Acquisitions, expansion boost Iliad

johannesburg - acquisitions and expansion of stores by building materials group iliad africa seemed to have paid handsomely, with the group reporting a 24 percent increase in earnings a share and a 33 percent increase in dividends for the year to december 31.

the group's turnover rose 25 percent to r2.7 billion during the period, producing earning of r161 million from r217 million, on the back of 5 percent inflation.

earnings a share for the year increased to r1.11 from 89.6c a year ago.

ralph patmore, the group's chief executive, said: "operating profit to turnover was maintained at a credible 8.2 percent, reflecting how fast the benefits of group synergies and purchasing power filter into new acquisitions."

during the year, iliad concluded six acquisitions at a cost of r135 million and expanded its geographic presence in the country to 81 stores throughout all nine provinces.

patmore said the working capital-to-sales ratio of 7 percent reflected the high level of operational focus that permeated throughout the group even during times of significant expansion.

the effective tax rate increased to 29 percent from 28 percent in 2004 mainly because of the effects of secondary tax on companies.

cash and cash equivalents at year-end were r192.6 million following strategic internally funded acquisitions of r135 million and the new store roll-outs.

commenting on the housing market, patmore said: "as predicted, the residential market grew at a slower rate. strong growth was recorded in the middle-income market, static growth in the luxury end and alterations market continues to grow unabated."

patmore believed the residential market was driven by confidence and affordability.

"both, although still at high levels, are showing signs of a downward trend in the statistics produced by the medium term forecasting associates.

"the relief granted in the national budget may extend affordability cycle."

patmore added that in contrast, the non-residential market had continued its growth off a low base, buoyed by a continued shortage of warehousing/industrial space, the rapid development of office space and heightened activity in retail development.

the group expects this to largely counter the slowdown in the luxury residential market.

"the solid operating results reflect continued demand in the marketplace and the benefits of expanding our presence in key sectors and geographic areas in the building market.

"through a controlled level of acquisition, we expanded our geographic presence in the building materials and boards sectors, and entered the plumbing and lighting segments.

"this gives iliad a presence in seven of its initially identified niche sectors."

iliad's shares closed 35c lower at r12.85 on the jse yesterday. the construction and building materials sector rose 1.89 percent.