CASHBUILD LIMITED - Audited interim results and dividend declaration December 2017

Release Date: 06/03/2018 07:05
Code(s): CSB
 
Wrap Text
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'). 
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
 the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, 
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
 information disseminated through SENS.

Email this JSE Sens Item to a Friend.

Share This Story