| Mon 28 Aug 2006, 9:29 | | Iliad Africa Limited - Unaudited results for the s |
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ILA
ILA
Iliad Africa Limited - Unaudited results for the six months
ended 30 June 2006
ILIAD AFRICA LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1997/011938/06)
Share code: ILA & ISIN: ZAE000015038
("Iliad" or "the company")
Unaudited results for the six months ended 30 June 2006
- Turnover up 23%
- Operating profit up 25%
- EPS up 21%
NATURE OF BUSINESS
Iliad Africa Ltd ("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 94 branded stores, each
concentrating on an identified customer-focused market niche.
Financial highlights
Iliad has posted its ninth successive period of half-year growth in
earnings for the six months to 30 June 2006. In line with expectations,
results for the period showed a 21% increase in earnings per share to
52 cents against the comparable period in 2005. Turnover increased by 23%
to R1,5 billion and the operating margin improved to 7,4% (2005: 7,3%).
Working capital continued to be managed well, with the working-capital-to-
sales ratio dropping below 8% (2005: 8,1%).
The period-on-period increase in cash outflows was primarily due to
increased payments of R20 million for dividends and taxation.
OPERATIONAL REVIEW
Iliad"s solid operating results reflect its unfolding strategic thrust,
acquisitive activity and continued demand in the marketplace with all
divisions performing in line with expectations.
All the divisions experienced solid growth in the residential market
although boards and ceramics experienced short-term delays in the flow of
work from commercial projects. This trend is expected to be reversed early
in the second half of the year.
During the period, the organic rollout of the building material division"s
cash-and-carry outlets gained momentum. Four stores are operating
profitably and a further six sites are presently being developed for stores
which will open for business before the end of 2006.
The ceramic division"s entry into the cash-and-carry arena began with the
formation of a new entity in which BEE management, highly experienced in
this market segment, has a 20% stake. Plans are being finalised to initiate
the rollout. This project is particularly significant as it gives Iliad
access to a sector where the Group has no market share.
The newly acquired lighting division, trading as Q Lite, is well on track
to meet its post-acquisition profit warranties. The geographic rollout of
lighting will begin nationally once the warranty period expires.
The ironmongery division increased profits as a result of internal
efficiency improvements after a stagnant period in 2005.
The wholesale division produced profits for the period and is growing in
stature. Certain challenges were experienced during the period which have
been rectified, the costs absorbed and we are confident about the future
prospects.
Iliad"s new plumbing division, primarily serving the needs of the insurance
industry, achieved exceptional results and will be strengthened with the
acquisition of Modern Bathrooms.
ACQUISITIONS
During the review period, Iliad completed several small acquisitions.
In the plumbing division, Sanware and Plumbing - a KwaZulu-Natal-based
business - was acquired to provide geographical coverage. After the review
period, Modern Bathrooms in Cape Town was acquired to extend coverage in
that region.
Q Lite was acquired as the platform business in the new lighting division.
These acquisitions were all in line with the stated strategic thrust and
were funded from internal resources.
Subsequent to the review period, Iliad acquired Western Cape-based building
materials supplier Campwell Hardware, effective end of August, for R165
million. The Campwell acquisition, subject to the approval of competition
authorities as well as the completion of the due diligence process, gives
the building materials division significant access into the Cape market,
complementing the existing operation in Somerset West and adding a further
11 stores in the Western Cape region. Predominantly a cash business,
Campwell has annual turnover of R330 million and is a dominant, respected
force in the Western Cape. Iliad will purchase the assets and liabilities
of the Campwell Hardware businesses and incorporate these into a new
entity, 25% of which will be sold back on the same terms to a BEE
consortium led by key existing management.
Although there will be some impact from this acquisition on Group turnover
in the second six-month period of the financial year, the major benefit
will emerge in FY 2007.
THE MARKETPLACE
As anticipated, growth in the new residential housing market slowed
significantly. Activity levels at the luxury end continued to show a
negative trend while the other segments grew, but at reduced levels.
Interest rate increases will continue to dampen demand. The additions,
refurbishment and alterations sector is showing resilience which is normal
as the pace of new residential activity tapers off.
Medium-Term Forecasting Associates based in Stellenbosch is projecting an
overall negative year-on-year real growth rate for the residential market
in 2006. All indicators - from confidence levels in the industry, to the
level of mortgage bonds being granted and the level of building plans being
passed - indicate a slowing residential property market.
The commercial market is showing reasonable growth, offsetting the slowdown
in the residential market to a large extent. This, together with a solid
additions, refurbishment and alterations market, will ensure acceptable
levels of activity for Iliad into 2007.
Inflationary pressures in the market-place are beginning to be felt. The
review period saw product inflation running marginally below 7% and this is
expected to increase further.
PROSPECTS
Iliad enters the second half of FY 2006 on a sound footing. Despite the
general slowing of activity in the residential market, the Group is well
positioned to capitalise on the commercial market as well as growth in the
additions, refurbishment and alterations market.
Through the ongoing implementation of our strategy, growth will continue as
a result of:
- Continued geographic expansion
- Growth of the wholesale division from both an efficiency and geographic
roll-out perspective
- Cash and carry roll-outs in the building materials and ceramics
divisions.
Given the above and its broad reach across the building materials supply
sector and strong, fruitful relationships with its empowerment partners,
Iliad is well positioned to continue delivering improved results.
ACCOUNTING POLICIES
The unaudited results of the Group for the six months ended 30 June 2006
have been prepared in accordance with the Group"s accounting policies,
which comply with International Financial Reporting Standards and are
consistent with those of the previous year. This interim report complies
with International Accounting Standards 34 - Interim Financial Reporting.
In April 2006 the Accounting Practices Board issued AC 503-Accounting for
Black Economic Empowerment (BEE) Transactions which is effective for annual
periods beginning on or after 1 May 2006. The statement seeks to clarify
certain issues specific to BEE transactions that arise on the application
of IFRS 2 Share-based Payment. The Group has elected not to early adopt the
interpretation and will apply the interpretation retrospectively to the
options granted in terms of the broad-based BEE transaction concluded on 18
March 2005 when the interpretation is adopted for the first time in the
2007 year. The effect of the adoption will be as follows:
The value of the options granted of approximately R40 million shall be
expensed in the 2005 income statement with a corresponding credit to
shareholders" equity
The earnings and headline earnings per share for 2005 will be restated.
The effect of the restatement will be a reduction of 27,8 cents per share
There will be no effect on the equity of the Group or the earnings for 2006
or 2007.
DIVIDEND
In line with the Group policy, no interim dividend has been declared.
For and on behalf of the Board of Directors
25 August 2006
Ralph Patmore
Chief Executive Officer
Neil Goosen
Financial Director
BALANCE SHEET
Unaudited Unaudited Audited
R000 30 June 2006 30 June 2005 31 Dec 2005
ASSETS
Non-current assets
Property, plant and equipment 48 389 41 267 52 172
Intangible assets 173 315 123 735 161 285
Deferred taxation 14 789 14 133 14 363
Total non-current assets 236 493 179 135 227 820
Current assets
Inventories 490 031 396 299 463 074
Trade and other receivables 401 219 341 897 308 917
Cash and cash equivalents 161 749 128 460 192 623
Total current assets 1 052 999 866 656 964 614
Total assets 1 289 492 1 045 791 1 192 434
EQUITY AND LIABILITIES
Capital and reserves
Stated capital 204 013 202 787 203 408
Retained income 417 056 288 865 387 941
Total shareholders" equity 621 069 491 652 591 349
Non-current liabilities
Interest bearing non-current
liabilities 844 2 134 1 405
Total non-current liabilities 844 2 134 1 405
Current liabilities
Trade and other payables 647 574 527 167 558 933
Interest bearing current
liabilities 1 211 1 625 1 214
Taxation 18 794 23 213 39 533
Total current liabilities 667 579 552 005 599 680
Total equity and liabilities 1 289 492 1 045 791 1 192 434
INCOME STATEMENT
Unaudited Unaudited Audited
6 months 6 months 12 months
% ended ended ended
R000 Increase 30 June 2006 30 June 2005 31 Dec 2005
Turnover 23 1 501 074 1 216 764 2 683 398
Cost of sales 1 087 974 876 055 1 888 730
Gross margin 413 100 340 709 794 668
Administration, selling
and distribution expenses 301 588 251 737 573 054
Operating profit before
investment income 25 111 512 88 972 221 614
Net investment income 1 436 2 673 5 389
Profit before taxation 112 948 91 645 227 003
Taxation 36 973 29 701 65 983
Earnings for the period 23 75 975 61 944 161 020
RECONCILIATION BETWEEN
EARNINGS AND HEADLINE
EARNINGS
Earnings for the period 75 975 61 944 161 020
Adjusted for: (494) (298) (680)
Profit on disposal of
property, plant and
equipment (494) (298) (680)
Headline earnings for
the period 22 75 481 61 646 160 340
Number of ordinary shares
in issue at end of period
including 7 851 111
treasury shares (2005:
7 851 111 treasury shares) 154 284 519 152 621 519 153 427 519)
Weighted average number of
ordinary shares in issue net
of treasury shares 146 049 889 144 560 568 144 933 286
Diluted weighted average
number of ordinary shares
in issue net of treasury
shares 150 671 887 147 719 959 49 702 713
Headline earnings per
share (cents) 21 51,7 42,6 110,6
Earnings per share (cents) 21 52,0 42,9 111,1
Diluted headline earnings
per share (cents) 20 50,1 41,7 107,1
Diluted earnings per
share (cents) 20 50,4 41,9 107,6
Dividend per share (cents) 32,0
ABRIDGED CASH FLOW STATEMENT
Unaudited Unaudited Audited
6 months 6 months 12 months
ended ended ended
R000 30 June 2006 30 June 2005 31 Dec 2005
Cash flows/(outflows)
from operating activities (15 882) (9 858) 143 365
Cash operating profit before
working capital changes 122 914 99 799 245 458
Working capital changes
for the period (33 798) (25 544) (1 443)
Taxation paid (58 138) (49 250) (65 787)
Dividends paid (46 860) (34 863) (34 863)
Utilised in investment activities (16 264) (57 015) (150 746)
Utilised in financing activities (226) (32 972) (35 317)
Decrease in cash and cash
equivalents (32 372) (99 845) (42 698)
Cash and cash equivalents at
beginning of the period 192 623 225 895 225 895
Cash and cash equivalents
acquired 1 498 2 410 9 426
Cash and cash equivalents at
end of the period 161 749 128 460 192 623
SUPPLEMENTARY INFORMATION
Unaudited Unaudited Audited
30 June 2006 30 June 2005 31 Dec 2005
Net tangible asset value
per share (cents) 305,8 257,0 295,4
Capital expenditure (R000) 6 462 4 251 19 356
Purchase of new businesses (R000) 11 120 53 376 134 376
Capital commitments (R000)
- approved and contracted 11 690 8 505 14 250
- approved not contracted 7 800 10 295 9 400
Depreciation (R000) 10 662 8 574 19 135
STATEMENT OF CHANGES TO SHAREHOLDERS" EQUITY
Unaudited Unaudited Audited
R000 30 June 2006 30 June 2005 31 Dec 2005
Balance at the beginning
of the period 591 349 484 213 484 213
Movements in stated capital 605 (19 642) (19 021)
Options exercised 605 1 209 1 830
Issue of "A" shares in terms
of BEE transaction 122 122
Treasury shares acquired by
a subsidiary (44 537) (44 537)
Proceeds on sale of treasury
shares by a subsidiary
(net of tax) 23 564 23 564
Movement in retained income 29 115 27 081 126 157
Profit after taxation 75 975 61 944 161 020
Dividends paid (46 860) (34 863) (34 863)
Total shareholders" equity
at end of the period 621 069 491 652 591 349
Registered address
First Floor East Block Pineslopes Office Park c/o The Straight &
Witkoppen Road Lonehill POBox 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
Link Market Services South Africa (Pty) Limited 11 Diagonal Street
Johannesburg 2001 POBox 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,
Campwell Hardware, SDT Style, Saflok, W Miller Hardware & Builder"s
Merchants and Modern Bathrooms.
Energy Passion Focus Performance
Date: 28/08/2006 09:29:52 AM Produced by the JSE SENS Department
