| Tue 23 Jun 2009, 8:52 | | ILA - Iliad - Trading Statement |
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ILA
ILA
ILA - Iliad - Trading Statement
Iliad Africa Limited
(Incorporated in the Republic of South Africa)
(Registration number 1997/011938/06)
Share code: ILA & ISIN: ZAE000015038
("Iliad" or "the Company")
Trading Statement
In accordance with paragraph 3.4 (b) of the Listings Requirements of the JSE
Limited, shareholders are advised that the Company`s results for the six
months ended 30 June 2009, being earnings and headline earnings per share,
are expected to be between 65% and 75% lower than the reported earnings and
headline earnings per share for the prior comparative period.
The financial information on which this trading statement is based has not
been reviewed by the Company`s auditors. The Company`s results will be
released on or about 24 August 2009.
Voluntary Commentary: Iliad Africa remains positive in a challenging trading
environment
Eugene Beneke, CEO of Iliad Africa Limited, the JSE-listed building
materials supplier, said that despite the challenging trading environment,
the group remains optimistic about the future. He said Iliad was confident
of its ability to deliver on its longer-term strategic objectives.
Beneke said the group`s turnover was expected to decline by 12 - 15% for the
half year ended 30 June 2009, reflecting a turbulent business environment,
the significant decline in building plans passed and the slowdown in the
finishing end of the industry, compared to last year. Trading conditions in
quarter 2 have proved particularly tough in the residential sector,
especially in the metropoles, but gross margins remained well protected, he
said.
Beneke said "that as a result of the significant decline in turnover that he
expected operating profit to decline by between 55% and 65% compared to the
prior half year". Despite expense increases below inflation, these costs, on
the back of the turnover decline will contribute to the anticipated decline
in operating profit. He noted that overheads did however include certain
once-off items incurred as part of the current project to significantly
lower Iliad`s overall cost base and to reposition the company for the
future. Finance costs on higher borrowings to finance increased working
capital contributed to an expected earnings decline of 65% - 75% versus the
prior year.
Despite the prevailing market conditions, Iliad has been able to utilise its
conservative debt structure to fund acquisitions in 2009, expanding its
geographic presence in the North West Province and the Western Cape. Subject
to regulatory and competition approvals, the acquisitions are expected to
add at least R180 million a year to Iliad`s turnover from 2010, broadening
the retail presence in its general building materials division, and
augmenting services in its specialised building materials division.
In the first of these transactions, Iliad has acquired TPS (Timber
Preservation Services), based in Cape Town. TPS is a treatment plant for
imported timber and offers strong synergies with the existing Iliad
operation, Thorpe Timber Company, an established timber merchant that
sources both imported and local raw timber to produce finished products for
blue-chip industrial clients.
In the North West Province, Iliad has acquired a platform business in DOH,
the largest and most-established general building materials supplier in the
Brits area. This operation will fill the trading space between Tshwane and
Rustenburg. DOH`s highly capable and experienced management team has been
retained, in line with Iliad`s focus on owner-managed enterprises.
In the Tshwane region, Iliad successfully bid for the stock and assets of
three general building materials stores which had been placed in
liquidation. Well-located in Wierda Park, Centurion and Hartebeesport, Iliad
has leased the existing premises and these stores will trade under an
established regional brand, extending its operational reach and offering
considerable distribution efficiencies. This transaction is still subject to
the outcome of the competition ruling.
Beneke says, "As with earlier acquisitions, Iliad will add value through our
financial management and procurement expertise. Given the length of approval
and other processes, these latest acquisitions are only expected to
meaningfully contribute in the 2010 financial year."
"As expected, the half year results will confirm 2009 is not business as
usual - at both a business and economic level. No short term building
industry recovery is expected and the trading environment for the balance of
2009 is anticipated to remain challenging. During quarter 3 of 2009, Iliad
will be completing phase 2 of its cost reduction programme. This will assist
in positioning Iliad to meet its long-term shareholder expectations."
23 June 2009
Johannesburg
Sponsor: Bridge Capital Advisors (Pty) Limited
Date: 23/06/2009 08:52:01 Produced by the JSE SENS Department.
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