Iliad Africa reports headline earnings, per share, of 97.4 cents for the twelve months to 31 December 2005 - 27% higher than the previous comparable period. Turnover rises to R2.168-billion - from R1.14-billion in the previous comparable period. Iliad chief executive Ralph Patmore

LINDSAY WILLIAMS: Iliad Africa posted its seventh successive year of growth in earnings. Nice set of results - you’ve got great exposure to the biggest building boom, and consumer boom, that this country has ever seen - which particular segments of the portfolio did well?

RALPH PATMORE: It’s really the residential sector that’s been driving the market for a while. Yet it’s still not, in real terms, at the levels of the early 1980s - so although I think we’re reaching the peak of this particular boom, on the residential side, the non-residential side is starting to show some life, and I think there’s sustainable growth there for a couple of years still.

LINDSAY WILLIAMS: You do sound a note of caution, on a couple of occasions, in your post-results commentary. You say: "Quantitative and qualitative indicators show that the upswing in building activity is broad-based, but has gained full momentum, with confidence levels in the sector above 90% according the BER index." Are you suggesting a note of caution for the industry itself, and also for shareholders?

RALPH PATMORE: Yes, I think it’s two-sided - I just don’t think we’re going to see the level of growth that we’ve seen in the past. On a number of occasions we’ve stated that we don’t believe there’s a bubble - we don’t think there’s going to be a huge drop-off. But I think the signs are telling us it’s reaching the peak - we just have to be aware of that.

LINDSAY WILLIAMS: Your performance included the turnover generated by Corpbuild businesses - acquired, I think, from 19 September 2003 - but you said if it had been in place from January 2003 turnover from this period would have shown 16% growth, including average inflation level of around 4%. Does that mean the next set of results will fully reflect this acquisition?

RALPH PATMORE: Well, the only reason we did that adjustment is that it is difficult to look at the numbers and compare them to 2003. It was done to annualise the 2003 numbers - as if they were on board. 2005 will be a straight comparison with 2004, but having said that, we’re actually sounding a note of caution on the residential side. Despite that, we’re actually very excited about the future - there are a number of very positive opportunities for us, and we think the next three to five years are going to be very good for us.

LINDSAY WILLIAMS: If there is a slowdown in the residential property side - not a crash, as you said, but a slow-down, and a pick-up in the commercial side of things - are you well placed in that market to benefit?

RALPH PATMORE: Yes, at this stage we’re probably 60% residential and 40% non-residential - but we do believe there are other opportunities in the market where we’re going to be able to gain market share. So even against a slight slowdown we’ll be increasing our performance over the next three years.

LINDSAY WILLIAMS: Would that be from a change of strategy, or will you be in the acquisition trail?

RALPH PATMORE: It’s not changing strategy - it’s just that we’re very focused into particular segments of the market, and what we’re doing now is breaking those segments into fragments, and focusing businesses into areas that we actually have no representation at this point in time - so it opens up huge possibilities for us.

LINDSAY WILLIAMS: One thing that did catch my eye - inflationary trends for locally produced products are on the increase. How long have you been noticing that change?

RALPH PATMORE: It started in the last quarter of 2004, and it’s really just a phenomenon that spins off from supplier demand. The supplier is not keeping up with demand, in terms of certain local products, and that generally then prevents you doing the same sort of negotiations that you could in terms of purchasing - so there’s an automatic rub-off on the other side into the market place. So it’s a combination of a few factors.

LINDSAY WILLIAMS: With CPIX inflation down lower - are you able to pass these increases onto the end-user?

RALPH PATMORE: At the moment, at this peak that we’re riding, not too many people are asking what the price is - just: "Have you got the product!" So it’s a matter of: "If you’ve got the product, you get the business." But I don’t think that’s going to last forever.