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CASHBUILD LIMITED
Registration number 1986/001503/06
Incorporated in the Republic of South Africa
("Cashbuild")
LOWEST PRICES ON BUILDING MATERIALS
AUDITED INTERIM FINANCIAL RESULTS FOR THE 26 WEEKS ENDED 23 DECEMBER 2000
- 86.5% improvement in cash resources
- 10.3% increase in headline earnings
- 16.7% increase in profit before tax and exceptional item
CONDENSED GROUP INCOME STATEMENT
Audited
Audited Unaudited 52 weeks
26 weeks ended 26 weeks ended ended
23 December 24 December % 24 June
R'000 2000 1999 Change 2000
Revenue 546,978 553,038 -1.1 955,576
Cost of sales 438,512 460,836 -4.8 788,688
Gross profit 108,466 92,202 19.5 165,886
Administrative, marketing
and other expenses 96,185 80,519 19.5 165,885
Operating profit before
exceptional item 12,281 11,683 5.1 1,003
Exceptional item 5,126 - -
Operating profit before
finance charges 7,155 11,683 -38.8 1,003
Net financing (income)/
charges (375) 837 144.8 601
Profit before taxation 7,530 10,846 -30.6 402
Taxation 4,093 3,155 29.7 (67)
Profit after taxation 3,437 7,691 -55.3 469
Minority interest 1,291 1,110 16.3 1,687
Profit/(loss) attributable
to shareholders 2,146 6,581 -67.4 (1,218)
Headline adjusting items:
Loss on sale of assets
(after taxation) 100 102 -2.0 138
Exceptional item 5,126 - -
Headline profit/(loss) 7,372 6,683 10.3 (1,080)
Earnings per share (cents)
Basic earnings 9.24 28.34 -67.4 (5.25)
Headline earnings 31.74 28.78 10.3 (4.65)
Number of shares in
issue ('000s) 23,225 23,225 23,225
CONDENSED GROUP Audited
BALANCE SHEET Audited Unaudited Year-end
23 December 24 December 24 June
R'000 2000 1999 2000
Assets
Non-current assets 55,954 55,524 64,774
Property, plant and
equipment 48,790 52,656 50,157
Loans and unlisted
investments 3,428 2,729 11,311
Deferred taxation 3,736 139 3,306
Current assets 284,357 226,443 242,375
Inventories 168,270 147,735 180,870
Trade and other receivables 32,325 33,799 44,021
Cash resources 83,762 44,909 17,484
Total assets 340,311 281,967 307,149
Equity and liabilities
81,368 84,614 77,576
Shareholders' funds 75,605 78,273 73,247
Minority interest 5,763 6,341 4,329
Non-current liabilities 1,483 5,210 3,586
Interest-bearing debt 259 4,670 2,746
Deferred taxation 1,224 540 840
Current liabilities 257,460 192,143 225,987
Short-term borrowings 2,867 474 359
Trade and other liabilities 254,593 191,669 225,628
Total liabilities 258,943 197,353 229,573
Total equity and liabilities 340,311 281,967 307,149
Capital expenditure 2,480 4,127 4,874
Depreciation 4,318 4,849 9,018
Net asset value per share (cents) 326 337 315
Capital commitment 75 50 501
Contingent liabilities 60 10,240 10,000
CONDENSED GROUP CASH FLOW STATEMENT
Audited Unaudited Audited
26 weeks 26 weeks 52 weeks
ended ended ended
23 December 24 December 24 June
R'000 2000 1999 2000
Cash inflows from operating
activities 66,115 27,421 20,158
Cash inflows/(outflows) from
investing activities 364 170 (8,449)
Cash inflows/(outflows) from
financing activities (201) (269) (11,812)
Net increase/(decrease) in cash
and cash equivalents 66,278 27,322 (103)
Cash and cash equivalents
at beginning of period 17,484 17,587 17,587
Cash and cash equivalents at end
of period 83,762 44,909 17,484
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
Foreign currency
Share Share translation Distributable
R'000 capital premium reserve reserve Total
Opening balance
at 25 June 2000 232 38,052 2,730 32,233 73,247
Foreign exchange
adjustment 212 212
Profit/attributable
to shareholders 2,146 2,146
Closing balance at
23 December 2000 232 38,052 2,942 34,379 75,605
NOTES TO THE CONSOLIDATED INTERIM CONDENSED FINANCIAL STATEMENTS
1.Accounting policies.
These consolidated condensed interim financial statements are prepared in
accordance with Statements of Generally Accepted Accounting Practice in South
Africa The accounting policies
used in the preparation of the interim financial statements are consistent with
those used in the annual financial statements for the year ended 24 June 2000.
Costs that occur unevenly during the financial year are anticipated or deferred
in the interim report only if it would also be appropriate to anticipate or
defer such costs at the
end of the financial year. The income tax expense is recognised based on the
best estimate of the annual income tax rate expected for the full year.
The interim financial statements should be read in conjunction with the annual
financial statements at 24 June 2000.
These interim financial statements were audited, while comparative figures for
December 1999 have not been audited.
The unqualified audit report is available at the registered office of the
company.
2. Earnings per share
Basic earnings per share is calculated by dividing the profit/(loss)
attributable to shareholders by the weighted average number of 23 225 000
ordinary shares in issue during the
period(1999: 23 225 000 shares; 2000 financial year:23 225 000).
To calculate the headline earnings per share, the profit/(loss) attributable to
shareholders is adjusted for the loss on sale of assets and the exceptional
item.
3. Exceptional item
A provision has been raised against the loan granted to the Cashbuild Share
Incentive Trust. The loan has been reduced in relation to the market value of
the Cashbuild share price
as at the close of business on 23 December 2000. The share price at this date
was 100 cents per share.
4. Investments
Carrying value(R000): R 3 428 Fair value(R000): R 3 428
The largest portion of this investment relates to the loan to the Cashbuild
Share Incentive Trust. This loan has been fairly valued at the market price of
the Cashbuild shares as at
23 December 2000. (See also note 3 on exceptional item).
COMMENTS
NATURE OF BUSINESS
Cashbuild is a retailer of building material and associated products, selling
directly to a cash paying customer base via its chain of 96 branded stores
throughout South Africa and its neighbouring countries. The Cashbuild chain is
the largest in sales volumes as well as in number of outlets in its industry.
Currently the company holds more than 10% of the market share in the supply of
building materials through merchants and retailers. The stores carry a product
range catering for the home improvement market, subcontractors and traders.
TRADING ENVIRONMENT
Market conditions differ from region to region, with the Botswana and Namibia
stores showing 23% and 49% growth respectively on a year-on-year basis, with
the Swaziland and Lesotho stores contributing strongly towards group earnings
and the stores in South Africa showing marginal improvement.
BUSINESS EXPANSION
Cashbuild is planning to increase its outlet network in growing its earnings
base.
The company has opened up two new stores in Swaziland and Mpumalanga.
Nhlangano, Swaziland is trending to forecast due to our competitive pricing and
the prime location in a new, high traffic shopping centre. In-store training
and incentive schemes will ensure that this store, as well as the Hazyview
store perform at high levels of growth and profitability.
In line with company policy of opening stores only when exceptional trading
sites become available, and where these sites show the necessary commercial
viability, Cashbuild has acquired a site in Meadowlands, Soweto and Louis
Trichardt after this reporting period. A five year lease was also signed in
January to secure a sight in Montague Gardens, Cape Town.
FINANCIAL HIGHLIGHTS
Notwithstanding the robust growth in the Botswana and Namibia stores and the
abnormally good trading conditions in the previous financial period, together
with the difficult trading environment, Cashbuild has once again achieved a
sustainable level of revenue growth. The previous financial reporting period
reflected the surge in business activity directly related to the increased
pocket spending from consumers benefiting from the demutualisation of Old
Mutual and Sanlam, as well as personal tax concessions. Management is
encouraged, however, by sustainable increasing revenue levels achieved without
the expansion of our store infrastructure.
Profit before tax (excluding the exceptional item) has shown better than
expected growth of 16,7% year-on-year for the comparable period. This is
attributable to the uniform application of firmer pricing policies as well as
improved stock management.
The increase in operating costs is largely due to our investment in a marketing
campaign to grow and diversify our customer base on a national scale. The
campaign proved successful in sustaining our sales margins and generating
additional revenues during peak trading periods.
Management's focus on stock management and shrinkage has resulted in a dramatic
improvement with shrinkage reducing by R4 million to 0,6% of sales for the half
year period. Product mix and stock availability have also improved.
A provision of R5,1 million has been raised against the loan of R8,5 million
granted to the Cashbuild Share Incentive Trust. This was necessary to bring the
loan in line with the underlying share price ruling at 23 December 2000.
The company has shown a marked turnaround in cash resources, improving from
R44,9 million to a closing balance of R83,8 million. Historically, the company
was a net borrower to fund working capital, whereas Cashbuild has been trading
cash positive throughout the last six months.
Cashbuild has a track record of consistent earnings growth with the exception
of the June 2000 year-end results. Shareholders have enjoyed an 88% return on
headline earnings per share over the past five years based on interim results.
The number of shares in issue has remained constant over this period.
Following a period of consolidation, Cashbuild can with comfort now expand its
infrastructure, which will have a positive impact on future earnings.
MANAGEMENT
During the period under review, Craig Daly was appointed as financial director.
He is effecting strict financial controls in the company, playing a key role in
Cashbuild's turnaround.
PROSPECTS
Improved margins, interest generated from cash balances, continued control of
stock shrinkage, and further cost control measures will assist Cashbuild to
improve the quality of its earnings.
Expanding the number of stores, in addition to relocating existing stores
closer to the customer will have a significant impact on growing revenue levels
Focus on customer needs, as well as cultivating other customer profiles will
alter the product mix, invariably resulting in improved margins.
DIVIDENDS
In line with company dividend policy, no interim dividend has been declared.
Funds generated will be retained in the business to assist with the business
expansion
AUDITED RESULTS
These interim financial statements have been audited, while the comparative
figures for December 1999 have not been audited. The unqualified audit report,
provided by PricewaterhouseCoopers is available at the registered office of the
company.
On behalf of the Board
DONALD MASSON PAT GOLDRICK
Chairman Chief executive
27 February 2001
Directors: D Masson*(Chairman), PK Goldrick (Chief Executive) (Irish), CT Daly,
CB Fourie, C Stassen*
*Non Executive
Company secretary: Alan C Smith
Auditors: PricewaterhouseCoopers Inc.
Registered office:
Cnr. Aeroton and Aerodrome Roads, Aeroton, Johannesburg.
PO Box 90115, Bertsham 2013.
Transfer secretaries
Mercantile Registrars
11 Diagonal Street, Johannesburg.
PO Box 1053, Johannesburg 2000.
AUDITED RESULTS OF CASHBUILD CONFIRM SOLID BUSINESS FUNDAMENTALS
PRESS RELEASE
JOHANNESBURG - JSE-listed retailer, Cashbuild Ltd demonstrated a successful
turnaround despite static revenue growth when announcing their audited interim
results for the twenty-six trading weeks ended 23 December 2000 today.
Cash resources rose dramatically from R44,9 million to R83,8 million, with the
company trading cash positively throughout the period.
Profit before tax, excluding the exceptional item relating to an adjustment of
the loan granted to the Cashbuild Share Incentive Trust, brought on a 16.7%
year-on-year growth.
Headline earnings per share rose 10% from 28.8 cents to 31.7 cents over the
comparable reporting period, delivering an 88% return for shareholders over the
past five years.
Cashbuild supplies building material and associated products to subcontractors,
traders as well as directly to the public. Their 96 stores are dispersed
throughout South Africa as well as in neighbouring countries, and are geared to
offer in high volume, quality building materials to local communities at
competitive prices.
In the main, the company sells to cash paying customers, with credit sales
accounting less than 2% of their annual trade.
Through ongoing training and the economic empowerment of their staff at store
level, Cashbuild has built up a trusted name and well-known brand in the home
improvement market, building contractors, community leaders, as well as among
development agencies.
"We aim to expand our market reach dramatically over the next twelve months.
Our strategy to enlarge Cashbuild's outlet network has been jumpstarted with
the opening of two new stores in Mpumalanga and Swaziland during this reporting
period. Through competitive pricing and a prime location, our new
Nhlangano-store in Swaziland is already over achieving on our budgeted
forecasts," comments Pat Goldrick, Chief Executive of Cashbuild.
"Although business volumes at the Hazyview-store are picking up gradually, we
are satisfied with the growing customer base in this competitive trading
environment."
At year-end Craig Daly was appointed as financial director to oversee the
implementation of strict financial controls and stock management throughout the
chain.
Explains Goldrick, "June 2000's inventory discrepancy directed our focus onto
the need for reliable management and strict disciplines. There is already a
positive contribution resulting from the corrective action taken. Furthermore,
our drive on reducing shrinkage has produced a saving of R4 million, to an
average of 0.6% of sales over the past six months. We will continue to
concentrate management resources on cost control measures in order to maintain
this ratio which is impressive even when compared with industry standards."
Key growth drivers for the next twelve months relate to the pursuit of
profitable market share through roll-out of additional stores, the relocation
of existing stores to more strategically located trading areas, and improved
economic fundamentals.
According to Daly, financial drivers for this well established yet dynamic
company include the prospects of attaining wider sales margins in tandem with
improving economic conditions, interest income raised from cash balances, as
well as a more productive application of working capital deriving from
continued stock reduction savings.
"Our results show that Cashbuild is firmly 'back-on-track'. With a strong
balance sheet and ample cash resources, we can finance all our growth
internally. Having consolidated our position, we are confident that we can now
introduce additional product lines in cultivating a new customer base, thus not
only growing our traditional market share, but also capitalising on more
profitable trading opportunities in previously untapped areas," continues
Goldrick.
In line with company dividend policy, no dividend has been declared for the
interim, with profits generated earmarked for business expansion.
END
ABOUT CASHBUILD LTD
Cashbuild is a retailer of building material and associated products, selling
directly to a cash paying customer base via its chain of branded stores
throughout South Africa, and its neighbouring countries.
Issued on behalf of : CASHBUILD LIMITED - JSE ticker: CSB
Client Contact : Mr Pat Goldrick
Position : Chief Executive
Tel No : (011) 248-1500
Cell No : 082 800 3681
Email : brenda@cashbuild.co.za
Client Contact : Mr Craig Daly
Position : Financial Director
Tel No : (011) 248-1500
Cell No : 082 873 0603
Email : craig@cashbuild.co.za
Editorial Contact : Ms Gail Young
Position : Account Executive
Tel No : (011) 880-0364
Fax No : (011) 788-3697
Email : southgro@icon.co.za
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