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CASHBUILD LIMITED - Audited annual results and dividend declaration - June 2014

Release Date: 02/09/2014 07:05
Code(s): CSB     PDF:  
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Audited annual results and dividend declaration - June 2014

Cashbuild Limited
(Registration number: 1986/001503/06)
(Incorporated in the Republic of South Africa)
JSE Code: CSB           ISIN: ZAE000028320

AUDITED ANNUAL RESULTS AND DIVIDEND DECLARATION – JUNE 2014

Revenue up 6%      Operating profit up 11%      Headline earnings up 12%     
Net asset value per share up 11%   Total dividend up 8%


SUMMARY CONSOLIDATED INCOME STATEMENT – AUDITED
R'000                                   Year ended        Year ended
                                           30 June           30 June          
                                              2014              2013        % 
                                         (52 weeks)        (52 weeks)  change 
Revenue                                  6 781 274         6 376 945        6 
Cost of sales                           (5 175 906)       (4 921 664)       5 
Gross profit                             1 605 368         1 455 281       10 
Selling and marketing expenses          (1 051 550)         (966 965)       9 
Administrative expenses                   (200 734)         (163 700)      23 
Other operating expenses                    (3 713)           (4 154)     (11)
Other income                                 8 195             2 078     >100 
Operating profit                           357 566           322 540       11 
Finance costs                               (1 004)           (1 225)     (18)
Finance income                              23 927            30 718      (22)
Profit before income tax                   380 489           352 033        8 
Income tax expense                        (111 036)         (103 482)       7 
Profit for the year                        269 453           248 551        8 

Attributable to:
Owners of the Company                      265 915           245 490        8 
Non-controlling interests                    3 538             3 061       16 
                                           269 453           248 551        8 
Earnings per share (cents)                 1 147.6           1 063.2        8 
Diluted earnings per share (cents)         1 136.6           1 038.3        9 


SUMMARY CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME – AUDITED
                                                    Year ended     Year ended 
                                                  30 June 2014   30 June 2013 
R'000                                                (52 weeks)     (52 weeks)
Profit for the year                                     269 453       248 551 
Other comprehensive income:
Total movement in foreign currency translation 
  reserve (FCTR)                                          3 711         4 240 
Attributable to:
Owners of the Company                                     4 253         4 506 
Non-controlling interests                                  (542)         (266)
Total comprehensive income for the year                 273 164       252 791 
Total comprehensive income attributable to:
Owners of the Company                                   270 168       249 996 
Non-controlling interests                                 2 996         2 795 
                                                        273 164       252 791 


ADDITIONAL INFORMATION - AUDITED
R’000                                               Year ended      Year ended 
                                                  30 June 2014    30 June 2013 
Net asset value per share (cents)                        4 858           4 379 
Ordinary shares (‘000s):
 - In issue                                             25 190          25 190 
 - Weighted-average                                     23 171          23 091 
 - Diluted weighted-average                             23 395          23 643 
Capital investment                                     269 555         198 042 
Depreciation of property, plant and equipment           87 351          75 008 
Amortisation of intangible assets                       13 237           6 773 
Capital commitments                                    163 787         164 995 
Property operating lease commitments                 1 130 661         953 363 
Contingent liabilities                                   1 411           6 307 


SUMMARY CONSOLIDATED STATEMENT OF FINANCIAL POSITION - AUDITED
                                                    
R’000                                             30 June 2014   30 June 2013 
ASSETS
Non-current assets                                     873 144        692 725 
Property, plant and equipment                          794 174        618 597 
Intangible assets                                       42 019         50 333 
Rent prepayments                                        36 530         20 557 
Deferred income tax assets                                 421          3 238 
Current assets                                       1 743 011      1 376 275 
Assets held for sale                                    12 393         15 645 
Inventories                                            933 035        986 709 
Trade and other receivables                             93 261        115 196 
Financial assets at fair value                               -        125 628 
Cash and cash equivalents                              704 322        123 818 
Current income tax assets                                    -          9 279 
Total assets                                         2 616 155      2 069 000 

EQUITY AND LIABILITIES
Shareholders’ equity                                 1 239 118      1 116 436 
Share capital and reserves                           1 223 723      1 102 976 
Non-controlling interests                               15 395         13 460 
Non-current liabilities                                100 217         96 099 
Deferred operating lease liability                     100 217         92 016 
Deferred profit                                              -          1 595 
Borrowings                                                   -          2 488 
Current liabilities                                  1 276 820        856 465 
Trade and other liabilities                          1 243 406        853 929 
Current income tax liabilities                          28 813              - 
Employee benefits                                        4 601          2 536 
Total equity and liabilities                         2 616 155      2 069 000 


SUMMARY CONSOLIDATED CASH FLOW STATEMENT - AUDITED
R'000                                               Year ended     Year ended 
                                                  30 June 2014   30 June 2013 
Cash flows from operating activities
Cash generated from operations                         929 670        156 378 
Interest paid                                           (1 004)        (1 225)
Taxation paid                                          (70 127)      (113 610)
Net cash generated from operating activities           858 539         41 543 
Cash flows from investing activities
Net investment in assets                              (261 968)      (179 743)
Decrease/(increase) in financial assets                125 628       (125 628)
Interest received                                       23 927         30 718 
Net cash used in investing activities                 (112 413)      (274 653)
Cash flows from financing activities
(Decrease)/increase in other borrowings                   (250)            16 
Shares purchased by The Cashbuild Operations 
  Management Member Trust                                    -         (2 546)
Shares purchased by The Cashbuild Share 
  Incentive Trust                                      (77 349)             -
Shares sold by The Cashbuild Share 
  Incentive Trust                                       21 763          1 842 
Dividends paid
    - own equity                                      (107 763)      (131 762)
    - non-controlling interests                         (1 061)        (1 180)
Acquisition of/increase in shareholding in subsidiary   (2 238)           (60)
Net cash used in financing activities                 (166 898)      (133 690)
Net increase/(decrease) in cash and cash equivalents   579 228       (366 800)
Effect of exchange rate movements on cash and 
  cash equivalents                                       1 276          2 672 
Cash and cash equivalents at beginning of year         123 818        487 946 
Cash and cash equivalents at end of year               704 322        123 818


SUMMARY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY – AUDITED
R’000            Attributable to owners of the Company        
                                  Share                          
    Treasury                      based                    Non-con-
Share  share           Treasury     pay-                   trolling 
 capi-  capi-    Share    share    ment           Retained    inte-    Total 
  tal    tal   premium  premium reserves    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 year
    -     -          -       -        -    4 506   245 490    2 795   252 791 
Dividends paid
    -     -          -       -        -        -  (131 762)  (1 180) (132 942)
Increase in shareholding of subsidiary
    -     -          -       -        -        -      (497)     437       (60)
Shares sold by The Cashbuild Share Incentive Trust
    -     1          -     766        -        -     1 075        -     1 842
Shares purchased by The Cashbuild Operations Management Member Trust
    -    (1)         -  (2 545)       -        -         -        -    (2 546)
Recognition of share based payments
    -     -          -       -    9 269        -         -        -     9 269 
Closing 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 year
    -     -          -       -        -    4 253   265 915    2 996   273 164
Dividends paid
    -     -          -       -        -        -  (107 763)  (1 061) (108 824)
Shares sold by The Cashbuild Share Incentive Trust
    -     3          -   21 760       -        -         -       -     21 763 
Shares purchased by The Cashbuild Share Incentive Trust
    -    (6)         -  (77 343)      -        -         -       -    (77 349)
Recognition of share based payments
    -     -          -        -  13 928        -         -       -     13 928 
Closing balance at 30 June 2014
  252   (23)    65 823  (85 694) 35 815   (6 083)1 213 633   15 395 1 239 118 


SUMMARY CONSOLIDATED SEGMENTAL ANALYSIS - AUDITED
R'000                                               Year ended     Year ended 
                                                  30 June 2014   30 June 2013
South Africa 
Income statement
Revenue                                              5 889 869      5 583 424 
Operating profit                                       311 405        277 733 
Statement of financial position
Segment assets                                       2 072 733      1 626 670 
Segment liabilities                                  1 155 662        786 355 
Other segment items
Depreciation                                            78 209         67 159 
Amortisation                                            13 237          6 773 
Capital investment                                     247 785        179 506 

Other members of common monetary area*
Income statement
Revenue                                                568 700        505 499 
Operating profit                                        34 718         31 610 
Statement of financial position
Segment assets                                         354 062        299 468 
Segment liabilities                                    151 474        121 066 
Other segment items
Depreciation                                             5 251          4 688 
Amortisation                                                 -              - 
Capital investment                                       9 107         13 259 

*Includes Namibia, Swaziland and Lesotho

Botswana and Malawi
Income statement
Revenue                                                322 705        288 022 
Operating profit                                        11 443         13 197 
Statement of financial position
Segment assets                                         189 360        142 862 
Segment liabilities                                     69 901         45 143 
Other segment items
Depreciation                                             3 891          3 161 
Amortisation                                                 -              - 
Capital investment                                      12 663          5 277

Group
Income statement
Revenue                                              6 781 274      6 376 945 
Operating profit                                       357 566        322 540 
Statement of financial position
Segment assets                                       2 616 155      2 069 000 
Segment liabilities                                  1 377 037        952 564 
Other segment items
Depreciation                                            87 351         75 008 
Amortisation                                            13 237          6 773 
Capital investment                                     269 555        198 042 


NOTES TO THE SUMMARY CONSOLIDATED ANNUAL FINANCIAL INFORMATION
1.Basis of preparation. The summary consolidated financial statements are prepared in accordance with the requirements of International Financial Reporting Standards, the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by the Financial Reporting Standards Council and the requirements of the Companies Act of South Africa 2008 applicable to summary annual financial statements. The accounting policies applied in the preparation of the consolidated annual financial statements from which the summary consolidated annual 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 annual financial statements were prepared under the supervision of the Finance Director, Mr AE Prowse CA(SA) and approved by the Board on 1 September 2014.

2.Independent audit by the auditor. These summary consolidated annual financial statements for the year ended 30 June 2014 have been audited by PricewaterhouseCoopers Inc., who expressed an unmodified opinion thereon. The auditor also expressed an unmodified opinion on the consolidated annual financial statements from which these summary consolidated annual financial statements were derived.  A copy of their 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 (2014: 29 June (52 weeks); 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 year by the weighted average number of 23 171 020 ordinary shares in issue during the year (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 R265.2 million (June 2013: R237.4 million) and a weighted average of 23 171 020 (June 2013: 23 090 567) and fully diluted of 23 394 727 (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                                        June 2014   June 2013   % change
Net profit attributable to the owners
   of the Company                             265 915      245 490          8 
Profit on sale of assets after taxation          (692)      (8 046)           
Headline earnings                             265 223      237 444         12 
Headline earnings per share (cents)           1 144.6      1 028.3         11 
Diluted headline earnings per share (cents)   1 133.7      1 004.3         13 

6.Declaration of dividend. The Board has declared a final dividend (No. 43), of 253 cents (June 2013: 191 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 (June 2013: 25 189 811) shares in issue at date of dividend declaration. Net local dividend amount is 215.05 cents per share for shareholders liable to pay Dividends Tax and 253 cents per share for shareholders exempt from paying Dividends Tax. The total dividend for the year amounts to 528 cents (June 2013: 487 cents) an 8% increase on the prior year. 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, 1 September 2014
Last day to trade “CUM” the dividend:      Thursday, 18 September 2014
Date commence trading “EX” the dividend:   Friday, 19 September 2014
Record date:                               Friday, 26 September 2014
Date of payment:                           Monday, 29 September 2014

Share certificates may not be dematerialised or rematerialised between Friday, 19 September 2014 and Friday, 26 September 2014, both dates inclusive.

On behalf of the Board

DONALD MASSON                        WERNER DE JAGER
Chairman                             Chief Executive
Johannesburg
1 September 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 (215 at the end of this financial year). 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.

INTERNATIONAL FINANCIAL REPORTING STANDARDS
The Group is reporting its audited results in accordance with International Financial Reporting Standards (“IFRS”). 

FINANCIAL HIGHLIGHTS
Revenue for the year increased by 6% and gross profit increased by a pleasing 10%. Operating expenses increased by 10%. Basic earnings per share increased by 8% and headline earnings per share increased by 11%. Net asset value per share has shown an 11% increase, from 4 379 cents (June 2013) to 4 858 cents. Cash and cash equivalents increased to R704 million (June 2013: R124 million) mainly due to a reduction in stock levels and payments to suppliers being effected after the year-end close.

Stores in existence prior to the beginning of July 2012 (pre-existing stores – 191 stores) increased by 1% in revenue and the 24 new stores contributed 5% of the increase. This increase for the year has been achieved in tough trading conditions with selling price inflation of 5%. 

Due to continued focus on margins within the competitive environment, gross profit percentage margin increased to 23.7% from the 22.8% of the prior year.
Operational expenses for the year remained well controlled with existing stores accounting for 5% of the increase and new stores 5%. The total increase for the year amounted to 10%. The main contributor to the increase on existing stores is the people cost component in order to maintain and improve customer service standards.

The effective tax rate for the year of 29% has remained consistent with the prior year.

Cashbuild’s statement of financial position remains solid. Stock levels have decreased by 5% notwithstanding the increase in the number of stores. Overall stockholding at 75 days (June 2013: 83 days). Trade receivables remain well under control.

During the year, Cashbuild opened 15 new stores, 20 stores were refurbished and seven stores were relocated. Six Cashbuild DIY pilot stores (not included in the 215 stores number), were opened and trading at the end of the financial year. Cashbuild will continue its store expansion, relocation and refurbishment strategy in a controlled manner, applying the same rigorous process as in the past.

PROSPECTS
Management remain positive about the top line trading prospects for the next quarter. The first six trading weeks since year-end have reported an increase in revenue of 10% on that of the comparable six weeks. This information has not been reviewed nor audited by the Company’s auditor.

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

Cashbuild Limited (Registration number: 1986/001503/06)
(Incorporated in the Republic of South Africa)
JSE code: CSB
ISIN: ZAE000028320
QUALITY BUILDING MATERIALS AT THE LOWEST PRICES
www.cashbuild.co.za

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