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Audited interim results and dividend declaration December 2016
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 2016
REVENUE (Rm)
UP 15%
OPERATING PROFIT *EXCL BEE (Rm)
UP 10%
HEADLINE EARNINGS *EXCL BEE (Rm)
UP 9%
NAV per share (cents)
UP 10%
DIVIDEND PER SHARE *EXCL BEE (cents)
UP 5%
SPACE GROWTH #Excl DIY stores (stores)
UP 24%
SUMMARY CONSOLIDATED INTERIM INCOME STATEMENT - AUDITED
*Restated
Six months Six months
ended ended Year ended
31 December 31 December 30 June
2016 2015 % 2016
R'000 (26 weeks) (26 weeks) change (52 weeks)
Revenue 5 170 907 4 509 710 15 8 669 643
Cost of sales (3 859 712) (3 370 211) 15 (6 404 966)
Gross profit 1 311 195 1 139 499 15 2 264 677
Selling and marketing expenses (812 037) (710 398) 14 (1 418 609)
Administrative expenses (138 296) (111 218) 24 (241 142)
Other operating expenses (801) (1 061) (25) (3 123)
BEE transaction expense (note 7) - (63 052) (100) (63 052)
Other income 1 944 11 472 (83) 9 773
Operating profit 362 005 265 242 36 548 524
Finance cost (3 365) (317) >100 (921)
Finance income 24 507 33 987 (28) 71 084
Profit before income tax 383 147 298 912 28 618 687
Income tax expense (110 593) (105 743) 5 (176 685)
Profit for the period 272 554 193 169 41 442 002
Profit attributable to:
- Owners of the company 269 963 191 240 41 437 442
- Non-controlling interests 2 591 1 929 34 4 560
272 554 193 169 41 442 002
Earnings per share (cents) 1 189.0 843.8 41 1 920.4
Diluted earnings per share (cents) 1 188.3 838.2 42 1 919.5
* Certain comparative amounts shown do not correspond to the 2015 interim financial statements and reflect adjustments made. Refer to note 2.
SUMMARY CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME - AUDITED
*Restated
Six months Six months
ended ended Year ended
31 December 31 December 30 June
2016 2015 2016
R'000 (26 weeks) (26 weeks) (52 weeks)
Profit for the period 272 554 193 169 442 002
Other comprehensive income:
Total movement in foreign currency translation reserve (FCTR) (15 483) 12 071 12 898
Attributable to:
- Owners of the company (14 621) 13 385 14 934
- Non-controlling interests (862) (1 314) (2 036)
Total comprehensive income for the period 257 071 205 240 454 900
Total comprehensive income attributable to:
- Owners of the company 255 342 204 625 452 376
- Non-controlling interests 1 729 615 2 524
257 071 205 240 454 900
* Certain comparative amounts shown do not correspond to the 2015 interim financial statements and reflect adjustments made. Refer to note 2.
ADDITIONAL INFORMATION - AUDITED
*Restated
Six months Six months
ended ended Year ended
31 December 31 December 30 June
R'000 2016 2015 2016
Net asset value per share (cents) 6 370 5 786 5 776
Net asset value per share (excluding treasury shares) 7 011 6 431 6 337
Ordinary shares ('000s):
- In issue 24 990 25 190 24 990
- Weighted-average 22 706 22 665 22 779
- Diluted weighted-average 22 719 22 815 22 789
Capital investment 90 926 98 469 592 155
Depreciation of property, plant and equipment 63 931 54 500 117 181
Amortisation of intangible assets 6 378 7 857 11 590
Capital commitments 293 998 697 367 83 697
Property operating lease commitments 1 436 346 1 443 571 1 484 197
Contingent liabilities 35 526 1 411 41 727
* Certain comparative amounts shown do not correspond to the 2015 interim financial statements and reflect adjustments made. Refer to note 2.
SUMMARY CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION - AUDITED
*Restated
31 December 31 December
R'000 2016 2015 30 June 2016
ASSETS
Non-current assets 1 439 163 1 010 410 1 430 879
Investment property - - 1 900
Property, plant and equipment 942 385 873 028 929 163
Intangible assets 396 946 35 987 399 689
Rent prepayments 79 769 79 237 81 339
Deferred income tax assets 20 063 22 158 18 788
Current assets 2 799 087 2 672 696 2 108 067
Assets held for sale 5 169 916 4 510
Inventories 1 605 660 1 211 063 1 225 580
Trade and other receivables 171 223 104 858 90 994
Prepayments 15 187 14 910 11 029
Cash and deposits 1 001 848 1 340 949 775 954
Total assets 4 238 250 3 683 106 3 538 946
EQUITY AND LIABILITIES
Shareholders' equity 1 615 642 1 478 545 1 465 425
Share capital and reserves 1 591 965 1 457 511 1 443 477
Non-controlling interests 23 677 21 034 21 948
Non-current liabilities 199 582 131 642 184 432
Finance lease obligation 1 644 - 2 243
Deferred operating lease liability 126 558 110 416 118 475
Deferred income tax liability 36 905 21 226 30 706
Contingent consideration (note 8) 34 475 - 33 008
Current liabilities 2 423 026 2 072 919 1 889 089
Trade and other liabilities 2 317 850 1 986 483 1 784 043
Finance lease obligation 1 169 - 1 110
Current income tax liabilities 76 398 81 347 71 858
Bank overdraft 22 078 - 26 715
Employee benefits 5 531 5 089 5 363
Total equity and liabilities 4 238 250 3 683 106 3 538 946
* Certain comparative amounts shown do not correspond to the 2015 interim financial statements and reflect adjustments made. Refer to note 2.
SUMMARY CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS - AUDITED
Six months Six months
ended ended Year ended
31 December 31 December 30 June
R'000 2016 2015 2016
Cash flows from operating activities
Cash generated from operations 512 752 557 869 761 718
Interest paid (1 898) (317) (921)
Interest received - non-investing 282 - 11 781
Taxation paid (101 129) (54 887) (150 157)
Net cash generated from operating activities 410 007 502 665 622 421
Cash flows from investing activities
Net investment in assets (83 244) (71 849) (163 434)
Business combinations - - (378 901)
Interest received 24 225 33 987 59 303
Net cash used in investing activities (59 019) (37 862) (483 032)
Cash flows from financing activities
Shares purchased by The Cashbuild Share Incentive Trust and Cashbuild
(South Africa) Proprietary Limited - - (244 541)
Shares sold by The Cashbuild Share Incentive Trust 2 526 - 95 716
Finance lease payments (540) - -
Dividends paid:
- Own equity (110 933) (76 192) (192 519)
- Non-controlling interests - - (1 059)
Net cash used in financing activities (108 947) (76 192) (342 403)
Net increase/(decrease) in cash and cash equivalents 242 041 388 611 (203 014)
Cash and cash equivalents at beginning of period 749 239 938 917 938 917
Effect of exchange rate movements on cash and cash equivalents (11 510) 13 421 13 336
Cash and cash equivalents at end of period 979 770 1 340 949 749 239
SUMMARY CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY - AUDITED
Attributable to owners of the company
Share-based Non-
Treasury share Treasury share payments Retained controlling
R'000 Share capital capital Share premium premium reserve FCTR earnings interests Total equity
Balance at 1 July 2015 (*Restated) 252 (25) 65 823 (192 382) 45 091 (4 289) 1 410 081 20 483 1 345 034
Total comprehensive income for the period (*Restated) - - - - - 13 385 191 240 615 205 240
Dividends 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 9 096 1 525 129 21 098 1 478 545
Total comprehensive income for the period - - - - - 1 549 246 202 1 909 249 660
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 - - - - - - (116 327) (1 059) (117 386)
Recognition of share-based payments - - - - 3 431 - - - 3 431
Balance at 30 June 2016 250 (23) 3 935 (279 319) 52 985 10 645 1 655 004 21 948 1 465 425
Total comprehensive income for the period - - - - - (14 621) 269 963 1 729 257 071
Dividends paid - - - - - - (110 933) - (110 933)
Shares sold by The Cashbuild Share Incentive Trust - - - 2 526 - - - - 2 526
Recognition of share-based payments - - - - 1 553 - - - 1 553
Balance at 31 December 2016 250 (23) 3 935 (276 793) 54 538 (3 976) 1 814 034 23 677 1 615 642
* Certain comparative amounts shown do not correspond to the 2015 interim financial statements and reflect adjustments made. Refer to note 2.
SUMMARY CONSOLIDATED INTERIM SEGMENTAL ANALYSIS - AUDITED
South Africa
Group Cashbuild business P&L Hardware business Other members of common monetary area** Botswana, Malawi and Zambia
Six months Year ended Six months Year ended Six months Year ended Six months Year ended Six months Year ended
ended 31 December 30 June ended 31 December 30 June ended 31 December 30 June ended 31 December 30 June ended 31 December 30 June
*Restated *Restated *Restated *Restated
R'000 2016 2015 2016 2016 2015 2016 2016 2015 2016 2016 2015 2016 2016 2015 2016
Income statement
Revenue 5 170 907 4 509 710 8 669 643 4 140 318 3 985 947 7 587 742 500 982 - 61 458 317 896 315 062 601 403 211 711 208 701 419 040
Operating profit 362 005 265 242 548 524 310 482 220 934 453 292 20 193 - 1 601 22 369 20 485 51 995 8 961 23 823 41 636
Statement of financial position
Segment assets 4 238 250 3 683 106 3 538 946 3 172 813 2 985 408 2 622 873 312 054 - 209 408 478 581 427 073 434 769 274 802 270 625 271 896
Segment liabilities 2 622 608 2 204 561 2 073 521 2 104 550 1 935 213 1 676 048 247 164 - 157 873 170 105 166 681 148 937 100 789 102 667 90 663
Other segment items
Depreciation 63 931 54 500 117 181 55 657 48 695 104 970 2 026 - 298 3 178 2 787 5 600 3 070 3 018 6 313
Amortisation 6 378 7 857 11 590 6 244 7 857 11 389 - - - 55 - 68 79 - 133
Capital investment 90 926 98 469 592 155 63 854 78 902 564 443 8 503 - 677 13 828 9 244 15 442 4 741 10 323 11 593
* Certain comparative amounts shown do not correspond to the 2015 interim financial statements and reflect adjustments made. Refer to note 2.
** Includes Namibia, Swaziland and Lesotho
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 27 February 2017.
2. Restatement of comparative figures and additional disclosures. During the prior period, 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 i.e. 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 a
reduction 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 was included in the June 2016 year-end annual financial
statements and was applied retrospectively. This has therefore resulted in a restatement of the comparative 2015 and 2014 figures
on the balance sheet and income statement, for which the impact on December 2015 is summarised as follows:
Restated Audited
R'000 2015 Movement 2015
Statement of financial position
Inventories 1 211 063 (27 959) 1 239 022
Retained income 1 524 552 (20 280) 1 544 832
Income statement
Cost of sales (3 370 211) 72 656 (3 442 867)
Gross profit 1 139 499 72 656 1 066 843
Gross profit percentage 25.3 1.6 23.7
Selling and marketing expenses (710 398) (75 223) (635 175)
Operating profit 265 242 (2 567) 267 809
Attributable earnings 191 240 (1 928) 193 168
Net asset value per share (cents) 5 786 (81) 5 867
Earnings per share (cents) 843.8 (8.5) 852.3
Headline earnings per share (cents) 811.3 (8.5) 819.8
3. Independent audit by the auditor. These summary consolidated interim financial statements for the six months
ended 31 December 2016 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.
4. Reporting period. The Group adopts the retail accounting calendar, which comprises the reporting period ending on the last
Sunday of the month (2016: 25 December (26 weeks); 2015: 27 December (26 weeks); June 2016: 26 June (52 weeks)).
5. 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 22 705 620 ordinary shares in issue at period end (2015: 22 665 552 shares; June 2016:
22 779 353).
6. Headline earnings per ordinary share. The calculations of headline earnings and diluted headline earnings per ordinary
share are based on headline earnings of R270.0 million (2015: R183.9 million; June 2016: R430.9 million) and a weighted average
of 22 705 620 (2015: 22 665 552 shares; June 2016: 22 779 353) shares and fully diluted of 22 718 913 (2015: 22 815 173; June 2016:
22 788 839) ordinary shares in issue.
Reconciliation between net profit attributable to the equity holders of the company and headline earnings:
R'000 Dec 16 Dec 15 % change June 16
Net profit attributable to the owners of the
company 269 963 191 240 41 437 422
Loss/(Profit) on sale of assets after taxation 53 (7 356) (>100) (6 566)
Headline earnings 270 016 183 884 47 430 876
Headline earnings per share (cents) 1 189.2 811.3 47 1 891.5
Diluted headline earnings per share (cents) 1 188.5 806.0 47 1 890.7
7. BEE transaction. A special resolution was adopted by shareholders on 30 November 2015, whereby 200 000 shares were
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 prior periods group results and the related transaction costs were R1.162 million. The
specific repurchase of shares was effected on 29 January 2016.
The financial impact can be summarised as follows:
% 2016 % 2016
Dec 2015 increase on Dec 2015 increase on
R'000 Dec 2016 Before BEE 2015 After BEE 2015
Operating profit 362 005 328 294 10 265 242 36
Attributable earnings 269 963 254 292 6 191 240 41
Net asset value per share (cents) 6 370 6 036 6 5 786 10
Headline earnings 270 016 246 936 9 183 884 47
Headline earnings per share (cents) 1 189.2 1 089.5 9 811.3 47
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: R34 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 R137 million, taxation of R33 million and goodwill
of R267 million has been provisionally recognised at date of acquisition. These values are provisional and approximate the fair
values as determined under IFRS 3.
The acquired business of P&L Hardware contributed revenue of R501 million and profit before tax of R19.6 million to the group for the
period.
9. Declaration of dividend. The board has declared an interim dividend (No. 48), of 540 cents (2015: 513 cents) per ordinary share
out of income reserves to all shareholders of Cashbuild Limited. The dividend per share is calculated based on 24 989 811 (2015:
24 989 811) shares in issue at date of dividend declaration. Net local dividend amount is 432 cents per share for shareholders
liable to pay Dividends Tax and 540 cents per share for shareholders exempt from paying Dividends Tax. Local dividend tax is 20%.
Cashbuild Limited's tax reference number is 9575168712.
Date dividend declared: Monday, 27 February 2017
Last day to trade "CUM" the dividend: Monday, 20 March 2017
Date commence trading "EX" the dividend: Wednesday, 22 March 2017
Record date: Friday, 24 March 2017
Date of payment: Monday, 27 March 2017
Share certificates may not be dematerialised or rematerialised between Wednesday, 22 March 2017 and Friday, 24 March 2017, both
dates inclusive.
On behalf of the board
STEFAN FOURIE WERNER DE JAGER
Chairman Chief Executive
Johannesburg
27 February 2017
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 (293 at the end of this financial period which includes the 10 DIY stores
and 44 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 audited results in accordance with International Financial Reporting Standards ("IFRS").
FINANCIAL HIGHLIGHTS
Revenue and gross profit for the period increased with 15%. Revenue for stores in existence prior to July 2015
(pre-existing stores - 229 stores) remained the same while our 20 new stores contributed 4% and P&L Hardware contributed 11% to
revenue growth. This increase for the period has been achieved in tough trading conditions with selling price inflation of 3%. Gross
profit percentage has increased to 25.4% from the 25.3% of the prior period (Refer to note 2).
Operating expenses, excluding the BEE transaction in the prior year, remained well controlled and increased by 17% which resulted in
an operating profit increase of 36%. Existing stores accounted for 4% of the increase in operating costs, new stores 4% and P&L Hardware 9%.
Earnings per share increased by 41% and headline earnings per share increased by 47%.
The effective tax rate for the period of 29% is 6% lower than that of the previous period, mainly due to non-deductibility of the BEE
transaction in the prior year.
Cash and cash equivalents decreased by 27% to R980 million due to the acquisition of P&L Hardware from own resources. Stock levels
have increased by 33% mainly as a result of new stores and the acquisition of P&L Hardware, with overall stockholding at 81 days
(December 2015: 70 days) at period end. Trade receivables remain well under control. Net asset value per share has shown a 10%
increase, from 5 786 cents (December 2015) to 6 370 cents.
During the first half, Cashbuild opened nine new stores, two stores were refurbished and two stores were relocated. Two stores were
closed, one traded in close proximity to another Cashbuild store and the other reached the end of its lease term. P&L Hardware
opened two new stores during this period. 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
Cashbuild stores revenue for the subsequent six weeks after half year end has decreased by 4% on the comparable six week period.
The Group, including P&L Hardware, has an increase of 7% on the comparable six week period. As a result management is cautiously
optimistic about the top line trading prospects for the Group for the remainder of the financial year. This information has not been
reviewed nor audited by the company's auditor.
Directors: IS Fourie* (Chairman), WF de Jager (Chief Executive), HH Hickey*,
AGW Knock (British)*, 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,
Rosebank Towers, 15 Bierman Avenue, Rosebank, Johannesburg, 2196
Auditor: PricewaterhouseCoopers Inc.
Sponsor: Nedbank CIB
Quality building materials at the lowest prices
www.cashbuild.co.za
Date: 28/02/2017 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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