Iliad Africa - ShareData · Iliad Africa Limited (Iliad or the Group) sources, distributes,...
Transcript of Iliad Africa - ShareData · Iliad Africa Limited (Iliad or the Group) sources, distributes,...
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2008 annual report
www.i l iadafr ica.co.za
Iliad Africa 2008 A
nnual Report
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2 008 annUal rePor t
OPERATION TEL FAX B-One – Centurion 0861 008 009 012 664 0404 Bildware Décor Centre – Umhlanga 031 566 5566 031 566 5568 Bildware Natal – Durban 031 332 5764 031 332 7895 Buchel – Menlyn 012 361 8304 012 361 8305 Buchel Designa – Faerie Glen 012 998 4687 012 998 3028 Buchel Hardware – Pretoria 012 300 2700 012 325 5472 Buchel Hardware & Tool Centre – Zambezi Drive – Pretoria 012 543 7500 012 567 6588 Buchel Tool Centre – Pretoria 012 300 3800 012 321 8120 Cachet International – Gauteng 011 201 4600 011 201 4601 Cachet International – KwaZulu-Natal 031 240 8100 031 240 8111 Chipbase – Durbanville 021 982 7810 021 982 7819 Chipbase – George 044 874 1753 044 874 1801 Chipbase – Montagu Gardens 021 551 2035 021 551 1926 Chipbase – Retreat 021 701 1128 021 701 5841 Chipbase – Somerset West 021 854 6810 021 854 6862 Chipbase – Stikland 021 949 1794 021 949 1712 Citiwood – Cape Town 021 930 5923 021 930 5625 Citiwood – Denver 011 622 9360 011 622 7938 Citiwood – Durban 031 579 2274 031 579 2293 Citiwood – Port Elizabeth 041 374 7414 041 373 0749 Citiwood – Pretoria 012 804 3554 012 804 0582 Citiwood – Vereeniging 016 421 1683 016 421 1337 Design Hardware – Northcliff 011 782 3629 011 888 1025 Design Hardware – Strijdom Park 011 792 9900 011 792 5153 Design Hardware – Woodmead 011 804 4293 011 804 6931 Ferreiras Décor World – Cape Town 021 510 5555 021 510 5666 Ferreiras Décor World – Durban 031 303 8400 031 303 8576 Ferreiras Décor World – North Riding 011 699 3500 011 699 3506 Ferreiras Décor World – Zambezi Drive – Pretoria 087 754 0500 012 543 2470 Just Tiles – Port Elizabeth 041 451 3602 041 451 1008 National Tile Traders – Bloemfontein 051 432 6360 051 432 1327 National Tile Traders – Boksburg 011 823 3340 011 826 2617 National Tile Traders – Centurion 012 661 6527 012 661 6586 National Tile Traders – Randfontein 011 693 6525 011 693 6907 National Tile Traders – Roodepoort 011 760 2315 011 766 3642 National Tile Traders – Rustenburg 014 597 0391 014 592 1586 National Tile Traders – Southgate 011 942 5978 011 942 5899 National Tile Traders – Strijdom Park 011 791 0206 011 791 0215 National Tile Traders – Vanderbijlpark 016 931 2456 016 931 2467 Q Lite – Cape Town 021 510 7920 021 510 5994 Q Lite – Strubens Valley 011 475 2412 011 675 2556 Q Lite – Umbilo Road Durban 031 306 9015 031 306 9017 Q Lite – Umhlanga 031 566 4070 031 566 4074 Saflok – Johannesburg 011 453 5375 011 453 5379 SDT – Gauteng 011 392 5306 011 974 3455 The Knob & Knocker – Johannesburg 011 201 4800 011 201 4801 The Knob & Knocker – KwaZulu-Natal 031 240 8100 031 240 8111 The Tile Depot – Cape Town 021 510 1248 021 511 7790 The Tile Depot – North Riding 011 462 3774 011 462 9125 Thorpe Timbers 011 724 4200 011 865 2204 Tile & Décor Mart – Alberton 011 907 1383 011 907 1494 Top Form – Somerset West 021 854 4005 021 854 3397 W&B Hardware – Bellville 021 948 4881 021 948 0370 W&B Hardware – Claremont 021 670 7270 021 670 7288 W&B Hardware – Paarden Island 021 510 0700 021 510 0728 W&B Hardware – Port Elizabeth 041 373 5993 041 374 5396
SPecIalISed bUIldInG materIalS dIvISIon
IlIad afrIca’S StrateGIc Intent
DRIVING FORCEOur strategy is to meet the product needs of the building industry through focused sourcing and redistribution of goods into each identified segment of the market
CORE COMPETENCIESTo survive and prosper we must excel at: • Market intelligence • Procurement • Trading skills
1 FIVE-YEAR REVIEW 2 ThE BOARD 3 GROUP STEERING AND EXECUTIVE COMMITTEE 4 ChAIRMAN’S REPORT6 ChIEF EXECUTIVE’S REPORT9 GENERAL BUILDING MATERIALS12 SPECIALISED BUILDING MATERIALS 16 CORPORATE GOVERNANCE22 VALUE-ADDED STATEMENT23 ANNUAL FINANCIAL STATEMENTS 61 ShAREhOLDER ANALYSIS 62 NOTICE OF ANNUAL GENERAL MEETING 65 FORM OF PROXY 66 NOTES TO ThE PROXY67 CORPORATE INFORMATION 67 ShAREhOLDERS’ DIARY 68 CONTACT DETAILS
contentS
Iliad Africa Limited (Iliad or the Group) sources, distributes, wholesales and retails general and specialised building materials. A range of customers, from large-scale contractors to do-it-yourself homeowners, are serviced through 112 stores.
The Group’s two focused divisions – General Building Materials and Specialised Building Materials – are headed by seasoned professionals. This structure heightens our ability to leverage common pools of expertise, extends the depth of senior management, accelerates the process of succession planning and enables each division to focus on its core market.
GroUP ProfIle
PHILOSOPHY• Owner-manager ethos with strong incentives for performance• Decentralised operating divisions• Tight centralised financial controls• Focus on niche markets without dominating any one segment• Leveraging common expertise between divisions
Quintessential 1672
Iliad Africa | 2008 Annual Repor t
five-yeAR Review
Revenue up 10% Earnings per share up 5%
Distribution maintained at 52 cents per share
2008 2007 2006 2005 2004 R000 R000 R000 R000 R000
Revenue 4 610 920 4 180 355 3 368 388 2 683 398 2 145 571
Profit before interest and taxation 354 397 347 433 278 060 221 614 173 612 Net (finance costs) investment income (18 279) (7 874) 2 310 5 389 4 041
Profit before taxation 336 118 339 559 280 370 227 003 177 653 Taxation (84 524) (92 126) (78 186) (65 983) (50 360)
Profit for the year 250 437 247 433 202 184 161 020 127 293
Headline earnings for the year 249 713 246 651 201 091 160 340 130 087 Number of ordinary shares in issue at year-end 138 217 794 146 433 408 154 284 519 153 427 519 150 737 519 Weighted average number of ordinary shares in issue 141 329 209 146 433 408 146 240 876 144 933 286 141 995 454
Headline earnings per share (cents) 176,7 168,4 137,5 110,6 91,6 Earnings per share (cents) 177,2 169,0 138,3 111,1 89,6 Fully diluted headline earnings per share (cents) 175,0 163,4 133,7 107,1 89,6 Fully diluted earnings per share (cents) 175,5 163,9 134,4 107,6 87,6 Distribution per share (cents) 52,0 52,0 40,0 32,0 24,0
Earnings and distribution per share (cents)
DISTRIBUTION EARNINGS
Profit before and after taxation (Rm)
AFTER TAX BEFORE TAX
Revenue (Rm)
4800
4500
4 200
3 900
3 600
3 300
3 000
2 700
2 400
2 100
1 800
1 500
1 200
900
600
300
0
04 05 06 07 08
180
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140
130
120
110
100
90
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50
40
30
20
10
0
04 05 06 07 08
360
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01
Iliad Africa | 2008 Annual Repor t
the boARd | directors
IndEPEndEnt nOn-EXECUtIVE dIRECtORS
Howard Charles turnerCA (SA) SEP (Stanford) Non-executive chairmanAppointed director in March 2003
Ralph trevor RirieBCom (Wits) CA (SA) OPM (Harvard) Non-executive directorAppointed director in March 2003
Makhosazana Khosi SibisiBA (City College of New York)Dip: supply chain management (Michigan, USA) Non-executive directorAppointed director in September 2005
EXECUtIVE dIRECtORS
Eugene Beneke BCom (Pretoria) CA (SA) Chief executive officer Appointed director in November 2008
neil Peter GoosenBCompt (Unisa) CA (SA) MBA (Wits) Group financial director Appointed director in September 1999
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directors Left to right Khosi Sibisi | Howard Turner - Chairman | Ralph Ririe | Neil Goosen | Eugene Beneke - CEO
Iliad Africa | 2008 Annual Repor t
GRoup steeRinG And executive committee
GROUP StEERInG COMMIttEE
EUGENE BENEKEChief executive officer NEil GOOSENGroup financial director
lUiS MENDESGroup company secretary
MARCO VAN NiEKERKSpecialised Building Materialsmanaging director ANDRiES STRYDOMGeneral Building Materialsmanaging director
GEnERal BUIldInG MatERIalS
WiM FOURiEBuilders Market East
GERRiT DU PREEzBuilders Market West
ABU OSMANCampwell Western Cape
DAVE YOUNGD&A Eastern Cape
ROlAND MEEKD&A Kwazulu-Natal and Rustenburg
RHONE DiABGauteng
CAliE OliViERlaeveldbou Mpumalanga
JOHN lATHWOODPlumbing
JOHN CARlilETraining
HARRY SMiTProcurement
GUiSEPPE MARTiNiinformation Technology
SPECIalISEd BUIldInG MatERIalS
JANNiE COETzEEBoards
CHRiS GOODRiCHCeramics
MOHAMED JAMEEl HAMiDCeramics Cash & Carry
ADRiAAN BOOYSENEquipment Hire
KiM DAViDSONironmongery
PiETER PRETORiUSlighting
BRiAN THORPEWholesale Timbers
GAViN ATKiNSONWholesale Plumbing and Hardware
JANNiE COETzEEWholesale Hinges
MAx SACKSWholesale ironmongery
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Group steering committee Left to right Neil Goosen | Eugene Beneke - CEO | luis Mendes | Marco van Niekerk | Andries Strydom
Iliad Africa | 2008 Annual Repor t
chAiRmAn’s RepoR t
Howard Turner | Chairman
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iliad has produced results for the year
to 31 December 2008 that amply
demonstrate this Group’s solid
foundations, prudent management and
ability to weather economic volatility –
even at the levels that characterised the
review period.
The 1% growth in earnings effectively
maintained earnings at the same level as
the previous year which had reflected
ten years of double-digit earnings growth.
The repurchase and cancellation of
8.2 million shares during the year
resulted in earnings growth translating
into 5% growth in earnings per share.
This, together with positive cash flows
from operating activities and a strong
balance sheet, enabled the board to
maintain the distribution to shareholders
at 52 cents per share.
iliad has long enjoyed a strong base
of shareholders, with our two largest
institutional investors being Rand
Merchant Bank Asset Management and
the Public investment Commisioner (PiC).
Macro environmentAs expected, 2008 presented a far
more challenging operating environment,
characterised by the combined impact
of a rapidly slowing global economy,
high domestic interest rates and
inflation and the unquantifiable effect
of South Africa’s energy-savings drive
in the early months. Trading conditions
across the board deteriorated sharply
as the year progressed. As long as the
energy crisis continues in South Africa,
commercial and housing projects will be
affected as minimal energy is available
for new projects.
in stark contrast to the reversal of the
residential market and slowing
commercial sector, the infrastructural
market continued apace, with increased
spending by both the public and private
sectors on infrastructure improvements,
utilities and mining.
With major economies now officially in
recession and few indications that South
Africa will escape this global turmoil, the
year ahead promises to be a signal test
of management resolve and ability across
the spectrum.
With 11 years of earnings growth behind
it, iliad is well positioned to withstand
the pressures 2009 will undoubtedly
bring. A strategic mix of revenue sources
across market sectors, geographic spread
of operations and committed, experienced
teams are all expected to contribute to
a reasonable performance in the new
financial year.
Iliad Africa | 2008 Annual Repor t 05
Black economic empowermentThe 2005 Broad-based Black Economic
Empowerment (BBBEE) transaction with
the Women’s Private Equity Fund (One)
and Vunani Capital for a 10% stake in
iliad continues to deliver benefits in
competitively positioning the Group for
tender work and extending the breadth of
our business experience.
internally the Group’s transformation
committee, chaired by independent non-
executive director, Khosi Sibisi, has been
active in having the BBBEE contribution
status independently verified. The
Group has been assessed as a level-8
contributor, and has set the long-term
target of becoming a level-4 contributor.
Plans are being developed to achieve
this objective, involving all levels of
management.
Strategyiliad’s strategy is to meet the product
needs of the building industry through
focused sourcing and redistribution
of goods into each identified segment
of the respective markets. We do this
through two divisions – General Building
Materials and Specialised Building
Materials. The former accounts for
approximately two-thirds of the Group’s
turnover and profitability, and markets
a comprehensive range of products
which are primarily sourced locally. The
latter accounts for the balance of group
turnover and profitability, and markets
differentiated value-added products,
mainly imported.
The Group’s business is conducted in
South Africa and part of our strategy is
to ensure that we operate throughout the
country in all areas where good markets
exist. To achieve this, new stores will be
opened or suitable businesses acquired.
Our preference is for owner-managed
operations. Should the opportunity for a
major acquisition arise, the Group is well
positioned to fund this through internal
resources or to gear the balance sheet to
a prudent 30%.
in the past three years, we have acquired
a number of companies that bolstered
our annual turnover and broadened our
presence in key group markets, while
expanding our international supply network.
iliad’s ability to identify companies
with activities that complement its
niche markets, to acquire these at the
appropriate price, and then to seamlessly
integrate them into group operations is
now well proven.
The decision was taken last year to
explore the possibility of expanding our
focus into the industrial sector. The
effects of the global economic crises on
South Africa have delayed implementation
of this decision but it will be reviewed
from time to time.
appreciationAfter 11 years at the helm, our founding
chief executive officer, Ralph Patmore,
decided to retire at the end of 2008.
Ralph played an invaluable role in the
growth of iliad over the last decade and
we wish him every success and happiness
in this new stage of his life.
We welcome Eugene Beneke as the new
chief executive officer. Eugene is a
seasoned professional with a very suc-
cessful career track record and we look
forward to his contribution in taking iliad
forward. Eugene is supported by a strong
and experienced management team and i
wish to thank them, my colleagues on the
board and all employees for their sterling
contributions over a difficult trading year.
Howard turnerChairman
Iliad Africa | 2008 Annual Repor t
chief executive’s RepoR t
Overviewiliad Africa posted a 1% growth in
earnings for the year to 31 December
2008, continuing its record of steady
growth since listing in 1998. Despite
a considerably more challenging
operating environment, earnings per
share was 5% higher than 2007 at
177.2 cents. Turnover rose 10 % to
over R4,6 billion, with 8% of this
increase attributable to the successful
integration of recent acquisitions.
Despite significant increases in
distribution expenses and tougher market
conditions, operating profit rose by 2%.
Whilst fuel prices decreased towards
the end of 2008, the lag between lower
prices and any impact on the supply
chain kept distribution costs extremely
high for the remainder of the year with a
significant impact on operating profit.
06
Eugene Beneke | Chief executive officer
Notwithstanding the slowdown the Group was able to counter challenging market conditions and post a growth in profits, due to a focus on internal efficiencies, financial disciplines and improved procurement skills.
Iliad Africa | 2008 Annual Repor t
Operating margins reduced slightly in
these exceptional circumstances.
Working capital was extremely well
managed, resulting in good operating
cash flow for the year. Strong
cash flow generated from operating
activities funded the repurchase of
shares, acquisition payments and the
distribution to shareholders.
On the procurement side, iliad recorded
good progress during the year underscoring
the concerted team effort it took to main-
tain gross margins and the strong relation-
ships the Group has built with manufactur-
ers and suppliers over the years.
inflation on locally sourced product con-
tinued to hover at approximately 9% while
the total Group averaged closer to 7%.
The Group’s most recent acquisitions,
Thorpe Timber company, National Tile
Traders and B-One, met all conditions
precedent in the year and contributed to
Group performance.
Performance in contextSlowing activity has been particularly
evident in the residential market as
demand continues to contract. The
effect has been most pronounced in
larger towns and metropolitan centres.
The start of several new housing
developments was postponed by
developers given the current state of
the market, the protracted effects of the
2007 introduction of the National Credit
Act, concerns about power supplies and
the slow pace of regulatory approvals.
industry monitors indicate that building
volumes were lower in 2008, and are
expected to fall further in 2009.
The non-residential market, which had
previously countered slowing activity in
the residential sector, began to show
the effects of the current economic
environment as the rate of growth
(measured by building plans passed)
slowed in the second half of 2008. The
market for additions and alternations,
which is directly correlated to personal
disposable income, slowed but we expect
this to reverse once the interest rate
cycle turns, with possible improvement
in demand towards the end of 2009.
Operational reviewNotwithstanding the slowdown the Group
was able to counter challenging market
conditions and post a growth in profits,
due to a focus on internal efficiencies,
financial disciplines and improved
procurement skills.
iliad’s General Building Materials division recorded solid results for the
year with the turnover increase of
9% matching inflation. This division
entrenched its presence in secondary
towns and expanded its store network.
Our Specialised Building Materials division produced a more muted
performance (excluding acquisitions)
given the slowing residential market
and heightened cost sensitivity that
forces end users to trade down when
finishes are selected. Whilst divisional
turnover rose by 15% compared to
inflation of 4%, the increase in turnover
reflects the acquisitions of National
Tile Traders, B-One and Thorpe Timber.
Although penetration into the non-
residential market has, until now, largely
compensated for the slowing residential
side, both volumes and margins have
been under pressure in this project-
based market.
A more detailed analysis of our perform-
ance follows in the divisional reviews.
07
Iliad Africa | 2008 Annual Repor t
divisionAl Review | General building materials divisionGRoup stRuctuRe And distRibution | our national footprint
08
BUilDiNG MATERiAlS
SPECIalISEd BUIldInG
MatERIalS
GEnERal BUIldInG
MatERIalS
Iliad Africa | 2008 Annual Repor t
General Building MaterialsThis division accounts for some two-thirds of the Group’s turnover and gross profits. it markets a comprehensive range of general products from 56 stores, for customers ranging from major construction to DiY enthusiasts. These products are primarily sourced locally.
Eight divisional clusters are headed by seasoned traders, who are also members of the group executive committee. This focused grouping provides the flexibility and the group perspective needed to maximise synergies. The executive team, together with operational management, are driving the same goals to achieve maximum profitability and synergy in the division.
Turnover rose by 9%, matching inflation of 9%, for the review period. Following minor internal restructuring to achieve better regional efficiencies, most regions
divisionAl Review | General building materials divisionGRoup stRuctuRe And distRibution | our national footprint
GEnERal BUIldInG
MatERIalS aCCOUntS
fOR 67% Of tHE
GROUP’S tURnOVER.
tHE dIVISIOn MaRKEtS
a fUll RanGE Of
nOn-dIffEREntIatEd
PROdUCtS.
67
09
Andries Strydom - Managing director
Iliad Africa | 2008 Annual Repor t
divisionAl Review | General building materials division
performed well during the year, meeting or exceeding expectations.. The shortage of energy had and will continue to have an impact on the performance as many projects were not approved or they were supplied with less capacity than required.
The refined model for the Cash & Carry cluster implemented in the prior period is producing the expected benefits. Fully-fledged regional builders’ merchant branches as well as the support office, effectively serve as administrative and procurement ‘hubs’ for our ten cash-orientated rural stores, resulting in lower costs, greater flexibility, improved supply chains, more identifiable brands and credit facilities where required. Once this model has been consolidated, and with more favourable market conditions, the store network and service range will be expanded to capitalise on group synergies and entrench iliad’s competitive advantage in this sector.
A fully-fledged merchant outlet was opened in lydenburg under the laeveld Bouhandelaars brand. This approach continues to take iliad closer to its customers while capitalising on shared information management systems and efficient distribution channels.
During the year, an investment was made in Campwell Hardware (acquired late in 2006) to upgrade its infrastruc-ture and maximise the opportunities in this key Western Cape market. The inde-pendent Somerset West store, W Miller, was refocused and incorporated into the Campwell management network.
USM Building Supplies, the well estab-lished Eastern Cape business acquired in 2007, achieved warranted profit during the year and was seamlessly integrated into the Group. its existing Jeffreys Bay outlet was relocated to a prime spot and the store size increased.
iliad’s plumbing cluster, which primarily serves the claims needs of the short-term insurance industry, was successfully transferred to the General Building Materials division to expand its geographic coverage and leverage this division’s existing network of 56 outlets. This broader network should serve the insurance industry nationally with both plumbing and building material.
Notable performances during the year included laeveld Bouhandelaars in Nelspruit which was refurbished with subsequent market share gains, despite increased competition. The Builders Market West recorded a commendable performance, outperforming the market.Procurement is one of iliad’s core competencies and a cornerstone of this division’s competitive advantage. Negoti-ated by the divisional executive team
10
Iliad Africa | 2008 Annual Repor t
divisionAl Review | General building materials division
and driven by operational management, procurement skills were significantly strengthened during the year and a refined group strategy aimed at building enduring supplier partnerships success-fully implemented. Under this strategy, preferred suppliers are determined and reviewed quarterly. The Group benefits from a stable panel of reputable suppli-ers and enhanced buying power, while suppliers benefit from steady group volumes. Given that the bulk of of iliad’s general building materials are locally sourced, strategic procurement – as op-posed to ad hoc sourcing – is essential in protecting group margins. This division also houses the Group’s commercial crime unit. Given that theft and fraud are ongoing risks in the retail environment, the commercial crime team continues to minimise losses to the Group through its multi-faceted approach and dedication. developing skillsiliad has taken the initiative in address-ing the shortage of skills in its industry. in April 2008, the Group appointed a training manager with significant opera-tional experience to ensure a sustain-able pool of skills for both the division and Group. This investment in training and development sets iliad apart in its industry and will establish a benchmark for skills development in the industry.
Based in Middelburg, Mpumalanga, iliad’s training facility accommodates some 35 trainees completing one of the Group’s eight internally-developed modules. Collectively, these three-day courses cover the spectrum of skills re-quired by the Group. At present, around 61% of participants are historically dis-advantaged South Africans. iliad has ap-plied for accreditation by the Wholesale and Retail sector and education training authority (W&R SETA).
divisional OutlookWhilst the year ahead is expected to be significantly more challenging, the groundwork completed in the review pe-riod has positioned the General Building Materials division to maintain its per-formance levels and prudently capitalise on attractive opportunities to increase its geographic presence.
11
Iliad Africa | 2008 Annual Repor t
divisionAl Review | specialised building materials division
Marco van Niekerk - Managing director
SPECIalISEd BUIldInG
MatERIalS aCCOUntS
fOR 33% Of tHE
GROUP’S tURnOVER. tHIS
dIVISIOn aCCOMOdatES
all tHE dIffEREntIatEd
OR ValUE-addEd
PROdUCt OffERInGS In
tHE GROUP.
33
Specialised Building MaterialsThe division accounts for one-third of the Group’s turnover and profit before interest and tax. This division houses the differentiated or value-added product offerings in the Group, a large percentage of which are imported.
Operating through 56 outlets, divisional clusters currently comprise boards, ceramics, ironmongery, lighting, B-One and wholesale. This wholesale cluster has several specialised sub-entities, including tools and hardware, hinges, draw slides and ironmongery.
importantly, in recent years, the quality and scope of iliad’s specialist ranges has made the group a preferred source for architects and commercial specifiers. The Group’s more recent acquisitions, National Tile Traders and B-One, met all conditions precedent in the period
12
Iliad Africa | 2008 Annual Repor t
and made valuable contributions to the Group results. Specifically, B-One’s es-tablished presence in the infrastructural development market offers significant opportunities for product and geographic diversification. National Tile Traders, with its solid management structure and established supplier relationships, presents a viable base for expansion from the existing base of nine outlets.Thorpe Timbers exceeded its warranted profit levels during the period and has been fully integrated into the Group.
Turnover rose by 15% (including acquisi-tions) compared to inflation of 4% for the period. This division’s more muted performance reflects the slowing resi-dential market and affordability aspect that forces clients to trade down when selecting finishes. Although penetration into the non-residential segment has compensated somewhat for lower activity levels on the residential side, margins were under pressure for most of the year
in this project-based market. in addition, the nature of iliad’s Specialised Building Materials division means it is particularly active in higher-end metropolitan retail developments, an area hardest hit by the current economic downturn.
Consolidating these specialised clusters into one division, while retaining their points of differentiation, continues to provide critical mass to leverage the Group’s inward-bound logistics and foreign exchange efficiencies and capabilities. This strategic initiative also effectively distinguishes iliad’s value-added and exclusive product lines from the non-differentiated products sold by the General Building Materials division.
The boards cluster has experienced tre-mendous challenges within an industry very hard hit by the economic slowdown. Quick reaction to external stimulus early in the year ensured that the cluster delivered a commendable performance.
The existing oversupply in the industry placed margins under increased pressure and supplier relationships have proven key during the second half of 2008. The ceramic cluster which operates in an exceptionally competitive environment, embarked on a refocusing exercise during the fourth quarter of the year following a disappointing performance. New management is simultaneously re-structuring operational efficiencies whilst continuing to improve service delivery. The cluster focus has remained the sup-ply of high quality European products.
The Cash & Carry ceramics cluster of the Specialised Building Materials division benefited from the prior-year acquisition of National Tile Traders. With outlets in Gauteng, North-West
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Iliad Africa | 2008 Annual Repor t
divisionAl Review | specialised building materials division
and the Free State, National Tile Traders marked the Group’s entry into the impor-tant middle to lower Cash & Carry segment of the ceramic tile and sanitaryware market.
The lighting cluster delivered a dis- appointing performance. New management and an aggressive sales focus are already portraying signs of improvement. Common divisional opportunities are aggressively sought after by cluster management and lighting will shortly leverage off opportuni-ties in both Gauteng and the Western Cape allowing a much wider activity net.
Retail sales slowed significantly year on year, underlining the prolonged impact of high interest rates and rising inflation. Sufficient stock and a diverse product range still ensure a prominent place in the starting line up for the additions, altera-tions and refurbishment market drive, long
awaited by industry participants. The wholesale cluster continued on its growth path, as expected, despite the market slowdown. With improved supply lines and infrastructure now entrenched, this cluster is extending its market penetration and leveraging its capabili-ties for group and external clients. With a pleasing balance established between support levels from intergroup companies and external clients, the focus will now shift to expanding the product range off this solid base.
The ironmongery cluster produced excel-lent results for the year and increased market share after recent efficiency improvements. The shift to more com-mercial business continued to place pressure on margins, which was con-tained through effective working capital management.
divisional OutlookTo support our efforts to reach our divisional objectives for 2009, the focus will be firmly on maximising growth opportunities and leveraging internal efficiencies. The coming year will test the resolve of the management team, in a difficult trading environment.
14
Iliad Africa | 2008 Annual Repor t
divisionAl Review | specialised building materials division
Group ProspectsWhilst the coming year is difficult to
predict, 2009 is expected to present
a challenging business environment,
amidst tough economic conditions. iliad
enters the year on a sound footing. We
expect the seasoned trading skills of
management and the focus on operation-
al efficiencies to assist greatly in dealing
with some of the pressure common to
economic downturns.
Although tougher market conditions are
expected to impact on Group turnover,
iliad will leverage its conservative debt
structure and strong cash generative
ability, to generate the necessary cash
flow required to fund anticipated and
appropriate acquisition opportunities.
appreciationThe Group moves forward as a listed and
growing Group with an enviable track
record of steady growth that owes much
to the dedication of its people at every
level. The passion and commitment you
bring to this Group, is deeply appreci-
ated. iliad’s board of directors, chaired
by Howard Turner, is a source of sage
counsel and steady guidance –
particularly in the current economic
turbulence.
We thank our customers for their loyalty
and steadfast support over the year.
We will demonstrate our appreciation by
continuing to deliver the superior serv-
ice, innovation and competitive pricing
that have become such a hallmark of
this Group.
Eugene BenekeChief executive officer
15
Iliad Africa | 2008 Annual Repor t
coRpoRAte GoveRnAnce
The iliad Africa Group remains commit-ted to the highest standards of corporate governance in all its business dealings, and complies with the spirit and form of the JSE listings Requirements in addi-tion to the principles espoused in the King ii Report on Corporate Governance.
The financial highlights, chief execu-tive’s report, operational reviews and directors’ report detail the Group’s performance. The board believes these reports, along with the chairman’s report and financial statements, reasonably reflect the Group’s position and pros-pects. The directors’ responsibility for the financial statements is set out on page 26.
Board of directors The chairman and a further two of the five directors are independent non-executive directors. The non-executive directors have the necessary skills and range of experience to bring independent and balanced judgement to group business. The executive directors comprise the chief executive officer and the group financial director.
The board meets to initiate, evaluate and monitor business matters which have an impact on the well-being of the Group and all its stakeholders and retains full and effective control of the Group. Management of day-to-day affairs has been delegated by the board to the chief executive officer.
Non-executive directors meet indepen-dently without executives present throughout the year, and communicate regularly. Outside of scheduled quarterly meetings, additional meetings are convened should any matter arise that requires consideration by the board. The chairman and chief executive officer meet at least once a month and also
communicate regularly.
One third of the board retires by rotation
each year. if requested to serve a further
term by the board, retiring directors
may offer themselves for re-election
by shareholders at the annual general
meeting. Newly appointed directors
cease to hold office at the conclusion of
the annual general meeting following the
term of their appointment. if requested
by the board to serve a further term,
those directors may offer themselves for
re-election by shareholders at the annual
general meeting.
All directors have access to the advice
and services of the chairman, chief
executive officer, group financial director
and group company secretary. The group
company secretary is responsible
to the board for ensuring that board
procedures and applicable regulations
are adhered to.
Board operation The board is responsible to shareholders
for both the conduct of group business
and group performance. it provides
leadership and vision to the group so
that shareholder value is enhanced and
iliad’s sustainable growth is realised.
The board approves group strategy,
reviews group performance, approves
interim and annual financial statements,
determines the Group’s authority levels,
treasury policies, risk management
policies and approves major investments
and the remuneration of non-executive
directors.
Financial reporting is routinely per-
formed. Non-executive directors are
given sufficient information to formulate
independent conclusions on all matters
brought to their attention at board
meetings.
The roles of the chairman and chief
executive officer are separate.
Board meetings Board meetings are held at least
quarterly or as required. All directors
are invited to add items to agendas
for board meetings. Dates for quarterly
board meetings in the following year are
set in November each year.
The board and its committees are
supplied with full and timely information
which enables them to discharge
their responsibilities, they also have
unrestricted access to all group
information, documents, records and
property.
Conflicts of interest Directors are required to inform the
board timeously of conflicts or potential
conflicts of interest they may have with
particular items of business. Directors
are obliged to recuse themselves from
discussions or decisions on matters in
which they have a conflicting interest.
Directors are also required to disclose
their shareholding in the company and
all other directorships quarterly, or as
changes occur. Declarations of interest
are tabled at each board meeting.
Board committees Committees are established to assist the
board in performing its duties, and the
board is empowered to form or disband
committees as appropriate. Details of
the committees are presented below.
Audit and risk management committee
The audit and risk management
committee comprises Ralph Ririe
(chairman) and Howard Turner (both
independent non-executive directors).
The chief executive officer, group
financial director, group company
secretary and representatives from the
internal and external auditors, are invited
to attend committee meetings and have
unlimited access to the chairman.
16
Iliad Africa | 2008 Annual Repor t
The committee functions under a written
board-approved charter and meets at
least three times a year. it reviews the
interim and annual financial statements
before submission to the board. The
committee maintains an objective
and professional relationship with the
external auditors, and has satisfied
itself that the external auditors are
independent.
The committee assists the board in
discharging, inter alia, the following
responsibilities:
• Operating effective systems of
internal control
• Operating an effective risk
management process
• Operating effective internal and
external audit functions
• Ensuring that timely, relevant and
accurate processes exist for interim
and annual financial reporting
• Nominating for appointment a
registered auditor who is independent
of the company
• Determining the auditor’s terms of
engagement and the fees to be paid
to the auditor
• Ensuring that the appointment of the
auditor complies with the Companies
Act, 1973, as amended, and any
other legislation relating there to
• Determining the nature and extent
of any non-audit services the auditor
may provide to the Company and
pre-approving any proposed contract
for such services
• Receiving and addressing any
complaints relating to the accounting
practices and internal audit of the
Company, the content or auditing
of financial statements or any
related matter.
The chairman of the committee is
required to report to the board after
each meeting.
The board has determined that the audit
and risk management committee has
complied with its terms of reference for
the year under review.
The audit committee has considered and
is satisfied with the competence of the
group financial director.
Remuneration committee The committee comprises Ralph Ririe
(chairman) and Howard Turner (both
independent non-executive directors).
The chief executive officer is invited to
attend committee meetings but may not
participate in discussions on his own
remuneration.
The committee operates in terms of a
written charter, approved by the board.
The main purpose of the committee is
to ensure that the company’s directors
and senior executives are appropriately
rewarded for their individual and joint
contributions to the Group’s perform-
ance, with due regard for the interests
of shareholders, the financial and com-
mercial well-being of the Group and rec-
ommendations from industry consultants
and surveys.
The committee has authority for
matters relating to employee remu-
neration, benefits and profit incentives.
Employee incentive schemes, at both
executive and divisional level, are sub-
ject to the approval of the committee
and are based on market conditions and
the achievement of prescribed, measur-
able performance targets. The company’s
philosophy is to set appropriate remuner-
ation levels, taking into account levels
of responsibility and the need to attract,
motivate and retain directors, execu-
tives and individuals of high calibre.
The Group operates both long and short-
term incentive schemes. The commit-
tee recommends fees for non-executive
directors to the board. Fee determination
is based on information from industry con-
sultants and surveys.
This committee meets at least
twice a year, and its activities and
recommendations are reported to
the board.
The board has determined that the
remuneration committee has complied
with its terms of reference for the year
under review.
Directors’ emoluments are detailed in
note 21 on page 54 to the financial
statements.
attendance of meetings
Column A indicates the number of meetings
held during the period the director was a
member of the board and/or committee.
Column B indicates the number of
meetings attended.
* Appointed 1 November 2008
§ Retired 31 December 2008
Directors Board Audit and risk
manage-ment
committee
Remun-eration
committee
HC Turner
E Beneke*
RT Ririe
NP Goosen
MY Sibisi
RB Patmore§
A B A B A B
4
4 4
4 4 3 3 2 2
1 1
4 3 3 2 2
4 3
4 4
17
Iliad Africa | 2008 Annual Repor t
transformation committee Khosi Sibisi (non-executive director) is
mandated to address all transformation
issues in the Group and chairs this
committee. Other members include
the chief executive officer and human
resources management. Selected
operational executives and senior
managers are invited to attend
meetings and are co-opted to drive
information gathering and assist with
implementation. This committee meets
at least twice a year and operates in
terms of a written charter approved by
the board.
The objectives of the committee
include ensuring smooth, systematic
and meaningful transformation of
employment and social responsibility
practices in the Group in line with
industry charters, legislation, business
profitability and growth objectives.
in line with the Department of Trade
and industry’s Codes of Good Practice
on Black Economic Empowerment (the
codes), the Group has had its Broad-
Based Black Economic Empowerment
(BBBEE) contribution status independ-
ently verified as a level 8 contributor.
The Group continues to strive to improve
its current rating and believes that fur-
ther improvement can be achieved.
Other committeesThe daily management of the Group’s
affairs is delegated to the chief
executive officer, who coordinates the
implementation of board policy through
the steering and executive committees,
which he chairs.
Steering committee The current composition of the
committee is as follows:
Eugene Beneke (chief executive officer)
Neil Goosen (group financial director),
luis Mendes (group company secretary),
Andries Strydom (MD General Building
Materials division),
Marco van Niekerk (MD Specialised
Building Materials division).
The committee
• Is responsible for the day-to-day
management of the Group and its
divisions, and reports directly to the
chief executive officer
• Provides assurance to the chief
executive officer that risk
management policies and strategies
set by the board are communicated to
all operations and operating effectively
• Reviews group performance as well
as commercial and strategic issues
affecting the Group
• Considers all acquisitions and
disinvestment proposals and manages
the process of capital allocation
by ensuring that investments and
disinvestments increase shareholder
value and meet iliad’s financial criteria.
The committee meets monthly, with
additional meetings convened whenever
necessary. The activities of the steering
committee are reported to the board.
Executive committee The composition of the executive
committee is set out on page 3.
This broader forum gathers and
consolidates information obtained from
the 15 operating clusters, with particular
emphasis on:
• Intra-divisional synergies
• Market intelligence
• Procurement opportunities
• Risk management policies
• Strategic direction.
All matters requiring strategic direction
or decisions are submitted to the
steering committee for deliberation and
subsequent referral to the board, where
necessary, for final consideration and
approval. The activities of the executive
committee are reported to the steering
committee.
Reporting controls The group has comprehensive monthly
financial accounting and reporting
routines for its operating divisions.
Management of cash and banking
relationships are centralised.
Formal quarterly meetings are held
between members of the steering
committee and each of the operating
executives and financial managers to
review performance, commercial and
strategic issues.
Internal audit The Group’s formal organisational
structure incorporates suitable
segregation of authority, duties and
reporting lines, and promotes effective
communication of information. The
internal audit and advisory service
responsibilities are clearly defined and
approved by the audit committee.
The head of internal audit reports
administratively to the chief executive
officer on day-to-day operations of
the internal audit department and
has open and direct access, through
informal meetings during the year, to
the chairman of the audit committee
and its members. The ultimate
source of internal audit independence
and authority is derived through its
functional reporting to the audit
committee.
coRpoRAte GoveRnAnce
18
Iliad Africa | 2008 Annual Repor t
The Group’s system of internal controls
is designed to detect and manage risk
to an acceptable level, rather than to
eliminate all risks of failure.
internal audit activities principally
evaluate the adequacy of risk
management and the effectiveness of
controls encompassing the Group’s
governance, operations, and information
systems. These include:
• Reliability and integrity of financial
and operational information
• Effectiveness and efficiency of
operations
• Safeguarding of assets
• Compliance with laws, regulations,
and contracts
Audit plans are drawn up annually and
approved by the audit committee.
These plans take account of changing
business needs, risk assessments, con-
cerns raised by the audit and risk man-
agement committee, external auditors
and management.
internal audit continued to function
effectively during the year, providing
management with an independent and
objective assurance and consulting
service. During the period under review,
no major breakdowns in internal controls
were identified, and the audit committee
has determined that the internal audit
and advisory service has complied with
its terms of reference.
Risk management Group risk management is achieved by
identifying and controlling the main
business and operational risks, and
ensuring that effective risk management
procedures and controls are in place to
minimise or eliminate risks that could
adversely affect achieving the Group’s
business objectives.
The Group is committed to managing its
risk and opportunities in the interests of
all stakeholders. Every business unit and
every employee has a responsibility to
act proactively in these matters.
The management of group risk and
ensuring that the policies and strategies
set by the board are operating effectively
is the responsibility of the Group’s
steering committee under the control of
the chief executive officer.
iliad consists of 112 business units and
managing risk in these units takes place
in the 15 operating clusters to which
they report.
The internal audit department is
responsible for assessing the
effectiveness of the Group’s risk
management processes and reports
its findings to the audit committee.
The quarterly board meetings have a
standard agenda item dealing with risk
management.
External audit The external auditors provide an
independent assessment of internal
financial controls and express an opinion
on the annual financial statements. The
external audit function offers reasonable,
but not absolute, assurance on the
accuracy of financial disclosures. The
external auditors’ plan is reviewed by the
audit and risk management committee
to ensure that significant areas of
concern are covered, without infringing
on the external auditors’ independence
and right to audit.
The audit and risk management
committee monitors fees paid to the
external auditors, which again remained
within acceptable levels. There is
co-operation between internal and
external auditors to ensure appropriate
combined audit coverage and minimise
duplicated effort.
Going concern The annual financial statements set
out on pages 27 to 60 have been
prepared on the going-concern basis.
The directors, after due deliberation at
the last meeting of the board, have every
reason to believe that the company and
the Group have adequate resources to
continue in operation for the foreseeable
future.
Ethics iliad’s code of ethics ensures that
the Group operates, in all respects,
as a good corporate citizen. The code
requires group employees to perform
their duties in good faith and to be
trustworthy in all their dealings with
customers, suppliers, each other and
any other stakeholders, and maintain
the Group’s reputation for integrity and
responsible behaviour.
iliad accepts the recommendations of
King ii that the company should conduct
its affairs with uncompromising honesty
and integrity. The Group continues to
adopt a zero-tolerance approach to theft,
fraud and offering or accepting bribes
and favours as well as uncompetitive
behaviour.
Communication with stakeholders
it is the policy of the Group to pursue
ongoing dialogue with stakeholders.
The chief executive officer and group
financial director regularly communicate
with major shareholders, institutional
19
Iliad Africa | 2008 Annual Repor t
investors and media analysts.
Financial results are published in the press
and shareholders receive a copy of these
results timeously. A comprehensive
website is maintained with information
on the company, an archive of annual and
interim results as well as an announcement
section. (www.iliadafrica.co.za)
annual general meetingThe agenda for the annual general meeting
is set by the chairman and the company
secretary and communicated to all
shareholders in the notice of the annual
general meeting, which appears on page
62 of the annual report. Consequently, the
notice of the annual general meeting is
distributed well in advance of the meeting
and gives all shareholders sufficient time
to acquaint themselves with the effects of
any proposed resolutions. Adequate time
is also provided by the chairman in the
annual general meeting to discuss any
proposed resolutions.
The conduct of a poll to decide on any
proposed resolutions is controlled by the
chairman at the meeting and takes account
of the votes of all shareholders, whether
present in person or by proxy. A proxy form
is included in the annual report on page
65 for this purpose.
The Group encourages and recognises the
importance of its shareholders’ attendance
at its annual general meeting.
dealing in securities The Securities Services Act and the
JSE listings Requirements regulate
transactions by directors and officers in
securities issued by the company.
Directors and officers may not deal in the
company’s shares without first obtaining
clearance from the chairman. The
chairman may not deal in the company’s
shares without obtaining clearance from
the chief executive officer. Details of all
share dealings in the company’s shares
by directors and officers are disclosed
in accordance with the JSE listings
Requirements and at each board
meeting.
Directors of the Company and its
major subsidiaries, the group company
secretary, their associate/s or members
of their immediate family may not deal,
either directly or indirectly, at any time,
in the securities of the Company on the
basis of unpublished price-sensitive
information about the Company’s
business or affairs. These people are
made aware of restricted or “closed”
periods for dealing in the Company’s
shares and the provisions of insider
trading legislation.
Our people iliad employs 5 080 people and
regularly submits statutory reports to the
Department of labour.
Employment equityiliad continues to provide equal
employment opportunities based on its
strong culture of internal promotion and
personal development. The Company
continues to pursue employment equity
by implementing the reported plan.
The Group is making systematic progress
towards its employment equity targets:
at the end of December 2008, 70,3%
of the overall workforce were from
previously disadvantaged groups.
At management and supervisory
levels, 48,4% (2007: 48,2%) are
from previously disadvantaged groups.
Focused employment equity plans are in
place and are being monitored regularly
by the transformation committee.
training and development iliad spent 0,9% (2007: 0,3%) of
payroll on training and development,
mostly at divisional level. Training
initiatives are focussed on development
and expansion of all core competencies
including trading skills, business
management and procurement.
Through the iliad Academy of learning,
in partnership with Unisa, the Group
offers two-year courses with four
modules focused on development of
business leadership. The fifth intake
began in 2008, bringing the total
number of beneficiaries to date to 59,
of which 28,8% are from historically
disadvantaged groups. iliad further
conducts apprenticeships in technical
fields such as truss manufacturing, at
two outlets.
iliad’s new and fully-resourced
training centre based in Middleburg,
Mpumalanga, operated from April 2008.
A total of 570 staff members (61% of
which are from previously disadvantaged
communities) underwent 12.415 hours
of training in courses ranging from
general sales to project management.
Support for small, medium and micro supplier enterprises
The nature of iliad’s business dictates
an unusually broad base of suppliers in
a number of industries, ranging from
generic to highly specialised products.
Where possible, iliad supports South
African companies, particularly BBBEE
small, medium and micro-enterprises.
The Group’s BBBEE procurement
policies are increasingly used to source
goods from empowered companies and,
in this respect, we are making progress.
This is clearly more challenging in
specialised sectors where the only source
is often abroad.
HIV/aids HiV/Aids is considered in the same light
as any other life-threatening disease and
the group will ensure non-discrimination
against HiV-positive employees.
Businesses monitor the incidence of
HiV to the extent that they are able
coRpoRAte GoveRnAnce
20
Iliad Africa | 2008 Annual Repor t
to without transgressing the rules of
confidentiality. Any employee wishing to
attend training or education programmes
on HiV/Aids is encouraged to do so.
Safety, health and environment All group businesses are required to
report to the executive committee on
their compliance with applicable laws
and regulations. The Group is committed
to best practice and each business is
required to adhere to the applicable iSO
standards governing these issues.
The nature of group businesses have
limited negative impact on the environ-
ment. The Group generates limited noise
pollution and, as far as possible, sites
are selected with sufficient facilities to
prevent vehicle congestion in surround-
ing neighbourhoods.
All waste generated by the Group is
disposed of responsibly through waste
management companies that either
incinerate waste or use it as landfill.
The Group’s operations do not produce
many effluent discharges and during
the year none of the Group’s operations
reported any significant discharge of
water. No fines were imposed for water
pollution or other issues related to the
use of water.
To minimise diesel emissions or other
harmful discharges from vehicles, route
plans are assessed to minimise distances
and regular service and maintenance
schedules are maintained for optimum
fuel consumption.
Corporate social investment Corporate social investment is an
important business issue. Focused
primarily on the communities in which
iliad operates, annual donations are
made to a host of non-governmental
organisations, including children’s
welfare organisations, animal welfare
organisations, care centres for the aged,
associations for the disabled, healthcare
projects and various community initiatives
assisting the underprivileged.
These initiatives are fully integrated with
the Group’s BBBEE strategy.
Overall, the Group contributed
R2,1 million (2007: R2,0 million) to
selected projects during the year.
Political contributionsThe Group does not contribute to any
political parties.
advertisingAdvertising is conducted through a vari-
ety of mediums by the business units
within the Group, targeting the markets
and customers which are appropriate to
each business unit. The Group has no
record of charges being laid by the pub-
lic or competitors regarding misleading
or unfair business practices or advertise-
ments.
ConclusionThe board of iliad is of the view that
the company complies with the Code of
Corporate Practices and Conduct of the
King ii Report.
21
iliad’s new training centre based in Middleburg
Iliad Africa | 2008 Annual Repor t
vAlue-Added stAtement
2008 2007
2008 Value added 2007 Value added
R000 % R000 %
“Value added” is the value which the Group has added to its
products and services. This statement shows how the value
added has been distributed among our various stakeholders.
CREATiON OF WEAlTH
Group turnover 4 610 920 4 180 355
Cost of merchandise and net expenses (3 673 867) (3 348 068)
Value added 937 053 832 287
investment income 52 996 14 721 Finance charges (71 275) (22 595)
Total wealth created 918 774 824 413
DiSTRiBUTiON OF WEAlTH
To employees – salaries and benefits 548 896 59.74 462 091 56,05 To government – taxation 84 524 9.20 92 126 11,17 To providers of capital
– Distribution to shareholders 76 145 8.29 58 574 7,10
To maintain and expand the group
– Depreciation 33 760 3.67 22 763 2,76 – Retained for future growth 175 449 19.10 188 859 22,91
918 774 100.00 824 413 100.00
Employees 59,47 56,05
Government 9,20 11,17
Providers of capital 8,29 7,10
Maintain and expand group 22,77 25,67
100,00 100,00
Average monthly number of employees which includes executive directors was: 5 080 (2007: 4 806)
DiSTRiBUTiON OF WEAlTH2008 2007
22
Iliad Africa | 2008 Annual Repor t
ILIAD AFRICA LIMITEDannual financial statements
2008
23
Iliad Africa | 2008 Annual Repor t
24 Statement of compliance by the company secretary
25 independent auditor’s report
26 Statement of directors’ responsibility
27 Directors’ report
30 Balance sheets
31 income statements
32 Cash flow statements
33 Statements of changes in shareholders’ equity
34 Accounting policies
41 Notes to the annual financial statements
contents
stAtement of compliAnce by the compAny secRetARy
AnnuAl finAnciAl stAtements
for the year ended 31 december 2008
24
in terms of section 268 6(d) of the Companies Act, Act 61 of 1973
[“the Act”] as amended, i certify that to the best of my knowledge and
belief, the company and the Group has lodged with the Registrar of
Companies, for the financial year ended 31 December 2008, all such
returns as are required of a public company in terms of the Act and that
all such returns are true, correct and up to date.
luis Mendes
Group company secretary
6 March 2009
Iliad Africa | 2008 Annual Repor t 25
Iliad Africa | 2008 Annual Repor t26
The annual financial statements, set out on pages 27 to
60 and other financial information set out in this annual
report, were prepared by management in compliance with
International Financial Reporting Standards and fairly present
the state of affairs of the Group. They were approved by the
board of directors on 6 March 2009, and have been signed on
its behalf by the undermentioned directors.
The manner of presentation of the annual financial statements,
the selection of accounting policies and the integrity of the
financial information are the responsibility of the board
of directors.
To fulfil its responsibilities, the board has developed and
continues to maintain a system of internal controls. These
controls are based on established written policies and
procedures, are implemented by trained, skilled personnel with
an appropriate segregation of duties and are closely monitored
by both the board of directors and the internal auditors.
We believe that the controls in use are adequate to provide
reasonable assurance that assets are safeguarded from loss or
unauthorised use and that the financial records may be relied
upon for preparing the financial statements and maintaining
accountability for assets and liabilities.
Nothing has come to the attention of the directors to indicate
that any material breakdown in the functioning of these
controls, procedures and systems has occurred during the year
under review.
After conducting appropriate procedures the directors are
satisfied that the Group will be a going concern for the
foreseeable future and have continued to adopt the going
concern basis in preparing the annual financial statements.
The board of directors is responsible for the financial affairs
of the Group. The external auditors are responsible for
independently reviewing and reporting on the Group’s annual
financial statements.
The annual financial statements have been examined by the
Group’s external auditors and their report is presented on
page 25.
Eugene Beneke Neil Goosen
Chief executive officer Group financial director
stAtement of diRectoRs’ Responsibility diRectoRs’ RepoRt
for the year ended 31 december 2008
Iliad Africa | 2008 Annual Repor t 27
Your directors are pleased to present their eleventh annual
report which forms part of the audited financial statements
of the company and of the Group for the year ended
31 December 2008. This report deals with matters not
specifically dealt with elsewhere in the annual report.
1 Nature of business and review of activities
Iliad Africa Limited is the holding company of Iliad Africa
Investments (Proprietary) Limited and Iliad Africa Trading
(Proprietary) Limited which have operating divisions and
subsidiaries that focus on the sourcing, distribution, retailing
and wholesaling of a comprehensive range of building
materials.
Iliad supplies the full spectrum of building materials in both
the residential and non-residential segments of the market
through a well-established geographic footprint and strong
regional brands. Proven trading skills, as well as the owner-
manager philosophy at operational level, have been positive
contributors to Iliad’s continued success.
1.1 Acquisition of businesses
The trading results of the new businesses acquired during the
year as well as the assets and liabilities have been incorporated
into the financial statements from the effective dates of
acquisition. The total cost of the investments was as follows:
R000 2008 2007
Net assets at fair value 28 704 22 910
Trademarks 50 100 22 075
Goodwill 62 315 67 065
Campwell Hardware
minority put option 5 687
141 119 117 737
Details of the acquisitions are as follows:
1.1.1 On 01 February 2008, in line with the Group’s stated
strategic intent, United Metal Processors (Proprietary) Limited,
a subsidiary of Iliad Africa Trading (Proprietary) Limited in
which previously disadvantaged management hold 30%,
acquired the business of National Tile Traders as a going
concern from National Tile Traders (Proprietary) Limited for
cash. With outlets in key locations in Gauteng, North-West and
the Free State, National Tile Traders marks Iliad’s entry into
the important middle to lower Cash and Carry segment of the
ceramic tile and sanitaryware market.
1.1.2 On 01 May 2008 the business of B-One was purchased
from B-One Holdings (Proprietary) Limited for cash. This marks
Iliad’s entry into the infrastructural market. This Centurion
based business supplies a service to the construction, civil
engineering and entertainment industry through the hiring out
of portable sanitation, storage, accommodation, office and
ablution facilities.
1.1.3 In 2006, Campwell Hardware (Proprietary) Limited
(“Campwell”) a wholly owned subsidiary of Iliad Africa Trading
(Proprietary) Limited acquired certain assets and liabilities of
the Campwell Hardware businesses from the Campwell vendors
for R165 million in cash.
As part of the acquisition, agreements were entered into
whereby the Campwell vendors acquired a 25% interest in
Campwell for R41,25 million and at the same time were
granted a Put option in terms of which they are entitled to put
the shares in, and claims against Campwell, back to Iliad in
any year after December 2008 but before 30 December 2011
for a consideration to be calculated with reference
to the profits earned by Campwell and the price earnings ratio
of Iliad.
In terms of the Put option formula, Iliad’s obligation to acquire
this remaining 25% of Campwell will be at a 30% discount to
the PE ratio of Iliad at the time of the Put option exercise. The
PE ratio at the time of the Put option exercise is capped at a
maximum of 10 times.
The directors wish to draw to the attention of stakeholders that
although the Campwell Put option is reflected as a R57 million
obligation, this commitment should be viewed as an opportunity
to acquire the remaining 25% of Campwell at a 30% discount
to the future listed market value of the Iliad share. The
25% tranche is also designed to act as a lock-in incentive
for Campwell vendors to remain in managerial positions in
Campwell until 2011 and to achieve and exceed their earnings
projections. As the put liability varies according to changes in
the future Iliad price earnings multiple, the directors are of the
view that Iliad has hedged itself against overpaying in respect
of this 25% stake.
Further details are set out in notes 3 and 11 of the annual
financial statements.
stAtement of diRectoRs’ Responsibility diRectoRs’ RepoRt
Iliad Africa | 2008 Annual Repor t28
2 Group results
The Group’s results and state of affairs for the year under
review are set out on pages 27 to 60 and further information
relating thereto is set out in the chief executive’s report.
3 Dividend
The distribution of 52 cents per ordinary shares paid out of the
stated capital during April 2008 is reflected in the statement
of changes in equity.
In view of the sound results, positive cash flows from operating
activities and a strong balance sheet, the directors have
maintained the distribution to shareholders by paying a cash
dividend of 52 cents per share (2007: distribution out of share
capital of 52 cents per share).
Set out below are the salient dates applicable to the
distribution:
• Last date to trade “cum” the distribution is Wednesday,
8 April 2009.
• Trading commences “ex” the distribution is Thursday,
9 April 2009.
• Record date is Friday, 17 April 2009.
• Payment date is Monday, 20 April 2009.
Share certificates may not be dematerialised or rematerialised
between Thursday, 9 April 2009 and Friday, 17 April 2009,
both dates inclusive.
4 Stated capital
4.1 Iliad Africa Limited
Details of the stated capital are as follows:
4.1.1 Issued ordinary shares
On 31 December 2008 the company had 138 217 794
ordinary shares in issue and the stated capital amounted
to R 122 451 following the repurchase and cancellation of
8 215 614 ordinary shares at a cost of R 85 822 604 and
a distribution out of stated capital of R 76 145 372.
At the beginning of the year under review the company had
146 433 408 ordinary shares in issue and the stated capital
amounted to R 162 090 427.
The issued shares are widely held by the public. An analysis of
shareholders and shareholdings at 31 December 2008 appears
on page 61 of the annual report.
4.1.2 “A” shares
There were no changes to the authorised and issued “A” shares
during the year under review.
5 Special resolutions
No material special resolutions have been passed during
the year except those passed at the annual general meeting
held on 29 May 2008 which dealt with the repurchase and
cancellation of shares by the company.
6 Directors and secretary
Non-executive independent directors: Messrs HC Turner
(chairman), RT Ririe and Ms MY Sibisi.
Executive directors: Messrs E Beneke and NP Goosen.
Following the announcement of Ralph Patmore’s retirement,
Eugene Beneke was appointed Chief executive officer of the
Group on 1 November 2008.
Ralph Patmore resigned as a director on 31 December 2008.
In terms of the company’s Articles of Association, Messrs
E Beneke and NP Goosen retire by rotation at the forthcoming
annual general meeting. Being eligible, both directors have
offered themselves for re-election.
Secretary: Mr JLD Mendes. Information concerning the group
secretary is reflected on page 67.
There were no further changes to the directors and group
secretary during the year.
diRectoRs’ RepoRt
Iliad Africa | 2008 Annual Repor t 29
7 Directors’ shareholding
The total direct and indirect beneficial and non-beneficial
interest of directors in the shares of the company are:
Direct Indirect and
2008 beneficial non-beneficial
NP Goosen 1 245 049
HC Turner 200 000
200 000 1 245 049
2007
NP Goosen 1 100 000
HC Turner 200 000
200 000 1 100 100
The shareholdings above have not changed between
31 December 2008 and the date of the financial statements.
No director held in excess of 1% of the company’s stated
capital. All major shareholders with beneficial interests in Iliad
greater than 5% at 31 December 2008 are disclosed on
page 61.
8 Subsidiaries
Information relating to the subsidiaries appears on page 60 of
this report.
9 Auditors
Grant Thornton will continue in office in accordance with
Section 270 (2) of the Companies Act.
10 Non-current assets
There were no changes to the nature and policies relating to
non-current assets of the Group during the period.
11 Post balance sheet events
11.1 Acquisitions
The following acquisition was made after year-end and prior to
the date of this report. This acquisition will not have a material
effect on the financial statements.
11.1. On 1 March 2009, in line with the Group’s stated
strategic intent, Iliad Africa Trading (Proprietary) Limited
acquired for cash, the business of TPS in Cape Town from
Timber Preservation Services CC. The acquisition will be
effected through Iliad’s subsidiary, United Tube (Proprietary)
Limited. The acquisition is however still subject to conditions
precedent.
diRectoRs’ RepoRt
Iliad Africa | 2008 Annual Repor t30
bAlAnce sheets income stAtements
ASSETS
Non-current assets
Property, plant and equipment 2 108 861 71 899
Intangible assets 3 580 703 468 288
Investment in subsidiaries 4 66 592 166 489
Deferred taxation 5 19 246 23 041
Total non-current assets 708 810 563 228 66 592 166 489
Current assets
Inventories 6 800 250 735 151
Trade and other receivables 7 519 985 469 279 397
Taxation 8 372 1 131 1 230 1 067
Cash and cash equivalents 8 96 238 47 043 8
Total current assets 1 328 607 1 301 799 48 670 1 075
Total assets 2 037 417 1 865 027 115 262 167 564
EQUITY AND LIABILITIES
Equity
Stated capital 9 122 162 090 122 162 090
Retained earnings (Accumulated loss) 984 239 733 802 74 775 (35 000)
Share-based payment reserve 9.6 40 247 40 247 40 247 40 247
Attributable to equity holders of the company 1 024 608 936 139 115 144 167 337
Minority interest 10 1 157
Total equity 1 025 765 936 139 115 144 167 337
Non-current liabilities
Long-term borrowings 11 65 981 68 286
Total non-current liabilities 65 981 68 286
Current liabilities
Trade and other payables 14 920 850 854 833 118 227
Short-term borrowings 11 4 234 2 948
Taxation 889 2 821
Bank overdraft 8 19 698
Total current liabilities 945 671 860 602 118 227
Total equity and liabilities 2 037 417 1 865 027 115 262 167 564
Net asset value per share (cents) 741,3 639,3
Net tangible asset value per share (cents) 321,2 319,5
Based on 138 217 794 ordinary shares at year-end
(2007: 146 433 408 ordinary shares)
GROUP COMPANY
2008 2007 2008 2007 Notes R000 R000 R000 R000
as at 31 december 2008
Iliad Africa | 2008 Annual Repor t 31
bAlAnce sheets income stAtements
Revenue 4 610 920 4 180 355
Cost of sales (3 261 971) (2 977 275)
Gross margin 1 348 949 1 203 080
Administration, selling and distribution expenses (994 552) (855 647)
Operating profit (loss) before investment income 15 354 397 347 433 104 116 (1 243)
Investment income 16 52 996 14 721 5 496 102 064
Operating profit before finance charges 407 393 362 154 109 612 100 821
Finance charges 17 (71 275) (22 595)
Profit before taxation 336 118 339 559 109 612 100 821
Taxation 18 (84 524) (92 126) 163
Profit for the year 251 594 247 433 109 775 100 821
Attributable to:
Minority shareholders 10 1 157
Ordinary shareholders 250 437 247 433
Profit for the year 251 594 247 433
Number of ordinary shares in issue at year-end 9 138 217 794 146 433 408
Weighted average number of ordinary shares in issue 20 141 329 209 146 433 408
Fully diluted weighted average number of ordinary
shares in issue 20 142 668 859 150 961 099
Earnings per share (cents)
– Basic 20 177,2 169,0
– Fully diluted 20 175,5 163,9
Distribution per share – declared post year-end from
current year’s profit (cents) 19 52,0 52,0
GROUP COMPANY
2008 2007 2008 2007 Notes R000 R000 R000 R000
for the year ended 31 december 2008
Iliad Africa | 2008 Annual Repor t32
GROUP COMPANY
2008 2007 2008 2007 Notes R000 R000 R000 R000
cAsh flow stAtements stAtements of chAnges in shAReholdeRs’ equity
for the year ended 31 december 2008
Cash flows from operating activities 245 727 153 236 109 106 100 551
Profit before taxation 336 118 339 559 109 612 100 821
Adjustments: 51 033 29 536 (5 496) (102 064)
Depreciation 33 760 22 763
Profit on disposal of property, plant and equipment (1 006) (1 101)
Investment income (52 996) (14 721) (5 496) (102 064)
Finance charges 71 275 22 595
Working capital changes during the year (33 243) (85 511) (506) 45
Increase in inventories (47 639) (128 386)
Increase in trade and other receivables (47 006) (19 598) (397)
Increase / (decrease) in trade and other payables 61 402 62 473 (109) 45
Cash flows from operations 353 908 283 584 103 610 (1 198)
Investment income 52 996 14 721 5 496 102 064
Finance charges (71 275) (22 595)
Taxation paid 25.1 (89 902) (122 474) (315)
Cash flows from investing activities (189 986) (141 033) 99 897 63 235
Purchase of businesses 25.2 (141 119) (112 050)
Repayments by subsidiaries 99 897 63 235
Additions to property, plant and equipment to
maintain operations (56 481) (32 402)
Proceeds on disposal of property, plant and equipment 25.3 7 614 3 419
Cash flows from financing activities (171 036) (53 177) (161 968) (163 779)
8 215 614 shares repurchased and cancelled (85 823) (85 823)
Cancellation of 7 851 111 treasury shares as per
special resolution (102 064)
Increase in short-term borrowings 1 286 1 651
Distributions out of share capital (76 145) (58 574) (76 145) (61 715)
(Decrease) / increase in long-term liabilities (10 354) 3 746
Net (decrease)increase in cash and cash equivalents for the year (115 295) (40 974) 47 035 7
Cash and cash equivalents at beginning of the year 96 238 156 854 8 1
Cash and cash equivalents acquired 25.2 (641) (19 642)
Cash and cash equivalents at end of the year 8 (19 698) 96 238 47 043 8
Iliad Africa | 2008 Annual Repor t 33
Balance at 1 January 2007 203 892 122 503 019 40 247 747 280 747 280
7 851 111 shares, held as treasury shares by a
subsidiary, cancelled in terms of special resolution 16 650 (16 650)
Profit for the year 247 433 247 433 247 433
Distributions from stated capital (note 19) (58 574) (58 574) (58 574)
Balance at 1 January 2008 161 968 122 733 802 40 247 936 139 936 139
8 215 614 shares repurchased and cancelled (85 823) (85 823) (85 823)
Profit for the year 250 437 250 437 1 157 251 594
Distributions from stated capital (note 19) (76 145) (76 145) (76 145)
Balance at 31 December 2008 122 984 239 40 247 1 024 608 1 157 1 025 765
Balance at 1 January 2007 232 367 122 (42 441) 40 247 230 295
7 851 111 shares, held as treasury shares by a
subsidiary, cancelled in terms of special resolution (8 684) (93 380) (102 064)
Profit for the year 100 821 100 821
Distributions from stated capital (note 19) (61 715) (61 715)
Balance at 1 January 2008 161 968 122 (35 000) 40 247 167 337
8 215 614 shares repurchased and cancelled (85 823) (85 823)
Profit for the year 109 775 109 775
Distributions from stated capital (note 19) (76 145) (76 145)
Balance at 31 December 2008 122 74 775 40 247 115 144
Share
Accumulated based
Stated “A” (deficit) payment Total
capital shares profit reserve equity
R000 R000 R000 R000 R000
Attributable
Share based to equity
Stated “A” Retained payment holders of Minorty Total
capital shares income reserve the company interest equity
R000 R000 R000 R000 R000 R000 R000
GROUP
cAsh flow stAtements stAtements of chAnges in shAReholdeRs’ equity
COMPANY
for the year ended 31 december 2008
Iliad Africa | 2008 Annual Repor t34
1 Accounting policies
The financial statements set out on pages 27 to 60 have been
prepared in accordance with International Financial Reporting
Standards (IFRS) and the Companies Act of South Africa
1973. IFRS is continuing to evolve through the issue and/or
endorsement of new standards and interpretations as well as
developments in the application of recently issued standards.
This may impact on future reported results and disclosure.
The basis of preparation is consistent with the prior year. The
financial statements are prepared on the going concern basis
in accordance with the historic cost convention, except for
certain financial instruments which are carried at fair value.
1.1 Judgements, estimates and assumptions
In preparing the financial statements, management is required
to make estimates and assumptions that affect reported
expenses, assets, liabilities and disclosure of contingent assets
and liabilities. Use of available information and the application
of judgement are inherent in the formation of estimates. Actual
results in the future could differ from these estimates which
could be material to the financial statements.
The following have been identified as being areas where
management has made significant judgements or estimates:
1.1.1 Impairment of assets
An assessment of each independent cash generating unit at an
entity and intangible asset level is performed at each reporting
period. Discounted cash flows are used to assess the cash
operating units. All assumptions and estimates used relating to
the discount and growth rates are disclosed in note 3.3.
1.1.2 Deferred taxation
Deferred tax assets are recognised to the extent that it is
probable that taxable income will be available in the future
against which they can be utilised. Future taxable profits are
estimates based on business plans which include estimates
and assumptions regarding economic growth, interest, inflation,
taxation rates and competitive forces.
1.1.3 Contingent liabilities
Management applies its judgement to facts and advice it
receives from its attorneys, advocates and other advisors
in assessing if an obligation is probable, i.e. more likely
than not or remote. This judgement is used to determine if
the obligation is recognised as a liability or disclosed as a
contingent liability.
1.1.4 Valuation of options The valuation of options granted to the Campwell Hardware
vendors (refer note 11.2) and the Woman’s Private Equity Fund
(refer note 9.6) have been valued by the directors with the
assistance of an external valuator.
1.2 Basis of consolidationThe consolidated financial statements incorporate the assets,
liabilities, income, expenses and cash flows of the holding
company and its subsidiaries.
The results of subsidiaries acquired or disposed of during the
period are included in the consolidated income statement from
the date of acquisition or up to the date of disposal.
Inter-company transactions, resulting profit and losses
and balances between Group companies are eliminated on
consolidation.
On acquisition, the Group recognises the subsidiary’s
identifiable assets, liabilities and contingent liabilities at fair
value from the effective date of acquisition.
Minority interests in the net assets of consolidated subsidiaries
are shown separately from the group equity therein. It consists
of the amount of those interests at acquisition plus the
minorities’ subsequent share of changes in the equity of the
subsidiary. On acquisition the minorities’ interest is measured
at the proportion of the pre-acquisition fair values of the
identifiable assets and liabilities acquired. Losses applicable
to minorities in excess of its interest in the subsidiaries’ equity
are allocated against the Group’s interest except to the extent
that the minorities have a binding obligation and the financial
ability to cover losses.
1.3 Business combinationsIn the case of businesses acquired during the year, the results
are included from the date the Group effectively obtained
unrestricted control of the businesses acquired, including the
fulfilment of all conditions. The businesses acquired have
been accounted for in terms of the provisions of IFRS 3, which
requires that the Group initially measures the identifiable
assets, liabilities and contingent liabilities acquired at their fair
values as at the date of acquisition.
Accounting policies
for the year ended 31 december 2008
Iliad Africa | 2008 Annual Repor t 35
1.4 Comparative figuresComparative figures are restated in the event of a change in
accounting policy or prior period error.
1.5 Post balance sheet eventsRecognised amounts in the financial statement are adjusted
to reflect events arising after the balance sheet date that
provide evidence of conditions that existed at balance sheet
date. Events after the balance sheet date that are indicative
of conditions that arose after the balance sheet date are dealt
with by way of a note.
1.6 Investment in subsidiariesShares in subsidiaries are accounted for in the company’s
separate annual financial statements, at cost less accumulated
impairment losses. Loans to subsidiaries are capitalised to
the net investment in subsidiaries where settlement is neither
planned nor likely in the foreseeable future.
1.7 Property, plant and equipmentThe cost of an item of property, plant and equipment is
recognised as an asset when it is probable that the future
economic benefits associated with the item will flow to the
Group and the cost of the item can be measured reliably.
Assets are stated at cost less accumulated depreciation and
any accumulated impairment losses. The useful lives and
residual values are assessed at each balance sheet date and
adjusted if appropriate.
Depreciation on property, plant and equipment is calculated
using the straight-line basis to write down their cost over their
estimated economic useful lives to estimated residual values,
using a method that reflects the pattern in which the asset’s
future economic benefits are expected to be consumed by
the entity.
The following rates were used during the year to depreciate
property, plant and equipment to estimated residual values:
Machinery and warehouse equipment 3 to 6 years
Vehicles 4 to 5 years
Computer equipment and software 2 to 3 years
Furniture and fixtures 7 to 10 years
Improvements to leased premises and renovations to
showrooms are depreciated over the lesser of the useful life
and the period of the lease.
The gain or loss arising on the scrapping of property, plant
and equipment and the depreciation charge for each period is
recognised in the income statement.
1.8 Intangible assetsAn intangible asset is an identifiable non-monetary asset
without physical substance. It includes patents, trademarks
and goodwill.
Intangible assets are initially recognised at cost if acquired
separately or internally generated or at fair value if acquired as
part of a business combination.
1.8.1 Trademarks
Trademarks are carried at cost less any accumulated
amortisation and any impairment losses.
Trademarks are assessed at the individual asset level as having
either a finite or indefinite life.
If assessed as having an indefinite useful life, the trademark
is not amortised but is tested for impairment on an annual
basis, or more frequently if there is an indication that the
carrying value may be impaired, and is impaired if necessary.
If assessed as having a finite useful life, trademarks are
amortised over their useful lives using a straight-line basis and
tested for impairment if there is an indication that they may be
impaired.
All trademarks currently held by the Group have been assessed
as having indefinite lives.
No valuation is made of internally developed and maintained
trademarks or brand names. Expenditure incurred to maintain
these brands is recognised in profit and loss.
1.8.2 Goodwill
Goodwill represents the future economic benefits arising from
assets that are not capable of being individually identified
and separately recognised in a business combination and is
determined as the excess of the cost of an acquisition over the
interest in the net fair value of the identified assets, liabilities
and contingent liabilities of the subsidiary or business unit at
the date of acquisition.
Goodwill is carried at cost less any accumulated impairment
losses. Goodwill is written down to the extent that the balances
will in all probability no longer be recovered from expected
future economic benefits.
At acquisition date, goodwill acquired is allocated to cash
generating units and impairment is assessed in relation to
these units on an annual basis.
Accounting policies
Iliad Africa | 2008 Annual Repor t36
1.9 Financial instruments
1.9.1 Accounting for financial instruments
The Group classifies financial instruments or their component
parts, on initial recognition as a financial asset, a financial
liability or an equity instrument in accordance with the substance
of the contractual arrangement. Financial assets and liabilities
are recognised in the Group’s balance sheet when the company
becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset and the net amount
reported in the financial statements when the Group has a
currently enforceable legal right to set off the recognised
amounts and either intends to realise the assets and settle the
liabilities simultaneously, or to settle on a net basis.
Financial assets, other than hedging instruments, can be
divided into the following categories:
• loans and receivables
• financial assets at fair value through profit or loss
Financial assets are assigned to the different categories on
initial recognition, depending on the characteristics of the
instrument and its purpose. A financial instrument’s category
is relevant for the way it is measured and whether the resulting
income and expense are recognised in profit or loss or charged
directly against equity.
An assessment of whether a financial asset is impaired is made
at least at each reporting date. For receivables, this is based
on the last credit information available, i.e. recent counterparty
defaults and external credit ratings. Financial assets that are
substantially past due are also considered for impairment. All
income and expense relating to financial assets are recognised
in the income statement line item “investment income” or
“finance charges”, respectively.
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an
active market. They are subsequently measured at amortised
cost using the effective interest method, less provision for
impairment. Any change in their value is recognised in profit
or loss. Iliad’s trade and other receivables and cash and cash
equivalents fall into this category of financial instruments.
Financial assets at fair value through profit or loss include
financial assets that are either classified as held for trading
or are designated by the entity to be carried at fair value
through profit or loss upon initial recognition. By definition, all
derivative financial instruments that do not qualify for hedge
accounting fall into this category. The Group’s management
however, does not consider any other financial asset for
designation into this category. Any gain or loss arising from
financial assets held at fair value is based on changes in fair
value, which is determined by direct reference to active market
transactions, and is recognised in profit and loss.
1.9.2 Financial liabilities
The Group’s financial liabilities, which are recognised at fair
value on initial recognition, include borrowings, trade and
other payables (including finance lease liabilities). These are
subsequently measured at amortised cost using the effective
interest rate method.
All interest related charges reported in profit or loss are
included in the income statement line item “finance charges”.
1.9.3 Cash and cash equivalents
Cash and cash equivalents comprise cash and balances with
banks net of bank overdrafts, short-term borrowings and
acceptance credits, all of which are available for the Group and
are readily convertible into known amounts of cash. Cash and
cash equivalents are measured at fair value.
1.9.4 Loans between companies within the Group
Loans between companies within the Group are measured at
amortised cost less any impairment loss. An impairment loss
is recognised in the income statement of the company when
there is objective evidence that a subsidiary loan receivable is
impaired. Impairment losses are eliminated on consolidation.
Accounting policies
for the year ended 31 december 2008
Iliad Africa | 2008 Annual Repor t 37
1.10 Impairment of assetsAt each reporting date the carrying amount of the tangible
and intangible assets are assessed to determine whether
there is any indication that those assets may have suffered an
impairment loss. If any such indication exists, the recoverable
amount of the asset is estimated in order to determine the
extent of the impairment loss.
Irrespective of whether there is an indication of impairment,
the Group also:
• tests trademarks with an indefinite life for impairment
annually by comparing its carrying amount with its recoverable
amount,
• tests goodwill acquired in a business combination for
impairment annually by comparing its carrying amount
with its recoverable amount.
Where it is not possible to estimate the recoverable amount
of an individual asset, the recoverable amount of the cash-
generating unit to which the asset belongs is estimated. Value
in use, included in the calculation of the recoverable amount,
is estimated taking into account future cash flows, forecast
market conditions and the expected lives of the assets.
If the recoverable amount of an asset (or cash generating unit)
is estimated to be less than its carrying amount, its carrying
amount is reduced to the recoverable amount. The impairment
loss is first allocated to goodwill and then to the other assets
of the cash generating unit. Subsequent to the recognition of
an impairment loss, the depreciation or amortisation charge for
assets is adjusted to allocate its remaining carrying value, less
any residual value, over its remaining useful life. Impairment
losses are recognised in profit and loss.
Impairment losses on trade and other receivables is determined
based on specific and objective evidence that such assets are
impaired and measured as the difference between the carrying
amount of assets and the present value of the estimated future
cash flows discounted at the effective interest rate computed
at initial recognition. Individual receivables are considered
for impairment when they are past due at the balance sheet
date or when objective evidence is received that a specific
counterparty will default. All other receivables are reviewed for
impairment in groups, which are determined by reference to
the industry and region of a counterparty. The percentage of
the write down is then based on recent historical counterparty
default rates for each identified group.
If any impairment loss subsequently reverses, the carrying
amount of the asset (or cash generating unit) is increased to
the revised estimate of its recoverable amount but limited to
the carrying amount that would have been determined had no
impairment loss been recognised in prior years. A reversal of
an impairment loss is recognised in profit or loss.
For the purpose of impairment testing, goodwill and trademarks
are allocated to each of the cash-generating units expected to
benefit from the synergies of the combination. No goodwill and
trademark impairment losses are subsequently reversed. The
attributable amount of goodwill and trademarks are included in
the profit or loss on disposal when the relevant business
is sold.
1.11 Leases
Leases are classified as finance leases or operating leases at
the inception of the lease.
1.11.1 Finance leases
Assets held under finance lease agreements are capitalised
and are depreciated over their expected useful lives or the
term of the relevant lease, where shorter. Leases are classified
as finance leases whenever the terms of the lease transfer
substantially all of the risks and rewards of ownership to the
lessee, whereas all other leases are classified as operating
leases. At the commencement of the lease, these assets are
reflected at the lower of the fair value of the asset and the
present value of the minimum lease payments at the date of
acquisition. The discount rate used in calculating the present
value of the minimum lease payments is the interest rate
implicit in the lease. Any initial direct costs are added to
the amount recognised as an asset. Finance costs represent
the difference between the total lease commitments and the
fair value of the assets acquired. Finance costs are charged
to profit and loss over the term of the lease and at interest
rates applicable to the lease on the remaining balance of
outstanding lease commitments based on the effective rates
of interest.
1.11.2 Operating leases
Rentals payable under operating leases are charged to profit
and loss on a straight-line basis over the term of the
relevant lease.
Accounting policies
Iliad Africa | 2008 Annual Repor t38
1.12 InventoriesInventories, comprising merchandise, raw materials and
finished goods are valued at the lower of cost and estimated
net realisable value. Estimated net realisable value is the
selling price in the ordinary course of business less the
estimated cost necessary to make the sale when inventories
are sold. The carrying amount of the inventories is recognised
as an expense in the period in which the related revenue is
recognised. The amount of any write down of inventories to net
realisable value and all the losses of inventories are recognised
as an expense in the period the write down or loss occurs.
Cost is determined on a first-in first-out basis. Obsolete,
redundant and slow moving inventories are identified and
written down to their estimated net realisable value. Cost
includes costs of conversion and other costs incurred in
bringing the inventories to their present location and condition.
Provision is made for slow moving, obsolete and redundant
inventories.
1.13 ProvisionsProvisions are recognised when the company has a present
legal or constructive obligation as a result of past events, for
which it is probable that an outflow of economic benefits will
be required to settle the obligation, and a reliable estimate can
be made of the amount of the obligation. Where the effect of
discounting to present value is material, provisions are adjusted
to reflect the time value of money, and where appropriate, the
risk specific to the liability.
1.14 Taxation1.14.1 Current tax assets and liabilities
Current tax assets and liabilities for the current and prior periods
are measured at the amount expected to be paid or recovered
from the tax authorities, using the tax rates that have been
enacted or substantively enacted by the balance sheet date.
1.14.2 Secondary taxation on companies
Secondary taxation on companies (STC) is recognised as part
of the current taxation charge when the related dividend
is declared.
1.14.3 Deferred taxation
A deferred taxation asset or liability is recognised for all
deductible or taxable timing differences except to the extent
that they arise from the initial recognition of goodwill or an
asset or liability in a transaction that:
• is not a business combination; and
• at the time of the transaction, affects neither accounting
profit nor taxable profit or tax loss.
Deferred tax assets are recognised for all deductible temporary
differences and unused tax losses to the extent that it
is probable that taxable profit will be available in future
against which they can be utilised. Future tax profits are
estimated based on business plans which include estimates
and assumptions regarding economic growth, interest rates,
inflation, taxation rates and competitive forces.
Deferred tax is calculated at the tax rates that are expected to
apply to the period when the asset is realised or the liability
is settled, based on tax rates that have been enacted or
substantively enacted by the balance sheet date.
1.14.4 Tax expenses
Current and deferred taxation is recognised as income or as an
expense and included in profit and loss for the period except
to the extent that the tax arises from: a transaction or event
which is recognised in the same or different period directly in
equity, or a transaction or a business combination.
Current tax and deferred taxes are charged or credited directly
to equity if the tax relates to items that are credited or charged,
in the same or a different period, directly to equity.
1.15 Revenue recognition
Revenue is recognised on the date of sale when significant
risks and rewards of ownership are transferred to the buyer.
Revenue is measured at the fair value of the consideration
received or receivable and represents the amounts receivable
for inventory sold and services provided in the normal course
of business, net of trade discounts, volume rebates and
value added tax. Sales within the Group are eliminated on
consolidation.
1.16 Cost of sales
Cost of sales consists of the cost of inventory sold during the
period net of trade discounts, volume rebates and value added
tax. Any write down of inventories to net realisable value and
all losses of inventories or reversals of previous write downs or
losses are recognised in cost of sales in the period the write
down, loss or reversal occurs.
Accounting policies
for the year ended 31 december 2008
Iliad Africa | 2008 Annual Repor t 39
1.17 Income from investmentsInterest is recognised on a time proportion basis that takes
into account the effective yield on the asset and the principal
outstanding.
Dividend income from investments is recognised when the
shareholders’ right to receive payment has been established.
1.18 Borrowing costsBorrowing costs are expensed in the period to which they are
incurred.
1.19 Translation of foreign currenciesForeign currency transactions are recorded, on initial
recognition in Rand, by applying to the foreign currency the
exchange rate between the Rand and the foreign currency
at the date of the transactions. Uncovered foreign currency
transactions are translated at the spot rates ruling on the date
of the transactions. The related monetary assets and liabilities
at year-end are translated at the spot rates ruling at the
balance sheet date.
Where forward exchange contracts have been entered
into to denominate transactions in Rand, the transactions
are translated at the spot rates at the transaction date. The
year-end monetary balances of liabilities are translated at
the spot rates at year-end. Open forward exchange contracts
are revalued at market rates for equivalent period exchange
contracts. Exchange differences are recognised in the results
for the year.
1.20 Employee benefits1.20.1 Short-term employee benefitsThe cost of short-term employee benefits, (those payable within
one year after the service is rendered, such as paid leave,
sick leave and bonuses) are recognised in the period in which
the service is rendered and is not discounted. The expected
cost of compensated leave is recognised as an expense as the
employees render services that increase their entitlement or, in
the case of non- accumulating leave, when the leave occurs.
The expected cost of profit sharing and bonus payments is
recognised as an expense when there is a legal or
constructive obligation to make such payments as a result of
past performance.
1.20.2 Defined contribution plansContributions to defined contribution plans in respect of
service in a particular period are recognised as an expense in
the period concerned.
By virtue of the types of schemes operated in the Group no
past service costs or experience adjustments will arise in the
retirement funding arrangements.
1.20.3 Defined benefit plansThe defined benefit plan is fully funded and there are no
unfunded liabilities. The Group’s contributions to the defined
benefit plan are charged to the income statement in the year to
which they relate.
1.21 Share capital and equityAny repurchases by the Group of its own equity instruments
are treated as treasury shares and are deducted from equity on
consolidation. No gain or loss is recognised in the profit and
loss on the purchase, sale, issue or cancellation of the Group’s
own equity instruments. Considerations paid or received are
recognised directly in equity.
1.22 Share-based payments
Goods and services received or acquired in a share-based
payment transaction are recognised when the goods or services
are received. A corresponding increase in equity is recognised
if the goods or services were received in an equity-settled
share-based payment transaction or a liability if the goods or
services were acquired in a cash-settled share-based payment
transaction.
For equity-settled share-based payment transactions, the goods
or services received are measured, and the corresponding
increase in equity is recognised, at the fair value of the goods
or services received, unless the fair value cannot be measured
reliably in which case the value is measured by reference to
the fair value of the equity instruments granted.
For cash-settled share-based payment transactions, the goods
or services received and the liability incurred is measured at
the fair value of the liability. Until the liability is settled the
fair value of the liability is re-measured at each reporting date
and at the date of settlement, with any changes in the fair
value recognised in the income statement for the period.
Accounting policies
Iliad Africa | 2008 Annual Repor t40
1.23 Statements and interpretations issued but not yet effectiveAt the date of approval of these annual financial statements,
certain new accounting standards, amendments and
interpretations to existing standards had been published that
are mandatory for accounting periods beginning on or after the
1 January 2009 which the Group has elected not to
adopt early.
The following standards and interpretations may have an
impact on the Group’s operations when they become effective.
The Group is of the opinion that the impact there on will not
be material to the Group results:
• Amendment to IFRS 2, Share-Based Payment (effective
from 1 January 2009): The amendment deals with two
matters. It clarifies that vesting conditions are service
conditions and performance conditions only. Other features
of a share-based payment are not vesting conditions. It also
specifies that all cancellations, whether by the entity or by
other parties, should receive the same accounting treatment.
The amendment will be adopted by the Group in financial
periods beginning on or after 1 January 2009.
• IFRS 3, Business Combinations (Revised) (effective from
1 July 2009): The new standard continues to apply the
acquisition method to business combinations, with some
significant changes. All payments to purchase a business
are to be recorded at fair value at the acquisition date, with
some contingent payments subsequently re-measured at fair
value through income. Goodwill may be calculated based on
the parent’s share of net assets or may include goodwill
related to the minority interest. All transaction costs will be
expensed. This interpretation will be adopted by the Group
for future acquisitions in financial periods beginning on or
after 1 July 2009.
• IFRS 8, Operating Segments (effective from 1 January
2009): IFRS 8 requires an entity to adopt the ‘management
approach’ to reporting on the financial performance of its
operating segments. The standard sets out requirements
under which segment information is presented on the same
basis as that used for internal reporting purposes. The Group
will apply these disclosure requirements in financial periods
beginning on or after 1 January 2009.
• IAS 1, Presentation of Financial Statements (Revised)
(effective from 1 January 2009): The changes made to
IAS 1 are to require information in financial statements
to be aggregated on the basis of shared characteristics and
to introduce a statement of comprehensive income. This will
result in a separate presentation of changes in equity that
arise from transactions with owners in their capacity as
owners from other changes in equity. The amended version
of this standard also changes the terminology and
presentation of the primary financial statements. The Group
will apply these requirements in financial periods beginning
on or after 1 January 2009.
• IAS 23, Borrowing Costs (Revised) (effective from
1 January 2009): In the revised standard, borrowing costs
that are directly attributable to the acquisition, construction
or production of qualifying assets form part of the costs
of that asset. Other borrowing costs shall be recognised
as an expense in the period in which they have occurred.
The Group will apply these requirements to significant
future capital acquisitions in financial periods beginning on
or after 1 January 2009.
• IAS 27, Consolidated and Separate Financial Statements
(Revised) (effective from 1 July 2009): In the revised
standard, transactions with non-controlling interests in
which control is not gained or lost are accounted for as
equity transactions. No income statement gain or loss is
recorded and no adjustment is made to goodwill. On loss of
control of a subsidiary, any retained investment is
re-measured to fair value and a gain or loss is recorded
in profit and loss. This interpretation will be adopted by the
Group in financial periods beginning on or after 1 July 2009.
Accounting policies notes to the AnnuAl finAnciAl stAtements
for the year ended 31 december 2008
Iliad Africa | 2008 Annual Repor t 41
2008 2007
R000 R000
2.1 Movements during the year Capital expenditure 56 481 32 402
Owned assets
– Machinery and warehouse equipment 16 034 1 807 – Vehicles 14 833 633 – Computer equipment and software 8 263 5 432 – Furniture and fixtures 15 307 11 933 – Improvements to leasehold premises 2 044 6 832
Capitalised leased assets – Machinery and warehouse equipment 5 765
Acquisitions (see note 25.2) 20 849 8 080
Owned assets – Machinery and warehouse equipment 11 697 2 973 – Vehicles 5 991 3 491 – Computer equipment 702 701 – Furniture and fixtures 2 434 915 – Improvements to leasehold premises 25
Disposals (6 608) (2 318)
Owned assets – Machinery and warehouse equipment (2 763) (305) – Vehicles (1 668) (863) – Computer equipment and software (553) (328) – Furniture and fixtures (842) (727) – Improvements to leasehold premises (782) (1) Capitalised leased assets – Machinery and warehouse equipment (94)
Depreciation for the year (33 760) (22 763)
36 962 15 401
2.2 Certain assets are hypothecated under finance lease and instalment sale agreements (see note 11).
2.3 Property, plant and equipment have an estimated replacement cost and insurance value of
R257 million (2007: R193 million).
Accounting policies notes to the AnnuAl finAnciAl stAtements
2008 2007
Net Net
Accumulated carrying Accumulated carrying
Cost depreciation value Cost depreciation value
R000 R000 R000 R000 R000 R000
2 Property, plant and equipment Owned assets
– Machinery and warehouse equipment 53 922 23 431 30 491 31 088 18 852 12 236
– Vehicles 41 544 18 564 22 980 28 606 19 936 8 670
– Computer equipment and software 39 405 28 708 10 697 32 903 24 563 8 340
– Furniture and fixtures 64 584 36 069 28 515 41 223 19 706 21 517
– Improvements to leasehold premises 25 197 12 694 12 503 29 475 14 375 15 100
Capitalised leased assets
– Machinery and warehouse equipment 10 563 6 888 3 675 11 201 5 165 6 036
Total 235 215 126 354 108 861 174 496 102 597 71 899
GROUP
GROUP
for the year ended 31 december 2008
Iliad Africa | 2008 Annual Repor t42
3 Intangible assets
Goodwill (refer note 3.1) 455 528 393 213
Trademarks (refer note 3.2) 125 175 75 075
580 703 468 288
3.1 Goodwill
At beginning of the year 393 213 320 461
Acquisitions 62 315 67 065
Contingent purchase consideration (refer note 11.2) 5 687
At end of the year 455 528 393 213
Goodwill represents the excess of the purchase consideration
over the acquirer’s interest in the net fair value of the
identifiable assets, liabilities and contingent liabilities at the
date of acquisition purchased as part of a business combination.
3.2 Trademarks
– Indefinite useful lives
At beginning of the year 75 075 53 000
Acquisitions 50 100 22 075
At end of the year 125 175 75 075
Trademarks represent registered rights to the exclusive use of certain trademarks and brandnames that have been acquired as part of a
business combination and have been stated at their fair value determined by external trademark valuation specialists.
Trademarks with an indefinite life are considered to be indefinite based on the following factors:
– There is a high product life cycle for the trademark;
– There is a high level of maintenance expenditure required to obtain the future economic benefits, and
– The Group has the intention and ability to reach the required level of maintenance expenditure.
No value has been placed on internally generated trademarks in the Iliad operations.
3.3 Impairment testing of goodwill and trademarks with an indefinite life
Trademarks and goodwill acquired through acquisitions have been allocated to various divisions representing cash generating units
and have been tested for impairment accordingly.
The recoverable amount of the underlying cash generating units has been determined based on a value in use calculation using
the cash flow projections for the forthcoming five years, as per the financial budgets approved by senior management, adjusted for
expected annual growth thereafter. The average annual growth rate for the following five years used for the cash generating units
ranged from 2,5% to 10% depending on the entity assessed. Thereafter an average range of the perpetuity growth rate was 6% which
approximates the estimated future inflation.
The after-tax discount rate applied to the cash flow projections was 14%, being the weighted average cost of capital of Iliad.
In determining the cash flow projections for the forthcoming financial year, sales, gross margins and costs were based on historical
performance and adjusted for projected synergies arising from the acquisitions.
Management believes that any reasonable and possible change in the key assumptions would not cause the carrying amounts
of the cash generating units to exceed the recoverable amounts.
These calculations indicated that there was no impairment in the carrying value of trademarks and goodwill at 31 December 2008.
GROUP
2008 2007 R000 R000
notes to the AnnuAl finAnciAl stAtements
for the year ended 31 december 2008
Iliad Africa | 2008 Annual Repor t 43
4 Investment in subsidiaries
Investment in subsidiaries (see note 27)
Shares at cost 1 1
Loans 66 591 271 245
66 592 271 246
Amount written off (104 757)
66 592 166 489
5 Deferred taxation
5.1 – Future tax allowances for trademarks which have
been written off 1 363 2 858
– IAS 17 straight-line rental adjustment 4 286 7 546
– Other temporary differences 13 597 12 637
19 246 23 041
5.2 Movements of deferred tax assets
Balance at beginning of the year 23 041 20 798
IAS 17 straight-line rental adjustment (3 260) 1 056
Reversing temporary differences on trademarks (1 495) (1 548)
Change in tax rate (795)
Other movements 1 755 2 735
At end of the year 19 246 23 041
6 Inventories
Merchandise 779 334 698 247
Raw materials 7 866 9 734
Finished goods 13 050 27 170
800 250 735 151
Inventory balances are net of write downs and provisions.
The cost of inventories recognised as an expense and included
in cost of sales amounted to R3,3 billion (2007: R3 billion).
The cost of inventories written off and included in cost of sales
amounted to R10 million (2007: R8 million).
GROUP COMPANY
2008 2007 2008 2007 R000 R000 R000 R000
notes to the AnnuAl finAnciAl stAtements
Iliad Africa | 2008 Annual Repor t44
notes to the AnnuAl finAnciAl stAtements
7 Trade and other receivables
Trade and other receivables 536 517 493 871 397
less: Impairment provision (16 532) (24 592)
519 985 469 279 397
All of the Group’s trade and other receivables are short-term.
The carrying value of trade receivables is considered a
reasonable approximation of fair value.
The trade receivables have been reviewed for indicators of
impairment. Certain trade receivables were found to be
impaired and a provision of R16,5 million
(2007: R24,5 million) has been recorded accordingly.
The impaired trade receivables are mostly due from
customers in the Group’s business-to-business market that
are experiencing financial difficulties. The reduction in the
impairment provision in the current year is due to the fact
that the Group has elected in specific circumstances to write
off debts as opposed to carrying an impairment provision.
Trade receivables comprise a widespread customer base.
The ongoing credit evaluation of the financial position of
customers is performed, and where appropriate, credit
guarantee insurance is purchased. The granting of credit is
made on application and is approved by management.
At year-end, the Group did not consider there to be any
significant concentration of credit risk which has not been
insured or adequately provided for.
In addition, some of the unimpaired trade receivables are past
due at the reporting date. The age of trade receivables past
due but not impaired is as follows:
More than three months but not more than six months
(91 – 180 days) 30 869 11 178
More than six months but not more than a year
(181 – 365 days) 1 748 7 435
32 617 18 613
GROUP COMPANY
2008 2007 2008 2007 R000 R000 R000 R000
for the year ended 31 december 2008
Iliad Africa | 2008 Annual Repor t 45
9 Share capital
9.1 Authorised
300 000 000 ordinary shares of no par value
12 243 804 “A” shares of no par value
9.2 Issued ordinary shares
138 217 794 (2007: 146 433 408) ordinary shares
of no par value
Balance at the beginning of the year 161 968 203 892 161 968 232 367
7 851 111 shares, held as treasury shares by a subsidiary,
cancelled in terms of special resolution 16 650 (8 684)
8 215 614 shares repurchased and cancelled (85 823) (85 823)
Distribution out of stated capital (76 145) (58 574) (76 145) (61 715)
161 968 161 968
9.3 Issued “A” shares
12 243 804 “A” shares issued on 1 April 2005 in terms
of the BEE transaction (Refer note 9.6) 122 122 122 122
122 122 122 122
Total issued share capital 122 162 090 122 162 090
notes to the AnnuAl finAnciAl stAtements
The increase in trade receivables past due but not impaired for
the current year is mainly due to increased levels of
government and quasi-government debtors levels and
independent contractors for whom there is no history of default.
Payment cessions over the contractors and credit insurance
exist over these trade receivables.
8 Cash and cash equivalents
Cash and bank balances 156 170 96 238 47 043 8
Bank borrowings (refer note 11.3) (175 868)
(19 698) 96 238 47 043 8
Cash and cash equivalents includes deposits in dividend
income funds.
The effective interest rate on cash and cash balances
averaged 14,4% for the year (2007: 10,5%).
Unutilised bank overdraft facilities amount
to R600 million (2007: R550 million).
Bank overdraft facilities carry an interest rate at the prime
lending rate of its bankers (2007: prime lending rate
of its bankers).
Other short-term banking facilities carry an interest rate of
1% below the prime lending rate of its bankers
(2007: 1.5% below the prime lending rate of its bankers).
GROUP COMPANY
2008 2007 2008 2007 R000 R000 R000 R000
Iliad Africa | 2008 Annual Repor t46
notes to the AnnuAl finAnciAl stAtements
for the year ended 31 december 2008
9.4 Rights of “A” shares
The following rights, privileges and restrictions attach to the “A” shares of no par value:
1 The “A” shares will rank as regards voting rights pari passu in all respects with the ordinary shares in the capital of Iliad;
2 The holders of the “A” shares shall be entitled to receive notice of all meetings of members of Iliad and shall be entitled to be
present and/or vote, either in person or by proxy, at any meeting of shareholders of Iliad;
3 The “A” shares shall not confer any rights to receive any dividend or distribution out of any capital or revenue profits of Iliad;
4 The “A” shares shall not confer any rights to dividends or return on capital, nor shall they confer any rights to participate in any
surplus assets of Iliad, on a winding up;
5 Iliad shall at its option, and within its sole discretion, be entitled to redeem, convert or acquire all or any of the “A” shares at the
stated capital in respect of the “A” shares divided by the number of “A” shares being redeemed, at any time after 31 December
2009 and prior thereto, only in the following circumstances:
5.1 In the event of Iliad exercising its call option in terms of the BEE agreement, at any time after payment (in terms of the BEE
agreement) has been made to the holder of the shares in the issued share capital of Iliad which are the subject matter of the
call option; or
5.2 In the event of any options that are the subject matter of the BEE agreement being exercised by the holder thereof, Iliad shall
be entitled to cause to be redeemed, converted or acquired at any time following the date of issue of ordinary shares in respect
of options exercised, so many “A” shares as correspond with the number of options that are exercised;
6 Iliad shall, at the option of the holder of the “A” shares, be obliged to redeem, convert or acquire all or part of the “A” shares at the
stated capital in respect of the “A” shares divided by the number of “A” shares being redeemed, at any time falling on a date which
is after that specified in 5 above, which shall apply mutatis mutandis;
7 The terms of the “A” shares may not be modified, altered, varied, added to or abrogated from, and
8 The voting rights referred to in 1 above, shall terminate forthwith upon redemption or purchase of the “A” shares by Iliad.
9.5 Iliad Africa Second Share Option Scheme
All options granted to executive directors and operational executives in terms of this scheme (which were granted prior to November
2002) had been exercised at 31 December 2006. No further options were granted to executive directors and operational executives
during the year.
Salient features of the Iliad Africa Second Share Option Scheme are:
– It makes provision for the granting of options to employees of the companies in the Group and the offering of shares for purchase as
an incentive to promote the continued growth of and interest in the company.
– The scheme shares shall in the aggregate not exceed 20% of the issued share capital of the company. Currently the maximum number
of shares available to this scheme is 11 000 000 shares, of which options have been granted and exercised for 9 610 000 shares.
– The number of shares that any participant is entitled to acquire in terms of the scheme shall not exceed 22% of the maximum
number of shares reserved for this scheme.
– The option will remain open for a period of ten (10) years after the date of granting thereof.
Employee and executive director beneficiaries can exercise their options granted after the adoption of this scheme as follows:
– after the expiration of two years from the option date 33% of such beneficiary scheme shares
– after the expiration of three years from the option date a further 33% of such beneficiary scheme shares
– after the expiration of four years from the option date the remainder of such beneficiary scheme shares.
Iliad Africa | 2008 Annual Repor t 47
notes to the AnnuAl finAnciAl stAtements
9.6 Women’s Private Equity Fund 1 (WPEF)
On 18 March 2005 the group concluded a broad-based BEE transaction. In terms thereof options were granted for 12 243 804
ordinary shares at a strike price to be calculated in accordance with the undermentioned formula.
Strike price = A + B - C
Where:
A = R6,58 (six rand and fifty eight cents), being a ten percent discount to the volume weighted average share price of Iliad on the
JSE as at 14 October 2004 (being the day after the letter of intent was executed by the parties);
B = Interest is calculated using the RSA 153 yield closing daily yield to maturity plus two and a half percent
C = The accumulated abnormal dividend for the period from the effective date to the payment date.
Based on the above formula the calculated price at 31 December 2008 is 957 cents (2007: 876 cents).
These options were valued on initial recognition and a share based payment reserve of R40 million (2007: R40 million) has been
raised in respect thereof. As this is an equity settled transaction these options are not revalued annually.
9.7 Unissued shares
The unissued ordinary shares are under the control of the directors in terms of a resolution of members passed at the last annual general
meeting of members. This authority remains in force until the next annual general meeting.
10 Minority interest Share of attributable earnings for the year 1 157 Balance at end of the year 1 157
Transactions with minority equity holders include the purchase by minority shareholders of 30% of the shareholding in United Metal Processors (Proprietary) Limited. The minority shareholders’ equity stake was acquired as part of the
National Tile Traders transaction.
GROUP COMPANY
2008 2007 2008 2007 R000 R000 R000 R000
Iliad Africa | 2008 Annual Repor t48
11 Borrowings11.1 Secured liabilities 13 046 10 165 Secured by finance lease and instalment sale agreements over vehicles and equipment with a net book value of R8 million (2007: R6 million). The liabilities bear interest at rates varying from 12,2% to 14,5% per annum (2007: 10,2% to 13,4% per annum) which are linked to the prime bank overdraft rate and are repayable in monthly instalments of approximately R0.5 million (2007: R0.2 million) inclusive of finance charges.
11.2 Contingent purchase consideration in respect of Campwell Hardware vendors 57 169 61 069 During 2006 the Group acquired certain of the assets and liabilities of the Campwell group.
The Campwell vendors retained 25% of the ordinary shares of Campwell Hardware (Pty) Ltd. The Campwell vendors have been granted a Put option by Iliad Africa Trading (Pty) Ltd in terms of which the Campwell vendors are entitled to sell this 25% tranche of Campwell Hardware (Pty) Ltd shares back to the Group. The Put can be exercised at any time between 2009 and 2011. The Put Strike Price is determined in terms of the Put formula which is similar to the Earn-Out Formula, with the added protection in the Group’s favour that the Put Strike Price also varies with future changes in the Group’s Price Earnings ratio.
It is the directors’ opinion, that, in all likelihood, the Put will be exercised in 2011. The directors have accordingly recognised the 25% acquisition, and raised the associated goodwill in respect of this acquisition. However, in future, should the Group’s acquisition of the 25% Campwell tranche be considered to be unlikely, the acquisition of this 25% tranche and associated goodwill asset will be de-recognised, and a minority stakeholder interest
will be recognised.
The estimated purchase consideration to acquire the remaining
25% of the Campwell shares has been calculated in terms of
the formula at R57 million (2007: R61 million) in present
value terms.
GROUP
2008 2007 R000 R000
notes to the AnnuAl finAnciAl stAtements
for the year ended 31 December 2008
Iliad Africa | 2008 Annual Repor t 49
11.2 Contingent purchase consideration in respect of
Campwell Hardware vendors (continued)
Significant variables in the Put Formula (and consequently in
the Group’s Put obligation) are:
- 70% of the future Group’s PE ruling on the Put exercise date
between 2009 and 2011 (capped to a maximum of PE of 10).
- future Campwell earnings between 2009 and 2011.
The Put obligation and underlying financial projections have
been revised .
The valuation of the liability based on the current market
conditions is lower than the carrying amount of R57 million,
however, the directors are of the opinion that these current
market conditions are abnormal in nature and have therefore
elected not to reduce both the liability and the associated
goodwill.
11.3 Bank borrowings (refer note 8) 175 868
246 083 71 234
11.4 Less: Amounts payable within one year included with
current liabilities (180 102) (2 948)
Secured liabilities (4 234) (2 948)
Bank borrowings (175 868)
Long-term borrowings 65 981 68 286
12 Commitments
12.1 Operating leases
Estimated future rentals
– Property 225 197 230 856
– Vehicles and equipment 53 128 71 068
278 325 301 924
Operating leases payable
– within one year 91 381 93 847
– in second to fifth year inclusive 183 414 196 912
– later than five years 3 530 11 165
278 325 301 924
notes to the AnnuAl finAnciAl stAtements
for the year ended 31 December 2008
GROUP
2008 2007 R000 R000
Iliad Africa | 2008 Annual Repor t50
12.1 Operating leases (continued)
Property commitments are for fixed rate leases for operating
and trading premises with an average term of five years.
Many lease contracts include a renewal option at the end of
the term at fair market rates. Rentals escalate at rates which
are in line with historical interest rates applicable to the
southern African environment. Lease periods do not exceed
ten years.
Motor vehicle and equipment commitments are fixed rate
leases in operating business units with an average lease term
of four years.
These commitments will be financed from available cash
resources, funds generated from operations and available
borrowing capacity.
12.2 Capital expenditure approved
Contracted for 29 120 25 721
Authorised but not contracted for 13 460 16 273
42 580 41 994
Capital expenditure will be financed from available cash
resources, funds generated from operations and available
borrowing capacity.
Commitment for acquisition of businesses. 100 000 130 000
Total commitments 420 905 473 918
13 Contingent liabilities
Contingent liabilities at balance sheet date, not otherwise
provided for in these annual financial statements, arising from:
13.1 Guarantees issued in the normal course of business for finance 620 000 550 000
facilities granted to subsidiaries.
Management has assessed the fair value of these overdraft
guarantees to be immaterial based on a probable weighted
outcome and is of the opinion that due to the high net asset
value of the companies involved, the expected losses under
the guarantees are unlikely.
13.2 Litigation, current or pending, is not considered likely to have
a material adverse effect on the Group.
GROUP COMPANY
2008 2007 2008 2007 R000 R000 R000 R000
notes to the AnnuAl finAnciAl stAtements
for the year ended 31 December 2008
Iliad Africa | 2008 Annual Repor t 51
notes to the AnnuAl finAnciAl stAtements
for the year ended 31 December 2008
14 Trade and other payables
Trade and other payables 920 850 854 833 118 227
920 850 854 833 118 227
All amounts are short term. The carrying values are considered
to be a reasonable approximation of fair value.
15 Operating profit (loss) before investment income
After taking into account the following:
Income
Reversal of provision for write down of investment
in subsidiary 104 757
Foreign exchange (loss) profit (700) 73
Profit on disposal of property, plant and equipment 1 006 1 101
Expenditure
Auditors’ remuneration 4 565 4 116 252 254
– Audit fees 4 058 3 885 250 220
– Under provision prior year 455 204
– Other services 52 27 2 34
Consulting fees for administrative services 7 503 6 804 355 275
Depreciation of property, plant and equipment 33 760 22 763
– Machinery and warehouse equipment 6 713 4 222
– Vehicles 4 846 3 557
– Computer equipment 6 055 4 152
– Furniture and fixtures 9 901 5 974
– Improvements to leased premises 3 884 3 997
– Capitalised leased assets 2 361 861
Operating lease rentals 112 486 105 246
– Property 87 902 82 757
– Vehicles and equipment 24 584 22 489
Staff costs 548 896 462 091
– Salaries and wages 512 506 431 610
– Retirement benefits 25 097 21 236
– Medical aid contributions 11 293 9 245
GROUP COMPANY
2008 2007 2008 2007 R000 R000 R000 R000
Iliad Africa | 2008 Annual Repor t52
16 Investment income
Dividends received
– Unlisted investments 36 599 12 989 5 438
– Subsidiary companies 102 064
Interest received 16 397 1 732 58
52 996 14 721 5 496 102 064
17 Finance charges
Bank and short-term borrowings 69 456 22 044
Capitalised finance leases 1 819 551
71 275 22 595
18 Taxation
Normal taxation – current 80 729 94 369 163
Deferred taxation – current 3 795 (2 243)
84 524 92 126 163
Reconciliation of tax rate % % % %
Standard tax rate 28,00 29,00 28,00 29,00
Reduction in tax rate: (3,05) (3,44) (27,85) (29,00)
– Exempt income (3,05) (3,44) (27,85) (29,00)
Increase in tax rate: 0,20 1,58
– Disallowable charges 0,20 1,58
Effective rate of taxation 25,15 27,14 (0,15)
19 Distributions out of stated capital
Distribution out of stated capital – declared on
29 March 2008 at 52 cents per share payable on
10 April 2008 to shareholders registered at 29 March 2008 76 145 76 145
Distribution out of stated capital – declared on
12 March 2007 at 40 cents per share payable on
10 April 2007 to shareholders registered at 29 March 2007 61 715 61 715
Distribution attributable to treasury shares (3 141)
76 145 58 574 76 145 61 715
GROUP COMPANY
2008 2007 2008 2007 R000 R000 R000 R000
notes to the AnnuAl finAnciAl stAtements
for the year ended 31 December 2008
Iliad Africa | 2008 Annual Repor t 53
notes to the AnnuAl finAnciAl stAtements
for the year ended 31 December 2008
20 Earnings, headline earnings, diluted earnings and diluted
headline earnings per share
Earnings and headline earnings per share are based on the
consolidated earnings and headline earnings attributable to
shareholders of R250 437 521 (2007: R247 433 848)
and R249 713 084 (2007: R246 651 230) respectively
and are calculated using the weighted average number
of 141 329 209 (2007: 146 433 408) ordinary shares
in issues.
Diluted earnings and diluted headline earnings per share
are based on the consolidated earnings and headline earnings
as stated above and are calculated using 142 668 859
(2007: 150 961 099) ordinary shares in issue.
20.1 Diluted weighted average number of shares
Weighted average number of ordinary shares 141 329 209 146 433 408 Increase in number of ordinary shares as a result of
unexercised share options for the BEE transaction 1 339 650 4 527 691
Diluted weighted average number of ordinary shares at
31 December. 142 668 859 150 961 099
Account is taken of the number of ordinary shares in issue
for the period in which they are entitled to participate in
the net profit of the Group.
20.2 Earnings per share
Profits for the year (R000) 250 437 247 433
Earnings per share (cents) 177,2 169,0
Diluted earnings per share (cents) 175,5 163,9
Percentage dilution (%) 1,0 3,1
20.3 Headline earnings per share
Profits for the year (R000) 250 437 247 433
Profit on disposal of plant and equipment (net of taxation) (724) (782)
Headline earnings (R000) 249 713 246 651
Headline earnings per share (cents) 176,7 168,4
Diluted headline earnings per share (cents) 175,0 163,4
Percentage dilution (%) 1,0 3,1
GROUP
2008 2007 R000 R000
Iliad Africa | 2008 Annual Repor t54
Directors’ Fixed Performance
R000 fees remuneration bonuses Total
21 Directors’ emoluments
2008
Non-executive directors
HC Turner 411 411
RT Ririe 256 256
MY Sibisi 106 106
Executive directors – paid by a subsidiary
RB Patmore (retired 31 December 2008) 2 616 3 124 5 740
E Beneke (appointed 1 November 2008) 417 417
NP Goosen 1 100 1 916 3 016
773 4 133 5 040 9 946
The remuneration of directors is reviewed annually by
the remuneration committee for approval by the board.
Non-executive directors are paid a basic fee with an
additional fee payable for their level of responsibility and
committee membership. They do not participate in any
group incentive plans or share schemes. They are
reimbursed for any group related expenditure.
All executive directors contracts are subject to a three
calendar month’s notice and restraint of trade agreements.
Non-executive directors are not bound by service contracts.
Directors’ Fixed Performance
R000 fees remuneration bonuses Total
2007
Non-executive directors
HC Turner* 513 513
RT Ririe* 309 309
MY Sibisi 98 98
Executive directors – paid by a subsidiary
RB Patmore 2 387 4 506 6 893
NP Goosen 900 1 898 2 798
920 3 287 6 404 10 611
* Additional directors’ fees of R132 000 for HC Turner and R71 500 for RT Ririe were paid for services provided during the
ABSA Capital private equity negotiations.
notes to the AnnuAl finAnciAl stAtements
for the year ended 31 December 2008
Iliad Africa | 2008 Annual Repor t 55
notes to the AnnuAl finAnciAl stAtements
for the year ended 31 December 2008
22 Retirement benefit information The Group contributes to defined contribution schemes covering approximately three fifths of the Group’s employees. The schemes
are administered in terms of the Pension Funds Act, 1956. Contributions to retirement funding during the year amounted to R26 million (2007: R21,2 million). As the fund is a defined contribution scheme, no actuarial shortage can arise in the future. All permanent employees are required to become members of this plan unless they are obliged by legislation to be members of various industry funds.
In addition, the Group contributes to a defined benefit fund for 31 members, which fund is currently in the process of being converted to a defined contribution fund. The last valuation performed in 2004 indicated that the fund had a nil surplus. This was approved by the Financial Services Board. The current valuation is in the process of being completed in accordance with legislation and will be reported in next year’s annual financial statements. Based on current information there is no reason to believe that a material surplus or deficit will arise.
23 Financial risk management
23.1 Credit risk
The Group’s exposure to credit risk is limited to the carrying amount of financial assets recognised at the balance sheet date,
as summarised below:
2008 2007
R000 R000
Classes of financial assets – carrying amounts
Loans and receivables
Cash and cash equivalents 156 170 96 238
Trade and other receivables 519 985 469 279
676 155 565 517
The Group continuously monitors defaults of customers and other counterparties, identified either individually or by group, and
incorporates this information into credit risk controls. Where available at reasonable cost, external credit ratings and / or reports on
customers and other counterparties are obtained and used. Iliad’s policy is to only deal with creditworthy customers.
Trade receivables consist mainly of a large and widespread customer base. The Group monitors the financial position of their customers
on an ongoing basis. Where considered appropriate, use is made of credit guarantee insurance. The granting of credit is controlled by
application and account limits.
The Group’s management considers that all the above financial assets that are not impaired for the reporting dates under review are of
good credit quality, including those that are past due. See note 7 for further information on impairment of trade and other receivables
that are past due.
Provision is made for bad debts and at the year-end management did not consider there to be any material credit risk exposure that
was not already covered by credit guarantee insurance or a bad debt provision.
None of the Group’s trade and other receivables are secured by collateral and other credit enhancements.
In respect of trade and other receivables, the Group is not exposed to any significant credit risk exposure to any single counterparty or
any group of counterparties having similar characteristics.
The Group only deposits cash with banks and financial institutions of quality credit standing so the credit risk for liquid funds and other
short- term financial assets is considered negligible, since counterparties are reputable banks and financial institutions with high quality
external credit ratings.
GROUP
Iliad Africa | 2008 Annual Repor t56
23.2 Liquidity risk
The Group manages liquidity needs by monitoring daily borrowing levels, cash flow forecasts and ensuring that adequate unutilised
borrowing facilities are maintained. There is no restriction on borrowing powers in terms of the Articles of Association and at
31 December 2008 the Group’s banking facilities substantially exceeded its forecast requirements for the forthcoming year.
As at 31 December 2008, the Group’s liabilities have contractual maturities that are summarised below:
23.3 Interest rate risk
Interest which is payable on long-term and short-term borrowings is at variable rates which are linked to the bank prime lending rate
(refer note 11).
The Group’s policy is to minimise interest rate cash flow exposures on its long-term financing. At 31 December 2008 the Group is
exposed to changes in market interest rates through its bank borrowings and long-term and short-term borrowings, which fluctuate
during the year and are subject to variable interest rates.
The following table illustrates the sensitivity of the net result for the year and equity to a reasonably possible change in rates of
-1% and +1% (2007: -1% and +1%) with effect from the beginning of the year. These changes are considered to be reasonably
possible based on observations of current market conditions. The calculations are based on the Group’s financial instruments held at
balance sheet date. All other variables are held constant.
2008 2007
R000 R000
-1% +1% -1% +1%
Net result for the year 2 327 (2 327) 962 (962)
Current Non-current Total
R000 Within 6 months 6 to 12 months 1 to 5 years
Liquidity risk analysis 2008 2007 2008 2007 2008 2007 2008 2007
Financial liabilities
measured at amortised cost
Bank borrowings 175 868 175 868
Finance lease obligations 2 329 1 621 1 905 1 327 8 812 7 217 13 046 10 165
Trade payables 861 161 778 640 59 689 76 193 920 850 854 833
Other financial liabilities 57 169 61 069 57 169 61 069
Total 1 039 358 780 261 61 594 77 520 65 981 68 286 1 166 933 926 067
GROUP
GROUP
notes to the AnnuAl finAnciAl stAtements
for the year ended 31 December 2008
Iliad Africa | 2008 Annual Repor t 57
notes to the AnnuAl finAnciAl stAtements
for the year ended 31 December 2008
23.4 Fair value of financial assets and liabilities All financial instruments are carried at fair value or amounts that approximate fair value, except for payables and interest-bearing
borrowings, which are carried at amortised cost.
The carrying amounts for investments, cash, cash equivalents, as well as the current portion of receivables, payables and interest-bearing borrowings, approximate fair value due to the short-term nature of these instruments.
The fair values have been determined using available market information and appropriate valuation methodologies.
23.5 Foreign currency risk Most of the Group’s foreign transactions are carried out in US Dollars and Euros. Exposures to currency exchange rates arise from the
Group’s purchases of goods denominated in foreign currencies and hence exposures to exchange rate fluctuations arise. In line with the Group’s risk management procedures the Group has partly hedged through the use of forward exchange contracts of its foreign currency exposure.
To mitigate the Group’s exposure to foreign currency risk, forward exchange contracts are entered into in accordance with risk management policies.
Foreign currency denominated financial assets and liabilities in US Dollars and Euros translated to Rands at the closing rate, are as follows:
2008 2007
Due within six months Rands Rands
US Dollar denominated financial assets (trade receivables) 107 246
Euro denominated financial liabilities (trade payables) (28 644 798) (31 823 616)
US Dollar denominated financial liabilities (trade payables) (67 617 972) (82 779 458)
Short-term exposure (due within six months) (96 262 770) (114 495 828)
Due after six months
Financial liabilities (trade payables) (8 846 052)
Long-term exposure (due after six months) (8 846 052)
Exchange rate at year-end:
US$1 = R9,40 (2007: R6,80)
€1 = R13,22 (2007: R10,05)
Due to the fact that the Group enters into forward exchange contracts in respect of its foreign currency transactions, changes in the
exchange rate would not have a material impact on the results.
GROUP
Iliad Africa | 2008 Annual Repor t58
2008 2007
The gearing ratios at 31 December are as follows: R000 R000
Total borrowings (refer note 11) 246 083 71 234
Less: Cash and cash equivalents (refer note 8) (156 170) (96 238)
Net debt (cash surplus) 89 913 (25 004)
Total equity 1 024 608 936 139
Total capital 1 114 521 911 135
Gearing ratio 8,8%
24 Segment reporting
The Group operates in the building materials supply market
segment within the Southern African building materials
industry, therefore no segmental information is disclosed.
23.6 Capital risk management
The Group’s objectives when managing capital are:
- to safeguard the Group’s ability to continue as a
going concern,
- to provide adequate returns for shareholders and benefits
for other stakeholders, and
- to maintain an optimal capital structure to reduce the cost
of capital, by pricing products commensurately with the
level of risk.
In order to maintain or adjust the capital structure, the Group
may adjust the amount of dividends paid to shareholders,
return capital to shareholders and issue new shares or sell
assets to reduce debt.
Consistent with others in the industry, the Group monitors
capital on the basis of the gearing ratio of which the group
has set at a maximum of 30%.
This ratio is calculated as net debt divided by total equity.
Net debt is calculated as total borrowings less cash and
cash equivalents.
GROUP
notes to the AnnuAl finAnciAl stAtements
for the year ended 31 December 2008
Iliad Africa | 2008 Annual Repor t 59
notes to the AnnuAl finAnciAl stAtements
for the year ended 31 December 2008
25 Notes to the cash flow statements
The following convention applies to figures other than
adjustments:
Outflows of cash are represented by figures in brackets.
Inflows of cash are represented by figures without brackets.
25.1 Taxation paid
Amounts (outstanding) advanced at beginning of the year (1 690) (29 795) 1 067 752
Amounts charged to the income statement (80 729) (94 369) 163
Amount (paid in advance) outstanding at end of the year (7 483) 1 690 (1 230) (1 067)
(89 902) (122 474) (315)
25.2 Purchase of businesses comprises the following:
Details of the acquisitions made during the year is set out
in the directors’ report on page 27. The estimated purchase
considerations totalling R141,1 million have been
provisionally allocated to the underlying fair value of the
identifiable assets, liabilities and contingent liabilities as follows:
Property, plant and equipment (20 849) (8 080)
Trademarks (50 100) (22 075)
Goodwill (62 315) (72 752)
Net current assets (16 545) (40 116)
Long-term borrowings 8 049 5 644
Cash and cash equivalents 641 19 642
(141 119) (117 737)
Satisfied by:
Cash and cash equivalents (141 119) (112 050)
Contingent purchase consideration (5 687)
(141 119) (117 737)
Goodwill of R62,3 million (2007: R72,7 million ) is primarily
related to growth expectations, expected future profitability,
the substantial skill and expertise of the company’s staff and
expected cost synergies. Goodwill has been allocated to cash
generating units at 31 December 2008.
25.3 Proceeds on disposal of property, plant and equipment
Book value on disposals 6 608 2 318
Profit on disposal 1 006 1 101
7 614 3 419
GROUP COMPANY
2008 2007 2008 2007 R000 R000 R000 R000
Iliad Africa | 2008 Annual Repor t60
27 Investment in subsidiaries Issued % % Cost of Cost of Amount Amount
share held held shares shares owing owing
capital 2008 2007 2008 2007 2008 2007
R R R R000 R000
Held directly
Iliad Africa Trading (Proprietary) Limited 1 100 100 1 1 19 519 224 172
Iliad Africa Investments (Proprietary) Limited 1 000 100 100 1 000 1 000 47 072 47 073
Held indirectly
BYM Building Supplies (Proprietary) Limited 100 100 100
Campwell Hardware (Proprietary) Limited 100 75* 75*
CMG Holdings (Proprietary) Limited 1 000 100 100
D&A Timbers (Proprietary) Limited 1 100 100
D&A Truss (Proprietary) Limited 100 100 100
United Metal Processors (Proprietary) Limited 100 70 100
United Steel and Pipe Supplies (Proprietary) Limited 20 000 100 100
United Tube (Proprietary) Limited 100 100 100
1 001 1 001 66 591 271 245
* Although the Group holds only 75% of Campwell Hardware (Pty) Ltd, the 25% minority holds a Put option on the shares held. This
option has been accounted for as a contingent purchase consideration and therefore the Group’s interest in Campwell Hardware (Pty)
Ltd has been recognised at 100% (refer notes 3 and 11).
2008 2007
Attributable profits and losses after taxation of subsidiaries R000 R000
Profit for the year 251 077 248 676
notes to the AnnuAl finAnciAl stAtements
for the year ended 31 December 2008
26 Related party transactions The company and its subsidiaries have entered into various transactions with related parties as follows:
Subsidiaries – Details of income from subsidiaries are disclosed in note 16 on page 52. – Details of investments in subsidiaries are disclosed in notes 4 and 27 on pages 43 and 52 respectively.
Directors – Details of directors’ remuneration and directors’ interests in the share option scheme are disclosed in note 21. Directors’
shareholdings are disclosed in the Directors’ report.
Key personnel
– Key personnel comprise the directors of the operating subsidiary and certain divisional managers. The remuneration paid to key
personnel during the year was R19 million (2007: R18 million).
Specific contracts
– R Ririe, a non-executive director, has a 13,5% interest in a company that is the landlord of the 2066 sqm premises occupied by
Builders Market Mafikeng. Rent paid to the company amounted to R0,5 million (2007: R0,4 million). The Group entered into a
seven year lease commencing 1st January 2007 at a straight-line annual rental of R0,6 million.
Iliad Africa | 2008 Annual Repor t 61
notes to the AnnuAl finAnciAl stAtements
for the year ended 31 December 2008
Portfolio size:
Range
1 – 5 000 2 948 80.33 3 258 870 2.36
5 001 – 20 000 399 10.87 4 359 125 3.15
20 001 – 100 000 188 5.12 8 711 186 6.30
100 001 – 1 000 000 108 2.94 36 058 341 26.09
1 000 001 and more 27 0.74 85 830 272 62.10
Totals 3670 100 138 217 794 100
Category
Individuals 2 853 77.74 15 609 149 11.29
Companies and other corporate bodies 815 22.21 121 163 596 87.66
Directors 2 0.05 1 445 049 1.05
Totals 3 670 100 138 217 794 100
Shareholder spread
Public 3 668 99.95 136 772 745 98.95
Directors 2 0.05 1 445 049 1.05
Totals 3 670 100 138 217 794 100
Major shareholders (5% or more of the shares in issue)
Rand Merchant Bank Asset Management 25 230 348 18.25
Public Investment Commissioner 17 625 398 12.75
The Kalithea Trust 9 140 000 6.61
*Supplied by Link Market Services South Africa (Pty) Ltd
Number of % of Number of % of issued
shareholders shareholders shares capital
shAReholDeR AnAlysis*
as at 31 December 2008
Iliad Africa | 2008 Annual Repor t62
ILIAD AFRICA LIMITEDRegistration number 1997/011938/06(Incorporated in the Republic of South Africa)Share code: ILAISIN: ZAE000015038(“Iliad” or “the company”)
Notice is hereby given that the annual general meeting of ordinary shareholders and “A” shareholders (“shareholders”) of Iliad Africa Limited will be held at East Block, First Floor, Pineslopes Office Park, cnr The Straight and Witkoppen Road, Lonehill, Sandton at 13:00 on Thursday, 28 May 2009 for the purposes of transacting the following business:
As ordinary resolutions1 To consider and adopt the annual financial statements for the year ended 31 December 2008 together with the directors’ and auditors’ reports.
2 To elect the following directors who retire in accordance with the provisions of the company’s Articles of Association and being eligible, offer themselves for re-election:2.1 E Beneke2.2 NP Goosen
Set out below are brief CVs of the directors retiring by rotation:
Eugene BenekeBCom (Pretoria) CA (SA) Chief executive officer
Eugene is a qualified chartered accountant and started his career as financial director of a construction and residential development company. Subsequently he held numerous managing executive positions in an 11 year career in the branded food manufacturing environment, mainly at Tiger Brands. Appointed as director on 1 November 2008 Neil GoosenBCompt (Unisa) CA (SA) MBA (Wits) Group financial director Neil qualified as a chartered accountant after having served articles at Deloitte & Touche. Thereafter, Neil gained commercial experience in the financial field with NEI Africa Limited and Roche Products (Pty) Limited. During this period, Neil also completed an MBA at the University of the Witwatersrand. Appointed as director in September 1999
3 To approve the remuneration paid to directors, as disclosed in the annual financial statements.
4 To place the ordinary shares held in reserve for the share incentive scheme under the control of the directors who shall be authorised to allot and issue these shares on such terms and conditions, at such times and for such consideration, whether payable in cash or otherwise, as they deem fit, subject to the Companies Act (Act 61 of 1973) (“the Act”) as amended, and the Listings Requirements of the JSE Limited (“JSE”) until the next annual general meeting of the company.
5 To reappoint the external auditors until the conclusion of the next annual general meeting.
6 To consider and, if deemed fit, to pass with or without modification, the following ordinary resolution: RESOLVED THAT the Directors be given the general authority to issue unissued shares of a class already in issue held under their control, for cash, when the Directors consider it appropriate in the circumstances, subject to the provisions of the Companies Act, No. 61 of 1973 (as amended), the Listings Requirements of JSE Limited and to the following limitations, that:• the authority shall be valid until the next annual general meeting of the company (provided it shall not extend beyond 15 months from the date of this resolution);• a paid press announcement giving full details, including the impact on net asset value, net tangible asset value, earnings and headline earnings per share, will be published at the time of any issue representing, on a cumulative basis within one financial year, 5% or more of the number of shares in issue prior to such issue;• issues for cash in any one financial year may not exceed 15% of the company’s issued share capital;• the issues must be made to public shareholders as defined by the Listings Requirements of JSE Limited and not to related parties; and• in determining the price at which an issue of shares may be made in terms of this authority, the maximum discount permit-ted will be 10% of the volume weighted average traded price as determined over the 30 business days prior to the date that the price of the issue is determined or agreed by the Directors of the company.The approval of a 75% majority of the votes cast by shareholders present or represented by proxy at this meeting is required for this resolution to become effective.
notice of AnnuAl geneRAl meeting
Iliad Africa | 2008 Annual Repor t 63
notice of AnnuAl geneRAl meeting
As special resolutions1 Special resolution 1: General repurchasesTo consider and, if deemed fit, to pass with or without modification, the following special resolution to give a general authority for the company to repurchase its own shares:
RESOLVED THAT Iliad, or a subsidiary of Iliad, be and is hereby authorised, by way of a general authority, to acquire shares issued by Iliad in terms of sections 85 to 89 of the Act, as amended, and in terms of the JSE Listings Requirements and that any director of the company be and is hereby authorised to sign all such documents and do all such things as may be necessary for or incidental to the implementation of this special resolution. The JSE Listings Requirements currently require that the company may make a general repurchase of its shares only if:• Any such repurchase of shares is effected through the order book operated by the JSE trading system and done without any prior understanding or arrangement between the company and the counterparty (reported trades are prohibited);• The company is authorised thereto by its articles of association;• The general authority shall be valid only until the company’s next annual general meeting; provided that it shall not extend beyond 15 months from the date of passing of this special resolution;• In determining the price at which the ordinary shares issued by Iliad are acquired by it or its subsidiary in terms of this general authority, the maximum price at which such shares may be acquired will be 10% above the weighted average of the market value for such ordinary shares for the five business days immediately preceding the date on which the repurchase of such shares is effected;• At any point in time, the company may appoint only one agent to effect any repurchase(s) on the company’s behalf;• After such repurchase, the company still complies with paragraphs 3.37 to 3.41 of the JSE Listings Requirements concerning shareholder spread requirements;• The company or its subsidiary may not repurchase shares during a prohibited period as defined in paragraph 3.67 of the JSE Listings Requirements;• Acquisitions of shares in any one financial year may not exceed 10% of the company’s issued share capital pursuant to this general authority;• Subsidiaries of the company shall not acquire, in aggregate, more than 10% of the company’s issued share capital, and
• The company publishes an announcement when it has cumulatively repurchased 3% of the initial number (the number of that class of shares in issue at the time that general authority is granted) of the relevant class of securities, and for each 3% in aggregate of the initial number of that class acquired thereafter. Such announcement must be made not later than 08:30 on the second business day following the day on which the relevant threshold is reached or exceeded.The directors have considered the impact of a repurchase of 10% of Iliad shares, it being the maximum permissible of a particular class in any one financial year, under a general authority in terms of the JSE Listings Requirements, and are of the opinion that such repurchase will not result in: • The company and the group in the ordinary course of
business being unable to pay its debts for a period of 12 months after the date of this notice of annual general meeting;
• The liabilities of the company and the group exceeding the assets of the company and the group for a period of 12 months after the date of the notice of annual general meeting, calculated in accordance with the accounting policies used in the audited financial statements for the year ended 31 December 2008;
• The ordinary capital and reserves of the company and the group, for a period of 12 months after the date of the notice of annual general meeting, being inadequate, and
• The working capital of the company and the group, for a period of 12 months after the date of this notice of annual general meeting, being inadequate.
Reason and effectThe effect of the special resolution and the reason therefor is to grant directors of the company a general authority in terms of the Act, as amended, for the acquisition by Iliad, or any subsidiary of Iliad, of Iliad shares.
At present, the directors have no specific intention with regard to the utilisation of this authority, which will be used only if the circumstances are appropriate. No repurchase of shares under this authority will be implemented until such time as the company’s sponsor has confirmed in writing to the JSE that the above working capital statement is valid.
Iliad Africa | 2008 Annual Repor t64
Material changesThere have been no material changes in the financial or trading position of Iliad and its subsidiaries between Iliad‘s financial year-end and the date of this notice.
Litigation statementThe directors, whose names are given on page 4 of the annual report, are not aware of any legal or arbitration proceedings, including proceedings that are pending or threatened, that may have or in the previous 12 months had, a material effect on the group’s financial position.
Directors’ responsibility statementThe directors, whose names are given on page 4 of the annual report, collectively and individually accept full responsibility for the accuracy of the information pertaining to the resolutions and certify that to the best of their knowledge and belief there are no facts that have been omitted which would make any statement false or misleading, and that all reasonable enquiries to ascertain such facts have been made and that these resolutions contain all information required by the JSE Listings Requirements.
Voting and proxiesAny member entitled to attend and vote at a meeting of the company may appoint one or more proxy/ies to attend, speak and vote in his/her stead. A proxy need not be a member of the company.
Shareholders, which are companies or other bodies corporate, may, in terms of section 188(1) of the Act, by resolution of its directors or other governing body, authorise any person to act as its representative at the annual general meeting.
The ordinary resolutions are subject to a simple majority vote of shareholders present or represented by proxy at the annual general meeting. Every shareholder present in person or by proxy at the annual general meeting shall, on a show of hands, have one vote only, and on a poll, have one vote for each share of which he/she is the registered holder.
Certificated shareholders and own-name dematerialised shareholders who are unable to attend the annual general meeting but wish to be represented thereat must complete and return the attached form of proxy in accordance with the instructions contained therein so as to be received by the company’s transfer secretaries, Link Market Services South Africa (Pty) Limited, 11 Diagonal Street, Johannesburg, 2001 (PO Box 4844, Johannesburg, 2000), by no later than 13:00 on Tuesday, 26 May 2009.
Dematerialised shareholders, other than those with own-name
registration, who wish to attend the annual general meeting,
must request their Central Securities Depository Participant
(“CSDP”) or broker to issue them with a letter of representation
to enable them to attend the annual general meeting in person.
Alternatively, such dematerialised shareholders must instruct
their CSDP or broker as to how they wish to vote in this regard.
This has to be done in terms of the agreement entered into
between the shareholder and his/her CSDP or broker.
By order of the board
Luis MendesGroup company secretary
Johannesburg
6 March 2009
Registered officeIliad Africa Limited
First Floor, East Block
Pineslopes Office Park
Cnr The Straight and Witkoppen Road
Lonehill, Sandton
PO Box 2572, Honeydew, 2040
Transfer secretariesLink Market Services South Africa (Pty) Ltd
11 Diagonal Street
Johannesburg 2001
PO Box 4844, Johannesburg, 2000
notice of AnnuAl geneRAl meeting foRm of pRoxy
Iliad Africa | 2008 Annual Repor t 65
notice of AnnuAl geneRAl meeting
ILIAD AFRICA LIMITEDRegistration number 1997/011938/06(Incorporated in the Republic of South Africa)Share code: ILA ISIN: ZAE000015038(“Iliad” or “the company”)
For use by certificated and own-name dematerialised ordinary shareholders and “A” shareholders (“shareholder”) at the annual general meeting to be held at East Block, First Floor, Pineslopes Office Park, cnr The Straight and Witkoppen Road, Lonehill, Sandton at 13:00 on Thursday, 28 May 2009.
I/We (full names in block letters) of (address) being the holder/s of ordinary shares in the company,
and/or “A” shares in the company appoint: (see note 1)
1 or failing him/her
2 or failing him/her
3 the chairman of the annual general meeting, as my/our proxy to attend, speak and vote for me/us on my/our behalf at the annual general meeting of the company to be held at East Block, First Floor, Pineslopes Office Park, cnr The Straight and Witkoppen Road, Lonehill, Sandton at 13:00 on Thursday, 28 May 2009, and at any adjournment thereof. I/we desire to vote as indicated below (see note 2):
Number of shares
In favour Against Abstain
of the the from
resolution resolution voting
Ordinary resolutions:
1 To consider and adopt the annual financial statements
2 Re-election of directors:
2.1 E Beneke
2.2 NP Goosen
3 To approve directors’ remuneration as disclosed in the annual financial statements
4 Placing of unissued shares under the control of the directors for the purpose
of the share incentive scheme
5 To re-appoint the external auditors
6 General authority to issue shares for cash
Special resolutions:
1 General authority to repurchase shares
(Indicate instructions to proxy by way of a cross in the appropriate space(s) provided above. Unless indicated above, the proxy may vote as
he/she deems fit.)
Signed at on 2009
Signature
Assisted by (where applicable)Each shareholder is entitled to appoint one or more proxies (who need not be members of the company) to attend, speak and vote in place of that member at the annual general meeting, (Instructions overleaf)
foRm of pRoxy
Iliad Africa | 2008 Annual Repor t66
shAReholDeRs’ DiARy AnD coRpoRAte infoRmAtion
INSTRUCTIONS ON SIGNING AND LODGING THE ANNUAL
GENERAL MEETING PROXY FORM:
1 A shareholder may insert the names of two alternative prox-
ies (neither of whom need be a shareholder of the company) in
the space provided, with or without deleting the words “chair-
man of the annual general meeting”. The person whose name
appears first on the form of proxy and has not been deleted and
who is present at the annual general meeting will be entitled to
act as proxy to the exclusion of those whose names follow. In
the event that no names are indicated, the proxy shall be exer-
cised by the chairman of the annual general meeting.
2 A shareholder’s instructions to the proxy must be
indicated by the insertion of an “X” or the relevant number of
votes exercisable by that shareholder in the appropriate box/
boxes provided. If a proxy form, fully signed, is lodged without
specific directions as to which way the proxy is to vote, the
chairman of the annual general meeting will be deemed to
have been authorised as he/she thinks fit. A shareholder or the
proxy is obliged to use all the votes exercisable by the share-
holder or by the proxy.
3 A deletion of any printed matter and the completion of any
blank spaces need not be signed or initialled. Any alteration or
correction must be initialled by the authorised signatory/ies.
4 When there are joint holders of Iliad shares, all joint share-
holders must sign the form of proxy.
5 The completion and lodging of this form of proxy will not
preclude the shareholder, who grants this proxy, from attending
the annual general meeting and speaking and voting in person
thereat to the exclusion of any proxy appointed in terms hereof,
should such shareholder wish to do so.
6 Documentary evidence establishing the authority of the
person signing this form of proxy in a representative capacity
must be attached to this form unless previously recorded by
the transfer secretaries.
7 Where this form is signed under power of attorney, such
power of attorney must accompany this form unless it
has been previously registered with the company or the transfer
secretaries.
8 A minor must be assisted by his/her parent or guardian
unless the relevant document establishing his/her legal capac-
ity has been produced or registered by the transfer secretaries.
9 Completed forms of proxy must be forwarded to the com-
pany’s transfer secretaries, Link Market Services South Africa
(Pty) Limited, PO Box 4844, Johannesburg, 2000 so as to be
received by no later than 13:00 on Tuesday, 26 May 2009.
10 The chairman of the meeting may reject or accept a proxy
that is completed other than in accordance with these instruc-
tions, provided that he/she is satisfied as to the manner in
which a shareholder wishes to vote.
notes to the pRoxy
Iliad Africa | 2008 Annual Repor t 67
Financial year-end 31 December 2008
Declaration of final distribution 6 March 2009
Publication of financial results on Sens 10 March 2009
Annual report posted to shareholders 31 March 2009
Payment of final distribution 20 April 2009
Annual general meeting 28 May 2009
Publication of interim results September 2009
shAReholDeRs’ DiARy AnD coRpoRAte infoRmAtionnotes to the pRoxy
Iliad Africa Limited
Incorporated in the Republic of South Africa
Registration number 1997/011938/06
Share code: ILA
ISIN: ZAE000015038
Group company secretary
Luis Mendes
PO Box 2572 Honeydew 2040
Business address and registered office
Iliad Africa Limited
First Floor, East Block
Pineslopes Office Park
cnr The Straight and Witkoppen Road
Lonehill, Sandton
PO Box 2572 Honeydew 2040
Transfer secretaries
Link Market Services South Africa (Pty) Ltd
11 Diagonal Street
Johannesburg 2001
PO Box 4844 Johannesburg 2000
Internet
http://www.iliadafrica.co.za
Attorneys
Fullard Mayer Morrison Incorporated
Second Floor, Office Towers, Sandton City
cnr Rivonia Road and Fifth Street
Sandton 2146
PO Box 78678 Sandton 2146
Principal bankers
First National Bank of South Africa
Mercantile Lisbon Bank, a division of
Mercantile Lisbon Bank Holdings Limited
Nedbank, a division of Nedcor Bank Limited
Sponsor
Bridge Capital Advisors (Pty) Ltd
27 Fricker Road, Second Floor
Illovo 2196
PO Box 651010 Benmore 2010
Auditors
Grant Thornton
Chartered Accountants (SA)
Registered Auditors
(Member firm of Grant Thornton International)
137 Daisy Street cnr Grayston Drive
Sandown 2196
Private Bag X28 Benmore 2010
Iliad Africa | 2008 Annual Repor t68
OPERATION TEL FAX BBS – Benoni 011 422 3005 011 422 4256 Builders Market – Bloemfontein 051 434 2241 051 435 2788 Builders Market – Empangeni 035 787 1416 035 787 1375 Builders Market – Kathu 053 723 2670 053 723 2670 Builders Market – Kimberley 053 833 4214 053 831 2840 Builders Market – Klerksdorp 018 462 2521 018 462 5122 Builders Market – Lephalale 014 763 1332 014 763 1351 Builders Market – Middelburg 013 283 6500 013 283 6511 Builders Market – Pietersburg 015 292 0614 015 292 1446 Builders Market – Richards Bay 035 789 3592 035 789 3600 Builders Market – Vaal 016 986 2085 016 986 1320 Builders Market – Welkom 057 352 8361 057 357 2035 Builders Market W Miller – Somerset West 021 851 2660 021 852 4312 Builders Market – Brits 012 252 3619 012 252 3619 Builders Market – Burgersfort 013 231 7578 013 231 7578 Builders Market – Giyani 015 812 4140 015 812 1855 Builders Market – Isipingo 031 902 9390 031 902 8391 Builders Market – Jane Furse 013 265 1876 013 265 1878 Builders Market – Mafikeng 018 381 5195 018 381 5140 Builders Market – Polokwane 015 297 6814 015 297 4862 Builders Market – Secunda 017 685 3201 017 685 1833 Builders Market – Shayandima 015 964 1664 015 964 1138 Campwell Hardware – Athlone 021 696 5167 021 696 6637 Campwell Hardware – Bergvliet 021 712 4400 021 712 9866 Campwell Hardware – Group X 021 376 5968 021 376 5970 Campwell Hardware – Nyanga 021 691 2206 021 691 5534 Campwell Hardware – Parklands 021 556 7631 021 556 7084 Campwell Hardware – Plaza 021 391 5555 021 392 2701 Campwell Hardware – Polka Place 021 392 7004 021 392 7010 Campwell Hardware – Stellenbosch 021 887 6830 021 887 6836 Campwell Hardware – Vasco 021 592 4119 021 592 4138 Campwell Tile & San 021 376 5968 021 376 5970 D&A Timbers – East London 043 743 3733 043 743 7561 D&A Timbers – Grahamstown 046 622 7301 046 622 8739 D&A Timbers – Kenton-on-Sea 046 648 1300 046 648 1117 D&A Timbers – Pinetown 031 705 8451 031 705 8030 D&A Timbers – Port Alfred 046 624 1103 046 624 2115 D&A Timbers – Shelly Beach 039 315 0790 039 315 0797 Ferreira's Express – Lyttelton 012 664 5687 012 644 2408 Ferreira's – Honeydew 011 795 3733 011 795 2936 F&F Building Supplies – Krugersdorp 011 762 4284/4316 011 762 7422 Laeveld Bouhandelaars – Bushbuckridge 013 799 0245 013 799 1657 Laeveld Bouhandelaars – Hazyview 013 737 7142 013 737 6585 Laeveld Bouhandelaars – Hoedspruit 015 793 0560 015 793 0695 Laeveld Bouhandelaars – Lydenburg 013 753 5349 013 753 5302 Laeveld Bouhandelaars – Malelane 013 790 1670 013 790 1673 Laeveld Bouhandelaars – Nelspruit 013 753 5300 013 753 5301 Laeveld Bouhandelaars – Witrivier 013 750 2090 013 750 0279 Modern Bathrooms 021 592 2190 021 591 4927 Rietpan Hardware – Benoni 011 571 6400 011 973 2996 Rustenburg Building Material – Rustenburg 014 597 1951 014 592 7352 Suncol – Benoni 011 421 6331 011 421 6539 USM – Jeffreys Bay 042 293 4480 042 293 4489 USM – Manor Heights 041 922 9920 041 922 9920 USM – Uitenhage 041 922 9920 041 922 9505
geneRAl BuilDing mAteRiAls Division
contAct DetAils
68
OPERATION TEL FAX B-One – Centurion 0861 008 009 012 664 0404 Bildware Décor Centre – Umhlanga 031 566 5566 031 566 5568 Bildware Natal – Durban 031 332 5764 031 332 7895 Buchel – Menlyn 012 361 8304 012 361 8305 Buchel Designa – Faerie Glen 012 998 4687 012 998 3028 Buchel Hardware – Pretoria 012 300 2700 012 325 5472 Buchel Hardware & Tool Centre – Zambezi Drive – Pretoria 012 543 7500 012 567 6588 Buchel Tool Centre – Pretoria 012 300 3800 012 321 8120 Cachet International – Gauteng 011 201 4600 011 201 4601 Cachet International – KwaZulu-Natal 031 240 8100 031 240 8111 Chipbase – Durbanville 021 982 7810 021 982 7819 Chipbase – George 044 874 1753 044 874 1801 Chipbase – Montagu Gardens 021 551 2035 021 551 1926 Chipbase – Retreat 021 701 1128 021 701 5841 Chipbase – Somerset West 021 854 6810 021 854 6862 Chipbase – Stikland 021 949 1794 021 949 1712 Citiwood – Cape Town 021 930 5923 021 930 5625 Citiwood – Denver 011 622 9360 011 622 7938 Citiwood – Durban 031 579 2274 031 579 2293 Citiwood – Port Elizabeth 041 374 7414 041 373 0749 Citiwood – Pretoria 012 804 3554 012 804 0582 Citiwood – Vereeniging 016 421 1683 016 421 1337 Design Hardware – Northcliff 011 782 3629 011 888 1025 Design Hardware – Strijdom Park 011 792 9900 011 792 5153 Design Hardware – Woodmead 011 804 4293 011 804 6931 Ferreiras Décor World – Cape Town 021 510 5555 021 510 5666 Ferreiras Décor World – Durban 031 303 8400 031 303 8576 Ferreiras Décor World – North Riding 011 699 3500 011 699 3506 Ferreiras Décor World – Zambezi Drive – Pretoria 087 754 0500 012 543 2470 Just Tiles – Port Elizabeth 041 451 3602 041 451 1008 National Tile Traders – Bloemfontein 051 432 6360 051 432 1327 National Tile Traders – Boksburg 011 823 3340 011 826 2617 National Tile Traders – Centurion 012 661 6527 012 661 6586 National Tile Traders – Randfontein 011 693 6525 011 693 6907 National Tile Traders – Roodepoort 011 760 2315 011 766 3642 National Tile Traders – Rustenburg 014 597 0391 014 592 1586 National Tile Traders – Southgate 011 942 5978 011 942 5899 National Tile Traders – Strijdom Park 011 791 0206 011 791 0215 National Tile Traders – Vanderbijlpark 016 931 2456 016 931 2467 Q Lite – Cape Town 021 510 7920 021 510 5994 Q Lite – Strubens Valley 011 475 2412 011 675 2556 Q Lite – Umbilo Road Durban 031 306 9015 031 306 9017 Q Lite – Umhlanga 031 566 4070 031 566 4074 Saflok – Johannesburg 011 453 5375 011 453 5379 SDT – Gauteng 011 392 5306 011 974 3455 The Knob & Knocker – Johannesburg 011 201 4800 011 201 4801 The Knob & Knocker – KwaZulu-Natal 031 240 8100 031 240 8111 The Tile Depot – Cape Town 021 510 1248 021 511 7790 The Tile Depot – North Riding 011 462 3774 011 462 9125 Thorpe Timbers 011 724 4200 011 865 2204 Tile & Décor Mart – Alberton 011 907 1383 011 907 1494 Top Form – Somerset West 021 854 4005 021 854 3397 W&B Hardware – Bellville 021 948 4881 021 948 0370 W&B Hardware – Claremont 021 670 7270 021 670 7288 W&B Hardware – Paarden Island 021 510 0700 021 510 0728 W&B Hardware – Port Elizabeth 041 373 5993 041 374 5396
SPecIalISed bUIldInG materIalS dIvISIon
IlIad afrIca’S StrateGIc Intent
DRIVING FORCEOur strategy is to meet the product needs of the building industry through focused sourcing and redistribution of goods into each identified segment of the market
CORE COMPETENCIESTo survive and prosper we must excel at: • Market intelligence • Procurement • Trading skills
1 FIVE-YEAR REVIEW 2 ThE BOARD 3 GROUP STEERING AND EXECUTIVE COMMITTEE 4 ChAIRMAN’S REPORT6 ChIEF EXECUTIVE’S REPORT9 GENERAL BUILDING MATERIALS12 SPECIALISED BUILDING MATERIALS 16 CORPORATE GOVERNANCE22 VALUE-ADDED STATEMENT23 ANNUAL FINANCIAL STATEMENTS 61 ShAREhOLDER ANALYSIS 62 NOTICE OF ANNUAL GENERAL MEETING 65 FORM OF PROXY 66 NOTES TO ThE PROXY67 CORPORATE INFORMATION 67 ShAREhOLDERS’ DIARY 68 CONTACT DETAILS
contentS
Iliad Africa Limited (Iliad or the Group) sources, distributes, wholesales and retails general and specialised building materials. A range of customers, from large-scale contractors to do-it-yourself homeowners, are serviced through 112 stores.
The Group’s two focused divisions – General Building Materials and Specialised Building Materials – are headed by seasoned professionals. This structure heightens our ability to leverage common pools of expertise, extends the depth of senior management, accelerates the process of succession planning and enables each division to focus on its core market.
GroUP ProfIle
PHILOSOPHY• Owner-manager ethos with strong incentives for performance• Decentralised operating divisions• Tight centralised financial controls• Focus on niche markets without dominating any one segment• Leveraging common expertise between divisions
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Iliad Africa 2008 A
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