| Tue 23 Aug 2011, 11:00 | | ILA - Iliad Africa Limited - Unaudited results for the six months ended 30 |
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ILA
ILA
ILA - Iliad Africa Limited - Unaudited results for the six months ended 30
June 2011
ILIAD AFRICA LIMITED
Incorporated in the Republic of South Africa
(Registration number 1997/011938/06)
Share Code: ILA ISIN: ZAE000015038
("Iliad" or "the group")
Unaudited results for the six months ended 30 June 2011
NATURE OF BUSINESS
Iliad Africa Ltd (Iliad or the group) focuses on sourcing, distributing,
wholesaling and retailing general and specialised building materials. Through
103 stores countrywide, the group services a range of customers, from large-
scale contractors to do-it-yourself homeowners.
Iliad is repositioning itself for sustainable future growth. This involves
introducing key strategic initiatives, including an over-arching brand in its
General Building Materials (GBM) division, and consolidating the group`s
enterprise resource planning platform.
As advised on 12 July 2011, Iliad continues to realign a portion of its
portfolio. Compounded by a significant slowdown in the building and
construction industry, nine underperforming branches have been rationalised
during the interim period and certain businesses put up for sale, as detailed
below. This realignment, representing approximately 4,8% of turnover, will
strengthen the group`s national portfolio by concentrating financial and
human resources in profitable clusters, and reduce the expense base by around
7,9%. The associated once-off costs had a significant adverse impact on
Iliad`s interim results.
FINANCIAL RESULTS
In line with the trading statement issued on 12 August 2011, the group
recorded an earnings loss of 212,2 cents per share for the six months ending
30 June 2011, against earnings of 15,1 cents per share for the comparable
2010 period. The earnings loss includes once-off portfolio adjustment costs
of R67,9 million and a R249,5 million impairment of intangible assets, mainly
relating to the Campwell Hardware and Thorpe Timber businesses. Excluding
these once-off portfolio rationalisation and impairment costs, the group
recorded an operating profit of R11,5 million for the period ending 30 June
2011, compared to R35,2 million for the comparable 2010 period.
The impact of the portfolio adjustment on the results is as follows:
Turnover Profitability
Unaudited Unaudited Unaudited Unaudited
% 30 Jun 30 Jun % 30 Jun 30 Jun
Rm change 2011 2010 change 2011 2010
Future
portfolio 4,9 1 883 1 794 (38,5) 32,0 52,0
Affected
operations (2,1) 95 97 (20,5) (16,8)
Total 4,6 1 978 1 891 (67,2) 11,5 35,2
Turnover increased by 4,6%, mainly due to a strong performance by the Inland
regions of the General Building Materials division. The balance of the group
reflects the continued subdued trading environment, marginal recovery in
building plans passed and the protracted slowdown in the finishing end of the
industry.
Year-on-year expenses (excluding once-off portfolio adjustment costs and
intangible asset impairments) have increased by 7,1%, reflecting the costs
associated with investing in key strategic initiatives. A decline in the
gross margin percentage reflects the intensely competitive trading
environment.
The group finished with an overdraft of R54,9 million, compared to cash of
R16,2 million at 30 June 2010. The reduction is mainly due to payment for the
DOH business, investment in working capital and once-off costs associated
with the portfolio adjustment.
Coupled with a streamlined and profitable portfolio and a two-year business
improvement project, Iliad is well positioned for sustainable growth and
strategic expansion.
OPERATIONAL AND MARKET REVIEW
The past two years have been a challenging period for the building material
supply industry. Iliad`s ongoing focus on procurement, improving cost
structures and operating efficiencies has countered these conditions to some
extent.
The residential market slowed further during the period, with building plans
passed, only now beginning to recover from the low base of 2009.
The non-residential market and market for additions and alterations continue
to reflect adverse macro-economic circumstances, best illustrated by ongoing
and intensified downtrading in the finishing end as consumers search for
value against constrained disposable income.
Against this background and as part of its portfolio review to maintain the
strategic balance of the group`s national footprint, nine branches in Iliad`s
GBM Inland and Coastal sub-divisions, Boards cluster and Ceramics cluster
were rationalised during the period, while the specialised Q-Lite Lighting
and SDT Wholesale Hinge businesses have been put up for sale.
Iliad`s General Building Materials division produced a mixed performance
under these circumstances. The Inland sub-division recorded excellent
results, with a double-digit increase in turnover and improved bottom-line
results (excluding once-off portfolio adjustment costs). Results from the
Coastal sub-division were more subdued but profitable.
In the Specialised Building Materials division, the down trading trend in the
finishing end continued during the review period. This affected the
performance of the Retail sub-division in particular although the Ironmongery
cluster delivered a reasonable performance and losses in the Ceramics
division were significantly reduced. In the Wholesaling sub-division,
improved results came from Equipment Hire and Wholesale plumbing and
hardware, but the Timber Wholesale business remained under pressure.
PROSPECTS
Our industry is adjusting to new trading conditions after the unsustainable
levels of 2004 to 2008. The infrastructural efficiencies implemented during
the period, stringent performance targets, realignment of the portfolio and
implementation of various key strategic initiatives position the group well
to capitalise on opportunities when growth returns to the market.
ACCOUNTING POLICIES
The principal accounting policies set out in the group`s 2010 annual report
have been consistently applied throughout the period ended
30 June 2011.
RESTATEMENT
The 2010 statement of financial position has been represented to show the
group`s bank overdraft separately to the cash and cash equivalents.
BASIS OF PREPARATION
The condensed financial results included in this announcement have been
prepared in accordance with the measurement and recognition criteria of
International Financial Reporting Standards ("IFRS") and its interpretations
issued by the International Accounting Standards Board in issue and effective
for the group at 30 June 2011, the AC 500 standards issued by the Accounting
Practices Board or its successor. The results are presented in terms of IAS
34, Interim Financial Reporting, and comply with the Listing Requirements of
the JSE Limited. These condensed consolidated financial statements were
approved by the board of directors on 18 August 2011.
Iliad`s condensed consolidated interim results for the six months ended
30 June 2011 have not been reviewed by the group`s external auditors. The
preparation of the group`s condensed consolidated interim results was
supervised by Neil Peter Goosen, Hons B Compt (Unisa), CA(SA), MBA (Wits).
SUBSEQUENT EVENTS
There were no material subsequent events and no material change in the
group`s contingent liabilities since the year end.
DISTRIBUTIONS
In line with group policy, no interim distribution has been declared.
For and on behalf of the board of directors.
18 August 2011, Johannesburg
Howard Turner
Independent non-executive chairman
Eugene Beneke
Chief executive officer
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited
Unaudited Restated Audited
R000 30 Jun 2011 30 Jun 2010 31 Dec 2010
ASSETS
Non-current assets
Property, plant and equipment 100 396 112 336 112 420
Intangible assets 267 103 503 724 516 633
Deferred taxation 63 043 25 046 33 446
Total non-current assets 430 542 641 106 662 499
Current assets
Inventories 692 559 609 930 698 320
Trade and other receivables 532 617 493 557 424 863
Cash and cash equivalents 244 305 200 083 401 366
Taxation 2 079 4 827 412
1 471 560 1 308 397 1 524 961
Assets classified as held for sale 21 256
Total current assets 1 492 816 1 308 397 1 524 961
Total assets 1 923 358 1 949 503 2 187 460
EQUITY AND LIABILITIES
Capital and reserves
Stated capital 122 122 122
Retained income 732 251 1 020 423 1 053 255
Total equity 732 373 1 020 545 1 053 377
Non-current liabilities
Long-term borrowings 1 766 4 477 2 825
Total non-current liabilities 1 766 4 477 2 825
Current liabilities
Trade and other payables and
provisions 880 711 737 803 858 413
Short-term borrowings 1 894 2 867 2 362
Bank overdraft 299 249 183 811 270 483
1 181 854 924 481 1 131 258
Liabilities directly associated
with assets held for sale 7 365
Total current liabilities 1 189 219 924 481 1 131 258
Total equity and liabilities 1 923 358 1 949 503 2 187 460
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
R000 % change 30 Jun 2011 30 Jun 2010 31 Dec 2010
Turnover 4,6 1 977 582 1 891 111 3 928 761
Cost of sales 5,5 (1 443 379) (1 367 926) (2 855 383)
Gross margin 2,1 534 203 523 185 1 073 378
Operating expenses 7,1 (522 654) (487 975) (996 308)
Operating profit before
portfolio adjustment
expenses (67,2) 11 549 35 210 77 070
Portfolio adjustment
expenses (67 918)
Operating (loss) / profit
before impairment of
intangible assets (56 369) 35 210 77 070
Impairment of intangible
assets (249 530)
Operating (loss) / profit
before investment income (305 899) 35 210 77 070
Investment income 12 085 6 732 18 086
Operating (loss) / profit
before finance charges (293 814) 41 942 95 156
Finance charges (25 007) (14 847) (31 032)
Operating (loss) / profit
before taxation (318 821) 27 095 64 124
Taxation 25 461 (6 258) (10 455)
Total (loss) / profit and
comprehensive (loss) /
income
for the period (293 360) 20 837 53 669
Attributable to owners of
the parent (293 360) 20 837 53 669
Non-controlling interest
(293 360) 20 837 53 669
RECONCILIATION BETWEEN EARNINGS AND HEADLINE EARNINGS
Attributable to owners of
the parent (293 360) 20 837
53 669
Adjusted for:
Impairment of intangibles 249 530
(Profit) / loss on
disposal of property,
plant and equipment (414) (331) 326
Headline (loss) /
earnings for the period (44 244) 20 506 53 995
Number of ordinary shares
in issue 138 217 794 138 217 794 138 217 794
Weighted average number
of ordinary shares in
issue 138 217 794 138 217 794 138 217 794
Diluted weighted average
number of ordinary shares
in issue 138 217 794 138 217 794 138 217 794
Headline (loss) /
earnings per share
(cents) (32,0) 14,8 39,1
(Loss) / earnings per
share (cents) (212,2) 15,1 38,8
Diluted headline (loss) /
earnings per share
(cents) (32,0) 14,8 39,1
Diluted (loss) / earnings
per share (cents) (212,2) 15,1 38,8
Dividends to owners of
the parent (cents per 20,0
share)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
Restated
R000 30 Jun 2011 30 Jun 2010 31 Dec 2010
Cash flows from operating
activities (120 238) 81 372 210 551
Operating (loss) / profit adjusted
for non cash items (43 579) 46 236 102 495
Working capital changes for
the period (70 856) 43 074 124 176
Taxation paid (5 803) (7 938) (16 120)
Cash flows from investing
activities (36 418) (35 835) (48 246)
Cash flows from financing
activities (29 171) (30 529) (32 686)
(Decrease)/increase in cash and
cash equivalent (185 827) 15 008 129 619
Cash and cash equivalent at
beginning of the period 130 883 (3 883) (3 883)
Cash and cash equivalent acquired 5 147 5 147
Cash and cash equivalent at end
of the period (54 944) 16 272 130 883
SUPPLEMENTARY INFORMATION
Unaudited Unaudited Audited
30 Jun 2011 31 Jun 2010 31 Dec 2010
Net asset value per share (cents) 529,9 738,4 762,1
Net tangible asset value per
share (cents) 336,6 373,9 388,3
Capital expenditure (R000) 16 520 20 541 39 716
Purchase of new businesses (R000) 21 182 18 885 31 794
Capital commitments (R000)
- approved and contracted 3 950 3 680 7 438
- approved not contracted 12 751 8 914 50 502
Depreciation (R000) 26 287 19 600 37 918
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
R000 30 Jun 2011 30 Jun 2010 31 Dec 2010
Total equity at the beginning
of the period 1 053 377 1 027 352 1 027 352
Movement in retained (loss)/income (321 004) (6 807) 26 025
Attributable to owners of the
parent (293 360) 20 837 53 669
Dividends to owners of the parent (27 644) (27 644) (27 644)
Total equity at the end of the
period 732 373 1 020 545 1 053 377
CONDENSED SEGMENT REPORT
Group
Unaudited Unaudited Audited
Restated
R000 30 Jun 2011 30 Jun 2010 31 Dec 2010
Turnover 1 977 582 1 891 111 3 928 761
Operating (loss) / profit before
interest and tax (305 899) 35 210 77 070
Total assets 1 923 358 1 949 503 2 187 460
Total liabilities 1 190 985 928 958 1 134 083
Capital expenditure 16 520 20 541 39 716
Depreciation 26 287 19 600 37 918
General Building Materials
Unaudited Unaudited Audited
Restated
R000 30 Jun 2011 30 Jun 2010 31 Dec 2010
Turnover 1 500 130 1 375 717 2 866 202
Operating (loss) / profit before
interest and tax (162 910) 49 889 106 735
Total assets 1 172 409 1 131 068 1 373 054
Total liabilities 723 996 568 888 742 459
Capital expenditure 8 880 9 163 18 613
Depreciation 10 186 9 168 19 240
Specialised Building Materials
Unaudited Unaudited Audited
Restated
R000 30 Jun 2011 30 Jun 2010 31 Dec 2010
Turnover 477 452 515 394 1 062 559
Operating (loss) / profit before
interest and tax (142 989) (14 679) (29 665)
Total assets 750 949 818 435 814 406
Total liabilities 466 989 360 070 391 624
Capital expenditure 7 640 11 378 21 103
Depreciation 16 101 10 432 18 678
CORPORATE INFORMATION
Iliad or the Group
(Incorporated in the Republic of South Africa)
Registered number 1997/011938/06.
Share code ILA ISIN ZAE000015038.
Registered address
Iliad House Block 7 Thornhill Office Park 94 Bekker Road Midrand
Postnet Suite 566 P/Bag x 29 Gallo Manor 2052 www.iliadafrica.co.za
Directors
HC Turner (chairman)* E Beneke (chief executive officer) T Njikizana*
RT Ririe* *non-executive
Group secretary
SC O`Connor
Transfer secretaries
Link Market Services South Africa (Pty) Ltd 11 Diagonal Street Johannesburg
2001 PO Box 4844 Johannesburg 2000
Sponsor
Bridge Capital Advisors (Pty) Ltd 27 Fricker Road Second Floor Illovo 2196
PO Box 651010 Benmore 2010
www.iliadafrica.co.za
Date: 23/08/2011 11:00:01 Produced by the JSE SENS Department.
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