Energy Passion Focus Performance

1
Energy - Passion Focus - Performance

• Annual Results
• December 2001

2
Business model

• Niche market focus
• Owner managed trading ethos
• Decentralised operating divisions
• Do not want to dominate any market conscious of
  overtrading
• Tight financial control
• High return on capital invested
• Consistent growth
• Shareholder value

3
Core competencies

• Understanding our market segments
• Proven trading skills
• Procurement expertise
• Leadership at the centre
• Clearly defined focus

4
Iliad Africa Trading
General Building Materials
Ceramic Tiles, Sanitaryware Finishes
Boards
Ironmongery

• Knob Knocker Northcliff, Woodmead, Menlyn,
  Umhlanga, Cape Town

• Ferreiras Honeydew
• Ferreiras Honeydew Wholesale
• Rietpan Hardware

• Ferreiras Décor World Northriding, Alberton
  Umhlanga
• Ferreiras Wholesale
• Ferreiras Architectural
• Just Tiles Kwa-Zulu Natal, Cape Town Port
  Elizabeth
• Tile Depot Northriding, Alberton, Cape Town

• Citiwood Denver, Pretoria, Vereeniging, Cape Town
  Kwa-Zulu Natal

Turnover 39 (HY 38) Profit 36 (HY
38)
Turnover 38 (HY 37) Profit 38 (HY
38)
Turnover 19 (HY 20) Profit 17 (HY
14)
Turnover 4 (HY 5) Profit 9 (HY
10)
5
General building materials
Sourcing, distributing and retailing Wholesaling
to outlying areas DIY, bakkie builder, affordable
housing, medium to small developer and contractor.

• Rietpan Hardware
• Ferreiras Honeydew
• Ferreiras Honeydew Wholesale

6
General building materials

• Supply building industry with materials
• Understand market segments, catering to specific
  needs
• Offer one-stop-shop, availability, competitive
  prices
• Personal attention as well as cash carry
  convenience
• 60 of sales on 30 days credit, 40 in cash

7
Ceramic tiles, sanitaryware finishes
Sourcing, distributing and retailing Residential
DIY, architectural projects, contractors,
developers, bakkie builders

• Upmarket Ferreiras Décor World Northriding,
  Alberton Umhlanga Rocks
• Middle market Just Tiles KZN, CT PE
• Cash-and-carry lower market Tile Depot CT,
  Alberton Northriding
• Commercial Ferreiras Architectural

8
Ceramic tiles, sanitaryware finishes

• Lifestyle retailing for upper market create
  shopping experience, focusing on range, product
  differentiation and quality finishes
• Attend European trade shows to introduce latest
  fashions locally
• Destination shopping, grow by word-of-mouth and
  building industry / home improvement magazines
• Long term relationship with Italian, Spanish and
  Portuguese factories
• No upper spending limited finishes a small of
  total value of home
• Grow commercial market through project leads,
  showcase latest products to architects
• Competitive prices key to cash--carry market

9
Boards
Sourcing, distributing and retailing Shopfitters,
kitchen manufacturers, joiners and DIY markets.

• Citiwood Denver
• Citiwood Pretoria
• Citiwood Vereeniging
• Citiwood Cape Town
• Citiwood Kwa-Zulu Natal

10
Boards

• Geographic spread
• Non-differentiated product
• Benchmarks product availability, competitive
  pricing and quality of service
• Procurement and supplier relationships

11
Ironmongery
Sourcing, distributing and retailing of home and
office finishes Residential, DIY, architectural,
contractual developers, bakkie builders,
furniture and kitchen manufacturers.

• Knob Knocker Northcliff, Woodmead, Menlyn,
  Umhlanga, Cape Town

12
Ironmongery

• Wholesale bottom to middle range to hardware
  stores
• Retail outlets focused on walk-in trade
• Asthetics and fashion play decisive role in
  buying decision
• Provide wide product choice
• Specialisation in ranges
• Convenience
• Supplier relationships
• Italian products lead at upper end of market

13
Acquisition criteria

• Business related to existing activities
• Owner manager ethos
• Trading competence
• Management continuity
• Platform business with proven track record
• Satellite business that can benefit from existing
  platform business
• Established supplier and customer relationships
• Potential to impact positively on EPS in the
  short or medium term

14
Income statement
15
Balance sheet
16
Balance sheet
17
Abridged cash flow statement
18
Operating performance

• General building materials improved strongly on
  last year, despite R2m debt write-off in low cost
  housing market
• Curtail supply to developers servicing low cost
  housing market by 50
• Ceramics Successful launch of boutique
  showroom concept, Umhlanga. Drawing on stock
  from Durban and Northriding warehouses
• Boards Although commercial market shrank,
  division managed improved procurement, allowing
  for better margins on saless
• Ironmongery Absorbed pre-opening expenses
  related to Knob Knocker stores in Umhlanga and
  Menlyn, contribution to flow through during
  current financial year

19
Cash from operations

• Eliminate R15m overdraft
• Improved working capital management
• Business cycle days General building materials
  30 days, Ceramics 88 days, Boards 59 days,
  Ironmongery 150 days
• Capital to be employed in share buy-backs,
  upgrade of outlets and opening / acquiring
  smaller stores

20
Share count

• Share buy-back dependent on availability of stock
• To buy up to 140 cent level, delivering a profit
  after tax return in excess of 25
• Weighing up return against improvements in macro
  economy warranting store expansion
• Share repurchased to be held in treasury as
  war-chest
• To fund acquisitions
• To serve as share incentives to existing and new
  management

21
Headline Earnings per Share
22
Attributable Profit
23
Building industry

• R39bn market, split equally between labour and
  material
• 60 of R19.5bn requirement supplied through
  distribution network
• As Retailers the Group operates in a market
  valued at R12bn.
• 40 commercial and 60 residential balance

24
Prospects

• Can double size of gross turnover to R1.2bn in
  South Africa
• Market sector and geographic
• Ceramics Revamped Ferreiras Décor World in
  Northriding and new Umhlanga outlet to bolster
  contribution
• Growth to come from Just Tiles improvement in
  management and systems to generate greater
  efficiencies

25
Why invest in Iliad?

• Debt free
• Cash generative
• Established branded stores
• Net asset value of 129 cents per share