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CASHBUILD LIMITED - Audited interim results and dividend declaration - December 2015

Release Date: 01/03/2016 07:10
Code(s): CSB     PDF:  
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Audited interim results and dividend declaration - December 2015

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 2015

REVENUE (Rm)
UP 14% 

OPERATING PROFIT *EXCL BEE
UP 32%

HEADLINE EARNINGS *EXCL BEE
UP 36%

CASH AND CASH EQUIVALENTS (Rm)
UP 23%

DIVIDEND PER SHARE (cents)
UP 36%

STORE GROWTH (number)
UP 5%

SUMMARY CONSOLIDATED INTERIM INCOME STATEMENT – AUDITED

                                                   Six months     Six months
                                                        ended          ended     
                                                  31 December    31 December                   30 June
                                                         2015           2014            %         2015
R'000                                               (26 weeks)     (26 weeks)      change    (52 weeks)
Revenue                                             4 509 710      3 967 929           14    7 692 646
Cost of sales                                      (3 442 867)    (3 026 041)          14   (5 844 200)
Gross profit                                        1 066 843        941 888           13    1 848 446
Selling and marketing expenses                       (635 175)      (580 872)           9   (1 161 479)
Administrative expenses                              (111 218)      (115 493)          (4)    (226 871)
Operating expenses                                     (1 061)        (1 854)         (43)      (3 352)
BEE transaction expense (Note 6)                      (63 052)             –         >100            –
Other income                                           11 472          6 352           81        7 759
Operating profit                                      267 809        250 021            7      464 503
Finance cost                                             (317)        (1 077)         (71)      (1 752)
Finance income                                         33 987         20 411           67       39 676
Profit before income tax                              301 479        269 355           12      502 427
Income tax expense                                   (106 458)       (78 372)          36     (139 048)
Profit for the period                                 195 021        190 983            2      363 379
Attributable to:                   
- Owners of the company                               193 168        189 280            2      358 916
- Non-controlling interests                             1 853          1 703            9        4 463
                                                      195 021        190 983            2      363 379
Earnings per share (cents)                              852.3          824.1            3      1 556.8
Diluted earnings per share (cents)                      846.7          816.1            4      1 536.7

SUMMARY CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME – AUDITED

                                                                  Six months   Six months
                                                                       ended        ended   Year ended
                                                                 31 December  31 December      30 June
                                                                        2015         2014         2015
R'000                                                              (26 weeks)   (26 weeks)   (52 weeks)
   
Profit for the period                                                195 021      190 983      363 379
Other comprehensive income re-classifiable to profit or loss:    
Total movement in foreign currency translation reserve (FCTR)         12 712       (1 144)       2 272
Attributable to:    
– Owners of the company                                               14 026         (584)       1 794
– Non-controlling interests                                           (1 314)        (560)         478
    
Total comprehensive income for the period                            207 733      189 839      365 651
Total comprehensive income attributable to:    
- Owners of the company                                              207 194      188 696      360 710
- Non-controlling interests                                              539        1 143        4 941
                                                                     207 733      189 839      365 651

ADDITIONAL INFORMATION – AUDITED

                                                                  Six months   Six months
                                                                       ended        ended   Year ended
                                                                 31 December  31 December      30 June
R'000                                                                   2015         2014         2015
Net asset value per share (cents)                                      5 867        5 389        5 329
Net asset value per share (excl treasury shares)                       6 520        5 910        5 822
Ordinary shares ('000s):                    
– In issue                                                            25 190       25 190       25 190
– Weighted-average                                                    22 665       22 968       23 055
– Diluted weighted-average                                            22 815       23 193       23 357
Capital investment                                                    98 469      100 207      168 602
Depreciation of property, plant and equipment                         54 500       52 321      105 821
Amortisation of intangible assets                                      7 857        6 962       14 700
Capital commitments                                                  697 367      165 455      105 134
Property operating lease commitments                               1 443 571    1 192 369    1 216 934
Contingent liabilities                                                 1 411        1 411        2 216

SUMMARY CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION – AUDITED
                            
                                                                 31 December  31 December      30 June
R'000                                                                   2015         2014         2015
ASSETS                                 
Non-current assets                                                   989 184      933 190      950 895
Property, plant and equipment                                        873 028      830 430      836 252
Intangible assets                                                     35 987       41 046       39 048
Rent prepayments                                                      79 237       61 274       68 807
Deferred income tax assets                                               932          440        6 788
Current assets                                                     2 700 655    2 335 429    2 117 533
Assets held for sale                                                     916       14 322        9 548
Inventories                                                        1 239 022    1 118 444    1 073 129
Trade and other receivables                                          119 768      115 696       95 939
Cash and cash equivalents                                          1 340 949    1 086 967      938 917    
Total assets                                                       3 689 839    3 268 619    3 068 428    
EQUITY AND LIABILITIES                                 
Shareholders' equity                                               1 498 749    1 374 535    1 362 745
Share capital and reserves                                         1 477 791    1 357 484    1 342 326
Non-controlling interests                                             20 958       17 051       20 419    
Non-current liabilities                                              110 416      102 381      105 979
Deferred operating lease liability                                   110 416      102 381      105 979     
Current liabilities                                                2 080 674    1 791 703    1 599 704
Trade and other liabilities                                        1 986 483    1 727 954    1 551 433
Current income tax liabilities                                        89 102       58 930       43 387
Employee benefits                                                      5 089        4 819        4 884    
Total equity and liabilities                                       3 689 839    3 268 619    3 068 428

SUMMARY CONSOLIDATED INTERIM CASH FLOW STATEMENT – AUDITED

                                                                  Six months   Six months
                                                                       ended        ended   Year ended
                                                                 31 December  31 December      30 June
R'000                                                                   2015         2014         2015
Cash flows from operating activities
Cash generated from operations                                       557 869      564 004      725 567
Interest paid                                                           (317)      (1 077)      (1 752)
Taxation paid                                                        (54 887)     (48 274)    (130 841)
Net cash generated from operating activities                         502 665      514 653      592 974
Cash flows from investing activities 
Net investment in assets                                             (71 849)     (90 559)    (148 915)
Interest received                                                     33 987       20 411       39 676
Net cash used in investing activities                                (37 862)     (70 148)    (109 239)
Cash flows from financing activities
Shares purchased by The Cashbuild Share                                    –       (1 685)    (161 237)
 Incentive Trust and The Cashbuild Operations 
 Management Member Trust                                       
Shares sold by The Cashbuild Share Incentive Trust                         –          784       54 547
Dividends paid: 
– own equity                                                         (76 192)     (57 718)    (143 630)
– non-controlling interests                                                –         (550)        (980)
Net cash used in financing activities                                (76 192)     (59 169)    (251 300)
Net increase in cash and cash equivalents                            388 611      385 336      232 435
Cash and cash equivalents at beginning of period                     938 917      704 322      704 322
Effect of exchange rate movements on cash and cash equivalents        13 421       (2 691)       2 160
Cash and cash equivalents at end of period                         1 340 949    1 086 967      938 917

SUMMARY CONSOLIDATED INTERIM SEGMENTAL ANALYSIS – AUDITED

                                                 Group                             South Africa           Other members of common monetary area*      Botswana and Malawi
                                      Six months ended   Year ended          Six months ended   Year ended      Six months ended  Year ended      Six months ended   Year ended
                                         31 December        30 June             31 December        30 June         31 December       30 June         31 December        30 June
R'000                                  2015        2014         2015          2015         2014        2015       2015       2014        2015       2015       2014         2015
Income statement                                                                                                                                                            
Revenue                           4 509 710   3 967 929    7 692 646     3 985 947    3 468 947   6 732 667    315 062    314 589     599 648    208 701    184 393      360 331
Operating profit                    267 809     250 021      464 503       223 357      215 993     394 039     20 537     26 471      48 371     23 915      7 557       22 093
Statement of financial position                                                                                                                                         
Segment assets                    3 689 839   3 268 619    3 068 428     2 989 118    2 649 626   2 457 852    428 735    413 183     392 983    271 986    205 810      217 593
Segment liabilities               2 191 090   1 894 084    1 705 683     1 921 742    1 622 338   1 477 423    166 681    188 901     148 989    102 667     82 845       79 271
Other segment items                                                                                                                                                     
Depreciation                         54 500      52 321      105 821        48 695       47 281      95 394      2 787      2 625       5 400      3 018      2 415        5 027
Amortisation                          7 857       6 962       14 700         7 857        6 962      14 700          –          –           –          –          –            –
Capital investment                   98 469     100 207      168 602        78 902       91 653     148 522      9 244      3 521       8 731     10 323      5 033       11 349

* Includes Namibia, Swaziland and Lesotho
 
SUMMARY CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY – AUDITED

                                                                         Attributable to owners of the company
                                                                                                        Share-
                                                                       Treasury            Treasury      based                              Non-
                                                                 Share    share    Share      share   payments             Retained  controlling        Total
R'000                                                          capital  capital  premium    premium    reserve      FCTR   earnings    interests       equity

Balance at 1 July 2014                                             252      (23)  65 823    (85 694)    35 815    (6 083) 1 213 633       15 395    1 239 118
Total comprehensive income for the period                            –        –        –          –          –      (584)   189 280        1 143      189 839
Increase in shareholding of subsidiary                               –        –        –          –          –         –     (1 063)       1 063            –
Shares purchased by The Cashbuild Share Incentive Trust and          –       (1)       –     (1 684)         –         –          –            –       (1 685)
 The Cashbuild Operations Management Member Trust     
Shares sold by The Cashbuild Share Incentive Trust                   –        1        –        783          –         –          –            –          784
Dividend paid                                                        –        –        –          –          –         –    (57 718)        (550)     (58 268)
Recognition of share-based payments                                  –        –        –          –      4 747         –          –            –        4 747
Balance at 31 December 2014                                        252      (23)  65 823    (86 595)    40 562    (6 667) 1 344 132       17 051    1 374 535
Total comprehensive income for the period                            –        –        –          –          –     2 378    169 636        3 798      175 812
Shares purchased by The Cashbuild Share Incentive Trust and The      –       (7)       –   (159 545)         –         –          –            –     (159 552)
 Cashbuild Operations Management Member Trust           
Shares sold by The Cashbuild Share Incentive Trust                   –        5        –     53 758          –         –          –            –       53 763
Dividend paid                                                        –        –        –          –          –         –    (85 912)        (430)     (86 342)
Recognition of share-based payments                                  –        –        –          –      4 529         –          –            –        4 529
Balance at 30 June 2015                                            252      (25)  65 823   (192 382)    45 091    (4 289) 1 427 856       20 419    1 362 745
Total comprehensive income for the period                            –        –        –          –          –    14 026    193 168          539      207 733
Dividend paid                                                        –        –        –          –          –         –    (76 192)           –      (76 192)
Recognition of share-based payments                                  –        –        –          –      4 463         –          –            –        4 463
Balance at 31 December 2015                                        252      (25)  65 823   (192 382)    49 554     9 737  1 544 832       20 958    1 498 749

NOTES TO THE SUMMARY CONSOLIDATED INTERIM FINANCIAL INFORMATION  

1. Basis of preparation. The summary consolidated interim financial statements are prepared in accordance with
   International Financial Reporting Standards ("IFRS"), the presentation and disclosure requirements of IAS 34 –
   Interim Financial Reporting as required by the JSE Limited Listings Requirements, 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
   interim 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 interim financial statements have been
   prepared under the supervision of the Finance Director, Mr AE Prowse CA(SA), and approved by the board on 29
   February 2016. 

2. Independent audit by the auditor. These summary consolidated interim financial statements for the period ended 31
   December 2015 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 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 Sunday of the month (2015: 27 December (26 weeks); 2014: 28 December (26 weeks); June 2015: 28 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 22 665 552 ordinary shares in issue at period end (2014:
   22 967 632 shares; June 2015: 23 054 612).

5. Headline earnings per ordinary share. The calculations of headline earnings and diluted headline earnings per
   ordinary share are based on headline earnings of R185.8 million (2014: R183.0 million; June 2015: R352.3 million)
   and a weighted average of 22 665 552 (2014: 22 967 632; June 2015: 23 054 612) shares and fully diluted of 22 815
   173 (2014: 23 192 936; June 2015: 23 357 365) ordinary shares in issue.

   Reconciliation between net profit attributable to the equity holders of the company and headline earnings:
   
   R'000                                                  Dec 2015    Dec 2014    % change     Jun 2015
   Net profit attributable to the owners of the company    193 168     189 280           2      358 916
   Profit on sale of assets after taxation                  (7 356)     (6 272)                  (6 585)
   Headline earnings                                       185 812     183 008           2      352 331
   Headline earnings per share (cents)                       819.8       796.8           3      1 528.2
   Diluted headline earnings per share (cents)               814.4       789.1           3      1 508.5

6. BEE transaction. A special resolution in terms of a specific repurchase was adopted by shareholders on 30
   November 2015, whereby 200 000 shares would be repurchased by the company from the Cashbuild Empowerment Trust
   ("the Trust"). The related cost has been provided for as a personnel expense in the Groups results. The specific
   repurchase of shares was effected on 29 January 2016 and the value created in the Cashbuild Empowerment Trust as
   a result of this specific repurchase has been distributed to the beneficiaries of the Trust.

   The financial impact at period end can be summarised as follows:

                                                      % increase               % increase
   R'000                                 Before BEE      on 2014   After BEE     on 2014
   Operating profit                         330 861           32     267 809            7
   Attributable earnings                    256 220           35     193 168            2
   Net assets value per share (cents)         6 117           14       5 867            9
   Headline earnings                        248 864           36     185 812            2
   Headline earnings per share (cents)      1 092.2           37       819.8            3

7. Declaration of dividend. The board has declared an interim dividend (No. 46), of 513 cents (2014: 376 cents) per
   ordinary share out of income reserves (excluding the effects of the BEE transaction) to all shareholders of
   Cashbuild Limited. The dividend per share is calculated based on 24 989 811 (2014: 25 189 811) shares in issue at
   date of dividend declaration. Net local dividend amount is 436.05 cents per share for shareholders liable to pay
   Dividends Tax and 513 cents per share for shareholders exempt from paying Dividends Tax. Local dividend tax is
   15%.

   Cashbuild Limited's tax reference number is 9575168712.
   
   Date dividend declared:                       Monday, 29 February 2016
   Last day to trade "CUM" the dividend:         Wednesday, 16 March 2016
   Date to commence trading "EX" the dividend:   Thursday, 17 March 2016
   Record date:                                  Thursday, 24 March 2016
   Date of payment:                              Tuesday, 29 March 2016
   
Share certificates may not be dematerialised or rematerialised between Thursday, 17 March 2016 and Thursday, 24 March
   2016, both dates inclusive. 

On behalf of the board
STEFAN FOURIE            WERNER DE JAGER
Chairman                 Chief Executive
Johannesburg
29 February 2016

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 (228 at the end of this financial 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, 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 interim audited results in accordance with International Financial Reporting Standards
("IFRS").

FINANCIAL HIGHLIGHTS

Revenue for the period increased by 14% whilst gross profit increased by 13%. Operating expenses increased by 15%
(mainly is as a result of our BEE transaction) which resulted in an operating profit increase of 7%. Basic earnings per
share and headline earnings per share increased by 3%. Net asset value per share has shown a 9% increase, from 5 389
cents (December 2014) to 5 867 cents. 

Revenue for stores in existence since the beginning of July 2014 (pre-existing stores – 213 stores) increased by 11%
while our 15 new stores contributed 3%. This increase for the period has been achieved in tough trading conditions with
selling price inflation of 2%. Gross profit percentage has been maintained at 23.7%.

Operational expenses for the period remained well controlled with existing stores accounting for 3% of the increase and
new stores 3%. The BEE transaction is responsible for the remaining operating expense increase of 9%.

The effective tax rate for the period of 35% is 6% higher than that of the previous period, mainly due to an increase in
non-deductible expenditure of the BEE transaction.

Cash and cash equivalents increased by 23% to 1 341 million. Stock levels have increased by 11% in line with increased
sales, with overall stockholding at 70 days (December 2014: 73 days) at the end of the period. Trade receivables remain
well under control.

During the first half, Cashbuild opened six new stores, seven stores were refurbished and one store relocated. The DIY
pilot continues with 10 Cashbuild DIY pilot stores (not included in the above 228 stores number). Cashbuild will
continue its store expansion, relocation and refurbishment strategy in a controlled manner, applying the same rigorous
process as in the past. 

EVENTS AFTER THE REPORTING PERIOD

Shareholders are advised that the purchase of 100% of the shareholding of P&L Hardware (Pty) Ltd was unconditionally approved by 
The Competition Tribunal on 3 February 2016. Management is in the process of finalising the due diligence processes 
and other conditions precedent. Take over date is expected to be within the first two weeks of March 2016.

PROSPECTS

With revenue for the first six weeks trading since period end having increased by 16% from the comparable six weeks,
management remains positive about top line trading prospects for the financial period. This information has not been
reviewed nor audited by the company's auditor.

1 March 2016

Directors: IS Fourie* (Chairman), WF de Jager (Chief Executive), HH Hickey*, AGW Knock*,
Dr DSS Lushaba*, D Masson*, 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 Proprietary Limited
70 Marshall Street, Johannesburg, 2001. PO Box 61051, Marshalltown, 2107
Auditor: PricewaterhouseCoopers Inc.
Sponsor: Nedbank CIB
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

Date: 01/03/2016 07:10:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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