| Tue 9 Mar 2004, 14:18 | | AUDITED RESULTS FOR THE YEAR ENDED 31 DEC 03 |
|
ILIAD AFRICA LIMITED - AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2003
ILIAD AFRICA LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1997/011938/06)
Share code ILA ISIN code ZAE000015038
AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2003
HEPS 23% up
Dividend 58% up
Strong cash flow
The Group is pleased to announce its audited results for the year ended
31 December 2003.
NATURE OF BUSINESS
Iliad Africa ("Iliad") focuses on the sourcing, distributing and retailing of
ceramic tiles and sanitary ware, bathroom fittings, hardware, building
materials, ironmongery, finished wood products and related accessories. A range
of customers, from large-scale companies and developers, to do-it-yourself
homeowners are serviced through a number of branded stores each concentrating
their efforts into an identified customer-focused market niche.
THE YEAR OF DELIVERY
2003 was a landmark year for Iliad. After five years, we have transformed from
being a "micro cap" stock (under R200 million) to a group with a market
capitalisation of over R700 million. Compound growth over the past six years at
HEPS level is 23%.
The acquired businesses of Corpbuild, on an annualised basis, has more than
doubled the group"s turnover. The effective date of the transaction was 1 July
2003, but Competition Commission clearance delayed ownership and the
incorporation of trading results until 19 September 2003.
23% HEPS growth pays testimony to the group"s ability to integrate an
acquisition of this magnitude. This was achieved due to the high level of
commitment demonstrated by the Corpbuild management team and a focused
decentralised structure allowing the traders to concentrate on day-to-day
business.
The board elected to fund the acquisition through a combination of shares and
debt. This allowed the group to broaden its shareholder base, increase
liquidity, and grow its market capitalisation. Year on year for the period July
to December the average share trade more than trebled. RMB, Sanlam and Old
Mutual are now substantial investors in the group.
FINANCIAL HIGHLIGHTS
The inclusion of the new businesses for 104 days of the year make comparisons
and ratio analysis very difficult on a consolidated basis. Turnover increased by
51% and earnings increased by 64%. The increased influence of a larger building
material division caused a drop in gross profit percentages, but this was more
than offset by a drop in the expense-to-sales ratio resulting in the operating
profit to sales percentage improving from 7,7% to 8,1%. Working capital
management was extremely strong resulting in a cash balance of R70 million at
year-end despite paying out R54 million as part of the acquisition purchase
price.
TRADING ENVIRONMENT AND OPERATIONAL REVIEW
The acquisition has not changed Iliad"s strategic intent to be a highly focused
supplier of building materials into niche markets. It has however created the
critical mass to enable the formation of a fifth division focused on
wholesaling. The modus operandi of selling to resellers is different to that
required when selling to end-users.
The residential sector continues its robust demand. The media has been
vociferous about the "housing bubble", a view we do not subscribe to. Our belief
is that the pool of potential home owners is widening and that fixed property
has become a preferred investment. The housing price boom is also driven by a
correction of the eight to nine years of stagnation in housing prices.
The building materials division experienced strong growth. It started to feel
the procurement power derived from the larger group, the full effect of which
will filter through in 2004. The annualised turnover of this division will be in
excess of R1 billion.
The ceramics division successfully completed the rebranding and the move of the
Durban operation to the Lion Match Park premises. Turnover almost doubled at
this operation in the last quarter and good reviews were received from
clientele, architects, developers and other professionals. Deflation of around
14% dominated its trading year. Management was able to hold operating margins,
reduce working capital and show a healthy year-on-year improvement on the profit
line.
The ironmongery division underwent major restructuring post the acquisition. It
now consists of four regional brands each carrying contract, specification and
retail expertise. In spite of the deflation on imported goods, management
produced solid results.
The boards division felt the brunt of the commercial market slowdown, a flood of
cheap imports and the resultant price cutting in a non-differentiated product
environment. Management"s core competencies of market intelligence, procurement,
and coalface trading ability ensured a growth in year-on-year profits.
The wholesale division has a number of top performing businesses and one loss
maker which is being repositioned and refocused. We are confident that in the
medium term this division will be a major profit centre for the group.
PROSPECTS
Iliad"s annualised turnover of around R2 billion is less than 12% of the
estimated market size. Opportunities exist to grow this share from within
existing stores, via store roll-outs and acquisitions. The balance sheet is
strong, so we have the ability to utilise debt in this quest for growth without
pushing our gearing levels much beyond 30%.
Growth will be predominantly pursued in the short term via geographic expansion
in the building materials division and refocusing of the wholesale division. The
other divisions all present opportunities of varying size and we are not
oblivious to opportunities in segments where we are to date not represented.
In summary we anticipate a solid performance in 2004.
DIVIDEND
Notice is hereby given that the Board has declared a dividend of 19 cents per
share. Shareholders are advised that the last day to trade "cum dividend" will
be Friday, 26 March 2004. The shares will trade "ex dividend" from the
commencement of business on Monday, 29 March 2004. The record date will be
Friday, 2 April 2004 and the payment date will be Monday, 5 April 2004.
Shareholdings may not be dematerialised or rematerialised between Monday, 29
March 2004 and Friday, 2 April 2004 both days inclusive.
AUDIT OPINION
Grant Thornton has signed an unqualified audit opinion on the financial
statements for the year. These have been approved by the Board and abridged for
the purposes of this report. Both the auditor"s opinion and the financial
statements are available for inspection at the company"s registered office.
The results comply with South African Statements of Generally Accepted
Accounting Practice and are consistent with accounting policies applied for the
year ended 31 December 2002.
For and on behalf of the Board
8 March 2004
Ralph Patmore
Chief Executive Officer
Neil Goosen
Financial Director
ABRIDGED BALANCE SHEET
Audited Audited
R000s 31 Dec 2003 31 Dec 2002
ASSETS
Non-current assets
Property, plant and equipment 42 318 14 861
Intangible assets 66 144
Deferred taxation 9 158 11 493
Current assets 604 675 260 879
Total assets 722 295 287 233
EQUITY AND LIABILITIES
Capital and reserves 386 327 124 156
Interest-bearing non-current liabilities 992 839
Interest-bearing current liabilities 2 575 2 357
Non interest-bearing current liabilities 332 401 159 881
Total equity and liabilities 722 295 287 233
ABRIDGED INCOME STATEMENT
% Audited Audited
R000s change 31 Dec 2003 31 Dec 2002
Turnover 51 1 140 019 752 764
Gross margin 48 324 826 219 829
Trading profit 60 92 740 58 140
Net finance cost (1 508) (3 818)
Profit before taxation 68 91 232 54 322
Taxation (24 680) (13 818)
Earnings for the year 64 66 552 40 504
Number of ordinary shares in
issue at year-end including
7 358 879 treasury shares
(2002: 7 358 879 shares) 147 200 000 75 269 000
Weighted average number of ordinary
shares in issue 88 478 042 68 104 952
Headline earnings per share (cents) 23 76,4 62,0
Earnings per share (cents) 26 75,2 59,5
Diluted headline earnings per
share (cents) 24 71,7 57,6
Diluted earnings per share (cents) 28 70,5 55,2
Dividend per share (cents) 58 19,0 12,0
Reconciliation between earnings
and headline earnings (R000s)
Earnings for the year 66 552 40 504
Adjusted for: 1 021 1 709
Amortisation of goodwill 1 173
(Profit)/loss on disposal of
property, plant and equipment (152) 1 709
Headline earnings for the year 60 67 573 42 213
ABRIDGED CASH FLOW STATEMENT
Audited Audited
R000s 31 Dec 2003 31 Dec 2002
Cash flows from operating activities 83 465 33 409
Cash utilised in investment activities (266 051) (7 024)
Cash effect of financing activities 204 154 (6 281)
Issue of new shares to acquire the
Corpbuild businesses 203 800
Other cash flows from financing activities 354 (6 281)
Increase in cash and cash equivalents 21 568 20 104
Cash and cash equivalents at beginning
of the year 21 129 1 025
Cash and cash equivalents acquired 27 293
Cash and cash equivalents at end of
the year 69 990 21 129
SUPPLEMENTARY INFORMATION
Year ended Year ended
R000s 31 Dec 2003 31 Dec 2002
Net tangible asset value per share (cents) 229,0 182,8
Capital expenditure (R000s) 13 147 6 895
Purchase of new businesses (R000s) 258 130
Capital commitments (R000s)
- approved and contracted 8 000 3 500
- approved not contracted 7 900 4 000
Depreciation (R000s) 8 423 5 123
STATEMENT OF CHANGES IN SHAREHOLDERS" EQUITY
for the year ended 31 December 2003
Stated Retained
R000s capital income Total
Balance at 1 January 2003 16 801 107 355 124 156
New shares issued 203 800 203 800
Share issue expenses (589) (589)
Options exercised and shares
allocated and issued 573 573
Earnings for the year 66 552 66 552
Dividends paid (8 165) (8 165)
Balance at 31 December 2003 220 585 165 742 386 327
Ferreira"s Buildware
Rietpan Hardware & Building Supplies
BM Builders Market
Lowveld Building Supplies
Benoni Builders
Rustenburg Building Material
F & F Building Supplies
The Knob & Knocker
B & B Hardware Distributors
B & B Locksmith Distributors
Keylok Supplies
Ferreira"s Decor World
Just Tiles
The Tile Depot
Citiwood
Building Centre
W & B Hardware
Buchel Hardware
Design Hardware
Benoni Building Supplies
Conways
Saflok
Registered address First Floor East Block Pineslopes Office Park c/o The
Straight & Witkoppen Road Lonehill PO Box 2572 Honeydew 2040
Directors G Psillos (Chairman)* RB Patmore (Chief Executive Officer) EH
Ferreira* NP Goosen RT Ririe* HC Turner* *Non-executive
Transfer secretaries Ultra Registrars (Pty) Limited 11 Diagonal Street
Johannesburg 2001 PO Box 4844 Johannesburg 2000
Sponsors Bridge Capital Services (Pty) Ltd First Floor Building 22A The
Woodlands Office Park Woodlands Drive Woodmead PO Box 651010 Benmore
2010
Date: 09/03/2004 02:09:54 PM Produced by the JSE SENS Department
