CONTENTS FINANCIAL REVIEW 5 OPERATIONS PRODUCT GROUPS 26 STORE DEVELOPMENT AND PERFORMANCE ANALYSIS 37 SUMMARY AND STRATEGIC OVERVIEW 43

Transcription

1 AUDITED INTERIM RESULTS AND DIVIDEND DECLARATION DECEMBER

2 CONTENTS FINANCIAL REVIEW 5 OPERATIONS PRODUCT GROUPS 26 STORE DEVELOPMENT AND PERFORMANCE ANALYSIS 37 SUMMARY AND STRATEGIC OVERVIEW 43 FINANCIAL RESULTS 46

3 DISCLAIMER This presentation differs from the presentation available on the website and in the hand-out given to presentation participants as a result of industry sensitive information contained therein. The financial information pertaining to Cashbuild Limited s (Cashbuild s) results are exactly as published on SENS in terms of the JSE Limited s Listings Requirements. This presentation may contain certain "forward-looking statements" regarding beliefs or expectations of Cashbuild, its directors and other members of its senior management about Cashbuild s financial condition, results of operations, cash flow, strategy and business and the transactions described in this presentation. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements, which are other than statements of historical facts. The words "believe", "expect", "anticipate", "intend", "estimate", "forecast", "project", "will", "may", "should" and similar expressions identify forward-looking statements but are not the exclusive means of identifying such statements. Such forward-looking statements are not guarantees of future performance. Rather, they are based on current views and assumptions and involve known and unknown risks, uncertainties and other factors, many of which are outside the control of Cashbuild and are difficult to predict, that may cause the actual results, performance, achievements or developments of Cashbuild or the industry in which it operates to differ materially from any future results, performance, achievements or developments expressed by or implied from the forward-looking statements. Each member of Cashbuild expressly disclaims any obligation or undertaking to provide or disseminate any updates or revisions to any forward-looking statements contained in this announcement. 2 NATURE OF BUSINESS Mass retailer of building materials, home improvement and related products Offers a focused range of quality products at competitive prices Selling predominantly for cash Largest retail chain of building materials in southern Africa Currently 317 outlets and expanding (251 Cashbuild, 58 P&L Hardware and 8 Cashbuild DIY outlets) 3 CASHBUILD AUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 1

4 FINANCIAL SUMMARY Revenue R5.4bn Operating profit R325m Headline earnings R249m Net asset value per share 7 303cents Rbn 5% Rm 10% Rm 8% Rand 15% Compound Annual Growth Rate (CAGR) 2 year 9% 11% 16% 12% 5 year 10% 11% 11% 12% 4 2 CASHBUILD AUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER

5 FINANCIAL REVIEW CASHBUILD AUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 5

6 INCOME STATEMENT STATUTORY PERIOD-ON-PERIOD R 000 Audited Dec (26 Weeks) Audited Dec 2016 (26 Weeks) % change Audited Jun (52 Weeks) Revenue Gross profit % Operating expenses Operating expenses % Operating profit (10) Operating profit % Net financing income Profit for the period (8) Earnings per share (cents) (8) Dividend per share (cents) (8) 930 Weighted number of shares ( 000) REVENUE BREAKDOWN % increase Cashbuild stores P&L Hardware stores R 000 FY 2018 FY Total Total New Existing* Total New Existing* Quarter Quarter (1) st Half Quarter Quarter Total st 6 weeks trading since period end up 7% * All stores in existence prior to 1 July CASHBUILD AUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER

7 SALES Growth: Q1: 5% Q2: 4% All stores Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Growth: Q1: 1% Q2: (1%) Excluding new stores Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun * 2016 has been smoothed for comparative 5 weeks vs 4 weeks 8 CUSTOMER TRANSACTIONS Growth: Q1: 2% Q2: 1% All stores Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Growth: Q1: (2%) Q2: (3%) Excluding new stores Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun * 2016 has been smoothed for comparative 5 weeks vs 4 weeks 9 CASHBUILD AUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 5

8 AVERAGE BASKET SIZE Growth Q1: 3% Q2: 3% All stores Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Excluding new stores Growth Q1: 2% Q2: 5% Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun * 2016 has been smoothed for comparative 5 weeks vs 4 weeks 10 GROSS PROFIT AND EBIT MARGIN 28.0% 27.0% 26.0% 25.0% 24.0% 24.5% 5.4% 26.3% 7.3% * 7.0% 27.0% 6.3% 25.9% 25.7% 25.4% 25.3% 25.4% 25.1% 6.0% 8.0% 7.0% 6.0% 5.0% 23.0% 4.0% 22.0% 3.0% 21.0% 2.0% 20.0% 19.0% 1.0% 18.0% FY 2014 FY 2015 FY 2016 FY FY HY 2HY HY EBIT margin 0.0% * Excludes BEE transaction 11 6 CASHBUILD AUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER

9 SEGMENTAL DISCLOSURE Rm Dec Cashbuild South Africa Dec 2016 % Dec P&L Hardware South Africa Dec 2016 % Cashbuild Namibia, Lesotho and Swaziland Dec Cashbuild Botswana, Malawi and Zambia Total Group Revenue Gross profit GP % Operating profit (10) (6) (45) (10) OP % Capital investment > (1) >100 Dec 2016 % Dec Dec 2016 % Dec Dec 2016 % Revenue Dec Revenue Dec 2016 Operating profit Dec Operating profit Dec % 6% 4% 10% 6% 4% 6% 7% 1% 6% 6% 2% 79% 80% 86% 86% South Africa (Cashbuild) South Africa (P&L Hardware) Namibia, Lesotho and Swaziland Botswana, Malawi and Zambia 12 SALES BY PROVINCE 5.6% % of Total sales 2.8% 2.5% 4.5% 20.0% 6.0% 2.2% 8.3% 10.2% 20.1% 5.7% 11.4% 5.9% 14.6% 3.8% 4.0% 2.9% 2.2% (1.7%) 34.0% Limpopo Gauteng Mpumalanga Eastern Cape Countries KwaZulu-Natal North West Free State Northern Cape Western Cape Period-on-period sales growth 13 CASHBUILD AUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 7

10 EXISTING BUSINESS TRADING R 000 Dec Dec 2016 % change Revenue Gross profit (1) Gross profit % Operating expenses Operating expenses % Operating profit (9) Operating profit % Existing business refers to stores that have comparative trading results for an entire prior financial period 14 OPERATING EXPENSES R 000 FY 2018 FY Existing business (237 Cashbuild and 41 P&L stores) % change - 1 st Half nd Half New business (22 Cashbuild and 17 P&L stores) st Half nd Half Total st Half nd Half CASHBUILD AUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER

11 OPERATING EXPENSES PEOPLE COST R million FY 2018 FY Existing business (237 Cashbuild and 41 P&L stores) % change - 1 st Half nd Half New business (22 Cashbuild and 17 P&L stores) st Half nd Half 13.5 Total st Half nd Half % of sales FTE headcount Increase for Cashbuild and P&L Hardware staff of 7.5% and 6.5%, respectively Benchmarks to ensure customer service standards are adhered to Continued focus on efficiencies 16 OPERATING EXPENSES DELIVERY EXPENSES R million FY 2018 FY Existing business (237 Cashbuild and 41 P&L stores) % change - 1 st Half (1) - 2 nd Half 56.4 New business (22 Cashbuild and 17 P&L stores) st Half nd Half 2.1 Total st Half nd Half 58.5 % of sales Delivery expenses below benchmark level CPI growth expected in 2 nd Half 17 CASHBUILD AUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 9

12 OPERATING EXPENSES ADVERTISING R million FY 2018 FY Existing business (237 Cashbuild and 41 P&L stores) % change - 1 st Half (6) - 2 nd Half 55.9 New business (22 Cashbuild and 17 P&L stores) st Half nd Half 3.6 Total st Half nd Half 59.5 % of sales Continued focused micro advertising New store launch 18 OPERATING EXPENSES PROPERTY R million FY 2018 FY Existing business (237 Cashbuild and 41 P&L stores) % change - 1 st Half nd Half New business (22 Cashbuild and 17 P&L stores) st Half nd Half 8.4 Total st Half nd Half % of sales Majority of P&L Hardware stores leased CASHBUILD AUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER

13 OPERATING PROFIT (EBIT) R 000 FY 2018 FY % change 1 st Half (10) 2 nd Half Total % 7.0% 6.0% 5.0% EBIT margin (% of revenue) 6.3% 5.8% 5.4% 5.2% 7.3% * 6.8% 7.0% 5.7% 6.0% 4.0% 3.0% 2.0% 1.0% 0.0% - FY 2014 FY 2015 FY 2016 FY FY 2018 * Excludes BEE transaction 1st Half 2nd Half 20 EARNINGS PER SHARE (EPS) STATUTORY period-on-period 5 Year CAGR = 11% Cents (8%) FY 2014 FY 2015 FY 2016 FY FY st Half 2nd Half Total EPS 21 CASHBUILD AUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 11

14 DIVIDEND PER SHARE (DPS) Cents (8%) FY 2014 FY 2015 FY 2016 FY FY st Half 2nd Half Total DPS Dividend cover remains 2.0 times Cashbuild Empowerment Trust R233 million to date 22 STATUTORY STATEMENT OF FINANCIAL POSITION R 000 Assets Audited Dec Audited Dec 2016 % change Audited Jun Property, plant and equipment Intangible assets Assets held for sale (13) Inventories Trade and other receivables (19) Cash resources Shareholders equity and liabilities Shareholders equity Interest-bearing debt (93) Trade and other liabilities Net asset value per share (cents) CASHBUILD AUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER

15 INVENTORY ANALYSIS Stock holding all stores (% growth) Stores stocked since December 2016 (13 Cashbuild and 13 P&L Hardware stores) Cashbuild P&L Hardware Group Existing stores (8) (1) (7) Total (3) 23 1 Purchase inflation at 2% Continued focus on SOQ and slow moving stock Working capital days at period end Dec Jun Dec 2016 Inventory Creditors STATUTORY CASH FLOW R MILLION W/Cap inflow: R176m >100% (19%) (312) (90) (19%) (82) 47% (6%) (15) (122) 100% (73) % Opening balance Jul'17 Operating profit (cash) Inventory Debtors Creditors Interest Dividends Taxation Fixed assets Business combinations Closing balance Dec'17 % change from December 2016 Inflow Outflow 25 CASHBUILD AUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 13

16 14 CASHBUILD AUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER

17 OPERATIONS PRODUCTS GROUPS CASHBUILD AUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 26

18 CEMENT SALES POCKETS Q1 Q2 Q3 W1 W4 W7 W10 W13 W16 W19 W22 W25 W28 W31 W34 W37 W40 W43 W46 W49 W CEMENT UNIT SALES PER SUPPLIER Dec Dec % 5% 16% 3% 5% 21% 24% 32% 22% 24% 18% 23% AFRISAM PPC NPC SEPHAKU MAMBA OTHER CASHBUILD AUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER

19 TOTAL TIMBER SALES Q1 Q2 Q3 W1 W4 W7 W10 W13 W16 W19 W22 W25 W28 W31 W34 W37 W40 W43 W46 W49 W TOTAL BRICK SALES Q1 Q2 Q3 W1 W4 W7 W10 W13 W16 W19 W22 W25 W28 W31 W34 W37 W40 W43 W46 W49 W CASHBUILD AUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 17

20 TOTAL ROOF COVERING SALES Q1 Q2 Q3 W1 W4 W7 W10 W13 W16 W19 W22 W25 W28 W31 W34 W37 W40 W43 W46 W49 W TOTAL OPENING SALES Q1 Q2 Q3 W1 W4 W7 W10 W13 W16 W19 W22 W25 W28 W31 W34 W37 W40 W43 W46 W49 W CASHBUILD AUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER

21 TOTAL PLUMBING SALES Q1 Q2 Q3 W1 W4 W7 W10 W13 W16 W19 W22 W25 W28 W31 W34 W37 W40 W43 W46 W49 W TOTAL HARDWARE SALES Q1 Q2 Q3 W1 W4 W7 W10 W13 W16 W19 W22 W25 W28 W31 W34 W37 W40 W43 W46 W49 W CASHBUILD AUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 19

22 TOTAL DECORATIVE SALES Q1 Q2 Q3 W1 W4 W7 W10 W13 W16 W19 W22 W25 W28 W31 W34 W37 W40 W43 W46 W49 W SALES PER WEEK ALL STORES - R MILLION Q1 Growth: 5% Q2 Growth: 4% Q3 Growth 1 st 6 weeks: 7% W1 W4 W7 W10 W13 W16 W19 W22 W25 W28 W31 W34 W37 W40 W43 W46 W49 W CASHBUILD AUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER

23 CASHBUILD AUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 21

24 22 CASHBUILD AUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER

25 STORE DEVELOPMENT AND PERFORMANCE ANALYSIS CASHBUILD AUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 37

26 CASHBUILD STORE DEVELOPMENT Total stores June 2014 June 2015 June 2016 June December Existing Cashbuild stores New Cashbuild stores Refits and relocations June 2014 June 2015 June 2016 June December 1st Half 2nd Half 38 P&L HARWARE STORE DEVELOPMENT Total stores June 2016 June December Existing P&L Stores New P&L Stores GROUP SUMMARY 22 New Stores: 10 Cashbuild and 12 P&L Hardware 4 Relocations: Tzaneen, Kokstad, Thulamahashe and Steelpoort 10 Refurbishments 1 Closure: Port Shepstone 317 Stores: 251 Cashbuild, 8 DIY and 58 P&L Hardware CASHBUILD AUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER

27 NEW STORES HY2018 Cashbuild P&L Hardware Gauteng Alexandra Diepsloot Dobsonville Kwa Thema Square Roodekop Western Cape Delft Lesotho Butha Buthe Mpumalanga Casteel Zambia Kabwe Ndola LESOTHO Gauteng Alexandra Braamfisherville Limpopo Apel * Acquired stores Eastern Cape Butterworth* Hunters Retreat* Peddie* Queenstown Mthatha (5) Sprigg* Vulindlela* York* Chatham* Oxland* 40 STORE PORTFOLIO BY LOCATION Number of stores December (December 2016) Location Town Rural Township Metro 31 (29) Dec Stores 35% 31% 24% 10% 74 (68) 108 (95) Dec Sales 34% 30% 25% 11% 96 (91) Dec 2016 Stores Dec 2016 Sales 34% 32% 24% 10% 33% 30% 25% 12% 41 CASHBUILD AUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 25

28 COMPETITOR LANDSCAPE 350 (350) 3 (3) 260 (245) 95 (93) 75 (78) 8 (7) 41 (43) 31 (31) 140 (140) 44 (44) 15 (15) 38 (37) 11 (9) 160 (160) (Jun : Store numbers) CASHBUILD AUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER

29 SUMMARY AND STRATEGIC OVERVIEW CASHBUILD AUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 43

30 THE SIX MONTHS AHEAD Political changes Competitive market Civil unrest Low growth environment Gross and operating margins Cashbuild remains one of southern Africa s largest retailers of quality building materials and associated products and continues to expand its footprint across both the Cashbuild and P&L Hardware brands 44 Thank you for your attendance and participation Switchboard: Werner de Jager Chief Executive Etienne Prowse Finance Director Shane Thoresson Operations Director For any further Investor Relations questions please contact: Marlize Keyter Keyter Rech Investor Solutions mkeyter@kris.co.za CASHBUILD AUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER

31 CASHBUILD AUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 29

32 30 CASHBUILD AUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER

33 FINANCIAL RESULTS CASHBUILD AUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 46

34 FINANCIAL HIGHLIGHTS REVENUE (Rm) 5% OPERATING PROFIT (Rm) 10% * 2016 *2015 Excluding BEE HEADLINE EARNINGS PER SHARE (cents) 8% NET ASSET VALUE PER SHARE (cents) 15% * 2016 *2015 Excluding BEE * 2016 *2015 Excluding BEE DIVIDEND PER SHARE (cents) 8% SPACE GROWTH* (stores) 9% * 2016 *2015 Excluding BEE *Excluding DIY stores 32 CASHBUILD AUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER

35 SUMMARY CONSOLIDATED INTERIM INCOME STATEMENT AUDITED R'000 Six months ended 31 December Six months ended 31 December 2016 % Year ended 30 June (26 weeks) (26 weeks) change (52 weeks) Revenue Cost of sales ( ) ( ) 5 ( ) Gross profit Selling and marketing expenses ( ) ( ) 10 ( ) Administrative expenses ( ) ( ) 7 ( ) Other operating expenses (1 428) (801) 78 (2 172) Other income > Operating profit (10) Finance cost (1 024) (3 365) (70) (3 785) Finance income Profit before income tax (8) Income tax expense ( ) ( ) (8) ( ) Profit for the period (8) Profit attributable to: Owners of the company (8) Non-controlling interests (11) (8) Earnings per share (cents) (8) Diluted earnings per share (cents) (8.0) CASHBUILD AUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 33

36 SUMMARY CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME AUDITED Six months ended 31 December Six months ended 31 December 2016 Year ended 30 June R'000 (26 weeks) (26 weeks) (52 weeks) Profit for the period Other comprehensive income: Total movement in foreign currency translation reserve (FCTR) (15 483) (20 833) Attributable to: Owners of the company (14 621) (18 974) Non-controlling interests 49 (862) (1 859) Total comprehensive income for the period Total comprehensive income attributable to: Owners of the company Non-controlling interests CASHBUILD AUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER

37 ADDITIONAL INFORMATION AUDITED R'000 Six months ended 31 December Six months ended 31 December 2016 Year ended 30 June Net asset value per share (cents) Net asset value per share (excluding treasury shares) Ordinary shares ('000s): In issue Weighted-average Diluted weighted-average Capital investment (Including business combinations) Depreciation of property, plant and equipment Amortisation of intangible assets Capital commitments Property operating lease commitments Contingent liabilities CASHBUILD AUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 35

38 SUMMARY CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION AUDITED R' December 31 December June ASSETS Non-current assets Property, plant and equipment Intangible assets Rent prepayments Deferred income tax assets Current assets Assets held for sale Inventories Trade and other receivables Prepayments Cash and deposits Total assets EQUITY AND LIABILITIES Shareholders' equity Share capital and reserves Non-controlling interests Non-current liabilities Finance lease obligation Deferred operating lease liability Deferred income tax liability Contingent consideration Current liabilities Trade and other liabilities Finance lease obligation Current income tax liabilities Bank overdraft Total equity and liabilities CASHBUILD AUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER

39 SUMMARY CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS AUDITED Six months ended 31 December Six months ended 31 December 2016 Year ended 30 June Cash flows from operating activities Cash generated from operations Interest paid (1 024) (1 898) (3 785) Interest received non-investing Taxation paid (82 642) ( ) ( ) Net cash generated from operating activities Cash flows from investing activities Net investment in assets ( ) (83 244) ( ) Business combinations (72 597) (5 740) Interest received Net cash used in investing activities ( ) (59 019) ( ) 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 Finance lease payments (600) (540) (1 110) Dividends paid: Own equity (89 224) ( ) ( ) Non-controlling interests (565) (1 376) Net cash used in financing activities (90 389) ( ) ( ) Net increase in cash and cash equivalents Cash and cash equivalents at beginning of period Effect of exchange rate movements on cash and cash equivalents (109) (11 510) (15 381) Cash and cash equivalents at end of period CASHBUILD AUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 37

40 SUMMARY CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY AUDITED R'000 Balance at 30 June 2016 Total comprehensive income for the period Dividends paid Shares sold by The Cashbuild Share Incentive Trust Recognition of share-based payments Balance at 31 December 2016 Total comprehensive income for the period Shares purchased by The Cashbuild Operations Management Member Trust Dividends paid Recognition of share-based payments Balance at 30 June Total comprehensive income for the period Dividends paid Recognition of share-based payments Balance at 31 December SUMMARY CONSOLIDATED INTERIM SEGMENTAL ANALYSIS AUDITED Group Six months ended 31 December Year ended 30 June South Africa Cashbuild business Six months ended 31 December Year ended 30 June R' Income statement Revenue Operating profit Statement of financial position Segment assets Segment liabilities Other segment items Depreciation Amortisation Capital investment * Includes Namibia, Swaziland and Lesotho. 38 CASHBUILD AUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER

41 Share capital Attributable to owners of the company Share premium Share-based payments reserve FCTR Retained earnings Noncontrolling interests Total equity 227 ( ) (14 621) ( ) ( ) ( ) (3 976) (4 353) (2 561) (2 561) ( ) (1 376) ( ) ( ) (8 329) (89 224) (565) (89 789) ( ) (5 556) P&L Hardware business Six months ended 31 December Year ended 30 June Other members of common monetary area* Six months ended 31 December Year ended 30 June Botswana, Malawi and Zambia Six months ended 31 December Year ended 30 June CASHBUILD AUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 39

42 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 Independent audit by the auditor. These summary consolidated interim financial statements for the six months ended 31 December 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 (: 24 December (26 weeks); 2016: 25 December (26 weeks); June : 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 ordinary shares in issue at period end (2016: shares; June : ). 40 CASHBUILD AUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER

43 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 : R464.4 million) and a weighted-average of (2016: shares; June : ) shares and fully diluted of (2016: ; June : ) 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 (8) Loss/(profit) on sale of assets after taxation >100 (558) Headline earnings (8) Headline earnings per share (cents) (8) Diluted headline earnings per share (cents) (8) Acquisition of business. In August the Group acquired the business of Build it Hunters Retreat and in September 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 to 31 December 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 (2016: ) shares in issue at date of dividend declaration. Net local dividend amount is 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 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 Chairman Werner de Jager Chief Executive Johannesburg 5 March 2018 CASHBUILD AUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 41

44 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 cents (December 2016) to 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. 42 CASHBUILD AUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER

45 CORPORATE INFORMATION Directors: IS Fourie* (Chairman), WF de Jager (Chief Executive), HH Hickey*, AGW Knock (British)*, Dr DSS Lushaba*, AE Prowse, NV Simamane*, SA Thoresson, A Hattingh (*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 Investor Relations: Keyter Rech Investor Solutions CC (Incorporated in the Republic of South Africa) Cashbuild Limited (Registration number: 1986/001503/06) (Incorporated in the Republic of South Africa) JSE code: CSB ISIN: ZAE CASHBUILD AUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 43

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