Cashbuild Limited · JSE:CSB
Cashbuild — FY2017 Earnings Presentation
55 slides from Cashbuild's earnings presentation, 2017
Slide 1: Audited Final Results and Dividend Declaration 2017
AUDITED FINAL RESULTS AND DIVIDEND DECLARATION 2017
Slide 2: Disclaimer
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
Slide 3: Nature of Business
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 300 outlets and expanding (2
Slide 4: Financial Highlights
FINANCIAL HIGHLIGHTS Revenue Operating profit Headline earnings Net asset value per share R9.7bn R620m R464m 6 642 cents 12% 13% 8% 15% 12.0 700 500 70 Rbn Rand Rm Rm 10.0 600 60 400 500 (21%) 50 8.0 (9%) 7% 300 400 40 6.0 300 200 30 4.0 200 36% 47% 20 15% 100 2.0 100 10 0.0 0 0 0 13 14 15 16 17 13
Slide 5: Financial Review
FINANCIAL Operating expenses well controlled REVIEW 5
Slide 6: Income Statement
INCOME STATEMENT STATUTORY YEAR-ON-YEAR Audited Audited % R’000 June 2017 June 2016 change Revenue 9 729 640 8 669 643 12 Gross profit % 25.5 26.1 Operating expenses 1 860 932 1 716 153 8 Operating expenses % 19.1 19.8 Operating profit 619 997 548 524 13 Operating profit % 6.4 6.3 Net financing inco
Slide 7: Income Statement Highlights
INCOME STATEMENT HIGHLIGHTS HALF YEAR COMPARISON 2nd Half 1st Half % % R’000 2017 2016 change 2017 2016 change Revenue 4 558 733 4 159 933 11 5 170 907 4 509 710 15 Gross profit 1 169 734 1 125 178 4 1 311 195 1 139 499 15 Gross profit % 25.7 27.0 25.4 25.3 Operating expenses 911 742 841 896 8 949 1
Slide 8: Revenue Breakdown
REVENUE BREAKDOWN % increase New P&L Existing R’000 FY 2017 FY 2016 Total stores Hardware stores* Quarter 1 2 447 381 2 131 884 15 2 12 1 Quarter 2 2 723 526 2 377 826 14 4 10 - 1st Half 5 170 907 4 509 710 15 4 11 - Quarter 3 2 230 311 2 037 965 9 4 10 (5) Quarter 4 2 328 422 2 121 968 10 4 8 (2) T
Slide 9: Sales
SALES All stores Growth: Q1: 15% Q2: 14% Q3: 9% Q4: 10% 2017 2016 2015 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Excluding new stores Growth: Q1: 1% Q2: 0% Q3: (5%) Q4: (2%) 2017 2016 2015 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun * 2015 & 2016 have been smoothed for comparative 5 weeks
Slide 10: Customer Transactions
CUSTOMER TRANSACTIONS All stores Growth: Q1: 7% Q2: 10% Q3: 8% Q4: 5% 2017 2016 2015 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Excluding new stores Growth: Q1: (5%) Q2: (2%) Q3: (5%) Q4: (6%) 2017 2016 2015 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun * 2015 & 2016 have been smoothed for co
Slide 11: Average Basket Size
AVERAGE BASKET SIZE All stores Growth Q1: 7% Q2: 4% Q3: 1% Q4: 5% 2017 2016 2015 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Excluding new stores Growth Q1: 5% Q2: 2% Q3: 0% Q4: 4% 2017 2016 2015 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun * 2015 & 2016 have been smoothed for comparative 5 w
Slide 12: Gross Profit and EBIT Margin
GROSS PROFIT AND EBIT MARGIN 28.0% 7.5% 27.0% 27.0% 26.3% 25.9% 25.3% 26.0% 25.7% 7.0% 25.4% 7.1% * 25.4% 24.7% 25.0% 24.5% 24.5% 24.0% 6.5% 23.0% 6.4% 22.0% 6.0% 6.0% 21.0% 20.0% 5.5% 5.3% 19.0% 5.1% 18.0% 5.0% FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 1HY 2HY FY EBIT margin * Excludes BEE transactio
Slide 13: Segmental Disclosure
SEGMENTAL DISCLOSURE South Africa Namibia, Lesotho and Botswana, Malawi and Total (incl P&L) Swaziland Zambia June June June June June June June June Rm % Var % Var % Var % Var 2017 2016 2017 2016 2017 2016 2017 2016 Revenue 8 748 7 650 14 596 601 (1) 386 419 (8) 9 730 8 670 12 Gross profit 2 236 2
Slide 14: Existing Business Trading
EXISTING BUSINESS TRADING % R’000 June 2017 June 2016 change Revenue 8 363 878 8 523 182 (2) Gross profit 2 198 013 2 223 198 (1) Gross profit % 26.3 26.1 Operating expenses 1 613 720 1 606 438 - Operating expenses % 19.3 18.8 Operating profit 584 293 618 361 (6) Operating profit % 7.0 7.3 P&L Hardw
Slide 15: Operating Expenses
OPERATING EXPENSES R’000 FY 2017 FY 2016 % change Existing business 1 613 720 1 606 438 - - 1st Half 831 804 799 169 4 - 2nd Half 781 916 807 269 (3) New business (23 Cashbuild and 46 P&L stores) 247 212 46 663 - 1st Half 117 386 12 036 - 2nd Half 129 826 34 627 Total 1 860 932 1 653 101 13 Total -
Slide 16: Operating Expenses – People Cost
OPERATING EXPENSES – PEOPLE COST R’000 FY 2017 FY 2016 % change Existing business 680.4 700.4 (3) - 1st Half 344.2 346.4 - - 2nd Half 336.2 354.0 (5) New business (23 Cashbuild and 46 P&L stores) 109.5 13.9 - 1st Half 53.0 5.0 - 2nd Half 56.5 8.9 Total 789.9 714.3 11 FTE headcount 6 365 6 029 6 • In
Slide 17: Operating Expenses – Delivery Expenses
OPERATING EXPENSES – DELIVERY EXPENSES R’000 FY 2017 FY 2016 % change Existing business 99.6 98.3 1 - 1st Half 48.8 49.7 (2) - 2nd Half 50.8 48.6 5 New business (23 Cashbuild and 46 P&L stores) 15.0 1.8 - 1st Half 7.3 0.5 - 2nd Half 7.7 1.3 Total 114.6 100.1 14 % of Sales 1.2 1.2 • Revised existing
Slide 18: Operating Expenses - Advertising
OPERATING EXPENSES - ADVERTISING R’000 FY 2017 FY 2016 % change Existing business 130.0 129.1 1 - 1st Half 78.6 76.3 3 - 2nd Half 51.4 52.8 (3) New business (23 Cashbuild and 46 P&L stores) 17.7 5.8 - 1st Half 9.6 2.7 - 2nd Half 8.1 3.1 Total 147.7 134.9 9 % of Sales 1.5 1.6 • Continued focused micr
Slide 19: Operating Expenses - Property
OPERATING EXPENSES - PROPERTY R’000 FY 2017 FY 2016 % change Existing business 317.8 312.0 2 - 1st Half 159.5 153.2 4 - 2nd Half 158.3 158.8 - New business (23 Cashbuild and 46 P&L stores) 60.7 7.8 - 1st Half 27.6 2.1 - 2nd Half 33.1 5.7 Total 378.5 319.8 18 % of Sales 3.9 3.7 • Majority of P&L Hard
Slide 20: Operating Profit (EBIT)
OPERATING PROFIT (EBIT) R’000 FY 2017 FY 2016 % change 1st Half 362 005 328 294 10 2nd Half 257 992 283 282 (9) Total 619 997 611 576 1 EBIT margin (% of revenue) 8.0% 7.3% 6.8% 7.0% 7.0% 6.3% 5.9% 5.8% 5.7% 6.0% 5.4% 5.2% 5.0% 4.1% 4.0% 3.0% 2.0% 1.0% 0.0% - FY 2013 FY 2014 FY 2015 FY 2016 FY 2017
Slide 21: Earnings per Share (EPS)
EARNINGS PER SHARE (EPS) STATUTORY YEAR-ON-YEAR 5 Year CAGR = 12% 2,400 7% 2 048 1 920 2,000 1 557 1,600 862 1 148 1,076 Cents 1,200 1 063 733 414 547 800 1,212 400 824 844 649 601 - FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Total 1st Half 2nd Half EPS 21
Slide 22: Dividend per Share (DPS)
DIVIDEND PER SHARE (DPS) 1200 (7%) 1 001 930 1000 800 712 488 390 528 Cents 600 487 336 400 191 253 513 540 200 376 296 275 -0 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 1st Half 2nd Half Total DPS • Dividend cover remains 2.0 times • 2016 Interim dividend determined excluding the R63 million cost of t
Slide 23: Statutory Statement of Financial Position
STATUTORY STATEMENT OF FINANCIAL POSITION Audited Audited R’000 June 2017 June 2016 % change Assets Property, plant and equipment 978 615 929 163 5 Intangible assets 397 015 399 689 (1) Investment property - 1 900 (100) Assets held for sale 4 345 4 510 (4) Inventories 1 289 491 1 225 580 5 Trade and
Slide 24: Inventory Analysis
INVENTORY ANALYSIS Stock holding – all stores % change Stores stocked since June 2016 (12 stores) 5 Existing stores (2) Cashbuild stores 3 P&L Hardware stores 2 Total 5 • Continued focus on SOQ and slow moving stock Working capital days at year end June Dec June 2017 2016 2016 Inventory 78 81 77 Cre
Slide 25: Statutory Cash Flow
STATUTORY CASH FLOW R’MILLION 1,600 W/Cap outflow: R116m 149% 762 34 234 1,400 64 31 21 21% 84% 197 1,200 10% 16% 31% 181 1,000 11% 16 801 800 749 600 7% 400 Opening Operating profit Inventory Debtors Creditors Interest Dividends Taxation Fixed assets Effect of Closing balance (cash) exchange rate b
Slide 26: Operations Product Structures
OPERATIONS Champion cement PRODUCT brand doing well STRUCTURES 26
Slide 27: Cement Sales
CEMENT SALES POCKETS Q1 Q2 Q3 Q4 W1 W4 W7 W10 W13 W16 W19 W22 W25 W28 W31 W34 W37 W40 W43 W46 W49 W52 2016 2017 2018 27
Slide 28: Cement Unit Sales per Supplier
CEMENT UNIT SALES PER SUPPLIER June 2017 June 2016 3% 4% 3% 3% 19% 7% 21% 27% 14% 24% 16% 1% 36% 22% AFRISAM PPC MAMBA OTHER SEPHAKU LAFARGE NPC 28
Slide 29: Total Timber Sales
TOTAL TIMBER SALES Q1 Q2 Q3 Q4 19 17 15 13 11 9 W1 W4 W7 W10 W13 W16 W19 W22 W25 W28 W31 W34 W37 W40 W43 W46 W49 W52 2016 2017 2018 29
Slide 30: Total Brick Sales
TOTAL BRICK SALES Q1 Q2 Q3 Q4 16 15 14 13 12 11 10 9 8 7 6 W1 W4 W7 W10 W13 W16 W19 W22 W25 W28 W31 W34 W37 W40 W43 W46 W49 W52 2016 2017 2018 30
Slide 31: Total Roof Covering Sales
TOTAL ROOF COVERING SALES Q1 Q2 Q3 Q4 25 23 21 19 17 15 13 11 W1 W4 W7 W10 W13 W16 W19 W22 W25 W28 W31 W34 W37 W40 W43 W46 W49 W52 2016 2017 2018 31
Slide 32: Total Ceiling Sales
TOTAL CEILING SALES Q1 Q2 Q3 Q4 11 10 9 8 7 6 5 W1 W4 W7 W10 W13 W16 W19 W22 W25 W28 W31 W34 W37 W40 W43 W46 W49 W52 2016 2017 2018 32
Slide 33: Total Opening Sales
TOTAL OPENING SALES Q1 Q2 Q3 Q4 26 24 22 20 18 16 14 12 10 W1 W4 W7 W10 W13 W16 W19 W22 W25 W28 W31 W34 W37 W40 W43 W46 W49 W52 2016 2017 2018 33
Slide 34: Total Plumbing Sales
TOTAL PLUMBING SALES Q1 Q2 Q3 Q4 12 11 10 9 8 7 W1 W4 W7 W10 W13 W16 W19 W22 W25 W28 W31 W34 W37 W40 W43 W46 W49 W52 2016 2017 2018 34
Slide 35: Total Hardware Sales
TOTAL HARDWARE SALES Q1 Q2 Q3 Q4 12 11 10 9 8 7 6 5 W1 W4 W7 W10 W13 W16 W19 W22 W25 W28 W31 W34 W37 W40 W43 W46 W49 W52 2016 2017 2018 35
Slide 36: Total Decorative Sales
TOTAL DECORATIVE SALES Q1 Q2 Q3 Q4 42 37 32 27 22 17 12 W1 W4 W7 W10 W13 W16 W19 W22 W25 W28 W31 W34 W37 W40 W43 W46 W49 W52 2016 2017 2018 36
Slide 37: Total Tools Sales
TOTAL TOOLS SALES Q1 Q2 Q3 Q4 9 8 7 6 5 W1 W4 W7 W10 W13 W16 W19 W22 W25 W28 W31 W34 W37 W40 W43 W46 W49 W52 2016 2017 2018 37
Slide 38: Total Electrical Sales
TOTAL ELECTRICAL SALES Q1 Q2 Q3 Q4 11 10 9 8 7 6 5 4 W1 W4 W7 W10 W13 W16 W19 W22 W25 W28 W31 W34 W37 W40 W43 W46 W49 W52 2016 2017 2018 38
Slide 39: Store Development and Performance Analysis
STORE DEVELOPMENT Zambia now trading P&L Hardware AND expanding PERFORMANCE ANALYSIS 39
Slide 40: Sales per Week
SALES PER WEEK ALL STORES Q1 Q2 Q3 Q4 Growth: 15% Growth: 14% Growth: 9% Growth: 10% W1 W4 W7 W10 W13 W16 W19 W22 W25 W28 W31 W34 W37 W40 W43 W46 W49 W52 2018 2017 2016 Growth 2017/2018 Q1 1st 6 weeks: 6% 40
Slide 41: Sales by Province
SALES BY PROVINCE % of Total sales 2.9% 2.2% 4.7% 21.9% 5.7% 2,500 9.9% 8.5% 2,000 55.3% 10.1% 19.1% 14.0% 11.2% 1,500 13.7% 4.9% (3.8%) 4.3% 1,000 1.9% 3.8% 500 8.1% (2.9%) 58 48 61 31 37 30 30 27 30 28 26 24 15 14 15 14 8 8 8 8 - Gauteng Limpopo Mpumalanga Eastern Cape Countries KwaZulu-Natal Nort
Slide 42: Store Contribution by Location
STORE CONTRIBUTION BY LOCATION Number of stores June 2017 (June 2016) Town- Location Town Rural Metro ship 30 (32) 2017 99 (87) 35% 32% 23% 10% Stores 66 (59) 2017 34% 30% 25% 11% Sales 93 (54) 2016 38% 23% 25% 14% Stores 2016 30% 28% 26% 16% Sales • P&L Hardware stores predominantly rural 42
Slide 43: New Store Performance
NEW STORE PERFORMANCE (Grouped by opening years) Operating profit margin (FY 2017) 12% Margin objective 10% 8% 6% 4% 2% 15 9 13 8 5 4 9 15 9 11 12 0% -2% 43
Slide 44: Store Development
STORE DEVELOPMENT Total stores 288 274 215 222 200 272 • New CSB stores 12 200 213 221 • New P&L stores 4 192 • Closed stores 2 June 2013 June 2014 June 2015 June 2016 June 2017 Existing stores New P&L Hardware New Cashbuild stores Refits and relocations 27 30 26 24 10 10 14 14 16 • Refurbishments 1
Slide 45: Store Development – New Stores
STORE DEVELOPMENT – NEW STORES 2017 GAUTENG Tembisa West Cloverdene LIMPOPO Moutsiya Mall (Siyabuswa) Jane Furse COUNTRIES Pilane Mall (Botswana) Outapi (Namibia) KWAZULU-NATAL Manguzi Bergville NORTH WEST Kanana Mall (Orkney) EASTERN CAPE Mtatha Vulindlela WESTERN CAPE Mossel Bay FREE STATE Botshab
Slide 46: Potential Store Growth
POTENTIAL STORE GROWTH • Approved at least 35 store locations - in various stages of development • Still significant growth potential • Approved 14 store locations • Potential growth to at least match Cashbuild store numbers 46
Slide 47: Summary and Strategic Overview
SUMMARY AND Expansion STRATEGIC strategy OVERVIEW 47
Slide 48: Size and Segmentation of Market
SIZE AND SEGMENTATION OF MARKET Total material market Building material market via distribution - estimated R208bn - R103bn R10bn R10bn R105bn R103bn R52bn R31bn Local hardware Large chains Construction Building Specialists Supermarkets 48
Slide 49: Competitor Landscape
COMPETITOR LANDSCAPE 350 (348) 3 (3) 245 (245) 78 (82) 24 (21) 49 (46) 7 (7) 20 (Converting to BUCO) 31 (31) 43 (42) 140 (136) 43 (42) 13 (14) 38 (38) 11 (10) 160 (160) (Dec 2016: Store numbers) 49
Slide 50: Acquisitions
ACQUISITIONS • Build it Kirkwood and Build it Hunters Retreat Both stores converted into P&L Hardware stores Kirkwood Hunters Retreat • P&L Hardware – Zimbabwe option Option to acquire P&L Hardware stores in Zimbabwe not exercised 50
Slide 51: Acquisitions (continued)
ACQUISITIONS (CONTINUED) • Buffalo Timber Transaction subject to Competition Commission approval Effective 5-business days after Competition Commission approval 7 Trading stores mainly located in the Eastern Cape To be converted into P&L Hardware stores One property acquired – trading as P
Slide 52: Expansion into New Territories - Update
EXPANSION INTO NEW TERRITORIES - UPDATE • Zambia First store opened on 24 August 2017 – Kabwe Second store under construction - Ndola – opening late 2017 Three more stores to open during 2018 52
Slide 53: Challenges / Risks for the Year Ahead
CHALLENGES / RISKS FOR THE YEAR AHEAD Maintaining growth in a challenging environment • Competitive market • Civil unrest • Low growth environment Protecting gross and operating margins 53
Slide 54: Strategy
STRATEGY Cashbuild Way Cashbuild Way External Initiative: Enhanced Community Involvement 54| (€Cashbuild
Slide 55: Thank you for your attendance and participation
Thank you for your attendance and participation www.cashbuild.co.za Switchboard: +27 11 248 1500 Werner de Jager Etienne Prowse Chief Executive Finance Director Shane Thoresson André van Onselen Operations Director Operations Director For any further Investor Relations questions please contact: Marl