, Felicia. Our first question is from Ryan Seaborne from 36ONE Asset Management. He asks, "Contract liabilities increased from ZAR 1.67 billion to ZAR 2.63 billion. This is generally positive for future work being awarded. This is also in line with a large increase in the order book. What is the quality and expected margin impacts? Has the forward book been expanded with higher risk and lower margins?
Sam Odendaal: Thanks, Ryan. I can maybe quickly start on the contract liabilities. Included in that number, it has gone up quite a bit, but there has been some advance payments that we have received. You are correct, it should increase margins slightly going forward.
Felicia Msiza: I think just to add to that, thanks, Sam. We do have a diversified quality order book. The order book is obviously in South Africa and Western Australia, and our focus as management is to focus on the execution of the order book. We are anticipating good margin on our order book.
Grace Chemaly: Thank you, Felicia. Our second question is from Rowan Goeller from Chronux Research. What opportunities are you seeing in Northern Mozambique, and will the infrastructure division become active there?
Felicia Msiza: Thanks, Grace. Yes, Rowan, currently B&E International is active on the contract crushing in Mozambique. With infrastructure projects underway in Mozambique, we are considering opportunities in line with our risk appetite, mainly on civil works, water, roads, and bridges.
Grace Chemaly: Thank you, Felicia. Our next question is from Ryan Seaborne from 36ONE Asset Management. You noted your strategy around Bauba Resources is now for a full sale versus a partial sale previously. Since you bought out all minorities in the road, Dave, can we assume your strategy is to own 100% of assets?
Felicia Msiza: Ryan, I will start with the announcement of Bauba Resources. Yes, you are correct. We are pursuing the sale of our full interest in Bauba Resources to focus on our core business. Discussions regarding the transaction are progressing well. We will keep the shareholders updated as the process unfolds and gets to finality.
Sam Odendaal: Maybe from my side, just to add onto the strategy, Ryan, you are 100% correct. The aim is to own 100% of the South African entities. Usually, when we do acquisitions, we do not buy 100% immediately, but over a 3-to-5-year period, it is ideal for us to then take up the balance. Our model in Australia is slightly different, where we will keep a minority interest.
Grace Chemaly: Thank you, Sam. Our next question is from Rowan Goeller again. Can you expand on PPP and PSP opportunities?
Jaco van der Bijl: Thanks, Rowan. Yeah. I think during the period, we have received financial closure on the Gautrain Station project. This project is to the value of approximately ZAR 800 million. We estimate that construction will commence by roughly mid-May 2027. Further to that, I can also mention from a PPP perspective that we have also received financial closure on the Lebombo Border Post project. I see there is a question further on. I can just confirm as well the value for this project for the group is approximately ZAR 1.7 billion, and we believe that construction work will commence by April 2027. In addition to that, I can also just mention that we are in the final stages of achieving financial closure in another significant project up in Africa. Timing on this is estimated to have a financial closure by February 2027, with an estimated construction work to commence by April 2027. Thank you.
Grace Chemaly: Thank you, Jaco. Our next question is from Jandre Pieterse from Umthombo Wealth, regarding Bauba. Can you please elaborate when Eskom connectivity happened, and is Kookfontein and Moeijelijk now connected?
Sam Odendaal: Thanks, Jandre. Yes, at Kookfontein, Eskom line is active at this point. It has been active for, I think, the last 2 months of the 6-month reporting period. At Moeijelijk, we only expect it to come online early in next year, the next financial year, so there will not be any impact on that. The cost benefit should be around ZAR 4 million per operation per month, should all Eskom lines be active.
Grace Chemaly: Thank you, Sam. We have another question from Jandre. He says, Good recovery in Australia. What do you expect from Australia ROCE going forward? Will they reach prior 35% levels?
Sam Odendaal: Thanks, Jandre. Yeah, the 35% is quite high. I think it has been a great performance, and the mix of Australia operations have changed slightly. Where it used to be more infrastructure, renewables, and roads, we have added now Axis Mineral Services, and that has been quite a big expansion, quite big balance sheet that we have added there. Therefore, it is going to be a slow return. I do not think we will necessarily get to 35%. We are comfortable with 15% where we are. But for Axis Mineral Services to start contributing and also Roadmac to profits, we are expecting to get that return on capital increase definitely to in the 20%, but I do not think back to 35%. The mix have changed too much.
Grace Chemaly: Thank you, Sam. Another question from Rowan. Does the failure of Concor create any opportunities?
Felicia Msiza: Thanks, Grace. We do know, Rowan, that Concor is currently under business rescue, and we are quite selective in terms of acquisitions. We actually do make sure that there is proper due diligence in place if we have to consider an acquisition, but we will evaluate. In fact, we are evaluating the various opportunities within Concor in terms of its assets and people selectively.
Grace Chemaly: Thank you, Felicia. This is David Fraser from Peregrine, asked a question about Lebombo Border Post, but we believe that one is already been covered by Jaco. Thank you, Jaco. Let me just get to the next. We have quite a few questions again on the sale of Bauba. I think Felicia has covered that. I am not sure if you want to add anything further.
Felicia Msiza: Thanks, Grace. Yes, as we indicated regarding the Bauba transactions, the discussions are progressing. Unfortunately, due diligence processes take time, and this is a major transaction. Due to the sensitivity of the transaction, we cannot disclose further details on the transaction, but management is working hard on those processes.
Grace Chemaly: Thank you, Felicia. Another further question from Mark de Morse from SBG Securities. Was there any opportunities for claim recoveries in Australia on the prior problem contract and the size of the potential claims?
Sam Odendaal: No, Mark, that project was completed in the previous financial year, and all the claims and everything has been settled, so there is going to be no effect on this year's results.
Grace Chemaly: Thank you, Sam. Another question from Mark. Could you comment on the opportunity for growth in concrete roads, and how is Raubex positioned?
Jaco van der Bijl: Thank you, Mark. No, I can confirm, I think basically from a group perspective, over the last 12 months, or the previous 12 months, we have spent significant capital on modern equipment, basically to assist us with the construction of these concrete roads. So in a nutshell, yes, from a group perspective, we are very, very well positioned to meet this hopeful demand into the future.
Grace Chemaly: Thank you, Jaco. We have a question here from Adesh Ramlal from Laurium Capital. Is the outcome of the municipal elections incrementally positive for Raubex?
Felicia Msiza: Thanks, Grace. Look, in terms of the work that we do, we are not really impacted by the outcome of the municipal elections, but obviously, we remain focused in terms of execution and some of the work that we execute for municipalities.
Grace Chemaly: Thank you, Felicia. We have a question again from John Repetissa. What is your working capital expectations for the H2?
Sam Odendaal: John, it is going to be very much the same as H1. I think we have got a big drive to reduce our stock levels, but due to the nature of the business, there is quite a lot of working capital requirements. Just take into account that we have received some advance payments in the H1 that will not occur in the H2, but other than that, we have got a firm grip on the working capital requirements and a good drive to increase it.
Grace Chemaly: Thank you, Sam. We have a question from Hayden Smith from Investec Bank. Can you please talk about the dynamics of diesel cost impacts within your various operations? Secondly, how has the Middle East issue affected bitumen sourcing and pricing? Is it mainly on shipping costs?
Felicia Msiza: Thank you, Hayden, for that question. So in terms of the dynamics, particularly on the increase on the fuel prices, our Mining Division and Materials Divisions have been affected the most because we cannot recover that increase. It is something that must be absorbed by the businesses, and you can see the clear impact on the bottom line. Also, another impact has been on logistics in terms of freight costs and all of that. In terms of bitumen, we were very strategic to make sure that we have sufficient bitumen in storage for about six weeks supply that we have had. So the Middle East conflict did not affect us in terms of the bitumen supply, and also the quality has been managed very well by the teams.
Grace Chemaly: Thank you, Felicia. It seems we have no further questions at this stage, so we would like to thank everyone for their attendance.
