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CSB - Cashbuild Limited - Audited interim results December 2006 and dividend
declaration
Cashbuild Limited
(Registration number: 1986/001503/06)
(Incorporated in the Republic of South Africa)
JSE Share Code: CSB ISIN: ZAE000028320
REVENUE UP 22%; NET ASSET VALUE PER SHARE UP 31%; OPERATING PROFIT UP 29;
HEADLINE EARNINGS UP 36%; CASH AND CASH EQUIVALENTS UP 28%; DIVIDENDS UP 36%
Audited interim results DECEMBER 2006
CONDENSED GROUP INCOME STATEMENT - AUDITED
Six months Six months Year
ended ended ended
31 December 31 December % 30 June
R`000 2006 2005 Change 2006
Revenue 1,744,427 1,433,174 22 2 710,417
Cost of sales (1,383,998) (1,120,215) 24 (2,114,497)
Gross profit 360,429 312,959 15 595,920
Selling and marketing expenses (224,148) (206,234) 9 (394,323)
Administrative expenses (44,543) (36,154) 23 (72,223)
Other operating expenses (1,001) (1,105) (9) (1,931)
Other income 908 1,479 (39) 4,499
Operating profit 91,645 70,945 29 131,942
Finance cost (854) (381) 124 (1,336)
Finance income 4,927 3,011 64 4,807
Profit before income tax 95,718 73,575 30 135,413
Income tax expense (31,585) (23,862) 32 (45,547)
Profit for the period 64,133 49,713 29 89,866
Attributable to:
Equity holders of the company 60,848 45,039 35 82,700
Minority interest 3,285 4,674 (30) 7,166
64,133 49,713 29 89,866
Earnings per share (cents) 268.4 200.4 34 366.3
Diluted earnings per share (cents) 268.4 200.4 34 366.3
ADDITIONAL INFORMATION - AUDITED
Six months Six months Year
ended ended ended
31 December 31 December 30 June
R`000 2006 2005 2006
Net asset value per share (cents) 1,188 906 1,003
Ordinary shares (`000)
- In issue 25,805 25,805 25,805
- Weighted-average 22,672 22,478 22,575
- Diluted weighted-average 22,672 22,478 22,575
Capital expenditure 39,159 46,006 77,349
Depreciation of property, plant
and equipment 13,174 9,201 20,403
Amortisation of intangible assets 549 833 1,734
Impairment of intangible assets 462 - -
Capital commitments 42,049 27,909 52,633
Operating lease commitments 630,189 522,480 530,936
Contingent liabilities 2,251 4,025 7,078
CONDENSED GROUP BALANCE SHEET - AUDITED
31 December 31 December 30 June
R`000 2006 2005 2006
ASSETS
Non-current assets 241,364 203,865 215,026
Property, plant and equipment 230,488 192,266 205,094
Intangible assets 5,833 7,712 6,852
Deferred income tax assets 5,043 3,887 3,080
Current assets 915,920 741,312 678,106
Assets held for sale 6,695 - 6,637
Inventories 564,094 480,998 482,836
Trade and other receivables 57,397 35,704 56,609
Cash and cash equivalents 287,734 224,610 132,024
Total assets 1,157,284 945,177 893,132
EQUITY AND LIABILITIES
Shareholders` equity 335,354 259,261 286,845
Share capital and reserves 306,692 233,737 258,909
Minority interest 28,662 25,524 27,936
Non-current liabilities 32,081 27,548 29,358
Deferred operating lease liability 28,586 23,809 25,917
Deferred profit 1,933 1,985 1,959
Deferred income tax liability 16 385 28
Borrowings (non interest bearing) 1,546 1,369 1,454
Current liabilities 789,849 658,368 576,929
Trade and other liabilities 764,060 632,950 540,438
Current income tax liabilities 24,718 24,471 35,542
Employee benefits 1,071 947 949
Total equity and liabilities 1,157,284 945,177 893,132
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY - AUDITED
Attributable to equity holders of the company
Cumm.
Share Share translation Retained Minority Total
R`000 capital premium adjustment earnings interest equity
Balance at
1 July 2005 224 22,161 (6,401) 178,362 20,850 215,196
Profit for
the period - - - 45,039 4,674 49,713
Dividend paid
- final 2005 - - - (12,200) - (12,200)
Net treasury shares
movement 4 7,658 - - - 7,662
Currency translation
adjustments - - (1,109) - - (1,109)
Balance at 31 December
2005 228 29,819 (7,510) 211,201 25,524 259,262
Profit for the period - - - 37,661 2,492 40,153
Dividend paid
- interim 2006 - - - (13,150) (80)(13,230)
Currency translation
adjustments - - 660 - - 660
Balance at 30 June
2006 228 29,819 (6,850) 235,712 27,936 286,845
Profit for the period - - - 60,848 3,285 64,133
Dividend paid
- final 2006 - - - (13,150) (2,559)(15,709)
Currency translation
adjustments - - 85 - - 85
Balance at 31 December
2006 228 29,819 (6,765) 283,410 28,662 335,354
CONDENSED GROUP CASH FLOW STATEMENT - AUDITED
Six months Six months Year
ended ended ended
31 December 31 December 30 June
R`000 2006 2005 2006
Cash flows from operating activities
Cash generated from operations 250,777 123,874 84,324
Interest paid (854) (381) (1,336)
Taxation paid (44,384) (18,514) (28,678)
Net cash generated from operating
activities 205,539 104,979 54,310
Cash flows from investing activities
Net investment in assets (39,139) (45,964) (76,533)
Interest received 4,927 3,011 4,807
Net cash used in investing
activities (34,212) (42,953) (71,726)
Cash flows from financing activities
Net treasury shares movement - 7,661 7,662
Increase/(decrease) in borrowings 92 (47) 38
Dividends paid
- own equity (13,150) (12,200) (25,350)
- minorities (2,559) - (80)
Net cash used in financing
activities 15,617 (4,586) (17,730)
Net increase/(decrease) in cash
and cash equivalents 155,710 57,440 (35,146)
Cash and cash equivalents at
beginning of period 132,024 167,170 167,170
Cash and cash equivalents at
end of period 287,734 224,610 132,024
CONDENSED GROUP SEGMENTAL ANALYSIS - AUDITED
South Africa
R`000 Six months Six months Year
ended ended ended
31 December 31 December 30 June
2006 2005 2006
Income statement
Revenue 1,430,440 1,154,491 2,197,666
Operating profit 72,043 54,613 111,068
Balance sheet
Segment assets 859,197 757,240 693,185
Segment liabilities 619,987 538,892 498,203
Other segment items
Depreciation 11,186 7,966 17,355
Amortisation 549 813 1,699
Impairment 462 - -
Capital expenditure 34,178 32,332 57,129
Other members of common monetary area *
R`000 Six months Six months Year
ended ended ended
31 December 31 December 30 June
2006 2005 2006
Income statement
Revenue 198,951 183,420 332,807
Operating profit 7,554 12,517 16,800
Balance sheet
Segment assets 192,207 118,113 116,145
Segment liabilities 122,434 53,519 47,048
Other segment items
Depreciation 1,495 833 2,066
Amortisation - - -
Impairment - - -
Capital expenditure 4,644 9,525 13,377
*Includes Namibia, Swaziland and Lesotho
Botswana and Malawi
R`000 Six months Six months Year
ended ended ended
31 December 31 December 30 June
2006 2005 2006
Income statement
Revenue 115,036 95,263 179,944
Operating profit 12,048 3,815 4,074
Balance sheet
Segment assets 105,880 69,824 83,802
Segment liabilities 79,509 48,505 61,036
Other segment items
Depreciation 493 402 982
Amortisation - 20 35
Impairment - - -
Capital investment 337 4,149 6,843
Group
R`000 Six months Six months Year
ended ended ended
31 December 31 December 30 June
2006 2005 2006
Income statement
Revenue 1,744,427 1,433,174 2,710,417
Operating profit 91,645 70,945 131,942
Balance sheet
Segment assets 1,157,284 945,177 893,132
Segment liabilities 821,930 685,916 606,287
Other segment items
Depreciation 13,174 9,201 20,403
Amortisation 549 833 1,734
Impairment 462 - -
Capital investment 39,159 46,006 77,349
NOTES TO THE CONDENSED GROUP INTERIM FINANCIAL INFORMATION
1. Basis of preparation. The condensed consolidated interim financial
information ("financial information") announcement is based on the audited
interim financial statements of the group for the period ended 31 December 2006
which have been prepared in accordance with International Financial Reporting
Standards ("IFRS"), the listing requirements of the JSE Limited
and the South African Companies Act (1973).
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. Reporting period. The group adopts the retail accounting calendar, which
comprises the reporting period ending on the last Saturday of the month (2006:
23 December (26 weeks); 2005: 24 December (26 weeks); June 2006: 24 June (52
weeks)).
4. 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
672 800 ordinary shares in issue during the year.
(December 2005: 22 478 083 shares; June 2006 : 22 575 442 shares).
5. Headline earnings per ordinary share. The calculations of headline earnings
and diluted headline earnings per ordinary share are based on headline earnings
of R61.3 million (December 2005: R45.0 million; June 2006: R82,8 million); and a
weighted average and fully diluted of 22,672,800
(December 2005: 22,478,083; June 2006: 22,575,442) ordinary shares in issue.
Reconciliation between net profit attributable to the equity holders of the
company and headline earnings:
%
R`000 Dec-06 Dec-05 Change Jun-06
Net profit attributable to the
company`s equity holders 60,848 45,039 35 82,700
Impairment of goodwill 462 - - -
Loss/(profit) on sale of assets
after taxation 30 (41) - 78
Headline earnings 61,340 44,998 36 82,778
Headline earnings per share (cents) 270.6 200.2 35 366.7
Diluted headline earnings per share
(cents) 270.6 200.2 35 366.7
6. Fully diluted and fully diluted headline earnings per share. In line with
disclosure during June 2006 the comparative fully diluted and fully diluted
headline earnings per share figures for December 2005 have been restated due to
the exclusion of the Cashbuild Empowerment Trust shares from the dilution
calculation.
7.Declaration of dividend. The board has declared an interim dividend (No. 28),
of 79 cents (December 2005: 58 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.
Date dividend declared: Monday, 19 March 2007
Last day to trade "CUM" the dividend: Friday, 13 April 2007
Date commence trading "EX" the dividend: Monday, 16 April 2007
Record date: Friday, 20 April 2007
Date of payment: Monday, 23 April 2007
Share certificates may not be dematerialised or rematerialised between Monday,
16 April 2007 and Friday, 20 April 2007, both dates inclusive.
On behalf of the board
DONALD MASSON PAT GOLDRICK
Chairman Chief executive
Johannesburg 19 March 2007
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 (160 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
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 customers` requirements are always in stock.
INTERNATIONAL FINANCIAL REPORTING STANDARDS
The group is reporting its audited results in accordance with International
Financial Reporting Standards ("IFRS").
FINANCIAL HIGHLIGHTS
Revenue for the period increased by 22% whilst both operating profit and bottom
line profits for the period improved by 29%. Earnings per share increased by 34%
with headline earnings per share increasing by 35%. Net asset value per share
has increased by 31%, from 906 cents (December 2005) to 1,188 cents. Cash and
cash equivalents improved by 28%.
Stores in existence since the beginning of July 2005 (existing stores) accounted
for 10% of the increase in revenue with the remaining 12% increase due to the 27
new stores the company has opened since July 2005. The increase for the period
has been achieved on the back of steady positive revenue growth in both quarters
of this half-year. The strategic initiatives put in place to address revenue
growth as well as focus on pricing, contributed to this good performance. Gross
profit margins for the half-year were lower in percentage terms due to the
occurrence of certain once-off costs as well as slightly lower trading margins,
but in terms of rand value, grew by a very healthy 15%.
Operational expenses for the period were well controlled with existing stores
increasing by 1%. New stores contributed 10%, the total increase for the period
being 11%. The biggest saving resulted from 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.
The effective tax rate for the period of 33.0% is at the expected level, with
STC charges the main contributor to the higher than statutory effective rate.
Cashbuild`s balance sheet remains solid. Stock levels have increased by 17% on
the back of higher trading volumes with the Cashbuild stock model being adhered
to by line management. This increase is further attributable to the stocking of
10 additional stores during this financial period (accounting for 7% of the
increase). Overall stockholding remains well managed at 69 days (Dec 2005: 66
days: June 2006: 65 days). The company`s cash levels increased by 28% to R287
million highlighting the company`s ability to generate cash. Trade debtor
balances remained well under control.
During the half-year Cashbuild opened 10 new stores, with a number of stores in
different stages of completion and due to be opened during the second half of
this financial year. Two stores were relocated during the half-year. The store
refurbishment plan and where the opportunity arises, the relocating of certain
stores, will remain an area of strategic focus.
PROSPECTS
Management is confident about the trading prospects for the remainder of the
financial year as consumer demand remains at healthy levels. The first nine
trading weeks after half year-end have reported an increase in revenue in the
region of 30% on that of the comparable 9 weeks.
INFORMATION TECHNOLOGY
The last six months were spent on intensive evaluation of different solutions
available. Functional demonstrations were presented by a short-listed number of
vendors and proved very enlightening. Management is currently in the final
stages of evaluating the architecture as well as solution that will best fit the
proposed architecture. A final decision will be made in due course.
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: Corporate Governance Leaders CC
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: 19/03/2007 10:52:04 Supplied by www.sharenet.co.za
Produced by the JSE SENS Department.
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