Iliad Africa Limited HY 2013 results

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Iliad Africa Limited HY 2013 results

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Iliad Africa Limited HY 2013 results

  1. 1. Basis of preparation The condensed consolidated financial results included in this announcement have been prepared in accordance with the measurement and recognition criteria of International Financial Reporting Standards (“IFRS”) and its interpretations issued by the International Accounting Standards Board in issue and effective for the Group at 30 June 2013 and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council. The results are presented in terms of IAS 34, Interim Financial Reporting, and comply with the Listing Requirements of the JSE Limited and the Companies Act 2008 (as amended). The condensed consolidated interim financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group’s annual financial statements as at 31 December 2012. The Board of directors approved these condensed consolidated financial statements on 22 August 2013. The preparation of the Group’s consolidated financial results for the period ended 30 June 2013 was supervised by the Chief Financial Officer: Chris Booyens CA (SA). Accounting policies The accounting policies adopted in the preparation of the condensed consolidated interim financial statements are in terms of IFRS and are consistent with those applied in the Group annual financial statements for the year ended 31 December 2012, except for the adoption of new or revised accounting standards and interpretations, that became applicable during the current reporting period. None of these have had a significant impact on the Group’s accounting policies and methods of computation, nor have they resulted in a restatement or re-presentation of the 31 December 2012 statement of financial position and related notes. Audit opinion These consolidated interim financial statements have not been reviewed or audited by the Group’s auditors. Changes to the Board During the period under review, Mr Howard Turner retired as chairman and director of the Board and Mr Andile Sangqu was appointed as both non-executive director (effective 1 March 2013) and chairman (effective 23 May 2013). Events after the reporting date Other than disclosed under the heading Strategic Projects above, there were no material subsequent events and no material change in the Group's contingent liabilities since the reporting date. Distribution In keeping with the Group policy, no dividend was declared for the Interim period. For and on behalf of the Board of Directors. 22 August 2013, Johannesburg Andile Sangqu Eugene Beneke Chris Booyens Chairman Chief Executive Officer Chief Financial Officer Unaudited Unaudited Audited R000 2013 2012 2012 30 Jun 30 Jun 31 Dec ASSETS Non-current assets Property, plant and equipment 130 358 120 004 134 158 Intangible assets 233 521 265 841 234 161 Long-term receivable 5 573 – – Deferred taxation 60 041 39 538 43 933 Total non-current assets 429 493 425 383 412 252 Current assets Inventories 520 222 694 481 694 452 Trade and other receivables 552 675 595 498 461 581 Taxation 6 214 6 695 15 866 Cash and cash equivalents 208 149 234 437 212 958 Short-term portion of long-term receivable 1 227 – – Assets classified as held for sale 129 410 – 72 711 Total current assets 1 417 897 1 531 111 1 457 568 Total assets 1 847 390 1 956 494 1 869 820 EQUITY AND LIABILITIES Equity Stated capital 122 122 122 Retained income 708 257 783 968 789 826 Total equity 708 379 784 090 789 948 Non-current liabilities Long-term borrowings 6 088 3 329 3 971 Total non-current liabilities 6 088 3 329 3 971 Current liabilities Trade and other payables and provisions 761 881 840 206 757 355 Short-term borrowings 1 552 1 101 1 503 Bank overdraft 335 263 327 768 289 875 Liabilities directly associated with assets held for sale 34 227 – 27 168 Total current liabilities 1 132 923 1 169 075 1 075 901 Total equity and liabilities 1 847 390 1 956 494 1 869 820 CONDENSED CONSOLIDATED SEGMENTAL RESULTS Group General Building Materials Specialised Building Materials The impact of the portfolio adjustments on the result is as follows: Revenue Profitability (EBITDA)* Rm % Change 30 Jun 2013 30 Jun 2012 % Change 30 Jun 2013 30 Jun 2012 Future portfolio 1,7% 2 018 687 1 984 860 (3,7%) 77 672 80 641 Affected operations (12,9%) 165 807 190 354 (90,1%) (26 793) (14 091) Total 0,4% 2 184 494 2 175 214 (23,5%) 50 879 66 550 *EBITDA before restructuring costs, fair value adjustment and loss of disposal of business components Group revenue increased by 0,4%, which reflects the continued subdued trading environment, marginal recovery in building plans passed and the protracted slowdown in the finishing end of the industry. Year-on-year expenses (excluding once-off portfolio adjustment costs and excluding depreciation/amortisation) have increased by 3,7%, reflecting the focus on expense management in order to partially negate costs associated with investing in key strategic initiatives. The Group ended the period with net borrowings of R134,8 million, compared to net borrowings of R97,8 million at the comparable date in 2012. The increase is mainly due to the investment in working capital and the costs associated with the implementation of our key strategic projects. Operational and market review The past few years have been a challenging period for the building materials supply industry. Iliad’s ongoing focus on procurement and improving cost structures has countered these conditions to some extent. The GBM division reported a performance that reflects the challenges within its trading environment. Whilst gross margins have been sustained, the marginal revenue growth was negated by expense increases (albeit below inflation) resulting in reduced bottom-line results for both the Inland and Coastal subdivisions. Improved revenue trends in Q2 are continuing into Q3. Significant marketing activity will support the new BUCO brand for the balance of the year. In the SBM division, the downtrading trend in the finishing end of the market continued during the period. The Ironmongery business within the Specialised Building Materials (SBM) division’s retail business delivered another sound result. An improved result by the Wholesaling subdivision, includes notable results from Equipment Hire and the Boards businesses. Post the previously mentioned disposals, the remaining SBM portfolio is set to deliver enhanced performance into the future. Prospects While the industry continues to adapt to the current trading environment, the infrastructural efficiencies implemented during the period, stringent performance targets, realignment of the portfolio and implementation of various key strategic initiatives ensure the Group is well positioned to capitalise on opportunities as growth gradually returns to the market. As a result of various disposals in 2013, a sound future portfolio is well positioned for sustained growth. Two new BUCO stores will be opened during the second half of 2013. The first seven weeks since 30 June 2013 reflected an increase in revenue for the future portfolio of approximately 5% on that of the comparable period in 2012. Nature of business Iliad Africa Limited, listed on the JSE in 1998, focuses on sourcing, distributing, wholesaling and retailing of general and specialised building materials. The Group operates through two focused divisions leveraging common pools of expertise, enabling each division to focus on its core market. General Building Materials (GBM) markets a comprehensive range of products primarily sourced locally. Specialised Building Materials (SBM) trades in differentiated or value-added products. A range of customers, from large-scale development and construction groups to do-it-yourself homeowners are serviced country-wide from an established base of 76 stores. Strategic Projects Notable progress was made on various strategic initiatives, which include : Consolidated Brand Portfolio - The national launch of the monolithic BUCO brand in all of our GBM stores, was successfully completed at the end of June 2013. This includes revamps to a number of the stores. Consolidated IT platform - The implementation of the Group's integrated ERP platform is progressing well, with more than half of these conversions completed. This project is anticipated to be fully implemented by the end of Q2-2014. Balanced Portfolio contribution - As part of our portfolio review to maintain the strategic balance of the Group’s national footprint, the decision was made to sell our Timber Wholesale, Ceramics and Ceramics Cash & Carry businesses, as we continue to refine the Group. At the Board meeting dated 14 March 2013, the disposal of the assets and liabilities of the Thorpe Timber business was approved. The Competition Commission unconditionally approved the transaction on 24 July 2013. The effective date for the transaction was 1 August 2013. The Ceramics Cash & Carry business was disposed of during May 2013 and Ceramics effective 12 July 2013. This resulted in a fair value adjustment on available for sale assets of R70,2 million and a loss on disposal of business components to the value of R6,0 million. There was also a portfolio adjustment cost of R14,7 million due to the rationalisation of two underperforming stores. Financial review In line with the trading statement issued on 01 August 2013, the Group recorded a loss (LPS) of 39,0 cents per share for the six months ended 30 June 2013, compared to an earnings of 20,1 cents per share for the corresponding 2012 period. The Group recorded headline earnings (HEPS) of 0,4 cents per share for the six months ended 30 June 2013, compared to headline earnings of 20,0 cents per share for the corresponding 2012 period. The results include the fair value adjustment on available for sale assets of R70,2 million relating to the disposals of the Timber Wholesale and Ceramics businesses, a loss on disposal of business components to the value of R6,0 million relating to the Ceramics Cash & Carry businesses as well as restructuring cost of R14,7 million in respect of the rationalisation of two underperforming stores. Excluding the abovementioned adjustments, the Group recorded an EBITDA on continuing operations of R77,7 million for the period ended 30 June 2013, compared to R80,6 million for the 2012 period. The future portfolio achieved an EBIT margin of 2,9% for the reporting period. CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Unaudited Unaudited Audited R000 2013 2012 2012 30 Jun 30 Jun 31 Dec Cash flows from operating activities 2 128 (83 961) (30 334) Operating profit adjusted for non cash items 42 188 62 775 137 994 Working capital changes during the period (49 713) (131 387) (121 336) Taxation refund/(paid) 9 653 (15 349) (46 992) Cash flows from investing activities (26 847) (30 305) (68 562) Cash flows from financing activities (25 478) (27 283) (26 239) Net decrease in cash and cash equivalents for the period (50 197) (141 549) (125 135) Cash and cash equivalents at beginning of the period (76 917) 48 218 48 218 Cash and cash equivalents at end of the period (127 114) (93 331) (76 917) SUPPLEMENTARY INFORMATION Unaudited Unaudited Audited 2013 2012 2012 30 Jun 30 Jun 31 Dec Net asset value per share (cents) 512,5 567,3 571,5 Net tangible asset value per share (cents) 343,6 375,0 402,1 Capital expenditure (R000) 21 922 30 774 71 242 Capital commitments (R000) – approved and contracted 4 976 1 582 4 477 – approved not contracted 25 607 18 292 48 028 Depreciation (R000) 21 233 19 003 38 618 Amortisation (R000) 640 1 262 2 523 Iliad Africa Limited (Incorporated in the Republic of South Africa) Registration number 1997/011938/06.Share code ILA ISIN: ZAE000015038 Registered address Iliad House Block 7 Thornhill Office Park 94 Bekker Road Midrand Postnet Suite 566 P/Bag x 29 Gallo Manor 2052 Directors A Sangqu (Chairman)* E Beneke (Chief Executive Officer) C Booyens (Chief Financial Officer) Prof F Abrahams* A Kalyan* T Njikizana* R Ririe* *Non-executive Group Secretary SC O’Connor Transfer secretaries Link Market Services South Africa (Pty) Limited 13th Floor Rennie House 19 Ameshoff Street Braamfontein 2001 PO Box 4844 Johannesburg 2000 Sponsor Bridge Capital Advisors (Pty) Ltd 27 Fricker Road Second Floor Illovo 2196 PO Box 651010 Benmore 2010 Auditors Deloitte & Touche Website www.iliadafrica.co.za CORPORATE INFORMATION Unaudited Unaudited Audited Unaudited Unaudited Audited Unaudited Unaudited Audited R000 30 Jun 2013 30 Jun 2012 31 Dec 2012 30 Jun 2013 30 Jun 2012 31 Dec 2012 30 Jun 2013 30 Jun 2012 31 Dec 2012 Revenue 2 184 494 2 175 214 4 493 085 1 677 190 1 678 168 3 454 283 507 304 497 046 1 038 802 EBITDA before portfolio adjustments 50 879 66 550 146 494 42 107 54 960 116 351 8 772 11 590 30 143 Loss on disposal of business components (5 986) – – – – – (5 986) – – Fair value adjustment on available for sale assets (70 232) – – – – – (70 232) – – Restructuring costs (14 699) – – (14 699) – – – – – EBITDA (40 038) 66 550 146 494 27 408 54 960 116 351 (67 446) 11 590 30 143 Depreciation (21 233) (19 003) (38 618) (13 255) (10 596) (22 050) (7 978) (8 407) (16 568) Amortisation (640) (1 262) (2 523) – – – (640) (1 262) (2 523) Intangible Impairments – – (30 419) – – – – – (30 419) EBIT (61 911) 46 285 74 934 14 153 44 364 94 301 (76 064) 1 921 (19 367) Total Assets 1 847 390 1 956 494 1 869 820 1 132 673 1 175 300 1 080 926 714 717 781 194 788 894 Total Liabilities * 1 139 010 *1 172 404 1 079 872 706 184 *747 664 640 269 432 826 *424 740 439 603 Capital expenditure 21 922 30 774 71 242 10 684 18 576 45 757 11 238 12 198 25 485 * Unaudited 30 June 2012 recompiled due to the portfolio adjustments CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY Unaudited Unaudited Audited R000 2013 2012 2012 30 Jun 30 Jun 31 Dec Total equity at the beginning of the period 789 948 783 949 783 949 Movement in retained (loss)/income (81 569) 141 5 999 Attributable to owners of the parent (53 925) 27 785 33 643 Dividends to owners of the parent (27 644) (27 644) (27 644) Total equity at the end of the period 708 379 784 090 789 948 ILI/2333Q ILIAD AFRICA LIMITED ■  Revenue increased 0,4% ■  Gross margin percentage maintained ■  Portfolio adjustments implemented Unaudited Interim Results for the six months ended 30 June 2013ILIAD AFRICA LIMITED Unaudited Unaudited Audited R000 % 2013 2012 2012 change 30 Jun 30 Jun 31 Dec Revenue 0,4 2 184 494 2 175 214 4 493 085 Cost of sales (1 601 198) (1 595 478) (3 283 864) Gross margin 0,6 583 296 579 736 1 209 221 Administration, selling and distribution expenses (3,7) (532 417) (513 186) (1 062 727) EBITDA before portfolio adjustments (23,5) 50 879 66 550 146 494 Loss on disposal of business components (5 986) – – Fair value adjustment on available for sale assets (70 232) – – Restructuring costs (14 699) – – EBITDA (160,2) (40 038) 66 550 146 494 Depreciation (21 233) (19 003) (38 618) Amortisation (640) (1 262) (2 523) Intangible impairment – – (30 419) Operating (loss)/profit before investment income (EBIT) (233,8) (61 911) 46 285 74 934 Investment income 8 403 8 858 18 591 Operating (loss)/profit before finance charges (197,0) (53 508) 55 143 93 525 Finance charges (16 525) (17 290) (29 919) (Loss)/profit before taxation (285,0) (70 033) 37 853 63 606 Taxation 260,0 16 108 (10 068) (29 963) Total comprehensive (loss)/income for the period (294,1) (53 925) 27 785 33 643 Attributable to: Non-controlling interest – – – Owners of the parent (53 925) 27 785 33 643 (53 925) 27 785 33 643 Number of ordinary shares in issue 138 217 794 138 217 794 138 217 794 Basic and diluted (loss)/earnings per share (cents) (294,1) (39,0) 20,1 24,3 Basic and diluted headline earnings/(loss) per share (cents) (98,0) 0,4 20,0 46,3 Dividends per share (cents) – – 20,0 Reconciliation of headline earnings Attributable (loss)/profit for the period (53 925) 27 785 33 643 Adjusted for: 54 538 (129) 30 316 Impairments of intangibles – – 30 419 Loss on disposal of business components (net of tax) 4 310 – – Fair value adjustment on available for sale (net of tax) 50 567 Profit on disposal of property, plant and equipment (net of tax) (339) (129) (103) Headline earnings for the period (R000) 613 27 656 63 959 Ratios Gross margin percentage 26,7 26,7 26,9 Operating margin percentage (EBIT) (2,8) 2,1 1,7 Effective tax rate 23,0 26,6 47,1

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