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Audited annual results and dividend declaration June 2016
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 2016
13% INCREASE IN REVENUE
41% INCREASE IN HEADLINE
EARNINGS
*EXCL BEE
15% INCREASE IN NET ASSET VALUE
PER SHARE
*EXCL BEE
41% INCREASE IN TOTAL
DIVIDEND
SUMMARY CONSOLIDATED INCOME STATEMENT – AUDITED
*Restated
Year ended Year ended
30 June 30 June
2016 2015 %
R'000 (52 weeks) (52 weeks) change
Revenue 8 669 643 7 692 646 13
Cost of sales (6 404 966) (5 719 379) 12
Gross profit 2 264 677 1 973 267 15
Selling and marketing expenses (1 418 609) (1 289 350) 10
Administrative expenses (241 142) (226 871) 6
Other operating expenses (3 123) (3 352) (7)
BEE transaction expense (note 7) (63 052) – >100
Other income 9 773 7 759 26
Operating profit 548 524 461 453 19
Finance cost (921) (1 752) (47)
Finance income 71 084 39 676 79
Profit before income tax 618 687 499 377 24
Income tax expense (176 685) (138 202) 28
Profit for the year 442 002 361 175 22
Attributable to:
– Owners of the company 437 442 356 703 23
– Non-controlling interests 4 560 4 472 2
442 002 361 175 22
Earnings per share (cents) 1 920.4 1 547.2 24
Diluted earnings per share (cents) 1 919.5 1 527.2 26
* Certain comparative amounts shown do not correspond to the 2015 annual financial statements and reflect adjustments made.
Refer to note 2.
SUMMARY CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME – AUDITED
*Restated
Year ended Year ended
30 June 30 June
2016 2015
R'000 (52 weeks) (52 weeks)
Profit for the year 442 002 361 175
Other comprehensive income reclassifiable to profit or loss:
Total movement in foreign currency translation reserve (FCTR) 12 898 2 272
Attributable to:
– Owners of the company 14 934 1 794
– Non-controlling interests (2 036) 478
Total comprehensive income for the year 454 900 363 447
Total comprehensive income attributable to:
– Owners of the company 452 376 358 497
– Non-controlling interests 2 524 4 950
454 900 363 447
* Certain comparative amounts shown do not correspond to the 2015 annual financial statements and reflect adjustments made.
Refer to note 2.
ADDITIONAL INFORMATION – AUDITED
*Restated
Year ended Year ended
30 June 30 June
R'000 2016 2015
Net asset value per share (cents) 5 776 5 258
Net asset value per share (excluding treasury shares) 6 337 5 745
Ordinary shares ('000s):
– In issue 24 990 25 190
– Weighted-average 22 779 23 055
– Diluted weighted-average 22 789 23 357
Capital investment 592 155 168 602
Depreciation of property, plant and equipment 117 181 105 821
Amortisation of intangible assets 11 590 14 700
Capital commitments 83 697 105 134
Property operating lease commitments 1 484 197 1 216 934
Contingent liabilities 41 727 2 216
* Certain comparative amounts shown do not correspond to the 2015 annual financial statements and reflect adjustments made.
Refer to note 2.
SUMMARY CONSOLIDATED STATEMENT OF FINANCIAL POSITION – AUDITED
*Restated *Restated
30 June 30 June 30 June
R'000 2016 2015 2014
ASSETS
Non-current assets 1 430 879 957 686 879 089
Investment property 1 900 – –
Property, plant and equipment 929 163 836 252 794 174
Intangible assets 399 689 39 048 42 019
Rent prepayments 81 339 68 807 36 530
Deferred income tax assets 18 788 13 579 6 366
Current assets 2 108 067 2 093 028 1 721 558
Assets held for sale 4 510 9 548 12 393
Inventories 1 225 580 1 048 624 911 582
Trade and other receivables 90 994 86 030 84 486
Prepayments 11 029 9 909 8 775
Cash and deposits 775 954 938 917 704 322
Total assets 3 538 946 3 050 714 2 600 647
EQUITY AND LIABILITIES
Shareholders' equity 1 465 425 1 345 034 1 223 611
Share capital and reserves 1 443 477 1 324 551 1 208 161
Non-controlling interests 21 948 20 483 15 450
Non-current liabilities 184 432 105 979 100 217
Finance lease obligation 2 243 – –
Deferred operating lease liability 118 475 105 979 100 217
Deferred income tax liability 30 706 – –
Contingent consideration (note 8) 33 008 – –
Current liabilities 1 889 089 1 599 701 1 276 819
Trade and other liabilities 1 784 043 1 551 430 1 243 405
Finance lease obligation 1 110 – –
Current income tax liabilities 71 858 43 387 28 813
Bank overdraft 26 715 – –
Employee benefits 5 363 4 884 4 601
Total equity and liabilities 3 538 946 3 050 714 2 600 647
* Certain comparative amounts shown do not correspond to the 2015 annual financial statements and reflect adjustments made.
Refer to note 2.
SUMMARY CONSOLIDATED CASH FLOW STATEMENT – AUDITED
Year ended Year ended
30 June 30 June
R'000 2016 2015
Cash flows from operating activities
Cash generated from operations 761 718 725 567
Interest paid (921) (1 752)
Interest received – non-investing 11 781 –
Taxation paid (150 157) (130 841)
Net cash generated from operating activities 622 421 592 974
Cash flows from investing activities
Net investment in assets (163 434) (148 915)
Business combinations (378 901) –
Interest received 59 303 39 676
Net cash used in investing activities (483 032) (109 239)
Cash flows from financing activities
Shares purchased by The Cashbuild Share Incentive Trust and (244 541) (161 237)
The Cashbuild Operations Management Member Trust
Shares sold by The Cashbuild Share Incentive Trust 95 716 54 547
Dividends paid:
– own equity (192 519) (143 630)
– non-controlling interests (1 059) (980)
Net cash used in financing activities (342 403) (251 300)
Net (decrease)/increase in cash and cash equivalents (203 014) 232 435
Cash and cash equivalents at beginning of year 938 917 704 322
Effect of exchange rate movements on cash and cash equivalents 13 336 2 160
Cash and cash equivalents at end of year 749 239 938 917
SUMMARY CONSOLIDATED SEGMENTAL ANALYSIS – AUDITED
Other members of common
Group South Africa monetary area** Botswana and Malawi
*Restated *Restated *Restated *Restated
Year ended Year ended Year ended Year ended Year ended Year ended Year ended Year ended
30 June 30 June 30 June 30 June 30 June 30 June 30 June 30 June
R'000 2016 2015 2016 2015 2016 2015 2016 2015
Income statement
Revenue 8 669 643 7 692 646 7 649 200 6 732 667 601 403 599 648 419 040 360 331
Operating profit 548 524 461 453 454 893 391 396 51 995 48 117 41 636 21 940
Statement of financial position
Segment assets 3 520 158 3 043 923 2 813 493 2 436 090 434 769 391 485 271 896 216 348
Segment liabilities 2 054 733 1 698 889 1 815 133 1 471 326 148 937 148 566 90 663 78 997
Other segment items
Depreciation 117 181 105 821 105 268 95 394 5 600 5 400 6 313 5 027
Amortisation 11 590 14 700 11 389 14 700 68 – 133 –
Capital investment 592 155 168 602 565 120 148 522 15 442 8 731 11 593 11 349
* Certain comparative amounts shown do not correspond to the 2015 annual financial statements and reflect adjustments made. Refer to note 2.
** Includes Namibia, Swaziland and Lesotho
SUMMARY CONSOLIDATED 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 2013 (Restated) 252 (20) 65 823 (30 111) 21 887 (10 336) 1 037 669 13 506 1 098 670
Total comprehensive income for the year (Restated) – – – – – 4 253 268 165 3 005 275 423
Shares purchased by The Cashbuild Share Incentive Trust – (6) – (77 343) – – – – (77 349)
Shares sold by The Cashbuild Share Incentive Trust – 3 – 21 760 – – – – 21 763
Dividends paid – – – – – – (107 763) (1 061) (108 824)
Recognition of share-based payments – – – – 13 928 – – – 13 928
Balance at 30 June 2014 252 (23) 65 823 (85 694) 35 815 (6 083) 1 198 071 15 450 1 223 611
Total comprehensive income for the year (Restated) – – – – – 1 794 356 703 4 950 363 447
Shares purchased by The Cashbuild Share Incentive Trust and
The Cashbuild Operations Management Member Trust – (8) – (161 229) – – – – (161 237)
Shares sold by The Cashbuild Share Incentive Trust – 6 – 54 541 – – – – 54 547
Increase in shareholding of subsidiary – – – – – – (1 063) 1 063 –
Dividends paid – – – – – – (143 630) (980) (144 610)
Recognition of share-based payments – – – – 9 276 – – – 9 276
Balance at 30 June 2015 252 (25) 65 823 (192 382) 45 091 (4 289) 1 410 081 20 483 1 345 034
Total comprehensive income for the year – – – – – 14 934 437 442 2 524 454 900
Buy-back of shares for empowerment transaction (2) 2 (61 888) 61 888 – – – – –
Shares purchased by The Cashbuild Share Incentive Trust and
Cashbuild (South Africa) Proprietary Limited – (7) – (244 534) – – – – (244 541)
Shares sold by The Cashbuild Share Incentive Trust – 7 – 95 709 – – – – 95 716
Dividends paid – – – – – – (192 519) (1 059) (193 578)
Recognition of share-based payments – – – – 7 894 – – – 7 894
Balance at 30 June 2016 250 (23) 3 935 (279 319) 52 985 10 645 1 655 004 21 948 1 465 425
NOTES TO THE SUMMARY CONSOLIDATED FINANCIAL INFORMATION
1. Basis of preparation. The summary consolidated annual 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 annual financial statements. The accounting policies applied in the preparation of the consolidated
annual financial statements from which these 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 have been prepared under the supervision of the Finance Director, Mr AE Prowse CA(SA), and
approved by the board on 29 August 2016.
2. Restatement of comparative figures and additional disclosures. During the year, the group changed its
accounting policy with respect to the treatment of advertising rebates in line with the guidance provided by
the newly issued IFRS 15. The change in policy allows for symmetry in the accounting treatment of rebates
by suppliers and customers, ie if the supplier is treating the rebate as a reduction of revenue, Cashbuild as
the customer should account for rebates as a reduction in the purchase price of inventory, which will result
in a reduction of cost of sales when inventory is sold. Cashbuild previously reflected these rebates as part of
its selling and marketing expenses. Further, in accordance with IAS 8, this results in information that is more
relevant to the financial position and performance. The change in accounting policy will be effective for the
year ending June 2016 and will be applied retrospectively. This has therefore resulted in a restatement of the
comparative 2015 and 2014 figures on the balance sheet and income statement, which 2015 is summarised
as follows:
R'000 Restated 2015 Movement Audited 2015
Statement of financial position
Inventories 1 048 624 (24 505) 1 073 129
Retained income 1 410 081 (17 775) 1 427 856
Income statement
Cost of sales (5 719 379) (124 821) (5 844 200)
Gross profit 1 973 267 124 821 1 848 446
Gross profit percentage 25.7 1.7 24.0
Selling and marketing expenses (1 289 350) 127 871 (1 161 479)
Operating profit 461 453 (3 050) 464 503
Attributable earnings 356 703 (2 213) 358 916
Net asset value per share (cents) 5 258 (71) 5 329
Earnings per share (cents) 1 547.2 (9.6) 1 556.8
Headline earnings per share (cents) 1 518.6 (9.6) 1 528.2
3. Independent audit by the auditor. These summary consolidated annual financial statements for the year ended
30 June 2016 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 unqualified
audit report is available for inspection at the registered office of the company.
4. Reporting period. The group adopts the retail accounting calendar, which comprises the reporting period
ending on the last Sunday of the month (2016: 26 June (52 weeks); 2015: 28 June (52 weeks)).
5. 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 22 779 353 ordinary shares in issue at year end
(June 2015: 23 054 612 shares).
6. Headline earnings per ordinary share. The calculations of headline earnings and diluted headline earnings per
ordinary share are based on headline earnings of R430.9 million (June 2015: R350.1 million) and a weighted
average of 22 779 353 (June 2015: 23 054 612) shares and fully diluted of 22 788 839
(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 June 2016 June 2015 % change
Net profit attributable to the owners of the company 437 422 356 703 23
Profit on sale of assets after taxation (6 566) (6 585)
Headline earnings 430 876 350 118 23
Headline earnings per share (cents) 1 891.5 1 518.6 25
Diluted headline earnings per share (cents) 1 890.7 1 499.0 26
7. 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 of R61.890 million has been classified as a personnel
expense in the group's results and the related transaction costs were R1.162 million. 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 year end can be summarised as follows:
% increase % increase
R'000 Before BEE on 2015 After BEE on 2015
Operating profit 611 576 33 548 524 19
Attributable earnings 500 494 40 437 442 23
Net asset value per share (cents) 5 981 14 5 776 10
Headline earnings 493 928 41 430 876 23
Headline earnings per share (cents) 2 168.3 43 1 891.5 25
8. Acquisition of business. On 1 June 2016 the group acquired 100% of the business of P&L Hardware for a
consideration of R350 million and a further R80 million (fair value: R33 million) payable if certain profit targets
are met over a three-year period. In line with Cashbuild's strategy for growing market share, the rationale
for the acquisition is to expand Cashbuild's geographical footprint and market share. It is intended that P&L
Hardware will remain and grow as a separate brand to Cashbuild.
Property, plant and equipment of R38 million, trademarks of R96 million, inventories of R169 million, trade and
other receivables of R12 million, cash and cash equivalents of R29 million, trade and other payables of
R138 million, taxation of R33 million and goodwill of R267 million has been provisionally recognised at date of acquisition. These
values approximate the fair values as determined under IFRS 3.
The acquired business of P&L Hardware contributed revenue of R62 million and net profit of R0.9 million to
the group for the year. Had a full 12-month results from 1 July 2015 to 30 June 2016 been included in the
group annual financial statements, the total revenue and net contribution would have been R894 million and
R35 million respectively.
9. Declaration of dividend. The board has declared a final dividend (No. 47), of 488 cents (2015: 336 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 (2015: 25 189 811) shares in issue
at date of dividend declaration. Net local dividend amount is 414.80 cents per share for shareholders liable to
pay Dividends Tax and 488 cents per share for shareholders exempt from paying Dividends Tax. The total
dividend for the year amounts to 1 001 cents (June 2015: 712 cents) a 41% increase on the prior year. Local
dividend tax is 15%.
Cashbuild Limited's tax reference number is 9575168712.
Date dividend declared: Monday, 29 August 2016
Last day to trade "CUM" the dividend: Tuesday, 20 September 2016
Date to commence trading "EX" the dividend: Wednesday, 21 September 2016
Record date: Friday, 23 September 2016
Date of payment: Monday, 26 September 2016
Share certificates may not be dematerialised or rematerialised between Wednesday, 21 September 2016 and
Friday, 23 September 2016, both dates inclusive.
On behalf of the board
STEFAN FOURIE WERNER DE JAGER
Chairman Chief Executive
Johannesburg
29 August 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 (284 at the end of this financial
year which includes the 10 DIY stores and 42 P&L Hardware stores). 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 annual audited results in accordance with International Financial Reporting Standards
("IFRS").
FINANCIAL HIGHLIGHTS
Revenue for the year increased by 13% whilst gross profit increased by 15%. Revenue for stores in existence
prior to July 2014 (pre-existing stores – 213 stores) increased by 9% while our 20 new stores contributed 3% and
P&L Hardware contributed 1% to revenue growth. This increase for the year has been achieved in tough trading
conditions with selling price inflation of 3%. Gross profit percentage has increased to 26.1% from the 25.7% of the
prior year (Refer to note 2).
Operating expenses increased by 14% (mainly as a result of our BEE transaction) which resulted in an operating
profit increase of 19%. Basic earnings per share increased by 24% and headline earnings per share increased by 25%.
Operational expenses for the year remained well controlled with existing stores accounting for 5% of the increase
and new stores 4%. The BEE transaction is responsible for the remaining operating expense increase of 5%.
The effective tax rate for the year of 29% is 1% higher than that of the previous year, mainly due to an increase in
non-deductible expenditure of the BEE transaction.
Cash and cash equivalents decreased by 20% to R749 million due to the acquisition of P&L Hardware from own
resources. Stock levels have increased by 17% mainly in line with increased sales, with Cashbuild stockholding at 76
days (June 2015: 78 days) at the end of the year. Trade receivables remain well under control. Net asset value per
share has shown a 10% increase, from 5 258 cents (June 2015) to 5 776 cents.
During the financial year, Cashbuild opened 11 new stores, 23 stores were refurbished and one store relocated. The
DIY pilot continues with 10 Cashbuild DIY pilot stores. Cashbuild will continue its store expansion, relocation and
refurbishment strategy in a controlled manner, applying the same rigorous process as in the past.
PROSPECTS
With revenue for the first six weeks trading since year end having increased by 5% for Cashbuild stores and 12% for P&L Hardware
stores from the comparable six weeks, management remains positive about top line trading prospects for the financial year. This
information has not been reviewed nor audited by the company's auditor.
30 August 2016
Directors: IS Fourie* (Chairman), WF de Jager (Chief Executive), 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 Proprietary Limited
70 Marshall Street, Johannesburg, 2001
PO Box 61051, Marshalltown, 2107
Auditor: PricewaterhouseCoopers Inc.
Sponsor: Nedbank CIB
QUALITY BUILDING MATERIALS AT THE LOWEST PRICES
www.cashbuild.co.za
Date: 30/08/2016 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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