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Cashbuild - audited annual financial results for the year ended 30 June 2005
CASHBUILD LIMITED
(Registration number: 1986/001503/06)
(Incorporated in the Republic of South Africa)
Listed on the JSE
JSE Share Code: CSB
ISIN: ZAE000028320
AUDITED ANNUAL FINANCIAL RESULTS FOR THE YEAR ENDED 30 JUNE 2005
OPERATING PROFIT up 43% HEADLINE EARNINGS up 41%
REVENUE up 35% CASH RESOURCES up 17%
CONDENSED GROUP BALANCE SHEET - AUDITED
R"000 30 June 30 June
2005 2004
Assets
Non-current assets 167,012 126,965
Property, plant & equipment 146,154 103,331
Intangible assets 7,654 8,521
Deferred taxation 5,792 6,530
Other non-current assets 7,412 8,583
Current assets 602,848 460,413
Inventories 397,480 279,141
Trade and other receivables 38,198 37,876
Cash and cash equivalents 167,170 143,396
Total assets 769,860 587,378
Equity and liabilities
Shareholders" funds 199,542 154,238
Minority interest 20,836 16,350
Non-current liabilities 22,867 21,710
Interest-bearing borrowings - 203
Operating lease liability 22,453 21,146
Deferred taxation 414 361
Current liabilities 526,615 395,080
Short-term borrowings 47 289
Tax liability 20,012 17,787
Trade and other liabilities 505,605 375,789
Employee benefits 951 1,215
Total liabilities 549,482 416,790
Total equity and liabilities 769,860 587,378
Capital expenditure 59,274 48,697
Depreciation of property, plant and equipment 16,005 10,664
Amortisation of intangible assets 243 220
Net asset value per share (cents) 773 664
Capital commitments 39,977 53,221
Property lease commitments 334,969 217,271
Contingent liabilities 1,874 3,044
CONDENSED GROUP INCOME STATEMENT - AUDITED
R"000 30 June 30 June Change
2005 2004 %
Revenue 2,208,902 1,635,233 35.1
Cost of sales 1,725,135 1,281,919
Gross profit 483,767 353,314
Operating expenses 366,777 271,458 35.1
Operating profit before
financing income 116,990 81,856 42.9
Net financing income 6,954 8,002 (13.1)
Profit before taxation 123,944 89,858 37.9
Taxation 42,034 31,903
Profit after taxation 81,910 57,955 41.3
Minority interest 5,969 4,652
Attributable earnings 75,941 53,303 42.5
Reconciliation of attributable earnings to headline earnings:
Attributable earnings 75,941 53,303
(Profit)/loss on sale of assets
after taxation (50) 137
Impairment of property - 307
Amortisation of goodwill 240 217
Headline earnings 76,131 53,964 41.1
Earnings per share (cents):
- Headline 347.5 251.3 38.3
- Fully diluted headline 313.3 232.4 34.8
- Basic 346.7 248.2 39.7
- Fully diluted basic 312.5 229.5 36.2
Dividend per share (cents):
- interim 53 29 83.0
- final (note 7) 54 49 10.2
Total dividend 107 78 37.2
Number of shares in issue (`000) 25,805 23,225
Weighted average number of shares
(`000) 21,906 21,477
Fully diluted weighted number of
shares (`000) 24,300 23,225
GROUP STATEMENT OF CHANGES IN EQUITY - AUDITED
Foreign
R"000 currency Distri-
Share Share translation butable
capital premium reserve reserves Total
Opening balance
at 1 July 2003 209 27,795 2,730 97,542 128,276
Attributable earnings
for the year 53,303 53,303
Dividend paid (15,300) (15,300)
Net treasury shares
movement 11 2,027 2,038
Operating lease adjustment
(Note 3) (14,079) (14,079)
Closing balance
at 30 June 2004 220 29,822 2,730 121,466 154,238
Attributable earnings
for the year 75,941 75,941
Dividend paid (22,980) (22,980)
Issue of shares 26 75,042 75,068
Share issue expenses
written off (188) (188)
Net treasury shares
movement (22) (82,515) (82,537)
Closing balance
at 30 June 2005 224 22,161 2,730 174,427 199,542
CONDENSED GROUP CASH FLOW STATEMENT - AUDITED
R"000 30 June 30 June
2005 2004
Cash flows from operating activities
Cash receipts from customers 2,208,580 1,637,186
Cash paid to suppliers and employees (2,063,330) (1,520,988)
Cash generated from operations 145,250 116,198
Interest received 7,599 8,683
Interest paid (645) (681)
Dividends paid (24,475) (15,300)
Taxation paid (39,018) (28,002)
Net cash inflows from operating activities 88,711 80,898
Cash flows from investing activities
Additions to property, plant and equipment (58,863) (41,042)
Additions to system implementation (398) (6,442)
Additions to trademarks - (22)
Acquisition of subsidiary - 4
Proceeds on disposal of property,
plant and equipment 1,119 1,024
Net cash (outflows) from investing
activities (58,142) (46,478)
Cash flows from financing activities
Proceeds from issue of ordinary shares 75,068 -
Net treasury shares movement (82,725) 2,038
Increase in long-term borrowings 1,104 654
(Decrease)in short-term borrowings (242) (106)
Net cash (outflows)/inflows from financing
activities (6,795) 2,586
Net increase in cash and cash equivalents 23,774 37,006
Cash and cash equivalents at
beginning of year 143,396 106,390
Cash and cash equivalents at end of year 167,170 143,396
CONDENSED GROUP SEGMENTAL ANALYSIS
June 2005
Other members
of common Botswana
R"000 South Africa monetary area* & Malawi Group
Income statement
Revenue
- External 1,739,638 263,224 206,040 2,208,902
- Internal 34,566
Operating profit before
financing income 88,419 13,745 14,826 116,990
Balance sheet
Segmental assets 616,485 83,647 69,728 769,860
Segmental liabilities 471,533 22,428 55,521 549,482
Depreciation 13,829 1,026 1,150 16,005
Amortisation 202 - 41 243
Impairment of property - - - -
Capital expenditure 49,414 9,486 374 59,274
* includes Namibia, Swaziland and Lesotho
CONDENSED GROUP SEGMENTAL ANALYSIS
June 2004
Other members
of common Botswana
R"000 South Africa monetary area* & Malawi Group
Income statement
Revenue
- External 1,239,762 215,291 180,180 1,635,233
- Internal 33,161
Operating profit before
financing income 61,901 13,732 6,223 81,856
Balance sheet
Segmental assets 478,631 52,073 56,674 587,378
Segmental liabilities 322,315 44,819 49,656 416,790
Depreciation 8,945 566 1,153 10,664
Amortisation 202 - 18 220
Impairment of property 307 - - 307
Capital expenditure 42,438 4,307 1,952 48,697
* includes Namibia, Swaziland and Lesotho
NOTES TO THE CONDENSED GROUP ANNUAL FINANCIAL INFORMATION
1. Audit opinion. The condensed announcement of results has been derived from
the group annual financial statements, prepared in accordance with South African
Statements of Generally Accepted Accounting Practice and in the manner required
by the Companies Act.
PricewaterhouseCoopers Inc. have audited the group annual financial statements
and their unqualified audit report as well as their report on the condensed
announcement are available for inspection at the registered office of the
company.
2. Accounting policies. The accounting policies used in the preparation of the
annual financial statements are consistent with those used in the annual
financial statements for the year ended 30 June 2004.
In terms of the JSE Limited Listing Requirements, compliance with IFRS is
required for financial years beginning on or after 1 January 2005. Accordingly,
the group is required to produce IFRS compliant financial interim results for
six months ending 31 December 2005 and compliant financial statements for the
year ending 30 June 2006 as well as restated comparatives. To this end the group
has initiated an IFRS conversion project, which is on track to meet the required
deadlines.
3. Change in accounting interpretation.
The group previously accounted for operating leases by recognising the lease
expense in the year in which the financial obligation arose. Due to the change
in interpretation of the accounting standard regarding leases, lease payments
under operating leases are now recognised as an expense on a straight line basis
over the lease term unless another systematic basis is more representative of
the time pattern of the user"s benefit. The impact of this change is that
earnings for the year was reduced by R0.6 million and that of the prior year by
R 0.1 million. Retained earnings at 1 July 2003 was reduced by R14 million
(after tax) and long-term liabilities increased accordingly.
4. Reporting period. The group adopts the retail accounting calendar, which
comprises the reporting period ending on the last Saturday of the month (2005:
25 June (52 weeks); 2004: 26 June (52 weeks)).
5. Weighted average number of shares.
Number of shares reconciliation:
Jun-05 Jun-04
Opening number of shares in issue
/fully diluted number of shares 23,224,812 23,224,812
Weighted number of shares issued
during the year 1,075,223 -
Weighted number of treasury shares (2,394,348) (1,748,021)
Weighted number of shares 21,905,687 21,476,791
6. Earnings per share. Basic earnings per share is calculated by dividing the
earnings attributable to shareholders by the weighted average number of
21,905,687 ordinary shares in issue during the year (June 2004: 21,476,791
shares).
To calculate the headline earnings per share, the earnings attributable to
shareholders is adjusted for the (profit)/loss on sale of assets, after taxation
,impairment of property and the amortisation of goodwill. It is also calculated
net of treasury shares acquired or sold by the Cashbuild Share Incentive Trust,
which are included in the calculation from the date of acquisition, as well as
the shares held by the Cashbuild Empowerment Trust.
This headline earnings calculation is in compliance with SAICA Circular 7/2002
as directed by the JSE Limited.
7. Declaration of dividend. The board has declared a final dividend (No.25), of
54 cents per ordinary share to all shareholders of Cashbuild Limited.
Date dividend declared: Wednesday, 28/09/2005
Last day to trade "CUM" the dividend: Friday, 14/10/2005
Date commence trading "EX" the dividend: Monday, 17/10/2005
Record date: Friday, 21/10/2005
Date of payment: Monday, 24/10/2005
Share certificates may not be dematerialised or rematerialised between Monday,
17 October 2005 and Friday, 21 October 2005, both dates inclusive.
On behalf of the board
DONALD MASSON PAT GOLDRICK
Chairman Chief executive
Johannesburg 28 September 2005
NATURE OF BUSINESS
Cashbuild is southern Africa"s largest retailer of quality building materials
and associated products, selling direct to a cash-paying customer base through
our constantly expanding chain of stores (134 at the end of this reporting
period). Cashbuild carries an in-depth quality product range tailored to the
specific needs of the communities we serve. Our customers are typically home
builders and improvers, contractors, farmers, traders and increasingly, large
construction companies and government-related infrastructure developers, as well
as all discerning customers requiring quality building materials at lowest
prices.
Cashbuild has built its credibility and reputation by consistently offering
lowest everyday prices, and through a purchasing and inventory policy that
ensures that customers" requirements are always in stock.
FINANCIAL HIGHLIGHTS
Headline earnings increased by 41% and operating profit before financing income
by 43% for the year ended 30 June 2005. Net asset value per share has,
notwithstanding the issue of an additional 2.6 million shares, increased by 16%,
from 664 cents (June 2004) to 773 cents. On a comparable basis the increase
would have been 29%.
Revenue for the first time, exceeded R2 billion, an impressive increase of 35%
on the previous year. Stores in existence since the beginning of the prior
reporting period (pre-existing stores) accounted for a healthy 26% of the
increase with the remaining 9% increase due to the 21 new stores the company has
opened since July 2003 (new stores).
This increase has been achieved as a result of the company"s ability to continue
to grow market share through its proven core strategies of `always in stock",
`lowest everyday prices" and the addition of its latest core strategies of a
free local delivery service and extended shopping hours. Our successful
marketing campaign of "Life offers no guarantees, but Cashbuild does" has also
had a positive effect on the top line growth.
Although there is a suggestion of a slow-down in the construction industry,
Cashbuild in its market segment has not seen any evidence of this. The
macroeconomic environment is still conducive to growth in this sector and
Cashbuild continues to be optimistic. Margins remain at acceptable levels.
The exceptional growth in market share has been achieved with a planned
resultant step-up in the cost base of the company. Operating expenses, as
expected, showed an increase of 35% on the prior year, with pre-existing stores
adding 26% of the increase, whilst new stores added 9%. This increase is
attributable to costs associated with our core strategies and other costs in
support of the future growth of the business, i.e. free local deliveries, pro-
active investment in additional employees to support our future expansion plans,
extended shopping hours, property expenses and expenditure on new IT
infrastructure.
The tax rate for the year is at anticipated levels, but lower than that of the
prior year, mainly due to the reduction in the South Afican companies tax rate.
Cashbuild"s balance sheet remains solid. Stock levels have increased by 42% on
the back of higher trading volumes (48% increase in the 4th quarter) with the
Cashbuild stock model being adhered to by line management. This increase is
further attributable to the stocking of 11 new stores opened during the last
financial year (accounting for 10% of the increase). Overall stockholding
remains well managed at 73 days (June 2004: 69 days). The company"s strong cash
generating ability resulted in an overall increase in cash levels to R167
million, representing a 17% improvement on the prior year (with no long-term
interest-bearing borrowings).
Cashbuild"s expansion plans continue in a controlled manner with 11 new stores
opened, seven refurbished and one relocated during this financial year.
PROSPECTS
Revenue for the first 12 trading weeks of the new financial year continues to
show strong growth on the comparable period. We have every expectation that
these growth levels, barring any unforeseen circumstances or significant
macroeconomic events, should continue for the remainder of the calendar year.
INFORMATION TECHNOLOGY
The first phase of Cashbuild"s new IT system implementation, being the roll-out
of a new IT platform at support office is still in the process of being bedded
down. The second phase, being the roll-out of a new IT platform at store level
will begin on completion of the first phase. This roll-out is expected to take
two years and is planned to commence during the 2006 calendar year.
BROAD-BASED BEE TRANSACTION
In terms of the broad-based BEE transaction approved by the shareholders on 7
February 2005, 2,580,535 shares were issued to the Cashbuild Empowerment Trust,
bringing the total issued shares to 25,805,347 (June 2004: 23,224,812). The
shares were issued for a total consideration of R75.1 million (R29.09 per
share). The trust was funded by way of an interest-free loan from one of the
group companies.
The first dividend payment to the beneficiaries of the Cashbuild Empowerment
Trust was effected during May 2005. This was very well received by the new
"shareholders" and has had a positive effect on staff morale and motivation.
DIVIDENDS
The board has resolved to amend the company"s dividend policy to a 3 times cover
based on 1st half results and a 2.5 times cover based on 2nd half results. The
dividend declared by the board is already based on the amended policy. The
increase in total dividend per share compared to the prior year, amounted to
37%.
Directors: D Masson* (Chairman), P K Goldrick (Chief executive) (Irish), C T
Daly, W F de Jager, J Molobela*, F M Rossouw*, N V Simamane*, A van Onselen
(*Non-executive)
Company secretary: Alan C Smith
Auditors: PricewaterhouseCoopers Inc.
Sponsor: Nedbank Capital
Registered office: cnr Aeroton and Aerodrome Roads, Aeroton, Johannesburg 2001.
PO Box 90115, Bertsham 2013
Transfer secretaries: Computershare Investor Services 2004 (Pty) Limited, 70
Marshall Street, Johannesburg 2001. PO Box 61051, Marshalltown 2107
LARGEST RETAILER OF BUILDING MATERIALS IN SOUTHERN AFRICA
www.cashbuild.co.za
Date: 29/09/2005 08:42:38 AM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
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