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Audited interim results and dividend declaration December 2017
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 2017
REVENUE (Rm)
UP 5%
OPERATING PROFIT (Rm)
DOWN 10%
HEADLINE EARNINGS PER SHARE (cents)
DOWN 8%
NET ASSET VALUE PER SHARE (cents)
UP 15%
DIVIDEND PER SHARE (cents)
DOWN 8%
SPACE GROWTH * Excluding DIY stores (stores)
UP 9%
SUMMARY CONSOLIDATED INTERIM INCOME STATEMENT – AUDITED
Six months Six months
ended ended Year ended
31 December 31 December 30 June
2017 2016 % 2017
R'000 (26 weeks) (26 weeks) change (52 weeks)
Revenue 5 404 984 5 170 907 5 9 729 640
Cost of sales (4 045 750) (3 859 712) 5 (7 248 711)
Gross profit 1 359 234 1 311 195 4 2 480 929
Selling and marketing expenses (894 962) (812 037) 10 (1 595 510)
Administrative expenses (147 522) (138 296) 7 (278 953)
Other operating expenses (1 428) (801) 78 (2 172)
Other income 9 578 1 944 >100 15 703
Operating profit 324 900 362 005 (10) 619 997
Finance cost (1 024) (3 365) (70) (3 785)
Finance income 27 975 24 507 14 40 814
Profit before income tax 351 851 383 147 (8) 657 026
Income tax expense (101 518) (110 593) (8) (187 540)
Profit for the period 250 333 272 554 (8) 469 486
Profit attributable to:
– Owners of the company 248 036 269 963 (8) 464 991
– Non-controlling interests 2 297 2 591 (11) 4 495
250 333 272 554 (8) 469 486
Earnings per share (cents) 1 092.2 1 189.0 (8) 2 047.7
Diluted earnings per share (cents) 1 091.6 1 188.3 (8) 2 046.7
SUMMARY CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME –
AUDITED
Six months Six months
ended ended Year ended
31 December 31 December 30 June
2017 2016 2017
R'000 (26 weeks) (26 weeks) (52 weeks)
Profit for the period 250 333 272 554 469 486
Other comprehensive income:
Total movement in foreign currency translation reserve (FCTR) 2 822 (15 483) (20 833)
Attributable to:
– Owners of the company 2 773 (14 621) (18 974)
– Non-controlling interests 49 (862) (1 859)
Total comprehensive income for the period 253 155 257 071 448 653
Total comprehensive income attributable to:
– Owners of the company 250 809 255 342 446 017
– Non-controlling interests 2 346 1 729 2 636
253 155 257 071 448 653
ADDITIONAL INFORMATION – AUDITED
Six months Six months
ended ended Year ended
31 December 31 December 30 June
R'000 2017 2016 2017
Net asset value per share (cents) 7 303 6 370 6 642
Net asset value per share (excluding treasury shares) 8 036 7 011 7 309
Ordinary shares ('000s):
– In issue 24 990 24 990 24 990
– Weighted-average 22 710 22 706 22 708
– Diluted weighted-average 22 722 22 719 22 719
Capital investment (Including business combinations) 186 982 90 926 193 271
Depreciation of property, plant and equipment 63 974 63 931 122 425
Amortisation of intangible assets 4 256 6 378 11 870
Capital commitments 259 668 293 998 303 380
Property operating lease commitments 1 905 706 1 436 346 1 656 394
Contingent liabilities 29 049 35 526 38 908
SUMMARY CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION
– AUDITED
31 December 31 December
R'000 2017 2016 30 June 2017
ASSETS
Non-current assets 1 611 715 1 439 163 1 481 122
Property, plant and equipment 1 052 109 942 385 978 615
Intangible assets 433 017 396 946 397 015
Rent prepayments 90 095 79 769 80 328
Deferred income tax assets 36 494 20 063 25 164
Current assets 2 839 542 2 799 087 2 232 120
Assets held for sale 4 477 5 169 4 345
Inventories 1 618 671 1 605 660 1 289 491
Trade and other receivables 138 294 171 223 122 462
Prepayments 39 019 15 187 14 402
Cash and deposits 1 039 081 1 001 848 801 420
Total assets 4 451 257 4 238 250 3 713 242
EQUITY AND LIABILITIES
Shareholders' equity 1 849 898 1 615 642 1 682 976
Share capital and reserves 1 824 909 1 591 965 1 659 768
Non-controlling interests 24 989 23 677 23 208
Non-current liabilities 203 559 199 582 198 469
Finance lease obligation 516 1 644 1 052
Deferred operating lease liability 150 534 126 558 137 051
Deferred income tax liability 39 331 36 905 37 480
Contingent consideration 13 178 34 475 22 886
Current liabilities 2 397 800 2 423 026 1 831 797
Trade and other liabilities 2 307 658 2 323 381 1 768 942
Finance lease obligation 1 127 1 169 1 191
Current income tax liabilities 89 015 76 398 61 664
Bank overdraft – 22 078 –
Total equity and liabilities 4 451 257 4 238 250 3 713 242
SUMMARY CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS –
AUDITED
Six months Six months
ended ended Year ended
31 December 31 December 30 June
R'000 2017 2016 2017
Cash flows from operating activities
Cash generated from operations 577 478 512 752 651 625
Interest paid (1 024) (1 898) (3 785)
Interest received – non-investing 370 282 –
Taxation paid (82 642) (101 129) (197 336)
Net cash generated from operating activities 494 182 410 007 450 504
Cash flows from investing activities
Net investment in assets (121 031) (83 244) (181 472)
Business combinations (72 597) – (5 740)
Interest received 27 605 24 225 40 814
Net cash used in investing activities (166 023) (59 019) (146 398)
Cash flows from financing activities
Shares purchased by Cashbuild Trusts or
subsidiary companies for share incentive
schemes – – (2 561)
Shares sold by The Cashbuild Share Incentive
Trust – 2 526 2 526
Finance lease payments (600) (540) (1 110)
Dividends paid:
– Own equity (89 224) (110 933) (234 023)
– Non-controlling interests (565) – (1 376)
Net cash used in financing activities (90 389) (108 947) (236 544)
Net increase in cash and cash equivalents 237 770 242 041 67 562
Cash and cash equivalents at beginning of
period 801 420 749 239 749 239
Effect of exchange rate movements on cash
and cash equivalents (109) (11 510) (15 381)
Cash and cash equivalents at end of period 1 039 081 979 770 801 420
SUMMARY CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY – AUDITED
Attributable to owners of the company
Share-based Retained Non- controlling
R'000 Share capital Share premium payments reserve FCTR earnings interests Total equity
Balance at 30 June 2016 227 (275 384) 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 227 (272 858) 54 538 (3 976) 1 814 034 23 677 1 615 642
Total comprehensive income for the period – – – (4 353) 195 028 907 191 582
Shares purchased by The Cashbuild Operations Management Member Trust – (2 561) – – – – (2 561)
Dividends paid – – – – (123 090) (1 376) (124 466)
Recognition of share-based payments – – 2 779 – – – 2 779
Balance at 30 June 2017 227 (275 419) 57 317 (8 329) 1 885 972 23 208 1 682 976
Total comprehensive income for the period – – – 2 773 248 036 2 346 253 155
Dividends paid – – – – (89 224) (565) (89 789)
Recognition of share-based payments – – 3 556 – – – 3 556
Balance at 31 December 2017 227 (275 419) 60 873 (5 556) 2 044 784 24 989 1 849 898
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
Year Year Year Year Year
ended ended ended ended ended
Six months ended 31 December 30 June Six months ended 31 December 30 June Six months ended 31 December 30 June Six months ended 31 December 30 June Six months ended 31 December 30 June
R'000 2017 2016 2017 2017 2016 2017 2017 2016 2017 2017 2016 2017 2017 2016 2017
Income statement
Revenue 5 404 984 5 170 907 9 729 640 4 271 340 4 140 318 7 787 042 583 894 500 982 960 454 321 089 317 896 595 995 228 661 211 711 386 149
Operating profit 324 900 362 005 619 997 278 610 310 482 535 787 18 883 20 193 32 378 22 431 22 369 38 378 4 976 8 961 13 454
Statement of financial position
Segment assets 4 451 257 4 238 250 3 713 242 2 919 915 3 172 813 2 407 381 719 842 312 054 540 125 540 836 478 581 496 554 270 664 274 802 269 182
Segment liabilities 2 601 359 2 622 608 2 030 266 1 793 586 2 104 550 1 509 869 442 731 247 164 249 770 198 252 170 105 173 217 166 790 100 789 97 410
Other segment items
Depreciation 63 974 63 931 122 425 53 590 55 657 107 428 3 350 2 026 2 823 3 477 3 178 6 038 3 557 3 070 6 136
Amortisation 4 256 6 378 11 870 4 126 6 244 11 622 – – – 52 55 93 78 79 155
Capital investment 186 982 90 926 193 271 92 065 63 854 106 024 72 665 8 503 13 437 13 592 13 828 42 548 8 660 4 741 31 262
* 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. There are three significant upcoming
new accounting standards which could impact the Group's reporting. The following standards are effective for
reporting periods commencing on or after 1 July 2018:
- IFRS 15 Revenue from Contracts with Customers
- IFRS 9 Financial Instruments
The following standard is effective for reporting periods commencing on or after 1 July 2019:
- IFRS 16 Leases
The Group will adopt the above standards and interpretations when they become effective.
The Group has been holding internal workshops to determine the potential impact of the adoption of IFRS 15,
IFRS 9 and IFRS 16 on the Financial Statements.
IFRS 15 – Revenue from Contracts with Customers replaces IAS 18 – Revenue, and provides a single comprehensive
model for revenue recognition based on the satisfaction of performance obligations and additional disclosures
in respect of revenue. The initial assessment indicates that there is a change expected for pending customer
deliveries and the classification and disclosure of our VIC customers' rebates.
IFRS 9 – Financial Instruments replaces IAS 39 Financial Instruments. The initial assessment indicates that the
impairment allowance of receivables currently estimated on the incurred loss model will be estimated on an
expected credit loss model.
IFRS 16 – Leases replaces IAS 17 – Leases. This has introduced changes to lessee accounting, in particular, the
requirement to recognise leases currently classified as operating leases on balance sheet. The initial assessment
indicates that the present value of operating rental commitments will be recorded as a financial liability with a
corresponding capitalised non-current asset on the Statement of Financial Position. The related amortised finance
cost and non-current asset depreciation will be recorded in the Statement of Comprehensive Income, replacing
the operating lease expenses currently recognised.
Management is still in the process of assessing whether these changes will have a material impact to the Group.
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 5 March 2018.
2. Independent audit by the auditor. These summary consolidated interim financial statements for the six months
ended 31 December 2017 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 (2017: 24 December (26 weeks); 2016: 25 December (26 weeks); June 2017:
25 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 22 709 554 ordinary shares in issue at period end
(2016: 22 705 620 shares; June 2017: 22 708 147).
5. Headline earnings per ordinary share. The calculations of headline earnings and diluted headline earnings per
ordinary share are based on headline earnings of R249.3 million (2016: R270.0 million; June 2017: R464.4 million)
and a weighted-average of 22 709 554 (2016: 22 705 620 shares; June 2017: 22 708 147) shares and fully diluted
of 22 721 970 (2016: 22 718 913; June 2017: 22 719 432) ordinary shares in issue.
Reconciliation between net profit attributable to the equity holders of the company and headline earnings:
R'000 December 17 December 16 % change June 17
Net profit attributable to the owners of the company 248 036 269 963 (8) 464 991
Loss/(profit) on sale of assets after taxation 1 307 53 >100 (558)
Headline earnings 249 343 270 016 (8) 464 433
Headline earnings per share (cents) 1 097.9 1 189.2 (8) 2 045.2
Diluted headline earnings per share (cents) 1 097.4 1 188.5 (8) 2 044.2
6. Acquisition of business. In August 2017 the Group acquired the business of Build it Hunters Retreat and in
September 2017 acquired Buffalo Building Supplies for a combined consideration of R72.6 million with the intention
that the businesses trade as P&L Hardware stores. These acquisitions are in line with Cashbuild's strategy for growing
the P&L Hardware brand. Property, plant and equipment of R18.3 million, trademarks of R2.2 million, inventories of
R17.2 million, trade and other receivables of R0.5 million, trade and other payables of R1.6 million, deferred tax of
R1.0 million and goodwill of R37.0 million has been recognised at date of acquisition. These values approximate the
fair values as determined under IFRS 3. The acquired businesses contributed revenue of R25.4 million and a net loss
of R0.4 million to the Group for the period. Had a full six-month results from 1 July 2017 to 31 December 2017 been
included in the Group interim financial statements, the total revenue and net contribution would have been
R43.5 million and R1.1 million respectively.
7. Declaration of dividend. The board has declared an interim dividend (No. 50), of 496 cents (2016: 540 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 (2016: 24 989 811) shares in issue at date of dividend declaration. Net local
dividend amount is 396.80 cents per share for shareholders liable to pay Dividends Tax and 496 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, 5 March 2018
Last day to trade "CUM" the dividend: Monday, 26 March 2018
Date to commence trading "EX" the dividend: Tuesday, 27 March 2018
Record date: Thursday, 29 March 2018
Date of payment: Tuesday, 3 April 2018
Share certificates may not be dematerialised or rematerialised between Tuesday, 27 March 2018 and Thursday,
29 March 2018, both dates inclusive.
On behalf of the board
Stefan Fourie Werner de Jager Johannesburg
Chairman Chief Executive 5 March 2018
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 (317 at the end of this financial period
which includes the eight DIY stores and 58 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 the best value.
Cashbuild has built its credibility and reputation by consistently offering its customers quality building materials at
the best value 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 period increased by 5%. Revenue for stores in existence prior to July 2016 (pre-existing stores –
278 stores) remained the same while our 39 new stores since July 2016 provided the 5% increase. Selling price inflation
was 3%. Gross profit increased by 4% in tough trading conditions with gross profit percentages decreasing from 25.4%
to 25.1%.
Operating expenses, including new stores, remained well controlled and increased by only 9% (existing stores 3% and
new stores 6%). Notwithstanding this, the increase in revenue did not compensate for the increased expenses, resulting
in the operating profit decreasing by 10%. Earnings per share and headline earnings per share both decreased by 8%.
The effective tax rate of 29% for the period is similar to that of the previous period.
Cash and cash equivalents increased by 4% to R1 039 million. Stock levels, including new stores, have increased by 1% with overall
stockholding at 79 days (December 2016: 83 days) at period end. Net asset value per share has shown a 15% increase,
from 6 370 cents (December 2016) to 7 303 cents.
During the first half, Cashbuild opened 22 new stores (10 Cashbuild and 12 P&L Hardware stores), refurbished 10 stores and four Cashbuild
stores were relocated. Cashbuild will continue its store expansion, relocation and refurbishment strategy in a
controlled manner, applying the same rigorous process as in the past.
Prospects
Group revenue for the subsequent six weeks after half year end has increased by 7% on the comparable six week
period. Management believe trading conditions will remain extremely challenging. 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*,
NV Simamane*, AE Prowse, SA Thoresson, A Hattingh (*Non-Executive)
Auditor: PricewaterhouseCoopers Inc. Sponsor: Nedbank CIB
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 Biermann Avenue, Rosebank, Johannesburg, 2196
www.cashbuild.co.za
Quality building materials at the best value
Date: 06/03/2018 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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