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Audited Interim Results and Dividend Declaration – December 2013
Cashbuild Limited
(Registration number: 1986/001503/06)
(Incorporated in the Republic of South Africa)
JSE Code: CSB ISIN: ZAE000028320
AUDITED INTERIM RESULTS AND DIVIDEND DECLARATION DECEMBER - 2013
Revenue up 7% Operating profit down 3% Headline earnings down 8%
Net asset value per share up 13%
SUMMARY CONSOLIDATED INTERIM INCOME STATEMENT - AUDITED
Six months Year
ended ended
31 December 30 June
2013 2012 % 2013
R’000 (26 weeks) (26 weeks) change (52 weeks)
Revenue 3 550 787 3 317 770 7 6 376 945
Cost of sales (2 736 277) (2 556 647) 7 (4 921 664)
Gross profit 814 510 761 123 7 1 455 281
Selling and marketing expenses (526 971) (486 825) 8 (966 965)
Administrative expenses (100 602) (76 286) 32 (163 700)
Other operating expenses (1 909) (2 251) (15) (4 154)
Other income 5 952 349 >100 2 078
Operating profit 190 980 196 110 (3) 322 540
Finance cost (836) (441) 90 (1 225)
Finance income 10 824 18 695 (42) 30 718
Profit before income tax 200 968 214 364 (6) 352 033
Income tax expense (60 179) (63 007) (4) (103 482)
Profit for the period 140 789 151 357 (7) 248 551
Attributable to:
Owners of the company 138 691 149 750 (7) 245 490
Non-controlling interests 2 098 1 607 31 3 061
140 789 151 357 (7) 248 551
Earnings per share (cents) 600.6 649.1 (7) 1 063.2
Diluted earnings per share (cents) 587.1 641.6 (8) 1 038.3
SUMMARY CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME - AUDITED
Six months Year
ended ended
31 December 30 June
2013 2012 2013
R'000 (26 weeks) (26 weeks) (52 weeks)
Profit for the period 140 789 151 357 248 551
Other comprehensive income:
Foreign currency translation reserve
(FCTR) adjustments 2 872 (1 677) 4 240
Other comprehensive income for the period,
net of tax 2 872 (1 677) 4 240
Total comprehensive income for the period 143 661 149 680 252 791
Total comprehensive income attributable to:
Owners of the company 142 728 149 221 249 996
Non-controlling interests 933 459 2 795
143 661 149 680 252 791
ADDITIONAL INFORMATION – AUDITED
Six months Year
ended ended
31 December 30 June
2013 2012 2013
R'000 (26 weeks) (26 weeks) (52 weeks)
Net asset value per share (cents) 4 799 4 233 4 379
Ordinary shares ('000):
- In issue 25 190 25 190 25 190
- Weighted average 23 090 23 071 23 091
- Diluted weighted average 23 623 23 339 23 643
Capital investment 133 056 127 892 198 042
Depreciation of property, plant and equipment 42 683 34 815 75 008
Amortisation of intangible assets 6 649 3 080 6 773
Capital commitments 174 454 184 810 164 995
Property operating lease commitments 1 040 423 860 587 953 363
Contingent liabilities 1 411 1 831 6 307
SUMMARY CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION – AUDITED
31 December 30 June
R'000 2013 2012 2013
ASSETS
Non-current assets 777 606 669 799 692 725
Property, plant and equipment 704 584 598 735 618 597
Intangible assets 47 885 47 225 50 333
Rent prepayments 24 870 17 027 20 557
Deferred income tax assets 267 6 812 3 238
Current assets 2 092 428 1 623 440 1 376 275
Assets held for sale 12 397 17 656 15 645
Inventories 1 028 496 950 212 986 709
Trade and other receivables 138 236 138 583 115 196
Financial assets at fair value 124 868 - 125 628
Cash and cash equivalents 788 431 516 989 123 818
Current income tax assets - - 9 279
Total assets 2 870 034 2 293 239 2 069 000
EQUITY AND LIABILITIES
Shareholders' equity 1 222 729 1 078 000 1 116 436
Share capital and reserves 1 208 816 1 066 376 1 102 976
Non-controlling interests 13 913 11 624 13 460
Non-current liabilities 101 666 92 186 96 099
Deferred operating lease liability 97 412 87 865 92 016
Deferred profit 1 569 1 621 1 595
Borrowings 2 685 2 700 2 488
Current liabilities 1 545 639 1 123 053 856 465
Trade and other liabilities 1 510 846 1 080 182 853 929
Current income tax liabilities 32 182 40 378 -
Employee benefits 2 611 2 493 2 536
Total equity and liabilities 2 870 034 2 293 239 2 069 000
SUMMARY CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY - AUDITED
R’000 Attributable to owners of the company
Share
Treasury based Non-
Share share Treasury pay- Controlling
capi- capi- Share share ments Retained inte- Total
tal tal premium premium reserve FCTR earnings rests equity
Balance at 1 July 2012
252 (20) 65 823 (28 332) 12 618 (14 842) 941 175 11 408 988 082
Total comprehensive income for the period
- - - - - (529) 149 750 459 149 680
Dividend paid
- - - - - - (62 955) (680) (63 635)
Increase in shareholding of subsidiary
- - - - - - (497) 437 (60)
Recognition of share based payments
- - - - 3 441 - - - 3 441
Shares sold by The Cashbuild Share Incentive Trust
- - - 766 - - 1 075 - 1 841
Shares purchased by The Cashbuild Operations Management Member Trust
- - - (1 349) - - - - (1 349)
Balance at 31 December 2012
252 (20) 65 823 (28 915) 16 059 (15 371) 1 028 548 11 624 1 078 000
Total comprehensive income for the period
- - - - - 5 035 95 740 2 336 103 111
Dividend paid
- - - - - - (68 807) (500) (69 307)
Shares purchased by The Cashbuild Operations Management Member Trust
- - - (1 196) - - - - (1 196)
Recognition of share based payments
- - - - 5 828 - - - 5 828
Balance at 30 June 2013
252 (20) 65 823 (30 111) 21 887 (10 336) 1 055 481 13 460 1 116 436
Total comprehensive income for the period
- - - - - 4 037 138 691 933 143 661
Dividend paid
- - - - - - (44 168) (480) (44 648)
Recognition of share based payments
- - - - 7 280 - - - 7 280
Balance at 31 December 2013
252 (20) 65 823 (30 111) 29 167 (6 299) 1 150 004 13 913 1 222 729
SUMMARY CONSOLIDATED INTERIM CASH FLOW STATEMENT – AUDITED
Six months Year
ended ended
31 December 30 June
2013 2012 2013
R’000 (26 weeks) (26 weeks) (52 weeks)
Cash flows from operating activities
Cash generated from operations 836 521 226 130 156 378
Interest paid (836) (441) (1 225)
Taxation paid (15 747) (27 051) (113 610)
Net cash generated from operating
activities 819 938 198 638 41 543
Cash flows from investing activities
Net investment in assets (126 480) (124 737) (179 743)
Decrease/(increase) in financial assets 5 000 - (125 628)
Interest received 10 824 18 695 30 718
Net cash used in investing activities (110 656) (106 042) (274 653)
Cash flows from financing activities
Increase in other borrowings 197 228 16
Shares purchased by The Cashbuild
Operations Management Member Trust - (1 349) (2 546)
Shares sold by The Cashbuild
Share Incentive Trust - 1 841 1 842
Dividends paid
- own equity (44 168) (62 955) (131 762)
- non-controlling interests (480) (680) (1 180)
Increase in shareholding of subsidiary - (60) (60)
Net cash used in financing activities (44 451) (62 975) (133 690)
Net increase/(decrease) in cash and
cash equivalents 664 831 29 621 (366 800)
Effect of exchange rate movements on cash
and cash equivalents (218) (578) 2 672
Cash and cash equivalents at
beginning of period 123 818 487 946 487 946
Cash and cash equivalents at end of period 788 431 516 989 123 818
SUMMARY CONSOLIDATED INTERIM SEGMENTAL ANALYSIS - AUDITED
Six months Year
ended ended
31 December 30 June
R'000 2013 2012 2013
SOUTH AFRICA
Income statement
Revenue 3 089 049 2 917 466 5 583 424
Operating profit 166 007 173 248 277 733
Statement of financial position
Segment assets 2 318 384 1 849 484 1 626 670
Segment liabilities 1 394 376 1 025 756 786 355
Other segment items
Depreciation 38 199 31 020 67 159
Amortisation 6 649 3 080 6 773
Capital investment 123 209 108 391 179 506
OTHER MEMBERS OF COMMON MONETARY AREA*
Income statement
Revenue 299 442 257 682 505 499
Operating profit 19 504 12 618 31 610
Statement of financial position
Segment assets 368 597 301 144 299 468
Segment liabilities 177 609 137 674 121 066
Other segment items
Depreciation 2 537 2 338 4 688
Amortisation - - -
Capital investment 6 341 16 226 13 259
*Includes Namibia, Swaziland and Lesotho
BOTSWANA AND MALAWI
Income statement
Revenue 162 296 142 622 288 022
Operating profit 5 469 10 244 13 197
Statement of financial position
Segment assets 183 053 142 611 142 862
Segment liabilities 75 320 51 809 45 143
Other segment items
Depreciation 1 947 1 456 3 161
Amortisation - - -
Capital investment 3 506 3 275 5 277
GROUP
Income statement
Revenue 3 550 787 3 317 770 6 376 945
Operating profit 190 980 196 110 322 540
Statement of financial position
Segment assets 2 870 034 2 293 239 2 069 000
Segment liabilities 1 647 305 1 215 239 952 564
Other segment items
Depreciation 42 683 34 814 75 008
Amortisation 6 649 3 080 6 773
Capital investment 133 056 127 892 198 042
NOTES TO THE SUMMARY CONSOLIDATED INTERIM FINANCIAL INFORMATION
1. Basis of preparation. The summary consolidated interim financial statements are prepared in accordance with the requirements of International Financial Reporting Standard, (IAS) 34 Interim Financial Reporting, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, Financial Pronouncements as issued by the Financial Reporting Standards Council and the requirements of the Companies Act of South Africa applicable to summary financial statements. The accounting policies applied in the preparation of the consolidated interim financial statements from which the summary consolidated interim financial statements were derived are in terms of International Financial Reporting Standards and are consistent with those accounting policies applied in the preparation of the previous consolidated annual financial statements. The financial statements have been prepared under the supervision of the financial director, Mr AE Prowse CA(SA), and approved by the board on 3 March 2014.
2. Independent audit by the auditor. These summary consolidated interim financial statements for the six month period ended 31 December 2013 have been audited by PricewaterhouseCoopers Inc., who expressed an unmodified opinion thereon. The auditor also expressed an unmodified opinion on the consolidated interim financial statements from which these summary consolidated interim financial statements were derived. A copy of the unmodified 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 Sunday of the month (2013: 29 December (26 weeks); 2012: Saturday 29 December (26 weeks); June 2013: 30 June(52 weeks)).
4. Earnings per share. Earnings per share is calculated by dividing the earnings attributable to owners of the company for the period by the weighted average number of 23 090 396 ordinary shares in issue during the period. (December 2012: 23 071 449 shares; June 2013: 23 090 567 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 R138.6 million (December 2012: R150.1 million; June 2013: R237.4 million) and a weighted average of 23 090 396 (December 2012: 23 071 449; June 2013: 23 090 567) and fully diluted of 23 622 629. (December 2012: 23 339 190; June 2013: 23 643 228) ordinary shares in issue.
Reconciliation between net profit attributable to the equity holders of the company and headline earnings:
%
R'000 Dec 13 Dec 12 change Jun 13
Net profit attributable to the owners
of the company 138 691 149 750 (7) 245 490
(Profit)/loss on sale of assets
after taxation (122) 398 (8 046)
Headline earnings 138 569 150 148 (8) 237 444
Headline earnings per share (cents) 600.1 650.8 (8) 1 028.3
Diluted headline earnings per share
(cents) 586.6 643.3 (9) 1 004.3
6. Declaration of dividend. The board has declared an interim dividend (No. 42), of 275 cents (December 2012: 296 cents) per ordinary share out of income reserves to all shareholders of Cashbuild Limited. The dividend per share is calculated based on 25 189 811 (2012: 25 189 811) shares in issue at date of dividend declaration. Net local dividend amount is 233.75 cents per share for shareholders liable to pay Dividends Tax and 275 cents per share for shareholders exempt from paying Dividends Tax. Local dividend tax is 15% and there are no STC credits available for use.
Cashbuild Limited's tax reference number is 9575168712.
Date dividend declared: Monday, 3 March 2014
Last day to trade "CUM" the dividend: Thursday, 20 March 2014
Date commence trading "EX" the dividend: Monday, 24 March 2014
Record date: Friday, 28 March 2014
Date of payment: Monday, 31 March 2014
Share certificates may not be dematerialised or rematerialised between Monday, 24 March 2014 and Friday, 28 March 2014, both dates inclusive.
On behalf of the board
DONALD MASSON WERNER DE JAGER
Chairman Chief Executive
Johannesburg 3 March 2014
COMMENTARY
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 (207 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 quality building materials at the lowest prices and through a purchasing and inventory policy that ensures customers’ requirements are always met.
FINANCIAL HIGHLIGHTS
Revenue for the period increased by 7% whilst gross profit increased by 7%. Operating profit decreased by 3% largely due to operating expenses increasing by 10%. Basic earnings per share decreased by 7% and headline earnings per share decreased by 8%. Net asset value per share has shown a 13% increase, from 4 233 cents (December 2012) to 4 799 cents.
Cash and cash equivalents increased by 53% to R788 million as a result of payments to suppliers (R528m) being effected after half year-end close.
Stores in existence since the beginning of July 2012 (191 stores) increased by 3% in revenue and the 16 new stores contributed 4%. This increase for the period has been achieved in tough trading conditions with selling price inflation of 4%. Within the competitive environment, gross margin percentage remained at 22.9%.
Operational expenses for the period remained well controlled with existing stores accounting for 6% of the increase and new stores 4%. The total increase for the period amounted to 10%. The main contributor to the increase on existing stores remains the people cost component in order to maintain and improve customer service standards.
The effective tax rate for the period of 30% is 1% higher than that of the previous comparative period, mainly due to the increase in non-allowable expenditure.
Cashbuild’s statement of financial position remains solid. Stock levels have increased by 8%, 7% contributed by new stores, with overall stockholding at 71 days (December 2012: 70 days). Trade receivables remain well under control.
During the period, Cashbuild opened seven new stores, 13 stores were refurbished and four stores were relocated. Cashbuild will continue its store expansion, relocation and refurbishment strategy in a controlled manner, applying the same rigorous process as in the past.
PROSPECTS
Despite the first 6 weeks trading since period-end having increased by 10% to the prior comparative period, management remains cautious about top line trading prospects for the remainder of the financial year.
Directors: D Masson* (Chairman), WF de Jager (Chief Executive), IS Fourie*, HH Hickey*, AGW Knock*, Dr DSS Lushaba*, AE Prowse, NV Simamane*, SA Thoresson, A van Onselen.
(*non-executive)
Company secretary: Corporate Governance Leaders CC
Registered office: 101 Northern Parkway, Ormonde, Johannesburg 2091.
PO Box 90115, Bertsham 2013.
Transfer secretaries: Computershare Investor Services (Pty) Limited, 70 Marshall Street, Johannesburg 2001. PO Box 61051, Marshalltown 2107.
Auditor: PricewaterhouseCoopers Inc.
Sponsor: Nedbank Capital.
QUALITY BUILDING MATERIALS AT THE LOWEST PRICES
www.cashbuild.co.za
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