| Wed 12 Feb 2003, 8:46 | | Cashbuild Limited - Audited Interim Results for th |
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CASHBUILD LIMITED
Registration number: 1986/001503/06
(Incorporated in the Republic of South Africa)
Listed on the JSE Securities Exchange
JSE Sharecode: CSB
ISIN Code: ZAE000028320
AUDITED INTERIM RESULTS for the 26 weeks ended 28 DECEMBER 2002
Headline earnings up 187%
Cash resources up 45%
Revenue up 34%
CONDENSED GROUP BALANCE SHEET
R`000 28 December 29 December 30 June
2002 2001 2002
Assets
Non-current assets 72,437 55,365 56,924
Property, plant and equipment 62,017 51,173 50,737
Loans and unlisted investments 8,400 2,866 3,625
Deferred taxation 2,020 1,326 2,562
Current assets 471,033 347,083 361,223
Inventories 266,933 199,443 198,238
Trade and other receivables 35,454 29,712 39,957
Tax paid in advance 87 1,836 438
Cash and cash equivalents 168,559 116,092 122,590
Total assets 543,470 402,448 418,147
Equity and liabilities
Shareholders` funds 116,119 80,132 95,179
Minority interest 9,398 6,413 8,266
Non-current liabilities 329 426 349
Interest-bearing borrowings 64 165 63
Deferred taxation 265 261 286
Current liabilities 417,624 315,477 314,353
Short-term borrowings 60 66 115
Tax liability 7,058 1,717 1,887
Trade and other liabilities 410,506 313,694 312,351
Total liabilities 417,953 315,903 314,702
Total equity and liabilities 543,470 402,448 418,147
Capital expenditure 17,066 8,128 13,015
Depreciation 3,610 4,313 8,241
Net asset value per share (cents) 500 353 421
Capital commitments 17,633 2,184 4,390
Contingent liabilities 7,265 4,864 3,364
GROUP INCOME STATEMENT
R`000 26 weeks 26 weeks 52 weeks
ended ended ended
28 December 29 December % 30 June
2002 2001 change 2002
Revenue 721,475 539,831 34 1,122,692
Cost of sales 565,831 418,374 873,572
Gross profit 155,644 121,457 28 249,120
Operating expenses 124,993 107,135 17 216,078
Operating profit before
financing income 30,651 14,322 114 33,042
Net financing income 6,316 1,635 286 5,789
Profit before taxation 36,967 15,957 132 38,831
Taxation 11,116 6,404 11,847
Profit after taxation 25,851 9,553 171 26,984
Minority interest 2,272 1,102 2,955
Attributable earnings 23,579 8,451 179 24,029
Headline adjusting items:
Loss/(profit) on sale of
assets after taxation 57 (3) 931
Headline earnings 23,636 8,448 180 24,960
Earnings per share (cents):
Headline 104.6 36.4 187 108.9
Fully diluted headline 101.8 36.4 180 107.5
Basic 104.3 36.5 186 104.9
Fully diluted basic 101.5 36.4 179 103.5
Dividend per share (cents)
(note 5) 25 - 35
Number of shares in issue
(`000) 23,225 23,225 23,225
Weighted number of shares
(`000) 22,604 23,178 22,911
Fully diluted number of
shares (`000) 23,225 23,225 23,225
CONDENSED GROUP CASH FLOW STATEMENT
R`000 26 weeks 26 weeks 52 weeks
ended ended ended
28 December 29 December 30 June
2002 2001 2002
Net cash inflows from
operating activities 60,388 61,393 74,062
Net cash (outflows)from
investing activities (19,731) (8,746) (12,412)
Net cash inflows/(outflows)
from financing activities 5,312 (48) (2,553)
Net increase in cash and
cash equivalents 45,969 52,599 59,097
Cash and cash equivalents at
beginning of period 122,590 63,493 63,493
Cash and cash equivalents
at end of period 168,559 116,092 122,590
GROUP STATEMENT OF CHANGES IN EQUITY
R`000 Foreign
currency Distri-
Share Share translation butable
capital premium reserve reserve Total
Opening balance
at 1 July 2001 232 38,052 2,730 38,162 79,176
Attributable earnings
for the year 24,029 24,029
Dividend paid (5,574) (5,574)
Costs of shares
repurchased (6) (2,446) (2,452)
Closing balance at
30 June 2002 226 35,606 2,730 56,617 95,179
Effect of change in
accounting policy (97) (97)
Attributable earnings
for the period 23,579 23,579
Dividend paid (8,129) (8,129)
Dividend received on
repurchased shares 221 221
Repurchased shares sold 6 2,446 2,452
Surplus on sale of
repurchased shares 2,914 2,914
Closing balance at
28 December 2002 232 40,966 2,730 72,191 116,119
NOTES TO THE CONDENSED GROUP INTERIM FINANCIAL STATEMENTS
1. ACCOUNTING POLICIES
The group`s financial information has been extracted from the audited condensed
group interim financial statements, which have been prepared in accordance with
the South African Statement of Generally Accepted Accounting Practice applicable
to interim financial reporting. The accounting policies used in the preparation
of the interim financial information is consistent with those used in the annual
financial statements for the year ended 30 June 2002, except that AC 133 in
respect of Financial Instruments: Recognition and Measurement, has been adopted.
2. AUDITED RESULTS
PricewaterhouseCoopers Inc.`s unmodified audit reports for the December 2002
condensed group interim financial statements and the summarised financial
statements contained herein are available for inspection at the company`s
registered office.
3. REPURCHASED SHARES
The company purchased 631 296 ordinary shares of Cashbuild Limited through its
subsidiary Cashbuild (SA) (Pty) Limited during the period December 2001 to
February 2002. These shares were sold to The Cashbuild Share Incentive Trust in
December 2002 and the surplus realised on the sale of shares has been
transferred directly to equity.
Number of shares reconciliation:
Dec 02 Dec 01 Jun 02
Shares in issue/fully diluted
number of shares 23,224,812 23,224,812 23,224,812
Weighted number of shares
repurchased 621,003 46,417 313,480
Weighted number of shares 22,603,809 23,178,395 22,911,332
4. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing the earnings attributable to
shareholders by the weighted average number of 22 603 809 ordinary shares in
issue during the period (2001: 23 178 395 shares; 2002 financial year 22 911 332
shares). To calculate the headline earnings per share, the earnings attributable
to shareholders is adjusted for the loss/profit on sale of assets. This headline
earnings calculation is in compliance with SAICA Circular 7/2002 as directed by
the JSE Securities Exchange South Africa.
5. DECLARATION OF DIVIDEND
The board has resolved to change its dividend policy to allow for continued
future interim dividends. In line with this policy change the board has declared
a dividend (No. 20) of 25 cents per ordinary share (2001: nil) to the
shareholders of Cashbuild Limited. The following dates are applicable:
Date dividend declared: 10 February 2003
Last day to trade "CUM" the dividend: 28 February 2003
Date commence trading "EX" the dividend: 03 March 2003
Record date: 07 March 2003
Date of payment: 10 March 2003
Share certificates may not be dematerialised or rematerialised between Monday
3rd March 2003 and Friday 7th March 2003, both dates inclusive.
COMMENTS
NATURE OF BUSINESS
Cashbuild is southern Africa`s largest retailer of quality building materials
and associated products, selling direct to a cash-paying customer base through
its constantly expanding chain of stores (109 at the end of this reporting
period). Cashbuild carries an in-depth quality product range tailored to the
specific needs of the communities it serves. Customers are typically home
builders and improvers, contractors, farmers, traders and, increasingly, large
construction companies and government-related infrastructure developers, as well
as all discerning customers looking for quality building materials at lowest
prices.
Cashbuild has built its credibility and reputation by never failing to offer the
lowest everyday prices, and through a purchasing and inventory policy that
ensures that customers` requirements are always in stock.
Our store staff have played an invaluable role in our success through their
commitment to a consistently outstanding level of customer service.
FINANCIAL HIGHLIGHTS
Management is proud to announce a 187% increase in headline earnings for the 26
weeks to 28 December 2002.
This achievement is mainly attributable to a 34% increase in revenue over the
comparative period last year. New stores contributed 8% to the increase but,
more importantly, existing stores showed real revenue growth of another 8%. The
18% balance of the increase is attributable to inflation. Revenue growth in the
first quarter is not directly comparable to that in the second. From a low base
in the first quarter, revenue growth amounted to 43%. This was in line with
management`s expectations given that during the corresponding period of the
previous financial year growth had been modest as a result of management`s
decision to withdraw all advertising while improving and reinforcing core
strategies. A similar level of growth is therefore not expected going forward.
Advertising was reinstated in the second quarter of the previous year with the
result that a more representative and genuinely encouraging 26% growth in our
business was recorded during this second quarter.
Gross profit percentage margin has dropped slightly, largely as a result of a
greater demand for commodity items in our stores, such as cement. Management is
nevertheless encouraged by the fact that the increased demand for commodities -
coupled with our strict adherence to our core strategy of "every day lowest
prices"- has resulted in increased revenue.
Operating expenses are well under control, the increase for the reporting period
(excluding new stores) being only 8%.
Financing income showed a healthy increase from R1,6 million to R6,3 million for
the period. This increase is attributable to high cash flows generated by the
business, which resulted in an increase in cash resources year-on-year of 45% to
R169 million. Higher interest rates also contributed to this increased income.
These cash resources will continue to be utilised to finance Cashbuild`s
expansion strategy.
Working capital continues to be a focus of management`s attention, with growth
in inventories and trade liabilities in line with management`s expectations,
given current levels of sales, the group`s "always in stock" strategy and the
rate of organic expansion.
Net asset value per share has increased 42% to 500 cents (2001: 353 cents).
The board has resolved to pay both an interim and a year-end dividend.
EXPANSION STRATEGY
In June of last year, Cashbuild undertook to open 10 new stores per year. In
fact, seven new stores were opened within the first six months of this reporting
period and Cashbuild is well on track to achieving its stated target.
Sites for new stores are identified on the basis of dependable demographic data
that indicates unambiguously worthwhile sales potential in the proposed
locality. Additionally, all financial investments must meet the strict criteria
that have always characterised the Cashbuild business model, which has proved
its ability to maximise returns in all the markets in which we are active -
rural, urban, and mass housing. Cashbuild is building on its existing large
customer base by successfully expanding its business model into urban areas.
MANAGEMENT
The group`s results show once again the continuing benefit it derives from the
experience, specialised knowledge, and commitment of its management at all
levels. Managers accept that they are personally responsible for delivering
sustainable results and readily take ownership of issues to be resolved and
opportunities to be exploited. Management style at Cashbuild is detailed and
comprehensive. The team is cohesive and well equipped to accept and deal with
challenges. Cashbuild`s management, with its vested shareholder stake in the
business, will continue to deliver steadily improving, sustainable results and
will stay focussed on its proven key business strategies. Tight financial and
operational controls will continue to be exercised.
Management has identified the Western Cape as an enormous growth opportunity. In
order to undertake the challenge of developing and managing this potential,
Billy Fourie has taken operational responsibility for both Western Cape and
Namibia divisions. To enable him to devote the required attention to maximise
this opportunity, Billy has resigned his position on the board of directors.
PROSPECTS
Cashbuild plans to more than double its turnover by profitably growing market
share to a minimum of 30%. As demonstrated in all our recent results, an
increase in turnover is invariably accompanied by a significant improvement to
profits and return to shareholders.
Management is confident that Cashbuild`s markets will continue to grow,
supported by government drives to increase home ownership, and the continued
striving of private home builders and developers to meet the aspirations of more
and more home owners for larger homes and better housing. In all of the
countries in which Cashbuild trades home ownership is increasingly seen as a
dependable and profitable investment.
Cashbuild is now the first-choice supplier of quality building materials in all
the markets in which it is represented. Our planned expansion and store
relocations will considerably increase the size of the market to which we have
access.
The group is confident that it will be able to maintain its record of rewarding
its stakeholders and shareholders with consistently excellent results into the
foreseeable future.
On behalf of the board
DONALD MASSON PAT GOLDRICK
Chairman Chief executive
10th February 2003
Directors: D Masson* (Chairman), PK Goldrick (Chief executive) (Irish), CB
Fourie, CT Daly, FM Rossouw*. (*Non-executive)
Company secretary: Alan C Smith.
Visit our website at: www.cashbuild.co.za
Registered office: cnr Aeroton and Aerodrome Roads, Aeroton, Johannesburg 2001;
PO Box 90115, Bertsham 2013.
Transfer secretaries: Computershare Investor Services Limited, 70 Marshall
Street, Johannesburg 2001; PO Box 61051, Marshalltown 2107.
Auditors: PricewaterhouseCoopers Inc.
Date: 12/02/2003 07:30:00 AM Produced by the JSE SENS Department
