| Mon 15 Aug 2005, 12:10 | | RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2005 |
|
Iliad Africa Limited - Unaudited Results For The Six Months Ended 30 June 2005
ILIAD AFRICA LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1997/011938/06)
Share code ILA ISIN ZAE000015038
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2005
EPS 24% UP BEE finalised
ENERGY PASSION FOCUS PERFORMANCE
Iliad Africa Limited (Iliad) focuses on sourcing, distributing and retailing
ceramic tiles and sanitaryware, 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 72 branded stores, each concentrating on an
identified customer-focused market niche.
FINANCIAL HIGHLIGHTS
Iliad posted an eighth successive period of half-year growth in earnings to 30
June 2005. Prior-year results have been restated for the transition to
International Financial Reporting Standards (IFRS), which were adopted with
effect from 1 January 2005.
In line with expectations, results for the period showed a 24% increase in
earnings per share to 42,9 cents against the comparable period in 2004. Turnover
increased by 22% to R1,2 billion and the operating margin improved to 7,3%
(2004: 7,1%).
Iliad is a cash-generative business. Cash flow was well managed during the
period, finishing with cash and cash equivalents of R128,4 million. The working
capital to sales ratio dropped below 10% for the first time for a half-year
reporting period.
The major outflows over and above the increased dividend and tax payments were
the acquisition of businesses (R54 million) and the share buyback programme (R44
million). The share buyback programme, concluded mostly at a price of around
R9,80 per share, saw Iliad buy back 4 573 500 shares or 2,9% of the total issued
shares, reflecting the board`s confidence in the group`s prospects.
Through acquisitions, Iliad has added some 9% to turnover during the period, in
line with its strategy of expanding its geographical presence and increasing
market share. The impact of acquisitions on group turnover in FY2006 will be
over R200 million.
THE MARKETPLACE
The residential housing market is slowing, evidenced by a flat market at the
luxury end. Qualitative and quantitative indicators show that the middle-income
market is moving towards an affordability test point at the end of calendar 2005
and growth in mortgage advances is projected to slow into 2006.
The Medium-Term Forecasting Associates project a 6% decline in real volume for
2006 in the total residential market, while the commercial market has bottomed
and is projected to increase by some 10% in that year. This should offset the
slowdown in the residential market to a large extent - a trend Iliad is well
placed to capitalise on.
OPERATIONAL REVIEW
Iliad`s solid operating results reflect its unfolding strategic thrust,
acquisitive activity and continued demand in the marketplace.
Building materials, boards and ceramics (cumulatively 85% of turnover and 92% of
profit before interest and tax) showed significant growth against the comparable
period in 2004, underpinned by increased market share through acquisitions and
growth in store numbers.
The exceptional results of the boards and ceramics divisions clearly demonstrate
their ability to capitalise on growth in the commercial market.
The ironmongery division, which was downsized following the sale of the non-core
Conways businesses at the end of FY2004, produced an acceptable return in a
slowing luxury market.
Following regulatory approval of the Cachet International acquisition, the
wholesale division is consolidating operations in regional warehouses in Durban
and Johannesburg. The Cachet International acquisition has provided access to a
quality imported product range using wholly-owned moulds. This division now has
an appropriate product range, and the right people and facilities in place. Cost
structures have been addressed and the division is geared for profitable growth
in FY2006.
Our new plumbing division, a complementary activity established with the
regulatory approval of the acquisition of Suncol, contributed only two months`
performance to the trading period but exceeded expectations. The benefits of
expanding by rolling out two additional stores into this sector, primarily
serving the needs of the insurance industry, are expected to unfold in 2006.
ACQUISITIONS
During the review period, Iliad completed the acquisitions of businesses in the
plumbing, wholesale and boards divisions, respectively Suncol, Cachet
International and SDT, and Timland. These acquisitions have all exceeded
expectations and the full impact of these extensions to Iliad`s business will
become apparent in FY2006. To date, all acquisitions have been internally
funded. Several additional acquisitive opportunities are under investigation,
which will also be funded from internal resources.
PROSPECTS
Iliad enters the second half of FY2005 on a sound footing: the wholesale
division has been optimally structured for sustainable growth and additional
acquisitive growth is nearing finalisation. The roll out of Iliad`s cash & carry
strategy through its building materials division began in July 2005 and a
similar model is being developed for the ceramics division. The benefits of
capitalising on Iliad`s core competencies and existing cost base are expected to
emerge in the next financial year.
With its broad reach across the building materials supply sector, and strong,
fruitful relationships with its empowerment partners, Iliad is well positioned
to capitalise on emerging trends in the property market and continue to deliver
improved results.
ACCOUNTING POLICIES
The unaudited results of the group for the six months ended 30 June 2005 have
been prepared in accordance with the group`s accounting policies. These comply
with the International Financial Reporting Standards (IFRS) and were adopted
with effect from 1 January 2005.
The comparative figures for the six months to 30 June 2004 and the year ended 31
December 2004 have accordingly been restated. This interim report complies with
International Accounting Standard 34 - Interim Financial Reporting.
As a result of the changes in accounting policies the following material
adjustments have been effected:
- With effect from 1 January 2005 goodwill is no longer amortised. A provision
of R3,6 million for impairment losses has been made in terms of IFRS 3 and IAS
36.
- Certain property, plant and equipment has been revalued to fair value in terms
of IAS 16.
- Escalating charges in operating leases have been calculated and recognised on
a straight line basis over the period of the lease agreement to comply with IAS
17.
In terms of an accounting standard IFRIC D16 which is in draft commentary stage,
there is the possibility that the fair valuation of the BEE options totalling
R40,2 million, which is not accounted for in these results, may require to be
expensed at year end. This is a non-recurring expense and will have no effect on
the cash flow of the group.
DIVIDENDS
In line with the group policy, no interim dividend has been declared.
For and on behalf of the Board of Directors
15 August 2005
Ralph Patmore Chief Executive Officer
Neil Goosen Financial Director
BALANCE SHEET
Unaudited Unaudited Unaudited
30 June 2005 30 June 2004 31 Dec 2004
R000s Restated Restated
ASSETS
Non-current assets
Property, plant and equipment 41 267 38 184 40 992
Intangible assets 123 735 60 867 65 748
Deferred taxation 14 133 10 012 12 937
Total non-current assets 179 135 109 063 119 677
Current assets
Inventories 396 299 318 754 359 271
Trade and other receivables 341 897 286 633 250 648
Cash and cash equivalents 128 460 75 588 225 895
Total current assets 866 656 680 975 835 814
Total assets 1 045 791 790 038 955 491
EQUITY AND LIABILITIES
Capital and reserves
Stated capital 202 787 221 612 222 429
Retained income 288 865 183 081 261 784
Total shareholders` equity 491 652 404 693 484 213
Non-current liabilities
Long-term liabilities 2 134 613 2 210
Total non-current liabilities 2 134 613 2 210
Current liabilities
Trade and other payables 527 167 363 130 429 685
Short-term liabilities 1 625 2 527 1 472
Taxation 23 213 19 075 37 911
Total current liabilities 552 005 384 732 469 068
Total equity and liabilities 1 045 791 790 038 955 491
INCOME STATEMENT
Unaudited Unaudited Unaudited
six months six months year
% ended ended ended
Increase 30 June 2005 30 June 2004 31 Dec 2004
R000s Restated Restated
Turnover 22 1 216 764 993 930 2 168 337
Cost of sales 876 055 712 288 1 548 946
Gross margin 21 340 709 281 642 619 391
Administration, selling and
distribution expenses 19 251 737 211 010 445 779
Operating profit before
finance income 26 88 972 70 632 173 612
Net finance income 2 673 751 4 041
Profit before taxation 28 91 645 71 383 177 653
Taxation 29 701 22 793 50 360
Earnings for the period 27 61 944 48 590 127 293
RECONCILIATION BETWEEN EARNINGS
AND HEADLINE EARNINGS
Earnings for the period 61 944 48 590 127 293
Adjusted for: (298) 1 266 2 794
Amortisation of goodwill 1 683 3 365
Profit on disposal of property,
plant and equipment (298) (417) (571)
Headline earnings for
the period 24 61 646 49 856 130 087
Number of ordinary shares in issue
at end of period including
7 851 111 treasury shares
2004: 7 358 879 treasury shares) 152 621 519 149 404 519 150 737 519
Weighted average number of ordinary
shares in issue at end of period net
of treasury shares 144 560 568 141 088 279 141 995 454
Diluted weighted average number
of ordinary shares in issue
at end of period net of
treasury shares 147 719 959 145 239 077 145 231 139
Headline earnings per
share (cents) 21 42,6 35,3 91,6
Earnings per share (cents) 24 42,9 34,4 89,6
Diluted headline earnings
per share (cents) 22 41,7 34,3 89,6
Diluted earnings per
share (cents) 25 41,9 33,5 87,6
Dividend per share paid in
April 2005 (cents) 24,0
The income statement has been
restated to give effect to the
adoption of IAS 17
The effect on the income
statement is summarised below:
Net income as previously reported 52 453 135 532
Adjustment for operating leases (net of tax) (3 863) (8 239)
Net income restated 48 590 127 293
ABRIDGED CASH FLOW STATEMENT
Unaudited Unaudited Unaudited
six months six months year
ended ended ended
30 June 2005 30 June 2004 31 Dec 2004
R000s Restated Restated
Cash flows from operating activities (9 858) 8 735 189 158
Operating profit adjusted for
non-cash flow items 99 799 80 284 196 576
Working capital changes during the
period (25 544) (23 947) 51 294
Taxation paid (49 250) (20 598) (31 708)
Dividends paid (34 863) (27 004) (27 004)
Cash flows from investing activities (57 015) (3 737) (24 490)
Cash flows from financing activities (32 972) 600 (8 593)
Net (decrease)/increase in cash and
cash equivalents for the period (99 845) 5 598 156 075
Cash and cash equivalents at
beginning of the period 225 895 69 990 69 990
Cash and cash equivalents acquired
(disposed of) 2 410 (170)
Cash and cash equivalents at end
of the period 128 460 75 588 225 895
SUPPLEMENTARY INFORMATION
Unaudited Unaudited Unaudited
30 June 2005 30 June 2004 31 Dec 2004
R000s Restated Restated
Net asset value per share (cents) 339,6 284,9 337,7
Net tangible asset value per
share (cents) 257,0 242,1 291,9
Capital expenditure (R000s) 4 251 4 922 10 984
Purchase of new businesses (R000s) 53 376 20 454
Capital commitments (R000s)
- approved and contracted 8 505 6 331 8 000
- approved not contracted 10 295 6 500 7 900
Depreciation (R000s) 8 574 7 635 16 129
STATEMENT OF CHANGES TO SHAREHOLDERS` EQUITY
Unaudited Unaudited Unaudited
six months six months year
ended ended ended
30 June 2005 30 June 2004 31 Dec 2004
R000s Restated Restated
Balance at the beginning of the period 484 213 386 327 386 327
Transitional adjustments to retained
income on adoption of IFRS (4 247) (4 247)
Balance restated 484 213 382 080 382 080
Movement in stated capital (19 642) 1 027 1 844
Options exercised 1 209 1 460 2 307
Issue of shares in terms of odd lot offer 40 40
Issue of A shares in terms of BEE
transaction 122
Repurchase and cancellation of shares
in terms of odd lot offer (473) (473)
Treasury shares acquired by a subsidiary (44 537)
Proceeds on sale of treasury shares
by a subsidiary (net of tax) 23 564
Share issue expenses (30)
Movement in retained income 27 081 21 586 100 289
Profit after taxation restated 61 944 48 590 127 293
Dividends paid (34 863) (27 004) (27 004)
Total shareholders` equity at end
of period 491 652 404 693 484 213
Ferreira`s Buildware, Rietpan Hardware, BM Builders Market, Building Centre,
Lowveld Building Supplies, Cachet International, Rustenburg Building Material, F
& F Building Supplies, Chipbase, D&A Timbers, Ferreiras Decor World, Just Tiles,
The Tile Depot, Benoni Builders Supplies, B&B Locksmith Distributors, B&B
Distributors, Suncol, Citiwood, W&B Hardware, Building Centre, Keylok Supplies,
Topform, Buchel, DH Design Hardware, The Knob & Knocker, Bildware, SDT, Saflok.
Registered address
First Floor, East Block, Pineslopes Office Park, c/o The Straight & Witkoppen
Road, Lonehill, PO Box 2572, Honeydew 2040
Directors
HC Turner (Chairman)*, RB Patmore (Chief Executive Officer), RT Ririe*,
B Mabuza*, NP Goosen *Non-executive
Transfer secretaries
Ultra Registrars (Pty) Limited, 11 Diagonal Street, Johannesburg 2001
PO Box 4844, Johannesburg 2000
Sponsor
Bridge Capital Services (Pty) Ltd, First Floor, Building 22A,
The Woodlands Office Park, Woodlands Drive, Woodmead, PO Box 651010, Benmore
2010
Date: 15/08/2005 12:00:11 PM
Produced by the JSE SENS Department
