CASHBUILD LIMITED - Audited results and dividend declaration for the year ended 30 June 2018

Release Date: 28/08/2018 07:10
Code(s): CSB
 
Wrap Text
Audited results and dividend declaration for the year ended 30 June 2018

Cashbuild Limited
(Registration number: 1986/001503/06)
(Incorporated in the Republic of South Africa)
JSE code: CSB ISIN: ZAE000028320

AUDITED RESULTS AND DIVIDEND DECLARATION for the year ended 30 June 2018

REVENUE (Rm)              
up 5%

OPERATING PROFIT (Rm)  
down 12%

HEADLINE EARNINGS (Rm)  
down 9%

NET ASSET VALUE PER SHARE (cents) 
up 14%

TOTAL DIVIDEND PER SHARE (cents)   
down 9% 

SPACE GROWTH (stores) 
up 7%
     
SUMMARY CONSOLIDATED INCOME STATEMENT - AUDITED

                                                    Year ended      Year ended
                                                  30 June 2018    30 June 2017           % 
R'000                                                (52 weeks)      (52 weeks)     change

Revenue                                             10 207 603       9 729 640           5
Cost of sales                                       (7 639 019)     (7 248 711)          5
Gross profit                                         2 568 584       2 480 929           4
Selling and marketing expenses                      (1 778 355)     (1 595 510)         11
Administrative expenses                               (267 566)       (278 953)         (4)
Other operating expenses                               (10 263)         (2 172)       >100
Other income                                            30 926          15 703        >100
Operating profit                                       543 326         619 997         (12)
Finance cost                                            (3 143)         (3 785)        (17)
Finance income                                          54 128          40 814          33
Profit before income tax                               594 311         657 026         (10)
Income tax expense                                    (169 063)       (187 540)        (10)
Profit for the year                                    425 248         469 486          (9)
Attributable to:                                                                         
- Owners of the company                                420 609         464 991         (10)
- Non-controlling interests                              4 639           4 495           3
                                                       425 248         469 486          (9)
Earnings per share (cents)                             1 852.0         2 047.7         (10)
Diluted earnings per share (cents)                     1 851.3         2 046.7         (10)

SUMMARY CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME - AUDITED

                                                                 Year ended     Year ended
                                                               30 June 2018   30 June 2017
R'000                                                             (52 weeks)     (52 weeks)

Profit for the year                                                 425 248        469 486
Other comprehensive income reclassifiable to profit or loss:                              
Total movement in foreign currency translation reserve (FCTR)         6 317        (20 833)
Attributable to:                                                                          
- Owners of the company                                               5 395        (18 974)
- Non-controlling interests                                             922         (1 859)
Total comprehensive income for the year                             431 565        448 653
Total comprehensive income attributable to:                                                
- Owners of the company                                             426 004        446 017
- Non-controlling interests                                           5 561          2 636
                                                                    431 565        448 653

ADDITIONAL INFORMATION - AUDITED

                                                                 Year ended     Year ended
R'000                                                          30 June 2018   30 June 2017

Net asset value per share (cents)                                     7 578          6 642
Net asset value per share (excluding treasury shares)                 8 338          7 309
Ordinary shares ('000s):                                                                  
- In issue                                                           24 990         24 990
- Weighted-average                                                   22 711         22 708
- Diluted weighted-average                                           22 720         22 719
Capital investment                                                  243 999        193 271
Depreciation of property, plant and equipment                       130 356        122 425
Amortisation of intangible assets                                     7 631         11 870
Capital commitments                                                 231 083        303 380
Property operating lease commitments                              1 780 204      1 656 394
Contingent liabilities                                               16 022         38 908

SUMMARY CONSOLIDATED STATEMENT OF FINANCIAL POSITION - AUDITED

R'000                                                          30 June 2018   30 June 2017

ASSETS                                                                                    
Non-current assets                                                1 663 396      1 481 122
Property, plant and equipment                                     1 100 132        978 615
Intangible assets                                                   433 467        397 015
Rent prepayments                                                     85 707         80 328
Deferred income tax assets                                           44 090         25 164
Current assets                                                    2 609 111      2 232 120
Assets held for sale                                                  4 510          4 345
Inventories                                                       1 512 823      1 289 491
Trade and other receivables                                         118 489        122 462
Prepayments                                                          20 360         14 402
Cash and deposits                                                   952 929        801 420
Total assets                                                      4 272 507      3 713 242
EQUITY AND LIABILITIES                                                                    
Shareholders' equity                                              1 921 484      1 682 976
Share capital and reserves                                        1 893 759      1 659 768
Non-controlling interests                                            27 725         23 208
Non-current liabilities                                            205 225         198 469
Finance lease obligation                                                115          1 052
Deferred operating lease liability                                  162 930        137 051
Deferred income tax liability                                        42 180         37 480
Contingent consideration                                                  -         22 886
Current liabilities                                               2 145 798      1 831 797
Trade and other liabilities                                       2 070 688      1 768 942
Finance lease obligation                                                936          1 191
Current income tax liabilities                                       74 174         61 664
Total equity and liabilities                                      4 272 507      3 713 242

SUMMARY CONSOLIDATED STATEMENT OF CASH FLOWS - AUDITED

                                                                Year ended      Year ended
R'000                                                         30 June 2018    30 June 2017
Cash flows from operating activities                                                      
Cash generated from operations                                     781 720         651 625
Interest paid                                                       (3 143)         (3 785)
Taxation paid                                                     (169 775)       (197 336)
Net cash generated from operating activities                       608 802         450 504
Cash flows from investing activities                                                      
Net investment in assets                                          (241 231)       (181 472)
Business combinations                                              (72 573)         (5 740)
Interest received                                                   54 128          40 814
Net cash used in investing activities                             (259 676)       (146 398)
Cash flows from financing activities                                                      
Shares purchased by Cashbuild Trusts or subsidiary
  companies for share incentive schemes                               (605)         (2 561)
Shares sold by Cashbuild Trusts                                      1 610           2 526
Finance lease payments                                              (1 192)         (1 110)
Dividends paid:                                                                            
- Own equity                                                      (201 210)       (234 023)
- Non-controlling interests                                         (1 044)         (1 376)
Net cash used in financing activities                             (202 441)       (236 544)
Net increase in cash and cash equivalents                          146 685          67 562
Cash and cash equivalents at beginning of year                     801 420         749 239
Effect of exchange rate movements on cash and cash
  equivalents                                                        4 824         (15 381)
Cash and cash equivalents at end of year                           952 929         801 420

SUMMARY CONSOLIDATED STATEMENT OF CHANGES IN EQUITY - AUDITED

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

Balance at 1 July 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
Total comprehensive income for the year                      -               -          -              -               -   (18 974)     464 991         2 636      448 653
Shares purchased by The Cashbuild Operations   
  Management Member Trust                                    -               -     (2 561)             -               -         -            -             -       (2 561)
Shares sold by The Cashbuild Share Incentive Trust           -               -      2 526              -               -         -            -             -        2 526
Dividends paid                                               -               -          -              -               -         -     (234 023)       (1 376)    (235 399)
Recognition of share-based payments                          -               -          -              -           4 332         -            -             -        4 332
Balance at 30 June 2017                                    250             (23)     3 900       (279 319)         57 317   (8 329)    1 885 972        23 208    1 682 976
Total comprehensive income for the year                      -               -          -              -               -    5 395       420 609         5 561      431 565
Shares purchased by The Cashbuild Operations
  Management Member Trust                                    -               -       (605)             -               -         -            -             -         (605)
Shares sold by The Cashbuild Operations Management
  Member Trust                                               -               -      1 610              -               -         -            -             -        1 610 
Dividends paid                                               -               -          -              -               -         -     (201 210)       (1 044)    (202 254)
Recognition of share-based payments                          -               -          -              -           8 192         -            -             -        8 192
Balance at 30 June 2018                                    250             (23)     4 905       (279 319)         65 509    (2 934)   2 105 371        27 725    1 921 484 



SUMMARY CONSOLIDATED SEGMENTAL ANALYSIS - AUDITED 
                                                                                                   South Africa                                                                             
                                                                                                                                            Other members of          Botswana, Malawi and
                                                           Group                  Cashbuild business        P&L Hardware business        common monetary area*              Zambia

                                                  Year ended     Year ended    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       30 June       30 June
R'000                                                   2018           2017          2018          2017         2018            2017          2018          2017          2018          2017

Income statement                                                                                                                                                                             
Revenue                                           10 207 603      9 729 640     8 043 743     7 787 042    1 136 436         960 454       606 644       595 995       420 780       386 149
Operating profit                                     543 326        619 997       478 813       535 787       21 458          32 378        36 269        38 378         6 786        13 454
Statement of financial position                                                                                                                                                              
Segment assets                                     4 272 507      3 713 242     2 764 523     2 407 381      715 887         540 125       527 675       496 554       264 422       269 182
Segment liabilities                                2 351 023      2 030 266     1 392 935     1 509 869      631 880         249 770       171 816       173 217       154 392        97 410
Other segment items                                                                                                                                                                           
Depreciation                                         130 356        122 425       107 108       107 428        8 388           2 823         7 496         6 038         7 364         6 136
Amortisation                                           7 631         11 870         7 377        11 622            -               -           103            93           151           155
Capital investment                                   243 999        193 271       119 772       106 024       81 638          13 437        23 954        42 548        18 635        31 262
*   Includes Namibia, Swaziland and Lesotho

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 27 August 2018.

2.    Independent audit by the auditor. These summary consolidated annual financial statements for the year
      ended 30 June 2018 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.

3.    Reporting period. The group adopts the retail accounting calendar, which comprises the reporting period
      ending on the last Sunday of the month (2018: 24 June (52 weeks); 2017: 25 June (52 weeks)). 

4.    Declaration of dividend. The board has declared a final dividend (No. 51), of 346 cents (June 2017: 390 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 (June 2017: 24 989 811) shares in issue at date of dividend declaration. Net local
      dividend amount is 276.8 cents per share for shareholders liable to pay Dividends Tax and 346 cents per share for
      shareholders exempt from paying Dividends Tax. The total dividend for the year amounts to 842 cents (June 2017:
      930 cents) a 9% decrease on the prior year. Local Dividends Tax is 20%.

      Cashbuild Limited's tax reference number is 9575168712.

      Date dividend declared:                                                                 Monday, 27 August 2018
      Last day to trade "CUM" the dividend:                                               Tuesday, 18 September 2018
      Date to commence trading "EX" the dividend:                                       Wednesday, 19 September 2018
      Record date:                                                                         Friday, 21 September 2018
      Date of payment:                                                                    Tuesday, 25 September 2018

      Share certificates may not be dematerialised or rematerialised between Wednesday, 19  September  2018 and
      Friday, 21 September 2018, both dates inclusive. 

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 22 710 768 ordinary shares in issue at year end
      (June 2017: 22 708 147 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 R424.1 million (June 2017: R464.4 million) and a weighted
      average of 22 710 768 (June 2017: 22 708 147) shares and fully diluted of 22 719 842 (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                                                                              June 2018   June 2017    % change

      Net profit attributable to the owners of the company                                 420 609     464 991         (10)
      Profit on sale of assets after taxation                                                3 456        (558)           
      Headline earnings                                                                    424 065     464 433          (9)
      Headline earnings per share (cents)                                                  1 867.2     2 045.2          (9)
      Diluted headline earnings per share (cents)                                          1 866.5     2 044.2          (9) 

7.    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 R64.2 million and a
      net loss of R4.6 million to the Group for the year. Had a full 52 weeks trading result been included in these Group
      annual financial statements, the total revenue contributed would have been R75.8 million and the net loss would
      have been R2.4 million excluding non-recurring costs incurred during the take-on and business integration phase. 

On behalf of the board                  

Stefan Fourie                          Werner de Jager
Chairman                               Chief Executive 

Johannesburg                            
27 August 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 (318 at the end of this financial year
which includes the seven DIY stores and 60 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 annual audited results in accordance with International Financial Reporting Standards ("IFRS").

Financial highlights
Revenue for the year increased by 5%. Revenue for stores in existence prior to July 2016 (pre-existing stores - 276 stores)
remained at similar levels while our 42 new stores provided the 5% increase. Gross profit increased by 4% with gross
profit percentage decreasing from 25.5% to 25.2%. This was achieved in tough trading conditions with selling price
inflation of 2%.

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 operating profit decreasing by 12%. Basic earnings per share decreased by 10% with headline earnings
per share also decreasing by 9% from the prior year. The effective tax rate of 28.4% for the period is similar to that of 
the previous period.

Cash and cash equivalents increased by 19% to R953 million. Stock levels, including new stores, have increased by
17% with overall stockholding at 88 days (2017: 85 days) at year end. Net asset value per share has increased by 14%,
from 6 642 cents (June 2017) to 7 578 cents.

During the year, Cashbuild opened 25 new stores (11 Cashbuild stores, six P&L Hardware stores and acquired eight
stores which were converted to P&L Hardware stores), refurbished 27 stores and relocated six Cashbuild 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
Group revenue for the six weeks after year end has increased by 1% on the comparable six week period.
Management believe trading conditions will remain extremely challenging. This information has neither been
reviewed nor audited by the company's auditor.

Directors:
IS Fourie* (Chairman), WF de Jager (Chief Executive), A Hattingh, HH Hickey*, AGW Knock (British)*, Dr DSS Lushaba*, 
GM Tapon Njamo*, AE Prowse, NV Simamane*, SA Thoresson, WP van Aswegen (*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 Biermann Avenue, Rosebank,
Johannesburg, 2196

Auditor:
PricewaterhouseCoopers Inc.

Sponsor:
Nedbank CIB 
                                      
www.cashbuild.co.za   QUALITY BUILDING MATERIALS AT THE BEST VALUE



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