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Unaudited Interim Results for the six months ended 30 June 2013
ILIAD AFRICA LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1997/011938/06
Share code ILA ISIN:ZAE000015038
Unaudited Interim Results
for the six months ended 30 June 2013
- Revenue increased 0,4%
- Gross margin percentage maintained
- Portfolio adjustments implemented
Nature of business
Iliad Africa Limited, listed on the JSE in 1998, focuses on sourcing, distributing, wholesaling and retailing
of general and specialised building materials. The Group operates through two focused divisions leveraging
common pools of expertise, enabling each division to focus on its core market. General Building Materials
(GBM) markets a comprehensive range of products primarily sourced locally. Specialised Building Materials
(SBM) trades in differentiated or value-added products. A range of customers, from large-scale development
and construction groups to do-it-yourself homeowners are serviced country-wide from an established base of
76 stores.
Strategic Projects
Notable progress was made on various strategic initiatives, which include:
Consolidated Brand Portfolio - The national launch of the monolithic BUCO brand in all of our GBM stores,
was successfully completed at the end of June 2013. This includes revamps to a number of the stores.
Consolidated IT platform - The implementation of the Group's integrated ERP platform is progressing well,
with more than half of these conversions completed. This project is anticipated to be fully implemented by the
end of Q2-2014.
Balanced Portfolio contribution - As part of our portfolio review to maintain the strategic balance of the
Group's national footprint, the decision was made to sell our Timber Wholesale, Ceramics and Ceramics Cash
& Carry businesses, as we continue to refine the Group.
At the Board meeting dated 14 March 2013, the disposal of the assets and liabilities of the Thorpe Timber
business was approved. The Competition Commission unconditionally approved the transaction on 24 July
2013. The effective date for the transaction was 1 August 2013. The Ceramics Cash & Carry business was
disposed of during May 2013 and Ceramics effective 12 July 2013. This resulted in a fair value adjustment
on available for sale assets of R70,2 million and a loss on disposal of business components to the value
of R6,0 million. There was also a portfolio adjustment cost of R14,7 million due to the rationalisation of two
underperforming stores.
Financial review
In line with the trading statement issued on 01 August 2013, the Group recorded a loss (LPS) of 39,0 cents
per share for the six months ended 30 June 2013, compared to an earnings of 20,1 cents per share for the
corresponding 2012 period. The Group recorded headline earnings (HEPS) of 0,4 cents per share for the six
months ended 30 June 2013, compared to headline earnings of 20,0 cents per share for the corresponding
2012 period.
The results include the fair value adjustment on available for sale assets of R70,2 million relating to the
disposals of the Timber Wholesale and Ceramics businesses, a loss on disposal of business components
to the value of R6,0 million relating to the Ceramics Cash & Carry businesses as well as restructuring cost of
R14,7 million in respect of the rationalisation of two underperforming stores.
Excluding the abovementioned adjustments, the Group recorded an EBITDA on continuing operations of R77,7
million for the period ended 30 June 2013, compared to R80,6 million for the 2012 period. The future portfolio
achieved an EBIT margin of 2,9% for the reporting period.
The impact of the portfolio adjustments on the result is as follows:
Revenue Profitability (EBITDA)*
% 30 Jun 30 Jun % 30 Jun 30 Jun
Rm Change 2013 2012 Change 2013 2012
Future portfolio 1,7% 2 018 687 1 984 860 (3,7%) 77 672 80 641
Affected operations (12,9%) 165 807 190 354 (90,1%) (26 793) (14 091)
Total 0,4% 2 184 494 2 175 214 (23,5%) 50 879 66 550
*EBITDA before restructuring costs, fair value adjustment and loss of disposal of business components
Group revenue increased by 0,4%, which reflects the continued subdued trading environment, marginal
recovery in building plans passed and the protracted slowdown in the finishing end of the industry.
Year-on-year expenses (excluding once-off portfolio adjustment costs and excluding depreciation/amortisation)
have increased by 3,7%, reflecting the focus on expense management in order to partially negate costs
associated with investing in key strategic initiatives.
The Group ended the period with net borrowings of R134,8 million, compared to net borrowings of R97,8 million
at the comparable date in 2012. The increase is mainly due to the investment in working capital and the costs
associated with the implementation of our key strategic projects.
Operational and market review
The past few years have been a challenging period for the building materials supply industry. Iliad's ongoing focus
on procurement and improving cost structures has countered these conditions to some extent.
The GBM division reported a performance that reflects the challenges within its trading environment. Whilst gross
margins have been sustained, the marginal revenue growth was negated by expense increases (albeit below
inflation) resulting in reduced bottom-line results for both the Inland and Coastal subdivisions. Improved revenue
trends in Q2 are continuing into Q3. Significant marketing activity will support the new BUCO brand for the
balance of the year.
In the SBM division, the downtrading trend in the finishing end of the market continued during the period. The
Ironmongery business within the Specialised Building Materials (SBM) division's retail business delivered another
sound result. An improved result by the Wholesaling subdivision, includes notable results from Equipment Hire and
the Boards businesses. Post the previously mentioned disposals, the remaining SBM portfolio has the potential to
deliver enhanced performance trends going forward.
Prospects
While the industry continues to adapt to the current trading environment, the infrastructural efficiencies implemented
during the period, stringent performance targets, realignment of the portfolio and implementation of various key
strategic initiatives ensure the Group is well positioned to capitalise on opportunities as growth gradually returns to
the market. As a result of various disposals in 2013, a sound future portfolio is well positioned for sustained growth.
Two new BUCO stores will be opened during the second half of 2013. The first seven weeks since 30 June 2013
reflected an increase in revenue for the future portfolio of approximately 5% on that of the comparable period in
2012.
Basis of preparation
The condensed consolidated financial results included in this announcement have been prepared in accordance
with the measurement and recognition criteria of International Financial Reporting Standards (IFRS) and its
interpretations issued by the International Accounting Standards Board in issue and effective for the Group at
30 June 2013 and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and
Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council. The results are
presented in terms of IAS 34, Interim Financial Reporting, and comply with the Listing Requirements of the JSE
Limited and the Companies Act 2008 (as amended). The condensed consolidated interim financial statements do
not include all the information and disclosures required in the annual financial statements, and should be read in
conjunction with the Group's annual financial statements as at 31 December 2012.
The Board of directors approved these condensed consolidated financial statements on 22 August 2013.
The preparation of the Group's consolidated financial results for the period ended 30 June 2013 was supervised by
the Chief Financial Officer: Chris Booyens CA (SA).
Accounting policies
The accounting policies adopted in the preparation of the condensed consolidated interim financial statements
are in terms of IFRS and are consistent with those applied in the Group annual financial statements for the year
ended 31 December 2012, except for the adoption of new or revised accounting standards and interpretations, that
became applicable during the current reporting period. None of these have had a significant impact on the Group's
accounting policies and methods of computation, nor have they resulted in a restatement or re-presentation of the
31 December 2012 statement of financial position and related notes.
Audit opinion
These consolidated interim financial statements have not been reviewed or audited by the Group's auditors.
Changes to the Board
During the period under review, Mr Howard Turner retired as chairman and director of the Board and Mr Andile
Sangqu was appointed as both non-executive director (effective 1 March 2013) and chairman (effective 23
May 2013).
Events after the reporting date
Other than disclosed under the heading Strategic Projects above, there were no material subsequent events
and no material change in the Group's contingent liabilities since the reporting date.
Distribution
In keeping with the Group policy, no dividend was declared for the Interim period.
For and on behalf of the Board of Directors.
22 August 2013, Johannesburg
Andile Sangqu Eugene Beneke Chris Booyens
Chairman Chief Executive Officer Chief Financial Officer
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
R000 2013 2012 2012
30 Jun 30 Jun 31 Dec
ASSETS
Non-current assets
Property, plant and equipment 130 358 120 004 134 158
Intangible assets 233 521 265 841 234 161
Long-term receivable 5 573
Deferred taxation 60 041 39 538 43 933
Total non-current assets 429 493 425 383 412 252
Current assets
Inventories 520 222 694 481 694 452
Trade and other receivables 552 675 595 498 461 581
Taxation 6 214 6 695 15 866
Cash and cash equivalents 208 149 234 437 212 958
Short-term portion of long-term receivable 1 227
Assets classified as held for sale 129 410 72 711
Total current assets 1 417 897 1 531 111 1 457 568
Total assets 1 847 390 1 956 494 1 869 820
EQUITY AND LIABILITIES
Equity
Stated capital 122 122 122
Retained income 708 257 783 968 789 826
Total equity 708 379 784 090 789 948
Non-current liabilities
Long-term borrowings 6 088 3 329 3 971
Total non-current liabilities 6 088 3 329 3 971
Current liabilities
Trade and other payables and provisions 761 881 840 206 757 355
Short-term borrowings 1 552 1 101 1 503
Bank overdraft 335 263 327 768 289 875
Liabilities directly associated with assets held for sale 34 227 27 168
Total current liabilities 1 132 923 1 169 075 1 075 901
Total equity and liabilities 1 847 390 1 956 494 1 869 820
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
R000 % 2013 2012 2012
change 30 Jun
Revenue 0,4 2 184 494 2 175 214 4 493 085
Cost of sales (1 601 198) (1 595 478) (3 283 864)
Gross margin 0,6 583 296 579 736 1 209 221
Administration, selling and distribution expenses (3,7) (532 417) (513 186) (1 062 727)
EBITDA before portfolio adjustments (23,5) 50 879 66 550 146 494
Loss on disposal of business components (5 986)
Fair value adjustment on available for sale assets (70 232)
Restructuring costs (14 699)
EBITDA (160,2) (40 038) 66 550 146 494
Depreciation (21 233) (19 003) (38 618)
Amortisation (640) (1 262) (2 523)
Intangible impairment (30 419)
Operating (loss)/profit before investment
income (EBIT) (233,8) (61 911) 46 285 74 934
Investment income 8 403 8 858 18 591
Operating (loss)/profit before finance charges (197,0) (53 508) 55 143 93 525
Finance charges (16 525) (17 290) (29 919)
(Loss)/profit before taxation (285,0) (70 033) 37 853 63 606
Taxation 260,0 16 108 (10 068) (29 963)
Total comprehensive (loss)/income for the period (294,1) (53 925) 27 785 33 643
Attributable to:
Non-controlling interest
Owners of the parent (53 925) 27 785 33 643
(53 925) 27 785 33 643
Number of ordinary shares in issue 138 217 794 138 217 794 138 217 794
Basic and diluted (loss)/earnings per share (cents) (294,1) (39,0) 20,1 24,3
Basic and diluted headline earnings/(loss)
per share (cents) (98,0) 0,4 20,0 46,3
Dividends per share (cents) 20,0
Reconciliation of headline earnings
Attributable (loss)/profit for the period (53 925) 27 785 33 643
Adjusted for: 54 538 (129) 30 316
Impairments of intangibles 30 419
Loss on disposal of business components
(net of tax) 4 310
Fair value adjustment on available for sale (net of tax) 50 567
Profit on disposal of property, plant and equipment (339) (129) (103)
Headline earnings for the period (R000) 613 27 656 63 959
Ratios
Gross margin percentage 26,7 26,7 26,9
Operating margin percentage (EBIT) (2,8) 2,1 1,7
Effective tax rate 23,0 26,6 47,1
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
Unaudited Unaudited Audited
R000 2013 2012 2012
30 Jun
Cash flows from operating activities 2 128 (83 961) (30 334)
Operating profit adjusted for non cash items 42 188 62 775 137 994
Working capital changes during the period (49 713) (131 387) (121 336)
Taxation refund/(paid) 9 653 (15 349) (46 992)
Cash flows from investing activities (26 847) (30 305) (68 562)
Cash flows from financing activities (25 478) (27 283) (26 239)
Net decrease in cash and cash equivalents
for the period (50 197) (141 549) (125 135)
Cash and cash equivalents at beginning of the period (76 917) 48 218 48 218
Cash and cash equivalents at end of the period (127 114) (93 331) (76 917)
SUPPLEMENTARY INFORMATION
Unaudited Unaudited Audited
2013 2012 2012
30 Jun
Net asset value per share (cents) 512,5 567,3 571,5
Net tangible asset value per share (cents) 343,6 375,0 402,1
Capital expenditure (R000) 21 922 30 774 71 242
Capital commitments (R000)
approved and contracted 4 976 1 582 4 477
approved not contracted 25 607 18 292 48 028
Depreciation (R000) 21 233 19 003 38 618
Amortisation (R000) 640 1 262 2 523
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Unaudited Unaudited Audited
R000 2013 2012 2012
30 Jun
Total equity at the beginning of the period 789 948 783 949 783 949
Movement in retained (loss)/income (81 569) 141 5 999
Attributable to owners of the parent (53 925) 27 785 33 643
Dividends to owners of the parent (27 644) (27 644) (27 644)
Total equity at the end of the period 708 379 784 090 789 948
CONDENSED CONSOLIDATED SEGMENTAL RESULTS
Group General Building Materials Specialised Building Materials
Unaudited Unaudited Audited Unaudited Unaudited Audited Unaudited Unaudited Audited
R000 30 Jun 2013 30 Jun 2012 30 Jun 2013 30 Jun 2012 30 Jun 2013
Revenue 2 184 494 2 175 214 4 493 085 1 677 190 1 678 168 3 454 283 507 304 497 046 1 038 802
EBITDA before portfolio adjustments 50 879 66 550 146 494 42 107 54 960 116 351 8 772 11 590 30 143
Loss on disposal of business components (5 986) (5 986)
Fair value adjustment on available for sale assets (70 232) (70 232)
Restructuring costs (14 699) (14 699)
EBITDA (40 038) 66 550 146 494 27 408 54 960 116 351 (67 446) 11 590 30 143
Depreciation (21 233) (19 003) (38 618) (13 255) (10 596) (22 050) (7 978) (8 407) (16 568)
Amortisation (640) (1 262) (2 523) (640) (1 262) (2 523)
Intangible Impairments (30 419) (30 419)
EBIT (61 911) 46 285 74 934 14 153 44 364 94 301 (76 064) 1 921 (19 367)
Total Assets 1 847 390 1 956 494 1 869 820 1 132 673 1 175 300 1 080 926 714 717 781 194 788 894
Total Liabilities * 1 139 010 *1 172 404 1 079 872 706 184 *747 664 640 269 432 826 *424 740 439 603
Capital expenditure 21 922 30 774 71 242 10 684 18 576 45 757 11 238 12 198 25 485
* Unaudited 30 June 2012 recompiled due to the portfolio adjustments
CORPORATE INFORMATION
Iliad Africa Limited (Incorporated in the Republic of South Africa) Registration number
1997/011938/06. Share code ILA ISIN:ZAE000015038
Registered address Iliad House Block 7 Thornhill Office Park 94 Bekker Road Midrand
Postnet Suite 566 P/Bag x 29 Gallo Manor 2052
Directors A Sangqu (Chairman)* E Beneke (Chief Executive Officer)
C Booyens (Chief Financial Officer) Prof F Abrahams*
A Kalyan* T Njikizana* R Ririe*
*Non-executive
Group Secretary SC O'Connor
Transfer secretaries Link Market Services South Africa (Pty) Limited 13th Floor Rennie
House 19 Ameshoff Street Braamfontein 2001
PO Box 4844 Johannesburg 2000
Sponsor Bridge Capital Advisors (Pty) Ltd 27 Fricker Road Second Floor
Illovo 2196 PO Box 651010 Benmore 2012
Auditors Deloitte & Touche
Website www.iliadafrica.co.za
27 August 2013
Date: 27/08/2013 10:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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