| Mon 6 Mar 2006, 12:00 | | Iliad - Audited results for the year ended 31 Dece |
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ILA
ILA
Iliad - Audited results for the year ended 31 December 2005
Iliad Africa Limited
(Incorporated in the Republic of South Africa)
(Registration number 1997/011938/06)
Share code: ILA & ISIN: ZAE000015038
("Iliad" or "the company")
AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2005
Recording its eight consecutive year of growth, Iliad Africa has announced a 33%
increase in dividends on the back of a 26% increase in earnings for the 12
months to 31 December 2005.
Turnover rose to R2,7 billion during the period (2004: R2,1 billion), producing
earnings of R161 million (2004: R127 million). Earnings per share for the year
increased 24% to 111,1 cents (2004: 89,6 cents).
- EPS UP 24%
- DIVIDEND UP 33%
NATURE OF BUSINESS
Iliad Africa Limited (Iliad) focuses on sourcing, distributing and retailing
building materials, ceramic tiles and sanitaryware, bathroom fittings, hardware,
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 seven divisions housing 77 leading branded
stores each concentrating on an identified customer market niche.
FINANCIAL HIGHLIGHTS
Placed third in the prestigious Sunday Times Business Times Top 100 survey in
2005, against considerably larger and more established companies, Iliad has
recorded its eighth consecutive year of growth in earnings.
The group grew turnover to R2,7 billion during the year (2004: R2,1 billion)
producing earnings of R161,0 million (2004: R127,3 million) on the back of 5%
inflation.
Trading profit to turnover was maintained at a credible 8,2%, reflecting the
pace with which the benefits of group synergies and purchasing power was applied
to new acquisitions.
A 7% working capital to sales ratio is testimony to the high level of
operational focus that permeates throughout the group even during times of
significant expansion.
The effective tax rate increased to 29% (2004: 28%) due mainly to the effects of
Secondary Tax on Companies.
The group continues to be a strong generator of cash. Cash and cash equivalents
at year end were R192 million, after financing strategic acquisitions and the
new store roll outs amounting to R134,4 million (2004: R20,5 million).
EPS for the year increased 24% to 111,1 cents (2004: 89,6 cents).
THE MARKETPLACE
As predicted the residential market grew at a slower rate. Strong growth was
recorded in the middle-income market, static growth in the luxury end and
increasing activity in the lower end of the market. The additions and
alterations market continues to grow unabated.
The residential market is driven by confidence and affordability and both are
showing signs of a downward trend in the statistics produced by The Medium Term
Forecasting Associates. The relief granted in the national budget may extend the
affordability cycle.
In contrast, the non-residential market has continued its growth off a low base,
buoyed by a continuing shortage of warehouse/industrial space, the rapid
development of office space and heightened activity in retail developments. We
expect a rapid increase in activity levels in the new financial year. This is
largely expected to counter the slowdown in the luxury residential market.
OPERATIONAL REVIEW
Solid operating results reflect continued demand in the marketplace and the
benefits of expanding Iliad"s presence in key sectors and geographic areas in
the building supplies market. Through a controlled level of acquisition, we
expanded our geographic presence in the building materials and boards sectors
and entered the lighting segment. This gives Iliad a presence in seven of its
eight initially-identified niche sectors.
Building materials, ceramics, boards and plumbing performed admirably from a
profit and working capital perspective.
The wholesale division broke even for the year, reflecting the costs of internal
restructuring for greater operational efficiencies and the integration of Cachet
International.
In line with the group"s stated strategic intent of controlled expansion, and
owner-manager culture, a number of acquisitions were made during the second half
of the year:
- D&A Timbers (Port Alfred) provided sought-after geographic coverage to the
building materials division along with experienced management.
- Chipbase strengthened our boards division, bringing established niche
operations and experienced management in the value-adding segment of
the market.
- Q Lite, an established specialist lighting company in KwaZulu-Natal, provides
the group with a platform business from which to grow in the lighting segment.
The acquisitions Iliad made in the first six months of the year and the previous
financial year have been successfully integrated and are all exceeding expected
results.
The building material division began the exciting programme of rolling out cash-
and-carry outlets under the Building Centre brand with stores being opened in
Burgersfort, Jane Furse and Brits. A further six stores are planned for 2006.
PROSPECTS
Iliad will continue to deliver on its stated expansion and segmentation
strategy. We expect the pace of growth in the marketplace to moderate, however
through prudent acquisitions, successful integration and a growing geographical
presence, the group is exceptionally well positioned to continue capitalising on
the numerous opportunities identified in its markets and to produce sustainable
long-term shareholder value.
ACCOUNTING POLICIES
The audited results of the group for the year ended 31 December 2005 have been
prepared in accordance with the group"s accounting policies. These comply with
the International Financial Reporting Standards (IFRS) which were adopted with
effect from 1 January 2005. The comparative figures for the year ended
31 December 2004 have accordingly been restated. The group has availed itself of
certain exemptions as permitted in IFRS 1.
As a result this had the following effect:
- From 1 January 2005 goodwill is tested annually for impairment and is no
longer amortised.
- The useful lives and residual values of property, plant and equipment have
been reviewed in terms of IAS 16.
- Escalation 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.
- On 18 March 2005 the group concluded a broad based BEE transaction, in terms
whereof options were granted to the BEE consortium. These options have been
independently valued at approximately R40,2 million. This amount has not been
brought to account in view of the interpretations by IFRIC which have culminated
in the issue of IFRIC 8 which becomes effective for year ends commencing on or
after 1 May 2006, and may need to be expensed with retrospective effect. This is
a non-recurring expense and will have no effect on the cash flow of the group.
AUDIT REPORT
The results for the year have been audited by Grant Thornton, and their
unqualified audit report on the 31 December 2005 annual financial statements and
the abridged financial statements contained herein, are available for inspection
at the company"s registered office.
DIVIDEND
In view of the good results, positive cash flows from operating activities and a
strong balance sheet the directors have increased the dividend by 33% to 32
cents per share (2004: 24 cents).
Last date to trade "cum dividend" Friday 24 March 2006.
Trading commences "ex-dividend" Monday 27 March 2006.
Record date Friday 31 March 2006.
Payment date Monday 3 April 2006.
Share certificates may not be dematerialised or rematerialised between Monday
27 March 2006 and Friday 31 March 2006, both dates inclusive.
For and on behalf of the Board of Directors
3 March 2006
Ralph Patmore
Chief Executive Officer
Neil Goosen
Financial Director
BALANCE SHEET
31 Dec 2005 31 Dec 2004*
Audited Audited
R000 Restated
ASSETS
Non-current assets
Property, plant and equipment 52 172 40 992
Intangible assets 161 285 65 748
Deferred taxation 14 363 12 937
Total non-current assets 227 820 119 677
Current assets
Inventories 463 074 359 271
Trade and other receivables 308 917 250 648
Cash and cash equivalents 192 623 225 895
Total current assets 964 614 835 814
Total assets 1 192 434 955 491
EQUITY AND LIABILITIES
Capital and reserves
Stated capital 203 408 222 429
Retained income 387 941 261 784
Total shareholders" equity 591 349 484 213
Non-current liabilities
Long-term liabilities 1 405 2 210
Total non-current liabilities 1 405 2 210
Current liabilities
Trade and other payables 558 933 429 685
Short-term liabilities 1 214 1 472
Taxation 39 533 37 911
Total current liabilities 599 680 469 068
Total equity and liabilities 1 192 434 955 491
*The changes to the balance sheet are reflected in the shareholders" equity
INCOME STATEMENT
31 Dec 2005 31 Dec 2004
% Audited Audited
R000 Increase Restated
Turnover 25 2 683 398 2 145 571
Cost of sales 1 888 730 1 509 498
Gross margin 25 794 668 636 073
Administration, selling and
distribution expenses 573 054 459 096
Operating profit before goodwill
amortisation 25 221 614 176 977
Goodwill amortisation (3 365)
Operating profit before finance
income (costs) 221 614 173 612
Net finance income (costs) 5 389 4 041
Profit before taxation 227 003 177 653
Taxation (65 983) (50 360)
Earnings for the year 26 161 020 127 293
RECONCILIATION BETWEEN EARNINGS
AND HEADLINE EARNINGS
Earnings for the year 161 020 127 293
Adjusted for: (680) 2 794
Amortisation of goodwill 3 365
Profit on disposal of property,
plant and equipment (680) (571)
Headline earnings for the year 23 160 340 130 087
Number of ordinary shares in issue at
year end including 7 851 111 treasury shares
(2004: 7 358 879 treasury shares) 153 427 519 150 737 519
Weighted average number of ordinary
shares in issue net of treasury shares 144 933 286 141 995 454
Diluted weighted average number of
ordinary shares in issue net of
treasury shares 149 702 713 145 231 139
Headline earnings per share (cents) 21 110,6 91,6
Earnings per share (cents) 24 111,1 89,6
Diluted headline earnings per
share (cents) 20 107,1 89,6
Diluted earnings per share (cents) 23 107,6 87,6
Dividend per share (cents) 33 32,0 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 135 532
Adjustment for operating leases
(net of tax) (8 239)
Net income restated 127 293
ABRIDGED CASH FLOW STATEMENT
31 Dec 2005 31 Dec 2004
Audited Audited
R000 Restated
Cash flows from operating activities 143 365 189 158
Operating profit before working capital changes 245 458 196 576
Working capital changes for the year (1 443) 51 294
Taxation paid (65 787) (31 708)
Dividends paid (34 863) (27 004)
Cash utilised in investment activities (150 746) (24 490)
Cash effect on financing activities (35 317) (8 593)
(Decrease)/increase in cash and
cash equivalents (42 698) 156 075
Cash and cash equivalents at beginning
of the year 225 895 69 990
Cash and cash equivalents acquired 9 426 (170)
Cash and cash equivalents at end of the year 192 623 225 895
SUPPLEMENTARY INFORMATION
31 Dec 2005 31 Dec 2004
Audited Audited
Restated
Net tangible asset value per share (cents) 295,4 291,9
Capital expenditure (R000s) 19 356 10 984
Purchase of new businesses (R000s) 134 376 20 454
Capital commitments (R000s)
- approved and contracted 14 250 12 500
- approved not contracted 9 400 6 300
Depreciation (R000s) 19 135 16 129
STATEMENT OF CHANGES TO SHAREHOLDERS" EQUITY
31 Dec 2005 31 Dec 2004
Audited Audited
R000 Restated
Balance at the beginning of the year 484 213 386 327
Transitional adjustments to retained income
on adoption of IFRS
IAS 16 - impairment of property, plant
and equipment (653)
IAS 36 - impairment of goodwill (3 594)
Balance restated 484 213 382 080
Movements in stated capital (19 021) 1 844
Options exercised 1 830 2 307
Issue of shares in terms of odd lot offer 40
Issue of A shares in terms of BEE transaction 122
Repurchase and cancellation of shares in
terms of odd lot offer (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 126 157 100 289
Profit after taxation restated 161 020 127 293
Dividends paid (34 863) (27 004)
Total shareholders" equity at year end 591 349 484 213
Registered address
First Floor, East Block, Pineslopes Office Park, c/o The Straight & Witkoppen
Road, Lonehill, PO Box 2572, Honeydew 2040, www.iliadafrica.co.za
Directors
HC Turner (Chairman)*, RB Patmore (Chief Executive Officer), NP Goosen, RT
Ririe*, MY Sibisi*
*Non-executive
Transfer secretaries
Ultra Registrars (Pty) Limited, 11 Diagonal Street, Johannesburg 2001 PO Box
4844, Johannesburg 2000
(Incorporated in the Republic of South Africa)
(Registration number 1997/011938/06)
Share code ILA
ISIN ZAE000015038
Sponsor
Bridge Capital Services (Pty) Ltd, First Floor, Building 22A, The Woodlands
Office Park, Woodlands Drive, Woodmead, PO Box 651010, Benmore 2010
Logos
Ferreira"s Buildware, Rietpan Hardware & Building Supplies, BM Builders Market,
Building Centre - Build for less, 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 Distributor, Suncol, Citiwood, Q Lite, Sanware &
Plumbing, W&B Hardware (Pty) Ltd, Keylock Supplies, Kitchen Topform Worktops,
Buchel, Design Hardware, The Knob & Knocker, Bildware, SDT Style, Design &
Trends, Saflok and W Miller Hardware & Builder"s Merchants.
Energy Passion Focus Performance
Date: 06/03/2006 12:00:10 PM Produced by the JSE SENS Department
