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Cashbuild - Audited annual financial results for the year ended 30 June 2006
CASHBUILD LIMITED
(Registration number: 1986/001503/06)
(Incorporated in the Republic of South Africa)
JSE Share Code: CSB & ISIN: ZAE000028320
Audited annual financial results for the year ended 30 June 2006
Net asset value per share up 33%
Revenue up 23%
Operating profit up 10%
Dividend per share up 8%
CONDENSED GROUP INCOME STATEMENT - AUDITED
R"000 Year ended Year ended
30 June 30 June %
2006 2005 Change
(Restated)
Revenue 2,710,417 2,208,902 23
Cost of sales (2,114,497) (1,725,135) 23
Gross profit 595,920 483,767 23
Selling and marketing expenses (394,323) (303,431) 30
Administrative expenses (72,223) (61,271) 18
Other operating expenses (1,931) (2,407) (20)
Other income 4,499 3,098 45
Operating profit 131,942 119,756 10
Finance cost (1,336) (645) 107
Finance income 4,807 7,599 (37)
Profit before income tax 135,413 126,710 7
Income tax expense (45,547) (42,546) 7
Profit for the year 89,866 84,164 7
Attributable to:
Equity holders of the company 82,700 78,191 6
Minority interest 7,166 5,973 20
89,866 84,164 7
Basic earning per share (cents) 366.3 356.9 3
Diluted basic earnings per share (cents) 366.3 356.9 3
ADDITIONAL INFORMATION - AUDITED
R"000 Year ended Year ended
30 June 30 June
2006 2005
(Restated)
Net asset value per share (cents) 1,003 753
Ordinary shares (000s):
- In issue 25,805 25,805
- Weighted-average 22,575 21,906
- Diluted weighted-average 22,575 21,906
Capital expenditure 77,349 59,281
Depreciation of property, plant and equipment 20,403 14,760
Amortisation of intangible assets 1,734 1,025
Impairment of intangible assets - 239
Capital commitments 52,633 39,977
Property operating lease commitments 530,936 334,585
Contingent liabilities 6,387 1,874
RECONCILIATION OF PREVIOUS SA GAAP TO IFRS
R"000 Year ended
30 June 2005 01 July 2004 30 June 2005
(Restated) (Restated) (Restated)
Net profit for the Equity attributable to equity
period holders of the parent
As previously reported 75,941 154,238 199,542
SA GAAP adjustments 1,987 (1,671) (6,085)
Reclassification of finance leases
(note 3) 962 (1,671) (708)
Effects of change to foreign
exchange rates (note 4) 1,025 - (5,377)
IFRS adjustments 263 626 889
Property, plant and equipment (note 5) 263 626 889
Restated under IFRS 78,191 153,193 194,346
CONDENSED GROUP BALANCE SHEET - AUDITED
R"000 30 June 30 June
2006 2005
(Restated)
ASSETS
Non-current assets 215,026 169,531
Property, plant and equipment 205,094 157,078
Intangible assets 6,852 7,648
Deferred income tax assets 3,080 4,805
Current assets 678,106 598,527
Assets held for sale 6,637 -
Inventories 482,836 394,747
Trade and other receivables 56,609 36,610
Cash and cash equivalents 132,024 167,170
Total assets 893,132 768,058
EQUITY AND LIABILITIES
Shareholders" equity 286,845 215,196
Share capital and reserves 258,909 194,346
Minority interest 27,936 20,850
Non-current liabilities 29,358 26,247
Deferred operating lease liability 25,917 22,453
Deferred profit 1,959 2,011
Deferred income tax liability 28 414
Borrowings (non interest-bearing) 1,454 1,369
Current liabilities 576,929 526,615
Trade and other liabilities 540,438 505,605
Current income tax liabilities 35,542 20,012
Borrowings - 47
Employee benefits 949 951
Total equity and liabilities 893,132 768,058
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY - AUDITED
Attributable to equity holders of the company
Cumm.
R"000 Share Share translation Retained Minority Total
capital premium adjustment earnings interest equity
Balance at
1 July 2004 220 29,822 - 123,151 16,360 169,553
Profit for the
year - - - 78,191 5,973 84,164
Dividend paid - - - (22,980) (1,483) (24,463)
Issue of shares 26 75,042 - - - 75,068
Share issue
expenses
written-off - (188) - - - (188)
Net treasury
shares
movement (22) (82,515) - - - (82,537)
Currency
translation
adjustments - - (6,401) - - (6,401)
Closing balance at
30 June 2005 224 22,161 (6,401) 178,362 20,850 215,196
Profit for
the year - - - 82,700 7,166 89,866
Dividend paid - - - (25,350) (80) (25,430)
Net treasury
shares
movement 4 7,658 - - - 7,662
Currency
translation
adjustments - - (449) - - (449)
Closing balance at
30 June 2006 228 29,819 (6,850) 235,712 27,936 286,845
CONDENSED GROUP CASH FLOW STATEMENT - AUDITED
R"000 Year ended Year ended
30 June 30 June
2006 2005
(Restated)
Cash flows from operating activities
Cash generated from operations 84,324 146,565
Interest paid (1,336) (645)
Taxation paid (28,678) (39,018)
Net cash generated from operating activities 54,310 106,902
Cash flows from investing activities
Net investment in assets (76,533) (58,162)
Interest received 4,807 7,599
Net cash used in investing activities (71,726) (50,563)
Cash flows from financing activities
Proceeds from issue of ordinary shares - 74,880
Net treasury shares movement 7,662 (82,537)
Increase/(decrease) in other borrowings 38 (445)
Dividends paid
- own equity (25,350) (22,980)
- minorities (80) (1,483)
Net cash used in financing activities (17,730) (32,565)
Net (decease)/increase in cash and
cash equivalents (35,146) 23,774
Cash and cash equivalents at beginning of year 167,170 143,396
Cash and cash equivalents at end of year 132,024 167,170
CONDENSED GROUP SEGMENTAL ANALYSIS - AUDITED
Year ended June 2006
Other members
of common Botswana
R"000 South Africa monetary area* & Malawi Group
Income statement
Revenue 2,197,666 332,807 179,944 2,710,417
Operating profit 111,068 16,800 4,074 131,942
Balance sheet
Segment assets 693,185 116,145 83,802 893,132
Segment liabilities 498,203 47,048 61,036 606,287
Other segment items
Depreciation 17,355 2,066 982 20,403
Amortisation 1,699 - 35 1,734
Impairment - - - -
Capital expenditure 57,129 13,377 6,843 77,349
*Includes Namibia, Swaziland & Lesotho.
CONDENSED GROUP SEGMENTAL ANALYSIS - AUDITED
Year ended June 2005
Other members
of common Botswana
R"000 South Africa monetary area* & Malawi Group
Income statement
Revenue 1,739,638 263,224 206,040 2,208,902
Operating profit 90,097 13,786 15,873 119,756
Balance sheet
Segment assets 619,900 83,719 64,439 768,058
Segment liabilities 474,913 22,428 55,521 552,862
Depreciation 12,778 985 997 14,760
Amortisation 1,025 - - 1,025
Impairment 198 - 41 239
Capital expenditure 49,421 9,486 374 59,281
*Includes Namibia, Swaziland & Lesotho.
NOTES TO THE CONDENSED GROUP ANNUAL FINANCIAL INFORMATION
1. Basis of preparation. The condensed consolidated financial information
("financial information") announcement is based on the audited financial
statements of the group for the year ended 30 June 2006 which have been prepared
in accordance with International Financial Reporting Standards ("IFRS"), the
Listings Requirements of the JSE Limited and the South African Companies Act
(1973). The financial statements for the year ended 30 June 2006 are Cashbuild"s
first published financial statements stating compliance with IFRS. Refer to the
reconciliation of previous GAAP to IFRS for the effects of IFRS compliance on
previously reported financial statements. The nature of all items reconciling SA
GAAP to IFRS has been described in detail in the financial statements for the
year ended 30 June 2006.
2. Independent audit by the auditors. These condensed consolidated results have
been audited by our auditors PricewaterhouseCoopers Inc., who have performed
their audit in accordance with the International Standards on Auditing. A copy
of their unqualified audit report is available for inspection at the registered
office of the company.
3. Reclassification of finance leases. Based on the reinterpretation of IAS 17
in respect of the classification of operating leases as finance leases, certain
operating leases were reclassified as finance leases. This reinterpretation was
taken into account in compiling the results and assets and liabilities amounting
to R 12.0 million and R 1.5 million respectively, have been accounted for on the
balance sheet
4. Effects of changes in foreign exchange rates. IAS 21 introduces the concept
of "functional currency". This change affected the accounting for the African
subsidiaries of Cashbuild, where there was reclassification of certain foreign
exchange gains and losses from the income statement to the foreign currency
translation reserve ("FCTR") in the balance sheet. The IFRS 1 exemption was
elected, which had the effect of eliminating the FCTR on the date of transition
(1 July 2004).
5. Property, plant and equipment. IAS 16 requires the reassessment of an asset"s
useful life and residual value at each balance sheet date. Applying this
statement retrospectively has had the effect of the results being restated.
6. Reporting period. The group adopts the retail accounting calendar, which
comprises the reporting period ending on the last Saturday of the month (2006:
24 June (52 weeks); 2005: 25 June (52 weeks)).
7. Earnings per share. Earnings per share is calculated by dividing the earnings
attributable to shareholders for the period by the weighted average number of
22,575,442 ordinary shares in issue during the year. (June 2005: 21,905,687
shares).
8. Headline earnings per ordinary share. The calculations of headline earnings
and diluted headline earnings per ordinary share are based on headline earnings
of R 82.8 million (June 2005: R 78.4 million) and a weighted average of
22,575,442 (June 2005: 21,905,687) and fully diluted of 22,575,442 (June 2005:
21,905,687) ordinary shares in issue.
Reconciliation between net profit attributable to the equity holders of the
company and headline earnings:
%
R"000 Jun-06 Jun-05 Change
Net profit attributable to the company"s
equity holders 82,700 78,191 6
Impairment of goodwill - 239
Loss/(profit) on sale of assets after taxation 78 (50)
Headline earnings 82,778 78,380 6
Headline earnings per share (cents) 366.7 357.8 3
Diluted headline earnings per share (cents) 366.7 357.8 3
9. Declaration of dividend. The board has declared a final dividend (No. 27), of
58 cents (June 2005: 54 cents) per ordinary share to all shareholders of
Cashbuild Limited. The dividend per share is calculated based on 25,805,347
shares in issue at date of dividend declaration. The total dividend for the year
amounts to 116 cents (June 05: 107 cents) an 8% increase year on year.
Date dividend declared: Monday, 18 September 2006;
Last day to trade "CUM" the dividend: Friday, 6 October 2006;
Date commence trading "EX" the dividend: Monday, 9 October 2006;
Record date: Friday, 13 October 2006;
Date of payment: Monday, 16 October 2006.
Share certificates may not be dematerialised or rematerialised between Monday,
09 October 2006 and Friday, 13 October 2006, both dates inclusive.
On behalf of the board
DONALD MASSON PAT GOLDRICK
Chairman Chief executive
Johannesburg Date: 18 September 2006
COMMENTS
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 (150 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, large construction
companies and government-related infrastructure developers, as well as all other
customers requiring quality building materials at lowest prices.
Cashbuild has built its credibility and reputation by consistently offering its
customers lowest everyday prices and through a purchasing and inventory policy
that ensures that requirements are always in stock.
INTERNATIONAL FINANCIAL REPORTING STANDARDS
The group is reporting its audited results in accordance with International
Financial Reporting Standards ("IFRS"). Results for the prior financial year
have been restated. The conversion to IFRS has had a limited effect on the
group"s results.
FINANCIAL HIGHLIGHTS
Revenue for the year increased by 23% whilst profit increased by 7%. Operating
profit improved by 10% and headline earnings by 6%. Net asset value per share
has increased by 33%, from 753 cents (June 2005) to 1,003 cents.
Stores in existence since the beginning of July 2004 (pre-existing stores)
accounted for 11% of the increase in revenue with the remaining 12% increase due
to the 28 new stores the company has opened since July 2004. The increase for
the year has been achieved on the back of a positive 1st half with revenue
growth for the second half of the year being a disappointing 11%. The result of
a change from a free national customer delivery service to a free local service,
as well as disappointing trading in our Botswana operation contributed to the
revenue growth being lower than anticipated. Management has strategically
addressed the 2nd half revenue growth and is pleased with the trading since year
end. Gross profit margins for the year remained at acceptable levels with some
downward pressure being experienced in the latter part of the fourth quarter,
combined with a shift in sales mix.
Operational expenses for the 2nd half of the financial year were well controlled
with existing stores increasing by 1%. New stores contributed 13% with the total
increase for the 2nd half being 14%. This, linked to the first half, resulted in
an overall increase for the year of 28% (existing stores 14% and new stores
14%). The non-recurrence of certain once-off costs, e.g. brand advertising and
the focus on managing the free customer delivery costs without compromising
service levels, were the main contributors to the cost savings compared to the
first half.
The effective tax rate for the year of 33.6% is at the expected level, with STC
charges being the main contributor to the higher rate.
Cashbuild"s balance sheet remains solid. Stock levels have increased by 22% on
the back of higher trading volumes (10% 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 19 additional stores during this
financial year (accounting for 15% of the increase). Overall stockholding
remains well managed at 65 days (June 2005: 59 days). The company"s cash levels
decreased to R 132 million resulting from the step-up in the opening of new
stores, the increase in operating expenses, as well as the utilisation of cash
to early settle creditors at favourable discounts. Trade debtor balances
remained well under control.
During the financial year Cashbuild opened a record number of 17 new stores.
Cashbuild remains committed to open at least 10 new stores per year for the
foreseeable future. Six stores were refurbished and three relocated during the
financial year. The refurbishment plan and, where the opportunity arises,
relocating of certain stores will remain an area of strategic focus.
PROSPECTS
Although indications are, based on lower building plans passed and lower bond
granting, that the residential market will experience a slow-down, management is
confident that, as in the past, the alteration and improvement segment will
remain at solid growth levels which will support real revenue growth in the
future. The first 9 trading weeks after year-end have reported an increase in
revenue of 20% on that of the comparable 9 weeks.
INFORMATION TECHNOLOGY
An independent review of the current status of the IT within the business was
commissioned at the end of the financial year. The findings of this review have
confirmed management"s belief regarding the long-term non-feasibility of the IT
solution currently in place. A comprehensive strategic plan has been developed
to address this matter.
Directors: D Masson* (Chairman), PK Goldrick (Chief executive) (Irish), WF de
Jager, J Molobela*, FM Rossouw*, NV 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: 19/09/2006 02:01:10 PM Supplied by www.sharenet.co.za
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