| Mon 12 Mar 2007, 12:20 | | ILA - Iliad - Audited Results For The Year Ended 3 |
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ILA
ILA
ILA - Iliad - Audited Results For The Year Ended 31 December 2006
and distribution declaration
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 2006
ENERGY
PASSION
FOCUS
PERFORMANCE
Turnover 25%UP Earnings per share 24%UP Dividend 25%UP
NATURE OF BUSINESS
Iliad Africa Ltd (Iliad) focuses on sourcing, distributing, wholesaling and
retailing general and specialised building materials. A range of customers from
large-scale contractors and developers to do-it-yourself homeowners are serviced
through market niche-focused clusters of outlets totalling 104 stores.
FINANCIAL HIGHLIGHTS
Iliad has posted its ninth successive year of growth in earnings for the twelve
months ending 31 December 2006. In line with expectations, results for the year
showed a 24% increase in earnings per share to 138,3 cents against the
comparable period in 2005. Turnover increased by 25% to
R3,4 billion while earnings increased by 26% to R202 million. The operating
margin was stable at 8,3% (2005: 8.3%).
Working capital continued to be tightly managed, with the working-capital-to-
sales ratio dropping to 6,7% (2005: 7,9%).
THE MARKETPLACE
The middle-income market remains the driving force in the residential sector and
continues to impress us in terms of its underlying strength and resilience. The
overall growth rate in the new residential housing market continued to slow.
Activity levels at the luxury end were below the prior year while those in the
lower end of the market continue to rise, albeit slowly given pedestrian growth
in state-subsidised housing. The additions, refurbishment and alterations sector
is showing growth which is normal as the pace of new residential activity tapers
off.
The commercial market continued its steady growth pattern from 2005 to a large
extent offsetting the slowdown in the pace of growth in the residential market.
Inflationary pressures in the marketplace are beginning to be felt and this
could be the single most significant factor that places a lid on the industry`s
growth. While the overall inflation figure approximated 8% we experienced
inflation in some areas of around 14%. This was offset by deflation in the
product lines imported from eastern-based countries.
Supply problems, in particular cement, are also constraining growth. The loss of
turnover due to shortages is difficult to quantify as often enquiries are only
received by our outlets because the client`s regular supplier is out of stock.
OPERATIONAL REVIEW
Following several years of strong organic and acquisitive growth, we found it
necessary to restructure the group into two focused legs - general building
materials and specialised building materials. This fully leverages procurement
opportunities, improves the importing logistical efficiencies and leverages the
common pools of expertise.
Iliad`s solid operating results reflect its unfolding strategic thrust, smooth
integration of recent acquisitions and continued demand in the marketplace.
The general building materials leg had an exceptional year with extremely strong
growth in sales and operating profits. The acquisition of Campwell was finalised
for R165 million but the delay in completing all the conditions precedent
resulted in their results only being consolidated into the group`s results from
December 2006.
During the period, the organic roll-out of the Building Centre (cash-and-carry)
stores gained momentum with six outlets opening.
The specialised building materials division had a mixed year with the
Ironmongery and Plumbing clusters producing solid profit growth while the
Wholesale cluster restructuring returned it to profitability.
The Ceramic and Boards clusters experienced relatively quiet years due to a
deflationary environment and a slow release of commercial contracts
respectively.
The newly acquired Lighting cluster, Q Lite, exceeded its warranted profit
target.
PROSPECTS
Iliad enters 2007 on a sound footing and is well positioned to continue
delivering improved results.
Overall growth in performance will continue as a result of:
* Continued geographic expansion in both divisions
* Growth in the Wholesale cluster from a newly created solid base
Cash-and-carry roll-outs in both divisions
* Efficiency improvements in the specialised building materials division
* Growth in the overall market.
ACCOUNTING POLICIES
The audited results of the group for the year ended 31 December 2006 have been
prepared in accordance with the group`s accounting policies, which comply with
the International Financial Reporting Standards (IFRS) and are consistent with
those of the previous year.
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 will 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.
AUDIT REPORT
The results for the year have been audited by Grant Thornton, and their
unqualified audit report on the 31 December 2006 annual financial statements is
available for inspection at the company`s registered office.
DISTRIBUTION TO SHAREHOLDERS
In view of the good results, future growth opportunities, positive cash flows
from operating activities and a strong balance sheet, the directors increased
the distribution by 25% to 40 cents per share (2005: dividend of 32 cents per
share)
The distribution will be by way of a capital distribution out of stated capital.
The authority to make this payment to shareholders was obtained at the annual
general meeting held on 9 May 2006.
Set out in the table below are the pro forma financial effects of the
distribution based on Iliad`s audited results for the year ended 31 December
2006. The pro forma financial effects have been prepared for illustrative
purposes only to provide information on how the distribution may have impacted
on the results and financial position of Iliad. Because of their nature, the pro
forma financial effects may not give a fair reflection of Iliad`s financial
position after the distribution or the effect on future earnings. The pro forma
financial effects are the responsibility of Iliad`s directors.
Before After Percentage
the distrib- the distrib- change
ution ution (%)
Headline earnings per
share (cents) 137.5 135.12 (1.7)
Earnings per share (cents) 138.3 135.92 (1.7)
Weighted average
number of shares
in issue net of
treasury shares 146 240 876 146 240 876
Net asset value
per share (cents) 510.3 470.33 (7.8)
Net tangible asset
value per share (cents) 255.3 215.33 (15.7)
Number of shares in
issue net of
treasury shares 146 433 408 146 433 408
Note:
1. The figures in the "Before the distribution" column have been extracted from
the published audited results of Iliad for the year ended 31 December 2006.
2. Earnings and headline earnings per share in the "After the distribution"
column have been based on the following assumptions:
* The distribution was made on 1 January 2006; and
* Interest, at an after-tax rate of 6% per annum, was forfeited on the cash
distributed.
3. Net asset value and net tangible asset value per share in the "After the
distribution" column have been based on the assumption that the distribution was
made on 31 December 2006.
Set out below are the salient dates applicable to the distribution:
Last date to trade "cum dividend" Thursday, 29 March 2007.
Trading commences "ex-dividend" Friday, 30 March 2007.
Record date Thursday, 5 April 2007.
Payment date Tuesday, 10 April 2007.
Share certificates may not be dematerialised or rematerialised between Friday 30
March 2007 and Thursday 5 April 2007, both dates inclusive.
For and on behalf of the board of directors
12 March 2007
Ralph Patmore, chief executive officer Neil Goosen, financial director
BALANCE SHEET
31 Dec 2006 31 Dec 2005
R000 Audited Audited
ASSETS
Non-current assets
Property, plant and equipment 56 498 52 172
Intangible assets 373 461 161 285
Deferred taxation 20 798 14 363
Total non-current assets 450 757 227 820
Current assets
Inventories 584 638 463 074
Trade and other receivables 403 884 308 917
Cash and cash equivalents 156 854 192 623
Total current assets 1 145 376 964 614
Total assets 1 596 133 1 192 434
EQUITY AND LIABILITIES
Capital and reserves
Stated capital 204 014 203 408
Retained earnings 543 266 387 941
Total shareholders equity 747 280 591 349
Non-current liabilities
Long-term borrowings 53 209 1 405
Total non-current liabilities 53 209 1 405
Current liabilities
Trade and other payables 764 552 558 933
Short-term borrowings 1 297 1 214
Current tax payable 29 795 39 533
Total current liabilities 795 644 599 680
Total equity and liabilities 1 596 133 1 192 434
INCOME STATEMENT
% 31 Dec 2006 31 Dec 2005
R000 Increase Audited Audited
Turnover 25 3 368 388 2 683 398
Cost of sales 2 398 881 1 888 730
Gross margin 969 507 794 668
Administration, selling and
distribution expenses 21 691 447 573 054
Operating profit before finance income 25 278 060 221 614
Net investment income 2 310 5 389
Profit before taxation 280 370 227 003
Taxation (78 186) (65 983)
Profit for the year 26 202 184 161 020
RECONCILIATION BETWEEN PROFIT
AND HEADLINE EARNINGS
Profit for the year 202 184 161 020
Adjusted for:
Profit on disposal of property,
plant and equipment (1 093) (680)
Headline earnings for the year 25 201 091 160 340
Number of ordinary shares in
issue at year end
including 7 851 111 treasury shares 154 284 519 153 427 519
Weighted average number of ordinary
shares in issue net of treasury shares 146 240 876 144 933 286
Diluted weighted average number of
ordinary shares in issue net of
treasury shares 150 403 056 149 702 713
Headline earnings per share (cents) 24 137.5 110,6
Earnings per share (cents) 24 138.3 111,1
Diluted headline earnings
per share (cents) 25 133.7 107,1
Diluted earnings per share (cents) 25 134.4 107,6
Distributions per share (cents) 25 40.0 32,0
ABRIDGED CASH FLOW STATEMENT
31 Dec 2006 31 Dec 2005
R000 Audited Audited
Cash flows from operating activities 197 874 178 228
Operating profit before working capital changes 301 531 245 458
Working capital changes for the year (10 914) (1 443)
Taxation paid (92 743) (65 787)
Cash flows from investment activities (208 128) (150 746)
Cash flows from financing activities (45 848) (70 180)
Net decrease in cash and cash equivalents (56 102) (42 698)
Cash and cash equivalents at beginning of the year 192 623 225 895
Cash and cash equivalents acquired 20 333 9 426
Cash and cash equivalents at end of the year 156 854 192 623
SUPPLEMENTARY INFORMATION
31 Dec 2006 31 Dec 2005
Audited Audited
Net asset value per share (cents) 510.3 406.2
Net tangible asset value per share (cents) 255.3 295.4
Capital expenditure (R000s) 20 531 19 356
Purchase of new businesses (R000s) 242 130 134 376
Capital commitments (R000s)
- approved and contracted 20 150 14 250
- approved not contracted 13 600 9 400
Depreciation (R000s) 22 254 19 135
STATEMENT OF CHANGES TO SHAREHOLDERS` EQUITY
Year ended Year ended
31 Dec 2006 31 Dec 2005
R000 Audited Audited
Balance at the beginning of the year 591 349 484 213
Movements in stated capital 606 (19 021)
Options exercised 606 1 830
Issue of A shares in terms of BEE transaction 122
Treasury shares acquired by a subsidiary (44 537)
Proceeds on sale of treasury shares by a
subsidiary (net of tax) 23 564
Movement in retained income 155 325 126 157
Profit after taxation restated 202 184 161 020
Dividends paid (46 859) (34 863)
Total shareholders` equity at year end 747 280 591 349
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) Ltd, 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 Advisors (Pty) Ltd, First Floor, Building 22A,
The Woodlands Office Park, Woodlands Drive, Woodmead.
PO Box 651010, Benmore 2010.
12 March 2007
Date: 12/03/2007 12:20:54 Produced by the JSE SENS Department.
