| Mon 1 Sep 2008, 8:00 | | ILA - Iliad Africa Limited - Unaudited results for the six months ended 30 june |
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ILA
ILA
ILA - Iliad Africa Limited - Unaudited results for the six months ended 30 june
2008
ILIAD AFRICA LIMITED
Incorporated in the Republic of South Africa)
(Registration number 1997/011938/06)
Share code: ILA & ISIN: ZAE000015038
Unaudited results for the six months ended 30 June 2008
(Incorporated in the Republic of South Africa)
(Registration number 1997/011938/06) Share code ILA ISIN ZAE000015038
Turnover up 14% Operating profit up 9% Earnings per share up 9%
NATURE OF BUSINESS
Iliad Africa Ltd (Iliad or the group) focuses on sourcing, distributing,
wholesaling and retailing general and specialised building materials. Through
114 stores countrywide, the group services a range of customers, from large-
scale contractors to do-it-yourself homeowners.
FINANCIAL HIGHLIGHTS
Iliad has posted another period of growth in earnings for the six months to 30
June 2008.
Despite a more challenging operating environment, earnings per share were 9%
higher than the comparable period in 2007 at 76,9 cents. Turnover rose 14% to
R2,2 billion, with 5% of this increase attributable to the successful
integration of recent acquisitions. The operating profit only increased by 9% as
a result of significant increases in distribution expenses. Fuel price increases
of around 75% accounted for the bulk of this extra cost. In the absence of a
significant drop in fuel prices, we do not anticipate being able to reduce the
distribution costs in the short-term.
Working capital continued to be well managed resulting in a good operating cash
flow for the period. The overall cash flow was negative predominantly due to the
repurchase of shares, acquisition payments and an increased distribution to
shareholders.
OPERATIONAL AND MARKET REVIEW
Iliad`s solid operating results for the period reflect its increased focus on
procurement, cost structures and operating efficiencies. The group`s most recent
acquisitions, National Tile Traders and B-One met all conditions precedent in
the period and their contributions to group results are on track. The
acquisitions made in 2007 have been seamlessly integrated into the group.
Slowing activity has been particularly evident in the residential market. The
start of several new housing developments has been postponed, due to the current
state of the market, the effects of the National Credit Act, concerns about
power supplies and the slow pace of regulatory approvals. Industry monitors
indicate that building volumes are likely to be lower by around 1% in 2008,
falling further in 2009.
The non-residential market, which until now has countered slowing activity in
the residential market, is expected to show the effects of the current economic
environment with the rate of growth slowing in the second half of 2008.
The market for additions and alternations, which is directly correlated to
personal disposable income, has slowed but we expect this to reverse once the
interest rate cycle turns.
Inflation on locally sourced product continues to hover at around 10% while the
total group averaged closer to 8%.
Iliad`s general building materials division recorded solid results for the six
month period, capitalising on its established presence in the secondary towns
and its management`s superior ability to leverage their trading skills by
servicing a wider geographic area around each outlet. The general building
materials division store network expanded following the June 2008 opening of an
outlet in Lydenburg (Mpumalanga). Site negotiations are under way for several
additional stores in other growth areas.
The specialised building materials division produced a more muted performance
due to the slowing residential market and the affordability aspect that forces
clients to trade down when finishes are selected. The penetration into the non-
residential market has to a degree offset the drop off on the residential side.
Margins, however, have been put under severe pressure in this project based
market. As expected the wholesale cluster continued on its growth path, despite
the market slowdown.
Although acquisitive growth is still an integral part of our strategy, we have
terminated several negotiations that we felt were too expensive in the present
market conditions. Iliad remains well placed to capitalise on appropriately
priced acquisitive opportunities in the short-term.
PROSPECTS
Iliad enters the second half of FY2008 on a sound footing. Our major focus on
operating efficiencies, cost controls and group procurement will ensure that the
effects of the downward pressures on demand will, to a large extent, be offset.
The group has not taken any drastic action to cut into the fabric of the
organisation, as we believe the market will not collapse as seen in the cycle of
the 80`s and 90`s. Furthermore, we strongly believe that the critical mass,
accumulated by the group, together with the seasoned trading skills of
management, will be an effective tool to combat the pressures common to
downturns. These pressures will result in opportunities for future acquisitions,
at reasonable prices. The conservative debt structure of the group has ensured
that we are in a prime position to weather any storm and to continue to grow in
the medium-term.
ACCOUNTING POLICIES
The principal policies used in the preparation of the results for the six months
ended 30 June 2008 are consistent with those applied for the year ended 31
December 2007 in terms of International Financial Reporting Standards.
BASIS OF PREPARATION
The board acknowledges its responsibility for the preparation of the condensed
consolidated interim financial statements in accordance with the Companies Act
in South Africa, 1973, as amended, International Accounting Standard 34 (IAS 34)
and the JSE Limited Listings Requirements.
These condensed interim financial statements have not been reviewed or audited
by the group`s auditors.
DISTRIBUTIONS
In line with group policy, no interim distribution has been declared.
For and on behalf of the board of directors
22 August 2008
Ralph Patmore, chief executive officer
Neil Goosen, financial director
Balance sheet
Unaudited Unaudited Audited
30 June 30 June 31 Dec
R000 2008 2007 2007
ASSETS
Non-current assets
Property, plant and equipment 101 903 56 151 71 899
Intangible assets 573 964 373 461 468 288
Deferred taxation 23 090 19 297 23 041
Total non-current assets 698 957 448 909 563 228
Current assets
Inventories 779 008 638 716 735 151
Trade and other receivables 583 093 513 053 469 279
Cash and cash equivalents 60 547 96 238
Taxation 1 131 1 131
Total current assets 1 363 232 1 212 316 1 301 799
Total assets 2 062 189 1 661 225 1 865 027
EQUITY AND LIABILITIES
Capital and reserves
Share capital 122 145 440 162 090
Share based payment reserve 40 247 40 247 40 247
Retained income 844 960 606 697 733 802
Ordinary shareholders` equity 885 329 792 384 936 139
Minority interest 189
Total shareholders` equity 885 518 792 384 936 139
Non-current liabilities
Long-term borrowings 74 048 52 805 68 286
Total non-current liabilities 74 048 52 805 68 286
Current liabilities
Trade and other payables 945 690 803 637 854 833
Short-term borrowings 4 300 1 188 2 948
Bank overdraft 146 774
Taxation 5 859 11 211 2 821
Total current liabilities 1 102 623 816 036 860 602
Total equity and liabilities 2 062 189 1 661 225 1 865 027
Income Statement
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
% 30 June 30 June 31 Dec
R000 Increase 2008 2007 2007
Turnover 14 2 240 889 1 963 588 4 180 355
Cost of sales 1 642 232 1 443 105 2 977 275
Gross margin 15 598 657 520 483 1 203 080
Administration,
selling and
distribution expenses 439 558 375 178 855 647
Operating profit 9 159 099 145 305 347 433
Net finance charges (8 194) (1 560) (7 874)
- Interest paid (24 031) (9 295) (22 595)
- Interest received 4 389 1 746 1 732
- Dividends received 11 448 5 989 12 989
Profit before
taxation 150 905 143 745 339 559
Taxation (39 559) (40 067) (92 126)
Profit for the period 7 111 346 103 678 247 433
ATTRIBUTABLE TO:
Equity holders of the
company 7 111 157 103 678 247 433
Minority interest 189
Profit for the period 111 346 103 678 247 433
RECONCILIATION
BETWEEN EARNINGS AND
HEADLINE EARNINGS
Adjusted for:
Profit on disposal of
property, plant and
equipment (210) (598) (782)
Headline earnings for
the period 8 110 947 103 080 246 651
Number of ordinary
shares in issue at
end of period 138 217 794 154 284 519 146 433 408
Weighted average
number of ordinary
shares in issue net
of treasury shares 144 492 195 146 433 408 146 433 408
Diluted weighted
average number of
ordinary shares in
issue net of treasury
shares 149 406 108 152 194 619 150 961 099
Headline earnings per
share (cents) 9 76,8 70,4 168,4
Earnings per share
(cents) 9 76,9 70,8 169,0
Diluted headline
earnings per share
(cents) 10 74,3 67,7 163,4
Diluted earnings per
share (cents) 9 74,4 68,1 163,9
Distribution per
share (cents) 52,0
Abridged Cash Flow Statement
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
30 June 30 June 31 Dec
R000 2008 2007 2007
Cash flows from operating activities 78 723 (27 403) 153 236
Cash flows from investment
activities (158 191) (9 817) (141
033)?
Cash flows from financing activities (162 903) (59 087) (53 177)
Decrease in cash and cash
equivalents (242 371) (96 307) (40 974)
Cash and cash equivalents at
beginning of the period 96 238 156 854 156 854
Cash and cash equivalents acquired (641) (19 642)
Cash and cash equivalents at end of
the period (146 774) 60 547 96 238
Supplementary Information
Unaudited Unaudited Audited
30 June 30 June 31 Dec
R000 2008 2007 2007
Net asset value per share (cents) 640,0 541,1 639,3
Net tangible asset value per share
(cents) 225,4 286,1 319,5
Capital expenditure (R000) 26 133 12 083 32 402
Purchase of new businesses (R000) 134 370 117 737
Capital commitments (R000)
- approved and contracted 14 279 30 950 25 721
- approved not contracted 27 050 15 100 16 272
Depreciation (R000) 14 953 11 006 22 763
Statement of changes in shareholders` equity
Unaudited Unaudited Audited
30 June 30 June 31 Dec
R000 2008 2007 2007
Balance at the beginning of the
period 936 139 747 280 747 280
Movements in share capital (161 967) (58 574) (58 574)
Share repurchases (85 822)
Distribution out of share capital (76 145) (58 574) (58 574)
Profit after taxation 111 157 103 678 274 433
Total shareholders` equity at end of
the period 885 329 792 384 936 139
Registered address First Floor East Block Pineslopes Office Park
c/o The Straight & Witkoppen Road Lonehill PO Box 2572 Honeydew 2040
www.iliadafrica.co.za
Directors HC Turner (chairman)* RB Patmore (chief executive officer)
NP Goosen RT Ririe* MY Sibisi* *non-executive
Transfer secretaries Link Market Services South Africa (Pty) Ltd
11 Diagonal Street Johannesburg 2001 PO Box 4844 Johannesburg 2000
(Incorporated in the Republic of South Africa)
(Registration number 1997/011938/06) Share code ILA ISIN ZAE000015038
Sponsor Bridge Capital Advisors (Pty) Ltd 27 Fricker Road Second Floor Illovo
2196 PO Box 651010 Benmore 2010
Date: 01/09/2008 08:00:01 Produced by the JSE SENS Department.
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