Serious concerns about unlawful conduct at prominent South African company

Construction giant Raubex recently delayed the publication of its annual financial results following a whistleblower report containing allegations of unlawful or improper conduct at the company.

Established in 1974, Raubex is one of South Africa’s leading infrastructure development and construction materials supply groups.

The company was listed on the JSE in March 2007 and operates throughout southern Africa and Western Australia. 

It has five divisions: Materials Handling and Mining, Construction Materials, Roads and Earthworks, Infrastructure, and Australian operations.

Raubex aims to be the African leader in road and civil engineering contracting, providing construction materials and mining services while meeting all stakeholder expectations.

Raubex was set to release its full-year results for the year through February 2025 on or about Monday, 12 May 2025.

However, on 9 May 2025, Raubex’s board of directors informed shareholders via SENS that the publication of its financial results will be delayed beyond this anticipated date. 

The board explained that this delay follows receiving an anonymous whistleblower report on 22 April 2025, which contains allegations of unlawful or improper conduct concerning the group.

“At this stage, these allegations have not been proven to indicate any unlawful or improper conduct on the part of the group,” the company said.

The board said it takes these allegations very seriously and is, therefore, seeking independent legal advice on how to deal with them and taking all necessary steps to investigate them. 

“It is prudent for the investigation to be substantially concluded before the company publishes its financial results,” it said. 

“This will also impact the timing of the issue of the group’s Audited Annual Financial Statements for the year ended 28 February 2025.”

Raubex investors left uncertain

The company explained that, at this stage, it could not provide a definitive revised date for publishing its financial results, but committed to finalising them as expeditiously as possible. 

Importantly, Raubex noted that the conclusion and the outcome of the investigation are not expected to impact its financial results, and its earnings guidance is anticipated to remain unchanged.

“The board will keep shareholders informed of any material developments in this matter,” it said.

The market did not react positively to this announcement, with Raubex’s share price down nearly 8% since its release. The company’s share price fell by around 7% on 9 May alone. 

Before this announcement, Raubex regularly reported a strong financial performance. Its latest interim results for the six months ended 31 August 2024 showed a 29.7% increase in revenue and a 48.2% increase in earnings per share.

Raubex had also become somewhat of an investment darling on the JSE and was regularly chosen as analysts’ preferred stock at events like the JSE SA Stock Picks event.

In 2023, FNB Wealth and Investments research head Chantal Marx identified Raubex as one of her top stock picks.

At the time, she explained that Raubex was well-positioned to benefit from government expenditure on road infrastructure in the country.

“One of the only areas where the government has been actively growing its expenditure over the last year or two has been in road infrastructure,” she said.

Marx said Raubex has been awarded many SANRAL tenders and subcontracted by or supplied materials to companies that won these tenders.

She added that the company has solid margins and a strong management team, making it a strong stock pick.

Marx also highlighted Raubex at a 2024 JSE Stock Picks event, describing it as a high-quality company in an interesting sector that would make a good pick for investors with a long-term view.

In a recent interview with BusinessDay TV, Sentio Capital’s Imtiaz Suliman also highlighted Raubex as his stock pick of the day. 

He said the company is well diversified and has grown its order books quite significantly over the last few years, to where they are now at record highs.

“I think as the government’s spending plans come through for infrastructure, Raubex is very well-positioned to benefit from that spend,” he said.