| Mon 24 Aug 2009, 12:40 | | ILA - Iliad Africa Limited - Iliad Africa reports 72 1% drop in earnings per |
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ILA
ILA
ILA - Iliad Africa Limited - Iliad Africa reports 72,1% drop in earnings per
share at the interim stage
ILIAD AFRICA LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1997/011938/06)
Share code: ILA ISIN: ZAE000015038
("Iliad" or "the Group")
ILIAD AFRICA REPORTS 72,1% DROP IN EARNINGS PER SHARE AT THE INTERIM STAGE
In one of the most challenging trading periods since listing Iliad Africa
Limited, listed in the industrial suppliers sector of the JSE, recorded earnings
per share of 21,4 cents per share for the six months to 30 June 2009, a decrease
of 72,1% on 76,9 cents per share in 2008. Turnover dropped by 13,3% to R1,94
billion, reflecting the turbulent business environment, the significant decline
in building plans passed and the slowdown in the finishing end of the industry.
Despite expense increases at 6.4% being below inflation, these costs, on the
back of lower turnover, contributed to the 62,4% decline in operating profit to
R59,9 million. Eugene Beneke, CEO of Iliad Africa says, "Overheads do, however,
include certain once-off items incurred as part of the project to significantly
lower Iliad`s overall cost base and to reposition the company for the future."
Finance costs on higher monthly borrowings together with an increase in the
average tax rate further contributed to the earnings decline. Borrowing levels
at half year have improved against that of the comparative period, reflecting
Iliad`s ability to protect its cash position in a challenging business
environment.
Iliad focuses on sourcing, distributing, retailing and wholesaling general and
specialised building materials. Through 112 stores countrywide, the group
services a range of customers, from large-scale contractors to do-it-yourself
homeowners.
Beneke says Iliad`s ongoing focus on procurement, reducing cost structures and
improvement to operating efficiencies played a role in limiting the impact of
the considerable lower levels of activity in all the group`s key markets thereby
protecting gross margins.
The residential market continued to slow during the period, and more
particularly in the second quarter, evidenced by a decline of 30-50% in building
plans passed, depending on the region, and very little new residential
construction activity. "Metropolitan areas have been most affected," says
Beneke.
The non-residential market and the market for additions and alternations have
also been negatively impacted on by the adverse macro economic circumstances.
The performance of Iliad`s general building materials division, which has the
greatest exposure to activity levels in metropolitan areas, mirrored economic
conditions and the resultant impact on consumer spending. Iliad operations in
outlying areas, however, continued to trade well. A new D&A Timbers store was
approved for rollout in 2010 in KwaZulu-Natal`s upmarket North Coast.
In the specialised building materials division, the trend towards trading down
in the finishing end continued during the review period, exacerbated by
excessive stock levels across the industry. Beneke said this added to the
pressure on margins but confirmed that stock related issues are continually
being addressed.
Despite prevailing market conditions, Iliad used its conservative debt structure
to conclude acquisitions during the period, expanding its geographic presence in
Gauteng, the North West and Western Cape provinces and adding at least R230
million a year to group turnover from 2010. "The acquisitions, detailed below,
will broaden the retail presence of the group`s general building materials
division, and augment services in its specialised building materials division,"
says Beneke.
These include:
* TPS (Timber Preservation Services), based in Cape Town, is a treatment
plant for imported timber and offers strong synergies with Iliad`s Thorpe
Timber Company, an established timber merchant that sources both imported
and local raw timber to produce finished products for blue-chip industrial
clients.
* Iliad has acquired a platform business in DOH, the largest and most-
established general building materials supplier in the Brits area (North
West Province). DOH`s experienced management team has been retained, in
line with Iliad`s focus on owner-managed enterprises. Regulatory approval
is awaited for this transaction.
* Iliad has bid for the stock and assets of three general building materials
stores 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. Regulatory approval is
awaited for this transaction.
As with earlier acquisitions, Iliad will add value through the group`s financial
management and procurement expertise, with meaningful contributions expected to
flow from the 2010 financial year."
The minority shareholders of Campwell Hardware (Pty) Limited exercised their
rights during the first half of this year under the put option, resulting in a
reduction of the deferred purchase consideration and goodwill.
Commenting on prospects, Beneke says that results for the first half confirmed
that 2009 is not business as usual - at both business and economic levels. "With
no recovery in the building industry materialising yet, the trading environment
for the balance of 2009 is expected to remain challenging. During the third
quarter, Iliad will complete its cost-reduction programme, assisting the group
to meet long-term shareholder expectations.
"Supported by strong teams, stable and diversified operations and the group`s
cash-generative nature, Iliad remains optimistic about the future and is
confident of its ability to deliver on its longer-term strategic objectives," he
concludes.
Iliad Africa is a listed company focusing on the sourcing, distributing,
wholesaling and retailing of general and specialist building materials.
BACKGROUND TO ILIAD
GENERAL BUILDING MATERIALS
* Cement, doors, windows, bricks and related products
Brands include Ferreira`s Buildware, D&A Timbers, Campwell Hardware,
Builders Market, Laeveld Bouhandelaars, and USM Building Materials etc.
* Focused on serving the short-term insurance industry`s needs relating to
the supply of geysers and related products
Brand includes Suncol
SPECIALISED BUILDING MATERIALS
* Tools, hardware, ironmongery, keys , locks and accessories to resellers
Brands include Cachet International, The Knob & Knocker and SDT
* An exclusive range of local and imported sanitaryware, bathroom furniture
and accessories
Brands include Ferreiras Decor World, National Tile Traders, Tile and Decor
Mart and The Tile Depot
* A range of chipboard, melamine board, shutter board, hardboard and formica
Brand includes Citiwood
* Door knobs, handles , locks, access control and ironmongery
Brands include Bildware, Buchel Design Hardware etc.
* Specialist lighting ranges and related products for residential,
architectural and alterations markets
Brand includes Q Lite
Customers range from large scale companies and developers to do it yourself
homeowners.
24 August 2009
Johannesburg
Sponsor: Bridge Capital Advisors (Pty) Limited
Date: 24/08/2009 12:40:15 Produced by the JSE SENS Department.
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