AGENDA

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AGENDA

• Strategic intent
• Earnings review
• Overview of business divisions
• Building materials division
• Wholesale division
• Ceramics division
• Boards division
• Ironmongery Hardware division
• BEE shareholding
• Overview of key indicators
• The future

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PILLARS OF STRENGTH

• Driving Force
• Our strategy is to meet the product needs of the
  building industry through focused sourcing and
  redistribution of goods into each segment of the
  market
• Core Competencies
• To survive and prosper we must excel at
• market intelligence/information
• procurement and
• trading skills

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PILLARS OF STRENGTH

• 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
• Operate one platform business in each segment
• Geographically roll out or acquire satellite
  businesses, leveraging the expertise of the
  platform operation
• Leveraging of common expertise between divisions

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PERSPECTIVE OF INDUSTRY STRUCTURE
Total building industry
R46bn
Labour
Materials
R23bn
R23bn
Distributors
Direct
R14bn 60
R9bn 40
Unrecorded Refurbishments
Est. R6,0 bn
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Building material supply market Estimated R20bn
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FINANCIAL HIGHLIGHTS

• Turnover up 90
• Operating margin 8,5 (20038,1)
• HEPS up 27
• Dividend up 26
• Increase in cash R156 million

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INCOME STATEMENT


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BALANCE SHEET
Audited 31 Dec 2003
R 000s
Audited 31 Dec 2004
42 318 66 144 9 158 604 675
41 645 69 342 9 406 835 814
ASSETS Non-current assets Property, plant and
equipment Intangible assets Deferred
taxation Current assets

956 207
722 295
Total assets
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BALANCE SHEET
Audited 31 December 2003
R 000s
Audited 31 December 2004
EQUITY AND LIABILITIES Total shareholders
equity Total non-current liabilities Short term
liabilities Trade and other payables
386 327 992 2 575 332 401
496 699 2 210 1 472 455 826
Total equity liabilities
722 295
956 207
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CASH FLOW STATEMENT
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EARNINGS PER SHARE
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HEADLINE EARNINGS PER SHARE
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DIVIDEND PER SHARE
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PERFORMANCE PER DIVISION
Division
Turnover PBIT

• Building materials 59
  56

• Wholesale
  5 2

• Ceramics
  16 18

• Boards
  10 12

• Ironmongery Hardware 10 12

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BUILDING MATERIALS

• Robust growth in turnover 18 - inflation for the
  year 5
• Improved working capital to sales ratio
• Aggressive credit control
• Balanced stock control
• Acquisitions
• DA Timbers
• East London based Buffalo Home Garden
  cash-and-carry DIY store
• To be converted into a fully fledged builders
  merchant and branded DA
• Product supply shortages
• Timber
• Cement
• Bricks
• KITE ERP system integration continued target
  completion 2006

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BUILDING MATERIALS - opportunities

• Market segment can be fragmented into three areas
• Urban builders merchants
• Credit facilities / Full range of product /
  Delivery service
• Completion of geographic footprint for builders
  merchants
• Eastern Cape to Western Cape
• Pretoria and Hoedspruit
• Rural cash and carry
• Cash / Bread and butter product lines / One
  store brand
• Gearing to target in the short term
• Five year targeted turnover R500 million
• Urban retail
• Cash / Lifestyle product range / Store location /
  One store brand
• Gearing to target in the medium term
• Five year targeted turnover R300 million

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CERAMICS

• Robust growth in turnover 9 - deflationary
  environment
• Ferreiras Décor World remained at the cutting
  edge of retailing
• New design studio offering conceptualization and
  design of
• up market bathrooms to customers
• Durban surpassed group ROCE hurdle rate in first
  full year of operation
• Imported product inventories well managed despite
  shortage of containers.
• Working capital to sales ratio at an all time low
• Second consecutive year of outstanding cash
  generation
• Prestigious contracts specified and supplied, for
  example
• Clearwater shopping mall
• Woodhill shopping mall

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CERAMICS - opportunities

• Market segment can be fragmented into four areas
• Up market retail.
• Up market destination showrooms / fashion product
  ranges
• Complete geographic footprint
• Cape Town and Pretoria
• Rebrand Just Tiles to Ferreiras Décor World
• Cash and carry retail
• Basic product range / cash / serves radius around
  store
• Gearing to target in the short term
• Five year turnover target R300 million
• Architectural specification
• No change
• Contract
• No change

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BOARDS

• Robust growth in turnover 18 - inflation for the
  year 4
• Working capital to sales ratio reached an all
  time low for the second consecutive year.
• Excellent cash flow generation
• Product supply lines were under extreme pressure
  with shortages in all product lines.
• Supplier partnerships ensured product shortages
  had minimal effect on turnover
• Acquisitions
• Timland store in Port Elizabeth as part of
  geographic roll out
• To be rebranded Citiwood
• Purchasing power and additional working capital
  will ensure solid result in 2005

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BOARDS - Opportunities

• Market segment can be fragmented into three areas
• Bulk
• Credit facilities / Delivery / Bulk value adding
  / Full product range
• Continue geographic roll out
• Value added
• Cash / basic product range / Flexible value added
• Gearing to target in the short term
• Five year turnover target R200 million
• Retail
• Cash / Lifestyle product range / location
• Gearing to target in the medium term
• Five year turnover target R150 million

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IRONMONGERY HARDWARE

• Robust growth in turnover 18 - inflation for the
  year of 2
• Regionally rebranded the retail stores moved from
  wholesale division
• Johannesburg - Design Hardware
• Pretoria - Buchel
• KZN - Bildware
• Cape Town - W B Hardware
• Revamped two stores to new lifestyle-orientated
  showrooms
• Paarden Eiland
• Northcliff
• Electronic access business, Saflok in first year
  as a stand alone business produced a return in
  excess of the group ROCE hurdle rate
• Sold non-core aluminium trader Conways, with
  outlets in Cape Town and Gauteng, to Wispeco

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IRONMONGERY HARDWARE - Opportunities

• Continue process of revamping retail outlets
• Analyzing overseas trends for electronic access
  systems with the view to establishing exclusive
  supply line agreements
• Increase focus on the small contracting business
  through external representatives

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WHOLESALE

• Focus placed on internal efficiencies to
  establish base for sustainable growth. This had a
  negative effect on profitability.
• Sourcing of imported product lines was placed on
  hold due to anticipated acquisition
• Post year end, acquired Cachet International an
  importer of plumbing, tools and hardware
  products.
• BBL, the locksmith focused business, produced
  acceptable results
• The Knob and Knocker successfully transformed to
  wholesaling
• Acquired SDT
• A specialist hinge and drawer slide supplier to
  cabinet makers/kitchen manufacturers
• Sole agency for premium products manufactured by
  Grass - Austria

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WHOLESALE - Opportunities

• Integration of Cachet International and BB
  Distributors and expanding market share
• Consolidation of wholesale businesses into one
  warehouse per region to leverage efficiencies.
  This is subject to existing leases.
• SDT to be rolled out to Durban and Cape Town

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BEE SHAREHOLDING

• Present
• Historically Disadvantaged Individuals held 25
  370 560 shares or 16,83 of ordinary shares in
  issue at 31 December 2004 according to
  independent BEE health check.
• Includes
• Kopana Ke Matla/PIC 12,8 million
  shares
• Elephante Import and Export 5,1 million
  shares
• Future
• 10 to be acquired by the Women Private Equity
  Fund 1 consortium.
• The WPEF consortium will acquire 4 081 268
  ordinary shares for a cash consideration of
  R26,9m. 
• In addition, the WPEF consortium will subscribe
  for 12 243 804 A shares of no par value in
  Iliad, at an agreed subscription price.

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STATE OF THE MARKET

• Slowing of growth in the residential market
• Commercial market improving

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STATE OF THE MARKET
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STATE OF THE MARKET - RESIDENTIAL
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STATE OF THE MARKET - RESIDENTIAL
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STATE OF THE MARKET - RESIDENTIAL
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STATE OF THE MARKET - RESIDENTIAL
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STATE OF THE MARKET - RESIDENTIAL
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SA RESIDENTIAL PROPERTY CYCLE
SA Res Property Market
RH LH
Undersupply
RM
MIH
Tightening Market
Equilibrium
AH
Loosening Market
Oversupply
AH - Affordable Housing MIH - Middle Income
Housing LH - Luxury Housing RH - Retirement
Housing RM - Rental Market

Source Based on Viruly
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STATE OF THE MARKET - RESIDENTIAL
PUBLIC SECTOR HOUSING
87.31 OF NUMBERS
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STATE OF THE MARKET - RESIDENTIAL
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STATE OF THE MARKET NON RESIDENTIAL
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STATE OF THE MARKET NON RESIDENTIAL
BPP Lowest level in a Decade
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STATE OF THE MARKET NON RESIDENTIAL
BPP Lowest level in a Decade
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STATE OF THE MARKET NON RESIDENTIAL
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STATE OF THE MARKET - REFURBISHMENTS
R1 Trillion of Assets requiring continuous
Additions, Alterations, Improvement and
Refurbishment in a 5 to 7 year cycle.
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MARKET ASSESSMENT

• 2005 2006/7
• Formal private residential flat
  decline
• Formal public residential (RDP) growth
  growth
• Formal private commercial growth
  growth
• Formal public commercial flat
  growth
• Unrecorded refurbishments growth
  growth

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FUTURE PROSPECTS

• Building Materials
• Geographic footprint
• Eastern Cape to Western Cape, Pretoria and
  Hoedspruit
• New Markets
• Rural cash and carry 5 year R500
  million turnover
• Urban retail 5
  year R300 million turnover
• Ceramics
• Geographic footprint
• Cape Town and Pretoria
• New markets
• Cash and carry 5 year
  R300 million turnover
• Boards
• New markets
• Value added 5 year
  R300 million turnover
• Wholesale
• New market
• Plumbing, tools and hardware 5 year R600
  million turnover

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FUTURE PROSPECTS

• New market segments
• Plumbing roll out Suncol business concept
• Lighting search for platform business
• Electrical search for platform business
• Forecasted environment of healthy activity levels

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